Following up my earlier assertion that economics makes Web 2.0 different, here are a few examples.

The companies that survived the first bubble-Amazon, Ebay, Google, and Yahoo-all have similar business models: they all took years of extended losses to build up the large numbers of users and economies of scale needed to turn a profit. Their business model works for sure, but the number of markets with enough motivated users to reach the scale required for this kind of model is very limited.

Now, thanks to a new economic model powered by a dramatically lower cost of technology and a new willingness by customers to pay for services, a new business model is possible. In my opinion Basecamp was the real proving ground for this new model. With just over 10,000 users, the company was profitable.

I posted this graph earlier but it’s so good, I’m going to include it again:

The real lasting value in Web 2.0 is not technology, its economics.

And this leads me to my other prediction: the companies that survived the first bubble were business plays more than they were technology plays. The same will be true for Web 2.0. Google, Amazon, Ebay…they are all fantastic but none were the first to bring search, books or online auctions to the web. Likewise, the majority of the long term successes to emerge from this 2.0 era will be business plays. Not the first the ones to use things like tagging and Ajax, but the ones who use these technologies to tap into new markets.

This is one the main reasons why I argue there is not yet a Bubble 2.0. There are not enough MBAs involved yet. First MBA entrepreneurs have to flood the market with thousands of business plans that will test out the boundaries of this new supply and demand curve. Then Wall Street and San Hill Road needs to get involved—again, more MBAs. They have to place their bets and start hoping for a bigger fool to come along to get them out. Then the casual investor can get involved. Once we get through all of these people and there are no more buyers left, the bubble will pop.

Right now its mostly only tech-savvy people that get it. Most of the companies launching today are exploring technologies (most of the same technologies actually), not business models. And VCs are clearly still looking at businesses for their merits and not just a quick flip. No, the MBA’s have not yet come in force. We have a long way to go yet before this Bubble 2.0 thing has run its course.