Profits Not So Evil After All

It’s no secret that DEMO, the launch event owned and operated by IDG and programmed by Guidewire Group, has faced stiff criticism for its practice of charging selected companies an $18,500 fee to participate in its program, which is as much about go-to-market and after-launch support as it is about making a six-minute demonstration on a public stage. A new competitor, TechCrunch, does not charge a fee to the companies it recruits to its TC50 conference, coincidentally scheduled to overlap with DEMOfall in early September. As the “free” launch platform, TC50 has positioned itself as the friend of entrepreneurs and its co-producer has taken umbrage at DEMO’s “payola” (his words, not ours) business model.

In fact, Jason Calacanis commented on a post on this blog earlier this week:

At the end of the day I don’t have a problem with you Chris. I actually think you’re very smart and cool. What I do have a problem with is the $18,500 fee. Intelligent folks can disagree about these fees, and the different models of our shows. I believe we have a better model and that the marketplace will vote with our model and “conference payola” (I know you don’t like the term) will stop. As an entrepreneur myself I want to kill the “pay for play” model.

So it was with keen interest that I saw an email yesterday from Heather Harde, TechCrunch CEO, regarding TechCrunch’s MeetUp at August Capital in July. An excerpt:

TechCrunch would love to explore renewed opportunities for event sponsorship. Our base package is $5k for a demo table with pre/post event promotional branding. We have options that go bigger and smaller too.

II. TechCrunch Partner and Product-Launch Sponsors – 6 spots available
Price: $10,000 – 25,000 (Price based on value of chosen programs)

  • Top-level company branding on the TechCrunch dedicated MeetUp page and on-site signage
  • Center traffic position for demo station; premium logo placement on sponsor banners at the August Capital meetup venue
  • Larger demonstration space (5′ table) in TechCrunch demo showcase
  • Product Launch Sponsor Options: (a) pre-event press outreach and onsite press support at the MeetUp; (b) 2 week advertising spot on TechCrunch
  • 150 word product description and web site link listed on the TechCrunch dedicated MeetUp page

For those of you playing along at home, that’s a $10,000-$25,000 charge to launch your product at TechCrunch’s MeetUp. Make no mistake, this is standard operating procedure in the tech world and would be unremarkable were it not for the fact that Mike and Jason (mostly Jason) slam DEMO on a weekly basis for charging startups to launch.

Since I’m giving free press to the benefits of launching your startup for a fee at the TechCrunch MeetUp, I think it’s important to share a couple of stats about launching at DEMO:

  • Each company launching at DEMO averages close to three million media impressions from conference coverage.
  • In the past four years alone, over 40 DEMO alumni companies have been acquired.
  • In just the past five years, DEMO alumni have raised over $3.5 billion in venture funding – and that is only a quick scan of 35-50% of the total demonstrator class for a given event.

We’ve said repeatedly that we welcome a newcomer on the conference stage and that, with more spaced-out timing, both TechCrunch 50 and DEMOfall can benefit entrepreneurs. But can we all finally agree that everyone involved – from producers to sponsors to startups – has profit as at least a partial motivator? At the end of the day, this is business plain and simple, and waging war on a company for profit-making enterprises is essentially rejecting the very atmosphere you claim to foster.

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  1. Jim Forbes said

    Great comment and good reportge of the underlying value of Demo to its companies. Also good logical conclusion. In the end honesty is its own reward and it bolsters credibility.

    Jim the retired Demo producer

  2. Guillaume Dumortier said

    I’m a young DEMO alumni on the attendee side, not presenting.

    DEMO has always brought value to me and the selection made by Chris and others has always proved to be very sharp and relevant for the industry.

    Paying the fee to DEMO is a comittment for a start up and you’d better be good during your 6mn.

    I think the fee is worth the premium coverage/networking and makes DEMO and Chris’s team excellent prescriptors. If companies pay the fee, DEMO makes the comittment of putting the launching company on the best possible path for the future.

  3. […] their event at the same time as DEMO. Carla Thompson and Chris Shipley of DEMO feel compelled to respond to the attacks, and another blogosphere battle is […]

  4. Carla,

    I am not a DEMO alumni yet, but soon I will be. I have also watched the DEMO vs. TC50 debate for a while, and finally I think I should say something.

    DEMO versus TechCrunch: credit, money, and passion

    Many people talked about the $18,500 fee. But few mentioned some others, such as credit, passion, commitment, decidability, and most important of all, ready to be real businesspeople in the unmerciful business world.

    Waiving a fee sounds like an action done by an angel. But it only shifts the load to otherwhere because we know there are no angels in this business world. I think you have done a pretty nice cover of this issue in your post.

    thank you, Carla. Look forward to meeting you at DEMOfall 2008.

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