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Governors Ball and Founders Entertainment Heads Wolowitz and Russell Talk Live Nation, New Ventures: Q&A

In an exclusive interview, Russell and Wolowitz speak with Billboard about why they felt the need to partner, why Live Nation, the impact of AEG Live's launch of its own festival, Panorama, on…

Fifteen-year-old Tom Russell and Jordan Wolowitz were randomly paired on the same floor at a Connecticut boarding school, and the North American festival landscape was forever changed. Russell and Wolowitz, partners in Founders Entertainment, left gigs at Superfly and agency ICM, respectively, with third partner Yoni Reisman (who has since moved on to other endeavors), to launch Governors Ball on New York’s Randall’s Island in 2011 with their own money. GovBall grew into what had been the largest remaining independently-produced festival on the continent, attracting 150,000 in aggregate attendance last year. GovBall’s independent status ended with the completion of a deal for Live Nation to assume a majority stake in Founders Entertainment, news of which Billboard broke last month.

In an exclusive interview, Russell and Wolowitz speak with Billboard about why they felt the need to partner, why Live Nation, the impact of AEG Live’s launch of its own festival, Panorama, on Randall’s Island, and what’s next for Founders.

Billboard: Before Governors Ball, no promoter had been able to successfully launch a major music festival in New York City. How were you able to pull that off?

Jordan Wolowitz: We were internally financed, Tom and I and our third partner [Reisman]. We each put in $50,000 of our own money to start the company. We never had an outside investor before, until now. When you look at the first GovBall, I don’t know if we paid a single act six figures that year. We had a very low talent budget, we were a bootstrap, very lean, do-it-yourself first-year festival — but it was financially profitable.The first GovBall wasn’t that expensive, we built it slowly in terms of the caliber of talent. That was 2011, and now that the festival scene has blown up to such extremes and there’s been such a gold rush behind it, I know that first-year festivals are treated differently now. Agents usually ask for 100 percent of the guarantees before the artists arrive at the festival. We weren’t subject to things like that; if we had had to pay the entire talent budget, we probably would have had to go seek outside funding, because we only had $150,000 in the bank the day we started. But we didn’t have to do that, and actually that’s one aspect that allowed us to remain legitimately independent the first year or two.

New York City had proven a tough market to crack in terms of launching a major music festival.

JW: Yes, AEG had tried to do All Points West [in 2009] right across the river in [Jersey City] New Jersey, they had acts like Coldplay, Jay-Z and Tool, and they couldn’t make it work there. The New York market is difficult, the ticket buyers are pretty particular with what they want because they can be… they have options. So it’s almost as important to cultivate a great brand as it is booking the right acts. If it was as simple as booking big headliners, somebody would have done it before we did. But we started small and grew it out.

What were the early factors that helped make Governors Ball come off?

Tom Russell: With Jordan coming from the booking world and myself from Superfly, we knew a lot of people in the industry, and when we left our respective jobs to start a festival and launch GovBall, we relied on those relationships heavily. I was calling people I had worked with for years on Bonnaroo and Outside Lands, seeing if they were interested in being involved in GovBall. Jordan was talking to agents that he had gotten to know over the years from being in the agency world. This is a reputation business, and we were launching a first-year event, so there has to be a large level of trust. Especially, if agents and managers are putting their artists on a festival in what is really every band’s biggest market, they have to be really sure they’re making the right decision. So we relied on those relationships heavily, and do to this day, whether it comes to the staff, or agents, managers, or even the City. We have a very close relationship with the City of New York, we work very closely with all of the city agencies, and we’ve always put on a safe event and been very transparent with them on everything. I think that has gone a really long way.

You mentioned that others have tried and failed in New York, what was the key to your success? Was it all about having the right mix of talent?

JW: If you go to our website and look at all the festival posters year by year, you can see the growth. The lineup and the way we curated it definitely helped. And people just had a good time every year, even the first year when our headliner was Pretty Lights, who at the time  hadn’t even played anything bigger than Terminal 5 in New York, to the next year, when we had Fiona Apple and Beck headline. We made the big leap in 2013, when we had Kanye West and Kings Of Leon and artists like that playing, but by that time, I think people had grown to enjoy coming to GovBall and had connected to our brand. People just come every year because they get to hear really good music and have a really good experience on site.

TR: In a city like New York, where there is so much to do and so many different forms of entertainment every night of the week, we had to put together a bill that was impossible to say no to. When we looked at what bands to book, we looked at bands that were coming out with new records, or hadn’t played the market in a while; we needed to put together something that when diehard music fans, or even casual fans, saw it they said, “holy shit, there’s no way I’m not going to that.”

