We live in a society where social media can alter our perception on things. Within this climate of false perceptions, people are constantly trying to protect themselves from:
- Clickbait headlines
- Fake news
However, some news, stories and events seem to convince even the most skeptical of readers. One of these stories is that of Fyre Festival—a music event that was supposed to be much more than a simple festival.
Two years after the event was (almost) launched, I decided to analyze the how’s and why’s of “the greatest party that never happened.” The outcome? Seven marketing and growth lessons that Fyre Festival can teach you.
Lesson #1: Don’t Lose Focus on What’s Important
This is the first and most critical lesson from Fyre Festival. When you build products, you should never lose focus on what’s important. And what’s most important in Fyre Festival’s case? The product itself. That’s clearly what the founders missed out.
They had a good product (the app), and they obviously needed help growing the top of their funnel. This means that they needed to generate higher awareness and bring more users into the app. Fyre built a marketplace with a direct network effect with:
- Users on one side
- Artists and influencers on the other
I’m sure that on many occasions—especially in the B2B space—you’ve noticed software companies hosting webinars, meetups, events and conferences as lead magnets for their core product. This kind of outbound action is a great way to generate awareness for your product.
For example, SEO software MOZ organizes the MozCon event:
Now think if, instead of trying to build a great product, Moz tried to host the greatest marketing event that ever happened. This would probably put Moz in a difficult position, as they are (and should be) a product-first company.
In other words, the Fyre app—and not Fyre Festival—should have been the company’s primary focus. By losing focus on what matters, Fyre failed to deliver promises on both sides. The rest, as they say, is history.
Lesson #2: Growing the Top of the Funnel is Not (Always) Right
You heard that right. I know that as an early-stage company struggling to find a problem-solution fit, you crave more users and paying customers. However, growing the top of the funnel when you are NOT ready is not always right.
In the diagram below, the Fyre app was standing somewhere before the blue line:
This means the company was (still) trying to find a problem which was critical for their target audience. You could say that the problem was finding and booking a well-known artist without having to pass through a dozen gatekeepers to do so.
However, no one can prove that this is a real-life problem and that Fyre was the solution to it. For all we know, the Fyre app may have had to pivot if it wasn’t for Fyre Festival, which of course massively killed the company. Thus, at this early stage, growing the top of the funnel is meaningless, and in many cases can harm the company rather than do any good.
The fact that Fyre tried to “growth hack” their way to success by generating awareness through the festival indicates that at this point, companies should focus on one thing and one thing alone: the problem. Growing the top of the funnel can come later, when the company has found a problem-solution fit.
Lesson #3: Get to Know Your Target Audience Better
Here is one of the most valuable lessons from Fyre’s failure. I speak from experience when I say that most founders believe they know their audience like the back of their hand. In that case, why is it that when you ask them more specific information about their target customers, they find it difficult to give a straight answer? It’s because they don’t really know who their target customer is.
According to Fyre Festival’s official website—which is now down—the price for the super limited early-bird tickets was $950:
Did the founders and marketing team know this was a price their target audience could pay? And if they were to pay it (which many did), were these the same people who would join the app to book an artist or influencer?
Doing something just for the sake of it, without knowing who the target audience is, can cause a series of problems. If the initial assumption was that the target audience was super-rich people who liked to party, then Fyre should have asked: are these the same people who are going to use our app? If not, there’s no reason to throw an event for them.
Instead, Fyre should have tried to understand who would have gained value out of their app. By creating a persona (or customer avatar) they would have known how to better approach these people. This is why you should always focus on really understanding your target audience.
If the actions you are taking don’t contribute toward achieving that goal, then you should change your route. If you don’t, your company may not survive.
Lesson #4: First Experiences Matter
Unfortunately, people nowadays don’t give second chances so easily. One mistake and you’re out of the market, sometimes for good. Does that mean you should freeze in your tracks every time you get a negative review from a customer online? No.
However, you need to understand that first experiences matter now more than ever. This is why the Fyre app never recovered after posts like this:
Think about it: you’re hosting an event to help your main product (the app) grow, and end up killing both the event and the app. How can a company recover from something like that?
People nowadays don’t forgive so easily and don’t have time for explanations. Moreover, people tend to speak out about a negative experience they had, but stay silent about a positive one. Usually, people want to talk about the extremes:
- Extremely negative experiences
- Extremely positive experiences
This is why you don’t get to see many neutral reviews on sites like Trustpilot. It’s also why you should offer an amazing first experience to your customers.
Lesson #5: The Value of the Lead Magnet Should NOT Exceed the Value of Your Product
Let’s start with an example: you sell a B2B software for $9.99 per month (flat pricing) and host a competition for people who are not yet your customers. The user has to enter their email and has the chance to win an iPhoneX. Sounds tempting, right?
Well, not exactly. In this case, the competition acts as a lead magnet—a way for you to collect emails that you can use to grow your top of the funnel. The problem here is that the value of the lead magnet, in this case the iPhoneX, is much higher than the product itself. This can cause two problems:
- You undermine the value of the product
- People will forget about the product and think of the incentive
In other words, the value of the lead magnet should never exceed that of the product. In our example, a great lead magnet could be:
The benefit with such a lead magnet is threefold:
- You (still) generate new leads
- You generate awareness about the product
- You get people to have a first experience with the product
This is obviously something that Fyre missed out. Fyre Festival was meant to be a promotional event for a booking app called Fyre. The app’s mission was simple:
“We’ve built a communications and integrated payments platform to remove pain points from the booking process and enhance efficiency on both sides of the deal.”
