Notes on Web 2.0 Expo

July 20, 2007

This April, I attended the Web 2.0 Expo in San Francisco. For those who haven’t heard of it, the Web 2.0 Expo is organized every year (for the 4th year running) by O’Reilly Media – the firm that coined the term Web 2.0. The conference was a week long and hosted some of the most prominent speakers in the world of the internet. Worthwhile? Well, I decided to let you take a view on that by sharing the key learnings from the conference with you (and if you find them self-evident,  well at least you didn’t have to fly 12 hours for them !! )

So here goes (split into the following chapters). The notes were left in the original rough-cut format that I composed them so apologies if there are things that aren’t clear (if so please do email me on xenios@peopleperhour.com and I will try to help )

1. on Web 2.0: what the hell is it ?

–          a lot of confusion and misinterpretation. People defining it as a world of wikis, widgets, communities, networks,  user-generated content etc etc
–          ultimately it’s about people on a website. If you remove them from a web 2.0 site you have nothing. In a conventional site your product is still there regardless if you have 1 user or 1 million users
–          communities Vs networks: a community is a place where people go for a reason i.e. to do something. Web 2.0 is the emergence of a set of tools that allows those people to network within those communities, exchange information, and collaborate
–          It’s not black and white even if a site is not fully Web 2.0 these days, some of the Web 2.0 features can and should be used to enhance the user experience on the site and capture the long tail. People are important on ANY site !

2. on design and development
–         a new design paradigm: hierarchical, top-down, linear design with heavy specs is now obsolete. Gives way to agile iterative design
–          less documentation; more iteration ~
–          not always a big picture from start. We are seeing more emergent systems built from the bottom-up. Features defined in small chuncks; rapid prototyping, time-boxed development, leading to testing and then redevelopment
–          the era of the Beta: everything is beta and stays a beta: cyclic development and continuous improvement. Consumer is now more forgiving: ‘quick and dirty’ approach: just get it out there and don’t wait for it to be perfect
–          emergence of the hybrid designer
–          lots of methodologies on design: common denominator is closed-loop, dynamic cycles, with brainstorming leading to rapid prototyping, testing and then continuous improvement
–          emergence of new environments, platforms, operating systems  and languages that accelerate the above: Ruby on Rails, Solaris, Django
–          open-standards make this easier also: there are now suites of APIs and mashups that are readily available e.g. www.programmableweb.com  Designers need to be aware of them to deploy them to their advantage
–          reduced need for heavy-duty infrastructure and hardware: eg Amazon EC2 services for developers and start-ups
–          increase in offshore development and ‘virtual teams’: problems with communication but gradually being sorted out  

3. on prototyping

–          rapid prototyping is key to the above
–          tools for the above are now increasing: Visio, Plone, Zope, Wuufu, Django, Axure. Adobe Fireworks,
–          importance of usability and user-centric design (UCD)
–          usability testing with a pinch of salt: results often distorted. Use it to weed out the stinkers

4. on measurement, testing and iteration

–          importance of Web analytics: lots of packages out there including Google Analytics
–          Multivariate testing: Optimost, Site Spec, Offermatica, Google Website optimiser

6. on Features

          emergence of an ecosystem with open-standards and APIs, facilitating  rapid deployment, exchange of knowledge & DIY approach
–          communities emerging from features: lego approach: building communities with features upwards
–          tagging, blogging, bookmarking, podcasting
–          APIs & mashups: www.programmableweb.com e.g. wrapleaf.com (online reputation system)
–          Widgets: www.widgetbox.com ; www.widgify.com ; www.clearspiring.com
Design of widgets does make a difference: optimum design: profile/ post (150 x 300 px)

8. on start-up & funding

–          start-ups becoming a lot more capital-efficient as the ecosystem is developing: a drastic drop in the amount of capital needed to get off the ground
–          Some average stats / trends :

  •  
    • $20k – $200 k to build a website
    • Average $1.5m fixed cost base (assuming 8 employees)
    • Relatively easy to break-even but very difficult to get to significant size ($500m is min. for Plc size). Big gap in the middle
    • More and more start-ups deploying a bootsrapping approach
    • VC model changing: small amounts, more early stage  
    • Seed capital: allows you to validate initial assumptions: $100 k – $500k
    • Series A: scale-up $5 – $8 m
    • Series B: ca.  $20 m
    • Exit: lots of deals happening on the $5 – $10 m mark. Very few deals happening on the $100m mark and they all seem to be acquired by a handful of players. This constrains how much money you can raise: to make 5x on exit you can only raise $1m unless you are truly scalable. Chasm in the middle 

–          VCs becoming more receptive to ‘paying out’ founders at spin-out stage
–          Optimum team is 2 people: one business and one technology

7. on PR & Marketing

–          PR 2.0 : use of blogs and online media to promote
–          Offline PR still very important e.g. case-study of Prosper.com (got most of their traction from PR)
–          Emergence of DIY approach: lots of free tools out there to help get traction: Podcasts, You-Tube,. Google News. Google Base, Google Catalogs, widgets
–          Everyone should be making the most use of these free tools to improve traction; but very few people actually are ! 