JW: We put as much thought into who plays at 1 p.m. as we do who plays at 7 p.m. Legitimately — we’re not bullshitting. We spend a lot of time on every single slot. GovBall only has four main performance areas, we’re not a festival that has eight or nine stages going on all over the place, so it gives us the ability to really heavily curate the festival from top to bottom.

What did the announcement of Panorama, a second festival on Randall’s produced by AEG Live, do to the value GovBall? Speculation is that it potentially devalued your property and perhaps that’s why you were such a vocal opponent.

JW: Actually, if anything it increased our value, because this deal was consummated at the end of last week, after everyone was able to see not only Panorama come out and fall flat on its face, but also our investor was able to see GovBall having its best ticket sales year yet. [Note: A Panorama spokesperson tells Billboard that “sales are good, we look forward to July and can’t wait to start booking 2017.”] If anything, we were able to sit there with the facts and say we’re actually more valuable than we’ve ever been, and our value is only going to grow. So, in a weird way, the Panorama effect was a positive one for us, because it clearly proved we were the best game in town. We fought so hard against Panorama when we were independent promoters. This started almost a year ago, and we were independent guys fighting for our lives. We didn’t feel they were going about it in the right way, we were independent promoters protecting our asset, and we weren’t going down without a fight.

Did the launch of Panorama play any role in your ultimate decision to go with Live Nation?

JW: It taught us a couple lessons. The biggest one was, with one particular headliner we wanted, basically the idea was they would play GovBall whenever it was they decided to come back, and we lost out on them because AEG was able to leverage an offer that consisted of two Coachellas, Panorama, FYF, and potentially more, and we, with just one festival to offer, couldn’t come close to offering that type of money. I was still able to book the lineup I wanted to book, with the exception of this one act, but it showed that with headliners now it was going to be a game of money, and it’s going to be a game of what kind of access you can offer other than just one festival. But, now that we’re able to breathe easy because Panorama is not a successful event compared to GovBall, the deal came down to us having other ideas for festivals and wanting to grow, and what strategic partner made sense in allowing us to grow, not only in terms of resources — like getting access to certain headliners — but also in regard to  launching a festival [so that] if it had growing pains it wouldn’t effect our business. Was there worry that Panorama would effect our value as it was coming to fruition? Absolutely. But, as it played out it, it has not, and has, thankfully, actually increased our value.

In the Panorama discussion you did position GovBall as being the David in a David vs. Goliath scenario, and now you’re aligned with an even bigger Goliath. Does that feel weird in any way?

JW: No.

TR: I would say that, for us, in this decision the most important thing was protecting GovBall and making sure that GovBall can remain at the high level that it’s been, and making sure we can book the very best bands that we know the people of New York City want to see. If that means we are no longer David and we’re on the same level as Goliath, so be it. 

JW: I think if you asked any other promoter or business person out there, when Panorama was originally trying to come two weeks after us… that is bad business, for them and for us. However they wanted to spin it, the exact same kind of event, the same kind of talent, two weeks apart — it would have given ticket buyers two watered-down festivals instead of one great one. There was another time of year they could have come and done this, so their intentions were so abundantly clear. No one would want to come to two huge music festivals two weeks apart. So that pissed us off at the time — obviously — because they had other motives besides just wanting to do a festival in New York, I don’t care what they say. We were independent promoters and we fought that as hard as we could, because that’s our style.

What was the biggest learning curve?

JW: I guess it depends on who you ask. I deal with the talent world, Tom deals with the operations and the New York City political side of stuff. For me, it’s when things happen with artists, the personalities and craft that comes with dealing with agents, artists and managers. The odd situations that come up with that. From a larger perspective, we started this festival as 26 year-olds, so if we had had a decade’s more experience, there were probably fewer things to learn. But we were learning on the fly, in every sense of the word…

TR: Not just about managing a festival, but about managing our business. We had been a part of bigger companies, but we didn’t really know about managing staff, or the ins and outs of running a small business, payroll taxes, health insurance, all that unsexy stuff that you don’t think about when you start your own business. But when you’re in the thick of it, you learn and learn quick.

JW: And to echo Tom’s point, you look at some of the other festivals that have now been acquired by AEG or Live Nation, even if they were at a point considered independent, they weren’t as independent as we were. If you look at Bonnaroo, while AC Entertainment and Superfly were independent promoters, they had [Red Light Management and Music Today founder] Coran Capshaw backing it financially and strategically. Even C3 at a certain point were backed by Coran and had a large institutional investor in Raine Capital before their [2014] deal with Live Nation. We had no one like that until now, it was really genuinely the three of us, and not a single other person had a penny invested in our business.

