Conference business great for organizers, not for attendees

Published in UT San Diego, February 19, 2013

Talking about the puzzle of startup investing, a famous Harvard Business School professor once said, “There is no perfect deal, but some deals are more perfect than others.” The perfect deal, he said, is a post office box to which people just simply sent checks.

I have come to the conclusion that the next best thing to that is the conference business followed closely by the “giving advice business.”

Ah, the conference business. There is an unlimited number of investing/venture/startup/meet the angels/pitch to a select group of 191 venture capitalists (seven of which actually have money to invest)/industry expert panels/conference/convention events. All are waiting to give you the keys to the kingdom, in exchange for somewhere between $995 and $1,995. But in true infomercial style, “But wait, there’s more. Order today and you get a 40 percent discount coupon.” What a racket. I have been invited to a dozen of these so far this year, and not one of them has asked me to pay the stated fee. Not one. Each solicitation comes with a discount. Dude, why not just tell me what the price really is — how dumb do you think I am? I mean, you are not fooling me into thinking that this secret handshake is just for me alone because I am special. And when you send the same email five more times, with an ever-increasing discount and an urgency that it will soon be sold out, that surely tells me this is a conference I cannot afford to miss.

And what a business model. The conference boondoggle gets people to pay to try to meet people they want and hope to meet, and the people they want to meet don’t really want to meet you, they want to meet their friends who come to the event to meet each other. Here is the game. You attend the panel and they get to tell you, the audience, how smart they are.

Then, when the panel ends, you run up and exchange some business cards, and each side feels pretty good for a while. They pontificated, you listened, they agreed to look at your deal, you hope they will, but you know they won’t. But for that single moment, each side has embraced a willing suspension of disbelief.

My anger is simple. Many conference organizers build nothing. Their sole raison d’être is to create a networking environment, with some cheap white wine. You would think the Internet could disintermediate them in some way.

And while the baby is on a tear, allow me to take a whack at advisers and scam artists who prey upon my unsuspecting entrepreneurial friends. Recently, a young Australian entrepreneur wrote to us about the companies that promise to find you money, but charge you money before they find it. In his words, “One guy charged $500 to videotape my pitch and then he wanted $900 more to critique it.” There are a slew of promoters, advisers, finders and angel funding sites that charge fees to the entrepreneur, claiming they will “raise him the money,” but first, of course, you need to be trained. And for that you must pay. And pay. Funny thing. They never charge the investor, only the supplicant.

The adviser/promoter business is rotten because it takes advantage of you at your weakest moment, when you will do almost anything to raise the money to follow your dream. It is worse than the lottery. At least there you know you have no chance. But hope springs eternal, and maybe this one time, maybe this guy really is not a Nigerian prince.

Rule No. 162

Really good advice is priceless. Don’t leave the conference without it.

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