Web 2.0 – And tonight we’re going bankrupt like it’s 1999
Web 2.0 – And Tonight we’re going bankrupt like its 1999!
I recently watched a documentary that related to the Web 2.0 bubble of a few years ago.
Web 2.0 is a buzz-term coined in the US to signify a change of emphasis on Internet behaviour. This is typified by a user or consumer driven internet model where the user is in charge of content. This is also known as social media.
Youtube, Wikipedia, Facebook, Myspace are all market leaders.
I was FASCINATED to catch this documentary, which debated this one underlying question:
“Is Web 2.0 another .com bubble?”
The over-riding consensus amongst the participants was NO.
I thought I would do my own research on the winners and losers of the Web 2.0 2006 startup race, as we enter 2008.
Is it reminiscent of the late 90s? How much has been lost in the frenzy? How are the first-movers fairing 18-24 months on?
In much the same way as the car-crash theory we all like to take a peep at failure, and there is something mischievously satisfying about hearing how many millions have been lost by multi-millionaires in bad investments.
So here goes:
At the time of the film, Bolt was sitting comfortably on a market value of around $130m. Shortly after this, a court case was filed by Universal for copyright infringements to the tune of $10m. This combined with an ever-decreasing user base proved to be too much for the company to handle.
After a last ditch and ultimately unsuccessful acquisition attempt of $30m by GoFish in February 2007 the company filed for bankruptcy, and in August 2007 the site was taken down.
The domain is now up for sale, along with all intellectual assets, bidding starts at $150,000 (£75,000) …. Any takers??
This was a browser preview programme. Again, the owners of this, publicly cast doubts of a bubble aside in late 2006 (incidentally they were in negotiations at the time with the first rounds of Venture Capital.)
The Venture Capital round raised $5.8m in Jan 2007, and although the idea may live to fight another day, the Browster brand has been abandoned it seems, and the site disappeared without a trace. This is still pending official word however.
But think of this, between the Venture Capital round and now the company has squandered a remarkable $11 A SECOND… for a whole year!
The CEO of Edgeio, Keith Teare is a British chap, seemed very much in the dodgy car salesman mould.
This site was a classifieds site in essence, think Ebay meets Autotrader.
There was a modest startup fund of $1m to get this show on the road.
This was followed by (yep you’ve guessed it) a finance raising round in July 2007 (That is just 6 months ago) that brought together a cool $5m
After a drastic fall in user-base, the management decided to jump ship and sold off the company to LookSmart for just $280,000, yes just $280k – 6 months after convincing investors to give them $5m!
The domain is now up for sale.
So that’s an approximate $40m that’s been lost on these three outfits over the course of the last 18 months.
Every cloud has a silver lining however, and here are the silver startups!
This is a website builder essentially, with a strong emphasis on photo website building, which incorporates part of a wider online community within Piczo.
This site has now established itself in the top 400 most visited sites in the World according to Alexa!
A nice concept, well executed it seems!
This is a nice idea this one, a custom search portal for the topic of your choice.
It is a New Zealand based company, and is still doing well with around 800,000 searches per day, earning it a place in the most popular 1500 sites on the web!
This is a job search engine, backed by over $17.3m in investments.
Rumours were rife in early 2007 with relation to a takeover bid from Google, these proved to lead to nothing. The company is prospering at the moment, with sales of
Competition between simplyhired and main competitor indeed.com is fierce currently, with US analysts predicting that “This town ain’t big enough for the 2.0 of them”
Acquiring the most notable volume of investment for the winners, here (a total of $30.5m) Videoegg is approaching 50,000,000 unique visits per month, and as it tries to redefine itself, in order to emerge from the shadow of Youtube, VideoEgg certainly seems to be heading in the right direction.
Has the nicest looking site of the lot of them anyway J
A wiki based site, that offered a more “software orientated” web experience. Users could share spreadsheets, word files and the site had social networking, and friend finding capabilities in line with the normal business model.
The company was acquired by Google in October 2006, and has since been closed for new business.
Nobody is quite sure what is going on here, or for how much the sale was – but as is the original tone, JotSpot is currently not in operation for new users… so it remains to be seen whether this will be a winner or a loser.
So in summary, was it/is it/is it going to be a bubble or not?
Like in most forms of business start-ups, some win some lose.
However you can be sure that as soon as another buzz word comes around, and cash hungry investors get all hot under the collar, there WILL be the foolhardy investments made.
This is the biggest danger to these start-ups in my opinion: False hope, un-natural growth and too much money too quickly.
I must also point out that these aren’t the overall winners, I could write reams about the Youtubes of this world, however you already know about those super-successful start-ups… chances are, that with the businesses included on this list – you do not.
I also muse, as I write this – that there are no inclusions from the UK on this list, or many lists on the web in terms of startups with any chance of making a mark.
Here is hoping in years to come we too can produce those killer ideas alongside American entrepreneurs….
So as far as Web 2.0 goes: “To bubble or not to bubble – I am sure we will find out!”