Being Disruptive With Web 2.0
posted Thursday, 20 October 2005
I think Richard MacManus is definitely onto something with his search for highly disruptive Web 2.0 startups. However, I do think some of the mystery of why there are few disruptive startups in this cycle (yet) can be largely explained. My humble opinion? It's due to many of the roots of Web 2.0 coming from emergent capabilities that came out of the most successful Web 1.x companies. Here's what I mean...
The startups in the last few cycles that ended up being the most widely successful were the ones that truly engaged their visitors. These included eBay, Amazon (who gave reviewing power to each and every one of its customers, and then brilliantly gave them the power to review the reviewers), Google provided page ranking, and Yahoo gave out social participation mechanisms like Halloween candy, and there were others too. Then someone noticed that all these leading players were doing some really special things and capturing mindshare and marketshare along the way. All by essentially opening their doors up, practically pushing their users in, and inviting them to help build the whole place. Or letting them use their services in their own sites. Pretty forward thinking, eh? This is all old news now but it filled up a lot of the open spaces on the Web using mechanisms the rest of the world is just figuring out.
Then there was BitTorrent, this was truly disruptive and innovative, but never had a meaningful revenue model. And while BitTorrent was an insanely great idea in ways too numerous to mention here, it utterly failed as a way of doing business (though someone really should figure out a business model for it).
This means that many of the larger niches which would normally exist for startups to get a foothold are already filled. These are the traditional spaces of search, content, and marketplace. Big spaces with lots of money and lots of existing presence. But new spaces can always be created and existing ones can be recreated if someone can reach the tipping point.
Now of course, there is also a lot of attention these days around the fact that Web 2.0 startups should be small and simple (ala the small pieces, loosely joined and more quality by doing less Web 2.0 memes). But while it's true that monolithic software and sites the way we used to build them is a really bad way to do things heading into the future, I think it's discouraging folks from attempting grand visions as well. Changing the world is hard work, and harder to do on the cheap. Fortunately, and I think Tim O'Reilly would agree, the best Web 2.0 places will require no advertising whatsoever. They will spread like wildfire on the strength of their own virtues. And besides, the cost of an Internet startup is a fraction of what it used to be.
OK, but accepting the argument that smaller niche spaces are available today to create new businesses in, startups are cheaper (but probably also smaller for a variety of reasons), and good ideas will take off by themselves through viral means and social network effects, then why aren't we seeing those disruptive entries into the market?
Personally, I think it's likely market latency. Web 2.0 is still a brand-new concept with a bunch of interrelated memes that have to be balanced and leveraged with some finesse (witness the leaden and heavy handed startups to date). Also note that I still have a hard time getting the people I work with to grasp the whole Web 2.0 mindset on the first try, they usually need to noodle on it. Then there is the development time for truly great ideas. There is some indication that special things are just around the corner. Flock is coming and is likely to leverage the mass migration of folks from their current browsers to new ones. Ning is tantalizingly close but probably off the mark. Someone will do non-developer service mashing in a way that really works for folks. And there are plenty of others (just check down the left hand side of this site.)
Finally, I think it will be folks that think really, really big that will make it big. Think high concept, medium investment. At its most extreme, Web 2.0 represents a fundamental shift of focus away from the PC and entirely to the Web. People that completely reinvent the way we think and work in a way that makes daily life easier, more enjoyable, and more frictionless will be the winners. I think startups like Goowy and others are heading in the right direction, though they aren't there yet. Hopefully, the VCs that do get it, like Ed Sims will continue funding bold ideas until the right ones are hit upon.
In my Web 2.0 dream, I want a handful of URLs to remember to get to all my information and software. I want functionality that gets completely out of my way and never makes me think about how to make it do what I want. I don't want to reinvent the wheel and I want to leverage what others have already done. I want to work, produce, communicate, collaborate, and shop, anywhere and everywhere, with security and speed. The startups that provide these things to people in fundamentally new and better ways will be the keepers of the flame. Mark my words.
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