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18 Feb 2016

Sticky Post By Matt Hottle Posted in Entrepreneurship, Funding, Start-ups With No Comments Permalink

5 Things Startup Competitions Get Wrong

Sticky Post By Matt Hottle On February 18, 2016 With No Comments

Every city seems to be hosting startup contests where founders pitch their companies to a dais of “experts” live on stage in an effort to win some funding. Sometimes these competitions are massive and worth millions but many are much smaller; awarding $5k to $20k. It’s within these newer and smaller competitions that I have noticed a recurring series of mistakes.

1. The judges are not experts in entrepreneurial businesses

You see this when sponsors become the judges or the panel includes commercial bankers who are really not business-builders. I love bankers and many of my friends are a part of that industry but they are institutionally bad at valuating and understanding start-up businesses. They tend to judge a business idea in terms of if they would give them a loan and for how much.

2. Contestants are often post-funded companies that have been in business for a year or more

When you are awarding $10k to a company that already has employees and overhead, you have given them 6 weeks of operating costs. That $10k could have launched a prefunded company’s business plan and allowed them to get a credible pitch together to secure additional funds. Instead, you have floated an established company’s payroll for a few weeks. You’ve created almost zero value. If the contest is awarding $100k or more, that’s a different story but when you are giving away small amounts of prize money, focus on those for whom it has the greatest impact.

3. The best idea almost never wins

Based on the sponsors, the event’s host, the constituency of the audience and other non-business-related factors, the least deserving of companies often win these events. There are always ulterior motives at play and when those are allowed to propagate, you see some truly awful business models walking away with money that would have served a greater purpose being set on fire in the parking lot. Nobody wants to admit this happens- but it does.

4. The event tries to be “like” Shark Tank

As soon as one of these competitions invokes the Shark Tank name in its promotional materials, it immediately loses credibility with me. Mark Cuban is not coming to your event. It is a TV show that is 50% substance and 50% manufactured drama. The best contests hold non-public and lengthy discovery sessions between the companies and the judges. Financial details are poured over and every assumption is challenged. By the end of that process, a business plan has been credibly reviewed and vetted. When those judges name a winner, it’s a very carefully considered verdict. The contestants come away with invaluable insight and advice from experts that will benefit them in perpetuity.

5. Read the fine print for the award money

More needs to be done to explain to contestants any requirements that will be imposed on claiming the prize money after it is “awarded.” This includes details around benchmarking or timing thresholds required before the money will be made available. What tax implications exist and was that explained to them? One competition I watched closely actually had a very short window where the winners could claim their award and it required hours of drafting financial reports and updating the business plan. At one point, the 2nd place winner decided the $6k they won wasn’t worth the effort and forfeited the money.

It is truly outstanding that more of these competitions are popping up all over the country. These events can be future-altering opportunities for start-up businesses or they can be thinly-disguised advertising events for the paying sponsors.

As with most innovative ideas, the shift toward commercialization happens at some point and the original altruistic motivations are supplanted by the attraction to revenue and marketability. We’ve seen this shift happen with the best events. If you think that AOL purchasing TechCrunch won’t turn Disrupt into an event where sponsors look to sticker-up everything that moves like a NASCAR, you may be sincerely disappointed.

If organizers can focus on creating the best possible value for their sponsors while maintaining the worth of the experience for contestants, these competitions can help launch the next big idea.

14 Dec 2015

Sticky Post By Matt Hottle Posted in Entrepreneurship, Redhawk, Start-ups With No Comments Permalink

Who are you Rooting for in 2016?

Sticky Post By Matt Hottle On December 14, 2015 With No Comments

Last year, I posed the same question for 2015 and the response was far greater than I expected, so I decided to do it again this year. After spending the last year with entrepreneurial companies all over the country, this list was hard to create. For the sake of brevity, I had to intentionally leave people out who should be celebrated here. Here is my very abbreviated list for 2016.

Jason Provonsha, Warble

Jason is a founding partner of Warble, a beacon technology start-up within the Lamppost Group of companies. Their tech allows marketers to reach audiences and engage them based on physical locations that range from several thousand feet to a single square foot. As marketers double down on the logic that where someone see your message is as important as how it’s seen, Warble is already on the leading edge of this tech.

