For Four Notable Startups, This Was SXSW

Partnerships, parties, panels

A tall rocker dude with a passing resemblance to Dave Grohl ambles into the Austin Four Seasons, hardly standing out among the flannel-wearing, phone-staring digerati during the first week of South by Southwest scattered across a lobby festooned with the requisite displays of cowboy boots and stag heads on the wall. It’s late Sunday afternoon and it looks as though Williamsburg (as in Brooklyn, not as in Historic) has invaded Southwest Texas, only with a few more notches of “you-mean-you-haven’t-tried-that-new-app-yet?” arrogance and earnestness.

Inside the hotel’s packed bar area, a mix of hipsters, nerds and the odd gray-haired exec clinks glasses and swaps observations about an even more digital future.

The Grohl doppelgänger, accompanied by a smartly dressed “bodyguard,” apologizes for being a few minutes late. “It’s South-by,” he says, an excuse everyone here uses. He is Chris Kantrowitz, founder of Gobbler, a cloud-computing service designed to enable musicians to share and store their files.

Kantrowitz tells the story of how, at the age of 14, he hustled his way into a job as a tester of video games for the original PlayStation by stalking the company’s executives at the Consumer Electronics Show. “My mom,” he recalls, “used to pick me up at school at 3 p.m. and drop me off at Sony.”

It is through moments like these that you get to experience the real SXSW, a destination where many attendees never seem to make it beyond the panels, keynotes—and the parties, of course. It’s in the lobbies, on the patios and bellied up to the bars of the Four Seasons, the historic Driskill Hotel, the Omni and the Hyatt where one tends to find the really important meet-ups, pitches, brainstorming sessions, and yes, deals being made—before the open bars and jammed parties sponsored by The App of The Moment kick off at happy hour and rule the night.

At the Four Seasons, Kantrowitz orders a Bloody Maria. It’s 4:30 p.m., and somewhat late for the start of cocktail hour at SXSW. Every two minutes, Kantrowitz spots somebody he knows and our interchange comes to a halt.

“Hey man, how are you doing? Happy South by Southwest. Awesome.”

Kantrowitz then spots his buddy Rob. “He runs digital for Bruno Mars’ manager,” he tells us. “Hey, there’s my girlfriend. You should totally talk to her. Amaryllis! Amaryllis! Sorry, you need to sit right there.”

The interview has officially been hijacked. We never even get the opportunity to talk about Gobbler.

Rather, now we’re on to Mulu.me. Amaryllis is Amaryllis Fox, Kantrowitz’s girlfriend, who spoke on three different panels in Austin and is CEO of the year-old company that helps make digital editorial content shoppable. Mulu has already partnered with Hearst Magazines, Condé Nast, The Huffington Post and the XO Group, proprietors of TheNest.com and TheBump.com.

Think of Mulu, which launched at SXSW in 2012, as empowering native e-commerce advertising. Its technology scans the words on a page and pulls out products that are then featured as ads within Shop This, a white-label shopping guide product built right into a site’s content. Advertisers can use Mulu to sponsor specific keywords. For example, if a whisk is called for in a recipe, then Williams-Sonoma can run an ad for the implement just below the text.

Fox says despite their recent push into e-commerce, magazine publishers still need a lot of guidance. “Hearst and Condé have had kind of a dire response to Lucky and ShopBazaar, to the point that a giant buzzer would go off in the entire building if someone bought one thing,” says Fox. “Up until now, they’ve only been able to do commerce monetization through affiliate partnerships—which is pretty incremental, to say the least—and then they have to send people away from the page, and then they lose the display revenue.”

Which begs the question: Why doesn’t Google just do this? It’s already got AdSense. Fox points out that while Google runs ads down the side of a Web page, Mulu shopping units run right in the content flow.

“We get a 2 to 12 percent click-through rate—a large part of that is because it’s in the content, it matches the colors, and it’s exactly the items you are reading about, so it feels [like] it’s editorial,” she explains. “Users really don’t know it’s an ad.”

Mulu is expanding and will soon roll out across beauty, DIY and golf titles. Men’s magazines are also a hot prospect. During a SXSW panel, Fox revealed that a rep from Hearst grabbed her to talk about teaming up with Mulu on sites like Esquire.com. Also in the works is a consumer-facing shopping experience that will enable users to save items they encounter across different sites for possible purchase later.

Someone suddenly interrupts our conversation. “You have a meeting with the Vyclone guys now,” he informs us.

“We love those guys,” Fox gushes. “They look like delinquent Brits.”

Enter the delinquent brits—so delinquent that they’re drinking, of all things, Bud Lights (“We’re trying to last,” explains co-founder and CEO David King Lassman). Lassman is the tech guy while co-founder and CCO Joe Sumner is the music/consumer guy. (Sumner’s dad happens to be Sting, who he resembles more than a little, and Sumner himself is a musician.)

Vyclone was also his idea. At a performance a few years ago, his manager told him how hundreds of fans were shooting videos of the show and posting them to YouTube. The clips got a handful of views.

But what, Sumner wondered, if fans were able to edit bits of all those clips to create one expertly produced video synced to a single audio track?

Or, what if three or four family members each shot a birthday party with their phones, where big brother and dad captured junior blowing out the candles from different perspectives while Aunt Sally got mom’s tearful reaction, then crafted those moments into one slick video?

One has to see Vyclone in action to fully appreciate it. As Lassman demonstrates, the app “knows” when others close by are recording the same event, indicating that the user is one of two—or 200—people recording video. Once everyone has captured their images, they can piece together all the clips to create the finished product (or let the app do it for them), then share it with the world.

