Think about the first thousand people that you got to your site and how tough that was. How about the first 5,000? Well, those are just hits on a webpage.
Today’s guest got 40,000 people to come to a music festival. That’s 40,000 people who didn’t just click a webpage, but PAID for the right to leave their homes and go spend hours at an event.
That’s so much harder and I want to learn how he did it so that we can all bring back some of his ideas to our start-ups.
Today’s guest is Tom Russell. He is a co-founder of Founders Entertainment, which produces the Governors Ball Festival, a three day multi-stage music festival on Randall’s Island in New York City.
Tom Russell, Founders Entertainment
Tom Russell is a partner in Founders Entertainment which produces the Governors Ball Music Festival.
Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy, home of the ambitious upstart. Today’s interview is a bit different from my usual. So I want to start off by telling you why this conversation is so important to listen to. And why I wanted to have this interview on.
See, think about the first thousand people you that you got to your site and how tough that was. To get just a thousand hits. How about the first 4000? Or the first 10,000? Well, those are just hits on a webpage. Today’s guest got tens of thousands of people to leave their homes and to come out to a festival. And I wanted to find out how he did it. I wanted to find out how he got those people to pay, how he got those people to come, and frankly, how he even was able to put together an event for them to come to.
Again, that’s so much harder than just putting together a webpage. Anyone can do it. But a festival, that’s something on a bigger scale and I want to learn how he did it so that we can all bring back some of his ideas to our [??] start-ups. The guest’s name is Tom Russell. He is a co-founder of Founders Entertainment, which produces the Governors Ball Festival. That’s a three day multi-stage music festival on Randall’s Island in New York City. Tom, welcome.
Tom: Thank you. It’s good to be here.
Andrew: How many people have come to the festival?
Tom: The first year we had 18,000. The second year we had 15,000 each day, and it was a two day event. And then last year we had 40,000 each day, and it was a three day event.
Andrew: Forty thousand. Free event, or they paid?
Tom: No. It was paid. Everything is paid.
Andrew: What are the ticket prices?
Tom: For this year’s event it is $230 plus fees for our three day event. And last year was the same.
Andrew: Congratulations. And . . .
Tom: Thank you.
Andrew: . . . as I was telling you before, for me to get a guest is pretty tough, on here. Or for the audience to get a customer is pretty tough, or an investor. But there are a lot of customers for us. There are a lot of investors. When you’re going after musicians, the kinds of musicians you want, it’s a pretty small pool. Right? So, I’m impressed by how you did it. Can you give the names of some of the performers who performed, obviously, at the festival?
Tom: Sure. We’ve had Kanye West, Kings of Leon, Beck, Fiona Apple, Guns and Roses. This year we’ll have The Strokes, [??], and Phoenix, Outcast, Jack White. The list goes on and on. We’ve had close to 200 acts play our festival over the years.
Andrew: And that’s part of what I want to learn from you. How you can court them? How you can make a deal with them? How you can get them to show up when there’s so many other options for them. Let’s understand where you got started. You looked at yourself at one point in your life and said, “If I’m going to start a business, it’s got to be now.” Where were you at that point in your life?
Tom: So I was working for a company called Superfly productions. They do the Bonnaroo Music and Arts Festival and the Outside Lands Music and Arts Festival. And I started working for them in college. I went to college in Tulane in New Orleans. And I worked for them for six years until I got to a point where I had hit my ceiling.
I wasn’t learning anything else, and I wasn’t being invited to those closed- door meetings, where the really important decisions were being made. And I didn’t have a voice in those important decisions. And I decided, now was the time for me leave and start my own venture. I’m not married. I wasn’t married at the time. I didn’t have any kids. I didn’t have too much money. I didn’t have too much to lose. So, I figured if there was a time to give it a shot it was then.
Andrew: How old were you at the time?
Tom: I was 26.
Andrew: And you were kind of in the music and business space since you were a kid. In fact, you tried taking up base, right?
Tom: I did . . .
Andrew: As a kid . . .
Tom: . . . but I’m a very impatient person by nature. Probably something I get from being a New York City kid born and raised. I didn’t have the patience to suck for a long period of time before you actually become good. So I opted to go the quote-on-quote easier route of going to business school and learning as much as I could there. And then seeing what I could do on the ground with various live music companies.
Andrew: All right. So you realize there’s a ceiling working at Superfly. It’s time to go out there and take a risk and start your own business. What is the first step that you take to building something so big?
Tom: Well, the first thing my partners and I realized was that we had to . . . we didn’t want to give our notices at our respective jobs before having an opportunity that we could jump on. And a good opportunity and a reliable one. So during the last few months of our jobs we set the certain motions in place to launch this festival.
I was taking meetings with folks from the city of New York and with production companies to make sure that we could get a permit for a new event. Making sure that we could get all the vendors lined up. My business partner Jordan was taking meeting with booking agents, telling them about this new festival, when it would launch. Making sure that we could get the talent.
And our third partner Uni [SP] was putting together a marketing plan and a sponsorship strategy so that we could really hit the ground running come January 1. So once we had all of those pieces in play and we knew that we could get certain bands, we knew that we had a permit, we knew that we had certain vendors locked, we told our bosses at the time that we were going a different direction. And then, starting on January 1, 2011, we hit the ground running, and put all the pieces together and announced our festival in about six weeks. So, yeah.
Andrew: You mean, announced that the festival was going to launch in six weeks?
Tom: No, we announced the festival in mid-February. And we announced the festival, the line-up, the tickets and everything. It was everything in one announce.
Andrew: I see. Gotcha. So if I were to make a checklist of everything that needed to happen before you can do that, before you can make the announcement. It’s, you needed the talent, you needed people to go up on stage. You needed the permit so that you’d have a space to do it. What else did you need?
Andrew: Money. Okay.
Tom: So that’s obviously the crucial part. We essentially went out to family and friends and offered them an investment opportunity. And we presented them with a business plan that described the market and how there was a void in the market for a music festival. We described the target talent and how those acts were kind of a rising stock if you will. They were all coming off of sold-out concerts in the market. They hadn’t played in a while, the demand was there.