Jason is as pragmatic as he is hard-working so he is easy to like immediately. He will describe the tick-tock he hears in his head as he focuses on generating revenue to replace the seed investment Warble received. This practicality, coupled with some very compelling usage cases, creates the sense that Warble is already started on the “I knew them when” trajectory. There are many challenges in front of them but when you spend time with Jason and his team, you feel their commitment to winning.

Adeeba Kahn and Jason Templin, Shu Shop

I had the pleasure to serve as Adeeba and Jason’s mentor during their recent entry in Rev Birmingham’s Big Pitch Competition. Their collaboration will create Birmingham’s first ramen shop and izakaya (Japanese-style pub) in the downtown theater district. Renovating a space that has been empty for more than 30 years and creating a concept that fosters regular patrons driving a sense of community in a once derelict part of town, the anticipation surrounding the opening of Shu Shop is incredible.

Adeeba does not currently possess a filter between her brain and her mouth in the most entertaining and endearing manner possible. Jason is chasing a dream and the passion he has for the food, the izakaya concept and creating a neighborhood space near the Alabama Theater comes across immediately. The difficulty of succeeding in the restaurant business is well-documented but they are tapping into an unmet need and creating a market in Birmingham. Their brilliance might be in the simplicity and sincerity of what Shu Shop will become.

Sam Eskildsen, Main Street Family Urgent Care

As private health care in the US becomes exceedingly challenging for providers and patients alike, there is a growing need for urgent care facilities. The concept of these purpose-built facilities is nothing new in urban and suburban areas but Sam is building a chain of Urgent Care facilities in rural markets. These areas have been underserved for decades and as rural private medical practices fold under the difficulty created by the Medicare/Medicaid and Affordable Health Care Acts, patients no longer have access to quality health care in these areas.

Make no mistake, Sam is a capitalist. The model he has created will generate some healthy returns and allow them to grow from the facilities they currently have into additional markets. Sam opted to go out and solicit his investors one by one without brokers or other institutional funders. He raised a significant amount of capital in 18 months based on the strength of the model. His tireless work ethic led to Main Street opening its first fully functional location within 2 years of creating his business plan draft. Public and private health care will continue to create a myriad of hurdles to overcome for Sam and his team but if there is anyone capable of pulling it off, its Sam.

Paul Hottle, Nature’s Art Studio

This mention has been in the making for at least 20 years. My father, who spent the better part of his professional career as an entrepreneur and organizational development professional, recently followed his heart and did something truly for himself. Dad started Nature’s Art Studio to combine his love for the natural world and carpentry. Taking discarded materials from sawmills and material suppliers and repurposing them into pieces that range from functional to why not, he creates things as he imagines them- without commercial concern for their ability to generate revenue. This near-blatant disregard of the economic viability of each piece is probably why most of them sell within hours of posting them to his own website or Etsy.

After years of supporting our family as an OD consultant and spending more time in hotels rooms and rental cars than in his own home, Dad finally gets to spend some time doing what he wants to do. He taught me and my brother that luck and fortune are a byproduct of hard work. Thinking of him finally enjoying the fruits of his labor drives me to succeed as an entrepreneur, dad and husband. This is my feeble attempt to recognize what he gave me over the years by saying that I’m rooting for him in 2016. The truth is, I’ve always rooted for him.

This is certainly a partial list and I’m not excited about having to exclude others- but now it’s your turn. Will you take the time to think about who you are rooting for in 2016? Will you tell them you are rooting for them?

Few things are more powerful than knowing someone is pulling for you simply because they appreciate who you are and what you are trying to accomplish. So, who are you rooting for in 2016?

18 Nov 2015

Sticky Post By Matt Hottle Posted in Entrepreneurship, Redhawk, Start-ups Permalink

Solvency in Year One: Our First Anniversary!

Sticky Post By Matt Hottle On November 18, 2015

I’d like to take the opportunity to reflect on surviving my first year as a new business. True, 80% of businesses survive the first year, but I’m proud that I didn’t have to dip into savings, borrow money from family, or suffer irreparable damage to my marriage. (That last item is one I’m especially proud of.) Most important, we got to partner with truly great companies and work with them to accomplish some great things.

Passing this milestone has made me contemplative. Rather than craft a bunch of high-minded platitudes, I thought I’d write a brief list of what I learned and the hypotheses confirmed in the first year of operating Redhawk.

