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SXSWi: After Bust 2.0

by Patrick Ruffini :: March 13th, 2007 11:40 am

11:37 — I’m now in a panel on “After Bust 2.0.” MUCH more crowded than the first panel of the day so I’m sitting on the floor in back.
11:40 — Gina Bianchini of Ning and panel say a shakeout is probably coming, but it doesn’t involved public markets so it won’t be as bad. It’s fundamentally different if a private investor loses money instead of the NASDAQ crashing.
11:44 — Two-way media like blogs kill bad ideas early on. So no more selling pet food over the Internet. But still do we need 600 digg and del.icio.us clones?
11:45 — WiFi is VERY slow.
11:46 — Web2.0 is lower scale than Web1.0 but that’s not exactly what venture investors want to hear. The crash won’t be as bad but the peak won’t be as high.
11:47 — It’s easier to fund things that work (duh) (i.e. once something has 2 million users). Secondary rounds of financing are bigger and make sense.
11:49 — Bianchini: It’s just as hard to build a small business as it is to build a big business. The shift from “not proven” to “proven” is getting a lot shorter. “This is a great time to be an entrepreneur.” Venture firms are quicker to jump on stuff. Do NOT go to a venture firm and ask for $5 million to prototype something. You have to be lean and cost-effective.
11:51 — In my corner here: 7 Macs, 1 PC (me).
11:53 — One way to start a business. Go back to your failed business plan from ‘99 and try it again.
11:55 — Bianchini: Don’t go chasing conventional wisdom. In the first bust it was B2B. The ones that stayed B2C (selling handbags) put their heads down and survived the crash. Trust your gut. Don’t build your business to look cool to VCs, build it around the consumer. VCs will eventually come along.
11:58 — Discovery Channel producer talks about how to apply Web 2.0 to existing offline companies. ABC News is getting innovative. USA Today is getting very Digg-like. Will their users nav to that? Interesting tidbit is that a lot of this new content isn’t indexable by Google, representing a view within the company that this doesn’t represent their brand.
12:01 — Don’t get distracted by the technology audience.
12:03 — In technology failure is not rewarded, but if you fail you are viewed as contributing positively to the ecosystem. A lot of the companies we really admire now were founded in 2001, 2002, 2003. Flickr, Dogster, etc. It was driven by passion not economic concerns.
12:04 — “Speaking of Dogster…” starts off a questioner from Dogster. What’s making things expensive is salary inflation — same problem as Bust 1.0.
12:09 — Google is very profitable because of search. Beyond contextual ads, it’s very, very, very hard to monetize based on ads. CNet probably has the best non-Google model. Also Ajax is throwing out assumptions about pageviews (preach it!).
12:10 — Hottest market is video, but advertisers are skittish about content. People don’t want their ad seen next to a beheading video, which was a theme in the last panel I attended.
12:13 — A guy from Satisfaction (great company name) has a model that relies on putting a layer of play over a boring industry like customer service. I feel like I’m porting back to the Joi Ito/Justin Hall panel from yesterday…
12:18 — Bianchini: What’s fun about right now is that anyone with passion and an idea can get in on the action. Big industries constrained by legal departments and IT departments. The most important thing about right now is authenticity (I see this in politics too).
12:20 — A guy from Harvard Business Review on the panel is talking about porting over Web2.0 into their efforts. Harvard was considered the “voice of God.” USA Today redesign was a paradigm shift in media. When people first propose building Digg or Slashdot-like features on traditional sites, it scares the crap out of people. Once competitors adopt them, that’s fine. Bianchini: eBay was doing community 11 years ago. This is not new.
12:22 — Will average USA Today readers adopt the Digg model. (Netscape users didn’t.) Remember, USA Today as a brand is thoroughly average. You read it because it’s at your hotel room door in the morning.
12:27 — There’s a talk about outsourcing now. People bragging about “cheap engineers in Buenos Aires…” Don’t you want good engineers? Let’s break down a lot of this crap about someone in the Bay Area is better than someone outside.
12:30 — One guy from Burlington, VT survived the bust by migrating his dot-com to a web development shop. He asks if a particular industry is more bust-worthy?
12:31 — Answer: The market probably can’t support 15 more video sharing sites.