This guy must have hit a nerve to generate so much vitriol. I think many of the comments here hit on some good points. I think the blog post we are discussing hits on some good points. It is possible that we are all right.
We need to be honest here and admit, however, that the vast majority of the free to use consumer startups that we are seeing will be challenged generate US$1 Billion in revenue a year. Or for that matter, even US$100 Million. That is why there is little talk about taking the majority of them public, because other than as a delivery vector for advertisements, there is scarce value in this crop of startups. To be perfectly frank, these are less than ideal platforms for ad delivery as well.
What can be done? We can try other models, and I'm sure many will. There are a boatload of virtual worlds, virtual world platforms, and MMOs coming on line this fall. ALL of them plan on using ads, microtransactions, and subscriptions. They are in the good position of being able to use all three of these at the same time, and all of them will. I predict though that by December all of these companies will have their models DESTROYED by two guys on their couch in boxer shorts developing a FREE virtual world on their laptops while watching SportsCenter and eating ramen. There will be 1000 college students "building portfolios" around the country that will make gigabytes of content for the new LINUX of virtual worlds. It will all be P2P or hosted on Amazon, and it will piss many a VC off. So the only thing these businesses will have left will be advertising.
This is the situation web 2.0 is in. People keep investing in the hope that some little twist will be the magic one that brings in the most ad bucks. Charging for these things is not an option, there will be free alternatives if you wait 6 weeks. Even virtual worlds can be duplicated in 6 weeks these days! What can we do?
It's easy to point out the holes in what is currently being done, it is much more difficult to offer a WORKABLE solution.
By hitting a nerve you presumably mean touching on some fundamental point that makes people uncomfortable. But not everyone who generates a lot of responses hits a nerve in that sense. Trolls pride themselves on causing huge fights from remarks with little more content than a bot might generate.
I'm not saying this was a deliberate troll. I'm sure it wasn't. But it had that in common with trolls.
When people are connected to an idea, they tend to believe it to be true, even as evidence starts to mount otherwise.
When a definitive answer to this question comes, minds may change, but like most disputable theories (global warming, economic cycles, religion) without proof, people tend to react on their base instincts.
To those that have a lot to lose in me being right, it's a tough pill to swallow. I haven't given any real proof, rather a selection of observances that could point to a conclusion.
To those without any real vested interest, or (like me) looking from the standpoint of a potential future interest, the situation seems more tenuous.
"This guy must have hit a nerve to generate so much vitriol."
He hit a nerve, but not any kind of "nerve of truth". We're simply tired of the same old bullshit repeated by thinking-impaired writers.
You can't have a "crash" if the stock marketed is not tied into the business. PlentyOfFish.com, my favorite example at the moment, does not need to worry -- directly -- about a stock market crash. Nor does he (it's one guy) need to worry about VC pulling out: he has no VC.
A stock market crash could hurt everyone, but that won't be caused by some "overvaluation" of Web 2.0 companies.
Folks, the worst thing that can happen here is that some people may have to get corporate jobs while they plan their next ventures.
Those who predict a Web 2.0 crash don't understand what happened the first time.
We need to be honest here and admit, however, that the vast majority of the free to use consumer startups that we are seeing will be challenged generate US$1 Billion in revenue a year. Or for that matter, even US$100 Million. That is why there is little talk about taking the majority of them public, because other than as a delivery vector for advertisements, there is scarce value in this crop of startups. To be perfectly frank, these are less than ideal platforms for ad delivery as well.
What can be done? We can try other models, and I'm sure many will. There are a boatload of virtual worlds, virtual world platforms, and MMOs coming on line this fall. ALL of them plan on using ads, microtransactions, and subscriptions. They are in the good position of being able to use all three of these at the same time, and all of them will. I predict though that by December all of these companies will have their models DESTROYED by two guys on their couch in boxer shorts developing a FREE virtual world on their laptops while watching SportsCenter and eating ramen. There will be 1000 college students "building portfolios" around the country that will make gigabytes of content for the new LINUX of virtual worlds. It will all be P2P or hosted on Amazon, and it will piss many a VC off. So the only thing these businesses will have left will be advertising.
This is the situation web 2.0 is in. People keep investing in the hope that some little twist will be the magic one that brings in the most ad bucks. Charging for these things is not an option, there will be free alternatives if you wait 6 weeks. Even virtual worlds can be duplicated in 6 weeks these days! What can we do?
It's easy to point out the holes in what is currently being done, it is much more difficult to offer a WORKABLE solution.