Laurel: I’m here today with the founder of Seatgeek, Jack Groetzinger. Welcome!
Jack: Thank you, thanks for having me.
Laurel: Yeah, we’re really excited to have you. So you started in 2009 and you’ve come a long way baby. (both laughing) The purpose of our podcast is to talk about how to get to and past and beyond the Series A, because a lot of companies struggle to even make it to Series A.
So let’s go…let’s turn back time to when you were younger and more innocent and tell us a little bit about your thinking around 2009 and whether or not you thought you’d be where you are today.
Jack: Yeah, I don’t think we ever imagined that we’d still be doing the same thing six years later. We started Seatgeek in 2009 when the economy just collapsed and it was actually a pretty difficult time to raise the seed round, so, we were definitely a little desperate back then.
And our whole sort of strategy was to focus on something that we thought differentiated us and we chose data specifically, as sort of like something that the ticket market lacked. We sold sports and concert tickets. We tried to build pretty narrow, but really strong data product for people who wanted to buy and sell tickets.
Laurel: So let’s go back in time to what the landscape looked like at the time. I would say…were most people buying their tickets online at that time? What was the market like?
Jack: Yeah, for sure, a lot of people were, I don’t think as many as today, mobile wasn’t really even a thing yet at that point and that’s been a huge facilitator for the ticket industry. I think back then ticketing was sort of an intermediate stage, where there were real marketplaces where people were transacting, but there was also a lot of commerce happening, it was like Craigslist that was a lot more informal.
Laurel: Was the story something that people…that was resonating with investors at the time? Did people get it?
Jack: Yeah, I would say, give us a B for people getting it. I mean it wasn’t a total slam dunk ticketing is a tricky industry and there was a lot of companies that failed. We tried to put a different spin on it.
We thought that historically there hadn’t been nearly enough transparency and sort of users had been sort of disempowered, rather than empowered and we would try and empower people and really act almost like a consumer advocate and use data as the primary way that we tried to accomplish that.
Laurel: Yeah, so what was your background that made you uniquely suited to start in this company?
Jack: I don’t know if I was uniquely suited, but prior to Seatgeek, I started Seatgeek with a guy named Russ, who I’d known for over a decade, we went to college together. And prior to finding this company, we did a different start up together, a company that we called Scribnia, that we had sold in the middle of 2009 and the purchase agreement was such that we didn’t have to work for the acquired, it was kind of a clean break.
So we pretty immediately had the opportunity to do something new together and go right into Seatgeek, mainly because it was something that we were both familiar with through our own sort of personal experiences, buying and selling tickets.
We both lived in Boston at the time and all the Boston sports teams were blowing up…so we almost sort of became…we moonlighted as amateur brokers, so to speak, we were pretty blown away by how bad the experiences were online back then.
Laurel: So it was a problem that you wanted to solve for yourselves.
Laurel: And Scribnia, what was that problem that you were solving?
Jack: It was a recommendation agent for blog content, so very different. We started it back when blogs were a pretty novel thing and the idea was that we would help users identify by the content that they might like to read.
Laurel: Has that still survived?
Jack: Yes, in a different form. It was bought by an ad network and is now…they’ve sort of shifted it to be a, more of a B2B product, for bloggers and other content creators, but yeah, it’s still around.
Laurel: Most of us write business plans when we’re thinking of starting a company. Did you write one for Seatgeek?
Jack: No, we didn’t.
Laurel: So what was it? Was it a PowerPoint? An executive summary? What was on that first…?
Jack: We didn’t really have the need to write anything because we weren’t presenting it to anyone first, so the first thing we did wasn’t, you know, create a document…it was just beginning to create the product itself, which took months, a lot of work and that effectively became the closest thing we had to PowerPoint.
Laurel: Okay, so you started the product and then…you had that luxury because you had the money that you got from selling Scribnia?
Jack: Yeah, we did an accelerator, it was called Dream Adventures, it’s still around today.
Laurel: Oh, yeah, right.
Jack: So that helped money-wise as well.
Laurel: Okay, that helps a lot. So there you are 2009, you’re building your product, you’re going to market…when did you get it to market?
