“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”…yes, it’s yummy

Posted by direwolff on October 7, 2005

So tonight I had the pleasure of joining some friends and acquaintances both old and new for what was termed a working dinner. The restaurant was Frisson, and while trendy and over priced, the food was yummy. The work part was related to us engaging in a discussion about some opportunties for nuanced business models on the Net. The attendees were all smart people, all with strong Net backgrounds, most entrepreneurs, and several had been attending the Web 2.0 conference.

At one point in the conversation we were discussing Specifically, how most users of the service do so for one of three reasons: (1) as a way to bookmark pages they’re interested in, (2) to spread their “cool” DNA (the fact that they’ve tagged something that others can now see was tagged by them), and (3) for search purposes. The fellow who explained this bit of research also then admitted that #2 was probably ahead of #1. I then raised the point that it didn’t seem to me from a casual user perspective that had any more utility than the bookmark feature in my browser, especially given that I don’t often use computers other than my own to access to the Net. The air seemed sucked out of the room at this suggestion and the reaction among this group was actually amazing to me. It was like I had used the Lord’s name in vein in a church or something. How could I even suggest such a sacriligious thought, but more importantly, every one explained how they found extremely important and useful. Though, it was only after raising the reality spectre that basically the market for today was only the digiratti of which they all belonged, that there was some concurrence with this idea.

It’s interesting to realize that most people who use the Internet in any sort of way have no idea what is. Of those people I’ve spoken to who are not part of the digiratti, their reaction generally falls in one of wondering if I’m saying something about food to which they feel obliged to respond with something like “yes, it’s yummy”. It’s either this reaction or one of being totally perplexed about what I’m talking about.

Basically my point was that even if found a business model, what would it matter, especially considering that most people still would have no clue what it did, why they would use it, nor how to get to it (where do the periods go again?). While I’m a big fan of what’s being made possible by the advancements of Web 2.0, I’m not convinced that the accompanying business models have been worked out yet even where the applications seem useful. And in a recent post by Fred Wilson, a VC with Union Square Ventures, he voices his concern with the fact that new ideas and companies are emerging which are effectively combinations of only recent concepts that themselves were not yet monetizable or proven before being gobbled up by the Web 1.0 or media companies feeding frenzy. Note the recent acquisition of Flickr and by Yahoo!, Dodgeball by Google, and to a certain extent MySpace going to News Corp (for the ungodly sum of nearly $600M on less than $30M in annual revenues, which is hardly justifiable on just about any measure) are examples of companies that went for values not commensurate with any real value metrics.

Anyway, all this to say, there’s still much work to be done on figuring how these great services will sustain themselves with real revenue models beyond what investors can afford to keep feeding them. But there sure are some neat things going on out there, so I’m not complaining.


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