Web 2.0: Lies, Mystery, and Opportunity

Slide 1: Web 2.0: Lies, Mystery, and Opportunity Rolf S kyberg rskyberg@ebay.com Disruptive Innovator for eB ay, Inc. M onday, 16 June 2008

Slide 2: I often get asked:

Slide 3: “ what exactly does a disruptive innovator do? ”

Slide 4: I am tempted to say,

Slide 5: I innovate,

Slide 6: disruptively.

Slide 7: but that’s simplifying things.

Slide 8: I do innovate disruptively,

Slide 9: but I also have the roots of an evangelist,

Slide 10: and it’s in the combination of the two,

Slide 11: that I can be most effective.

Slide 12: sometimes, my disruption is the innovation

Slide 13: sometimes, my innovation is the disruption

Slide 14: more to the point,

Slide 15: the wider I can spread new ways of looking at the world,

Slide 16: the more disruption I can cause, by proxy.

Slide 17: and hopefully, that disruption

Slide 18: starts with you.

Slide 19: last year I told you about

Slide 20: horses,

Slide 21: radios,

Slide 22: birds,

Slide 23: dishwashers,

Slide 24: and France.

Slide 25: this year will be

Slide 26: no different.

Slide 27: I also told you

Slide 28: that you should sell hotdogs,

Slide 29: imagine the social aspects of your business shop eat

Slide 30: and to stop being fascinated

Slide 31: that your toilet is internet enabled.

Slide 32: of course, not to mention,

Slide 33: my favorite slide

Slide 34: the electric jock strap.

Slide 36: this year I'm going to tell you a new story

Slide 37: twice as shocking as the electric jockstrap,

Slide 38: and no less important.

Slide 39: it starts, now:

Slide 40: The Lie (we all wanted to believe)

Slide 41: the title of my presentation last year was:

Slide 42: "Web 2.0: Why We Got Here and What's Next"

Slide 43: I remember thinking as I stood before you

Slide 44: "well isn't Web 2.0 a little dated?

Slide 45: “ isn't it kinda already over? "

Slide 46: but based on the reception I received,

Slide 47: the message that I gave was right on target.

Slide 48: I'm going to start this presentation

Slide 49: by reminding you of last year's message,

Slide 50: "Web 2.0 is great and all,

Slide 51: but it can be even better if you fulfill needs.”

Slide 52: perhaps the part of the previous sentence left off

Slide 53: is the why.

Slide 54: of course it's implied:

Slide 55: by fulfilling needs, you increase your business

Slide 56: and therefore profit.

Slide 57: but what if you're not generating any profit in the first place?

Slide 58: what if you’re just starting out?

Slide 59: is Web 2.0 still the path to riches?

Slide 60: this morning I'm going to paint you a picture

Slide 61: of where others have left off

Slide 62: and your opportunity begins.

Slide 63: maybe I should have entitled this session:

Slide 64: Web 2.0: show me the money

Slide 65: so let's start with a story:

Slide 66: since ancient times

Slide 67: it was known that rubbing a piece of amber jewelry

Slide 68: with a patch of fur

Slide 69: could create an electric shock

Slide 70: specifically, the rubbing would create static electricity.

Slide 71: + + + + + + + + an imbalance of electrons _ _ _ _ _ _ _ _

Slide 72: + + + + + + + + wanting to “ jump back” from where they came from. _ _ _ _ _ _ _ _

Slide 73: you've probably been shocked

Slide 74: when exiting your car

Slide 75: even though your seat is not made of amber,

Slide 76: and your backside is not covered in fur.

Slide 77: for a long while,

Slide 78: static electricity was regarded as a curiosity:

Slide 79: something known, but not understood.

Slide 80: in the 1700's experiments started in earnest

Slide 81: and scientists got pretty adept at creating a charge

Slide 82: but they still didn't know what to do with it.

Slide 83: so, they took turns igniting tins of alcohol,

Slide 84: shocking themselves and each other,

Slide 85: lining up monks in a mile-long row

Slide 86: and shocking them,

Slide 87: shocking birds and beasts at a distance,

Slide 88: and even lining up 900 soldiers

Slide 89: having them hold hands

Slide 90: and shocking the wits out of them

Slide 91: for the amusement of the royalty.

Slide 92: electrity was great,

Slide 93: a fun party game

Slide 94: but what to do with it?

Slide 95: they made all sorts of fascinating devices

Slide 96: some for shocking

Slide 97: some for sending sparks shooting across the room

Slide 98: one was a tiny cannon you filled with swamp gas,

Slide 99: corked the end, and ignited with a spark.

Slide 100: heady with passion of the era,

Slide 101: embracing both the ducats

Slide 102: and the time's discoveries,

Slide 103: these illustrious researchers

Slide 104: created a series of fantastic contraptions.

