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SXSW 2012: 8 Crucial Takeaways

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Mindy Best | WireImage | Getty Images
SXSW logo

Another South by Southwest Interactive has come and gone. Attendance this year soared to nearly 25,000, a 227 percent increase from 2009, organizers said. The scores of entrepreneurs, investors and technologists who migrated to Austin, Texas, for five days in mid-March offered up loads of insight. Here are eight crucial takeaways from this year's gathering:

1. 'Don't Launch at South by Southwest'

"That's the story of this year's conference," said Jacob Brody, head of business and community development at MESA, a boutique investment bank advising digital and traditional media companies. "Foursquare and Twitter were special. Back then, people were just starting to use mobile apps and the conference was much smaller with a lot less noise." (However, if you do decide to launch at next year's SXSW, Foursquare co-founder Dennis Crowley has some tips for you, such as leaving some of the team back home in case a server goes down.)

2. Forget About the Exit

"When we're meeting with entrepreneurs for the first time, and they start talking about an exit, that's an immediate red flag," said Jeff Jordan, a general partner at Andreesen Horowitz, a Silicon Valley venture capital firm, and the former president of OpenTable and PayPal, speaking on a panel about his journey from startups to the VC industry.

3. Know Your Angel

Naval Ravikant, the CEO and founder of AngelList, said entrepreneurs should do background research on potential angel investors before taking money from them. "On AngelList, you can look through public reviews of angels posted by startups they've funded," Ravikant told an audience at the SecondMarket house. Ravikant urged entrepreneurs to contact the founders of companies an angel has invested in for information on what it's like to work with a particular investor.

4. Learn to Code

"The goal wasn't to become the next CTO of Facebook. It was to learn just enough —the bare minimum — to get my idea out into the wild," said Vinicius Vacanti, the founder of Yipit, who taught himself to code in 2008. Vacanti and co-panelist Nate Westheimer, the founder of Ohours, urged people without coding skills, who rely too frequently on software developers, to go through a "sweat lodge experience," an extended period of time during which one does nothing but learn the basics of coding. Vacanti started with this resource and Westheimer used this one.

5. Beware the 'Button of Doom'

"The back button is the button of doom," warned Jared M. Spool, the founding principal of digital training and consulting firm User Interface Engineering during his talk on "the secret lives of links." When someone clicks the back button, the chances of them finding the information they're looking for dramatically drops, Spool noted. The average person finds the information they want on a website 42 percent of the time, according to studies Spool cited. But when a person hits the back button once, that percentage drops to 18 percent. And when a person clicks the back button twice, their chances of finding the info they want falls to 2 percent. The takeaway: If you're regularly seeing back buttons in your users' click-streams, your site probably needs a redesign.

6. Prepare to Pivot

Your initial product will probably require some serious tinkering before it's a home-run. That was one crucial takeaway from a session with Scott Cook, the founder of Intuit. Cook, who was interviewed by Eric Ries, the author of The Lean Startup, said he pitched Quicken, Intuit's accounting software for consumers, to 25 venture-capital firms. They all turned him down. Quicken ended up generating a small sliver of Intuit's total revenue. But the follow-on product — accounting software for businesses known as QuickBooks — was a big hit and now makes up a large chunk of the company's revenue.

7. Stop Thinking, Start Doing

People have a tendency to plan too much and do too little, said Sean Miller, a group planning director at R/GA and John Militello, head of creative innovation at Google . During their talk, the pair spoke of a study by Tom Wujec, a professor at Singularity University, in which small teams were told to use marshmallows and uncooked spaghetti to build the tallest structure. In comparing the performance of different groups, Wujec found that architects and engineers performed the best (not surprisingly). But the next best-performing group was a big surprise: kindergarten students. MBA students, for their part, performed the worst on average. Wujec concluded that kindergarten students eschewed the planning stage, which MBAs and other groups used to try and establish who's in charge and what to do. Kindergarten students, in contrast, simply experimented over and over until they found a model that worked.

8. Relationships Move the Needle

It's often said that the real action at SXSW doesn't take place at the panels or the keynotes, but in the surrounding cafes and bars where entrepreneurs and investors do deals over a breakfast taco or a shot of tequila. For most attendees, the sit-downs, dinners and parties are more important than the event's programming because of the business relationships they foster. "One relationship can move the needle $100,000," said Neil Blumenthal, the CEO and founder of the eyeglasses company Warby Parker, as the clock struck midnight at a Beachmint party. "That's why I'm not at home right now."

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