December 2011 Archive

Elon the Great (Tweeter)

Do yourself a favor and go follow Elon Musk on Twitter. Unless you work in one of his companies' PR departments. Then definitely don't. Because you'll likely want to ruin what's great about it. Last night he went on a full-scale comedy routine about Catherine the Great and…ahem...horses. It was a confusing and amazing Twitter debut.

God bless the PayPal Mafia. Not only have they given us a bevy of interesting companies that have reinvented everything from solar panels to electric cars to space ships to how friends connect to how we find jobs to how we consume videos online. It's also created countless millionaires, thousands of jobs in one of the bleakest periods in American economic history and billions in market value. 

But the less talked about value add of the PayPal mafia? Larger-than-life moguls. Uber-contrarian Peter Thiel makes news nearly every time he opens his mouth. Max Levchin almost had his foot cut off fleeing Chernobyl. And Elon Musk makes rockets and has a laugh like a James Bond villain. And now he Tweets about Catherine the Great romancing horses.

I miss the Valley's golden age of weird moguls. I know that's a little petty, because Silicon Valley is ultimately about creating jobs, building products and creating shareholder value, and there's something to be said for boring, responsible, predictable CEOs and founders.

But if we wanted bland-glad-handing men in suits who never say anything that could offend anyone but also has no substance, we'd go to DC. If we wanted plastic perfection, we'd work in Hollywood. If we wanted slick, suited masters of the finance universe we'd work on Wall Street. The reason we're all in Silicon Valley is because we like pirates and individuals, and all-too-often PR departments white-wash that out of entrepreneurs and then wonder why they don't get more press. (Ignore for the moment that Elon actually lives in LA-- I'm describing industries here, not actual towns.)

In fact, there's a bizarre inverse relationship between how interesting a company is to the press and how boring the founder's public image is.

There are a few exceptions: Apple and Steve Jobs are both fascinating figures, ditto Amazon and Jeff Bezos, and-- love 'em or hate 'em-- Andrew Mason is as interesting as Groupon. But think about the consumer companies we tend to fixate on like Facebook, Twitter, Quora and even eBay and Yahoo from the first wave of the Web. They've usually got pretty shy founders who work all the time, live modestly and don't make waves if they can help it. (This is why people like Ben Mezrich and Aaron Sorkin need to make things up about them to sell movie tickets.)

Now take a look at the golden age of enterprise software. It was hard to make readers care about a seemingly-boring company like Sun Microsystems that made servers, or Oracle which made database software, or customer relationship management software. And yet Scott McNealy, Larry Ellison and Marc Benioff were each larger-than-life, trash-talking, sparring, headline-generating machines that no PR person could tame in their hey-days. I covered enterprise software for BusinessWeek and those personalities were the only thing that helped me get stories in the magazine. 

Elon's can't-be-tamed-nature got me in trouble once when I was interviewing him for TechTicker and he called Randall Stross of the New York Times a "huge douchebag." I-- GOD FORBID!-- laughed at it, because it was unexpected and hilarious and his PR person standing a few feet away almost collapsed. The New York press totally freaked out and went after me about it. It was pretty ugly at the time. But that interview still makes me laugh. I'll take scandal over boring any day. 

Thanks for All the Birthday Wishes, Facebook

Yesterday was my 36th birthday. My birthday used to be an event that passed between Christmas and New Year's unnoticed and only occassionally remembered by friends and family. AKA: Worst birthday ever. But now in an era of social networking, I-- like hundreds of millions of others-- am now flooded with birthday wishes. Absolutely innundated.

That's a huge shift in a short period of time. It's sort of amazing when you stop to think about it. 

More amazing than the sheer number of "Happy Birthdays!" is the range of people they came from. I'm paging through several pages of wall posts on Facebook and everyone from cousins I haven't seen in more than a decade, to my kindergarten best friend, to a coworker from five jobs ago, to my brother's ex, to everyone I've ever come across in the tech industry-- there they all are, wishing me happy birthday, in bizarre juxtoposition to one another. It's like my own episode of "This is your life Sarah Lacy" captured in birthday wishes. 

