Friday, November 10, 2006

Web 2.0 Report

If I had to sum up a simple message from this years Web2.0 I would say that it's the realization that the Internet IS the platform and let's stop talking about it and start getting on with it. AOL announced that they will open AIM. Their new slogan "open in every way." With Google, Amazon, Yahoo and you can implement a very sophisticated application and host it virtually for free. Marc Benioff has put aside the whole 5th floor of the old Seibel building (which he got cheap) for entrepreneurs to create mashups that salesforce will help them monetize.

The implication of this is certainly felt by the VC community which judging from the attendee list was very well represented. Today a start-up can create a product with free Internet software services from Google, Amazon, AOL, Yahoo and Gather a critical mass of users and create immediate value. This new formula for success has very low risk and potentially very high return. The key is identifying a problem and optimizing everything for the user. The prime example of the power of user generated content and listening to what users want is Craig's list.

Craig's list CEO, Jim Buckmaster put it succinctly saying "defer to users early and often." Craig's list is the 7th most visited Internet property but only has 18 employees which is several orders of magnitude less than anyone in the top ten.

In fact many of the start-ups indicated that their VC money was still in the bank. In the session with Ram Shriram and Roger McNamee both agreed there is a lot of money out there for Web2.0 companies. After a question from a young entrepreneur on how much of her company to give up to VCs the question of smart money vs. dumb money came up. Roger pointed to Ram saying "he's the smart money." Roger went onto say the the best way to know the smart money is - If you can call (your investor) with good news or bad news at 2AM then that's the smart money. Ram shared his criteria for investment. He looks for the passion of the founders. If they have found a problem to solve and are passionate about solving it, then he's in. It's not a question of understanding the business plan. That can come later.

In the session with Jeff Bezos, Jeff explained that Amazon's biggest cost is idle time. This is why they are making Amazon's infrastructure available at a very low cost as services over the web. Some of the prices he mentioned.
  • S3 - 15 cents GB/month
  • EC2 - about $70/month
  • Alexa Web Search - 30 cents/1000 requests

The computing is completely elastic. In the future you will be able to send inventory to Amazon's warehouses with a webservices call. Later you can send specific items anywhere with another webservices call. This is further proof that you can easily leverage all of Amazon's infrastructure at very low cost to build your own company.

The other main theme was how convergence of media and the Internet is creating disruption. The buzz was all about Google's acquisition of YouTube and the problem of digital rights that exists every where user generated content is published. It seems a problem that can be solved with a lot less posturing then we're seeing. The rumor is that Google set aside $500M to pay for content rights in the YouTube acquisition. This video of Colbert makes the point.

To set the stage for irreverence, the conference featured 40 shorts. This one opened the conference.

From The Desk
From the Desk

Richard Treadway

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