I'm amazed by how many web 2.0 startups have appeared within the past two years. It seems that everyone smelled success with MySpace, Digg, YouTube, and Del.icio.us, and the race was on. Hundreds of 2.0 ideas have launched in the past year, making for an increasingly crowded space.
Though there are millions of users to compete for, 30 versions of MySpace can't all be successful (Virb, Facebook, Friendster, Hyves, Hi5, etc). Every successful venture has 15-20 copy cat competitors crop up within a year of publicity. Everyone smells blood and rushes in to get a piece of the action. It's fair to say that billions of VC dollars are being spent right now on startups that will fall flat within five years. Some will take less time than that.
The Web is getting bloated. The variety is great, though difficult to keep up with. Keeping up with 2.0 startups is like drinking water from a fire hydrant. Too much is going on.
Expect two things to happen within the next 16 months: First, VC money for new web 2.0 businesses will dry up after several hundred current ideas flop. Second, we as users will have the opportunity to see which startups are actual improvements. Some companies will provide improved features, style, and usability. Some will be exact copies of other ideas. In all, the users will have the chance to choose which ideas are best.
Some billionaires are in the making here. But many more ideas are headed toward the abyss.