Of all the sectors that have been hit hardest by the pandemic, the events industry is pretty high up there. Digby Vollrath, co-founder of Feast It, explains why he’s bullish of the industry – and he shares opportunities to fill gaps in the market when events bounce back.
DANNY GIACOPELLI: Hey guys, welcome back to the Weekly. I'm Danny Giacopelli, Courier's Editorial Director. Of all the sectors that have been hit hardest by the pandemic, the events industry is pretty high up there. Not that it's a competition, but while some restaurants can still operate takeaway service, or do outdoor dining, events companies are almost completely shut down. And because of that, about 61% of event-focused business owners here in the UK say they're likely to go bankrupt by early next year without more government support. That would be a loss of about 413,000 jobs. Those business owners also report that they've lost about £83,000 in revenue since March. Well, the company that carried out that survey is Feast It, which connects event planners with thousands of suppliers and street-food vendors. Today we're with Feast It's co-founder, Digby Vollrath. He says that while event companies are in a huge amount of trouble, and support is needed to make sure jobs are protected, he's still bullish on the long-term future of events. And it's not just wishful thinking, these two raised nearly £2mn across a few rounds before and during the pandemic, when the revenue was down 98%. So sit tight and hear Digby talk about how their investors bought into the future of events. And he'll explain some ways to make money in events when everything goes back to normal.
DIGBY VOLLRATH: I think it's been a very interesting six months. At the start of the year, you do your planning and at no point were we predicting in January that our entire industry would be banned globally, and that there would be no option to get around it. The way we looked at it was to split the problems across a few different ways. Back in February, we looked at it from a perspective of what is this going to look like? There was news that there was a flu coming in, and it was going to have some effects. Events like the Olympics in Tokyo were getting banned. Initially we thought it was going to be three months, six months, nine months, an 18-month problem. We were quite lucky that we adapted pretty early.
We've been running a triple model method the whole time, always making sure we have a system that we can back up to and alternate to. For us, it's just been about how long it's going to last. And then how are we going to judge it? What are our business circuit breakers? When do we get to the next stage and understand where to go from that?
We were fortunate in that we had closed a round of funding just before the lockdown. That meant that we didn't have to instantly cut, and while we changed our business model overnight, we were able to think long term. We've kept the same belief throughout, which is that we're bullish on the events industry, we believe that fundamentally, humans care about connecting and that this space will, in the long term, recover. Covid is not going to be this great change maker in events. Over a 10- year horizon, I think we'll see certain things change; we'll see potentially people travelling globally to go to things like conferences, we'll see kind of certain aspects of events changing. Maybe who attends them and what's online versus what's offline, alternating. Events like festivals, weddings, stuff like that people are going to want to return to. Our long-term horizons haven't necessarily changed on a five-year kind of outline, that's what we're still aiming for. In the short term, it obviously has had a huge effect on how we think about 2020, and then even 2021.
DANNY: I want to dig into a few different parts of that and break it apart. The first thing is the macro view of the events industry. You just carried out some really interesting research, a survey on events companies here in the UK and it was dismal reading, it was really depressing. One of the headline stats of that research was that 61% of the UK events businesses that you talked to, that amounts to many, many thousands of companies, expect to go bankrupt within the next half year. 61%.
DIGBY: At the moment, companies are saying that by March next year, which on the current government timetable is when events will be legal again, 61% of them said they're not going to make it through without further governance. What that means is about 400,000 jobs are likely to be lost over that period.
What we found really interesting is that people are very confused about the events industry. People understand what hospitality is and understand what that is as an industry: pubs, restaurants, etc. But events is one of these industries that falls through the gaps because about 25,000 small businesses predominantly make it up. Whether that be a single wedding photographer, through to small street food businesses, lighting, rigs, whatever it may be – there's a huge number of small independent businesses powering this. Often, it doesn't get lumped together. It gets treated as a separate thing. Everyone's aware of what the wedding industry is, everyone's aware of what the festival industry is, everyone's aware of what the conference industry is, but events, as a holistic industry, has really fallen through the gaps. The way we've looked at it is that it's larger than the domestic tourism space, it's five times the size of the UK film industry. It's a huge monolith that because it's always been broken down into constituent parts, it's not treated with the value to the economy that it actually has collectively.
