Strategy Series–Stepping on the Web 2.0 Scale
January 23, 2007 | Shasta Ventures | Menlo Park, CA

Moderator: Tod Francis, Managing Director, Shasta Ventures

Speakers: Adam Gross, VP Developer Marketing, Salesforce | Shawn Hardin, CEO, Flock | Jason Pressman, Partner, Shasta Ventures | Sam Schillace, Engineer, Writely/Google

Scaling a Web 2.0 business is a very popular topic (we sold out this session a few weeks in advance) but there’s no magic formula, yet… Sitting in a room full of smart people is a pretty sweet way to acquire some knowledge; we all walked away with new ideas and new ways to look at how this business is evolving.

Here’s a summary of what went down:

Business Plans/Business Models:
-Sam Schillace claims Writely never had a chance to even write a business plan, they weren’t setting out to get acquired but it happened quickly anyway. “You don’t sell your business, a business buys you”. So don’t start out aiming to get acquired. It probably won’t work.
-A plan to make money from advertising had better come with a way to deliver a massive (or extremely qualified leads) audience
-Venture is investing in solution companies – find a problem and fix it, your team is as important as the software
-To become a large market blockbuster you’ll need to have proprietary technology, mass distribution, deep customer relations

Making That Dollar:
-It comes down to three ways to monetize: advertising, transactional or get acquired
-The money for transactional is in services
-The user is the buyer, stay focused on them, this is particularly true for Office 2.0, the IT department can’t regulate web-based apps like they could with desktop apps, so customers use what they like
-Users sharing apps with each other, using the web to generate sales, no actual salesforce needed (this came from Adam of salesforce.com)

Top predictions for the future:
-Kids think email is ‘too slow’ – grownups – pay attention
-Semantic web – that same youth market will grow up and demand the extreme level of data exchange that unbound data can deliver
-Commerce is a big market, there is still room for growth, another huge retailer/service provider may be emerging around the corner (but no one is sure what it will be)
-Mobile will be huge but gatekeepers (carriers) all want a chunk of anything new that emerges
-We predict that Office 2.0 is really the big growth for the Web 2.0, subscription and licensing are the routes to profit
-Advertising won’t work with Office 2.0, it will be driven by consumer facing Web 2.0 companies