Will the UK catch the Web 2.0 wave? Or a burst of Bubble 2.0?

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“They stole our revolution. Now We’re stealing it back”. So runs the tagline at the end of the weekly email newsletter for technology geeks, NTK.net. And although the slogan has been running since 1997, in 2006 the slogan has never been more appropriate. Standing outside a cold London town hall, watching hordes of mostly fresh-faced young men (I counted six women among 800) file in to a conference on the future of web applications, “stealing back the revolution” feels like an appropriate phrase. It’s a long way from an autumnal day in San Francisco, Oct 2004. But was this dawning of the mythical “Web 2.0” movement in the UK, or another false dawn for the Uk internet industry?

The phrase Web 2.0 started life as media savvy way to bill a conference put on by technology luminary and publisher Tim O’Reilly in October 2004. This tried to pin down some of the emerging trends online, which didn’t seem to fit into the old “just another web site” box.

The conference built on earlier theories about the “Semantic Web”, which treated the web more like an operating system in its own right, rather than just a telecommunications network. Web 2.0 was also about mass participation of ordinary people – so blogging and communities fitted in.

For the next year or so the term grew in currency until just about anything new online was being labeled as “Web 2.0.”

A year later, in October 2005, The Web 2.0 conference convened again, and this time the sense of a “bubble” was palpable. Whereas smaller web developers had attended the first event, the second was noticeable for the addition of large online firms and venture capitalists, all hungry to exploit the new momentum in the Web industry, for so long in the doldrums after the bubble burst in 2000.

You could hardly blame them. 2005 saw some of the biggest business deals done online for five years. The August 2004 flotation of Google had kick started a year of gang-busting rises on technology stocks. A new wave of US sites like Flickr, MySpace, Upcoming, del.ici.ous were all bought out and various commentators landed on the Web 2.0 handle to lump these events in together.

Fast forward to the present, and the Web 2.0 movement hit London in the form of several physical events all within the space of a week. The future of Web apps conference, an MSN dominated event billed as “Mashup” at the Royal Society of Arts, and one by New Media Knowledge on creating innovation and Web 2.0 startups in the UK.

So is another dotcom bubble starting to occur, or is something fundamentally different happening? And is the UK about to “miss out” again, given it had barely 6 months of boom last time around?

In a packed Kensington Town Hall, over 800 web developers pushed fire regulations to the limit (200 more had to be turned away) to hear speakers from some of the poster children of the new wave on the Web including Flickr, Google, Yahoo!, 37signals.com, feedburner.com and Haveamint.com.

The “Future of Web Applications” conference was organized by Ryan Carson. An American living in Bath who himself developed a Web 2.0 application, Dropsend.com, said: “There’s a real buzz because we made it affordable for ordinary coders to come. The culture of the UK we’re trying to battle is the perception that there isn’t innovation happening here. Dropsend was contacted by VCs, but none of them are from the UK, for instance.”

During the event, Carson gave a much lauded presentation on how to build a Web 2.0 company and application from scratch, and unusually with costings. The final figure came to £25,680, which seems a paltry amount, given that del.icio.us was sold for a reputed $30m after a similar tiny investment.

In fact, Joshua Schachter, who created del.icio.us, also spoke to the assembled crowd. Del.icio.us perhaps typifies the Web 2.0 movement among small teams of hackers and developers. Created as a hobby project to publish Schachter’s collection of favourite web sites online, it became a place where you could browse other people’s. This created a huge buzz, since suddenly people could easily find out what was “hot” long before any media outlet had deemed to report on it. Del.icio.us – together with sites like Flickr – allow free-form tagging of sites, which creates a taxonomy created by ordinary folk, dubbed a “folksonomy”.

But hard-core Web 2.0 proponents don’t talk in terms of what people do online, but what machines do. Speaker David Heinemeier Hansson of 37Signals.com wrote a computer language called Rails, which is often called “Ruby on Rails.” With is he built, Basecamp.com and Tadalist.com, simple online project management tools which have put the wind up much larger firms in the space.

Kicking back in a leather sofa in Kensington, Heinemeier Hansson chuckles about all the fuss.

