YOUTUBE has been good to Mike Moritz — and not just because his investment firm made an estimated $500m (£260m) when the video-sharing website was bought by Google last month.

Moritz, a senior partner at Sequoia Capital, is Silicon Valley’s pre-eminent venture capitalist, whose successes include both Yahoo and Google, where he remains a director. But he grew up in Cardiff and, unlike his accent, his affection for British sport has survived more than 25 years in California.

“The greatest thing that’s happened is that now on Monday morning I can watch all the soccer highlights on YouTube,” he said last week. “That’s what technology brings. You never used to be able to get the Premiership here.”

Online video is much more than just a good way of catching up with last night’s game. “I used to follow Glamorgan as a little kid,” said Moritz. “I remember vividly Gary Sobers hitting six sixes in a row. I didn’t know a video existed of that — and found it on the web in black and white. It was wonderful.

“There’s stuff from Bob Dylan and the Rolling Stones from the early 1960s. It’s fantastic — a treasure trove of personal memories that are being rediscovered.”

YouTube was the poster child of last week’s Web 2.0 summit in San Francisco — a showcase for the companies that are inventing our digital future. The sell-out conference, now in its third year, was attended by 1,000 entrepreneurs, venture capitalists and representatives of the big technology firms.

The organisers had to turn away 5,000 more who were willing to pay $3,300 to hear from a stellar cast of speakers that included Google’s chief executive Eric Schmidt, Amazon founder Jeff Bezos and Yahoo co-founder David Filo.

Just as compelling for many of those attending was the chance to learn from the new wave of internet entrepreneurs who have helped to define what has become known as Web 2.0 — people like Jim Buckmaster of Craigslist, which has revolutionised classified advertising; Caterina Fake, who founded the photo-sharing site Flickr; and Kevin Rose, the founder of Digg, a fast-growing news site.

The mood, if not triumphalist, was full of optimism. Fittingly it was Schmidt, the head of the web’s most important company, who put the case most succinctly. “Don’t bet against the internet,” he said.

In America at least, the term Web 2.0 has become so widely used in business and technology circles that it is in danger of being drained of its original meaning. At its simplest, Web 2.0 is a collective noun for the new generation of internet companies that includes Wikipedia, Flickr, MySpace and YouTube.

What these companies have in common is that they have all grown explosively fast thanks to the contribution made by their users. The encyclopedia entries written by the Wikipedia community, the profile pages created by MySpace users, the photos and videos uploaded to Flickr and YouTube — all this activity creates services that become richer, more compelling or more useful with every day.

This powerful feedback loop — known by technologists as a network effect — helps to explain the rapid growth of these start-ups. Wikipedia (founded in 2001), MySpace (2003) and YouTube (2005) are among the 20 most popular sites on the internet.

Tim O’Reilly, the technology publishing guru whose company helped stage Web 2.0, and which coined the phrase in 2004, said the key was “harnessing collective intelligence — harnessing network effects to build applications that get better the more people use them”.