The Kayak of Events Ticketing
Russ D’Souza and Jack Groetzinger hope to disrupt the events ticketing industry with their start-up SeatGeek, a ticket aggregator that saves users time and money, similar to what Kayak did for airline tickets. After graduation, the Dartmouth classmates landed management consulting jobs in Boston, a town that's serious about its sports teams. "Everyone is fanatical about sports and every game would sell out," recalls D’Souza. "I’d constantly search for tickets and there was no easy place to buy, since every site had different inventory and different tickets."
So in 2009, he and Groetzinger decided to create SeatGeek, which they developed at Dreamit Ventures, a Philadelphia-based accelerator program similar to TechStars. The idea was to build a platform where users could search for the best tickets from more than 50 event-ticketing sites such as Stubhub, Ticketmaster, and eBay. Interactive maps and an algorithm called Deal Score highlight the best values according to users’ priorities (such as price, seating, dates, etc). When a user clicks on an available ticket, the link takes them to the checkout page on the ticketer’s site. SeatGeek takes 10 percent of the transaction. New York City-based SeatGeek, which now has 23 employees, hit revenue of $5.2 million last year and has raised $4 million from several investors, including Ashton Kutcher’s VC firm.
"The ticket industry is backward technologically," says D’Souza. So it wasn’t as difficult as one might think to get big-ticket companies to partner with SeatGeek. "They make 25 percent in fees, and pay us 10 percent of that," he says. "But that’s way better than any other channel they use to get traffic, like billboards or Google ad words. Every sale we generate is profitable for them." The tiny, anonymous company quickly became a huge lead generator, racking up revenue of $1.5 million in 2011 and spiking to $5 million last year.
But scaling a company is always difficult. "Getting more and more people to the site is a huge challenge for any company and there’s no silver bullet," says D’Souza. His solution: partner with a company that was already engaging a huge fan base. D’Souza and Groetzinger decided to shoot for the moon and managed to land a meeting with Eric Winter, head of Yahoo! Sports Ecommerce.
Winter says he found the product "sleek and more intuitive than others," including the ticketing partner that Yahoo was using at the time. But he made his final decision based upon his gut impressions of Groetzinger and D’Souza. The result of the partnership: Winter says that SeatGeek’s "killer product produces for Yahoo at a level that is no less than 25 times greater than our previous partner." D’Souza says that Yahoo is now "our largest and best business partner."
While SeatGeek’s primary focus has been on tickets to sporting events, the founders are now targeting the music industry as well. They’ve raised $4 million in capital, mostly from angels and small venture capital firms, including A-Grade Investments, founded by Ashton Kutcher and Guy Oseary. "We would have had very little luck meeting the right people [in the music industry] were it not for Guy," says D’Souza. Some key introductions prompted the partners to start building a tool that will allow artists to showcase their upcoming events on Facebook and to push event notifications to fans, who will then (theoretically) buy tickets on SeatGeek.
D’Souza says he’s not too concerned about competitors at this point. He’s got most major ticketing companies as partners and while some smaller player have tried to copy SeatGeek’s business model, he says that "we’ve managed to create a huge amount of space between us and the nearest competitor."
The Kayak of Events Ticketing
What Kayak did for airline tickets, Russ D'Souza and Jack Groetzinger hope to do for the events ticketing industry with SeatGeek.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.