We survived Bust 1.0. Is there a Bust 2.0 coming up?
Gina Bianchini CEO, Ning Inc
David Hornik General Partner, August Capital
Eric Hellweg Sr Editor, Harvard Business Review
Narendra Rocherolle Co-Founder/Principal, 30 Boxes
Michael Sippey VP Prod, Six Apart Ltd
Lane Becker: Satisfaction Inc
Lane Becker: I lived through the first boom and bust. Are we headed through a bust 2.0? When is it all going to fall apart and why?
David Hornik: It all starts with a panel.
Gina Bianchini: I don’t think it’s going to fall apart. We now have 1.2 billion people online. The amount of ad dollars is huge. There is tremendous opportunity. Perhaps not every startup will not be YouTube, but the opportunity is great for building something for the future. Some startups will make it and some won’t. I think we are in a fundamentally different situation than we were in 7 years ago.
Eric Hellweg: I do agree that things are different right now. I DO think we are headed for a shakeout. I don’t think it will be as catastrophic as it was in 2001.
David Hornik: It’s okay. It’s just MY money.
Michael Sippey: How much do we care about David’s money. If you’re building a REAL business, when the bust comes and the private equity disappears, that’s different than what happened in 2001.
Eric Hellweg: The ad money is growing, but we’re dealing with a much smaller pie. Your slice might be harder to fight for. Right now we’re in a pretty frenzied state. I don’t know how long the center will hold.
Gina Bianchini: Your slice of the pie doesn’t need to be that big. You can get up and running for just a couple 100 bucks at most. You don’t need to make a lot of money.
Michael Sippey: One of the risks that we have is the need to expand the users of online advertising. Google needs to educate more and more small businesses.
Narendra Rocherolle: A lot of people are here because of publishing revolution that has been two-way. Now people will kill the great ideas early on. There are areas where it reminds him of Bubble 1.0. Part of this is a bit of a con. You’re trying to build something up and sell it. The web industry is a difficult industry.
David Hornik: There are smart investors and irrational investors. Find things that have meaning and are valuable. Most importantly, you have to be building a real business.
Narendra Rocherolle: I didn’t meant to generalize, but in general… VC plays a huge role in developing things, but it also provides a risk. It’s on a lower scale now.
David Hornik: VC people won’t say, “I’ll pay you a smaller price because I think it’s a small idea.” There are deals that haven’t proved that they work and there are those that have.
Gina Bianchini: It’s just as easy or hard to build a big business as a small business. I want to be around and do the thing that I started in five years. The shift from not-proven to proven has shorted. This is a great time to be an entrepreneur. It’s critical that you do things cost-effectively.
Question: This idea of a bust is based on the CPM of advertising. What about businesses that have huge communities? will that mitigate the bust?
Michael Sippey: We have a very diverse business for that reason. We sell subscriptions AND software. It helps us understand our customers and we think it gives us a leg up.
David Hornik: It is a lot cheaper to provide services JINGLE 1-800-Free-411 is a service that will give you 411 for free with an ad. It changes the whole nature. Wouldn’t it better if we did THIS? Let’s start it! These things are always a timing problem. Forget the bust.
Gina Bianchini: It’s important not to follow conventional wisdom. Every single consumer company turned into a B2B play. eBags and Zappos focused on their business and were mocked by insiders. Now, they have completely lived through Bust 1.0. There is value to know what your business is in your gut. Don’t build your business to look cool to VCs.
Question: How can bigger companies survive the next bust?
Eric Hellweg: Follow your consumers. Don’t blindly throw money online. It’s very easy to see where there is interest.
Lane Becker: All the community content, USA Today made sure that non of it would be read by Google.
David Hornik: What happened to the cable companies is happening to the television networks now. You have the capacity to focus on just the thing you want to focus on.
Question: Web 2.0 doesn’t seem that different to me. I’m curious about the idea that there isn’t going to be bust. How are the smaller people going to deal with it?
Gina Bianchini: I think that there always be survival of the fittest. I think it’s a good thing. If you define the opportunity as a bubble, it’s not quite right. It’s more like there is excitement. There will always be companies that make it and companies that don’t make it. It’s not a bubble, it’s life. That’s what makes it fun and why we don’t work at GE.
