January 26, 2019 (1986 words)
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Entrepreneur (and scam artist) Billy McFarland was a product of his system, and he has more in common with 'legitimate' entrepreneurs than they'd like to admit.
Tags: meritocracy, startups
This post is day 26 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.
I just watched the Netflix documentary on Fyre Festival. Truly, it was a sublime event - the quintessence of our late capitalist dystopia - and even though I read all the big investigative articles about it when they first came out, I still learned a lot from watching the documentary. If you haven’t seen either documentary (or followed the news coverage) and don’t want spoilers, maybe stop reading now.
Now, if the documentary were a piece of fiction, I’d say it was a multi-layered allegory: about rich (or pseudo-rich) white kids being given every chance in the world; about the highly destructive “fake it ‘til you make it” mentality of startup culture; and about the empty promises that underlie all advertising.
Sadly, however, it was a record of real events, and the viewer is left thinking, 1) what a horrific scam that hurt so many people, and 2) damn, Billy McFarland is good.
But he wasn’t good enough, and he did get caught, in the end. Which brings me to the first topic I want to discuss:
No fucking consequences
Billy McFarland got 6 years in prison. Like, six (6). That’s it. In exchange for scamming a bunch of investors out of their money, and for not paying the wages owed to people who worked for him every day for weeks, he got 6 years in prison. And he’s barred from running another company (though I’m sure he’ll find a way around that).
For comparison, a homeless man who used a fake $20 bill to buy food & toothpaste also got 6 years in prison.
Now I’m against prisons in theory, but Billy McFarland is making me want to reconsider. When a homeless man tries to acquire basic necessities for life & is prevented from doing so because those goods are considered commodities that can only be provided via the market, he is not guilty of any crime; it is society that has committed a crime against him, by impeding his access to what should be public goods. But when some spoiled white dude runs a huge self-aggrandising scam and screws over the people who believed in him and gave up their time for him, that should be considered a crime.
I apologise for the swearing and hyperbole in this section’s heading. I am extremely mad. One of the last scenes in the documentary featured MaryAnne Rolle, who owned a restaurant that provided food for some of the attendees and who says she was never paid for her work, meaning that she had to pay her staff out of her own pocket. (On the bright side, it seems like she’s managed to raise money through GoFundMe, though it goes without saying that she shouldn’t have had to.) And the Bahamian locals who worked every day for weeks to put up the infrastructure in time for the festival? Not paid either.
Even the employees at Fyre Media, who were working on an event-booking platform (think “Uber for bookings”) that Fyre Festival was ostensibly created to promote, got shafted eventually, even if not as badly: A week after the festival, Billy told them they wouldn’t be fired per se, but they wouldn’t be getting paid anymore because the company couldn’t make payroll. When one of his employees clarified, bluntly, that they wouldn’t be getting laid off (so they wouldn’t qualify for unemployment) and would still be expected to work at the company without pay, Billy’s response was highly unempathetic, befitting someone whose main source of income was “raising money” from various investors as opposed to actually working for a living. The subtext was: I don’t need you anymore, so I don’t really give a shit; you’re on your own.
To be fair, Billy was an equal-opportunity scammer; he defrauded investors just as much as he defrauded workers, if not more. He managed to get a ton of money from investors through a combination of personal charisma & artful lying (about which artists they had booked, and about how much revenue they had, and even about his own personal wealth).
But he didn’t have a realistic plan for actually paying investors back - as the festival drew closer, it became clear that any plan for salvaging the festival (and returning money to investors) was all wishful thinking. So of course he had to be punished for that. Hence the 6 years in prison: long enough that it feels like justice has been served, but not so long that it deters any wannabe entrepreneurs from taking Billy McFarland-esque risks to “create wealth”. As one of Billy’s critics concedes near the end of the film, Billy was really good at parting consumers from their money, and that’s a skill that America loves to reward. So he can’t be punished too harshly, because his actions weren’t that different from those of entrepreneurs we still glorify; Billy’s risks were just a little too brazen, and a little too unsubstantiated.
But he had to be punished at least a bit. You see, Billy McFarland’s real crime was not the trifling amounts of money he stole - individual investors could absorb the loss, whose scale barely mattered to capital as a whole. His real crime occurred on an ideological level: he undermined the whole myth of wealth creation that justifies the outsize rewards associated with entrepreneurship. In other words, he made the ruling class - and the system that created them - look stupid. By getting people to invest in his harebrained schemes without any sort of due diligence, he violated the unspoken trust that allows capitalism to function. He lied, and not just to consumers, but to investors, who didn’t even realise they were being played! They really believed in him - they thought he was going to be the defining entrepreneur of the decade.
