Web 2.0: What Happened to Organic Growth???

Another day, another round of VC. From TechCrunch this week:

Online social network Multiply has closed a Series A funding round with $5 million from Transcosmos and $1 million from the company’s founders. Multiply is a service that filters all networking functions, from highlighted users to visible tag clouds, through a proximity filter with a slider. In other words, users determine whether they want to view information about people just on their contacts list, who are friends of a friend, etc.

And this from last month (via The Medici Effect):

Wine.com has become the most stubborn dot.com hangover ever.

The San Francisco online wine retailer, which depending on how you count is now on around its seventh reincarnation since launching in the 1990s, will announce tomorrow that it has raised $12 million in new venture capital from New York-based Baker Capital.

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p>Technorati also announced a new $7 million round this week. Hardly significant for a company people speculated to have been talking about a billion-dollar acquisition a while ago, but still, it makes you wonder – if the organic growth model really works, how can a Web 2.0 poster-child still need a cash injection after being live and successful for over 2 years?

Cameron Reilly I believe had planned to go organic with ThePodcastNetwork, but he reported this week that he started to opt for the acquisition path instead.

Funding last week for some hotel version of myspace I’ve never heard of that wants to expand to Japan; Rumours of upcoming funding for HuffingtonPost; I could go on.

VC is all good if you know what you’re gonna do with the cash, but what happened to organic growth? You know, all the arguments about “everything’s cheap now” (open-source argument), “people are willing to pay for virtual goods” (37S/Flickr argument), “avoid overplanning” (agile argument), “Adsense rocks” (plentyoffish argument), “VCs burned us in 2000” (learning from history argument), “we can outsource development” (naieve naieve argument).

Am I missing something? Has Web 2.0 entered a new phase where VC is now the thing to do? Did the organic growth model just fade away?

Sometimes the world is ready …

Researching JSON-RPC for the “JSON Message” pattern, I came across this interesting slashdot posting from January 24, 2005, a few weeks before “Ajax” was coined

Seen those funky remote scripting techniques employed by Orkut, Gmail and Google Suggests that avoid that oh so 80’s page reloading (think IBM 3270 only slower) … Now is the turning point. Forget that horid wait while 100K of HTML downloads when the application just wanted to update one field on the page. The XMLHttpRequest object has made it’s way into all the main browsers with it’s recent introduction into Opera and Konqueror (sans the Konqueror bug). This new form of web development now works on Internet Explorer 5, 5.5, 6, Mozilla, Firefox, Safari 1.2, Opera 8 Beta and Konqueror 3.3 (with a much needed patch). (Emphasis Mine.)

Ben and Dion @ Ajaxian also mentioned in their recent podcast they had to stay up late in Las Vegas reworking their TSS presentation because Ajax had just been coined and matched their content.

Sometimes the world is just ready for something.

A recent podtech podcast had a VC mentioning how he’ll often hear a great proposal for the first time, then hear the same idea from five different startups within two weeks. It reminded me of this ridiclous-but-true dotcom-days story from 2000, where a journalist wrote an April Fool’s story about a startup offering free cars with advertising on them. Several real companies meanwhile were planning to do just that, and legend has it that they sweated upon encountering the article. But here’s the punchline:

FreeCar’s Mr. Butler purchased the FreeWheelz joke Web site for $25,000 from Esquire and Mr. Fishman, who split the proceeds. “They got a lot of hits to their Web site,” Mr. Butler reasons. “I have access to their database and prevented anyone else from buying it.”