The Social

The coastal resort that hosted the Summit Series event last weekend.

(Credit: Caroline McCarthy/CNET News)

PUERTO MORELOS, Mexico--They kept their Twitter feeds quiet and their iPhone cameras dormant. Most of them didn't want their names to be used.

There was more than a little bit of paranoia in the air as the guests arrived at last weekend's Summit Series event, formally the Young World Leaders Summit--not the most modest of names. It was a gathering of about five dozen under-35 entrepreneurs and executives at a beachfront luxury resort outside the glitzy vacation city of Cancun. Among those present at the retreat, which was fully paid for by sponsors, were a handful of executives from Facebook and other Silicon Valley start-ups, media and publishing entrepreneurs, young venture capitalists, edgy youth marketers, and jet-setting global issues advocates. As for an itinerary, there were snorkeling lessons, ample pool- and beachside chill time, and plenty of parties.

"We want to create the Allen & Co. retreat for young people," Summit Series organizer Elliot Bisnow said in an interview overlooking the Caribbean Sea, referring to the annual gathering of tech and media moguls in Sun Valley, Idaho. Bisnow had previously put together the inaugural Summit Series event in Park City, Utah, last spring, with 19 young entrepreneurs meeting for a ski weekend. He said it was so successful that he and fellow organizers Ryan Begelman and Ben Hindman decided to expand it for the Mexico edition. "It took us awhile to figure out the messaging, but we want to create an environment for the top young people in the world to get together in a fun place and talk ideas, business, challenges."

What can also take awhile, for that matter, is convincing the notoriously look-at-me young digerati to turn everything off. But for the Summit Series, they complied without protest. Given the dire financial climate, they knew that the vicious gossip-blog culture could make this all look really bad.

But why did they risk it in the first place? After the American International Group spa resort scandal and, closer to home, last month's blogospheric revulsion at a YouTube video of young dot-commers dancing poolside at a mansion in Cyprus as the markets crashed, scrutiny of executive excess is at an all-time high. And the young folks at the Summit Series event aren't stupid: they knew what investors, partners, and shareholders would think if they should, gasp, be outed having a good time.

Some said they came for the networking, and the promise of meeting interesting new people with whom they might not otherwise cross paths--or even cut a deal or two. Others said they honestly just needed a few days to get away from the business world and get a much-needed refresher during difficult times. The offer of four expense-free, breezy days in coastal Mexico was too good to pass up. (Disclosure: I paid for my accommodations.)

"The way young people do business today is much more relationship-driven than it used to be," said Bisnow, an energetic 23-year-old who was a nationally ranked tennis player before dropping out of college to start his company, a D.C.-area newsletter start-up called Bisnow on Business. "I think it's so valuable to be able to create friendships in special places, not in a stodgy boardroom." It's not quite a novelty: that's what golf courses, Ivy League alumni clubs, and Elks lodges have done for years.

So, in order to maintain a level of image control and to ensure that attendees were comfortable talking openly, the few reporters present were asked beforehand to agree to keep most of the goings-on off the record. Photographs were not permitted during the tequila-soaked evening hours.

And indeed, a brief flurry of nerves surfaced during Thursday night's dinner reception when one prank-minded marketer in attendance decided to float a rumor that a poolside photograph from the Summit Series had surfaced on gossip blog Gawker. Due to the international locale, most people there had spotty or extremely expensive mobile data access, and nobody wanted to admit to being paranoid enough to run back to his room and check the Web. Luckily, before too long, the prankster had admitted to his joke, and after that, the only thing close to mass hysteria arose when some people realized they couldn't always access Wi-Fi from their rooms.

There were a few organized activities. On one day, the young creators of socially conscious shoe brand Toms, which gives away one pair of shoes to a child in a developing country for each pair it sells, took Summit Series attendees on a road trip to donate shoes in a nearby village. Another featured a cave-diving outing. There was also a presentation from business guru and Twitter heavy-hitter Timothy Ferriss, author of The 4-Hour Work Week--"Some people really get misled by the title," Ferriss told me as we all walked to a nightclub in nearby Playa del Carmen one night.

