When Tim O’Reilly first defined Web 2.0 it helped define an emerging industry surrounding new web technologies following the bust of the internet bubble. Yesterday afternoon I read a post about Tim O’Reilly course correcting the definition. The definition was ultimately being expanded to include Google as part of Web 2.0. I found it somewhat entertaining as ultimately Web 2.0 is really nothing more then the internet.

While we can place terms for the evolution of how human’s leverage the power of the technologies provided by the web, ultimately the web continues to evolve and no matter what application are built to harness the power of it, it is still simply the internet. Humans simply weren’t used to what is ultimately a “many to many” communication platform instead of one to one as most communication was prior to the web.

To be honest, I even have used the term “social web” as though there is a subset of the web focused on communication and technologies which help improve our ability to socialize (or “communicate”). The entire web is about communication though and ultimately we are simply integrating the tools that leverage the power of the web to more effectively communicate.

As such any terms which attempt to define anything outside of digital transactions (including “Web 2.0″, the “social web”, etc) is simply placing a term for what is ultimately humans striving to leverage the web to communicate more efficiently. I guess defining terms is a way for us to create a sense of place and time and make us feel like we are progressing.

Let’s stop making “Web 2.0″ products though. What we really need to build is great products and tools that help us communicate more effectively. That’s it.

Over the past two years I have spent countless hours traveling to conferences around the world to meet some of the most influential people on the internet today. As I traveled from one conference to the next I have found that there appeared to be an excessive number of events covering social media, social technology, and Web 2.0. I’ve participated in some of those conference and many of them were amazing productions but there has definitely been froth in the market.

Warning Signs Beginning to Emerge

The first warning sign that I saw was the shut down of DigitalLife Expo by Ziff Davis media. While I honestly can’t say that I heard about the event previously, it was a sign that perhaps bad things were to come. Yesterday while walking around a local conference I heard that the Social Media Marketing Summit being held by mthink was having trouble selling tickets.

These are only a few of the events that are in the process of disappearing. How many times can people possibly listen to the same speakers talk about the same topic? Ultimately this is a question that can’t be answered but it’s my inclination that there are most definitely some events being put on by individuals that don’t even have expertise within the industries they are promoting.

The Integration of Media & Events

It’s not over though. The real value is generated by the integration of online media and offline events. The business model for modern media companies is through event promotion. Just like the music industry is generating a large portion (if not the majority) of their cash flow through concerts, new media companies are succeeding by promoting conferences.

Last night I saw a post on the Facebook blog about the Future of Web Apps in London and realized just how nice it can be to be in the circle of influencers. For those events that don’t have event directors with the industry leaders on speed dial, it can be much more challenging to build a successful event. That’s why those companies need to rely on building media companies.

Unfortunately I see it time and time again that some random individual pulls in a few good speakers which snowballs into a decent lineup for an event and suddenly is able to sell-out to a packed crowd. I was fortunate enough to fill-up the Social Ad Summit a few weeks ago with great speakers and great attendees but I believe it was my reliance on creating content which drove the success of that event.

Content is still King and the same holds for the content within conferences. If you have the ability to consistently produce quality content, you are good to go. Unfortunately you can’t always hit the ball out of the park with conferences and that’s why generating other media to back up those events is so important.

This Economy Will Eliminate the Froth

Honestly, if there is one good thing to come of this downturn in the economy, it’s that the froth will be eliminated. You can’t run successful businesses without delivering high-quality service to your customers the majority of the time. Those that were able to pull revenue thanks to an environment with more excessive spending are going to face tough times ahead. You need to either be a thought leader, have a large reach (through your media), or have the best roledex (or any combination of these) to succeed in this environment.

There has been tons of events covering the exact same topics in the same geographic regions which has made for an extremely challenging environment. Do you agree that there has been somewhat of a conference bubble in this space?

Despite the collapse of Wall Street and what I previously considered a tech conference bubble, one person that continues to build value is Loic LeMeur. Yesterday he was announced as one of the most influential people on the web.

Last week I had the pleasure to sit through Fred Wilson’s keynote at Web 2.0 Expo in NYC. While the history given by Fred is not comprehensive, it does provide great insight as to how New York has grown to become one of the fastest growing (if not the fastest growing) web industries in the U.S. There were a few key components listed in Fred’s keynote which I think is important for any other bubbling center for web and entrepreneurship.

