Web 2.0 Bust arrives — finally. Say goodbye and get to work on the next great thing.

[Note: This post is generating a little more traffic than normal, so I need to encourage you to actually read what this post says, before reacting to the subject line. I remain a true-believer in many of the actual approaches that the regrettable label Web 2.0 is hung upon. But I think the label Web 2.0 and the “gold rush” mentality it has spawned is long overdue for a correction.]

I am lucky.

I became a blogger in 2000, early enough to remember when blogging and bloggers were a small group of people who were passionate about the phenomena and dynamics of online community and personal expression and conversational media and the technologies that underpin them. Back then, “social media” was not a business. Indeed, back then — and I’m an expert on this topic — venture capitalists wanted nothing to do with anything new that had something to do with “content” or “community” on the Internet. Recall, this was 2000, the year Google introduced Adwords and four years before Google rolled out Adsense, the two juggernauts that slam-dunked (to the tune of about $20 billion in gross revenues this year) the business model proof of concept of search advertising — especially within the context of tightly focused, narrow-niche online communities with plenty of content perfect for “contextual advertising.”

Frankly, it was the “freedom from business model” nature that first drew me to the nascent tech blogging community.

In my case, I was also drawn to bloggers back then because they (we) were not giving up on the web despite the near-deafening drumbeat of news about lay-offs and failures that, from about 2000-2002, made it appear the Internet was about to be unplugged.

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As I mentioned in a post the other day, I call that time the F’d Company era, because of the website that caught the zeitgeist of the period — an online forum where very scared dot.com employees spent a portion of their day speculating what shoe would fall next.

Bloggers, however, were focused on something else. It was all about, “Hey, check this out. This is kinda cool.” It was about discovery and hanging out and talking about how cool it was not to have to spend lots of money on hardware to do stuff that a few months earlier would have cost tens of thousands.

It was a time where the DNA of today’s social networking sites was established: The inclusion of RSS and a bias against anything that is “closed” or “walled” were just two of the foundational concepts codified (figuratively speaking) during those couple of years when the VCs were convinced nothing of true value could come out of all of this goofy blogger stuff.

It took until about 2003 for people to even start attaching the word “business” to “blogging.” In June, 2003, I attended a conference in Boston that claimed then (and the website still exists) to be the first business event for blogs. Click through to that link and you’ll get a sense of the innocence of those times. Yet, as you’d expect, there was lively debate and lots of disagreement. But I can’t recall there being VCs in the audience — but a few were likely there as Blogger.com had been purchased by Google a few months before. (My post-conference post from June 11, 2003.)

Soon, however, blogging and business became intertwined. And money started flowing from VCs to anything with an RSS feed. And then all this cool stuff became something about marketing rather than changing the world. And then, in October, 2004, all the cool things people were doing got an incredibly awful name: Web 2.0, which meant anything, so therefore meant — and still means — nothing. And then everything once more (in Web 1.0 fashion) began to be about startups and VCs and debates about whether or not one is worthy of being taken seriously if they live outside a 30-mile radius of Sand Hill Road.

And then in June, 2005, it got a Bible: TechCrunch, a medium so powerful that web developers soon began to equate success with getting mentioned by it — and for good reason as more and more VCs who had no idea what was going on began to use TechCrunch as a filter for finding new ideas.

One more thing happened in June, 2005, that put those collective things called Web 2.0 into the mainstream: Apple — recognizing they had been handed a billion dollar branding present and endless free content for potential purchasers of iPods people thought they needed to retrieve, store and play them — began to incorporate podcasts into the iTunes platform. In other words, they turned iTunes into the equivalent of an RSS newsreader for audio files.

Within a couple of years, South by Southwest Interactive went from being a conference where a few hundred people discussed CSS compliance issues to a mega-convention where several thousands of people attend sessions where accountants discuss IRS compliance issues. (Okay, that was a joke. In addition to the “surprise, you’re an accidental entrepreneur” sessions, SxSW still draws lots of purist geeks who wouldn’t be caught dead at an event where ideas are pitched to VCs — unless in a parody fashion.)

