5 ms·

Bubble 2.0

37 points by mqt 18y ago

bayareaguy 18y ago
Try to explain to someone in a bar (outside of San Francisco) or at your family reunion that there’s an operating system that’s better than Windows for many purposes, and that it’s made largely by volunteers who donate their time to the project, largely for nothing more than the pleasure of doing so. Whether or not that would go over in a bar would depend on the kind of bar it is, but you'll get a pretty obvious answer if you ask the people at a church how it could be possible that there’s an organization that’s better than a corporation for many purposes, and that it’s made largely by volunteers who donate their time largely for nothing more than the pleasure of doing so.
- Tichy 18y ago
  I thought they do it to get to heaven...
  - bayareaguy 18y ago
    Good point. Most people I know who attend regularly see the institution of the church as a means to do good in the world and their community. Some also contribute to open source projects in the same spirit. However the more I think about it I suspect they would remind me that the pursuit of pleasure by doing good is just another form of hedonism, so strictly speaking my rephrased analogy isn't right either.
  - jimbokun 18y ago
    That is certainly not mainline Christian theology. Although it might be the view of many sitting in pews who have not seriously contemplated their faith. Googling "faith works" will get you far more than you care to know about the topic.
    - Tichy 18y ago
      Nevertheless, a short summary would be appreciated, as I wasn't planning on becoming a specialist on faith workers. Therefore I don't feel very inclined to invest the research hours - especially as the first Yahoo search results were not very instructive.
- rw 18y ago
  The cathedral is bizarre.
deleted 18y ago
[deleted]
edw519 18y ago
And please don't forget about the next huge market for web apps: the enterprise. For every consumer using a Web 2.0 site, there are a hundred at work in their cubicles. But their employers will never use ad supported apps for 2 reasons: they don't want their employees reading ads on company time and they'd rather pay someone to hold responsible. These are fiduciary issues that all the ads in the world cannot overcome.
- bokonist 18y ago
  What's your theory about why the enterprise market died? What will change that brings it back?
  - edw519 18y ago
    What's your theory about why the enterprise market died? Not sure I understand what you're talking about. A little enlightenment please.
    - bokonist 18y ago
      Massive amounts of VC investment went into enterprise focused startups in the 1990's. It seems like there are far fewer enterprise software startups now (although it's very possible I'm mistaken). From the tidbits I've heard around, there was a lot of saturation and consolidation. The web has been here for a while now - why do you expect to see a reversal of this trend?
      - edw519 18y ago
        although it's very possible I'm mistaken You are. There is more activity than ever in the enterprise, midlevel, and small business arenas. Just because you haven't heard it around doesn't mean it's not happening.
    - tortilla 18y ago
      One problem, I saw, is that the decision makers are never really the end-users. You have sales teams specifically selling to C-level executives. There's a disconnect, especially in traditional companies not involved in tech.
volida 18y ago
its funny you mention youtube all the time and the article is about a bubble and you dont give even one example of the web apps you imply their business is a bubble. The problem is doing something that people want, and not about temporary traction to a site, that can be converted into eyeballs for ads. By the way linux is coded largely by unitesity students or people who work at large corporatins like nokia so your argument that its coded by people who code for free is actually based on an illusion many others have too.
- ssharp 18y ago
  The entire "build something people want" mentality is flawed. If I could raise enough money, I could build cars and give them away for free. It's something people want and I would quickly own the market. Sure, the low overhead of the web makes giving your service away for free more realistic but it doesn't make the business model any more valid given the inability for a lot of well-funded startups to become profitable. It's not that difficult to monetize traffic but it is very difficult to monetize traffic to the levels that would justify the current web 2.0 valuations. Maybe everyone is thinking that one day soon, we're going to see a revolution in advertising that will rain down on website owners. I don't see it happening. This blog post was dead on.
  - volida 18y ago
    I am not defending the current model but the reality is that there isnt another one for those trying to do a free service. Therefore providing some extra features for those who pay is the way to go if you dont want to depend on ads. Other than that if your web service scope is people who pay only then that means that probably in position to pay for marketting your product. To even have a chance to grow as big as youtube you have to have the capacity to exist without equal growth in terms of revenue. Thats the nature of the web services success and I don't see the reason to call it bubble. If it wasn't risky more people would do it. Contrary to that model, you can be one of the many successful sites that are not huge but make money by selling their product or service. Other than that the article is not dead on because is very generic. Just because not all attempts to create a business succeed doesnt mean there is a bubble.
aston 18y ago
