Posts Tagged ‘Wall Street’

LONG-TERM VS. SHORT-TERM

September 30, 2009

Every news outlet reported today on GM’s announcement to kill another of their brands, Saturn.  It seemed by everything I’ve read that Penske buying Saturn was a “sure thing”, but seems they’ve had second thoughts.  Now the brand that pulled-off one of the marketing coups of the century, by turning a car recall into a party with their first “Saturn Homecoming”, is closing after 23-years in business.  Guess GM had to make the move, but doesn’t it make you wonder why they were running so much advertising for the brand knowing they could be scuttling it any minute?  That’s what free government money gets you.  No accountability!  Maybe we are seeing a little of that in our business too.

One of the lessons they teach in the military is to “Prioritize Long-Term Over Short-Term Goals”.  They preach the same lessons in most MBA programs I’m sure, although it would seem that the folks on Wall Streethave a little trouble keeping those straight.  Anyway as an example in LT. CMDR. Jon Cannon’s book, “Leadership Lessons of the Navy Seals”, he talks about tracking a dozen terrorists in a particular region of the world.  If the terrorists knew the Seals were watching, they would pull up stakes and move.  If you take out only one or just a few of them by moving too quickly, the troops risk of missing the others and giving them a chance to re-group.  The solution of course is to wait for the opportunity to take out all 12 terrorists simultaneously.

In our business today, we are seeing a lot of short-term versus long-term thinking and this is no way to succeed!  To go back to the military for a second, sure there are times when short-term is all you can think about.  Trying to survive in a fox hole surrounded by enemy troops during the Tet Offensive would probably be one of those times.  But once that enemy has been pushed back past a safe perimeter, it is time for a long-term plan to win the battle…then the war.  That was probably our problem in Vietnam, and now.  The U.S. didn’t understand the loses Ho Chi Minh was willing to take.  They didn’t really calculate how many years the Vietnamese people had been at war, how extensive their tunnels, supply lines and fortifications were.  Instead we just had what we believed was a long-term strategy, “Stop Communism”.   The American people really didn’t understand what that meant. 

Back in the day, record labels let artists take time to develop.  An act wasn’t expected to break until their third or fourth album.  Promoters, managers, and agents used to look at a band and say “in 10-years they will be playing arenas.”  Now we expect that by an artist’s second tour.  Jazz Fest, Coachella, Warped Tour, all great businesses that we admire.  All lost money for their first few years.  Sure we all get lucky sometimes as Tom Petty once said, but mapping out your long-term goals with those you work with will give everyone a sense of purpose and direction.  Bump in the road, you can change course but the long-term plan is still the mission.  There is nothing worse for moral than your team hearing about your company’s plans, directions, new products, etc, from someone other than you.  How many times lately have you heard from employees at certain companies, “what do I know, I only work here?”

Quarterly earnings are for chumps.  Sure leaders have to pay attention to them, especially at a publically held company.  But for a second think about the beginning of Jack Welch’s tenure at General Electric.  Forget whether you think he did a good job, whether he cooked the books, whatever.  At first, Welch was far from the shoe-in for the job.  Once he got the job, he was going to take GE in places it had never been before and at the same time sell-off parts of the company that made them who they were (such as small appliances).  Selling Wall Street on Welch’s long-term plans for GE wasn’t easy.  You can imagine the look on investor’s faces the first time they heard the words “GE Capital”.  Making investors and Wall Street believe in his long-term plan is exactly what Welch did.  He showed how with investment (we won’t call in sacrifice) in the future… and education to his team, the street, investors, the press, and anyone who would listen, the long-term goals of transforming GE could be achieved thereby making it more profitable for years to come.   

No reason why you can’t try that today.  Instead of the accounting person in your office asking for your yearly or quarterly numbers…how about a 5-year plan?  And not just the numbers, but how you plan on achieving those numbers?  When Michael Rapino first took over what is now Live Nation he spoke a lot about “value proposition”.  Michael told us how he was going to re-invest in the customer experience.  Then Wall Street and quarterly numbers got in the way and the new message became…”well everyone has at least one or two artists they want to see in a year”.  I don’t know about you, but the Value Proposition stuff sounds better to me. 

