🤝 The future of the $180B+ in-person events biz


December 1, 2020

PLUS: Ryan Reynolds is good at business.

The Hustle
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This is the first day of the last month of 2020. Think about that.

The Big Idea
Concert

What’s next for the $180B+ in-person events industry?

Other than “what’s trending on r/WallStreetBets,” one of the main ways investors value stocks is by looking at future expected cash flows.

If you want to see this process at work, look no further than Live Nation.

The live events company reported a YoY revenue drop of 95% in Q3, yet its current market value ($14B) is largely in line with fall 2019.

The market is pricing in a return to normality

In a recent report, The Economist bucketed in-person event companies into 3 categories (collectively worth $180B+):

  • Exhibition, conventions, and trade shows (e.g., Informa)
  • Event promotion (e.g., Live Nation)
  • Pro sports (e.g., NBA)

The article comes to an interesting conclusion: Companies unable to adapt during the pandemic are in a good position to do well moving forward (and vice versa).

There was little the exhibition industry could do this year

Its revenue is projected to decline by 67% to $9B, per The Economist.

Take the Hannover Messe — one of the world’s largest trade fairs — as an example. Typically hosted in April, the event is housed in a complex the size of ~69 American football fields and can accommodate 250k people.

This type of event can’t be replicated in Zoom.

Investors seem to agree: Informa, the largest player in the space, is up 15%+ since news of the vaccines first broke.

Most major sports leagues were able to keep going

However, the money does not flow evenly across all stakeholders.

Among American sports leagues, teams take home ticket and concession revenue (which have been crushed), but leagues take home broadcasting rights (still going).

More concerning than the revenue split is the way live sports is being consumed. Everyone going digital during the pandemic has 2 negative effects:

  • Hastening the decline of the lucrative cable TV bundle. 
  • Rapidly changing viewing habits away from “whole game” consumption to snippets here and there.

Live events have seen some digital doubles

The South Korean super-boy-band BTS garnered ~1m viewers for a virtual concert. And Lil Nas X serenaded 33m watchers in Roblox.

However, like the exhibition industry, certain live event elements (e.g., mosh pits, rave sticks, Coachella wristbands, insane amounts of molly) can’t be duplicated online.

Touring accounts for the majority of a musician’s revenue — and they’ll want to get back to normal. Live Nation’s CEO Michael Rapino sure thinks it’ll happen, saying that he “expect[s] shows at scale” by next summer.

Check out related coverage:

  • Trends: Breaking down the multibillion dollar trade show biz
  • ESPN is pivoting to subscriptions. Will it work?
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Snippets

  • Science is en fuego right now: Using a program called AlphaFold, Alphabet’s AI subsidiary DeepMind made a big advance in predicting the 3D shape of proteins, which is key to understanding “the biological machinery of life.” Future applications include designer medicines and more nutritious crops. 
  • Facebook acquired CRM startup Kustomer for ~$1B. FB usually acquires consumer-facing products (think Instagram, Giphy). Known for its chatbots, Kustomer will help small-business advertisers better interact with end users.
  • ServiceNow — the $104B cloud IT firm — had a case of M&A envy when it heard competitor Salesforce is buying Slack. So it dropped ~$500m to acquire Element AI, founded by one of the “godfathers of AI,” Yoshua Bengio.
  • FCC Chairman Ajit Pai — noted for rolling back net neutrality rules and drinking from comically large coffee mugs — will be leaving the role come Jan. 21, 2021.
  • GM will no longer take an equity stake in EV truck maker, Nikola. The decision comes following months of internet ridicule due diligence.
  • HOOOOOODDDDDDLLLLLLL: Bitcoin set a new all-time high price yesterday, $19,850.
  • “It’s not good enough”: Zoom is on such a tear in 2020 that its quarterly revenue projection of +329% for next quarter is a letdown… $ZM stock was down 5% on the news.
 
The Biggest Data

The biggest deal of 2020: A $44B exchange between 2 data giants

British mathematician Clive Humby is credited with coining the phrase “data is the new oil.”

Often lost in the catchiness of this idea is Humby’s further explanation that “although inherently valuable, data needs processing, just as oil needs refining before its true value can be unlocked.”

The value of “unlocking” data was made abundantly clear yesterday when S&P Global announced a $44B all-stock deal for IHS Markit.

