Many of us have seen the documentary on Netflix by now so I’ll keep it short. Fyre Festival was a failed music festival that didn’t occur between April 28-30 and May 5-7. Well technically it did, there just wasn’t any music, or a festival, but there were these amazing sandwiches! Recently we had a chance to look at the pitch deck that then CEO Billy McFarland, founder of the failed festival, used to raise capital for the venture.
Take a look at the deck yourself which we found posted this week:
Now, for venture capital investors, screening pitch decks can feel like a 6th sense, but in analyzing Billy’s pitch deck something stood out – the pitch deck was not terrible compared to the typical early stage startup deck. The result was a marketing campaign they executed on flawlessly – but a festival that was a total flop. But how did it get to this?.
1. Lack of focus.
“You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1000 things.” – Steve Jobs
The first 9 slides of the deck are about the tech-enabled celebrity booking service that was the original Fyre product. And it’s a pretty classic startup deck in most ways.
But then slide 11 takes a turn to the Fyre Festival. Which comes across as a completely different company to me. They are loosely linked in the fact that they are using this festival as a way to advertise for their main business, but are very different products, require different teams, and probably should have had different investors.
It is hard enough for startups to compete with established companies with few resources. And it has been said that companies rarely die from starvation (no new ideas to pursue) but from indigestion (trying too many ideas) as pointed out in this article by Bryce Roberts.
To us, this is a red flag in the Fyre presentation.
2. Short term thinking.
Startup CEOs will either lose money or make money for investors. It’s binary. And it can take longer than a decade to find out. The team matters a lot to investors because early stage startups are just buckets full of people more than anything. So, having a slide that says “LAND OWNERSHIP – Fyre has been given $8.4M of market value land” is VERY different than “We rented an island for X weeks”. From a long-term relationship point of view – it is incredibly important to be crystal clear in your investor materials. You’re going to be attached to these people for a long time. Don’t start that relationship with a breach of trust.
Another great example of short-term thinking is the slide mentioning that the island was once owned by Pablo Escobar. In the Fyre documentary on Netflix, we learned that Fyre’s contract with the landowners explicitly stated that they are not allowed to reference Pablo Escobar in marketing materials. Yet, here we are. In the short-term, it may have felt important to include this information to excite investors – but from a long term perspective – very bad idea. Fyre ended up losing the right to use this island as a result and had to scramble to find a new location for the festival.
3. Don’t market what you can’t actually sell.
To be clear, what Billy pulled off with their marketing campaign says a lot about our culture in ways we won’t dig into but the fact is: they did an A+ job promoting the Fyre Festival.
But it’s also really easy to sell a bag of money at a discount. At the end of the day, what you promise your customers needs to at least be feasible.
“If there’s no trust – then what can we really accomplish?”
Storytelling is important, it’s one of the most visceral ways of connecting with human beings. It’s intimate, it’s personal, and it’s built on certain principles and expectations like integrity, justice, fairness, etc. We learned in Yuval Harari’s Sapiens that storytelling is perhaps one of the single greatest evolutionary stepping stones for humanity – without the ability to share anecdotes we wouldn’t be able to mobilize large groups of people in pursuit of a common goal, like constructing the great pyramids of Giza or putting a man on the moon. Yet at the same time, we know that stories can be double-edged swords. We’ve all seen what happens when narratives are riddled with deceit – It leads to hysteria, panics, and poor judgment. For example, let’s not forget the story of Elizabeth Holmes and the fall of Theranos.
In startups, we have a unique privilege in that people really want to support our ideas and champion our success. We have a responsibility to build businesses on ethical and moral footing. It is with trust in this belief that investors have the courage to invest (along with the belief that the company is going to make a dent in the universe of course). If there’s no trust – then what can we really accomplish?
On this topic, we’d love to recommend a book to each of you: How Will You Measure Your Life? By Clayton Christensen. The book is a unique departure from Christensen’s typical writings about innovation. The book is a bit more of a guide to make sure you don’t end up like Billy and the Fyre Festival. Let us know if you enjoy it!
Written by Collin West and Nihar Neelakanti