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    Home » Opinion » Alistair Fairweather » Genius capitalises on insanity

    Genius capitalises on insanity

    By Alistair Fairweather18 March 2013
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    Alistair Fairweather
    Alistair Fairweather

    For the better part of a decade, the US has been in a slump. Its unemployment rate remains stubbornly high, its growth rate even more stubbornly low. Its government is deadlocked, its debt is rising quickly and its populace is largely gloomy about the future. And yet, at least in one city, the ­optimism is palpable.

    That city is Austin, Texas, and the source of optimism is the annual South by South West Interactive (SxSW) conference, which attracts technology entrepreneurs and professionals from around the world, and all of them are brimming with enthusiasm.

    Take Brian Chesky, the young entrepreneur who cofounded Airbnb, a service that allows people to rent out their spare bedrooms and sleeper couches to people visiting their city. What kind of crazy person would want to rent out their spare bedroom to a stranger? Hundreds of thousands of people, it seems. Airbnb has booked more than 10 million nights since it launched in 2008.

    Had Chesky listened to the dozens of respected venture capitalists who turned him down — the rudest of which ­simply walked out of a lunch meeting without even finishing his drink — he and his cofounders would never have persisted for the three lean years it took to make the ­company viable.

    Questioning received wisdom is a theme that runs thick through the SxSW conference. South African-born Elon Musk, who made billions by cofounding PayPal, has since founded SpaceX, the first private company to successfully launch a spacecraft and then dock with the International Space Station. Musk also cofounded Tesla, a company dedicated to making high performance electric cars — an idea that many experts openly scoffed at.

    Or take Bre Pettis, founder of MakerBot, a company that manufactures relatively inexpensive 3D printers. These devices literally print out objects in a hard plastic,  based on any designs that are fed into them. And so, for US$2 200, anyone can become a small-scale manufacturer overnight. To Pettis, this represents the start of “a new industrial revolution”.

    No institution is safe from these free-thinking pioneers. When Jonah Peretti founded BuzzFeed in 2006, no one in the serious news business suspected that this effervescent mix of cute animal pictures and witty articles would one day intrude on their turf. But today the site is creating hard news and making hard cash.

    For Peretti, there is absolutely no discontinuity between serious news and cute animals. He compares the media to a Parisian sidewalk café: yes, you may take your news­paper and your philosophy book to the café to read, but you may also stop and pat the cute dog at the next table. “When you pet the dog, you don’t become stupid,” Peretti says.

    BuzzFeed is also challenging that most sacred of conventions, the division between advertising and editorial: “Newspapers got used to hating advertising and putting it off to the side. We realised we could work with brands to make advertising interesting and useful instead of shoving it into a corner.”

    This approach is proving wildly successful in a market where other media companies are struggling to survive.

    If these true believers had a high priest, they might well choose Peter Thiel as their leader. Another PayPal cofounder, Thiel has reached ­legendary ­status by being one of the first outsiders to invest in companies such as Facebook, LinkedIn, Yelp and Quora.

    Thiel is convinced that the problem with America’s economy is a lack of bold and well-defined vision. “When there’s no definite view of the future, you end up in a place where you stop building things.”

    Thiel challenges Warren Buffett’s approach as essentially defensive and pessimistic. “We actually like to invest in companies that are losing money. A company that is making lots of money is often out of ideas,” Thiel says. He relates an anecdote about the early days of Facebook when they were offered $1bn by Yahoo less than four years after founding the company. They turned down the offer, after minimal debate, and the rest is now history.

    What kind of insane people would turn down $1bn in hard cash for a company without any real ­revenues? The kind of insane people who have the vision to change the world, it seems.  — (c) 2013 Mail & Guardian

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