AUSTIN, Texas — The annual South by Southwest (SXSW) 10-day event in Austin, Texas, runs rampant with free drink tickets, celebrity sightings, parties with strobe lights, and live music performances, which bring an injection of consumer spending to the city.
This year, the festival and conference started in full force with those positive vibes flowing. Then, midway through the event, Silicon Valley Bank (SIVB) collapsed, and things got weird — and not in the way suggested by Austin's unofficial slogan, "Keep Austin Weird."
By Sunday afternoon, the pressure was mounting following Silicon Valley Bank's failure, and companies that were customers of SVB reached a critical point in which they had to make potentially detrimental business decisions.
Roku (ROKU), for example, had nearly $500 million tied up at SVB. It probably didn’t foresee its cash evaporating when it planned its SXSW experience in downtown Austin. The company was showcasing its latest technology while uncertainty over its business operations loomed large.
Signal and Cipher CEO Ian Beacraft warned that there was little time and that government officials needed to act fast.
"Monday is D-Day for a lot of companies," Beacraft told Yahoo Finance prior to the actions taken by the FDIC, Treasury, and the Federal Reserve to stabilize the banking system. "Within weeks, we'll start to see shops closing up. And within months, we'll see the ripple effects across the rest of the economy."
A sigh of relief arrived hours later for Roku and many other companies at SXSW when the FDIC assured SVB customers that they would have access to all of their funds.
But as the after-effects of the Silicon Valley Bank crisis continued to play out, dealmaking remained a top priority at SXSW as entrepreneurs sought out their next infusion of capital, venture capitalists scouted out the next major tech business, and mega-cap tech businesses hosted flashy events.
"I do think that the next few years are probably, in venture capital, going to be the best vintage years in the past decade," Lux Capital Co-Founder Josh Wolfe told Yahoo Finance. "Why? You've got lots of firms that know what they're doing, and their reputations are rising, and their access and their networks are growing at a time when prices are coming down. And when prices go down and valuations get lower, your future returns — if you're right or lucky — can be very high. So very optimistic for the future of venture."
Attendees use the escalator during the Austin Convention at the South by Southwest Conference in Austin, Texas, U.S. March 16, 2023. REUTERS/Nuri Vallbona ·Nuri Vallbona / reuters
SXSW puts Austin, autonomous vehicles on display
Despite the turmoil in the financial sector, SXSW continued along its post-pandemic comeback to show off the latest technology — and its host city, Austin.
For Austin Mayor Kirk Watson, who has returned for a second term more than two decades after his first term, concerns of a bust echoed his experience from the dot-com bubble.
“It does feel like 'Back to the Future' for me,” Watson told Yahoo Finance at SXSW. “I was mayor and kind of navigated through the first big tech boom. And then shortly after I left, there was the bubble burst on that. And we were just becoming a big city. We were becoming the place that people were looking to for the information and knowledge economy."
"Now, we are a big city and we have all of that diversity,” he added. Google (GOOG, GOOGL), Dell (DELL), Tesla (TSLA), and AMD (AMD) logos featured across some of the city’s largest real estate properties provide a visible reminder of the technology companies that have set up shop in the state.
A general view of the city of Austin along the Colorado River in Austin, Texas, October 25, 2021. Picture taken with a drone. REUTERS/Mike Blake ·Mike Blake / reuters
Austin might see another leg of growth from a new wave of technological advancements. Artificial intelligence, robotics, virtual reality, and autonomous vehicles were just a few examples of innovation on display during SXSW.
With each new advancement, Watson said he aims to foster a city that embraces creativity.
"Austin's unofficial motto is ‘Keep Austin Weird,’" he said. "I've always interpreted that as 'Keep Austin Creative' because those first ideas that you hear the first time you hear them, most of the time people say, ‘Whoa, that's kind of weird,’ though it becomes something really big. And this is a town that embraces that.”
Driverless cars and other forms of autonomous mobility have become one type of technology at the forefront in Austin and at SXSW.
In 2021, Tesla CEO Elon Musk decided to move his company's headquarters to the city following a fallout with California legislators and a rebuke of COVID-19 policies. The innovative business and its technology have left a mark on the city.
Watson told Yahoo Finance that he has taken test rides in Waymo autonomous vehicles during his time in the Texas Senate.
Waymo, which started as Google's self-driving unit, has since relocated away from Austin. However, in recent weeks, three different autonomous vehicle representatives have scheduled visits or meetings with the mayor, all vying for the ear of the city leadership.
"Seriously, this week, I've had three different entities call [to talk] to me, including Tesla on that," Watson said. "It's gonna happen, and it's gonna happen soon."
