Winning TechCrunch Disrupt - Is it All it's Cracked up to Be?
In light of the recent TechCrunch Disrupt Europe and San Francisco competitions we decided to speak to a few of the past winners to hear about their post-competition progress and what the accolade has meant for them. Disrupt provides a playground for investors among a number of startups that battle it out for a $50,000 check and some serious bragging rights. But what does winning the competition actually mean? Is holding the title a true indicator of success? And is the hype accurate, or is it just that - hype?
One of the first winners of the competition is Shaker, an Israeli company that earned the title in San Francisco in 2011. Shaker provides a synchronous real time gathering in simulated locations. Each user is assigned an avatar connected to their Facebook that can travel into different virtual locations, chatting and interacting with friends and friends of friends over common interests.
When Shaker competed in TechCrunch Disrupt they were doing pretty well, boasting 250,000 active users and $3,000,000 in funding ($1,000,000 from an angel investor, Zaki Rakib, and $2,000,000 from Pitango). What they needed was international visibility, and they were certain that TC Disrupt could give them that. At the time, Shaker hit all the right buttons in Silicon Valley - they were social, virtual and friends of friends. They gave a great pitch that generated a lot of excitement, and walked away with the title.
And so what does Shaker say about winning the competition? Co-founder Gad Moar says,
“It’s dangerous, that’s what I would say. Why is this dangerous? It puts the business way beyond the company. Back then people looked at Shaker and saw this great company and said ‘Wow look at Shaker, they will scale immediately, they solved the problem.’ And we didn’t solve the problem. We never said that we solved the problem. We were a young company at the beginning of a product and we were beginning on the journey to find the optimal ending point for us. If you are a winner of TC Disrupt, unless you’re sold for $2,000,000 a month after, you might not do your job. It sets an expectations bar that is just too high.”
Three years down the line, Shaker is not the same company. Moar believes that the internet was not ready for a generic meetup world. People today are far more “asynchronous” - they do a lot of things at one time. People will talk on the phone while they are watching TV. They will cook while they check their Facebook. Moar believes that this attitude makes it hard for someone to commit to spending time in virtual world and that this made it hard for Shaker to scale. As a result, they pivoted. Now Shaker is a social gaming application called Caso Casino that recreates the experience of going to Vegas. They realized that gaming is a far more interactive experience and they applied their expertise to create a new application that appeals to this “asynchronous” lifestyle. Interestingly, during the Q&A portion of their TechCrunch pitch, one of the judges expressed concern about the fact that Shaker was a purely synchronous platform. While Shaker as a business is still thriving and doing big things, the idea that the TechCrunch team rooted for three years ago is no longer the main focus of the company.
Despite this, Moar acknowledges that winning the competition did help them. It put them at the heart of the tech world and gave them a strong credibility which was important for a company coming from very far outside of the Valley. Moar thinks it might have helped them to get a higher valuation, it helped with recruiting, and probably helped to sign some deals, such as a partnership with the NBA. Shaker was also able to raise a Series A round of $15 million led by Menlo Ventures. However, this deal was not directly correlated to the TC win - the term sheets were prepared before the competition. This is contrary to what is suggest by an article TechCrunch posted entitled, “Less Than a Month after Winning Disrupt, Shaker Raises $15 Million”.
Overall, Moar says that the competition definitely helped Shaker make progress. Next time he would set an appropriate expectation, but he would still enter, and he would still try to win.
The photo accompanying the article, showing an
exhausted Shaker co-founder with his prize
Craig Walker, founder of UberConference, thinks that the high expectations are one of the best things about the competition; having the additional pressure really forces a company to buckle down. Even just the deadline is enough to light a fire under a startup - knowing that at 3pm on May 23rd you will be on stage demoing truly motivates a team to get things done.
UberConference holds the title of the 2012 TC Disrupt New York winners. They provide a service that aims to change the tiresome and flawed process of conference calling. The company was founded by Craig Walker, who has a long history in Silicon Valley. Walker worked for Google Voice, founded Yahoo! voice, was the first Entrepreneur in Residence for Google Ventures and founded Switch Communications (previously Firespotter Labs). Unlike Shaker, Walker already had a strong reputation and connections within Silicon Valley. However, Walker is insistent that whether you’re well known or not, the competition is still extremely important for any new company.
“Whether you’re well funded or have done it before, it doesn’t matter. Our hundreds and thousands of users at UberConference really don’t care that we once worked at Google Voice or are backed by Andreessen Horowitz. And so we will do whatever we can do to get the word out and build grassroots awareness. If I were to start another company at some point it would be the exact same path. Every time you have to treat it like it is the first time because the market doesn’t care what you have done in the past, it’s what have you done for me lately.”
According to Walker, one of the best things about winning is the validation; having that third party affirmation adds an extra boost of confidence for potential investors and for the team. “We had been talking about and working on our product as a team,” says Walker, “but then when we won, it was like ‘Hey, we’re on to something here! It’s not just crazy Craig telling us this is important’. The validation is good internally, as well as externally.”
After the competition they closed a $15 million venture round led by Andreessen Horowitz and Google Ventures. Walker believes that this was simply accelerated by winning the competition, and not directly attributed to it. He stressed that winning the competition is not an escape velocity for success. UberConference would have done the exact same things whether they won or not, the process was just expedited by the prize.
“At a certain point, you go from riding that launch buzz to actually having to prove it in the real world. It’s like going on a first date - it’s all excitement and flowers and starry eyes and then three months later you have to do the real work. That’s why you better have something sustainable and real. The reality of the service is proven once you get out of the cocoon of tech insiders. The launch buzz is great, but that is all it is. You have to turn it into a fire. ”
The 2013 winners, Enigma, also believe that the buzz is not nearly enough to propel your company to success. Co-founder, Hicham Oudghiri says:
“Disrupt is an excellent launching pad to pursue your larger company objectives. It is extremely important to use the success as a driving force for growth and not a source of complacency or arrogance. It’s a great honor to win TechCrunch Disrupt but if that is your crowning achievement you’ve missed the mark.”
Still enjoying the immediate buzz of the competition is one of our incubating companies, Showkit, who went to the finals of TC Disrupt New York in May. Showkit CEO, Anthony Kelani, agrees that being in the competition does not mean that you can rest on your laurels. There is plenty of limelight at the beginning and an abundance of influential people are exposed to your company, but it is really up to you to hustle to make sure that those relationships go forward. There are still the same problems that every startup has, with a little added push into the eyeline of investors and customers.
Overall, Moar says that the competition definitely helped Shaker make progress. Next time he would set an appropriate expectation, but he would still enter, and he would still try to win.
And so to address my previous questions - is competition an indicator of success? The first competition was hosted only a few years ago and so not enough time has passed for many of the companies to become established. However it can be said that every single winning company except one has received venture funding after the competition. CarMechanic didn’t raise any more after their seed round, but they seem to be surviving on the money they do have. Two of the companies were acquired - Saluto was acquired by Asurion for $100 million and Qwiki was acquired by Yahoo! for $50 million. However, Yahoo! recently closed down their Qwiki project.
And what does winning TechCrunch really mean? It seems that the competition provides you the best launchpad around. Whatever stage your company is at, it propels you into the limelight and the vision of hundreds investors and clients. As a winner, you will undoubtedly be noticed. But if you want to capitalize on the attention you need to truly work hard to make those relationships turn into something fruitful. Most of the industry does not blindly follow TechCrunch’s advice, and so it is unlikely that winning alone is going to secure you a deal. If you are ready to scale and take on that kind of attention, it will do wonders to expedite the process of growing your company, which is essential in the fast changing tech world.
