AUSTIN, Texas — Matthew Rosenberg, co-founder of a startup on the leading edge of the hottest technology trend at this year's South By Southwest Interactive festival, looked around at the throngs in the Texas streets outside the influential tech conference and shook his head in wonder.
"We're the new rock stars," said the 28-year-old co-founder of New York-based Fast Society, a mobile service that allows groups of people to communicate simultaneously through a text-message-based system. "Entrepreneurs are the new rock stars."
Fast Society is one of a long list of startups at South By Southwest competing to use text messaging as the basis for group sharing of locations, photos, voice, text and other social information.
The 17-year-old fast-growing South By Southwest (SXSW) Interactive conference was the place where Twitter first came to prominence in 2007. It was the place in 2009 where the concept of smart phone location check-in services was first popularized by the New York startup Foursquare.
SXSW remains one of the most fashionable places to seek out the emerging trends in personal technology, particularly on the mobile and social web. Still, even some young entrepreneurs worry that the mushrooming event is losing its soul, as corporations and what Rosenberg called "the beautiful people" are drawn by the money and cultural interest behind the boom in online social media.
Among the other hot startups and trends making their debuts at SXSW Interactive for 2011: Digital music services where your tunes are stored on the Internet "cloud," instead of your phone or computer; next-generation search engines like Moodfish, which uses terms like "sunny," "sensual," "intense" and "quirky" to find appropriate entertainment nearby.
And there was actress Demi Moore's favorite SXSW startup: Zaarly, where you send out an offer from your smart phone to pay a fee to have a service performed, and people in your geographic vicinity can respond to your offer. Moore and husband Ashton Kutcher, who have become active investors in tech startups, are among the backers of Zaarly. Both, along with talk-show host Conan O'Brien and other Hollywood notables — SXSW also includes a film festival — showed up at a sweaty, broom-closet-sized studio in downtown Austin. They all talked about the intersection of social media and entertainment on Facebook Live, the live talk show that streams over the Web.
After discussing how massive support on Twitter and Facebook helped show O'Brien that he needed to keep performing after losing his spot on "The Tonight Show," the talk-show veteran bantered with interviewer Randi Zuckerberg, sister of Facebook CEO Mark Zuckerberg, about the public obsession with the iPad 2.
"Right now, someone at Apple is watching: 'He displeases us,' " O'Brien joked to Randi Zuckerberg in a comically menacing voice. " 'Destroy the one they call Conan.' "
Last year, the Interactive festival for the first time surpassed attendance at the older South By Southwest music festival, which first spawned the overall event in 1987. And with last year's attendance of about 33,000 expected to grow by more than 30 percent for this year's event, the entrepreneurs actually have become the rock stars.
Corporate sponsors like Chevrolet, Miller Lite and Pepsi are prominent at this year's event. "We're getting a lot more mainstream businesses coming ... to learn about how they can use social media to help their bottom line," said Hugh Forrest, director of the Interactive festival. Even Apple, which Forrest said has been resistant to being a major presence at SXSW, has set up a temporary store in downtown Austin this year.
For now, Rosenberg and the other three members of Fast Society aren't making rock star money. None of them is drawing a salary. In Austin, to save money, they are crashing in the condo of a friend who's away on vacation. Only two of the four-man team, all between 27 and 29, could afford to pay the $750 conference fee.
Younger entrepreneurs like Rosenberg are mainly interesting in building companies around smart phone applications, as mass-market social networks like Facebook and Twitter, once the shiny new baubles of SXSW, now need to be augmented by social services that are more personal and flexible.
In the words of Jared Hecht, the 24-year-old co-founder of competing service GroupMe, the new services are like a "reply all" button for texting, or a mobile chat room for you and your closest friends. Big social media platforms have become so large and homogenous "that the communication there often becomes sterile," Hecht said. "People are feeling, 'I need something that is a little more me.' "
So Fast Society and GroupMe, which are targeting people from their late teens to early 30s, are based on the premise that people want more ability to freely express themselves through technology to a select group of friends — safe from the eyes of parents, relatives or other judging eyes.
"Facebook, when we were in college, it was a safe place," Rosenberg said. "What we're doing is the new photo album; it's the new video camera."
Despite the excitement, the festival's relentless commercialism bugged Rosenberg a bit. "I mean, just look around you. Pepsi is everywhere. Chevrolet is everywhere. I guess the days of South By Southwest being about celebrating startups are disappearing."
But he said Fast Society couldn't be happier with how its guerrilla marketing efforts were panning out. The young entrepreneur refused to confirm nor deny a persistent rumor that Fast Society bought drinks for everybody on their flight from New York to promote the startup.
But whether true or not no longer mattered — the rumor helped get Fast Society noticed. That, along with prominent mentions in The New York Times and tech blogs side by side with much larger, better-funded group-messaging teams like GroupMe and Beluga, a Silicon Valley service formed by three ex-Googlers and bought by Facebook this month.
"In our space, everyone else has a ton of money, and we're keeping up with them," Rosenberg said. Coming to South By Southwest and trying a host of guerrilla marketing tactics — Fast Society also charted a free party bus to chauffeur people downtown on the first day of Interactive, before they were shut down by authorities — "was a calculated risk," he said.