Thoughts from Web 2.0

My biggest takeaways from Web 2.0 2005:

  • Less money than ever is required to start a company. Three people working from their homes in different cities were able to launch SocialText in 2 months with a $5k investment. Technology gets the credit for this trend: free communications with Skype and ICQ, free software with open source, fewer lines of code with Ruby, free distribution through blogs. With venture funds moving into the billion dollar range, there’s an emerging opportunity at the angel investment level.
  • Meanwhile, big brands continue their domination. The top 5 Internet companies have finally exceeded their dotcom valuations, and only 1 of the top 10 biggest companies (Google) is less than 10 years old. They are picking up small companies at a rapid pace, largely to acquire talented employees and reduce the threat of future competition.
  • The definition of ‘talent’…Barry Diller believes that the role of ‘talent’ in publishing content will assure a long-term role for traditional media companies while David Sifry believes ‘authoritative bloggers’ can improve relevance in the blogosphere. Will the Web 2.0 world encourage a meritocracy where one’s talent or authoritativeness brings them to prominence? Does such a meritocracy work for or against big media?
  • This year’s Web 2.0 had a very different feel than last year’s. Some observations…Every event was over-attended (except perhaps Recovery 2.0). There was less of a tech presence and more business presence, and there appeared to be an associated difference in attendee net worth. Front-and-center speakers were traditional industry titans like Diller and Semel instead of quirky disrupters like Bezos, Cuban, Cantor, Butterfield, and Lessig. And the food and drinks were better.
  • Overall, an invaluable event. No other single conference I’ve attended provides a better look at the increasing pace of technological development. Makes one wonder whether Kurzweil’s singularity really will happen in the 21st century.

A few thoughts on how to make next year better:

  • Use social networking tools to help people meet each other if they have common interests (ex. CEOs can talk to CEOs, tech knowledge leaders to tech knowledge leaders). And maybe guidelines and a training session for the use of socialtext.
  • Book a venue big enough to allow unrestricted attendance. And offer some subsidies to bring in attendees who stand out in field of technology but are poor.
  • Publish tag words for each workshop, panel, and speaker and publish permanent links to each section of web2con.com content.

My full notes can be seen in the extended blog entry.

Web 2.0 2005 — Full Notes

A few thoughts overall:
– For those of us in the mobile space….Interesting parallel between Eslambolchi of AT&T and some wireless carriers at CTIA. Conclusion is that what we really need from the carriers are some damn good pipes, and the carriers who deliver that very valuable service won’t be commoditized.
– Mary Meeker has great info about technology markets and trends, but she needs some serious help with Powerpoint…would be much easier to absorb if she did a build on each slide to pop-up 1 or 2 conclusions over top of the mass of metrics.
– My favorite quote: ‘for those of you who read my piece and thought it was a piece of wankery’ – tim talking about his web 2.0 handout
– ‘Self reinforcing nimbleness’ means rapid prototyping with the participation of the community (ex. of SugarCRM with 20 languages donated by user community).
– Community-focused services have to balance their social contract with their users against the profit-focused motives of investors or corporate owners.
– As tired terminology, ‘user generated content’ has replaced ‘meme’. ‘Architecture of participation’ is also a bit overused, but it’s so dead-on that I hope it lasts a while.

