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I was psyched when Ev announced his plan for Obvious Corp., buy the Odeo assets and run a lean company that can take advantage of rapid/cheap development and the network effects of multiple products.

There’s three trends in the ensuing discussion, all caused by plummeting costs of running a web business. Most people are only paying attention to the first two.

1. The VC world is adapting by offering more seed funding. George Zachary, Odeo VC/Board member, launched a seed funding program called Quickstart that’s aiming to make 50 loans in the $100-250k range. That’s a fortune compared to Paul Graham’s Y-Combinator.

2. Entrepreneurs are adapting by skipping venture funding, acquisitions, and IPOs in favor of running small businesses. 37Signals blows this horn loudest, but I’m partial to photo sharing site SmugMug. Chief Geek Don MacAskill said of a recent SmugMug acquisition rumor:

We love our business, we love our customers, and we love the people we work with. Not only that, but it pays the bills - we’re profitable, with no debt and no investors! Why mess with a good thing?

3. Geeks are finding happiness. That’s my favorite trend. Don doesn’t just think that keeping SmugMug privately owned makes economic sense, he thinks it’s more fun.

Ev said the same thing about the formation of Obvious:

Lastly, for me, I just wanted to create a company that would be as much fun and as fulfilling as possible. Fun in work to me means a lot of freedom, and ton of creativity, working with people I respect and like, and pursuing ideas that are just crazy enough to work. I don’t want to have to worry about getting buy-in from executives or a board, raising money, worrying about investor’s perceptions, or cashing out.

Costs are low so you don’t have to be in somebody else’s debt. Development tools are more powerful. And companies are building the infrastructure that supports the ‘muck’ of doing business online. With massive storage systems (Amazon S3), ad programs (Adsense / FM Media Publishing), and cheap hosting you can focus completely on your customers. A company can easily be two people who are 100% focused on building and polishing features for their users.

As David Galbraith points out, small sustainable business is the natural state for every other professional group.

When I was an architect, you didn’t set up a practice on your own to ‘exit’, you setup to build a company that made a profit and made products that made the environment a better place along the way - a sustainable enterprise. The whole idea of ‘exit’ in the context of building an architecture firm, or a legal or medical practice is preposterous.

Will it work?

Bryce at O’Reilly Alpha Tech Ventures calls the venture reaction “spray and pray”

This is a hits business and we just don’t know who the winners are going to be any more. The old formula was one that they were all comfortable with - get a proven team in a hot market and you’ve got a winner. Then Odeo happened (CRV was the primary backer). Rockstar team, smoking hot market, all-star angels — and it didn’t deliver the hyper growth traditional VCs need for their return profile. YouTube on the other had was a couple of junior guys from PayPal moving into a saturated market which had never really panned out. $1.65B later…

That may be true if you’re a venture capitalist and you require one of the investments to be a gigantic success. But I don’t think it’s true for companies like Obvious that have a parallel products in development (Odeo, Twitter, Hellodeo, Odeo Podcast Studio). It certainly wasn’t true for blog networks like Weblogs, Inc. As Jason Calcanis points out, launching to a network that already has traffic works:

StyleDash.com was the best launch in the history of Weblogs, Inc. thanks to the support of AOL and their traffic machine. The graph below is from SiteMeter which we’ve found is about 5-10% less than our internal stats.

It shows 1.5M pages in month one and almost 2M pages in month two. It used to take us 12-18 months to get a blog to 1M pages… now we start at 1M pages. That’s the power of scale, and that’s been the biggest lesson I’ve learned at AOL: how to build a “scale business.”

Of course the network effect isn’t actually a new idea. John Andrews from the SEO world calls it competitive webmastering (just added that to my vocab):

I am an independent competitive webmaster, and this sounds like what I (and many SEO practitioners) have done for years. I build web properties using the latest technologies and small teams (if I need any team at all). I monetize via subscriptions, advertising, and (affiliate) marketing. I use my sites to support my other sites, following sound SEO principles such as semantic theming and whatnot, for organic search traffic and search marketing. My “network” is my base for launching new sites and new promotions, obviously.

If that’s not inspiring, check out Markus Frind of Plentyoffish.com’s take on where the web is going:

Ebay Created a economy of 750,000 people making a living off its site. Google created a program where a couple of hundred thousand people could monetize their sites. Now thanks to google, huge drops in hardware costs and better software individuals and small companies can build sites that were impossible only a few years ago. At the moment there is no better example then me, if you would have said 3 years ago that someone was doing 600 million pageviews a month out of their apartment with no employees you would have been laughed at. There are thousands of other people who in the past 3 years have used adsense to grow and build large sites. In the next 2 or 3 years we are going to see thousands of these sites run by little groups taking over industries. This is because they will have reached critical mass.

I wonder if we’re in a happiness bubble where instead of chasing IPOs, tech entrepreneurs are chasing happy lifestyle businesses. If we are, then I’m pretty sure it’s early and that there’s plenty of room for the first few hundred thousand people to setup store fronts.

