Startupbootcamp Interview Series: FlipTix

Original Source: https://www.bullpen.com.au/startupbootcamp-interview-series-fliptix/

We bring you a series of interviews with the 10 companies accepted into Startupbootcamp’s Sports & EventTech cohort.

In this edition we talked to the CEO of FlipTix Jaime Siegel.

Ticketed events, physical events have come to a halt and we know why. So how has your company used the shutdown time to retool and optimise the business?

Jaime Siegel: “This is a very common topic of discussion. We avidly went through the stages of grief, like in a matter of minutes and moved very quickly to put our company into a position to survive and weather this storm and we’re now in a position to have enough runway for almost two years. You know I hope it doesn’t last that long, but we’re there.

“What’s really interesting about this is that never before has there been an opportunity so widespread for business owners and CEO’s to take a look at their business and really think about, is what you’re doing the most efficient way of doing it? How would you do it differently.’ The analogy that I like to use is if you are renovating your house, if you decided to live in your house while you were renovating it, it would get very difficult, not an ideal situation, you might get it done, it would take longer, it may not look as good and you’ll have to make a lot of compromises. However, if you move out of your house and do the renovations and take it right down to the bare studs you’re able to do it quicker, you’re able to do it more efficiently and you’re able to arrive at a better result. That’s really where we’re at right now. We can take everything down to the studs because we have this huge pause in the global business.”

Your current sweet spot before shut down was multi day events, music festivals as such, so where you expand from there?

JS: “FlipTix’ technology works for literally any event and in fact it doesn’t even need to be ticketed, it just has to be a controlled access event. We have a guest list feature, for example VIP tables in a club, is an example of something that’s not ticketed but has controlled access.

“Initially we made a conscious decision that our focus was going to be multi-day music festivals, and the reason is that music festivals like any large event, for example, a Test match in cricket, you have tens of thousands, hundreds of thousands of people over its duration. Where there’s very long days, there’s fatigue that really exacerbates the normal comings and goings that you would see in any event, and there’s just bigger numbers. We’re able to show a much bigger impact on events like music festivals, where you have a very diverse line up. Typically during the day, there’s smaller indie bands, then at night it’s the headliners.  Just because it’s all music doesn’t mean it’s the same fans. The younger kids generally are going to like the indie bands and the older folks are going to see the headliners. So there was kind of this built in dynamic that we could leverage. That same dynamic is also present in large sporting events where there are multiple matches, races or teams.  That is where we anticipate our expansion as we move into the Australian market.”

Has education and awareness for the consumer become one of the challenges?

JS: “No, not really. We don’t view educating the consumer as a challenge. The biggest challenge is educating the promoters and event owners because, unlike most other start-up companies, we’re not better, faster or cheaper. We are a completely brand new concept.

“When you have something that’s completely new, the challenge is whether people get it right away. We just had one of the legends in the music festival business who joined our board. He got it right away. But often times when you have a new concept, people try to understand it based on what they already know.

“There are a couple of important points for us: number one, we do not resell tickets. We’re not a secondary market and we don’t resell tickets at all. We call our tickets ‘Flips’ because we’re ‘flipping in and flipping out’ and if we sell Flips they’re completely brand new, never been used barcodes, wristbands or tickets.”

Moving away from events and festivals, how does FlipTix partner with sporting clubs, rights holders?

JS: “Just to jump back a little bit in terms of the pivot, sports was not our focus, but we were being very opportunistic with it, we were engaged in some substantial discussions with a few major sports teams. But sports in the United States, in particular, present some interesting problems for start-ups, because many of the sports leagues require very substantial upfront payments to do business with them. While there will be 100 plus games per season and in a short format game, like baseball or basketball, you’re going to have less turnover during the game. It becomes about volume over the course of an entire season as opposed to one individual event.

“Now what Startupbootcamp allows us to do, fuelled by this COVID crisis, is that we’re planning to pivot to sports with Startupbootcamp and its partners, because that’s where the opportunities are going to be in the world in the near term.

“We bring a brand new revenue stream to promoters, teams and rights holders, and it costs them nothing. We bring new customers that costs them nothing. The FlipTix platform will work for sports, just as we have proven it does for music festivals.”

Cricket, Formula 1, the Australian Open, these are longer day or multi-day events.

What about multi-game passes where you may purchase tickets for X amount of games, could they be flipped.

JS: “Yes absolutely, we can do that. What we find is that it really depends on the individual event and the relationships that they have. So for example, if you’re using Ticketmaster then they’re going to want to push you to use their verified resale platform to sell unused tickets. Other secondary markets may have partnerships with events. We can certainly sell inventory of unused tickets but, that’s not our  uniqueness.

“Let me give you an example of what is unique about FlipTix. If you want to go to the NCAA basketball tournament in the US, you may buy a ticket for five sessions over the course of a tournament. Each session is actually two games. If you ever see the basketball tournament on TV, the stands always look empty, even if it’s sold out. Why is that? Because half the people are really there for only one of the two games in the session and there’s no re-entry. Once you leave, you’re out. Which means that the fans of the first game depart before the second game, leaving stands that are about 50% empty for the second game.  We create the ability to Flip new people into that second game of a session. Just that opportunity alone in the US presents an opportunity for a new stream of millions of dollars in potential revenue to be shared with the NCAA on just the basketball tournament. Instead of a one or two per cent Flip rate, it could be a 25 or 30 per cent Flip rate based on the change over between games in a single session.”

