The notion of “creative destruction” captures the raw spirit of innovation on the web. New concepts arise, with some displacing old ones. The only problem is we never know which concepts will succeed and which will fail. Furthermore we don’t know which aspects of those ideas will win out over others. For instance, online video turned out to be wildly popular, but the aspect of making the videos embeddable was part of what made YouTube spread.
In a way, the past 4 years can be seen as a series of science experiments, each mixing and remixing pieces of other concepts. Some grew, some went flat, and others died off. Like a living organism, companies fight to multiply — to get more users, pageviews, and at the bottom line, revenue.
The problem is that aspects that help web services self perpetuate don’t take into account the problems they may pose. Email gave way to spam. P2P yielded piracy. Ubiquitous publishing invites slander.
Underlining it all is the fact that ideas that self perpetuate succeed in spite of their detractors and negative externalities. Managing the externalities of these ideas is near impossible because we don’t know which ideas will succeed. By the time winning ideas achieve scale, so have their problems. The cat’s out of the bag.
The effect is that we do an amazingly bad job of managing problems created by our ideas. Bill Gates famously claimed spam would be solved by 2006. We’re still shutting down spam rings.
So too has the growth of Facebook and other social media properties left us with a major problem, a lackluster business model. The aspects that make social networking self perpetuating are not related to a business model, consequently Facebook has focused on scaling user growth (it’s core competency) and not revenue generation. Facebook’s latest user numbers are way up.
But in every problem there is opportunity. New revenue models, anti-phishing, copyright detection, and a host of other problems riding the coatails of successful ideas are oppening up real opportunities for new innovators.