Arrington on Bubble economics

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Good observation by Mike Arrington on the state of affairs in the web indy these days, what with a dead IPO market, and a lot of money chasing very few good ideas.

I particularly like his point that Web 2.0 principles (whatever they may be I leave to your imagination) can conspire to bash down barriers to entry for copycats and competitors. I  assume he is positing open standards, data portability, etc.

But even in this new reality, we’re seeing what looks like way too much money chasing too few good ideas. And when someone does have a good idea, all of the principles of Web 2.0 work to destroy competitive barriers companies try to put in place to protect their business (See Todd Dagres of Spark Capital make this argument recently in the Wall Street Journal).

So when we see a few companies fall, people run for the hills.

But I disagree that Web 2.0 companies cannot become sustainable businesses. The Network Effect is still the most powerful force driving Internet success today. People don’t, for example, go to Digg because it has great software. The original Digg, as launched, cost Kevin Rose less than $2,000 to create. Anyone can create a Digg clone, and many have. The reason Digg is, and will continue to be, successful is because of the community it has created. People go to Digg because everyone else goes to Digg, and every new user who submits stories and/or votes occasionally adds value to the whole network. The Network Effect is also driving Facebook’s success, and YouTube’s. None of these companies have interesting software. All of them have an incredibly valuable community. All of these companies have to work hard to keep their lead, but it is nearly impossible for new entrants to catch up.

Weather alarm

I discovered a great new blog last month, Walking the Berkshires, by Tim Abbott, a conservationist writing from the northwestern corner of Connecticut in Litchfield County. He’s a great, elegaic writer, and I found him while googling on an invasive seaweek species called codium, aka “deadman’s fingers.”

Abbott captures in a post the sense of alarm I have this sunny January afternoon with temperatures more suited to the middle of May than the beginning of winter. He notes:

“Yesterday the temperatures in the Litchfield Hills hovered around 60 with a warm, soaking rain. Last night might have kicked off the spring amphibian migration. Today the sun is warm and the temperature on the shady side of my house is 66 degrees. These would be welcome signs of spring in late February, but this is the first week of January. Something is terribly wrong.

There are daffodils pushing up new growth in frost-free ground. These are not the new bulbs I planted last fall that shot up in November and have failed to die back. They are well established, and are responding to the unusual warmth and moisture in the soil as if Spring were just around the corner and not 11 weeks away. There are soft green buds on the lilacs. We have not had more than a brief dusting of snow all season.

Most ominously, the sugar maple in our back yard is weeping sap from the drill holes of a woodpecker and ants swarm at the openings. The sap is rising on 12th night. Last year the first run came unusually early in late January. This was my post at that time on what I feared was a sign of things to come. My fears seem to have been justified. This is no January thaw. In very significant ways, we have simply bypassed winter.”

While walking with my wife yesterday, I expressed my concern that the June-like weather would cause some specific issues. Like the spring amphibian migration — the spring peepers that are a harbinger of more clement weather, could, in theory, come out and start their songs only to get hit very hard by what inevitably will be a return to solid sub-freezing temperatures. My lilacs are budding. Snapdragons left in the flower beds are thriving. Sweet peas are climbing the trellis, and sure, while it is nice to sit in the kitchen on a January night with friends with the windows open, it is still very odd to step outside in shirt sleeves and look up at Orion’s Belt and feel something disconcerting — that constellation is usually viewed while bundled to the max with a cloud of breath fogging the night air.

I’m not going to wade into the global warming issue. I believe it is real, I get perturbed by those who dispute it, and I worry about the size of my “carbon footprint.” And as more and more people say, “If this is global warming, then I’m all for it,” I can’t help but agree and not miss 48″ blizzards, $600 a month heating oil bills, and clenching my teeth as I drive to the market for a bottle of milk while slipping on black ice.

Check out Abbott’s blog. I like his stuff.

Whereabouts 1.7-1.15

Today: 1.7, Cotuit for some R&R and catchup on some projects. Spring-like weather makes outdoors the draw today

Monday 1.8: up at 3 am to make a 6 am flight to RTP via JFK. Meetings in and around RTP

Tuesday 1.9-1.11: RTP, meetings, meetings, meetings

Thursday 1.11: return to Cotuit

Friday 1.12: working from home

Saturday-Sunday 1.13-14: Cotuit

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