March 12, 2012

Start-Ups Compete For Attention At SXSW

Austin, Texas´ South by Southwest (SXSW) festival, an annual event put on since 1989 to draw attention to the city´s vibrant music scene, has in recent years seen an influx in the arrival of tech companies, large corporations and even start-ups looking to also grab some of that attention.

However, for those start-ups trying to grab some of that attention, it could be a daunting task trying to make waves in a place that is overrun with so many other launchers.

“It has become challenging to break out at SXSW because there's so many great startups competing for the attention of thought leaders here,” said Kleiner Perkins Caufield Bowers partner Chi-Hua Chien.

“I counsel my startups not to use [SXSW] as a launching ground because it´s so crowded as a place for launches,” added Joe Kraus, a partner at Google Ventures.

But don´t tell that to past start-ups Twitter and FourSquare.

Twitter became one of the most talked-about start-ups at the 2007 event when it set up giant TV screens in the conference hall that flashed “tweets” to SXSW attendees. The exposure tripled its traffic.

In 2009, FourSquare launched at SXSW and now has more than 15 million users.

Highlight, an app for iPhones that alerts users if someone they know -- or possibly somebody they may want to know -- is nearby, is one of this year´s hot start-ups. While the company is not releasing any statistics, the talk is that attendees were downloading the app more than any other.

But analysts predict it is doubtful we will see anymore Twitter-like success stories  at the SXSW.

One of the big reasons for that prediction is that smaller-sized gatherings like those a few years ago made it easier for start-ups to get noticed, veteran attendees of the event said. The interactive part of the event attracted 7,000 people in 2007 when Twitter lit up the stage, according to a spokeswoman for the event. This year´s SXSW Interactive tally could be three times that.

Though it is likely that won´t stop start-ups from continuing to try and capture the limelight at the annual festival.

In a bid to grab attention, social-network start-up Tagged offered free rides from the airport. And online coupon site WhaleShark Media offered discounts good for the event´s food vendors. Others threw a flash mob dance party that reverberated up Congress Avenue, Austin´s main thoroughfare.

If start-ups do it right, like use search-engine optimization to get the word out, they can possibly capitalize from the SXSW event, said Kip McClanahan, an early-stage investor at Silverton Partners in Austin.

But many companies, including those dishing out freebies, have shifted focus from using SXSW less as a place to win customers, and more as a place to connect with potential partners, he said.

“The top consumer companies all have people here,” WhaleShark Chief Executive Cotter Cunningham told Reuters. “It´s ideal for relationship building.”

His company, backed by Institutional Venture Partners, Google Ventures and others, owns sites like RetailMeNot.

Sahil Lavingia, founder of online-payments company Gumroad, said his marching orders from his backers Accel Partners and venture capitalist Danny Rimer were clear. “I am told just to go and enjoy the ride,” he said.

Even for those who do capture the crowd´s attention, there is a great amount of doubt that the buzz will last, said media marketing specialist David Berkowitz in a blog. He is among the analysts who do not foresee another Twitter success story emerging from the SXSW.

Group-messaging service Beluga, and contact service Hashable, are two such companies that garnered a lot of initial buzz, but didn´t live up to those expectations once SXSW was gone, he noted.

Paul Davison, co-founder and CEO of Highlight, said he is thrilled with the crowd´s take on the iPhone application. But he said he is aware that SXSW often creates an artificial environment and there is no telling how well his product will do once the festival ends.

“My hope is people go back to their hometowns and start telling more and more people about it,” he said, adding that the festival was helping achieve one important goal: making sure what he called “the right people” know about it.

However, the buzz already started to fizz for Highlight minutes before Davison´s comments were posted on Saturday -- a venture capitalist and an executive for Apple both said they had deleted the app from their phones because it chewed up too much battery life.

Davison said he was aware of the glitch and the company was working to resolve the issue. He said users can put the service on pause until the problem is fixed if need be.


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