Confirmed: Making money is hard.
Learned: Your first customer will always be your favorite and the most valuable.
Confirmed: There are no more “normal hours of operation.”
Learned: I am even more frugal than I thought.
Confirmed: Operating in a small market is all about networking.
Learned: Mental exhaustion is very real.
Confirmed: A supportive family and understanding wife are the cornerstones of any success.
Learned: Time seems to compress at rates previously believed to be physically impossible.
Confirmed: Fortune favors the bold (ok—so one platitude).
Learned: I became a better person after starting my own business. I’m trying harder now to be a good dad, husband and friend.
Confirmed: If you do great work, the rest starts to take care of itself.
Learned: What we do is important. The work we get to do improves the balance sheet AND the quality of life for clients. Hearing a near-neurotic client tell you they slept for 6 consecutive hours for the first time in 9 months is pretty throat-lump-inducing stuff.

The list could be longer and more inclusive but, at some point, it becomes completely self-serving and no one wants to read that. It would be a mistake not to acknowledge all the support and love from my friends, family, clients and colleagues. I only hope I can repay their kindness over time.

12 Oct 2015

Sticky Post By Matt Hottle Posted in Entrepreneurship, Start-ups With No Comments Permalink

How Start-ups Sabotage their Success

Sticky Post By Matt Hottle On October 12, 2015 With No Comments

I recently met with a couple of guys starting a new business and they flattered me by asking what advice I would offer them as they start their new venture. They both came from technical backgrounds and are very smart but have almost no business experience. The question was in two parts.

What self-inflicted issues do I see in start-ups?
What should founders, with limited business experience, do to help flatten that learning curve?

Needless to say, those questions are both savvy and very complex. I cautioned them that they should gather several viewpoints. We had an excellent conversation and, as readers of my ramblings on LinkedIn, they suggested I share it as a brief checklist. If you don’t like it, it’s their fault.

Self-Inflicted Issues

Here are some common head-scratchers I keep running into:

Attempting to generate revenue exclusively through social media
No actual salespeople or sales process
Making crucial business decisions based on securing another round of funding
No strategy to generate scale/growth
Profitability considerations completely absent from strategic discussions
Image being prioritized over substance
B2C marketing in an obvious B2B model
No company-wide goals
No strategic planning horizons longer than 90 days
Poor or absent talent management practices

Flattening the Learning Curve

Things to consider

Be open to outside input. No one is calling your baby ugly and if you constantly resist feedback and criticism, you may never realize your full potential.
Be flexible. You will make mistakes and learn from them but the more basic and flexible your strategy, the better. The ideas you started with will probably be blown up within 30 days so prepare to pivot.
If you take funding money, make sure you place a premium on arrangements where the investors provide a structure to actively support, advise and promote your start-up. The money is great but agreements that go beyond financial help are the ones with the highest value.
Explore incubators or accelerators with successful “graduates.” If you watch the HBO show “Silicon Valley,” they satirically illustrate that starting an incubator is not a very high hurdle to clear. Graduates are what you are looking for—not ping pong tables and craft beer Thursdays.
Dilution of equity is not the end of the world. A fully diluted ownership stake of 51% on a $10 million company is far better than 100% of a $100k company. If there are more slices of pie being cut but the pie is now 100 times larger because of the partnerships and growth that dilution created, you are winning.
Except for highly technical positions, hire based on attributes—not experience. What attributes will make someone successful in the role for which you are hiring? Fit between the candidate and the position on that level is a far better predictor of success than a resume with the right titles on it.

This is not a complete list and opinions will vary but in the limited scope of this conversation, I do think these hold higher value than the dozen other considerations I would suggest for pre-funded companies.

It was apparent to me that I would not be the last person from whom they sought feedback. I highly doubt I was the first.

12 Sep 2015

Sticky Post By Matt Hottle Posted in Redhawk, Start-ups With No Comments Permalink

Birmingham is the Marv Levy of Entrepreneurism

Sticky Post By Matt Hottle On September 12, 2015 With No Comments

This October marks 6 years since our family moved from Atlanta, GA to Birmingham, AL. In that time, our kids have grown a few feet, I started my first two businesses and gained several more gray hairs in the process. Moving from a growing Atlanta metro to the decidedly smaller Birmingham was a big transition.

The first two questions we were asked when we moved in were if we had found a church to join and what football team we supported. In case you are totally unaware of the college football culture in Alabama, there are only two teams in the world- University of Alabama and Auburn University. I have much love for all my Samford, UAB and Troy friends but most of them incorporated either the “Roll Tide” or “War Eagle” vocal reflex during childhood.

