January 2009 Archive
Earlier this month I made my feelings about OpenTable abundantly clear, and as I said then, the reason the company is most likely anxious to get all those unused dining checks off its books is because it's gussying up its financials to go public. Of course, I thought the company would wait until the market recovered. Nope, they filed today, which means OpenTable is either very optimistic about a turnaround in 2009 or really needs some cash.
Since flaming the company, I've had a few conversations with people who really do love it, find it useful and have not had my issues. (Although most everyone I've talked to agrees the dining rewards program is lame, at best.) Still, should OpenTable price, I don't think this is a stock you want to own for the following five reasons:
1. Did I mention it's 2009? Have you seen the markets?
2. OpenTable is essentially a local business. They have to conquer territory market-by-market, restaurant-by-restaurant. Local is one of the hardest and most expensive things to do well. It's also one of the only things that the Internet doesn't particularly make easier. Just look at Craigslist: The gods of local. The site's traffic is still dominated by a few big cities. Local hits tipping points and network effects but only in each city. There is traditionally no national tipping point for locally-oriented businesses. In other words, a restaurant in Memphis isn't going to do something because a restaurant in New York finds it valuable.
3. Margins. Imagine that! OpenTable isn't very profitable selling software-as-a-service. That's because it's a very expensive business model to scale, as I've detailed at length here. In short: The software doesn't sell itself, subscription revenues are monthly and steady, but lower in dollar amount and customers can cancel at any time. Such is the pay-as-you-go business model. You can build a huge business here as Salesforce.com has proven. Unfortunately, it's really the only one who has proven that. Even Netsuite, who I'm very bullish on, has struggled with profitability.
4. Restaurants are going to be closing and cutting corners as the recession wears on-- that can't be good for revenue growth. When fewer people are coming in your doors, do you need to pay for a reservation service?
5. The online travel agency effect. I could be way off here, but a lot of San Francisco restaurants just take reservations on their own sites, eschewing OpenTable. They don't want to pay the fees, and why should they when building and maintaining a Web site isn't exactly hard in this day and age? OpenTable may have brought restaurants into the online age, the way sites like Expedia and Travelocity did for the airlines, but increasingly vendors hate middlemen. Especially middlemen who control the customer relationship and take a cut of the proceeds. A lot of restaurants will still want to outsource, of course, but I think it's a risk when it comes to growth.
To OpenTable's credit, they reached out to me after that nasty early January post, and I was supposed to have a sit down with CEO Jeff Jordan. That's not happening now thanks to the quiet period! But I look forward to talking to him when he can talk again. OpenTable has always been ostrich-like when it comes to media so maybe there's something I'm missing here. I'm always open to someone changing my mind, as Tony Hsieh knows!
My new goal is to get Jeff Bezos on TechTicker. That's right. Fair warning Mr. Bezos: You are the new Moby Dick. (Larry Ellison, you toyed with me for too long.)
Since I've historically been a Valley beat reporter, I've never gotten to interview the Seattle-based Amazon CEO, and I am increasingly amazed with his leadership. Om Malik put it best on TechTicker several months ago, when he said Bezos is the closest thing any Internet company has to a Steve Jobs. Before you hit that comment button: Larry and Sergey aren't CEOs, and Facebook is too young to call.
First off, there are almost no tech founders who remain CEOs from starting a company through its IPO and beyond, particularly given the short-sighted nature of Wall Street these days. The only other one I can think of is Ellison, who I've said before deserves to be the highest paid CEO in tech, for his uncanny ability to get where his business is going from a technology point of view, a market point of view and a business point of view.
But more than that, Ellison is that rare breed who can inspire and terrify his people at the same time, and exert enough authority that Wall Street doesn't question him. Ok, maybe the question him, but they'd never dream of ousting him even in the bad times. In fact, over the last few months while everyone has been saying no other tech CEO has the same value to his company as Jobs, I've argued Ellison is a less-sexy version of the exact same dynamic. (By "less-sexy," I mean he sells databases and middleware, not iPhones. I only swoon for Mr. Lacy and this man.)
Bezos is the only CEO of the Internet generation cut from Ellison cloth. He has routinely stood up to Wall Street and was often considered an absolute dog next to eBay's "monkeys-could-run-us" lean and mean business model. Nonetheless, he thumbed his nose at Wall Street with his famous chortling laugh, which you can hear in the clip below.