Jack: We launched in September of 2009.
Laurel: Okay, launched in September of 2009, by 2011 you were making…you were bringing 1.5 million in sales?
Jack: I don’t remember, but that sounds right. If you read that online, it’s probably true.
Laurel: I read it on inkman. So you’re bringing in 1.5 million in sales, I’m presuming that was in sales and not in revenue for the company, because you guys take, you took a 10% transaction fee at the time.
Jack: Yeah, so it’s semantics, we don’t take a fee, per se, rather the seller basically pays us a marketing commission, but the prices you see on Seatgeek are the same prices you would pay if you bought elsewhere.
Laurel: Right. Okay, so 1.5 million in sales in 2011, 5 million in 2012. That’s pretty good growth.
Jack: Yes, I’m thinking as you say that that those numbers are right, I honestly don’t remember, but if you read them online, they must be right.
Laurel: And then by 2013, you had raised 4 million dollars from the same people who had invested early on or…? What…who invested?
Jack: A little of both. The firm that led our series A was a seed fund called Founder Collected, a guy named David Frankel there led it. He’s amazing and he’s been a huge part of our growth and he’s been on our board since then, that was 2010.
They actually weren’t the firm that put in the very first money, that was a syndicate of angels, based here in New York that led our seed round, back in 2009.
Laurel: What’s the critical thing that made you and your company successful, if you had to look at the years you’ve been in business, how many total years have you been in business now?
Jack: Six and a half.
Laurel: Alright, so six and a half years in business and you’ve gone from zero in 2009 to…what are your sales today?
Jack: Annoying response, but we don’t disclose our current sales.
Laurel: You did to ink magazine. What am I, chopped liver?
Laurel: So if it was 5 million in 2012 and…
Jack: It’s hundreds of millions today.
Laurel: And those are…those are sales or those are transactions or the net after the transaction or the fees or whatever?
Jack: The former.
Laurel: Okay, so hundreds of millions of dollars in sales, you started in 2009, what do you think is the critical thing that made you and your company even survive for six years, do this well, anything?
Jack: Focusing on our product, caring about making it amazing beyond everything else.
Laurel: I mean, everyone says that, like our product is so great, we focused on the product, but what…break that down for me a little bit, what does that mean in day to day terms, in tactical terms?
Jack: One manifestation of that is making seemingly irresponsible decisions at the expense of the product, so we didn’t do “marketing” for three or four years at Seatgeek, which is, you know, sort of think about the basics of a company, a startup, that’s a pretty core thing. We just ignored it.
We didn’t have our first full time finance person until after we’d raised over 100 million dollars. And I think a lot of those decisions, in isolation were potentially bad decisions, because we…I’m sure the current finance team would appreciate if we had been closing our books in an airtight way for six years, up to this point.
But I do think that it allowed me and everyone else at the company to focus exclusively on the product itself and you’re right, everyone says they have a great product. I’m bias, ours is better and we care about it more, I think there’s lots of little ways that manifests itself.
Laurel: Well, let’s talk about, let’s talk about what that looks like in the office every day. So in my office, when I was running my company, caring about the product meant huge attention to detail, you know, I would be horrified if there was a typo on the site, I wanted to make sure that whatever we did…site changes, we did them on the weekends so that it didn’t disrupt the user, I mean, tell me, what does it mean for you to focus on the product?
Jack: I think its inherently a little bit qualitative and hard to nail down. One way it manifests itself for us is most people at Seatgeek have a virtual machine with the Seatgeek app running locally and are committing code to it on a pretty frequent basis. It’s not like someone who isn’t on the marketing team isn’t going to be re-reading our API, they’re probably going to be making a more superficial change, like changing some copy.
But the fact that everyone is that close to what we are building and sort of has an understanding of how it works inside, communicates this culture of people being very close and caring pretty intimately about what the product is and what it needs.
Laurel: So everyone is running a virtual machine, when you say everyone, do you mean all the developers on your team or…?
Jack: No, like not literally is it everyone on the team, the majority of people at Seatgeek who are not developers are also doing that.