8. on business models

–          Web 2.0 still quite fickle as far as monetization is concerned. Not a great variety in monetization avenues
–          Broad versus Verticals. Different funding requirements
–          Two predominant models: Media business (advertising), E-commerce. Third is Marketplaces. Some subscription models as well but not as many
–          Media. All about CPMs. CPMs have been stable

1.      Broad CPM = $0.5 – $2 e.g. My Space ($0.52), Netvibes, Youtube, Twitter 

2.      Demographic CPM = $1 – $5 e.g. Facebook  ($1.03), Asmallworld

3.      Endemic Advertising CPM = $10 – $40 e.g. Fandango ($41.67), Flixter

–          Endemic sites are becoming more and more important. Strong emphasis on content to facilitate a purpose e.g. Flickster, Fandango
–          More vertical opportunities to exploit, harder to be successful if you are broad – need to depend on stringer technology  e.g. Youtube
–          Average Revenue Multiples 3.8 x for Media, 1.8 x for e-Commerce
–          E-commerce: still quite a few niche verticals where it’s easy to make money and get to break-even. Challenge is always in scale-up

9. on the new NEW  thing

–          emergence of the webtop. Convergence with desktop
–          offline synchronization: APPOLO by Adobe. (alpha phase) www.adobe.com/go/apollo
–          ethics, copyright issues, morality on the web
–          mobile: still many opportunities. not a reflection of the web but an extension of it
–          the big question: who will fill the remaining 8 slots in the billion dollar mark ?? ca. room for 20 slots. 12 of which are taken !
–          the other big question: must everything on the web be 2.0 these days? Is this the death of 1.0 or 1.5 ? No, but almost every site should maxise the opportunity to utilize these tools to bring their people together and create a community that strengthens their purpose, whatever that may be.

  
 

As most will have noticed, there have been a number of changes on our site recently. Amongst these is the addition of new ‘Categories’ to reflect the broader scope of demand from Buyers.

The most recent example has been the newly added ‘Property’ category, covering anything from building and plumbing to mortgage advice and conveyancing.

In light of these changes, we strongly recommend to all Providers to review the categories/subcategories that their profile is featured in by updating their profile (by logging in People per Hour and clicking on ‘Edit my Categories/Subcategories’).

As mentioned previously, another new feature is the addition of a portfolio for all Providers that can be used to upload examples of your work (e.g. previous logo designs, photos of building work done, presentations that have been produced).

The portfolio was requested by both Buyers and Providers and we are hoping that you will find this new feature very useful. We are delighted to see that some Providers have already started uploading their work to their profiles (this can be done via the My Portfolio section in the Provider log in area) and we hope that this will continue.

With all the rhetoric on Web 2.0 – a ‘term’ (?) we have deliberately steered clear from to date – we finally decided to share our thoughts with the world on this much discussed, overheated topic (and in doing so of course adding to the heat!).

 

What is Web 2.0? The matter of fact answer is this: it is a term coined by Tim O’Reilly of O’Reilly Media that has since sent us all asking that same question again and again (and of course making him more popular and richer all along). In O’Reilly’s own words: “Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform” Is it? Tim Berners-Lee’s view (the founder of the internet himself) is that  Web 2.0 is nothing new as it’s “components” have been around since the inception of the web.

 

In thinking about the topic myself, one thing I personally find baffling is this: throughout history, Man has confronted innovation and technological advancement with vastly contrasting reactions that are always at either extremes and (with the benefit of hindsight) rarely make any sense.  When the first car was released it was a nothing more than a “horseless carriage”. Yet when tools that already exist simply become more accessible, it is called a ‘revolution’!

