Web 2.0: Where everyone, virtually knows everyone.

I planned to take a short break from beating my Web 2.0 drum with this essay and move on to another topic. However, my experience two weeks ago at TechCrunch’s inaugural meetup BBQ at Mike Arrington’s place caused me to reconsider. The experience lead me to think about Web 2.0’s impact on social circles. In the physical world, social circles are groups of people who happen to frequent the same places and know the same people — either personally or professionally.

If you haven’t already noticed, Web 2.0 has enabled the formation of “virtual social circles” — circles that are so geographically sparse that they can only exist virtually. Since “virtual social circles” is a mouthful, for simplicity sake, I will refer to these circles as “Web-circles.”

While at the Techcrunch BBQ, I met a number of guys who I already knew — and somewhat surprisingly, already knew me — even though we had never officially met. Guys like Jeff Clavier , Nivi , Fred Oliveira (visiting from Portugal) and others who I knew (virtually) — although we had never actually spoken, seen each other in person, or even exchanged emails. Considering that I am an East Coast guy residing in Maryland, more than 3000 miles away from the Bay area, makes the fact that we already knew each other even more powerful and profound. In essence, we have been traveling in the same Web-circle, connected by our mutual interest in technology, startups, investing and Web 2.0. Our initial face-to-face conversations were aided by the fact that we already had mutual respect for each other’s background, talents and thoughts on the subject matter — knowledge that we gained primarily through blogging, but also through tagging and sharing data using services like del.icio.us.

A few years ago, prior to the emergence of this new two-way Web that we’ve collectively coined Web 2.0 — a moniker thats come through mass-collaboration and mass-debate, Web-circles really didn’t exist. Some would argue that newsgroups and IRC chat rooms qualify, however, I would counter that those Web-circles are small by today’s standards. So while traveling back to the East Coast on the red-eye, I considered the impact that Web-circles are starting to have on value creation.

The emergence of virtual founding teams.

Over the past several months, I have received more business plans and pitches from startups made up talented founding teams that are geographically fragmented. It hasn’t been uncommon for the CEO to reside in one State; the interface guru to reside in another State; the programmer to reside in another State (or Country); and other geographically dispersed freelancers to be involved. It’s becoming more apparent that founding teams are forming though pure virtual means. In many cases, I am already familiar with one or more members of the team as well as the startup itself -– through my involvement in the Web-circle.

Due to the difficulities associated with providing “hands-on” guidance from afar, it has historically been a “no-no” for an early-stage VC to make a lead investment in a startup that is located outside of its geographic area. Will Web 2.0’s enablement of Web-circles and virtual founding teams change this paradigm? There are many investors, including myself, pondering this question.

We’re funding eight new startups at the moment. A friend asked what they were doing for office space, and seemed surprised when I said we expected them to work out of whatever apartments they found to live in. But we didn’t propose that to save money. We did it because we want their software to be good. Working in crappy informal spaces is one of the things startups do right without realizing it. As soon as you get into an office, work and life start to drift apart.

Paul Graham - Essay

If the entire founding team is dispersed, the product is complete or near completion and momentum has begun to build around the startup; can a small investment be made to fuel further growth? Or should the executive team be immediately required to come together and establish roots in a single location near the investor. Historically, this has been determined by “the golden rule.” Which states that, “he who has the gold, makes the rules!” However, now that The World is Flat , and talent is boundless, should we reconsider this approach? I’m not sure, but it has been my experience that talent attracts talent. So if Web-circles are enabling high concentrations of talent to come together in founding teams – that’s a good thing. So for now, our firm will consider these opportunities, carefully, on a case-by-case basis.

Moving from Web-circles (social networking) to true connections.

It is now obvious that working relationships can be formed through Web-circles. But can true working relationships be sustained by pure virtual means? Absolutely. There are more than a few individuals (primarily developers) that I have never met in person, but continue to work with on a semi-regular basis. However, Skype and instant messaging has brought these individuals to my desktop, so considering how much time I spend online, its almost akin to being in the next office.

So will Web-circles ever replace the need for true “face-to-face” business connections? Not for me. Despite my success in establishing virtual connections through Web-circles, the extrovert in me will always prefer in-person connections. So if you’re reading this essay and are planning to attend the Web 2.0 conference next week in San Francisco, be sure to say hello, there is a high likelihood that I already know who you are.

Posted by Clarence Wooten on September 30, 2005
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