Whether or not you think it's coming, we may have already witnessed the burst of the Web 2.0 bubble, sans the panic-driven running/screaming.
On a call yesterday with Bob Allard, president of software development firm Extension Engine; Richard Banfield, CEO of Web design and development firm Fresh Tilled Soil; and Dan Allard, director of business development at Fresh Tilled Soil, the execs explained their theory that Google itself is a bubble, and -- as per the Web 1.0 law of numbers -- that bubble, in a way, has already burst.
"The 1.0 bubble was thousands of companies [that] raised billions of dollars worth of market cap... appeared out of nowhere during the IPO market, and then practically 100 percent vanished," says Bob Allard. In Web 2.0, on the other hand, this hasn't happened, because all of those IPOs have gone to Google rather than several thousand startups. "In lieu of a Web 2.0 massive IPO market and bubble deflation, [Google's market cap] went from $300 billion to $150 billion... Call it 'bubble bursting,' call it 'correction,' but that's like fifteen $100 million companies going out of business in three months."
[Ed. Note: Data from early November shows that Google's market cap peaked near $230 billion and stands today at $145 billion -- still a significant drop.]
Allard adds that, had Google not been around to hire them, those couple of thousand now-Googlefied Stanford and MIT graduates would have "probably been working together to start their own IPO-driven startups," scattering IPOs across the board rather than centralizing them within one giant.
So what does this mean for the current Web 2.0 community outside the Google sphere? According to Richard Banfield, the Google bubble, and essentially its "burst," is significant because Google acquires more companies than anyone else in the Web 2.0 space.
"Entrepreneurs know they're going to build the next whatever-it-is with the sole intention of selling to Google," says Banfield. "If Google isn't buying, because they don't have the cap power to do that, it's going to significantly affect [the industry]."
"There's less of a hype than there was during the first bubble... We did get caught up in the hype again, we did invest in a lot of companies... A good portion have not survived," says Allard.
"I don't think Google's to blame, but I do think we gave a lot of credit to the Google monster, [assuming] 'If nothing else, they'll acquire us and we'll share in the rising tides.' "
I think if i'm not mistaken the "Semantic web" is what has been touted as the Web 3.0.
So actually Google belongs to the Web 2.0 era and since it has been the engine of Web 2.0, people are just curious to know whether they will be a reliable barometer of what is happening in the Web 2.0 world.
Well it seems the tech savvy guys like to confuse ordinary folks like us with thse tech jargons and don't be surprise if you start hearing about Web4.0 even though we are still to know what make up a web 3.0 technology!!! I share your concern about the need to have more reporting and description but i think categorization will be a dominant part of the eveolution of the web.
I always thought the term "Web 2.0" was an anachronism, like "horseless carriage". First of all, who creates 1.0, 2.0, 3.0 web sites? It's a process of continual change.
As far as Google, when were they ever the "Semantic Web"?
They might be the "Boolean" web, (as in Boolean Search) but they are certainly not semantic like Hakia.
There are lots of emerging markets, the problem for pundits is there is no overall "word" to encompass them. Ever individual effort is different.
I would like to see more reporting and description and less categorization. Interesting areas are how WiMax and the Asus's are making a Web-2-Go rather than a web 2.0
I guess we can't say for sure if Google's market cap drop is contributing to the recession, but it would definitely make for a good headline.
The execs I spoke to seemed to think that, either way, VCs wouldn't be investing in start-ups they way they used to because, with today's social Web, they can see how well certain companies and ideas are received on the Internet before deciding to jump right in with funding. However, I wouldn't doubt that Google is stifling innovation. Particularly if Google stops acquiring companies because of its market cap, some young entrepreneurs may be less likely to launch their start ups.
Great article, it raises two questions for me. First, if the value of Google's market cap has dropped from $300 Billion to $150 Billion could this one of the contributing factors to the the current recession? Second, if all of the IPO's are going to Google, instead of new start ups, could this be stifling innovation?
According to whom? it doesn't trade on the open market and never had an IPO. So I guess you could base it on the Microsoft investment, but that happened a while back and surely if Google has dropped $100B in market cap I can bet Facebook has.
In addition, Google has an actually business model that generates billions of dollars in revenues and profits. Facebook doesn't have that yet. In fact, last I heard, it was still losing money.
Interesting post. I will only like to cite two companies (not so old) that were not mean to be acquired by Google. One is Facebook which according to techcrunch has current market worth of $16 billion. Second example is that of Youtube . Youtube was acquired by Google but the intention of the founders of Youtube were not to be acquired by Google
Google is a bargain is also a worth read portion of this latest article by CNN money.
In general, although the silicon valley is going through a slump but I am optimistic as some good investments have been made in the fields that have not been generating so much revenue so far but are expected to be full of potential. One such example is Location based services.
I came across this article and it perfectly sums up your post in a very powerful way." Web 2.0 is an aftermath of Google" says Miner and so doom's day prophet of web2.0 should just basically watch Google's share as a very reliable yardstick to sound the bell:
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