Slide 105: their elaborate machines

Slide 106: were financed by the kings and queens,

Slide 107: or lords and barons

Slide 108: (some of whom they were themselves)

Slide 109: and often drew a large audience,

Slide 110: or at least the consternation of popes.

Slide 111: and yet, electricity was still a novelty:

Slide 112: while these machines might be good

Slide 113: at making dead frogs dance,

Slide 114: hardly was this a path to riches.

Slide 115: the real value of electricity

Slide 116: wouldn't be known for another 150 years,

Slide 117: when someone figured out how

Slide 118: to turn it into a reliable light source.

Slide 119: shocking each other was amusing

Slide 120: for a century and a half,

Slide 121: but darkness itself was the problem electricity was to eventually solve.

Slide 122: let me tell you another story

Slide 123: with a similar beginning,

Slide 124: and a twist near the end.

Slide 125: in the dark days following the first dot-com bust

Slide 126: the world was flush with opportunity:

Slide 127: massive investment

Slide 128: in internet-delivered dog food

Slide 129: was now sunk cost

Slide 130: and the raw materials for growth

Slide 131: were abundant.

Slide 132: one raw material was the trained professionals

Slide 133: and as you would expect:

Slide 134: with no dot-com to boom,

Slide 135: they were bored.

Slide 136: the curious among them started picking up the pieces

Slide 137: mashing them together in interesting ways

Slide 138: and creating new fantastic machines.

Slide 139: eventually they needed help,

Slide 140: and additional dollars,

Slide 141: and it wasn't long before the engineers and V Cs came

Slide 142: attracted by a hunger

Slide 143: to be part of the next big thing.

Slide 144: the gadgets with promise

Slide 145: attracted the most attention,

Slide 146: and collectively began to take shape.

Slide 147: whatever that thing was with the old web,

Slide 148: this new one is awesomr!

Slide 149: instead of watching dead frogs dance

Slide 150: you could view numa numa dance on Y ouTube

Slide 151: let your friends know through Digg,

Slide 152: bookmark it with del.icio.us,

Slide 153: spam your contacts on their myspace wall

Slide 154: all while snapping photos of their reaction

Slide 155: to then post on Flickr

Slide 156: and what was the twist?

Slide 157: lumbering giants of the first internet age awoke

Slide 158: reached for their wallets

Slide 159: and plonked down fat stacks of cash.

Slide 160: these new startups should fit nicely

Slide 161: with their existing cash streams.

Slide 162: suddenly, the new exit strategy wasn't an IPO

Slide 163: it was getting bought out.

Slide 164: create a machine that's fantastic enough

Slide 165: and somebody wealthier than you

Slide 166: will step in and make your dreams come true.

Slide 167: yippeee!

Slide 168: massing their arsenal,

Slide 169: the remaining entrepreneurial among them

Slide 170: smelled the fortune and dove in with both feet.

Slide 171: the lie we all wanted to believe

Slide 172: was that all it takes is a quirky idea,

Slide 173: grab some pieces,

Slide 174: and a whole lot of pastel graphics.

Slide 175: then,

Slide 176: step 4 profit!

Slide 177: and perhaps it wasn't a lie really,

Slide 178: nobody told us that we'd attain fame and fortune

Slide 179: but we hoped,

Slide 180: we believed.

Slide 181: we watched a lucky few come up all cherries

Slide 182: in round two of the web.

Slide 183: yet some held back

Slide 184: “ I don't get it,” they'd say

Slide 185: “ I don't believe it,” said others.

Slide 186: the skeptics were unswayed by the new web

Slide 187: at lunch time, the old guard and new guard would spar:

Slide 188: "how are you going to make money showing videos on the internet? "

Slide 189: "doesn't matter!” they reply,

Slide 190: "we'll just put some ads on it!"

Slide 191: and therein lay the mystery:

Slide 192: if the coffers of Web 1.0

Slide 193: wouldn't cough up the cash for all of their projects

Slide 194: how were they going to make money?

Slide 195: it's wonderful if you can create: the next social network around categorizing and tagging media via your mobile phone

Slide 196: but is anybody going to pay to use it?

Slide 197: The M ystery (of what to do next)

Slide 198: problem was,

Slide 199: many of these fantastic machines

Slide 200: were novel toys,

Slide 201: stunning in their own right,

Slide 202: but still largely

Slide 203: flights of fancy.

Slide 204: they were solutions without problems,

Slide 205: or at least:

Slide 206: solutions without problems people would be willing to pay for,

Slide 207: yet.

Slide 208: how do you monetize something never designed to make money?

Slide 209: if cash flow wasn't part of your original objectives,

Slide 210: it's unlikely it will exist in the final product.

Slide 211: to understand the future, we must look to the past,

Slide 212: the pieces that I've been mentioning

Slide 213: are ones you should all recognize,

Slide 214: in fact, I mentioned most of them last year.

Slide 215: what's interesting is to understand how they fit in context.

