Webware

NEW YORK--Tim O'Reilly, founder of O'Reilly Media, is known as a futurist, but his keynote address on Thursday morning at the Web 2.0 Expo was heavy on the realism in the wake of sobering news from Wall Street.

Web 2.0 evangelist Tim O'Reilly addresses the crowd at the last Web 2.0 Expo, in April.

(Credit: Dan Farber/CNET News)

"(These are) pretty depressing times in a lot of ways," O'Reilly said in an address that first had looked like it would simply be a starry-eyed discussion of enterprise opportunities for Web 2.0. "And you have to conclude, if you look at the focus of a lot of what you call 'Web 2.0,' the relentless focus on advertising-based consumer models, lightweight applications, we may be living in somewhat of a bubble, and I'm not talking about an investment bubble. (It's) a reality bubble."

Global warming. The U.S. losing its edge in science and technology. A growing income gap. "And what are the best and the brightest working on?" O'Reilly asked, displaying a slide of the popular Facebook application SuperPoke, which invites you to, among other things, "throw sheep" at your friends.

"Do you see a problem here?" he posed, showing another slide of the popular iPhone app "iBeer," which simulates chugging a pint. "You have to ask yourself, are we working on the right things?"

He brought up examples like Google.org, the Omidyar Network, and even small companies that have decided to take on social and political challenges rather than the trendy social-network craze of the week. "Business is the engine of innovation," O'Reilly said. "I really believe in markets, and I believe in the power we all have to build great companies that change things."

As for the financial-services industry, O'Reilly implied that in a big sense, firms had it coming. "If you look at what went wrong on Wall Street, this is an industry that, in its heart, parades a lot of value," he said. "Liquidity in markets is critical. But if you look at the last decade...these Wall Street firms captured a lot more value than they were creating."

There's an inherent irony in what O'Reilly said, given the fact that massive conferences like the Web 2.0 Expo are packed with the trendspeak and hype that birthed SuperPoke-like entertainment, and certainly aren't helping the environment by distributing tons of press kits and swag--not to mention flying in hundreds of attendees in a massive spurt of carbon emissions.

To be fair, O'Reilly Media has been printing fewer event programs and encouraging conference goers to recycle, and it has used carpeting made of post-consumer material.

There is clearly a lot that needs to change, and perhaps the tech industry trend of large-scale conferences is part of it. We'll see whether Silicon Valley's leaders and moguls are willing to do what they think is right, rather than what they think is profitable.

But O'Reilly encouraged the audience to start small, and he offered them their first challenge: register to vote.

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One way to build a product is to take the idea for it, and go out and try to get someone to fund its development. That's the philosophy the venture capital economy is based on. But ideas and money can flow in different directions. Prizes, for example, can fuel amazing innovation. In this development model, a bucket of money is set aside to fund a goal, and the first team to achieve the goal gets the money. The X Prize suborbital flight--funded by an insurance bond--is the currently-famous example of this. Also, Charles Lindbergh flew across the Atlantic and won a prize.

Now there's BigCarrot, a social site designed to help individuals create their own challenges, contribute to other challenges, and evaluate the contestants before the prize money is awarded.

Prizes range from social to technological.

Anyone can set up a challenge on BigCarrot and get other people to contribute to it. The site's premier test case is the creation of a free, open-source .Mac competitor. A guy in Wisconsin, Ben Spink, won the challenge and collected the pool of money, $8,622, that 172 individual funders had put up for it. The average contribution to the "NotMac" fund was $25.

Prizes are awarded based on the votes of the funders. Every person who contributes gets one vote (the amount of money people put in is not a factor). Once the community decides they have a winner, the escrowed funds are transferred.

Here's what prize funders directly get out of contributing to a challenge: Nothing. Yes, they can exercise their passion or beliefs by contributing money to causes that they like. And yes, if the challenge results in social change or the delivery of a product they like, they can benefit from it. But there's no direct payback. Contributors don't get shares in the inventions (at least not yet).

It's important to note that contributors' funds for a challenge are not pledged or earmarked. They're actually paid up front. If you want to fund a project, you transfer your money to BigCarrot. Some other similar systems, such as ThePoint, use pledges, but BigCarrot CEO J. Kent Pepper said it would be too hard to guarantee pledge deliveries, especially for challenges that take a long time to win. The interest on the escrowed money is BigCarrot's revenue stream, so if this concept takes off, the company will become filthy rich. Pepper said he'd like it to become philanthropic.

So contributors will never get their money out, even if a challenge is never won. Pepper told me that if a challenge has no activity (in the forums on the site, among other places) for more than two years, the funds earmarked for it will get redeployed to a newer, hopefully related challenge.

There's also no simple way to put a time limit on a challenge, such as the one the X Prize had on it. I think deadlines are important, but having them would force the issue of returning money to funders on the unfulfilled challenges.

While I have strong doubts that BigCarrot will become the clearinghouse for incentive-driven invention and see a huge amount of cash flow through it, it a cool social experiment in direct action. Prizes can excite entrepreneurs to create clever solutions to any kind of problem, and letting individuals contribute gives them a piece of the satisfaction when the prize is won. I would hope to see more direct payback to the funders in the future, though.

Wealth Base Camp, a recently-launched social networking site that I originally heard about at the New York Web 2.0 Meetup, encourages its user base to "live up to your dreams." The site is geared toward folks who have caught the entrepreneurial bug and are looking to figure out how to get themselves off the ground--and then make some bank.

Basically, it's like a "niche" version of LinkedIn--instead of a social networking site for business users in general, it's specifically for those with a particular set of needs and objectives ("creating wealth"). Wealth Base Camp is organized so that members can fill out their profiles with their skills and objectives so that they can match up needs and collaborate with other users wherever they see fit. There's also a list of events somewhat similar to Upcoming.org. Members are also encouraged to share their "expedition reports" of successes and failures so that other members can read them and learn from them. I have never tried to use online social networking as a business tool (other than utilizing LinkedIn as a substitute for business cards) so I'm not really sure what kind of success rate one would expect.

The catch is that I'm not entirely positive if budding entrepreneurs will really want to participate in an active social network. Especially if they're new to the field, many of them may approach with trepidation and be skeptical of "collaboration" out of the fear that their ideas could easily get snapped up by other users with less-than-savory intentions. People have reason to be secretive about what they do: just look at the number of copyright and trademark lawsuits out there, and at the tendency of one of the most successful tech CEOs out there to keep as much under wraps as is humanly possible (yes, I'm talking about Mr. Jobs).

Then there's the potential that it'll become a haven for scam artists. Optimally, the team behind Wealth Base Camp will be able to keep tabs on this. If they can, it could be interesting to see where something like this goes. The focus of LinkedIn is certainly on touting one's past successes and becoming well-connected, whereas Wealth Base Camp is all about meeting other people who are similarly starting at the bottom of the heap. A noble idea, for sure. Will it work in a MySpace-like social networking format? That's still unclear.