A second presentation came from Scott Harrison, founder of Charity Water, a nonprofit bottled water company that donates all proceeds to the construction of clean water facilities in developing countries and uses Google Earth to prove it. Harrison's graphic images and his tale of transformation from hard-partying club promoter to impassioned philanthropist left some of the younger Summit Series guests--particularly the ones still cushioned by Valley venture cash and a Web 2.0 bubble that has yet to fully pop--a bit shell-shocked. After the talk, they left the room and returned to the pool, looking sheepish but eager to order another round of margaritas.

Beyond that it was mostly an unstructured gathering--and considering many of the entrepreneurs had never gone to college, this was probably the closest they'd come to Spring Break in Cancun. That said, the Summit Series' five-to-one male-to-female ratio probably put the kibosh on most legitimate debauchery--other guests at the quiet resort must have thought it was some kind of fraternity reunion or bachelor party.

Getting down to business
But business was inescapable, and that was the point. During the day, many of the Summit Series' pale 20-something men shuffled about in swim trunks by the pool, a BlackBerry in one hand and a pina colada in the other, and a copy of the latest bestselling business-productivity book under their arms--like Malcolm Gladwell's The Outliers, a just-released title about what makes some people wildly successful while others pass by unnoticed. The more outgoing ones hopped from beach chair to beach chair, making introductions. A few of the dreamier, ideas-oriented types scribbled away in Moleskine or Muji notebooks as they looked out over the beach. One young publishing entrepreneur shared his favorite beach drink recipe with some new friends: blended ice, bananas, and rum. Then they talked ad strategies.

"Dozens of deals have been done this weekend. People have sold companies," Bisnow boasted, smiling broadly. He declined to say which ones, but I could confirm at least one small deal: that one of the new-media CEOs in attendance had offered ad inventory to another guest's nonprofit organization.

The sponsorships were important, too, Bisnow added. They'd turned down plenty of requests, he said, before settling on office giant Staples, real estate firm Jones Lang LaSalle, the wealth management division of Goldman Sachs, and investment firm Charles River Ventures. At the previous Summit Series event in Park City, Bisnow told me, 6 of the 19 attendees had ended up doing business with sponsor Jones Lang LaSalle.

"This is, in my opinion, one of the best sponsorships in the world," he added, and said that the dates for the next Summit Series event were already on the calendar. They'd be back in Park City, with 250 attendees and a flagship sponsorship by men's magazine GQ. Bisnow, whose broad-shouldered build and neatly trimmed haircut give off a vibe of bold, frat-president confidence, expressed no concern about financial issues getting in the way.

But still, no amount of money talk or margaritas could drown the presence of the ongoing economic crisis. One of the CEOs at the Summit Series, who runs a public company, was worried about the perception that he was at a beachfront retreat while his company's stock--like so many others'--had lost 30 percent of its value. Another left abruptly on day two of the four-day retreat, reportedly due to a "business emergency" involving funding that was in danger of falling through. And by Saturday afternoon, two or three of the investor-dependent dot-com founders, one of whom complained that the event had been too "cliquey," were vocally itching to get back to their fledgling companies.

I wondered if maybe some of them had wanted more structure, a more concrete networking plan that would make them less nervous about skipping town for a few days. "I don't like structure," Bisnow told me with a grin. "I'm young and eccentric and I want to hang out."

Over breakfast on Sunday, shortly before vans started to arrive to take the Summit Series-goers to the Cancun airport for their flights back to New York, D.C., San Francisco, and elsewhere, co-organizer Hindman, who founded an offbeat walking-tour company, said to Bisnow that some get-to-know-you activities would've been good. The Valley guys didn't spend enough time meeting the eco-entrepreneurs, for example.

