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« "Do Not Track List" is the First Shot in the Behavioral Targeting Wars | Main | Getting Service the Old School Way »
Monday
Oct292007

The Web 2.0 World is Skunk Drunk on Its Own Kool-Aid

KoolaidmanThis is a sad time for the web. It's as almost somber as the time just before the last bubble burst in 2000. I was working in PR with dot-com startups at the time and the way I feel now is how I did back then. I wish I didn't, but I do. Something needs to be said. Even if no one listens or cares what I think.

Now, it needs to be noted that I am as optimistic about technology's long-term impact on business, society and marketing perhaps as much as anyone you know. I bet my career on digital marketing. However, since I started this blog lots of people have rightfully made fun of how much I touted every little new site to come along. Their criticism is accurate.

However, over the last year my thinking has evolved dramatically. I have become less interested in every new shiny object and more engrossed in the social changes it, slowly, effects. This is in part a byproduct of the tech blogosphere getting drunk on its own Kool-Aid.

Many people I know, love and respect are heralding every new site as like it's Jes.usR.com. No one's casting a cynical eye anymore. No one's looking at valuations and reality - or at least very few people are.

The endless dot-com parties are back. So are the countless trade shows/conferences that regurgitate the same "new paradigms" the last 10 events did - with no end in sight. And yes, the ridiculous BS press releases are flying into my Gmail box. This is why I don't speak at or attend very many Web 2.0 conferences anymore. I don't have the heart for it. I would be stirring the big pot of Kool-Aid.

Let's face it, we're skunk drunk and it's because of money. It's almost like we all need to enter Betty Ford Clinic 2.0 together. This time, it's not stock market money but private equity, M&A, VCs and to some degree the reckless abandonment of logic by some advertisers who are perpetuating what is sure to end badly when the economy turns. Hubris is back my friends.

The bubble really began in earnest on October 9, 2006 when Google bought YouTube. That's when every person with an entrepreneurial itch woke up and smelled the hype and money. Prior to then, startups were more focused on the entrance, not the exit. But the Google YouTube deal and many others that followed (including big time investments) really opened up the floodgates to money and it changed the attitude of the web.

Meanwhile, the sleeping giant many of us mocked - the big media - got with the program. CNET's CEO talked about this today. The TechCrunches and Gizmodos of the world aren't a threat to his business. They're a boon because they send his sites traffic. Beth Comstock from NBC echoed a similar theme.

I am sorry to be a party pooper on conventional wisdom, really. But I miss the days of 2004 when the class that includes Flickr, del.icio.us and others started. They really were about changing the web, not making a quick buck (they did so only because they added value). There are companies still out there like them. Twitter is one I believe takes this approach. Automattic (the company behind Wordpress) appears to be another. Dave Winer also shares this spirt. He creates services like NYTimes River because it's fun and he thinks it will add value to our lives (and he is right).

However, most of the rest of today's net startups are only after the almighty dollar and while that's capitalism, it saddens me because it has done little but breed hubris.

Reader Comments (59)

I hear your point.But a startup must try.It must try to create some hype.All I'm saying is that it's not bad to try to make a successful service in and of itself, and use whatever means possible to get that service in front of users.It's only bad if we aren't critical, and we are.It's only VC's that need worry about what you are suggesting. If a service has value, users will recognize that and use it.In other words, hype dies, but useful services won't.
October 29, 2007 | Unregistered CommenterMatt Terenzio
One more thing. Don't avoid conferences. We need rational voices like yours, not the watered down voices that are starting to proliferate these conferences. I'll stop going myself.
October 29, 2007 | Unregistered CommenterMatt Terenzio
Sure, but you fail to mention any concrete example of things that really made you have a change of heart.

Maybe you should check out startups that started before the "quick buck" phase, let's say, something like Sampa (www.sampa.com).
October 29, 2007 | Unregistered CommenterMarcelo Calbucci
Hey Steve, it's not all that bad. I'll admit it's getting a bit crowded and it does smell like the late 90s, but I think part of your concern was that you were in the middle of alot of this. That's OK too, when others were skeptical the young turks said change or die (or something dramatic like that).

Remember I wrote in BrandWeek in 2005 companies should test podcasting with about 5% of their marketing budget. You thought that was too much back then.

No, after you get it off your chest and you return to normal from the high tech rush, the picture will be clear. It's just the way capitalism gets the cream to rise to the top want discards its wannabes that didn't, at least this time around.

Newspapers are not going to die, they will change not die. Television will not go away, it will change.Advertising will need to be more accountable, but it too has a valued place in a free, competitive, world market.

The frightening question still needs to be answered. With all the fragmentation, how are new content producers going to make enough money?

Sure everyone is there own journalist, producer, radio station yada yada, but will they be able to quit their day job?



