Fred Wilson, a VC who has sometimes thrown cold water on the notion that there’s a new bubble in Web investment, is now getting worried that a downturn is coming that will hit the Web as well as the rest of the economy. He seems to feel it in his bones:
My mind is trained to expect headwinds soon. I don’t know that we will, but I can’t help but expect them. … Right now in web tech, we’ve got a huge supply of new companies and a huge demand to invest in them. That’s not sustainable forever.
And we are getting to the point that some web 2.0 companies are going to start failing. VCs will keep bad investments alive for a while, but they won’t pour good money after bad forever. We’ve seen some web 2.0 companies close their doors and we are going to see more.
Finally there’s the question of what’s next? Is it semantic web? Programmable web? Social web? Yes, yes, and yes. But we are still seeing a lot of me too companies, slight twists on ideas that are now five years old. We are not yet seeing boldly new ideas, at least not enough of them to say we are now in web 3.0.
Which brings me to , the conference where I spent most of the last couple of days hearing pitches from several dozen Web startups. Despite some skepticism out there, I think many of them have interesting ideas, from Mint’s easy money management to ’s emailbox management tools to ’s personal manufacturing platform. I don’t know if their business models or management teams will hold up—who can possibly know?—but at least they’re not all me-too ventures. The hit rate on my attention was a lot higher than what I get in my email box, that’s for sure. And I know I’ll be keeping an eye on more than a few of these.
But not a few others, including some in the “Demo Pit” at TechCrunch40 who didn’t make the top-tier cut, seemed derivative, even a little strange, and in some cases downright desperate in their marketing. One dating site had a woman in hot pants standing in front of their demo, and gave out condoms to attendees. Maybe it was supposed to be ironic, but I dunno.
Then there’s , which offers free wakeup calls, and Sleep.fm, “the first sleep and wake up social networking site, where your friends’ alarm messages wake you up.” (I think these Web 2.0 folks need to get some shut-eye.)
Yet another company, Zivity.com, described as a social networking platform focused on “sexy models and beautiful photography” and one of the presenters at TechCrunch40, sent out an invitation to meet models at the conference, adding: “Journalists are encouraged to take photos.” Yeesh.
None of this talk should diminish the importance of the many startups at TechCrunch40 that are working hard to create something new, let alone groundbreaking services such as Facebook, Digg and Techmeme, Twitter, and a bunch of others. If there’s a bubble in Web 2.0, some great, useful new services are nonetheless emerging out of the froth.
It’s just that when you start seeing scantily clad women at demos, tacky tchotchkes, and buzzwords tripping over each other in press release after press release, it’s hard to disagree with Fred that there’s a reckoning ahead. It won’t be a surprise if investors start shying away from funding everything in sight. And it probably won’t be a bad thing, either.