Getting outside the frothy bubble

Scoble, I’m impressed. Some lucidity for once. Great post that asks a lot of insightful questions. Isn’t a bit ironic, however, that you work for company smack in the middle of this supposed bubble? What are PodTech’s plans to avoid the bubble? What happens if the ad revenue never materializes? Will the quality of your content be something good enough people will actually PAY for? Do you plan to have PodTech lead by example?

Robert, check out my post from August 24th–”Blogging outside the silicon valley bubble–my rant on houw to get there.”
http://susanmernit.blogspot.com/2006/08/blogging-outside-silicon-valley-bubble_24.html

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Best,
Susan

I would suggest that while we are transitioning over the next few years, most of the mainstream does not use the computer to the extent we all do. In other-words, beyond scouring for a picture of Suri, the MSM audiences are not out there yet taking action.

I can’t tell you how amazed I am regularly when people I talk to have never heard of BoingBoing.

Though this is ok. Froth is made up of lots of little bubbles. You don’t really need VC money to make it and you don’t need for it to grow into a million dollar business, ever.

So there is no need to bring it all together into Google and Yahoo, you just need an original idea that people respond to.

If I didn’t have greater aspirations, I could run Rocketboom off of t-shirt sales.

Micro-payment is the new macro.

Key to success is to look past the bubble hype. Of course we are in a bubble there is a massive shift in the economics and wealth of the ‘netarchitecture’ going on right now.

There will always be ad revenue in user or audience based models. The issue is that the ad model doesn’t and will not translate from what it is today to the new market environment that is developing.

Keys to avoid the bubble is to enter the market with a clear sustainable plan: build a great team and execute a business/revenue model that generates cash flow and market position. From that point on competing on value will determine who stays around.

The business model is somewhat proved for web advertsing: if one can get a lot of traffic with reasonable cost, you can make money. The baseline cost for most web-based companies increase very slowly vs traffic. The difficult part is to generate traffic (without costing too much).

I have compiled a list of websites and their effective CPMs (monthly revenue vs pageviews) based on public information.

http://lifeisaventure.wordpress.com/2006/08/28/how-much-money-do-you-generate-per-pageview/

I do love to read your big picture take on all things soap related, Robert. Listen why don’t you tell me what in web 2.0 (apps, ideas, services….)corporations can benefit from–Fortune 500 to less that 10 employees. A laundry list please–I want YOUR take. Let’s get real with no froth and bring the worthy developers and ideologues to the stage, to the table, this May–face-to-face with real customers with deep wallets eager to get it and use it. I wait.

LayZ: we already have, gasp, real revenues and real clients. They are on the “Corporate” bar on our home page. So, no need to worry about us. At least not short term. Now, if the entire world blows up again like it did in March 2000 and everyone cuts their budgets way back? Then we’ll definitely feel pain. But I’m working on diversifying our revenue streams outside the tech world so that we can ride that out.

Great foam on a cappuccino can last a long long time. Poor foam won’t sustain through the length of the cup. I don’t think its so much about escaping the froth, but sustaining through it.

Brotherhood: the problem is that if your cappuccino has only froth and no cappuccino then it isn’t a good cup of joe.

Robert, in your update, you talk about the Paul Graham’s approach to “worry about building audience first” and that “that’s actually a good point of view to take.”

Doesn’t that sound like the last few internet bubbles in the Valley?

I still maintain that “grow big and” [insert GET ACQUIRED BY GOOGLE or SLAP GOOGLE ADS ON MY PAGES] is still a poor business model (if you can call it that).

Let’s not forget that Yahoo had “won” because their portal and search got more eyeballs than anyone. Only what happened? Someone with better innovation and execution (Google) came along and suddenly that vast audience switched. Why? Because the product was better.

Audiences are fickle and they vanish. Better businesses, with better products, can come along and take them away.

Don: I don’t think that many of the 1999 businesses actually had audiences of any real size or depth. And, if they did they certainly didn’t have a way to monetize those audiences. Today we do.

But, yeah, you’re right. I’d rather own Printing for Less than Digg, for instance. But that’s just me.

Yes Don, some folks improve on others but why are you techies (I am not one) persistently fixated on who leads and who’s got something better at the expense of another. There is so much room in the sandbox. Yahoo and Google are good. Microsoft and Apple are good. Tehnorati and Wiki are good. And not to tout oligopolies there’s plenty of room for also rans. There is such an appetite. But I will tell you this: you have to reach the mainstream to succeed. You must end the esoteric edge. Adopt the user POV. At our web 2.0 conference (corproate audience) this May we will limit techie vitriol–for everyone’s beneficial engagement and to actually galvanize them. It will be a lovefest not a hatefest so common in tech blogs. You see it’s about resonating with one user. We cause self-destruction somewhat like the Republicans and Democrats cause America to be seen in the wrong light around the world day-by-day in their “conversations”. Let’s call on the carpet those who do wrong–this is the power of our beneficial transparency. But let’s encourage everyone too. I am fan of every lab, every creator–they will empower our future. Remember almost all including Bill G. and Sergei B. started virtually alone. I don’t think Sergei can even accept his own accomplishments in his persistent reference to “luck” for his success. C’mon guys let’s celebrate and let’s reach out to the non-techs, the masses of users yet to be born. Where your riches are. Graham is right to the extent that you have to give audiences something they want. Contrary to some bloggers cynical view it is not pornography and free videos they seek. Who have they been talking to? People want ease, speed, knowledge, help, functionality, ubiquity, pleasure… C’mon. Let’s get real. Navel gazing won’t generate revenue. Applaud Paul for believing in “three guys” and putting money behind them. There’s plenty of room for all.

