Boom 2.01
Monday I wrote an entry concerning the struggles a small company goes through when the decision of taking VC money must be made. Today I would like to talk about all the craziness that is starting to occur around us and why it worries me.
It started with Yahoo! acquiring Upcoming.org and then AOL acquiring Weblogs, Inc. and finally Verisign purchasing Weblogs.com. I seem to recall this type of craziness happening before and a lot of people promising themselves that they wouldn’t allow it to happen again. Well I fear the bubble will be much stronger this time around and its burst will be even more damaging because many of us really did believe we learned from our mistakes the previous time.
We are at a point where everyone has an idea that they feel will succeed and earn them a significant amount of money. However, what’s the gameplan if that doesn’t happen? Impossible right? Any idea can work in this type of environment and that’s why everyone starts a blog network. If WIN can be bought then surely anyone who decides to launch a network with over 10 sites will have a chance to be bought…
When I had the idea of the 9rules Network in my head I got really excited, not because I thought it would make me rich, but because it had the potential to leave an impression on the web. I know many outsiders are still skeptical of what the Network is and that it just a club of sites. Because of the Network some writers have received greater exposure and others have acquired new jobs. New friendships and partnerships are being formed on a daily basis that more than likely would never have occurred if the Network didn’t exist. Cheesy? Possibly, but if there ever is a crash, I know this idea will still be around and running on all cylinders.
But what does 9rules, Inc. get out of all of this? We get to be right in front of almost over 100 (and growing) influential sites on the web in many different categories and now two languages. We have developed relationships with each and every site not by trying to sell them anything or making false promises, but just because we have put them first. How many companies have the opportunities that we now have?
A couple of months ago if you would have asked me whether or not I would have taken funding for this company I would have responded by telling you that is the wrong question to ask. The real question would’ve been whether or not a VC would have had the patience to allow us to build these relationships first before we moved on to making them money. I don’t think any of them would and I think that is a very good thing because it means the idea of the Network should be around in any type of economy and environment. Not just the ones that get people giddy.
Exit Strategy
If you have ever written a business plan or talked to an investor you know that you are expected to come up with an exit strategy for your company. Although a very good idea for a lot of companies, I hate trying to come up with one for just the Network. When I look at the big picture of what 9rules, Inc. is going to accomplish I can see an exit strategy, but for just the Network I would like to think there is no need for one. Even if all my partners left me because they are tired of me not brushing my hair, I would like to think that this Network that we have built can still stand on its 100 legs.
Idealistic? Yes. That’s just how I work at times.
So what happens if a company comes up to me and offers me 8 or 9 digits for everything that we have created? That’s easy, I take the money, but it would be much easier to create a couple products and services where I don’t have to worry about that exit strategy occurring and that’s the path we are about to take.
So Why Are You Worried?
Because AOL paid $25 million for 31 blogs in which only a couple should be considered quality and Verisign forked over around $2 million for a pinging service. Not the only one on the web, just the one with the weblogs.com domain.
Well I guess I shouldn’t be that worried because this just means that if you create a quality product that is useful to many people you should do just fine in the future. Isn’t that how it always is though?
I would like to ask you a question. Did you have some big plan in your head that you thought out for the 9rules network in the “beginning” or was it more of a natural “gut instinct” approach that just “felt right” to be taking with each step you took?
Why I’m asking this is that I’ve just discovered something pretty amazing this morning (at least from my viewpoint) and I think you and your “community” are taking a path that mirrors this thought / idea very closely.
One last thing to note. If you are trying to build a sustainable community, is there ever really an “exit strategy”? I mean do people sit around and say “What’s the exit strategy for the Web?”
By Nollind Whachell on October 7, 2005 12:57 pm
Good question Nollind. Initially there was an idea of how we could go about this and make money from everything. Then over time things just happened to evolve into the strategy we have now. I knew from the beginning where I wanted to start and I had that gut feeling that the Network would make for a great base for the future.
So I guess you can say we went with that felt right instead of chasing the fat dollars first. Definitely wasn’t the easiest decision because all have those bills to pay, but the decision always seems right no matter how many times we go back to look at it.
Care to share what your discovery is?
By Scrivs on October 7, 2005 1:06 pm
Ok, that’s what I thought, that it was more of a natural “gut instinct” thing (which overrode the pull to grab the quick cash).
