NEW YORK--When News Corp. mogul Rupert Murdoch plunked down $580 million to buy the social networking site MySpace in 2005, C.H. Low had a reaction not that uncommon among tech industry veterans.
"I said, 'This is ridiculous! Are we in another bubble?' " said Low. "But I thought, 'Murdoch is a smart man. Something else must be going on here.' "
Three years later, Low is the CEO of the software startup Orbius, one of an estimated 50 to 100 companies selling software and on-demand tools to help everyone from automakers to traditional publishing companies add social networking and improved community functions on their Web sites.
For many of the companies here at O'Reilly's Web 2.0 Expo, the approach to selling these community-building tools is downright old-fashioned: Site licenses, maintenance fees, and all sorts of enterprise software business models (of course, many with a software-as-a-services spin) that sound more like something out of the 1990s than the business plans of start-ups trying to get traction at the end of the Bush era.
But the conference taking on a decidedly business-focused tone shouldn't be all that surprising. In fact, it's a change remarkably similar (but on a smaller scale) to what happened in Web 1.0.
In the early days of the dot-com boom, many skeptics wondered loudly if the Web could offer any real business value. Sure, it was fun; the cool kids were able to brag about their cyber credentials, and it was a good way to sell things like books and CDs. But a place to do serious, global corporation kind of business? Unlikely. And all those advertising-based business models? Craziness.
Then a new generation of companies working on software to allow businesses to conduct transactions online and move their pricey corporate software to a more affordable Internet-based model. Only a few of them are still around, but they forced big corporate software names like IBM, Oracle and SAP to come up with viable Internet software that eventually helped drive the little guys out of business or into acquisitions (and a few of those companies running on ads managed to survive).
Today, Web 2.0 technology just may be passing from the "cool kid' phase to the business-to-business phase. (A little ominously for the little software companies here, IBM announced Wednesday that it's opening a center in Cambridge, Mass. to study social networking and create a set of social networking software tools it can sell to customers.)
Strolling away from the "Long Tail Pavilion" (named after Wired editor Chris Anderson's oft-cited and occasionally ridiculed book), Low recalled his career as a serial entrepreneur. He was chief technology officer at VerticalNet, one of the biggest (and ultimately disappointing) names in the first dot-com boom. After that, he founded several small companies, and was taking time of when the MySpace acquisition gave him the bug to get back in the game.
"Web 2.0 needs to be a utility" Low said. "It can't be just for fun."
An enterprise software guy" fits right in
That's exactly what Majid Abai, chief executive of Los Angeles startup Pringo, is counting on. Pringo sells community-building and management software that typically costs in the range of $20,000 to $50,000. He wasn't all that surprised so many companies at the Web 2.0 Expo were focused on selling tools for community building rather because there's a good sales pitch for it: It allows companies to improve communications with customers, distributors and employees. And the best way to do it, he believes, it to build those communities on top of packaged software.
"I'm an enterprise software guy," Abai said. "If this conference had been here last year, it would have been a completely different game" focused more on flashy companies targeting consumers.
In a conference room overlooking the show floor, LiveWorld CEO Peter Friedman was demonstrating new software that allows the managers of a Web site to quickly create a discussion group around a particularly topic, whether it's a story on a news site or a car. His company, which was founded in the 1990s and was nearly gutted in the dot-com bust, sells community-building software and management services that isn't all that different than the discussion forums Friedman helped run at Apple in the 1980s.
Don't tell the guys out there," he said, motioning to the show floor below him, "but what we're doing is basically enterprise software." He added that technology and needs have changed, 'but what we're doing isn't all that different from what we were doing years ago."