Champions of Web 2.0 see a shift to more participation by the public

By Scott Kirsner  |  October 10, 2005

SAN FRANCISCO -- ''What year is it again?" asked the guy in front of me at
the bar, obviously having a flashback even before he'd downed his first
glass of wine. At the Web 2.0 Conference here last week, the calendar may
have said 2005, but it felt like 1998 all over again.

Venture capitalists were once again dealing out business cards. ''Half of
Sand Hill Road is here," said Venky Ganesan, a VC with Globespan Capital
Partners, referring to the main drag of Silicon Valley investing.
Attendees crowded the halls of the Argent Hotel downtown, trying to peek
inside packed pitch sessions.

Entrepreneurs were touting the merits of creating a product and letting
people try it before they devised a plan for how to earn money. The word
''eyeballs" (referring to visitors lured to a site) was once again
uttered, unironically.

This time around, though, the battle royal involves Microsoft trying to
squash Google, rather than Microsoft scheming to cut off Netscape's air
supply. And while in the mid-1990s pioneering companies were still
explaining why the Web mattered, pushing for broader adoption of
high-speed connections, and trying to nudge transactions online, in 2005,
most people understand that the Web is a pretty powerful medium -- whether
for conducting business or for wasting copious stretches of time at

The case being made by writer and entrepreneur John Battelle and publisher
Tim O'Reilly, the two organizers of the Web 2.0 Conference, which gathers
Internet and software innovators to show off their next-generation ideas,
is that we're in the midst of another shift.

They see a second rev of the Web taking shape, one where it's much easier
to participate. That could mean starting a blog or producing and sharing a
snippet of video, or collaboratively working on a Web-based document.
Wikipedia, a community-authored encyclopedia, is an example. It might also
be by ''tagging" content, attaching words to describe an audio podcast, so
that, for instance, someone might be able to quickly view every podcast
that dealt with cars. Companies that grok the Web 2.0 ethos try to learn
from their users to improve their products over time. They're often
''lightweight" companies, to use the Web 2.0 lingo, requiring just a
little bit of funding and a few employees. Often, those employees rely on
prefab modules and open source software in putting together a product.

''In the Web 1.0 era," said David Hornik, a venture capitalist at August
Capital, ''when a company raised $10 million, they spent $2 million on
servers from Sun, another $2 million on software from BEA, another $2
million on Oracle software, and then they'd have only $4 million left to
actually build the thing." Now, companies can spend much less money on the
necessary technical infrastructure, and more on realizing their idea,
Hornik said.

(August Capital is, of course, on Sand Hill Road; Hornik is one of the
first VCs to maintain a blog, at

Web 2.0 companies seem to be concentrated in Silicon Valley, not Boston.
Mike Hirshland, a general partner at Polaris Venture Partners in Waltham,
told me he has been doing a lot of prospecting for deals on the West Coast
and expects to finalize an investment in a Web 2.0-type company soon.

''You don't hear the term Web 2.0 much in New England," he said. The lone
local company that was demonstrating its technology at the conference was
Brightcove Networks, a Cambridge firm that is building a system to enable
anyone to publish video on the Web and then make money when it's viewed,
either by inserting ads or charging on a pay-per-view or subscription

One reason is that Boston entrepreneurs and venture capitalists are
oriented toward developing technologies that will appeal to corporate
customers, not consumers. Web 2.0 companies like or (both owned by Yahoo) are focused on serving consumer needs,
such as, respectively, sharing photos or information about upcoming
events. Even those geared to corporations, like or, approach the task from an unorthodox perspective, building
a fan base among the lower ranks of a customer's organization with
inexpensive products, rather than selling pricey software packages to the
top IT executives.

Ross Mayfield, chief executive of Socialtext, calls this ''bottom up"
adoption, where rank-and-file workers discover software that makes their
jobs easier, and that software eventually spreads throughout the company.
''All great productivity applications -- e-mail, instant messaging,
spreadsheets -- have not been brought into the enterprise from the top
down," Mayfield says. ''They've done it from the bottom up." Socialtext,
based in Palo Alto, Calif., sells software that helps employees
collaborate on the Web.

Some worry that the term Web 2.0 is in danger of being overused, deployed
by marketing mavens at start-ups to whip up the same kind of froth and
frenzy that ''dot-com" did a decade ago. Tim O'Reilly, in kicking off the
conference, mentioned that he'd found 10.7 million citations of the term
in Google. ''We definitely are running the risk of another hype cycle," he
acknowledged. ''Let's focus on the substance."

That will be a challenge. When Silicon Valley gets excited about a meme --
a Web 1.0 term for a new concept or idea -- like Web 2.0, everyone gloms
on and dozens of copycat companies sprout up like Tribbles. But out of
that process, important players sometimes emerge. There's also lots of
wreckage, as we learned during the aftermath of Web 1.0. Google was just
yet another attempt to build a useful search engine -- until it became
something much bigger. Flickr seemed like just another photo-sharing site,
until users discovered the value of adding descriptive tags to their
photos, and sharing them with the wider community.

''Everyone gang-piles onto a concept," observed J.J. Allaire, chief
executive of the Cambridge start-up Onfolio, which collects, shares and
organizes online content, ''and maybe something good comes of it."

Scott Kirsner is a contributing editor at Fast Company. He can be reached

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