Phil Sim

Web, media, PR and… footy

Poor Web 2.0 fools

Is it starting to become obvious to people yet, that 99.9 per cent of these Web 2.0 consumer plays WILL die?

TechCrunch reviews the upcoming Google Calendar. If you valued one of the squillion of Web Calendering apps on the market at $10 yesterday, write them down to a cent today. They’re all gone.

The only play that had a chance in this market was Trumba. Of all the Web 2.0 plays that SHOULDN’T have tried to build a revenue-generating business off the bat, it was Trumba. They could have used their speed to market and the network effect that was inherent to their approach to build a massive user base that would actually have some value now. Glad it wasn’t my $8 million they raised.

30 Boxes. Pfft. I said on launch it was a dog. Now it’s a dog with fleas. And what was that calendar with the stupid name? Sponge something? Can’t remember. Stupid and forgettable, that’s a neat trick. As I said at the time, their one innovation – the English-language parser – would quickly be replicated by others and guess what, it’s in Google. Bye bye, whatever your name was.

The primary problem for all these Web 2.0 startups is many were built on the assumption that it would be easier for a Google, Yahoo or Microsoft to buy rather than build. But, as you can see from some of the details leaking out about Google Calendar and some of the other things there doing most of these new add-ons are highly integrated into their existing apps. Not meaning to say I told you so (okay, yes I am) but as I said in my GMail: One app to rule them all post, all of this stuff is going to work together and as such its far easier to build than buy.

In fact the only way most of the Web 2.0 companies have any value is if they have sticky user-bases. That’s why Flickr, delicious (I refuse to do the dot thing), etc were acquired. You can clone just about any of this stuff in a matter of months but you can’t clone tens of thousands of passionate users.

Meanwhile, I was really glad to see fellow Aussie Nik Cubrilovic who has done a stellar job for TechCrunch while Mike Arrington has been away talking about some of the latest developments at SalesForce.com. Unfortunately, Salesforce.com doesn’t tend to qualify as being “cool” in Web 2.0 circles probably because they don’t have tags and they’re making too much money. That’s so old school.

However, when the gazillion web startups with no business models have all died it will be companies like SalesForce.com who will be left standing tall. Funny thing is for all the new business models that have been floated none have innovated where it counts – the revenue model.

I’m working with a company at the moment that has red-hot technology in a red-hot market and has what I think is red-hot revenue model too. The company founder thought much the same thing but on trying to raise capital to push ahead, kept getting the same message – you’re not Web 2.0 enough.

Here’s one of his rejection slips: “We would be interested in going further with this if you were conviced that building a lightweight web service was the key to your succes, but it seems like your end goal is still the [old-fashioned, proven revenue model]* and that makes it not our sweet spot. Let us know if your strategy changes.” (* Our description of the term in brackets.)

This VC is a complete and utter twit. However, unfortunately after getting this same message over and over, the founder went about trying to develop a “lightweight web service” (read no revenue-model consumer play). As far as I’m concerned the founder had it right all along. Why? Because his solution came out of a real customer need. He’s built it based on real problems, real feedback from real people who are prepared to pay real money for a real solution. We’re now looking at a channel model (gasp, shock, horror, weren’t all resellers supposed to be disintermediated by now) based on his original premises. I think he’s got a home-run on his hands with a concept that is really core to what the whole Web 2.0 movement is about. But because the VCs can’t put it in a nice, little neat Web 2.0 box he’s been passed over time and again.

I can guarantee one thing. He’s going to be around a lot longer than any calendar app. Unless of course Google buys him first.

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Filed under: Google, Online Calendars, Web 2.0

47 Responses

  1. Caitlin says:

    Web 2.0 strikes me as simply the dotcom hype era all over again. What does it actually MEAN? That VC strikes me as the sort of person who would’ve chosen whether or not to invest in a company in 1999 based on whether it had a .com after its name. Then again, you haven’t told us what his actual description was.

    By the way you’re confusing ‘they’re’ and ‘their’ etc in your post if you feel like doing some editing.

  2. Rob Irwin says:

    You’ve been told, Phil ;)

  3. Great! That’s very like to what I’ve written in my Russian-language blog about all this Web 2.0 stuff. Hopefully the Web 2.0 crisis will be much softer than the dot-com bubble crash. As they are not traded on Nasdaq and millions of private investors don’t waste their money, the stock market shouldn’t collapse this time.

  4. PeteCashmore says:

    Yep, I expressed a similar sentiment earlier today:

    http://mashable.com/2006/03/08/look-out-calendar-startups-google%e2%80%99s-in-town/

    I’m totally with you on the need to build sustainable businesses with genuine business models.

  5. [...] Squash: Poor Web 2.0 fools. “This VC is a complete and utter twit.”  [...]

