Dreams of the website wannabes

In 1998, I was writing about Silicon Valley for the Financial Times. Until I switched over.

Nicholas Denton joins the internet venture hopefuls of Silicon Valley.

Ali Partovi is a walking advertisement for Silicon Valley. At 25, he has wealth, fame — at least in the clubby world of internet professionals — and a dream to change the world. It looks effortless.

If only it were that simple.

He is already a millionaire, though, in terms of the funny money of Silicon Valley, the shares and stock options that are the currency of the young internet companies with no revenues which spring up in the technology seedbed stretching south from San Francisco.

LinkExchange, the two-year-old venture he runs in the city with a couple of college acquaintances, arranges the barter of advertising space between web publishers. With 250,000 sites participating in the exchange, the company reaches more web viewers than all but a handful of top media companies.

It is a Silicon Valley take on the American dream. Ali, and his colleagues Tony Hsieh and Sanjay Madan — the one sociable and the other two shy, even a little nerdy, all highly intelligent — are the offspring of immigrants from Iran, China and India respectively. They are less than two years out of university.

And their venture, LinkExchange, is growing so rapidly it makes Yahoo! — a four-year-old internet navigation service now worth more than $4bn — look like a stodgy member of the establishment.

Their success certainly seems to reaffirm the notion that anyone with talent, determination and a good idea whatever their background, can make it in the US — especially in Silicon Valley, the last, best hope of the American dream, according to some immigrants.

“I don’t think it matters here where you come from, which university you went to or your country of origin,” says Mike Moritz of Sequoia Capital, the venture capital firm backing LinkExchange, himself born in Wales. “It is the caricature of the American dream, the home of the overnight success story.”

Ali and his friends are having fun, which is the pinnacle of achievement in Silicon Valley, a community that sets little public store by conspicuous consumption, although it has certainly produced wealth. It gave birth to companies such as Intel, Oracle and Sun Microsystems, as well as a new horde of internet ventures.

Many of LinkExchange’s 53 employees are college or school friends, many of whom also share apartments, who behave as if work was just an extension of a student party. “There are six or seven people from our dorm that we gradually recruited to join LinkExchange,” says Tony. “One friend, he got off the bus, slept on the floor, and never went back.”

Take one Friday night in a little-used theatre in the shadow of the freeway that leads out of San Francisco towards the strip of high-technology firms to the south. Ali and his buddies are throwing a party, a regular monthly social gathering called DrinkExchange, an important event for wuppies, or web yuppies.

The space, cavernous though it is, teems with web designers, wannabe internet tycoons, and even a few talent-spotting venture capitalists.

DrinkExchange began a year ago, when Ali sent out electronic mail invitations to a few friends, who forwarded them to theirs.

Now some 500 people mill around, buying drinks for each other, as the event’s rules command, flirt, or swap tips about the latest, hottest internet start-ups. Ali knows many guests by their e-mail addresses rather than by sight, which can be a little awkward.

Silicon Valley has long been inspired by tales of restless young men (yes, mainly men) who dreamed, did something new and, almost incidentally, made fortunes.

Already part of the canon is the story of Jerry Yang and David Filo, two Stanford University students who in 1994 started compiling a list of favourite internet sites in a trailer on campus and woke up one day to find they had created, in Yahoo!, the most valuable internet media company around. And for every Yahoo!, there are a dozen myths in the making.

The wealth can be notional. Sequoia Capital, one of the valley’s leading venture capital firms, invested $3m for a minority stake in LinkExchange, and the venture would almost certainly command more than $20m if put up for sale. But earnings are another matter.

Internet advertising revenues have generally been disappointing. Consumer goods companies, in particular, remain to be convinced that banner advertisements across the top of web pages are a good way to build their brands. Link-Exchange does not disclose financial results, but it is a safe bet the revenues fall far short of costs.

For the moment, Ali, Sanjay and Tony, the three main shareholders, live in shared apartments, like most other recent graduates in high-rent San Francisco. They will likely only realise their windfall if the company succeeds in going public or is acquired.

And there is no guarantee of that. Mike Moritz, while confident of LinkExchange’s success, warns: “The challenges of starting a small company are so intense that only the gifted and the lucky survive.”

And Ali, Sanjay and Tony do not really prove that anyone can make it in America. All three of the LinkExchange management team, and many of its employees, went to Harvard University. Ali’s DrinkExchange events are noticeably short of blacks and Latinos.

Even the DrinkExchange parties, and the office foolery are just the flipside of a life consumed by work. “We had just come out of this tunnel of work, a good three months when no one went out, they just worked day and night. I was sitting with a friend on a Friday night, and didn’t know what to do. There were so many people I hadn’t seen in months, so I sent an e-mail out to 20 people and got about 60 responses back. People had been working so hard that they didn’t have a social life. You could paint a pretty depressing picture.”

But no one dwells on that. At a DrinkExchange party, all anyone sees is someone, obscenely young, having fun, making it, someone they want to be, someone they can be, damn it. Including me: I am leaving the Financial Times after eight years as a journalist to join a small internet venture with big ambitions. The Silicon Valley stories may be airbrushed. But, like so many others, I want to believe them.

Copyright Financial Times Limited 1998. All Rights Reserved.