If you
believe anyone can create the next big thing on the Internet by tomorrow morning,
you’re not alone. The public tends to make generalizations about the ease
in which entrepreneurs can achieve sky high valuations. But Sarah Lacy,
author of the new book Once You’re Lucky, Twice You’re Good: The Rebirth of
uncovered business survival secrets and personal hurdles that leave you exhausted just from hearing about them. I asked Sarah to give
us a peek into the world we all dream of.
Weeks: Although the public believes that
most internet startups find success overnight, you found out that this is a
myth. Why?
Lacy: What makes the Internet so attractive
to VCs is that you can build a site or product really fast and know overnight
if you have a potential winner. Product development, audience growth and
branding – it’s incredibly quick. While these aspects can be fast, building a
business is an entirely different matter. There are more resources today for
creating a good business model online. The network of advertising services
allows most Internet companies to make decent cash inflow while you build the
business. For example, Facebook has hired a ton of people to try to figure out
their monetization model while the company is already earning millions. Back in
the 1990s, this wouldn’t have occurred. Another example is Digg, a company that
has always had the revenue side of its business outsourced. This gave the
company the ability to focus on building a great product, instead of having to
raise a lot of money or worry about audience.
Weeks: What are some of the surprising
things you learned about today’s prominent Web 2.0 entrepreneurs?
Lacy: One of the interesting things is
that
everyone expects it to work. When I was following the “scene,” I thought I knew
how stuff worked, but then I found out that when people opened up to me I
learned their true stories – like what’s really being discussed when a company
is in acquisition talks or how deals can drag on and on. Another thing I
learned was that the games that big companies play with small companies are
very pronounced today. Once the entrepreneur gets tired of talking and says,
“Make me an offer,” the big companies tend to just walk away. But the
entrepreneur’s agony over how to handle the “sell” is changing. In the past
there was an unprecedented amount of ownership and the entrepreneur would
agonize about selling because of the VC’s interest, but now Web 2.0
entrepreneurs have more control and the power to make decisions.
Weeks: How has the role of venture
capitalists changed in the past few years?
Lacy: They’re pretty absent right now.
happened was that after the dot com crash, VCs had the power again. But since
then, entrepreneurs have learned how to build internet businesses without
venture money by using angels or friends. People aren’t desperate for millions anymore.
The typical big VC shops aren’t thriving in the interactive space. Ning was bootstrapped
and Slide used one VC round and then went to work with partners on Wall Street.
Weeks: When you and I spoke together on
the panel at the Girls in Tech event in
Francisco
to the top of the digital media class. Did you interview female entrepreneurs
for your book?
Lacy: Yes. Mena Trott of Six Apart and Gina
Bianchini of Ning are interesting women because they play huge roles in their
companies, and yet they gain little respect. It was horrifying that people
thought Gina didn’t deserve to be on the cover of Fast Company. Same with Mena – often men treated her like a brash,
emotional girl, but she learned how to work through this battle. Both of these
women realized that no one important listens to this crap. We can’t let it
affect our relationships, career, compensation, et cetera. There’s a myth that
we can manage what other people say about us – we have to throw this thinking
out the window because we can only hope that the crap and truth averages out in
our favor. I believe that no single thing written about you can have a
tremendous personal impact.