Despite my recent postings, I’m actually working on something that matters: a personal finance website called Wesabe. We’ve got a rough version up and we’re looking for a few more friends to test it out. If you’re interested email me.

I was recently in the hospital under heavy sedation (long story). Apparently the drugs made me extremely chatty and I began to explain to all of the doctors how I was building something that was going to change the world and then questioning them on how they managed their finances (the anesthesiologist used Excel). Even sober, I still believe that.

Most people go through life not knowing where their money goes, not knowing wether they’re getting good value from the people they give their money to, and too guilty to do anything about it. They say they’re too lazy to enter their spending in to a program like Quicken, blaming themselves when they should really be blaming Quicken for being such a crummy product. Meanwhile corporations are gathering more and more data on you so that they can come up with new and more sophisticated ways to part you from your money.

Wesabe thinks organizing your finances shouldn’t be a chore and that you should be keeping tabs on the people you give your money to so that you can find the good merchants and avoid the cheats. For the most part we’ve built something that does this. And we’re getting closer to those goals every day.

The rest of the company are Marc Hedlund and Jason Knight, founders, who write the Wesabe blog, Brad Greenlee and Coda Hale, rails gurus, and Jeff Fassnacht, designer.

I hope this explains why financial tips randomly started showing up on my blog.

Here’s the powerpoint from my Web 2.0 talk at Sonoma County Web Developers.

This is a list of resources for getting started with Web 2.0, how to understand it, where to find examples of people practicing it, where to learn the technologies behind it, and where to obtain the software that powers it. Originally prepared for my talk on Web 2.0 Opportunities at the Sonoma County Web Developers SIG, so that we could have a discussion about opportunities without getting too bogged down in learning the techniques.

What is Web 2.0?

What is Web 2.0: Design Patterns and Business Models for the Next Generation of Software

O’Reilly Media first popularized the term Web 2.0. This is Tim O’Reilly’s essay on the trends and companies defining the second generation of web development.

Wikipedia Entry on Web 2.0

Wikipedia’s entry on Web 2.0 with links to major resources. Wikipedia is itself an example of the Web 2.0 idea, “architecture of participation,” where the entire content of the encyclopedia is voluntarily contributed, editited and maintained by its readers. For example, the history page for their entry on Web 2.0 shows hundreds of updates from scores of users over the course of the last 16 months.

All Things Web 2.0 - The List

Need examples? This page lists several hundred companies that are built around the ideas of Web 2.0.

Design

Current Style in Web Design

Overview and examples of the designs that define web 2.0, like simplicity and effective use of whitespace, color, and big text.

Yahoo’s User Interface Design Patterns

Solutions to the most common design problems with descriptions. Great starting place for the fundamentals of web design. Includes when, why and how to use auto-complete, breadcrumbs, tabs, pagination, and ratings.

Yahoo’s UI Components

Downloadable UI Widgets and Ajax libraries including a calendar, slider, and tree view.

A List Apart

Articles on web design, graphic design, and user interface design.

Digital Web Design Articles
More articles on web design.

Programming

Ruby on Rails
Plenty of people are still building websites with Java, PHP, Perl, Python, and .NET. But plenty of other people are finding Ruby on Rails to be a platform that makes the common things trivial while staying out of your way when you want to do the hard things. This is the official Rails site with links to tutorials and documentation.

Rolling with Ruby on Rails

Great tutorial on how to get started with Rails. Takes you from installation to a simple cookbook application

Javascript Tutorial
Before you get too far with AJAX you’re going to have to learn some basic javascript. This is a decent tutorial along with very good documentation.

Getting Started with AJAX

Tutorial that takes you from beginning to end of a simple AJAX page.

script.aculo.us and Dojo
Getting AJAX to work correctly across browsers is hard. So it’s always better to start with somebody elses code. These are two of the best AJAX libraries.

Markup

Learning XHTML

Short and simple explanatioin of the differences between HTML and XHTML.

Learning CSS

Great starting point for learning CSS.

Head First HTML with CSS and XHTML
Great book for learning HTML and CSS.

What is RSS?

RSS is a formt for sharing and subscribing to feeds of site updates. Blogs are the most common sites to produce RSS feeds for their sites.

Bloglines

Even if you’re not producing RSS, subscribing to other people’s feeds can be very convenient. Signup for bloglines, a website that specializes in managing subscriptions, put a subscription link on your browser toolbar, and start subscribing.

Microformats
These are easy ways for you to provide semantic information about the data in your pages so that other people can programmatically parse and process the information. These are just starting to get mainstream traction.

Software

Blogger

Blogger is a blog hosting company. They let you create your own blog and start blogging in a matter of minutes. Odeo’s blog is run by bloggger.

MovableType

They offer free blog software (the paid versions are for extra support) and have an active community of developers creating add on products. Also their comment spam blocking is very good. That’ll come in handy if you become popular.