Laurel: Hmm, interesting. Is that something that you would recommend to other founders too?
Jack: I think for us it’s happened organically and that’s a good thing. I think if you force everyone to do it, it would probably fail out of the gate. We inherently try to hire technical people, even for non-technical roles, those sorts of people which are naturally curious and want to get their hands dirty a little bit, with software, often, so it sorts of happened naturally, as a result.
Laurel: Wait, so you hired people who wanted to have virtual machines running the software in the background, not the developer positions?
And when you hire that sort of person and then further, you have a good development environment that’s easy for anyone to setup and it’s well documented, then it only is natural that such a person would get the app running locally so that they could fool around with it and make changes and try to improve the site.
Laurel: Did anybody mess up?
Jack: Yeah, I mean it’s part of being sort of an immature software organization, with pretty good controls in place to make sure that, you know, somebody that started yesterday can’t take down the whole site.
Jack: Yeah, exactly.
Laurel: So how do you identify a tinkerer from a resume or from a cover letter? How are you finding these wonderful people?
Jack: It’s pretty, usually they’ll develop many ways by actually talking to them and hearing what they enjoy doing, but on a superficial level, you know, sort of in the job application/resume stage, it can often be as simple as looking to see if they have a personal website and if they have a pickup handle and if they do what kind of code is there…
Laurel: So you only hire people who have a good pickup handle?
Jack: No, not at all.
Laurel: No? I mean, I hear google only hires, you know, the top of the class maybe? Maybe that’s a good strategy though, just make sure they have some kind of…in their skills, the skills area of the resume they list certain…
Jack: Yeah, I don’t want to paint to extreme of a picture, I mean there’s plenty of non-technical people at Seatgeek, I just think it’s something that among the, you know…pick a number…the top six or seven values that we put a lot of weight on, technicalness and being really into what we’re building is important.
Laurel: That’s great. What’s the number one tip for managing your relationship with your investors? Let’s talk a little bit about the investor relationship, because that’s critical as you grow, right? Have you ever hit some headwinds in your company? Or was it always smooth sailing?
Jack: I never had a huge scary moment, I’ve been very fortunate, but knock on wood, I know I’m not supposed to mess up the audio.
Laurel: So you have certain core investors, right?
Laurel: Maybe, let’s say…
Jack: Dozens of people in our category.
Laurel: A couple of dozen people who…and how often do you interact with any investors on your calc table? In any way? Whether through email, phone calls, updates, anything?
Jack: Most of our interaction, most of my interaction with people on the board, which is a group of four or five folks, I’d say that’s the substantial majority of it…we will send out periodic updates to everyone who has invested and those we’ll usually lead through side conversations, we’ll periodically ask favors of folks, so if we’re recruiting for an important position, maybe we’ll ask if anyone knows someone who would be great.
I think that since we’ve just grown, we’ve gotten a little bit more sensitive about you know, having more investors and not wanting to wait and waste lots of people’s times, unless there’s actually something that we can add or they can add. So we’ve tried to reduce the number of updates we make, but make them a little bit more meaty.
Laurel: Let’s fast…lets go back a little bit in time, when you were more reliant upon your investors. Was there ever a point where you were reliant on their either advice or help or introductions or anything?
Jack: Far and away, I mean sure…people have provided valuable intros, but that pales in comparison to just these value of having a board of directors and having the cadence of board meetings every two or three months and I think that that sort of governance can seem like a pain in the ass, when you’re raising your first round, it’s actually unusually important and sort of strategically has kept us on the right path throughout the life of the company.
Laurel: Do you feel like the investors have been guiding you along the way?
Jack: Yeah, I mean it’s sort of a nurturing, you know, long term thing, so it’s not like, there’s like alright, “oh, I’m going to dispense advice now for 10 minutes” do these things, more like sort of a constant dialogue, you know, explaining where we’re at, explaining the things that we’re wrestling with getting the take of smart people on it and making decisions based on that.
Laurel: Have you ever worried about giving them some news or some, I don’t know, I found when I had a board, I was kind of afraid…I had Bill Actman on my board and I was afraid to A…bother him, because he was so busy with his hedge fund stuff. And B…just have him disagree, right? So confrontation.