  6. pwb says:

    By paraphrasing the founder, you have lost credibility for me. Fact is, it is possible to compete effectively with Google. Orkut, Reader, Gmail, Video, Base, News, Froogle and Talk are being destroyed by competitors. And you seem to forget that there are other buyers: Microsoft, Yahoo, AOL, IAC/Ask, eBay and News Corp.

  7. eh says:

    i might listen to you if you could actually fucking spell. stop acting so self-righteous when you write an 8th grade level.

    stop using meaningless terms. you are an architecture astronaut. i hope you die.

  8. Phil Sim says:

    Pwb not sure what you mean by paraphrasing the founder??

    The thing is we’re in the first five minutes of a four-quarter slugest. Nobody is really destroying the big boys because they’re not making money or they’re not building sticky audiences. When was the last time any of those companies bought your typical Web 2.0 startup. Yahoo still has a ton of work to do to integrate the properties they bought but when they have, their isn’t going to be any easy integration work there. Microsoft is centralising everything around Live.com.

  9. Phil Sim says:

    I might start listening to you when you find the Shift key…

  10. You know you’re Web 2.0 when…

    Yes, the title of this piece is sure to be provactive as the term Web 2.0 bottoms out with a vengeance in the infamous trough of disillusionment. Those in the know realize it’s no longer cool to say Web 2.0 in many technology circles. Eve

  11. Gabe says:

    This is a pretty good article, but you don’t have any right to call anyone else a fool until you learn the difference between “they’re” and “their.” Really, that’s third-grade stuff.

  12. Phil Sim says:

    Sheesh, everyone’s a sub-editor these days… Hope the edits appease.
    *hi caitlin*

  13. Elijah Blue says:

    Silly boy. WEb 2.0 is innovation. 90% fails.. 10% succeeds… cool new world. And you can build a Web 2.0 company and get it running for $50-100K (vs. $5million to turn on the lights during dot com boom days). It’s like comparing 8 track tapes to SATA hard drives. What we need here kids are more writers (creators) and less editors (rewriters/critics/bloggers). Anyone can criticize, few seem willing to do the work to create.

  14. Caitlin says:

    Sorry, my inner-sub escapes on occasion. At least I wasn’t curmudgeonly about it, like some others. Just thought it might help. I can’t edit my comments so it’s stuck there now.

    I would like to know what words the VC actually used where you have insert the paraphrased version in brackets.

  15. Rob Irwin says:

    You know what I long for, Phil? And these guys could be onto it… simple, useful Web apps which have an actual purpose, work well… and most of all, don’t have to be sold by some wanker saying Web 2.0 every 3 seconds. A pipedream?

  16. Phil Sim says:

    Elijah, I started a dot com business in 2000 post-crash thats still going strong today so I reckon I’ve earned my right to have a rant. I’ve got about four projects I’m involved with and every single one of them has a real thought-our business model. The Internet doesn’t need to be artificially inflated so as to set-up a bubble. You can create anything you want, just don’t go pretending its a business when its got no revenue model behind it.

  17. Phil Sim says:

    Hi Caitlin, the only bit I paraphrased was the bit in square brackets which was in the first instance ‘box’. I only changed it because nobody really would understand what that means without the context of the wider business. Suffice to say the ‘box’ in this instance represents something tangible that can be sold, has been sold and has the potential to be sold alot more of…

  18. Peggy says:

    Phil,
    ‘Pfft’. Jumpin’ brain cells here. Hey, just thought I would let you know – the domain name is for sale(pfft.com) :)

    Oh and once again I feel so at home here at Squash – I am always mis-using your for you’re, and their for they’re, so there. Don;t get me started on its and it’s. Agree, Web two oh is mostly Pfft, but not Phat.

  19. Phil Sim says:

    Rob, this is why I made such a big deal of this. Here’s a guy who didn’t want to get pulled into the Web 2.0 claptrap. But he couldn’t get through any doors until he started falling into line. Doesn’t leave an entrepreneur which much alternative. You should keep an eye on this, it’ll be a cracker channel story. Oh and by the by, the Web 2.0 lite product that this guy has come up with rocks as well. I can’t see how he’s going to make any money out of it, but that’s not the point, hey? All bow to the marketeers…

  20. farlane says:

    Phil, I started a web business 1996 that had a revenue model and is still going strong, and I’m gonna agree with Elijah here.

    Web 2.0 seems to me to be at its core about changing the way we interact via computers. Attacking it for not having a business model is like attacking Picasso for not having easily marketable art. “But what IS it, Pablo??”

    So what if you can’t tell what it is or how it will make money and so what if it fails. On occasion, these new projects create applications of surprising power and beauty that are changing our human experience. Sure, lots of them are complete vapor, but if you are placing a bet on where the software tools that revolutionize our world will come from, I think the smart money is somewhere in that wooly web 2.0 world.

