Reference no: EM133381557

1. Analyze the history of the Fyre Festival. What was the intended vision, and when did this vision start to change? Who are the key players? Who is accountable?

2. Identify the root causes of the festival's failure.

3. As a consultant to McFarland, what specific criteria should be used to measure event planning alternatives and what metrics should be used to gauge their success?

4.What instructions would you give to McFarland for changing the way the next event is planned, and how would the organizers themselves need to change? What action plan would you make for Fyre Festival 2, focusing on the organizational mistakes made during the first festival and how they will be resolved.

In 2017, Billy McFarland set out to create an immersive music festival in the Bahamas. He spent eight wecks alongside rapper Ja Rule planning for a festival that ultimately never brought a single act to the stage. In its wake, the Fyre Festival became one of the most widely documented festivals of the century, but not for the reasons that McFarland had envisioned. The festival became the subject matter of thousands of news articles, parodies, and memes that poked fun at the event planning nightmare.? What had gone wrong from an organizational standpoint, and what proactive measures could have been taken to avoid the disastrous outcome?

BILLY MCFARLAND

At the time of the festival, McFarland was a savvy 25-year-old entrepreneur.' Growing up, he had been an early adopter of technology and was described as bright and cunning. In 2013, McFarland founded an exclusive credit card and reward company called Magnises, which McFarland described as a community-oriented payment tool." Magnises's value proposition was to create a payment method that echoed the exclusivity that came with premium cards such as the American Express Black Card. His card granted members exclusive deals, tickets, and access to a clubhouse in New York City's West Village.

The business targeted wealthy millennials and launched McFarland's public profile into the sphere of the social elite. He became a prominent fixture in New York's nightlife, and began "living like a moviestar.'* He was driving a Maserati around the city, living in a penthouse, and flying on private planes.? McFarland booked Ja Rule for one of his events, and quickly became friends with the popular rapper, noted for having eight Billboard Top 10 hits in the early 2000s.? Ja Rule signed on as an ambassador for Magnises but had no involvement with daily business operations.!

Over the next few years, customers complained to Magnises that they were not receiving their promised rewards and were being charged their creditcard feesmonths early . To obtain short-term cash, McFarland began selling tickets for exclusive shows such asHamilton or a Beyonce concert tickets that he did not....

The business targeted wealthy millennials and launched MeFarland's public profile into the sphere of the social elite. He became a prominent fixture in New York's nightlife, and began "living like a movie star."* He was driving a Maserati around the city, living in a penthouse, and flying on private planes.' McFarland booked Ja Rule for one of his events, and quickly became friends with the popular rapper," noted for having eight Billboard Top 10 hits in the early 2000s." Ja Rule signed on as an ambassador for Magnises but had no involvement with daily business operations.!°

Over the next few years, customers complained to Magnises that they were not receiving their promised rewards and were being charged their credit card fees months early." To obtain short-term cash, McFarland began selling tickets for exclusive shows such as Hamilton or aBeyoncé concert tickets that he did not actually have." Despite the customer complaints and liquidity issues, after amassing millions of dollars of investment capital, McFarland started to think bigger."

FYRE MEDIA

As Magnises began to crumble in early 2016, McFarland began to focus on starting a technology and booking company called Fyre Media. The concept of Fyre Media was to connect celebrities and performers with party and event hosts. Although McFarland's team at Fyre Media believed in his vision and ability to attract investors, internal human resources issues quickly began to unfold." According to Fyre Media employees, no paperwork was drafted upon their employment, and payment often came through wire transfer or in cash with no record of remuneration.

To keep motivation high, McFarland stressed the emotional connection the team members shared with each other. As trouble unfolded in the company, McFarland told his team, "We are a family. It's time for us to band together.* To turn Fyre Media into the ubiquitous booking service for talent, McFarland searched for a unique promotional plan. While Fyre Media was still finding its footing, McFarland shifted his attention once again, this time toward hosting the now infamous festival.!?

