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‘Not Worth The Risk’: Startups, VCs Backing Out Of SXSW Due To Coronavirus Concerns

Mary Ann Azevedo — Tue, 03 Mar 2020 16:02:16 +0000

Note: SXSW organizers canceled the event on March 6. Read more here.

On March 2, and announced they would back out of the South by Southwest (SXSW) festival being held in Austin, Texas, due to fears over coronavirus (COVID-19). Today, Intel followed suit. A petition is being circulated by mostly Austin residents asking organizers to cancel the annual event (as of this morning, it had ). Now it appears that startup founders and venture capitalists, too, are nixing plans to attend SXSW – scheduled for March 13 to 22 – due to coronavirus concerns.

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I reached out to SXSW organizers to get their reaction, and they referred me to on their website that said they are working closely on a daily basis with local, state and federal agencies to plan for a safe event.

“As a result of this dialogue and the recommendations of Austin Public Health, we are proceeding with the 2020 event with the health and safety of our attendees, staff, and volunteers as our top priority,” they continued.

No doubt the unprecedented cancellation of SXSW would have a major economic impact on the Texas capital. The 2019 South by Southwest festival had a $355.9 million impact on Austin’s economy, according to an referenced by the .

In fact, the 2019 event had the biggest economic impact in SXSW’s 33-year history. Further, SXSW “is the most profitable event for the city’s hospitality industry,” according to the report and as cited by the Statesman.

‘Not worth it’

As SXSW organizers no doubt scramble to deal with the crisis, we talked to a few startup founders and VCs to hear about why they’re skipping the festival this year.

, founder and CEO of San Diego-based , told me he’s going to cancel his plans to attend SXSW. This is a big deal, he said, because his company (which recently raised a $6 million Series A) is in the pitch event for consumer tech.

As a new parent, Barbo said the risk simply isn’t worth it. And his co-founders, team and investors are all supportive of his decision.

“Attending SXSW is not the best decision for my family,” he told me in a phone conversation this morning. “We were honored to be selected for the pitch competition and it hurts me to pass that up, but with so many people converging on the city, it seems inevitable that something will come out of it if the event continues.”

Barbo, too, is disappointed in organizers and city officials for not taking things like Facebook and Twitter backing out, and the concerns of residents and attendees more seriously .

“I hate to say it, because SXSW has always had an immaculate reputation, but this feels like a lack of leadership on the part of organizers and the City of Austin,” he told me.

, co-founder and CEO of Bay Area-based , said he was planning to fly to Austin for SXSW but in light of the virus, his company has “restricted all non-essential travel.”

“SXSW has become one of those events that you feel like you should go to. There’s a lot of creative thinkers there,” he told me via Zoom this morning. “But it takes just one employee coming down with it to shut down a whole office. So I’m not going.”

Jain too shares Barbo’s surprise that the event is even still happening.

“W��ٳ� and Facebook cancelling their events, why would these guys continue? In fact, I should get my money back,” he said. “The amount of bad press they’ll get might ruin the brand for years going forward.”

VCs chime in

But it’s not just founders. VCs and investors also are opting to stay home.

Tim Ferriss, investor and host of The Tim Ferriss Show podcast, this morning that he’s not going.

“After much thought, I’ve cancelled my attendance at SXSW. I love SXSW, but I don’t believe the novel coronavirus can be contained, and I view an int’l event of 100K+ people as a huge risk to attendees and the entire city, given limited ICU beds, etc.”

On Twitter, San Francisco-based co-founder and GP revealed that after moving all in-person meetings to video, she also “cancelled SXSW.”

Via DM, she told me that her decision stems from the fact that COVID-19 seems highly contagious from the initial data.

“While I’m not worried about how it could affect my health, I’m worried about potentially becoming a carrier,” she wrote. “Our health system in the US seemingly cannot handle a large volume of cases, so I thought it was best to do my part in society and slow the number of cases. If they made it online, including the event I was supposed to judge, I’d be happy to still partake.”

And, a Los Angeles-based VC told me that one of his teammates had agreed to attend SXSW this year. He wrote me via DM: “She has asked not to go and we agreed she should not. We instituted a policy today strongly advising against attending any conferences until further notice (along with other guidelines).”

Ultimately, are organizers willing to sacrifice safety and health for dollars? Guess we’ll see. While it would no doubt be extremely difficult, and expensive, to cancel or postpone at this stage, they may have no choice if public pressure continues to build.

