"Web 3.0 is taking what we've built in Web 2.0—the wisdom of the crowds—and putting an editorial layer on it of truly talented, compensated people to make the product more trusted and refined."

Its amazing to me what venture capitalists can be convinced to invest in. Clearly, large sums of money are not distributed generally to people who know best what to do with them. Here are some rules for you.

1. If the first place you hear about a hot new technology trend is the pages of Newsweek, this either means that you don't know much about technology, or its a bunch of fluff generated by marketing people that will have no real impact on anything.

2. The Internet will never be better than mass media at doing things mass media is good at. In general, the Internet is good at enabling more participatory media that produces content which meets the interests of narrow audiences. The Mass Media is good at presenting professionally produced information that meets the interests of a wide audience.

3. Revolutions in technology are generally driven by changes in technology. The change in technology that enabled more participatory media hasn't prevented less participatory media from being created. The creation of new "less participatory media" is not a technology revolution because it is not enabled by a change in technology. It was possible to do that all along.

While it is certainly the case that there are good business ideas that aren't based in technology revolutions, they certainly shouldn't be sold as technology revolutions if they aren't technology revolutions, and they shouldn't be expected to impact society in the same way that technology revolutions do.

This is the corner that the VC industry painted itself into with retail dot com companies. Webvan, for example, was not a new technology. It was a grocery store. The economics of it worked like the economics of grocery stores, and it was competing in the already saturated, low margin grocery store market. It was not a bad business idea, but it was also not a software company and the core mistake made by its investors was to assume that it would behave like a technology revolution behaves.

Is User-Generated Content Out? | Newsweek Technology | Newsweek.com