*The following paper was done as an assignment towards my MBA degree
Abstract
This paper will analyze the firm SeatGeek. The paper will begin by explaining the reasoning for my selection of the firm. It will then detail the industry analysis for the firm’s industry, which will discuss factors that influence demand and profitability along with explaining various threats and opportunities within the industry. Following the industry analysis, the paper will explore an organizational analysis of SeatGeek that will provide insight into the firm’s characteristics, strategy, financials, strengths and weaknesses. Lastly, the paper will offer recommendations for the firm on how to proceed going forward with a justification for the recommendation.
SeatGeek
SeatGeek is a mobile-focused, secondary ticket resale and search engine company operating within the secondary ticket marketplace industry based out of New York City. The company serves the global secondary ticketing industry by allowing users to search for the best ticket options amongst leading ticket sale websites such as TicketsNow, eBay, Ticketfly and more (SeatGeek Company, (n.d.).
Founded in 2009, SeatGeek was the idea of friends, Russell D'Souza and Jack Groetzinger, who were frustrated there wasn’t one individual website that would allow them to simultaneously search all secondary ticketing sites like Kayak.
The company holds no actual inventory however, it makes the majority of its revenue from the resale commissions. In 2016, SeatGeek became primary ticketing partner of Sporting Kansas City (SKC) in Major League Soccer. This marked their first move into primary ticketing (Perez, 2016).
Explanation of the selection criteria for choosing SeatGeek
The commission-based business model with no inventory
I chose SeatGeek for a few reasons however, most interestingly was there commission-based model that utilized other resale companies inventory. This sort of ingenuity, combined with the one-of-a-kind ticket search interface, allows the company to focus more energy into marketing and growth as opposed to maintaining a balanced inventory.
The differentiation of their product in an established industry
SeatGeek splashed into the online secondary ticket resale market after the likes of major players such as Ticketmaster (1976) and StubHub (2000). There differentiation within the industry was the creation of the first search engine exclusively for tickets, which allowed users to treat SeatGeek as a one-stop shop. There intuition provided a much easier entrance to the market even with the existence of much larger economies of scale. This alone, with no clear substitutes, helped them flourish to their current capacity.
Ability to operate within both the primary and secondary ticket sale industry
With their partnership with SKC becoming their first entrance into the primary ticket sales industry, this shows the company’s ability to scale and eagerness to grow.
Sources used in preliminary research
Industry Analysis
This section of the company profile explores the industry analysis of the secondary ticket marketplace industry. This section will be composed of five sections with each providing a different angle by which to analyze the industry. First, a description of the industry will be given followed by the various factors that influence demand for the industry. The analysis will then proceed in identifying factors that influence cost structures and profitability. Lastly, this section will outline the various opportunities and threats within the secondary ticket marketplace.
Description of the secondary ticket marketplace industry
Nature of the industry. The secondary ticket marketplace industry (hereinafter referred to as ‘the industry’) ‘is the ticket marketplace that exists between fan and brokers of event tickets after they have been purchased from the primary ticket market’ (SeatGeek 101, 2017).
Customers and channels of distribution. The industry’s customers are typically cost-conscious consumers who intend to find the best deal for their money. The industry operates through numerous distribution channels, both legally and illegally, including C2C (Consumer-to-consumer) sales via social sites (ex. Craigslist, Facebook), resale market scalpers (on-site scalpers), secondary no scalp zones (on-site, resales at face value), secondary ticket market websites (ex. StubHub, TicketsNow) and secondary ticket market aggregators (ex. SeatGeek).
Size of the industry. According to the Institute of Economic Affairs, the market for secondary ticket sales is growing rapidly in volume and is expected to show a compound annual growth rate of 19% and reach a global value of $15 billion by 2020 (Davies, 2018).
Industry Locations. The size of the industry is conducive to online retailers, providing both sellers and buyers with the furthest reach possible. In this online-dominated industry, this enable organizations to save on overhead, an option that numerous industries can’t replicate. Given the ease of ticket distribution, online transactions are the new norm within the industry. Though the industry is dominated online, in-person sales and secondary no scalp zones are exceptions.
