I'll be honest: I was not especially looking forward to reading "Once You're Lucky, Twice You're Good," Sarah Lacy's new book about the phoenixlike rise of "Web 2.0" entrepreneurs from the ashes of the dot-com flameout. It wasn't that I had anything against Lacy, a journalist and fixture on the local tech scene, but her subject, Silicon Valley and its new best and brightest, seemed like homework.
For one thing, the Valley's resilience, its capacity for innovation, the alchemical way it turns introverted brilliance into billions -- these have been chronicled before, often and very well. Two, the phrase "Web 2.0," now a generic label for any Internet venture, oozes blind optimism the way "dot-com" once did, even though there's little evidence, yet, that the scene's biggest companies -- Facebook, say -- have hit on a way to actually make money.
And also, there's this: Silicon Valley is an ugly place. Not physically, but, for all its gleeful output, socially. We're talking about the global mecca for antisocial, intensely competitive workaholics who aim to beat each other at achieving obscene wealth. Yeah, I want to read about that.
And yet, trust me, you do. Lacy, who's worked as hard to get her story as her subjects do to get their billions, manages to paint Silicon Valley's overachieving, high-ambition young stars as people who aren't irredeemably awful. And it turns out that folks who are just shy of intolerable -- but not quite -- make for terrific entertainment.
By tunneling deep into their pasts, their paranoias and anxieties, their troubled romantic relationships, their outsize dreams -- and mostly by hanging out with them and getting great stories -- Lacy delivers a sophisticated psychological study of an ascendant economic class. "Once You're Lucky" becomes, in the process, something bigger and better than a chronicle of Silicon Valley. It's really about the peculiar personalities that all innovative economies demand -- the people who, in five or 10 years, are sure to run the world, or at least your life.
As Lacy tells it, after the bust, Silicon Valley moved quickly to cleanse itself of impurities. The chief impurity, the main impediment to innovators' success, was venture capitalism. During the boom, these moneymen showered millions on undeserving ideas, and, worse, they pushed good ideas and good innovators to the sidelines. Young companies were forced to go public before they were ready, their visionary leaders were replaced by suits who "didn't get it," their ideas squandered in a drive for stock-market billions.
But since the collapse, the moneymen's influence has been on the wane, because money itself is now less in demand. With the cost of server space, Internet access and software development plummeting, you no longer need tens of millions to start a world-changing Web company. And thanks to Google, which will give you money simply for putting small text ads on your site, Web developers can now automatically recoup even these small costs.
Lacy points out that in 1994, Marc Andreessen and Jim Clark, the founders of Netscape, needed at least $40 million to turn the Web browser into a real business. A decade or so later, Kevin Rose, the founder of the cool-news site Digg, built his business on less than $500,000, and Mark Zuckerberg started Facebook in his Harvard dorm room for even less than that. Zuckerberg was turning a profit before he took a dime from investors.
And even when the new entrepreneurs do take V.C. money, they get it, now, on highly favorable terms. That's because the old guard is helping guide the new -- men like Rose and Zuckerberg (nearly everyone here is male, by the way) have forged deep relationships with innovators who'd been burned by V.C.s during the boom.
Rose's mentor is Jay Adelson, a fascinating figure who still can't talk about Equinix, the networking company he started in 1998, without choking up. Adelson was pushed out from Equinix by folks he calls "the sweater vests" -- V.C.s, middle managers, investment bankers -- and he's adopted a rallying cry in his efforts to help Rose succeed with Digg: "Fuck the sweater vests." The attitude has worked. With Adelson's help, Rose managed to secure financing while still keeping a huge stake in his firm, assuring that he'll be the sole decider of his fate.
Zuckerberg, meanwhile, found a friend in Sean Parker, a refugee from Napster who'd also had bruising experiences with sweater vests. Parker put Zuckerberg in touch with Peter Thiel, one of PayPal's co-founders, who'd started a venture capital firm more willing to cater to new entrepreneurs' whims.
With their help, Zuckerberg got money without having to give up much of Facebook -- he now controls more than a third of the company and has an unconditional voting majority on the board, meaning that if the company does make the billions some expect, he'll become one of the wealthiest men in the world. Zuckerberg, by the way, just turned 24.
But it's not his financial acuity that's most interesting about Zuckerberg. It's his work ethic. The fellow seems to spend every waking moment at Facebook's offices, which he refers to as "the house." Explaining to Lacy why he doesn't socialize, he says, "People think I'm rude, and maybe I am, but it's not intentional. I just don't like to leave the house."
Or this bit, per Lacy:
When his girlfriend Priscilla graduated from Harvard and moved to Palo Alto, they didn't move in together. And they had a series of "negotiations" over how much she'd get to see him. The final treaty: One date per week, a minimum of a hundred minutes of alone time, not in his apartment and definitely not at Facebook.
It's their inability to stop working that emerges as the defining characteristic of many of the Web 2.0 set. This is especially true of Lacy's main character, a man often described as the most intensely competitive person in the Valley, if not on the entire planet. This is Max Levchin, a Ukranian immigrant and another PayPal founder.
In recent years Levchin has also helped start Yelp, the innovative user-reviews site, and Slide, which makes "widgets" that folks apply to their Facebook and MySpace profiles. The SuperPoke and the FunWall, two silly applications that your Facebook friends have no doubt asked you to install -- those are Levchin's creations, and thanks to their success, Slide is now valued at more than half a billion dollars.
Levchin's story is the consummate Silicon Valley success tale, but one that most people don't understand. Folks not from here think of the Valley as a place for visionaries -- there's a misconception that if you land in Mountain View with a great idea, you'll win billions. What people miss, Lacy notes, is that ideas alone matter little; witness how Friendster, one of the earliest social-networking apps, squandered its lead by failing to innovate.
Levchin succeeds because success, to him, is all that matters in life. It matters more than life itself: He confronted a lifelong fear of drowning by jumping into San Francisco Bay as part of a triathlon. His overriding goal, now, is to create a bigger company than his last one, PayPal, which sold to eBay for $1.5 billion.
"Max isn't simply the wunderkind who hits on a great idea," Lacy writes, "he's the guy who figures out what the great idea is through painstaking trial and error. He's not so much a visionary as he is relentless. Max simply does not get burned out and quit."
Working for Levchin would be, at best, extremely uncomfortable. And, worse, you'd be building stuff -- the FunWall, the SuperPoke -- that is most charitably described as frivolous. Yet you finish Lacy's book with no illusions about Levchin: This guy will succeed again, you're sure of it. In his quest for "world domination" -- yes, he has used those words -- Levchin, like Silicon Valley, is unstoppable.