Web 2.0 start-up strategy: sell-out big

The dream of an acquisition by Google, Yahoo, News Corp, is a foolhardy replacement for a viable business plan...The creation and operation of a profitable Web 2.0 business is a worthy dream in and of itself.
Written by Donna Bogatin, Contributor
In “Web 2.0 champions don't champion business plans” I noted that Web 2.0 impresario Michael “TechCrunch” Arrington is “making money by promoting Web 2.0 start-ups lacking business plans”:

TechCrunch cheerleads daily on behalf of twenty something software developers rapidly prototyping cool Web 2.0 apps. According to TechCrunch, it is:

'dedicated to obsessively profiling and reviewing new Internet products and companies.'

TechCrunch is not obsessed with the commercial viability or long-term sustainability of new Internet products and companies, however.

Arrington reaffirmed his disdain for Web 2.0 business plans today at “The Future of Web Apps Summit.”

In “TechCrunch's Arrington shares his winners and losers” fellow ZDNet blogger Dan Farber reports on Arrington’s professed criteria for being a Web 2.0 winner and his “advice to would be startups”:

Shared attributes of winners

• Passion for what they are doing
• Do something extraordinary
• Remove serious friction
• Great founder dynamics
• Never raise big money or raise it after you have won
• Perfect revenue model is not required
• Launched with post on TechCrunch

No need for a “perfect revenue model” in Arrington’s Web 2.0 book. Moreover, Arrington warns that Web 2.0 “losers” all “over business-planned.”

Arrington qualifies Web 2.0 winners as those that got acquired, big time:

Winners (got acquired): Writely, del.icio.us, Userplane, Flickr, Weblogs, Inc., Myspace, Bloglines, Truveo, Grouper, Skype, Newroo.

Writely: Google acquisition
Del.icio.us: Yahoo acquisition
Userplane: AOL acquisition
Flickr: Yahoo acquisition
Weblogs: VeriSign acqusition
MySpace: News Corp. acquisisiton
Bloglines: IAC/InterActiveCorp
Truveo: AOL acquisition
Grouper: Sony acquisition
Skype: eBay acquisition
Newroo: News Corp. acqusition

Moral of the story to twenty something amateur entrepreneurs? In the words of YCombinator’s Paul Grahm, don’t “sweat the business model” Or, multi-billion dollar corporations are sure to be on the look out for your cool app!

Notably absent from Arrington’s list of winning acquisitions, the Tucows acquisition of the assets of the defunct Kiko online calendar service via auction at eBay for about $250,000.

TechCrunch and YCombinator would undoubtedly be greater champions of Web 2.0 start-ups if they championed realistic, attainable Web 2.0 start-up goals. The dream of an acquisition by Google, Yahoo, News Corp…is a foolhardy replacement for a viable business plan, as the Kiko team can attest to.

I cite the Kiko team on its Web 2.0 start-up's demise in “Eight sure ways to get in TechCrunch Deadpool”:

we thought that the release of Google Calendar might be good because it would push one of the other big players into acquiring a calendar application to compete. 30boxes had stated that they didn't want to be bought out so, as the #3 player, things were looking hopeful. Things didn't pan out, but that's okay. None of us were ever had a Lexus on hold.


The creation and operation of a profitable Web 2.0 business is a worthy dream in and of itself. Moreover, proving that a cool app can also make money just might garner a shot at the Web 2.0 lottery dream of acquisition, big time!

Do you have a Web 2.0 start-up with a business plan?
I want to hear from you! Click Below

LAUNCH of 'The Real Deal': Call for Web 2.0 companies with business plans!

UPDATE First Interview in Series:
Digg: Kevin Rose talks 'The Real Deal' in exclusive interview

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