A frequent Silicon Valley ritual is the moneymaking gathering known as the technology conference, where investors, entrepreneurs and industry...
SAN FRANCISCO — A frequent Silicon Valley ritual is the moneymaking gathering known as the technology conference, where investors, entrepreneurs and industry executives strike deals, catch up on trends and engage in nonvirtual networking.
But a noisy new entrant has incited a bitter public dispute with a more established competitor over the most ethical way to run such a conference.
Demo, a 17-year-old conference franchise owned by technology publisher IDG, has been the springboard for hits like the Palm Pilot and the TiVo digital video recorder. In San Diego next month, 70 startups will pay $18,500 each to make a six-minute presentation to investors, journalists and others.
To Michael Arrington, the elbow-throwing founder of the popular Silicon Valley blog TechCrunch, Demo’s business model amounts to “payola.”
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Arrington is the co-organizer of TechCrunch50, a conference in San Francisco that he intentionally scheduled for the same time as Demo. In his event, 50 startups, selected from a pool of 1,038 applicant companies, will not have to pay to make their pitches.
Arrington’s show makes money in other ways, like selling sponsorships and tickets for the event and charging companies to demonstrate their products on tables outside the main conference hall.
Fifteen companies, including Yahoo, Microsoft, Google and the venture-capital firm Sequoia Capital, are paying $35,000 each to sponsor the show. More than 25 exhibitors are paying $10,000 to exhibit their wares and 1,200 people are expected to buy tickets costing $1,200 apiece.
To promote their conference, Arrington and his colleagues have used their widely followed blogs and Twitter updates to accuse Demo of concealing its high price tag and exploiting the attention-starved startup community. They vow to kill the Demo conference.
Demo’s soft-spoken executive producer, Chris Shipley, says the fees have never been hidden and that there is no lack of companies willing to pay. She said she meets with 700 companies a year to select the best startups to present at two annual Demo events.
Shipley also says TechCrunch is obfuscating its own moneymaking ambitions and the true nature of its relationships with its venture-capital sponsors, who she says may be paying in part for early access to the most promising startups.
TechCrunch denies that sponsors get any special advantages. Companies can choose to let venture capitalists peek at their applications, but only after the conference ends.
This is a fight that Arrington went looking for. A lawyer who turned to blogging in 2005, he attended three Demo shows before announcing his competing event.
In addition to criticizing the presentation fee, he complained that there were too many startups at the event, that the wireless Internet network for participants was unreliable and that a committee of executives, entrepreneurs and journalists could more carefully select the best startups.
The sharp criticisms surprised Stewart Alsop, a venture capitalist who created Demo in 1991, in part because he thought other conferences did not devote enough attention to product demonstrations.
Alsop has no current affiliation with Demo but is upset at the TechCrunch accusations.
“What I’ve seen from Mike Arrington has just been classless,” he said. “I don’t understand what business objective he has other than to get notoriety.”
TechCrunch is enduring some inconveniences of its success. Most of the company’s 15 employees are involved in screening the startups, and the work is done at all hours.
Founders of one startup say they were screened at 11 p.m. on a weekday night — by TechCrunch’s publicity and marketing executive.
Many Silicon Valley entrepreneurs say the overlapping dates of the two conferences have forced them to make a difficult and awkward decision. A preponderance will attend TechCrunch, which they say generates more buzz because some of the bloggers who cover startups cannot afford to attend Demo in San Diego.
Nevertheless, Shipley says her business shows no signs of weakening.
Though she concedes Demo might have to adjust its business model in the future, she says it is still profitable and that the full schedule of companies are paying to take the stage next month.
Shipley seems wary of talking about the dispute.
“Frankly, if you believe in entrepreneurial capitalism, then the market will decide and take care of itself.”