Kellblog

I heard this soundbite today (pronounced “web two dot over”) as Silicon Valley’s response to the crisis in the financial markets, declining consumer spending, and the imminent recession.

In many ways, I think it’s true.

• Many of the previously-unconstrained-by-revenue web 2.0 startups are in for a reality check.

• I attended the now-famous Sequoia “Rest in Peace Good Times” meeting and indeed sat in the front row. While I concur with Sequoia that this is a big structural problem that will take years to unwind, I think it will impact different companies in different ways. (And you have to love the Whiner Jenkins parody in response.)

• Heck, even the father of Web 2.0, Tim O’Reilly, urged startups to get serious and stop delivering silly software.

• Because web 2.0 startups were less capital-intensive, it seems that there are way more of them. And, oh, are some of the names painful. I won’t miss Weebly, Zlio, and Yoono.

• Heck, there was even the famous web 2.0 bubble video by The Richter Scales, a sure sign that things were coming to a head.

However, in many ways, I think the Web 2.0ver assertion is not true at all. In fact, it almost misses the point. While a swarm of eyeball-catching, oddly-named, twenty-something-led startups may get obliterated, that wasn’t the point of web 2.0 (outside venture circles, at least). To me, web 2.0 was, is, and will remain, an important collection of concepts that will endure:

• A read/write web, where we can participate, update, annotate, comment, link, tag, etc
• A social web, where there is awareness of relationships that can be leveraged appropriately
• User-generated content, which is here to stay and, in fact, always has been (think: radio call-in shows, Kids Say the Darndest Things, or America’s Funniest Home Videos)
• The use of the web for communication and entertainment. People are natural communicators. We will always adapt our tools to that fundamental need.
• A personalized web, that understands what we like and how we like to get it

These concepts — and others — came with web 2.0, and perhaps despite the illness of the hosts who brought them, they are most certainly not web 2.0ver.

Nova Spivack, founder and (I think) CEO of Radar Networks / Twine (see prior post here), entrepreneur, blogger, and grandson of management legend Peter Drucker, is often described as head salesperson for the semantic web / web 3.0.

Here is the video of Nova giving a presentation on the semantic web at the recent Next Web conference in Amsterdam. It’s ~45 minutes, but well worth watching.

My favorite quotes:

• “Let’s turn the web from something that is more like a file system into something that’s more like a database.” (Hallelujah!)

• “The web is the database. We’re turning the web into a database. We’re making the world wide database.”

• “Keyword search has reached its limit. It’s not going to get better. It’s going to get worse.”

Nova Spivack at The Next Web Conference 2008 from Boris Veldhuijzen van Zanten on Vimeo.

Thanks to Daniel Tunkelang for blogging about this.

Thanks to Alex Moissis for passing along a link to the following presentation in a comment on my previous post (Nobody Knows) on the current financial crisis. I thought the presentation was so good, so insightful, and so statistics-packed, that I’d share it here.

And lest I accidentally end up a financial blogger, I’ll remind you that I rather presciently wrote this post on the real estate roller coaster in April of this year.

I’m seeing increasing blogosphere references to Intrade prediction markets, so I thought I’d cruise over to intrade.com and have look. I first heard of the idea of using prediction markets in business over a decade ago from amateur economist and Business Objects co-worker Timo Elliott.

While I found the idea intriguing, Timo was way ahead of this time. In those days no “serious” business person would use anything “as random as a market” to do something important, like forecast sales. But inexplicably those same serious people were seemingly happy to have a market set a price for a share of their stock.

In any case, the whole concept was legitimized with the publication of The Wisdom of Crowds in 2004 and, seemingly overnight, using markets for predictors of all things became rather mainstream. Towards that end, businesses like Intrade appeared, allowing you to effectively buy and sell futures contracts in events, such as:

• Will the Higgs boson be observed in 2008?
• Will Obama win the presidency?
• Will there be a magnitude 9.0 earthquake this year?
• And most of all, will there be a recession in 2009?

Let’s see what Intrade has to say. On the boson, you can buy a contract that says it will be observed before the end of 2008 for only $2. (If the event happens by the date, the contract is worth $100; if it doesn’t, it expires worthless.) The price has plummeted due to the shutdown of the large Hadron collider.

On the presidential race, it seems as if the economic crisis has been good for Obama.

On the possibility of a magnitude 9.0 earthquake striking before the end of this year, while they’re only trading for $4, I’m still selling since there have only been four magnitude 9+ quakes in the last 118 years. You can buy or sell the contracts on Intrade. If you sold these at $4, the most you can make is $4/contract when it (hopefully) expires worthless on 12/31/08. By the way, buying a contract for $4 that pays $100 if an event occurs represents 24:1 odds (remember you get your bet back), which is actually quite consistent with the history (118/4 = 29.5). But remember 5/6th of the year is already past.

Finally, on whether they’ll be a recession in 2009, that contract costs nearly $80 and will deliver $100 if it happens, implying odds of 1:4. Note, that’s not 4:1, but 1:4 — i.e., a fairly certain outcome in the minds of the betters.