Profit trends. As mentioned previously, the industry is expected to be worth $15 billion by 2020. This large increase is due to volume increase in demand and increasing prices that result. Unlike most resale markets, the secondary ticket marketplace typically sells their tickets at a marked-up price and includes higher fees, which are passed on to buyers (Davies, 2018).
Competitive nature of the industry. The industry is highly-competitive due to the high concentration of competitors within the industry. With surging demand for limited tickets and lack of differentiation besides price, the firms within the industry face challenges in increasing their relative market share. This large concentration of firms creates several entry barriers for new competitors wishing to obtain a piece of the market share.
Factors that influence demand
Demand for event tickets is cyclical in nature, which leads to both increases and decreases in demand. The factors that drive demand within the industry include trust, risk, time or availability (scarcity of tickets) and popularity of the seller (D'Agostino, 2016).
Typical factors leading to an increased demand in event tickets from the industry include the scarce availability of tickets, time left prior to the start of the event and preference of seller. As a factor of forecasts predicting substantial increases in the industry size, the competition amongst buyers has been steadily increasing. This competition has allowed firms within the industry to increase prices on tickets therefore isolating a high-dollar market during times of extreme demand.
Other factors in increasing demand is based on the time left until the event along with preference of seller. Demand increase sharply as the event reaches its beginning. During this time, sellers can benefit tremendously. Along with that notion, reputable sellers are often preferred as buyer’s like to know their purchase is guaranteed in case an issue were to arise. The bigger firms in the industry typically benefit the most during the late surges in demand prior to the event beginning.
To the contrary, the industry also has factors that lead to a decrease in demand. The risk associated with purchasing a ticket may be too much for the buyer to bear given the known uncertainty amongst unknown entities. When cost-conscious buyers prefer low-costs tickets, they usually prefer to shop their options before making a binding purchase. Often times, this delay and indecisiveness can lead to buyers foregoing the event altogether, resulting in losses for firms.
Why customers use the services. Greater demand is driven by a need for a product. Therefore in order to be sought after, the product must serve a function to the buyer. In the case of the secondary ticket marketplace, that function is the access granted to the specific event for which the buyer purchased the ticket by without the need for primary ticketing firms.
Stage in the product life cycle. As mentioned previously, the industry is projected to grow to approximately $15 billion by 2020 (Davies, 2018). This indication, along with fewer first-time buyers, advancements in ticketing technologies and high-margins for competitors in the industry, shows that the secondary ticket marketplace is currently in the growth stage (Parnell, 2014). Another indication of the growth stage is when weaker competitors go out of business, as was the case with TicketStumbler that closed for business in 2011 (“TicketStumbler”, 2019).
While considering factors that influence demand in the industry, it is essential to analyze the macroenvironment and the various forces, or trends, within it. These include the political-legal forces, economic forces, social forces and technological forces. In order for a firm to properly weigh its strategic options, all of these forces should be well understood (Parnell, 2014).
Economic Trends. The economic forces affecting the demand include a rising GDP, increase discretionary spending amongst most classes and the rise of the millennial generation. According to bea (“GDP”, 2019), the increase in real GDP reflects increases in consumer spending, business investments etc. This increase in consumer spending results in increased discretionary spending, which the event/ticket industry is a benefactor of.
Demographic trends. Demographic trends have also effected the industry significantly. Another large factor for increased demand includes the rise of the millennial generation who now represent the majority of consumers in America and have historically changed the landscape of spending for young adults. With less brand loyalty than ever before, Millennials prefer to spend their money on experiences rather than material possessions. According to Forbes (Morgan, 2019), 74 percent of Americans are now prioritizing experiences over products.
However, with the consumer-focus being on experiences, this can sometimes lead to buyers foregoing one-off events in order to save for longer, inclusive events and vacations.
Social and cultural trends. Demand is also driven by social values, the concepts and beliefs, that society practices. The demand factors here tie into the American Psyche (Goddard, 2017) of favoring societal values such as freedom, movement and happiness. The industry’s demand capitalizes on many of these values giving consumer’s convenience to book what they want when they want it.