Word Press

Offers both blog hosting and free blog software.
MediaWiki

Software for collaborative writing where any visitor can add or edit content. This is the software that runs Wikipedia. There’s lots of other software that you could choose from, but I think this is the most polished.

PBwiki

Hosted Wiki. You can signup and get started in a matter of minutes.

The latest web trends are enabling incredible business opportunities at almost cost. The people hyping these trends as Web 2.0 are too immersed in the technology and the pundentry to apply the trends where the real value is, everyday problems and needs, most of which already have been solved but are ripe for improvement or replacement.

These trends are hot, their implementation costs low, and their business applications untouched.

That’s the theme behind my upcoming talk at Sonoma County Web Developers, “Web 2.0: Opportunities to Make It Big While Keeping It Small,” 6:30PM Tuesady April 11, Santa Rosa, CA

Official Announcement | Directions

The SCWD is the perfect group to have this talk with. They’re some of the most pragmatic and down-to-earth developers I’ve ever met and I’m extremely grateful for the opportunity.

I’ll focus mainly on three areas:

User Generated Content - Give people a voice and they’ll speak. Give them tools and incentives and they will fill your site with content. Hint: the incentive is not money.

Web Services/Components - Companies want to give you features for your website. For free. Most of these features are prohibitively expensive to build on your own.

Blogvertising - Blogs are fantastic for cheap marketing. You don’t even have to write a blog to take advantage.

I love the early work at Feedication.com. He’s basically aggregating everything about a person that’s available in RSS. I’d love to see a way to browse that data either by layering a social network (aggregate XFN) or adding tags. My profile has my del.icio.us links, my blog feed, my netflix history, flickr photos, and my odeo channel.

I’m at ETel today, mostly to see old friends but still really enjoying myself. Kudo’s to the O’Reilly conference team for always putting on such great events. Here’s some notes.

RAGI
Every O’Reilly ‘emerging tech’ conference comes up with one technology that is suddenly very easy and very accessible. I think RAGI, a Rails to Asterisk interface, wins this time. I managed to miss the presentation but heard great buzz afterwards. Here’s an O’Reilly introduction. An anonymous Odeo engineer asked about scaling issues in Rails and got back a response that Rails scales well as evidenced by sites like Odeo =)

AstLinux - HA
This is a linux distro tweaked for running Asterisk (mostly the same tweaks that real-time apps get). He’s working on adding in High Availability support which would give people an N+1 architecture. Too buzz-wordy? Key detail was that HA would work better and be impemented sooner for VOIP.

Zork on Asterisk.
Awesome! Coolest demo of the day goes to Zasterisk, a project to let you play Zork over the phone. It’s does Asterisk to speech recognition (Sphinx) to Zork to text-to-speech (Festival) and back out.

Imagine playing Zork while on hold or playing a MUD during your commute (VMUD).

VC Fireside Chat.
Sort of dreading this one but the others in the time slote didn’t look good. Turns out Marc Hedlund was on the panel. Point was start off with a product for yourself, but know when to make the switch to a product for others.

Other VC talking about the types of people he sees in early stage investing (spore stage). Two. One with a plan and no product. The other with a hack but no plan. He’s especially interesting if someone has already payed for the hack.

I think the key concept in those two points is that it’s extremely important to prove that someone likes the product (important if you’re trying to get investment).

Favorite phrase of the day was along the lines of: vc’s blog in order to ‘chum the waters’

Marc gave more advice, be plain spoken. Common theme in his engineering management. Complexity is a sign that you don’t understand the problem. Plain speech also gives people the impression that you know what you’re doing. Convoluted speech just gives people the impression that _they_ don’t know what’s going on.

More Marc. Hit it where they ain’t. Find a need that nobody is talking about and go after that. It’s not that you’ll be the only person in the space, but that you’ll be in the first wave.

Quinn Weaver. Open Source is viral marketing. If you create software that is used my millions you can create a company after. Another example of having proven customers. MySQL is a good example of a funded company and 37Signals of a private company. His company Fairpath is planning to give away a Perl to Asterisk software, Dido. Release tomorrow. I like Quinn.

Usability.
A YakPak guy asked who did not have a microphone on their computer. Several Mac people raised there hands. My hand went straight to my forehead.

Favorite Encounter.
Cooper Marcus of Spark Parking. He’s got a nice clear business model, pragmatic goals, and cool tech that involves phones and gluing wireless devices to the ground. He’s also Lowell ‘90.

Stole this link from Nat on Radar, 10 Steps to a Hugely Successful Web 2.0 Company

I liked this one, especially after all the feedback we got from our beta testers with the early launch of Connection:

2. Get a responsive and chatty audience using the product. The del.icio.us community eats new features like piranhas. They pour over the service, discuss it, promote it, and complain when they don’t like stuff. You couldn’t have hired a better, more thorough, or more passionate group of alpha testers. Don’t rush to get the service so easy that my dad can use it, because he’s not going to really be helpful to you in the early days when you need really hardcore Beta testing.