One Day in Silicon Valley

Guy Rolnik learns a lesson for the umpteenth time, and meets a dog

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I cannot say that of all the people I met during that autumn 2007 visit to California's Silicon Valley, it was the nice Jewish guy I interviewed who left the greatest impression. Not even in that office.

No question about it, Mark Pincus was the nicest of all the brilliant go-getters I met at the Valley's startups and at its giants, too, from search-engine behemoth Google to business-oriented social networking site LinkedIn and social-networking-site application developer Slide. Mainly, Pincus was the only one who didn't talk only about himself.

But truth be told, what stuck with me from my meeting with Pincus was his dog. She ambled into the office while we spoke and amiably created a puddle right next to me. Pincus called for his assistant, who clearly knew the drill and responded with mop and bucket.

So, what was the dog's name? I'll return to that in a moment. First let's continue our stroll down memory lane, to the halcyon days of the fall of 2007 in San Francisco, Mountain View and Palo Alto.

Google, Google, Google, a young Internet company in its eighth year but already the talk of the town. It had reached a market value of $200 billion, vacuumed up all the major talent around and was considered the coolest, most creative and most talked-about company in the Internet world and probably on the planet.

Facebook had also begun its breakthrough that year, but no one imagined that it would be soon be considered Google's biggest threat or the biggest story in the online world.

When I asked Robert Glaser, a senior Google engineer who led the company's social networking project, about Facebook he said it didn't matter much if it was Facebook or MySpace or LinkedIn: A social network is just a basic Internet platform and soon enough such networking capabilities would be all over the web.

Glaser believed that these social networks would use Google's OpenSocial platform, which the company believed would render Facebook superfluous.

Shortly before Google launched OpenSocial, Facebook made a revolutionary move and opened up its platform to third parties. Now anyone could develop a Facebook application that any of the network's users could use if they wanted. In hindsight, it was probably one of Facebook's smartest moves, which enhanced enormously the social networking site's value to its members.

Google realized as much in short order. It developed OpenSocial as an alternative standard that would enable the development of similar applications for any social networking site.

The silent threat

Three years later, it turns out that being the leader in searches doesn't necessarily mean you'll lead in social networking, too. One day searching for your friends' recommendations may be as popular as searching the entire Internet.

When was the last time you heard of OpenSocial? Did you ever use it? Meanwhile, Facebook increased its membership exponentially, from 35 million three years ago to 500 million today, and it has been crowned the most important Internet company in the world.

Threats can come seemingly out of nowhere. In the fall of 2007 no one gave much thought to Apple's iPhone, which had been launched four months earlier.

Google CEO Eric Schmidt, who also sat on Apple's board of directors, never dreamed that in two years the iPhone would pose a strategic threat to his own company and he would be forced to step down from the Apple board.

When Apple launched its mobile phone the company's market capitalization was $150 billion. Today it's $237.5 billion. In 2007 Apple was still known mainly for its personal computers, its music players and iTunes, its revolutionary online music store. CEO Steve Jobs had yet to be apotheosized. Google co-founders Larry Page and Sergey Brin thought they were safe.

Meanwhile, still in 2007, in Max Levchin's small and dreadfully modest downtown San Francisco office, I found the ultimate expression of the stereotype of nonchalance and coolness.

Levchin, 32, Jewish of course and born in Kiev, refused to discuss money. He didn't even want to know what his share of PayPal, which he had co-founded, was.

Levchin was a member of the "PayPal Mafia," the group of geniuses behind the blockbuster online payment service that was eventually bought by the online auction site eBay, for $1.5 billion. PayPal's founders moved on to found several more blockbuster startups including YouTube, LinkedIn, Slide, SpaceX, Yammer, the genealogy site Geni, micro-lender Kiva and electric sports car manufacturer Tesla.

Speaking in a low, monotonous and utterly confident tone Levchin told me that Facebook applications were the hottest thing on the Internet. Two years earlier he had founded Slide, developer of six of the biggest Facebook apps at the time.

In 2010, three years after my meeting with Levchin ater, Slide has yet to make its true breakthrough. Recently the company announced it was changing its business model, from being based on advertising to being based on collecting hundreds of thousands of dollars a year from big brands, in exchange for presenting them prominently in its applications.

Murdoch did it again, almost

In the fall of 2007 Facebook was breathing down the neck of MySpace, then the most successful social networking site, which publishing baron Rupert Murdoch bought for $560 million in 2005. Everyone nodded and said Murdoch had done it again, that he had elegantly stepped into the Internet age.

Perhaps that was why uppermost in my mind during my meeting with LinkedIn CEO Dan Nye was a rumor that Murdoch aimed to buy LinkedIn, too. The rumor appeared on Tech-Crunch, an Internet blog on Web 2.0 companies (a reference to applications focusing on user-generated content ).

Nye declined to comment on the rumor. He agreed to say only that when he was hired by venture capital funds to run the company his condition was that they build it for the long run. If the company was sold off, he said, it would be for a lot of money.

A year later Nye left LinkedIn. He was replaced by Reid Hoffman, one of its founders.

What of a takeover? The likelihood of Murdoch's News Corporation buying LinkedIn now is remote. MySpace is dissolving in Murdoch's hands and no one still believes that the superannuated publisher will be crowned the new Internet king buying up the social networking sites. Murdoch has replaced the MySpace management repeatedly and is now looking to unload the company. The meteoric rise of Facebook in the face of MySpace's implosion is not a recommendation for the Internet-readiness of Murdoch's media empire.

Now you know how that day went. Pincus was my last appointment.

A pooch by any other name

Pincus' brand-new offices in Potrero Hill, San Francisco, followed the American tech startup stereotype: a mess. He apologized for it, explaining that everything was in motion, that he and his partners had just raised money from Hoffman and were tackling what they hoped would be the next big thing on the Internet.

Which is?

"Facebook applications, of course," he said.

Levchin already tried to sell me those goods earlier today.

"He's right."

I first met Pincus at the TheMarker Internet Conference in March 2006, at which he had declared the death of eBay: "It's the America Online of the Internet age." A new bubble was forming, he warned, echoing a popular opinion at the time. He got that wrong: The only bubble forming was in the U.S. real estate and financial markets.

Well, entrepreneurs aren't supposed to predict the future; their job is to make it exciting.

Pincus was just one of many developers targeting Facebook applications at the time. Clearly most wouldn't make it. He'd had his startup successes, but who knew whether one success was a reliable predictor of more? I didn't.

I didn't even ask Pincus the name of his new startup, or of his dog.

Dear reader, the dog was called Zynga, and the startup named for that winsome pooch is now the hottest thing in Internet circles. It's worth about $4.5 billion and the legendary Hollywood producer Jeffrey Katzenberg, Steven Spielberg's partner in DreamWorks, recently said that if he could start his career over from scratch he'd want to be Mark Pincus.

What does Zynga do? It designs games for Facebook, mostly. Its most popular one is Farmville. Yes, that frivolity where people feed virtual animals with virtual food and grow virtual crops on a virtual farm.

But why call it frivolity? Isn't it time to treat exciting ideas with respect? Zynga's revenues, which derive mostly from people who pay real money to buy virtual money that they use to upgrade their imaginary farm, reached a very real figure of $500 million this year. Industry sources think Zynga is netting about $15 million a month. Pincus is now heading his very real company named after a very leaky dog to public flotation, which will probably make him, at the age of 44, one of America's richest men.

And I yet again learned a lesson, for the umpteenth time - to take the personalities I meet more seriously and to give them the respect they deserve, even if all they do is pee on my leg.

Mark Pincus, a nice guy, and a member of the muse’s species.



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