South By Southwest (SXSW) in Texas is known as one of the world’s biggest music and film festivals, but it is also home each year to SXSW Interactive – a gathering of investors, startups and technologists from all over the world.
That’s where I’ve just returned from, where my company Ormsby Street was invited to attend by UKTI as one of its Tech Ambassadors. SXSW Interactive is one of the most important events for startups and tech innovation in the US, and the place where many tech firms seek to launch new products, new digital services or form new partnerships.
I was there to try and develop partnerships with US banks ahead of our US launch, but the whole event is a melting pot of ideas and opportunities, in the many events, seminars and presentations (including Barack Obama!) that take place. I gained a strong understanding of the nature of startup culture at SXSW, and learned a number of lessons that UK startups can take from the event.
There was a small but dedicated focus on fintech at this year’s SXSW, and a constant theme was the need to balance security and convenience. Barack Obama’s keynote speech focused on this, putting forward the argument that authorities need access to data on electronic devices because the ‘dangers are real’.
Security is a weighty issue, with the President talking about the implications if say, the authorities are looking to understand and disrupt terrorist plots. How this balance is addressed is something to consider for every fintech startup. The best fintech firms offer an updated, digital and more customer-focused way of approaching traditional elements of banking, but if this is compromised by security issues, then that could curtail fintech’s current growth.
Try to solve a major issue
The other main element of Barack Obama’s keynote speech was a recruitment plea, an appeal to the startups at SXSW to address the biggest issues of society. He asked which skills within startups could be used to upgrade any number of legacy systems, and while that’s a lofty ambition for all startups to take, there is sense in what he is saying.
True disruption is rare, and the best startups have come up with a proposition that has either challenged the accepted way of doing something, or has created a new approach entirely. I attended several pitch events at SXSW, and I could see that this was a problem for several of the startups I saw pitch for funding – they were describing problems that very few people had and which weren’t actually big problems in the mind of the user. Suffice to say, most investors switched off at this point.
Be open to the ‘gospel of doubt’
The other major speaker at SXSW was Casey Gerald, founder and CEO of MBAs Across America. He didn’t just open the whole festival, he also had to open for President Barack Obama, perhaps the toughest speaking gig in town.
He drew on his own experiences – religion, Yale, a violent robbery that forced his face into the ground with a gun put to his head and an internship at the soon-to-fail Lehman Brothers – to challenge delegates how they view their businesses, their practices, and themselves. He spoke of the need to question everything and the ‘gospel of doubt’, finding room to question the people who tell you they have all the answers.
The key takeaway for startups? Be questioning, be challenging and know that vulnerability can be vital for change and success.
Innovation lies with products, not companies
There was a lot of big business at SXSW, many of which were looking for the right solution to address a specific gap in their own offering. What quickly became clear is that most of the innovation on display came within a product, rather than the company behind that product.
So if a startup is seeking acquisition, it is unlikely to happen, not in the traditional sense anyway. What is far more likely, based on my observations at SXSW, is a partnership based around white labelling or similar arrangement with big business. So startups must be open to collaboration from an early stage. An acquisition may be the end goal but only those who can forge partnerships with multiple larger organisations are likely to attain longer term independent growth.
Choose the right event for where your startup is at
Having attended a number of events over the past 18 months, SXSW was definitely among the busiest, and had a buzz that others lacked. What it isn’t though, is somewhere that will drive a large volume of sales, as one or two very disappointed entrepreneurs realised to huge disappointment.
SXSW is a trade show to attend to see if your product or service will really grab people’s attention at scale. If it works on that level, then you are ready to take it off to bigger stages and a full blown launch.
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