As for the discovery, I don’t want to reveal it just yet actually. You see this idea/approach is one that already exists (as I found it on the Web). What I want to do first though is “translate” it so that it applies to the Web, if that makes any sense. What’s amazing though is that a lot of what is said in it could literally be copied and pasted and still make sense with regards to the Web. That’s why I was so blown away by what I was reading.
Anyways, I’m going to start work on this “translation” this morning, so no idea how long it will take. The idea/approach is pretty extensive but I’m going to try to simplify it in a brief outline first so people can quickly grasp it and then provide more details to elaborate on the concept and back up it’s approach. As I said though, your community approach to the 9rules network has a lot of the elements of it. Hopefully when I’m all done I’ll even see more comparisons to the 9rules network which will in turn justify the idea/approach itself and be a perfect example of it.
Here’s an interesting little hint though. The word “design” keeps reoccurring in this idea / approach (but, no, it has nothing to do with graphic design). I found that quite ironic considering that isn’t 9rules network primarily comprised of designers?
By Nollind Whachell on October 7, 2005 1:52 pm
I think the crash we are about to see in the next few years will be absolutely devestating.
1) Everyone on the web is trying to get rich off advertising, which is exactly what happened a few years back. Pretty soon, advertising dries up because it just isn’t as effective any longer.
2) The biggest presence on the net, Google, is bloated with stock as it is. What happens when it crashes down?
3) Yahoo, eBay, all the big players are buying companies that aren’t worth half of what they are paying for them.
Consequently, we will see a crash, and these glory idealistic days of “Web 2.0″ will come crashing down on our heads. Anyone remember how the web was right before the last crash? Flash, XHTML, DHTML, CSS, PHP, etc, were all just starting to hit it big. Same thing happens with all these 2.0 technologies. History likes to repeat itself. I’d say its only a matter of time.
This also says to me that we need to start looking for other modes of revenue other than advertising. Advertising simply won’t continue to be so effective.
By Aaron Lebo on October 7, 2005 5:15 pm
Great post Scrivs and you’re right, it does compliment nicely my Cautious Optimism and Cynical Buzz post.
I think people have every right to be cautious and even cynical of Web 2.0. There is a lot of hype out there, but equally there is a lot of optimisim and opportunity. Even if there is a crash (and what goes up almost always goes down at some point), it’s probably 2 years away at least. There’s a lot of time to enjoy the current bubble, which has only just started remember. So as the title of my post goes, my approach is to be cautiously optimistic and ever so slightly cynical. But frankly it’s a turn-off when people are overly cynical. Just as I’m sure it’s a turn-off when people get too hypey (as I’m probably guilty of doing sometimes - but hey this is my niche).
As for the network, I like the approach 9rules is taking of quality sites in a connected network. I agree with you Scrivs that weblogsinc is not worth $25million, if that was the price paid. I would say there are maybe 4-5 ‘quality’ sites in that network, the rest are pretty average ‘quantity over quality’ stuff. I’m hopeful that quality will be rewarded in Web 2.0, eventually, which is why I’m working so hard on my Read/WriteWeb blog - as I’m sure the rest of the 9rules members are too.
By Richard MacManus on October 8, 2005 3:43 am
I dont believe online industries as a whole are in for a crash. Some companies will pop, but these will be companies that are trying to be big too quick.
The company I work for survived the “.com” boom and bust (with some pain) but we survived because we have a good product that gives advertisers a real return on investment we were able to stick around and compete with other forms of media for advertising budgets.
Online is just another form of media and as far as advertising revenue is concerned its out performing many “traditional” forms in terms of spending and revenue created and that did’nt happen back in the late 90’s so things are looking good.
The AOL thing really isnt big news. Its big for us because we blog more than we eat, but not to the industry as a whole. If the venture fails to make money the ripples wont spread that far. 25m is probably what they spend on carrots in the AOL canteen each year.
By Rob Winters on October 16, 2005 1:35 pm
one thing no one seems to know about creating a blog network is that it has to be stocked before you open the doors.
i spent a lot of time building an adult blog network that did some decent numbers. a new blog wouldnt get any real traffic or click-thru bucks unless it was (or appeared to be) at least 6 months old.
we’d spend a few weeks filling it up with posts, soft launch the thing, and then market it as if its been around awhile. we called it ‘instant aging’.
By ryan on October 17, 2005 6:43 pm