1999 Is Calling. It Wants Its Hype Back

from the where-have-we-seen-this-before... dept

There's been lots of talk about the possibility of "Bubble 2.0," which (so far) appears to be taking a lot of ideas from the original dot com bubble, and using dynamic HTML to make it look cooler (it moves! in a browser!). While it's true that some of these second attempts are doing things much more intelligently this time around, an increasing number are not. Once the money starts flowing (and, if you hadn't noticed, it's flowing), it seems that "lessons learned" get tossed out in favor of doing anything possible to jump on the gravy train. The only problem is that we've seen how this train ride ends, and it's a train wreck that we'd all probably be better off avoiding. Still, if you want to revisit the signposts of years past, here are two more: it's suddenly fashionable again to put your startup in "stealth mode." Stealth mode is a silly term for it. Being quiet about what you're doing certainly can make sense -- especially early on when you're still figuring out the details of your messaging and positioning. However, too many startups use stealth mode as a buzz builder -- as if not telling people what you do deserves more attention than having an actual product. It's that second use of stealth mode that tends to cause over-inflated expectations. The second bubble sign is when the failures of the original dot com bubble return from the dead to try to make it again. In this case, it's "boo.com," whose only claim to fame these days was how spectacularly it flamed out. However, in a bubble era when "any publicity is good publicity," the larger the failure you're trying to resurrect, the more publicity you'll likely receive. So, come on Webvan, Kozmo and others. It's time to come on back. All you need to do is use AJAX and it'll make people forget to ask if you have a business model.

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  1. identicon
    Jonathan, 25 Jan 2006 @ 11:00am

    Bashing Web2.0 is so trendy...

    Hi Mike.

    I'm not sure why I'm bothering to comment on your post, but since I disagree with the consensus I'll add my piece.

    It's easy to tell the difference between what we'll call "Web 1.0" and "Web 2.0." Web 1.0 is about web sites that have content and the ability to interact in some way, like commenting on a blog. Web 2.0 is about building an ecosystem of web applications that work together (often using open standards like XML) and feel more responsive.

    However you want to label it, Flickr is clearly different from Ofoto, Google Maps is clearly different from Mapquest, etc.

    Bubbles are based on extreme valuations without clear business models. What are some examples of this? The Web 2.0 companies that have sold weren't really overvalued from what I've seen -- some of the small ones were actually under a million dollars, and even Flickr and Delicious were relatively cheap for the user base and talent they brought the acquiring company.

    Repeat ideas:
    This one actually makes me mad. Sure, Boo.com was a terrible idea. But some of the best products are repeats of ealier failures. Myspace is a close copy of Six Degrees. Municipal Wifi is a repeat of Ricochet (though I'm not sure this counts as web 2.0).

    I know that Kozmo and Webvan had bad business models, but there really should be a good way to have groceries delivered to my house.

    Stealth Mode
    I generally think it's a bad idea, though as a person starting a company with no PR agent I generally have no idea what I should tell the press. Can I tell them who my clients are? Or what type of clients I have? If I say "we're working on home deliver" will they label me "Webvan 2.0"? (For the record, I'm not working on the new webvan.)

    So Mike, of you're so down on the current crop of startups, what do you think people should be doing? What are some great business plans that haven't ever been tried before?

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