 

Why is this, I ask? Could it be that we as humans have an innate unwillingness to accept things simply for what they are?  Are we incapable of learning from history? Scott Roesenburg (founder of Salon.com) put this very succinctly in his book Dreaming in Code: “Most participants in the creation of new software are either blissfully ignorant of the past or recklessly confident of the future – blithely certain that this time things will be different.” In the words of another great Man “the only thing history has taught us, is that it has taught us nothing”

 

Leaving that side-thought  for the minute, let’s return to the un-answerable question: what is Web 2.0? We decided to shed some humour on the topic by quoting some of the funniest definitions we’ve heard or read about (which in fact are a lot more accurate then many of the more ‘serious’ ones)  

  1.  It’s when you make all the content.  And they keep all the revenue.Thanks” 

  2. “It’s when you need to sign up to every site you want to use.  And a few that you don’t.”

  3. ”  It’s a technology that allows no thought to remain unexpressed. No matter how stupid or grammatically incorrect it may be.”     

  4. “communities, user generated content, ajax, wikis, tags, and the rest of it,…”

  5. “It’s when you make “friends” on every bloody website you visit”

  6.  ” It’s when clouds have tags, not rain “ 

  7. ” It’s a phrase that refers to a perceived second generation of web-based communities and hosted services – such as social networking sites, wikis and folksonomies – which facilitate collaboration and sharing between users [citation needed] “

  8. ” its where you have lots of faces on a website” 

  9. ” It’s when clouds have tags, not rain.”  

From the non-humorous definitions, the most accurate I’ve ever heard of is “Web 2.0 is about people”. Vague as that may be, it really is the only common denominator and the cornerstone of all this hype – it’s about giving people (which are not necessarily web designers or programmers) the simple tools to publish their own content easily and quickly,. And to that effect we should be paying equal, if not more,
respect to the advent of Broadband for allowing that data to be transferred at speeds that make this practical and economical.

 

 In an effort to pre-empt your questions: NO that is not why and how we chose the name “People per Hour”. Nor is it why we favour that definition. Our name is our name because that’s what we do – we allow “People” who need things done to come together with “People” who can do them. So does that make us a Web 2.0 company? Well, I’ll let YOU figure that one out. After all, our site is all about YOU so your opinion – your collective opinions – should be the ones that count. On my side, what I’m more interested in, is figuring out whether we are a Horseless Carriage 2.0. To that effect, I will be sure to keep you ‘posted’ .

In a post cold-war era, where capitalism reigns as the dominant force of globalization, never has there been a time where we were in as much control of our own labour as we are now – the very cornerstone of Marx’s Communist Manifesto that argued against capitalism as a force that oppresses workers and denies them the freedom of their own labour.

And yet, in a capitalist society where free markets are the driver of economic growth and distribution of wealth, we are now blessed with technological tools that allow us to very simply “be in control” – Marx’s dream albeit in a capitalist society. Is this a paradox? Or is it a convergence of what use to be seen as two opposing school of thoughts?  I say – neither.

 

No doubt, as many critics have argued since Marx, the problem of realizing the Marxist dream was one of practicality and implementation. In the words of George Orwell “the trouble with communism is that it takes up too many nights”. Indeed, in an age where the industrial revolution was still at its infancy, we could safely argue that society lacked the infrastructure and mechanisms to allow people – the “working classes” – to channel their labour and skills where they were needed. The hubs of capitalism – markets where money is aggregated and exchanged between companies and retailers –  inevitably dominated as the only practical mechanism of achieving ‘clearance’. And achieved it they do, but they do so on the behalf of all of us – what led to the argument of ‘oppression’ of the working classes in the first instance.

 

Enter the internet revolution. Now, for the first time in history, we have at our disposal a medium, easily accessible to all, that redistributes the market forces from those almighty aggregators down to simple people – the “working classes” – empowering them with the means to be freed from the dependency of ‘hubs’, ‘aggregators’ and the corporations that dominate them. With sites like www.eBay.com , they can buy and sell products directly online and dictate the price; with sites like www.prosper.com they can borrow and lend money and dictate the terms themselves; with www.PeoplePerHour.com they can sell their services as and when they feel like at a rate they choose themselves. And not just that, they can choose to be a lawyer in the morning, and a translator in the afternoon (if they have the necessary skills of course) or a retailer in the evening! They can choose to work at night or in the day, from an office or remotely. Indeed, as far as “being in control goes” – it doesn’t get much better than that.

 

This may not be obvious to all of us yet, but we are experiencing a very fundamental paradigm shift. Picture this: two people across continents – simple people who have never met and who in the world of capitalism are powerless to make any noticeable difference – are now able to transact between themselves directly and transparently and in doing so taking a slice of the profits of a multinational corporation. And because the direct dealing cuts out the middle-man, the rate – for whatever the transaction involves – is bound to be better, so not only do you bypass them but you beat them in their own game. And all the while, you are “in control”.

