Web 2.0 Didn’t Invent the Wheel

Are you reading The Drama 2.0 Show? If not, you should be.

One of the hard parts of blogging about Web 2.0 is trying to maintain a balanced view of the latest and greatest in web technology as a whole. Note that I don't say each news item or review, because there will always be good and bad. The Drama 2.0 Show, which I assume most people interested in Web 2.0 are already reading, doesn't take that tack. Instead, it focuses on debunking much of the Pollyanne-esque commentary that I think every blog about Web 2.0 sees. We all know the flag bearers for every “new” app: the Wikia zealots, the Scoble fan-boys… this blog flogs them all with equal relish (except for TechCrunch's Duncan Riley, who seems to hold an exalted status on the blog).

There was one particularly vitriolic response to the blog, however, which I reacted to first with uproarious laughter, then anger, then actual shock as the post sat with me for a bit. There is a divide in tech at the moment between a large faction of the 20-something 2.0 “innovators” and some of the old guard who are 30-somethings with more of a been-there, done-that mentality.

I've been alternately called out by commenters here at Profy as either “too young to know better” or “too old to understand.” For the record, I'm in the “too old” camp. I was a web developer during the Web 1.0 bubble, and worked at companies who were just as clueless as some of the Web 2.0 companies I see today. I worked on coding and doing QA for apps that were little more than features. My husband actually worked for a start-up rather than a more established company, and we have the pile of worthless stock options to prove it.

Web 2.0 has built upon the foundation laid by Web 1.0, but trying to claim that there isn't a bubble right now is just plain silly. The blogger in question claims that 20-something entrepreneurs are out there making money while “your day has come and gone.” Is this really the mentality of the current wave of “innovators?” Getting millions in funding does not equal making millions of dollars. Building an app that rakes in VC while having no way to make money (and ergo, eventually PAY EMPLOYEES) is not the way to ensure that a company has longevity.

Here's a clue: the companies who survived the 1.0 bubble are the companies who MADE MONEY. There were tons of 1.0 companies (many of which you young whippersnappers who were still in diapers for the first bubble probably never heard of) who were doing amazing things. But when investors woke up and realized that in order to receive a return on their investment, the companies had to be MAKING MONEY, suddenly that investment money dried up. eToys was once far from the KB Toys web site that it is now. It had innovative products, owned the BabyCenter.com site (see, 1.0 had social networking as well!), and cool commercials. Anyone remember Napster? We are still seeing companies (Qtrax, anyone?) try to find a business model to do what Napster did in spades. Look at Pets.com! They had a cool sock puppet! How come they vanished?

At the culmination of the bubble burst, F*ckedcompany.com was posting upwards of 15-20 companies closing a day. Many employees found out they were losing their jobs when they showed up to work and found places closed. Many of these companies even had business plans (something many Web 2.0 companies seem to find irrelevant) but their burn rate was much higher than their ability to bring money in.

Businesses can't exist in a vacuum. Investors will not continue to throw money at great ideas that make no money. The fact that Facebook has Google-perks without the Google cash train is a nearly identical successor to the mentality of Web 1.0 before the bubble burst. You can't spend money like crazy unless you are also making money like crazy. And the people who are still in this industry after living through loss of jobs (and worthless stock options) are only too willing to share lessons learned. The trouble is, people like this blogger think that it can't happen again, because adding the word “social” or “widget” in front of the same old “feature, not an app” idea makes it somehow more valuable.

Without substance, or the ability to make money, many of the companies we cover right here on Profy may make their way over to the F*ckedCompany Hall of Fame. And they won't have invented the crash and burn, either.