GenuineVC David Beisel's Perspective on Digital Change

October 9, 2005

Originally, I was skeptical of the term Web 2.0. But after having been immersed in talk about innovation in the Internet space at the Web 2.0 conference last week, I have changed my opinion. While I don’t particularly like the label itself, it has become the standard accepted vernacular for what’s going on in the Internet space. And so the phrase has come to mean something. Many people have expressed their view, most notably Tim O’Reilly in his must-read piece on the subject, What is Web 2.0?

I don’t think there is any denying that the Internet has changed over the past ten years and that there is a current emerging excitement. I’d argue that this enthusiasm isn’t merely a rehash of what happened during the past boom. The current situation is now different than it was, and the Web 2.0 label characterizes that distinction – that we are genuinely in a second phase of evolution of how people and machines interact with each other on Internet.

The purpose of adding my own distilled summary perspective which follows is twofold: to contribute to the existing conversation in the blogosphere of people discussing this topic, and to also communicate to those readers who aren’t already immersed in Web 2.0 a better characterization of why I feel there is a legitimate recent newfound excitement around the Internet. In sum, I believe that we are on the verge of strong potential value creation and innovation in the Web 2.0 space because of the support, participation, and connectedness that the web now embodies.

Support. Support for innovation on the web is now stronger than it ever has been along three dimensions: infrastructure, technology, organizational structure. We now have a physical infrastructure that wasn’t available to us just a few years ago. The penetration of broadband in America is finally at a level which gives a critical mass of users access to the network. With Wifi proliferation, numerous connected devices have become untethered from the desktop. Moreover, server hardware costs have dramatically decreased to a point in which the price barriers to launch a new web service have become minimal. Both new and existing Web 2.0 companies rest on this fundamental infrastructure foundation.

Technology adoption is also boosting the support for innovation on the ‘Net. Though the specification isn’t new, the recent popularization of RSS (Really Simple Syndication) is facilitating the freeing of content to be used and consumed differently. Many other technologies (like AJAX for rich internet applications) are providing the support for managing and expressing data and services in new ways.

Finally, the organizational structure of the Internet is notably different than it was a few years ago. One of the most dramatic changes is the realization and implementation of a self-service model of offerings which enable the smaller niche organizations or individual users access to the same services as large players originally enjoyed. For example, Google’s Adsense fundamentally changed the ability for content to become monetized across the entire web.

It is with these three levels of support that are laying the groundwork for startups to offer services and monetize them in a way that just wasn’t possible during the last boom.

web2.jpgParticipation. Much has been said about the recent popularization of blogging. But I think that the notion of “participation” goes much further beyond that. This category has expanded beyond it to encompass all media types of user-generated content. Written word like blogs and wikis are emerging as a way for people to express themselves. And tagging and contribution along other media types (like photos, videos, and audio) signify that users of the Web 2.0 type services want to not just consume them but also contribute to them as well. We are moving from a web in which the content available is not a static, but rather circular and participatory.

Also, participation is not just for the users, but for the developers as well. A key component of Web 2.0 is the notion that developers engage with users in an iterative perpetual development cycle. Whereas when the medium was new during Web 1.0, the interaction with nearly all actors involved was passive. Now, both users and developers have grown to become comfortable with participating in the web, and this comfortability is opening new doors.

Connectedness. Lastly, Web 2.0 to me means connectedness along many planes – computers are now connected differently to each other, people are truly connecting to other people, and people’s connection to their devices are changing. Web services are empowering computers to interface with each other in new ways (whether through open APIs, syndication protocols, or P2P file transfer methods like BitTorrent). Now I understand why Bezos said, “Web 2.0 is making the Internet better for computers.”

Possibly more importantly, connectedness is valued by people as well in this stage of the Internet. E-mail was the original killer app in Web 1.0, but now we are seeing a myriad of other ways the web can link people (who either know each other or don’t). Social software and Skype are just two examples, and with both of these, the network effects are creating immense value as the value of the service increases at a rate exponentially in line with the number of people who use it. Moreover, the power of people connectedness has demonstrated viability of viral marketing and word-of-mouth as a primary marketing tool for web startups, as opposed to large media advertising spends.

Thirdly, there is a new connectedness between users and their devices. Online rich UI applications facilitate ease of interaction. Mobile devices have started to and will continue to evolve in allowing people to connect to devices at any time and any place.

These concepts – support, participation, and connectedness – represent to me a top-level summary of all of the changes that have and are occurring which are facilitating the industry. These notions are fostering newfound opportunity for creation that wasn’t available previously. Please don’t interpret my excitement about the potential for innovation in this space as an opinion that there we won’t be part of a typical boom-bust cycle and that there won’t be many (catastrophic and public) failures. In fact, I believe that we need to apply a healthy skepticism to any new ideas, concepts, and business (see my post on the subject). That being said, I truly believe that Web 2.0 signifies that there is new opportunity to create value – and wealth – on the Internet that wasn’t available to us just a few years ago.

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    Absolutely! I love your examples. It sounds like your experience matches mine completely. Thanks for sharing.

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