A cynic could say that the friction points being taken out of wishing someone happy birthday make it less special somehow. That those little things that used to thwart birthday wishes like having to remember it was someone's birthday, being organized enough to call or send a card on that day, having that person's contact information up-to-date to begin with-- these were obstacles that you worked to overcome if you truly care.

Get used to this kind of thing. With Facebook finally going public next year, there's going to be a raft of haters on the company, and endless stories about how its eroding relationships, killing our privacy, drowning puppies. Blah, blah, blah.

It's not that those haters don't have a point. A lot of the people wishing me happy birthday wouldn't have in a non-Facebook world. But I'd argue, even if the message of each wish is a little diluted, the sheer volume of those wishes more than makes up for it.

If you stop and think about the level of intense connection Facebook has enabled in the world, it's pretty mind-boggling. It's happened so gradually and is such a constant in our lives that we already take it for granted. You literally never have to lose touch with someone if you don't want to. That's a massive change in the nature of human relationships in just a matter of years. It was no less remarkable than when people were first able to see politicians on television, or able to call anyone, anywhere with a mobile phone, or have the world's information at their fingertips.

Facebook feels like it's taken an ice-age to make it to the public markets, but in terms of broader societal impact we're only seeing the beginning of what it means. 

Golden Age of Tech Blogging Done? I Couldn't Disagree More

I'm a big fan of Jeremiah Owyang's market analysis but I think he missed the point on this one, big time. He recently wrote a post on how the Golden Age of tech blogging is over. No way. Unless of course, he means we're about to enter the platinum age. Because things are far from dead in tech blogging-- and blogging in general. In fact, I think we're poised to enter one of the most exciting periods yet. 

I'm a big believer that tech trends tend to over-promise in the short term but under-promise in the longterm. As Jeremiah points out, the last few years demonstrated some of the limitations of blogging-- ie, we can't all make businesses and build big audiences, it won't replace all older forms of media, and  it's a grind that will wear down all but the most intent. In a lot of ways sites like Facebook, Yelp and Twitter have scratched that itch for self-expression by giving the masses an easier and more painless way to get the endorphin rush that blogging gave in the early days. Scoble speaks to that in Jeremiah's post. And that's thinned out the blogging herd-- no question.

But there are still plenty of people who love to write-- not just share, Tweet and comment-- for a living, and blogs are still the best platform for that. In many ways, professional blogging is just getting started. It's a time when new entrants are jumping into the field with bold, fresh ideas, standing on the shoulders of the blogging giants that came before, taking a second stab at reinventing the new media landscape. Look at what Bleacher Report has built in the long-neglected sports world, and what SB Nation is doing. Look at how the Verge (owned by SB Nation) is reinventing one of the oldest and most successful niches in blogging-- the gadget blog. And if you believe what you read, more new entrants are coming in the tech news category. 

Sure, a lot of the first generation have been bought up or the founders have gotten tired and are blogging less. And that's a massive loss. And, yes, that's lead to exodus of talent at some core properties.

But none of that means the medium is dead or struggling. Quite the opposite: It's ripe for a reboot and throughout the blogosphere the  next generation is sprouting up, fired up with new ideas and resolve to build exciting new businesses that are different from wave #1 from the beginning. 

Here are some of the trends this generation seems to be playing with in new ways:

- Reader blogs. Pioneered by HuffPo and SeekingAlpha, I believe we're only getting started when it comes to platforms that enable readers to blog alongside paid authors. Bleacher Report has created a fascinating business around carefully curated user blogs that other verticals may seize upon. A lot of the power of blogging is the individual voices but as we learned from blogs 1.0, there's a major distribution problem if you don't want to blog everyday. Squeaky lawsuits aside, the unpaid blogger isn't dead. Plenty of people want to write just to be read. In our world, VCs like Chris Dixon, Fred Wilson and Ben Horowitz are writing some of the best stuff out there. Imagine how many other people are out there who don't write for a living, but have plenty to say. They don't want to blog everyday, and are put off by the distribution problem if they post only sporadically. Expect a lot more innovation here. 

