The Challenge of Web 2.0 Company, there are too many of us!

Categories: Web IndustryPosted on June 15th, 2007

It’s hard to keep track of influx
I’m having an increasingly hard time keeping track of all the start-ups being launched. I go to STIRR events (and here, and here) Startup Launch events, read Techcrunch, Techmeme, Digg, etc. One of the markets that I think is interesting are the do it yourself Social Networking applications (build your own myspace) and I started a list. At first there were 8 companies on it, now there are over 50!

Low, low barriers to entry
With startups being so cheap to create (see this video interview of Guy Kawasaki and his $12,000 dollar success/failure) we’ve got to believe that the barriers to entry are low, maybe too low. As technology matures, open source infrastructures are a commodity, and grabbing piece meal of parts is so easily found, how will a Web 2.0 company differentiate? It’s also interesting to see which companies are getting funded.

Differentiation
There’s a few things they can do of course, 1) Niche into a different market, or focus on a vertical. 2) Have kick-ass marketing, know the right people, learn how to be louder that the rest, or get the ‘influentials’ (like the 400 on my Twitter follow list) to check the product out 3) Build a disruptive technology that no one else has done yet.

I suspect for the successful company, it’s going to be a combination of two or three of those elements that will yield success. I get countless emails from startups, PR firms, and the like to try out their products (and of course blog about it) but over 90% of the time I ignore them. Why’s that? They often seem the same.

Deciding factors
Of course, I fall into the same boat, if there are 70 mlllion + blogs out there (not to mention video blogs) what will make me stand out and be unique? The web sure seems to be an empowerment, it doesn’t take much for that college student to launch his website dream, but with the barriers being so low, I really only believe there’s room for a handful in each segment. I was here at the first boom, I smell a shakeout sometime in the future, maybe 2008.

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This entry was posted on Friday, June 15th, 2007 at 10:10 am and is filed under Web Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

I absolutely agree. There is not enough differentiation among Web 2.0 startups; there’s getting to be far to many “me toos” instead of geniunely new ideas.

I still believe there are still opporunities in finding novel applications of Web 2.0 technologies in markets that haven’t seen them yet.

After all, the Internet is very big and as much as people in the valley like to think everyone has heard of a company like Digg, the fact is that most people haven’t.

In other words, there is still a LONG way to go before all of the Web 2.0 technologies that we take for granted have reached their full audience. With this growth and expansion there will be plenty of opportunities for companies who can apply these technologies to real-world business problems.

Joe Davison
TechAnalyst.com

Posted by Joe Davison on June 15th, 2007 at 3:47 pm

Jeremiah,
Our company is developing a new version of our platform which will incorporate a number of social media features (perhaps another one to add to that extensive list you started building in February).

We realize the field is already very crowded, so we are banking on our ability to reach into untapped verticals as the key to our success. We started with the real estate industry and had some degree of success as being a recognized player. Now, we’re turning our attention to a couple of others.

Frankly, that seems like a logical strategy for any startup. Rather than attempting to achieve broad-based attention, which invariably leads to marginal penetration in any given industry, it makes sense to dig deep into specific verticals.