Business as Unusual – the Fyre Festival’s Lesson in How to Fail at Capitalism

Two things never change in the Caribbean: the tide will come in, and money will hide from the law. The ocean still arrives, but the cash is leaving, at least from Fyre Cay. According to CNN, an attorney named Mark Geragos has filed a $100 million class-action lawsuit against Ja Rule and “and festival co-founder Billy McFarland. The federal lawsuit filed in central California accuses the pair of fraud and breach of contract.”

Ja Rule is the name weathering the scorn-storm, but he’s just that, the face. There is another factor to consider: McFarland. Do you know why celebrities who are successful businesspeople get glowing profiles that contain the phrase “Such-and-such is a tycoon?” It’s because so many of them are bad at it. And so, there’s almost always a silent partner, a friend to handle the details. Here the string-puller was McFarland. According to the Post, McFarland has a history of overpromising and underdelivering:

Long before he was forced to apologize for his now notorious Fyre Festival, entrepreneur Billy McFarland founded another company in 2013 called Magnises that made some familiar-sounding promises targeting status-seeking millennials. For an annual membership fee of about $250, Magnises members could “unlock their cities and take their lives to the next level.”

And so:

But some of those benefits never materialized or were far from what was advertised, according to a report earlier this year by Business Insider. … Over the past three years, the Better Business Bureau has registered 17 complaints about Magnises, ranging from billing issues to problems with delivery.

This follows a pattern:

If Magnises had served as a cautionary tale for McFarland along the way, that didn’t stop him from launching similar subscription-only spinoffs for private chartered air travel (Magnises Air) and sporting events (SportsPass) along the way. And McFarland certainly didn’t seem to apply any of those lessons to Fyre Festival, the “once-in-a-lifetime musical experience” that imploded under the weight of its own hype and disorganization this week.

Why is McFarland referred to as a businessman? If he is a lord of commerce, then every suburban child playing guns in a grassy lot is a Navy SEAL. Beyond Fyre Festival’s mishaps, the fact that McFarland is taken seriously—that nobody challenges his “businessman” image—suggests the business press does not understand what businesspeople actually do. The financialization of American commerce has muddied the waters considerably. Donald Trump, for instance, was occasionally referred to as a businessman.

In the high end of the American economy, there are many investors, but fewer businessfolk. People who only have large amounts of capital are gifted persuaders—Silicon Valley is full of those—but they are not business people. So, what’s the difference?

Easy. Results. You are not a businessman if you are not reliable.

Business ventures may fail—that’s okay, most businesses do. A business may underperform—it’s no sin to miss the mark. But not delivering—not trying to deliver—is an ethical breach, and that is what the Fyre Festival did.

This sounds like small-bore, Fifties, Mason-lodge bullshit, but it’s true. All the truisms and airport bar discussions about How to Succeed in Business amount to that. Repeated, reliable results. And if this all sounds vaguely like an echo of something you’ve heard before, that’s unfortunate; clichés get to be clichés because they are beaten on, like drums, until the slightest amount of novelty, freshness, and spin is worked out. But this does not make them any less accurate. Reliability is crucial. Even if someone is not gifted, they can be reliable. This is the turtle school of thought—and yes, it is banal and ridiculous and eye-roll-inducing, and that is because it is accurate. Accurate things have the luxury of being boring.

Malcolm Gladwell once wrote a piece about how the McKinsey school of thought led to overemphasizing “talents” at the expense of competence. This led to companies like Enron, which imploded. Contrast that to Procter & Gamble, Gladwell wrote, which “doesn’t have a star system,”

How could it? Would the top M.B.A. graduates of Harvard and Stanford move to Cincinnati to work on detergent when they could make three times as much reinventing the world in Houston? Procter & Gamble isn’t glamorous. Its C.E.O. is a lifer—a former Navy officer who began his corporate career as an assistant brand manager for Joy dishwashing liquid … But Procter & Gamble has dominated the consumer-products field for close to a century, because it has a carefully conceived managerial system, and a rigorous marketing methodology that has allowed it to win battles for brands like Crest and Tide decade after decade.