The upside of the end of Web 2.0

Fortunately, the Web 2.0 Bust isn’t technically a financial market bust in the way the dot.com bust was, or the way the stock market is. The 2001-02 dot.com bust was a classic market collapse in which widows and orphans lost money on a wide array of publicly traded, but vaporous, companies that had imaginary revenues, or none — nada, zilch. (Unfortunately, widows and orphans have now lost all their money in conservative, safe investments, like real estate and bank stocks.)

The only people losing money in the Web 2.0 Bust are VCs and angel investors and individuals who have poured heart and soul and savings (and friends and family savings) and credit-card debt into starting the 20th knockoff iteration of Facebook they hoped would be mentioned on TechCrunch.

More importantly, Web 2.0 Bust will result in many good things: It will once more convince a lot of smart young people that they should pursue careers in other fields — that they should take their incredibly smart minds and find cures for cancer and develop alternative fuels and teach math to inner-city children.

Advice to journalists and bloggers: Don’t be F’d Company 2.0

During the past year, I’ve sorta drifted away from reading TechCrunch and its many imitators. I still subscribe to the feed of Techmeme, but feel certain that will also end if it becomes a Chinese torture drill of drip-drip-drip daily stories whenever a small company lays off a few employees.

Over the next few months — and longer — the easy thing for tech bloggers and journalists to write about will be business retrenchments and failures. Believe me, there will be plenty of layoffs and closings.

But that’s not going to take you anywhere. It’s not what your advertisers want. It’s not what your readers are interested in. Among your readers, there are those who still believe that we’re still in the midst of something that will change the world. That opportunities still exist. The discoveries have not yet been made.

There are still those who believe that hunkering down only makes you equivalent to the traditional media you were supposed to replace.

Cool new technology and creative web ideas are not going away. People are still doing cooler stuff than you can imagine.

Web 2.0 may be busted. But Cool 2.0 is just getting started.

What is Cool 2.0?

I’m not sure. But I feel certain it can’t be explained in less than 140 characters.

Bonus links:

Dare Obasanjo “TechCrunch Turns into F’dCompany 2.0” – Another observation regarding how sad it is that TechCrunch is serving up a steady diet of schadenfreude.

Louis Gray: “The Valley’s Proponents Become Its Critics in Hard Times” – I’m thinking the same thing Louis is thinking.

  • Cool! I like it.

  • I’m not sure, Rex. Web 2.0 hasn’t busted. The financial sector may be gloomy but Web 2.0 continues to shine. If anything’s gone bust, it’s the plethora of terms that say the same thing as Web 2.0: Enterprise 2.0, Government 2.0, Mobile 2.0, Hiring 2.0. How many second versions can there be?

    When you consider I know dozens of people in my family and hometown who never heard the term, “Web 2.0,” let alone can define what “social media” is without drawing reference to Facebook, the concept isn’t going anywhere.

  • Ari. I thought that’s what I said. If you get to the core of what’s taking place (not the financial transactions), nothing is going to change. Great ideas are going to keep emerging and evolving. However, the whole “gold rush” mentality — the notion that Web 2.0 is a label you can hang on any idea and think it makes sense — that is what is busted when the VCs and Angels exit. And that’s a good thing.

  • Rex, sometimes markets need “cleansing and rebalancing” in order to weed out the weak and allow the strong to thrive — and make way for newcomers. So if we lose some of the pure get-rich-quick gold diggers, it will be better for the cool ones who are left. Anita

  • You’ve really captured the essential spirit and energy of what was happening before it got packaged and branded as Web2.0. As is that nature of these things, the packaging and branding will fall out of fashion but the spirit and energy will continue to thrive and drive the next wave of innovation. Really enjoyed your post.

  • thibaud

    What will be cool will be a new user interface that’s user-centric, not URL-centric, and that enables smart filtering, compartmentalization and security so as to reduce the web’s astronomical noise-to-signal ratio to manageable levels.

    Most of the 2.0 apps and businesses are time-wasters for kids and Scoble-type nutcase adults who don’t have real jobs or demanding family and other responsibilities. The next wave has to deal with the information overload, the intrusiveness, the tsunami of noise and crap that has made the web so disappointing for real people who lack the time to spend on something as inane and noise-ridden as FB or Twitter.