**

VC Panel
* New term for me: ‘net-gen’ is 16-24 yr olds.
* Socialtext started with $5k and 6 months sweat equity from 3 people living out of their homes. It took 2 months to prototype. They got paying customers after 6 months, and then took $150k from an angel (series A), then took $400k from Omidyar. All marketing was through blogs. They used virtual office tools like Skype and IRC, commodity hardware and open source software, development tools which require fewer lines of code. All of it equals low cost.
– Paul’s angel investment fund likes funding grad students b/c their living expenses are so low.
* Web 2.0 increases the gap between angels and VCs. Paul’s group tries to fill this gap, kind of like a soccer (or baseball) farm team. One option is to encourage VC partners to individually invest, but it’s hard to create a fund to go after small investments b/c VC partners want to do deals and not be investment fund managers. Endowments could also play a role here.
– There’s a question of how to scale small bets $400k or under if you’re a VC.
* Statement from Ross Mayfield – we’ve spent years building the infrastructure, now the challenge is building the social network.
– Steve Jurvetson has 26 venture firms of which the largest is 4 people, this allows them to scale better.
– CRM represents how software is evolving (with alliteration)….from Siebel to Salesforce.com to SugarCRM.
* ‘Self reinforcing nimbleness’ means rapid prototyping with the participation of the community (ex. of sugar crm with 20 languages donated by user community).
* Community-focused services have to balanced the social contract with their users against the profit-focused motives of investors or corporate owners.
* Statement from SteveJurvetson – IP has little value in software (as opposed to nanotech or biotech), the ability to spread virally is a huge factor in their investments.

Mashups Workshop
– Things to look at include: googlemapsmania, blog.simplyhired.com, alkemis.com (mashes google maps, a9 photos, & traffic web cams), extendthereach.com, alalygis.com (census data).
– The word ‘mashup’ was stolen from the music world.
– Definition of a mashup is the remix of 2+ web-based data or services, probably using AJAX.
* Big issue with mashups is authentication against multiple services. eBay’s system requires a redirect to eBay and back, issue isn’t just security but also gaining the trust of the user to enter their credentials at a new site.
* A rule of thumb for creating a mashup is to find a problem that requires 2 or more web sites to complete.
* Lots of talk about business models and ownership of content. [I have too many opinions about this to list them here.]

Keynote Tim and John
– Last year, it was a sense of relief to make it through the bad years, this year there’s the sense that we just shouldn’t screw it up. Hopefully it’s not a bubble, or a mini-boomlet. [Amen.]

Barry Diller – IAC
– Regaring the AskJeeves acquisition….they originally looked at a portal/search acquisition due to fears of the search threat. But even though they determined there was no threat, it looked like the thing to do as part of an offensive strategy. They ruled out AOL due to the high price and other reasons.
– IAC will definitely get involved in making product (content).
– Diller thinks Murdoch’s acquisition of MySpace is ex. of ‘hands on opportunism’. Time will decide whether he got them cheap or threw away money. Diller told the story of a cab ride where Murdoch admitted that he was betting the company on the Fox purchase.
– eBay and Skype was speculative at the ratio of price to revenue.
– The reason that the US lags in broadband is a problem with US national policy.
– He advocates ‘net neutrality’, which would be a law against restricting other’s services that pass over your network.
* He thinks the reason why the architecture of participation won’t replace old media is that there is a l
imited amount of ‘talent’ out there. Making everyone’s content publishable won’t change that.

Skye Dayton
* SK-Earthlink is $440m joint venture between SK Telecom and Earthlink
* S Koreans have huge loyalty to their wireless service provider b/c it enables their life, their phone is their ‘tether to the world’ [how does this contrast with movement of us carriers to dumb pipe?].
* TTL is a brand for youth, retail store is a cafe-type hangout for after school.
* CyWorld is the largest mo-blogging service in the world, 1/3 of the S Korean population is using it 4 years after launch.
* Satellite tv is a phone with a satellite dish crammed inside.
* iPod has yet to break into S Korean market, 10m music enabled cell phones were sold this year, 70% of all electronic music is on phones, and SK is largest distributor of music on or off line in S Korea.

Bran Ferren – Applied Minds
* web 3.0 will mean that things will suck less.
– [This preso reminds me of the jarring presentation by jack dangermond at Where 2.0, applied minds is most likely the only thing in common between ESRI cult-show and Web 2.0 conference, though I met a couple of nice guys from ESRI Arc Web Services that do get it.]

