5 Key Lessons We Can Learn from the Fyre Festival Fiasco
By: Jotham Lim
The infamous Fyre Festival incident has been heavily scrutinised since the exposé in late 2017. With two Netflix and Hulu documentaries released earlier this year, this topic has once again stirred up quite a buzz. Outside the obvious fraudulent and unethical undertones, what can we, as entrepreneurs, learn from this entire ordeal?
Brief Introduction
The Fyre Festival was a joint initiative by 27-year-old entrepreneur Billy McFarland, CEO of Fyre Media Inc., and celebrity rapper, Ja Rule. The music festival was supposed to be held on a private island in the Bahamas once owned by Pablo Escobar. There was a strong artist line-up, including industry bigwigs such as Blink-182, Migos, and Major Laser.
The festival garnered heaps of social and mainstream media attention with the help of a strong marketing campaign involving a plethora of top-tier social media influencers. Tickets were even sold as high as $250,000 for the VIP packages.
However, on the day of the festival itself, attendees were left stranded on a different island without proper food, water, or accommodation, with limited access to the outside world. The infrastructures were half-built, and most stakeholders have yet to receive payment even today. A crowd of unpaid local contractors and unhappy festival-goers gathered in front of the festival command centre demanding answers. Riots were about to break out, and organisers cancelled the festival the very next day. Billy, Ja Rule, and several others abandoned the island, leaving behind their responsibilities towards attendees, employees, and other stakeholders.
“Fyre Fraud” went down in history as arguably one of the worst music festivals of the 21st Century.
It is easy to dismiss this incident as just another fraudulent case. However, the festival was initially intended to help promote the Fyre App, an artist booking platform run by Fyre Media. What started out as an ambitious marketing campaign turned into a malicious mess through a series of bad decisions and corporate directives.
The problems faced by the organisers will seem familiar to some of us. If we are not careful, we might fall into the same traps as well.
A Marketing Plan is Not a Business Model
Sales and marketing are undeniably vital to a company’s success. A great product without a marketing strategy will eventually fade into irrelevance, but a marketing plan without a product is fundamentally unsustainable.
Billy McFarland was not selling tickets to a music festival. He was selling a vision of what could possibly be the next Tomorrowland or Burning Man. Both investors and customers bought that dream and ate it all up.
McFarland had built a strong marketing campaign but without a readily available product. The sales packages were made on the spot, and he included anything that would sell the festival without first assessing its viability. Problems started cropping up when he couldn’t deliver on his promises.
For us, diverting all our attention into sales and marketing is very tempting because it’s what brings in money and drives company profit. Big numbers can attract wealthy investors that are willing to invest even more money in your company.
However, without a great product to back the sales figures up, consumers and stakeholders will eventually figure out that the product is not worth their time nor premium price. Sales figures will taper off eventually, and we’ll be knee-deep in trouble.
That is essentially the business model of serial entrepreneurs: heavily market your product during the initial stages and sell off the company before it starts going downhill. Rinse and repeat. This all means a viable strategy to build your wealth, but is it a reliable long-term strategy? If we have our customer’s best interests at heart and actually want to make an impact on society, we must realise that a marketing plan will never replace a reliable, quality product nor substitute a business model.
Digital Marketing for Millennials
Touching on marketing thus far, the only thing that the Fyre Festival did exceptionally well was understanding what clicks with millennials and what doesn’t. Billy McFarland had a genius for leveraging that advantage. The organisers behind the Fyre Festival brought in giants from the social media influencer industry, with actresses and models who have millions of followers under their names. They appeared in promotional materials for the festival and helped spread the word to their followers. They had even paid Kardashian family socialite Kendall Jenner $250,000 for just a single Instagram post promoting the festival.
The cost of this marketing strategy may seem outlandish, but it was definitely cheaper than traditional strategies while being much more effective at the same time. What’s more, the insinuation of having many influencers in one place piqued the interest of celebrity lifestyle news agencies, promoting a second wave of free promotion without Billy having to lift a finger. For entrepreneurs looking to tap into the millennial market, it is worth taking a look at the methods used behind the successful campaign and how to get more value from it through proper targeting.
Understanding Your Revenue Model
Organising and planning a music festival is a massive undertaking that requires a lot of funding. Hosting in a big city is hard enough, but a private beach in the middle of the Bahamas is a whole new level of challenge.
Fyre Media relied heavily on ticket sales and investor funding to finance the entire event. Despite the initial listed price of $250,000, tickets were actually sold for a low, low price between $500 and $1,500, while VIP tickets were sold for only $12,000. Halfway through the planning process, they soon realised that not many millennials were able to afford the high price of tickets. They had no choice but to severely cut down ticket prices, taking away much of their revenue stream.
With abysmal ticket sales, Billy McFarland was unable to leverage the figures to attract much-needed investor funding during the later stages of preparation, which prompted further problems. With a shoestring budget and a tight deadline, it’s no wonder why it didn’t take off the way it was promised.
We shouldn’t put the cart ahead of the horse. It is vital to know how much money is going out of the company at all times. To ensure we limit whatever damages are necessary, there should be a sizeable sum of extra cash on hand for easy access in times of weathering a storm. Taking huge unnecessary risks in the name of “entrepreneurial spirit” only reflects irresponsibility towards employees, customers, and investors. An informed decision always holds more weight than an uninformed one.
Your Identity Is Not Tied to Your Business
When we dedicate our life to a particular goal, it is easy to project our identity onto said goals. As entrepreneurs, we spend a lot of time cultivating and growing our business, much like we would raise a child. Eventually, there will be people who criticise how we operated, and most of them have our best interests at heart. If we are not careful, we may interpret this as a personal attack against ourselves.
According to Billy, his idea genuinely held water at first, but when hyperbole began to stack, things got blown out of proportion. Consultants and employees voiced against many of the choices he made, but he decided to shut out all incoming feedback that didn’t align with his vision and went as far as asking some “troublemaking” employees to leave the company.
We shouldn’t be defined by the way we run our business. It is easy to get caught up in the hustle and forget that there is more to life than running a business. If we take ourselves less seriously and have a higher purpose in mind, we wouldn’t flinch at any form of criticism. Instead, we would take the feedback and make ourselves better people. Being a well-rounded person can actually help us grow in many more ways than one.
Final Key Point
There is nothing glamorous about the actual work of an entrepreneur. Many romanticise the idea of being their own boss, taking reliable people under their wing, and building wealth, but the truth is nothing of the sort. Being an entrepreneur is a day job basically solving problems and putting out fires that randomly pop up out of nowhere. Ask any seasoned entrepreneur, and they’ll tell you that every day is a forest fire. There is nothing fancy about being an entrepreneur as portrayed in social and mainstream media. It is a rare, straight myth.
Entrepreneurship is tough work with long hours of planning, coordinating, and dealing with problematic and annoying stakeholders with boots-on-the-ground and smiles on your faces. These forest fires deserve much-needed respect and admiration. We recommend readers independently analyse similar case studies and draw conclusions and interpretations to help their respective businesses. It is always good to learn from people’s mistakes, and God forbid we make the same mistakes ourselves.