Web 2.0 consolidation ahead?

Posted on March 22, 2007. Filed under: Uncategorized |

Web 2.0 consolidation ahead?

I’m reading Hillel Cooperman. He left Microsoft (ran the Max team) to run a startup in Seattle. And has become one of my favorite bloggers already in the few months he’s been doing that.

Anyway, today he writes “It’s amazing to me how many startups I talk to plan on making money via advertising, tell me about all the big numbers they’re going to post, and haven’t done this basic math.”

This is something I’m thinking to myself more and more too as I meet more and more startups. There are a TON of startups chasing advertising dollars. I wonder to myself how many really will be successful? Sure PlentyOfFish has gone nuclear. But he’s a one-guy business who is in a highly engaged audience type (dating). He says he makes $10,000 a day or more from his Google ads. I believe him, too, cause he’s seeing millions of visitors a day.

Oh, and to those people who say I never say anything nice about Microsoft, note that I am praising Microsoft here (he runs on .NET and says his system runs on far fewer servers than his competitor, Match.com does).

Anyway, back to the point. Lots of these companies are funded by venture or rich investors. At some point the revenues will have to kick in or else the founder will be kicked out and the service sold.

I am watching TechCruch’s deadpool and I wonder if TechCrunch’s new CEO is going to do something really smart: grab these companies as they struggle for revenues like a goldfish gasping for breath in a small fishbowl. Then, aggregate them together and build a killer ad network (even the worst of the Web 2.0 sites I’ve seen have thousands of visitors and lashed together would make a killer Google ad network).

Remember who made out pretty well during the last downturn? Pud of “f’d company.” He got bigger and bigger as more and more people got laid off.

I wonder if Mike is looking to do the same in the consolidation phase?

Another aside: why was Twitter so hot at SXSW last week? There simply wasn’t much else cool to talk about. That tells me that the innovation funnel is pinched closed. What happens next? The strongest survive on their own. The weaker ones get picked up in a consolidation phase. Why? The companies with the best salespeople will be able to sell ads on networks made up of lots of smaller, weaker, players.

Anyway, what do you think. What will you do when the consolidation comes?

In the meantime, Loren Feldman is bored with all the Web 2.0 stuff. He cracks me up, here’s a fun short video (probably will get 10x the audience of my long and boring vids).

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