A few weeks ago, having stumbled upon a street sticker that I planted 5 years ago near Gramercy Park, I was inspired to share with you my experience creating 90sFest.
The post grew too long, so I decided to cut it into two parts. Part 1 was about why we started the company and what we did right:
The music festival business was booming with many large exits
Festivals were literally the business of “fun” and it was a refreshing change from finance
We felt we could take advantage of new trends in social media to achieve massive scale
We understood festival economics and thought we had landed on a better model: higher $ spend per attendee, increased sponsor exposure, & reduced artist fees
Now with all that working for us, where did we go wrong?
Here we are, nearly one month later and I can finally share: procrastination directly proportionate to the difficulty of the subject matter ;-).
Cofounder Troubles: Equal is Not Always Fair, Fair is Not Always Equal
To say we had co-founder problems would probably be an understatement. When we started the company, there were 5 co-founders. Three of us were Wharton grads with duplicative skills in finance and economics; 2 of us were festival promoters. There were a lot of overlapping skills and not much differentiation.
From the start, we decided to split the equity equally among all five founders. We did not draft documents memorializing the agreement, we did not establish a scope of work, we did not identify a commitment in terms of hours devoted or risk taken. For example, some cofounders had full-time jobs to fall back on, while others were 100% focused on the business - should they have been compensated equally?
In hindsight, I would never again start a business with a club of high-level decision-makers. I would seek cofounders with complementary skillsets. I’d ensure that documents were drafted up-front identifying a clear scope of work and cofounders were given the ability to “fire” one another with cause.
In the end, we wasted countless hours infighting (mostly about one another’s commitment level). Removing this wasteful energy might have been enough to change our course. Reallocating this energy towards more productive endeavors like execution, raising capital, or strategy would have been even better.
Competitive Moats: Ideas Are a Dime a Dozen
90sFest was the right idea at the right time and we executed our first one well. However, from the moment we started promoting the event, our idea was in the ether. While we wasted a few thousand dollars trademarking our IP, we couldn’t own a decade. The competition recognized the opportunity and came fast and furious.
I remember when our production manager emailed me just 2 months after our first event. “Congratulations on all of the growth,” he said. “What growth?” I wondered. We had not yet announced any new shows.
I scrolled down the email to see that a new event called I Love the 90s already had announced seven dates; they were showcasing 3 of the 8 artists who performed at the first 90sFest. (I later realized that this event was produced by the agent from whom we booked our first headliner).
We were losing our own game, but how?
No Attachment, Be Willing to Pivot
The week after the first 90sFest, we met with a massive hip-hop agent. Our plan from day one was to scale smaller 90sFest events across the country then the company to a larger promoter after proving a replicable concept. This agent saw that vision clearly and wanted to represent us in selling it.
However, he wanted to drop what I believed to be the most important part of our events: the immersive experience. I thought that this “secret sauce” helped us create invaluable content for social media through which we could scale our reach beyond that of any other music festival.
I might have been right, but never got to prove it. The immersive model was too capital intensive and we were not able to scale it fast enough.
Meanwhile, our competitor, I Love the 90s, was more self-aware. They rolled out a concept in which the experience was secondary. This model required much less money to produce; in fact, they were paid ahead of each show, whereas we were paying hundreds of thousands in deposits before earning a penny of revenue.
They went on to sell out hundreds of shows over the next two years and ate our lunch. While we knew the creator literally just ripped off our idea, there was nothing we could do about it.
We were stubborn. Had we listened to this agent and pivoted to a capital-light model, we might have had a different fate.
Understanding Your Suppliers is As Important as Understanding Your Customers
You don’t often hear it, but luck does play an important role in entrepreneurship. A month after our first event in Brooklyn, we learned that the venue where we hosted the first 90sFest, would be converted into a skate park and no longer hold concerts.
This set us back to square one in New York, where we had hoped to repeat and grow our flagship event. To do so, we would need an equally sized venue, but the options were very limited. Ultimately, we had to settle on Governors Island. The venue was lower capacity, more expensive, and extremely inconvenient for attendees who would need to take a ferry to get there. In this new space, we had no chance of hosting a larger event than the prior year.
Meanwhile, the other most important suppliers to music festivals are the artists. When we started 90sFest, we identified over 500 artists who could perform and felt this was plenty. But we failed to consider one important supply constraint: the artists who could sell the most tickets did not want to be typecasted in a 90s show. Without these artists, scaling each individual event to a multi-stage show would not be possible.
How It Ended
Despite these setbacks, we grew 90sFest to 5 markets in our second year. The shows were successful, but not enough for us to continue the same path in year 3.
Our only chance was the capital-light model that we had turned down the year prior. To do so, we secured United Talent Agency, one of the big 3 talent agencies, as our partner.
But it was already too late.
I Love The 90s had planted their flag in hundreds of markets. If they were successful in a market, the venue wanted them back; if they were unsuccessful, the venue blamed the 90s concept and refused to try again with us. Even with the help of UTA we could not string together a ten-show tour.
Finally, we gave up on events altogether. We recognized there was value in our digital assets, so we sold them to a social media marketing agency.
In hindsight, we learned so much over those three years that we might have turned lemons into lemonade. But we spent so much energy on in-fighting that after three years the team was exhausted and some had already moved on.
———
Five years later, I can look back with pride on all that we accomplished and enough time has passed that I can objectively see where we slipped. Today, I do my best to apply these lessons to startup investing, and to share them with young founders.
While every business is different, I believe that the overarching lessons are applicable to any startup company.
Final thought: if you are young and you want to learn about business building, produce a concert! It’s fun, challenging, and rewarding + includes almost every element of business building, and is accessible to non-engineers.
What I’m Reading
Ideas
Common Ways New Technologies are Misunderstood, Chris Dixon
Markets
John Street Capital, A Thread on Last Week’s Big Tech Earnings
The Unauthorized Story of Andreessen Horowitz
Metaverse, NFTs, and Digital Collectibles
31 Ideas for Music + Crypto, Jack Spallone
My Collectible Ass, McKensie Wark (Oct 2017)
NFT Appraisal Mechanisms, Jake Brukhman
Crypto
New Infrastructure Bill Includes Tax Implications for Crypto, Jerry Brito
US Marshals Chose Anchorage Digital to Custody Seized Digital Assets
Thank you for reading this edition of the Look Up! Weekly. If you like this newsletter, please share it with your friend:
If you haven’t signed up yet and would like to receive Look Up! Weekly directly to your inbox, you can subscribe here:
Or follow me on Twitter:
As always, feel free to reach out with feedback, guest recommendations, and ideas for future posts and episodes.