Similarly to Ellison, Bezos was a visionary in terms of product (cloud computing and the Kindle), knowing his customers (a brilliant user interface, pioneering recommendation engine technology that actually works, and Amazon Prime) and business (investing more money and continuing to discount quarter-after-money-losing-quarter believing volume would win out in the end).
So I know what you're thinking: What about that Internet "four year curse"? Well, it only holds true for the do-no-wrong Internet darlings like Yahoo, eBay and Google. Amazon never quite fit that. It never had a golden-goose of a business model, so it never got lazy. It never had the luxury to get lazy.
In fact, Amazon is increasingly the exception to not only to the four year curse and the horrific 2008 fourth quarter, but a lot of stories I write. Back in August, I wrote about the antiquated publishing industry. One solitary bright light: The Kindle, which the fourth quarter results showed actually boosted book sales, something so counterintuitive even Amazon-bull Henry Blodget totally mis-calls it in the above video. In a time when Borders is fighting for its life and Barnes & Noble had to cut jobs for the first time in its corporate history, that's nothing short of amazing. (And as a reporter pitching a new book, I'm nothing short of grateful.) You have to wonder whether Bezos sold his soul to the devil during one of those post-2000 quarters when it looked like the company was going to go belly-up.
Then there was my December column on how stagnant ecommerce has been since the 1990s. My one exception? You guessed it: Amazon. There are a zillion small reasons why I always try to make purchases on Amazon, despite that old conventional wisdom that you can't build loyalty in ecommerce because it's so easy to click to a cheaper competitor. Among my reasons: Amazon's superior user interface and search, the ease of one-click purchasing and free overnight shipping via Amazon Prime, and the affiliate system. Amazon has given me more than $1,000 in credit this year, thanks to people clicking through my site to buy my book and other items on Amazon. Speaking of, anyone need to do some shopping? That link is up and to the left...
So, keep up the good work Mr. Bezos, and just know that me and my camera crew are coming for you.
Girls in Tech-- one of my favorite organizations-- is hosting a mix-and-mingle event featuring me, but more importantly the amazing crew of smart girls who go to Girls in Tech events. The invite is below. Please pass it on and please join us!! (Please RSVP to the email address below)
Well, now that they've taken down the creepy guy doing pushups, I do! Look at the cute picture Erica O'Grady just took of Olivia and I during our fab coffee and cupcake time at Ritual. And it's already up! Funny how the real time web enables a quantum leap even from Flickr which seemed a quantum leap from everything else. (This is this shortest blog post I've ever done!)
I really don't know what to say about Michael Arrington and the whole spitting thing. Let's start with the fact that the clip of me throwing water on him is no longer as funny to me as it was yesterday, even though it was clearly staged and you can hear me laughing as I walk off.
I thought about penning a quick column for BusinessWeek about the topic, but it was just too close to home. After all, I've got some experience here. I haven't ever been spat on (yet), but I have had a few very disturbing physical things happen to me over the last few years, and more than a few threats. And at least once a day someone, somewhere online says something brutally mean about me. Notice I didn't say "something about my work"-- something about me personally. And 99.99% of the time, they've never met me.
But more to the point, Michael is a good friend of mine and I know him. I know him well enough to know the characterization of this ValleyWag post is utter bullshit. Michael didn't seek out being famous. That doesn't even make sense. He started TechCrunch at a time when startups were utterly unsexy, and no one thought you could build a huge media business off a blog. Michael eschews the limelight more than he seeks it. He spends most of his time at home, working hard, not out talking about it. He does a fraction of the press and appearances he could do. (Trust me, he's bailed on me more than a few times!) And even at Valley parties, he's usually off to the side or sitting in the back somewhere talking to entrepreneurs. And he's turned down many funding and acquisition opportunities for TechCrunch. He's stashed away at least a year's worth of revenues, so this is hardly some Web 2.0 pony he was trying to run until it died, and now having failed, he's looking for an out. Please. Michael is hardly a saint; if you're going to say something mean about him, why completely make it up?
