Why the Web 2.0 Expo Bummed Me Out

I spent part of the day at the first full day of the Web 2.0 Expo. I have to say that I wasn’t super psyched about this show for some reason, but I had a hard time putting my finger on exactly why. The source of my dour attitude suddenly became clear when John Battelle made an off-hand remark about how some of the companies on stage were founded during the “Golden Age” or web 2.0 start-up companies. Then I read this post by Rubel. Thinking back on the days when Digg, SixApart, and other companies were founded, I was able to finally put my finger on what’s different and why I am a bit bummed out about what’s happening in the web 2.0 world. If you don’t want to read beyond here, suffice it to say that my critique/commentary applies to web 2.0 companies that were started after the sun had set on the “Golden Age” of this nascent industry:

The media outlets who care about web 2.0 are crowded – A few years ago, the re-emergence of the consumer Internet was a big story. I think we’ll look back on the BW cover story on how many of today’s web 2.0 super stars “made” crazy amounts of money as the first sign that we had reached a peak. There is only so much space on TechCrunch and other outlets who are focused on what remains to be a largely techie phenomenon.

Distribution is extremely dear and not getting any cheaper – Every time I look at what a commanding (and growing) share of search traffic my employer (Google) and those other guys (Yahoo, MSN, and Ask) control, I continue to wonder how new start-ups will get discovered beyond the core 1-5 million web 2.0 junkies. Without good SEM/SEO strategies or ridiculously good PR, it’s getting harder to build a business that grows to real web scale. Making matters worse, some of the “new” distribution platforms (MySpace, Bebo, etc) are showing themselves increasingly unwilling to allow others to build meaningful businesses on the backs of their user bases.

Few of these companies have broken out beyond the core web 2.0 crowd of users nor do they show any prospects of doing so soon – Many of our most “celebrated” companies in the web 2.0 space are in the low single digit millions of users. Maybe some of them will break out. In scanning the attendees and looking at the landscape, I didn’t see or hear a lot of ideas or concepts that had mainstream appeal or opportunities. Maybe I’m wrong, but it’s just my gut.

What seemed to gnaw at me during the whole presentation was the basic notion that these changes hadn’t taken place. So many of the folks I spoke with or listened to were describing company building models or strategies that worked in the “old days” when distribution was slightly less concentrated, when the press was not bloated with stories about new consumer web companies, and when the incumbents were asleep to the opportunity. The world for web 2.0 startups is really different now. I’m not convinced that it’s changed in a way that means start-ups can’t succeed, but I think a lot of the other fundamental web 2.0 precepts (cheap development costs, relatively inexpensive user acquisition, building a business on the back of another existing or emerging network,  and other such ideas) should be retired into the world of folklore.