Daily Archives: August 22, 2006

Mike Arrington – Selling eggs and serving beer to the Web 2.0 miners

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In the California of 1850 the Gold miners rarely struck it rich, but many of the saloons, shops, and others who offered the miners a supporting infrastructure did very, very well.

156 years later things have not changed all that much.   Tens of thousands of people flock to Silicon Valley to make their fortunes.   They mine for electrons rather than gold, but only a handful strike it rich.

Enter Mike Arrington, the charming and very sharp fellow who runs TechCrunch, arguably the top Web 2.0 information watering hole in the blogosphere.

CNN Money has a great article about how Mike and a handful of other bloggers have launched publishing empires, rising from obscurity to international prominence over just the last few years.

Although Arrington has his hand and money invested in several Web 2.0 startups, I predict that, like the saloon keepers of 1850, his key contribution will be as a facilitator and information provider.

Cheers 2.0 Mr. Mike!

First Scoble, then Battelle! Web 2.0, are you bubbling?

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John Battelle, always insightful, is worried about Web 2.0 as a bubble.    Given that he’s one of the great 2.0 enthusiasts this comes as a bit of a surprise.    John writes:

… one of the really cool things about Web 2 is that you can keep making new companies, see if they work, then disassemble them and try again. Only, that won’t happen if the companies are kept falsely alive by a preponderance of venture capital and VC-related spending …

It’s a very provocative point, and I can see this happening during trips to Silicon Valley where some of the efforts simply … suck … yet they have enough funding to keep on trying.   I’m not even convinced some of these folks believe in their companies – they just show up at the trade shows and go through the motions until the money runs out, then head to a new gig.

That said I’m not as worried as Scoble or Battelle about a bubble, because I think this is what is going on right now and I think it’s a healthy and natural, though “new”, model for business development.

* The internet business ecosystem is inherently unstable and ripe with uncertain outcomes.

* This instability and uncertainty leads to an experimental, rather than “sweat equity” approach to  building businesses.

* For the Venture Capital community the best approach is to fund many Web 2.0 startups at modest levels, hoping that perhaps one in ten will become a solid business OR an aquisiton target and yield 10-100x the VC investment.

* For the big players like Google, MSN, Yahoo, the best model is to let the new 2.0 companies shake out on their own and aquire the successful ones as Google did with Keyhole maps, Picasa, etc, etc and Yahoo with Flickr, del.icio.us, etc, etc.

Ummmmm …. but what is the best model for aspiring 2.0 companies?    I think it’s to stay away from the VC fray and build lots of *inexpensive* experiments.     One of the best examples of this approach is the brilliant site PlentyofFish.com by Markus Frind, which started almost as a lark and has become a top tier site in a short time.