Which startup’s collapse will end the Web 2.0 era? | Hacker News Reader

Which startup’s collapse will end the Web 2.0 era?

andrewchenblog.com

23 pointspeter12344 comments

I think this is a classic mistake in analyzing trends. What we are going through is a typical hype curve: http://en.wikipedia.org/wiki/Technology_hype

First, a technology/trend gets way too much buzz and results start to disappoint so it curves down. Then, when everyone's cynical, the real value companies start to take off.

Web 2.0 has used up its currency as a buzz word. Fine. But the technology itself has been wildly successful.

I work at HubPages.Com, a Web 2.0 startup that gets revenue from online ads and we have never been doing better than right now.

Way to jinx your company dude.

Hi Cosmo,

Thanks for your concern about HubPages. I personally don't believe in jinxes and even if I did, I'm not sure I would agree with your reasoning.

Are you saying that you are so sure of your viewpoint that Web 2.0 is dead that anyone who is doing well is lucky and if someone (me) takes this luck for granted, then the luck will go away.

HubPages is doing well because in this economy, revenue sharing web sites are a great way for people to make extra money. As long as businesses need to advertise and as long as online advertisement is a critical way to do this, web sites like HubPages will do fine.

Business model is key. Jinx is irrelevant.

-Larry

I was working at a startup south of Market in SF during the dot-com boom and bust. Industry Standard, the TechCrunch of its day, had a billboard with an electronic tech news ticker that loomed large over the neighborhood and, TJ Eckleburg-like, over the startup scene at large. The day in 2001 when, walking to work, I saw that sign being dismantled was, for me, the day the dot-com era died.

Collapse of Techcrunch and Valleywag might end the "Web 2.0" hype era. Web 2.0 itself won't end, because it never existed - you can't really find anything "web 2.0" that isn't just evolution or wider distribution of concepts from "Web 1.0".

IMHO, IMDB.com qualified as Web 2.0...

You said exactly what I was thinking.

Facebook.

When Facebook actually needs to live up to the fact that continuous VC-funding isn't a viable income stream, the bubble will burst.

You need to make money to be successful, always have and always will. Like the first time, the ones that can do that will move into the next round, the one's who can't, won't.

Facebook had layoffs this year so that it will be profitable in about two. Odds are they'll survive. But they won't be as high profile as they used to be. It was a big deal there was "live news" coverage on Facebook through CNN in 2008 and 2009 with the election. Soon that'll be seen as a partnership as stupid as Yahoo! Music with RealNetworks Rhapsody.

My bet is Twitter. Its ubiquitous, and yet: useless. It's userbase is relatively small, and yet there's no good way to monetize them. Its provocative enough that people either love it or hate it, but not nearly useful that people will get an account just to have one (like richer social networks, where people joined Myspace/Facebook to avoid network isolation).

I tend to disagree. I'm not a twitter user, but one thing they do have is a user base that finds their service essential. This is ripe for income generation. Charge $5-10 a month and viola, revenue. (I think at the moment they look to be exploring other options, but that's a viable fall back from my view.)

I don't think you can say the same for facebook. Very few people will pay for this thing. I'm willing to bet that their own internal research confirms this. Facebook's biggest issue with regards to profitability is not so much that they need to find ways to make money, but that they need to find ways to make enough money to pay back all the money they've already used. They are leveraged to a crazy degree, and seem to spend like drunken sailors. They've got a huge workforce and have innovated little since launching their "platform", which has been all but abandoned - from a user perspective - because of abuse.

They've got a leadership problem in my opinion. And that's a hard problem to solve.

Facebook has been approaching profitability for a while. They've got a bunch of different models, some of them have been working, and they're constantly refining.

Both Facebook and Twitter would collapse if they charged. Not as many people would pay for Twitter as you seem to think.

Not as many people would pay for Twitter as you seem to think.

Where are they going to go? Back to email, IRC, or Blogspot? I doubt it. To Twitter's cheaper competitors? How are they going to stay in business?

Rather than just die, Twitter will monetize. Though I doubt that they would monetize by simply charging people to read Tweets. That's much too blunt. There are more subtle methods of throttling the free-account users and thereby encouraging them to pay: limit the outgoing tweet rate, limit the rate of direct messaging, limit the number of followers or followees, lower the number of allowed characters by five for each successive tweet that you write on a given day...

Here's an idea: charge for low latency. If you're on the free plan at Twitter you can make as many tweets as you like and they will be sent to your followers and posted to the public site... eventually. Within, say, 2 hours (or 4 hours, or 8 hours). But if you want instant Tweeting you've got to buy a (fairly cheap) subscription.

Any such change will cause an uproar, so Twitter won't do it unless they have to. But if they have to, I expect they will. They're not just going to fold up and die.

Where are they going to go? Back to email, IRC, or Blogspot? I doubt it. To Twitter's cheaper competitors? How are they going to stay in business?

I actually don't use Twitter at all because for me Tumblr does far more, and it does it more effectively. (Tumblr actually has a Twitter client now.) There are a lot of other companies that do what Twitter does. Friendfeed, Jaiku are the two that come fastest to mind.

I'm certain Twitter won't die, because there are a lot of options open to them. Monetization directly is not their best option, though. They've been free for too long for that to easily work.

"Where are they going to go? Back to email, IRC, or Blogspot? I doubt it. To Twitter's cheaper competitors? How are they going to stay in business?"

Where do they go: facebook, orkut, linkedin or any other social network for 'status updates'. Some free service for 'realtime news'. There's no business secret or technical trickery on twitter - it's really a simple and reproducible service...

On how to survive: by using VC money for years, maybe? Expecting to get bought by GOOG (oops, I think jaiku already did this)? Not making any money at all (exactly what twitter does today)?