I will be 49 years old in December. I have one foot in the old school dock and the other in the new media boat. I have five childern the 18 year old about to go to college in a similar way that I did. (Albeit registration is a hell of a lot easier) My 9 year old twins, however I'm not sure what college will look like for them, online, in China, or will they even need formal schooling?

It's enough to make you want to stay in bed, but then you'll miss the next post, or twitter, or IM, or text...

October 29, 2007 | Unregistered CommenterAlbert Maruggi
Oh geez....I thought *I* was the only one whose eyes were glazing over.

I was at Vignette during the dotcom heyday and businesses-afraid-of-getting-disrupted threw money at us. Neighbors bought stock in companies with sock puppets as mascots. A guy I deeply respected started a dotcom and wanted me to run sales...but my gut told me the value prop was marginal and I went with that. I thought of myself as a wimp who was WAY too cautious...but that caution was borne out in March of 2000 and I've never looked back.

Right now there are so many value propositions that are marginal -- and invisible since they can't ALL get our attention -- that I can't keep up AND THAT IS WHAT I DO as a management consultant in the so-called Web 2.0 and internet-as-a-platform space. I read 160 blogs, 35 trade rags and digitally converse with dozens of connected and smart people per week and none of us can stay abreast of what's happening as the "shiny objects" ship and get our attention for the moment.

My experience with Twitter is one example (though you're a devotee I see). I signed up, lots of friends were on it, I started to tweet and then thought, "Wait...do I really want to tell everyone where I am and what I'm doing? Do I really want to be interrupt-driven more than I am with all the input already coming in from so many sources?" My answer was "turn it off" and I did seven days later.

It's time to assess what's meaningful and what's not, though we believers in Darwinian theory know it will take care of itself.
October 29, 2007 | Unregistered CommenterSteve Borsch
Thank you so much for your objective honesty. I'm feeling the exact same way as you (and so I have left the entire Web 2.0 marketing fold). Recently I made a tough decision, and it means I'm moving out of Silicon Valley because it removes me from the ease of marching in step with what is feeling like a homogeneous hive mind. One blog reader asked me why - below is part of a private email exchange:

I know you mean well, but there's pretty much nothing that is going to convince me to remain in the Bay Area. Not saying it isn't right for others.

Today it reminds me in many ways to the Bay Area that I didn't want to move to in 2000. At that time the start-up I was with was going to move here in the next round of financing. That never came to pass because the whole startup funding and IPO market as you know imploded. Anyhow, it was my intention to figure out a way to leave the engineering team behind in SLC (I was CTO) because I thought Silicon Valley was - singularly obsessed. Fun to visit, but don't want to be sucked into its vortex.

In Oct 2002, I moved here because it was "sobering" up" and because I needed a more open-minded community to live in. At that point in SV, people were more contemplative, reflective, taking stock of what was truly important, etc. It wasn't the same vibe as 1999. At the same time, I did move here precisely because I wanted to be positioned for the next wave of startups - figured everything moved in cycles and Silicon Valley was still going to be at the heart of it.

I never anticipated that it would take so long for the Internet to be back in vogue (I worked in 'Net from '95) and that in the interim while I was "waiting" for the next wave of startups, that my passions, purposes, and motivations would radically shift.

About 18 months ago, it seemed to be a pivotal point here. Historically I thought it was like Florence maybe before the Renaissance. After a while you have so much wealth and so many riches from wool trade and the new world of banking finance, that they started applying that wealth towards the beautification of the city spreading the abundance into artistic, spiritual, and cultural endeavors too. However, as the economy (particularly Web 2.0 / VC-driven) kept getting better over the last 18 months that is not at all what happened here - it seems rather that those with the cash use their wealth to pour it back into other startup ventures - either their own, or as an angel.

I don't want to fight the tide, and I don't want to convert anyone. Not my thing. I'm a big Oscar Wilde fan, and he said: "Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live."

October 29, 2007 | Unregistered CommenterEvelyn Rodriguez
One big difference between the Prom and Conferences: The former spikes the punch with booze, the latter spikes the booze with Kool Aid.
October 29, 2007 | Unregistered CommenterSeth E
100& TRUE!
October 29, 2007 | Unregistered CommenterYorkali Walters
All true, except why you're feting that clunk delicious stuff boggles me.
October 29, 2007 | Unregistered CommenterProkofy Neva
This may be the best and truest thing you've written in a long time Steve - maybe ever. I attended more conferences this year than I ever have and to be honest, by the end of the run I was so overwhelmed with indifference that I have been quietly celebrating the fact that I don't have to go to any more this year. It's all sound and fury... you know the rest.

I agree with you about Twitter and there are a few other companies that have eschewed the easy M&A bucks to pursue an idea. Kudos to them. Too many of the companies I've taken briefings from this year left me wondering why I was supposed to care about what they're doing.

