Learn from eBay: Avoid Web 2.0 Buyer's Remorse


Saugatuck Technology VP Mark Koenig made an interesting point in our recent interview about Web 2.0 technologies, that companies may need to take a "playground approach," in which employees are encouraged to experiment with multiple uses for social computing tools to determine the best uses for them. He told me:


The thing you think might be the best use may turn out ultimately not to be the best use. You might get in there and try to do a marketing campaign to attract new customers, then discover you've created benefits you weren't expecting for existing customers. It may be the second or third application that yields the real return, but you don't know what that application is yet.


Wise words. However, that doesn't mean you shouldn't at least try to come up with a logical business case beforehand. I think that's a problem with Web 2.0 technologies. There's this fear that "all the cool companies" are using them and those that aren't are losing competitive edge. That's an erroneous impression, at least according to a recent Burton Group report.


Granted, Web 2.0 tools tend to be less expensive than traditional solutions, so there's more room for experimentation, but blindly throwing them out there can be a disaster. The poster child for this (at least this week) is eBay, which just sold StumbleUpon, a social Web site recommendation service it bought in 2007, to an investment group headed by StumbleUpon founders Garrett Camp and Geoff Smith. Terms of the deal weren't disclosed, but it's safe to say that the investors got it for less than the $75 million eBay paid. This as eBay tries to unload Skype, for which it paid a hefty $3 billion in 2005, then took a $1.4 billion writedown in 2007.


Now I realize eBay was buying Web 2.0 companies, not simple applications or tools. But I think there's still a fairly obvious lesson there. It's pretty universal, actually. I wish someone had shared it with me before I tried my first drink of Purple Passion (feel free to insert any other liquor commonly served in a bathtub). If your main motivation for doing something is to keep up with the cool kids, don't do it.