On the flip side was Paul Carr's column in the Guardian. Paul-- like the Gawker crew-- is outrageously snarky. And really, he's far better at that game than most of Gawker Inc, his excellency Nick Denton aside of course. Paul brilliantly writes about the online currency of mean, which I've written about a good deal too, but he writes about it from the point of view of someone who profits off of doing it, not being the subject of it. Paul and I are good friends, which strikes a lot of people as weird, since I'm one of the people he has profited off trashing. But if you read that column, you understand why.
The reason I'm so speechless given all the strong feelings I have about this issue, is that I fear there's no solution and that worries me. If Ivory Tower print media is truly dying, and we're all going interactive, it's going to severely limit the pool of people willing to be journalists. It's one thing to expect this kind of abuse and scrutiny if you're a Hollywood celebrity, a public company CEO or a politician. But someone writing about startups? Why? That shouldn't come with the territory. We shouldn't even be that interesting!
If Michael stays away longer than a month--which I don't think he will--it will be a huge loss for Silicon Valley. Look at TechCrunch50; look at the Crunchies; look at the daily blogging of a broader swath of tiny unheard of startups than any other site. TechCrunch is the best friend entrepreneurs have had over the last few years, and no offense to the team there, but Michael is hands-down the best blogger on the site.
As for me, I have no intention of running away. For one thing, a lot of the abuse I get is because I'm a woman. (Trust me, you just don't want details here.) For the sake of other women, I'm not letting anyone get away with that kind of gender bullying. But there may well come a time, as it has for Arrington for now, where my safety and the toll it takes on my loved ones is just not worth writing another story.
In case you missed it, here is my Forum appearance today. We talk about tech layoffs and the impact on Silicon Valley. Listen for the angry call and email I get mid-way through...sorry folks! No offense meant!
I've been doing a lot of radio and TV lately, but Forum is one of my favorites. I love having an hour to dive into a subject and the callers and emails are always intelligent.
One knit I didn't get to pick with Carl Guardino: He mentioned Palm as an exception to short term thinking on Wall Street. Yeah, well, it wasn't just executive fortitude. It's a lot easier when you get $425 million from a private equity firm. We wouldn't be seeing the Pre without that deal. Still, I'm happy for a case of private equity spurring technology innovation, not just financial engineering. And, if I haven't made this clear yet, I WANT A PRE NOW!
Another shocker: How many calls and emails were in support sending people with H-1B visas home. Really? I thought Silicon Valley was past that kind of xenophobia. That was sort of disappointing.
Trying to get back to some regularity with my BusinessWeek columns. This one posted tonight for tomorrow, and I'm quite proud of it. It keys off a lot of things I've been writing about on this blog: The hollowness of engineering traffic, obnoxiousness of sites like Twply, and my frustration with too many people trying to game the system versus just build a good product or create good content. It all came together around this idea of Web 2.0 killing the last metric that matters for advertisers: The unique user.
It was an observation Roger McNamee made in the Yahoo greenroom when he came by the studio a few weeks ago, and it's been working its way around my head since, so I fully credit him.
If you read the blog a lot, you probably notice a lot of similar themes work themselves out here, then later wind up in a column or on TechTicker. Writing is like thinking, and my commenters always help me sharpen my thinking. You let me know when I'm on to something and push me on another angle when I'm blind to it. So thanks, everyone. Instead of cutting you in on my paycheck, I'll just refrain from annoying you with ads on this site. Deal?
NOW, speaking of Roger McNamee, I have some news. He cut his hair! Background: Roger's hair ignited quite an uproar among TechTicker commenters. I'm sorry-- he's Roger McNamee, a former top fund manager and one of the most successful Valley investors and he's giving you investing advice and you're upset about his hair??? As I Twittered at the time it was an act of civil disobedience against the policies of the Bush administration. Roger says once he got confirmation that Bush was safely back in Texas he cut off a whopping 14 inches giving it to Locks of Love. I don't have an "after" picture, but below is the before, in video form:
I mentioned back in December that several big changes were brewing for me in 2009. A big one was Olivia’s leaving (although she didn't really go anywhere; she just no longer has to do what I say...) and one small one was my new gig as a regular contributor on Press:Here (Yes, mom, real tv!) There are two more very exciting new projects I can’t yet share; I hope to be able to in February. But today, I can finally talk about one big change that’s 90% exciting and 10% sad.
