The Myth, Reality & Future of Web 2.0

This week’s hot meme has many of the thought leaders, investors and pundits doing a bit of hand wringing about the whole Web 2.0 thing. Some have called for a sanity check, and others called it a bubblet.

The discussion flared up when Josh Kopelman, a well known angel investor, wrote that many of the Web 2.0 companies that were cropping up were targeting a niche audience. He found that many were me-too or forgettable permutations of some of the more established players such as Flickr, You Tube or Digg.

The Myth of Web 2.0 is the investment opportunities. The reality of Web 2.0 is too little original thinking. Web 2.0, simply put, is a set of technologies and a new kind of thinking, which companies like Yahoo, Google, Microsoft and AOL are incorporating in their products. That’s the reality and the future of Web 2.0. Looking out further, Web 2.0 technologies could and should make an impact in the Enterprise, that boring place we call work! (Full post, after the fold)

A few months ago, I argued about the scalablity problems beyond 300,000 users and how companies have to start spending the big dollars on building out the infrastructure. The response to that post was almost bi-partisian: the readers who were from the network builder camp agreed with what I was trying to say, while others simply could not buy into the scalability as a problem theory.

The 53651 Meme

Meme of the week, however, explains why the second camp did not care much for the scale as yet. Josh Kopelman pointed out that many of the so called Web 2.0 products were catering to a highly skewed audience, the one that cares about all-things Web 2.0. “Too many companies are targeting an audience of 53,651. That’s how many people subscribe to Michael Arrington’s TechCrunch blog feed.” he wrote.

My theory on this goes something like this: “The boom here is about people starting companies, getting funded. Where’s the opportunity for second-hand participants? None of these companies are making money, or going public anytime soon.”

Paul Kedrosky is right when he writes, “a just-launched service gets to wander around telling people that it already has, say, 12,000 people trying the product when the reality is that it is the same fickle folks who try and discard everything.” Brad Feld says that first 25,000 users don’t mean anything.

Dave Winer takes a different perspective, and says, that the number of users matter (or don’t) but it all really depends on what your motivations are: someone who simply champions innovations or someone who invests in the Web 2.0 start-ups. Jeff Nolan sums it up succinctly when he says that none of these things really matter to the people who got money to spend - the enterprise buyers.

I don’t mind living in the echo chamber, and I certainly wouldn’t suggest that we get off the hype train or suddenly strive to become boring like so many other industries, but I would caution to not drink the proverbial kool-aid to the degree that we have in the bubblet that we seem to be in for the last year.

Mainstream & Web 2.0: Don’t Know, Don’t Care

At Paul Graham’s Start-Up School, when I asked people about Netvibes and Tech.Meme well, not many people were aware of them. (Niall thinks it has to do with my accent, that people did not hear clearly and thus did not raise their hands. Quite possible!) More recently, when in New York, even my more tech-savvy pals were unaware of this whole Web 2.0 thing, though most read weblogs (in html format) and listened to podcasts. A few weeks ago, I had a conversation with Michael Eisenberg, a big shot VC in Israel (and a general partner at Benchmark Capital.) He said, that Web 2.0 might just be a Silicon Valley thing, and was quick to point out the differences between the Web 2.0 and consumer Internet start-ups (such as You Tube.)

The way I see it, there is a lot of commonality in Indian food and Web 2.0. Even as early as 1990s, Indian food was not familiar to the American palette. It took a long time before people got used to the earthy aromas and spices. But once they did, the Indian restaurants blossomed in America. But even now I don’t think people are adventurous enough to try anything other than Chicken Tikka Masala and/or Daal (Lentils) with rice.

It is the same thing with Web 2.0 technologies. Yahoo and AOL, two companies who know the mainstream consumer are introducing the Web 2.0 in “Tikka” sized chunks to the mainstreet. AOL AIMPages is a good example. So is My.Yahoo. There is enough RSS/Ajax/whatever that the mainstream consumer can handle. Google, which makes a heavy use of Web 2.0 technologies, in offerings such as GMail, but the mainstream users are not sweating the details. Microsoft’s Live offerings, though still popular with early adopters, are going to help spread the Web 2.0 philosophies in a manner the mainstream users can handle.. (Read: What do Microsoft and Macy’s have in common?)

The Web 2.0 pioneers who created some fantastic new apps are like those star designers. They created the template of what’s cool. A few months later, just like Macy’s Microsoft learnt the new babble. Microsoft Office Live, is the watered down version of Web 2.0, wrapped in a business model for folks who don’t know and frankly don’t care about Ajax or whatever that goes into the cauldron.

Web 2.0 Enterprise

While many are focusing on the chasm (as PK calls it) between the early adopters and mainstream consumers, I have a slightly different view on all this. I think the Web 2.0 Web 2.0 philosophies (and related technologies) are going to have the maximum impact in the enterprise.

I have argued about this in public forums, and private chats with many within the industry. A faster, better more nimble front end cobbled together for a corporate application such as PeopleSoft. The nimbleness of some of the Web 2.0 applications is a perfect match for software on demand or SOA or whatever they are calling it this week.

The Web 2.0 apps leverage cheap hardware, open standards and availability of plentiful bandwidth. Inside the firewall, bandwidth is many times what we have on the public Internet. Cheap hardware and open standards are pretty much a given in any enterprise. But more importantly, the size of the audience is predetermined, and the operating environment is more controlled. This eliminates some of the issues of scale and scalability associated with consumer-facing applications.

And frankly, most enterprise applications could use a serious makeover. I cringe every time I have to use one of the many apps you have to touch as an employee of a large company. A more indepth discussion on this can be read on Peter Rip’s blog, where he writes, “Web 2.0 is a lighter weight version of SOA. RSS/REST is the new EAI.” Dion Hinchcliffe, makes a very compelling and coherent argument in favor of what Rip is saying.

SOA is both the “Mini-Me” of Web 2.0 (identical in almost every way but 1/8 its size) and a key archetype for it as well. Though admittedly one that lacks a few important ingredients. What is compelling, and I’ll talk about this in detail in future articles, is that Web 2.0 actually has powerful mechanisms that “complete” SOA..