Whatever else can be said about it, business is about promising and delivering—those are the two actions businessmen and women absolutely, positively must execute. Contracts are simply a formalized version of this fact. A person who crafts individual experiences is a craftsman: a painter makes a picture, a carpenter shapes a cabinet, a bouncer puts sleeper holds on drunken rowdies. These are craftspeople, who use their own genius to inflict unique experiences on recipients. That’s the individual level. Business is the art and science of creating exchanges for people that go beyond the single action or the individual person’s effort. It can be done well or haphazardly, ethically or shadily. But that’s the whole ballgame.

Business is therefore about the repeated, regular intersection of customers and providers. If you want to make the world’s most perfect meal, you’re a cook. If you want to make the world’s most perfect meal and make a profit, you are an enterprising cook. But if you want to make the world’s most perfect meal on a regular basis for profit, you are a businessman. The key there is regular. It’s not enough to cook a steak immaculate Tuesday and grill poorly Wednesday; the steak must be cooked well every single day. And it is this fact that McFarland does not quite grasp, if his company’s “apology” is any indication.

It may be now said, this past week witnessed two great disasters: What happened on the island, and this strange statement. Such a rotisserie display of passive voice I never did see:

Everyone was very concerned for our guests. They needed a place to sleep and everyone did their absolute best to rebuild. We took everyone to the beach and built as many tents and beds as fast as possible, but as more guests arrived, we were simply in over our heads.

Listen to this half-hearted wax-paper narrative. How they dodge, how they shuffle! You weren’t concerned for your guests, you didn’t do your absolute best. “Over our heads”? This was not the act of an aggressive sea. The water was at your knees, and you decided to lay down because you were tired. That’s how you got in over your head. Because you didn’t care to do anything else. Business Insider suggests you already knew the festival would be doomed: your team personally reached “out to performers and celebrities in advance of the festival and warned them not to attend — acknowledging the fact that the festival was outrageously underequipped and potentially dangerous for anyone in attendance.”

This mysterious no-identity voice goes on. Italics mine:

They simply weren’t ready for what happened next, or how big this thing would get. They started by making a website and launching a viral campaign. Ja helped book talent, and they had hundreds of local Bahamians join in the effort. Suddenly, they found themselves transforming a small island and trying to build a festival. Thousands of people wanted to come. They were excited, but then the roadblocks started popping up.

They, they, they. Like the Devil in horror movies, there is presence everywhere but solid form nowhere. Does this flimflam sound at all like a human being you would buy a paper-plate burger from? This is a serious question. I’m earnest as the Mass. Imagine an individual came up to you on friendly ground, and said these words, or words very much like them:

Then something amazing happened: venues, bands, and people started contacting us and said they’d do anything to make this festival a reality and how they wanted to help. The support from the musical community has been overwhelming and we couldn’t be more humbled or inspired by this experience. People were rooting for us after the worst day we’ve ever had as a company. After speaking with our potential partners, we have decided to add more seasoned event experts to the 2018 Fyre Festival, which will take place at a United States beach venue.

Those oily sentences—probably straight out of whatever two-days Vegas bond-sales seminar this guy took—”Use your failure as a leverage to promise more, move smoothly onto the future”—to hell with that. How about being responsible? McFarland and his ilk are dressing up as businessfolk, but they are playing pretend. Apparently in the business press, it is as easy to say you are a businessman as it is for me to proclaim myself King of Jerusalem.

Fyre Festival, your wrongfulness is not an opportunity to pivot onto even bigger promises; you have cost the customer their time and their trust. You must settle matters before you make more of it. Make righter, not brighter. “We will put on the dream festival.” No, you won’t. You’re about to be sued out of existence, and you still haven’t learned your lesson. What is the different between the businessman who promises big when he knows he can’t deliver, and the fool who has someone else’s money? There isn’t any.