Mike Isaac

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Parties — Not Panels or Products — Were the Animating Spark at SXSW

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Standing in the Starbucks line at the tail end of my last day in Austin, I’m not happy. I’m tired and somewhat underwhelmed by the tech-focused things I’ve seen during South by Southwest’s Interactive sessions. My feet hurt like hell. To top it off, some jerk accidentally steals my iced Americano.

And then it happens — a “South By” moment. The jerk, whose name I learn is Andy, returns with my coffee (already half-sipped), and we start chatting as the barista makes our new drinks. Turns out he went to college with my colleague Liz Gannes, and is a now an employee at a major tech company I’m interested in. We exchange numbers, and promise to meet for coffee at some point after the conference. And then he asks the usual question that bookends every SXSW conversation: “So, what parties are you headed to tonight?”

Moments like these are fast becoming the value of South by Southwest Interactive, once considered a premier place to discover the latest trends in tech, and the companies that will define the landscape of devices and the Web in the years to come.

Instead, many make the trek from Silicon Valley, New York, and other tech hubs for the chance to meet like-minded people, perhaps wander in and out of a few panels, and network, network, network.

“I have one friend who comes to South By exclusively for the parties, without going to a single panel,” said Nick Tommarello, founder of the Y-Combinator-incubated startup WeFunder, who was attending South By for the third time. “I come here to hang out with all of my friends.”

The parties are indeed something else. Venture capital firms rent out entire restaurants off Austin’s Sixth Street thoroughfare, offering open bars and top-tier music acts. Big-time Internet companies like Twitter host rooftop ragers, with throngs of people waiting around the block to get in. And then there’s the Path party, the highly exclusive, not-so-secret shindig that’s been thrown by the social startup for the past few years. It’s become so difficult to get into that even its own investors were rumored to be turned away at the door.

SXSWToolKitMake no mistake — this is where the real work of South By is done. Young, nerdy engineers and slick biz-dev types hop from one party to the next almost systematically. Partnerships are forged, secrets are traded. And the hosts use the occasion to attract promising talent, each party offering a glimpse into the “good life” after recruitment.

“The budgets for some of these things that I’ve seen are insane,” one Silicon Valley venture capitalist, who preferred not to be named, told me. “They just keep getting crazier and crazier.”

As a result, fewer startups use the occasion to launch significant product updates and releases at South By, in fear of being drowned out amid a sea of loud marketing noise, raucous parties and ridiculous publicity stunts.

“I’ve seen no apps that I really care about here,” said Matt Ceniceros, director at Austin-based marketing company PulsePoint group. Indeed, it’s almost a complete 180 from last year, when apps like Highlight, Banjo, and other location-based discovery apps gained much buzz — some would call it hype — at the conference, and then failed to take off in the months that followed.

Even larger companies like Facebook held only small, informal gatherings targeted mostly at members of the press, with no significant product launches. Twitter took the opportunity to treat many of its ads and media brand partners to a night of fun, but had little to say in the area of news.

“We felt there was way too much noise and distraction for the press at SXSW to choose this as a effective launch venue,” one startup employee told me, who preferred that I not name her, as her company was still in ‘stealth mode.’ “This was a good call,” she said.

Instead, companies like hers found it better to meet reporters and potential investors for drinks, or perhaps a chance introduction in a hotel lobby bar. Even for writers — people like me — it’s a time to meet new sources, VCs and startups, with the aim of formally catching up after the conference is over.

Later that evening, Andy from the coffee line ends up texting me. He’s at the Mohawk, an outdoor bar and late-night music spot, and wants to know if I want to join him in wandering around to different parties later in the evening. With just 12 hours before I have to catch a flight back home to San Francisco, I tell him I’ll be meeting him shortly.

It’s time to get to work.

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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google