By: Bruce Byfield
Web 2.0 is a popular buzzword, but nobody seems altogether sure what it means. It has something to do with user-driven content and interaction among users, but is there more to it?
There must be, given deals like Google's $1.65 billion purchase of YouTube. With that kind of money on the table, every mainstream business executive is eager to become a part of Web 2.0. And like the dot.com prospectors at the turn of the millennium, many of them imagine that, if they build their business, then the users will come.
Unfortunately, the reality is more complicated. The openness of Web 2.0 requires a rethinking of business tactics that most executives aren't prepared to undertake. They can learn some of the new tactics from books like Wikinomics and The Cluetrain Manifesto -- or they can start here, with some basic points to ponder:
If you're starting now, you're already behind
The Web 2.0 success stories you've heard about have been the result of several years of work. The big winners were the pioneers, and while the gold rush isn't over, most of the best claims are already staked out. If you're just starting now (especially if you're not part of the technical community or have never taken part in a social network) you're starting from a distinct disadvantage.
That doesn't mean that success is impossible. You can still strike it rich, particularly if you're already used to interacting with customers through email or newsletters and can lure them to your new site. However, you probably have to scale your fantasies to fit reality. The odds are that a multi-billion deal isn't going to happen for you. Shoot for profitability or a comfortable revenue stream and you're less likely to be disappointed.
You're engaged in a contradiction
Face it: what you learned in business school or at your small city meetup is at odds with the values of those who participate in social networking. Business convention teaches you to protect your interests, while social networking favors sharing. Somehow, you're going to have to learn to reconcile the contradiction between your interest in the bottom line and the values that are likely to prevail in the community that you're hoping to form. It won't be easy, and any signs of cynicism will be quickly seized upon by your potential customers.
Your more realistic users will accept that your company needs to make money, but evidence of predatory business practices will discredit you faster than anything else. Remember: you're not the first one to think you can make money from Web 2.0, and many members of your community are as smart as you are.
You're not in a position of privilege
Executives are used to information flowing largely from them to customers. When customers deliver information, traditionally executives tightly control it. But in the social networking of Web 2.0, you lose that control. Customers will criticize you if they feel like it. If you try to control or delete the criticism, your efforts will only become another source of complaints.
On the Internet, customer interactions are conversations, and you have to accept the inevitable give and take. Instead of resisting this inevitability, learn to be politely attentive. Develop a sense of when to act on a criticism. Usually, if most of the community is saying the same thing, or an influential member is saying it, you'll need to act. If only a minority or a known trouble maker is criticizing you, then most likely you can ignore it.
You need to walk the walk
In any community, fair dealing is respected. Web 2.0 is no exception. So far as you can, you need to demonstrate that you share those values -- not just in your interactions online, but in your other business practices as well. Too many inconsistencies, and your community will desert you as a hypocrite.
For instance, one company thinking of taking the Web 2.0 plunge loudly proclaims its charitable activities while relying heavily on interns. It defends this practice as a way for the interns to gain valuable experience while paying them $4.50 an hour, and hiring more interns than full-time staff. You want to predict how long it will take for the community of users to draw parallels between itself and the interns?
Forget protecting your content
If you plan to offer content generated by your company, your first impulse may be to copyright it. One site, for example, offers articles giving career and business advice that it paid contractors to write. Following standard business logic, it has carefully included copyright notices on the site.
The trouble is, in the context of Web 2.0, you can not only expect users to ignore the copyright, but to condemn the standard business logic as well. Instead of struggling against the inevitable, look at the Creative Commons licences that allow you to define how you will share content. The licence has provisions for everything from wide-open sharing to stricter control of circumstances, so you should be able to find some variation that is acceptable to you. The stricter controls may still be ignored, but violators will be fewer and you'll at least get points for trying.
Building a community takes effort and time
Even if you have existing customers, building a site is unlikely to be enough. Most successful Web 2.0 sites are built with successful advertising, sometimes of the traditionally sort, but more often of the word-of-mouth sort typified by blogs and mail forums. Without being too obvious, you have to nurse this type of support to start your community. Otherwise, you'll have an empty site that no one uses.
Building good will is an ongoing process
You may need a while to learn how to interact with your community. However, once you establish good relations, you need to keep them. Don't be like one site that, after establishing friendly relations with its community, neglected its needs until the goodwill was lost and the most active community members established a rival site.
