Scary Stuff About Web 2.0

Steve Baloff of venture firm ATV has an unnerving article in DailyII about his fondness for venture investing in “Web 2.0” companies. In his ritual invocation of all the usual themes — higher bandwidth, commerce plus community, capital efficiency, and search — plus his petri-dish biz prose — “investment opportunity”, “paradigm-shifting”, “convergent”, “monetize”, “robust user experience”, etc. — it is, unintentionally, one of the scariest articles I have read on this subject in some time.


  1. If the article was written 2 years ago it would have been a better read.

  2. You think that’s bad — my cab driver on the way back from the airport was telling me all about this great Web 2.0 startup he and his friends were putting their money into, hoping to flip it to Rupert Murdoch :-)

  3. Dinesh Vadhia says:

    There have been a number of interesting VC-related posts recently and here are two things to think about:
    1. We all know this and even Steve Jurvetson said so at a public presentation at Stanford last year or so. A good VC will recieve tens of thousands of business ideas – solicited and unsolicited – per year. From this they whittle it down to a few – just a few – investments per year.
    However, that is not the point. The point is that they recieve all these ‘in confidence’ business ideas for FREE from which they can work out which way the wind is blowing. Your business idea is but another data point in their internal decision making. Of course, they’ll tell you different and that is another point ie. just as Hollywood lives by the ‘script’, VC’s live by the feed of business ideas. And, they will do anything to make sure these business ideas keep flowing eg. Steve Baloff’s article and the hundreds like it.
    2. Once an entrepreuner accepts external investor finance they are no longer a free agent. Their role changes immediately from an entrepreuner who wants to change the world or at the least pay off the credit cards, the mortgage, the divorce settlements, the kids education etc. etc. to an “investment manager” ie. the entrepreuners role is now to manage the VC’s financial investment.
    In most cases the entrepreuner doesn’t get this shift and usually results in the VC’s favorite Gray-haired CEO coming in. Not that the Gray-hair makes much of a difference to the success of the company.

  4. I think calling this one of the scariest articles you have read is a little harsh, and I’d be interested in hearing more from you on why you’d make that statement. I’d hate to see history repeat itself, but I think it’s important for confidence to be returning to the industry.