Meanwhile, head here to read about how heightened concerns about germs are contributing to a surge in sales for some startups in the disinfecting space.

Note: Post-publication, Founder said she is also not attending SXSW.

Illustration:

Immigrant Tech Entrepreneurs Talk Moving, Raising Money And Overcoming Challenges

Mary Ann Azevedo — Fri, 03 Nov 2017 22:35:31 +0000

There’s a lot of debate these days about immigrant entrepreneurs and their impact on the United States’ economy. But one thing’s for certain: Immigrant entrepreneurs can be a force to be reckoned with and have the ability to offer insight and experiences that are valuable to all.

While there are few hard statistics on the number of immigrant entrepreneurs, a recent research by the National Bureau of Economic Research estimates that the immigrant percentage of entrepreneurship has over time, from 17 percent in 1995 to 28 percent in 2008. If that trend continued, that number is likely even higher today.

In this article – the first of a two-part series – we’ll talk to three immigrant entrepreneurs about their experiences of building a company in the United States.

Taehoon Kim

is CEO and co-founder of San Francisco-based, a developer, and publisher of free-to-play mobile multiplayer games.

The serial entrepreneur was born in Seoul, South Korea, and previously co-founded and . Kim was also a of Samsung’s smartphone and mobile gaming business.

Kim moved to Vancouver, Canada, when he was 11 years old. He went to college in the United States but then went back to Seoul to work at Samsung and other startups.

He officially moved to the United States after one of the lead investors in his startup – – suggested Kim move to the Bay Area and incubate the company at their offices.

“It was a very smooth transition,” he said. “I was very impressed with all the infrastructure already in place and the quality of people that were helping us.

But the fact that his situation was more the exception than the norm was not lost on Kim.

The sheer number of startups in Silicon Valley made everything so competitive – from hiring to finding office space.

“If you do have a great prop up, momentum and backers, that’s when Silicon Valley shines,” he told �� News. “But if not, it’s a very difficult place to be a startup. If you don’t have a certain momentum going for you, it’s actually a lot harder to do a startup here. But I had the advantage of having a top-tier VC firm such as NEA as my backer. And, that was enough for me to able to get things done over here.”

Still, Kim concedes that hiring was a challenge.

“It takes years to develop a human network to put together a good team,” he said. “So immigrant entrepreneurs have it even tougher since they have to introduce themselves into the ecosystem. Those already in Silicon Valley know a lot of people, including people they worked with in the past.”

Since moving to the U.S. in 2011, Kim has grown nWay from four employees to about 80.

“Hiring is not hard, but hiring right is,” he said. “Every hire is a risk when you don’t know too many people or have a network in place. So my advice to other entrepreneur is to hire very slowly because the right team, culture, and chemistry will make or break a company.”

Like many immigrants, Kim hasn’t forgotten his home country. In 2014, he opened an office in Seoul that currently has about 14 people. Having grown up there, he knew that there was strong talent around server engineering and artists.

“So we took advantage of that knowledge and hired top people in those areas that may be harder to find here,” he said.

NWay is clearly doing something right. Its Power Rangers app was released earlier this year and picked up 6 million downloads in four days, and more than 23 million so far. Kim’s since partnered with and , creator of the Power Rangers brand and they have become investors in nWay.

“It’s been a lot of fun actually developing and launching that game,” he said. nWay also previously worked with developers on games based on “Star Wars,” “James Bond,” “Indiana Jones,” “The Godfather” and “Star Fox.”

Mazda Marvasti

, CEO and co-founder of Irvine, Calif.-based, was born in Iran before making his way to Southern California and launching a startup called that was eventually sold to . Prior to AppLariat, Mazda was the CTO of the cloud management business unit at VMWare, which became a $1 billion-plus revenue segment in just four years. Marvasti holds more than 20 patents on Big Data statistical analysis techniques.

Marvasti moved to New York in 1979, during the height of the Iranian Revolution.

“Half the people who come to the U.S. choose to,” he said. “The other half are running away from something.”

Marvasti didn’t speak any English when he first moved and admits to feeling “massive culture shock.”

“It was probably high school before I started to understand what the teachers were talking about in class,” he said. “Plus, it was a difficult time to be a person from Iran. I was bullied and beaten up in school. There was trash thrown in my front yard every morning. But I had a supportive family who helped me assimilate. And by the time I was a senior in high school, I considered myself just one of the kids.”

