TechCrunch Disrupt Part 2: Where Are We Headed?

In Part 1 of my retrospective on TechCrunch Disrupt, we talked about some of the breakout startups and why they might be poised to disrupt their sector.  But now I’d like to take a step back and look at what this crop of startups says about where online business is heading in the coming years.

In almost every panel and conversation, I heard echoes of three big themes…

1. Every startup (almost) is consumer-facing.

Perhaps this stems from who TechCrunch selected to present, but nearly every entrepreneur was focused on providing a high quality service to one user at a time, rather than trying to sell larger subscription services to businesses.  Furthermore, the monetization strategy seems to have shifted significantly away from advertising, and toward paid app downloads, freemium models, and rev-sharing with e-commerce.  During the entire conference, I don’t think I heard the terms “page view” or “impression” once.  Gone too was the internet bubble attitude of “build an audience first, figure out revenue later.”

Philosophically, I think it’s a positive trend.  If you know that someone actually has to pay for what you’re offering, you really do need to supply them with a highly valuable, cutting edge, constantly evolving service.  User satisfaction and individual customer relationships are paramount.

2. Every startup is a platform, everything is built around being easily distributed.

I don’t think I saw a single startup that could be called a “destination site.”  In fact, most of them only had websites as one avenue for users to find and access their service.  It seems like the startup culture has reached a point where no one believes that users will just flow in if you build a great app – articulating very clearly how the service will be distributed and promoted is as fundamental as the service itself.  To this end, there was a lot of talk of game mechanics, virality, and financial incentives to users (discounts, rev sharing, etc.).

3. No one wants to produce content, except the very largest sites.

No startups made any mention of building text, images, or video themselves – they just want to provide tools to manage it or services to ingest and analyze it.  The only ones talking about producing content are established players who are morphing into giant content factories: Aol + Seed, Yahoo + Associated Content, and Demand Media.  At one end, AOL wants to expand their Seed platform to produce high quality content that borders on news or, at least timely topics.  Tim Armstrong claimed they’d even build content in areas that weren’t commercially viable, in the interest of building up a community. At the other end, Demand Media creates lower quality evergreen content driven by analytics and monetization potential.  Yahoo and Associated Content may fall somewhere in the middle; they’ll likely figure their strategy out over the coming months.

Looking at these three themes as a whole, it’s clear that tech startups are increasingly focusing on building services that offer flexible products quickly, can establish revenue streams early, and iterate based on lots of hard data.  To accomplish this, many are built on the back of popular APIs and open source code.  Proof of concept can be hit in a much shorter interval, but it might come at the cost of being forced to continually innovate at the same pace as those controlling the APIs and services (Twitter streams, Facebook Connect, etc.).  But regardless, we’ll continue to see startups being built that aren’t afraid to test the waters, pivot quickly, and head wherever their users take them.

Hope this you found this rant informative and interesting!  Feel free to shout questions / comments / furious epithets at me below.

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