News Column

No Big Breakout at SXSW Since Twitter and Foursquare

March 8, 2013

The edgy social-media show that launched two of its biggest start-ups the past decade no longer seems as cool or as much of a launching pad.

Since Twitter took the show by storm in 2007, and Foursquare did the same in 2009, there hasn't been a breakout product or service of the same magnitude at the South By Southwest Interactive (SXSWi) show, which begins today.

SXSW is a small-scale version of the CES international electronics show in Las Vegas -- a more-intimate, less-gadget-focused networking event in Austin, distinguished by early-stage companies, late-night music and mountains of barbecue.

The 20-year-old show is probably best known for playing a seminal role in Twitter's emergence as a household name. The microblogging service, which recently passed 200 million members, continues to participate at SXSW to connect with potential business partners, customers and the media, says Joel Lunenfeld, Twitter's vice president of global brand strategy.

"It's been an evolution from our discovery as an innovative product to a place where the conversation about SXSW takes place (via Twitter)," Lunenfeld says. "Last year, we emerged as a strong place for brands and advertisers," such as American Express.

Twitter gained even more fans by sponsoring with American Express the highlight of last year's show -- a Jay-Z concert -- to launch a Twitter-AmEx partnership. SXSW is "always going to be a launching pad," Foursquare CEO Dennis Crowley says. "What better place to test your app in front of thousands of early-adopter beta testers?"

And yet ...

Despite SXSW's reputation and growing attendance -- a record 26,500 people are expected to descend on Austin this weekend for the interactive segment of the 10-day event -- the question needs to be begged: Is the interactive portion of the show still an effective showcase? Or are entrepreneurs approaching it differently?

Gone are the days when a Twitter or Foursquare could rise above the noise, says Jared Hecht, co-founder of GroupMe, a group-messaging service attending for the third time. "I'm not sure winners even emerge for a day," he says. "The best strategy may be to launch before SXSW, make a name for yourself, and then build off it at SXSW."

With a modest budget, GroupMe garnered attention last year with creative marketing. It gave away grilled-cheese sandwiches and beer -- then had speed-eating champion Takeru Kobayashi wolf down grilled-cheese sandwiches for a world record.

"It's harder to make an impact, yes," says Hugh Forrest, director of SXSW Interactive. "There are a heck of a lot more companies, and apps, than five and 10 years ago."

If recent years are any barometer, the divergent fates of start-ups at SXSW illustrate that a good dose of serendipity is often necessary for success. The mythology surrounding SXSW is that it was the starting point for Twitter and Foursquare. Not true. Both companies had been around; what SXSW did was act as a catalyst for their widespread popularity.

Highlight, GroupMe and others have made favorable impressions since then, but nothing on the scale of Twitter and Foursquare. "Launching at SX is a hard thing to do," says Highlight CEO Paul Davison. "There is so much noise."

Sometimes, the attention can be too much. Blogger Robert Scoble -- who is briefed by virtually every significant tech firm -- struggles to recall a star-turning product out of SXSW since Foursquare. After plumbing his encyclopedic brain, he said, "Well, Highlight was discussed a lot last year."

Highlight launched several weeks before SXSW and gained fame and infamy. Its app was lauded for its ability to seemingly connect people with even the slightest common interests, but it was dinged for burning smartphone batteries. (A new version consumes far less energy.)

"By the start of (SXSW), our company had gained so much traction we thought we had to go," Davison recalls. "It was all pretty last-minute and organic. We weren't trying to hype it, but we felt lucky in getting attention."

Companies best positioned for success are either established brands such as Pepsi and Chevrolet that need "more social cred" or a well-funded start-up "looking to make a big splash," says marketing expert Aaron Strout. "There needs to be a strong tie to mobile, social (and) digital in their value proposition."

Pepsi is visiting a fifth year to "stress test" its social-media wares before a "large, influential audience," says Joshua Karpf, director of digital and social media at PepsiCo. Its booth typically commands a healthy slice of floor space -- a marketing advantage most show attendees can only dream of. For most start-ups, a marketing budget of more than $25,000 is considered an extravagant investment for SXSW.

Up-and-comers such as Banjo, a mobile app for travelers, hope to tap into SXSW's zeitgeist, which can be an "organic, slow process," says Banjo CEO Damien Patton. "Things just don't blow up overnight. We consider SXSW part of a long-term strategy."

Like scores of other start-ups, Qloo planned to make a splash without blowing its marketing budget. In the end, it bowed out of the show because its product isn't ready.

"I don't think I would ever put my hopes on launching a product there," says Alex Elias, CEO and founder of the social-discovery platform. "To break through the noise -- especially when you have to compete with the Pepsis of the world -- (would require) a huge marketing spend."

Twitter benefited from serendipity more than anything else, Elias says.

Twitter did not launch at SXSW, but it "just kind of took off," Crowley recalls. "Same for Dodgeball (Crowley's old start-up). We didn't launch at SXSW, but first saw the 'Oh, wow, this is going to be really powerful' (moment) when all the Dodgeball users came together ... for the first time at SXSW 2006." (Google acquired Dodgeball, a location-based social network, in 2005.)

"There is a fragmentation of attention," says Craig Danuloff, CEO of Rewind.Me, a rewards-based app modeled after Klout, which measures social-media influence. He emphatically shook his head no when asked if SXSW was in his company's plans. "It's almost a myth of a single-trigger event. Maybe it just happens, as it did with Twitter.

"But there is just so much capacity for the big hot thing."

Dennis Crowley, CEO of Foursquare.

Justin Sullivan, Getty Images

Joel Lunenfeld, Twitter vice president.


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Source: Copyright USA TODAY 2013


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