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The definition of web 2.0 businesses

Bill Liao on 28.12.2006 at 02:14 h

Yet again I was asked today to define the term WEB 2.0 and because my inquisitor was a professional investor with little technical background I felt compelled to come up with a good, crisp and non-technical answer.

The investor in question also passed on a little humor, that has been running around the net, in that she inquired drolly whether she would loose twice as much money investing in WEB 2.0 businesses as she had done by investing in WEB 1.0 businesses.

It came to my mind that this piece of humor is unfair because a particular feature of well constructed WEB 2.0 businesses is that they tend to have low variable costs (particularly marketing and capex). The perfect response then hit me as I mused on this point... so I said... " Oh no thats the difference right there! WEB 1.0 was all about BURNING cash whereas real WEB 2.0 businesses are all about EARNING cash!"

So lets all earn it rather than burn it in 2007!

Happy New Year!

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The Definition of Web 2.0 Businesses from "DiTTES.iNFO BLOG"

Bill Liao hat zum Jahresende eine sehr interessante Erklärung zu dem ganzen Web 2.0-Business geliefert: WEB 1.0 was all about BURNING cash whereas real WEB 2.0 businesses are all about EARNING cash! ... [Read More]

11 Comments

steve wrote on Dec 28, 2006 8:40:05 AM:

Dear Bill,

I would say

Web 2.0 = 2x E[ROI(Web 1.0)]

And season greetings to you and your community.

P.S.: has been quite quite on this blogspace since the IPO of XING ;-)

Marcus Brown wrote on Dec 28, 2006 10:06:43 AM:

I would seriously reconsider whether you would want this person to invest in your business.

Bill liao wrote on Dec 28, 2006 11:00:53 AM:

Actually we were not talking about investing in our business she was asking me about the subject as a friend and we were just musing on the current trend for WEB 2.0 M&A as she has been trying to figure out what makes it tick.

Oliver Thylmann wrote on Dec 28, 2006 9:46:38 PM:

First version of a product is often a failure. Second will succeed if the trend is correct. So here people are, still selling shoes on the internet but this time as a multi million dollar business. Just as one example. That is web 2.0 from an investment perspective. Otherwise, you can find a new meaning for every other perspective.

Greetings,

Oliver

Bill liao wrote on Dec 28, 2006 10:36:05 PM:

I agree a lot of second movers have been super successful.

Emil wrote on Jan 8, 2007 3:31:16 AM:

Actually there is no difference between web1.0 and web2.0: Quite none of the companies involved in any of the versions had or have a working business plan. It was (is) all about having traffic and popularity and yes, burning money. The situation became even worse with web2.0: In between technology has become just a means to an end (as it should): Completely demystified without any own value. Today communities are here, tomorrow they will be elsewhere. Investing in such a volatile market can be very profitable but will most likely be disastrous for many investors just as it was several years ago.

sparky wrote on Jan 9, 2007 11:07:58 AM:

FYI:

Is the Web 2.0 Bubble Bursting?
http://www.redherring.com/Article.aspx?a=20633&hed=Is+the+Web+2.0+Bubble+Bursting%3f

"The site that got its start during the bursting of the dot-com bubble, F**ed Company, is on a roll these days."

Bill liao wrote on Jan 9, 2007 12:36:23 PM:

From reading the article it is difficult to say if it is a bubble in the first place as it seams to say that the VC expansion might stop before it pops.

While the article talks about layoffs at many startups it does not talk about the many companies that are hiring.

Apparently though it is not very comfy having to raise third round VC money in the US right now.

Tim Rohrer wrote on Jan 16, 2007 2:37:03 PM:

Hi,

thanks for this discussion!
I think there needs to be another technical element within the solution to call it Web 2.0.
Have a look at http://www.zpeech.com
or try it on http://www.zpeech.com/xing.com
This Web 2.0 enables you to comment any Website on any Website. That is another level to the internet.
What do you think?
Tim

Bill liao wrote on Jan 16, 2007 5:17:23 PM:

Interesting site I have seen browser plugins that do something similar still it is user generated content and derivitive information both hallmarks of web 2.0

vaperumeMup wrote on Jul 20, 2007 9:45:43 AM:

Communications
In a rapidly moving news environment, FDF operates a 24/7 press office and provides communications support to members [url="http://www.marikina.gov.ph/mrknaforum/forum/viewthread?thread=3649"]FDF[/url] is the voice of the UK food and drink manufacturing industry. We work hard to promote the interests of the UK's most important manufacturing sector.