Lane Becker: Failure isn’t necessarily looked down on in this industry. When you look at it that way. Most of the truly new things started in 2001-2003. They all started when we were starving.
Question from Ted at Dogster: Inflation in salaries caused some of the problem.
Narendra Rocherolle: There are ways to get labor cheaper offshore. When salaries go up, think about the value of investing in that salary. During the lean years, people found ways to incentivize workers. The more you play into the inflation, the more you suffer through the downside.
David Hornik: When you’re starting a company and building something with a small team, the worst thing you can do is create a big distance between you and the people who are building it. It’s an investment. Is that an appropriate use of the money.
Michael Sippey: The difference between the markets. Dick Costelo: Ask the Wizard: Making hiring decisions. When you hire, no false positives.
Gina Bianchini: I think no false positives is bullshit.
Michael Sippey: Read his thing because he goes through it on job type. It’s really good.
Question: People are shifting their attention from TV, radio and print to the Internet. What’s your outlook on this shift?
Narendra Rocherolle: Consumer media is really hard. It is really difficult. Very few ad companies have put it together. Banners are being thrown out the window, so now we’re asking them to try all new things. There is a lot of money being spent, but it is probably still on the horizon.
Eric Hellweg: The advertisers are reluctant to put ads around video, despite its popularly.
Gina Bianchini: It takes a while for advertisers to figure it out. When it happens, it HAPPENS and it REALLY happens. There is enough money out there right now for people to build smart businesses.
Lane Becker: We have figured out a way to make customer service entertaining and fun. There is a huge market there in the future.
Question: Interruptions and user experience. How long will people’s attention will last?
David Hornik: People with more time than money and people with more money than time. You have to be able to help both segments of that market. There are people who are willing to give attention to advertisers for content and then are people who would just rather pay you. Make sure you give options to both.
Lane Becker: ABC is just fighting the medium and it’s just not going to work for them.
Question: Do businesses understand the concepts of Web 2.0? It seems like some companies are just using Web 2.0 to use it to do what they already want to do.
Narendra Rocherolle: Avoid the topic sentences. Web 2.0 is great conceptually. Email is still as important as it was before, but Widgets is the popular thing right now. There is no magic bullet. Everyone is launching a social network, but it’s not a magic bullet.
Gina Bianchini: What’s so much fun right now is that anyone with passion and a good idea can make it big. One person can do a lot more than big business because they aren’t restrained by legal departments. Authenticity is MOST important. People’s bullshit meters are so fine tuned. You have to not be a poser.
Eric Hellweg: Grasp on the CONCEPTS like authenticity and transparency. It’s such a new concept to so many people. There IS a business value for welcoming in the community.
Michael Sippey: The USA Today was a very big thing. If you can see an implementation that is done in a way that can see how it has been done. Then it will be a lot more real. More and more media will be social.
Gina Bianchini: eBay 11 years ago was doing communities. This isn’t new.
Eric Hellweg: It’s easier now.
Gina Bianchini: If USA Today does it, then it’s somehow better.
Eric Hellweg: The USA Today going to be an interesting experience. Can a brand like them embody some of the social ideas?
Question: Outsourcing 10 years out, all this labor saving outsourcing that we are doing is going to kick our butt. What will that creative scene look like?
David Hornik: I’m sure their skill is excellent. This is a communication issue. USA is the “creative engine” of the world. Does that change over time. I hope there will be a lot of interesting innovation in the Bay Area. Over time, there will be increased pressure.
Gina Bianchini: A small team of REALLY productive people can do more than numbers alone. Don’t you want “good” engineers? Thinking of people as expensive or cheap doesn’t work anymore.
Michael Sippey: It gets really hard to deal with engineers all over the company. It’s always hard to communicate and we still suck at it.
Eric Hellweg: Forecasting 10 years out, there are pricing issues already. In 10 years, they will probably be making as much as we are.
Eric Hellweg: Can the market support 15 video sharing sites?
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