- UI. The Verge has really experimented with this and while it's a bit too busy for my tastes, I love that it's pushing the envelope. As blogs have exploded with volume to drive more traffic and page views, the industry has created huge challenges from a user interface perspective. A lot of the older generation of blogs have struggled to address this, as entrenched audiences have balked at dramatic changes. But there are fewer sacred cows for new properties starting with a clean sheet of paper. 

-It's definitely not all about short, commodity news. I totally disagree with Jeremiah's assertion that blogs are bound by shorter and shorter attention spans. Over the last year at TechCrunch, I wrote several very long posts and those were some of the highest trafficked on the site. If the content is good, people will find time to read. We're seeing this with the explosion of Kindle Singles and new imprints like Byliner. Writing long for the sake of long is silly, but don't underestimate a smart audience. People will read you if you do quality reporting and have something interesting to say.

- Business models. In many cases, blogs haven't yet figured out a way to monetize their influence. TechCrunch had an insane amount of reach and influence compared to any other platform for which I've written. And yet, TechCrunch made the least per ad of any platform for which I've written. There's something wrong with that, and it'll get rectified at some point. The new generation will be the ones to experiment, throw assumptions out the window and find those answers. The new generation has the advantage of starting from where the previous generation of blogs left off. The first generation did the hard part. It proved blogs had to be taken seriously; that it was possible to build a big audience, rival the biggest, most respected names in old media in terms of influence, and buid a business if you got large enough scale. The next generation will start from that premise and go further.

- Less about a Single Star; More about the Platform. One of the biggest challenges of the first generation of bloggers was building the property beyond one, dominant voice. TechCrunch did this better than many, but in the end many still viewed it as "Mike's blog." Part of that was because a lot of those blogs started as a hobby. This next generation are starting blogs as businesses first, and solving for challenges like these from the beginning. 

- Not for Sale. I can't speak for other nascent blogs out there but the biggest lesson I've learned from the first wave? Start out with a mindset not to sell. Ever. When you sell, your platform and brand may live on, but eventually your voice dies. 

Not selling can sound laughably naive in some corners of the Valley. Indeed, I've known enough entrepreneurs to know you can never know at the beginning of the journey where it'll end up. But, at least for me, I've set the expectation in every conversation I've had with potential investors and employees: If I'm going to build something, my plan is not to sell. I'm not building a non-profit. I think everyone taking the risk on my new site, me included, will make money. Lots of money. But it won't be from an acquisition, and if it is, I've failed.

That mindset is reflected in every thing a new blog does; from the way a new blog sets up compensation to the way it hires its staff and in particular, it makes the point above about platforms and individuals even more important. The only way to build a lasting media property is to build one that stands for something not someone

Attention World: Don't Give the Arnon Kohavis Your Money

Robert-preston-musicman-3It's a sign that I'm ready to get back to blogging that at 7 pm on Christmas night, cuddled with my new baby and surrounded by my family, I read a Tweet that made my blood boil. It boiled with that special kind of anger that can only be quenched with a long, blog rant. 

That's fortunate, because my "maternity leave" has about another week left on it. It's unfortunate, because I haven't started my increasingly less mysterious new job yet. That leaves me with one place to write: This blog which has a tiny readership.

So hopefully this story finds a way to circulate out to the wider audience of government officials and old money elites who have good intentions of wanting to make their city a beacon for entrepreneurship. Hopefully it reaches them before they get bamboozled into giving the wrong people money to make it happen. People like Arnon Kohavi. 

The Next Web has an article on why the venture capitalist who rushed into Chile and declared it the next coming of Silicon Valley has now pulled out a mere six months later. Here's what any Chilean entrepreneur reading this needs to know: That's all total and complete B.S. It's not you that's the problem, it's Kohavi. 

I have seen this kind of thing a lot in my travels. Throughout the emerging world and increasingly corners of America that have fallen on hard times, seemingly everyone has gotten the memo on how high-growth entrepreneurship-- not hand-outs and bail-outs-- is the answer to economic bliss. Everyone wants it. Countries are desperate for it.

