August 2008 Archive

Stop What You Are Doing and Watch This Before It Goes Away!

(thanks dave rosenberg for the heads up)

This is why I love geeks!

Valley Girl: Saving the Publishing Industry One Column at a Time

Here's my latest BusinessWeek column. It started out as a blog post but got longer and longer so I transformed it into a column instead. It's about how the publishing industry needs to be as transformed by Web 2.0 (aka community, interaction, marketing) as it was by Web 1.0 (aka transactions) if it wants to stay vibrant. (Fitting since I'm in Amazon country today!)

In case it wasn't clear: I actually had a near-fairy tale experience with Gotham so its not a bitch-fest at all. I just want publishing to stick around as a viable industry! Now, to the next task at hand: My Gnomedex keynote! eeeeek.

6% Can Be a Lot More Than You Think

Earlier this week, Paisano created quite a stir with his review of Y Combinator’s demo day. The reaction certainly shocked me, as I thought it was a pretty balanced piece. He gave Y Combinator credit for a lot of Web innovation while bringing up the fact that no big homeruns have come out of the incubator yet and mentioning they take a rather hefty cut of a startup for a comparatively small $5,000. (Semi-related, I enjoyed this post about the topic of incubator resentment.)

The biggest stir came from the 10% figure in the first draft (Y Combinator actually takes up to 10%; our apologies for the error!) But I think the debate it sparked was well worth having. Paul Graham—Y Combinator’s Grand Poobah—coincidentally had a piece on his blog the same day about the topic of giving up equity. (Apparently it was written last summer, although I just saw it that day.)

It’s a thought-provoking argument, and I’m not sure what I make of it. Perhaps I’ve been in the Valley too long, but at first blush it just reads like a VC trying to convince you to take his money. It’s a rational argument—but it certainly assumes that investors have a huge affect on a company’s outcome and when it comes to Web businesses, I’m not sure they do, especially at the early stages. Especially considering how much more equity you have to give up for every dollar you raise in those early days.

From Graham:

“For example, suppose Y Combinator offers to fund you in return for 6% of your company. In this case, n is .06 and 1/(1 - n) is 1.064. So you should take the deal if you believe we can improve your average outcome by more than 6.4%. If we improve your outcome by 10%, you're net ahead, because the remaining .94 you hold is worth .94 x 1.1 = 1.034.”

Yes, that makes sense, logically. But it ignores the plain fact that there’s no way to know if Y Combinator improves the company any more or less than on-the-fly learning would or—better yet—free mentorship from someone who has been there. In other words, maybe your startup is 10% better after going through an incubator. But maybe that would have been the case anyway, because you had a great idea that built an audience. In that case you’re not net ahead. It’d be like going to someone’s house for dinner then paying them for the meal they intended on giving you for free. Or, perhaps it's more like taking out an insurance policy, and most of the best entrepreneurs don't like insurance or safety nets. That's why they are entrepreneurs!

UGBT: See You in Seattle Tonight?

I’m tired. There. I said it. 2008 has been a combo of a sprint and a marathon and now it’s August when much of the world gets to hit the beach, and it’s really wearing on me. Apologies to my friends I haven’t seen in months, and anyone I’ve rudely yawned at in the last few weeks. Things are so bad, Mr. Vinnie (my cat) has started cuddling up with Olivia instead of me—measures Mr. Lacy (my husband) hasn’t taken, thank goodness!

It’s either the worst week or the best week to get back out on the road for my User Generated Book Tour. I’m gonna be positive and say the best week. This tour has easily been one of the best things I’ve ever done personally and professionally, and it’s only one-third done. It’s definitely a loss-leader. And definitely hard to organize. But in just a few stops the definition of what it means to be an entrepreneur this time around has become more and more pronounced, as has the fuller ripple-affect of all the things I spent a year writing about in my book. (And some ten years writing about elsewhere.)

Already a few macro-themes are popping out at me, as different as the individual cities are, and I’ve already got a few larger articles and projects that are percolating as I go. So please, smart entrepreneurs, human routers, friendtors and nontrepreneurs in Seattle and Portland, even if you don’t want a book, come out tonight and Sunday, have a beer and tell me what you’re doing. Tell me why your city is different. Tell me what opportunity the Web has unlocked for you. Those are the moments that make the endless airport security lines worthwhile.

(BTW: Thanks for the shout out Rick!)

Is this the Recession's Other Shoe?

As I say in the video below, there's an uneasy feeling in much of the Valley these days. We're watching the economy crater all around us, but....well, we're not really seeing any direct impact. Just like watching a pitcher throw a no-hitter, I almost feel like I should whisper that.

Most everyone I know is making more money than they did last year. I only have one friend who has reported a substantial drop in his home price. And the only few people I know who've lost their jobs are journalists-- and that has little to do with the economy, and everything to do with a general industry's ineptitude. Sure we pay sky-high oil prices, but people seem to get around that by biking, taking the train, carpooling and of course driving hybrids. Making things more uneasy for those here in 2000: We didn't cause this one.

It's actually made my challenge at TechTicker harder, because we're supposed to be covering tech from Silicon Valley and Wall Street. On Wall Street, the "tech story" is the same story as every other market story: FINANCIAL MARKET ROLLER COASTER! But in the Valley, people only tangentially seem to care. This has left everyone wondering if we're truly getting a pass on this downturn or if there's a another shoe out there to drop.

