Tom Foremski of the Silicon Valley Watcher reports that Kleiner Perkins Caufield & Byers, one of Silicon Valley’s leading venture capital firms, has stopped investing in Web 2.0 startups. “We have absolutely no interest in funding Web 2.0 companies,” says Randy Komisar, a partner at KPCB. He mentioned this during an after dinner conversation last week. He said he had recently told John Battelle, one of the organizers of the rapidly growing Web 2.0 Summit conference, that the term no longer had the same positive cachet it once had. In the VC community it clearly has a negative one.
Tom goes on to say:
It won’t be just Kleiner Perkins that has lost interest in Web 2.0 companies. The firm is one of the trend setters in Silicon Valley, with a long string of massively successful investments over several decades. And Silicon Valley VC firms always invest in trends, rather than companies.
So, is this the end of Web 2.0? Though the buzz word may have lost some of its luster, I can’t imagine VC’s, not believing that “Web 2.0’s” core principle’s aren’t worth the investment. Socially driven applications, or as Tim O’Reilly puts it “the network as platform, and applications that leverage the true strength of that platform”, still has plenty of legs.
What say you?
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November 6th, 2007 at 7:35 am
Great post Markus! I agree the term “web 2.0″ is over used and more often used incorrectly. I think most should view “web 2.0″ more as an era of change; a renaissance of sorts versus an end-all-be-all or type of product. When viewed as an end-all-be-all then yes I agree there is an end, and the end is likely near. Of course the web as a medium is ever evolving so this renaissance will likely repeat itself again and again and be the source of new ways of thinking, executing, and display labeled as “web 3.0,” “web 4.0,” and so on and so forth. The weight we give these terms can be our own fault but I think, scratch that I hope, people use these terms merely as a way to encompass a new way of doing things.
November 6th, 2007 at 9:55 am
Taken with a grain of salt. Perhaps a firm looking to artificially deflate the value of some potential acquisition targets.
Angela’s post just about covers it all in that we put too much weight on the semantics and hence they get missed appropriated. Web 2.0 like other catch-all phrases has been used to foster a discussion around an era in our industry that encompasses certain traits and attributes, but is in no uncertain terms wholly defining of one particular thing. When I think back on the earlier days of the Intenet I hear echoes of references to terms like “Internet Time”, “e-business”, “vapor models”, and other such terms that served as vehicles for conversation that have since faded into the anals of business case and historical studies on the rise of the Internet. We will hear more and use more terms to facilitate the dialogue around the exciting new eras of the Internet.
So to KPCB, I’m just sayin’ - if you don’t want to call it Web 2.0 anymore since you have the dough, you can call it whatever you want, but when your next investment is called out on this blog or any other as a Web 2.0 venture, think about the ROI.
November 6th, 2007 at 8:35 pm
I’ve been hearing the term Web 10 kicking around lately. But seriously, I think this is a question about whether we’re approaching a bubble again — and then will we see another round of serious fallout with only the strong surviving? I’m not sure, I think Google is providing that anyone can get strong. With OpenSocial and recent announcements about what they plan to do in the mobile arena (let’s hope the carriers let them) it opens the power of business for almost anyone to create. That developers can make money from so many open source projects nowadays is kind of the next wave. That bloggers, vloggers, and the like can make money from producing their own content and distributing it themselves, without a book or newspaper, or magazine publisher, is also kind of next wave. Next wave in thinking that whereas all of the power was only in the hands of a few, is moving more and more every day toward massive individuals each having some capacity of power.
It’s the effect of The Long Tail. It’s the effect of The Jump Point.
In the not to distant future, upstart companies won’t necessarily need VCs to survive.