Web 2.0 – Lessons Learned, Futures Predicted

Web 2.0 – Lessons Learned, Futures Predicted
Dan Rosenweig, CEO Yahoo!
Marc Andreessen, Chairman & Cofounder Opsware, Inc., co-founder Netscape
John Battalle, journalist
10/6/04 John:
What mistakes were made that have been repeated?

Dan:
How much got done and how much was created. There were a lot of mistakes in stupid people doing stupid things, but a lot of energy creation. Doors opened up with Netscape and things got ahead of themselves. Greed ruined things faster than it should have.

Mark:
The same mistakes keep being made over and over for the next 3,000 years. But there is an unending opportunity in this industry. There are an unending number of ideas we can explore. We’re lucky to live in an environment that allows us to.

John:
Let’s start at the beginning. Yahoo has a browser. What do you think of the future of the browser?

Mark:
The most amazing thing about the past was that Microsoft got a monopoly in the browser market and then didn’t use it. They didn’t do what they did with software for the web. They have an Internet services without using the leverage of their browser – it’s just the default search and homepage.

Everything that they did in the 90s was illegal according to the government. It’s amazing that they haven’t done more creative things – creative manipulations to software APIs to take out their competitors. We have a whole generation of Internet companies and 90% of people are still coming into these from the Microsoft browser.

John:
In terms of the browser, RSS has become huge. Where might it go? Integration point of the browser and server?

Mark:
There are lots of things you can do. Netscape had a long list. Browser innovation stopped in 1998. Firefox is getting attention and Safari has started innovation again after 6 years of nothing. Microsoft will respond. They love to screw with other businesses.

Dan:
Well don’t keep waking them up! Innovation will come around services and the user experience. It’ll be about what people can get and what they really want. Early Netscape things have come to fruition now. From a competitor standpoint, the more we try to cage people, the less likely they are to stay in the cage. RSS is a big part of My Yahoo! We have 200 million to 300 million people using it per month. Just when people thought it was all over.

John:
Are you going to create client software for Yahoo?

Don:
We’ve done well without it. But music needs it, messenger needs it. There are things you can do with a client that you can’t do on the web. But without connecting it together, its irrelevant. Yahoo now has a browser!

John:
We spoke earlier about owning data being the new lock-in. Do you see that happening?

Mark:
We saw this in the 1990s. The power of the web is about sharing things without permission. That’s an energizer for innovation. Open source has compounded that at the code and protocol level. Software is more and more open.

John:
Yahoo vs. Google. You guys have registered users and Google does not. How does that affect things?

Dan:
Data is essential in this industry. We’re moving from a world of mass media to a world of my media. This is the core of what data can help drive. But data lock-up is a situation that leaves companies vulnerable. When someone finally unlocks the data, the company falls apart. Like online travel services, they own the data and operate through contracts.

Mark:
This is coming from a company that said tell us how to use APIs and maybe we’ll give you some.

John:
When do you see a Yahoo API suite?

Dan:
We can’t do everything over night. We can’t just change everything. Yahoo has tried over the past 3 years to become more open and more accessible. We’re far from perfect but that’s the direction we’re moving in.

Mark:
There’s a striking list of things you can’t do yet. You can’t take a profile from one place and put it somewhere else. Online email transfer from one service to another is impossible. Patterns are setting up towards high levels of data lock-in. As strong a form of lock-in as with software licenses.

John:
What about small businesses which are allowing you to share?

Mark:
There are a lot of ifs ands and buts. Like social bookmarks. Lots of people have gotten rich legally by putting in terms of service and technological restrictions. Yahoo has been more open than most. Most large Internet companies are closed. The business advantage is huge. I’d say we have a 10 year lock-in at least.

John:
Consumers have strange habits with technology. Never start a media business that assumes that consumers are going to change their habits for you. That’s a difficult business to be in. Is that still true? Can you start something that gets people out of their current habits? With a 10 year data lock, we should start something tomorrow to get around it?

Dan:
Search can change habits. No one is required to do anything. At the end of the day, better products and services win out. Certain companies have an advantage. Small companies have a different advantage. Business is business. There are share shifters that have really valuable services for long term value and monetary investment.

Mark:
The cellular and mobile business shows a future. Globally they have a huge number of units. The hot cellular vendor switches fairly quickly. There is no brand loyalty or lock-in with so much innovation. Search engines had an avalanche of switching when new ones came out. There is so much information and so many different communitities for ideas to spread virally, we’ll see a lot of turnover of brands and services. Marketing people don’t expect people to shift behavior, but we’ve already seen shifts with Internet and mobile phones. Marketing insisted that people wouldn’t use mobile phones until the sound quality was good. With mp3s there were lots of hoops to jump and lots of people jumped, even breaking the law to use them. People are willing to try new things without marketing or advertising. Consumers are getting more and more aggressive to seek what they want.

Dan:
It’s too easy to change, so most people do. The technology barriers that existed when Mark started his company don’t exist today. You can leverage technology and experience together. Just don’t make it hard because people are willing to do it.

John:
The big debate of the late 90s was Netscape vs. Microsoft. Microsoft fought bitterly because of this idea of a Net OS. This idea has come back?

Mark:
Microsoft won’t notice this time (joke).

John:
In a Web OS, will Google be one of the principle actors?

Mark:
This is fascinating because Google is being led by the nose, willing or unwilling, into a direct confrontation with Microsoft. Everyone is spoiling for a fight. Sun has been frustrated by Microsoft. They took a swing at them and ended up being hit by Linux instead. It’s not clear where the actual competition between Google and Microsoft is yet. But the ecosystem is pushing this. The Google guys are smart and creative, and I’m sure they’ll find ways of dealing with this. I’m not sure what form the battle will take, but Google will probably do some surprising things.

Dan:
We’ve been talking about technology, software and Web Os. But you should turn it around and ask what do the users want. Better companies will get in front of what the users want. It’s someone else’s problem if people want a fight. Make sure you’re doing what is relevant to want users want. Technology talk is fun and great for blogs, but we need to focus on the consumer.

John:
Consumers are reading blogs.

Dan:
Just don’t get whipped up on what so and so says. Stock prices can’t control you. Just create value over time.

Mark:
Platforms are great when they work. You can build on top of someone else’s platform if you have access to APIs and code. There are an interesting set of questions with respect to platform and OS vendors. Musicmatch and ipod can’t connect with each other. As these problems shake out, we’ll see a channeling effect.

John:
You’ve both built companies. With this experience, where would you building your next company?

Dan:
There’s this new notion of my-media and publishing when you want. The web is the most selfish medium ever created. We’re going to start to see the linkage of things from the desktop to the web and in other devices. The web is going to become ubiquitous.

Mark:
If you take a look at the number of users on the Internet, the cost has declined to build an Internet business. Bandwidth is falling in price. The people price is falling. On the business model side, we’ve cracked the code on advertising as an industry. There is 10 times the amount of revenue you can recover as before.

Dan:
There used to be only 3 or 4 companies that could take in ad revenue. Now, anyone can.

Question:
In RSS space, there’s a building momentum behind the roach motel strategy. Meta data goes in, but it never comes out. Are you committed to open source for meta data?

Dan:
We won’t commit to anything. There are a lot of issues around data… privacy, security and business issues. We’ll take more time than people want us to. But we’ll all surrender to what the user wants.