Archive by Author - Sarah Lacy

Poor Valley Girl!

by on May 15, 2008 at 12:00 pm

In a busy day for tech news– with CNET getting bought, Carl Ichan is causing more troubles for Yahoo, and OF COURSE my book coming out officially– I hope someone will check out my latest Valley Girl column on BusinessWeek about Israel’s startup scene. As you know, if you read this blog, I spent a week in Israel in April and was a frustrating and enlightening experience. Sounds contradictory? Than it was an Israeli experience.

This was an incredibly hard column to write, because Israel is such a complex and contradictory place. At the heart of the column are a few questions for the tiny but very entrepreneurial country, which I think is at a bit of a crossroads: Will Israel always be Silicon Valley’s farm team or emerge as a tech hub independent of the Valley? Should it aspire to that? Can Israeli entrepreneurs make great Web entrepreneurs?

Take a look! Give my column some love!


by on May 4, 2008 at 12:00 pm

If there’s one theme that I’ve thought about, talked about and written about the most over my career covering tech and finance it’s the debate of whether you need to relocate to Silicon Valley to be successful. In my case, there’s no doubt I’ve had a better career just by covering business in the Valley, so it’s hard for me to believe anyone who wants to profit from the startup ecosystem wouldn’t be more successful here. Over the years, I’ve read a lot of weak treatises that say Valley isn’t all that great, ultimately coming off either bitter or just naive, but here is a pretty nice piece arguing against Valley relocation. Although, I’m still not convinced.

The strongest point the writer makes is about the damaging affects of the temptation to bulk up on venture capital and not figure out a real business. There is a certain “Valley game” you can get sucked into that can cloud good judgment. Although, I think tying that to Web 2.0 is a bit misleading since the hottest Web 2.0 companies all bootstrapped themselves or lived on angel funding for most of their early days. And besides, really, isn’t knowing when to take money just a test of a good entrepreneur? Hell, I’ve been offered money to start a company before. It’s not access to cash that defines your worth, it’s the discipline to know if that’s the right thing for you and your business.

Per the point about it being harder to retain great people in the Valley, that argument can go both ways. Pro argument for the Valley: the Valley has more talent than anywhere else and they all know the costs and risks of being at a startup. Con: the best people always want to flock to the next hot startup. Personally, I think the latter is overstated. There are certain momentum seekers who will flock to the next pre-IPO name, but those are the people most entrepreneurs don’t want working for them, so actually that phenomenon can be a nice filter. After all smart people work at Mozilla, a company that has said it will never go public. Also, if startups are worried a hotter name will steal their coders, doesn’t that put a healthy pressure on startups to be the best they can. I just generally think competition is good for business. I guess it comes down to what you want: a nice business that might get acquired or to really build something big and lasting. If it’s the latter and you can’t make it in the Valley, are you really good enough to be a billion dollar company?

For good measure, here is a nice piece Evan Williams wrote about it earlier this year. As you’ll see he’s mixed too, but I think his story underscores the more practical point: There’s an undeniable correlation with being in the Valley and success, so if it’s easier why wouldn’t you just move? Evan also points out the social advantages of living in a place where there’s so much creativity and entrepreneurial spirit in the air. Indeed, that seems to be the part people outside the Valley miss. Because it’s one of those things you need to be around to understand. It is the norm to want to build something here– that’s incredibly powerful to entrepreneurs in other parts of the world who are used to feeling like outcasts or silly dreamers.

I’m thinking about this a lot today (while everyone else still seems to be obsessing about Micro-hoo!), as I finish up a column on Isreali entrepreneurs for BusinessWeek. I talked about this a lot over there: Whether all Israeli startups have to move their HQ to the Valley or not, so check out my column this week for more. Israel has benefitted greatly from this symbiotic relationship, but the question is whether it holds them back from being a true technology hub. One interesting note: the people who tend to argue you don’t have to move usually aren’t in the process of building a company. They have either already made their money (frequently, by relocating to the Valley) or are investors, attorneys or other members of the startup ecosystem in markets outside the Valley. In other words, there’s a logical argument that boosters of Atlanta, Austin, London or Tel Aviv can make, but when it’s actually your business and you’re the one trying to mitigate risk of failure, it’s another matter.

There’s something about it that’s like looking at a baseball team’s lineup in April. It could look like a killer team on paper, but somehow on the field they just don’t gel. A city could have every natural resource a startup needs, and somehow lack that cultural glue, support system or whatever you want to call it that is really the intangible reason people don’t leave the Valley once they are here. A lot about this in my book, and I’d love to hear thoughts from any readers once it’s out and I (hopefully!) have readers.

And with that hackneyed analogy, I am off to a Sunday baseball game! Any Israelis: send me some final thoughts before I file!