Always be thinking of something new
Like virtual Web hosting in the '90s, Web 2.0 is a low cost of entry business. In other words, you don't need a lot of expertise or development to become a player, especially if you ramp up with FOSS. However, what is an asset when you're starting becomes a liability when you are trying to keep the loyalty of your community. In the few years of Web 2.0's existence, communities have proved themselves to be fickle, migrating to each trendy site that comes along. To stem the loss, you can't just stop when you've completed your site. You need to be thinking of new features that will attract and keep users.
The trouble is, the simpler the concept of your site, the progressively harder new features will be to invent. Unless your site is innately valuable in itself, like del.icio.us, you may reach a point where you'll have to change the site's direction entirely to keep in business.
Know your revenue stream
The rhetoric of Web 2.0 is idealistic, and balancing it against the bottom line is difficult. Almost anything you do is likely to be denounced by part of your community. If you sell ads on the site, users will complain that they are distracting. If you charge for complete participation on the site, like Classmates.com, you handicap the creation of the community you hope to profit from.
The truth is, making money is the one part of the Web 2.0 model that nobody has quite figured out. I know of one company that put a million dollars over four years into a business networking site, yet was unable to produce a tenth of that in yearly revenue. When the company recently went on the block on eBay, the starting bid was $60,000.
The most assured revenue stream, of course, is growing a community large enough to attract a buyout, and, even then, you can't count on making back your investment. And even if you do earn a profit, you're only passing the problem of how to make money off your site to the buyer.
Conclusion
If these tips sound pessimistic, then you've got my drift. As a business phenomenon, Web 2.0 is difficult for executives to grasp and likely to be as fleeting. Vast fortunes have been made from it, and smaller ones are probably still waiting to be made, but at some point in the next year or two, the end will arrive. If you want to profit from Web 2.0, you need to get in fast and develop your community even faster. By this time next year, Web 2.0 could be history. Some of the sites that sprang from it will still be around, but most of them will be making only modest profits and some will be loss-leaders to draw attention to other things. Go into the trend with your eyes open, and you won't be disappointed when Web 2.0 comes tumbling down.
Bruce Byfield is a computer journalist who writes regularly for NewsForge, Linux.com, and IT Manager's Journal.
Entrepreneurs are not by nature people who walk around with a Plan B in their pocket. Even though it goes against the grain. It goes against the unflagging optimism and sense of “I can do this” that keeps great entrepreneurs going long after others have given up. But successful entrepreneurs are also savvy, practical survivors.
Great entrepreneurs are also masters of timing. The master of timing in Web 1.0 was Steve Case, when he persuaded Time Warner that AOL was their equal in a merger. It was so outrageous that it was the signal that triggered the end of the Web 1.0 boom. Of course when history does repeat itself - as it usually does - it does so with a surprising twist that takes everybody by surprise. The obvious parallel today, Facebook and Microsoft, does not apply. Microsoft is only investing what is a rounding error for them; and they may well have a preferred rate, which means that in the worst case they get the same return as they get on their cash hoard in Bonds.
So, no, I am not calling a bubble or even forecasting the timing of a recession. But I would say that one of the following should be on the To Do List for entrepreneurs in the current climate (which one depends on the lifestage of your venture):
1. Raise more money (a lot more) than you think you need. VCs have plenty of money to put to work and you need enough to ride out a cycle and really build something to last. Jason Calacanis said he raised enough for 5 years with Mahalo and he has seen a cycle come and go.
2. Get to cash flow positive quicker than you had planned. (And if you are already there, don’t take this as the time to start a major expansion built on borrowed money).
3. Accept that offer. Not the first one of course. Not the second one if you have good poker nerves. But take the third one. Live to venture another day.
The aim of many entrepreneurs is to take a business idea and convert it into a professional and functioning business on a low budget. This is typically called “bootstrapping” and it is fraught with potential pitfalls and dangers. But when done well it can really help get a company going fast, professionally and without the founders having to give up much (if any) equity - or bankrupting themselves.
Wiki : Bootstrapping
Google’s interest in social networking sites is known. It acquired Orkut two years ago and later acquired YouTube. Perhaps the number of people that visit these sites was an attraction. Now aiming to capture the mobile audience and in its endeavor to provide more services through mobile devices, Google acquired mobile social network, ‘Zingku‘.
Some view this move as an important part of Google’s imminent launch of a phone Gphone.
