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The coming Tech Bust


I can’t wait for YouTube to crash (DotCom 2.0 Crash – UGC Tears before bedtime) – better sooner than later, we’ll lose some videos but it’ll make us wake up ethics and need to secure our user generated content on sharing sites.

I also figure we’ll move away from centralised hosting services with locked down content like YouTube to decentralised peer-to-peer (flexible) networks and open content such as group-editable livecasting on Mogulus or something.

But make no mistake: this is crunch time. And it’s gonna hurt – the list includes:

Twitter

Although well-used by many and even relied upon by some (like me), Twitter has yet to turn on a revenue model. It’s not like the company would lose users, if it set up a minor advertising strategy as a test; people want to see the company make some money. Please, Twitter, turn on the revenue before it’s too late.

Meebo

This is one of the coolest online communication companies I’ve seen. I like its products and services. But the revenues for running branded chat rooms cannot be all that large. Meebo belongs under the wing of a larger company like Facebook or Microsoft, but with Meebo’s expensive valuation and the coming cutback in M&A, I fear that its exits may be blocked.

TripIt

A very useful service for organizing travel information. Wait, travel? Who’s going to be traveling more often during the economic storm we’re heading into? People are going to sit at home on their mattresses filled with cash, teleconference instead of go on business trips, and take vacations in their backyards. I fear for this company and other clever travel start-ups.

Zillow

The real-estate site’s revenue model is advertising. Real estate and bank advertising. Unless the real-estate research site starts charging for foreclosure listings, I don’t see it doing too well in a hunkered-down economy, in which people are trying to hold on to their homes for dear life, not upgrade.

the rest are here on CNET (by Rafe Needleman)

Just one thought – if we don’t have much disposable income, no money for holidays and entertainment, will we spend all our time online, catching up in social networks, and socializing in virtual worlds? This might be THE growth area in a downturn?

EDIT: Just found this – Sequoia’s Capital’s Slides of Doom or Venture Capital Warning to CEOs http://www.docstoc.com/docs/1822343/Sequoia-Venture-Capital-Warning-to-CEOs


Laurel Papworth

Named by Forbes™ Magazine in the Top 50 Social Media Influencers globally, named Head of Industry, Social Media (Marketing Magazine™) and in the Power150 Media bloggers (AdAge™). CERT IV Training and Assessment certified trainer (Diplomas and Certificates etc) Adult Education. Laurel has manager Facebook Pages for Junior Masterchef, Idol, Big Brother etc. and have consulted on private online communities for banks Westpac, not for profits UNHCR & governments in SE Asia. Lecturer, social media, University of Sydney for 10 years and Laurel has 11,000 online students. Laurel Papworth personally connects to 6 million followers online and has taught around 100,000 people in the last 10 years how to be social media managers.

4 thoughts on “The coming Tech Bust

  1. I guess it depends a bit on whether social networks fit into the lipstick index. When your budget gets tight, internet access certainly makes for a sound entertainment investment. Skip pubs, clubs, movies, gigs, etc… any of which can cost as much as a month of connectivity. Maybe.

    But the downturn is certainly likely to put the screws on any service with no clear ROI/business plan.

  2. Still think this economic crisis will really show us how much people value social networks and social media. Up until now the users have chickens & not pigs. Be interesting to see how much people want to keep their social media alive when there are economic consequences to that decision.

  3. @200ok yeah I heard about the rise in purchases of lipstick and luxury cosmetics from an Estee Lauder documentary. Fascinating. I don’t wear lippy myself 🙂

    @Kate In times of crisis we turn to community – in spite of the fact we have to share more, be more vulnerable. Apparently New Yorkers for the first time in their lives bonded on the streets post 9/11.

    I’m guessing that the community will try to keep Twitter alive, for instance. I personally will put a few million* into the donation pool.

    *monopoly money.:)

  4. Great post. Several of the companies you featured have enjoyed high valuations pre-revenue, and from those valuations attracted lots of capital. The true test of their real value will come when people have to potentially lose them or pay for them, and that payment may mean going without something else.

    No question this downturn will be hard on most of us but I believe there will those who learn to thrive in the hard times. Those people just won’t have the luxury of building the audience first and monetizing later. Models that work will monetize immediately.

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