Web 2.0: The Subtle Bubble

A couple of weeks ago we explored how Web 2.0 is the new hype du jour, and asked whether it represented a more mature version of the Internet or just another bubble. Now, Umair Hague of the aptly-named Bubblegeneration blog worries that Web 2.0 is taking on too many of the characteristics of the late '90s dotcom boom. For example, he notes how many startups are focusing on getting acquired by big players like Yahoo and Google rather than building something more substantive:

I think these [acquisitions] are kind of the wrong incentives for entrepreneurs. What made the Valley cool was it's refusal to think small, and do truly disruptive things. But getting a small change acquisition to essentially extend a Yahoo/Google/etc product line sets incentives for incremental, not disruptive, innovations and models.

At the same time, Umair notes that VC capital is far more focused and less free-flowing than it was a decade ago, so the big Web 2.0 deals aren't anywhere near as big as their Web 1.0 predecessors. Which could be a good thing. The VCs this time around seem to be using much more discretion in choosing their investments. Plus, the bigger they come, the harder they fall...

What's striking about Web 2.0 is how quickly people began to disdain it after it began making headlines. Folks, understandably, are still smarting from the last dotcom bust, whether they embarrassed themselves by buying into the hype (hey, we all did!) or lost something more tangible, like their retirement funds. The reaction to Web 2.0, though, is especially curious given that there's a question about how much Web 2.0 "hype" really exists. Sure, it's the hot topic among bloggers and new media types, but surveys suggest that the average Internet user barely knows what a blog is, let alone the more cutting edge Web 2.0 concepts. Umair's noting of tepid VC enthusiasm similarly makes the point.

For commentators such as the always-provocative Nicholas Carr, Web 2.0 isn't even a technical concern. In one of his blog posts, Carr discusses the ethical and spiritual aspects of new technology. Whether or not you agree with Carr's premise, one thing is clear; for him, technology takes a back seat to culture, process and perception when it comes to discussing Web 2.0.

Web 2.0 won't be a bubble so much as it will come to a slow boil; its benefits will be more subtle, and will be adopted without the average user even realizing it. As Umair says, there are fewer startups out there with ideas that appear disruptive at first blush. But that's not to say they aren't innovative. One of the key benefits of Web 2.0 is that it improves and streamlines what people are already doing (searching and posting Web content, for instance) rather than creating whole new ways of doing things. Take the Google Maps API. Developers can use it to create all kinds of mashups, making maps out of virtually any database. But to users, the end product -- no matter how useful they may find it -- is simply another web page. They don't have download and learn new software in order to use it. The same goes for blogs and wikis, which for the most part present as standard websites. Sure, people will adopt new technologies such as mobile devices, but they don't have to to realize the benefits of Web 2.0.

Web 2.0 represents incremental, sustaining change rather than radical, disruptive change. That, therefore, may be why many Web 2.0 startups haven't yet caught the eye of VCs.

Source: ZDNet