First, Fred references the launch of the Interactive Telecommunications Program at NYU back in 1979. Today, in D.C. there is not a single program in the area that I know of that has been able to duplicate what the ITP has accomplished. While many reference the University of Maryland and their Dingman center for entrepreneurship as a hub, not a single program in the area has had the success which ITP has. Go take a look at their course guide for some clues on why this program has been so successful. One thing to note is that this did not come out of an engineering school, it came out of an art school!

Second, Fred references the heavy media presence in New York City. There was the launch of the “Connect Times” in 1989 by Josh Harris. Over the years there was the launch of numerous other digital media outlets including Ziff Davis’ ZDNet and CMP’s TechWeb in 1991. One of the things that I’ve consistently highlighted as being important for any emerging technology and entrepreneurship community is media coverage. In D.C. we are still somewhat behind in our reach but our coverage has improved substantially over the last two years.

Third, in 1995 Mayor Giuliani and Bill Ruden launched 55 Broad St. It was a building from a failed investment bank which was turned into a technology oriented building including high speed internet and incubator space. This is something which still does not exist in D.C. today. The closest thing is a co-working space in Adams Morgan called Affinity Lab but there is nothing supported by the local government.

Finally, there was a large presence of ad networks, new media startups (Silicon Alley Reporter, @NYC, etc), agencies (which were rolled-up) and more. Things quieted down temporarily and then blogging emerged, events launched and the buzz built. We are witnessing the buzz building in D.C. and within the next 12 to 24 months I think we are going to witness D.C. turn into a nationally recognized center for web technology.

D.C. isn’t the only city facing the same challenges though. Chicago, Boston, Austin, Denver, Miami, Atlanta, L.A. and others all are trying to build centers for web technology. Unfortunately for those cities, D.C. is going to beat them to the punch but hopefully they can learn from our success! Check out Fred’s video below for more insight.

This is a continuation in the series on “The Social Web Economy“.

This is one type of company that entrepreneur leaders run. On the social web product companies are those that help give meaning to our media, they provide context. They are also the services that we frequently refer to as “applications” or “apps” for short. Product companies rely on the large distribution companies (as described in the next post) to grow.

There is a constant tension between product and distribution companies. Given the product companies’ reliance on the large platforms they are constantly monitoring the environment to make sure their reach isn’t wiped out overnight by subtle changes by large platforms. Product companies have substantial influence in a number of ways.

First and foremost, these organizations have become the lifeblood of many distribution companies. As such, the platforms have to balance the demands of users and the demands of product companies (which are sometimes referred to as “developers”). We have been watching this play out on the Facebook platform where it has taken more than six months to roll out their new design as they receive feedback from developers and users.

The second form of influence that product companies have is with agencies and advertisers. Successful product companies are ultimately building mini-platforms that compete directly with the platforms that they relied on to build their company. The competition is for advertising dollars and ultimately the team with the best negotiators and best portfolio of advertisers wins.

Next Post: “The Social Web Economy: Distribution Companies“

Last week Tim O’Reilly keynoted at the Web 2.0 Expo and rather than promoting all the potential that Web 2.0 provides, he criticized developers for investing many of their resources on building completely useless applications. From throwing sheep to chugging beer, many of the applications have not provided much substantive value. The question that I have is if it is really the developers who are at fault or is it the users that download and install the applications that should be criticized?

Unraveling the Social Change Equation

Over the past couple years, a large movement has been brewing on the web. With the help of social technology, internet users now have access to over 1.4 billion individuals (Source: Internetworldstats.com). With all of this connectivity, we figure that there must be some way that we can drive change like never before. We have seen the launch of Change.org, Idealist.org, Zaadz.com and a whole slew of newer services that help individuals drive change.

Just last year when Facebook launched their platform, Causes was launched by Sean Parker and Joseph Green and the team has been working to try to drive the number of donations being given through the application. We still have a long way to go though. If you take a look at the top cause on the Causes application, there are over 3.375 million members supporting “Support the Campaign for Cancer Prevention” and $72,697 has been donated. This amounts to approximately $0.02 raised per user.

