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SXSW Panel Preview - Unsexy & Profitable: Making $$ Without Hype
Unsexy & Profitable: Making $$ Without Hype, 3:30 p.m. March 13, Hilton A/B
Matt Chasen, the CEO and founder of Austin’s uShip Inc., has watched lots of flashy company sail through South by Southwest Interactive on a wave of hype (but with no business plan).
That’s good for some companies (coughTwittercough), but Chasen says that for many start-ups, little attention is paid to the basics of business: working hard and becoming profitable as quickly as possible.
“Hype is good and hype helps but it’s very rare to have hype-driven companies actually amount to anything,” Chasen said. “What ultimately makes any business sexy is being successful.”
Ah, yes: The Sexy. It’ll be the topic of the South by Southwest Interactive panel “Unsexy & Profitable,” which will include Chasen, Hooman Radfar of Clearspring Technologies, Inc., Alan Martin of CampusBookRentals.com and writer Paul Carr from TechCrunch as moderator.
So why do companies like Twitter and Facebook — which have upended the tech industry but started off with no clear business plan — get the spotlight while smaller, more successful companies get written off as boring?
In the case of Twitter, Chasen says, “It was obviously very hyped and growing incredibly quickly. But it’s a great example of one that may or may not actually be a business. That really has yet to be determined. That doesn’t mean the founders aren’t going to make a lot of money. But hey, maybe some of us would trade our business for Twitter.”
As for uShip, the company, which auctions shipping services on its Web sites, was founded in early 2003, launched in 2004 and reached profitability in mid-2008. Chasen says the company focused on coming up technology that would improve an established industry and create a strong revenue model.
“Transportation is just about one of the most boring, old-school industries. But it’s an industry that in my mind was sort of overlooked during the initial sort of Internet revolution,” Chasen said. “I was looking for was an industry where there seemed to be a lot of opportunity. It was a growing problem: how do you get things from point A to B?
“It was also an industry that really had a lot of opportunity to make much, much more efficient using all the strengths that make the Internet great.”
The company is expanding to international areas, but, “we’re being as careful as we can to focus on not getting ahead of ourselves. We’re reinvesting profits instead of blowing a bunch of money in new markets,” Chasen said.
Because Chasen’s company is hosting the panel, he joked, “We’re feeling a tremendous pressure to stay profitable.”
Other panel participants include CampusBookRentals, which might also be considered a more staid kind of company in an established industry, while Clearspring, which focuses on Web site widgets, could be considered “Sexy but unprofitable.”
Chasen cites eBay as a company that focused on what might have been considered a boring area — flea market-type items and auctions for merchandise that might not sell anywhere else — and built a powerhouse business from what now seems like an obvious idea.
I think things can often look unsexy and it’s not until something is an obvious success or making money or goes public that it starts to look more sexy,” Chasen said.
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By Eric Falcao
February 17, 2010 9:48 AM | Link to this
I am very excited about this panel but I think the panelists (and you, Omar) need to be careful about using Twitter as your case-in-point example of sexy and unprofitable.
It's been reported in Bloomberg that they made about 25 million dollars last year off of their Google & Microsoft API deals. It's not a stretch to say that they were profitable in 2009 and they have not even begun to scratch the surface on their revenue potential, whatever that may be.