The obvious question being, has Matt, as a gambling type, figured out a way to place a wager on the bursting side of the bubble? Basically, like a short on Web 2.0. If so, I might want in. You know, to hedge my bets...
- mattmaroon 18y ago
  That's a tough one. It's hard with none of it being publicly traded. To my knowledge none of the betting markets have contracts based on comscore data or the like, though that might be a great startup idea.
rtf 18y ago
The internet is built on free-or-nearly-free operation. That's the beauty of it and I don't think Web 2.0 is likely to fall apart any time soon because of it. As the author says, the VC-funded "get big fast" sites will face some major challenges going forward, since the market has proven itself transient and eager to move on when things take a wrong turn(the growth of news.yc is attributable mostly to refugees of other sites moving in), but those companies are really a sideshow to the main event, which is happening in little fits and starts and niches. I feel that the real stars are usually operating fairly quietly, building on a primarily-open model rather than a walled garden, and creating strong businesses in a highly traditional fashion: by being the best around. (cue the Joe Esposio song) You can still build a stable foundation on an open model if your company holds the expertise in the technology; your immediate competition is likely to be arrogant and compete in the sprint for the walled garden, rather than the marathon for the open model. (other companies working towards an open model are collaborators toward a standard, but competitors in services. Hardly an unusual situation.) If the competition gets a lot of momentum in an inelastic product(for example, operating systems or instant messaging), that can kill you early on, but over the long term the most-open player usually becomes disruptive and causes the marketplace to expand with a new set of services. That is my observation of most such situations in technology.
Tichy 18y ago
Digital goods are not the same as physical goods. Too bad if Mint and Quicken lose out - there will always be free alternatives, so it is not really that big a loss for society. There are also countless bands who make music and never see a dime, as well as countless bloggers who blog for free. Not everything is going to die without money.
axod 18y ago
"But, as far as for profit-websites (which have not-insignificant expenses) are concerned," Hosting is pretty darn cheap these days... If you keep your expenses tight, the chances of having to shut down are pretty much 0, and the chances of turning a profit are pretty high. I also think the chances of youtube not being around are pretty amazingly slim. Even if it costs a ton to run, it's a strategic long term thing.
- webwright 18y ago
  "...and the chances of turning a profit are pretty high." Really? How big is your team? The general easy-math burn rate number for a software engineer is $200k/yr... So say you're a startup with 3 founders who'd like to (eventually) get paid market value. How many page views do you need for $300-600k year? Or subscriptions? Starting a company is getting easier. Turning a profit is still damn hard.
  - run4yourlives 18y ago
    Your point is sound but 200k/yr is a little extreme. More like $100K, all in. (Salary + options + benefits)
rokhayakebe 18y ago
I am not sure how Matt's startup is doing but I know his blog is gaining more traction and I can see it rise to a healthy and dedicated audience within the next 12 months. Matt may be that one guy who makes a million in profit from his blog.
hooande 18y ago
There aren't nearly as many high profile startups that depend entirely on advertising for revenue as people seem to think. Many startups that appear to have no revenue model make money in ways that aren't obvious to consumers. How does del.icio.us make money? By selling marketing data compiled from tagged urls. Flickr didn't start with a clear revenue model, but they can pay most of their bills from the ~5% of users who have a paid premium account. Even craigslist, the paragon of free services, makes a significant amount of money by charging for job listings in a few select markets. Matt makes some excellent points, and I believe him that the future is probably going to be dominated by smaller companies with low profit margins as opposed to venture backed behemoths. But it doesn't change the fact that it's difficult to NOT make money with a "wildly popular" product. If you have a growing website with hundreds of thousands of happy users, you will find a way to make money. I run a website that is mildly popular on occasion and believe me, we get emails. Every few weeks someone will come to us and suggest ways that we can make more money. The more popular the website, the more opportunities you'll find to make money on it. I don't think that Mint or YouTube will close their doors any time soon. There are just too many ways in which they could build significant revenue. Right now their biggest problem is choosing and implementing the right one.
- webwright 18y ago
  "How does del.icio.us make money? By selling marketing data compiled from tagged urls." Really? Do you have a source for this info? I'm not saying the data isn't valuable, I just can't see where they offer this.
- aston 18y ago
  There's a difference between making revenue and making a profit. While I won't argue your assertion that it's easy to find revenue sources when you're popular, I'd appreciate seeing some hard evidence that it's also easy to pay all the bills. That del.icio.us, flickr and YouTube were all acquired and were all at one point rumored to be bleeding money for their parent company doesn't bode well for the average "free" service.