With the rise of social media, social issues, including news, events, personal information, have been pushed in front of millions of consumers who form their own opinion on these issues. Social media allows users to share experiences and also allows users to follow their friends. This has undoubtedly sparked increased interest in events that may have otherwise went unnoticed.
On the other hand, social media trends have also had negative effects on demand within the industry. In 2019, the New Orleans Saints fan base publicly stated a boycott of the NFL’s most coveted event, the Super Bowl after a non-call in the NFC Championship game. This boycott stemmed from social media exposure and gained heavy traction, leading to numerous Super Bowl ticket-holders to return or forgo their tickets (Hider, 2019).
Political trends. Certain political factors have affected the industry as well. With the rise of the industry, numerous teams, band and entertainment venues began placing limitations on their ticket allocations to secondary markets. This places a strain on the market and for the individual hoping to buy a cheaper, after-market ticket. As can be seen, the relationship between the primary and secondary ticket industries can be love and hate. Fortunately, a recent bill was introduced in the Arizona House that will serve to ‘protect the rights of the secondary-ticket market’ (“Proposed”, 2019).
Technology trends. Advancements in technology have both assisted and hindered demand within the industry. Purchasing tickets is unbelievably easy with users able to open an app on their phone and within a few clicks, their tickets have arrived. The advancement of smart phones in society has been a large reason for the exponential growth in the industry. Before the advent of this technology, tickets were either purchased through a desktop computer, box offices and face-to-face exchanges, which was not nearly as convenient as today’s advancement in the industry’s technology.
Other innovations include large investments by both primary and secondary ticket sellers to increase compatibility on their sites. This has led to firms such as Ticketmaster, SeatGeek and Eventbrite to introduce “open platform” models that allows the sale of tickets on other popular sites such as Facebook and YouTube.
There are certainly drawbacks to certain technology factors in the industry. As stated with the political factors of demand, numerous primary ticket firms have been purposefully withholding large allotment of tickets until only days or hours until the event. They act in this manner so they can have tickets to sell when fans want to buy them the most. This has been labelled the death of the ‘sold out show’ and negative factor on demand (Lawrence, 2019).
Developments by firms within the industry. There have been several innovative developments by firms within the industry that have effected demand. The industry’s initial player, StubHub, owns the earliest title of a firm operating exclusively online within the secondary ticket market when they began in 2000.
Shortly after, secondary ticket market aggregators began to appear more frequently. These aggregators are able to search a multitude of websites for the best ticket prices similar to Kayak for travel. As the topic of this paper, SeatGeek, was one of the initial secondary ticket aggregators along with FanSnap and Tickex (History, n.d.).
Lastly, TickPick has integrated the Affirm payment option into its platform that will give consumers the flexible choice of paying for tickets over a 3, 6, or 12-month period (TickPick, 2018). This tactic targets individuals whom are both proactive and cost-conservative.
Pricing trends. The industry has its fair share of competition from numerous firms. The secondary ticket market buyers are already more frugal going into their ticket search. Though firms may not be as flexible on prices comparatively within the industry, they do have other methods of marketing themselves as ‘lower priced’ (TickPick, 2018). TickPick, a secondary ticket resale firm, positions itself in the market as the best resale site with no service fees upon checkout. This has enabled the company to gain traction amongst quick, impulse purchasers.
Factors that influence cost structures and profitability
Stage of product life cycle effect on financials. As mentioned earlier, the industry is currently in the growth stage as major players become settled with a distinguishable market share while smaller firms are having trouble gaining appeal or traction financially. The industry is now experiencing fewer first-time buyers, advancements in ticketing technologies and high-margins for competitors in the industry. Though in the growth stage, the industry is beginning to reach its plateau with the current entry barriers to potential firms (Parnell, 2014).
This stage has created steady cash flows for the well-established firms in the industry. The majority of their development efforts are now towards marketing and agreements with professional venues and teams. Though the business will continue to thrive so long as the event industry exists, it’s important to realize only a few large firms are reaping the majority of the revenue.
