The Web 2.0 movement is just a Yahoo or Google away from touching off another round of irrational exhuberance.  Hundreds of Steve Jobs wannabes are once more registering cutsy domain names, writing heavily fictionalized business plans, and waiting–like a edgy band of illegal immigrants in a Home Depot parking lot–for the VC trucks to come around and throw piles of money at the latest, greatest  Ajax-based application or social networking idea.  Suddenly, it’s 1998 all over.

Soon we’ll be hearing the dreaded “mind share” meme again.  Don’t worry about making a profit or even if you have a product that people will actually pay money for.  Create the buzz, ramp up, and leave the hard sell to Wall Street.   Where is Henry Blodgett now that we need him?

The reality is most of these ventures will fail, as most of them always do, despite all the wonderful technical ingenuity on display.  As one who remembers the great crash of 2000 and had dealings with (and, alas, bought a little stock in) some pretty well-financed and solid-looking companies in the peak years, today’s crop of prospects look far shakier than the Calicos, Broadvisions, Manugistics, Claruses and Vitrias did in 1998.

For one thing, much of that earlier wave of innovation was focused on supply chain and procurement management software for enterprises–categories that require a lot of developers and marketers and other highly-paid humans for success.  That meant large capital investments.  Despite the fact that most of these ventures were well-financed and had the brightest people on board, only Ariba and a handful of others have survived. 

Many, perhaps most, of the players in the Web 2.0 wave are not really companies at all.  They are clever applications with cute names waiting to be discovered by people with money, business plans, and management skills.  Virtually all are one-trick ponies.  New development tools like Ajax and the ability to leverage the huge equalitarian reach of the web to create buzz have lowered the financial barriers to entry.  Anybody with a idea can attract attention.  Whether the ideas are good, or useful, is another matter. 

Some of the larger social networking sites like MySpace are well-funded but you have to think that side of the Web 2.0 revolution is quickly getting over-saturated.  How much more time do teenagers have to spend online avoiding their parents.

This is not to say there are not young Steves and Bills and Larrys out there in the new crop of contenders who have the vision to take some breakthrough ideas and build great companies.  But, when even a giant like Google can’t figure out how to monetize half of the stuff it creates you have to wonder if we’re not racing toward a new bubble that is far sillier than the last one.