The problem is few city governments and city boosters have the foresight and patience to make it happen. Everyone wants to be the next Silicon Valley; few people want to face the reality that Silicon Valley took decades and decades of supporting the most brilliant, crazy and cocky entrepreneurs to get to where it is today. The ability for anyone-- and, trust me, I mean anyone-- to come up with an idea and a week or two later have a full bank account, incorporation documents and the emotional support and good will to make that dream a reality is rooted back in the 1950s and the days of Robert Noyce and Fairchild Semiconductor. In fact, it goes back even further to the 1930s and the days of radio technology, spinning out of Stanford and being purchased by the national defense department. 

Because the prospect of building something like that is so daunting, people are looking for someone who can promise them a quick fix. Something like Harold Hill in the Music Man who came to River City and promised a band could be formed just by thinking about playing instruments. But the real lesson of Silicon Valley isn't one of cheap tricks and hacks. It's one of perseverance, hard work and doing something because you have an illogical belief it in-- not because you want to make any money. Money is the by product of true entrepreneurial creation, not the other way around. 

So when a modern day Harold Hill comes swaggering into town telling you he can make you a Silicon Valley in a matter of months: Don't listen. Even if he sells it in a glitzy musical number. Run him out on a rail. Don't let him finish his corny dog and pony show, don't introduce him to the local librarian, and don't give him one red cent, because he doesn't know what he's talking about. He doesn't even understand the thing he's promising you'll become.

In the musical, the fraudulent "thinking method" somehow worked--to the surprise of even Harold Hill himself. Real life is far less forgiving. No one has ever produced a shortcut to building an ecosystem of entrepreneurship, and no one ever will. Real ecosystems take real time and real work. They take people who care about entrepreneurs and want to help them develop, whether they personally make money or not. That's not Arnon Kohavi. This is a lesson Chileans almost learned the hard way when Kohavi came to town. 

Arnon Kohavi. Remember that name, don't give him money and don't let him invest in your startup. He's technically a venture capitalist but only because that's a club you get to elect yourself into if you have enough money. Good VCs invest because they love great entrepreneurs and want to be around them and help them realize their dreams. If this interview with him on the Next Web is accurate, Kohavi is nothing more than a short-term profit seeking Harold Hill wrapped in venture capitalist's clothing.

I hope Kohavi was grossly misquoted. I hope his words were twisted out of context beyond recognition. I hope when he read that post, he was aghast at how it made him look. 

But I doubt it. Sadly, there are plenty of Kohavis out there who travel country to country promising the moon and then asking for a big check. When they get it and those promises invariably don't happen, they come up with plenty of excuses why. When they don't get it, like Kohavi, they sulk away and blame others. On to the next town and the next batch of promises.

To wit: Just six months ago he moved to Chile and declared that "The next Skype, Facebook or MercadoLibre would come out of Chile," setting up a Santiago venture capital fund called Yarden VC. ("Seventy six trombones led the big parade..." Just imagine the oompas and the baton-wielding dance moves as you read that quote.) 

That's a big claim. What'd he base it on? Apparently meeting some government people who wanted a local entrepreneurial ecosystem. Ok, that's every single place in the world. Find me the city that would rather not have jobs and wealth created there, Mr. Kohavi. The next Skype and Facebook can't from everywhere. Based on government enthusiasm, Kohavi says he came to Chile for six months as a test to see if he could create a "real" venture capital fund. Only that's what he says now. That's not what he said at the time. At the time, he said-- definitively-- that the next Skype, Facebook or MercadoLibre would come out of Chile. 

Guess what? In six months that didn't happen. Of course it didn't. It took far longer for the actual Skype and Facebook to succeed, bolstered by far stronger ecosystems. But don't pay attention to facts like those-- look at the kids in those spiffy new band uniforms! Somehow the great Kohavi was going to divine whether they were in Chile in six months, and he determined they weren't. The ecosystem wasn't ready for his investing brilliance so he picked up stakes and pulled out. He's going to try Asia next-- not surprisingly Singapore, a city-state known to give large cash handouts to investors moving into its ecosystem.

Let's take a closer look at his razzle-dazzle excuses and justifications.