All of which casts a hard shadow on the legitimating mystique of venture capital. The people who have the power to make investments are supposedly in those positions because they’re good at their job - because they know how to tell the good investments apart from the bad. So if someone as obviously full of shit as Billy McFarland can come along and win the trust of so many investors, that exposes the superficiality of the whole game, which then threatens the entire legitimation narrative. It calls into question the idea that people who are wealthy have genuinely “earned it”. And that brings me to my next point …
Earned vs unearned wealth
After Billy is arrested and released on bail, he moves back in with his parents in New Jersey. One of the subjects of the documentary (I forget his name and position) rejoices that now, Billy can no longer hang out in his penthouse and drive around in a Maserati, “flaunting the wealth that he stole” (emphasis mine).
I found that wording really interesting. The implication is that Billy hasn’t really earned his wealth, so he doesn’t have the right to live in a penthouse apartment and drive a Maserati. As opposed to … who exactly? The rich kids of Instagram lot, who “earned” their wealth through the good grace of being born to a wealthy family? The more “legitimate” CEOs, like Jeff Bezos (who built his empire on exploitation) or Bill Gates (who used intellectual property law in a predatory way to build his)? Or how about the Sackler family, whose wealth (and subsequent philantrophy) was extracted by causing the American opioid crisis?
This is not to defend Billy McFarland’s actions, or to say that he did earn his wealth. My point is that none of these people earned their wealth. Some are more morally unscrupulous than others in their pursuit of wealth/immortality/whatever-drives-these-people, but at the end of the day, the stark wealth inequality we see is not the result of better “merit” or “deserving” - it’s an abuse of power, plain and simple. Any contrived distinction between people who flaunt their wealth because they “earned” it vs those who, like Billy, “stole” it, is a rhetorical trick whose goal is to obscure what those two groups have in common. None of them earned it. At best, they captured it, via means that may have been condoned by the prevailing legal structures, but that are fundamentally unjust and illegitimate. This leads to my penultimate point:
Billy McFarland is a product of his circumstamces
The really unsettling thing for me, watching this documentary, is how much Billy resembles people I know. Not entirely, obviously - I don’t know anyone who’s been sentenced to prison for investor fraud - but the difference is a matter of degree. If you were to plot “tech entrepreneurs” along an axis indicating how sociopathic they were, then you would end up with up with a lot of people clumped near the “sociopathic” end of the spectrum, much closer to Billy than they might want to admit.
Because it’s not just happenstance that tech entrepreneurs tend to put profit/growth before morals: it’s almost a requirement for the job. It’s a systemic issue, brewed up by tech entrepreneurship’s deadly mixture of flawed incentives and superficial accountability mechanisms.
Consider Theranos, once valued at $9 billion and whose founder turned out to be basically lying the whole time. Or Hampton Creek, once valued at more than $1 billion and similarly disgraced (it’s since rebranded as “Just”).
Part of this has to do with how tech has become seen as the prosperity engine for capitalism in general: the really stupendous amounts of money pouring into tech are ultimately meant to justify our broader economic system, in the hopes that innovations in the tech sector can generate returns to satisfy - or at least pacify - everybody else. The stakes are high, and the systemic incentives lead to bolder and more audacious visions being pitched, whether or not they can actually be carried out.
That’s not the whole story, though. I think the case of Billy McFarland is a case of cynicism, being someone who figured out how to raise money through guileless investors and decided he could reverse engineer that process, by affecting the personal confidence that is supposed to be the consequence of knowing what you’re doing. He didn’t know what he was doing, but he was able to act like he did, anyway, and raise a ton of money in the process (both through Fyre, and in his subsequent post-bail scam where he sold fake event tickets). And there’s something almost admirable about him, because his willingness to game the system implies that he never really believed in the system - he saw it for the legitimating myth it was, and figured out how to game it. Which is more than you can say for most.
Billy reminds me a bit of Adam Wheeler, who was sentenced to a year in prison for pretending he went to Harvard. The Baffler ran a great piece on the whole saga by Jim Newell, who says:
All Wheeler did, anyway, was spot major systemic inefficiencies and disingenuously exploit them for personal financial reward.
Both Adam Wheeler and Billy McFarland spouted outrageous lies for which they were caught. But both were acting fairly rationally within the confines of the system: they followed the incentives, and realised that they could get a lot of the reward without actually having to put in the work.
And it worked - at least, for a while. They got caught eventually. But there are more Adam Wheelers and Billy McFarlands out there, who haven’t yet gotten caught, and there will be more in the making as long as the system that generates them persists.
There’s more to be said about Fyre Festival and the heavy role played by influencer marketing, but I’m almost out of time, so I’ll save that for another post. As always, thanks for reading.