"Yeah," Bisnow admitted, nodding and taking a bite of food. "That might be cool next time."

The other suggestion: More women, please.

Facebook founder and CEO Mark Zuckerberg rarely writes for the company blog, typically taking a byline only when the company is doing some damage control. But on Thursday, the young executive penned a post for the Facebook Blog about his recent trip to Europe, which included a speaking engagement at the Future of Web Apps conference in London.

There's nothing ground-breaking in the post, titled "Hello from Madrid." But considering Zuckerberg is known for keeping to himself, a mild irony for the young fellow who facilitated the sharing of ten billion photos and a cascade of personal information, it's a surprise. Zuckerberg gives few interviews, and when he speaks at conferences, he sticks to talking points.

Mark Zuckerberg (right) at the Future of Web Apps conference in London, with FOWA organizer Ryan Carson.

His focus? How Facebook is having an impact beyond U.S. borders. "A Spanish developer told me how she reconnected with her cousins in Latin America --something that may have not been possible if our users hadn't translated Facebook into Spanish," he wrote. "In Paris, a group of people in the Marais district organized a neighborhood protest against the filming of a TV show in their district. In the U.K., Cadbury brought back the Wispa candy bar after thousands of users campaigned for it on Facebook."

It's not particularly personal. But I'm all for hearing more from Zuckerberg. He's clearly a bright guy, not to mention the fact that he created one of the biggest cultural phenomena of the past decade, and maybe a more open image could help deal with the oft-vicious gossip about Facebook that's constantly swarming around the Web. Plus, one of Facebook's board members is Marc Andreessen, one of the tech industry's most high-profile "CEO bloggers," so Zuckerberg has a good example right in front of him.

That said, it's good to be careful: Some might interpret this kind of post as a sign that the 24-year-old is spending too much time globe-trotting and "focusing on growth" while the rest of Silicon Valley is veering into panic mode.

Either way, travel-related blog posts are way more exciting when they're accompanied by dance videos. Get on it, Zuck.

LONDON-- Britain's normally gray capital was unusually sunny this week. So were the attitudes of Web developers gathered here for a conference while, across the pond, Wall Street was in full panic mode.

A bright-eyed pack of several hundred aspiring Web visionaries descended upon London's Excel conference center for the semi-annual Future of Web Apps (FOWA) conference. Eager developers trawled the show floor's booths for stickers that they promptly stamped onto their (overwhelmingly Apple-manufactured) laptops. One pack of young men strolled around in straw sombreros. Another trio passed some time in between lectures by tossing around a Frisbee with the Yahoo Developers Network logo on it.

There was only off-hand talk about the global economic crisis that was also unfolding, in part, just a few train stops away in London's financial district. But people walking these halls all share a fervent belief in the power of their own ideas: Innovation cannot and will not stop, financial crisis be damned.

"A lot of people have asked (whether) the recession will impact certain things. I think the answer is probably that a major recession will impact everyone in some way, but traditionally I think some of the best companies have been built in down economic times," Facebook founder and entrepreneurial icon Mark Zuckerberg said in his keynote address on Friday evening. "If what you're providing is value to the end users...that lasts."

This wasn't some cloistered retreat of idealists. While FOWA is a small conference compared to bigger confabs like the Web 2.0 Expo or Demo, it pulls in big tech sponsors: AOL, Microsoft, Facebook, MySpace, Adobe, Sun Microsystems, all of whom want to reach FOWA's audience of young Web developers. Last year, the tech world went wild over Web platforms--packages of code released to companies and developers so that they could build their own widgets and applications to run on social networks like Facebook and MySpace. Now the industry has seen the platform craze extend to mobile phone software, like the iPhone, and new development platforms for downloadable desktop software, like Adobe Air and Microsoft Silverlight.

