- Imagine a beautiful island getaway for a moment…
- The lucrative danger of ‘influencers’
- Plus, something to watch for in Australia’s future
Today’s Profit Watch kicks-off where I left my latest Netflix viewing last night.
The show was called Fyre.
I think you should watch it. I’m almost certain it’s a template for similar scams in the future.
It’s about a music festival, a compulsive liar, the power of social media…and millions of stolen dollars.
It was called the Fyre Festival.
It was going to be the hottest music event of the year. The promotional campaign was stunning.
Unfortunately, the reality turned out to be very different…
The Netflix show is a documentary about what happened (warning: there are a few spoilers below!).
This is a taste of what happens…
An entrepreneur called Billy McFarland teams up with a self-styled rap ‘mogul’ called Ja Rule.
They decide to launch a music festival on an island in the Bahamas. They let it be known that they had bought it. Columbian drug lord Pablo Escobar once owned it. The buzz began here.
Then came the marketing. The top supermodels in the world flew in. They cavorted in bikinis around the white sand and the blue sea.
Frye was going to be an exclusive and luxurious romp. You could stay in a beautiful villa. The catering would be first rate. The bands booked were world famous.
The supermodels were key ‘influencers’. They brought huge social media followings.
They coordinated a marketing campaign across their platforms — oblivious to everything about what they were flogging except the money.
One Company Critical to the 5G Roll-Out in Australia
If there’s one market event to learn about for 2019, this is it! Free report reveals what the FT calls a ‘game-changer’ for humanity. Plus, get a free subscription to Australia’s newest, most forward-looking daily investment email, Profit Watch. Enter your email address below and click ‘Send Me My FREE Report’.
The launch of the Fyre Festival was a sensation.
It was sold out — if I remember correctly — in 48 hours.
What follows is the most incredible, cringe-inducing train wreck I can remember…
A five star scam exposed
Neither Billy McFarland or Ja Rule had any experience in this field.
The original island couldn’t even handle the number of people that bought tickets. Another site was found.
The ‘luxury tents’ were really emergency shelters left after a hurricane. The food was a cheese sandwich.
The ‘villas’ were houses rented off Airbnb — and there wasn’t even enough of them.
What’s extraordinary is that the man behind the operation — or the scam, if you prefer — kept it going.
Hundreds of guests landed on the island even though all the music acts cancelled. When the paying public arrived, they found mattresses soaked from rain and no way off the island.
The team at Fyre had induced people to preload a festival ‘wallet’ with cash to help pay for special events and treats while they stayed.
It was an outrageous grab for cash to fund the event. McFarland was bleeding money everywhere.
Even more astonishing is the fact that Billy McFarland convinced his staff the whole time they might pull it off.
It’s one thing to fleece people who have no idea what’s going on. But he kept this tragic farce rolling for months.
He had hundreds of local labourers working on the stage right until the end. Some worked for over a month without a single dollar in pay.
The most poignant moment of the film is the local caterer who couldn’t bear not to pay the staff who subcontracted to her. She lost US$50,000.
The chutzpah of Billy McFarland is something to behold.
Somehow he convinced investors — fiddling the books helped — back in New York to plough over US$20 million into this thing.
Not a note of music played. McFarlane is now serving time in prison.
I’m sure there’s a lesson here…
Social media to enable next real estate scam?
It might sound strange to mention the idea of a real estate boom in Australia’s current situation.
But I’m sure there’ll be another one.
One thing I’m going to watch for — especially after watching Fyre — is for a promoter to use the power of social media to sell a development.
Here’s a scenario to think about…
The audience will be millennial. They will be naïve and seduced through influencers and marketing about a fast way to get on to the property ladder.
Most likely some of the people part of this will be as clueless as Fyre’s fashion models.
These millennial investors will send their cash in…and have a lot of glitzy images of their future piece of paradise.
At some point, it will become clear they own nothing more than scrub bush somewhere…and they’ve lost an awful lot of money.
There are many men like Billy McFarlane in the world. History is pretty clear on that point.
And property will keep booming and busting…
So, it stands to reason we’ll see more scams too.
Social media will enable it in a way we haven’t quite seen before. That’s what will fool most of us.
Certainly something to think about…