Those questions were an early indication that our new life in Birmingham may be a bit simpler, exceedingly sincere and endearing.

Atlanta was a transient city and it seemed like no one there was from there (including us). Everyone came from somewhere else as Atlanta serves as some kind of young professional waypoint. People come and people go in Atlanta as the general economy waxes and wanes.

Socially and emotionally, the transition for our family was easy. After spending several years becoming more involved in the business community here in Birmingham, one thing struck me as the start of the football season grew near.

From a business and economic development standpoint Birmingham is the Marv Levy of cities.

Let me elaborate on that awkward comparison.

Marv Levy is a first-ballot NFL Hall of Fame coach and has one of the most interesting legacies in the history of football. He took the Buffalo Bills to 4 consecutive Super Bowls- losing all four. Some regard that as abject failure while others recognize it as one of the most impressive runs in professional coaching simply based on the incredible odds against reaching the championship game 4 years in a row. It had to be excruciating to get that close and not reach the pinnacle of success.

Much like Marv Levy’s Bills, Birmingham’s success or failure is largely based on the perspective of the interpreter. I think it’s fair to say the city has often taken two steps forward to take one, two or even three back in some cases.

Birmingham was a juggernaut in the steel industry because the three main components to make steel were in close proximity to the city. Foundries, furnaces and mines popped up everywhere with more than 26,000 people employed in some facet of steel and iron production.

This steel boon contributed to Birmingham receiving its nickname- The Magic City. At the beginning of the 20th century, Birmingham expanded in population and infrastructure at such a rapid rate, it was considered to be just like “magic.”

Two steps forward.

In the 1940s, Birmingham raised the aviation fuel tax while courting Delta Airlines to place their hub here. Delta chose Atlanta- something that has played a major role in our neighbor to the east establishing itself as a major economic city, eventually getting the Olympics and proceeding to grow like crazy. That also created a durable disdain for Atlanta in older Birmingham social circles.

One step back.

Birmingham’s history is complex. It is recognized as a successful pioneer in heavy industry while also being glacially slow to recognize the responsibility of driving social progress and civil rights. This historical dichotomy should create a crippling gravity working against innovation, development and growth.

Thankfully, we have a whole new group of entrepreneurs in Birmingham that remind us just how close we are to realizing our full potential as a city and region.

Having spent some time with several companies at Birmingham’s Innovation Depot, talking with the newly-minted entrepreneurs at Co-Starters in Woodlawn and donating time to Rev Birmingham, I am reminded of the famous Marv Levy quote:

“Where else would you rather be than right here, right now?”

In many ways, it feels like the Birmingham entrepreneurial community has ripped off the rear view mirrors and put the pedal flat against the floor despite the disadvantages we have inherited or have self-inflicted.

We have high tech companies like VIPAAR providing virtual augmented reality allowing surgeons to consult with other surgeons thousands of miles away, in real time, as surgeries are being performed. Motus Motorcycles, the first American-manufactured and designed sport touring motorcycle, started delivering bikes to their first customers in the last 60 days. Other creative businesses like Revelator Coffee who literally make each cup of coffee by hand and craft brewers Good People, Trim Tab, Avondale and Cahaba appear to embrace and leverage the advantages of our small enclave. Their success may be because of Birmingham or in spite of it but that doesn’t really matter.

What matters is that Birmingham has developed a meaningful entrepreneurial community of products and services. Birmingham is showing that is doesn’t need or even want to be Nashville, Atlanta or Dallas. As my friend Deon Gordon, the head of Business Development for Rev Birmingham says, “We are trying to be the best Birmingham we can be.” The unique combination of stubbornness, naivety, creativity and crocodile skin among our entrepreneurs has created an up and coming business community for which I am equally proud and excited.

Like Levy’s Bills, Birmingham routinely gets so close to what feels like ultimate success but just hasn’t reached the level where our entrepreneurs are widely celebrated. Far from just getting a participation trophy, Birmingham entrepreneurs have already succeeded by striving to get better every day- even if that isn’t fully appreciated by the general population. We… are… so… close…

So I ask you- “Where else would you rather be than right here, right now?”

