By Brian Back
To capture the mix of hope and hype at South by South West last week, one needed look no further than a turntable interview between Steve Case and Tim O’Shaughnessy.
Case, AOL co-founder turned sustainability focused investor with Revolution, and O’Shaughnessy, founder of LivingSocial, took to an Austin Convention Center stage March 11 as ambitious entrepreneurs who’ve achieved a level of success many of the 20,000 SXSW attendees are hungry for, but few will achieve.
Last week’s SXSW attendees – entrepreneurs, hipsters, gamers, creatives, corporate geeks, and financiers – strolled among sessions and parties with eyes focused downward on mobile devices. Only two decades ago, Case’s AOL was faced with the branding challenge: What is the internet? It was a different time, serving Case a seven-year slog of growth and hiccups for AOL before the company went public. His was the first internet company to do so.
O’Shaughnessy, meanwhile, leads a heavily financed, three-year-old upstart finding its way amid stiff competition from first-comer Groupon, newcomer Google, and late-comer SaveLocal (Constant Contact). Some analysts have cast the daily-coupon phenomenon as a fad, and last year LivingSocial reportedly lost $558 million on revenue of roughly $245 million.
That didn’t stop Case, whose Revolution holds a major investment in LivingSocial, from lobbing softball questions to O’Shaughnessy. He asked about the magnitude of LivingSocial’s recent alliance with Amazon, which has been snooping around in the coupon space. O’Shaughnessy downplayed the fad phenomenon and said LivingSocial is looking forward. It’s less about daily deals, he said, and more about local and social commerce.
Although it’s unclear how LivingSocial’s trending matches with financial projections pitched to its investors, O’Shaughnessy conceded the daily deals don’t offer as much revenue as people think. He said the company is where it is financially because it’s investing in growth, fleshing out adjacent categories in the travel business, food take out and delivery, and other ways to become a “connective tissue for merchants.”
Google is the default destination for search, he said. Facebook is that for friends, and Amazon is that for online shopping. O’Shaughnessy said he wants LivingSocial to be the default answer for “local.” That may sound ironic when considering the definition of local, but it didn’t stop Applebee’s from marketing “There’s no place like the neighborhood.”
Enter the Access Economy
In addition to its investment in LivingSocial, Case’s Revolution holds Zipcar up as its poster child for what Case and others are currently calling the “sharing economy.” Case’s January interview on The Colbert Report (below) comically revealed the branding challenge of that moniker. “The so-called sharing economy…” Colbert said with staple smirk. “Sharing seems Marxist … a Socialist idea.”
Case’s initial and unfortunate response to Colbert was to bring up communes. He later joked that he would fund Colbert’s idea to start a business sharing toasters.
As this year’s SXSW Interactive demonstrated, however, this exciting new business model with far-flung applications is exploding. We at Sustainable Industries and TriplePundit are in the camp of those who dub it the Access Economy, a name that speaks to the consumer benefit as well as its vast economic development potential.
At SXSW, Case said this new economy is just in its early stages and holds great potential in the next 10 to 20 years. He cited Revolution’s recent investment in LooseCubes, an office space sharing site, and Porticoclub.com, a luxury vacation rental site. “Those kinds of ideas I think have a lot of legs to them,” he said.
But perhaps more important to the Access Economy than any of Case’s investments is his increasingly resonant voice around entrepreneurship as President Obama’s Commission on Jobs and Competitiveness. He’s been campaigning on behalf of the federal Jumpstart Our Business Startups (JOBS) Act, which in a rare show of bipartisanship passed the House but currently remains hung up by Democrats in the Senate.
It contains a provision that would make it easier for small businesses to access capital through sources such as crowdfunding. Instead of just funding “projects” on sites such as Kickstarter, everyday people could bypass current requirements to be an accredited investor in a business. Critics warn that could lead to bad investments and consumers getting fleeced. Yet as Case put it, “You don’t need to be an accredited gambler to go Las Vegas.”
Case said his first impression upon getting involved in the Jobs and Competitiveness commission was that the Congress “did not understand entrepreneurship.” So armed with viral #jobsact, he called for easier access to capital on behalf of young companies with entrepreneurial ideas. If the effort manages to succeed, today’s SXSW Interactive entrepreneurs could find more Access Economy in their very own funding options.
Steve Case photo courtesy Case Foundation.