Zingku was started in 2005, and is a mobile social network that typically targets teenagers and 20-something's, helping them to share photos, send invites, and conduct polls through mobile phones for free.
There’s also a 'shameless commerce' aspect to the network, which enables businesses send access code to customers to help them download and share ‘mobile flyers’. ‘Zingku’ deploys standard text and picture messaging on mobile phones, and browsers on the Web, sans installation of special software.
With the acquisition, the network has frozen new account sign-ups. Its Web site says that existing accounts will be transferred to Google unless canceled by Oct 4.
Domains are hot again. After the bubble burst in the 90's, no one ever thought that anyone would pay a 5 years salary for a domain name again. Think again. iFly.com was recently sold for $65.000. Thats not a wild sum, but it's not a wild domain either. I did read somewhere that creditcards.com was sold for $2.750.000 last year. Someone did a pretty good investment there. I browsed ebay and found that ss.com was up for bidding, and the tag was around $55.000.
So why do people spend a redicoulus amount of paper on something as silly as the right to use a certain address on the internet? Think of it as real estate. Buy and sell later. Another reason is that the clever SEO crowd discovered that anchor text is one of the strongest SEO tool availible. That means if someone link to my site with the text "widgets" in the anchor tag, search engines will associate my site with "widgets" and give the site higher rankings on that particular search phrase. So this means that if I own "widgets.com", chances are that many people will link me up with the domain name, and since that contains my main keyword, half the SEO is already made.
Don't get stuck in keywords
So what should you look for when buying a domain name? Assuming you don't have the big bucks to spend, you try altering your searches and broaden your acceptance of domains for your web presence. This can be very frustrating. Let's say you are selling "widgets". So you want widgets.com - tough luck. That domain was registrered 3 years ago and some guy wants a whopping 50 grand for it. Ok, what about "widgets.net" or "widgets.org". Try again. All of them are most likely occupied. Given that all popular keywords are taken combined with the releases of some new country codes, people are coming up with some creative domain ideas. How about welcome.to/sweden? or the popular del.icio.us?
Let's rewind this for a moment. Is it really that important to have your main keyword in the domain name? Should you really be looking for "buy-widgets-at-my-site.info" in the end? Think of the big ones. Google. Amazon. Kelkoo. Apple. The key is not the keyword - it's the brand. Keyword domains are out. Branding names are in. Big time in.
So when choosing your domain name, don't get stuck in the keyword thinking. Take it back to the brand. If necessary, have a domain lookup tool at your disposal when choosing the brand in the first place.
I particularly like google (who doesn't). Its easy to remember, you can verbalize it (let's google that) and it has a deeper meaning (googolplex - the highest number there is). And today, the brand is stronger than ever.
Learn the lesson from google itself. Think beyond keywords.
This article was written by David Hellsing
David Hellsing is a designer and web developer living in Gothenburg, Sweden. He is the founder and gentle dictator of Stylegala and the swedish design firm monc.
I found his blog Cycling to Australia, it was interesting for me, he cycle from England and after 128 day, that he start his journey from England he passed France, Switzerland, Liechtenstein, Austria, Slovakia, Hungary, Ukraine, Moldova, Romania, Bulgaria, Turkey, now he is in Iran what a long way , he came to Iran from Bazargan frontier. Friday 28 September 2007 he was in Tehran and I think he still is in Tehran. in his weblog I found a lot of interesting photos which is taken by him during his trip, his flickr album is here . I know what he said. and bad for him that he came to Tehran In Ramadan which there is nothing to eat - in Ramadan in Tehran all the shops and restaurants are close until fast break- for someone who have to cycle and need more calories ? what do you think ? I couldn't write him a comment, I don't know what was wrong with blogger. but I want to say him
Welcome to Tehran and keep cycling.
Another thing which he mentioned in his blog and was interested for me was Our Internet filtering :( , that was for flickr site which is filterd in lots of ISPs and Internet cafe in Iran. so we couldn't see some of his shots from Iran.
The allegations made by What should Orkut do? about Orkut popularity and the reason it’s not popular in the U.S. anymore have been confirmed by the renowned Forbes magazine. The article is very analytical and shows it’s possible to make a better Orkut with high profits to the company (we hope Google CEO has read Forbes’ article).
Here goes some pieces of the article:
"Orkut’s Brazilians and other foreign users could also be a significant source of revenue, argues Greg Sterling, a consultant with Sterling Market Research. "If you’ve got the ad coverage, an international user is as valuable as anyone," he says."