27 Aug 2015

Sticky Post By Matt Hottle Posted in Entrepreneurship, Start-ups With No Comments Permalink

Founders: your peer group may just be a Taco Fan Club

Sticky Post By Matt Hottle On August 27, 2015 With No Comments

The learning curve for any start-up is steep and immediate. For successful founders, that learning happens exponentially and early mistakes turn into valuable guideposts for future decision-making. As these founders figure out how to simultaneously be the CFO, CEO, CMO, CSO and Director of Custodial Services, they are forced to do all the things needed to lead their company.

It is lonely at the top, and founders are used to making most, if not all, decisions of consequence. This creates an incredible growth experience for them as professionals but the stress and doubt created in the responsibility of concentrated authority can be overwhelming.

One of the ways many founders cope with this is to form or join a peer group. These groups come in many flavors and range from completely informal to highly structured. Some start-up companies even use these in lieu of advisory boards. Unfortunately, some of these return questionable value because they serve more as mutual admiration clubs than members who push each other to overcome business obstacles.

Talking to some tech founders about their own peer groups at a networking event recently, I asked some questions about the groups they had created and how they operated, one theme seemed to repeat itself. These founders sought out people that were just like them. They wanted peer groups made up exclusively of members in their exact same business, market and technology space. After asking a series of follow-up questions, it was obvious they wanted validation more than they wanted to be challenged to adopt new strategies. They wanted to commiserate with their peer groups about topics like customer expectations, overseas pricing competition and the challenges of finding the best taco in town.

I didn’t make that taco thing up. One founder actually told me he had spent the better part of an afternoon discussing the best taco place with his peer group on Slack.

Setting aside the obvious value of locating the best tacos, I did find this self-inflicted tunnel vision fascinating.

At one point I challenged one of those founders stating, despite what he thought, “All problems weren’t created in a SAAS company and they haven’t all been solved by a SAAS company.”

This isn’t to pick on him, start-up founders or SAAS companies. I’ve met many people who create these cocoons of group think and herd together in like-minded groups who have more interest in propping each other up than challenging each other to get better.

It’s very important to have people around you that support, love and encourage you unconditionally. It is equally important to have a cohort that challenges you and holds you accountable. Ideally, you have both. Everyone can benefit from a mentor or group of people that is dissimilar and creates some friction of thought or mindset. If everyone around you is exactly like you, your chances to learn and grow diminish exponentially.

Having a peer group that only disagrees about whether hot or mild salsa is best for a taco probably won’t create the discourse required to grow and develop your business.

04 Aug 2015

Sticky Post By Matt Hottle Posted in Business Headlines, Finance, Funding, Start-ups With No Comments Permalink

Profit: The Inconvenient Metric for Start-up Businesses

Sticky Post By Matt Hottle On August 4, 2015 With No Comments

Marc Andreessen recently tweeted a reminder that a company’s stock or valuation is based on future performance—not current performance. He is, of course, correct.

I have been following, with great interest, the ongoing debate about current Venture Capital, Private Equity and Start-up funding activity over the last 5 years and if it has created another bubble. The money guys will tell you it’s very different than in the 90’s where EBITDA, not profitability, was the accepted measure of a tech company’s performance, IPOs were the preferred method of raising significant capital and investment banks didn’t really understand the technology.

I would argue the institutional money guys still don’t really understand the technology. Currently, raising money through private equity is the preferred path for many tech companies where everyone wanted an IPO in the 90’s. I would argue it is the same cow by a different name.

After Uber disclosed an operating loss of $470 million, it received enough participation in its latest bond offering to signal a valuation of over $50 billion. That’s right… $50 billion valuation on a company that lost $470 million last year and doesn’t even explain how or why it lost it before new investment dollars fly in through a bond offering.

At some point, profitability must have a far greater stake in the measurement of a company’s viability. Scaling a company through self-funding is slow and incremental. It can be tedious and frustrating.

This emphasis on profitability isn’t happening because the private equity market is flush with cash—enabling and encouraging start-ups to embrace concepts like “run-rate, IRR and total addressable market” to justify their race to scale at the cost of profitability. This is the rub. Private investment wants to see growth—especially top-line revenue. Profitability is assumed to be coming at some point—even when there are no strong indicators this will actually happen.

Revenues still rule in financing rounds. If you show exponentially increased revenues from the previous round, your valuation usually goes up. What if, instead of top-line revenue, PE shops saw profitability increasing on the same revenue numbers from the previous round?

Unfortunately, it is reasonable to assume the valuation suffers even though the founders were actually running a better company.