How do you deal like…did you ever have a time where you felt like there was some news or some question in your mind and you didn’t want to ask their opinion?
Jack: Yeah, I know what you mean. For me, I think…
Laurel: It’s like mom…it’s like the relationship with your parents…like what was your relationship with your parents like?
Jack: It was, you know, different than the relationship with my board.
Laurel: I mean, I didn’t tell my parents anything, they knew nothing.
Jack: For me, I think, I just always want to make sure that we’re prepared and that…I think what’s the thing that I would fear, would be delivering bad news, but not having done the sort of background work to make it a productive conversation or to actually get interesting advice.
So for example, let’s say like, I have something bad happen and we were like told everyone, like “guys, guess what, something bad happened”, but maybe imagine like there were two or three pieces of data that would be sort of like key to knowing to sort of figure out what the path forward is…I want to have that data or I want to have whatever the next steps are, ready for everyone to jump right into.
Laurel: Rather than just announcing bad news, you’re saying you want to deliver it with some solutions, is that what you’re saying?
Jack: At least the framework, yeah. I mean I think bad things happen to every company, it’s ignorant to assume otherwise, but at least when bad things happen we try to do everything we can do to, you know, turn things around and that includes getting the advice of folks, but it also includes a lot of other work and if we’re able to do that other work quickly, before, kind of you know, disseminating things, then you know, maybe we do so we at least go into the situation with a perspective, rather than being like “shit, we don’t know what to do.”
Laurel: So if we had to turn this into advice for a founder, what would you advise? The founder has some bad news, how should he or she approach it with the board?
Jack: I would, you know, what I try to do is think of all the possible steps forward myself, do the research that I was going to do if I need to answer for myself which of those steps forward are best and then have it all ready to present, so you can sort of lay out, listen, there’s three options, this is sort of the background that you need for each, I think we should do A, but, you know, I’m curious as to what you guys think.
Laurel: Would you recommend building consensus in the background with one or two of them, so you always know before the meeting that someone is going to be agreeing with the solution you agree with or…?
Jack: That’s a good question. I think, me, I’ve always done that case by case, so if it seems like something where people might get particularly upset if it was sort of like presented…if it was like dropping a bomb sort of situation, then maybe, yeah, we’d chat about it beforehand.
Laurel: So we’ve talked to a number of founders who talk about the value of communicating with…internally as well as externally. So how do you communicate internally to your staff?
Jack: The…a lot of little ways…the one thing that I think is important, that we’ve always done is just to present, a largely unedited version of our board presentation to the entire company at, basically as soon as possible opportunity.
All team launches with the whole company every Thursday and we’ll typically have two to four people present and those are usually people who are employees, although not always. It will usually be people talking about something important that they worked on recently, something that they discovered, something that’s happened to Seatgeek or to them. And within those presentations, we’ll also present a largely unedited version of our board deck to the whole company, to sort of keep people in touch with the telemetric of the big things.
Laurel: I used to pop quiz my employees, it was a fun thing. We would give them the numbers once a month and tell them how we were doing, how we’re tracking…all of our metrics. And then we’d have a staff lunch and we’d ask them to write down questions…answers to questions to see how much retention there was for the numbers.
Because these were questions that people were asked on a daily basis from clients and customers. What are your, you know, what are your…what’s your growth, you know, how many website visitors are there? How many people are in the membership department, you know, in your membership, you know, that kind of thing. And it was interesting to see who actually paid attention and who cared. You learned a lot about your employees that way.
So you communicate through the town lunch, what do you call it, just…?
Jack: Team lunch.
Laurel: Team lunch on Thursdays. You give them the edited board presentation. Any other communications throughout the month?
Jack: Yeah, lots of team wide emails, whenever anything notable happens, whether that’s a big product launch or signing a partnership. Usually whoever was sort of leading that initiative will send out an email.
We also use dashboards pretty rigorously to give a layer of data transparency, so basically any meaningful KPI related to Seatgeek, any employee can find…
Laurel: What kind of dashboard?
Jack: We use something called Looker, which is basically a set of interfaces on top of Amazon Redshift, which is a data warehouse thing that Amazon makes.
Laurel: Looker, is that a startup?
Jack: You got it.
Laurel: ER? They own the ER, wow.
Jack: I don’t know if they own it, I think they do though.
Laurel: That’s interesting. So you use that a lot?
Jack: Yeah and there’s, you know, other companies that might use Tableau for that sort of thing. I think the tool…you know, Looker is great, we like it, but the tool is a little less important than just the structure of sort of making sure you get all of your important data into a central place where anyone can access it.
Laurel: Do you guys use Slack? Are there any other must have tools that you’re using?
Jack: No, I don’t think…we’re very dependent on Github. I think there’s a lot of good software out there, so it’s hard to even call that a must have, because I’m sure there is many almost as good alternatives. But Github issues have become an important part of our workflow.
Laurel: Any other advice for staying in touch with employees? I had one founder that I spoke to who said he likes to announce when they lose a client. Now I don’t know if that doesn’t really pertain to you guys, but any things that are counter to what you would expect? Like do you ever tell your employees bad things that happen or…?
Jack: Sure. Yeah, I think that if you don’t announce bad news, you have no credibility when you announce good news. And also, you would also have that company that fundamentally isn’t transparent, right? Which I don’t think anyone wants to work at.
Laurel: Yeah, it becomes harder and harder to become transparent…to stay transparent as you get bigger.
Jack: Sure, yeah.
Laurel: At what point did you feel like you were running something big?
Jack: Seatgeek is really small in the grand scheme of things.
Laurel: How many people do you have?
Jack: A little over one hundred.
Laurel: And do you interview every single person before they’re hired?
Jack: Almost everyone.
Laurel: Really? That’s cool. If you had to give somebody advice on how to evaluate investors, what would you do? What would you say?
Jack: Yeah, I mean I think from evaluating investors, I’m not sure that like learning about the venture industry is the place I would start. I think in terms of one question I wished I’d asked earlier on…well, it’s not a question but maybe at least a question.
So by learning about the venture industry, you might understand that where…when a VC invests in you, the fund that they invest out of and where they are in the life cycle of that fund is potentially important, right?
Laurel: That’s a good point.
Jack: Like if you’re in the first versus last investment, then that’s going to have potential implications on their ability to follow on, the motivations of the partner, you know, sort of long term, obviously if they’re…if you’re the first investment out of a fund they’re just getting going on, with re-upping with their LPs whereas if you’re the last, the potential; hopefully that wouldn’t be the case, that they could move on sooner…sooner than later.
Laurel: So how does that impact you as one of their portfolio companies and your relationship with the investor?
Jack: I think ultimately it conceptualizes that the relationship with them, meaning like, I’ve spent a lot more time in more recent rounds of financing, just getting to know someone personally, just understanding what they’re all about and what they care about. And what they do on Sunday afternoons and you know, sort of why they got into the industry in the first place.
And a lot of their day to day involves dealing with their LPs and sort of the other side of the business that startup founders never see. So understanding that world a little bit more has helped, I think overall, me sort of understand the motivations of the investors that we work with.
Laurel: Would it be fair to say that you’ve had some discretion in who you choose to invest in your company in recent rounds?
Jack: Oh yeah, totally. I mean, yeah, it’s everything to me, right? Like I think it’s a pretty permanent and important relationship, so I, you know…in all the financings we’ve done, I’ve made sure that I got to a point where I felt deeply comfortable with the person leading it before we moved forward.
Laurel: Was there any instance where you didn’t feel comfortable with somebody?
Jack: No, I’ve been lucky. We’ve raised…
Laurel: No, I mean that you turned down because you didn’t feel comfortable.
Jack: Ohhh, yeah, I mean I think it’s less…how do I put this? I would say it’s not as if we’ve had sort of all this interest from folks who we decided that were fundamentally bad people.
It’s more just in a lot of ways, and maybe it’s a trite thing to say, but a little bit like hiring a business partner, where you’re selling, in a lot of cases, a large part of your company to someone that you’re going to be working with for a long time. So I think comfort isn’t the only thing you’re looking for, it’s a pretty close partnership and you have to feel really great about it before you dive in.
