Michael Wolff strikes again

Michael Wolff, the author of Burn Rate (a notorious and bitchy account of life as the founder of an unsuccessful Internet startup) and an excellent and highly experienced journalist, writes in the latest Vanity Fair about newser.com, a news startup which is apparently endeavouring to create a new paradigm in news and in which Wolff has a stake and is involved.

Here's another quirky advantage of the Internet (or, depending, serious disadvantage) and Internet news: people are willing to work for less and, even, for free. That's one result of the Internet's utopianism, that you're doing something of higher purpose, and of the myth of sweat equity, that you're working for future, fabulous riches (which sometimes you are).

Oddly, talking about the plasticity of the Internet, about the possibilities for utopia and riches, actually makes things happen. Somehow something comes into existence. While Google and its creepy form of corporatism dominate this Web era, there are now, given off-the-shelf "solutions" (meaning cheap equipment and cheap, pre-written software), more garage and dorm-room operations than there have ever been (one of which, perhaps sooner rather than later, will challenge Google). Indeed, Mark Zuckerberg's dorm-room companions continue to sue him over the ownership of Facebook because they claim it grew out of more than just idle dorm-room chat. (For the purposes of full disclosure: my financial interest in my hypothetical newspaper is about the same as that of Zuckerberg's roommates in Facebook—I will settle, if big money is made, for a small retirement home on the beach in East Hampton.)

Make-or-Break Time For The Net Newbies

Excellent article in Business Week - for the "web 2.0" crowd 2007 will be the year to put up or shut up... time to prove that the business can scale beyond the founders, develop and implement a real distribution / sales strategy and pull in material revenues.

extracts below - but it's worth reading the whole article

It's a formula that has fired up Internet entrepreneurs from Palo Alto to Paris: Start with free software, add falling prices for computing and data storage, toss in ever-cheaper distribution costs, and you can launch an online service for practically nothing. But now that many so-called Web 2.0 outfits have a couple of years under their belts, it's sinking in that it takes real money to turn those ideas into real businesses--to reach a broad audience, scale up operations, and, you know, turn a profit. "It's true that you can do a science experiment more efficiently than you could five years ago," says Rob Shurtleff, managing director at Divergent Ventures, a venture capital firm. "But don't confuse doing the science experiment with building a large enterprise."

... out of scores or even hundreds of startups in any given category, whether it's video sharing or photo slideshows, only a handful will be bought in their first rush of success. ...

That means raising significant money to spend on nuts and bolts. Web services may cost mere hundreds of thousands of dollars to set up. But turning them into profitable companies could cost $15 million to $25million, much of which must be spent on distribution, engineering, and infrastructure, says Brad Feld, a managing director at Mobius Venture Capital Inc.

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