So what should a start-up do?

Elliot Bohm, the CEO of Card Cash offers a very reasonable strategy is his Inc Article, “Why you shouldn’t always be looking for Venture Capital.”

He proposes the strategy they executed at Card Cash which was to take an initial round from a VC fund which adds brand credibility and allows you to build your business and then use traditional debt funding to grow.

This, of course, requires startups to get off the milk wagon of private equity and focus on building a business where profitability is part of the strategy. To use traditional debt like short-term loans, you have to prove you can actually service that debt. Banks are a for-profit business so they aren’t likely to loan material amounts of money to a business that can’t create net income.

Private equity models work and they can help a good company and concept become great through financial support. They can also enable less than responsible behavior as startups enjoy playing with other people’s money.

Truly durable companies are profitable companies. The longer start-ups focus on the value of an exit and how many rounds of financing they can execute, the less likely they are to see a profit. It would be almost revolutionary to see the prestige of “exits” be replaced by the elusive, but more impressive measurement—profitability.

18 Feb 2015

Sticky Post By Matt Hottle Posted in Entrepreneurship, Funding, Start-ups With No Comments Permalink

5 Things Startup Competitions Get Wrong

Sticky Post By Matt Hottle On February 18, 2015 With No Comments

Every city seems to be hosting startup contests where founders pitch their companies to a dais of “experts” live on stage in an effort to win some funding. Sometimes these competitions are massive and worth millions but many are much smaller; awarding $5k to $20k. It’s within these newer and smaller competitions that I have noticed a recurring series of mistakes.

1. The judges are not experts in entrepreneurial businesses

You see this when sponsors become the judges or the panel includes commercial bankers who are really not business-builders. I love bankers and many of my friends are a part of that industry but they are institutionally bad at valuating and understanding start-up businesses. They tend to judge a business idea in terms of if they would give them a loan and for how much.

2. Contestants are often post-funded companies that have been in business for a year or more

When you are awarding $10k to a company that already has employees and overhead, you have given them 6 weeks of operating costs. That $10k could have launched a prefunded company’s business plan and allowed them to get a credible pitch together to secure additional funds. Instead, you have floated an established company’s payroll for a few weeks. You’ve created almost zero value. If the contest is awarding $100k or more, that’s a different story but when you are giving away small amounts of prize money, focus on those for whom it has the greatest impact.

3. The best idea almost never wins

Based on the sponsors, the event’s host, the constituency of the audience and other non-business-related factors, the least deserving of companies often win these events. There are always ulterior motives at play and when those are allowed to propagate, you see some truly awful business models walking away with money that would have served a greater purpose being set on fire in the parking lot. Nobody wants to admit this happens- but it does.

4. The event tries to be “like” Shark Tank

As soon as one of these competitions invokes the Shark Tank name in its promotional materials, it immediately loses credibility with me. Mark Cuban is not coming to your event. It is a TV show that is 50% substance and 50% manufactured drama. The best contests hold non-public and lengthy discovery sessions between the companies and the judges. Financial details are poured over and every assumption is challenged. By the end of that process, a business plan has been credibly reviewed and vetted. When those judges name a winner- it’s a very carefully considered verdict. The contestants come away with invaluable insight and advice from experts that will benefit them in perpetuity.

5. There’s fine print about the award money

More needs to be done to explain to contestants any requirements that will be imposed on claiming the prize money after it is “awarded.” This includes details around benchmarking or timing thresholds required before the money will be made available. What tax implications exist and was that explained to them? One competition I watched closely actually had a very short window where the winners could claim their award and it required hours of drafting financial reports and updating the business plan. At one point, the 2nd place winner decided the $6k they won wasn’t worth the effort and forfeited the money.

It’s truly outstanding that more of these competitions are popping up all over the country. These events can be future-altering opportunities for start-up businesses or they can be thinly-disguised advertising events for the paying sponsors.

As with most innovative ideas, the shift toward commercialization happens at some point and the original altruistic motivations are supplanted by the attraction to revenue and marketability. We’ve seen this shift happen with the best events. If you think that AOL purchasing TechCrunch won’t turn Disrupt into an event where sponsors look to sticker-up everything that moves like a NASCAR, you may be sincerely disappointed.

If organizers can focus on creating the best possible value for their sponsors while maintaining the worth of the experience for contestants, these competitions can help launch the next big idea.