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Unsustainable Web 2.0 Momentum – Look For Realistic Options

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Caterina Fake of Flickr.com fame writes it’s bad time to start a (Web 2.0) company. In a scenario where everyone is starting a company and managing to get funded she writes,

You’ve got $5 million in the bank, and they do too. Their VCs want them to succeed every bit as much as your VCs want you to succeed. This gets you into a horse race, which no one wants: it’s exhausting and expensive.

She adds,

Web 2.0 isn’t all that. Hello?. I don’t think there’s a rising tide lifting all boats here. I don’t think Web 2.0 is the magic bullet some people seem to think it is either. It ain’t the features, it’s that AND the business.

As I wrote weeks back, its time for a reality check on the Web 2.0 movement. Web 2.0 is clearly getting disproportionate coverage in the blogosphere. Web 2.0’s share in the real world as delivering value to business and society is indeed limited – if we look at the enterprise software. This is what is directly responsible for making the business machines hum and improve — be it airline scheduling, dispatching crude oil or treasury management or powering the stock exchanges of the world. I sort of agree with the view that Web 2.0 lacks meaning and magic.

I am fine with already established players like Amazon and Google getting Web 2.0 tagged; I am also fine with finding a productive niche in which to thrive in the information value chain. Moving forward in the e-business space, we need to have the wisdom and mechanisms for cross-integrating/leveraging Web 2.0 applications for larger benefits. This calls for standards in development, building and integration blocks -– all this would come only out of a solid base of Web 2.0 apps as a foundation -– truly a tall order given the fragile nature of several Web 2.0 entities.

In this overcrowded and overhyped market, clearly if one is building a product centered on the Web 2.0 community, its likely to be headed nowhere. In a small crowded market, the means to get out of the niche segment looks quite difficult. We can definitely see a petering out of the Web 2.0 momentum as we see it now and several entities would disappear. But one hope is that out of this, something robust and strong might emerge, but we have to cut through the hype. In the enterprise software segment, we are now beginning to see good ideas getting funded and enterprises getting launched. As the notable Ray Lane recently wrote with respect to enterprise software companies, opportunities exist for companies pursuing the innovate/dominate paradigm.

Moving forward, I believe in general that good companies with robust business models will always get funded and would swim through tides to make it – cool websites with presentable fonts are not necessarily the ones with good business models.

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  • http://www.mashable.com Pete Cashmore

    I tend to agree – the startups that create the most value (and often, the ones with the strongest business models), will *always* do well. It’s always a good time to start a sustainable business.