Cautionary tale: business lessons from Fyre Festival

One of my favorite pastimes - live music - has provided an epic case study.

One of my favorite pastimes - live music - has provided an epic case study.

OK, friends. Let's talk about Fyre Festival. After nearly a week of schadenfreude (those boxed lunches, gah!), I'm ready to pull out a few lessons re: business ethics, learning curves, cash flow, and failure. Buckle up! 

Before we begin, here are the cliff notes, for anyone who missed it in the news cycle. From the L.A. Times"The music and lifestyle festival, billed as "the cultural experience of the decade," melted down spectacularly as thousands of guests who'd paid thousands of dollars to enjoy the weekend arrived on a private island to find that preparations were nowhere close to finished. Organizers canceled the planned two-weekend event on Friday, but not before people who'd flown out found themselves stranded."

If you haven't seen them, take a sec to check out these pictures, because they are priceless. Fortunately, no one was hurt during this debacle, so don't feel too guilty about laughing at the spectacular failure of the event. Honestly, it is beyond words; you need to see it to believe it.

Now, what can the rest of us non-celebrity types learn from this mess? On the one hand, it is so far beyond the pale of the ordinary work disaster that it barely seems relevant. Yet, this case carries the seeds of important business issues. Or, rather, it reflects the full flowering of those issues in a truly worst case scenario.

Fyre Festival illustrates what can happen to people, organizations, projects, ideas, etc. that are all marketing and no value.

The "Insta-Famous" phenomenon has reached its nadir here, or so I hope. But even those of us in less glamorous contexts should recognize that this case suggests a dark side to the common advice, "fake it 'till you make it." There is still a place for this advice, i.e. its rightful place: where competent, substantive people try new things with full awareness that they cannot - and should not - fake it forever. 

Understanding the difference between "fake it 'till you make it" and "selling a bill of goods" is paramount. The latter is fraudulent - if not legally, then certainly in the ethical sense. Besides, why would you even want to create, sell, or promise something that is...nothing? Where is the fun in that? It's mere trickery; it's easy; it's boring. 

The debacle serves as further evidence of the business case for business ethics.

It is painfully obvious that no one on "the Fyre Squad," as the org's leaders call themselves, gave this much consideration. Even the most basic ethical analysis would have raised an important red flag - the safety of guests and staff. Further evidence of this disregard is organizers' decision not to postpone or cancel the event, in spite of strong indications that it would flop. There have also been allegations of front-office sexism and racism. And it looks like these will be expensive failures; organizers are facing a $100-million class-action lawsuit, with more expected to follow. Ouch.

How could they have avoided this? Early and regular stakeholder analyses. Stakeholder analysis is an important business ethics strategy, which "good" organizations execute as a matter of course. You might not know it by name, but you should recognize the big idea, which is that an organization has ethical duties to various stakeholders. Stakeholder groups include investors or donors, customers, vendors, employees, volunteers, the local community, and, if the organization is for-profit, owners. Everyone in the organization should understand those duties and apply them regularly in decision-making. 

There is a good way to fail and a bad way to fail. 

Perhaps Michael Jordan said it best: "I can accept failure. Everyone fails at something. But I can't accept not trying (no hard work)." The Fyre Festival spectacle represents the worst possible way to fail - with the stink of scam, incompetence, and plain laziness. To try and fail, substantively, is just fine; to not try and fail is humiliating.

On a more positive note, this case illustrates that the failure most people fear is, in fact, not so scary. It barely holds a candle to a disaster like Fyre Festival. While this doesn't exactly eliminate a garden-variety fear of failure, it certainly puts it in perspective. We will always have the comfort of comparison ("At least it wasn't as bad as Fyre Festival.")

Finally, a word about $$$$. 

Another business mantra tested by the Fyre case is the classic marketing trope, "You have to spend money to make money." This wisdom stands, but it doesn't excuse organizations from managing their cash skillfully. Vice News reports that organizers spent millions on early celebrity endorsements, which left them without the cash needed to pay employees and vendors. One former employee claims, according to Vice, "They didn’t have any money. They kept paying the influencers and the models."

The lesson here? Know your cash flow like a boss. Be as creative as you dream with product ideas, processes, aesthetics, marketing, and the like, but keep your finances tight. Button down those numbers like a crisp, collared shirt. Understand exactly how much cash you have on hand, when more will flow in, and when you need to pay out. Be ready to pay your vendors and your debts, on time and every time. This way, you can actually deliver the goods.

I have to admit, this case study has been a fun one! But it must have been a tough lesson to learn for everyone involved at Fyre Media. Please, take it to heart. And, go ahead, look at those pictures once more. We both know you want to.