MIA Friday

by on May 2, 2008 at 12:00 pm

Apologies, dear readers. I have been MIA this morning. Pilates at 8 a.m. and then had to rush Mr. Vinnie to the vet for some issues you don’t want to know about….believe me. He’s going to be fine and actually got a gold star for losing another half a pound. The big fella — who is essentially Tony Soprano in cat form– is now under 20 lbs for the first time, since, um, he was a kitten, I think.

I also swung by the bank to deposit a very, very important check from Penguin. Important because it solidifies the fact that my book is indeed getting published in 15 days and important because it represents the down-payment on our new Victorian in the mission!! Yay!

So, as I get my late start to blogging, mosey over to TechCrunch and read this. Whether you care about technology because you are a rabid early adopter or a rabid stock investor, this is an important issue for you. I’ve only recently started to understand just how hard it is to move companies to the US– even from non-threatening places like the UK. (I mean what are they going to do? Charmingly mock us to death?) Between this and the H1-B Visa issue there’s just way too much of a disconnect between the Silicon Valley ecosystem that WANTS smart people with good ideas and the smart people with good ideas that support the Silicon Valley ecosystem.

Made worse by the fact that 50% of the congress doesn’t even have a passport.

Am I right?

Twitter: Not Mainstream, but Seeping Out of the Echo Chamber for Sure

by on April 28, 2008 at 12:00 pm

One major flaw in Kara’s informal survey: Equating this wedding she was at with “outside the Silicon Valley echo chamber.” I’ve been stunned how quickly people outside the Valley have started following me on Twitter. My in-laws asked my husband if it was an invasion of our privacy to “follow us” and while I was out of town my parents– who use absolutely zero social networking or social media sites and are doing good if they read anything I write — sent an email to my husband that read, “What is a Twitter? Is it just like a one-line blog?” I was floored. And, let’s not forget international. Every time I travel outside the U.S. I’m stunned by Twitter’s ubiquity. After all, mobile apps are much stronger outside the U.S. In my own informal polls, people in Europe and the Middle East rank Twitter among the most global companies in the Valley, well above Facebook even.

In short, Twitter isn’t mainstream, but it’s getting outside the echo chamber fast. The problem is it’s not necessarily in predictable ways. It’s in random spurts.

Virtual Worlds….Really?

by on April 25, 2008 at 12:00 pm

We have a few pieces posting on Tech Ticker today and Monday that parse through a lot of the first quarter venture capital data. I’ve never interviewed that many people in studio at once and not sure how good of a job I did 🙁  (Video on the jump and more on TT)

Anyway- among the biggest surprises to me was how hot virtual worlds were in the first quarter. (and how hard it is to say “virtual worlds”) Wha???

I heard a lot about virtual world companies in Europe and Israel, but
my impression was it wasn’t a US phenomenon any longer. Some bets were
made, Club Penguin did well, Second Life– eh, we’ll see. I just don’t
think virtual worlds are like social networking where everyone will one
day use one in some way. In short, because they’re don’t meld your
online self with your offline self– it makes them more distinct. That
seems so at odds with how the Web is developing to me.

I’m sure there are some niches and some good bets, but $185 million worth in one quarter? Sheesh. Do you want
to lose money, Sand Hill Road? Assuming it has mostly been momentum
chasing the kids space, which is an untapped area of development
online. Still…let’s get our heads back in reality here.

Interview with Orli

by on April 21, 2008 at 12:00 pm

orli interviews me about my book. i can’t believe i miss israel as much as i do given how sick i was! i want to go back!

Israeli Women: as Woman-y as the Rest of Us

by on April 21, 2008 at 12:00 pm

Men are always befuddled by women, right? Well, last week, I felt their pain. I spent a good deal of my time in Israel meeting with female entrepreneurs and bloggers to get a sense of how gender roles were different from Silicon Valley, where frankly, I?m often the only woman in the room.

A key difference: Women are required to serve in the Israeli army along with men. That’s right, the prettiest, girliest, most flirty girls I saw on the trip had all spent two years in khakis carrying machine guns. In fact,
Israeli blogger Orli Yakuel used to fold parachutes in the army. She
and her troupe got to jump out of planes as a “bonus.” They frequently
went before the men, because they were less scared, and well, no Israeli
men wanted to be shown up by a bunch of girls. Wow. I mean, we like to
say “girl power!” in the U.S. when we change a tire. But that is

But the army hardly made these women macho or masculine. Interestingly Liat Vardi?who is co-founding Blogla, a portal for women with Maya Miller?said
serving in the army helped her discover her femininity. They learned
there are many areas where women are just better than men, like

As the girls talked, I was getting very excited, imagining a country of
bad-ass women who have none of our hang-ups in the U.S. You know, lower
pay, being considered a “bitch” if you?re successful in business,
always being judged by what you wear. Imagine a guy trying to bully you if he knew you used to run around with a machine gun jumping out of a planes? So much of gender roles boil down to confidence. I went to a fantastic all girls school for 13 years and I credit it for a belief that I could do whatever I wanted. But if I’d been in the army? Forget it. I’d be 90% more bad-ass, at least. Boo me on stage? Pssshh. Big deal! I’m a commando! Watch yourself, coder!

