When the internet went mainstream, it changed how we do business – forever.
Never had it been so easy to reach so many people at once, with such a low barrier to entry.
Anyone could build a location-independent business, reach people and build teams all over the world, and avoid the big investment in a brick and mortar storefront and inventory that used to be par for the course. All you needed was an internet connection and an idea.
The internet democratized entrepreneurship, making dreams come true for millions of people with a dream of more money, more freedom, and more impact.
And yet, this “golden age of entrepreneurship” has gradually been eroding, with big question marks about the future.
To answer those questions and to see what’s coming next, we have to go back in time to look at how the internet has evolved over the past 40 years.
The First Era of the Internet: Web 1.0
The early era of the internet (from the 1980s through the early 2000s) was open source, where the original source code is made freely available, and can be modified or shared by anyone.
The Internet was all about making information accessible to everyone, and Web 1.0 delivered on that promise, replacing encyclopedias, phone books, and even library card catalogs.
And as more and more people connected their personal home computers to the internet, it became the place to find and consume information.
And if you had a business, you began to advertise online by building your own website.
But the process was clunky and slow, and often hard to navigate.
Maybe you can remember the days of “dial-up internet” and the series of beeps that meant you were connected.
But the potential was there. And as the technology started getting better and faster, Steve Jobs, Mark Zuckerberg, Jeff Bezos, Larry Page and the other pioneers of the big tech companies built their platforms on open protocols, even as their capabilities would soon rapidly outpace those protocols.
With the explosive growth of mobile devices, we would soon be in a new era of the Internet – Web 2.0, or “the web as platform.”
And while it became EASIER to leverage these platforms to build a business online, there was a price to pay.
GAFA and the Web 2.0 Era
GAFA stands for Google, Apple, Facebook, Amazon, also known as the “Big Four” for-profit tech companies.
If Web 1.0 was all about open information, Web 2.0 became the era of closed-source, centralized data. These companies built walls around their technologies and monetized the heck out of them, either through paid services or advertising.
The creation of the massive advertising platforms of Facebook, Google, YouTube, and to some extent, Amazon presented a huge opportunity for small online business owners.
You no longer needed a big marketing department or a TV advertising budget to get the word out about your business, you could advertise for $5 or $10 a day on Facebook and the algorithm would do the work of finding your ideal clients for you.
Leads were cheap, conversions were high, and data was plentiful.
The barrier to entry for online business was lowered yet again.
But the price this time was much higher – because not only did you not own your data, you were also subject to the whims of the rapidly changing platforms.
As Chris Dixon describes it in “Why Decentralization Matters”:
“During the second era of the internet, from the mid 2000s to the present, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon (GAFA) — built software and services that rapidly outpaced the capabilities of open protocols. The explosive growth of smartphones accelerated this trend as mobile apps became the majority of internet use. Eventually users migrated from open services to these more sophisticated, centralized services. Even when users still accessed open protocols like the web, they would typically do so mediated by GAFA software and services.
The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence without worrying about centralized platforms changing the rules on them, taking away their audiences and profits. This in turn stifled innovation, making the internet less interesting and dynamic.”
Online business owners have experienced this firsthand. Some of us might remember the panic every time Google would issue an update to its algorithm – just the mere mention of “panda” and “penguin” was enough to send business owners into a frenzy.
That panic continues to this day – for example, the iOS updates that had advertisers wondering if this was “the end.”
And while it clearly wasn’t “the end”…
With the Big Tech companies making the rules (and changing them just as quickly), building an online business on these platforms is a riskier proposition than it used to be.
With both Apple and Android allowing users more control over their data and how they are tracked across the internet, the ground has shifted to a post-cookie world.
And business owners are rightly concerned about what’s next.
Here’s the thing: every disruption to the status quo yields opportunity, but only to those who take action.
The Internet is now entering its Third Era – and the winners are being decided as we speak.
Web 3.0 and The Future of Owning Your Data
Web 3.0 is an attempt to take back control of power and wealth from corporations and return it to users.
People don’t want Google and Facebook tracking them around the internet anymore, and they’re demanding ways to take back their privacy and their data.
Many business owners have lost faith in the “Big Four” – ad costs are skyrocketing, accounts are suspended or blocked for no apparent reason, and they don’t want to build their business on platforms that might just be one software update away from becoming obsolete.
Yet, here’s where disruption is creating new opportunities.
We can already see the transition being made back to a more decentralized version of the Internet.
New crypto networks and the blockchain are examples of this, with a community-governed platform and decentralized data.
The Post-Cookie world is creating a new opportunity for business owners to collect and OWN first party and zero party data (and create a relationship of trust with their customers at the same time).
First-party data is data collected directly from your audience, as opposed to being acquired and sent to you by a third-party. Zero-party data is data that your customers intentionally share with you.
Both forms avoid relying on a “platform” to collect, analyze, and share data, putting the power back into the business owner’s hands (and the consumer’s!).
So what’s next?
Well, the internet is still early in its evolution. It’s hard to say exactly where Web 3.0 will take us in the months and years to come.
But this moment feels like an opportunity.
Like Amazon in 2001, Facebook in 2004, Uber in 2008, 2022 may well be known as the year the Internet changed forever.
People are looking for new and better ways to use the internet that don’t require giving up their privacy or putting their trust in big, centralized, for-profit corporations.
Chris Dixon says, “Software is simply the encoding of human thought, and as such has an almost unbounded design space.”
But the question of what comes next depends on who can build the most compelling new products – without sacrificing trust and privacy.
Online business owners are uniquely positioned to take advantage of this new opportunity, as the barrier to entry gets lowered yet again in new and different ways.
If you want to hear MORE about this new era of the internet and how our ASK Community Members and Partners are pivoting and thriving – Subscribe to the KickASK Podcast using the links below: