As I walked to lunch on a grey day in NYC, I stumbled upon this artifact from my second startup company, 90sFest.
It has been a bit over 5 years since we started this company, and a while since I have reflected on this experience.
Having spent the last 3 weekends in New York’s resurgent live entertainment scene, I’m reminded how important these businesses are for society. Tens of thousands of people literally dancing to the beat of the same drum is a panacea after a year of isolation and disconnection. Empathic attendees might even feel the awkwardness of the early sets as young DJs emerge from their caves for the first time to perform for large audiences, and the audiences themselves like socially-awkward Bambis struggle to find their dancing feet. But after hours on the floor, one can feel the opening of a collective remembrance that our neighbors are more than threatening carriers of some deadly virus, but living, breathing, stomping, sweating, kindred spirits. Their wide smiles, ecstatic shouts, group hugs, and dance circles help foster an air of rehabilitation and reconnection.
I loved producing festivals.
Unlike other work, where one deadline rolls into the next, and it’s difficult to see the impact of the day-to-day grind; events offer the creators a sense of completion. I remember standing on the stage with my partners during the last act of 90sFest, overlooking a mass of thousands of bodies celebrating life. After months of preparation and many sleepless nights, I finally let out a sigh of relief.
Live event production and promotion is a labor of love. The economics of these businesses are far less attractive than one might imagine — even a full house can generate massive losses on fixed operating overhead (predominantly artist fees and production expenditure).
I knew these economic challenges well when I started 90sFest. For 3 years prior, I served as outsourced CFO for Prime Social Group, a company smack in the middle of the live events industry, reviewing the financial projections for hundreds of shows.
So why’d I start this company?
For starters, the live events industry was a hot sector in public and private markets in 2014-15. SFX had just gone public with a $1.3B IPO, Live Nation was buying festivals at +20x EBITDA multiples, and it seemed like a great growth sector. Second, the nature of the work excited me – this was literally the industry of fun! I spent the previous 4 years in finance and felt in my soul that it was time to create something tangible + enjoyable for people.
We had a few finance professionals on the team and we believed we could build a better economic model for events. The key was in reducing our talent budget as a percentage of our prospective ticketing revenue. We did so by creating a bundle whose “sum of the parts was greater than the whole” – hence the nostalgia concept; Salt-n-Pepa alone couldn’t sell 10,000 tickets at $75 a pop, but a once-in-a-lifetime nostalgia experience could. This thesis was ultimately correct, our (ticket sales - artist fees) was profitable in year 1, which is a rare achievement among first time festivals.
We also thought we could pioneer 360 media. Before the opening of places tailor made for IG posts like the Ice Cream Museum, we had a hunch that if we recreated memetic concepts from Reddit, Buzzfeed and (still emergent) Instagram in real life, we could capture that viral content, and push it back online through distribution partners, or “Influencers,” as they’re now called + the “micro-influencers” who were themselves attendees. This was a novel concept at the time. Our partners at F*ckJerry, were not yet charging for sponsored posts; one year later, their asking price was $40k per. This was also a successful strategy – we were able to grow one of the top social media followings of any music festival in 2015, despite how new our event was.
We targeted a niche audience – older Millenials. Older crowds have more disposable income, which is better for food and beverage sales, a main profit driver.
It’s also better for sponsors. Though sponsorship sales were a grind, our niche concept and millennial audience, attracted some major names like Nickelodeon and Hasbro.
So what did we miss and what’d I learn? Will continue in next week’s letter.
Advancing the World of Atoms with Ben Chiarelli, Founder & CEO of Cellibre
“We have big visions of reinventing how we make things as humanity.”
In Part 2 of my conversation with Ben, we start to dive into the weeds of his work at Cellibre. When we start to consider that DNA is the “code” of life, we can imagine a world where humans learn to manipulate organic matter just as we manipulate virtual worlds. Except the code is much more complex - adenine (A), cytosine (C), guanine (G), and thymine (T) - 4 base options rather binary 0 or 1. As a result, we understand far less than you might think about the impact this all will have.
However, it offers an incredible opportunity for us to create an abundant future by sustainably and economically manufacturing the compounds we need to maintain life on Earth via all of the raw materials that cells already provide.
What I’m Reading
Ideas
On Advice, A Thread by Sam Bankman-Fried
Chinese Farmers Capitalize on TikTok to Go Direct to Consumer
Markets
Supermarkets are Stockpiling Inventory as Food Costs Rise, WSJ
Circle to Go Public at $4.5B Valuation
Barkin: Labor Market Hasn’t Healed Enough to Taper
Metaverse, NFTs, and Digital Collectibles
A Framework for the Metaverse, Matthew Ball
Portraits of Roblox, View from the Platform, Alex Wiltshire
Crypto
Stablecoin Triptych, Arthur Hayes
Visa’s Crypto-Linked Card Usage Tops $1 billion in 1H2021, CNBC
Bitcoin Mining Difficulty Decreases with China Crackdown
Understanding the Recent “China FUD”, Jason Choi
Part 2: Optimistic Rollups, Ben Simon
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