Competitive environment. While in the IO perspective, the various forces that drive competition can be summarized by using the Porter’s Five Forces of Industry Competition and the effects it has on cost and profitability.
Intensity of rivalries. The existing rivalries within the industry are mainly between larger, more established firms such as StubHub, TicketsNow, SeatGeek, Ticketmaster and Vivid Seats. With a lower concentration of competitors, these larger firms experiencing less direct rivalry rather they increase their marketing efforts to increase their reputation among other firms. This also true due to fast industry growth and low fixed costs for most online retailers.
There is however, one main factor that creates the need for firms in the industry to be proactive in their rivalry efforts. The lack of differentiation and essentially no switching costs, allows more autonomy for buyers but less brand loyalty for firms. This drives firms to use clever marketing to increase sales such as rewards programs and exclusive-access opportunities. For example, in 2010 Live Nation Entertainment, parent company of Ticketmaster, joined forces with American Express to offer rewards and presale access to big ticket shows to its card holders (Ticketmaster, n.d.).
Threat of entrants. As the industry is reaching the plateau of the growth stage, the larger firms have a stronghold on valuable market shares. This in itself has created higher entry barriers for competitors who will be faced with a daunting task of entering an industry with such economies of scale. Such barriers include the lack of infrastructure to serve the masses, insurance and permits for resale, lack of capital, access to existing distribution channels and perhaps most importantly, brand image.
Pressure from substitutes. Substitutes come from strictly outside the industry. Because of this, they cannot be identified until the industry is defined (Parnell, 2014). In the industry, there are no immediate substitute products that can replace event tickets. Looking elsewhere, substitute products are capable of satisfying similar needs of the consumer. The only alternative to viewing a live event in-person is viewing it on internet, television or radio. Though this has been available for some time, there pressure remain low from substitute products outside the industry.
Bargaining power of buyers. Buyers hold significant power within the industry. Buyers are cost-conscious, the product is undifferentiated and has low switching costs amongst firms. In addition to flexibility offered to buyers, the industry is also faced with other factors driving bargaining power consumers including a brand-free Millennial generation and C2C options such as Craigslist.
Bargaining power of suppliers. The suppliers in this industry can be considered the venues, teams, performers or organization that hold legal possession of the tickets prior to disbursement. For events, suppliers are much different than those suppliers operating in the tangible product market. The ticket, tangible in physical form, represents access to an event that must be possessed to enter. Therefore demand for the ticket can be much higher as the number available is predetermined and the exclusivity of one-off events create large masses of impulse buyers (Mendenhall, 2014).
Cost drivers. Though more established firms have headquarter offices and satellite locations, the large portion of the infrastructure needed to operate within the industry is web-based. Fixed costs for overhead goes mainly to labor and IT, online functionality. In the paperless world that has become so prevalent and with smart phones, paper tickets have all but become a thing of the past cutting down raw material costs to ticket suppliers.
It should be mentioned though that some firms within the industry, mainly secondary ticket market websites like Ticketmaster, do carry an inventory of tickets. This compared to several other sites that host resales and collect a commission (StubHub, SeatGeek etc.) makes the approach slightly different as the latter companies don’t face the possibility of a loss. Observing the cost drivers on the value chain, firms in the industry have low costs for creating value leading to higher profit margins.
Opportunities in the industry.
Within a perennial industry such as the secondary ticket market, there are opportunities available in the industry that can be capitalized upon. As the forecast shows, the large increase in market size shows there is several opportunities for firms within the industry to open new revenue streams. This inherently accredited to an increasing population and more dispensable discretionary income for buyers. With that, there are new event venues being built and larger demand for the events. Respectively, the opportunities that result from these factors include a strong increase in market demand, favorable demographic and technological trends.
The strong market demand allows firms to position themselves to capture repeat business and first-time buyers. These are done in unique ways however, more prevalent processes include discounts for first-time buyers and rewards programs for repeat buyers. This also creates opportunities for firms to create partnerships as official ticket partners with new venues to expedite the ticket process.