Advertisements could have easily generated more than $0.02 per user. So can social networks be used to drive change, if so, how?

How Can Social Networks Drive Substantial Change?

It’s clear that there is a ton of untapped potential in social networks to drive change. As Tim O’Reilly pointed out, much of that potential is being funneled into ways that individuals can waste time. Can we really be disappointed by our escapist desires? So far, I have yet to find a single social network which has truly impacted the world in a way that idealists believe social networks could positively impact the world.

Simply through their existence, web-based social networks help to spread democratic ideals and help individuals around the world share their experiences with others. I’d suggest that as a whole we have yet to develop effective metrics for measuring change. Right now Causes could use dollars generated as one metric, but how about the application’s ability to drive users to action?

This is just one metric and I’m sure that there are hundreds of others. We all have that gut feeling that social networks can drive substantial change. Some of them already are but frequently we end up creating a network of individuals that talk about change rather than do something about it. While passive change is one form of change I have a feeling that there is a lot more opportunity out there.

What ways do you think social networks can more effectively drive change? How can we measure the impact?

I was watching Mark Cuban last night in an interview from Techcrunch 50. You should definitely watch it as there was a lot that I took away and there are a lot of inspirational stories. The one statement that stuck with me and is a perspective that I hold for the most part is “Sales Cures All”. If you can hire an amazing sales staff you are light years ahead against any competitor that doesn’t have a team working to increase the bottom line.

I have spent the past 8 years trying to build businesses and all of them have failed. I’m finally running a business that is able to stay above water. If you want to take advice from a person that has failed time and time again here’s what I’d suggest:

• Launch Your Site as Quickly As Possible - I have met so many sites that are in the alpha stage and in still in “stealth mode”. In the social web economy, this will kill your company. Take a look at the quality of Facebook applications that launched and rose to the top. There are only a few companies that you can point to where quality user interfaces were critical for success. The bottom line is that good ideas are viral.
• Iterate Quickly - Once you launch your beta product which may not be the prettiest product it’s time to start iterating quickly. This lets your users know that you are dedicated to improving their experience and will keep them coming back for more.
• Find the Quickest Path to Revenue - Your company isn’t much of a company without a bottom line. You probably know of all the venture funded companies that have no revenue currently. I can guarantee you that those companies will get increasing pressure from their investors to produce. While some companies don’t need revenue, it’s critical to keep your company afloat. Facebook for instance strives to operate at or close to break-even. It’s a good model to follow.
• If You Have Something to Sell, Sell It! - There are countless startups that keep iterating without revenue. Charge someone else to pay for those iterations! One way to accomplish this is by licensing your product to a client and letting them foot the bill for your first iteration. This model only works for certain products but the lesson learned still applies to others. As soon as you have a product, it’s time to start selling.

Disclaimers

The model that I’ve described above works best in the social web economy. If you are trying to build revolutionary technologies like the fastest electric car (e.g. Tesla), keeping the product in stealth mode for a period of time is perfectly acceptable. The social web economy is one of the fastest moving industries and getting your product out there and being able to iterate is critical. Not all industries are this fast as most others are much more capital intensive.

Bottom Line

Over the past year I have spoken with countless startups and after speaking with the most successful ones I’ve realized that they always have an amazing sales team. Mark Cuban confirmed my observation last night and this rule is one I’ll continue to follow. Following this rule is also how I launched Social Ad Summit, which will take place next week in New York City.

Thanks to the support of amazing sponsors, we were able to accomplish something that I would have never previously considered possible for Social Times. Rather than waxing poetic about Social Times, I’ll leave you with a quote from Ray Kroc: “If you work just for money, you’ll never make it. But if you love what you are doing, and always put the customer first, success will be yours.”

This is a continuation in the series on “The Social Web Economy“

Over that past few weeks we have defined all of the participants in the social web economy but now we’ve got to figure out what exactly they are building. Often times it is difficult to understand what exactly is being built and given that this is still a nascent industry roles overlap both of individuals as well as companies.  Along with roles of individuals, the positioning of products frequently overlap but in a rapidly growing industry there’s enough room for everyone to participate.

