I don’t hate tech startups. I really don’t. But the reason I was running late to TechCrunch Disrupt NYC, one of the startup world’s major annual conferences, was because I had trusted Google, the granddaddy of all tech startups. Before I had left my apartment, I plugged the conference site’s address into Google Maps and dutifully followed the subway directions it gave me.
I hadn’t brought an umbrella because I didn’t want to carry my full-size umbrella around the conference all day. I really wish I had, because Google had given me terrible directions, putting me 32 blocks south of where I needed to be. By this point it was raining as hard as any hurricane I’ve been around to see, and my jacket had been completely soaked through.
From May 21-23, the third Disrupt NYC was held in a giant warehouse on Pier 94 on the banks of the Hudson River. Maybe I’m just helping them with the nautical theme, I thought. I was even wearing boat shoes.
But to people in the startup world, my entrance may have looked menacing. Thunder roared into the building as the sliding doors opened for me. I arrived drenched in the unforgiving elements of nature, a reminder that all they work for is a wild abstraction, riches being doled out to things that can never be touched and only exist on a screen. But most ominous of all was the look on my face: I was unenthusiastic. The startup world, I would come to see in the three-day conference, is based on everyone involved being completely enthusiastic and having utmost faith in the industry. Unlike everyone around me, however, I had doubt. And when I talked to them, they could sense it.
I had come to Disrupt to look for signs of the tech bubble, that all the money being thrown around in this startup world is making companies that have little value seem to be worth a lot. And I think I found it.
Apparently TechCrunch should have been more careful when they were scouting conference locations, because they ended up selecting the perfect metaphor. Conference attendees were, in the blog’s own words, “stuck for three days in a big warehouse.” The space was cavernous and alienating, and — like a bubble — mostly empty space.
The environment was heavily branded with TechCrunch logos everywhere. During breaks, the TechCrunch Disrupt theme song played. The song had a single lyric: “TechCrunch. Disrupt.” Green light, the color of the blog, but also, of course, the color of money, seemed to bathe everything. The green lights scanned the crowd, as if looking for some random place to shoot cash.
Birds dotted the rafters of the warehouse. Floor space was so empty in the building that they sometimes landed in small flocks on the ground to search for food left by attendees. But they were mostly notable for chirping during the panels and interviews in the curtained main hall; sometimes so loud it was hard to hear the speaker system over them.
The green TechCrunch stage had a single podium and was flanked by two giant video screens. Sitting in the crowd, it looked rather like a revival meeting.
The ethics of a news organization like TechCrunch putting on an event for the companies it covers and charging for it might seem questionable, but of the many ethically questionably things it's been accused of (not always rightfully), it ranks low — the giant namesake tech conference is practically the norm for tech publications now. There's All Things D's eponymous event, GigaOm's Mobilize and paidContent conferences, The Next Web's Conferences and Business Insider's Startup, to name a few. And Disrupt is on the heels of Internet Week New York, another tech conference asking startups for their time and dollars in exchange for possible media glory. It's no secret these conferences make serious money.
“There’s a reason we knock ourselves out for these shows,” AOL’s Ned Desmond, who serves as COO for TechCrunch and other blog properties, told me with a smile. “They do very well for us.”
At TechCrunch Disrupt, a small 30-inch “cocktail height table” in Startup Alley, an area with rows of companies displaying their wares, cost the youngest, lowest-funded companies $2,000 for a single day on the floor. The prices went up from there to nearly $10,000 for an “exhibitor table.”
And that’s just the more affordable level. Prices to become an event “sponsor” weren’t listed on TechCrunch’s website, but were surely much higher than that. At the very top level were “partners,” companies like AT&T, Credit Suisse, and Google and younger tech startups. Despite all that spending, Google didn’t even bother to set up a table at event.
