Sarah Lacy is a senior editor at TechCrunch, the world’s largest blog on tech entrepreneurship, and the author of the critically acclaimed “Once You’re Lucky, Twice You’re Good.” After more than a decade covering business in Silicon Valley, Lacy decided to follow the flow of capital into the developing world. She bootstrapped a two-year, 40-week journey looking for the best entrepreneurs Silicon Valley had never heard of. The result is her recently released book “Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos.” Delivering the last talk at Day 1 of Big Omaha 2011, Lacy spoke mostly about the journey that led to her new book and the innovators that played a major role in it. A handful of the highlights:
Her love of Omaha
“I came here on my first book tour … I had never been here, and I loved the warmth and the creativity and the energy and the people,” she said. Lacy is pregnant and already traveling quite a bit as it is, and she added that “this is only one of two keynotes that I have agreed to do while pregnant that I am not getting paid for, and that tells you how much I love this city and love being here.”
Pitching her new book and leaving Silicon Valley
“I wanted to spend 40 weeks in emerging markets and write about entrepreneurs no one had ever heard of,” Lacy said. “Every single publisher tried to talk me out of this idea. My family tried to talk me out of this idea. My husband tried to talk me out of this idea. Michael Arrington tried to talk me out of this idea.” Lacy added that everyone shared that opinion because “Americans don’t care about the rest of the world.” Her response to that sentiment: “That’s too bad, because the rest of the world is taking over this century.”
“Of all of the people that have been lifted out of poverty in the world in the last three decades, 75 percent of it has occurred in China,” Lacy said. She added that “all of these people are entering the formal economy.”
Different cultures of innovation
In Israel, Lacy said, they have a “hacker mentality — that solving problems within constraints, that creative problem solving.” She said that what really makes the country live “like there is no tomorrow” is the fact that some areas of the country are under constant threat of attack. As a result of this culture of risk taking, Lacy said, “Israel gets 30 times the venture capital per capita of Western Europe.”
Following the money
When Sarah first decided to pursue the story of entrepreneurs outside of the Valley, she noted that many of the VC firms had established offices in emerging markets. “Investing out of country is very difficult,” Lacy said. “If the opportunity was equal between Silicon Valley and emerging markets, then all of the investment would happen in Silicon Valley.”
The innovation she found in India
Lacy shared stories from several countries, but I found the ones in India to be especially interesting because they show how difficult it could be for a western entrepreneur to grasp the cultural impacts of technology in a developing country. For instance, one entrepreneur found that despite the high number of cell phone users in the country, it still wasn’t feasible for many people in the smaller towns to pay for cell phone services. “In 2000, there were three million Indians with cell phones,” Lacy said. “Today, there are more than 600 million.” They did this by getting the per user costs down from $50 for those of us in developed nations down to $6 per user. However, it still wasn’t enough. They needed to get it under $2.
So they developed their own, self-sufficient cell phone tower that they could ship to a small town and have a user assemble on site. “As a result, they can make money when people pay less than two dollars per month,” Lacy said. “The impact of this is staggering.”
She went on to tell a story of a woman that was only surviving on her pension checks from the government, but they didn’t always come. Now that she has a cell phone that gives her access to the government, she is able to call and complain, fixing her problems with getting her checks.
Lacy’s favorite person was a man that had very little education, but had still managed to build a company called SMS One, an SMS newsletter where they get a local editor to collect stories and manage subscriptions. Even though it sounds simple, the applications for his service are very critical to his customers. “For instance, most villages only get the government water pipe turned on for one hour a week, and they never know when that hour is going to come,” Lacy said. “If they miss it, then they don’t get any water for a week. Now, they get a warning on their phone that says the water is coming at 2 o’clock today.”
The stories only grew more emotional from there as she discussed the story of a little girl that had been helped during some difficult medical treatments. Another women had tried to commit suicide, but the editor of the newsletter used it to gather money to pay this women’s medical bills, showing her that life was still worth living.
“This is why when westerners say ‘Why are we giving poor people computers and cell phones? They need food and water,’ this is why they are wrong,” Lacy said.
Lacy said the biggest barrier to innovation is making excuses. During her travels, she met people who could have made excuses about their misfortune but refused to. “Every time you think you can’t do this in Omaha, think of these people,” Lacy said. “You guys have every bit as much of an opportunity to build things here as we do [in Silicon Valley] because everything is being turned on its head.”