Life & Death - The Web 2.0 & Voice 2.0 Continuum
I've been reading so much conversation the past couple of weeks about the death of Web 2.0 (Arrington) or not (Boyd). Michael and Stowe aren't the only ones talking about it. The buzz is everywhere. Just this morning on Squawkbox, the failures of Jangl, TalkPlus were part of the conversation.
Make no mistake. Times are tough. Venture capitalists aren't throwing money away. They aren't looking for high burn rates. There's a nice perspective on Mashable (Recession is the Mother of Tech Invention). It isn't just the tech sector, VoIP or unified communications. Check out the equities market in general (thanks Don).
Times are tough everywhere. The Fed has been bailing people out, but in the tech sector, bailout is achieved by death and destruction. The last round we called the burst of the bubble, and that phrase has been kicked to death already as times have gotten tougher. But I don't htink this is all as bad as many folks are saying. Colleague John Furrier wrote Gloom in Ventureland - Try Gloom Period - Innovation Happens Now in response to a Wall Street Journal piece. I agree with John that the WSJ seems to be calling for a dogpile on the Silicon Valley. Then again, remember we don't call it the Silly Valley for nothing. There's been plenty of silliness and massive funding of some of the most absurd ideas of all time centered there. And let's not forget that in years past, the Silly Valley was the spawn of books like Po Bronson's Nudist on the Night Shift. The Silicon Valley does not today, nor has it ever, represent the reality of competitive free-market business.
SV is a microcosm of a variation of what I'd call cronyism run rampant. It's built on rumor and innuendo - smoke and mirrors - card tricks. Why is it surprising that when it comes time to actually build a sustainable business, some of those companies flounder and sink into the abyss?
What does this mean for the rest of us? It means we tighten our belts, make wise business decisions and investments, and we look at where the value is. Wild speculation doesn't do any good in "fat" times. There's just a more painful price to pay when the lean times come.
Is the industry in trouble? Not hardly. Whether you call it telecommunications, voice services, VoIP or unified communications, our sector of technology is going strong. And companies like IBM, Cisco and Microsoft continue to invest resources - R&D, marketing, sales and engineering - in building their sustainable and profitable business lines. These aren't companies that are likely to play short-sighted games for the sake of quick return.
We're in the middle of the ebb and flow of one of the largest industries ever assembled. In ebb and flow, there are going to be bubbles. There are going to be highs and lows. But the general level of the water, if you look at the horizon rather than at your feet, doesn't vary that much.
Voice 2.0 isn't dead because while we all talked about it, it was never really alive. It was an evolutionary path we've been following. I don't believe we're done following it. We're simply in a time when fiscal responsibility, profitability and smart business decisions are necessary survival skills.
I think we're going to see a number of companies, particularly small innovators, stumble and fall. For many, their cash burn rate has never been able to keep up with the investment or seed money in the first place. I expect I have some friends and colleagues in this boat. I'm sorry to see them struggle, but it's how we learn. Some acquisitions will still happen, but they'll either be very strategic, or a company with deep enough pockets may leverage a "pennies on the dollar" buyout with some measured speculation.
We've seen some acquisitions in the past year or two that I thought were pure fantasy. So far, those have proven to be non-actionable by the acquirer, so I'm sticking to that. Some money was wasted and some people will pay the price for poor judgment. I don't think we'll see any wild, speculative purchases in the near term. We're going to see people doing smart things unless they slip.
See also Reality Check: Surviving Is Always Hard for Startups.
As part of all this conversation, talk of the value of social media often seems to come into play too. In general, social media is simply another evolution of the web. Remember when people didn't have an email address on their business card? Or a web site? Social media is integrating itself into our culture of business in much the same way. And in lean times, it provides not just a source for commiseration, but a place to catch ideas and see how others are doing too. The social media tools we've come to embrace play a vital role in surviving the ebb and flow of industry trends. They're our lifeline, and something to leverage to our best power. If you aren't using them, you're falling behind.
Falling behind when times get lean and tight isn't a desirable position to find yourself in.
Now's time to engage. Get into the conversation. Publish papers that represent your good business judgment. Demonstrate your acumen by how you present your story. Be smart. Work smart.
Sheryl and I have our sights set not to survive, but to thrive. I think that's a good mindset for everyone in every business.
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