The crisis, a perfect timing for launching online start-ups

Web 2.0 Summit 2008

The major players inside the Internet industry appreciate that the moments of crisis, as it also happened in 2000-2001, are a perfect timing for launching new projects, sites that will gain billion of dollars in a few years. At least this is the conclusion drawn by the founder of Digg.com, Kevin Rose, to Web 2.0 Summit 2008 which just ended at San Francisco. It’s also true that the only concrete event of the conference was the launch of MySpace Music and the rumor that the online division of News Corp. will launch an MP3 player under its own brand, for competing with iPod. Does anybody really believe this?

On the other hand, on this time Web 2.0 Summit was more like a business summit in comparison with the previous meetings of the young people in industry. The players in domain don’t legitimate anymore as successful start-ups, but as serious, mature companies that have a significant impact on audiences. On this time, Kevin Rose or the founder of Twitter Biz Stone weren’t anymore speakers at the conference, they being replaced by leaders in the high-tech industry, such as Al Gore, Paul Otellini, chief of Intel, and also stars, such as Lance Armstrong, or talent hunters from all big corporations. The experts in domain consider that all is due to the crisis. “The current crisis is the opportunity of the century in economy”, John Doerr, expert in high risk investments (venture capital) stated. The problem of all these people is represented by the fact that the Americans are in the worst situation at the money chapter, he says. And this directs to the lack of success for many online services. On the other hand, the future can’t be otherwise than positive for the industry, the expert says. The founder of Digg, the biggest site that shares press and blog content, has rendered justice to the investor. He said that it was the perfect timing for launching an online start-up. The difficulty in obtaining financing will determine less people to adventure during this period, and the small value services won’t see any money, Kevin Rose emphasized. The economic problems and the lack of start-ups will draw the media attention on each new initiative, he added.

First the media attention and then financings

The Web 2.0 companies, such as Digg, Facebook or Flickr were founded in 2004, when the economy was re-establishing after the dot com crash since 2001 and when the situation was relatively similar, the investments missing and being a difficult period especially for the online companies.
Digg entered in the media attention, mainly because it was something new at that time, and after that the financings turned up soon. Rose said that he hired an unknown company to set up at low costs the site, and then he worked day and night, in weekend or in holidays, for getting where he is at the time being. Rose has drawn the attention that Twitter is the best instrument for promoting the start-ups. He appreciated that the site allows setting up a constant audience and of a group of fans that are able to support any initiative.

The analysts from the Wall Street admit that at the moment in Silicon Valley the gates aren’t being closed and there aren’t being dismissed to many experts; however the companies that want to survive will be forced to take difficult decisions. “At the time being, the web companies must action <> for removing the surplus and for finding financing solutions in order to keep the businesses in their maximum form”, an investor at New Enterprise Associates stated.
Only the companies that have a perfect internal mechanism will find investments of the funds in domain, and without these money they won’t be able to survive”, the experts warned.