The Kool-Aid no longer satisfies.
October 29, 2007 | Unregistered CommenterMarc Orchant
Marc Orchant: I find myself nodding in agreement with you.

Steve: I've been feeling uneasy for some time. This post makes me understand that unease a lot better.
October 29, 2007 | Unregistered CommenterRobert Scoble
Not all of us have drunk the Kool-aid/become "Fanboys"!
October 29, 2007 | Unregistered CommenterMark Mayhew
Not all of us have drunk the Kool-aid/become "Fanboys"!
October 29, 2007 | Unregistered CommenterMark Mayhew
I'm not employed in the higher high tech industry per se, but I find myself having to take a step back at times and re-evaluate whether things are worthwhile.

I'm learning a lot from following the conversations on Twitter, but I'm forced to admit that most of the content won't help me define requirements for better widgets at Megacorp (although some of the content may help in ways I don't even realize).

Now whether I'd put some of my money behind these ideas is another matter entirely. I enjoyed the Scoble 4:59 video shot on the freeway, but 99% of Americans wouldn't. When I asked my 100 close personal MySpace friends if any of them were Twitterers, not one responded in the affirmative. And it's probably a coincidence that so many of my physical friends have MySpace accounts. Can companies make any money when so many of them are chasing so few people?
October 29, 2007 | Unregistered CommenterOntario Emperor
Steve, you may be right in the narrow sense, but there's so much new technology coming out, I can't see how this is true in the larger sense.

Yeah, the hype machine must be going strong now in the tech/VC community, but just like Washington politics, you guys need to be careful you don't lose touch.

I don't, for example, understand why everyone's so down on YouTube. Maybe something better will take their place, but right now all my kids, from 7-19, are really into it. There's also all sorts of business and learning possibilities just beginning to be explored. Certainly it's got to be a big market there for somebody.

My paradigm for internet investment is that it will parallel the American railroads. The first round of big railroad investment mostly flopped, but the second wave of growth/investment was the real deal and lasted a long time.

Besides, even if the supposed web 2.0 bubble were to pop, I doubt it would slow down tech startups much, with costs down so much.
October 29, 2007 | Unregistered CommenterGordon R. Vaughan
As others have said, one of Steve's best posts. I'd stopped reading Micropersuasion a long time ago because I got tired of the constant cheer leading. Coming from the world of enterprise, the degree of hubris never sat comfortably so I guess what's happened is that Steve has found what most of us in enterprise land already knew. Despite constant abdgering I refused to turn up at Office 2.0. Not because it was a lousy conference but because it seems most conference organizers have gotten lazy and failed to recognize there are more voices out there than the 'usual suspects.' Plus, change is a lot harder than people think. I guess Steve's found that out the hard way. But full marks for making the point. humility counts. Now let's all move on.
October 30, 2007 | Unregistered CommenterDennis Howlett
I agree about the hype. However, the only thing that bothers me about it is that I personally am not in a good position to make lots of money from it.

You know, back in pre-bubble days, my rational mind prevented me from believing any the hype, thus I didn't join one of the startups with no business model, and I didn't make a quick exit with lots of cash. After that, I had small children, so joining a startup wasn't an option.

Now I am older and wise enough to know that I don't care whether they have a viable business model, as long as I can get cash out of it. You might think that sounds greedy but actually it's just cynical. Someone is going to make cash from this bubble, so it might as well be me. I have to work at a day job, so it might as well be for a company with a potential exit in the short term.

So please just let me know if you know an Israeli startup looking for a savvy marketing person. I'll take care of getting the required hype.

October 30, 2007 | Unregistered CommenterRebecca Rachmany
For those of you who still are looking to get drunk on the Web 2.0 Koolaid, I keep a feed just for you: http://www.google.com/reader/shared/14480565058256660224

Tons of "new shiny things" for you to consider.

My favorite quote from Twitter tonight:

Chris Chapman says: "the good thing about my feed reader is that 5 minutes after I've read everything, there's usually something new. this is also the bad thing." http://twitter.com/trioptimum/statuses/374600282
October 30, 2007 | Unregistered CommenterRobert Scoble
The get-rich-quick schemes will fail, as usual. Not all of Big Media is getting with the program, either. Just look at Hulu. Yes, I know they're your client. It's not your fault they suck.

What tech bloggers need to do is tune out the hype -- be it from get-rich-quick schemes or Big Media flops -- to get to the real gems.
October 30, 2007 | Unregistered CommenterMike Abundo
Hi,

Please check out this week's version of Grand Rounds at http://runningahospital.blogspot.com/2007/10/grand-rounds-volume-4-number-6.html.

Many thanks.

