“The business model is hamsters generating less money with each turn of the wheel.”

The phrase is from Dave Winer, noting the path of Web 2.0 company growth and the difference between what the systems are worth to the owners vs. what they are worth to the early adopters:

The APIs are corporate APIs, the CMSes are silos, the business model is hamsters generating less money with each turn of the wheel.  permalink

I can't say this is wrong, but it brings some regret for the time spent being the early hamster on the wheel and seeing whatever value I added to the likes of brand new systems being captured completely by those systems. It makes me want to start something brand new of my own – but then – you end up being captured by all of the tools you have to learn to bring it online.

Perhaps the best thing to think through this is that all new shiny online services have a lifespan. Some of them grow quickly and then die (remember Pownce? I thought not), some of them grow slowly and still live on somehow (remember Plurk?), others never get off the ground (a dozen tiny spam-overrun Twitter clones), and a tiny handful make it to Twitter size. You generally don't know when you're starting to talk to people through some new online system whether you are going to treat it as a long-term commitment to learning a complex system, or just some hands-on experimentation in something to be ignored and forgotten in a few weeks.

So you are a hamster, and you see a wheel. Do you get on to try it out, give yourself some exercise, or do you go to your workshop and build a better wheel?

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2 thoughts on ““The business model is hamsters generating less money with each turn of the wheel.”

  1. Bill Tozier

    I wonder sometimes whether the problem may be “services” that do not address more than a hypothetical problem. Perhaps one would like to see problems solved, and when the habit of solving a particular kind of problem becomes apparent, a service to simplify that solution.
    Though I could be wrong.

    Reply
  2. Dave Winer

    I get on the wheel, spin furiously faster and faster, urged on by a VC who says there might be some cheese at the other end of the path I’m running down (which is what the wheel looks like to the hamster).

    Reply

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