Demystifying Web 2.0

Richard J. Goossen shows how entrepreneurs can make the most of Web 2.0

Social networking, community building, global interactivity, and mass collaboration: They're all part of the phenomenon called Web 2.0. But how can entrepreneurs tap into this technology-fueled mind shift? Richard J. Goossen, an entrepreneurship professor, consultant, and author of e-Preneur: From Wall Street to Wiki (Career Press) makes sense of Web 2.0 for small business owners. He spoke recently to Smart Answers columnist Karen E. Klein; edited excerpts of their conversation follow.

For those of us catching up, can you define Web 2.0?

Web 2.0 is one of those buzz words that became distorted almost as soon as it was coined. Now it sort of just means trendy, hot, or innovative. But Web 2.0 was supposed to give us a fresh way to look at the Internet after the dot-com bubble burst. The key concepts of Web 2.0 are the harnessing of collective intelligence, social networking, and an emphasis on the data gathered through computers rather than the technology itself.

So where Web 1.0 was more static, Web 2.0 aims to pull in customers rather than have them just sitting there and looking at something. The key is that the customer becomes a co-creator of the medium.

Many small business owners who write to Smart Answers say they are confused about Web 2.0. Is there a way to simplify it?

Established companies should concentrate on using Web 2.0 to tap into their client bases and draw on what's called "the power of the crowd." For instance, I've written about the Fluevog shoe company, which has 10 stores in the U.S. and Canada. It's not a mainstream product, but customers are passionate about their shoes. The founder went to trade shows where people were constantly giving him notes and ideas for new designs. So he decided to create an area on his Web site where he asked his customers tell him what they'd like to see in shoe designs.

He got about 700 replies and made a shoe based on one of the suggestions. That's harnessing crowd power to help a business succeed. The company has also asked customers where Fluevog should advertise, and it has had customers send in pictures of themselves wearing the shoes at landmarks like the Eiffel Tower and the Colosseum in Rome. If an entrepreneurial company has a passionate following for its product or service, then Web 2.0 can't be beat as a way to tap into that.

I can imagine some CEOs being a bit squeamish about turning that much power over to their customers. Crowd sourcing is a true collaboration with your customers, which is definitely an odd concept. It goes far beyond customer feedback surveys or comment cards. Entrepreneurs have to be more transparent if they want to participate in it. If they're closed and protective and more traditional, this isn't going to work for them.

What about start-up entrepreneurs? How do they use Web 2.0?

I think it's a matter of being creative and looking at new concepts through an entrepreneurial lens. I go to Silicon Valley innovation conferences and technology summits, and I see that the people there don't necessarily look at new ideas through a base of entrepreneurial knowledge. Would-be entrepreneurs could sift through the concepts in these cutting-edge environments and apply business knowledge to them. It's not that tough to do, because a lot of the conference content is posted online for free, either in abstracts or videos or PowerPoint presentations.

Just like other entrepreneurial endeavors, it's all about finding a void, looking for an unfilled niche, reading the crowd, and creating something that will take off. The great thing is that for very little money, anybody can go online and create something that becomes viral.

What are the pros and the cons of doing business in a Web 2.0 environment?

The Web 2.0 world is a meritocracy. Attending these conferences is like being at a high tech U.N. People from all over the world are competing in the same space. Competitors can pop out from everywhere, and if their idea is good nobody cares where they are located. That's both good and bad for entrepreneurs, I suppose.

The other positive thing is that using crowd power lets you test out new ideas slowly without going for broke. Throw things out there, see how people respond, and then give them what they want. It's discovery-driven business planning rather than the old-fashioned planning that comes from the top down. Entrepreneurs are particularly good with this approach because they can test things and recalibrate quickly. The aren't stuck in long development cycles in the way larger companies often are.

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