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Are we headed for the burst of a bubble in social media? SXSW sure felt like it

Omar L. Gallaga, Digital Savant

Staff Writer
Austin 360
Rudy Heredia, right, and Monica Charles, left, talk up the new mobile location app Highlight at SXSW. Highlight was the most buzzed-about new app at the fest.

Somewhere between the time Leonardo DiCaprio appeared his scruffy-yet-baby face hidden beneath an Oakland Raiders cap at a downtown party full of models and high-finance types, the day Al Gore flew into town for a little more than three hours just to talk to a room full of badge-wearing tech geeks and the night Jay-Z performed at the behest of American Express, I began to get a little spooked.

It wasn't that South by Southwest Interactive, which concluded on March 13 after five days of panels, parties and extracurricular beverage consumption and extreme food truck eating, wasn't fun.

The fun of launching a company at the fest, meeting tech micro-celebrities or simply floating through town during the year's busiest technology festival attracted 24,569 participants this year at Interactive continues to grow in size and influence.

But along with the buzz of giddy party times was something I haven't felt at SXSW in recent years: a palpable sense of anxiety, a nagging feeling that the money and the hype are getting so big (and, yes, so stupid) that this ride can't possibly last.

The last time I felt this way was in the late 1990s as a young reporter for Technopolis, a personal tech section that used to run in the American-Statesman. In this section, which lasted about two years, we covered the local people and technology helping drive the giddy dot-com rush.

At that time, Austin software companies and dot-coms with grand ideas but seriously flawed business plans threw lavish parties, gave insane sign-up bonuses to recruit talent and turned their offices into expensive, toy-filled playpens for workers.

This time, instead of websites to sell you things you'd rather buy offline, it's a rush of apps for your phone or tablet device and social media services built on the (we hope) steady backs of Twitter, Facebook and other tech successes. The hope in the tech industry is that we're all jacked-in to this global social-media phenomenon and that we'll continue to spend more time, attention and money on keeping ourselves connected and entertained.

The problem isn't that as a culture we'll suddenly shun technology; that's not likely to happen no matter how often our privacy is breached or how jarringly our lives are upended by so much sudden change in how we communicate.

What's actually happening is that there are so many apps and technology services being developed, so many smartphones and other mobile gadgets vying for attention, that the vast majority of them will have to fail. Many of them already have.

We're well beyond the saturation point on some of these fronts and more, and more startups are going to find that showing up at SXSW and hiring street teams to hand out little postcards begging attendees to try new apps (even free ones) won't work.

At SXSW Interactive this year, the only new mobile app that broke through as a topic of discussion was "Highlight," which uses your location and your social networks to let you know when friends-of-friends or people you have something in common with are in your proximity.

Attendees alternately criticized the app for being too creepy and invasive, for draining too much of a smartphone's battery and for having too many rough edges as a new, unpolished product. Brenden Mulligan, writing on the widely read tech blog TechCrunch, even took the app's eye-burning logo to task in a profanity-laden postscript to a larger piece called "Why Highlight Wasn't a Breakout Success at SXSW."

The irony is that "Highlight" was the fest's breakout success, at least in terms of actual people downloading and trying out something new in the petri dish of SXSW Interactive's early-adopter environment.

Like so much of what I saw at SXSW this year, it seemed like a decent idea that isn't likely to spread or go mainstream after the buzz of the festival wore off, unlike past fest successes like Twitter and Foursquare. (Even Foursquare I still have my doubts about.)

On the third day of Interactive, a panel called "Social Media Is a Bubble and SXSW is a Fad" expressed some of the dread and déjà vu I was starting to feel. If it had merely been attention-seeking panelists proclaiming their fly-in-the-ointment view for the amusement of the crowd, I might have thought differently. But the packed Omni Austin Hotel conference room included audience members who — in an extended Q&A and on a Twitter discussion — also expressed their sense that a bust is inevitable. At least in the world of social media and the exploding app-development industry, each voice who spoke proclaimed that the glut of rushed products won't gain traction and will lead to a massive shakeout.

Things could get ugly really, really quickly.

But there's reason to remain positive: Austin's tech industry is built on far more than social networking and mobile software. We have a strong chip industry, Dell has diversified beyond its core PC business, Apple recently announced it's bringing thousands of new jobs to the area, and the Central Texas tech industry survived the last big tech bust to emerge even stronger and with more talent.

I'm not saying we all need to take shelter now, but it wouldn't hurt to check the storm cellar to make sure we're well-stocked and ready for the worst.

Contact Omar L. Gallaga at ogallaga@statesman.com; 445-3672. Twitter: @omarg