Second Life / Linden Labs
* 50k users on 1000 servers.
* Amazing how real-world services exist in the virtual world: picture sharing service, selling skydiving equipment, selling skins (as in epidermus), skulpting boots and guns, dancing lessons, wedding planning, Burning Man, charitable giving, a top seller is making $100k/year.

Terry Semel – Yahoo!
* Old media was all about content and distribution, and technology was not a factor. Today technology is at the core of media.
* When asked about yahoo’s move into journalist and content creation with war reporting, he responded that there are 3 type of content they want to provide their users:
1. User generated content
2. Media companies distributing external content through Yahoo!
3. Experiment with creating Yahoo!’s own content
* [Now I understand why every ppt preso I’ve ever seen presented from anyone at Yahoo has contained a numbered list. Apparently, Terry likes them.]
* Search provides 5% of page views on the internet but 40% of monetization. This shows a huge opportunity to monetize the other 95%. Google as a portal is #4 behind Yahoo, MSN, and AOL, Gmail is 1/10 the size of Yahoo mail. Yet Google has a 87b market cap to Yahoo’s 50b market cap.
– Question about Chinese jailing using Yahoo’s data. Answer is that all int’l news organization make these compromises all the time, engagement is a better strategy than dis-engagement.

Mary Meeker
– http://www.morganstanley.com/institutional/techresearch/pdfs/meeker_internet_trends100605.pdf
– The valuation of the top 5 internet companies has exceeded the valuation of the boom years, $178b vs $261b today.
– Broadband is at 25-30% penetration, it’s the sweet spot.
– In wireless, 2G is at 20%, 3G will reach that level in 2009.
– 1b global internet users vs 2b mobile users.
– Skype is fastest growing app in history, 87% outside of North America.
– Their new model is SFO = Search, Find, Obtain.

Technorati – Dave Sifry
* 18.9m weblogs exit, a new one every second. 55% are still active in 3 months, 13% are updated weekly, 8% are spam.
– Spam is a problem but can be addressed. ‘All healthy systems have parasites’ – Cory Doctorow
– Old media is finally catching on to blogging. Newsweek and Salon were first. Today, they are announcing the wash post, intl herald tribune, der spiegel.
– 1/3 of blog posts use tags or categories.
* They recently added the ability to have your search results influenced by ‘authoritative bloggers’. Example is bush (president) vs bush (gardening).

Eslambolchi – AT&T
– Forces of control vs forces of freedom.
* 3 mbps is average broadband today, 40 mbps by end of decade.
* With broadband, we can move from one-way distribution of content to interactive, participatory, personal publishing.
– WIMAX will create a unified mobile network instead of CDMA, GSM, etc.
* ‘Turning the infrastructure inside out’ means exposing billing, editing and other systems to the customer.
– ‘Cognitive radios’ on unlicensed spectrum will provide more options.
– Fber will be required to reach the 100mbps of real broadband.
– We’re moving from using phone number as a unique ID to using IP address which doesn’t recognize geography.
* IP technology is over 30 years old, we’re trying to force things into it, ‘application layer routing’ will be next.

Panel Discussion: Open vs. Closed Models Danny Rimer , Jeff Barr, Toni Schneider, Sam Schwartz
– What content do you actually own? Amazon owns the catalog, customers, and purchasing processes. Yahoo owns user’s trust and user’s data and connection between users.
* Contrast between yahoo and google mapping api’s: Yahoo brings content in while Google takes content out. Yahoo lists their developer’s accomplishments on their web site, while Google lets outside websites do that.
* MySQL gets 1/3 of downloads of Skype.
– Lots of excitement at this year’s web 2.0 about technology, to sustain it next year we’ll need to see a lot of good business models.
* There’s been a polarization around a couple of companies who have been given the right to explore new things They are acquiring small companies in order to bring talent on board while eliminating future competition. [Wonder what is the cost per smart person compared to typical headhunter fees.] Amazon gets many job applicants who demonstrate working apps that they’ve build themselves.
* eBay bought Skype because it was a good fit. The PayPal acquisition had proved that eBay has a ‘GE approach’ to running companies. They give the benefit of being part of a larger network of companies while remaining independent. This was very important to the founders and the money was in the right range.

