Web2.0 was supposed to be the next big thing on the Net. And, yes, there were some cool technologies, like Flickr.com, Writely, del.icio.us, and Digg. Biggies like Yahoo!, Microsoft, and Google even snapped some of these up.

But there's a problem: while these sites are definitely cool, the business model is often hazy. After all, when you give something away, you need either a premium product to upsell or a lot of users to monetize things with advertising.

Well, we are finally seeing signs of trouble in the Web2.0 world. For example, PubSub recently closed shop.

Interestingly enough, some of these failed companies are finding some liquidation value on eBay (yes, despite a terrible stock performance, this company definitely has a killer business model). I wrote about one for BloggingStocks recently, in which a community search engine decided to sell out.

The most recent to hit eBay is Kiko, an online calendar site. In fact, the company's investor wrote a blog post on the demise, blaming the "do no evil" Google.

As for the eBay listing, there is currently one bid - for $49,999.99.

I talked to Gordon Gould, who recently raised venture capital for his Web2.0 startup, ThisNext. According to him: "We looked long/hard at whether to raise institutional money or not for ThisNext . We decided in the end it made sense to do so. The 'build it for no money' opportunity is highly problematic, particularly if you are in a crowded marketplace (and the web services marketplace is currently very crowded). More broadly, taking VC money can help a company weather macro and company-specific economic downturns. I started Upoc in 1999 and raised an $18mm round in early 2001. If we had not raised that round, Upoc would have been crushed by 9/11. Our VC's basically gave us the working capital to survive the downturn. VC can also help companies not make every product decision to be a 'bet the company' type of scenario where you can afford to experiment a bit. Taking no money usually means if you make a mistake, you die."

Tom Taulli is the author of various books, such as the Complete M&A Handbook and operates InvestorOffering.com.

eBay: The Web2.0 Killing Fields originally appeared on BloggingStocks on Mon, 21 Aug 2006 08:27:00 EST. Please see our terms for use of feeds.