Leave it to the new Mr. Sunshine, Paul Kedrosky, to find that shoe. Henry Blodget used to be called Mr. Sunshine around the Tech Ticker offices for his general bearishness of tech stocks earlier in the year, but Paul easily stole that title a few weeks ago in a hotly debated segment on whether falling oil prices are as bad for the economy as rising oil prices. (I agree with his point, btw. And come to think of it, that's one that hurts the Valley too, although more tangentially.)

Kedrosky is back today to argue why a strong dollar is bad for the economy, and it -- finally and unfortunately-- comes back to tech. Tech gets about 55% of its revenue from international sales and that is where a lot of the growth is for the large, publicly traded Valley companies. You know: The ones that would actually greatly affect our local economy if they stumbled, unlike the more written about Web 2.0 upstarts. Watch the video for his full point:

Muxtape RIP? Noooooooooooooooooooo

Another post by Geoffrey Ellis:

Looks like the RIAA has shut down the user generated audio streaming mixtape site Muxtape.com for the time being. A note on the front page of the site says:

"Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA."

And the August 18th Muxtape blogpost says: "No artists or labels have complained. The site is not closed indefinitely. Stay tuned. Beta users of Muxtape For Bands: you are unaffected by this outage."

I can't find much other info on the muxtape situation other than my assumption that the RIAA can't find a way to play nicely with the new realities of music dissemination. I imagine it has to do with the fees
associated with streaming audio (the streaming cost of one song currently runs $0.0008). Anyone else have any info? Sad to see it go. Hopefully it will be back in it's same awesome state and not some sucky watered-down version.

Props to My Co-Host

TechTicker has been a bit sparse in August-- a combination of slow news, New York going to the Hamptons en masse, and me flitting in-and-out of town on my seemingly-never-ending-yet-only-one-third-done User Generated Book Tour. My TechTicker co-host Aaron Task has had a great month though: He flew to South Korea to interview sitting president Myung-Bak Lee in a Yahoo News exclusive. His clips posted today, and he did a fabulous job.

As you know if you read this regularly, I’m generally obsessed with the culture of entrepreneurship and innovation and the way Web 2.0 platforms have fundamentally changed it from a geographic, financial, and social point of view. That’s why I’ve spent more time out of Silicon Valley this year than I have, well, ever—be it in Tel Aviv or Omaha, Nebraska. While, I do hope that 2009 will be a calmer travel year (and my very patient and understanding TechTicker overlords hope the same) I am planning on a few trips. South Korea and India are two of the top ones on the list, so I devoured these clips and am so proud of Aaron and the TT team for doing such a great job.

I won’t embed all of them here, but please go to TechTicker for more. My two favorites are below. The first is about South Korea’s position as a tech leader—thanks in large part to its amazing broadband infrastructure we all hear so much about in the Valley. (And drool when we hear about it.) The second is about the two Koreas and when they will ever unite. I thought Aaron did a pitch perfect job of bringing up the emotional significance of this for his family (his dad was a Korean war veteran) while not making it about himself. He’s a pro.

Clip #1:

Clip #2:

Oh, Wait, Katie Couric Actually WAS Wearing a Digg Shirt on YouTube?

I thought it was a hoax at first, then I saw the whole video. Ok, ok, it's easy to mock, and a lot of people are doing that. But as Mr. Lacy pointed out, "It's really cool that she gets it or her people do at least." As he further pointed out: The Inquirer doesn't even get the basics. Good point.

More from Mr. Perspective, via IM:

"it's a huge break. it's still really mainstream and people are getting it. it must be exciting. Kevin is just a guy who started something that people really like. maybe some day it will happen to us."

That is pretty much the magic of Web 2.0, isn't it? Also puts our own little echo-chamber in perspective. It's fashionable to think Digg is done these days, but it's clearly still spreading.

UGBT: Seattle, Portland Fun Coming Soon

And now, an update from Olivia. Yes, we need more log-ins/bylines on this blog. I know. On the million-mile-long to do list.

The latest thing I’ve learned about Valley techies? They all have taglines as personal life mottos. “Money’s not the goal- it’s just the best way to play the game”; “Stay cocky”; “Get ugly early”; “Be careful who you date.” [ed: special prizes if you accurately pair tech luminary with his or her tagline!] I haven’t quite decided on which snazzy aphorism best encompasses my life goals, so we’ll just settle for a short-term one:

SARAH LACY'S UGBT IS COMING TO SEATTLE AND PORTLAND.

That should suffice for now. Details on the jump. As always HUGE thanks to local organizers, and books will be for sale for $20; T-shirts for $15. If you have a book, bring it. Sarah will lovingly sign it for you. The more marked up and dog-eared it is, the more loving the signature.

Two of the Coolest Things I've Seen in a While

Ok, let's all take a break from freaking out about Paisano's guest post on Y Combinator. (btw: I've realized today it's more fun to let someone else create controversy and just watch the page views roll in! Hang in there, Pai!) I wanted to share two things that made my day:

First, Robert Jensen of the Des Moines Twitter posse made a UGBT Guitar!!! Check it out! I think I want one of these! To get your own pack of SarahLacy.com UGBT stickers with your city's name, email Olivia at sarahlacy dot com. (Has to be a city on the tour, Seattle and Portland stops are LATER THIS WEEK/NEXT WK! RSVP and spread the word!)

Second: The latest Lacy Jump. This is by Sam Purtill, frequent SarahLacy.com commenter. Sam actually has an unnamed cameo in the book. If anyone can name it for me, you get a free T-Shirt. Or you could just do your own Lacy Jump and get one. Sam: Yours is on the way!

Once you're lucky cliff jump from Sam Purtill on Vimeo.