Tell me about the first partnerships. What was the experience like? Was integrating with partners or other companies tricky?

JS: “When we did our first festival, the KAABOO Del Mar Festival in Del Mar, California. We were so excited and we reached out to their ticketing company and said, ‘hey, we’re doing the KAABOO Festival we need to integrate with you.’ And they said, ‘I don’t think so.’ We had a momentary pause and then we thought about it and figured things out. By the end of the day, we had a plan because we realised that we didn’t have to integrate with their ticketing platform at all.

“Of course there is certainly a benefit to be integrated. We’re integrated currently with the biggest festival wristband company in North America, which is Front Gate Tickets, they’re based in the US and they are a subsidiary of Ticketmaster. Being integrated brings a number of efficiencies, it’s easier for reporting, it’s just a simpler process, but we have ways around it if we’re not integrated, which we have done at many events. We’ve worked alongside many major ticketing platforms in the US, because we don’t need to be integrated and because we’re partners with the promoters.

“We’re still only in the first year and a half of operations and growing fast, but our technology roadmap and our patent portfolio pretty much covers a lot of the features that make this all scalable and passive in how it works.”

You mention patents, you have a defensible position?

JS: “I have almost 30 years of experience as a patent attorney.”

Oh, well, that’s a very handy weapon.

JS: “I’ve literally led or worked on projects that generated billions of dollars licensing or asserting patents for my clients. I spent many years at Sony, I was on the team that wrote the first patent policy for the Chinese government related to standards licensing. I also ran the P/L for one of the largest public patent entities in the world.

“The reason why I was so intrigued and why I decided that I was going to put my all into this company is precisely because I could protect it. We currently have 15 patent applications on file, and our first international patent application we filed was in Australia, because I recognised that as a significant potential market for us. I tell my investors that if the company ran into any problems, which I don’t expect we will, but if we did, we still have our patents which are going to be significantly valuable because this market is not going away.”

As you sell Flips, they’re brand new, never been used barcodes, or tickets, I noted down a problem that you may have is being tarred as a reseller, which you’re not.

JS: “Our whole approach from the beginning was that we are going to partner with the ecosystem, we’re not going to be a broker, we’re not going to be a secondary market player, we’re going to partner and ultimately, like right now, for example, we work on a revenue share model with our promoters, event owners and partners. But within the next 24 months we anticipate to be at a model where our partners will keep 100 per cent of the economics of Flips and what we will be getting is a license fee on every original ticket that is sold for the entire event, simply to make that event Flip enabled.  The license fee will likely be passed directly through to ticket purchasers, so we will still be zero cost for our promoter/team/rights owner partners.”

There is a lot of interesting ways tickets get reused.

JS: “The closest thing you get, in terms of a legitimate reuse of a ticket, is the Wimbledon charity exchange where you could drop a ticket in a bucket and put in a five pound note and take a ticket out of the bucket. But that’s recycling that same ticket. Even they are not cancelling a ticket and issuing a new ticket.

“You mentioned something about tennis, tennis is a tremendous opportunity, particularly the Australian Open because the seated venues are all sold out. I understand that they sell a tremendous amount of tickets just for grounds passes. Grounds pass holders are right there ready to step into vacated seats in the venues.

“The same thing for horse racing. You have sold out the stands, but there are thousands of of people in general admission. We don’t have to worry about getting people to a venue because they’re already there and you could provide this opportunity to upgrade them into those into those seats that are vacated, and it’s all done electronically.”

Ah yes, the upgrades and standing to seating changes is interesting.

JS: “The other piece that we bring is additive marketing to our partners. We’re marketing to different kinds of customers that events are typically marketing to. When event organisers are marketing tickets they’re marketing tickets to primary ticket purchasers that are planning ahead to attend an event and those are not the same kind of people that make last minute decisions. I could give you a very concrete case study where we had a major festival where it was sold out, our waitlist was the equivalent of 25 per cent of their paid audience. Out of that 25 per cent, and we’re talking thousands and thousands people on our waitlist, out of that 25 per cent, a full 80 per cent of those customers were brand new to the ecosystem of this festival promoter. This festival promoter was one of the biggest in the world, so they have quite a database, but these people, the 80 per cent of the customers we had on the waitlist for that event, were not in their database.”

The fan insights, attendee insights is an interesting proposition to nail.

JS: “Yes! I’d like to point out that we think of ourselves not as a ticketing company that happens to have tech. We’re a tech company that happens to do ticketing.”

The proposition goes towards value adds marketing building databases. Increasing the value proposition for fans, attendees in general.

JS: “Exactly. FlipTix just makes events better. Better financials; better fan and guest experiences; and, better data. The opportunity we’re talking is that in any place where you have some sort of access control it works. It works for all events, and even if an event isn’t sold out this will work because people leave early regardless of whether an event is sold out or not.”

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