If you looked at the conference's array of sponsor booths, you'd think the tech economy was booming like it was in 2006. AOL was handing out pamphlets about developing on properties like social network Bebo and widget-maker Goowy; Sun Microsystems advertised its "Startup Essentials" program with, somewhat incongruously, a mechanical surfboard. Perhaps the biggest piece of showmanship came from MySpace, which hawked its U.K. developer program with one of London's iconic double-decker buses parked on the show floor, covered in MySpace regalia and playing nightclub-worthy electronica from a set of D.J.-style turntables inside.

That's not to say reality wasn't an uninvited guest to the festivities.

None of the big companies on the FOWA show floor seemed to be looking to actually hire new developer talent. A representative at Microsoft's booth, speaking to me over the din of the Guitar Hero stations that the company had set up, said he doubted anyone was hiring and estimated that the market for developer talent in London had probably dropped by five or six percent. A representative at AOL's booth wasn't sure if the company was hiring or not, but said they were really only there to drum up interest in properties like Goowy and Truveo among the developer community.

Entrepreneur or employee?
But it's unlikely that developers were concerned by the lack of employment opportunities; a job at AOL or Microsoft, or even Google, isn't what today's Web kids want anyway. That's not surprising, considering most of them belong to a digital generation that has been characterized by entrepreneurial self-promotion.

Inspired by people like Zuckerberg and Digg founder Kevin Rose, who also spoke at FOWA, and encouraged by how inexpensive it is to build on the Web these days, they see the recent wave of Web innovation as self-propelled. If you can't found a company because the venture capitalists are getting picky, at least build an iPhone app. Who cares if Adobe's not hiring?

Kevin Rose: "A lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in."

(Credit: Caroline McCarthy/CNET News)

But then, there's that pesky "reality" thing again. Many of the developers, as well as designers and consultants also present at the show, spent the Web 2.0 boom swimming in lucrative freelance contracts, and a few admitted that they're now doing the unthinkable and searching for full-time employment. "From the freelance perspective, things are tough," said Suw Charman-Anderson, a London-based consultant who has been a freelancer for ten years. "If someone offered me a job, I'd have to think seriously about it...It's been a very quiet summer for me, and the (client) interest I'm getting now, I'm getting interest from India. Their economy seems to be a bit more robust."

A few companies with executives at FOWA were interested in hiring developer talent. Those companies tended to be independent but established companies that had either a stable revenue stream or a healthy cushion of venture capital to last through difficult times--and often, they are run by the very same people who subscribe to the idea that innovation can live through, and even thrive in financial disaster.

"Companies are seeing that they really need a Web presence and so many have embranced blogs for that," said David Recordon, head of open platforms at Six Apart. "I don't think that's something that businesses will neccessarily cut if money's becoming tight."

Digg's Rose proudly announced in his address to FOWA's attendees on Thursday morning that his company is hiring new engineering talent. But in an interview with CNET News later that day, Rose said everything is tougher now, from finding investors to easily affording company expenses.

"Start-ups that don't have traction and don't have that kind of hockey-stick-like growth on Alexa or Compete or whatever are going to have a really difficult time raising an additional round of funding," Rose said in the interview. "I think that a lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in." Frugality has always been crucial to Digg, said Rose, who had worked at several start-ups during the dot-com boom.

Survival of the fittest
Recordon and Rose, in their belief that sound business practices and useful services will survive, sum up the general of the freewheeling, free-thinking world of Web developers, where there's a heavy temptation to put a positive spin on the financial crisis. Their reasoning? Starting a business and making it last is always hard, and when a bull market flush with venture cash makes it easy, that's not a good thing. Many at FOWA argued that even in the best of times, the culture of Web 2.0 development should be a sort of Darwinism, albeit a very happy Darwinism covered in stickers with the logos of Bay Area geek brands like Flickr, Digg, and Laughing Squid.

"Starting a company is hard. Period. Exclamation point," said Michael Galpert, founder of a New York-based image-editing start-up called Aviary, in a talk about how to build a company outside Silicon Valley.

Mark Zuckerberg (right): "Some of the best companies have been built in down economic times."