 

The extent and reach of this is mind-boggling. The internet has changed the way we buy and sell items, it has changed the way and speed with which we access information, and now it is changing the way we deploy our innate right to work.  So is it a paradox or just a convergence of different social dogma? I repeat the answer I started with – neither. It’s just the web! 

Becoming your own boss may be an exciting path, and a goal worth striving for, but if you are risking a secure job, you better take some advice from those who’ve done it before. Make no mistake – it will not be an overnight process or an instant path to success.

To help you, we have tapped into our extensive network of people – self-employed practitioners and business founders – and asked them what they think are the key lessons they have learnt along the way.

  1. Have a solid plan and be prepared to not stick to it: rarely do things go as anticipated in a start-up, but if you develop the right attitude, this can work to your advantage. You will encounter unanticipated problems as you go along but also opportunities. Look out for them and stay nimble – that is your one biggest advantage to your larger competitors.

  2. Hire only when you have to and always aim to hire people who are better than you. If you hire an A-class employee, they will to hire another A-class employee in the future, whilst B-class employees will hire people who are inferior to them in their effort to cover their own incapabilities and make themselves shine.
  3. Focus on what you do best and outsource the rest. Do not distract yourself with non-core tasks or projects. Sites like www.peopleperhour.com will help you find flexible labour as and when you need it, enabling you to delegate projects without having to hire extra people.  
  4. Hire people who want to get their hands dirty: the type of person who fits in a startup atmosphere is very different to your classic business executive. They need to be hungry and prepared to do the legwork. Make sure you downplay the picture when you interview: you do not want people who are looking for an easy ride or piggy back on your success.
  5. Articulate a simple and concise message. However complex your product or service is, it must be understandable by unsophisticated people. If you can reach the masses, you will always have a stronger chance of success. As Albert Einstein said “it must be as simple as possible, but no simpler”.
  6. Professionalism above all else; take emotion out of the equation, keep your personal life out of it, and remain objective and fair at all times. There is a fine line between showing empathy and sympathy. A good boss must be empathetic but objective and sometimes cold of emotion. 
  7. On Day 1, write the following acronym, stick it on the wall in front of you and leave it there: CIMITYM (Cashflow Is More Important Than Your Mother).
  8. Learn to be wrong fast: did you ever wonder why some of the most successful businessmen are uneducated? Because education teaches you how to be right all throughout. In business, what’s more important is to learn to be wrong and to spot it fast, so you can adapt, change and move on. The agile do better in business.
  9. Focus on scalability: many businesses grow to be profitable but few have the intrinsic scalability to become leading organization. One of the first things you need to do to achieve that is minimize the dependence of the business on you! Systematize the business and implement standardized processes so that it doesn’t need you. In the words of Warren Buffet, “make sure a fool can run the business, because one day a fool will”!
  10. Implement a philosophy of continuous improvement: the Japanese have engrained this so much in their corporate cultures that they have a special word for it: ‘kaizen’. Some of the most advanced and successful organizations like Toyota were largely built on that premise. Make sure you talk to your customers, get feedback, learn from it, and implement leanings where applicable. Do not sit back waiting for big step improvements: the small-small will bring you more results in the end and faster than you think.

    

Firstly, thank you to everyone for your comments and suggestions – keep them coming!

As you would have noticed, the site is being improved on a daily basis and new features are constantly added.

Two new features have just been also introduced due to popular demand; please try them out and let us know what you think:

 1) Online Portfolio for Providers – this feature was requested by a number of providers, especially in the design categories, but it is applicable across the board. Simply log in with your Provider credentials and you will notice the new option ‘My Portfolio’. You can upload up to 10 files of your choice in your portfolio (e.g. images of designs you have produced, word documents with articles you have written etc); these are then displayed on your profile page, enabling you to showcase your abilities and thus increase your chances of winning work. 

2) One-to-one private messaging – this feature was requested mostly by Buyers, but again it will benefit everyone on the site. Buyers can now ask questions/clarifications in private about the bids they receive and Providers can respond to them. Please note that only Buyers can initiate a private exchange of messages (to avoid flooding the Buyers with messages) and Providers can only issue one reply per question asked by the Buyer.

To ask a question, simply log in and navigate to the particular bid (in My Projects) you want to ask a quesion about and write your message in the box at the bottom of the page. Similarly Providers can respond by logging in, navigating to the relevant bid (in My Bids) and clicking the Reply link next to the Buyer’s question.

 We hope you find these new features useful; as always, comments/feedback is most welcome!