My opinion about startup conferences has… shifted over the last few years. When you are paying hundreds (sometimes thousands of dollars) for a ticket, and then you add on flights and hotels for you and your team - you can’t just ignore the question of ROI.
This quarter I’m attending a bunch of conferences - Saastr in San Francisco, SaaStock in Ireland, and VidSummit in LA - and the question is still there for me: is this ticket worth the money?
I’ve been asking myself this for years, and we finally decided to find out why these tickets are so damn expensive. Because for a bootstrapped startup founder, that $1,000 ticket or that $5,000 booth on the ‘Startup Alley’ is a big decision. However, conferences tend to promise customers, investor intros, round tables, and meeting Lupita N’yongo for some reason. If you’re looking to meet celebrities, a conference might not be the place.
So I sat down with conference organizers who agreed to share numbers they hadn’t shared publicly before. We looked at dozens of industry insights, and the main thing we learned is that conferences are an extremely risky business. Despite the expensive tickets and the super expensive sponsorships and booths, organizers barely make any money, and a fair share of them close at a loss.
So, let's talk about the actual numbers behind startup conferences.
Now, before I get into breaking down that ticket price, let me help you figure out whether or not they are worth it for you.
I've been to a fair share of conferences and trade shows, from SaaStr to Collision to SXSW, and I went from “I just can’t see the ROI”, to actually enjoying them lately. The key? Embracing networking.
Visiting booths is cool. Only a handful of talks will be insightful (like the ones I’m doing at Saastr and SaaStock next month), but the core of this is NETWORKING. It’s not sales (you won’t be able to quantify the value), but if your job requires you to meet people, partners, collaborations, other founders… there are few spaces, other than conferences, where you can get so many relevant people in the same room.
So I went from planning a full schedule of going from keynote to keynote where I was paying attention and taking notes, to skipping most of the talks and just spending the day chatting with people. The hilarious thing, being an introvert, I kinda suck at networking, so my cheat sheet is bringing my team with me. I wouldn’t have thought that networking as a team is easier, but it really is. Also, we have Youtube now. It’s been crazy to see how people recognize my face, or at least have heard of Slidebean, so it’s also a test of the effectiveness of our marketing.
If you didn’t know yet, we’re not in the business of making videos- Slidebean is a platform for founders to scale their startups.
Also, by all means, I’m speaking about real in-the-flesh events. Virtual events are a thing that we should leave in 2020. Real humans with real beers in their hands. Beer is a key to networking.
Ok, let’s talk about numbers now.
Conferences are a massive business. In the US alone, in 2018, there were 1.8 million conferences, conventions, and trade shows, that generated 3.2 million jobs. This is a $381 BILLION industry (with the shittiest margins, but I’ll get to that).
Even if we reduce our scope and we focus on the tech world, there are still hundreds of conferences happening all over the US and the world. But in the startup niche, SaaS, SaaStr, and SaaStock are the leaders.
SaaStr was started by Jason Lemkin. In 2012 he had made a name for himself after selling Echosign to Adobe for some good money. He started blogging and answering questions on Quora, and in a matter of months, started bouncing the idea to convert this audience into a meetup. Fast forward 10 years and they’ve operated their US conference for almost a decade, and the first thing you’ll assume is that this is a large organization - you’re wrong.
15 people organize this massive event, with hundreds of speakers, hundreds of sponsors, and thousands of attendees. They essentially work all year for a sprint of 3 days, with thousands of people, hundreds of speakers, and sponsors. In 2020, COVID almost killed them, but they pivoted and started organizing their events outdoors, and it was a massive hit! Add to that free food, and BOOZE! It’s a festival vibe. A big evolution from the gloomy hotel they used to have. But that doesn’t come close to guaranteeing profits, it just makes things riskier.
When they started, it took them 3-4 years to see any profit from their early conferences. Moreover, costs rack up quickly. These aren’t thousands of dollars in food or production; we are talking hundreds of thousands, sometimes millions on a single item for a single contract.
So if we were to cut this ticket to understand how much went to each thing, we’d have to start by extending it with sponsor money. Sponsors and booths end up funding a good portion of your costs - so you’re cost of attending - but it breaks down to something like this:
- 30% Food and Beverage
- 16% Audiovisual Equipment
- 10% Decoration
- 10% Marketing
- 7% Space Rental
- 6% Registration Process
- 6% Staff Travel and Accommodation
- 5% Speakers
- 4% Security
- 3% Shuttle
- 3% Wi-Fi
Add to that that many ticket sales happen in the last few weeks before the event. That is why tickets get more expensive towards the last few days, because their risk is higher (and also FOMO and pressure for the buyers who decide last-minute).
But back to my point - If they miss their ticket sales mark, they are in the hole for things they already paid for, for things that they already committed. And nowhere was that a bigger hit than in 2020. So there’s a possibility that you can LOSE millions of dollars. Also, you won’t know how much money you actually made until the very last minute. So why go through the trouble?
Many companies have leveraged their reputations to create events massive events. It seems like a natural evolution for a platform such as SaaStr, TechCrunch, or even us to make that leap and go beyond the screen. It was time to exploit that potential and meet people.
These human connections are worth more than online connections. I understand that now, and it’s one of the reasons I’ve been forcing myself to attend more of these. Companies and media outlets that take the risk are looking to maximize their company reach, to consolidate a digital presence into the physical world.
It’s the same reason sponsors have booths; it makes those customer connections real. It’s like the anti-Metaverse.
For many organizers, that connection IS the reason why conferences are worth it.
This is a functional model you can use to create your own formulas and project your potential business growth. Instructions on how to use it are on the front page.