I missed my one year anniversary on 8 May. It is just over a year since I wrote my first blog post On Yahoo. My blogging has waned in recent weeks, primarily down to the amount of things I have had on since the start of the year. Now however my flat is finally redecorated after the flood and our startup is edging towards launch.

It may be that I don’t have the time to blog as much or at all after we launch. What I found interesting about blogging was that it allowed me to think about areas outside what we were then working on (music and p2p). It was the early posts I wrote a year ago which led me to think more about advertising and what was wrong with it online.

My basic thesis was, Google apart, nobody was doing anything different from old media. Grab enough attention then try to cram ads in as many nooks and crannies as possible. Nobody really seemed to be thinking differently about showing people advertising when they found it useful and in a useful context. Everything was geared towards a bait and switch with he who had the most traffic winning.

What is interesting to me is not how many impressions you can show but showing people commercial information in a helpful way. Volume becomes far less important if you can show ads in a way that people actually find helpful. I always thought why interrupt someone when they are trying to do something else? Far better to capture their attention in the moment when they are looking for something. That is what Google does he best and the reason it is so successful.

Even though we were initially not interested in advertising at all blogging allowed me to pursue some interesting thoughts and ultimately led me to the idea which we are now working on as our main project. So, even if I never write another post, writing this blog has been hugely important for me.

I’ve been reading a book about maneuver warfare as practised by the US Marines. This is based on principles such as focus, surprise, flexibility, tempo and boldness. In each chapter examples are given and what I have found interesting is they give examples on either side. On the face of it one may think that boldness would emphasise taking action over not doing so.

Applied to the current rumours of Google buying Twitter it may seem like the bold move is to go ahead and buy, but it is not. The bold move is to pass. There is no question that Twitter is the hot startup at the moment. It gets the Daily Show mentions, the celebrity tweets and the avalanche of tech blogosphere coverage. People urge Google into doing the deed and that $1bn is nothing against the cost of missing out. It is true that Google needs another giant revenue stream to continue its growth and that it hasn’t really diversified away from its original idea despite many attempts. The problem is that Twitter is not yet a business. And Google has already been burnt spending 10 figures on another not to be missed startup when it bought YouTube.

If the bold move is to pass the really bold move is to buy delicious from Yahoo. I noticed that Google has added a ‘bookmark this’ button. It is hardly well publicised and I suspect nobody uses it. Unlike Twitter whose value is in the immediacy of its content, delicious has quietly built an alternative index of the web. It doesn’t matter that it is far smaller than Google’s robot built index, its value is that it was built by humans. I only bookmark a few pages each day, on a good day, but those I do have far greater value than something indexed by a robot because I can understand the content of the page far better.

Each page I bookmark links me to a group of likeminded individuals and I am always interested to see what they have bookmarked under the same heading. This is in embryo a ‘PageRank for web users’ rather than links. It has the potential to be a powerful search engine but delicious is not hot any more. It got swallowed by Yahoo and left to rot.

The bold move? Pass on Twitter and buy delicious. They already have Schachter, might as well rescue his creation.

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Fred Wilson says there has been too much money in VC and I agree with him. The truth is that there have been no grand slam businesses in the last generation of web companies. None have worked out a business model and become standalone, profitable businesses in the same way Amazon, eBay, Yahoo, Google and PayPal did in the previous generation. And between those there have only been two business model innovations: online auctions (eBay) and search marketing (Overture/Yahoo/Google).

The reason is that there has been no business model innovation in this generation is that there has been no pressure to come up with one. Companies which had built a large userbase would always be able to raise more capital, removing any pressure to come up with a reliable revenue stream. It is possible that the glut of VC money sustaining unprofitable businesses has actually retarded the growth of innovative business models.

However now there is reason to think this is changing. A severe recession increases the pressure to innovate your way to a reliable revenue stream rather than a cool new feature. The value of companies with such innovation will rise relative to companies with many eyeballs and no money. The collapse of CPM rates underlines the diminishing value of traffic.

Traffic is still important but it needs much better ways of being converted into cash. There is a theory that in the Internet age nobody will pay for anything any more. I disagree. If you create something valuable people will pay. And now the money is drying up we’ll have no choice but to work out what that is.

Pic:  Cobalt123