Slide 216: Web 1.0 pushed our technology hard

Slide 217: and we saw giant improvements in big databases and cheap connectivity.

Slide 218: the databases gave us a place to put all our stuff,

Slide 219: and the connectivity let us get it back out again.

Slide 220: the ability for users to upload created a flood

Slide 221: from niche markets,

Slide 222: amassing us something to "put" in our new services,

Slide 223: and creating a sense of purpose.

Slide 224: surely all these people

Slide 225: with all this stuff

Slide 226: must need services!

Slide 227: throw in the next generation of

Slide 228: synchronous and asynchronous communication

Slide 229: and you've got some "life" around stuff,

Slide 230: there are people here and it's interesting!

Slide 231: these five pieces laid the groundwork for the next five:

Slide 232: major websites built names around the voting and ranking of content,

Slide 233: delivering the "best" stuff to the most people.

Slide 234: on the fast, cheap storage

Slide 235: we had plenty of space to squirrel away

Slide 236: rich resources like photos and video.

Slide 237: and once we had the interesting stuff to watch and view,

Slide 238: the technological cleverness of A JA X

Slide 239: let us achieve this without hassle

Slide 240: and also stream this across the web,

Slide 241: via embedded widgets.

Slide 242: other major building blocks

Slide 243: are the creation of reputation over time,

Slide 244: mass-user editable content,

Slide 245: social networking functionality,

Slide 246: pushing info out through feeds,

Slide 247: or aggregating it in,

Slide 248: and embracing the mobile world.

Slide 249: so imagine this petri dish of a world

Slide 250: and what happens when you let it grow…

Slide 251: flickr is built of these parts

Slide 252: so is Y ouTube,

Slide 253: Wikipedia,

Slide 254: Digg,

Slide 255: and Facebook.

Slide 256: they all share a common DNA

Slide 257: and their success would have been impossible without it.

Slide 258: this world was flush with investment and enthusiam,

Slide 259: everyone pumping the environment with hopes and dreams

Slide 260: it's not suprising to assume,

Slide 261: "surely you could do something with these pieces? "

Slide 262: and of course you can build fantastic machines

Slide 263: and they can solve real-world problems,

Slide 264: but this isn't quite the real world, is it?

Slide 265: these fantastic machines,

Slide 266: these weird creatures,

Slide 267: evolved in a world

Slide 268: where they didn't have to make money ?

Slide 269: where the bottom line, was more of a

Slide 270: "hazy area".

Slide 271: so where do you come in?

Slide 272: what hope are we left with to make a buck?

Slide 273: The Opportunity (before you)

Slide 274: in the wake of 2.0 fervor,

Slide 275: opportunities have multiplied.

Slide 276: while some might regard Web 2.0 as an interesting,

Slide 277: if ultimately over-hyped era,

Slide 278: the clever among us don’t see the opportunity lost,

Slide 279: but found.

Slide 280: if you attempt to extrapolate

Slide 281: the current group of Web 2.0 products,

Slide 282: you get a very skewed conception of making money.

Slide 283: lack of monetization pathways

Slide 284: doesn't signal there's no future,

Slide 285: but it does signal that the present is not a good indicator

Slide 286: of what's to come.

Slide 287: just like web 1.0,

Slide 288: the 2.0 era included massive investment,

Slide 289: and some of the work of our generation's best minds.

Slide 290: the relative rarity of new millionaires

Slide 291: doesn't imply the work done was for naught.

Slide 292: because as the hopeful were toiling away

Slide 293: crafting elegant and useful solutions

Slide 294: to problems in their own special spheres,

Slide 295: they were also sharing their solutions

Slide 296: though open source and open platforms.

Slide 297: and what we're left with is an incredible wealth,

Slide 298: of potential solutions.

Slide 299: so let's examine a few of the pieces

Slide 300: to give you an idea of what I'm talking about:

Slide 301: RS S feeds

Slide 302: what we think they do: keep us updated on the latest news

Slide 303: what they actually do: represent a uniform, user-controlled method of staying informed by providing a conduit to share information asynchronously across multiple platforms

Slide 304: (this is a big deal!)

Slide 305: opportunity fields: marketing, CRM , inventory management, metrics reporting

Slide 306: voting

Slide 307: what we think it does: allow users to rank the "most popular" of items

Slide 308: what it actually does: with the right algorithm, separate the good from the bad

Slide 309: opportunity fields: spam filtering, fraud detection, market research, collaborative creation, data normalization, taxonomy bootstrapping

Slide 310: A JA X

Slide 311: what we think it does: cool stuff on the web

Slide 312: what it actually does: reduces operator fatigue, reduces wasted bandwidth, is a bridging tool between the document-based web and the next

Slide 313: opportunity fields: personalized experience, live data integration, visualization and creation, navigation and click-through activity tracking, web-application creation

Slide 314: social networking

Slide 315: what we think it does: spam your inbox with vampire invites

Slide 316: what it actually does: create "protected spa