Web 2.0 & The Changing Ethos Of Startups

I am not so unduly optimistic about the Web 2.0 movement – I had been calling for a reality check for some time. But the enthusiasm shown in building this movement is indeed amazing and some of applications show promise of success.

There are some interesting new trends on the Web, and it's the nature of a phrase like Web 2.0 that adheres to them, says Paul Graham. He finds that a lot is different now from 1998. Web sites look different. Startups operate differently. People use the Web in different ways. The changes were gradual, but if you have a gradual change of sufficient magnitude, it starts to become a different world. He sees that technology is an ever larger component of business, so power is shifting to the people who are experts in that, rather than management or finance. He adds that the startup world will increasingly be ruled by technical people rather than business people. The idea of building something popular then figuring out how to make money from it was born in the Bubble. It sounds irresponsible, but it works.

If you can make something people want and not spend money, you're 90% of the way there. Startups will be ever more common because they're now so cheap to start. In most of the startups we fund, the biggest expense in the first year is simply food and rent. It costs little more to start a startup than to hang around doing nothing. And instead of having to go work in a cubicle in some office park, you get to work with your friends on your own project. If you succeed, you get rich. All part of the silicon valley edge phenomenon. Clearly, the web2.0 movement is gaining momentum - though the coverage seems to be ahead - calling for a reality check.In it own way the web2.0 ecosystem is beginning to be felt, albeit a small niche now. My feel is that these developments represent the very tip of exciting innovation to come — innovation that will require a new approach to venture investing led by a new breed of angel and venture investors that are able to successfully balance irrational exuberance with prudent funding to fuel the creation of new platforms for growth.