While this fast growing environment can’t continue to grow indefinitely, there has never been a better time to be a participant or a company in the social web economy (unless of course you count the bubble as good times).  As this industry begins to solidify itself, I’m confident that we will see the rapid consolidation of companies as well as many companies that will join the what Techcrunch has coined the “deadpool”, the place where failed startups go to retire.

Over the coming weeks I will cover the various types of companies in the social web economy which includes:

• Product Companies
• Distribution Companies
• Social Web Agencies
• Ad Networks & Sales Teams
• Analytics Companies
• Media Companies
• Communications/Public Relations Firms

Each of these companies contribute in some form to build the products and services that millions of users will hopefully end up using on a daily basis.  I’ll cover what’s the biggest challenges facing each type of company and how where they fit in the social web landscape.

Next Post: “The Social Web Economy: Product Companies“

Do you remember the days when you had to walk into a computer store to buy software? I remember Egghead software down the street from me where you would go to actually purchase games and other types of computer software. Soon enough those days will be long forgotten. This transformation has been taking place extremely fast and much of that transformation has taken place in the last couple years.

Platforms Are for Distribution

In my series on the social web economy, I’ve highlighted platforms as the center for distribution. While I’ve yet to cover all of the types of companies and how they interact, platforms are increasingly about being the center location for software to be distributed. When the Facebook platform launched last year, it was one of the first to bring this idea of instant installation on the platform to the mainstream.

Initially when you developed software, it was the job of the software developer to handle 99 percent of the promotion. One of the key selling points for many of these software packages was the platform that they ran on. There were categories in actual stores which classified software as “IBM Compatible”. Eventually that transformed to mean that your software worked on Windows but ultimately it still required visiting a store to purchase the software.

Even today, there still is no central directory owned by Microsoft that is the primary location which consumers visit for finding and downloading Windows compatible software. Same thing goes for Apple. While there is the Windows Marketplace and the Apple store, neither stores are comprehensive and fully supportive of third-party developers.

A New Model of Distribution Emerges

The Facebook platform was a complete paradigm shift for most people in the industry. The concept that you could install an application with the click of a button was game shifting. No matter how that installation took place (the application wasn’t actually being “installed” on your computer), it made people realize that a centralized application directory owned by the platform owner was a great model.

It was so great that every other social network adopted the model within months and now we have Facebook, MySpace, Orkut, hi5, imeem, Bebo, Friendster, Meebo and many others all with their own platforms. The majority all have their own application directories. While this new model of distribution was made popular by Facebook (as far as I can tell), all other operating systems and platforms have adopted this model.

Not only has there been a paradigm shift for platform owners but consumers as well. Users of Facebook should soon be asking, why can’t I access software for my computer the same way that I can on Facebook and MySpace?

Distribution is Going Mobile

Fortunately for Apple, you can! When Apple released their iPhone this summer, users flocked in droves to downloaded the latest applications that they could install on their phone. Millions of applications have been downloaded and it appears that the trend isn’t stopping. Google has announced their Android market which will launch later this year, Microsoft has announced their intent to launch a mobile distribution product and all the other platforms are racing to do the same.

Earlier this week I learned that Nokia has their own application directory. According to one person I’ve spoken to at Nokia, they’ve had this for years it’s just that most consumers in the U.S. haven’t been aware of it. The bottom line is that every single mobile operating system will soon have a centralized software distribution service.

All Operating Systems Will Have Central Distribution Channels

The race began with social platforms and transferred to mobile but I would argue that the battle will transfer to all operating systems. For example, why can I only download applications for my iPhone or iPod touch within iTunes? Shouldn’t I be able to download software for my computer? Apple hit a grand slam when they launched iTunes in that it runs on both P.C. and Mac!

The only competitor that Microsoft has is the Zune and so far there are no signs that it has been extremely successful (although I have friends who rave about it). Apple started by cornering the market on legal music distribution and they may end up cornering the market on legal software distribution if Microsoft doesn’t do something about it quickly.

While you can get into a theoretical discussion about the future of cloud computing versus personal computing, the reality is that most consumers still use personal consumers and install software on them. There is still a giant market for this and as far as I know there isn’t a central location for downloading all the applications you need for your computer.

Do you know of any alternative software distribution channels? What are your thoughts on this new paradigm?

