Inc.com recently profiled AllHipHop.com's disastrous attempt to expand a successful barbecue into a group of high profile events that almost destroyed their company.
I at first thought it was kind of brave and a step forward for hip hop business that AllHipHop.com founders Chuck Creekmur and Greg Watkins would reveal what was a far bigger disaster than anyone outside the company's core network seems to have realized. Unfortunately it's unclear whether or not it was a learning experience that taught them anything other than the template approach to leveraging a successful website.
The first big mistake revealed in this article was the choice to go from a small casual event, a hip hop community barbecue, to a whole series of high profile events that required them to turn over operations to outsiders:
"Watkins and Creekmur had outsourced much of the work to an event planner, a concert promoter, and caterers, giving them few budget parameters. The fashion show alone cost $25,000. The company had to pay to remodel the club, build a runway, buy insurance, hire models, and order invitations."
That should read as a pretty clear recipe for disaster without even getting into what happens when an artist who performs for free hits the afterparty and starts ordering drinks on the sponsors tab.
The lessons learned seemed to be along the lines of putting basic business systems in place and making clearer binding agreements with service providers.
The lessons they couldn't learn were the ones that would have come from doing one piece of the puzzle at a time with direct hands-on involvement.
If they were both closely involved with organizing the fashion show, for example, they would not only be learning about putting accountability structures in place but would have learned the details of putting on a show.
Maybe they picked some of that up as well, since they were doing some low-key events beyond the barbecue, but it sounds like they will remain vulnerable to people who function professionally in a way that is basically satisfying but does not outperform. If you don't have someone trustworthy on your team who knows when a service provider is talking bs, you will be provided with a certain amount of bs even in the best of circumstances.
"Then there was the biggest line item of all--the $90,000 grand finale concert at the Hammerstein Ballroom. The event wasn't well publicized, and only a few hundred tickets had been sold. Watkins wanted to cut their losses and cancel it. "It's not worth it," he told his friend. But Creekmur was determined to press ahead with the original plan. Canceling the concert would have been a major embarrassment, undermining their goal of building the brand's visibility. "Let's put on the best event possible and think about money later," Creekmur argued."
That attitude is truly frightening but actually understandable given that these were two guys who loved hip hop and found themselves with a successful web business on their hands.
But it's also a reminder that it's better to accept one's short-term embarrassment while cutting one's losses than to put up a good front and risk the very real chance of being taken out of the game.
Though they insist after all is said and done that these events have successfully raised their profile, one has to wonder among what group of people? AllHipHop is the one web brand writers can drop that truly catches attention at all levels from Internet thug to rap star and that has little to do with events.
So who the heck were they trying to reach? That's not indicated in the article and it sounds rather squishy without some more specific goal than raising visibility.
But it appears that this disaster pushed them to go back and re-evaluate their web business and put fairly standard procedures in place and that's all to the good.
What raises questions about their future is their decision to begin talks with venture capitalists in '07.
An influx of capital from vc's, as opposed to normal investors, comes with an expectation of outsized returns that would almost ensure that they will ultimately become managers of professionals doing jobs that they themselves don't fully understand.
That can work but if it doesn't then they won't be facing service providers who will work with them to dig back out. They'll be facing people who will cut and run as soon as things go bad though possibly after demoting Creekmur and Watkins and ensuring the company's death. That's way more humiliating than canceling a concert.
Three experts weigh in at the end of the article with mixed results.
Lawrence Gelburd, a lecturer at The Wharton School, suggests that they extend their brand via partnerships and merchandising and so forth, i.e., follow another template to the obvious.
Steven Rogers, a professor at the Kellogg School of Management, suggests that they continue on their path of strengthening their business systems and learning more about business. That's good enough advice and, given their post-disaster actions, seems to be what they're already doing.
Tim Westergren, founder of Pandora Media, says that staging events to boost your website is a mistake and that maybe they should focus on what they do best, their web game.
Both Rogers and Westergren advise the AllHipHop lads to focus on building their strengths and that's great advice unless your current strengths are keeping you from realizing much bigger goals.
But should they give up events when they're in what is still the biggest media center in the world?
Events are actually doing very well for publishers who use them to make money rather than to market their websites. If we remove the marketing AllHipHop angle and replace it with events as a marketing platform for others, they would be able to leverage and monetize their quite strong brand and their New York location while simultaneously building that brand through successful events.
There's actually a lot they could do if they give up the template approach which they've embraced and to which they seem committed going forward.
I use "template approach" to indicate that they're making the same mistakes going into new territory as their web imitators have made with copying AllHipHop.
AllHipHop helped create the template that most hip hop news sites and even most magazine sites now follow. You've got your features, your interviews, your video, your this, your that, almost all of which follows the most obvious checklist of possibilities that ensures that most such sites will have limited success though it does help newbies navigate your site upon first encounter.
AllHipHop entered the events scene with a unique event, a hip hop community barbecue, and then ramped it up by following the most obvious checklist of events possible:
art show, artists showcase, fashion show, roundtable discussion, concert
Does anything on that list surprise you in the least?
Does anything about the lessons AllHipHop learned suggest that they will deviate from the obvious in the future given that putting normal business systems into place at a successful web operation has led to seemingly inevitable meetings with venture capitalists?
That's not to say that leveraging the obvious is a mistake. But which part of that company is the obvious part to leverage?
For my part, the rather slow attempt to expand on illseed's Rumors column suggests that their grasp of the obvious is leading them in the wrong direction, a process that venture capital would only intensify.
I was told in '07 by a source who will remain unnamed that the Rumors column was their biggest hit after the forums. If you check out who's giving MSM entertainment publishers trying to succeed online the most grief, you'll find that it's the gossip blogs.
Do I really need to go on with the obvious details?
Like the experts said, build on your strengths. If they knew the company and the landscape in which AllHipHop operates a bit better, they'd recognize that a smart build-out of that section could have outsize returns. AllHipHop's illseed shows signs of that understanding but the commitment to that option is weak because the two founders are busy seeking investors while one of them is most likely writing the illseed column (according to folks who might know but AllHipHop's kept a tight lid on that one).
[illseed may prove me wrong and I would have no complaints with that.]
Will following a template kill AllHipHop in the end?
Probably not on its own. They helped create the web template for such sites and their brand is strong enough and the business systems are supposedly being put in place in a manner that should allow them to leverage the offline events template and do quite well.
But given that they clearly want much more than they have, however much that might be since the financial figures revealed are designed to show them doing quite well without actually revealing how well they're actually doing, their hunger for growth may well outstrip their knowledge of what fuels that growth and limit them to being successful in a milieu that does not reward simple success.
The New York hip hop "community" and venture capitalists are equally unforgiving and are much happier with seeing death than with low-key success. Death satisfies the inherent aesthetic of New York's dominant forms of hip hop. Quick death allows vc's to move on so they can get to that oversize return that few businesses will ever reach since low-key success does not make them rich.
On that gloomy note, ProHipHop wishes Greg Watkins and Chuck Creekmur the best of luck in their future endeavors.
Please send responses to clyde(at)prohiphop(dot)com for possible inclusion in a follow-up post.
Related ProHipHop Coverage:
AllHipHop's illseed Seeks Sidekick, May Launch Rumor Site
SOHH Rides 2 Girls 1 Cup to #1 Hip Hop Site Status
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