Laurel: What do you tell people who ask you “hey, I’m raising money, what advice can you give me? I’m out there hitting the pavement."
Jack: Yeah, ultimately I think the amount of control you have when you’re running the financing process is so much smaller than the impact of having something as a distraction, so if you’re really good at raising money, maybe you increase your chances a bit. But ultimately if you don’t have something that’s getting traction, then you’re probably screwed anyway.
Laurel: Well a lot of these people are just starting out, they didn’t have, you know, the benefit of…
Jack: Yeah, so it’s traction on a smaller scale, but I still think its…if you don’t have a track record and you just have an idea and you haven’t built anything remarkable, it’s still going to be difficult to raise money. Traction at the very early stages can be in relatively small numbers, but it’s still important.
Laurel: Right, absolutely. What’s the biggest challenge that you’ve had getting from…or that you did have, getting from Seatgeek to Series A? I mean was it just a smooth path up? Was there a bump along the way? What was the challenge that you faced?
Jack: Probably not necessarily a…we had a weird, weirdly quick transaction there, so it might not be applicable to Seatgeek. We raised our Series A about seven months after we closed our seed and it basically was because we did off with a particular survey investor, the guy I mentioned earlier, David Frankle…
Laurel: You had just done your seed seven months earlier, you happened to be introduced to him and he wanted to do your Series A sooner?
Jack: Yeah, well this was also the amount of money that we’d raised at that point perhaps should have been called a seed, it certainly went to that. I think we raised 2 million bucks.
So it was, particularly by today’s standards, very small Series A and we weren’t so concerned with the name of the round, we were more just excited to get him on board.
Laurel: Right, but wait, that was the Series A or that was Series…?
Jack: That was the Series A.
Laurel: That was the Series A. Was two million? Okay, cool.
Jack: Seed size amount, right?
Laurel: Yeah, it wasn’t huge, right? For a Series A?
Jack: It’s all in semantics.
Laurel: So you just raised your Series C? Why do you still need money?
Jack: Why did we raise a Series C? The main motivation is to really build Seatgeek into a meaningful, mobile ticket brand. And not in just a sort of way of the tech blog world, but in a more national sense, so that if you walk up to someone in a random, sort of flyover state city, that they’ve heard about us and hopefully use us to you know…
Laurel: Get tickets.
Jack: Run their lives. Yeah, get tickets. And we’ve done a lot of focused advertising, particularily on the channels that everyone uses, things like Facebook and Twitter, that have been working but thought that if we needed to, if we wanted to kind of level up and grow on that scale, then you know building a brand is really expensive, we needed a lot more capital to do it.
Laurel: It’s exciting. What are you going to do with that money? I could think of some ways.
Jack: We’re all still in this bootstrap mentality around here, that we’re pretty rigorous about measuring the ROI about marketing spent and back to how much it actually cost and figuring out if it’s worth spending more.
So we’ve been running a lot of tests on little channels at a small scale, been seeing what’s been working and then pouring more money into the things that have been working.
Laurel: So for those of us who don’t have as much money as you do to do all these tests, can you tell us what the results were? Like what are the best places now?
Jack: For us, we’ve had good luck with a bunch of online things and a few offline things. So digital marketing continues to be huge growth channel for us, you know, Facebook, all the obvious stuff, Facebook, twitter, google, Pinterest, etc. Offline, I’ve had really good success with a bunch of subway campaigns, I saw some dressed for radio, on podcasts…we’ve been doing out of home testing recently, which is going really well. We’ve been doing mailers believe it or not, old fashioned US post.
Laurel: I’m old fashioned, I still get the newspaper, man.
Jack: For us, the focus and challenge is always about finding fans and finding people that…or targeting people that will actually do or go to live events or want to go to live events.
Laurel: Have I missed asking you any of the big questions? I feel like there’s so much that happened between 2009 and today that I haven’t asked you about.
Jack: You’ve been comprehensive.
Laurel: Thank you for joining us on the show today, I really appreciate your coming.
Jack: Thanks for having me.