4 Big Themes We're Tracking at South By Southwest

Chances are that by the time you read this, I'll be walking the streets of Austin with Motley Fool Rule Breakers teammate Karl Thiel. We'll be there with a handful of other Fools for the annual South By Southwest Interactive conference, or SXSW, as it's come to be known.

SXSW is (rightly) thought of a place where code and design mesh in a primordial ooze of creativity that births start-ups. It's the perfect place for LinkedIn (NYSE: LNKD  ) co-founder Reid Hoffman to pitch his new book, The Start-Up of YOU. He'll be doing exactly that in a Saturday session I plan to attend.

LinkedIn as the new Twitter?
Why does Hoffman's pitch matter? Because connective services such as LinkedIn have led to more geographically independent innovation. Start-ups are now born and bred entirely on the Web. LinkedIn is helping the entrepreneurs behind these Big Ideas find each other more easily, as evidenced by a 70% increase in premium subscriptions revenue in 2011 -- twice as much growth as the year prior.

Put another way: SXSW is fertile ground for exploring the sorts of Big Ideas and potentially disruptive technologies that make Rule Breaker investors like us salivate, which is why we'll be there from Friday's opener through Tuesday's close.

3 more Breakers we'll be visiting
Our agenda includes a visit with HomeAway (Nasdaq: AWAY  ) co-founder and chief executive Brian Sharples. The stock hasn't done well recently, down more than 38% even as the Nasdaq has rallied more than 17% over the past six months. Larger-than-expected losses in the fourth quarter -- specifically, a $0.13 per share miss on a GAAP basis -- didn't help matters. Nevertheless, I see this as a long-term growth story. Karl and I plan to ask him about the earnings potential of add-on services such as a new built-in booking engine.

We also plan to visit Google's (Nasdaq: GOOG  ) Austin-area "Village," where we expect to hear more about tools for creating Android software, improvements in the Chrome browser, custom YouTube channels, and the just-released Google Play store designed to compete with iTunes. SXSW is in many ways a content conference, and we expect to hear a lot about what the Big G and its rivals are doing to attract more of it.

On Tuesday, I leave Austin to drive to San Antonio, the home of two-time Breakers recommendation Rackspace Hosting (NYSE: RAX  ) . While there, I'll have a chance to sit down with co-founders Pat Condon and Dirk Elmendorf, tour facilities, and get an up-close look at how this purportedly commodity operator of hosting services managed to improve monthly revenue per server by 10% last year as return on invested capital soared from 11.6% to 14.7%. Want to know what Fanatical Support looks like from the investor's perspective? Stay tuned for our trip reports.

4 big themes we'll be watching
Now here are four big themes we expect to touch on during our SXSW weekend:

  1. Social media ... EVERYWHERE
    Search the SXSW schedule for "social" and you'll find 150 different sessions. Almost anything you can imagine is covered, from the psychology of social design to how to write a proposal that will win social media clients to transforming social networks to serve seniors. There's even a contrarian panel discussion about why social media is a fad and why SXSW has become a bubble.
  2. Big brands making Big Statements
    Foolish veterans of SXSW believe the show has gotten more commercial with each passing year. Says Greg Robleto, who heads the Fool's social media team, "I expect to see at SXSW 2012 the corporatizing of Austin continue with more excess, more giveaways, and more tempting distractions to keep you from even going to the panels." Google's 'Village' doesn't quite fit the theme, since it's designed for educational sessions, but you can expect us to report on shark-jumping excess from others.
  3. A lot of exciting start-ups … with a few Fakers in the making
    SXSW is well known for its "Start-Up Village" for showcasing new ideas. Some will already be venture-backed. Others are likely to be seeking funding, and all will be seeking the buzz needed to win a user base. Remember: Twitter debuted at the 2007 SXSW Interactive festival. We won't be surprised if the quest to become this year's Twitter unleashes a crop of Fakers. You can expect us to limit our enthusiasm to only the most Breakerish of Big Ideas.
  4. Cloud computing as the new computing
    Finally, while it's not quite as popular as social, we expect presenters and vendors alike to keep beating the drum for cloud computing. Dozens of sessions speak to securing or controlling the cloud, while others tout development and design and the inevitability of cloud hosted games. How are developers dividing their time between coding for the cloud versus coding install-and-manage apps? We'll report on what we find.

Are there other topics or sessions you'd like to see us cover? Please weigh in using the comments box below, and if you're on Twitter be sure to follow @TMFRuleBreakers for our most up-to-the-minute coverage of SXSW.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Google and Rackspace Hosting at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google and LinkedIn. Motley Fool newsletter services have recommended buying shares of Rackspace Hosting, LinkedIn, HomeAway, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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