Startups on the floor generally said it was worth it, but some admitted to reluctance about paying TechCrunch to be there. “It is weird,” Unawkward founder Gerald Ramos told me. He said he got a discount on his cocktail table from Launch Pad Ignition, a startup accelerator that invested in his company and a sponsor of Disrupt, and wouldn’t otherwise have come for a little table that didn’t seem worth two, three, or four thousand dollars. He said he was pushed into buying a stand-up banner to display next to his table. Ramos said the banners cost $1200. Many other companies there appeared to have purchased one.
Startups who applied and were accepted to the conference’s competition, the Startup Battlefield, got in for free. But, looking around after he got there, Jay Shek, the CEO of Battlefield competitor Centzy, said he wouldn’t have paid to be there. “It seems a little quiet here,” he said. It wasn’t the last time I would hear people say it seemed like a down year for the event.
People who simply wanted to attend and not set up a table could have done so for the low, low price of $2,995.
Nearly every TechCrunch attendee who had been to Disrupt the previous year said attendance seemed down this year. Desmond told me attendance of the hackathon preceding Disrupt was up but would merely say Disrupt “met expectations.” Are people less interested in the startup blog juggernaut now that it has more competition? Or has the tech bubble finally brushed against the absurdity of paying thousands of dollars for a table and a few days of posturing before the rest of startup world?
Despite all the money TechCrunch rakes in on Disrupt, it still asks for volunteers to help out, because why pay people when you can get students who want to get jobs with you or with startups will work for free? One volunteer, Amith Shetty, told me it was his third year as a volunteer. “This one isn’t as active,” he confirmed, saying there were “definitely” fewer attendees than in years past. He blamed it on, of all things, the rain. “A lot of the tickets are company-sponsored. It can be like, ‘Oh it’s raining, I don’t feel like going out there.’” These are tickets, mind you, that are supposed to be worth thousands of dollars. (Though I got in for free as a member of the press.)
AOL certainly isn’t down on TechCrunch. The blog lends the struggling ancient Internet corporation cachet, but I was surprised it didn’t put its name around the event more. It had a single table at the event where attendees could try out its various iPad apps, such as one for The Huffington Post. But that table was covered in TechCrunch branding. It’s almost like they’re too timid to take any credit for TechCrunch.
Everyone at Disrupt threw around the word “community” to describe the startup world. I think a better word is “religion.”
"Basically this is the last great gold rush. I'm not fucking with you. I really mean this,” Jonathan Basker a VP at startup incubator Betaworks, told me. “Whether these guys are right or wrong, they're putting their whole life on the line on that idea they think is so interesting and so worthwhile that they're going all in on it and you have to respect that. Even if you think it's the dumbest idea ever, even if you think there's zero chance of success, an asinine notion, you still have to respect [them].”
Like everyone in the startup industry I met, Basker has a basic optimism about startups and high degree of enthusiasm at any given time. I, however, do not. Basker had that sussed out within two minutes of talking to me, and suddenly halted what he was saying to tell me so.
“You have this look on your face that makes me think you hate this whole thing. You're totally down on it." I mean, I do have plenty of concerns about the startup world. But I have a good poker face. I was maintaining a neutral demeanor like a good journalist. For startup people, however, a lack of enthusiasm is highly suspect. “You hate it,” Basker continued. “You think it’s distasteful.”
Why is it that all the startup press walking around seemed to be fawning over each and every company in this thoroughly birded warehouse? I’m not sure the people who start startups and some of the people who cover them have any differing ideas at all. They, along with the investors, are all members of the same religion. One has to have an almost religious fervor that, despite the high failure rate, any startup truly can become a huge business that actually proves itself to be worth the reckless speculation and the money that has chased money chasing money chasing money.
The next day, a young startup guy came up to me told me he thought he recognized me from somewhere. He didn’t. He asked me how I was liking the conference. I said I was there as a journalist, so I was just kind of observing everything. “Why do you hate it here so much?” he asked. “Just kidding!” He was only kind of kidding.
