Of all the obvious things floating on Internet, least obvious is that we are in big soup. Economically speaking. When bad economics is in full swing, assumptions we collected during great times are dangerous to hide behind.

Web2.0 companies relied heavily on advertisement as their preferred business model. With enough eyeballs we can convert enough visitors into meaningful revenue. That is turning out to be a wishful thinking. Online traffic is growing but revenue tied to incremental traffic is anything but satisfying.

Jeremy Liew, venture capitalist at Lightspeed Ventures, writes on Wall Street Journal, has a suggestion for web2.0 startups -

I predict that media buyers will focus on both a flight to quality and a flight to surety. This will benefit three types of startups: companies with large audiences, companies that sell direct-response advertising, and companies that offer valuable niche content.

He is urging companies to ratchet up their direct sales force. This is a classic twin-edged sword. Hiring sales staff is ugly expensive. Especially in times when companies want to cut their fixed cost.

Companies in this environment are better off aligning with networks who already have direct sales force. Partner with them and extend your lifeline.

Dominating niche is going to be key. This is true independent of economic environment. Niche strategy will help companies find new revenue streams. There are revenue streams which look convincing when viewed under the extreme focus of niche segment.  Application subscription, content based tools, virtual gifts, advertorials (something which Jeremy used in WSJ and managed to pitch two of his portfolio companies!) are some of the ways companies can extend revenue stream.

Doing the same thing and expecting different result… You have heard that before!