The reason Google must invest efforts in quality improvement initiatives on Orkut and start to places ads on communities and profiles. Ads must be discreet and harmonic with the design. It’s easier now the new Orkut look is designed in white. Fake profiles and evil communities must be deleted as well as users involved with these activities must be banned from the website and arrested in case they’re involved with criminal activities.
"[...]Google, which won’t disclose Orkut’s revenue numbers, has recently been putting more of its massive resources behind the site. On top of this week’s redesign, the company last year sponsored a social networking project at Carnegie Mellon to develop a tool meant to improve Orkut’s domestic popularity. The result was Socialstream, a prototype for a site that allows users to post text and multimedia content to a single page, then syndicate that content to any social network where they have a profile."
It means Google has finally realized Orkut has potential, that’s why the company has redesigned the website to look likes more professional than that baby blue thing. Now Orkut must work on privacy and security.
Silicon Valley: one of the wonders of capitalism. The anti-globalization activists forget internet technologies (which they use to spread their demagogy against globalization) would never be developed in another economic system.
"Until now, Orkut has been an also-ran in the U.S. because it’s been neglected by Google," Sterling says. "But with just a few tweaks and redesigns, and in combination with all of Google’s services, it has the potential to really differentiate itself from MySpace and Facebook."
The confirmation about the reasons why Orkut has been kicked out of the United States of America just like we allegated on last edition. It’s an incontestable evidence that Google will be recompensed with profits by improving Orkut. When it happens everyone will realize capitalism is a fair system that recognizes those who work and have great ideas for making a difference.
According to Blognation UK, an unofficial Facebook IM app will be going into BETA this Friday. Emphasis is being placed on the fact that no registration, installation, or download is needed to use the chat program. All Facebook users can instantly access the system. Although this application (Friendvox) is not a company-owned property, it will likely provide any and all functionality that an in-house system would. In other words, this app may be a prime takeover target for Facebook if they aren’t already developing a client of their own.
To be honest, I think we all knew that it was only a matter of time before a Facebook IM client came to fruition. I guess that time is now. Whether it provides any level of competition against MSN Messenger, AIM, Yahoo Messenger, and/or Google Talk is yet to be determined.
Here are some screenshots of the new IM (courtesy of Blognation UK):
I wasn’t overly impressed by the chat interface - I thought it was rather ugly when compared to the rest of Facebook. The traditional clean look has been replaced by a web 1.0 feel. Then again though, the system was not created by Facebook itself.
It will be interested to see what the company’s next step is in the space. It will also be interested to see what other applications and spaces the company plans to enter in the coming months. If I were any kind of social app, I’d be scared to death if there was a chance Facebook might enter my realm. These companies will need to erect barriers quickly if they planning on surviving the initial Facebook tsunami.
I pass WEB 2.0 Design Quiz :) and now I am graduated ! Give yourself a try and figure out how smart you are on Web 2.0. Even so the results are believable. After you take this test you will receive a special code with the results on an icon that you can place on your website so that every visitor can see how aware of the Web 2.0 issues you are.
Omid Zaman - Web 2.0 Design Master's Degree
In a great article regarding to Social networking site tops in London, Toronto form Reuters Life!, It shows London and Toronto have the highest number of Facebook users.
TORONTO (Reuters Life!) - It could be due the climate, the large number of students or the ethnic mix of the people who live there, but whatever the reason London and Toronto have the highest number of Facebook users.
The social networking Web site, which began in a dorm room at Harvard University in 2004 for students, says it has more than 41 million active users. Its impressive growth has made it an Internet and social phenomenon.
According to media reports, Toronto was top of the Facebook world as late as the end of June, but London surged ahead over the summer.
Facebook said it does not keep statistics on networks, but a look through the regional areas in the top three countries -- the United States, Canada and Great Britain -- shows that London had 1,159,185 users, while Toronto was a close second with 836,605.
Experts agree that it's hard to explain why certain social communities take off and others don't, but speculate on possible factors.
"Historically speaking, the harsher the climate and the more dispersed the population, the more telecommunication has had a major influence in shaping the culture," said Mark Federman, a researcher at the University of Toronto.
"There has always been a greater per capita early adoption of communication technologies in Canada compared to the USA and a similar situation exists in Northern Europe," he added in an email interview.
Federman also believes the penetration of high speed Internet access in the United States, even in urban areas, is lower than in Toronto or in Europe.
