By Peter Berlin

The 2018 football World Cup has kicked off in Russia, and people around the globe are by now glued to their radios, televisions, and laptops, living each save, each goal, every triumph, every loss. Excitement reigns, but at the same time, some are also turning their thoughts to the future, to 2022 and beyond. Organising and hosting an event on the scale of the World Cup is a massive undertaking, as FIFA, the governing body of world soccer, the OECD, and even the voters of the Swiss canton of Valais, know well.

On 30 May, the Organisation for Economic Co-operation and Development (OECD) Council Recommendation on Global Events and Local Developmentwas endorsed by ministers at their annual meeting in Paris, just a couple of weeks before the World Cup opening ceremony in Moscow, and as the French capital begins its preparations to host the Olympic Games in 2024.

The OECD document offers a blueprint for events of limited duration but global reach, which can include exhibitions and cultural festivals as well as major sports competitions. Hosting a major event can be a catalyst for social and economic betterment, and policymakers have a role to play in making sure such events bring value for money and that their impact on local communities and the environment is properly and openly assessed. The OECD Recommendation, which is the first of its kind, can help, the intention, as Secretary-General Angel Gurría said, being to encourage “sensible and efficient investment” that contributes to job creation and transparent management. Organisers need to ensure that the benefits are shared “before, during and after the events”.

The staging of World Cups and, in particular, the Olympics Games, has been problematic over the years. Potential host countries have felt pressure from their own public, who want to be allowed to participate in deciding whether or not to host such events. A lack of public support led Boston to withdraw its bid to host the 2024 Olympics. And in June 2018, the canton of Valais rejected, once again, a proposal to bid to host the Winter Olympics. Switzerland might be the home of the International Olympic Committee, but its citizens–or at least those in Valais–want no part of the games. The slogan of those opposing the bid was “three weeks of fete, 30 years of debt.”

The trend could continue, for as Chak Hee Anh, director of global affairs at the Korean newspaper JoongAng Ilbo, noted during OECD Forum 2018, an international public policy debate which takes place alongside the ministerial meeting, “more and more, we are seeing countries reconsidering the notion of having these big, sometimes, disruptive events.”

Why? Firstly, cost. The Olympics and the World Cup do not come cheap–and their budgets have a tendency to inflate along the way. “It’s quite easy to spend more money than you are supposed to use,” explained Cesar Cunha Campos, director of FGV Projetos, speaking at the OECD Forum. For the 2016 Brazil Paralympics and Olympic Games, for instance, “the bidding process in the Paralympics was US$400 million and we spent US$2 billion; for the Olympics US$17 billion and we spent US$29 billion. So, you have to be careful.”

The official price tag going into the 2018 World Cup in Russia is US$11.8 billion, already over budget, though some estimates put the figure as high as US$14.2 billion, which would make it the most expensive World Cup ever. But these numbers are dwarfed by the costs of the 2014 Winter Olympics in Sochi and the Beijing Summer Games, which both exceeded US$50 billion. The 2022 Qatar World Cup could smash all records.

Then there’s the return on investment. The histories of both competitions are filled with stories of projects gone awry. The 1976 Montreal Olympics checked all the boxes for ill-conceived infrastructure: the unnecessary Mirabel airport, now used only for freight, and an over-ambitious Olympic Stadium, nicknamed the “Big Owe”, which is hardly used and still soaks up public money. The 72,000-seat Mané Garrincha stadium in Brasilia, which cost around US$500 million to renovate for the 2014 World Cup and the 2016 Olympic Games football tournament, is not used by any elite soccer clubs today and its parking lot has become a garage for city buses.

For the 2012 London Olympic Games, the city promised to build a new, dedicated athletics stadium, despite the likelihood of limited demand for one afterwards. The legacy committee now rents the London Stadium to West Ham, a Premier League club, which is demanding conversion of the athletic facilities into a more football-friendly arena.

Local government heads worry that they will not be able to afford the upkeep on the shiny new arenas. Russia has spent between $3.5 billion and $4.7 billion on stadiums for its 32-team competition. This includes $500 million to convert the Fisht Stadium in Sochi, built at a cost of US$770 million for the 2014 Winter Olympics. What will the return be? In his annual televised phone conversation with heads of regional governments at the start of June, President Vladimir Putin said the stadiums should be “self-sufficient”, though he explicitly ruled out using them as flea markets, a repurposing that happened after the collapse of the Soviet Union.

Another issue is the increasing size of World Cup–2018 might be the last one with 32 teams participating. FIFA has long planned to expand the competition to 48 teams for 2026, giving more spots in the finals and more money to its member nations. At their pre-World Cup congress in Moscow, FIFA members deferred a decision on whether to expand the 2022 competition to 48-teams. They accepted the recommendation of the inspection team not to go with Morocco’s bid to host such a large World Cup in 2026, voting for a joint United States-Mexico-Canada ticket instead.

If the World Cup is now so big that even the US cannot host it alone, where does it go from here?

Nor are cost and size the only problems to address. There is responsible business conduct to uphold too, not least regarding labour standards, which have been seriously questioned in relation to Qatar’s world cup preparations.

The OECD recommendation, which calls for labour rights to be respected, is a positive step. The tool can help host countries, regions and cities, as well as international event partners, to better design large-scale events shaped to local needs and with people at the heart, and generate long-term benefits. By improving on the design and implementation of such events, by managing their legacies thoughtfully, we can focus on what brings us together in sport, what is shared when a match kicks off or a race begins.

As French Paralympian and OECD Forum participant Michaël Jérémiasz reminds us, these events are “much more than just a few weeks of sport”. They are an opportunity to inspire and be inspired, to “share what humanity can be”.

The Writer works for the OECD

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By Martin Zwilling

After many years as a mentor to aspiring entrepreneurs, and an occasional angel investor, I realized that new venture founders all seem to stumble on similar pitfalls, despite my best efforts to steer them to smoother routes. Of course, I would never say never, and passion does overcome many obstacles, but it still pays to learn from a few key lessons of others before you.

You may not be ready to absorb all one-hundred insider rules I found in a new book, Straight Talk For Startups, by Randy Komisar and Jantoon Reigersman, so I’m offering here a selection of my top ten from their list, adding my own insights. For the rest, these authors come with a wealth of startup and venture capital experience, with real-life examples to back up all their rules:

Starting a venture was never easier – succeeding never harder. In the early days (20 years ago), most new e-commerce businesses, for example, cost a million dollars to set up. Now the price is closer to $100 if you are willing to do the work yourself. But “easier” brings more new startups, with more competition determined to rise above the crowd.

Aim for an order-of-magnitude improvement. Make sure your idea has real customer value, a large opportunity, and a sustainable competitive advantage before you start. “Nice to have” or a ten percent cost advantage alone doesn’t make it these days. To get investor and customer attention, you need a tenfold improvement in cost or function.

Know your financials and interdependencies by heart. Most of the tech entrepreneurs I know pay minimal attention to the financials. They assume that “if we build it, they will come.” Early investors expect you to explain five year revenue projections, gross margins, and break-even. At rollout, you need to add cash flow and customer acquisition.
Net income is an opinion, but cash flow is fact. A large customer like Walmart will provide a large net income, but can easily kill you with cash required for inventory and receivables cycles. I recommend that every startup CEO sign every check personally, and be miserly in managing payables and expenses. Out of cash means out of business.

Don’t accept money from people you don’t know well. Many entrepreneurs argue that the color of the money is the same from all sources. They fail to realize that investors are like spouses, requiring chemistry and a complementary win-win relationship for long-term success. Take your time courting investors, and get views from peers and advisors.

Avoid professional investors unless you absolutely need them. If you don’t want a boss, don’t look for an investor, since they can be the toughest boss you ever had. Fund it yourself and grow organically to avoid the cost, pain, and time of finding angels or VCs, and keep control and equity for yourself. Over ninety percent of startups today are self-funded, or use only friends and family.

Don’t let a short-term fix become a permanent mistake. Crowdfunding, for example, may seem like a good fix for initial funding, but usually precludes professional investors later if needed to scale the business. The same is true if you accept unusual valuations or term sheet options to close a specific deal. Every investment has long-term implications.

More ventures fail from indigestion than starvation. Raising too much money can be a curse. Early ventures with too much cash lose focus and are reluctant to pivot. Founders should ask for funding in stages, as the venture builds momentum, decreases its risks, and increases valuation. Hungry entrepreneurs are always the most creative.

The founder should choose the best CEO available. Most often, new venture founders are the solution builder, visionary, and the first CEO. Yet many don’t have the interest or experience to scale the business. Don’t let your ego prevent you from stepping into a better fitting role as the business evolves. It’s more fun than failing or being pushed out.

Choose an exit strategy – don’t wait for it to find you. The best exit for most startups these days is to be acquired by a major player, rather than going public (IPO), or staying private too long. It’s best to start early in courting potential acquirers or investment bankers, rather than waiting for them to swoop in and knock you off your feet.

In addition to these rules, I also want to second the cardinal rule that every entrepreneur needs to be able to explain why the proposed new venture is important to them, to others, and worth all the blood, sweat, and tears that will likely be involved. Only then will I believe that you that you have the potential to beat the odds and change the world, and have some fun at the same time.

The Writer is a veteran startup mentor, executive, blogger, author, tech professional, and Angel investor. Published on Forbes, Entrepreneur, Inc.

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