We talked about our experience. And we put together this really sound business plan. And then we went out to family and friends and we offered them three different classes of investments. Each class varied based upon level of risk and reward. It was a waterfall structure of investment. And really going to parents and cousins and friends, we grouped together the necessary amount of capital, which was close to a million bucks to pull this thing off. And luckily our business plan was correct. And we were very . . .
Andrew: Where does a million bucks go? Whoa. I didn’t realize it took so much to put this together. Where does a million dollars go, when it comes to the first event?
Tom: About half goes to talent and about half goes to production. So the cash flow process of the music industry is an interesting one because you have to pay deposits up front and then you have to pay a whole lot of cash at the very end. And you’re relying on ticket sales to kind of make sure you have enough money at the very end to pay all the bills. But, it goes quick. Let me tell you.
Andrew: By production you mean things like the speakers, the stage . . .
Andrew: . . . the security, the . . .
Tom: Permits, police . . .
Andrew: . . . space, did you have to pay for the space? You found an opportunity with Governors Island, right?
Tom: We did. We had a relationship with the company that worked on Governors Island. And because of their close relationship with the island and the folks that run the island, we were able to get a permit in a really quick amount of time. And we were able to get the land to use for the event for a really reasonable rate.
At that time, the city of New York was putting a lot emphasis on Governors Island. And trying to advertise it as not only a place for family entertainment, but also for concerts, and arts and culture. And the event that we were trying to do fit within that category. So they gave us a little bit of a break in terms of rent. And we were able to do our event in their biggest, most wide open space.
Andrew: Governors Island is that little island right down to the south of Manhattan, right?
Andrew: As a kid I used to dream of living on that island or one of the other islands because it’s so close to Manhattan that you get the views and you get the close proximity. But hopefully you wouldn’t have to pay as much. And it’d be kind of cool.
Tom: The only problem is there are no roads there. So it restricted us from staying there for a year or two and beyond.
Andrew: And there’s no, what is it called, the tram?
Tom: The tram, yeah there’s no tram there.
Andrew: . . .[??] . . . Don’t have that either.
Andrew: How do you get on and off it?
Tom: You can only go by ferry, which made year one very expensive. Because we had to pay for, not only all the patrons to take a ferry there and back, but we had to pay for all the production and the artists to take a ferry there and back. And ferries are very, very expensive. And not only that, but operationally, it’s very challenging.
If there was, God forbid an emergency and we had to evacuate the island, it would be very, very tough. So we weren’t able to grow our event to the size and scope we wanted to on that island because of that. So we had to make a change in year two to another venue that could handle the size and scope of the event that we had always wanted to create.
Andrew: Tom did you have an issue of the chicken and the egg problem where the talent wouldn’t show up unless you had the production facilities, and the production facilities wouldn’t show up unless you had the talent and all that or was it just if you had the money and you had the space people would show up?
Tom: Well, being a concert and festival promoter is a very high risk, high reward game, if you will. From the artist perspective they want to make sure they get paid, and they want to make sure they get paid well. New York City, for better or for worse, is every single artist’s best market. It’s also one of the most high profile places they’ll play in the world, so for a band to trust a new festival to be their exclusive New York City player they have to have a lot of trust, so that’s where not only money, but also our reputations, you know, really helped us.
Andrew: The reputations from working at Superfly?
Tom: From working at Superfly, from my business partner, Jordan, working at ICM and Paradigm, the talent agencies. You know, folks that we were telling about this event, they had some doubts, but they saw that we were real people from real companies with real experience. Talking with us, they knew that we had our head on our shoulders. They knew the money was real, because we paid them on time. You know, they also recognized that there was a void in the market. They recognized that they were having their bands being on something that was special and new, and they were betting on the festival. Lucky for them, and for us it worked.
Andrew: This is so hard for a new interviewer like me to get top guests for a…or a new interviewer like I was. I’m now at about 1,000 interviews, so it’s easier, but it is hard when you’re getting started.
It is hard to get that marquee customer when you’re building a web app, and here you’re able to do it just because of your past reputation was…because there’s so many other people who worked in this space who would have been turned down. What was it about the way that you communicated your experience that made these acts, and other people who you’re working with comfortable and trust you?
Tom: Well, you have to rely on your resume, and the relationships that you have. Much of this business, and frankly any business is relationships, so you know, for my job at Superfly I met a ton of great people in the production world, and I had forged good relationships with various officials around the country. I relied on that to give us some legitimacy.
You know, my partner Jordan worked with bands ranging from The Black Keys to Neil Young to The Strokes to Regina Spektor, so you know, everybody knew that we were the real deal. You know, you have to just rely on those relationships. Everybody did background checks, everybody made phone calls to make sure we were the real deal. When you work for really professional, successful companies it’s a good sign.
How many times a day do you hear about a new company, whether it’s a tech company or not that was started by somebody who used to formally work at Apple or used to formally work at, you know, Blackstone or wherever? You know, people learn as much as they can from the best of the business, and then they carve their own path.
Andrew: What about the way that you maintain those relationships? See, you and I got connected here to do this interview, but you spoke to two other people at the company. You spoke to April Dykeman, who did the pre- interview with you. You spoke with Anne Marie via email, who said, “Andrew’s email from last night was a little nuts. He must have been up really late.” They both had interactions with you, and here I am having an interaction with you. Chances are we’ll never get to talk to you again.
I’d like to find a way to keep not just you in my network, but all the other guests who I’ve interviewed in my network, and I bet that Anne Marie and April would like to do the same thing, but it’s kind of weird if all we do is email you and say, “Hey, Tom last year you were on Mixergy, how are things going now?” Then we’re kind of becoming pen pals. I guess what I’m trying to come back to is how do you maintain relationships with people who you’ve worked with who you don’t necessarily have any more ongoing work with.
Tom: I guess the goal is to leave such a strong impression on someone or a company where they want to keep in touch with you, and when you email them they want to email you back. You know, we like to pride ourselves on being some of the most fun guys in the business to work with. We like to have a good time. We like to do things in an utmost professional manner, and when people recognize that and experience that they want to keep in touch. If you have a good time hanging out with somebody, whether it’s for business or pleasure, when they reach out to you again they’re going to remember that great time, and…
Andrew: What do you mean?