Like London, Toronto is the home of various universities and about half a dozen community colleges, so there is a large population of "demographically-right" potential users, according to Federman.
Leslie Chan, a social science lecturer at the University of Toronto, agrees.
"University students in that regard are big users...there are a lot of students (in Toronto) and when you add them all up, when these students link up to friends and relatives outside -- it's kind of a snowball effect."
Federman added that Toronto's strong ethnic mix may also mean a greater likelihood for people wanting to connect with others all over the world. The relative affluence of the city also means a larger percentage of the population has access to high-speed internet.
"I think that certain of the factors might equally apply to London, or any large urban area," Federman added.
Half of users of Facebook, which is a growing favorite with the 25 and up age group, make daily visits to the site.
Membership in the New York, Los Angeles and Chicago regional networks combined is about 918,168, while Washington D.C., boasts 272,723 people on its network.
Dissecting Facebook by numbers is not very straightforward. Users can join multiple networks or chose not to associate themselves with any network. But the figures are significant enough for researchers to be interested in how social communities evolve and expand.
Chan said that he is now seeing colleagues look at these types of questions as serious research, but added: "We don't have the answers yet."
To start let's define two things that make a social network; the app and the underlying social graph. On a site like dogster, the application is "dogs" and the social graphs are the groups, the messages, the profiles, friends and comments. Features are added to the app by the company, and users add to the social graph. "Dog of the week", "dog blogs", "dog videos", "local dogs" are all features of the app, and how the users interact with each other what friends they make are the social graph. Sometimes the apps grow a lot bigger than the social graph, sometimes the social graph grows a lot bigger than the app. In the case of myspace the application started as voyeurism and music, but the social graph grew so big and spawned many other applications. In the case of youtube, the application of sharing videos got so big that the comments and profiles, the social graph got dwarfed even though those features were there.
What's important is that regardless of the outcome, a lot of companies got funded as "social networking for X" where X could be fantasy sports, trendspotting, dogs, cats, vampires etc. The formula that got VC funding was, "take an application that people know, and build a social graph around it." The hard part wasn't building the application but getting the users. It was all about getting users, building the social graph.
What facebook did was turn this upside down. They said, "we have a social graph, why don't you build an app on it". In their platform you start with the social graph and build the app on it. Since the hardest part of building a social network is getting the social graph, facebook effectively gives this to an application. This is what's so impactful about the platform.
It's because of this paradigm shift, there are apps with 9M users in under 2 months. Facebook gives the app maker a social graph to work on the app maker grows fast, adds back to the social graph, grows it a little bigger, benefiting the next app and most importantly facebook that owns the social network. They own the most important, hard to do, defensible, valuable piece of any social network, their users.
By owning the social graph they are controlling what makes the network work, they control the operating system. As networking guys will realize instantly, facebook becomes the "IOS of social networking". Hopefully, the application developer learns to monetize their apps (haven't seen a good example yet, doesn't mean I won't) and everybody wins.
Facebook took a good killer app, your desire to know what your friends are doing, aka, your social graph, and turned it into a platform. The killer apps of today are the platforms of tomorrow.
So what does this mean for a social networking site? The days of starting a site to build a user base on your own is over. You will have to do it on facebook, otherwise your competition will and they will grow faster. For those sites big enough to have a decent social graph, they still have to have a facebook presence, not to be left out, and will their current user base remain relevant if the facebook user base grows fast. It's the old Microsoft adage "no need to build this, the operating system gives it free". Over the years Microsoft took the top applications on windows and made it part of the OS. This is the same story happening here and there is no stopping it. Every independent social network has to keep a good eye for what's going on at facebook, and if I were them go straight there and stay there. Yes, Microsoft got the lion's share of the market, but app developers on windows did well if they wrote the right apps. But one thing is for sure, no app vendor made it big if they were not supporting windows.
Becoming the operating system of social networking is why the facebook platform is the most relevant thing that happened to the Internet this year. They are on their way to become a Microsoft of sorts.
So what are they worth? I don't think it's $1B, I don't think it's $2B, I don't think it's $3B. I think it is more. Who will buy them? My bet is that it won't be any of Yahoo, Google, Microsoft. They all have products that touch this, and they all have the capability to do this. I think the buyer will be one that who is much less obvious, one for whom this move is way more disruptive and game changing.
The next big question is, will they take a $10B offer? I am not sure that they will.