I was having a chat with the crew at work, and as usual, the big Monday topic is Web 2.0 (sigh)! And the start of the the conversation was about the concept of the Web 2.0 business model, and "Entering with your exit strategy"!
So I threw my $0.02 worth in, and said, "Web 2.0 is nothing more than the Marketing List Nxt strategy". Why?
Well, I know most of the Web 2.0 startup "montrepreneurs" would claim upon the good book that they are building social communities, extending the web to the people, making business democratic, <insert altruistic motives here>, but at the end of the day, it's about drawing eyeballs to your sight for ad-rev, or building a "community" of users who at some point can be shanghaied by a bigger galleon (yes, I look at the acquisition phase of small Web 2.0 startups by big players akin to the Web version of Pirates of the Caribbean) who will then asset their brand for as long as they can, hoping there is a segment of those customers that can be classified as "new".
This value of new is important. Generally the little W20 company has drawn in a diverse set of people, and has created enough novel value to retain them for the period of time that their concept is "never before seen" (mind you this is very short given the dynamic nature of the web and the ease at which imitation can occur). But the challenge is to try and "exit" before their space is filled by "me too" players. The time between "being the market" to "sharing the market" and the diversity of their memberbase are the two critical factors which affect their exit'ability.
So let's take W20 company (I've had this idea for a while, so I'll use if as my example) FutureState. FutureState provides an interactive site where people can ask the world for sage advice. For example, if I want to move from being a software developer to architect, I put my problem up on the site, and other members can contribute "steps". These steps are advice that could lead to you getting from current state to future state. Then, people who have made that journey provide feedback on those steps as to what is most likely to succeed (essentially they rank the steps). The system then uses an algorithm to choose the best set of steps, and publishes those for all to see. So overtime, I build a bunch of members, but while my member base is growing, other Web 2.0 me toos are building their sites. So I then have to work out what is the profile of my member base. The easiest way to do that is to build into the site a capability to ask questions of my demographic upon registration "to enhance their experience".
I then go out and find cashed up market players who could benefit from my member base, but don't already have members of that profile. I then get "acquired" (I use the rabbit ears because my view of an acquisition is to enhance or improve upon the acquisition to improve your core business, not just to get mindshare...but anyhoo) by a bigger fish, you quickly brands my goodness with their brand, hoping that before my members realize I am no longer offering them a social service, but have sold them out and am sipping pina colada on my yacht, the big fish has succeeded in gaining new mindshare or brand awareness. This also happens roughly around the same time the me toos hit the street, and deteriorate the bigger fished newly acquired eyeballs and minds (which doesn't matter because the acquisition occurred through shares not cash, which tied the little W20 company inexplicably to the bigger fish anyway).
So next time you meet that next great Web 2.0 savior, ask them, "What's your exit strategy?"... if they stare blankly at you with genuine surprise, wish them well, if they look at their feet, cross their arms, make fun at your dress sense, or start talking about the weather, slap them! It's the easiest way to distinguish Web 2.0 from Marketing List Nxt!
And just a word of warning for all those Web 2.0 start-ups, give some thought to long term impact. Like the dot com boom and bust, and the general cowboy (I love that term, dynamic and agile) attitude of the software industry over the past 30 years, it has left our landscape (ICT) looking like a toilet! As long as marketers continue to drive the waves of our industry based on how they can leverage a site to sell versus delivering actual value, the closer the whole industry gets to extinction.
Phew... I hope that was worth more than $0.02!