Great article by Jack Biddle of Novak Biddle Venture Partners, particularly this part about the explosion of “Web 2.0″ companies:
Here is What VCs Face the Second Half of 2007…
Old school becomes fashionable again.
1) If this was easy, everyone would do it
2) When everyone does it, its too easy
3) When its too easy, no one makes money
So my prediction is that the smartest people on the planet will continue to beat each others brains out to no net good end for another 2 quarters, until being a doctor, or a lawyer, or an investment banker is hands down the coolest and most lucrative gig.
When venturing is about money, no one makes a dime. When venturing is about pioneering, because pioneering is cool, a lot of innovation takes place.
My prediction is that by the end of 2007, people won’t venture for profit. They will venture to do really cool things, because they can.
And 10 years later… the best of the best will get paid despite the fact they had the time of their lives.
Beating each others brains out. What a great quote. Indeed, right now the smartest, most talented people are rabidly innovating to try and be the next AJAX-wiki-blog-social networking-collaborative-search… (you get the idea) site. Many people have realized that building these sites with open source tools or cheaper foreign labor is even possible as a part-time gig.
This cannot be sustainable. The online space continues to grow in audience size, but there are not enough eyeballs and advertising dollars to go around to make people enough money to support all of them.
In the meantime the Fortune 500 IT departments continue to have major, basic infrastructure and operating challenges. Here the competition is relatively lower and the best and brightest will soon return to fight these challenges.
I’m starting to wonder if the online space is rapidly heading to a point where the only type of service that can survive is a not-for-profit that leverages (essentially free) tools and infrastructure to build coalitions of innovators who are happy to work for nothing on something they feel passionate about.