Tom: They’re going to want to hear…
Andrew: What kind of great time have you had with people? I imagine in the music business you must have such great times that you probably can’t tell me about half of them, but give me like the most fun one that you can talk about.
Tom: There’s a lot of ego in this business, and there’s a lot of people who think they’re too cool for school. I would say that we don’t qualify in that category. Honestly we don’t give a shit about that. We just want to put on a really good memorable live show and make sure everybody has fun doing it. From the security guards who are guarding the stages to the artists that are playing on the stages. To the patrons in the front row, the patrons in the back row.
Andrew: So what do you do to ensure people have a good time? So, I worked on Wall Street for a little bit and I would hear these crazy stories of what people would do together and these are bonding experiences. Like one guy drove on the sidewalk in Manhattan, and then got pulled over and his brother was a Cop and he got out of it. Now the other people in that car are always going to remember the crazy time they had with the guy who drove on the side walk, you know, in Manhattan. Do you have anything like that? Any experience like that?
Tom: Not really no, I don’t have very many crazy stories in the industry. If you will, I mean we try to be very professional we just like to have a lot of fun. We keep things very light hearted, we’re very professional. And the things that people remember most and one of the things that get people to trust you the most is doing your job and doing your job well. You know a lot of these artists are trusting you with their reputation and with their talents and if you take care of them and you put them on a platform to reach thousands of new fans. They’ll remember that, and respect that. So yeah.
Andrew: If you really want to party down I could introduce you to a guy on Wall street. His name is Paul Serbia I worked for him, he works as a headhunter. He is a head hunter. So, he has the stories. Apparently the rock starts are not having as much fun as the Wall Street guys.
Tom: You know that doesn’t surprise me. I grew up reading books about the music industry, from 60s, 70s, and 80s. And first of all, I don’t know how they were successful doing all the partying that they were doing. But you know people definitely partied. People definitely did crazy shit. People have fun. That’s not necessarily our MO. We’re pretty business oriented, we’re light hearted, we’re good guys, we’re nice people. we like too, to do it well and have fun while doing it.
Andrew: Who was the first big name guest that you got to sign on that made you say “This is happening”?
Tom: Probably Kanye West…
Andrew: Oh yeah.
Tom … Probably, you see he was at that point in time the biggest act that we had ever pure-cured. He was certainly the most expensive and he is one of the, he is a superstar. You know, to be honest I’m not a big Kanye West fan. You know, I like a different style of hip hop. But he is a star and he is a true artist and we knew that once we got him to sign on board for the festival that it would launch us to a new level of music festival. He’s a major prominent figure in our time.
Andrew: So, Tom, how do you get. . . By the way, did your screen just go dark?.
Tom: No, it’s the light in here. We’re in a green oriented building. So the…
Andrew: You’ve got to shake your hands up in the air like that?
Tom: I got to go over there. If you want me to do that, I’m happy to do it though.
Andrew: Yeah go for it and then I’ll ask my follow up question. While you do that I’m going to tell the audience that this interview is sponsored by??? nailed it. I was going to give the audition my sponsor. I’ll do that right now. This interview is sponsored by Scott Edward Walker of Walker Corporate Law.
I’ve said it. Past guests have said it. If you’re starting a new business especially, a start up in the tech space you want a lawyer who understands where you’re going in the future, where you’re funding is going to come from and how you need to be set up for that. Where your sales are going to come from. Who you’re going to exit too, and how to set you up for all those steps along the way. If you’re just starting out, talk to Scott, he will help you get started. If you’re a little bit further along he’s going to help you set yourself up for success at those later stages. Acquisitions, Bizet, selling your company and so much more. He is the entrepreneur’s lawyer. To find out about him just go to Walkercorporatelaw.com.
Let me say it again because I say things very quickly and I need to give my sponsor proper attention, walkercorporatelaw.com. So Kanye West could perform on his own and sell out a stadium right? He could sell out Madison Square Garden. Why does he need to work a festival with other people?
Tom: You know his playing a music festival is a really interesting opportunity because it allows artist to play in front of a large amount of people that aren’t necessarily fans of his. It puts his name and his music in front of fans of lots of other fans. It gets him an opportunity to get new fans and also it gives him an opportunity to play in front of the most amount of people possible in this market.
You know, he can go to the Garden and play in front of 18,000 people, he could go to Barclay’s and play in front of 17,000 people or go to the Governors ball and play in front of 40,000 people. So, if you want to have the most impact on the most amount of people you play a music festival.
Andrew: Gotcha, all right, so you get him on board. You know things are going well for you. What is the big challenge? It feels like then everything comes together, that the City of New York is helping you with location, you’ve got the music acts, you’ve got the million dollars in funding from friends and family. Where is the big early challenge?
Tom: You know, there are just a lot of hiccups that pop up along the way in every aspect of the business. Whether it’s an artist who has crazy requests and you have to make it happen or not make it happen. Whether it’s the city that has new regulations or new folks who need certain things met in a certain amount of time.
Things just pop up and it usually catches you by surprise and it’s how you react to them and respond to them and get through them that really make or break you. We had a pretty bad rain storm this year in 2013 that resulted in ankle-deep mud. Everybody who came to the event can surely remember the insane amount of mud, and we had a tropical storm that came through on Friday and it dumped six inches of rain onto the property and mud everywhere.
That resulted in a lot of challenges with getting around and it resulted in city officials and parks officials very concerned about what to do. Do they cancel the event? Do they not? How does it get repaired? Who is responsible for the bill? You know, safety was a primary concern. There were a lot of things that just kind of came out of nowhere that we had to address and address immediately.
Andrew: So, how do you address the safety issue? That’s a legitimate concern. People are going to be in mud. It is going to create more chaos and you have to reassure the city before you even know for yourself how things are going to turn out. What do you say?
Tom: Sure. Well, it really comes down to planning. Before the event, we had a very complex, very intricate emergency management plan that addressed everything from severe weather to terrorist attacks to assaults to really any sort of scenario that could happen at any sort of event. And there was protocol for what to do in each scenario.
Our severe weather protocol was we had a meteorologist who was on site starting a week out of the festival and about five days out, they noticed this tropical storm that was actually first a hurricane and then it was reduced to a tropical storm that was headed toward us. It became evident that we were definitely going to get hit with a certain amount of rain, and we knew just based on our experience that it would result in a lot of mud.
So we huddled up with the City and the Parks Department to make sure that we had ample amount of materials to cover the grounds, to lessen the negative impacts of the mud. So everything from wood chips to plywood to hay, you know, creating walkways so that folks could get around, additional security, additional medical. We did everything that our emergency management plan stated to create an environment that was as safe as possible, considering the circumstances. So….
Andrew: God. I got to tell you, Tom, for me, the emergency backup is an I- Phone that allows tethering in case the Internet in the office goes down. I can’t imagine having to do all of that. Do you ever look at these tech millionaires who just pop up overnight and go “It’s so much easier.”
Tom: I mean, I don’t know if it is so much easier. It’s just different. You know, I imagine, and everybody is different, but so many of these tech millionaires spend hundreds and thousands of dollars working on their idea and their start up. It’s the same way for us. We spend hundreds of thousands of hours working on this gig, and things get challenging. You know?
And you know my worst nightmare, which is that tropical storm last year, can be compared to a start up losing their funding, almost going bankrupt, or going bankrupt. Everybody has their different doomsday scenario. But, it’s how you address that scenario and how you persevere that kind of defines you and shows you whether you are a success or not.
Andrew: All right. So we got an understanding of where the idea came from, how you got the location, how you got the talent. How about the way you got thousands of people for that first event, when you had no reputation. How did you get them to come out? How did you even get them to understand that this event was going on?
Tom: A couple of things. First and foremost, you get people to come to your event by having talent. You get people to come to your website by having good content. You need to know what people want. For us, since we are all really, really big music fans, we know who people want to see. We know that folks want to see a certain act.
We know that that act hasn’t played the market in a certain amount of time. We know that their web presence is incredibly strong and that their fan base in incredibly social media driven. We know these things just being music fans and having our ears to the ground. So, you know, you give people what they want.
Andrew: So you’re saying Kanye West, people are showing up just for him.
Tom: Unless you’ve seen the movie, “Wayne’s World 2”, it’s one of our very best and it inspired us daily. Wayne and I said, it was one movie that hits home which is, if you book them they will come. So we know which ones to book. We are confident that if we book them and get them the people will come.
Andrew: You know what? It is the same time for me, at least, in my interviews that if I book Tim Ferriss, for example, I know that a certain number of people are going to come. If I book Seth Godin, the way that I did when I first started out, I know his fans are going to discover him because he doesn’t even have to tweet. They’re such rabid followers of his work that they’ll find him. I see. But you also needed to do some marketing. How much money did you spend on marketing?
Tom: The first year we had a $50,000 marketing budget which was next to nothing. And we really didn’t know how much we needed to spend on marketing. We just put that as an earmark, but we didn’t have to spend anything beyond that because the sales were there. And because we were able to do good enough in barter and trade.
So people wanted to come to the events. We didn’t want to spend more money on marketing, so we did a ticket trade where we could trade $10,000 worth of tickets for $10,000 worth of marketing.
Tom: It depends. So different ad networks, blog networks — I forget a few of them now because it was a few years back — but Complex Media was one of them. Spin Media was another one. We were able to go to these networks and say, “Hey, we know you want to come to the event. We know you have a lot of clients that you can treat to this event. We’re just looking for eyeballs. We’re looking for exposure. So we’ll give you an eq1ual amount in tickets, in experience, as you can give us in marketing dollars. Let’s do a deal.”
Thankfully, they were into it, and that’s why we were able to get away with such a small marketing budget in year one.
Andrew: Wow. That sounds easy, but it’s not as easy as it sounds because, yes, they want the tickets. Yes, they are going to give you a certain dollar amount, but there’s some spots that cost $10,000 but are really not worth that much. And others that are worth even more.
Tom: That’s right.
Andrew: How were you able to figure out which ad spots you want from these guys who essentially giving it to you for no cash and which ones are the wrong ones?
Tom: Well, we knew, looking at our Google Analytics, we knew where a lot of our traffic was coming from. We took out ads on some of these sites, and we saw what their clicks were like. We know who our target audience was. So we knew what they were frequenting.
We knew where the music fans were going. We knew music fans were going to music sites, and we were covering that with our marketing budget. But we also knew that music fans go to lifestyle sites, and they go to sites to read about fashion and sports and art and entertainment.
So how do we kind of hit the casual music fan? How do we hit the other folks by making them aware of the event? And we did the barter, and we saw the clicks where we’re second to none. We had a strong gauge of which type of ads perform the best, based upon our experience at previous jobs, whether it was a leader board or what not or a site takeover. And we just relied on that knowledge and the analytics to really choose the most effective route.
Andrew: I see Pitchfork.com, for example, was very effective for you for sending traffic over.
Andrew: Why Pitchfork? I understand that it’s a music site. I think they even covered the first year they did Kanye West’s list and all kinds of stuff, but what’s the deal with Pitchfork?
Tom: They have such a massive, massive base when it comes to music fans. People really trust their opinion. If they post about something, whether it’s an album review or an event or a news story, people trust them. They are curators of good content, if you will. When they post something, you’re going to get a lot of clicks from it and especially if it’s from an editorial perspective.
So you have a site that revolves around music. You have a site that revolves around good content where their base really trusts their opinion. So that combination of music lover and that trust is going to result in people wanting to learn more about whatever Pitchfork is writing about.
Andrew: What did you learn about how to pitch media about an event?
Tom: It’s a tough question because we have to compete with so many other events out there. It’s gotten a lot easier over the years as we’ve gotten bigger. Really, media wants to cover our event if they like the talent that we have. So in year one it was pretty tough. Year two it was a little bit easier. Year three very easy because we had huge bands, and we were the first music festival to hit the New York City market since All Points West and our lineup was vastly bigger than All Points West and then this year we’re just riding away from last year.
We have an equal size lineup, we have bands that haven’t played the market in over eight years that are huge, we have a lot of New York City bands, and we’ve really become known as the New York City event. So you combine good music and a good event with the biggest media market in the world and you’re going to get attention so it’s gotten easier.
Andrew: When you did spend money, it was largely on Facebook, Google, YouTube. How did that go for you?
Tom: It went great. You know as time goes by so many more market budgets are going away from TV and radio and print and going to a digital. You know, we spend about 98% of our marketing budget on digital through YouTube, through Facebook, through Google. We are very hands on with our marketing and we analyze analytic [??] daily basis.
Andrew: So what was most effective?
Tom: The YouTube ads for sure.
Andrew: What was your YouTube ad?
Tom: We had a pre-roll video that popped up. So let’s say you were searching for [??] before you watch that you will see a 15 second pre-roll advertising our festival and showing our lineup. People click on that, they go to our website. Little popup banner ads that popup in those videos as well. YouTube is such a popular destination for music fans whether they want to listen to music for free or they want to watch a video, or hear music for the first time. You know, it’s a popular place on the Internet and so we hit them and it’s performed incredibly well for us.
Tom: Facebook used to perform better, but since Facebook changed their algorithms it’s harder to reach folks. You basically just have to pay more for it so.
Andrew: I do see that of all the major social networks Facebook still sends you the most organic traffic . . .
Andrew: . . . more than [??], more than obviously Instagram which sends hardly any traffic to anyone and you guys get a little bit from Last FM, but again all of it is dwarfed by Facebook. What are you doing on Facebook that’s been working so well?
Tom: Well, a lot of the organic stuff is people just sharing the windup and sharing information about the event. You know, one of the things that people do when they go to an event and buy tickets is they tell other friends. They try to convince their friends to join them. You know, I’m going to this festival come join me and they put it on their social media and there’s no better way to market an event through word of mouth.
If your friends who you trust their opinion and you know they like to do cool stuff and they like to have fun and they’re talking about going to this event, you’re going to trust them because you know them and you know their style and their taste. So many people we know that are our age and our main demo are on Facebook and pretty much everybody’s on Facebook. It’s very easy to share things. It’s very easy to see what your friends are into. It’s just performed really, really well for us just because of that.
Andrew: Your tickets are sold through Eventbrite.
Andrew: Is the Facebook integration part of Eventbrite and . . . no because Eventbrite Facebook integration sends people back to Eventbrite not to your site, right?
Tom: That’s correct. So all of our ads click through or any of . . . most people and most fans of the festival will just post the lineup and then a link to our website and then they go to a website, and they learn all about it, and they can click there to buy tickets. All of our Facebook ads click through to our Eventbrite page where people can buy tickets.
Now on that Eventbrite page, you can see our lineup, you can learn about the event, but it’s pretty much just focused on scientifics. You know, it’s pretty simple, it’s pretty straightforward, and it gets people to see what we want them to do which is buy tickets.
Andrew: Your Eventbrite page looks great. Most people have the standard Eventbrite design. You guys really customized it. Eventbrite did it for you though, right?
Tom: They actually didn’t. But one of the reasons why we love Eventbrite is because they’re so flexible. So we went to them and we said we don’t like the way your ticketing pages look much respectfully. We want to put our graphic designer in touch with your web team and have you guys figure out together how to make the site look as good as possible. Our web designer is a very good friend of ours. He’s very knowledgeable in all sorts of code so he was able to go into the Eventbrite back end and customize it so it looked as close to our website as possible so it didn’t really feel like you were leaving the site.
You know, when you click on something and it takes you away from a site, you’re instantly kind of taken aback and you want to leave there. So if we can make it look as much like our website as possible, you know, people are still thinking they’re in the same place people feel more comfortable and we certainly want people to feel comfortable when they’re spending money on tickets.
Andrew: It’s really well done. What’s the designer’s name?
Tom: Sirtin Studios, S-I-R-T-I-N. He a very good friend of ours, and incredibly good at what he does.
Andrew: Really good, it’s one thing to change a web design that you have full control over to the look that you have in mind, it’s another thing to do that for someone else’s site. One of the things I’ve learned about Eventbrite from other organizers is, they cut deals with events that they think add to their reputation, right?
Tom: What do you mean cut deals?
Andrew: They will reduce the price that they give you if give them a little more promotion at an event that they are proud to be associated with.
Tom: They are a growing company and they’re trying to get more clients right? And the ticketing business is very, very competitive, especially in the music space. So like any business in this industry, you’ve got to do what you’ve got to do to get clients and to get business. Where they’re lucky is that their platform is so strong and so good, that they can cut that deal to get that client. Then once renewal comes up, the client doesn’t think twice because they know how good it is.
Andrew: I see. So you’re saying you got a deal, but you’re not necessarily getting it in the future?
Tom: I think we’ll get in the future cause we just generate so much revenue. I mean if you generate a sh-t load of revenue then they’re making a sh-t load of money. So you have the leverage, because if you go away then they’ll lose that. It really just comes down to leverage, and leverage is money so.
Andrew: Kevin Hart who created that company is one of the smartest entrepreneurs that I’ve ever interviewed. I don’t even know if I could communicate in an interview how freakin’ bright the guy is.
Tom: I met him a few weeks ago, and I was intimidated by his demeanor because he just seem like he was incredibly smart. I was wondering what was going through his brain. I agree with you, he’s incredibly smart.
Andrew: So one of the cool things about living in San Francisco now is I get to meet the people who work for the people who I admire. Just to see like behind the scenes, are they full of it or do they really have more. Even behind the scenes the guy is fantastic. He will do things like, encourage his people to go help out local start-ups. Partially because, then they get to learn what’s going on at those start-ups, and bring the knowledge back to Eventbrite.
And partially because I guess it creates great relationships with the start- up community. There’s no question that the guy has incredible access and it makes since that he would have invested in some of the biggest tech companies beyond Eventbrite.
All right. I’ve got to stop just praising him, it’s (inaudible) right now. So to me, actually speaking of revenue, you did over, over what over … how much revenue did you do on the last concert?
Tom: Over 14 million in ticket sales, and over 3 in other means.
Andrew: Fourteen million dollars in sales, in ticket sales. No wonder Kevin Hart loves you guys, and merchandise and other … what else beyond merchandise is there.