People kept encouraging Marvasti to change his name but he resisted. And now he’s thankful he didn’t.

“It’s an advantage because it stands out in a way that’s different,” he said.

After getting his PhD from Georgia Tech University, Marvasti ended up working for a major auto manufacturer for five years before deciding to move to Southern California.

“From an opportunity perspective, it seemed to be a much more viable place to be,” he said. “And I’ve been here ever since.”

Plus, he found the state to be very welcoming.

“Over here I blend in with everybody else,” he said. “There’s just more openness to different types of people, and to the notion of the best idea winning. It’s just a more inclusive place. California is truly different.”

Marvasti got into the high-tech industry in 1997 and hasn’t looked back.

His last startup had a 150-person team in Armenia, a country where Marvasti had visited and realized was home to “a lot of educated people driving taxis who wanted to do more.”

“When the company got acquired by VMWare, they inherited the Armenian team.

When I asked Marvasti why he didn’t open an office in Iran, his answer was not surprising.

“The sanctions in place makes it very difficult,” he said. “And actually a lot of Iranians have moved to countries like Armenia to look for jobs so there is another way of tapping that talent pool. But sadly, despite the fact there’s talented, highly educated people in Iran, the political climate and sanctions make it extraordinarily difficult to do business there.”

Marvasti’s latest company, Applariat, is developing enterprise software that enables companies to move all their apps into the cloud and make those applications look like cloud native apps.”

As an immigrant who has experienced discrimination and bullying, and seen it happen to his friends, Marvasti believes he has a better sense of understanding the perspective of other immigrants who are looking for a job than those who were born in the United States.

“But I don’t tend to favor them,” he said. “I’m more concerned with can you move the needle forward for my company? That’s the way I treat them – the same way I want to be treated. But in general, I find it interesting that immigrants can be cast in a bad light because my experience is they are hard-working and just want to be able to contribute.”

Vineet Jain

Vineet Jain, CEO and co-founder of Mountain View-based , moved to the United States from India in November 1993.

Prior to Egnyte, Jain founded , a supply chain software solution provider funded by

, , and . He has held a variety of senior operational positions at and .

When moving to the U.S. at the age of 25, Jain went straight to the Bay Area after spending less than one year in the United Kingdom.

“The lure of Silicon Valley was well-known, even then,” he said.

Jain ended up founding his first startup, Valdero, after leaving KPMG, who helped him get his green card. He has never taken for granted his ability to live and work in the U.S.

“One thing I keep saying is that no country on the planet is more welcoming to immigrants than the United States of America,” he said. “When it comes to the level of freedom you feel here to try out your ideas and the support system that is there irrespective of color, race or country of origin, I think this country is the best. And the Bay Area, despite its traffic and expense, is one of the best places on the planet to be an immigrant, especially in tech.”

He ultimately sold Valdero on the advice of an investor.

“It wasn’t a stupendous exit,” he said. “There were a lot of hard lessons learned. I took it as a failure that I couldn’t generate a lot of wealth for employees and investors.”

Egnyte is now in its tenth year and has grown to 400 people, having hired 100 people in 2017 alone. The company has $62.5 million in venture capital but hasn’t raised money since November 2014. It’s been cash flow break even since the fourth quarter of last year and briefly turned in the second quarter of this year.

Personally, Jain said he did not experience discrimination as an immigrant. And he views his company as an extension of his family.

“I came here solo and am married and have one child,” he said. “We have no other family here. What sustains you here is the company and people you work for. Driving up to the office two days after Christmas last year, I saw our parking lot was full while so many others were empty. That day I felt so privileged, humbled and honored to have people working here who deeply care and were busting their chops to do a great year-end.”

But Jain too hasn’t forgotten his home country. Egnyte has around 45 employees in Mumbai.

And, one of his personal goals is to give back to his home country by helping support health care and education initiatives.

“The poverty there is very widespread and so many people can’t afford basic medication or surgery,” he said. “I really want to help somehow, and anonymously, give health benefits to deserving people. I want to help build the education system. Right now I do it indirectly through my mom but one day I hope I can get to a point where the basic needs of my family are all met and I can just focus on that.”

Stay tuned next week for the second story in this two-part series where we’ll talk to three other immigrant entrepreneurs about their experiences.

Top image and gif via . Headshots via subjects.

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