Great Depression 2.0 Resurrection: A Viable Business Model

In today’s Internet economy, there has been a monumental, seismic shift in everything called Web 2.0. As with any other sector, there has been tremendous layoffs, companies going under, and it being virtually impossible to raise significant VC funding without proof of revenue. As I wrote in my previous post, despite the waterfall of bad news that permeates the publications we read, I still believe that starting a business in this environment can be a good idea.

Why?

It seems counter-intuitive, for Web 2.0 vets, but this is the first time in three years where you are expected to charge for your services! Long gone (for the near future) are the days where you have infinite competitors, driving down the price of your offering to zero, while forcing you to up the ante with features and functionality, hoping to break even by slapping on some Google ads. The bigger the pockets, the more you can hold out on developing a viable business model. I feel like any new company today that says they will be ad-supported will immediately get laughed at, and saying that you’ll figure it out after you get critical mass, is now unacceptable Web2.0-speak. You have to generate revenue immediately, otherwise you will not be here tomorrow. Very few folks have disposable money lying around, eager to jump into entrepreneurship to compete with you!

Long gone are the days where everyone at their job is waiting to start their own Web 2.0 start-up. Long gone are the days where you can legitimately say to people that you have no idea how you’re going to make money. Outside of the LeWeb Conference going on right now, I don’t remember the last time I’ve read about a significant Web 2.0 conference. Even the Crunchies awards and the Open Web Awards have had materially less buzz than last year.

I can’t remember the last time that I’ve heard about ten new, intriguing start-ups in a given week, reading all the blogs like Techcrunch, Mashable, or ReadWriteWeb. I check my feeds once or twice a day, where in the past, I was checking every hour, learning about tons and tons of new ideas. Web 2.0 isn’t sexy anymore. There won’t be any major acquisitions anytime soon, because the Yahoos, Googles, and Apples of the world are not buying anyone for the foreseeable future. They are weathering the financial and economic storms, and it’s really reflective in their stock prices.

I prefer things this way. I don’t have the deepest pockets by any stretch of my imagination, and I see competitors going out of business left and right. They were structured for a different environment, and with things slowing down, I feel like I have a chance. I have a long, long way to go, before I get out of this Alpha state, but  I am happy that I don’t have to worry about ten new companies starting up this week to compete with me. I think those that are the most passionate about the problems they are solving will prevail in this environment. The goal at this point in time is to be alive two years from now, when everyone is anticipating a stable and increasing economy.

We’ve learned a great deal since starting this journey, and over the next couple of months, we will reveal why we got in this business in the first place. We’re excited, encourage, and with some major partnerships that we have in the pipeline, we will do the previously unthinkable, generate revenue.

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3 responses to “Great Depression 2.0 Resurrection: A Viable Business Model

  1. That’s the spirit! lol.

  2. That’s an interesting take. I think that companies that are able to hunker down and develop usable, practical software over the next 2 years or so will emerge from this crisis in good shape once the money starts flowing. It’s a good time to concentrate on improving one’s software without being distracted by other things. At least, that’s one way to look at things positively…

  3. Tom,I agree 110%. There is so much terrible software out there, and now people can focus on making it useful, usable, and valuable, instead of putting it together, hope to get on Techcrunch, and profit.

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