Jeremy Allaire, Brightcove
– There are 3 monetization models for tv and video:
1. Ads
2. Pay media
3. Syndication
– Announcing their product launch today, which they will be selling to content companies. It runs in Flash, Flash8 allows for best quality, console allows programming and distribution of video. [Very cool, but wish it was for consumers.]
– The End from Viacom is in trials with them

Jason Kottke
– ‘less is more’
* It takes 3 people to start a company: programmer, designer, sweeper (business person).
– Limit yourself to 30 hours/week so you’re more efficient with your time.
* Don’t write an FSD, instead build the customer experience first, ‘nothing functional about a functional requirements document’.

Jonathan Miller – AOL
– A good thing about the rumors of a sale or spin-off is that AOL’s value is now part of the discussion.
– Question about AOL creating other companies…They helped make Overture into a big company as their first ad partner. Then Google gave some stock and took over the ad network. Could MSN now come in with a better offer?
– AOL needs both ‘copyrighted content’ and ‘user generated content’. The Weblogs Inc acquisition fits that strategy.
– Yahoo and AOL are more on path to video than other companies, AOL is in the lead with video search.
* Of all the big brands currently on the web, only one (Google) is less than 10 years old, there’s no reason to under-value the potential of one of these rare big brands.
– They are changing the Delaware-incorporated name to AOL to allow for int’l expansion.
– Story of name change from AOL to TWX. Miller suggested it in summer of 2003, it was a way to ‘move on’.
– Story…during first few months he went to say hello to Time Warner execs. The CEO said he’d had a bad experience bringing previous AOL people in….if you have your car towed in NYC you get yo
ur car bck and there’s a sign in the window that ‘the person here did not tow your car, they are here to help you get your car back’.
– AOL valuation is 4-5 times earnings, TW is 9-10 multiple, bringing AOL to this level would double the stock. This is probably the best chance of TWX to bring the stock up.
– Need to prove that the open model works and thus improve the valuation before doing a spin off or sell off.
– AOL safety marketing campaign was effective b/c it greatly improved brand as measured by consumer surveys, it’s rebounded significantly.
– There were 660m CD’s when he started?
– AOL looked at AskJeeves, thought about it and it’s a good company, but the math didn’t work. Didn’t want to fight it out in algorithmic search (instead focus on targeted search like video).

**

Shawn Fanning, SnowCap
– Product for publishing music. Goal is to ‘turn pirates into shipping agents’.
– Good spokesperson in Mickey Hart, bootleg tapes were the original music sharing service.
– Aiming for the long tail, not the top 200 artists
– $30 to register, then share transaction revenue as percentage.
– Participation by labels as well as artists, big names will help the long tail get started.
– There are 25m tracks now being shared, they want to turn them from gray to white.
– iTunes is too closed of a system, they only parter with the big labels.

**

Web 2.0 Ad Models: A New Approach to Marketing? 
Jeff Jarvis, President & Creative Director, Advance.net
Dick Costolo, CEO, Feedburner
Matt Cutts, Software Engineer, Google
Chas Edwards, Vice President, Sales & Market Development, Federated Media Publishing
Brian McAndrews, President and CEO, aQuantive
Mark Pincus, Founder, tribe.net

