Ross Kennedy of Seatsub talks about the idea behind his new startup; how to get honest feedback on your website; and why offshore software development is not a great idea for every startup.
How did you come up with the idea behind Seatsub?
Like our CEO, Scott Tachiki, I was a season ticketholder a sports team. While having a beer with a management personnel from one of the teams I joked to him I was one of his best customers because I kept renewing my season tickets but I rarely used them. I was shocked when he replied that I was one of his worst season ticket holders. “Wait” I responded “I renew my season ticket plan at the first of every year, pay in cash well before the season starts, and don’t show up. How do you get better than that?” He said, that’s the problem – you never show up. Teams make money off the parking and the concessions which include things like merchandise sales and food and beverage.
So why didn’t I go to the games? The real problem is finding someone to go to the games I can’t make. Look at the pain you have to go through. You have to make phone calls and send emails to find someone to take over the tickets if you can’t go. Rarely does anyone ever get back to you right away because they have to check with their families before accepting and you can’t have a short phone call with your friends and family, even if you know in the first 30 seconds of the call that they don’t want your seats. After you’ve done that a few times, and gone through that process you just stop trying. In a season there are 72 games not counting the post-season playoffs that you have to fill.
So I set about trying to solve those challenges and remove the barriers that people face. There are social networks that help people get connected, but they don’t solve a real problem or create a tangible value. I wanted to create value for the consumer. And there are literally hundreds of ticketing companies, but no one is focusing on actually driving attendance.
So how do you add value to the consumer?
We save the consumer time and allow them to reconnect. If you’ve ever owned season tickets then you know what it’s like to look at a drawer full of unused tickets at the end of a year. We also found that in many cases up to 90% of season tickets are owned by companies. The tickets are bought with the intention of giving the tickets to clients, employees, and others. So at the end of the year, if the tickets aren’t used someone gets in trouble for not having found enough people.
How much is a fan in the seat worth to the team – buying concessions, etc?
It varies but on average for AAA baseball it’s $10 to $12 per ticket holder. That’s not including advertising but only parking and concession sales. For first time goers they’ll probably buy souvenirs pushing their value up by substantially more.
For the teams this makes incredible sense. We’re driving people that would otherwise have not attended. We’re also giving them market data that helps them drive their future season ticket sales and figure out more closely what their fans actually want and how they behave.
Our CFO, Franco Cirelli, formerly of the NBA, reaffirmed this approach to value creation by recounting efforts to improve the sports fan (i.e. consumer) experience.
What are the alternatives?
The top three are Stubhub, Craigslist, and eBay. Ticketmaster is trying to enter that market. They just acquired TicketsNow. But they focus on major league venues.
Is the system up and running now?
Yes. I’d be happy to give you a demo.
Is the website up?
Yes. But have you ever done something that you later found you weren’t good at? Well, writing the content for the website is like that for me. We’re remessaging it now. If you ever want truly honest feedback ask your brother. Mine wrote seven pages of feedback and it was only a seven page website.
How much does it cost to use?
It’s free to the consumer/fan and it costs nothing to setup for the team. We only take a share of the profit for customers that show up to the games. With minor league teams the fans in the stands are much more important than the major leagues, because their revenue comes primarily from the fans. The majors get ad money from TV viewers.
Do ever see this growing into a full-blown community with discussion boards, a store, etc?
We’re still learning. I heard from a customer the other day that when they go to the game they like to buy their concessions ahead of time. We could take orders over the web and have it delivered to them in the stands. The community side of the house already has a number of systems out there – Facebook, MySpace, and more, but do we want to play in that space?
Ever thought about other venues such as symphonies?
Yes. For example, do you know what the announced attendance at the University of Utah Womens Gymnastics is? On average 12,000. There’s many other venues we could pursue. Also, think about a golf course. Tee times could be organized and monetized this way.
How much have you raised so far in funding?
That’s not a public number right now.
You don’t use offshore software developers? Why?
I’ve gone off shore two or three times and had bad experiences. Besides, with the tight timeframes we are working on, I need immediate communication with the team. If we have it overseas it takes 12 hours or more to get a change done.
The other challenge is that should we ever go down the acquisition route, our buyer will likely have requirements around the quality of code. I was privy to an acquisition in the past where they went through the code line by line. And of course there is always the worry around intellectual property protections.