MappingTheWeb //

With many web 2.0 start-ups lacking in the revenue department, declaring bankruptcy, or failing to prove out their business models , what do you do with your website and operations as many are still driving reasonable amounts of targeted traffic? Obviously, large financial firms are not going to represent a 2-man operation and scout out potential acquisitors. It’s just not worth their time. So what’s the best way to go about exiting? eBay apparently.

This first came to my attention just over a month ago when TechCrunch reported that Kiko was putting itself up on the auction block at eBay. At first this seemed ridiculous to me, but after the AJAX calendar company received $250,000, I took a second look. A couple of interesting points to note:

• The bidding climbed over $100,000 in the last two minutes
• The company was eventually acquired by Tucows - the popular shareware site
• Kiko was only one year old
• Rumour has it, there was only one full-time employee and two part-time contractors

I guess it wasn’t such a failure after all.

Quoting TechCrunch:

“New companies are easy to start, easy to fund and (now) easy to sell for a few hundred grand on eBay…this might be the way many of these small companies eventually find liquidity.”

So why am I bringing this up a month after the sale - because another company, LiveLocker, has called it quits and listed itself on eBay. The auction is currently live and bidding will end in 10 days. Currently, the minimum bid price is $5,000 but we haven’t seen a bid yet. It will be interested to watch this story unfold and see what the company sells for - if it does at all. TechCrunch has also posted a list of other companies who have listed themselves on eBay here.

In the end, all is not lost for these web 2.0 start-ups. And yet again, eBay fills an inefficiency in the market - and makes some good money doing it.

The other day, a friend of mine asked me, “Who do you think will last longer or prosper the most, Google or Yahoo?” My response was rather surprising to my friend. Contrary to what many people may think, my answer was Yahoo. Now let me explain why. I can sum it up in one word really: diversification.

Google generates the majority of its revenue from one source - advertising. Although this is a great model, there are a few concerns - the first being click fraud. Experts estimate that 10-30% of all contextual ad dollars can be attributed to click fraud. Should this problem somehow be quantified, Google will be in serious trouble. In addition, if another company comes along with a smarter ad system or a more robust offering, Google’s number one source of revenue will be seriously jeopardized.

Where does Yahoo generate revenues? Across numerous offerings. Yahoo obviously has an in-house ad system, as well as a Google competitor via its Overture acquisition. But Yahoo also has HotJobs, Auctions, Domains, and Dating just to name a few of the revenue-generating services that Google does not offer. What does this do for Yahoo? Well, in contrast to Google, if click fraud does become a major problem or a smarter ad system comes along, Yahoo is a lot better positioned than Google. It has other revenue sources that allow the company to diversify its offering.

I do believe Google has a better search algorithm than Yahoo, but Yahoo has made a serious push in this area and I’ve definitely seen improvements. Long term though, I think Yahoo may be in a better position to prosper than Google. Therefore, if you’re looking to add a search engine/portal to your long-term stock portfolio, you may want to consider YHOO rather than GOOG.

Google bought YouTube. Yahoo may buy Facebook. Other web 2.0 companies such as Flickr, del.icio.us, Upcoming, Measure Map, and Writely have been snapped up - so who’s next? Here are a few of my top bets:

• Digg - democratic news site
• Technorati - blog search engine
• Riya - facial search recognition
• LinkedIn - business social network
• Zoho - online office product suite
• Opera - mobile web browser
• StumbleUpon - web discovery tool

Obviously the Internet giants (Yahoo, Google, Microsoft, Amazon, eBay) would be the most likely potential acquisitors. But media conglomerates (FOX Interactive, Viacom, AOL-Time Warner) may also be potential acquisitors. FOX has already bought MySpace and Viacom has been on the prowl for awhile.

So which web 2.0 company/companies do you think will be acquired next? By who? Drop a comment with your thoughts.

How do you define a winner in the world of web 2.0? By revenues? Traffic? The good it has provided to the world? To be honest and from a personal standpoint, I’m going to have to go with the third one on the list. My view of web 2.0 is an Internet where processes are simplified, user-generated content and participation fuels the surge, and the web’s information is more accessible and useful. That is web 2.0 to me. So for part 1 of this blog post series, I’m am going to outline a company that has re-organized a vast amount of information, made it much easier to navigate, and ALL at no cost to the user. Who am I talking about? None other than Craigslist.

Why do I like Craigslist so much?

• FREE service
• No flashy ads or full-blown images
• Clean interface lay-out
• Fast page load speeds
• Extremely simple navigation and hierarchy
• Brilliant posting system

The list goes on and on - I know for a fact I haven’t covered all the robust features.

Craigslist has essentially taken the historical newspaper classified system to a whole new level on the Internet. Not only is it free, but it is so easy to use and find exactly what you are looking for. Why would anyone want to use the newspaper anymore? The breadth and reach of the web is worldwide, whereas the distribution of a newspaper is much less vast. Once again, another web service benefits from the network effect - the more people that use Craigslist, the more powerful, useful, and valuable it becomes. And the cycle continues as such.

This true success story is made even more powerful by its mission of service and non-corporate culture. Though Craigslist is a for-profit entity, the company does very little to drive revenues and focuses mainly on the user experience. This is the reason you see no ads - ever. The company supports its operations by charging business below-market rates for help wanted ads in San Francisco, New York City and Los Angeles, as well as for broker apartment listings in New York City. Amazing. Click here to see just how effective and inexpensive those ads are.

Craigslist is definitely a web 2.0 winner and has shown the world what a little philanthropic project can turn into with a little luck. Thanks for everything Craig Newmark. You’re a brilliant man and you’ve made the world a better (and more useful) place to live.

Congrats to the team at b5media.

They recently completed a $2 millions US round of financing headed by Brightspark Ventures and JLA Ventures. The company, headed by Jeremy Wright, Darren Rowse, Duncan Riley, and Shai Coggins have added Rick Segal to the team as chairman.

Both Darren and Duncan are Aussies, while Jeremy is a small town Canadian boy. I’ve had the pleasure of chatting with these three guys and they are top-notch fellows. Shai is also from Australia, but I haven’t had the pleasure of chatting with her yet. Maybe one day. Nonetheless, I wish this Aussie-Canadian quartet all the best.

Hopefully the money can help the company expand their top quality network and allow more bloggers to express their thoughts, insight, and opinions to the world - well, and make some cash while they’re at it. I just think that a blog network such as this is a win-win situation for both sides and you’d be foolish to think otherwise.

b5 media is a blog network by bloggers from around the world, who cover a variety of topics. I strongly suggest everyone check them out. Plus, they’re cool guys. Really.