37 points by mqt 18y ago

Try to explain to someone in a bar (outside of San Francisco) or at your family reunion that there’s an operating system that’s better than Windows for many purposes, and that it’s made largely by volunteers who donate their time to the project, largely for nothing more than the pleasure of doing so. Whether or not that would go over in a bar would depend on the kind of bar it is, but you'll get a pretty obvious answer if you ask the people at a church how it could be possible that there’s an organization that’s better than a corporation for many purposes, and that it’s made largely by volunteers who donate their time largely for nothing more than the pleasure of doing so.

Tichy 18y ago
I thought they do it to get to heaven...
- bayareaguy 18y ago
  Good point. Most people I know who attend regularly see the institution of the church as a means to do good in the world and their community. Some also contribute to open source projects in the same spirit. However the more I think about it I suspect they would remind me that the pursuit of pleasure by doing good is just another form of hedonism, so strictly speaking my rephrased analogy isn't right either.
- jimbokun 18y ago
  That is certainly not mainline Christian theology. Although it might be the view of many sitting in pews who have not seriously contemplated their faith. Googling "faith works" will get you far more than you care to know about the topic.
  - Tichy 18y ago
    Nevertheless, a short summary would be appreciated, as I wasn't planning on becoming a specialist on faith workers. Therefore I don't feel very inclined to invest the research hours - especially as the first Yahoo search results were not very instructive.
rw 18y ago
The cathedral is bizarre.

deleted 18y ago

[deleted]

edw519 18y ago

And please don't forget about the next huge market for web apps: the enterprise. For every consumer using a Web 2.0 site, there are a hundred at work in their cubicles. But their employers will never use ad supported apps for 2 reasons: they don't want their employees reading ads on company time and they'd rather pay someone to hold responsible. These are fiduciary issues that all the ads in the world cannot overcome.

bokonist 18y ago
What's your theory about why the enterprise market died? What will change that brings it back?
- edw519 18y ago
  What's your theory about why the enterprise market died? Not sure I understand what you're talking about. A little enlightenment please.
  - bokonist 18y ago
    Massive amounts of VC investment went into enterprise focused startups in the 1990's. It seems like there are far fewer enterprise software startups now (although it's very possible I'm mistaken). From the tidbits I've heard around, there was a lot of saturation and consolidation. The web has been here for a while now - why do you expect to see a reversal of this trend?
    - edw519 18y ago
      although it's very possible I'm mistaken You are. There is more activity than ever in the enterprise, midlevel, and small business arenas. Just because you haven't heard it around doesn't mean it's not happening.
  - tortilla 18y ago
    One problem, I saw, is that the decision makers are never really the end-users. You have sales teams specifically selling to C-level executives. There's a disconnect, especially in traditional companies not involved in tech.

volida 18y ago

its funny you mention youtube all the time and the article is about a bubble and you dont give even one example of the web apps you imply their business is a bubble. The problem is doing something that people want, and not about temporary traction to a site, that can be converted into eyeballs for ads. By the way linux is coded largely by unitesity students or people who work at large corporatins like nokia so your argument that its coded by people who code for free is actually based on an illusion many others have too.

ssharp 18y ago
The entire "build something people want" mentality is flawed. If I could raise enough money, I could build cars and give them away for free. It's something people want and I would quickly own the market. Sure, the low overhead of the web makes giving your service away for free more realistic but it doesn't make the business model any more valid given the inability for a lot of well-funded startups to become profitable. It's not that difficult to monetize traffic but it is very difficult to monetize traffic to the levels that would justify the current web 2.0 valuations. Maybe everyone is thinking that one day soon, we're going to see a revolution in advertising that will rain down on website owners. I don't see it happening. This blog post was dead on.
- volida 18y ago
  I am not defending the current model but the reality is that there isnt another one for those trying to do a free service. Therefore providing some extra features for those who pay is the way to go if you dont want to depend on ads. Other than that if your web service scope is people who pay only then that means that probably in position to pay for marketting your product. To even have a chance to grow as big as youtube you have to have the capacity to exist without equal growth in terms of revenue. Thats the nature of the web services success and I don't see the reason to call it bubble. If it wasn't risky more people would do it. Contrary to that model, you can be one of the many successful sites that are not huge but make money by selling their product or service. Other than that the article is not dead on because is very generic. Just because not all attempts to create a business succeed doesnt mean there is a bubble.