Monday was the first time throughout this crisis that Boris Johnson highlighted events as an industry. I think there was some line about it not being hugely affected or that it would be fine. What we've found is that we're pretty much the only space at the moment, that's just completely bad. Most other sectors have some normality in place.
DANNY: Even hospitality. I mean, hospitality is on its knees as well, but at least they have takeaway. They have various things like make-it-at-home boxes, which they can sell. It's still not nearly enough to sustain the industry, but physical events, it's just done.
DIGBY: Yeah, exactly. Right now, you can go to the pub in a group of six and some form of trade can happen. Curfews have massively damaged the space as well as all of the other restrictions, but there's still something that you can do. In the same way that restaurants have been able to pivot to platforms like Deliveroo. But the events industry, holistically, doesn’t have that. If you're someone who works in lighting rigs or in sound design, there's not really something that you can pivot to that doesn't work without an audience and doesn't work without a physical space to be able to do that.
What's been key over the last few months is how to get this sector back to working. No one in our space is suggesting we throw a huge festival tomorrow and let everyone not socially distance. But how do we get events back? And how do we get them back safely? Then, how do we start building confidence in the public about when they can come back?
At the moment, we're in this particular crunch period where we've had 100% event cancellations over the last six months. The vast majority of those have been weddings or private events. Very few people went for having 15-person weddings, or Zoom weddings, or any of those alternatives. The vast majority just hit pause on it or at least until 2021, or 2022. Because the government's basically said that jobs in this space are not viable, and what they're deeming viable is a business that can trade now, in 12 months from now, if we allow the 61% of these businesses to go on, that's about 15,000 companies which will fail and 400,000 jobs which will get lost, but then those jobs will be immediately available as soon as the events industry is able to return, if and when a vaccine is produced.
What we're trying to say is how do we create something with confidence? Other industries have been more successful at this than we have as a space. If you look at the film industry, what they did was underwrite insurance and add confidence for those to get back to filming and to protect those jobs. For the events industry, it's not saying let's get back together today, it's saying how do we build confidence in the public that they can be sure that their August wedding in 2021 is going to be able to take place? And how do we get the deposit to flow back into the space in order to get these businesses through to that period, when they're going to need to be able to produce it?
As one analogy I read put it, you can't turn the space off and on like a light bulb. If those jobs are lost, that's going to take years and years to recover, to even get to where we started, if we're not really really careful with this space. For us, this is something that's a huge part of our national identity. We are a nation that's famous for its parties and events. The most famous festival in the world is held here, things like the royal wedding is something that billions of people tune into watch. We're known for our hospitality and we're known for our events. It's something that's really core to who we are as a nation and I think that it's been forgotten in all this time and it's something that needs protecting. If we don't try to save it now, there'll be a significantly reduced ability to have it come back.
DANNY: When you're looking at the long-term future of events, you are assuming that a vaccine will be the magic fix and everything will go back to normal. What happens when Covid-22, Covid-23 hits and then everything goes back to the way it was in March? Everybody panics and looks to the government. Are there any long-term fixes that businesses can do now to proof themselves against a future catastrophic incident?
DIGBY: All of us are hopeful that this is the last Covid we'll have to deal with.
DANNY: That's the thing, it won't be. It's probably going to happen again in a few years, another Coronavirus or another pandemic. You can't then say: oh, who would have ever thought of that?
DIGBY: It's a really good point. I think for us, there are really positive steps being made. When people are looking at how the festival season 2021 is going to be, there are some really interesting ideas coming out on having tests that will take four minutes, half an hour, an hour to do, and then making that a part of the entry process. If we know who's entering the space, we know that they are not contagious, then brilliant. At the moment, if you're travelling to somewhere like Italy, you've got to arrive with a negative Covid test. There are countries where they're doing a much better job of getting a tourism industry back than we have because of doing that. It's the same thing for international travel and events, how do we start adding those added levels of security?
