Note: The following is a repost from the Horn Group Blog.
I’m usually pretty skeptical of group think, and there was plenty at this week’s Web 2.0 conference in San Francisco, but I couldn’t help but be swept up by the notion that we are moving into a new era of user empowered, social computing. While opinions differ on what Web 2.0 actually means, Tim O’Reilly’s essayWhat is Web 2.0 does a great job of connecting the dots and is a must read.
While some saw the almost utopic exuberance of the conference dangerously reminiscent of the late 90s bubble, one key difference was the equally prevalent idea that companies require fewer resources to get started. Less people, less money. Just a great idea that fills a specific need, usually collaborative or social in nature. Open source and the steady drop in hardware costs, plus the maturity of rapid development methodologies and web frameworks such as Ruby on Rails, has created an environment where little money and fewer resources are required to realize an idea. Jason Fried of 37Signals, creators of Basecamp, says that all you need is a programmer, a designer and a sweeper to run interference between the two. While a somewhat naive statement, it’s true that this environment, coupled with user experience enhancements made possible through AJAX and the standardization of browser technologies, has resulted in a huge upsurge in web innovation. Open APIs have encouraged the reuse of data in new and remarkable ways. Perhaps the most famous being the Housingmaps.com mash-up by Paul Rademacher. By overlaying user contributed real estate listings on craigslist with Google Maps, an entirely new service was created.
I can’t help but think that as consumers become more sophisticated, marketing becomes less necessary. Word of mouth creates a buzz, and ultimately quality wins over marketing dollars. The user driven social architecture of Web 2.0 provides the framework for this to happen. In many ways Web 2.0 companies such as Flickr (now Yahoo) and del.icio.us are simply content databases– systems for storing, accessing and organizing user contributed content. They are content repositories that grow organically based on user participation. This is a phenomenon of democratization. As put by Ross Mayfield, CEO of Socialtext, “Web 2.0 is people.”
Beyond the ad revenue model of Google, the monetization opportunities of the smaller Web 2.0 companies appears TBD. While the lack of viable business models echos the bubble days of Web 1.0, the emphasis of these companies truly seems to be about creating something useful and sustained rather than flipping the company for gobs of cash. Some may argue that this is naive, but as I heard someone say on the conference floor, “Greed is so Web 1.0.”