Did that independence create challenges or opportunities, or a mix of the two?

JW: It was a mix. I think it caused us to be hyper-obsessive over the decisions we made, because we couldn’t fuck up, basically. One bad year would put us out of business, so the swings were pretty emotional and dramatic. Having to write a seven-figure check for the first time to a headliner made your stomach feel a little interesting.

Your timing with the launch of GovBall was aligned with when this festival arms race began to heat up, both of which were interested in going concerns. Given your early success, and the fact that you had already done the heavy lifting, I imagine it wasn’t long before you started getting interest from potential investors, am I wrong?

JW: No, you’re right. The timing was actually kind of right as festivals started getting bought up. I think it was 2012, our second year, when people started to come knocking. We had a festival that was financially profitable, and we had a great brand. We didn’t, at that time, need the investment, and also we knew that if anybody was going to buy in at 2012, they would be buying in way cheap, because we knew how much growth there was to have.

TR: GovBall year one was a one-day, two-stage event. GovBall year two was a two-day, two-stage event. GovBall year three, four, five, six, is a three-day, four stage event. Our model has grown from year to year, and we just didn’t really have the need for a partner. We were content with what we had, and where we were going, so it wasn’t until pretty recently that we huddled up and said, “now’s a good time to take on a partner.”

So why now, and why Live Nation?

JW: We really took our time; people have been knocking on our door for four years about this, from every major international promoter you could name to institutional investors on Wall Street, to random risk people, we heard from them all. If we just wanted to do Governors Ball and never do anything else, maybe we would have just stayed in our lane and never done a deal. But Tom and I are relatively young guys, we’re 32, and we really have some big goals and things we want to achieve in the next to 10 years.

TR: We have GovBall, that’s our one event. But we don’t want to be a one-event company, we want to have five big events. And the only way that we can grow and grow quickly in this environment was to take on a partner to help facilitate that growth. There was literally no way to do it — no smart way to do it — without taking on a partner. And we thought Live Nation was the right partner because of the people. The people we talked to, from [CEO] Michael Rapino to [Chief Strategy Officer] Jordan Zachary, [C3 partner] Charlie Walker, they’re all first-class businessmen and first-class guys, and guys that we frankly can learn a lot from. Michael has a track record of investing in entrepreneurs and talented people and letting them do their thing. He did that all across Europe, he’s done it here in the U.S. with C3.

What has been the reaction to the Live Nation partnership from the fans and industry?

JW: Tom asked one of our interns to check our [email] box to see if anyone had written in about the sale, and not a single person did. In terms of the industry, people just congratulated us. People who knew us well and knew our story knew that we were by definition purely independent and had run this risk on our own for six GovBalls, and I think people were happy for us. I think our mentors were proud of us. People were like, “good for you,” and we went on about our day.

How important was it to talk to the C3 guys and the Bonnaroo guys as you made your decision?

JW: It was very important, and now it’s part of the process in terms of vetting who we were going to go with. We talked to the C3 guys, the Bonnaroo guys, and even people at HARD Events, and all sorts of festival people who have partnered with Michael, and they all had great things to say. Someone made the point that even the big European promoters like [Festival Republic founder] Melvin Benn and [MCD Presents founder] Denis Desmond, who did deals with Michael on their festivals 15-plus years ago when he was running Europe for Clear Channel [Entertainment], those guys still run their festivals, and they still own equity stakes in those festivals, and they’re still in  business with Michael. That has to mean something: it means their festivals are going well and he’s a great partner. Actions speak louder than words, not only [Live Nation’s] resources, but the team they built there is just far and away the best in the business.

It’s an important distinction that Live Nation acquired Founders as opposed to GovBall; it seems that they want to be in business with you two guys.

JW: Yeah. I think if you asked Michael or Jordan Zachary, I think frankly they would be disappointed if we only end up doing GovBall, as successful as it is. Part of the reason we got the value we got for Founders is because they expect a lot out of us going forward. We’re relatively young guys, I can’t think of other promoters doing a festival our size in the U.S. who are our age.

We have a festival market in the U.S. that’s reaching a level of maturity, and there have been some pretty epic failures from well-funded producers. So what are the opportunities out there?

JW: We don’t want to open up our playbook to our competitors, but we have some targeted areas that we have in mind specifically for big live events. Our decision making has always been incredibly calculated, and we’ve been spending the last five or six years now while building GovBall kind of knowing where we want to strike next. People will be hearing from us a few times in the next year or so about these events, but we’re as aware as anyone about the festival oversaturation in certain markets and some bonehead decisions that promoters just make inherently. I think that just comes with being a promoter.