EightBlack.

I was living in the US when the first internet bubble occurred.

And I was living in a city which most people laughed at when I told them the name.

Omaha, Nebraska (go Huskers!)

I became quickly defensive when people gave me a hard time about where I lived (and let me put the record straight, I’d move back there tomorrow. In a heartbeat).

Did you know that Omaha is home to 6 of the Fortune 500 companies in the US.

Warren Buffett lives there.

Anyway.

One of my neighbours worked at Morgan Stanley - he’s been there 34 years. He was watching the tech boom unfold like a wise old man (which he is). I actually credit him with saving my ass.

One of my buddies in the US who I used to work with when I was with BT, asked me to come along and interview with a start up he just joined called PeoplePC.

Amazingly, it’s still alive. Just.

The original concept was an online buyers club network - or something.

I flew to San Francisco 3 times. And met with some very bright people - maybe too smart. Among one of them was John Sculley, of Apple Computer fame (although I think if you ask Steve Jobs about John Sculley, you’ll get belted over the head with a gMac or something).

Not only was Sculley behind PeoplePC, but so was Softbank, Japan’s famous technology investment firm.

On the surface, it all looked very impressive. Smart people. Smart backers. Good intentions that were awash with good old fashioned American capitalism. Perfect.

But my wise old neighbour told me not to make the move.

He said “Do you understand their business?”

“Sort of. Well, more than you, anyway” I said to myself.

The conversation went on on an. And in the end, I took his advice - I’m not quite entirely sure why.

I didn’t make the move across to San Fran.

PeoplePC died a slow death, my buddy from NY was retrenched soon after I decided not to move and the VC money (and the Sculley Brothers investment firm and Softbank) all packed up and moved on.

Eventually, the shell of the company was sold and now the business trades as a “me too” ISP.

But my point with this story is that Web 2.0 (the era we are in right now) is completely different to that of Web 1.0.

Web 1.0 was insanity. I was there. I watched it unfold - before I had any real interest in the web or could even fathom the impact the online would have on all of us.

I remember going to an online conference in New York, hosted by Guy Kawasaki - who to this day is one of the smartest online guys around. He ran a company back then called Garage.com and it’s motto was “we start up start ups”. I still wear that t-shirt to this day.

Guy would be the first to admit that he’s grown up since then and his outlook regarding the online world has matured. Garage.com has now changed it’s name to Garage Technology Ventures.

Anyway, there we were, sitting in a conference room with 600 other people and the vibe and the buzz was electric.

At the lunch break, I sat down with 10 people I didnt know - all of who were a lot younger than me. Anyway, about 10 minutes into lunch, this pimply faced kid beside me, turns to me and tells me that he needs a CEO. He’s all of 19 or something, has some insane business plan, actually (according to him) has venture capital and is desparate for staff.

It was madness. It was like watching the real life version of “Wall Street” and everyone chanting “greed is good, greed is good”. Thank christ no one wanted to hug me.

With web 1.0, there was so much money around, so much hysteria, so much hype that it was scary. Thankfully, most of these people were dealt a lesson in reality soon after, but a lot of them pushed ahead, unperturbed by the events.

But it IS different now.

The deals are being done are more logical - even if they appear crazy.

To many in the outside world, the GooTube deal reeks of the Year 2000. But it’s not. While it may not have a commercial model that works just yet, it has one thing that most, if not all the start-ups of 2000 did not have. It’s called “eyeballs” and traction.

100 million people a day watch or download videos on YouTube.

The guys at PeoplePC were more concerned about how they could dominate the world and flip the thing and get out rather than getting customers to buy their stuff.

Google on the other hand was started by 2 geeks who wanted to develop the best in search, and screw the making money bit for now. Even after they got their first round of capital - it was still another 4 years before they worked out how to make a dollar.

But Google’s fans sprang up everywhere. Google is, to this day, the very best example in word of mouth marketing. Period.

And YouTube was born out of a group of friends wanting to share video content with each other.

None of them employed Madison Ave ad agencies, spent millions on Superbowl advertising or engaged marketing people to piss a lot of money against the wall and rave on about “brand positioning” or something as equally moronic.

And that’s why News Corp and Murdoch are all over these new companies like a rash.

Smart bastards like Murdoch are prepared to bet big. And so far, it’s paid off.

Companies like Microsoft and Yahoo! are in trouble right now. Not because they’re not successful, or don’t have enormous wealth and capital - but because they won’t move and take action.

They need to shit or get off the pot. Before someone else does.

It’s the very reason that the rumour mills have already started to circulate the story that Microsoft should buy Yahoo!

Now that makes sense.

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This entry was posted on Monday, October 16th, 2006 at 7:36 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.