When Demo 09 kicks off Monday in Palms Springs, Calif., the high-technology showcase conference that prides itself on putting cutting-edge companies in front of A-list venture capitalists and journalists will do so in perhaps the worst economic environment in modern tech history.
Exhibitors at Demo pay well into five figures for the privilege of giving a six-minute presentation to a room full of influencers--many of whom have paid up to $3,000 to be there. So one could wonder whether the show can maintain its relevancy while companies are shedding record numbers of jobs, when credit is as tight as it's been in decades, and in an era where tech firms have more ways to promote themselves than ever before.
Yet Demo is not alone in its class: smaller tech conferences of between several hundred and several thousand attendees, such as TechCrunch 50, AlwaysOn, and those run by the GigaOm network. And with money being as tight as it is and the Internet and social media allowing start-ups and companies with new products to bypass traditional promotional methods, one question is obvious: Do we need these conferences?
The answer, according to conference organizers, attendees, and journalists, is yes. But we don't need all of them. And it seems likely that over the next year or two, unless economic conditions improve dramatically, only those conferences that can provide the kind of value that attendees and exhibitors alike need--a solid focus, great content, a long list of influencers, high production value and exceptional networking--will make it.
"I think every business in general is at risk to some degree right now," said Eric Faurot, a senior vice president at TechWeb, which puts on the Web 2.0 conferences, as well as many others. "In the event business, the stronger events, the really healthy events that have a real purpose to them, will emerge stronger, and weaker events will just die. They just won't survive."
Demo, of course, is in a transition period. It announced earlier this month that its longtime director, Chris Shipley, would be stepping aside after its fall 2009 iteration and that VentureBeat CEO and editor-in-chief Matt Marshall would be taking over. Marshall will appear on stage with Shipley at next week's event.
The Demo formula
Some might say that Demo's model of charging a fairly hefty fee to exhibitors, as well as several thousand dollars to attendees--not to mention the fact that it's held at pricey resorts in out-of-the-way places like San Diego, Palm Springs, and Phoenix--would make it a candidate for extinction. But Demo may in fact have just the right formula.
Asked if his software company, Bomgar Corp., would exhibit at Demo in the future after having done so two years ago, CEO Joel Bomgar was unequivocal: "Absolutely....We considered it a huge benefit when we did it."
Bomgar said he had paid $18,000 to present at Demo, and wouldn't blink at paying such a fee again, even if it had gone up a bit.
"If it was a matter of spending $20,000 to get in, we would alter our budget" to do so, said Bomgar, who is speaking on a panel at Demo next week, but who otherwise has no connections to the show. "All of the (benefits it offers), you can leverage to a value that far exceeds $20,000."
To Bomgar, one of Demo's most valuable functions is its traditional filtering process, in which organizers whittle down hundreds of companies--all of which are willing to pay the five-figure fee--to the between 65 and 70 that are finally chosen to present.
"The media and the venture capitalists show up to a show like Demo," Bomgar said, and "they know they're getting the cream of the crop. If they were just getting a random selection, that's instantly less compelling, rather than getting a focused group."
For Michael Arrington, who wears the hats of both a prominent tech journalist--editor of TechCrunch, which he founded--and one of the organizers of TechCrunch 50, a conference's value comes from the people he meets.
"I need to be around CEOs," Arrington said, "because they're the ones that will talk (about what their companies are doing). And there needs to be a lot of news breaking."
That's the lesson conferences can learn in order to stay vital, Bomgar suggested: Give the press and the money people the confidence that they won't be wasting their time by attending, and they'll go out of their way to come, regardless of where the event is. And if the media and the top VCs are on hand, then serious companies that are committed to building their businesses will line up to exhibit, even if they have to pay a hefty fee to do so.
The TechCrunch 50 model
There are other models, of course. For example, TechCrunch 50, an annual show in San Francisco put on by, among others, Arrington and Weblogs Inc. and Mahalo founder Jason Calacanis, gives a select group of start-up tech companies a chance to showcase their wares in front of many of the most prominent tech journalists in the world--without paying a fee.