For individuals, smaller businesses, how do they do it? Covid was something that just didn't apply to any insurance, right? No one's insurance covered pandemics. In the future, maybe we're going to have to pay for more premium insurance models, maybe we're gonna have to have things that protect us and how our deposit systems work. There's going to have to be levels of security that ensure that this space is more protected, where it's not going to be completely wiped out. Our study showed that the average events company that we've worked with during this time, has lost somewhere around £80,000 in sales. How do we make sure that they could have claimed that back via having insurances or stopgaps that could have protected them? In the future, that's going to have to be a way that we make this industry more secure, protect it against acts of God and any third-party events that could affect us in any way.
DANNY: So you think the answer then is being better at responding to these things, rather than diversifying the business model so that you don't have to rely on physical events? Obviously, if you're an events company, events are your bread and butter. You can't start selling widgets and doing all sorts of different things. But are there any other paths you can take to make money when you find yourself in a situation when being in person is not allowed?
DIGBY: A lot of food suppliers pivoted to delivery or meal kits, there's a lot of options there. We saw musicians try everything from recording music messages and trying to do something that lets them design some revenue: music teaching, things like that. But fundamentally, this is a £90bn industry that, sure we can get 5% of it happening online and we can do hybrid events, we all remember those really exciting days of mid March, where we did Zoom pub quizzes, but that's a world that I don't think anyone wants to return to immediately right now. So whilst there are hybrid event ideas going ahead, I don't think that's something that the public could cry out to repeat for the next 10 years of their life.
DANNY: Yeah, I think I think Zoom pub quizzes lasted for about four weeks at the Courier HQ.
DIGBY: Yeah, exactly. Certain events are definitely going to move online. I think we've all learned that international business travel is not going to be as essential as it was. We've worked out that you don't need to go to New York, you can have a bunch of Zoom meetings, and save a lot of money. Or there might be a focal city where, rather than having 60,000 people turn up at South By Southwest, can you do it with 5,000 people, because a huge amount of it can be done digitally.
DANNY: It seems like that is an actual long-term change. We’ll all still go to weddings, people will all go to their favourite music festival if it's still running, but will they be as willing to go to that trade show in Las Vegas?
DIGBY: Yeah, exactly. I think that's gonna change. What's interesting is that, prior to Covid the largest wallet in events is now millennials. Whether they be the people organising the company's Christmas party, or weddings, or birthdays, the largest spenders now come from millennials, and millennials as a demographic value experience over possessions. Something like 78% of millennials would rather spend money on an experience than on buying an item they find desirable. That's only going to increase. Millennials are only going to become a larger part of the spending power of the next five to 10 years.
Fundamentally, what we all really want to do is be around other people and connect. We all rushed back to the pub as soon as they reopened. I didn't suddenly see many hybrid weddings. There were a few outliers, but I'm 29 and I'm at the age where every single person is getting married, and I don't think I went to a single Zoom wedding this summer. So I think we're definitely going to see physical events are not going anywhere. It might change immediately the age demographics that attend them, or the size, but they're coming back. As soon as we can, people are gonna be back enjoying each other's company. But I do think that kind of the business corporate side of it might alter what events look like for the next couple of years.
DANNY: You guys mentioned that you managed to survive, partly because you raised a good amount of cash before this all kicked off. You also mentioned the scenario planning that you were doing. Could you dig a bit deeper into that and explain what exactly you did and how you convinced your investors to give money to an events company in the middle of a pandemic, when you likely lost all of your revenue?
DIGBY: I'm sure they're asking themselves that as well. We were really lucky in that we'd actually just closed a round of funding prior to lockdown. It actually wasn't a particularly big round, it was meant to be a bridge to a larger institutional round that we are hopefully going to be closing now.
