‘Not Worth The Risk’: Startups, VCs Backing Out Of SXSW Due To Coronavirus Concerns

Note: SXSW organizers canceled the event on March 6. Read more here.

On March 2, Twitter and Facebook announced they would back out of the South by Southwest (SXSW) festival being held in Austin, Texas, due to fears over coronavirus (COVID-19). Today, Intel followed suit. A petition is being circulated by mostly Austin residents asking organizers to cancel the annual event (as of this morning, it had more than 31,000 signatures). Now it appears that startup founders and venture capitalists, too, are nixing plans to attend SXSW – scheduled for March 13 to 22 – due to coronavirus concerns.

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I reached out to SXSW organizers to get their reaction, and they referred me to a statement on their website that said they are working closely on a daily basis with local, state and federal agencies to plan for a safe event.

“As a result of this dialogue and the recommendations of Austin Public Health, we are proceeding with the 2020 event with the health and safety of our attendees, staff, and volunteers as our top priority,” they continued.

No doubt the unprecedented cancellation of SXSW would have a major economic impact on the Texas capital. The 2019 South by Southwest festival had a $355.9 million impact on Austin’s economy, according to an October report referenced by the Austin American-Statesman.

In fact, the 2019 event had the biggest economic impact in SXSW’s 33-year history. Further, SXSW “is the most profitable event for the city’s hospitality industry,” according to the Greyhill Advisors report and as cited by the Statesman.

‘Not worth it’

As SXSW organizers no doubt scramble to deal with the crisis, we talked to a few startup founders and VCs to hear about why they’re skipping the festival this year.

Cody Barbo, founder and CEO of San Diego-based Trust & Will, told me he’s going to cancel his plans to attend SXSW. This is a big deal, he said, because his company (which recently raised a $6 million Series A) is in the pitch event for consumer tech.

As a new parent, Barbo said the risk simply isn’t worth it. And his co-founders, team and investors are all supportive of his decision.

“Attending SXSW is not the best decision for my family,” he told me in a phone conversation this morning. “We were honored to be selected for the pitch competition and it hurts me to pass that up, but with so many people converging on the city, it seems inevitable that something will come out of it if the event continues.”

Barbo, too, is disappointed in organizers and city officials for not taking things like Facebook and Twitter backing out, and the concerns of residents and attendees more seriously .

“I hate to say it, because SXSW has always had an immaculate reputation, but this feels like a lack of leadership on the part of organizers and the City of Austin,” he told me.

Vineet Jain, co-founder and CEO of Bay Area-based Egnyte, said he was planning to fly to Austin for SXSW but in light of the virus, his company has “restricted all non-essential travel.”

“SXSW has become one of those events that you feel like you should go to. There’s a lot of creative thinkers there,” he told me via Zoom this morning. “But it takes just one employee coming down with it to shut down a whole office. So I’m not going.”

Jain too shares Barbo’s surprise that the event is even still happening.

“With Google and Facebook cancelling their events, why would these guys continue? In fact, I should get my money back,” he said. “The amount of bad press they’ll get might ruin the brand for years going forward.”

VCs chime in

But it’s not just founders. VCs and investors also are opting to stay home.

Tim Ferriss, investor and host of The Tim Ferriss Show podcast, announced on Twitter this morning that he’s not going.

“After much thought, I’ve cancelled my attendance at SXSW. I love SXSW, but I don’t believe the novel coronavirus can be contained, and I view an int’l event of 100K+ people as a huge risk to attendees and the entire city, given limited ICU beds, etc.”

On Twitter, San Francisco-based Hustle Fund co-founder and GP Elizabeth Yin revealed that after moving all in-person meetings to video, she also “cancelled SXSW.”

Via DM, she told me that her decision stems from the fact that COVID-19 seems highly contagious from the initial data.

“While I’m not worried about how it could affect my health, I’m worried about potentially becoming a carrier,” she wrote. “Our health system in the US seemingly cannot handle a large volume of cases, so I thought it was best to do my part in society and slow the number of cases. If they made it online, including the event I was supposed to judge, I’d be happy to still partake.”

And, a Los Angeles-based VC told me that one of his teammates had agreed to attend SXSW this year. He wrote me via DM: “She has asked not to go and we agreed she should not. We instituted a policy today strongly advising against attending any conferences until further notice (along with other guidelines).”

Ultimately, are organizers willing to sacrifice safety and health for dollars? Guess we’ll see. While it would no doubt be extremely difficult, and expensive, to cancel or postpone at this stage, they may have no choice if public pressure continues to build.

Meanwhile, head here to read about how heightened concerns about germs are contributing to a surge in sales for some startups in the disinfecting space.

Note: Post-publication, Backstage Capital Founder Arlan Hamilton said she is also not attending SXSW.

Illustration: Li-Anne Dias