The Year Nobody "Won" SXSW

By Erin Griffith , written on March 12, 2012

From The News Desk

South by Southwest Interactive has become famous for producing big "winners."

Twitter, Foursquare and GroupMe can credit the festival for their respective surges in buzz from the influencer crowd. That led to mainstream buzz and, eventually, adoption.

Now Twitter is worth something like $8 billion, Foursquare $600 million, and GroupMe sold to Skype for $85 million. The SXSW effect is no joke.

Past winners have one specific thing in common -- they're consumer Internet companies with services well-suited for a giant festival of networking-hungry early adopters. Call it SXSW bait. Twitter, Foursquare and GroupMe had it.

This year, it feels like a small army of companies are trying to copy their successes. They're doing it with apps that seem to be made specifically for SXSW; they serve the attendees of a big festival packed with networking-hungry early adopters.

And that may be the reason there has been no clear winner. With each year, the big "win" is a little less big. GroupMe's bump was smaller than that of Foursquare, Foursquare's bump was smaller than Twitter's. This year the bump is negligible.

Foursquare's SXSW buzz in 2009 was entirely a surprise, Dennis Crowley admitted on stage last week. He and co-founder Naveen Selvadurai took separate flights so they could tag-team coding on the app up until the very last minute. They had no shirts, stickers, street team, or promotional plan whatsoever. They decided to launch at SXSW as a way of giving themselves a deadline. That it took off at all was part luck, part market fit, and part lack of competition.

This year it feels like the most buzzed-about startups, the location-based networking ones, were created for SXSW. The usefulness of a networking app like Highlight or Glancee (or Sonar, or Banjo, or INTRO) is amplified when you're around 20,000 potential new contacts. The usefulness of Highlight or Glancee back in our home towns, when we're surrounded by millions of strangers and are not in networking mode, is greatly reduced.

They kind of remind me of those brightly colored wayfarers every party hands out. They're super fun to wear here, while you're at the party. Once you're back home, they go into the drawer.

I can't see myself using Highlight when I'm back and not in constant networking/socializing mode. I'd use it at a social function if I recognized someone I knew but couldn't remember how. The problem is that that someone I recognized would also need to have Highlight and also have it running. Some believe that Highlight's ability to remember connections, mutual friends, and things in common gives it the potential to replace business cards. Again, that requires everyone I might ever exchange info with to have Highlight.

I think the idea behind most of these services, Highlight especially, is a really smart one. I'm not arguing Highlight or Glancee or Sonar can't grow because they don't have users. I just don't think any one of them will "win" SXSW, emerging with a massive wind at its back in the way that Twitter, Foursquare, and GroupMe have. They're the type of apps that require a critical mass of users to work; that mass is about to scatter from SXSW.

It doesn't help that so many teams had the same idea executed in different ways. The sector is noisy and crowded. Even if Foursquare and Gowalla launched around the same time, they were two of a kind, not 20 of a kind. With location-sharing-networking-friend apps (what are we calling this category?), it's hard to know which one to try.

Out of them all, Highlight definitely has the most buzz (and the cutest promotional English Bulldog). It's also used by the biggest names in tech, thanks to some influential connections.

Paul Davison created the app last year and distributed it to friends in private beta. At a brunch event thrown by some Silicon Valley investor types, he accidentally created a "mini-frenzy" over the app while showing it to a group of friends. Robert Scoble walked up and asked what everyone was obsessing over. Not wanting to talk about the app with bloggers before it was ready, the group mumbled "nothing" unconvincingly and tucked away their phones.

The best way to get a blogger interested in something is to keep it a secret from them. The rest of the story, you know. That may be the case, but this is one category that, if it works, will take off like a slow burn and not a SXSW-fueled wildfire.

As a category, there's also the creepy factor that people are continue to grapple with. When blogs and then social networking emerged, it seemed weird to share so much information about ourselves with others. We obviously got over it. Highlight and its peers are betting that the future of social networking and sharing will be the ability to learn about those around you as if you had a sixth sense. The typical pattern is that after users get past the initial weirdness of sharing personal information, they usually find the service they shared it with to be useful and rewarding, and the benefits outweigh the cost of the privacy they gave up, Davison said. It'll happen eventually. Maybe not this week.

In order for Highlight or any of the new location apps to win, they need their masses of Austin influencers to stay on board for longer than it takes for that pair of promotional shades to collect dust in the drawer.