From what I could see, the default in the startup world was either to love an idea dearly or to merely like it. When I talked to startup founders and went down a line of questioning that made it seem I might actually have a negative idea of what they were doing, a disturbed look came over their face. (A similar look appeared when I wasn’t using a proper amount of startup jargon in speaking. I got myself caught up on their dialect quickly.) They seemed to think I was confused and just needed to hear more about their startup, so I got stuck talking to some, repeatedly. Eventually I learned to just fake enthusiasm, look down, say, “what a cool idea,” like I was jealous I hadn’t thought of it, and then I was able to walk away.
All of this a little weird and severely restricts the diversity of attitudes in the startup world, but it’s probably exactly why the industry works. Unlike in other areas of business, people are startlingly genuine and seem to earnestly like helping one another.
The cool kids, the startup and investor success stories who dominate Disrupt panels, set this example for everyone else. If you’re not into living a restrained lifestyle, investing to help good companies and your friends, and planning out how to direct the rest of your wealth to philanthropic efforts, you shouldn’t really be allowed in the club. There was a palpable peer pressure emanating from the stage, made possible because even the most successful people treat others like their peers. At lunch, I sat in the cafeteria near opening interviewee Fred Wilson of Union Square Ventures, an incredibly rich man. His eyes bulged as he bit into the same free kind of sandwich I was eating.
So maybe it’s more like high school than a religion. A high school where everyone is really, really nice.
The peer-enforced uniformity has some interesting effects. There were far more men than women, but I never got the sense there was exclusion, per se.
I went to the opening night’s sponsored party hoping drunk startup people would tell me the dirt on each other and admit to fears about the tech bubble. I got neither. They drank, but they conscientiously left piles of dollars for the bartenders and just networked the whole time. I’d never seen a more civilized open bar.
The sponsor was car-sharing rental program Getaround, last year’s Disrupt competition winner and a lavish spender this year, to show off their success getting funding, I guess. They projected photos of cars you can rent on their service onto a screen above the dance floor. Because nothing says “party” like looking up to see a photo gallery of 1998 Ford F-150s.
Still, Getaround tried to make it look like the club it was. They had music playing from thefuture.fm, a startup that records dj sets, or something like that, and Getaround representatives repeatedly got on the mic to tell people to dance to no avail. They also set up a VIP section to make it seem more like a party. I asked Asher Adelman, who was at Disrupt with Israeli startup Tokkster what the deal was with the VIP section and who was in it. He didn’t know. “They asked if I wanted a wristband,” he said. Apparently they were just giving them out at random. He didn't take one.
The idea of a tech bubble was never explicitly brought up on stage at Disrupt.
When I brought it up, the response most everyone, including a guy who walked around all three days in a t-shirt and a kilt, gave me was, “I don’t think there is a tech bubble. But if there is, I don’t care.”
Startup people don’t think the bubble is a problem for them because they’re true-blood startup people. The bubble is only a problem for the people they blame for causing it: the outsiders.
There were repeated references on stage to people coming into the startup industry to make a quick buck, people who do not fit the ethos of the true believers. In passing, interviewers, interviewees, and panelists refer to people coming from finance or consulting, the kind of people who look to maximize the money they can make on a career path out of college, and trying to get into startups and startup incubators, because they sense that’s where the big money now is. Bros in geeks’ clothing.
The gold rush of the startup world has brought plenty of speculators and spectators. Random people with money were still running around the floor, jamming their wallets into people aggressively, startups told me. I ran into deposed NBC head Jeff Zucker, who said he was “just taking in the scene” and “always keeping my eyes open.”
If anything, true-blue startup people actually want the bubble to pop, to purify the startup world of these cynical speculators and poseur startup creators out to make a quick buck and the headaches they cause. Real startup people won’t quit when the bubble’s been popped. They’re in this for life. And if you question that, well, maybe you’re not a true believer after all.
"Tech is such a good spirit,” explained Song Zheng, a “developer evangelist” at Tokbox. “Like, everyone is helping each other. So if there is a bubble and it pops, then there's no money, but people in tech will always have that passion. So, not to worry. It's like-minded people and stuff."
