In The Black
Reporter: This was the first year for the festival, correct?
Reporter: Are you in the black?
What I want to say: It’s none of your f***ing business.
What I actually say: We had a great first year.
This question always pisses me off. You would think with the start up culture that exists today, most people would understand capital-intense businesses can take years to get in the black. There are stories in the news every day about startups burning through capital month-after-month and having to raise money for 2 or 3 years before they see a dime. Guess what? It’s the same for events.
There are two big differences between events and most startups. One, it’s difficult for events to change course. You’ve set your date and venue, the talent has been hired, and tickets are already selling. If tickets aren’t selling well, you don’t have many options to turn the tide. You just have to ride it out. Two, that year of hard work comes down to one day or weekend. If you don’t hit your mark, you must wait another year to get out of the red.
Making sure you raise enough capital – and having investors that understand it may take 3 to 5 years to make money – is critical for the event startup. There’s nothing worse than selling 15,000 tickets, generating over $1.5M in revenue, but your investors are only focused on the $500,000 loss. I’ve seen software startups in a similar position after year 1 and investors not hesitate to double-down. I can’t say the same for events.
Is it any wonder why so many first-year events fail? There is an unreasonable expectation events are supposed to be profitable year 1. Maybe the reporter’s question about being in the black makes sense. Regardless, my response – internally and externally – isn’t going to change.