Some clients specifically ask midVentures about our experience making web 2.0 applications; and they specifically ask for a web 2.0 design. Some concrete business minds and potential investors will explicitly divorce themselves from Web 2.0 because of its low-profit buzz. But that begs the obvious question- what is web 2.0? I have identified a few core characteristics shared by most web 2.0 applications.
1. User-generated content. Information, text, photos, events, connections- once upon a time the author or company staff would be solely responsible for creating the content. Essentially- web 2.0 means users create the content for the company- such as profiles on facebook, videos on youtube, articles on wikipedia.
2. The basic usage is free. Web 1.0 enjoyed a subscription-based membership model and revenue stream- and many business plans flooding competitions and VC desks still wear the hat of the paid web 1.0 subscription model. Now- basic usage is free; to encourage a critical mass of users necessary for exponential growth, and leverage of emergent revenue streams; such as ad revenue, premier subscriptions, or optional features. Linkedin is basically free- allowing it to reach a critical mass of users, and therefore I pay $15 a month for p2p network messaging.
3. Interoperability of information. Web 2.0 applications actually endorse the use of API’s (application programming interface) which allow 3rd parties (other websites) to query and post their own info. For example, Google Maps has comprehensive geographic data- and any other website can plug google maps into their site, leveraging the interoperable information. The reason for free interoperability- you become more necessary to other companies- you get more traffic by proxy- and you get publicity as an information-friendly company.
4.
Rich User Experience. Obviously craigslist with its innocent grey still falls into the web 2.0 bracket without a necessarily rich UI (user interface); but browse around
kayak.com,
elance.com,
facebook.com,
netvibes.com, hulu.com- and you realize that the website becomes more of a control panel for interacting with information and media. Web 2.0- where a critical mass of users is more important than subscriptions and proprietary information- must therefore make the experience more enjoyable to the user. That’s why adobe flex (
flex.org/showcase/), microsoft silverlight (
silverlight.net), and ajax (used by gmail, google maps, google calendar, etc) are attracting the new generation of talented developers. Turn the website into media-rich software- which attracts more users.
5. Questionable revenue streams. Developing facebook apps and iphone apps are a decidedly web 2.0 behavior; amidst the tenuousness of their revenue. Amazon.com, founded by Jeff Bezos, is a coutner-example- where some web 2.0 companies overtly over-analyze every financial figure before launching their app- and there are 99 netvibes for each amazon. In web 2.0 land, you build something really cool- and think about revenue once you reach critical mass. Facebook, for example, has yet to find a revenue stream that simply covers its costs.
But there is also a basic web 2.0 philosophy behind the business. When you live and breathe web 2.0, you make sites that take 2-3 months to develop, and maybe 2-3 years to grow and sell. You capitalize on information opportunities in order to make strategic apps that larger players (who move slower) want to acquire. For example, chicago-based Feedburner took 3 years to get acquired by google for a sizable amount. Web 2.0 can be whittled down to using every possible technology and opportunity to build and grow something fast.
I do not endorse web 2.0 as a required new venture standard- but I definitely endorse speed in development and growth as a critical competitive edge over larger but slower-moving competitors.