Speak with you soon…

Jim

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CRUSH IT!!!

September 22, 2009

A few weeks ago Bill Maher did a special edition of his HBO show Real Time by pulling away from the program’s usual format and only interviewing two guests.  One of those guests was Bill Moyers.  Moyers, one of the most respected journalists of our time spoke about what is needed from our leaders in Washington (but it applies to everyone), Passion.

As an example of the passion needed today, Bill Moyers brought up John F. Kennedy’s inauguration speech from 1960.  Specifically the lines “Ask not what your country can do for you; ask what you can do for your country.”  Moyers points out that if President Obama asked Americans to do the same today…to sacrifice for their country…he probably wouldn’t see a second term (sad to hear but probably true).  Yet at the same time, it is exactly what is needed.  The President was elected because he gave Americans, and to some degree the world…Hope.  You can do the same in your office.

Many see mixing passion with business as unprofessional.  It is misunderstood.  I bet Jim Cramer was seen as crazy by “the establishment” on Wall Street before he got his own TV show.  And I have to believe that was the case with my friend Gary Vaynerchuk (and Kramer’s friend too)…who wrote a book about it called Crush It http://crushitbook.com

Crush It calls for readers to cash-in on their passions.  And who would know better than Gary.  He took a small family run business and turned his passion for wine and Business 2.o into what is now VaynerMedia;  a multi-million dollar enterprise that encompasses retail (The Wine Library) in New Jersey, online retail (winelibrary.com), publishing (He has two books @ age 33), and Gary’s widely popular web TV show, Winelibrarytv.com.  He has even added travel to the portfolio with his second cruise, The Crush It Cruise http://www.crushitcruise.com (full disclosure, The Agency Group Events produces this cruise with our partner Mike London).  Where are the Gary Vaynerchuks of our business?

We saw passion in our heroes…from what is now an almost forgotten business.  People like Bill Graham (anyone within 100′ knew he had passion), Mo & Lenny @ Warner Bros., Frank Barcelona, and of course Ahmet.  Their passions were the acts, fans, and the business of music.  My personal heroes are Abraham Lincoln (honor …and he fought for what he believed in), Bill Graham (devotion to fans and those that play for them), Walt Disney (details in creating the experience for fans) and P.T. Barnum (his ability to communicate with consumers).  All four men had passion and spoke passionately for what they loved.  Today we all seem to be weighed down by the quarterly numbers of every other mature, consolidated industry.  Yet for most of you, the numbers have nothing to do with why you got into this business. 

It is time for all of you to stand-up and become the JFK’s of your offices!  What we all need right now are leaders we can believe in.  Ones that inspire us to do great things (JFK wanted to put a man on the moon)…so we will want to sacrifice…be part of something bigger than ourselves.  Bill Moyers is a great man and he has inspired me.  Bill reminded me of the things we can do when given hope…when we are part of a “Great Group”…when we are pushed to succeed vs. torn down.  Bill, Bill, and Gary reminded me to Crush It. 

Speak with you soon…

Jim

BRING THE SUNSHINE WITH SUMMER!

March 24, 2009

I read an article recently (don’t remember where but think it was Brandweek) about how all of the negative stories Americans watch, read, and talk about on the economy each day are effecting depression levels.  No surprise, they are up dramatically.  The bad news is just about impossible to get away from.  Even if you try and hide, it pops-up on your IRA, 401K, mortgage statement, or even a phone call with a friend.  So how can Live Entertainment help bring the sunshine to consumers, media, and brands this summer?

In the March 23rd issue of Advertising Age, author Bob Garfield tells us that “the future is bright…but the present is apocalyptic.”.  He is speaking about media.  Newspapers saw a “20% drop in circulation…amid 23% population growth” in the same period.  Magazines have seen ad pages drop off “22% so far in 2009”.    Broadcast radio, TV, and billboard giant Clear Channel that “was going to destroy our very democracy”…well now so much anymore.  Network television’s audience continues to erode in the double digits.  Garfield says that “cable has problems of its own…as it’s no more DVR-proof than broadcast.”  Even online publishers like Yahoo! are taking a hit. 