Well, it?s not quite that rosy. Apparently there are just hang-ups that come
with the gender no matter how well you can hit a target with an uzi.
For one, both Liat and Orli confess to being horrible at
negotiating when it comes to their own salaries. How is that possible? (For what it’s worth: Kara Swisher’s advice is to pretend you are a lesbian while you negotiate. That actually works.)

Perhaps the fact that it’s required– hence not a novelty– to be in the military as a woman in Israel means it doesn’t have the same cultural impact it would in the U.S.? (Please, weigh in in the comments, Israelis!) Still, I think overall, Israeli women have a leg up on us. They’re just tougher. How could they not be? I am totally rooting for them to prove it.

Of course, there?s the other endemic girl quality we all share: boy-craziness. Liat blushed showing us her engagement ring and gushing about her talented chef of a fiance who keeps her and Maya in high quality organic meals as they scrape by on startup wages. (Blogla is looking for angel investment, btw, something there is not enough of in Israel.) Indeed, the girl traveling geeks all agreed there was plenty to be boy crazy about. None of the
girls on our delegation, whether married or single, gay or straight,
could help but notice Israeli geeks are just better looking than the
ones you see in the Valley (Sorry guys! It?s empirically true. You could chart it if you wanted to and I know how you all LOVE analytics!) I asked Orli about it. “Forget the geek
part, Israeli men are just better looking,” she said. I wouldn’t go that far. She did admit there was one cute Valley geek, but I won’t embarrass her by saying who….

Back Home…Finally!

by on April 20, 2008 at 12:00 pm

I got home safely late Friday afternoon after some 20 hours of travel time. I was only gone a little over two weeks, but it felt like months. There was so much crammed into my trip to London, Cannes and Israel that I tried to capture as much as possible here, but really, I’m still processing a lot of it. As much as I was ready to be home, I also immediately wanted to go back everywhere.

So don’t expect I’m done blogging about it all. I’ve also got a BusinessWeek column on London and one on Israel to come, plus a lot of the video I shot on the trip for Yahoo. But right now, I just need a break and some bedrest!

a country of jewish mothers

by on April 17, 2008 at 5:00 am

About 9:30ish or so last night i was sitting at a cafe on the beach with Orli Yakuel and JD and while we had a great conversation and the setting was beautiful, it was soon clear my stamina and success pressing my luck had just run out. my fever was coming back, i was sniffling, hacking– both orli and jd were looking at me and wincing.

so unfortunately i had to stay in bed today. a doctor is coming in a
few hours to see what is wrong, and if i’m well enough to travel back
to san francisco tomorrow. in the mean time, the hotel has called
several times to check on me and just brought up the jewish version of
sick food: tea, OJ and Matzoh
with butter. so if for any reason i can’t fly out– i’m sure i will have plenty of people taking care of me.

there’s this weird thing surrounding whether or not Israelis are
“nice.” they are known to be a very direct, brusque culture. indeed, as
sweet as the hotel staff has been today, other times i’ve called to ask
a question and they cut you off mid-sentence and transfer you somewhere
else. and just try driving here (i haven’t btw. peta dunia satelit but i don’t want to!)
there’s honking, swerving, throwing up hands as they yelling things in
hebrew angrily. without prompting most people who live here apologize
for how rude israelis are, and seem embarrassed by it.

but i think i speak for all of the “traveling geeks” when i say we’ve
experienced mostly love and hospitality here. it reminds me a bit of
New Yorkers– who can be pushy and rude in aggregate but warm and
helpful one-on-one.

but more to the point, it seems to be one of those cultural qualities
that makes Israelis such great entrepreneurs. there’s a quote from an
American CEO in my book and he’s responding to some pretty tough
criticism of how he treated his people during the bust. he said the
great thing about a recession is you don’t have the luxury of being
nice– it’s all about survival so you just do what’s best for the
business. that’s how the israelis run their businesses and their lives.

Jerusalem Venture Smarties

by on April 16, 2008 at 12:00 pm

i’d always hoped the smartest VCs weren’t all in Silicon Valley (because believe me– if you’d met some of them that’d be quite an indictment to the non-Valley venture world.) We just had a great meeting with Jerusalem Venture Partners and they confirmed it.

We saw a few startups we’re not allowed to talk about, and i had mixed feelings about them. but you could see that JVP has a very distinct investing philosophy, something a lot of the me-too Valley firms could learn from. in the interest of show-not-tell, go to Scoble’s qik video. I filmed a separate interviews that’ll be up on Tech Ticker one day…


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