These are 2 of the biggest data providers on Wall Street

S&P’s corporate history dates back to the 1860s, when the company kept tabs on railroad data.

Today, S&P operates 3 primary businesses: 1) bond ratings; 2) stock indexing (including the ubiquitous S&P 500); and 3) data analytics (CapIQ, Platts).

IHS Markit — which was formed by the merger of 2 smaller firms in 2016 — is known for its credit derivatives data as well as energy and transportation data.

The market data industry is exploding

… with its biggest vendors now finance’s kingmakers.

The London Stock Exchange is looking to close a $27B deal for S&P competitor Refinitiv while the privately held Bloomberg — Wall St.’s OG data firm — could be worth ~$60B.

S&P Global itself has seen its market value increase 10x to $85B over the past decade.

If data is the new oil, then the refiners are getting their hands on the cheddar.

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Marketing Magic
Ryan Reynolds

Ryan Reynolds is rewriting the celebrity-investor playbook

For years, my favorite Ryan Reynolds character was Van Wilder, a “7th-year senior” whose life goal is to help undergrads at Coolidge College.

But per TechCrunch, real life Ryan is busy helping blow up brands in both sexy and unsexy industries.

In August, Aviation Gin (a spirits company he co-owns) sold for $610m to Diageo. Now, Mint Mobile (a mobile virtual network operator he co-owns) is on the rise.

Celebrity business collaborations are big on hype…

… but it often doesn’t bring “much value other than the initial press wave,” per TechCrunch.

Alicia Keys (Blackberry) and Lady Gaga (Polaroid) became the “creative directors” for 2 corporate laggards that couldn’t turn around their fortunes.

Ashton Kutcher was Lenovo’s “product engineer” for the Yoga 2 Tablet (this one doesn’t even need a joke).

Celebrity investments also have a checkered history: Jay-Z (streaming service Tidal), Justin Bieber (photo app Shots), Justin Timberlake (a social network that wasn’t Facebook).

Reynolds has 50m+ followers across Twitter and Instagram

Instead of random brand shoutouts, the Deadpool star leverages his own marketing agency — Maximum Effort (co-founded with George Dewey) — to make timely ads, like Aviation Gin’s riff on “Peloton Wife.”

“We get to acknowledge and play with the cultural landscape in real time,” Reynolds tells TechCrunch.

For Mint, that includes:

  • A $125k New York Times Super Bowl full-pager noting that print is cheaper than a $5m TV spot (with savings going to customers).
  • A 5G video explainer that ends with “we may never know what 5G is, so we’ll just give it away for free.”

He calls it “fast-vertising.” And whatever that really means, it’s working: Mint’s revenue has grown 500x in the last 3 years.

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Business history of the day
Poor's Manual

Poor’s Manual of US railroads. Somewhat ironically, the “P” in the $85B data firm S&P Global stands for “Poor’s” — as in Henry V. Poor, a 19th-century financial analyst.

Poor — who was very not poor — began publishing “a manual on railroads in 1868, which was geared toward investors… and included information on railroad companies” like their capital, rolling stock, expenditures, and routes. 

The last Poor’s Manual was published in 1924.

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TRENDS

Hindsight is 2020

A lifetime ago (April), we had one of our Trends analysts, Steph Smith, give a presentation on the downstream effects of COVID. Some of it was wrong. Much of it was right. But there was one slide that was spot on: “Tech wins. Monopolies rule. FAANG will emerge stronger than ever.”

Like many of us, Steph has never lived through a pandemic. But there is something that she does know better than 99%+ of the population: remote work.

Whether we like it or not, our world has transformed permanently — Zoom has become a verb. But, working remotely can be tough. Asynchronous communication. Amorphous schedules. Nerd neck….

The “copy and paste” approach that many companies have fallen into isn’t working. Steph will dive into the fundamentals of remote work and use frameworks from 3 books: Give and Take, Algorithms to Live By, and the Four Tendencies.

The last time we had Steph present, over 5000 people registered for the event and nearly 3000 signed up live. 🤯

PS: If you’re reading this and still haven’t pulled the trigger on our Black Friday sale, we’ve extended it by one day for Hustle subscribers only. Use the code “HUSTLEONLY” for $150 off.

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