Dave Winer enjoys controversy, but I have to take issue with his recent statement about the next bubble burst, and how it will be represented by Google stock crashing. Now the New York Times have picked up on it, quoting Dave here:
Web 2.0, according to Mr. Winer, is nothing more than an aftermarket for Google. So many start-ups rely on Google – both as a basis for creating Web sites and as a channel for selling Google ads – that the entirety of Web 2.0 (the new generation of sites that rely on interactivity and open systems) will stand or fall with Google, Mr. Winer says.
When Google crashes, he wrote, that’s the end of that, no more wave to ride, no more aftermarket, Bubble Burst 2.0. And the flip of this is also true – as long as Google’s stock stays up, no bubble burst.
Source: A Bubble Watcher Watches Google – New York Times
I take no issue with debates on stocks crashing – not my space.
My issue with Dave’s statement is the second point, and how it will represent the end of Web 2.0. This is just plain wrong. Its as wrong the predictions that the 2000 dot com crash represented the end of e-commerce. I don’t even need to go into the semantics of how crash 1.0 was driven by lack of business cases, and how crash 2.0 might be precipitated by overpayment for eyeballs, e.g. YouTube, and Skype. Of course there are many startups, who hope to be picked up by Google, just as Web 1.0 companies hoped to be picked up by Microsoft. I could argue that many Web 2.0 companies are started on a shoestring compared to Web 1.0 but that’s irrelevant to my real point.
The underlying thread of internet use, increased online tenure, and demographic shifts, translating into increased expectation from online continues. It translate into web based applications, which we are now beginning to see evolve in very real ways, with extraordinary potential to support the web lifestyle. We are seeing a true desire to participate and lever social networks for commerce, hobbies, and personal involvement.
The shifts we are seeing both in consumer expectations, and web development are going to continue through Crash 2.0 as they did in Crash 1.0 and will carry on through future crashes. Crashes are simply periodic reality checks while business ensures that pace of change does not get ahead of earnings potential, and the stock market is the window on to that check.
So relax, make sure your investments are diversified, and enjoy the ride!
Bankwatch 
Colin, I think your point is extremely important
I think the point Dave was trying to make is that there are a lot of businesses riding on Google’s AdSense to make money. And when Google struggles because they only have one revenue source, those other sites will struggle.
Outside of advertising, how does Google make money? Gmail is free, Google Calendar is free, Spreadsheets, free. Google sells some applicances (I have a Google Mini is one of my racks), but that won’t support the food chain as it stands today.
Do I completely agree with Dave Winer, not really, but there is part truth here and there.
Otto,
google’s adsense is easily replaceable with competing services from yahoo and ebay. The issue is more with the global advertising spend. if it decreases, then companies will have less to play with.
Does this represent a problem for internet advertisers? yes, but I’d posit that they will be the last media to be affected, as marketers can get a direct ROI from their ad-campaign on the individual level from adsense. (eg. user saw ad/clicked ad.. user bought something in 2 weeks time)
Otto … I agree with you, and I believe your point validates the first part of Daves argument.
What I specifically took issue with, was the second comment:
“When Google crashes that’s the end of that, no more wave to ride, no more aftermarket, Bubble Burst 2.0”
I don’t believe the current trend into Web applications is driven by anticipated aftermarket/ takeout from purchase by Google in the same way that Web 1.0 takeout was driven by buyout from Microsoft, or blind hope with VC instant millionaires.
I see a more practical idealism, reflected in a terrifically improved user interface using ajax and flash, combined with genuine utility, in things like microformats, OpenId, applied social networks such as Wesabe etc.
Note the relative silence of VC’s this time around.
Yeah, I agree with Colin. There are certainly companies that are looking for a quick buyout, and a change in the advertising market may affect their exit plans, but there are also companies (speaking for Wesabe, we’re defintely hoping to be one of them) looking to build a solid business, not a quick flip at all.