Meow Wolf…

Meow, What?

Meow Wolf!

Meow Wolf is one of the fastest-growing companies in the burgeoning field of immersive entertainment movement. The company is also a B Corp doing phenomenal triple bottom line work for artists, community and the environment while providing financial returns for investors.

Meow Wolf fully embraces leveraging the power of the marketplace for good.

Genesis

Meow Wolf started in 2008 as an arts collective of young creative individuals in Santa Fe, New Mexico. Santa Fe, known as “The City Different” for over a century, is rich in history and a globally recognized art market, reported by some as the third largest in the US.

Santa Fe is known for its artists, galleries, and numerous cultural events but the city is also a challenging place for new artists, particularly young ones, to gain a foothold. The capital of New Mexico, population 83,000, has one of the lowest proportions of citizens between the ages of 18 and 35. The city also has the highest cost of living in the state, with limited professional opportunities for creative young professionals.

The six cofounders of Meow Wolf came together in their 20s to figure out how to make a living as artists. They took money out of their own pockets to rent their own gallery. They figured out by working together they could achieve greater things. They put on art shows and hosted alternative music. Through collective effort, they reached a larger and wider audience. The goal was to attract sufficient audience to foster more creative skills and bolster awareness of younger artists in the Santa Fe community. Success would mean providing an example and anchor for other young artists to stay in Santa Fe.

Meow Wolf began as a fully volunteer effort. Over the course of many projects, the core team figured out how to work together. A fundamental tenet of this emerging DIY (Do It Yourself) group was “radical inclusion.” If you showed up, had something to offer, and put forth an idea you wanted to lead, you were in.

This practice led to more and larger-scale invitations. Meow Wolf became an epicenter of creative activity in the region. In 2011, the collective of approximately 30 artists was invited to create a full-scale installation in Santa Fe’s Center for Contemporary Arts. The Due Return, an “inter-dimensional ship settled on an alien landscape,” focused attention on Meow Wolf as producers of a new kind of art—a collaborative form singular in character in which the uniqueness of each creative person is also maintained.

Can Artists Get Paid?

As the years went by, Meow Wolf tried different legal entities in search of a sustainable operating model. The last one they attempted was to form a business.

The six cofounders had stayed on board over the years and learned how to put together a business plan with assistance along the way from local supporters. Collaboration with the nonprofit organization Creative Start-Ups propelled Meow Wolf forward as a finalist of a new business competition, and that entity became one of Meow Wolf’s first investors.

The idea was a new kind of art exhibit: an entertainment center with 22,000 sq. ft. of seamless spaces of creativity linked by an explorable sci-fi narrative. Think children’s museum meets funhouse meets Disney. Thanks to the landlord patronage of George R.R. Martin of Game of Thrones fame, Meow Wolf acquired and refurbished a derelict bowling alley in a warehouse district far from the glitz and glamour of the tourist-beloved downtown.

Meow Wolf put forward a debt investment offering and raised private investment, ultimately bringing in just over $1.5 million. Century Bank, a local institution, also provided a loan, once the group rounded up sufficient guarantors. An early campaign via Kickstarter, another B Corp, propelled the group forward and brought media attention. Government funding and in-kind trade also contributed funds to get the doors open.

As a result, artists and creatives came. More than 120 people worked for minimum pay. In exchange, the company started a profit share of more than $1 million to compensate builders through profits at the location. And, then…it happened!

The Santa Fe site, named House of Eternal Return, opened its doors in March 2016, to immediate acclaim. The first-year business plan called for 125,000 visitors. That was reached in about 100 days. More than 400,000 visitors came through the doors in the first year.

From this success and revenue, Meow Wolf was able to offer sustainable living wage jobs to the artists and creatives who built the project. Dozens joined the company for full-time salary and benefits; health insurance for the first time in their lives. The company ethos and structure allowed the artists to keep their creativity and collaboration flowing.

Today, House Of Eternal Return has seen more than one million visitors from around the world. The collective has been awarded the 2018 New Mexico Governor’s Award For Excellence In The Arts, a 2017 THEA award for Outstanding Achievement, and has been featured in The New York Times, PBS NewsHour, VICE, and The Los Angeles Times, as well as many other global news sources. The space was also named by Yelp, alongside true legends, as a top ten venue to see a show in the United States. A documentary about the journey, “Meow Wolf: Origin Story,” premiered in September 2018 and will be available for streaming soon.