As stated earlier millennials are not loyal to brands for the most part, which does effect the industry. This is changing the industry demographics. This is a challenge to most firms looking to increase sales to repeat customers. However, while the millennial generation is experience-driven and with the demographic trend driving demand for event tickets, this is an opportunity for firms to increase their visibility and more youthful events. Firms should properly research social trends for millennials and other experience-driven buyers to see what is the most popular and desired. This can benefit firms marketing efforts to target the demographics more likely to buy-in.
Lastly, we see technological advancements with the smart phones and paperless tickets that offer opportunities for firms to be innovative in the industry. These opportunities are available to firms of all sizes, which may provide potential firms a chance to enter the market. For example, Blockparty, a recent innovation within the industry, is a blockchain based live event ticketing system that eliminates fake and counterfeit tickets off the market. This is certainly an opportunity for the industry to remove public doubt about trustworthiness of firms in the industry. It also gives firms the opportunity to adopt and utilize the technology. (Bitcoin, 2018).
Threats in the industry. Threats are prevalent within the industry given the web-based nature. Namely threats include bargaining power of the suppliers and negative technological trends like counterfeits and scalpers/bots.
As mentioned earlier, suppliers of tickets have been known to deliberately not release ticket allotments to firms and buyers alike. Suppliers have sole possession of tickets and sell them via their contracted resellers, typically Ticketmaster within the primary market. Instances such as this effect market prices and usually shift the cost burden to its consumers.
Counterfeits are a major pain to the industry because they undermine consumer trust and lead to repercussions to the firms within the industry. Counterfeits tickets have cost the industry millions of dollars in unsellable inventory and potential sale from dissatisfied customers.
Scalpers present threats to the industry by both in-person and online via bots. Scalpers, though in the industry, do work against the firms by driving up costs and removing available inventory to resell. Online, bots threaten the industry by scamming buyers. They are also highly prevalent within the ticketing industry. These usually occur on non-competitor sites such as Craigslist and Facebook. Bots engage unsuspected buyers and are able to steal their financial information. This poses a threat in itself but also by taking advantage of unsuspected buyer which leads to another big threat in the industry (Steiner, 2017).
This industry analysis took an in-depth look into the factors within the industry that influence demand, cost structures, profitability, along with opportunities and threats in the external environment.
SeatGeek Organizational Analysis
This section of the company profile will research the organizational analysis SeatGeek’s. The organizational analysis will examine the company’s mission, characteristics, culture and assets. This section will also dissect some financial information and how it compares to other firms within the industry. Lastly, we will identify various strengths and weaknesses of SeatGeek and how it effects the firm.
Company Description
SeatGeek is a mobile-focused, secondary ticket resale and search engine company operating within the secondary ticket marketplace industry based out of New York City. The company serves the global secondary ticketing industry by allowing users to search for the best ticket options amongst leading ticket sale websites. This portion will explore the organizational structure, mission and other characteristics associated with the way conduct business. . The company operates within the secondary ticket marketplace and has recently moved into selling within the primary ticket sales industry as well.
The Mission. According to ChairNerd, SeatGeek’s blog, the mission of the firm “is to build software that enables that happiness.” (Groetzinger, 2015). This mission speaks for the company by identifying means of the organization and stating the purpose though it does miss the element regarding tickets. They have continued to stick by this mission and develop new technologies as they continue to go. SeatGeek has certainly been at the forefront of the industry’s biggest technology breakthroughs such as their featured ticket search engine. Notably, they recently became “the first ticket buying experience on the Snapchat app, and one of the first e-commerce offerings within the mobile messaging and discovery service” (SeatGeek, 2018).
Characteristics of SeatGeek, Inc. Now in its 10th year, SeatGeek was founded in 2009. SeatGeek seems to value a strong, interpersonal company culture. From their website, you can notice that under the ‘Our Team’ tab, they feature each department then individual ‘personal’ photos of all their employees. This alone seems to highlight they are investors in human capital and appreciate the results of it. They also have numerous organizational events that can be viewed from their website along with employee spotlight write-ups (SeatGeek, 2017). SeatGeek has made stellar reputation for its workplace environment, which led to the firm making Glassdoor’s list of Best Places to Work in 2017 and 2018 (Turner, 2017).
SeatGeek is a private company so much of their financial data is not disclosed. In an article written by Amplify, SeatGeek was going to deal out an equity stake worth $30 million in part of a larger deal with the Dallas Cowboys. Though it was unclear how much of an equity position this equals, and industry analysis stated this was roughly a 15% stake (Brooks, 2018).
If this prediction is close to the mark, that would give SeatGeek a $199.5 million evaluation.
According to PitchBook, SeatGeek has anywhere between 201-300 employees, however after examining the company website mentioned earlier it appears to be closer to the latter (SeatGeek Company, (n.d.). If the financials aligned, this would show a company operating with a substantially large assets and equity pool. SeatGeek’s primary location and headquarters is in New York City but since they mainly web-based, this does not limit their reach in the U.S. or around the world.
Pattern of past objectives and strategies. SeatGeek has kept focused-differentiation strategy (Parnell, 2014). Their technology is at the forefront of their innovation and strategic efforts since the firm’s inception. In the first three years of business, SeatGeek introduced various technology programs aimed to enhance the customers experience on the website. Soulmate, coding application for fast autocomplete during texting, was one of their first releases.
Another example is Tracelytics, a highly-advanced troubleshooter able to trace layers of software to root of the problem (Category, n.d.). These continued advancements began to shift to towards application within Android and IOS systems to enhance the consumer’s mobile ticket purchasing experience. Given the rise in usage of Smartphone in the last decade, this inevitable shift in focus for the firm was part of a larger objective to integrate their technology on all operating systems to compete with bigger firms and establish a niche. SeatGeek’s strategy has always been focused and differentiated based on their prowess with technology for the purpose customer experience.
Strategy success. The overall strategy of the firm to continue delivering up-to-date products while keeping its focus on the Android and IOS has been largely successful. The firm has been able to stay ahead of the game in development by anticipating both consumer preferences and interface changes. The firm would do well by keeping with this strategy however, they will need to continue fine-tuning this strategy as market conditions change.
Financial Analysis
Financial ratios. Differentiated firms tend to fund enterprises associated with quality improvements such as SeatGeek aims to do with customer service. SeatGeek doesn’t release their sales or revenue numbers. However, reliable financial sources provide close estimates to actual numbers. As Brooks (2018) analyzed, the company has a loose business evaluation of $199.5 million in assets and equity.
The growth of SeatGeek year-over-year has been increasing substantially. Forbes analyzed SeatGeek in 2015 estimating it had nearly doubled its annual revenue to $25 million with an 8% sales commission. They estimated the firm would be worth $70 million 2017 and $125 million or more in 2018 (Feldman, 2017). Given the estimates available for 2018, if we were to assume SeatGeek’s sales commission stayed at 8% and the estimated revenue was $125 million, which would indicate the firm netted a profit of $10 million in sales alone. With ticket sales only equating to $10 million in profit, this would indicate SeatGeek’s other revenue streams such as new technology innovations and ticketing partnerships are responsible for more than 50% of the firm’s inputs.
In regards to the firm’s financial trends, their initial approach during the startup stage was aimed at building capital through funding rounds to advance their strategies into the broader marketplace. Since establishing themselves as stout competitors in an industry of many but few dominant players, they have begun to be more aggressive in their use of assets. The deal with the Dallas Cowboys was estimated to be a 15% equity stake worth $30 million showing they are no longer in their infancy in the industry life cycle. This shows they have moved out of the startup stage to the later phases of the growth stage (Parnell, 2014).
Organizational Strengths
This section will look into the various strengths of the firm. This will layout various strengths along with their application of them into the continued growth of the firm.