Tom: You have concessions, you have sponsorship, you have merchandise, you have ATM fees, so on and so forth.
Andrew: Are your investors, the ones I talked about earlier, are they praising you the way that I just praised Kevin Hart only twenty time more?
Tom: Well, what’s interesting is that the very first year we borrowed money from friends and family on a short term loan basis. After that first year when we made money, cause we also internally, my two partners and I, we also invested money. So we took the money that we made from year one, to finance year two, took the money from year two to finance year three. So we don’t have any investors. We are completely self-funded and self-owned.
Andrew: And that investor, I know you had an investor pulled out in January, months before the first one launched, do you know him?
Tom: We do. He was a friend of ours who ran a website. He had some money and wanted to do a festival, he knew that we were trying to do a festival, and he agreed to be the financier for it, and then got cold feet and backed out.
At that point we had already given our notices to our jobs and we were backed into a corner and we put together this business plan and went to friends and family and were able to scrounge up enough money to pull off year one. We were scared sh-tless at the time, but thank goodness that happened because if it didn’t, this amazing brand that we created wouldn’t be entirely owned by us, would be owned by someone else. So yeah we’re lucky that the chips fell how they fell.
Andrew: I had an investor in my first company who just wasn’t interested and I for the longest time would try to do really well so that he could regret it. It was one of the little motivations. I won’t ask you.
Tom: No, we haven’t spoken to him in a long time. He’s very successful in his other ventures. I think he didn’t know a lot about the music festival space. And once he learned a lot more from myself and my business partners he got nervous about it. It’s an insanely unique, interesting business and business model. And it’s not for the faint of heart.
You know, you can lose millions of dollars incredibly easily. And unless you really know your shit, you’re not going to be successful. And for an outside person who doesn’t know music to risk millions of dollars, you need to know a lot about what you’re investing in. And he just didn’t have that knowledge to feel comfortable. And so . . .
Andrew: What’s the one thing, more than anything else, that you can attribute your success to?
Tom: Relationships and experience I guess. Either that or hard work. I mean, it was the relationships that we had that got us to where we are. It was the experience that we had over the years that gave us the knowledge to do what we’re doing. And it was the consistent hard that allowed us to execute everything that we wanted to execute. You know, there are many sleepless nights and we certainly don’t work a traditional 9 to 5. But, you know, you’ve got to bust your ass if you want to be successful.
Andrew: When I have sleepless nights, worry about one thing. And the way that I can relax myself and stop worrying about it is to shift my focus from what I don’t want to have happen, from that fear, from that worry, to what I do want to happen. I just keep focusing on, like, if I’m worried that today you’re going to think I’m a jerk because of that email that I sent you yesterday, we should talk about that in the interview.
I will come back to in my mind and go, you know, learn something from this interview, you’re going to learn something from this interview. Or you’re going to make this so powerful that others are going to want to do the interview, or people are going to be amazed by it. But I’ll try to focus, shift my focus to one thing that will reassure me and remind me of where I’m going. What’s your tactic for dealing with that?
Tom: You know, that’s a good question. Just staying focused on the task at hand and accomplishing the goal. Don’t get tied up in the negatives, focus on the positive. And just figure out a way to make it work, you know.
Andrew: So you just keep shifting your focus back to the positive? Let’s give an example. Eminem was scheduled to be at the event, at one of the years.
Andrew: Which year was it?
Tom: Actually this year, 2014.
Andrew: Twenty fourteen. And then what happened?
Tom: So we locked in Eminem in August. And in December, late December, he pulled out of the festival because he got an offer to do a stadium tour with Rihanna. It was a lot of money. It was a very big opportunity for him. And it was so big that he basically reneged on the commitment he made to us and to others. So he backed out in December and we were without a major headliner.
And, you know, when we first heard the news we were devastated and incredibly upset, you know. There are things we could have done, like, legal action and other crazy things like that. But, you know, why do that? Why not just shift the focus on, well, you know what? There’s other great headliners out there. Let’s go get another great headliner.
Andrew: So whenever your mind would go to this, actually, where would your mind go? When you start to worry about losing Eminem, what’s the worry that you have? Is it, this event is going to fail. We’re going to lose money. Is that we’re going to lose face. It will not be as fun. What’s the one thought that comes to your head that you almost have to wrestle out of there?
Tom: Well, the biggest problem then was that it was late December. And by late December the previous year we had pretty much confirmed all our headliners. So at that point it was, shit, what other headliners are available in June, and are they good enough to sell 40,000 tickets? You know at that time we, let me put these lights on again.
Andrew: Sure. I must not be in a green building because I’ve got so many lights on me.
Tom: At that time, you know, we had, we just didn’t know what was available. But we knew that we had a brand and an event that was popular, very popular. And, you know, agents and managers they want to put their bands in the festival. So we reached out to all the bands that were available. And luckily at that time Outkast was, you know, planning their return. And, you know, we were able to replace Eminem with Outkast. You know it’s, you just got to figure it out. You know, you got to figure out what the best solution is.
Andrew: To reassure yourself do you think, there’s tons of other bands out there? Or I figure things out. It there a thought that goes through your head that allows you to regain your strength and get out there and find Outcasts?
Tom: Honestly, you’ve got to kind of convince yourself, “There is a good solution. Let’s figure it out.”
Tom: And then you go talk to your business partners. You talk to other really smart people that you rely on and you will figure it out.
Andrew: What about competition? You’re small relative to giants like Live Nation.
Andrew: How do you deal with that?
Tom: It’s not easy, at all. You know, New York City is the biggest market in the world and there are big ones like Live Nation and AEG, and there are smaller ones that have a lot of power like Bowery Presents. It’s very tough because we are competing against them for a lot of these bands New York City plays. It’s gotten easier as time has gone by as we become more established.
You know, let’s just say you are a band that could sell 2000 tickets in New York City in June, in the summertime. You could play a 2000 person venue in June in the city in the summertime, or you could play the festival, where instead of playing in front of 2000 people, you can play in front of 20,000 people. You could have 10 times as many people see your show, hear your music, learn about you, and it’s become, not necessarily a no-brainer, but a much more attractive play than playing these other smaller rooms.
