The Idea Dude


Tuesday, January 09, 2007

Where is the equity in Web 2.0?

The acquisition of MyBlogLog by Yahoo yesterday coincided with our own thinking for 2007 of our own venture at TheGoodBlogs. First of all, for me there are always good feelings when startups succeed because so many fall along the wayside. MyBlogLog started January 2005, self-funded with 5 people. So a 2 year effort yielding $12 million is certainly a win in my book. The stats I heard were 45,000 members and $1 million views per day. At $3 per month or $25 per year and say 1 in 10 were premium members, the yield would be around $100k revenue from subscriptions. Not bad but certainly not what Yahoo was buying. The equity I believe was having statistics for 45,000 blogs and the ability to feed that information into the rest of the Yahoo search and e-commerce network.

So the question regarding Web 2.0 equity is still an enigma to me, especially when most services are free and only a tiny fraction would pay for premium services. Fighting for ad dollars seems to be upward battle with the amount of noise and choice out there. Is building a Web 2.0 business an oxymoron or is Web 2.0 build to flip a better description? So often technology is cyclical so is the current phase a reflection of the early days of the Internet when 'eyeballs' was the equity? In which case are we heading for business-2-business (B2B, if you remember that phrase, you probably have scars to prove it) in social networking? At least, in the business world, there are things called IT budgets, and companies are willing to pay a premium for quality and service. What do you think?

As they say in the movies... show me the money!


Anonymous Anonymous said...

If it is build to flip, then you can't escape the thoughts of another bubble. I've already read some blogs that think that is coming far to quickly.

However, as you point out, the companies that are being bought are being bought for a good reason, namely a userbase such as MyBlogLog is and rarely for the revenue they are generating.

I agree with you that it is nice to see these kinds of startups succeed as it provides inspiration to continue my own efforts.

5:29 PM  
Blogger The Idea Dude said...

Thanks for the comment, Robert. I once heard the 'bubbles' come in 5-7 year cycles. Hopefully this one has more substance and less hype.

11:10 PM  

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