adrianmott.com

I always thought that the web 2.0 phenomenon was fairly frustrating.  Technology entrepreneurs and VC’s alike spent hours and millions developing ideas and products, some of which succeeded, but most of them flopped.  Learning from the dot com boom of the late 90’s, investors were more conservative with their money this time around, and there certainly were some success stories out there.  There were also the flops however, as many companies relied too heavily on advertising revenues as their method of survival and faced the harsh realities that going this route requires high traffic volume that many companies simply could not drum up.

So what are the lessons that technology startups should take away from Web 2.0?  Well there are plenty of resources that have been developed in the actual process of DOING a startup and how to handle the development of an early stage technology product and company.  Some of my favorites are Paul Graham, 37 Signals and Seth Godin to name a few.  But I believe that the reason for so many Web 2.0 companies failing has to do with the revenue models that they had (or didn’t have).

Perhaps going forward (in Web 3.0? ugh…), startups will take this lesson and be more inventive in terms of their revenue models – or perhaps the paradigm of free web services will shift (something I would love to see happen).  Another interesting thought that I had on these companies is that there are very few enterprise companies that have had real success and had an IPO.  Success in the Web 2.0 world meant an acquisition, not long term sustainability.  In any case, here are some interesting graphics that speak to the Web 2.0 movement, it’s success and failures:

Flipped Companies:

Failed Companies: