3 Day Startup (3DS) partnered with the 80/20 Foundation and Geekdom to host the first-ever 3 Day Startup for the Performing Arts. The program introduced San Antonio’s performing arts organizations to lean start up techniques and intraprenuerial thinking. The results were powerful insights into ways to better engage audiences and the community in their work, while simultaneously generating new sources of earned revenue and improving sustainability.
The Current State of the Performing Arts Industry
According to the NEA, nearly half of the nation’s adults attended at least one type of visual or performing arts activity in 2012. And nationwide, the performing arts industry is made up of approximately 8,840 organizations, generating nearly $13.6 billion in annual revenues. In San Antonio alone, arts and culture organizations and their audiences generated more than $134 million in direct economic activity in 2010, according to Americans for the Arts. However, while arts organizations thrive on creativity, producing innovative, exciting, and inspiring performances on stage, they often struggle to harness that same innovative spirit and apply it to their business models. As we have seen with a string of recent high-profile cases (New York City Opera, The Philadelphia Orchestra, among others), many face deficits, go bankrupt, or are forced to downsize. Such failures prevent organizations from serving their communities, while developing a reputation for the performing arts among skeptics as an inefficient, ineffective money-pit.
About 3DS Performing Arts
3 Day Startup (3DS) is a world-renowned entrepreneurship program where university students start companies through a learning-by-doing model. 100 programs at colleges and universities on five continents, including Harvard, MIT, ESADE, and Tsinghua University, have helped students form over 71 companies that have collectively raised $18 million in investment capital. 3DS is a 501(c)3 not-for-profit corporation that relies heavily on earned-income, which has leveraged its own experience as a not-for-profit to develop innovative entrepreneurship programs focusing on nonprofit sustainability, social entrepreneurship, collaborative consumption, and edutech, among others. 3 Day Startup Performing Arts is a first-ever application of its proven methodology to the field of the arts. The objective of the program was to teach non-profit performing arts organizations how to create earned revenue sources to further their ability to fulfill their missions while moving them closer to financial self-sufficiency. The three day program culminated with each team presenting an earned revenue generating concept to a panel of foundation representatives and performing arts experts.
“People may think that the creative arts are vastly different from technology, but we realized how similar the brains of an artist and an entrepreneur are.” – Asia Ciaravino, President and CEO at The Playhouse
The focus of this 3DS program was on developing new earned revenue strategies. Though many of the techniques taught can be applied to many other challenges that non-profit operations face. With already scarce funding from federal and state agencies dwindling even further and a highly-competitive philanthropic climate, arts organizations are being forced to explore new approaches to provide the resources required to sustain their organizations and fulfill their missions.
Funding Models in the Performing Arts Today
Per a report by the Rand Corporation, “The revenues of America’s nonprofit arts organizations fall into three main categories: earned income (ticket sales, other business activities, and investment income), philanthropic contributions (from individuals, foundations, and businesses), and direct government subsidies.” While the ratio of earned income to total income varies widely across different categories of arts organizations and across geographic location, many would argue that increasing an organization’s earned income sources helps to mitigate risk by lessening dependence on outside organizations, such as governments and foundations, whose priorities can change over time. If developed strategically, new earned income streams can also provide new resources to help an organization expand its reach and impact. However, organizations that disproportionately rely on contributed income face several key challenges:
- The number of foundations and donors giving to the arts is not increasing.
- According to a recent study by the Institute for Philanthropy, one of four strategic trends among wealthy donors (annual philanthropic spend of $2.1 million, from personal wealth or endowments averaging $79 million) indicated that “none gave money to the arts.”
- Competition for foundational, corporate, and individual donors is becoming more intense.
- According to The Urban Institute, “between 2001 and 2011, the number of nonprofits has increased 25 percent; from 1,259,764 million to 1,574,674 million today. The growth rate of the nonprofit sector has surpassed the rate of both the business and government sectors.”
Organizations were selected by the 80/20 Foundation, which believes that building strong arts programs in the city are key to attracting and retaining top talent in other industries. According to Foundation Executive Director Lorenzo Gomez, “The performing arts are competing with other types of entertainment and social activities and we want to see them have a competitive edge,” says Gomez. The groups selected to participate were: Ballet San Antonio is San Antonio’s premier professional ballet company and the resident ballet company of the Tobin Center for the Performing Arts. YOSA (Youth Orchestra of San Antonio) “changes kids’ lives through music,” serving more than 1,500 young people in San Antonio through its orchestras, after-school programs, camps, and school partnerships. Chamber Orchestra of San Antonio (COSA) a classical chamber orchestra whose mission is to cultivate classical music through education and the performance of rarely-experienced, as well as timeless, works. San Antonio Symphony Orchestra is the resident symphony orchestra of the Tobin Center for the Performing Arts, committed to inspiring and enriching San Antonio through excellent symphonic performance, education and service. The Tobin Center for the Performing Arts will be the city’s premier performing arts center, home to San Antonio’s finest arts organizations, and a transformational catalyst — for the performing arts, for children, and for downtown San Antonio when it opens in Fall 2014. The Playhouse is San Antonio’s oldest arts organization, producing high quality live theatre that inspires, educates, and entertains audiences of all ages.