So it’s gotten easier over time and thankfully there is not that much festival competition in the New York City market because there is not many places to do it and because we have really left our mark as THE New York City event. So yeah, but competition is something that always rears its head and we lose some bands to promoters, especially headliners when companies like Live Nation can own a band’s entire tour and control exactly where they go. But we try to stay focused and plan way far ahead and convince the agent and the manager that we are a better opportunity than elsewhere.
Andrew: Year two sales were low and you were thinking, “Maybe we’re going to lose money.” How did you pull out of that?
Tom: So our year two sales were slower than we anticipated. And we did not really know why. We had to huddle up internally. We had to talk to our trusted friends and inner circle about, “Are we going to need bridge financing? Are we going to lose money and need to raise money to do year three? How is it all going to work?”
We came up with a lot of different scenarios and plans for different amounts of losses and for break even and what not. We came up with a lot of different plans. So, we knew going into it exactly what we would need to do depending upon where our sales were. Thankfully, we broke even that year and we had made money from year one to ride us into year three. But, it was such a learning process and really a beneficial one, trying to figure out.
At that time, we did not really know what bridge financing was, we did not know the intricacies of short term loans and what the mandatory interest level was really because in year one we borrowed from friends and family and those folks did not really care if we lost the money, to be frank. In year two, the folks we talked to cared a little bit more and it was tough but it was a really good experience and a lot of times, it’s when you are backed into a corner and you have to address tough subjects that you learn the most.
Andrew: In the pre-interview with our producer, April asked you if you could teach a class to other entrepreneurs, what would it be about and that’s our way of trying to get at what lesson you learned that is so powerful that you would want to pass it on to other people. We usually get things that are much more common than what you gave, which is taking calculated risks. How do you do it? How do you take calculated risks in an industry like this?
Tom: Well, I don’t read as often as I should but I have read some marketing books and a lot of them say “Don’t be afraid to fail” and “Don’t be afraid to take risks.” I totally agree with that but you have to make sure you are taking calculated risks. You have to look at all of the options and all of possible outcomes and make sure that it really makes sense. In this industry, with the amount of competition there is, and with the high risk, high rewards stakes, you really have to make sure that everything is lined up so that you can maximize your probability for making money.
It’s really not easy, but making sure that you can book certain bands that you know you’re going to sell a certain amount of tickets. Making sure that your expenses are a certain amount and not going to go over. Making sure that you have a brand that can grow. Making sure that the economy is in the right place, the demand is there.
You really have to analyze all aspects of the business and the business model, and make sure that everything is in line so you can make a calculated risk as opposed to just taking a risk, because too many people in this industry take risks and lose millions, and either go bankrupt or go into hiding.
Andrew: I’ve seen the people who go into hiding. Even making financial models, that’s part of the answer to running a cool concert?
Tom: Absolutely. I mean ultimately it comes down…I mean every business comes down to the numbers, you know? Your business isn’t going to survive if you don’t have the dollars in the bank and you don’t produce those numbers, so it’s the least sexy part of what we do, but it’s, you know, one of the most important.
Andrew: Speaking of numbers, how old were you when you first became a millionaire?
Tom: That’s a tough question. Last year.
Andrew: Last year.
Andrew: Did you do anything to celebrate, acknowledge it, anything like that?
Andrew: No. It was just another number, and you just moved on.
Tom: No, I have a goal of the amount of money I want to make in my life, so once I hit that goal maybe I’ll do something really fun, but until then just stay focused and keep doing it.
Andrew: What’s the number?
Tom: Ten million dollars.
Andrew: Ten million dollars. Why 10?
Tom: You know what? I have no idea.
Andrew: It just came up, right?
Tom: It’s just a number in my head that if I had 10 million in my bank I would feel really fucking good.
Andrew: I see. You have a million dollars. I don’t know if you read the New York Times article, but monocles now are the rage. I feel like you’ve earned it. Would you buy a monocle? You can get it from…
Tom: I’d buy a monocle if I had a hat and could grow a mustache like the Monopoly guy.
Andrew: Well, maybe the second you have to earn. Maybe save the hat for the five million, and the mustache…
Tom: One step at a time. One step at a time.
Andrew: You know, I don’t know if you saw it, but there was this viral video going around about how I guess it was a Fox affiliate that accidentally showed a penis on the screen, because they were showing…
Tom: I saw that yesterday.
Andrew: You saw that, right?
Tom: I saw that yesterday, and my lady friend said that to me.
Andrew: Did you see what they did right after it came on?
Tom: The reaction?
Tom: Yeah, it was amazing.
Andrew: It was like [gasp], and then they carried on like nothing happened. I hate that. I feel like they’re doing a show, and they might as well be just talking heads at that point. I want to be real, and that’s why I asked you about money, and that’s why I think I should acknowledge even the mistake that I made yesterday. Instead of it coming from me, since you were on the other end of it, how did it come across to you? What did you experience? We should be open about this.
Tom: About the email that you sent?
Andrew: The email that I sent, and the mistakes that I made. I want to apologize publicly, but I feel like I should set up for the audience to understand what I’m apologizing for.
Tom: Well, to be honest with you, I didn’t know that, you know, your company and series was just focused on tech. I had no idea, so when you mentioned to me that it was just focused on tech and my business didn’t really qualify it just surprised me, but I was curious, you know, how, if my business wasn’t tech, how we’d qualify to even be reached out to. That’s why I asked that question, but you know, I didn’t really think anything of it. It just sparked some curiosity.
Andrew: The email that you sent back that you didn’t just say, “Okay.” You said, “Well, then how did I even get this far,” made me go back and think…well, here’s what happened. I was sitting to do five interviews yesterday, and two of those interviews that I was about to record were with people who just clearly didn’t fit. I went back, and thankfully our process is so detailed that I can see where the mistakes were made and we can go back and correct it.
That made me think, “You know what, I had five interviews to record yesterday, and two of them weren’t right. Let’s look at tomorrow.” Then I saw you, and I said, “Oh, what is this? Now we’re doing…”what is the name of your company? I don’t know the name of your company, except through our site. It’s…
Tom: Founder’s Entertainment.