Point one: Kohavi blamed Chile's not being "ready" on the older generation of elites in Chile who "just don't get it." Entrepreneurship is about disruption not getting an engraved invitation from elites who already have power and money. Those people will never support a toppling of the established order, and more to the point, who cares if they do? If you are enabling great entrepreneurs with great ideas, some stuffy old-world elites won't be able to stop them. Real innovators and investors hear those people "not getting it" and see it as a challenge. They can't wait to make them eat their words. 

Point two: No one can "test" your startup ecosystem in six months, and come up with a binary result like "YES! The next Facebook is coming from here!" or "No, sorry you aren't ready." Anyone who has studied entrepreneurship knows that the best companies are started in the bleakest times and the worst companies are started when it seems like a slam dunk. No one can predict if a great entrepreneur will come out of a certain place and time, and many investors better than Kohavi have lost money and been humbled trying. It wasn't very long ago that most of the Sand Hill Road establishment deemed the consumer Internet dead. In fact, it was during the time when the *actual* Skype and Facebook were forming. And they were laughed out of many investors' offices. 

Point three: Kohavi says Chile is ten years off from being "ready." So his solution is to leave. If he really believed in Chile's potential, he would stay and help build that ecosystem. I guarantee you there are brilliant entrepreneurs there now who could use cash and mentorship. More to the point, venture funds are ten-year investment cycles. That would make now the perfect time for him to roll up his sleeves and make himself an integral part of building that ecosystem. Ten years isn't very long for a real venture capitalist to wait, and he'd be perfectly positioned to reap the rewards. But, of course, that would depend on him believing any of the stuff he's saying.

Point four: Kohavi has the nerve to criticize Endeavor-- a non-profit organization that came into Latin America to help entrepreneurs before it was fashionable and before governments gave charlatans money to do so. He says "Chilean family offices may still give money to Endeavor, but for them it's not about entrepreneurship-- it's just a way to brush their ego and they only do it because it is all conducted in Spanish."

First off, who cares why they do it if it helps local entrepreneurs? I've seen first hand the impact Endeavor has had on countries in Latin America and South America. No one has been a better friend to entrepreneurs there. The fact that Endeavor can wrangle money out of these "elites" Kohavi says don't care about entrepreneurship is a credit to the organization's ability to do what's necessary to create an ecosystem for entrepreneurship, even when strong forces are aligned against it. 

But the second half of that statement is the weirder part, which brings me to… 

Point five: If I am reading it right, Kohavi is criticizing elites for wanting to invest in projects and entrepreneurs who speak the language of the country. Um….. really? So, let me get this straight: Part of this elite's crazy inflexibility against entrepreneurship was a preference for doing business in their native language. Does anyone really think that's an outrageous request? Even top venture capitalists from Silicon Valley hire locals when they go into other countries. No one credible is trying to invest in China speaking English. This is foreign investing 101.

Kohavi adds later: "It's crucial for the local startup community to get used to speaking English." Why? The Spanish speaking Web is a massive market opportunity. I'd be willing to bet that the next huge Web company that comes out of Chile will be for the Spanish speaking world, just as the huge Web companies that have come out of China are for the Chinese speaking world. That's the big market opportunity. That's what the Valley won't do well. That's the reason to be funding companies in Chile. 

Kohavi tries to compare this to Israel, but Israel is a totally different country that rose to entrepreneurial prominence at a very different time in the global startup ecosystem. I've written at length about this so I won't rehash it here, but Israel had to build stuff for the Western world not only because it was a small country but because it was surrounded by hostile neighbors and there aren't hundreds of millions of people who speak Hebrew. The opportunity for Chile is completely different. Furthermore, Israeli entrepreneurs succeeded because they built an ecosystem tailored to their exact strengths, whether they were speaking English or not. (And, by the way, Israel has struggled to produce stellar returns since the technology bull market of the late 1990s.) Chile will succeed building an ecosystem tailored to its strengths, which with all due respect to the Next Web, Kohavi didn't become the expert in during his short six month stay. 