“Web 2.0 is a Joker card for anyone to use at this particular moment in time,” he says. ” It’s amazing we’ve gone on for so long without people really defining it.”

He puts the new wave down to some very simple things. After ten years of the Web and the development of computing, “software is free, hardware is cheap, so all you need is passion and time. We’ve removed the obstacles to create something online. Thus you see a bubbling up of new projects that do interesting things.”

He says Web 2.0 is not a full-blown dotcom bubble. “To me a bubble is when everyone is on board. To me there’s more dissent. And no-one is really making any money compared to last time. A handful of companies have been bought out, but that’s a couple of drops in the ocean.”

He thinks that this time round Web 2.0 will be a seen as a platform where normal people can build a sustainable, long term business by offering services and software.

He developed Rails to be a programming the framework which sits on top of the Ruby programming language which means it’s much easier to create simple, elegant web services quickly. The result means a much better experience for the web site visitor.

So, for instance a user can interact with the site without having to load lots of pages – all the work is done within the one screen. Typical examples of this include Google Maps and functions on Flickr.com. This is achieved by using a language called Ajax to build javascript applications faster and more easily.

Web 2.0 sites end up doing more of the hard work for the user, which probably means they will appreciate a site more and return more often.

Cal Henderson, chief architect of Flickr.com, also spoke at the conference. He says Web 2.0 is “”It’s just a name for a bunch of technologies that have been around longer than the term.” He defines Web 2.0 as being about the collaboration and aggregation of data, along with an opening up of software by firms to make this possible. One example is firms releasing the code for their Application Program Interface (API), a set of routines, protocols, and tools for building software applications.

“Mashups” of APIs are creating a buzz online because of the possibilities of literally mashing up several data sources. Typical mashups often involve Google Maps, such as Housingmaps.com which mashes together real estate ads taken from Craigs List with maps.

Tom Coates, a ‘social media’ expert and blogger, who built a thoughtful reputation at UpMyStreet and the BBC and recently joined Yahoo! says the “web is starting to change dramatically and become more than the sum of it’s parts”

He says we are moving form a world of linked web pages to a world of data sources linked via APIs: “The data is moving to the centre and becoming more connected in a way it never was before. [It’s becoming] a web of data sources, services for exploring and manipulating data, and ways that users can connect together.”

So, for instance, as an internal experimental project at Yahoo! which is not public, he bult a “Yahoo! Astronewsology”. This merges information from the Yahoo! News site with Astrology predictions. Thus you can compare what was supposed to happen to, say, Capricorns that day, with what actually did happen.

Although this is a humorous application, Coates says that the effect of anything which is a “mashup” of data sources ends up making both services “better and more useful. The consequences are that this creates massive creative possibilities, accelerated innovation and no one has to build the same service twice. To real people it means a greater sense of connection – and whatever they do generates more value.”

But mashing up APIs are not just crazy geek ideas. As Coates points out, the BBC has released the API for its programme information, allowing developers to build tools which bring people back to their programming. And in the future, not release an API may mean your online business will turn into a “backwater” says Coates.

In theory sites with these newer approaches could start to have a competitive advantage. And small teams can also make use of the web to market their ideas through blogs. Who needs vast marketing departments?

“Size is no longer an advantage and often a huge disadvantage. Microsoft was one of the firms that made Ajax work, but they are almost the last ones to make it work,” says Heinemeier Hansson. Microsoft famously won’t be ready with Atlas till late this year. It took just three people to make Basecamp.

It’s partly factors like this which are getting business people excited about Web 2.0, and igniting the hype about a new dotcom bubble. Bubble 2.0 anyone?

As Ashley Friedlein, CEO of e-consultancy.com, points out, Web 2.0 style application are probably going to be “great for online retailers.” It makes sites faster. That means people buy faster and are more likely to come back. And its no coincidence some developers at the conference were from large financial institutions, including American Express.

But back on the conference floor, some voices of frustration were emerging. The brave new 2.0 world means more power than ever before can be wielded by small teams of committed geeks, perhaps a satisfying riposte to the hordes of Google developers and the Venture Capitalist driven dotcom bubble of old. But where are these crack teams coming from in the UK?

