Someone stole all the tea at the TechCrunch50 Conference. All the tea bags, that is. I wanted a pick-me-up and coffee can send me over the top. Alas, no tea. "I'm so sorry. This is the first time in all my years of catering that this has ever happened," said one of the catering company reps. (She's lucky the event's co-founder Mike Arrington wasn't around to experience the moment). But the tea heist incident seemed, in a nutshell, to summarize the mood at the annual confab that lets startups pitch their technology. Everyone wanted something. VCs didn't want too pay much. CEOs didn't want to get paid too little. No one wanted to leave empty-handed.
The turnout was solid, with a packed hall and sharp-elbowed blue-shirted bizdev guys battling it out for the best seats in the house. Startup execs were hesitant about money and worried that they might not be able to raise what they needed. The judges were more supportive than in years past (when contestant iMo had a snafu in demoing its mobile iPhone driving game app, judge Yossi Vardi led the audience in an encouraging cheer).
But at the same time, the big event underscored the problem with Internet startups. Barriers to entry are low. Almost none has a good path to making any money. And VCs have been burned too often to give these startups high valuations. Walking through the Demo Pit where startups that did not make the finalist list had purchased small tables to hawk their wares, I could only find a handful of companies that I though would be remotely useful. Even the CEOs of the companies I spoke to who are looking to raise money downplayed the importance of getting cash.
That's something of a statement and a sea change. Most of the CEOs and companies at TechCrunch50 are taking a big risk, investing their own money, tapping into their credit cards, shaking down their aunts and uncles. And they truly believe in what they are doing. In fact, they believe enough that they are reluctant, in many cases, to take VC money at reduced valuations. That said, they are operating under diminished expectations. One exception proved the rule. Free personal finance software outfit Mint.com, the TechCrunch50 winner from 2007 (and one of my favorite Web tools), was purchased by personal and small business financial software and services company Intuit (INTU) for $170 million, according to TechCrunch, which broke the news.
To put this in context, however, $170 million is a nice exit but hardly the type of billion-dollar home run that venture capitalists dream about. It's possible Mint, which was rapidly gaining ground, could have gotten up enough steam to get to $1 billion. Online finance is a huge market. But CEO Aaron Patzer and the board believed it was a good time to exit. Among all the TechCrunch50 heavy hitters for the past two years, Mint had the biggest exit.
Ironically, many of the startups were chasing areas that are already crowded. A number of travel startups were in the Demo Pit, as if there aren't enough travel startups. A handful of personal or visual search engine companies were also there. With Microsoft rapidly building up its search engine Bing and Google (GOOG) in the process of rolling out new features, the search space would seem to be a particularly tough sell. A number of social networks and tools to help people and companies manage social networks and social media were there. There does seem to be a few companies doing this these days.
There were a few startups that I absolutely loved. Bojam.com looks like it will be an amazing tool for musicians and music-lovers who want to create and collaborate on online music. iAte is a super-fun Twitter-filter app that can tell you what your followers are eating and, in the future, make suggestions on where you should eat. SeatGeek is a super-cool tool that can help you predict the value of seats for events, a great companion to anyone who uses Stubhub and other secondary ticket markets.
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