"We don't charge anything (to exhibitors) for TechCrunch 50, so the only cost is people's time," said Calacanis. "In a down market, many intelligent and creative people have extra time. There is literally zero cost to the startup....If they make it to the main stage, they get $250,000 to $1 million worth of exposure in my estimation."
And according to Calacanis, the TechCrunch 50 model seems to be working pretty well. "We've seen more demand for this year than the previous two years in terms of companies asking us for the deadlines,speaker requests and sponsorship."
Still, expecting conferences to expand in this environment is unrealistic, said TechWeb's Faurot.
"You can't defy the physics of travel restrictions, and paying for conferences," said Faurot. "So any event that doesn't have a rock-solid position is at serious risk...You're going to sell less conference passes than last year, and you're going to sell less sponsorship than last year."
He explained that while TechWeb considers itself fortunate to have "the market leader" in several conference categories, it is without a doubt seeing the effects of the economic downturn. Faurot said where growth for some of the shows might have been around 30 percent two years ago and 15 percent last year, this year the company is simply hoping not to lose ground.
"We're calling flat the new growth," Faurot said.
Factoring in social media
While the evolution of social media--and the promotional and networking opportunities that services like LinkedIn, Facebook, Twitter and others give companies and individuals alike--may pose a threat to conferences that are not prepared to deal with it, it also presents a big advantage for those that are.
"In our experience, we've actually found that social media has increased (attendance at) events," Faurot said, "because people who are building relationships online, and people then have a reason to meet that person physically. It's very powerful. I think you just have to embrace it."
And that's where Demo may be in a good position, he added.
"People say, 'Of course, I can release my product at a number of events,' and there's a lot of alternatives to doing a launch at something like Demo," Faurot said. "But on the other hand, Demo is creating a time and place where people are focused on a category. The bet is you're going to amplify more (there) than if you just did your own announcement."
One phenomenon that has gotten a lot of notice in the last couple of years is what is called "lobbyconning," where people who haven't paid to get into a conference hang out in the lobbies at the event venues in order to network with the paying attendees.
But Faurot said that the activity of lobbyconning existed long before the term became well-known, and that, in fact, conference organizers who don't see such behavior are going to be unsuccessful.
"The worst thing for an event is when someone doesn't want to sneak into it," Faurot said.
One who isn't planning to sneak into Demo is BusinessWeek reporter Arik Hesseldahl, a longtime attendee of the conference. In a story he wrote earlier this month about Shipley's departure from the Demo directorship, Hesseldahl touted the value of the show.
"Shipley has run a great show, one that I have always considered a must-go," Hesseldahl wrote. "I quit attending most of the other tech conferences, but have always liked Demo because it is manageable, and because it's always interesting. Shipley has always picked a great crop of companies and I always leave Demo feeling optimistic about the future for tech companies and for the general state of innovation."
Of course, as a longtime attendee, Hesseldahl's enthusiasm for Demo isn't a surprise. But one person who gave the conference an endorsement was, perhaps, unexpected.
"I'll certainly go to (DemoFall)," said Arrington, who had stirred up a fair bit of controversy last year when he and Calacanis scheduled TechCrunch 50 at the same time as the 2008 edition of DemoFall and who, at the time, said, "Demo needs to die." "I think we're on different weeks this year. If we're invited, we'll go."
TechCrunch50 co-organizer Jason Calacanis says the conflict over the dates of his event and DemoFall's are the fault of the Demo organizers.
(Credit: Dan Farber/CNET News.com)I'm reading Henry Blodget's story on Jason Calacanis' rant about how the Demo conference organizers are to blame for the scheduling conflict that pits TechCrunch 50 against DemoFall. And I have to say, I'm a little dubious of Calacanis' statements.
According to Calacanis--who gave Blodget an "exclusive" interview on the matter despite telling me Wednesday that he was deferring to TC50 co-organizer Michael Arrington on the matter--the conflict is all Demo's fault.
