Caterpillar: Web 2.0 giant
There may well be a time when Facebook, YouTube, Digg, and the other Web 2.0 fashion plates make some real money, but for the moment their results pale in comparison to those of the most unexpected beneficiary of the web's recent evolution, the industrial-age stalwart Caterpillar.
Context & Ripple Effects
Nick Carr's jab lands in a debate already running through the corpus: TechConsumer argued back in July 2007 that Web 2.0 isn't enough on its own, and internetnews.com had Google wearing a bullseye at the Web 2.0 conference circuit as far back as November 2006. The throughline is skepticism about whether attention-heavy consumer sites can convert popularity into profit.
Carr sharpens that skepticism with an inversion: the biggest winner from the web's evolution so far is Caterpillar, an industrial-age equipment maker whose results make Facebook, YouTube, and Digg look like fashion plates still searching for a business model. The timing matters because investor hype around Facebook was peaking that same week, including panel talk of a possible $100B valuation — a figure floated by fans and investors, not anything confirmed.
First-order effects
- Facebook, YouTube, and Digg enter the fall 2007 funding and press cycle carrying a public counter-narrative: their revenues are being measured against a heavy-equipment manufacturer's and found wanting.
Second-order effects
- The gap between the rumored $100B Facebook chatter and actual earnings gives skeptics like Carr a concrete benchmark, forcing Web 2.0 boosters to defend valuations with revenue rather than engagement metrics.
Third-order effects
- If the pattern holds, the durable value of the web accrues to companies that use it to sell real goods and services — Caterpillar's position — while pure attention aggregators remain dependent on eventually inventing a monetization model, echoing the post-dot-com reckoning over which internet businesses were actually businesses.
The trend: The web's economic value is migrating toward incumbents who monetize it as a channel for existing businesses, leaving consumer Web 2.0 sites to justify their valuations against profits they have yet to earn.