Is this a bubble?
15 May 2006
Back in the early days of the internet and it’s growing popularity amongst “normal” folk, came a bust. This bust was called the “.com bubble” and signified the bursting of a market over-inflated with investment cash.
Now we start to hear terms such as “Web 2.0” and the risk of another ”.com bubble” and as a freelancer just about to go full time in web development it’s something that I, and my colleagues have been thinking about.
The whole notion of a bubble seems to have arisen as a direct result of one-man-and-his-dog outfits setting up a business from home based on the Google advertising revenue model. Basic idea is, build vaugely-interesting-for-5-minutes site, kit out with Google ads, make loads of cash – unfortunately this is not a model I can see working in the long term.
A lot of truly interesting enterprises have sprung up on the web, love them or hate them, 37 Signals are paving the way for usable AND useful web applications that are changing the way certain people use the internet. Google are in there as well, buying out anyone with a good idea and incorporating it into the Google machine with much success.
I can definitely see where all the talk of “bubbles” is arising from just by looking at the applications popping up on Techcrunch everyday, some look to be very useful and some look to be utterly dismal. The problem is that all new applications of a certain look are now being branded “Web 2.0” (lots of controversy over that moniker) which would seem to place them all in the same category, in my mind this is definitely not the case.
I take SiteVista as an example, this is a company that myself, Paul and Matt have been working on for over a year now and whilst it doesn’t turn over enough to support the three of us it certainly has a sustainable business model (we are in the black with revenue growing all the time). What we have created is a sustainable business based on a real need, the idea for which comes from Paul’s work as a web designer and the frustration he had when working with the competition, therefore this is solving a definite problem backed by the weakness of the existing competitors. However SiteVista has made several “Web 2.0” application listings alongside these applications that have no real business model to back them up.
This is where I see the real bubble happening, whilst we’re focussing on a real problem (testing website compatibility), others are building an Ajax based web desktop backed by advertising and trying to get venture capital funding. We know that our model is sustainable so we have no desire to seek funding, what happens when the VC funded applications fail? Too many applications are being built by geeks, for geeks, and ultimately this is not going to reach market penetration at this stage in the internet game.
Just because technologies such as Ajax and RSS exist, it doesn’t mean that you just have to build an application based around them. We use Ajax in the current implementation of SiteVista, and future incarnations will be making use of RSS. This doesn’t mean that we are about these technologies, it just means that we have identified a situation where they will compliment our core product. Too many people are building apps based around hopping on the current bandwagon without too much thought as to what problem they are trying to solve with them, I take over-ajax-ification as a prime example of this.
The success of sites such as MySpace shows that the internet has landed in many homes across the globe, internet presence is never going to go away so there will always be call for developers such as myself. It’s just a shame that we all have to be tarred with the same “Web 2.0” brush as all these fancy show off applications that are doomed to wither away and die.
Update: Looks like Dave Winer has been talking about the same thing, Is Web 2.0 a bubble?
Feed me
May 15, 2006 at 04:33 PM Well, arguably the first bubble gave us huge bandwidth capability, technical progress and browser capability that would have taken a lot longer without it. This is currently a micro-bubble...the numbers are smaller, the mainstream press interest less, and the star performers (e..g google shares) are at least making money. But the need to take VC is an interesting one - it's never been easier or cheaper to build 'applications' and yet there's still money floating around...I get the impression that VCs need to spend it somewhere...so welcome to circular self-justification... Personally, I think the bubble is great - it will drive innovation and challenge existing perceptions. Plus the innovation over the last few years has been social - whereas the bubble of 99 focused on 'e-business', the drivers of RSS, blogs, podcasting etc. are all long lasting, socially important changes that will profoundly affect the way humans work and share knowledge. More bubbly!
May 15, 2006 at 08:24 PM koolweb2 is pretty kool..user driven sites, reviews, rankings..
May 16, 2006 at 08:07 AM @Sam - and also the exact kind of "listing" site I was referring to that is tarring us all with the same brush. Whilst we're definitely embracing the new technologies available I wouldn't like us to be included in the same category of "Web 2.0" as all the other sites that don't have any real business model. I'm glad to say that we aren't listed.
June 18, 2006 at 12:59 AM You mention your disdain for the "latest" dotcom bubble but I can't help but notice (despite a valid need) that sitevista is certainly poised to exploit (via price structure) the Web 2.0 explosion. IMO web 2.0 is based on revamping standards that support clean code via CSS validation. HMMM! I guess you're not quite "above" the hype, even though you go out of your way with this rant. A tongue-in-cheek approach might have better concealed your juxtaposition. Sorry but your hand has been revealed! Why not consider lowering your price structure for sitevista and actually contributing to the very market your courting, which happens to be the Web 2.0 dotcom bubble.
June 18, 2006 at 10:03 AM I think Eagleshout wants us to lower our prices :-)
July 07, 2006 at 01:46 PM I think that if the bubble comes, it will just be a clearing of the over-invested startups with no business model other than to build hype (much as the dotcom bubble was). The "Web 2.0" label doesn't really mean much as it covers such a wide range of ideas. I don't think it will matter whether the term is dropped or continues, those products and services that have value will continue to have value unless they are lured in by the VCs to over-inflate.