Delegate Peter Nixey of WebKitchen.co.uk says “The trouble is Web development has not been in fashion in the UK. Developers go and code secure systems in Java for banks, but we’re not breeding Web 2.0 developers in the UK. In the states it is and you can get a decent job The City hinders the opportunities here because the risks of being an entrepreneur are too high. There aren’t any TechCrunch BBQs here where someone will come along and buy you for 500K.”

Entrpreneur Gareth Knight, of OneAfrikan.com, says: “I hope this event will kick start the UK. The UK new media industry revolves around advertising and marketing and not around technology. All the top web agencies are in media, not technology. An investor who I talked to said are you prepared to go to Silicon Valley, because that is what it’s going to take.”

Attending the conference was Paul Birch, co-founder of BirthdayAlarm.com in 2001, and one of the few UK entrepreneurs to have taken a UK-based start-up to Silicon Valley. He believes the UK is not ready at all for the next wave of web services.

“What is the same as the last time we had an upturn in the Internet business, is that the UK has fucked up again. We enjoyed just six months of the last bubble. The US are beating us by a factor of 20-1 this time round,” he says.

“The fact is Web 2.0 will produce lots of multi million dollar businesses. But the difference in the US is that there is an ongoing conversation between techies and business and they can interface. In the UK we don’t seem to have that middle layer,” he says.

Right now there is not big money, because Web 2.0 firms can do it cheaply without the need for venture capitalists and large investment. Development is now a commodity item.”

Also attending the conference was Simon Murdoch, Amazon’s first boss in the UK and now an active angel investor in companies such as Videoisland, Shazam and FriendsAbroad.com, a new Internet service for people who want to improve their language skills. Murdoch says, without a hint of irony that “there’s potentially a paradigm shift going on. Web 2.0 is data being interconnected, which means you can do things quickly and in interesting ways. We’ve only just started to understand the applications that can come out of this. Ultimately they will may a tangible difference, but it’s quite hard to predict how. The developers are evangelical about this, and the examples are just the first ones. It will take time for 800 people to go into their areas and turn them into real products for real people.”

“It’s too early to have affected the investment community. What’s going on here is more like 1997 in Web terms. Here’s cool stuff, and now think about what to make happen. Only then do you think about the business models,” he says.

Paul Farnell, a student at Manchester Metropolitan University, who has created Sitevista.com said: ” Universities here don’t encourage startups in the way US universities do. They do it from a commercial angle and take equity – in the UK they don’t.”

Just as the Web Apps conference sung the praises of the web as a new field for data, similar noises were being made at an exclusive event in London that Wednesday evening. At an event called “Mashup” organised by Midentity.com, Sam Sethi, a consultant to MSN UK, spoke before an audience not of geeks but of mostly pin-stripe-suited businessmen.

Sethi said the “GYM Club” (Google, Yahoo and MSN) are out to form networks into which Web 2.0 service could be plugged in from outlying companies. But underneath it all, is data – and the gold standard will be our identities and reputations. Why? Because advertisers will demand that we are better and better targeted.

Only a day later 40 people gathered in central London bar to hear speakers from Yahoo, Last.FM and Video Island talk about why there are so few Web 2.0 firms in the UK, brought together by New Media Knowledge. The debate there was about how to bring out Web 2.0 innovation in the UK – where one developer had to resort to sleeping in a tent on a London roof to be able to afford to run his idea online.

Stories like this contrast with the media’s image of “dot-commers.”

Tuesday last week saw the return of a distinctly bubble-economy, billed as a direct echo of “First Tuesday ” the notorious networking event for venture capitalists and internet entrepreneurs of the late 1990s.

The contrast with the geeks at the conference couldn’t have been more palpable. While developers queued for a sandwich lunch on the Thursday, the revivalists behind “Second Chance Tuesday” quaffed drinks for five pounds a time at a central London private members club as they were filmed by TV crews.

As one blogger who attended wrote: “Since when are budding entrepreneurs known for being flush with cash?… I didn’t bump into many (new) people doing any web apps – most of the people there seemed to be focused around advertising / media / fashion.”

In all, it smacked of a time when hype was favoured over substance.

Meanwhile, British Web innovators continue to have to make a choice: job offer in San Francisco or rooftop in London?

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