So as marketers look for ways to reach consumers… and media try to attract business…and consumers look for a way to come out of their depression…in walks the answer to everyone’s prayers…BRANDED LIVE ENTERTAINMENT!

Walt Disney built Disneyland to make his world of imagination come to life.  That’s what we have the ability to do in Live Entertainment.  Right now, people are hurting.  Everyone is looking for an escape and we can provide that.  It is really simple…so lets do a quick brainstorm to show how easy it really is.  I’m going to turn on the TV and the first brand I see, we are going to create a Live Entertainment event for them that also solves the above issues.  Shit…ShamWow…ok.

1) TALENT – We have to have Vince from the commercials, he is amazing! 

2) EVENT – How about a car wash that uses only ShamWows to wash, dry, and detail your vehicle…the car wash is free with your ShamWow purchase.  We can use NASCAR pit crews to do the washing, make it a race, more exciting…even help out NASCAR who’s numbers are down as well. 

3) MEDIA – Tie-in print, radio, TV, cable, and web partners.  Do ad buys with all that have promotions circling back to the event.

4) GIVING BACK – Water from car wash should be recycled…hoses should have the latest water saving nozzles…soap is all biodegradable…and a portion of the money should go to local charities.

5) MORE – Maybe the car wash is tied to filling the city swimming pool for the summer…or maybe the event is actually using ShanWows to clean-up your city.  How about Mayor Bloomberg gets bankers, traders, and the like to use ShamWows to clean-up Wall Street and show America that not every NYC banker is corrupt. 

Well, you get the idea.  Brands need ways to communicate directly with consumers, as their usual forms of message distribution fall-off (see above).  The media need to sources of income and ways to drive traffic.  Consumers need cheering up.  Let’s help everyone out this summer and BRING THE SUNSHINE BACK!

Speak with you soon…

Jim

“IF I WERE…MICHAEL RAPINO

December 1, 2008

You can call me a sucker.  I bought Live Nation stock when it was at $20.  Friday it was trading at $4.89.  So why when Live Nation CEO, Michael Rapino had just announced that the company’s third quarter numbers were up significantly over 2007 would the stock price actually slip?  If you were to take out the sale of Live Nation’s motor sports division to Feld Entertainment, they were still up.  So why did the stock fall, and what can our friend Michael do to restore confidence on Wall Street?

In talking to friends who have also looked at the numbers, Wall Street just doesn’t seem to believe in Live Nation’s business model as it currently stands.  Their margins are just too small for analysts, investors, and if you own your own business, probably you too.  When Michael Rapino first took over as CEO of Live Nation, he spoke in public about the consumer’s “value proposition”.  Michael told us at conferences about his plans to make the “amphitheater experience” better.  He talked about food selection, price, the potential of taking out ARAMARK, etc.  Then what happened?  The realities of running a public company, quarterly numbers, and the like must have set-in.   That customer experience stuff was not heard about again.  Instead Live Nation’s message shifted to branding (Live Nation, Artist Nation, Fan Nation, House of Blues, Fillmore, etc), an international platform for brands to reach consumers (e.g. the Citi deal), and deals with Madonna, U2, and of course Carrot Top (just seeing if you were paying attention).  Brands, bands, and fans you might say.  Problem is the fans are last in this equation.  Now you add the Ticketmaster Entertainment scenario in there just for shits and giggles and it really becomes a migraine for Michael.

We will stay away from the Ticketmaster in this letter and just focus on Live Nation and Michael.  Starting with Jack Welch?  Well, Jack may be a business leader from the past, but his brave steps to form GE Capital and move General Electric away from less profitable businesses the company was known for such as small appliances (toasters, can openers, etc) make for a good example of what Michael and company need to do.  Live Nation needs to show Wall Street a plan and a leader that will get the company to the goal line.  So without further B.S., here are some of the things I would do…”If I were Michael Rapino”

·     HIRE SOMEONE FROM DISNEY PARKS TO RUN VENUE OPS – There needs to be a complete overhaul of everything (employee training, venue maintenance, F&B, VIP programs, ticketing, parking, security, transportation, etc).

