Tonight after work I went to Starbucks with the CarWoo team. They are building a better way to buy a car. Got funded to the tune of $6 million. Are one of Paul Graham’s favorite Y Combinator companies. He’s been telling people he thinks they have potential to go public. Why? Because they are “crushing it” as they help car buyers have a better experience. I liked them so much I spent 40 minutes talking with the co-founders about their new service and how they are changing the world.

But that’s not what this post is about.

No, during that coffee break (it’s a startup, after all, and they went back to work) we talked about SXSW. I took a picture because this is what I wish SXSW was: intimate, fun, conversations about the tech industry. That’s what SXSW used to be.

Instead, this year, SXSW became something different. It got too crowded. I remember waiting in lines for more than an hour just to get into an over-crowded, loud, party where you could barely move around.

Next year is looking even worse. Already it’s the number one event on Plancast (my favorite place to find geeky events) by far. I’m hearing that hotel rooms — if you can find them — are running $800 a night or more.

So, this is an industry challenge.

Do we turn SXSW into something that really becomes a parody of itself, or do we try to save it?

Me? I want to get more of those intimate experiences we used to have. I remember when the entire Web Standards Project fit at one picnic table. I remember having a fun conversation with a small group, all huddled around Craig Newmark in the rain at a BBQ place across the street. I remember being able to get into parties without being a VIP and last year the VIPs even had to wait in line at nearly every party. Heck, I remember when Scott Beale Tweeted in 2007 that he was sitting all alone in an empty pub and I joined him and had a leisurely beer at a picnic table with him and a few other friends. Those days are seemingly gone.

Can we bring them back?

I’ve been studying this problem for a long time. Back when I worked at Microsoft Linda Stone invited me to a party. She pissed off my wife because she insisted on keeping the party size small. I didn’t grok that at the time, but by keeping the dinner party to 10 people she made an experience that was magical and that I’ll remember the rest of my life.

Now, we can’t do that at SXSW. Why? Too much opportunity cost. If we did a dinner like that everyone would be looking at their watches and realizing that they could be out meeting cooler people and collecting business cards. Heck, I was at one dinner one night and watched as people were looking at Twitter and Foursquare and seeing people peel off for better events elsewhere. “Gary Vaynerchuk is pouring wine,” one partier advertised. I’ll be honest. I ended up going to that eventually too.

I arrived just as Gary was pouring his last bottle of wine. But it felt empty. Why? Because I barely got to say 15 words to Gary. That isn’t the same experience as getting to hang out in Sonoma with Gary and a handful of other people (another experience I’ll remember the rest of my life).

In my studying of group dynamics I’ve noticed that the ultimate dinner party is four people. Why? Five makes it easy to “split” the conversation. Two people can feel OK peeling off and having their own conversation. But if you limit it to four, I notice that conversations are more intimate and people look at their phones a lot less often.

The trick is, how do we encourage people to stick into a group of four long enough to have the magical experience that I had tonight where you get to really know someone and have some deep conversations. The kinds that change careers. Friendships. Families.

It seems weird for me to say this, but I’m tired of going to big massive parties where you collect a lot of business cards but don’t have any good conversations to show for it. I now have enough business cards. I don’t need more. I bet many of you are in the same place. In fact, this year we’ve seen companies like Pip.io and Path come along and try to serve smaller “micro” groups. Path limits you from sharing photos with more than 50 friends. I’ve come to like that constraint, somewhat. It’s just that I wish I could share with many small groups.

So, how about this as a proposal:

Kill the big parties. Instead, follow Zappos’ lead. This year they hosted a bus. It could only hold about 30 people (it had its own bar, after all). But the time I spent on that bus is still my favorite experience at SXSW. Why? Because it forced a small handful of people to sit together and talk. Even if it was just for 15 minutes it was nice to have an intimate experience with a small number of other people.

To me the Zappos bus was the prototype of the “MicroSXSW experience.” Here’s some video of that:

Here, look at how Zappos seats people at work:

There are fewer than 10 people in one department. This photo is of the Casual-wear department. Why not put dozens of people into one department? Because humans don’t do their best work in large groups.

Today I met a remarkable entrepreneur. He made a magical iPhone app with one other guy: WordLens, that translates Spanish to English in real time on your iPhone. I interviewed him today too. Two guys changed the world. Micro style. Or, look at Instagram. They only have four people and their iPhone app just passed a million users. Micro style. (I interviewed one of the co-founders recently there too).

Noticing a trend yet? You should. Micro teams change the world.

I remember that in 1996 ICQ released to 40 people. Within two years they had about 100 million users. That was before Twitter. Micro style. Three kids and a parent with a little bit of money. Changed the world.

So, I think I’ve made the case for what we need to do at SXSW. Make it possible to have these “Micro SXSW” experiences.

In fact, make it fun! Let’s see what we can do together as we brainstorm.

I’m looking for ways to make it impossible to interact with more than three people at a time and how to hold that group together as long as possible. It doesn’t sound scalable, does it?

Revolving Door Party at SXSW 2010 from Ed Hunsinger on Vimeo.

But, how about a Revolving Door Party? It wasn’t possible to fit more than three other people into one of those at the same time. Magical. Why did the most fun thing at SXSW only happen after all the normal people went to sleep (Foursquare alerted me to this after I had pulled the covers over my head — I thought it was interesting enough to get dressed and go downstairs and, indeed, it was).

In 2008 I held a “MicroSXSW” event at the Salt Lick:

How about if we do rolling parties that way?

Or, even better, how about if you get 10 cards with three spots on them when you arrive at SXSW and you pick people to have a “MicroSXSW” with? Fill them all in and get entered into a prize. Heck, let’s get Foursquare to let you all “check in” to such a “MicroSXSW” for a special badge. Getting a badge for attending a huge party? Lame. Getting a badge for having a great conversation with three other people? Awesomeness! Heck, I’d love it if you recorded your thoughts or interviewed each other. The folks going to SXSW are the top Web builders in the world. Imagine all the knowledge we could share with the world that way. Imagine that big companies rewarded the best “MicroSXSW” with prizes.

Can you come up with better ideas for how to bring these great experiences to more people? Let’s brainstorm.

By the way, Rackspace on Thursday, is deciding what to do with its SXSW budget. I hope we figure out a way to support a MicroSXSW movement. You can help with your ideas.

Otherwise we’ll all be stuck in line at the Mashable and Digg party having no fun. If that happens another year it’ll probably be the last time I go. I have enough business cards. I’m chasing MicroSXSW experiences now. You in?