Does Web 2.0 invalidate Rosenberg’s Law?

A book should stand on its own, reviews should stand on their own, and in general, it little profiteth a writer to reply directly to criticism. But at the end of his review of Dreaming in Code in the Journal (which is now available for free at this link), Paul Boutin asked me a direct question. So it doesn’t seem out of line to answer.

The author reluctantly condenses what he’s learned into Rosenberg’s Law: “Software is easy to make, except when you want it to do something new.” Cute, but MySpace and YouTube went from half-baked ideas to billion-dollar businesses while Mr. Rosenberg was writing his book. Is he saying they were hard, or that they do nothing new?

There’s no question that creating software using the Web as a platform provides multiple advantages, and has helped lots of companies, including those Boutin names, roll out products fast and improve them quickly. Web apps can be upgraded and patched without troubling the user and they come with a tight built-in user-feedback loop, so they lend themselves perfectly to an incremental improvement process, which is the smartest way to avoid the software-disaster swamp. They also solve cross-platform issues and provide sharing and collaborative features as an organic part of their environment.

This change in the software landscape is a running theme in Dreaming in Code, and one that the Chandler developers were acutely conscious of. But in today’s Cambrian explosion of Web-based applications, I can’t really think of each service as a discrete piece of software. The teeming startups of Web 2.0 are really each adding a feature or two — photo-sharing! backup! social bookmarking! word-processing! etc. — to the vast application that is the Web itself. (That’s why they make such fine acquisition-bait for the larger Web-platform companies who are competing with arsenals of such features.)

I do not intend any denigration of the huge accomplishments of the creators of both MySpace and YouTube, and I have no idea how hard or easy their development efforts were. But I think of these companies’ achievement as more in the realm of community-building than software invention. Of course they had to develop some software along the way. But their software platforms — for enabling the hang-out-together experience (at MySpace) or the sharing of short videos (on YouTube) — were not the centerpiece of their achievement. Each company refined and elaborated functions already being performed by other services. Each of them triumphed not by inventing novel extensions to the world of stuff you could do on the Web but by making things people were already doing online much easier, particularly for non-geeks.

As for their creation of “billion-dollar businesses”: remember that these are businesses that haven’t seen anything like billion-dollar revenues; they were valued by acquirers at half a billion dollars (in MySpace’s purchase by Fox) and $1.5 billion (in YouTube’s acquisition by Google)– and much of these prices was paid in stock, not cash.

Still, Boutin’s point is that both companies produced significant value quickly, and I’m not going to argue with that. But in each case what the acquisitors valued was less the code than the customers. You can be idealistic and call that “community,” or be cynical and call it “eyeballs”; either way, it’s what Google and Fox were buying.

In any case, my tongue-in-cheek Rosenberg’s Law made no claim to address the relative ease or difficulty of making money in the software business. I was trying to say something about the correlation between the ambition to innovate and the likelihood of ending up with your wheels in a ditch. MySpace wasn’t the first online hangout, and YouTube wasn’t the first video-sharing service. Instead, each of these companies went to school on their predecessors over the last decade of social media on the Web. And good for them! I imagine that what they did was “hard” in its own way — just not in the specific way that Dreaming in Code explores.