·     BRING IN A CMO FROM A FORTUNE 500 COMPANY – Certainly Live Nation has its share of marketing pros to count on (Jim’s from the East, Brad in the West, Lulu in Texas, etc), but what our business needs is are marketers that are used to dealing with big ad agencies, big brands, big budgets, and have worked for publicly traded companies.

·     HIRE A CUSTOMER SERVICE CZAR – Disney, Ritz Carlton, Nordstrom, and other customer service culture oriented companies are great places to look.  Live Nation should stand for customer service.

·     TICKETING, OK I’M BREAKING MY PROMISE – Live Nation’s new ticketing system should bring them greater revenues from ticketing… in theory.  But with Ticketmaster Entertainment now owning a management company that supplies so much talent to Live Nation venues, Live Nation’s ticketing is looking much more complicated.  As stated in earlier LiveWorks Newsletters, Irving Azoff is an artist manager first and foremost.  So as an example, both Irving and his partner Howard Kaufman know that their client Jimmy Buffett is probably better suited to play outdoors.  The company Irving now runs makes out better (at first look anyway) if Buffett plays indoors.  Will Buffett play the amphitheaters next summer?  If he does, where do you think all the extra ticketing money Live Nation might be making on their new deal will be going???  Do you think ticket surcharges are going to go down?  Is it too late to talk to Irving about getting Barry Diller to buy LN out of their ticketing commitment???  Just asking.

·     MARKET THE EXPERIENCE – Maybe I sound like a broken record, but in this case LN has something special.  I believe strongly in the amphitheater experience… at least the old one.  Yes, for acts that carry huge productions, they may not be the best places to play.  But for the fan experience, when done right, there is noting like seeing a concert outdoors.  Just ask a Buffett, Dave Matthews, Grateful Dead, Tom Petty, James Taylor, Warped Tour, or any other artists’ fan that has frequented the “sheds” over the years.  Same can be said for many Live Nation clubs.  Have your newly hired CMO come up with some kick-ass marketing that reminds fans how much fun it is to be at a concert with your friends, family, etc.  It brings people together.  Gives them something to share.  That’s why fans buy the event shirt.  So they can show all their friends they were there.

·     FORBID PAPERING – Papering a show (giving away free tickets for gig that doesn’t sell) or selling-off lawn tickets for $10 after the show goes on-sale should not be allowed at any Live Nation show.  As Gene Simmons put it in his Keynote at the Billboard Touring Conference, “it is like letting the fox into the hen house” (can’t believe I just quoted Gene).   Fans find out about these things real fast, and the ones that paid full-price this time will wait for the free tickets or the fire sale the next time the act is through.

·     HIRE A CHIEF TECH OFFICER – This isn’t an IT guy.  This is someone like Joe Rospars.  Joe ran the tech side of Obama’s campaign, while the company he founded with his partners, Blue State Digital was responsible for the online fundraising.  Live Nation needs someone that can speak to music fans and figure out a way get those fans to help make new ones.  Fact is, in 2003 when Ann Marie Wilkins called me to contribute to Obama’s Senate run in Illinois, I had never heard of him.  He is now President Elect of the United States.  In early 2007, most Americans still hadn’t heard of our new President.  Guys like Joe can do a lot for our business.

·     BUY METROPOLITAN AND JAM – I know they certainly don’t want to sell to you and you may not want to buy them, but John, Jerry and Arny are all legends in our business with great relationships your people don’t necessarily have.  Do you really need one more competitor in markets that has seen nothing but turbulence?  Imagine the artists you could potentially promote in NY and Chicago with those guys on your side.  This seems like a no brainer to me…other than getting them to do it.

·     GO ON A ROAD SHOW – All of the above cost money and in the short term, earnings will suffer.  This could be hard for investors and analysts alike to swallow but you must remain strong.  Put a plan into place and then go out on the road and sell it to your entire staff, local “town hall meetings” and finally, Wall Street.  But don’t just go to NY.  Speak with analysts, traders, and business leaders in every community you do business in.  Let consumers see a face to Live Nation.

