Category Archives: Web 2.0

New York Times Article on Web 2.0

The New York Times had an article on Web 2.0 and the Web 2.0 Summit today, entitled: Silicon Valley Start-Ups Awash in Dollars, Again.

Here are some excerpts:

Internet companies with funny names, little revenue and few customers are commanding high prices … Consider Facebook, … which is reportedly being valued by investors at up to $15 billion. … nearly half the value of Yahoo, a company with 38 times the number of employees and … 32 times the revenue.

The trend is described as a return to madness (by skeptics) or as a rational approach to unlimited opportunities presented by the Internet (by true believers) …

“There’s definitely a lot of betting going on, and it’s not rational,” said Tim O’Reilly, a technology conference promoter and book publisher.

Mr. O’Reilly is credited with coining the phrase “Web 2.0,” which refers to a new generation of Web sites that encourage users to contribute material. His Web 2.0 conference, which begins Wednesday in San Francisco, has become a nexus for the optimism around the latest set of society-changing online tools.

But that has not stopped Mr. O’Reilly from worrying that the industry is minting too many copycat companies, half-baked business plans and overpriced buyouts.

The article is a must read.

My own rather cynical take is that Web 2.0 is like the Web 1.0 without the exits. Which, from a venture capital perspective, is akin to saying that it’s like beer but without the alcohol. Or hockey without the fighting. Or as Woody Allen once said, sex without the love.

Yes, there are a few amazing deals (e.g., the VMware IPO, the YouTube and Skype acquisitions). And even more amazing are the valuations/employee — e.g., YouTube was $1.6B for what I’m told was 30 people — or an amazing $53M per head. Zuckerberg today said that Facebook had 300 people, so if Microsoft is investing at a $15B valuation, then that equates to a equally amazing $50M per head. Those are the truly stunning numbers in my opinion.

But, for the most part, these “Internet companies with funny names” aren’t going public or getting acquired as far as I can tell.

Perhaps I’m not seeing it because the IPO bar has been raised and perhaps there really is a bubble in M&A valuations and maybe more of these little companies are getting bought than I think. But what I think is happening is that a few companies are getting sold at stellar valuations and making big headlines and for every one of those there are 100 other ones living on the VC dole, with 30 guys, a few servers, and a lot of hope.

One of the nice things about Web 2.0 is the barriers to entry are pretty low. That means lots of companies. Which in turn means lots of carnage down the road. This site, for example, tracks over 2,500 web 2.0 companies in 172 categories.

Go Check Out Facebook, Now!

The other day I was updating my LinkedIn contacts and I ended up sending a wide broadcast email asking friends and associates to join my LinkedIn network. I like LinkedIn and I use it as a way to keep in touch with a broad network of people with whom I’ve worked in the past. We also use it for recruiting and sometimes sales.

I’d setup a Facebook profile several months ago in response to an invitation, but I’d left it blank and never spent much time on the site. I’d noticed a steady up-tick in my rate of Facebook invitations during the past few months, so I’d been thinking about taking a serious look. In addition, I’d read about Facebook’s strategy to become a “platform” (whose meaning was not immediately clear to me in the context of a social networking site) so investigating it was rising on my to-do list.

But it was only after receiving multiple responses to my broadcast email of “dude, LinkedIn is Facebook for dinosaurs” that I decided that I needed to do something. I’m pleased to report that I now have a complete Facebook profile, about 50 friends (compared to 450 on LinkedIn), and I must say I really like the site. Why?

  • It combines the best aspects of LinkedIn (e.g., biography, contacts, contact network, friend finding) with those of MySpace (messaging, updates, photos)
  • Unlike MySpace, it’s not loaded with spam sites and flashing lights.
  • It has groups and networks that you can (easily) join and leave
  • It has a certain hominess that blurs personal and work lines
  • It has both Facebook-provided apps (e.g., calendar, photos) and user-provided ones (this is the platform part)
  • It has a clean, simple user interface

In fact, my only reservation about Facebook relates to one of the things I currently like about it — the work/personal life blurring. Amongst my current friends I have former co-workers, Mark Logic customers, high school friends, a board member, some industry analysts, current employees, and even my High School aged son. That’s cool.

While that’s cute and homey, it’s already created some awkwardness. After my son starting using a user-provided “compare people” app on me, I decided to use it on my friends and was quickly asked questions like “who has a better body?” comparing a current customer with a former employee. Not good. Mercifully, there was a “skip” button of which I made prodigious use.

So one nice thing about LinkedIn is that it’s purely professional, at least as I’ve set it up. Going forward I think Facebook will need to provide a “role separation” solution and hopefully they will do a better job at it than Amazon, which still gives me recommendations for children’s books and golf balls based on my buying them — for others — in the past.

In playing with Facebook, I realized something else: I really like their focused marketing strategy. Instead of a general, broad attack, they started out with one segment (university students — actually barring others from joining for years), established dominance in that segment, and then expanded from there.

So, call me a fan. Given the potential to become a serious platform, replace email communications, and hide lots of content from Internet spiders in so doing, I think everyone should check it out.

In addition, I’d recommend this post, which provides an excellent introduction and overview — Web Strategy: What the Web Strategist Should Know About Facebook.

Bubble 2.0? 5,000 Web Apps in 333 Seconds

Here’s a great piece of PR from SimpleSpark, a Web 2.0 applications directory site which they call “the place to find and share a new world of web applications.” As of this instant, SimpleSpark is tracking 5,108 apps. They made a video that shows in 333 seconds the logos of the first 5,000 applications they are tracking.

(In fact, in the Captain Anal department, I think it’s 5,001 if you include SimpleSpark itself.)

Think of all the venture capital that went into funding all these companies. Happily, most aren’t capital intensive, but in any case — it’s a lot of companies. Browse the catalog a bit if you’re not convinced. Bubbly anyone?