The bootcamp introduced participants to formal ideation processes and exercises to generate a large quantity of possible solutions to a given industry-specific problem. Another goal of the exercise was to encourage participants to think differently and consider new and even outrageous ideas. Whereas traditional “sit-around-the-table” brainstorming tends to favor individuals with certain communication styles or organizational rank, participants engaged in a structured process to make sure that all the members of each organization had an equal opportunity to develop and contribute ideas for consideration.
Earned-Income Strategies & Startup Skills
On day one of the program, the organizations generated a wide variety of ideas, ranging from simulcasting pre-show backstage activities, to benefit-granting memberships, to enhanced food and beverage experiences, to merchandising, to mobile apps. Ballet San Antonio came up with the idea of a membership program for young dancers to create a formal pipeline between the hundreds of dance schools for children across the city and their organization, the city’s only professional ballet company. The ideation process also yielded several interesting ideas from The San Antonio Symphony, including a mobile app to gamify the experience of learning about a symphony orchestra and a Conductor’s Baton with a QR-code scanner.
After narrowing down to a few initial front-runner ideas and subsequently using Sentiment Voting to gauge the interest of the entire group, each organization’s team hit the streets with their ideas in search of the holy grail of startup success: customer feedback. Utilizing first-person interviews in locations across the city, phone interviews, as well as online surveys, participants spoke to potential customers about their nascent ideas. The process helped teams to refine their ideas, abandon those that didn’t meet a customer need, or quickly pivot to new ideas. One team that was seeking feedback on an idea for mobile app learned that customers were not interested in what they were pitching, feeling that it was inconsistent with their current brand. The team changed course, and opted to work on other ideas, which had been popular among participants during the Sentiment Voting exercise. Later, the group found a compelling way to use this idea to help fund the development of an app that would be tied to the new service in a way that excited their customers. This experience is an important one for many arts organizations, who often invest significant time and resources in developing a new idea before doing any sort of market validation to see if there are patrons who want or need the idea.
“Having the instant feedback from both like-minded arts professionals and the general populace allows you to recalibrate your concept and continue to refine it through the multi-step feedback process. I loved having that feedback; you don’t have to continue down the wrong path for very long.” – Asia Ciaravino, President and CEO at The Playhouse
Additionally, each organization collected some valuable data on the public’s perception of their organization’s brand. Many admitted to having branding issues, with negative associations of their field or a simple lack of awareness about their work and organization. Groups tried out different wording to their interview questions, which revealed unique insights based on the terminology chosen: when framing a question around “theater” versus “play,” or “chamber music” versus “live music,” groups found significantly different levels of interest and enthusiasm for the ideas they were pitching. This was a crucial insight for several of the organizations, and one that they never would have realize without speaking to directly to their audiences.
A key theme of any 3DS program is collaboration. From the start of the Boot Camp, the groups demonstrated a great sense of camaraderie and collaboration, showing themselves remarkably comfortable sharing ideas among organizations. When the teams were integrated during a cross-pollination session, they learned to build on the ideas of others and to provide solid, actionable feedback. Collaboration is not a new concept to performing arts groups: the scarcity of resources, the paucity of performance spaces, and the inter-dependence between artists and arts presenters leads to regular dialogue. However, tendency towards collaboration is often countered by a hesitancy to sharing funding strategies. Many of the arts groups in a given community (or even nationwide) rely on the same small number of dedicated arts funders (the local and national equivalents of the “Six Rich Guys”). Thus, fears that sharing too much could lead to another arts organization taking away some or all of the “pie.” This competition among arts organizations is exactly why more earned revenue sources are so critical: earned revenues actually allow for an organization and arts ecosystem to “grow the pie.” To set a clear tone of collaboration and cooperation, the program took place at Geekdom, the largest co-working space in Texas and the hub of San Antonio’s start-up scene.
The Art of the Pitch
Many arts administrators are comfortable on-stage or in other settings in front of an audience. The startup world excels at presenting ideas via pitching, which entrepreneurs rely on to get funding. Bringing these two skills together was an on-going part of the program. The audience for each pitch session during 3DS Performing Arts included:
- The other participants in the room
- A pitch acts as feedback generator, which can yield powerful insights from a group of individuals knowledgeable about the industry
- Any stakeholder that will be required to buy-in in order to implement a new earned income strategy
- The ability to advocate clearly, succinctly, and effectively will be crucial to selling your board, organization’s leadership, staff members, and potential customers
- Foundations…but not in the way you think!
- Foundations like to give to success, not distress. They want to be an accelerant on your fire, not the flint and steel. They will likely be more impressed by the fact that you have dreamed up an idea, implemented it, and you are seeking their help to execute this project on a larger scale.
As funding initiatives for performing arts organizations change due to the current economic climate, it is becoming more important than ever for arts leaders to examine their funding options closely. Sustainable funding paths for different performing arts organizations will vary, but the 3DS Performing Arts program pushes organizations to explore autonomy and self-sustainability in an extreme hands-on format. All participating organizations walked away with a better sense of sustainable funding options, and entrepreneurial skills that can be applied to solve many other organizational challenges.
“The ability to focus in for 72 hours CANNOT be undersold. I witnessed ideas that likely spent months or event years on the shelf, get pulled down, tinkered with, and given a go.” Mario Ocho, Interim Chairman of the Chamber Orchestra of San Antonio