DANNY: How much was it?
DIGBY: So we closed with £650k just prior to Covid. And then we've now gone to close £1.2 million during Covid. The £650k gave us some breathing space. We didn't immediately need to pivot and lay off lots of people. Obviously, we took advantage of things like the furlough scheme. Why did people then come back and invest in us on similar terms in the middle of Covid? The reason why is that we're bullish about the future events. Covid will forever change how we interact with going into work, and what that looks like. I can't look into the future but I don't think work from home 100% of time is going to be the future, and nor do I think everyone will be back in the office from nine to five. When it comes to events, the human desire to be social and spend time with each other and interact with each other won't go away as a result of Covid. If anything, I think we're going to be more desperate off the back of this. When we are actually allowed to go out and hug our loved ones again, to spend time with each other, there will be a real yearning for us to do so.
We're building a digital platform in what is still an incredibly analogue space. The comparison we use is if events were a market, it's actually where travel was 20 years ago. There's thousands of independent small businesses that power this market in the same way as travel. However, at the moment there's no digital aggregator that makes that process easier for both the consumer and supplier. What we offer for the consumer is a marketplace, in which we curate the best buys in the country. We do the hard work, the discovery, and then we streamline that entire process of finding a supplier and then booking them. For our suppliers, they are all artisans and experts in their individual fields. Someone who's a street-food trader and who makes the best hamburgers in London is not necessarily going to be the best digital marketer. We want to build a platform that helps them to grow their business. By being digitised in this analogue space, there's a huge area of growth for us in the long term.
There will be a continued transition to people transacting online as people are going to be organising events online more. We're looking at how people are going to operate 10 years into the future, and how events are going to come back. We're not building something with a 12-month horizon, we're building with a 10-year horizon in view. We want to build the largest events company in the world and that's not going to happen over the next six months anyway. I wish it would, but it's not. So how do we build over the long term? That was the conversation we had with our investors. What we can do in the short term has massively changed, but our long-term vision remains the same. How we created confidence in them was to be super, super honest. We were running those three different models, at all points we were communicating that there was a zero revenue chance, we never ever shied away, we never tried to hide behind brilliant stats about user engagement or anything like that. We went from having really ambitious numbers of the year, to being 98% down in sales from target in April.
DANNY: Were you following the worst-case scenario path? Your worst-case scenario, I imagine, was zero revenue coming in.
DIGBY: Yeah, I think we had one or 2% above that. In the eyes of an investor, it was the worst case. We're incredibly fortunate in that we've got an incredible group of investors who've been with us a long time and followed us through this. We've obviously built up a lot of goodwill as founders with them over that time, whether they buy the vision from us or we're just really great liars, we've kept that goodwill. For us, it was about presenting the situation. Right now we are a tech business, we can continue to build. We will have less data points to understand that what we'll build is correct, we'll have less immediate validation of what we're building, but we can still build a better product for what the world’s going to look like when we get out the other side of this. There's a very perverse blessing in disguise, where we can just be totally focused on the product. That's the only thing we can worry about right now.
DANNY: Don't worry about any customers, because there are no customers.
DIGBY: That was the logic. We can go out there and we can read and really invest in what we're building for the future, and make sure that what our suppliers are going to need and what our customers are going to want off the back of this. What are the things that they're going to be worried about? How are they going to need their fees paid? How would they want to spend money? How are they going to think about their events? What is the level of insurance that they're going to need? All of these different problems that are definitely being kicked up from this. How do we go and solve those problems now, so that when we talk about a recovery next year, we are incredibly well-positioned to be a 10 X platform than we would have been otherwise. That laser focus, there are some investors who probably didn't buy into this, but we have a really strong group who did bite into this bullish vision on a five-year horizon. If you buy in that events will return and you buy that we're in the business of building a solution for what events will look like five years from now anyway, this is a small hiccup in that road.