(Arrington, by the way, set the tone for the environment by telling me, bluntly: "Demo needs to die.")
Demo Executive Producer Chris Shipley "may be crying that we are taking her dates, but that is false," Blodget quotes Calacanis as saying. "Demo moved up their dates this year by three weeks to come after TechCrunch40. They (were) on 9/24 last year and we were the week before them. Demo decided to move their conference up to try and unseat us."
Now, I'm not involved in the date scheduling of either conference, but in a telephone interview Wednesday, Shipley told me that Demo schedules the dates of its events three years ahead of time and that the date of DemoFall 08 was publicly announced at the end of the 2007 fall event.
I've been trying to find proof of this announcement, and have so far been coming up short. But I do see proof, from a very old calendar page on Demo's site that listed the dates of Demo's main 2008 winter event all the way back when they were still planning their 2006 events.
I suppose even if Demo had only announced its fall dates at the end of the 2007 show, Calacanis' point could be valid if Shipley et al had tried to move their event in front of the expected date of the 2008 TechCrunch confab.
But if Shipley is telling the truth--and I have no reason to doubt her, especially given the calendar page I cite above--I think Calacanis may have his facts a bit twisted. After all, he doesn't offer any evidence that Demo tried to ace it out on dates other than the fact that DemoFall 08 is a couple of weeks earlier than was DemoFall 07.
But as Calacanis surely knows, conferences move their dates around all the time. Witness the Game Developers Conference, which in 2007 was the week before South by Southwest. In 2008, it was a month before, and in 2008 it will be two weeks after, if my math is right. The reality is: event scheduling, which is often done years ahead of time, is tricky, and it's somewhat rare for a conference to always be on the exact same dates.
Want proof of that? Well, TechCrunch 40 was a week later on the calendar last year than it is this year.
Another Calacanis statement to Blodget makes me wonder, as well. He said, "The marketplace is going to decide which conference model is better: pay for play or merit based with a $50,000 grand prize."
Well, let's assume for a moment that both events sell out, or at least get more or less the same attendance as they did a year ago. If that happens, how is a winner determined?
Not to take Shipley's side in this, but I sort of agree with her about one thing, and that is, in the end, the losers here are the entrepreneurs who are going to get wedged in between a news-hungry press trying to cover both shows and the VCs who want to be able to see what's hot.
Of course, Calacanis ended his bullet-pointed "interview" with what he termed a genuine offer of a job for Shipley.
"If she wants to do the right thing, she should resign from IDG/Demo after this year and join the TechCrunch50 event," Calacanis told Blodget. "We would love to have her on our team--that's a serious offer. She should be working with Mike and I and help us bring TechCrunch50 to Europe, India and Asia."
My guess is that Shipley is going to hold on to her current job. But I remain open to surprise.
TechCrunch founder Michael Arrington, in discussing the decision to place TechCrunch 50 at the same time as DemoFall said, 'Demo needs to die.'
(Credit: Dan Farber/CNET News.com)The scheduling of the TechCrunch 50 conference, which was announced Wednesday, has pit it directly against DemoFall, a long-standing event geared toward entrepreneurs and their products.
And while TechCrunch founder Michael Arrington and CEO Heather Harde insisted in interviews late Wednesday that their selection of September 8-10, 2008, as the dates for TechCrunch 50 was about the availability of an affordable San Francisco venue, Arrington also made his feelings about Demo clear.
"Demo needs to die," Arrington said in the interview. "It's just an old-school model...It clearly involves pay to play, and what we're offering is better."
By "pay to play," Arrington was referring to the five-figure fee that all companies that present at either Demo or DemoFall must pay for their spots.
TechCrunch 50, by comparison, will not charge the companies that present.
Demo Executive Producer Chris Shipley expressed disappointment on hearing the news that TechCrunch 50 had been scheduled for the same dates as DemoFall.
"I think that certainly...TechCrunch 50 is a great venue for young companies," Shipley said by phone from Madrid, Spain. "But to put it up against Demo means those companies are now going to be competing for attention, and I just don't see how that's good for entrepreneurs."