Norman's Cay

McFarland invited Ja Rule to to join him in hosting the festival. They initially decided that their festival would take place on the small, private island of Norman's Cay in the Bahamas. The island lacked basic infrastructure and thus raised questions for others involved in planning the event about the suitability of the location for the festival. Keith van der Linde, a pilot who was involved with preliminary planning for the festival, believed that the only way to shelter guests was to have a cruise ship anchored close to the island. But when he began to raise his concerns about sanitary, toilets, and accommodations, McFarland removed van der Linde from the project.!

The Fry Festival team became excited about the location after learning that the island had once belonged to Colombian drug lord Pablo Escobar. However, McFarland's deal to lease the island restricted him from disclosing the connection to Escobar in promotions or during the event itself. Nonetheless, when McFarland released a widespread promotional video for the Fyre Festival ni early 2017, Norman's Cay was prominently touted as being "once owned by Pablo Escobar." Due to this infringement, the deal was cancelled, leaving the festival without its promised private island, just weeks before the event was set to take place.?°

This complication did not deter McFarland and Ja Rule. They continued to promote the festival as taking place on Norma's Cay, when in reality the festival had been moved to Roker Point on Great Exuma, also in the Bahamas. This island was 60 kilometres long and hosted a population of around 7,000 residents.?' The new event location was an unfinished housing development, still under construction, edged by steep drops into a water basin.

Promotion

While the Fyre Media team was not very experienced in event planning, their promotional strategy was undoubtedly effective. McFarland and Ja Rule first unveiled the festival during the Web Summit in November 2016.2' The Web Summit, held annually in Lisbon, Portugal, was considered to be the largest tech event in the world.?*

Then, to gain traction, Fyre Media adopted an influencer strategy, using celebrities with massive online followings, including Kendal Jenner,Bella Hadid, and Emily Ratajkowski. The social media plan, developed by Jerry Media, was to have influencers simultaneously post a neon orange square, which would link to the promotional video. The concept was developed to "stop the Internet," the intention of the unnatural orange colour being to slow down users scrolling Instagram and other platforms.

Over 400 athletes, models, and influencers posted the orange square at the same time on December 12, 20166.2 According to a Fre Media employee, Jenner alone was paid USS250,000 for the post-which she did not label as an advertisement.? Fyre Media claimed that 300 million impressions were reached withinthefirst48hours after the campaign began." Fyre Media took advantage of the trust that these influencers had built with their followers in order to make its event appear reputable. The promotional strategy created a rift between those who were "in" and involved with the event. and those who were not -the outsiders. The marketing was successful, and the festival sold out.

After the festival, two former Fyre Media employees criticized the actions of Grant Margolin, the company's chief marketing officer. Fyre Festival was Margolin's first involvement with event planning, and he had quickly become overwhelmed." The employees reported that Margolin had positioned himself as a "marketing genius" in meetings and dismissed the valid concerns others expressed to focus solely on sales and image. When Margolin was asked about menus, he replied, "They [festival attendees] won't care what we feed them." In one meeting, he declared, "I wouldn't call myself a perfectionist, but everything must be perfect.""

As the event drew closer, ticketholders became uneasy with the lack of communication from the festival organizers. But if ticketholders commented on Fyre Media's Instagram page using any vocabulary related to flights, tickets, lineups, or event details, they were instantly deleted and blocked from the page.

Finances

Since the festival organizers had no prior experience planning an event anywhere near the scale of the Fye Festival, they began to seek the advice of consultants and industry professionals. On March 6, 2017, Fye Media hired veteran event producer Yaron Lavi to help develop the overall plan." Lavi recommended the event be postponed until at least November. McFarland rejected this idea, claiming that the weather would be better in April. 36 According to a production executive involved with the project, the team tried to set up most of the event by themselves to save costs. Reportedly, McFarland "literally Googled 'How to rent a stage,' and he rented a stage, and that was it. That was al they had."