Point six: Kohavi says, "At the moment, Latin America still feels back in time. Many of the local websites I have tried to use were not updated, and the service was bad." OK, that's just a bizarre thing to say to argue a place isn't ripe for entrepreneurship. Most investors would see that as a sign of market opportunity, not a reason why entrepreneurship would fail.

He continues, "This is a serious issue because entrepreneurship isn't formed in a vacuum; for startups to thrive, the whole country has to be tech-driven, and use the latest gadgets and online services." That's absurd. Who creates those gadgets and services to begin with if not entrepreneurs? Silicon Valley arose out of fruit orchards! How high tech is that? Kohavi's arguments just collapse on themselves with the slightest application of common sense. 

Let me strip away the phony promises and glitzy dance numbers and decode what Kohavi is really saying here: People didn't give him money so he's off to Singapore-- a city state known for giving people like Kohavi who can talk a good entrepreneurial game scads of cash. If Singapore does produce the next Skype or Facebook, I guarantee you Kohavi's presence there will have had nothing to do with it. The real Skype and Facebook weren't overnight successes anymore than Silicon Valley was as an ecosystem. No one can give you something he himself can't even understand. Kohavi wouldn't know the next Niklas Zennstrom or Mark Zuckerberg if he walked in and pitched him any more than Harold Hill could spot the next Yo-Yo Ma.

When Men Try to Give Baby Gifts

A few weeks ago I was razzing Arrington about never giving us a baby gift, particularly given the rather thoughtful ones we recieved from his arch nemesis.

This isn't *technically* true-- Heather bought out half of our registry on behalf of TechCrunch and AOL and delivered them to our baby shower along with two trays of homemade baby-themed cupcakes and sent flowers on behalf of the team when he was born. But all this was news to Mike who didn't actually put any work into it.

He said it was "weird" for men to buy baby gifts. I listed all the other men I know who'd sent them and he assured me, their wives or assistants made all those decisions. In the case of Marc Andreessen, I'm positive that's not the case. No one else would send a crate of "Sarah 2.0" T-shirts in a variety of colors all about eight sizes to big.

At any rate, the email I just got below sort of made Mike's point and made me laugh:

Hey Sarah.  I wanted to send you a belated congratulations on the birth of Eli and a timely congratulations on the pending launch of your new site.  At least I'm on time for something!  

[Redacted] would love to send you a belated baby gift.  Don't worry, I managed to convince [him] that Eli did not need a [name of his startup] onsie.  He gave me a onesie that said "All About the Tit" after the birth of my first child.  For the second child, he went too far on the other end of the spectrum and gave me a tiny Italian suit, size 3 months--as if my newborn had business meetings and needed to look sharp.  Needless to say, neither was every worn.  If you're OK with us sending you a gift, which I promise is useful, can you provide your mailing address?

In Lieu of News, Here's a Soap Unicorn

I am busy doing a lot of exciting things. The problem is, I can't really talk about them because I don't want to say what my next job is yet. (Watch me dodge questions on Bloomberg earlier this week here.) So in lieu of that, here's a picture of Eli in the bath with a soap unicorn horn on his head. 

Eli_Unicorn_4x6

Now that Thanksgiving is behind us, I'm trying to lay-low for the rest of the year. I'm focusing on work stuff that has to get done and enjoying the final moments of my "maternity leave." It's either been the least successful or most successful maternity leave in the world, depending on your metrics. 

Sarah Lacy’s entertaining and informative tour of the world’s fastest growing economies undeniably proves what we’ve known at Endeavor for more than a decade: that impressive and inspiring Entrepreneurs can truly come from anywhere! In taking us on a whirlwind journey bursting with frenetic energy – matched only by that of the amazing entrepreneurs she meets – Lacy gives us an important glimpse into the future of the global economy – a place where the craziest, high-impact entrepreneurs from anywhere and everywhere set the pace.
Brilliant. Crazy. Cocky.

New Book

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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Srah Lacy

Sarah Lacy is an award-winning reporter who has covered high-growth entrepreneurship for more than fifteen years. She is the founder, CEO and Editor-in-Chief of PandoDaily.com, the site-of-record for the startup ecosystem. She lives in San Francisco.

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