Venture Capital

No Sign of a Tech Downturn at South by Southwest Parties

In Austin, startups and other companies still spend lavishly, hoping to get noticed by the conference's influential attendees.

Inside The South By Southwest (SXSW) Interactive Festival
Photographer: David Paul Morris/Bloomberg

Even Tumblr—which saw its faltering owner, Yahoo!, write down the social media property's value by $230 million just last month—is partying in Austin, Texas, like it's, well, 2015. Tumblr’s Saturday night soiree had all the trappings of a big South by Southwest blowout: a legendary multi-story music venue (the Mohawk), a teen-favorite headliner (Grouplove), and bearded bartenders. But one usual perk was missing: free drinks.

The cash bar felt like a good reminder that it's 2016, which for Silicon Valley has meant retrenchment, cost-cutting, falling valuations and plummeting expectations. For the most part, though, Silicon Valley didn't let the bad news dampen its bacchanalia.

“I was expecting a more subdued South By, but some parties are even bigger than last year,” said Bryan Goldberg, the chief executive of women’s media site Bustle and a third-time attendee. He also argued that despite the talk of a bubble bursting or losing air, the venture economy is still fairly robust. “The Kool-Aid and the punch are just a little less spiked than before,” he said.

The downturn didn’t deter fledgling startups from spending big on splashy stunts. Dating app Flutter had its marketers wear huge red heart masks as they walked through downtown. Service, a startup that offers to sort out customer service snafus for you, paid 40 Austin locals $15 an hour to be its “wizards,” who relieve conference-goers of unappealing tasks like waiting four hours in line for the luscious brisket at Franklin Barbecue. “We got four people into Obama’s speech and seven people into Franklin,” said founder Michael Schneider. The company spent close to $40,000 for the whole marketing effort, he said. That tab includes the bright blue pointed hats each wizard donned, which Schneider was hoping would get him noticed. (It worked!) “There’s so much noise,” he said. 

Pia Poppenreiter, a 28-year-old German founder of Ohlala, was hoping to get South By attendees buzzing about her app that just expanded from Europe to New York City. Ohlala's event wasn't the biggest or the best attended, but the art on the wall—21 illustrations of vaginas—was the first indication that this wouldn't be some antiseptic American brand-building exercise. Ohlala connects users for, as Poppenreiter delicately puts it, “paid dating.” At Ohlala’s party, several dozen attendees sat in velvet-lined booths and munched on raw oysters and turkey meatballs as Poppenreiter explained how people shouldn’t rush to judgment on what might or might not happen on a date that begins with a man offering a woman $300.

The rest of the conference was peppered with the usual odd couples of art and business: Questlove spun records at a greeting-card company’s party. Sia sang for Samsung. Chromeo DJed an 8:30 a.m. SoulCycle class at the Spotify House. On Saturday, shared-office startup WeWork—sucking in the heady air of a crisp, new $16 billion valuation—hosted a party in its office where Lord of the Rings star Elijah Wood manned the turntables.

The venture capital firm Andreessen Horowitz held its annual guest-list-only party Saturday night at Bob's Steak and Chop House with generous pours of wine; a pair of haiku writers hired to bang out on-demand poems on Royal typewriters; and Go Cubes, the chewable coffee created by startup Nootrobox.

At a party hosted by Founders Fund, a venture capital firm started by billionaire PayPal co-founder Peter Thiel, two rubber unicorn masks were passed around. The night before, as the crowds thinned, a woman dressed as a fairy rode a white horse with a unicorn horn past the Hilton hotel. Even as a slowdown in venture funding has put a damper on the unicorn startup frenzy, the crowd laughed along with the joke.

Susan MacTavish Best, a professional party-thrower, hosted an event on Saturday night for Hampton Creek, the eggless mayonnaise maker backed by prominent technology investors. "To the outsider, throwing a party at SXSW might appear to be utter madness. We fly halfway across the country to sip cocktails with our friends from back home," she said. "But once in Austin, we are free from our daily grind."

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