Paul Levy
October 30, 2007 | Unregistered CommenterPaul Levy
For me your post is another sign of us entering the digestion phase. The rush started for me with companies like Flickr which showed us that we can make the Internet a better place. Same with YouTube. Now I've been seeing a number of Web 2.0 companies recently and I'm failing to answer the biggest, hardest question of all when I see them, "So What?". Too busy doing what we could, not enough time wondering if we should.

Thanks for this Steve.
October 30, 2007 | Unregistered CommenterStewart
Steve,

You show signs of what I'd call a hangover. A hangover from drinking, in fact, too much of that Kool Aid. I'll give you the other version... Not everyone building new web apps are drinking the Kool Aid.

BTW, Flickr was, in words of their founders, an accident. They didn't build it to change the web, and little they knew. Do you really think that every startup today is launching simply in the hopes to be acquired? One reason people are building web apps because it's darn easy and darn inexpensive to do so, and I bet they all know that their chances of being acquired is 1 to 100.000. Should they stop? Hell no. Why should they? Because a guy named Steve and another guy named Dave think they're after the quick buck and their work is pointless and meaningless - mainly because neither Steve nor Dave see value in it? The world is a huge place, and today there are a lot more people on the net who don't know what the hell is that web 2.0 thing, than people who does. I know, it's a shock, but it's true.

Another reason people are building things is because they think what they do does add value - they REALLY do. To that respect you mention Dave Winer. Of course, the guy gets all the attention he can get. Change the name Dave Winer for John Doe, and you wouldn't even know what NYTimes River is, and if you read about it on TC, chances are you wouldn't pay any attention. After all, if Dave sends you an email telling you about that project, you'll read it, you migth try it and you might even send him feedback personally. Do you read all the pitches from unknown Doe's? Of course not, and I don't blame you. But I do blame you for using Dave as a good example. Use someone most of us don't know. Scoble does that really good and he does it all the time. He adds value (even from his own personal view) every time he does it. You mentioning Dave and his pet projects here didn't add any value to me whatsoever.

Anyway, I know quite some "little people" who do that same thing Dave does with A LOT more heart than him. You know why? Because he's not risking anything. He doesn't have to. But these other guys are. They're giving up a happy monthly paycheck so they can build things they believe in. Too romantic for you? It's hard to see with 20 new services/startups popping up every day, but it's happening. Dave is a commodity to himself. The guy is smart, he most definitely outsmarts me 100 times, but I also believe that people who are working their butts to build their dreams should not give a rats ass about what Dave has to say about what they do. The really great ones won't. And thank god for that!!

Once a friend of mine told me how screwed our youth are: sex, drugs, getting wasted every wekend... Sure, we have that and it's a problem. But there are also a lot of youngsters who are healthy both in body and spirit. They do sports, the work hard, they'll make us all proud in the next Olympics or whatever.

You're talking about the sex and drugs of this so called 2.0 thing, but on the other hand, there are great people doing great things, building really cool services. But the field is too crowded and it's getting harder to spot cool stuff. And some really great people working on amazing projects might see their projects die because they came when the hangover levels were too high.

On the other hand, I do agree to an extent the financing part of your post, but that's because there are many VCs also drinking the Kool Aid. But like entrepreneurs, not all of them are.
October 30, 2007 | Unregistered CommenterRBA
I have observed that blogs sprout everywhere but instead of creating value, focus has been on monetization.

Earning thru blogs is not bad but there should be balance on things.
October 30, 2007 | Unregistered CommenterSonnie
"I said so" really is a hollow consolation isn't it? Wait, I need to post this on my Tumblr account. I don't attend many conferences, but I should. I don't know enough about search or analytics. Never will have it cold. And neither will you. Yes, you, reader of this post. You need to constantly be filtering the good stuff from the bad. Just the modern cycle.

The difference now is Google and the massive advertising dollars it is bringing to the market. The market has been validated and is drawing dollars that frankly should have come in those "bubble days".

If you can't keep up, then you're not curious enough, and rest assured that 22 year old junior staffer can . . .

Always good to be cautious, but this time it's a little different.
October 30, 2007 | Unregistered Commentermjmantey
Geez, I didn't think we were at that stage yet-- but I suppose we are. I have been cognizant of the Kool-Aid, or "New Media Fishbowl" mentality for a long time. Many of us have personal reasons to ride it.

One thing to remember about Bubble 1.0 is that after all the carnage, a relatively small number of companies with good ideas and smart business plans survived and thrived-- what the heck is a Google anyway, right? Another group got purchased or otherwise cashed in at the right time. The rest, well..

This is part of the process--is it any different than other industries? How many ridiculous TV pilots get greenlighted? How many drugs go through FDA trials vs. how many make it to the big time. Everyone thinks they have a great idea, and a few will really, truly make it out of the fishbowl. I argue that the process and the eventual pain are worth it.
October 30, 2007 | Unregistered CommenterDoug Haslam

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