(Credit: Caroline McCarthy/CNET News)

He's right. It's a risky industry. In a city like London or New York, especially, many of these bright young developers and engineers likely turned down then-lucrative jobs in the financial sector in order to pursue the more volatile path of entrepreneurship or freelancing. They are already living lifestyles that many of their peers would deem excruciatingly difficult.

"I don't believe in good work, I believe in excellent work at a start-up company," Mahalo founder Jason Calacanis said in a talk about "entrepreneurial insanity" on Friday. "Start-ups are like the Tour de France or the Olympics, but in any team sport if somebody's not pulling their weight, they pull the whole team down."

Conference host and consultant Simon Wardley reminded the audience at a talk about innovation that this industry is never easy and that uncertainty is a perpetual hallmark. When you come up with a novel idea, it won't be novel for long.

"By the time we have all the information necessary to make a perfect decision, that decision is generally worthless," Wardley said. "Opportunities need to be seized."

And entrepreneur-turned-investor Julie Meyer of Ariadne evoked a quotation from Sir John Templeton that says to "invest at the point of maximum pessimism." Encouraging entrepreneurs to get venture rounds completed and to use the cash wisely, Meyer said, "Entrepreneurs are always investing at the point of maximum pessimism. That's what they know how to do best."

This is where the Darwin effect comes into play, as some entrepreneurs readily compare the current financial crisis to the original dot-com bust in a good way--that it might have a positive effect on the industry by separating quality start-ups and ideas from a long, candy-colored, vowel-free parade of Web 2.0 silliness. Being part of the business had become almost too easy, a fact easily illustrated by the loads of goofy widgets that flooded Facebook's developer platform and soon generated a vocal backlash.

Google engineer Kevin Marks, who helped build the OpenSocial platform, pointed out that the lean years of 2001-2002 brought forth many of the start-ups that have proven to be both innovators and powerful market forces in the past half-decade. "If you look at when the dot-com bubble burst, a lot of the companies that are speaking (at the conference) today grew out of that," Marks said. "What you tend to get in the quieter times is people coming up with these things...Flickr is a great example."

But here's the problem with this crisis-be-damned idealism: it will not always play out as well as every optimistic developer hopes. Many of the ambitious young techies who are convinced that they have the wherewithal to make it through the financial crisis are going to be in for a nasty surprise. That VC pitch spree might come up fruitless. That social-advertising-based business model might not turn a profit.

"There is not and cannot be a simple method (to innovation)," Simon Wardley said in his talk. Nor is steering a company, or even a great idea, through the worst economic conditions since the Great Depression.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

One part college reunion, one part cultural showcase, and one part weeklong think tank, some classify the South by Southwest Interactive Festival (SXSWi) as "spring break for geeks."

But this year more than ever, many eager young entrepreneurs consider the festival, which takes place Friday through Tuesday, to be more than just a nerd haven where the margaritas are flowing, the barbecue is sizzling, and (almost) everyone knows that Ruby on Rails is not the name of an indie-rock band. Going to SXSWi is considered a crucial business move, particularly after the meteoric rise that the then-unknown Twitter enjoyed at last year's festival. The microblogging start-up not only gained buzz from winning a SXSWi Web Award, but also earned a loyal following of tech-friendly addicts who used it as their communication tool of choice at the chaotic confab.

For bootstrapping entrepreneurs, SXSWi is like a cross between a debutante ball and a petri dish: spread the word about your new social-media brand among likeminded people (particularly over an open bar), and ideally get them to start using it on the spot. This time around, plenty of new companies are vying for the status that Twitter enjoyed last year--but caution is key. Not only will it be extremely difficult for any start-up to pull off a "Twitter coup" at the festival, but it'll be even more difficult for it to do what Twitter has not yet achieved, and that's the feat of translating SXSWi trendiness into real-world success.