For guests, the cost for a day ticket ranged from $500 to S1,500, while VIP packages were offered for $12,000 or more." One VIP package carried a price tag of $250,000; however, there was no evidence that a customer purchased a package at this price." Contrary to much of the reporting on the abhorrent pricing, most concertgoers purchased their tickets for around $500. Those who spent more on their tickets were some of the first to leave the festival, or they never arrived in the first place.*

As planning continued, management realized that the endless costs would greatly outweigh the revenue coming in from the cheaper tickets. McFarland was able to solve short-term problem so onsite with handfuls of cash that he kept in his shorts, but behind the senes, cash was scarce. Fyre Media therefore changed its sales tactic and posted that general admission tickets were sold out, meaning only the premium, more expensive tickets were available to purchase. The team also began to design and sell tickets for premium villas and housing that did not exist at Roker Point.*

As the festival date grew closer, the employees still working with Fyre Media noticed that the company credit cards were being declined more frequently. The team that was still working on the booking app were not given updates as to what was happening at the festival, but they did know company resources were being strained.* McFarland communicated that funds would be generated through a $25-million deal with Comcast Ventures, a branch of American telecommunications conglomerate Comcast Corporation, who agreed to invest in Fyre Media.* Comcast Ventures did consider this deal, but passed ti up after conducting due diligence.*

As funds quickly began to disappear, McFarland turned to Ezra Bimbaum, a New York investor, for temporary financing. Birnbaum offered a $3-million loan with the condition that Fyre Media repay S500,000 within 16 days. Further, Fyre Media needed to raise the company's valuation to over $75 million or face a $900,000 penalty.*To address the need for immediate cash, Fyre Media informed customers that the event was now cash and card-free, and attendants would instead need to pre-load RFID (radio frequency identification)-equipped bracelets with funds. McFarland recommended that ticketholders upload $300-$500 for each day that they planned to attend the festival. According to a lawsuit filed later by Birnbaum, about $2 million was loaded to the bracelets, 40 per cent of which was used to pay off the short-term loan.' McFarland was proud of this plan, despite many warnings that the bracelets would not work atthe festival due to poor wi-fi connection

Entertainment

Popular acts advertised as being on the festival lineup included Pusha T, 'Tyga, Major Lazer, Blink-182, and Migos. Chloe Gordon was hired as a talent producer, tasked with coordinating travel and logistics for the artists.' Gordon was to work alongside an 11-person team and Fyre Media executives. However, when - 94 she arrived on Great Exuma on March 14, she was stunned to see how little preparation had been done. The festival grounds were not much more than a parking lot covered in gravel. The acts were all asking her for payment. When she asked the business manager for an update, she was told to "stand by" for three days in a row.5° Employees and festival organizers were not able to easily communicate with each other because production tools such as uniforms and walkie-talkies had never arrived.S

On the Thursday before the event, Gordon became aware that there was no money left, and no technical director running the production. She did notice that time had been taken to secure an alcohol sponsor.? According to a local bartender, McFarland had spent about $2 million on alcohol, with hundreds of thousands more owed in taxes."

Accommodations

Due to budget, time, and geographical constraints, Lavi urged the team to develop a tent system to replace the temporary villas that had been promised. As Lavi began making these replacements, he implored the Fyre Media team to reach out to customers who had purchased tickets, to inform them of the change in offerings. Lavi was told an email was being prepared, but he later stated, "To this day I don't know if it ever went out."*

During several stages of planning, members of the internal team as well as those brought on to help continued to recommend the festival be delayed until 2018. The executives, however, insisted on moving the festival forward. According to Gordon, when event planners proposed the delay, a member of the marketing team responded with, "Let's just do it and be legends, man."* McFarland said his mindset was, "Whatever it takes, we are all in, let's go make this happen." He described the constant onset of problems as a "whack-a-mole" game. As he found creative (and potentially illegal) solutions to his issues, he gained confidence that he could not be defeated.

The caterer that Fyre Festival had contracted pulled out of the event a few weeks before it began. Two weeks before the festival, a new catering company was hired and given a budget of $I million, reduced from the origional $6 million planned for food31 from the o rig in ' The promotions had marketed unforgettable meals c catered by famous chefs. Instead, Trevor Dehaas, one of the festivalgoers, received two pieces of bread with a cheese slice and some salad. He tweeted a photo of this meal, which was later shared thousands of times online and through news sources." The cheese sandwiches were meant for staff, but a few guests had grabbed some due to a lack of direction.