aston 18y ago

The obvious question being, has Matt, as a gambling type, figured out a way to place a wager on the bursting side of the bubble? Basically, like a short on Web 2.0. If so, I might want in. You know, to hedge my bets...

mattmaroon 18y ago
That's a tough one. It's hard with none of it being publicly traded. To my knowledge none of the betting markets have contracts based on comscore data or the like, though that might be a great startup idea.

rtf 18y ago

The internet is built on free-or-nearly-free operation. That's the beauty of it and I don't think Web 2.0 is likely to fall apart any time soon because of it. As the author says, the VC-funded "get big fast" sites will face some major challenges going forward, since the market has proven itself transient and eager to move on when things take a wrong turn(the growth of news.yc is attributable mostly to refugees of other sites moving in), but those companies are really a sideshow to the main event, which is happening in little fits and starts and niches. I feel that the real stars are usually operating fairly quietly, building on a primarily-open model rather than a walled garden, and creating strong businesses in a highly traditional fashion: by being the best around. (cue the Joe Esposio song) You can still build a stable foundation on an open model if your company holds the expertise in the technology; your immediate competition is likely to be arrogant and compete in the sprint for the walled garden, rather than the marathon for the open model. (other companies working towards an open model are collaborators toward a standard, but competitors in services. Hardly an unusual situation.) If the competition gets a lot of momentum in an inelastic product(for example, operating systems or instant messaging), that can kill you early on, but over the long term the most-open player usually becomes disruptive and causes the marketplace to expand with a new set of services. That is my observation of most such situations in technology.

Tichy 18y ago

Digital goods are not the same as physical goods. Too bad if Mint and Quicken lose out - there will always be free alternatives, so it is not really that big a loss for society. There are also countless bands who make music and never see a dime, as well as countless bloggers who blog for free. Not everything is going to die without money.

axod 18y ago

"But, as far as for profit-websites (which have not-insignificant expenses) are concerned," Hosting is pretty darn cheap these days... If you keep your expenses tight, the chances of having to shut down are pretty much 0, and the chances of turning a profit are pretty high. I also think the chances of youtube not being around are pretty amazingly slim. Even if it costs a ton to run, it's a strategic long term thing.

webwright 18y ago
"...and the chances of turning a profit are pretty high." Really? How big is your team? The general easy-math burn rate number for a software engineer is $200k/yr... So say you're a startup with 3 founders who'd like to (eventually) get paid market value. How many page views do you need for $300-600k year? Or subscriptions? Starting a company is getting easier. Turning a profit is still damn hard.
- run4yourlives 18y ago
  Your point is sound but 200k/yr is a little extreme. More like $100K, all in. (Salary + options + benefits)

rokhayakebe 18y ago

I am not sure how Matt's startup is doing but I know his blog is gaining more traction and I can see it rise to a healthy and dedicated audience within the next 12 months. Matt may be that one guy who makes a million in profit from his blog.

hooande 18y ago

There aren't nearly as many high profile startups that depend entirely on advertising for revenue as people seem to think. Many startups that appear to have no revenue model make money in ways that aren't obvious to consumers. How does del.icio.us make money? By selling marketing data compiled from tagged urls. Flickr didn't start with a clear revenue model, but they can pay most of their bills from the ~5% of users who have a paid premium account. Even craigslist, the paragon of free services, makes a significant amount of money by charging for job listings in a few select markets. Matt makes some excellent points, and I believe him that the future is probably going to be dominated by smaller companies with low profit margins as opposed to venture backed behemoths. But it doesn't change the fact that it's difficult to NOT make money with a "wildly popular" product. If you have a growing website with hundreds of thousands of happy users, you will find a way to make money. I run a website that is mildly popular on occasion and believe me, we get emails. Every few weeks someone will come to us and suggest ways that we can make more money. The more popular the website, the more opportunities you'll find to make money on it. I don't think that Mint or YouTube will close their doors any time soon. There are just too many ways in which they could build significant revenue. Right now their biggest problem is choosing and implementing the right one.

webwright 18y ago
"How does del.icio.us make money? By selling marketing data compiled from tagged urls." Really? Do you have a source for this info? I'm not saying the data isn't valuable, I just can't see where they offer this.
aston 18y ago
There's a difference between making revenue and making a profit. While I won't argue your assertion that it's easy to find revenue sources when you're popular, I'd appreciate seeing some hard evidence that it's also easy to pay all the bills. That del.icio.us, flickr and YouTube were all acquired and were all at one point rumored to be bleeding money for their parent company doesn't bode well for the average "free" service.