– Blog world has low page views but huge reach, so CPM is low and thus low money.
– Federated Publishing’s goal is to allow bloggers to quit their day jobs.
* There’s a middle piece that’s missing for blog advertising. On the large side there’s Google, and then there are small companies such as adbrite, blogads [kanoodle?].
– Big advertisers are afraid of rationality, for example they don’t want the price of Claritin versus a generic to be seen by consumers.
– Anecdote – the first Google adwords sponsor was shipping lobsters by mail.
* Agency response….biggest thing that’s needed is better metrics, another thing is that this space is forcing advertisers to rethink things and see advantages of metrics over traditional tv, print, etc.
* Metrics and measurements, ‘that which gets measured gets bought’.
* ‘Engagement’ is a new popular term on madison ave. It means not how many eyeballs but how deep, relevant, and interesting. Madison ave has no clue on how to measure ‘engagement’, cost per click is nice but not enough.
* ‘long tail’ vs ‘big butt’
– Nike was an early blog advertiser, verizon was an early podcaster.
* In a world of media fragmentation, there’s a huge value to select a list of blogs from the 19m out there [blog authorities].
– Example of an experiment with .5% commission on loans became a $100 cpa.
– Need to get around banner blindness…don’t show anything before first 5 impressions.
* Jarvis is serving up 4x as much RSS as HTML, but how do you monetize RSS.
– Feedburner’s goal is to provide their customers with metrics; there are no cookies with RSS.
* Blogarm? has huge opportunity b/c u can’t monetize RSS right now.
– Reed said that each node becomes a network, so not square of the number of nodes of network but exponential.
– In cpa world advetisers only pay for transactions, so there’s less risk.
* Publishers can choose their ads and offer those ads on to other publishers, the revenue gets spread among each node in chain.
* Ross, if anyone can be a publisher, cpa doesn’t work, someone may tell someone else that there’s a really cool book (do they share in revenue?), lessinfluencers? in france is trying this.
* Jeff, ‘stop measuring the impressions and start measuring the impressed’.
* CPA vs CPM worlds, one encourages closed model and the other allows open.
* Why the fear of contextual advertising (big brother)?, google has to make sure to ask permission.
* Hard to measure brand advertising vs performance advertising.
– We need cookies for measurement of ads, but people don’t like cookies due to privacy.
* Vectors are interesting….if you visit five chemistry sites in one week, chemistry ads would rise in prominence, then disappear when the purchase is made. Random purchases (ex. one time barbie doll) then get weeded out.
* Amazon advertising currently is like ‘whack a mole’ b/c u don’t know what ads will be served next.
– Google personalized search lets you choose categories which then target your search results, this tech will flow over to ad serving.
* Serendipity also holds role in advertising, spending money on building brands and introducing products, some targeting helps but a random ad can still be effective.
– Role of rich media (video and audio) on the web…example is a podcast from a digital photography company such as canon, you can play it when you’re standing at BestBuy surrounded by digital cameras.
– John Stewart and Crossfire – 150k viewers on CNN vs viral downloads of 2.5m + bittorrent millions.
* Not enough supply of quality video, most agencies and mktrs are very familiar with 15-30 sec ads and looking for places to put them, but they don’t have them. Video is bigger in brand advertising.
* Why not embed an ad in John Stewart video and let it spread organically.
– Problem is that advertisers don’t see themselves as part of the conversation.

**

Recovery 2.0
– tag ‘recovery2’, email recovery2@socialtext.com subject meeting [email]
– Attended by 42 people plus a few stragglers in the olympic conference room. Two celebrities were there: Jeff Jarvis and Craig Newmark. Attendees spanned local nonprofits,bloggers, local interested citizens, google & yahoo (& mapquest, of course), and a few web 2.0 tech people who want to find a way to help.
– Jeff Jarvis’s had two goals, getting better at swarming and communicating.
– Best example for improvement is the 50+ message boards for missing people after Katrina.
– Yahoo added a link for donations to their site and recieved $45m in 2 days and $60m total.
– Brainstorming:
. coordination between agencies and government
. truth and transparency
. access to communications and internet
. people finder (shared database, metasearch, emailing it out)
. donations
. access to expertise
. persistent community and sustainability
. hand off to persistent entities
. commercial involement
. what is the list of critical info that you need for missing persons
. communication to an affected population and volunteers
– practice of tech response to emergencies
– create a working group
– example of telephone ladies in bangledesh where each village had a gramin telecom cell phone which allowed them to better coordinate preparation/response to hurricanes

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