This class is worth attending. Robert posed THE question–and because his blog powers remain strong he induced wise participation from the commentarium. Thanks all. Keep it coming. I’m taking notes.

What’s a product? Something that attracts customers. What’s a good show? Something that puts asses in seats. What’s a leader? Someone with followers. What’s a good web 2.0 service? Something that attracts clicks.

At the end of the day, it isn’t the inventers, entrepreneurs or VCs who can define success: it’s the audience. They either click or they don’t.

So what’s the recipe for success? I don’t have it, but I can tell you where to look

An unsolved problem is a product opportunity. A customer pain-point is a product opportunity. But a solved problem is also an opportunity–provided you can offer a substantially easier, faster, and/or cheaper solution.

When you play the feature war on a small scale, the best you an hope for is to trade some of your audience with your competitors. But the big win is not to seduce customers away from competitors (though that’s always fun), the big win is to pull non-customers into the circle.

Anyone who wants to break out of the froth can find hugely valuable clues and tools in “Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne. Their subtitle captures their premise very well. “How to Create Uncontested Market Space and Make the Competition Irrelevant.”

Enough with thinking outside the box. “Blue Ocean Strategy” can teach you how to think outside the bubble.

It’s not just a fantasy world 2.0 bubble – the housing one is comming to the Valley as well…

@marie germain:

I think you’re misunderstanding me. If you read my linked blog entries and such, you’ll find that I’m an advocate of lots of competition. I’m a Flickr competitor, in some sense of the word, yet I blogged about ‘Flickr doesn’t suck’.

I could care less who has more market share than I do, because I don’t want to be the market leader. It’s part of our corporate strategy to NOT go for market share but rather for ecstatic customers who drive profit. I’m sure we could have offered free accounts away and grown like a rocket, too (we were on the scene years before Flickr), but that wasn’t our target.

Ask anyone who knows me and my company – we’re fixated on the customer experience and customer service, not on who’s in the lead. I have to have ready answers, because everyone I meet says “But how are you different than Flickr?”, but that’s life.

Don

Success in web 2.0? Both the idea AND the execution make you smile. Often you get the first but not the second (Riya springs to mind). Wikipedia has both (though is it 1.0 or 2.0?), as does Flickr.

Hey Don: Nice web services powered by Smugmug. I promise to look into it more. Sounds like you have great service there. Hope you find ways to get that to the masses. It’s nice that it’s not an advertising model. People are slowly learning that great things are worth $$ from the web–not just off the shelf. I cannot tell you how behind the photo shops are!! I have a client (a big retail chain–I am a markerter) that still has a guy hiding in a backroom printing photos at a snail’s pace for a price per photo that is not competitive–and the customers have to doddle in the mall for an hour+ while they wait. SmugMug is a print service killer. Everybody these days in the photo print biz: grocers, Walmart, pharmacies. It is all so archaic. You just have to induce trial. I will celebrate you and SmugMug too.

What a great post. What a great topic. I couldn’t agree more. And on top of that, I like the way the thought’s put. The thing is, I think, that there’s so much pathos involved, so much money tied up and ultimately, by those who are really in it, so much uncertainty, that the issue’s hard to get to. Hopefully this is only one of many posts like this, by Robert and the rest of the blogosphere. I do think it’s coming. The anti-froth. The see-it-as-it-is kinda folks and consequently their posts and the repercussions of them. Well, maybe that’s just wishful thinking, but we’ll see.
The most important thing I gather from your point, and what I’ve been thinking about in much the same way is the concept of perspective. For example, the now famous 53,651 Kopelman post is a great example of how even while being a VC but just out of the Valley one can get a more accurate perspective (he’s from Philly).
Another example, now that I think about it, is my own. I follow the industry closely, very closely, I know my startups, my big players and the top bloggers, but I still have the luxury of seeing it from the outside. I’m in high school still. Yep, I said it, high school. I guess I have a way different perspective for that matter then. And well, I couldn’t agree with you more, like I said. I love this stuff, I really do, but I want more and I want it better and I think it’s going to take some pretty major changes. Not to self promote, but I just wrote a post on this myself at joshwais.blogspot.com .

Oops, I of course meant to say joshwais.blogspot.com.

Well – I’m not in the valley and I’ve been saying for some time my website stats reflect far more the influence of start pages than search engines. So me no valley boy but life’s a changing – just that netvibes is a techcrunch boost so not exactly outside the bubble.

In your article, you mention that people “outside the bubble” just know how to “search” when they are looking for something. I consider myself to be very technically savvy. However, I must admit that “search” is my main means of finding things on the web as well. For those of us in the “great unwashed” outside the bubble, what should we be doing besides using Google or Yahoo?

Thanks for your help.

Greg: if you’re a geek you probably can name a few other Web sites as well. What’s your favorite travel site? Mine isn’t Google. What’s your favorite real estate site? Mine isn’t Google. What’s your favorite mobile site? Mine isn’t Google. What’s your favorite news site? Mine isn’t Google’s search engine. What’s your favorite blog? Mine isn’t on Google.

People outside of the tech world usually have trouble naming all these things. Then I watch how they use the computer and they mainly use the main search page they got used to.