The 2007 Web Trend Map, Version 2.0

Check this out. It’s the top 200 sites on the web, visualized as a subway map, where the lines are trends and the stations show supplemental information, such as the momentum of the site.

It’s very creative and quite interesting; it’s produced by a Japanese firm called Information Architects. Go here for IA’s blog post on this. Go here for my favorite version, the interactive clickable one.

The Relevancy Quest

In the classic book, The Innovator’s Dilemma, Clayton Christensen concludes that a key reason leading companies fail is because they spend too much energy working on sustaining innovations that continuously improve their products for their existing customers. Seemingly paradoxically, he points out that these sustaining innovations can involve very advanced and very expensive technology. That is, it’s not the nature of the technology used (e.g., advanced or simple) that causes innovation to be sustaining or disruptive — it’s who the technology is designed to serve and in what uses.

I think search vendors need to dust off their copies of The Innovator’s Dilemma. Why? Because, for the most part, they seemed wedged in the following paradigm, which I’d call the relevancy quest:

  • Search is about grunting a few keywords
  • The answer is a list of links
  • The quest is then magically inducing the most relevant links given a few grunts

And it’s not a bad paradigm. Heck, it made Google worth $140B and bought Larry and Sergey a nice 767. But can we do better?

Some folks, like the much-hyped Powerset, think so. They’re challenging the grunting part of the equation, arguing that “keyword-ese” is the problem and the solution is natural language. They seem unphased both by Ask Jeeves’ failure to dominate search and by the more than 20 years of failed attempts to provide natural language interfaces to database data, used for business intelligence (BI). As I often say, if natural language were the key to BI user interfaces, then Business Objects would have been purchased by Microsoft years ago for a pittance and Natural Language Inc.’s DataTalker would rule BI. (Instead of the other way around.)

But I respect Powerset because at least they’re challenging the paradigm and taking a different approach to the problem. And, while I sure don’t understand the cost model, I also respect guys like ChaCha because they’re challenging the paradigm, too. In ChaCha’s case, they’re delivering human-powered search where you can literally chat with a live guide who helps you refine your search.

I can also respect the social search guys, including the recently launched Mahalo, because they’re challenging the paradigm as well — using Wisdom of Crowds / Web 2.0 / Wikipedia style collaboration to created “hand-written results pages” for topics, such as the always searchable “Paris Hilton.”

The folks I have trouble understanding are those on the algorithmic relevancy quest, companies like Hakia, a semantic search vendor (interviewed here by Read/Write Web) whose schtick is meaning-based search, and who comes complete with a PageRank ™ rip-off-name algorithm called SemanticRank ™. Or Ask who recently launched a $100M advertising campaign about “the algorithm“. These people remind me of the disk drive manufacturers who invested millions in very advanced technologies for improved 8″ disk drives (to serve their existing customers) all the while missing the market for 5.25” disk drives required by different customers (i.e., PC manufacturers).

Are the Hakias of the world answering the right question? Should we be grunting keywords into search boxes and relying on SomethingRank ™ to do the best job of determining relevancy? Is the search battle of the future really about “my rank’s better than you rank” or equivalently, “my PhD’s smarter than your PhD”? Aren’t these guys fighting the last war?

As usual, I think there are separate answers for Internet and enterprise search.

On the Internet side, sure I think search engines can certainly use more “magic” to improve search relevancy. For example, they can use recent queries and a user profile to impute intent. They can use dynamic clustering and iterative query refinement (e.g., faceted navigation) to help users incrementally improve the precision of their queries.

More practically, I think vertical search and community sites are a great way of improving search results. The context of the site you’re on provides a great clue to what you’re looking for. Typing “Paris Hilton” into Expedia means you’re probably looking for a hotel, where typing it EOnLine means you’re looking for information on the jailed debutante.

Of course, there are a host of Web 2.0 style techniques to improve search like diggs and wikis which can be put to work as well.

Increasingly, our publishing and media customers are going well beyond “improving search” and changing the paradigm to “content applications” — systems that combine software and content to help specific users accomplish specific tasks. See Elsevier’s PathConsult as a concrete example.

On the enterprise search side, I think the answer is different. As I’ve often mentioned, on the enterprise side you lack the rich link structure of the web, effectively lobotomizing PageRank and robbing Google of its once-special (and now increasingly gamed and hacked) sauce.

When I look for the answer of how to improve search in an enterprise context, I look back to BI, where we have decades of history to guide us about the quest to enable end-user access to corporate data.

  • Typing SQL (once seriously considered as the answer) failed. Too complex. While SQL itself was the great enabler of the BI industry, end users could never code it.
  • Creating reports in 4GL languages failed. Too complex.
  • Having other people create reports and deliver them to end users was a begrudging success. While this created a report treadmill/backlog for IT and buried end-users in too much information, it was probably the most widely used paradigm.
  • Natural language interfaces failed. Too hard to express what you really want. Too much precision required. Too much iteration required.
  • End users using graphical tools linked directly to the database schema failed. While these tools hid the complexities of SQL, they failed to hide the complexity of the database schema.

It was only when Business Objects invented a graphical, SQL-generating tool that hid all underlying database complexity and enabled users to compose an arbitrary query that the BI market took off. Simply put, there were two keys:

1. The ability to phrase an arbitrary query of arbitrary complexity (not a highly constrained search).

2. The ability to hide the complexity of the database from the underlying user

While no one has yet built a such a tool for an arbitrary XML contentbase (and while I think building one will be hard given the lack of requirement for a defined schema), MarkLogic customers use our product every day to build content applications that generate complex queries against large contentbases, and completely hide XQuery from the end-user.

Simply put, it’s not about improving search. It’
s about delivering query. That’s the game-changer.