DANNY: If what you're saying is even remotely true, and not just wishful thinking, if events do come back in a big way, and if so many of these events businesses fail, which isn't quite out of the realm of possibility right now, then when events do come back, there's going to be a huge amount of opportunities to fill. There's going to be a dearth of opportunities for events professionals, right? Which gaps do you foresee for a smart founder to fill if they're placing their money on events?
DIGBY: Our big focus is how to protect this industry. We're a marketplace. Our job is as a sales arm to our suppliers, so we need our suppliers to exist as well. At the moment, we're in talks with the government trying to find ways to protect as many of those businesses as possible. The UK has got a phenomenal bank of talent and this will wipe out a generation of that talent if they are left to fail.
DANNY: Priority number one is to not let them fail. But what will need to be plugged, what kind of talent will we lose in the process?
DIGBY: There's gonna be two interesting things that happen. Firstly, if there's an explosion in the number of events, at the moment 70% of events we had lined up for this year have moved into next year or the year after. Even if just half the number of weddings that would have taken place next year go ahead, we're still looking at a year with 120% of the number of normal weddings. Right now, if you are trying to book a wedding venue for the latter half of next year, you're gonna really, really struggle to find something in June, July, and any other peak days, and then in the big seasons, so there will be this huge recovery. There are definitely going to be massive changes around recruitment into these small businesses. There will suddenly be caterers that have got twice as many events than they might normally have, but they've had to lay off a huge amount of that staff. That's a really interesting problem that this space is going to have to deal with when recovery comes.
There will be a peak season of return and there's going to be a huge amount of seasonal workers, freelancers, people from businesses that haven't been able to survive this that are going to be available and we're going to have to find a way of getting them back into work, finding staff and getting all the best people back to fill these roles. I think that insurance is another space where we'll see major developments as well.
DANNY: I would think insurance tech and insurance startups are all just scheming right now; thinking how can we make really easy solutions for all of these small businesses that have been left out.
DIGBY: Yeah, exactly. Especially when it comes to freelancers and individual workers, people on short-term contracts or seasonal labour, finding employment solutions for them. How can we protect those people? Even for those businesses who've got pretty razor-thin margins anyway, how can we ensure that they survive if this happens again?
DANNY: I know nothing about insurance, but do you think pandemics will move from something that's considered an act of God to something that's actually able to be covered?
DIGBY: If you lost your earnings insurance and you lost your earnings, I think essentially, the insurance company should pay out.
DANNY: Because nobody had a pandemic covered in their policies at all, right? People had to read the fine print.
DIGBY: There's going to have to be a space where there's greater protection around these things, right? There's going to have to be systemic change to how we ensure so that this doesn't happen again. The events industry is insured up to the hilt, more than almost any other industry. You're talking about some independent photographers and caterers who have got £10m worth of liability insurance for every event they do. It is an industry that is incredibly highly insured, and yet somehow it fell through the gaps in every single space when it came to this.
DANNY: Are there any other opportunities or gaps to fill that you see? That maybe you or other people could fill?
DIGBY: Getting people back to work. That, for me, is a primary focus. The amount that millennials will and have become the primary basket is going to be interesting, too, and seeing how that adapts. The gatekeepers of money have always been of a different generation from who the money is then spent on. Often, in the past the person organising the event might not be the same demographic as the person attending the event. That's going to see a shift.
Hybrid events are something that people are trying and playing with and I'm sure those will get better, just like video conferences got a lot better over the last six months. Securing the public's confidence to go out and interact with each other, raising the comfort levels of people being in the same space and using systems like Track and Trace, that is going to be interesting to see develop over the next few years.
DANNY: That's Digby Vollrath from Feast It. And that's it this week, make sure to tune into our new six-part podcast series. We've just launched it in partnership with Instagram. It's called Looking Up. Every week, we'll meet founders across six cities here in the UK to find out how they've been adapting during Covid. Just search for Looking Up on Apple Podcasts or Spotify. Hit me up with any questions or comments as always, I'm at [email protected]. The Courier Weekly is back again next Friday. We'll see you then.