The founders of the app decided to host the event for two main reasons:
- To show that they had an available network of artists and celebrities
- To further promote the app so that more people got to know about it
The lead magnet—the Fyre Festival—had a perceived value that was significantly higher than the value of the product. Very often, this can seriously harm your product’s reputation and even kill your product completely, as in Fyre’s case.
Lesson #6: Be Ready to Keep Up With Demand
This is one of the most common mistakes among young startup founders and CEOs. As I mentioned earlier, the first experience that the user has with your product matters. This means that you should serve the users you have in the best possible way.
In addition, it is of paramount importance to understand that the more users you have, the better your structure and process should be. If your organization is not well-structured, everything will eventually fall apart. You don’t want to find yourself in the position of reading online posts such as this:
This is why you should be ready to keep up with the demand. Does that mean you need to stall your growth until you’re ready? In most cases, no. However, in some cases, and always depending on the product, you may have to set up processes first and seek to grow later.
In other words, you have to be ready to keep up with the demand. This is a rule that applies in any type of business:
- Physical products
A great example is Tesla and the 400,000 pre-orders the company received back in 2016 for its Model 3 car:
Something that sounds exciting at first can easily turn into a product nightmare, regardless of whether you are selling cars or hosting events to promote your app.
Let’s move on to the final lesson.
Lesson #7: Don’t Use Growth Hacks Before Finding a Product-Market Fit
One thing that goes unnoticed by the overwhelming majority of growth hackers is the fact that—most of the time—growth hacking comes after finding a PMF. Yes, there are examples of companies that have managed to use growth hacks before finding a product-market fit. Such an example is Robinhood, the popular stock trading app:
However, the reason why cases like Robinhood are widely popular is exactly because they are so rare. You need to remember that growth hacks are more effective when a company:
- Is growing at a fast pace
- Has a widespread set of customers
- Has customers who are happy with the product
- Has customers who are constantly bringing in new ones
- Is great at solving one (or more) commonplace, real-life problems
Using growth hacks before finding a product-market fit can cause a series of major problems, resulting in you finding yourself being apologetic in an effort to explain what happened:
Notes on Marketing, Entrepreneurship & Fundraising
Aside from the 7 marketing and growth lessons I just analyzed, I would like to cover 3 additional lessons that Fyre Festival can teach you. The perspective here is slightly different, but the lessons are equally as important. I hope that these 3 lessons—similar to the 7 we covered previously—will help you gain a better understanding of what matters when it comes to marketing, business and entrepreneurship.
Is your marketing ethical?
This is a simple but powerful question. Would you say that your marketing is 100% ethical? Do you speak the truth to your target audience and customers at all times? Do you communicate the value of your product as it is, without any fluff or complex words that aim to impress? You have to, because it’s easy to go from this:
No matter how good your product is, your job is to communicate its value without exaggerating. Otherwise—and especially if you won’t be able to keep up with demand or meet expectations—you might find yourself in a very difficult position. To wrap this up, your marketing has to be ethical and human first. Everything else will follow.
Entrepreneurship is (most of the time) like gambling
You don’t need me to tell you that entrepreneurship is often very similar to gambling. You need to feel comfortable with the odds, or you shouldn’t roll the dice. Nearly 75% of VC-backed startups fail. This is a secret that most venture capitalists know, but which most founders seem to ignore. Nevertheless, founders play against the odds, most of the time aiming for:
- A successful exit
- A successful IPO
The truth is that some of the world’s greatest entrepreneurs like Steve Jobs or Elon Musk always played against the odds. When you are ready to risk everything, one of two things can happen: 1) You win and become stronger, or 2) You lose and (even) go to jail. In Fyre Festival’s case, it was the latter.
Is there something wrong about fundraising?
Most VCs make you believe that your idea is going to be the next tech unicorn; that you are unbeatable and should have an all-or-nothing mentality. This way, you’ll make them rich, and you’ll become rich, too. Most likely you are going to retire rich by the time you hit your late thirties. If only that were true.
Have no doubt: most venture capitalists know that statistically, your startup is all but doomed to fail. There’s nothing wrong with it, it’s just the way things are. They’ll never tell you that, though. Instead, they will invest in your startup, as they will in many others—like gamblers do when placing small bets on the roulette.
What happens when the numbers don’t come up as expected? They invest further in you. There’s simply no logic behind that—it’s a vicious cycle.
It’s easy to point the finger when something goes wrong. Ironically, if Fyre Festival was successful, there wouldn’t have been so many valuable lessons from it and people wouldn’t have learned as much. You see, there’s a natural tendency toward negativity. It’s a universal human trait that isn’t going to change. People find events with negative sentiment to be more important.
However, as I mentioned previously, everything is a matter of perspective. We can all choose our perspective on things, even for an unfortunate event like Fyre Festival. I’ve personally chosen to pay attention to the lessons this event can teach us rather than focus on the negative side of things. I hope you found them to be just as valuable.
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