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Lessons From Fyre Festival for Any Business Owner

Lessons From Fyre Festival for Any Business Owner
Fyre Festival attendees were promised a luxury getaway on the island of Great Exuma (pictured) in The Bahamas. What they got was not nearly so glamorous. / Credit: Claudio Soldi / Shutterstock

Common advice for business owners, especially those just starting out, is to "underpromise and overdeliver." Fyre Festival – the luxury music festival that existed only in advertising – did exactly the opposite.

Fyre Festival was created by Ja Rule, a former hip hop artist, and Billy McFarland, the CEO of Fyre Media Inc., to promote their app for booking musical talent. It was advertised as a high-end experience on a private island in the Bahamas, filled with big-name bands, gourmet food, supermodels and luxury accommodations. Tickets, which were sold in advance, ranged in price from around $1,000 to $12,000.

When festival attendees arrived, however, they found FEMA tents, employees who didn't know what was going on, cheese sandwiches in Styrofoam trays and no easy way to fly home. The disaster was chronicled in real time on social media, as most of the guests were social media influencers, and McFarland was eventually sentenced to six years in prison for wire fraud.

The flashy headlines, social media outrage and behind-the-scenes documentaries about the festival can make Fyre seem like a singular fiasco, completely separate from the day-to-day reality of running a business. But its dramatic failure offers cautionary lessons for any business owners who wants to avoid disappointing their customers or harming their brand – not to mention ending up on the wrong side of a lawsuit.

Information released in court, articles published by former Fyre employees, and documentaries produced by Netflix and Hulu showed that McFarland not only didn't know how to plan a luxury festival, he didn't listen to the advice of those who did.

After securing a $4 million loan, McFarland was told by event experts that it would cost closer to $12 million to stage the festival he was already advertising. Later estimates upped that amount to $50 million, given the last-minute planning and infrastructure that needed to be built. Many of the professional event planners hired to pull the festival together recommended canceling the event, or postponing it for a year to be able to deliver what had already been promised to attendees.

Rather than McFarland trusting their advice and either canceling or changing plans, Fyre advertising went ahead with no change. As a result, the festival was completely unable to deliver on what it promised.

For a business owner, there will be many times that you have to take on a project or responsibility that you've never tackled before. Maybe you have no experience handling certain business operations but need to be the one in charge anyway. Maybe you're growing your business and offering new services to customers. New challenges are an inevitable part of a growing business.

Tackling these new challenges successfully, however, requires a willingness to listen to people with more experience than you. Whether those people are tax advisors telling you which deductions are ideal for your taxes or an event planner telling you how much brand-new infrastructure is going to cost, experts have valuable insight that will save you trouble down the road.

Sometimes you will need to shop around for different price quotes, or you may notice a more efficient way to manage your business operations than the one an advisor suggests. But knowing when those ideas are smart choices – and when they are shortcuts that will backfire and hurt your brand – requires first learning from the people with the hands-on, professional expertise that you lack.

Fyre attendees were promised luxury beachside accommodations and meals cooked by celebrity chefs. The reality of soggy mattresses and frozen waffles was decidedly less appealing. While the festival owners were certainly to blame, both the media and several lawsuits held a second set of people responsible for the deceit: the models, celebrities and other influencers who promoted the festival on their social media accounts, particularly Instagram. Most of them posted ads and other content for Fyre without disclosing that they were being paid to promote an event that they knew almost nothing about.

Social media offers businesses an opportunity to connect personally and directly with their target pool of customers. Working with bloggers or social media influencers customers already follow and trust can be a great way to expand your advertising reach. But it is still advertising. Even if working with social media influencers and bloggers is new territory for your business, that should never be an excuse to engage in dishonest promotions.

No matter where advertising is happening, it should be clearly marked and disclosed if you want to retain the trust of your customers and preserve your brand's reputation. This isn't just good business – in most countries, it is also the law. Before you engage in any social media promotions, be sure to familiarize yourself with laws about influencer advertising in whichever country your business is being promoted.

The failure of Fyre Festival ultimately comes down to dishonesty, which can destroy a business and its owner's reputation faster than almost any other mistake.

Even if you fail to heed the advice of experts, even if you accidentally fail to disclose your advertising relationships, being honest about your mistakes can go a long way toward regaining the trust of your customers and salvaging a bad situation. Hopefully that bad situation will never include a nonexistent luxury music festival, but in the age of social media and instant communication, even a single bad review online can severely damage your company's reputation.

Addressing concerns or complaints as openly as possible, admitting fault when it's warranted and canceling plans that won't live up to the standard you want to set can go a long way in preserving your customers' trust, even if trying to cover your tracks seems more appealing in the moment.

McFarland and the other Fyre organizers failed to communicate honestly with customers and investors at every step of planning their disastrous festival – and the result was no one was willing to extend them the benefit of the doubt or accept anything less than legal penalties when their scam fell apart.

Katharine Paljug

Katharine Paljug is a freelance content creator and editor who writes for and about small businesses. In addition to Business News Daily, her articles can be found on Your Care Everywhere, She Knows, and YFS Magazine. Visit her website to access her free library of resources for small business owners.