Still, there is so much money being thrown around the startup world, that having lots of it doesn't confer any kind of exceptional status. “The amount of money you raise is a lot less important than who you raise it from,” Sequoia Capital’s Greg McAdoo said during a panel on Wednesday. Most everyone on the floor has been getting capital from somewhere, but they only tell you from whom if it allows them to name-drop one of these cool-kid investing groups.
All the optimism in the face of the bubble would make sense if there actually were any new companies to be excited about, but if they’re around, they weren’t at Disrupt. Almost none of the startups were geared to be used by the public at large. There were no big ideas at Disrupt.
Just a few good ideas. Unawkward, which lets strangers sign up for local events and experiences together and get to know one another, sounds like it could be interesting. Competition winner UberConference, which improves audio conference calling, will probably be successful, if the remaining businesses that still just use audio for their conference calls decide to change their provider, I guess. Consider yourself disrupted, audio conference calling! There was also something everyone was calling “Zappos for bras.” Boob shoes? Okay, fine.
But if you, like many investors, like sticking your money in dumb startups, there were plenty of options. MolarGeek is a social network for dentists where they can share photos with each other of the most disgusting mouths they’ve worked on. Klik is a hardware startup: A piece of wood painted in green and red with a magnet in the middle. You’re supposed to stick it on the top edge of your laptop or monitor to visually warn people if you’re too busy working to talk. Seemingly half of the companies there were offering to embed videos in websites in some way.
Startup people may think their club to be exclusionary, but its insular nature creates problems. Some problems they don’t like to address — like when the lack of women in the field was brought up in a panel interview and none of the five interviewees, all men, of course, would really talk about it.
On Tuesday, I talked to Neil Wehrle of hownow, an app that allows anonymous text chat but charts the chat on the world map based on where the originator of the chat was located. I compared it to Omegle, a well-established anonymous text chat Web and phone app that, from what I can tell, is a very popular and likely profitable enterprise, and is certainly the biggest name in the field. Wehrle hadn’t heard of it and was just about to present to the Battlefield. I assumed the judges would ask him about Omegle; they didn’t. They asked him about a slew of anonymous text chat apps that apparently exist but are in the startup world, funded by venture capital. Those apps were basically just copying Omegle’s idea, but much less successfully, and now more derivative companies still are copying them. I downloaded hownow and discovered it had only a couple dozen users in the world. Despite all this, hownow was quickly acquired by Betaworks during the conference.
I got dozens of e-mails from PR people before and during Disrupt, but I didn’t respond to any of these e-mails except for the one with the subject line “Crack a Cold One with Adrian Grenier.” It was about a press event inconveniently far from Disrupt at a bar that looked like it had been removed from Brooklyn piece by piece and bizarrely rebuilt in the middle of a Chinatown alley. But I was totally going.
Grenier’s Churchkey Can Co. manufactures beer in flat-top cans like ones used by breweries for about three decades in the last century until the invention of the pull-tab (the thing you use to open an aluminum beverage can today) in 1962. Flat-top cans are much more difficult to open than pull-tab cans. Flat-top cans require a tool called a churchkey to puncture holes in the top for drinking and aeration. Thus, they quickly disappeared from the market.
The idea behind Churchkey Can Co. is that you should somehow want to go through the hassle of poking holes in one of these flat-top cans to get to the beer inside. There’s a lot of bullshit sloganeering about beer being “worth the effort” and drinking a beer like your grandfather did to justify gimmick.
In other words, Churchkey is a brewing company that has no interest in beer. It exists because Grenier and ex-Nike designer Justin Hawkins decided they wanted to make some old steel cans. The actual beer is an afterthought.
All of this would easily be dismissed as just another celebrity’s dumb business idea, but it’s actually supported with capital from a host of tech investors. “We’ve heard that executives from Facebook and Zynga, as well as CrunchFund, have put money in to date,” TechCrunch wrote in April. CrunchFund is Michael Arrington’s investment outfit. And according to The Kernel, Arrington had that story placed on TechCrunch.