One problem with that argument, however, is that since TechCrunch 40--the slightly smaller 2007 precursor to TechCrunch 50--companies have had to choose one show or the other.
That's because both TechCrunch and Demo effectively require participating companies to be launching themselves or their products for the first time.
Still, any controversy over the timing of the two events is going to focus on the fact that TechCrunch 50 will take place on the same dates as DemoFall--Arrington told me he wasn't aware of the dates and that Harde had been in charge of scheduling--even though DemoFall's dates had long been announced.
"Venues are really hard," Arrington said of the location for TechCrunch 50, San Francisco's Design Center Concourse. "We really like this venue (and) this was the only dates we could get it."
He elaborated, saying that he and his fellow organizers needed to find a venue in San Francisco that was affordable and that could hold between 1,000 and 2,000 attendees.
"There aren't many venues (in San Francisco) where you can get 1,000 to 2,000 people sitting down," Arrington said.
While Arrington would not say how much money TechCrunch 40 made in 2007, he did say it was profitable.
He said that of some 1,100 attendees at the 2007 event, approximately 800 paid full price of $2,500, while about 100 students paid $490. That means the event brought in around $2.5 million in ticket sales alone, not counting what sponsors gave.
Shipley wouldn't say what DemoFall 2007 earned, but did say that the majority of the 650 to 700 attendees had paid. With tickets for that event costing $3,000, that means DemoFall likely earned well into seven figures as well, just from tickets. Presenting companies likely paid well more than $1 million more to demo.
But Arrington insisted that his event is better for early-stage entrepreneurs because presenting companies pay nothing to demo at TechCrunch 50.
For her part, Shipley said she appreciates that TechCrunch 50 doesn't charge its participating companies, but added that many companies that exhibit at Demo are established firms for whom the fees are not onerous.
In fact, she said the fees may well establish those that pay it as serious about their products in the minds of the press and venture capitalists that attend.
Still, she suggested Arrington's assertion that Demo needs to die is unfortunate.
"I'm not certain why it must die," Shipley said. "I think that there is a lot of room in the market for products and services that support entrepreneurs. And I don't see how it's a benefit to (the entrepreneurial ecosystem) to kill off a platform that's all about supporting entrepreneurs."
For years, the Demo conferences--one in the spring and another in the fall--have dominated the mindshare of the technology press and venture capitalists eager to see the hottest start-ups and new products at their public unveilings.
But now, Michael Arrington and Jason Calacanis have scheduled their TechCrunch 50 event--which will showcase 50 hand-selected start-ups--to overlap with DemoFall.
And besides the cachet that comes with being selected for the TechCrunch event--Arrington said in a blog post this afternoon that the 40 companies that participated last year have raised $143 million in venture capital to date--one major selling point for companies that might agonize over which event to attend is that TC 50 doesn't cost participants a dime.
DemoFall, by contrast, costs the 70 or so companies selected to attend well into five figures.
TechCrunch is also cheaper to buy a ticket for: $1,995 through July 15, and $2,995 afterwards, versus DemoFall's rate of $2,999.
So what's a start-up to do?
One thing seems clear: Both events will probably be slightly less rich with the best companies and products than they might otherwise have been, since some potential TC 50 selections will still no doubt choose to go to DemoFall.
After all, if you're a company that has raised millions of dollars in funding, the $15,000 or $20,000 it costs to take part in Demo isn't all that much.
Maybe the real question that will determine which event comes out on top is which one Wall Street Journal kingmaker Walt Mossberg, a longtime fixture at the Demo shows, chooses to cover. If I were an executive at a company vying for either event, I'd be calling Mossberg right now and asking politely if he knows.
And in the same vein, if I'm Arrington and Shipley, I'm trying to figure out the best way to get Mossberg to commit to my show.
Either way, it's a bold--and aggressive--move on Arrington's part. And it's sure to make him a whole bunch of new enemies, and a bunch of new friends. Which camp you fall into depends on whether you are part of the Demo family or not.
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