Women Entrepreneurs Need To Avoid The Bro-tastic Mistakes Of The Fyre Festival
By now, almost every thought piece has already been written about the Fyre Festival. If it wasn’t infamous when shit hit the FEMA tents in 2017, the recent Netflix and Hulu specials certainly sent it into the pop culture zeitgeist as the all-time biggest Millennial scam. Millions of dollars, Instagram influencers, and the schadenfreude of a FOMO groomed generation spanned the social networks the weekend of April 28th, 2017, as dozens of dejected tweets and Instagram posts from the Fyre attendees trickled in, revealing that the promised all-inclusive luxury, immersive music festival in the Bahamas was actually akin to a natural disaster site.
In the media, the Fyre Festival is being critiqued as a case study of sorts: a one off, phenomenal event involving the gross lies fabricated by a startup owner to gain VC funding and whose storyline is so unique, it could only be captured in a two-hour documentary paid for by Fyre Festival investors (you can’t make this shit up).
The reality, however, is that the culture within the founder-VC dynamic, harbors a systemic toxicity that rewards the misleading numbers and the showboating mentality that perpetuated the Fyre Festival into what it was – a startup, investing, and cultural disaster.
In our interview with Spinster financial advisor Marie Graver, we learn why the Fyre Festival is indicative of a more toxic startup culture, and what women entrepreneurs – and investors – should take away from the incident.
Spinster: The start-up space is incredibly unregulated, especially when it comes to funding and investments. Has anything like this happened before?
Marie: There’s a history involving a lack of regulation around business and the handling of money. The 2001 Enron scandal is probably the one our generation is most familiar with, outside of the startup sector. Eron essentially brought on the age of regulatory crack down on accounting firms and fraud perpetrated by big corporations.
I remember this ethical conundrum was heavily emphasized in my accounting classes (at the University of Illinois) and drilled into our core learnings; an auditor has an obligation to the public and not to the client.
I didn’t really think about the impact that these ethics lessons would have on my own career, but it has increasingly become a topic that I think should be emphasized not only in accounting, but to all business owners in all industries in general.
Spinster: For those of us without a business background, can you explain how Enron connects with the Fyre Festival?
Marie: Okay, so fast forward to the present where startups are the hottest new trend and investors are pouring money into what they hope is the next big unicorn. Investors only want to be promised a huge return on profits, and founders are pressured to increasingly inflate their numbers to get funded. The regulations have not yet caught up to the fast-moving world of Silicon Valley and it’s because there hasn’t yet been an ‘’Enron’’ to force the regulations to change. We continue to find new ways to perpetuate a culture of fraud and the fast life until the proverbial shit hits the fan and people get hurt.
Spinster: So the Fyre Festival is like Enron 2.0? Except instead of shareholders getting hurt, this time its investors, and a lot of rich kid’s wallets.
Marie: Yeah. You could say the Fyre Festival is the ‘’Enron’’ of the Millennial generation. The perfect example of white male privilege at its best: a charming and intelligent entrepreneur who can sell literally anything to anyone who is unfortunate enough to fall for his sociopathic lies.
Spinster: So you’re saying that what we saw (in the documentary) is fairly commonplace in the relationship between VCs and founders?
Marie: Audiences who watched the Fyre Festival documentaries o nHulu and Netflix should not be fooled into thinking that Billy McFarland is the only founder of a startup who has ever fraudulently raised money from investors and drained their capital faster than a shot of tequila. These documentaries have only helped to expose one of the many sociopathic founders who mistreat employees, lie to investors, and ultimately expect no repercussions for their actions.
Spinster: So outside of entrepreneurs not lying on their financial projections, what else should the startup space take from this?
Marie: Within the financial sector, we should be asking ourselves why we continue to make the same mistakes over and over again, and how can we prevent them?
Specific to the startup sector, how can we ensure unaudited pitches and financial models pilling up on investors doorsteps are NOT encouraging unintended or mal-intended fraud? Because it’s not just the founders that should be blamed for this type of behavior, either. The investors and VCs can look to themselves for perpetuating a bro culture of boasting to get further ahead in funding. Investors want to hear that they are making a good investment and they want to hear it from a confident and seemingly successful man. I say ‘man’ because that’s pretty proven by any statistic showing where VC money ultimately goes - to men. Which is its own problem.
In terms of regulation though, if no regulations exist, then VCs have to protect their own interests and ask themselves, ‘’does this seem too good to be true?’’ Until the regulations have caught up to the times, it’s up to investors, social media platforms, and influencers to actually evaluate and do their due diligence before investing or selling a new brand to the general public.