"It looks like everybody's fighting for it," said David Karp, founder of blogging platform Tumblr, which launched last year and will be making an appearance at SXSWi for the first time. "I think the whole thing is kind of funny, the way people look at this industry and the way they're super competitive about it."

It's true. While few actual product launches take place at the nearly press-conference-free SXSWi, many small companies have amped up their product offerings in the weeks before the festival or have created SXSWi-specific promotions to get the word out. Pownce, a microblogging start-up that launched last year, just opened an application programming interface (API) for developers. Publishing platform BricaBox formally launched in late February and has debuted SXSWi party guide SXSWhere.com as one of its inaugural product demonstrations.

Unofficial debut for many
Other companies consider this year's SXSWi to be their unofficial debut in the tech enthusiast community--much like Twitter, which was already five months past its formal launch at last year's SXSWi. "We really want to make a big splash," said Matt Galligan, founder and CEO of the Colorado-based Socialthing, a new company that aims to help users organize their online social-networking profiles in one place. Socialthing, currently in private beta, is hosting a party on Sunday night, has set up a booth at the festival, and has beefed up its server power to accommodate new users.

"South by Southwest is just one more step out for us," said Sam Lessin, founder of file-sharing start-up Dropio, who says that he's "really amped" that his company was nominated in the "Technical Achievement" category of this year's Web Awards. "We want to push the name out, get the concept of what we're doing out a little bit wider, and get feedback and reactions and engagement from those people."

A few bloggers have suggested that Dropio, which lets users toss all kinds of media into group "drops," could be "this year's Twitter," as SXSWi attendees could potentially use it to communicate and share information with one another. Lessin has mixed feelings about the characterization. "There are aspects of Twitter which are awesome, and which we would love to be associated with," he said. "We'd certainly love the kind of growth that they saw coming out of SXSWi (2007). There are other aspects that we'd rather not emulate."

Lessin confirmed that Dropio's servers will be getting extra juice for the festival to prevent high-profile meltdowns like the ones that still occasionally plague Twitter a year after its SXSW 2007 debut.

Plus, there's the disappointment factor. Despite the fact that it remains very popular among social-media geeks, Twitter really isn't a household name, and the tech industry's perpetual hype-backlash cycle has led some up-and-coming entrepreneurs to tone down their enthusiasm when it comes to SXSWi buzz. "This is not an important event for us," said Karp, who added that he doesn't think elevated chatter at SXSWi indicates future success for a start-up, given the festival's insidery crowd. "Conferences aren't necessarily a great case for a mainstream activity. This is going to be like a big tech slumber party."

Nevertheless, Tumblr will be co-hosting a party with video start-up Next New Networks, and is encouraging people to contribute to a group blog. "During the party we're going to just hand out an e-mail address that people can put into their phones, so that during the event they can send in video and text updates and photos," Karp explained, still insisting that it wasn't a big deal. "We kind of fell into this party that we're now co-hosting. That was mostly an accident."

Is another Twitter needed?
Twitter broke out last year, he theorized, because it was just the perfect fit for the conference in a way that we won't likely see again. "Twitter was especially magical in that such a thing didn't really exist (before) and it blended in perfectly with the conference," Karp said. He added that because of that, there's a chance that this year's SXSWi masses will just use Twitter again as their communication tool of choice; many of them still use it avidly, after all. There might be nothing that emerges as the "next Twitter" because nothing is needed.

Then there is the fact that the new-media industry may be looking less for a hot new start-up and more for sweeping ideas to help mature the industry. If the recent Future of Web Apps conference in Miami was any indicator, the hot topics in social networking and Web development are community-driven standards like OpenSocial and DataPortability that aim to infuse a jumbled landscape with a bit of order.

And let's face it: at its core, SXSWi is one big party, and plenty of those present will be there to have a good time with fellow geeks, not philosophize about the next big thing. At least one entrepreneur I talked to has indicated that the most important preparation he's done pre-SXSWi has been brushing up on his Guitar Hero skills.