Last year when Facebook opened there platform there was a sudden influx of brands looking to gain access to a new channel for branded exposure. The demand was significant and just in the past couple weeks we have seen an increasing number of applications come out from companies like Context Optional and Buddy Media. How do these new applications differ from websites of the past and how what new opportunities do they provide?

What are the Opportunities?

Facebook and all the other social platforms have provided brands with a new way of engaging with their customer. As social media has provided a channel for direct engagement, social platforms have provided brands with a central location for a large number of users. Companies (brands) in turn get direct and targeted exposure to their end consumer and it builds brand awareness.

The one problem with these new channels? Monitoring ROI is extremely challenging. While you can get users to download an application or most users on social networks are not in a state where a direct purchase will be made. As such these new branded applications are much better at building awareness and building “engagement”.

What Types of Things Are Being Built?

There is a wide array of applications that are being built. Some also work and some don’t which makes many of these applications a crap shoot without some sort of expertise and the purchase of individual installations. Some of them are being hailed as great successes though and the two primary companies I know that are doing a good job are Buddy Media and Context Optional.

Today Buddy Media announced the release of the Bacardi Mojito application. Yesterday Context Optional announced the release of a few applications as well including Today I’m Toasting by Miller. The place where I see the most room for growth is on new platforms like the iPhone. For instance, Audi released an extremely successful application on the iPhone which was one of the most downloaded applications for at least a week.

Today the application is the 5th most popular free application according to Apple. You can’t find a single branded application among the top applications on Facebook or any other platform. While this has to do a lot with the timing of this application, I would suggest that this Audi application probably ranks among the most downloaded applications all together.

What Does the Future Hold?

There is clearly an increasing demand for branded applications but the biggest question is if these brands feel that the investment is worth the return. Most likely a large number will have successes but as some brands generate a less than satisfactory result we will see those advertising dollars go to other channels. Fortunately we are still extremely early in this process and trying to figure out how all of this will pan out.

The reality is that brands need to try experimenting in this space and hopefully over time social networks and other non-traditional channels can prove that they are worth serious advertising dollars.

Yesterday afternoon I read an interesting article by Caroline McCarthy about how BuzzCity, the company behind the mobile social network MyGamma, has raised $10 million. According to McCarthy, “MyGamma is geared toward ‘unwired’ customers–those who have a mobile device but lack access to either a PC or a reliable broadband connection.” In other words it helps those that are unconnected get connected with other people that were also previously unconnected.

It’s an interesting model and it must have a long-term vision. If the company was a non-profit I would completely understand their strategy but I’m not quite sure how you generate money when your target market is a demographic which isn’t marketed to. I’m not suggesting that we shouldn’t develop technology which benefits the impoverished or the uneducated but I’m not sure when doing so on venture capitalists’ dimes makes sense.

The Chase Toward Acquisition is Based on Free

One company after the other that we see get acquired by Google, Yahoo or AOL appears to inspire more and more people to launch free sites. We are building tools which appear to help us “communicate more effectively” but do nothing to help generate revenue. It’s a result of the tech boom as Judy Estrin describes in today’s New York Times, “Starting in 1998, there was such a shift in Silicon Valley toward chasing money and short-term returns.”

I completely agree with Judy for the most part (at least in the Web 2.0 industry) and think that this perspective is damaging industries. If people weren’t chasing short-term returns, would there still be this massive influx of new, free products? Most definitely because not everybody is incentivized by short-term returns.

The Destruction of Traditional Media

Another side-effect of this “market for free” is that traditional media is being damaged as content creators give away their content for free and consumers become satisfied with new types of user-generated content. While the destruction of traditional media is arguably inevitable in the digital age, it’s still an important issue that needs to be explored.

When the margins on content creation continue to diminish, it becomes challenging for anybody in the media business to become highly profitable. Then again, the music industry has shifted their primary revenue generating activity to concerts and tours and it seems that an event-based model makes sense for many other forms of media.

An Interesting Dynamic, An Unknown Future

Unfortunately I can’t tell you what the long-term effects of a large market for free is but most of the implications appear to be negative. The only person supposedly “benefiting” from this free market is consumers and the few companies that can get acquired. Do you think that the market for free is sparking innovation or is it really stunting it? What do you think the best models of revenue generation in this environment will be?