Twitter doesn't have the same operational costs though, so that top-line number doesn't need to be as high as you would think it would be.

But Twitter is valuable because of the number of people using it. Get rid of them and other users dwindle, and it would feed back on itself. That's the same problem that Facebook has: each user less is a drop in value for the site.

Actually, Twitter's users are worthless. They are a cost to Twitter -- and they bring in no revenue (yet). (Obviously this doesn't apply to their new business/commercial accounts).

Facebook's users at least see Ads. I have actually bought stuff off Facebook because the targeting was perfect.

And Twitter's user base is about 6 million, which is also a far cry from Facebook's 50 to 175 million, depending on what number you believe.

Twitter could put search on every page (Twitter Search), generate 100 million searches/month and then put search ads next to them.

What kinds of ads would appeal to people searching on Twitter? I've never done a Twitter search where a paid ad would have made much sense.

You've never searched for a company or a brand to see what people were saying about them? (Competitors or damage control PR ads) Or for a conference hashtag? (Local eateries and hotspots) Etc.

I have. I've never searched and thought that paid results might give me something better than the stream.

I've never searched Google and thought the paid results might give me something than the real results either, but that doesn't stop those ads from making money.

"Charge $5-10 a month and viola, revenue"

That would be the perfect moment for someone to launch a similar tool. I guess Pownce's history would be a lot different if it could be launched the day twitter decides to do that.

seriously, $10 a month to read what your friends are doing? As useful as twitter can be, it's never worth that much a month!

I'd pay $10 a month for Twitter no problems (only if it was for multiple accounts though, I have a few!). I've seen a lot of people say the same.

Twitter is monetizable - it doesn't need to be "useful" in any productive sense. Flower shops are still in business but they just flowers. Jewelry stores are still in business and they just sell pretty rocks.

While users aren't everything, I find it hard to believe that a site with 70 million uniques in the US alone will collapse. However, as a company, it will likely have to contract.

Google...because if Google goes down the crapper, that means the crap has really hit the fan. And Google's demise will take thousands of websites with it, who rely on adwords, adsense, and getting found in Google search results.

Except google isn't going anywhere; it's one of the pinnacles of advertising success

Never say never...the internet landscape is filled with corpses of websites that people never expected to fail

Silicon Valley is filled with corpses of companies that people never expected to fail. The Googleplex rests in a cementery. http://en.wikipedia.org/wiki/Googleplex#Facilities_and_histo...

Google makes $4 billion in profit on $22 billion in revenue. I'm pretty sure they're not going anywhere. They're more like Microsoft than an internet company now.

Google aren't going anywhere but what about YouTube? They recieve around 13 new hours of video every minute and that's just uploads! The storage and bandwidth costs must be horrendous. I just can't see how the very light amount of ads they serve could possibly cover the cost of such an operation.

I agree, but so far I'm completely wrong =)

http://news.ycombinator.com/item?id=328227

Then again, I have until Oct. 2010 for that to play out (and I do have money behind my mouth on that one). 2009 is going to be the year for testing Google and its advertising income. They may gain market share from the little guys getting weeded out, but I'm still keenly interested to see how their income and EPS plays out.

If they're still holding strong into late '09 and pushing $5 EPS per quarter, well I'll be a tad bit poorer and a little bit smarter.

I think the model its pretty good, one of the most effective ways of advertising is the internet.

But I think Google will grow weaker everyday because of competition (But that can take more than 20 years).

IMHO the fact that Yahoo had missed so bad on web ads is one of the biggest failures in business history.

I'm more curious which Web 3.0 startup's success is going to end the Web 2.0 era. Unfortunately, Web 3.0 might involve semaphore and smoke signals.

I don't get why this guy was voted down. The truth of the matter is, the old guard always remains, they just become irrelevant. Facebook won't die, but it also won't be cool and consume your life -- the same way AIM isn't dead, but it's not like you sit around and think "they're reading everything I'm writing! It's only a matter of time before they make billions off of this!"

In fact, to this point -- I remember that, when Friendster first started, the founder's goal was to sell the company to AOL for something like $100M. This was why he turned down the Google stock.

I assume he was down voted for painting Web 2.0 as an aesthetic-driven convenience based entirely on an over-indulged consumer nirvana where we can waste 10 hours rounding our corners while the foundation of our entire civilization might cease to be.

In the same vein, verything we currently rely on could equally be called out. This could be the end of Automobile 10.0, Computer 4.0, Internet 3.0, Electricity 18.0 and Civilized Culture 1.0 (I kid..).

Design has a high purpose for some and the study of usability, ergonomics and tools to automate your way to market are nothing even remotely new. Web X.0 will work because it serves people better in whatever paradigm they may live, be it civilized or relatively barbaric. Obviously, limited by the eradication of the internet entirely. Humane interfaces on a non-existent platform will never get any eyeballs :)

None!

There is no single entity which could collapse and end web 2.0. Any entity collapsing would herald more opportunities for other start-ups. The lack of money for the large would bring in more small players exploiting the missed possibilities. Web 2.0 is about unlimited flexibility and that will survive any collapse of the "real economy".

that's a very interesting question! Twitter anyone?

It will be time to call it quits when we lose zombo.com. The loss of goatse.cx was bad enough.

Hmm I'd argue Digg.

This isn't Reddit. If you are going to "argue Digg", you need to actually write some reasons for that.

How about that they have a staff of 80 people, with the majority of them not working on something directly related to the site (Digg Labs) -- that's burning up all the site's revenue and profitability?

Reddit, one of their competitors, has a staff that probably numbers less than 10.

Reddit has 6.5 (one part time guy).

Ridiculously sluggish Javascript pages which are still loading after 5 minutes.

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