By definition, the Churchkey can is the opposite of innovation, re-introducing archaic technology to the market. It’s so contrary to human progress that the English language doesn’t even have a word for it. And yet, supposedly the brightest minds in technology are pumping money into this very process.
The bar event hosted about a dozen journalists. When I arrived, I was handed a Churchkey beer and a churchkey to open it and headed to the bar to give it a try. I pressed the tool down into the top. I dented it a bit. Grenier was behind the bar and gave me tips on the sort of psyche I should have when doing this to help me get it open. About 30 seconds into my attempt, I had finally gotten the two holes into the can. That’s only 29.5 seconds more than it would have taken me to open a pull-tab can. Grenier toasted me, and we clinked cans. He noted the cans make a different sound when they clink than aluminum cans do. Okay.
I took a sip. It was a pilsner. There was a bit of a steel aftertaste.
We were waiting around for the presentation to begin, so Grenier made some small talk. A journalist asked him about living in L.A. He answered. There was a pause, and Grenier took his churchkey out again.
"You can actually personalize this," he said, carving letters into the can. "A little scratch away," he summed it up. "A little bit."
I asked Grenier if this was his first startup. No, he said. He has a website—“shift dot com.” I jotted down “shift.com” in my notebook, but apparently I was spelling it incorrectly. No “f” maybe? “It’s ‘s-h-f-t,’” Grenier corrected me. “No ‘i.’”
"My first startup of physical product," he explained. Then he gave it a bit more thought. "It's the best-tasting one."
A bit later, I asked him if he had wanted to go into craft brewing or it was really all just about making this can. “The can is sort of incendient," he said, putting a stress on this made-up word, "of all the values we share in craft beer—participation—that really is in that point of distinction between the modern consumer society that is mainly lying and unaware. This is a way to get people re-engaged."
I asked him about his spot at TechCrunch Disrupt the next day. Did they ask TechCrunch for a slot on stage, or did TechCrunch come to them?
"We're the original tech vertical,” he said, then paused. "It's an ironic thing because it is disruptive," he continued, staring unblinkingly into my eyes. I still don’t know what that meant.
Later, Grenier started to perform the pitch, and he was nearly flawless. Clearly this was more his environment.
"Justin and I met in Portland, and we were at a birthday party, having a conversation over a beer, and at a certain point we got into the nostalgia of beer and the heritage of beer and how it builds communities," he said. "And eventually we started reminiscing about the old way that people used to open beers."
When they found out nobody was making hard-to-open anachronistic beer cans, "we decided to exploit the absence in the market."
Apparently, though, it’s illegal for bartenders to let customers open the cans themselves, which is supposed to be the whole point of drinking this beer. Hilarious.
Before we left, a journalist asked how hard it was to sell the beer to startup investors. Hawkins said tech investors are "maybe a little more willing to take risks." "And they got all the money!" Grenier interjected.
The next morning, hardware day Grenier, Hawkins, and their other partner took the Disrupt stage for a long interview about their company, the kind of interview no other startup had gotten or would get the entire three days of the conference.
Before the interview began, Arrington grabbed a mic and asked for volunteers to come up and try the beer. He put the mic in their faces and asked them for their opinion. Then he left the stage. Arrington drank a Churchkey beer on stage in a later panel, during which TechCrunch blogger Alexia Tsotsis was seen in the crowd opening and distributing Churchkey beers to attendees.
As the morning drew to a close, the emcee came on to announce the lunch break and tell attendees to visit the see the exciting new technologies in Hardware Alley, such as the four-bladed remote-controlled helicopter device that came on at stage right. The helicopter immediately crashed into the giant screen, flew vertically on it for a moment, and fell to the ground. The operator ran over and tried to re-launch it a few times, but it was to no avail. He put it under his arm and slinked away.
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