Nat Turner

Myware

I recently read a very interesting post by Fred Wilson that discussed the emergence of "myware." It's certainly not a brand new concept, but something that many people are starting to adopt as a fresh trend in web businesses. In another post, Fred describes these services as "spying on myself." He makes a good point about how this is almost an exact parallel to the near-historic use of spyware to capture our behavior and leverage that information in advertising, only now we trigger the tracking. I love the concept of myware. I have recently fallen in love with Last.fm (as evident by the widget on my right sidebar), and only regret not using it sooner. Through a downloaded application, Last.fm will track and "scrobble" every song you listen to through your desired music application. It then aggregates that information online, creating charts and recommending music based on your listening behavior. It also adds a nice social networking component that recommends you to people with similar music tastes. I think models like these are winners. The one aspect that may skew things just a little is the influence of known observation. A common problem in marketing research, people tend to change their behavior when they know they are being observed. For example, would you stop listening to hardcore rap if you knew your music choices were being published on your blog? That is something, however, that I'm sure will be overcome with these services.

Myware, however, still seems to be in its very infancy. Companies are starting to see the value in clickstreams through companies such as Root.net (TechCrunch profile here). Other existing examples of myware include Wesabe.com, which seeks to help consumers "take control of their money." I personally think Wesabe is just a first step and can be taken much further. As it stands, the only value I see in their service (which still requires you to track down and import certain file types of your statements), is the discovery of "tips" that other users write. While it certainly may be valuable to some to be reminded to save 10% of their paycheck every time they buy something off of Amazon, more concrete and valuable services should also be offered. What if after you bought groceries from Trader Joe's it recognizes that you will probably shop for the same items again and now recommends shopping at Costco to save as much as X%. Through partnerships and by pooling the power of its users, the service could even offer the required Costco memberships at a discount at this step. Fred does a better job at introducing this new trend and possibility, but I agree with him when he says that myware will start to take off in 2007.

Congrats to YouTube

Congratulations to the entire YouTube team on what must be a very exciting day. As I'm sure everybody has seen, YouTube has finally been acquired by Google. The price tag was $1.65 billion, all in Google stock. I'm a big fan of this deal. I actually had the chance to meet Chad just over a year ago when YouTube was in its infancy (barely into the Alexa Top 100,000!). We met at a small cafe in the Valley before I even knew what online video was all about. I'll always remember the conversation.

I'm very excited to see what transpires from the merger, especially in regards to advertising. Will Google implement an AdWords-type platform to sell short video ads against YouTube traffic? A lot of fun questions are yet to be answered.

Is Facebook next?

Is there a bubble?

Is the internet in a new bubble? I think so. Before I get in too deep, let me first begin by saying that I was by no stretch of the imagination plugged into the first bubble. I was both too young and too out of touch to have experienced it all. But at the end of the day, I can't help but notice what's going on around me, and what I think this may lead to.

This summer I have experienced many extraordinary things. I met some amazing people, gained a ton of experience, and had a lot of fun doing so. Yet I can't help but notice that many people have been completely consumed by this "Web 2.0" phenomenon. They live it, breath it, and work in it. Some quit there jobs to join the crowd. Sure, like last time, a handful of well-built companies will break out of their startup shell (no pun intended for VideoEgg) and remain. But, just like last time, hundreds more will fail.

This time around though, I think we will experience a cultural bubble more so than an economic bubble. By definition, an economic bubble "refers to a market condition, where the prices of commodities or asset classes increase to absurd levels (that no longer reflect utility of usage and purchasing power)" (Wikipedia). Sure, this time around people will lose money, but this time around we also don't have IPO's from countless internet rockstars with only ideas (yet). In other words, I believe startups launched in 1999 had further to fall than startups launched in 2006, on average. The platform seems to be inherently lower. Some of this most certainly stems from VC's remembering the sting of the last bubble, and second-guessing their basic market reactions. This time around, the blunt of the fall will land mostly on the startup owners themselves, and not on the mass market. If "Web 2.0" as we know it crashed tomorrow, my neighbors back home probably would never hear about it, yet they sure as hell lost money last time around.

I think this is a key distinction of this latest craze. People left and right are launching companies based only on features and tools, and not on economically-viable business models. Most provide small conveniences at best. This can also be characterized as almost natural, as the barriers to starting a business have been greatly reduced. Some have received venture funding, and the common exit strategy for most is acquisition. Companies become the talk of the party when it’s rumored that they may be picked up by Google. Yet at the end of the day, it seems as though nearly every “Web 2.0” acquisition up to this point has been a recruiting tool more than it was a purchase of technology or customers. For example, I may be wrong, but it appears that Yahoo! purchased nearly identical userbases between flickr and del.icio.us, yet they added several new internet darlings to their team. This trend can only last so long, and only time will tell if their influence will justify the price tag. Just like last time, there are only so many great entrepreneurs and visionaries to go around. There’s a reason the most successful venture capital firms invest in teams, and there’s also a reason why there are only so many successful venture capital firms. I think in this next inevitable "crash," many people will wake up one morning and realize they don't have another "Web 2.0" party to attend. A large component of it will be this cultural shock (Disclaimer: I did attend several of the Bowling 2.0 matches for VideoEgg :) ). Web 2.0 has taken on a culture of which I have never seen.

Video is a great example of the new bubble, and I think is the most logical place to look for it to start bursting. I remember reading that there were over 170 internet video startups at one point (if anyone has a link to this article, would love the link). Most are simply “me too” companies that sprouted up once YouTube surprised everyone. It also goes without saying that internet video is also the most expensive new internet segment to operate in, with YouTube rumored to be hemorrhaging millions in bandwidth costs per month. Most of these websites will get to a point where they either have to start charging their users or blast ads on their videos. And unfortunately for them, the former will result in their users moving on to the next service that doesn’t charge, and in the latter the market for video ads just doesn’t exist yet. In the first bubble, it turned out that companies with “brilliant” ideas weren’t practical and couldn’t get market adoption. In this next bubble, it looks like the players have the consumer adoption (to a degree), but will struggle with monetizing that traffic. I bet a domino-rally will ensue once the first venture-backed video startup folds under the pressure.

Thoughts welcome. And up next, my thoughts on the future of video ads.

Corporate Web 2.0

So yesterday I got to visit the Sony headquarters in San Diego, California. One great moment came out of it. This sign was posted on the door before we went into the presentation. Hilarious ending to an interesting day. I guess this sums up what these corporate beasts think of the newest bubble.

On a similar note, while I certainly love and enjoy many sites that are dubbed as being "2.0 (Flickr, del.icio.us, and digg to name a few), I think that there are hundreds of others that just don't make the cut. They are either fads, outrageous ideas that the mainstream community just won't use (aside from the readers of TechCrunch), or simply a mashup of so-called "next generation internet tools," with no real concept or business model. Sony, just like many other large corporations, is simply trying to figure out what this all means for their business and business in general. Whether or not these sites stand the test of time is going to be an interesting question in the next year or so to come, and one that I think many will find to be false.