In the Entertainment & Nightlife industry, reality and success are oftentimes less important than perception and ego. Most people are intrigued by those that live a privileged life. After all, who wouldn’t want to receive instant respect & admiration in virtually all situations.

Appearances are oftentimes deceiving; many public figures have overcome numerous hardships before ever appearing on anyone’s radar. It’s difficult to achieve consistent public recognition; cleverness, ambition and persistence are required. Unfortunately these qualities are usually replaced at a later time with arrogance and deceit to enhance profits. It’s a cycle: initial attention encourages monetization, profit and momentum which makes achievement of additional goals easier, leading to even more attention, profit and the desire for increasingly ambitious goals.

But what happens if these goals become destructively selfish? People are very poor at resisting temptation and managing power. Greed becomes stronger and is aided by disdain for the continued personal sacrifice that success requires, leading many public figures to become “Image Managers” while pursuing selfish interests and instant gratification that mitigate internal feelings of emptiness.

It’s easier to leverage past achievements while managing perceptions and riding the momentum towards all future objectives than continue with the personal sacrifices necessary to compete with younger, hungrier entrants.

Gossip More Important than the Truth?

Fortunately it’s relatively easy to identify those whose selfishness has corrupted their character and who must now rely on manipulation. Words are the most favored deception tool by casting the most positive spin on every situation without commensurate action. Negative incidents and chatter are also shrewdly dismissed and neutralized by the media with little regard for the truth.

How Does this Apply to the NYC Nightlife & Entertainment Economy:

• The top ~5 to 6 revolving exclusive establishments are so profitable that even if income declined 50% they’d still net a few million in operating profits; this figure, when reported to the Internal Revenue Service, is typically reduced by 50%-70%
• Middle-tier establishments will continue to shut down. Venues that once experienced $35K in gross sales (liquor sales plus entrance revenue) on Saturdays are currently averaging $12K, leaving many venues unable to pay their bills (i.e. Citrine)

Bottom Line: It’s very difficult to receive honest information without a strong deterrence for people not to lie.

Regardless of poor economic conditions, exceptional Industry operators & innovators with the discipline to overcome greed, complacency and personal ego will emerge stronger. They understand that the attributes which initially brought success are more important than meticulously managing public perception.

Update October 2009: Back in May, I was accurate in predicting that many mid-tier venues would close. Currently, I think we’ve moved past the major consolidation and closing phase. Instead I foresee increases in both renovations (closing for 2-8 weeks then relaunching under a new name) and private placement capital raises where Owners utilize more aggressive marketing “stories” and financial projections to transfer enhanced risks onto gullible investors.