Andrew: Founder’s Entertainment. I don’t know that. I said, “Founder’s…something is broken here. I don’t want Tom to have to sit here on Wednesday to record, and then be told, wait, this is not a good fit,” so I quickly emailed you to avoid a problem, and I explained, “I like the story, but it’s just not going to be a good fit.” Then you emailed me back and you said, “Wait, then how did I even get this far?”
Thankfully, like I said…I was starting to say, I went back and I saw every stage of the decision making process right up to the specific email that I got that got me so excited that we could potentially even have you on that I said, “We’ve got to make it work.” Then I realized, “Oh, governors.” I said, “Maybe I should…”not that I was drunk, but like sober up as in just my head was a little woozy from sitting for five interviews, maybe I need to make sure that I’m not making a mistake again before emailing him.” I said, “Screw it. I’ve got to email Tom.” I apologized, and…
Tom: Thankfully you were willing to come back on here.
Tom: Of course. Of course.
Andrew: It’s…part of what we do here is just fun conversations with entrepreneurs. The behind-the-scenes stuff is very detailed. It’s very structured, because otherwise, I’d go mad trying to find people. Do you have a structure, too, for finding performers, for making sure they’re the right fit, and so on?
Tom: Yeah. As I mentioned earlier, we’re huge music fans, so we know pretty much off the top of our heads how many tickets different bands were worth in different markets. Especially this one. We know when a band can come here if we’re going to sell 10,000 tickets or 5,000 tickets or 500 tickets.
We have a talent grid that lays out the headliners and the second-to-close, the third-to-close, and the first bands up. We have a good gauge of how many tickets each of those slotted acts should be able to sell. We just kind of mix and match from there, see who’s available that fits in that category, make them an offer, and hopefully they confirm and we’ve slotted them there.
Andrew: I wouldn’t have expected so much data to go into this. I see your festivals as such as a fun event. I see you, you’re wearing a hoodie. You’re just kind of relaxed over there.
To me, if we hadn’t had this deep conversation, I would have thought, “He just knows music. What’s the big deal? You just find a few acts and you put them together and life works out.” But it is so much more of a business than I would have expected. I would have thought all art, hardly any business.
Tom: Well, isn’t that any industry? From an outsider’s perspective, you just see the easy, fun part. It’s the behind-the-scenes stuff that most people don’t think about that is where it gets the most complex.
It’s why we do what we do. Why we want to have the fun and have great music and have a great time and see some special entertainment. The only way to get there is to do the nitty-gritty and all the behind-the-scenes stuff.
Andrew: Let me say this to my audience. This interview is fun. The ones with the bigger names you gravitate to even more, the ones that have anything to do with systems or any like that, people don’t seem to go to.
Be one of the few people who understand the value of this, of creating systems, of modeling your success, and so on. What I’m trying to say is, when you’re searching for interviews on Mixergy, search for the ones about how to organize your business in a way that makes sense, in a way that’s professional.
Let me give you a suggestion. Instead of talking about the topic, I’ll give you a specific suggestion. Listen to my interview with Sam Carpenter about his book, “Work the System.” He is a guy who takes complicated businesses and systemizes them in a way that they actually will function, that they will grow, so that he can hire people who manage each part of the business so that it will grow without him in a responsible way.
Sam Carpenter is one of several interviews that I’ve done on Mixergy and courses about systems. I really urge you to go and listen to that. Be one of the few people who appreciate that it may not sound sexy, but it’ll lead to sexy results.
It’s all available for you on Mixergy. Hit the search bar and go look for Sam Carpenter. One of the things that I learned by looking at our system is Scott Wells is the guy who suggested that we interview you. Do you know Scott?
Tom: The name rings a bell. Where exactly from, I cannot tell you.
Andrew: Okay. I thought maybe he was like a close, personal friend of yours. But he’s someone who is so passionate about you and your work that he said, “You have to go check it out.” Of course, I said yes.
Final question is this. When I asked you what you were excited about doing this interview, you said — I wrote this exactly — “We are at the forefront of cool shit.” What does this mean and what does this have to do with the tech community?
Tom: We like to think of ourselves as curators of cool shit. Whether that’s really cool music and live music. Whether that’s really delicious, awesome food. Whether that’s really great partners that are bringing really cool, unique things to the table.
Right now, in the technology space, there is so much development and so much movement, and companies are offering so many different things that better our lives. We really make an effort to try to work with those companies to expose our consumers and our patrons to that technology.
Whether it’s a new app company or a new phone or a new whatever, wireless sound system, we want to work with companies that do really cool, unique stuff that our patrons can benefit from. We try to restrict all of our sponsors to ones that have products where our consumers can benefit, both at the festival and at home.
The company like yours and the Web site like yours that work with, and chat with, technology companies from around the world that are creating technologies that, ideally, make our lives easier, make our lives better, we want that.
We want to feature technology that can do that. We want to educate our audience, not only on good music that they’ve never heard of, or good food that they’ve never tried, but also good technology that they never even knew existed. That once they do know exists, can make their lives easier and better.
Andrew: What’s a good way for people to follow up with you, to say, “Thank you for doing this interview,” to say, “Hey, I love what you said about being at the forefront of cool shit,” and “Hey, Andrew is a bit of jerk. Don’t let his systems get in the way of conversations.” Is there a way for people to follow up with you?
Tom: Yeah. Just shoot me an email. It’s email@example.com.
Andrew: I’m also going to suggest anyone who’s heard this interview all the way through now go back and take a look at the Web site with a fresh, new understanding of the business. If you go to governorsballmusicfestival.com now, unlike most people who click at the “Buy Tickets” button and don’t understand all the stuff that goes on behind the scenes to creating that page, you’re going to look it in a whole different way.
You’re going to recognize the domain name at the top. You’re going to recognize the art that went into it. You’re going to recognize how they even have the share buttons in there in a way that you might not have noticed or maybe just brushed past in the past. Don’t just look at the site. Really, really look at the site. Tom, thank you so much for doing this interview.
Tom: It’s a pleasure. Thanks for reaching out.
Andrew: You bet. Thank you all for being a part of this. Goodbye.