about this episode
Hello everybody and today on This Week in Startups we’ll teach you how to get the best price on sports and concert tickets. Russell D’Souza is here from SeatGeek, he was one of the TC50 from 2009. A brilliant entrepreneur. All that and more, right now on This Week in Startups.
Hello everybody, hello everybody and welcome to the show. Russell D’Souza is here. Russell I met you in 2009 when you pitched to be one of the TC50 companies. –RIP– TC50 will be relaunched as The Launch Conference.
You and your co-founder applied to TC50 and were accepted. Launched at the conference. You got incredible reception and have done great since then.
JC: What was it like applying to TC50 and what was the process? What impact did it have on launching your company, that had 2 guys at the time?
RD: When we look back on the good decisions we’ve made as a company, I’d say a top 5 decision was to do TC50. That’s how big of an impact it had.
[Russell describes the process for applying to TC50 and some of the thoughts and feelings he had during the process. Russell talks about the number of rounds and who he met with. He talks about the judging process and how tough it was. He discusses some of the tough questions from the panel and that he didn’t answer the questions well.]
JC What happened? Why didn’t you respond well? Did you just freeze up?
RD I think we didn’t get enough criticism along the way, and we were unprepared to answer those questions. Paul Graham really pushes you. I think we could have been one of the top 5 company, but our failure to answer effectively really twisted the outcome.
[Jason and Russell discuss the challenges of being prepared to launch and answer the tough questions.]
JC: So you’re saying that when you’re a young startup, everybody being so nice can be detrimental?
RD: I just think you have to be so crisp in the way you answer when you’re onstage. You’re a lot slower onstage.
[Jason and Russell talk about the SeatGeek preparation and what could have been done differently.]
JC: What tips do you have for answering tough questions?
RD: I think you need to be prepared and hold your ground a little bit. Don’t let them push you around.
JC: Sometimes it’s like an interview. It’s as much about how you respond as what you say.
RD: You’re going to go back and forth with an angel, but with the press you get one shot.
JC: Did you raise any money?
JC: The incubator gets you exposure and credibility.
RD: Absolutely. We met most of our investors during that time.
[Jason and Russell discuss the incubator process, demo days and funding.]
JC: How much did you raise?
RD: We raised 1M dollars.
JC: That gives you 12-18 months of runway?
RD: Yes. We hired a team and we have things going. We’ve been conservative in our people growth. We wanted to be sure our runway wasn’t the same as it was pre-funding.
JC: How do you balance adding people quickly, but not spastically?
RD: We tried to evaluate who could add value. We knew we needed to hire a business development guy.
[Jason and Russell discuss hiring and some of the strategies of getting key people (i.e. recruiting, applicants, age) etc. They also discuss the difficulties of hiring developers]
JC: A mediocre developer takes the place of a great developer. Somebody who is average is taking the place of someone who is good. And someone who is good is taking the seat of someone who is great. What kind of incentives do you need to offer as a startup company to get a good biz dev guy? Is it 5%? 1%? 1/2%?
RD: I don’t know what the range is generally. I think Mint is the one who put out some information about startup hiring. If you talk to VCs you get an idea of generally what the typically is paid out for those early employees. We just want to be standard. The VC is a good place to get that data because they have so many portfolio companies they work with.
[Jason talks about the value of getting incredibly detailed statistics on compensation from Sequoia Capital, which is powerful information for hiring and negotiation]
[Jason and Russell review the SeatGeek site and discuss the premise and the progress of the offering. SeatGeek is polling from all the big secondary ticket markets. They are RazorGator, StubHub, TicketsNow, TicketNetwork and eBay. Once they have the information, they use math to find the best deals. Jason and Russell drill into the INCREDIBLE UI for evaluating the best deals.]
JC: Interviews like this just don’t exist without great sponsors like GoDaddy and .CO. Go tell them how much you appreciate them by tweeting thank you to them.
[Jason resumes the analysis of the site. He discusses how far the site has come and how long it’s taken to get there. Product manager founders are so valuable and how it bridges the gap between product dev and development. They also discuss the event layer of metrics and how the value of the event effects ticket prices. They also discuss the forecasting algorithm to determine when to buy.]
JC: How well does the forecasting algorithm work?
RD: The algorithm we launched with was about 73% accurate depending on the event type. It’s now gone up to about 80%. There’s a limit there. If A-Rod is going for his 600 HR, the prices are going to rise in a way we can’t model.
[Jason and Russell discuss the factors that effect ticket prices. They also discuss the inverse relationship when a ticket is REALLY popular. Sometimes those who are going to buy, buy early, which makes prices act differently, usually dropping. They discuss some of the key factors of different event types. They talk about exits in the airline space and the potential for a big exit in the ticket purchasing space.]
RD: The average purchase on the site is $300. 2.4 tickets.
JC: You get the affiliate revenue?
RD: We make between 8-14% of the ticket price. That’s way bigger than the airline space. Your take in the airline space is $1-2 per ticket. Ours is much higher.
JC: That’s extraordinary. So if Mahalo wanted to do a partnership with your site. How would we do the split? I would do Mahalo Tickets powered by SeatGeek or something?
[Jason and Russell discuss how SeatGeek does affiliate programs.]
JC: You guys have raised just over 1.5M. Are you profitable yet?
RD: Not profitable yet. But we could be profitable if we wanted to, but we want to be a huge company and that requires us to push back the profitability.
JC: With the FareCaster getting bought by Bing, your investors must be excited. Do you raise a big round and buy ads, or do you keep incredible focused and look for an exit?
RD: We don’t even think about acquisition. We don’t want to build something with the idea of flipping it. I think there are other ways to get more users without buying a big round of ads.
JC: Does competition keep you up at night?
RD: When people use our product they’re amazed. Our value is around the incredible historical data we have to make predictions. If you think about who’d really going to dive into this, they’re probably going to make one for flights first.
JC: What’s the hook that get’s people to come?
RD: I think it’s the UI that helps me not feel ripped off. If I can remove people from feeling ripped off, mission accomplished.
JC: So having that protection is an unspoken value proposition.
RD: Absolutely. That’s how you go viral. That’s how you get talked about.
[Jason talks about the pain of buying tickets, especially for kids events]
JC: Who’s on the board? How do you fend for yourself?
RD: On our board we have 4 people. What’s interesting is that the investors fully admit that we know the problem and they are there to support us. They give us advise and off to help. We’re very lucky. It’s never ‘Go do this!’
JC: Do you ever feel like you want a little more coaching?
RD: It’s there if we want it.
[Jason and Russell talk about the environment for raising money and M&A, and how to raise money while running the company]
RD: Constraint breeds creativity. (Marissa Mayer).
JC: Russell you’ve been a great guest. Continued success. Everybody go try SeatGeek.com the next time you have a need for tickets.