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Startup culture thrives at South by Southwest

This feature was produced in collaboration between Vox Creative and Chase. Vox Media editorial staff was not involved in the creation or production of this content.

By Brian O'Connor

Since its debut as a local music festival in 1987, South by Southwest has evolved into one of the country's most influential conferences for film and interactive media — as well as for startup businesses. The SXSW Startup Village launched four years ago, and it reflects an economic reality: startups are the lifeblood of the economy.

"Launching a startup is demanding, success isn’t guaranteed, and it might take longer or cost more than you think," says Christian Muntean, a principal at Vantage Consulting, which advises businesses and entrepreneurs on management issues. "Most people that an entrepreneur knows probably don’t understand the experience, so they can’t offer meaningful support. That’s why you need a clear vision for why you are pursuing this. You have to cultivate a reaction to dig deep as opposed to quit or find excuses."

He's echoing the subject of a panel at SXSW Startup Village, "The Startup Struggle Is Real." The Startup Village takes over an entire floor of a hotel, with more than 130 programming sessions designed to educate entrepreneurs and keep inspiration afloat . More than 70,000 attendees are expected, from startups to entrepreneurs to investors, with sessions that will cover startup funding and entrepreneurial best practices.

Dean Levitt, founder of Teacup Analytics, knows a few things about startups — he's on his third. "The hardest thing about being a startup, especially when money is tight, is knowing whether you'll get enough customers to reach that break-even point," he says.

Levitt, whose company helps businesses demystify their website analytics, says that many startups, driven by hope, fall prey to wishful thinking: spending money on quick fixes like PR firms that over-promise or agencies that say they can deliver millions of social media followers for little money. "These are invariably a huge waste of money and lead to no customers," he says, "and that can cause an artificial lack of faith in one's startup."

Instead, Levitt believes it's important for entrepreneurs to get an occasional reality check by enlisting an outside mentor or coach with relevant industry experience. As an example, Levitt mentions the time when his previous startup became the target of a potential acquisition; he was terrified he'd lose his business. "I had lost all sense of perspective," he says. "My mentor coaxed me back to reality and although the deal eventually stalled, I learned a lot about myself and my business. I was able to enter into future negotiations with a more realistic perspective."

Danielle Tate got a reality check for her startup quicker than she anticipated. Ten years ago, after getting married and spending countless hours in a bureaucratic tangle trying to change her name, she developed a way to expedite the process with an online name-change service. Her idea, MissNowMrs, encouraged her to leave her position as a salesperson at a medical supply company. "We were growing 30 percent annually and then we started to plateau," she says. The recession caused couples to delay marriage, and competitors sprang up. Payroll became an issue.

"We had to come up with a new idea to boost revenue," says Tate, repeating a familiar refrain of many entrepreneurs, the subject of another panel at Startup Village, "Find your Product/Market Fit in 15 Minutes." Instead of solely focusing on brides as clients, she expanded her market to include the bride's wedding guests. "You have to be open to paradigm shifts," says Tate, who started selling wedding-gift cards to the bride's friends. "You may be focused on a particular market and customer profile, but stepping back and looking at the big picture can allow you to find a new customer base for the same product or service that you currently offer."

Most if not all startups will face the challenge of scaling their business, navigating how to work on their business instead of in their business. It's the most perplexing of questions: When to hire? "In most cases I recommend that early hires should be people who generate revenue or dramatically leverage your ability to generate revenue," says Muntean. "Assuming your business model is right, someone who generates revenue should also be contributing to building the vision."

Muntean says startup founders should resist hiring someone to sit at the front desk simply because that's what other startups are doing. "Don't hire for ego," she says. "Don't hire positions that you think need to be filled but you aren't sure how they'll contribute. Don't get impressed with degrees or pedigrees. Be impressed by experience. Hire people who've done it."

He says that it's often less about when you hire and more about who you hire, a topic that the SXSW Startup Village will address with "Rise of the Social Employee: Rewards and Risks." "When you find the right person—the kind of person who can make a significant difference for your organization—do what you can to bring them in," he says. "They'll pay for themselves. If you hire the wrong person, it doesn't matter how much you've saved up — they'll burn through it and take your joy with them."

Brian O'Connor is an editor and writer in New York who writes about business and brands.

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This feature was produced in collaboration between Vox Creative and Chase. Vox Media editorial staff was not involved in the creation or production of this content.

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