·     PRICES – We all know that on top of tickets, the prices for concessions, parking and merchandise are just too high.  With that said, it is funny that an act will make a comment on stage about the price of a beer, popcorn, or parking at a Live Nation venue but won’t say a word about those same prices (or even higher) in the arena.  Why is this?  In many cases, the fans feel ripped-off, and the bands feel they are being ripped-off.  This is a huge perception problem.  The answer is probably going to have to be a combination of dropping your prices to increase volume and positive PR in the short term.  Long range, we need to work on the “value proposition” because for whatever reason, our fans seem to have a problem with the $8 parking at your venue while football fans pay at least twice that and don’t seem to complain.

We have probably covered enough.  Again, my disclaimer is that I’m a Monday morning quarterback.  I don’t have to sit in Michael’s shoes everyday.  But I do feel that Jack Welch’s example is a good one here.  If you are really in this for the long term Michael, some of what is written above just might make sense to you.  To bring the live business back to health we need to think less about gross and more about number of tickets sold.  In the long run, getting more fans through the doors to experience live entertainment is the only way to win.  The concept of fewer bodies at a higher ticket price can only work for some acts and for so long.

Talk with you soon…

Jim

This Is A Bull Market!

October 28, 2008

We have all read of great military victories where outnumbered forces win over far superior armies.  The Battle of Guagamela where Alexander and a force of 50,000 (or less) beat back over 200,000 Persians or Julius Caesar’s victory at Alesia, where his Roman army of 30,000-60,000 defeated over 300,000 Gallic tribes.  You see these same kind of remarkable results every day on sports fields and conference rooms around the world.   Teams, athletes, businesses that should easily win on paper are beat by those with inferior resources, skills, size, etc.  They do it through the will to win (among other things).  This is the attitude we are taking through our current economic downturn and we suggest you do the same.  It may be ugly on Wall Street, but in the Entertainment and Branded Live Entertainment businesses, it is a Bull Market!!!

Going to work everyday worrying about the economy is not going to make it better.  In no way am I suggesting you forget about it, in fact just the opposite.  Look at the recession as an opportunity to serve fans, talent, partners, brands, etc.  Find new ways to reach and talk with your consumers…start a dialogue…build or re-build a community.  Put the audience first.  Here are some suggestions (some may be painful) on how to win in our Bull Market.

1) Spend more time working on fewer projects. With the number of shows, festivals, and attractions we are putting through our markets, there is no way to do a great job on all of them so it becomes a numbers game.  Stop that shit.  If you don’t believe…don’t have passion, let it go to your competitor or same it for another time.

2) Marketing is not buying ads and putting shows on-sale! There are event and entertainment marketing people out there from Feld to Disney, AEG to Live Nation, who would love the budgets, staff, and tools that their counterparts at companies like GM and Unilever have to work with.  Take on fewer shows and maybe those budgets and tools will exist.

3) Spend time with your team thinking about price points. Consumer value is the name of the game here.  How many times have you put together a small focus group even within your own office to talk about how much a ticket or hot dog should cost?

4) Leadership is key to winning! Whether the CEO of a big company or President of “Me Inc.” you need to lead by example.  Show the world you aren’t scared and have a plan to move everyone forward.

5) Now is not the time to cut staff or marketing budgets. They are both easy targets during hard times but ultimately could and will have negative effects on the long-term heath of your business.  Cutting staff is bad for morale both inside and outside the company.  As for marketing budgets, any business that either increased or kept their marketing spend level during the recession of the early ’90’s came out ahead of their competitors when things got good again.

6) Look at winners for inspiration. Target’s numbers are down, Wal-marts are up.  Follow the leader when developing and or marketing your next event.

Yes, you can read “The Secret”, pray, or call Mom and Dad for advice (I do all the time).   They all may work for you.   For me, I think about the fact that everyone needs an escape from their daily lives.  Live entertainment can bring that to them like no other medium.  It is something you share with those around you…a moment in time that can’t be captured.  The other day, win guru Gary Vaynerchuk passed on a big money speaking gig because it conflicted with a NY Jets home game.  When I asked him why, he said something like “he could always make that money back but could never take back those Jets snaps”.

This is a Bull Market!!!

Talk with you soon…

Jim