I follow Steve Rubel’s blog, he always writes thoughtful pieces and finds great new gems. Last night however, he has written a post about Web 2.0 being Skunk Drunk on Its Own Kool-Aid that has quite a bit that I do not agree with.
His premise is that Web 2.0 innovation is gone, that great companies of 2004 are no where to be seen, that new companies are getting lavish and are here for a quick buck. He says:
Let’s face it, we’re skunk drunk and it’s because of money. It’s almost like we all need to enter Betty Ford Clinic 2.0 together. This time, it’s not stock market money but private equity, M&A, VCs and to some degree the reckless abandonment of logic by some advertisers who are perpetuating what is sure to end badly when the economy turns. Hubris is back my friends.
First of all, today’s companies are seeded with a lot less money than before. Series A are smaller and so are series B. A lot of innovation has been brought in on a cheap. Yes, there maybe quite a few companies out there and VC placed a bunch of bets, but these bets are spread out among many so to suggest that people are drunk and wasting money is wrong.
Secondly, this is way different from 10 years ago. This is not a bubble, this is an innovation cycle. Thats how things work. When opportunities come along, funding happens and some over funding, and then things cool off. This is not really a problem.
Steve sites YouTube acquisition. I agree that the amount of money Google spent was huge. But this was a unique instance and apparently Wall Street thinks it was worth it - hence Google’s stock price. Facebook is likely to be overvalued right now as well, but at this point it is Microsoft’s problem, at least until IPO happens.
Perhaps the biggest issue I have with Steve’s post is that he fails to understand that after innovation there is a digestion. Daily we are faced with examples of gaps in what we created that need to be patched. RSS is still not mainstream. People still do not get structured information. Not all services have APIs and not all APIs are done right.
I am with Richard on this. We are still innovating, even though it is not of a storm as it was. We can’t be because we need time to understand and fix up some of what we already built.
So this is not time to be negative, instead this is the time to go encourage people to fix things, to clean up and to digest what we created. And this is not news, I have written about it on Read/WriteWeb on August 22nd.
And finally, we are surely continuing to innovate. Look at what we have created and watch AdaptiveBlue over the next few months - more innovation is right around the corner.