Financials. As mentioned previously, there is no a lot of existing financial information in the public domain. However, based off of what is available from the sources above, the company looks to be in a very comfortable financial position. As Brooks (2018) analyzed, the company has a loose business evaluation of $199.5 million in assets and equity. This will allow for more flexibility with new initiatives and endeavors.
Reputation. SeatGeek was the first ticket aggregator in the secondary ticket market. They have kept their first-movers advantage by continuing to fine-tune the functionality and customer experience on the site. Their industry reputation is good and there are no issues regarding ethics or business-conduct. They are however, constantly fighting for more relative market share as the titans, StubHub, dominate the market.
In the secondary ticket industry, reputation is everything. Users want the guarantee that they are safe when purchasing tickets and that safety comes in no bigger form than the company’s name. Therefore, there current strength of having a good reputation is certainly a kick start to bringing in more business. The firm is continuing efforts through marketing and advertising to increase its reputation amongst the industry’s leading firms.
Economies of scale. SeatGeek has been able to reach a fair reputation in the market that have enabled them to scale at safe yet optimistic way. Through their well-timed strategies, they have been able to increase their number of employees while also driving more sales through the website. They have also been able to support their forward-thinking approach by receiving more funding via multiple rounds of venture capital investments.
The growth of both operations and funding simultaneously, has benefited the firm to begin drawing more profits from sales by reducing cost per sale. Though the cost is minimal, this reduction in cost has been the driving factor for continuing to scale the business. They were notably gaining traction in the market so much so that discussions of an acquisition from Ticketmaster was discussed in 2014. This was prior to SeatGeek securing a $35 million investment from Accel Partners and other partners like Peyton and Eli Manning (Rey, 2014).
Proprietary technology. As previously discussed, SeatGeek’s biggest advantage in the market is their various proprietary technologies such as Soulmate and Tracelytics. The firm was founded by Russell D'Souza and Jack Groetzinger from DreamIT Ventures, which was an early tech startup. Operating within the tech sector allowed the two to move into the secondary ticket market rather seamlessly as they possessed the acumen to launch and scale.
The proprietary technology has allowed SeatGeek to standout as the innovators within the industry. There technologies and applications are so highly-coveted that they launched a B2B/ enterprise side of the firm to work directly with the content providers. SeatGeek’s ingenuity allowed them to begin selling their services to other organizations. This was possible when they purchased the Israeli-based software company, TopTix, for $60 million. As D’Souza stated, “Having both a primary brand and great B2B technology, coupled with a consumer-facing brand, has allowed us to go out and win new business” (White, 2018).
Proven management. Running parallel to their efforts, is the proven management by D’Souza and Groetzinger that had pushed the firm into B2C (previously referred to us C2C since the tickets are sold between individuals) and now B2B. “We are at a compelling point in the history of SeatGeek. Our B2C product is doing very well and now we are making progress on the B2B side of the business. Abroad, we don’t even have a consumer brand. Now that we have all of these pieces in place, the goal is to put the puzzle together and deliver the best experiences possible for both our users and our enterprise clients,” said D’Souza (White, 2018).
Organizational weaknesses.
This section of the company profile will highlight the firm’s weaknesses as they operate within the industry. These weaknesses are going to provide insight into potential corrective measures in the recommendations section.
Low profitability on sales. Though the company has been growing indefinitely and raking in large profits, the difference remains that SeatGeek does not possess an actual ticket inventory. Since they operate on a commission-based business model, their sales only result in a 20-percent ticket commission (Burleson, 2018). As compared to ticket companies that hold their own inventory, SeatGeek comparatively makes very little back per sale. Though the profit per sale is low for the industry, their volume of sales and their success in scaling has helped to alleviate low inputs from sales. SeatGeek has begun to slowly move into the primary ticket market, as a way to combat this.
Ticket resale policies. SeatGeek has taken some criticisms due to their high commission fees for sellers. Sellers have to give up 20-percent of their ticket revenue if they choose to sell on SeatGeek. This situation makes the more frugal buyer seek a different medium to sell. It is among the highest resales fee within the industry. This matters more too lower-priced tickets as sellers don’t want to give up that large of a stake in their potential profit (Burleson, 2018).
