Example:

I am wondering what would be the correct way to code an un-ordered list inside of an unordered list like the design above.
I am assuming that it would be like:
<ul>
<li>
<a href="#"> site 2 </a>
<ul>
<li> <a href="#"> link 1 </a></li>
<li> <a href="#"> link 2 </a></li>
<li> <a href="#"> link 3 </a></li>
</li>
<li>
<a href="#"> site 2 </a>
<ul>
<li> <a href="#"> link 1 </a></li>
<li> <a href="#"> link 2 </a></li>
<li> <a href="#"> link 3 </a></li>
</li>
</ul>
or
<ul>
<li> blah </li>
<ul>
<li> inside list item </li>
</ul>
</ul>
Would this be the correct way, if not what would it?
While both methods will render correctly in the browser, only one method appears to be valid HTML.
Invalid:
Valid: