Entrepreneurial Austin

Steve Case, courtesy Case Foundation

To capture the mix of hope and hype at SXSW Interactive, one need look no further than last week's 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 Interactive attendees are hungry for, but few will achieve.

Today's SXSW Interactive 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.