  21. I think you’re correct. Do something remarkable that creates value and which solves a customers problem. Start with the hard problem first… listen to the customer and hear what he has to say. Finally build something that has a “sustainable” profitable revenue model that scales to volume. Web 2.0 is just getting going. They hype will die down soon and people have to do the hard job of generating revenue.

  22. Phil Sim says:

    Farlene, love your analogy except to say that Picasso had a market for his art from pretty much day one because his genuis was instantly recognised. Van Gogh might be a better comparison for the majority of start-ups on account of the fact that he died broke. And Peter, thank you, you’ve put it beautifully.

  23. farlane says:

    Damn, brought down by an analogy bug.

  24. [...] Este post diz uma coisa importante: um negcio da Web 2.0 tem de ser um negcio. Parece bvio? Nem para todas as start ups. Vale a pena ler. 9 Março 2006 | ·Adicionar ao DoMelhor.net ·Adicionar ao OuviDizer.com [...]

  25. Thanks for the compliment Phil, I will be writing more and more about the Web 2.0 business space in the future – I really think Salesforce is under-appreciated as they laid the ground for a lot of what we know now as Web 2.0

  26. [...] of Web 2.0 fools.  You won’t find ME doing Calendar apps. [...]

  27. [...] Phil @ Squash writes that the upcoming (inevitable, someday soon) launch of a Calendar app from Google, the value of all Web 2.0 calendaring apps just took a nosedive. The primary problem for all these Web 2.0 startups is many were built on the assumption that it would be easier for a Google, Yahoo or Microsoft to buy rather than build. But, as you can see from some of the details leaking out about Google Calendar and some of the other things there doing most of these new add-ons are highly integrated into their existing apps. Not meaning to say I told you so (okay, yes I am) but as I said in my GMail: One app to rule them all post, all of this stuff is going to work together and as such its far easier to build than buy. [...]

  28. Rob Irwin says:

    Don’t worry mate — I’m-a-watchin’ :)

  29. [...] Dragos from Argumente points to two interesting readings; the optimistic list of Next Net 25 and a pessimistic yet cool reality check on Web 2.0 and chances for a startup to succeed within [...]

  30. Jen says:

    Phil, just wanted to commend you for your blog. Your reality check is something a lot of people need right now, and echos some of the feelings I have about Web 2.0: at its best it can be exciting and innovative, but unfortunately it’s very seldom at its best. Glad to have come across your blog.

  31. Print says:

    Great blog to read about Web twoPOINTzero

    I was just reading about salesforce.com when I received an invite to test it. I was reading about it on squash, and I have to agree.
    Squash is a great blog, it sums up a lot of the underlying flaws in this brave new world of bullshit they call web zwei…

  32. edub says:

    Correct me if I’m wrong but doesn’t Web 2.0 have any actual meaning other than being a marketting term?

    I mean, there’s got to be a laundry list of items that separate web 2.0 from web 1.0, right?
    Anyone?

  33. criação says:

    nice blog…congratulations from Brazil…

  34. Azzurra says:

    Buon luogo, congratulazioni, il mio amico!

  35. Gillou Chonchon says:

    Great comments, you guys !!!

  36. Doo Doo Brown says:

    Warren Buffett just crapped in his depends laughing too hard about Web 2.0. Glad other people actually see the what’s really important.

  37. toksee says:

    The issue is the proliferation of sites – especially in the social networking area. What’s needed is a way to tie them all together so one can communicate with others in different networks.

  38. JT Martin says:

    Seems to me that Web 2.0 has become a “buzz” word that everyone throws around to get attention. With all the new Web 2.0 sites popping up, it’s harder and harder for them to come up with something that is really unique. That is what will draw the attention of new users and eventually lead to a big buy out. When are we going to see the creation of a Web 3.0 phenomenon?

  39. [...] read an interesting blog  the other day: http://squash.wordpress.com/2006/03/08/poor-web-20-fools/.  There are definitely a lot of naysayers with good arguments for why people are skepticle about [...]

  40. [...] read an interesting blog  the other day: http://squash.wordpress.com/2006/03/08/poor-web-20-fools/.  There are definitely a lot of naysayers with good arguments for why people are skepticle about [...]

  41. yes, The issue is the proliferation of sites – especially in the social networking area. What’s needed is a way to tie them all together so one can communicate with others in different networks.

  42. tenis oakley says:

    nice blog , I mean, how can I didnt know after this date.

  43. coby kyros says:

    I LOL at poor web and this crazy things people say about it. Never understand. Internet is just a tool and principles never chance.

  44. [...] Sim, one of my favorite bloggers, has a great and accurate article today about the Web 2.0 madness. His post ought to be read as a companion piece by anyone who remotely agrees with my Play Dough [...]

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