After a year developing the prototype, Lassman says, he and his partner realized they had underestimated Vyclone’s potential. “We said, hold on: This isn’t just music—this is really, really social video,” he relates. “And I can use my finger to edit any movie.” Lassman puts together a particularly jumpy clip for us. “I’ve made my MTV cut,” he says.

Launched last July, Vyclone certainly has momentum, attracting an impressive roster of investors including DreamWorks and Live Nation. Also, Apple named it one of the top apps of 2012.

“The beautiful thing is, you don’t have to be a filmmaker—you can rely on all those other people to capture the things you don’t,” says Sumner. “Even just two angles makes video so much more compelling.”

But did they “win” SXSW, like Twitter and Foursquare in years past? “I’ve been to South by Southwest so many times,” says Sumner. “I was a musician in my former life—I know what it is here, when there’s a lot of noise. There’s this myth that people or products broke out at South-by, but it’s usually not true. Usually in those cases, it was something that was building and building and building. We’re well aware of that.

“It’s kind of like everybody gets together here and jousts with their noise. For us, this is a really good test to see how much noise we can make.”

As for how to break through all that noise, Vyclone brought in a double-decker bus from London, parking it outside the convention center. Across four days, music acts including Royal Canoe and Blake Lewis played on the roof while they encouraged fans to shoot the performances with Vyclone. Meantime, Lassman and Sumner were busy taking meetings with Disney, among others.

Vyclone is hardly alone in the social video world. There’s Viddy, Socialcam, Vine—even Facebook is said to be looking at a collaborative video product.

“It’s a big ecosystem out there,” Lassman admits. “We consider ourselves complementary to what they are doing. We’re clearly about creation. Sure, there’s a broadcast element. But we have a very different take on the process. We’re about social co-creation. We’re trying to get people out of this paradigm [he looks at his phone] and getting them to look up and say, ‘Let’s do this together.’ The people that want to be shouting about what they’re doing, Viddy and Socialcam are absolutely fantastic for that.”

There is the danger, of course, that YouTube could simply copy the concept. “That’s always the worry,” Sumner concedes. “But we have a significant technological lead. It’s not that easy to do.”

As for the commercial prospects, Lassman proposes the possibility of a range of white-label products for media companies—CNN encouraging its iReport contributors to produce more sophisticated clips from around the world, for example. Meantime, artists including Madonna, Bloc Party and No Doubt have embraced the app, and Vyclone just announced a partnership with Microsoft.

What’s more, Lassman says, agencies are reaching out, as are a handful of consumer brands. “We’re at the beginning of that journey,” he says. “It’s going to be fascinating to see how it unfolds.”

The Vyclone group breaks up, moving on to another table and another meeting.

“We don’t get much sleep,” says Sumner. “It’s great to talk to so many different people at once. Ninety-five percent of it is bullshit, but you get nuggets, you get some really good stuff. Even in the bullshit, you get the zeitgeist.”

You can almost forget you’re at SXSW when you enter one of the bars in Austin that doesn’t appear to be hosting some tech company hoedown. You walk up to the bouncer with driver’s license in hand, trying to remember if Lone Star or Shiner Bock is the brand of beer you’re supposed to drink while in Texas. Then he hands you back your ID and asks if you’re on GonnaBe.

Huh?

That was the promotional gimmick for one of the apps looking to break out at this year’s festival. GonnaBe hired doormen at about a dozen bars in downtown Austin to spread the word about the location-based planning app. Such a word-of-mouth marketing tactic might seem about as promising as catching a cab near the Austin Convention Center. But Hank Leber, co-founder and CEO of GonnaBe, is no marketing novice. The former McKinney account planner won a Jay Chiat Award for social media strategy in 2010 after putting the Travelocity gnome on Chatroulette.

“We want to be the social-life concierge,” Leber says of his five-person startup. Through the GonnaBe app, users can post their destinations for the night—like a restaurant, bar, concert or party—then invite others and even enable others to post that they plan to tag along, with or without an invite. While all that’s fairly basic, GonnaBe also plots the destinations on a map featuring a patent-pending “time slider” that lets users check out what’s happening where at a given time.

GonnaBe could have better prospects than your typical startup at SXSW. It was launched last October after going through Activision co-founder Howard Marks’ Los Angeles-based startup accelerator Start Engine. In addition, the company has raised $200,000 in seed funding and counts Target CMO Jeff Jones as an unofficial adviser.

Plus, the app has a built-in, if yet untapped, business model. As users post personal events via the time slider, merchants can post specials sourced through Foursquare and events by way of Ticketmaster/Live Nation’s feed. GonnaBe is also in talks with AMC Theatres, Landmark Theatres and Fandango about organizing dinner outings that include discounted movies or free popcorn.

Besides social organization, GonnaBe wants to leverage user locations, a move that has benefited former South-by breakouts like Foursquare but proved limiting for pretenders like last year’s darlings Highlight, Sonar and Glancee.

Naturally, Leber sees his app’s focus on future destinations as a major differentiator. Few people need to know where all their friends are right now; they’re probably all busy anyway. “It’s not designed for South-by—it’s for when you go home and it’s less hectic,” Leber says.

Still, a potential danger for GonnaBe would be Foursquare adding similar functionality to its apps, turning Leber’s business into just another feature. The thought has definitely crossed his mind, leading Leber to imagine an entirely new marketing strategy around GonnaBe.

“I want to hack into Foursquare,” he cracks, “and send a comment to everybody who checks in, [saying], ‘If I had known two hours ago where you were gonna be, I would have been there with you.’”