My role with TechTicker is going to be changing next month. Instead of spending three days a week co-hosting the show from Yahoo’s studios, I’m relinquishing my tenuous hold of the co-hosting reins to Aaron Task and Henry Blodget who’ve been far better at being the daily force behind TechTicker than I ever could with all my other commitments and insane travel schedule.
Instead, I’m going to focus on bigger interviews and more produced “Tales of the Valley” documentary-style pieces for TechTicker, and hopefully, elsewhere on Yahoo too. These pieces take longer to schedule and produce so expect less of me on camera. In fact, yesterday was my last Monday morning 5 a.m. trek down. But I’ll continue doing my (mostly) daily “Valley Buzz” column for the site, and at least a few studio days per month. (Attn Paul Kedrosky and others: You’re not done with me yet!)
Why this is 90% exciting is obvious: I’ve always been the kind of reporter who is happier out of the office reporting unique stories or talking to fascinating people, not weighing in on the day-to-day news. Also the cinematic eye of my amazing cameraman and editor, Brad Williams, is frankly wasted just pointing a robotic camera at me every day. We will get to invest more in stories, and TechTicker gets more of what we do really well.
It also gives me far more flexibility. For most of the last 16 months or so I’ve woken up at 5 a.m. on Mondays, Wednesdays and Thursdays, commuted an hour to Sunnyvale and spent all day booking, shooting and editing, then frequently come home to late nights of source meetings, events, or work for my BusinessWeek column. And all too frequently the days in between were spent traveling to speaking gigs, conferences or book tour events. In fact, last week, one of the baristas at the Yahoo coffee bar accused me of not really having a home in SF, just spending my life going from Yahoo to the airport then back to Yahoo. That wasn’t far from the truth in 2008. Frankly, it took a serious toll on my health, my marriage and friendships, and from time-to-time the quality of the work I was producing for Yahoo and BusinessWeek, and of course, my own blog, which was neglected most of all.
Launching and co-hosting TechTicker has been an amazing experience that has challenged me, excited me, frustrated me and most of all given me a huge appreciation for how hard the video medium is to do well. It was a great change from being heads-down on one huge project, like I was in 2006 and 2007 with the book. But it’s not really my strength. I’m not going to be the Maria Bartiromo of online news, and frankly, I never wanted to be. (Although this piece gave me *huge* amounts of respect for her.) I want to be someone who can work across mediums, continually inspired and challenged by the differences between them. This move will also give me the chance to work more closely on stories with my amazing executive producer Diane Galligan who always makes my pieces better. The chance to learn from her was one of the main reasons I took the job at TechTicker in the first place.
All that said, the move is also tinged with some sadness. I really love the crew that I work with at TechTicker, and Yahoo is—believe it or not—a fun place to go to three-days-week. And with the economic crisis of the last year, being on camera daily has forced me to stay up to date on the latest national news, that doesn’t always permeate the Valley ecosystem. I’ve learned so much about the economy and the markets from Henry, Aaron and regular guests like Paul Kedrosky. Now, I hope the ability to focus on telling fewer stories really well will help me teach our millions of viewers more about Silicon Valley, which is, after all, the reason I took the job in the first place and the reason I was hired.
On the jump are a few of my favorite interviews and Tales of the Valley pieces we did early in the year before the studio grind took over. Hope it whets your appetite for what’s to come! Also in the comments, feel free to leave your ideas of a dream segment or guest.
And on top of everything, Vimeo won't let me change the thumbnail. Yep, the face says it all, folks.
The Morning Don't: Episode 14 from sarah lacy on Vimeo.
An unforgettable portrait of the emerging world's entrepreneurial dynamos Brilliant, Crazy, Cocky is the story about that top 1% of people who do more to change their worlds through greed and ambition than politicians, NGOs and nonprofits ever can. This new breed of self-starter is taking local turmoil and turning it into opportunities, making millions, creating thousands of jobs and changing the face of modern entrepreneurship at the same time. To tell this story, Lacy spent forty weeks traveling through Asia, South America and Africa hunting down the most impressive up-and-comers the developed world has never heard of....yet.
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