Birth of a Movement

As of August 2018, Meow Wolf employs more than 350 people and features over 60 local New Mexico artists in the gift shop. The location features top food trucks, a music venue, full café and bar, and education center. Revenues from the last 12 months are nearly $12 million, with profit margins approaching 40%. This is a booming business.

The company has had otherworldly social media success. Meow Wolf is the most “Instagrammed” place in all of New Mexico and the #1 family attraction and has more than 315,000 Facebook fans and near half a million website views a month from around the world. These figures rival nationally renowned cultural institutions and in cases of engagement percentage, surpass them.

The company is committed to its principles. To document that commitment, Meow Wolf converted its legal designation into a Delaware Public Benefit Corporation and has certified as a
B Corp, confirming its dedication to supporting creatives, community well-being, and a sustainable environment. These values are documented in the company’s 2017 Impact Report, reflected in its installation of solar power, minimal facilities water use, and comprehensive, family-wide employee benefits.

In 2016, the group started the Annual Meow Wolf DIY Fund, which seeks to give back to artists and art collectives around the US that also seek to create positive community impact around collaborative processes. In 2017, the fund supported more than 100 artist spaces and projects giving more than $200,000. The 2018 Fund is inviting others to contribute via Indiegogo so that the company can give even more. Artist collectives can apply online.

Experience the Future

With the exponential success of the Santa Fe location, the company is now expanding with new large-scale immersive locations set for Las Vegas and Denver in 2019 and 2020. Other cities will be announced soon.

From a financial perspective, Meow Wolf’s growth—first fueled by interest from “pure” impact investors supporting the early days—now attracts the attention of mainstream investment institutions. The company’s goal is to provide market rate returns for investors.

Meow Wolf has funded its growth through a variety of equity and debt investment vehicles. The company has built solid relationships with aligned investors and is interested in finding more. Early debt investors are being repaid punctually and with strong returns. In 2017, Meow Wolf launched an investment crowdfunding campaign with the platform WeFunder, a B Corp. A single Facebook post was all Meow Wolf needed to raise $1 million in two days, the fastest US equity crowdfunding campaign known at that time. Additional raises in debt and equity are planned shortly.

New projects are underway to create an innovative portal for intellectual property. The company will offer a place online for fans to find new content and new experiences. Meow Wolf is developing engaging offerings with strong partners like E-Line, a socially responsible gaming company, also featured in this publication. New great things are also in the mix with VR/AR (virtual and augmented reality) with an industry leader Magic Leap. Meow Wolf is also visiting Los Angeles and elsewhere to form entertainment industry partnerships and creative programs.

All About Community: People & Place

Another core practice is to support artists if they have entrepreneurial endeavors. For instance, the Experience Tube—a long-time dream of Meow Wolf artist Nick Toll—has been the subject of global viral attention. Kathy Lee and Hoda tried one as a holiday gift last December on The Today Show. Also, a young man named Nico Salazar, who graduated from college in Santa Fe, took his signature artistic style and launched a popular clothing line called Future Fantasy Delight.

Meanwhile, the music venue, located in House of Eternal Return, which brings nearly 100 performances to Santa Fe each year, fosters entertainment in a city where there is little nightlife after 9:00 p.m. The venue provides another source of cash flow to the creative economy: solid paid gigs for performers.

While immersive exhibition experiences and storytelling remain the flagship of Meow Wolf’s collective goals, you can also count community engagement, ethical philanthropy and strengthening the local economy as key and sustained efforts to engage a wider circle of talented young people and community organizations.

Meow Wolf took a stand to remain in Santa Fe by building a headquarters here. Thanks to funding from State of New Mexico, the City of Santa Fe, and the bank BBVA, the company was able to acquire a manufacturing center that had been closed by industrial equipment maker Caterpillar a few years ago. The positive place-making that the company provides to a neighborhood is extensive.

The mission of Meow Wolf is to foster community and support emerging artists. With the success of House of Eternal Return, the dream has expanded. The company seeks to be the largest employer of creatives in the world and a billions-dollar B Corp within five years. The business plan will continue to “do well by doing good.”

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Note: Certain contributors to this report may represent asset managers or specific investment opportunities. Their inclusion is not intended to be, nor should it be construed, as a recommendation or endorsement of their products or services by Cornerstone Capital Inc. The views expressed by external contributors do not necessarily reflect those of Cornerstone Capital Inc. While Cornerstone Capital Inc.’s “Creativity & The Arts” publication of this material is unrelated, please note that an employee of Cornerstone Capital Inc. is a direct investor in Meow Wolf.