No rewards program. More and more firms within the industry are beginning to create reward programs as a way to combat the transient, one-off purchase nature of the industry. As noted in a previous section, Ticketmaster teamed up with American Express as a way to reward members by granting early access to highly desired tickets. Beyond Ticketmaster, only a few other companies have attempted ticket reward programs however, none have found it sustainable to continue. SeatGeek may take a closer look into this option as a way to attract and keep consumers (Burleson, 2018).
SeatGeek Recommendations
This section will discuss my recommendations for SeatGeek to capitalize or minimize their various strengths, weaknesses, opportunities, and threats discussed in industry and organizational analysis. This section will be addressed in sequential order based on the degree of importance and detail of the various SWOT elements. Each recommendation will include either a justification for the commendation or a defense on why it should not be engaged. The following format will be used to abbreviate the various SWOT factors: (R): Recommendation, (S): Strength, (W): Weakness, (O): Opportunity, and (T): Threat.
R1, S1: Creation of proprietary technology
Known on the surface as a primary secondary ticketing firm, perhaps the best strength of SeatGeek is their ability to create proprietary technology applicable to a multitude of firms and industries. The ingenuity of the firm has created new revenue streams, which are essential for businesses that hope to sustain competition and increase their relative market share in the industry.
Tech savvy founders, Russell D'Souza and Jack Groetzinger, have largely invested in this strength most notably by purchasing the Israeli-based software company, TopTix, for $60 million (White, 2018). Currently, the firm is successfully operating both a primary brand through secondary ticket sales and a B2B initiative to equip various firms with their technologies. This invaluable strength should begin expanding into even more industries. As technology usage is only growing amongst consumers, firms within other industries are looking for new ways to complement their own services online whether it be for proprietary and/or security purposes.
Justification: The B2B side of the firm has gained notable traction and praise amongst technology-seeking industries. This expansion would benefit the firm’s financials and brand reputation amongst consumers.
R2, O1: Licensing proprietary technologies
SeatGeek’s ability to produce proprietary technologies gives it a unique comparative advantage (Parnell, 2014). They standalone as the dominate firm in terms of production, which has given them an opportunity to open a new, robust revenue stream with their B2B enterprise. This creates a clear opportunity for the firm to begin strategizing about the implementation of technology licensing. Consumer demographics are typically tech savvy and will expect their ticket provider to offer a service that satisfies their needs.
This can also be seen as a long-term strategy as typical licensing agreements include royalty payments, which can create a constant revenue stream for the firm. Additionally, the firm can decide to produce online-based technologies for other industries that operate online. There current technologies can offer advanced troubleshooting, security and search functionality to firms in other industries. They have proven the concept with their B2B enterprise but should begin expanding while they continue to scale the secondary ticket sale business.
Justification: SeatGeek needs to capitalize on their proven talent to produce novel technologies. Ticket purchasing along with nearly numerous other industries have migrated their operations online, which offers SeatGeek the target audience. In the long term, this will create a new sustainable revenue stream to fund future ventures and operations.
R3, T1: Exclusive partnerships between competitors and venues
As mentioned in the company overview, SeatGeek recently penned their first exclusive primary ticketing contract with Sporting Kansas City (SKC) Major League Soccer season (Perez, 2016). Though this was an opportunity SeatGeek couldn’t pass up, the main player within the industry has begun partnering with venues and professional leagues to avoid competition from small firms.
Ticketmaster has the largest presence and reach within the industry allowing them to expand into these sort of agreements with leagues, teams and venues. In 2017, Ticketmaster signed a new 5-year agreement with the NFL and vowed to offer the “first open architecture, fully digital ticketing system in sports” D. B. (2017). Currently, Ticketmaster is the only NFL licensed marketplace for primary and secondary ticket sales. This threatens all other smaller firms within the industry as it doesn’t provide the same guarantee, which is the most important factor to consumers given increases in counterfeiting and digital scalping (Steiner, 2017). This has given Ticketmaster both the comparative and competitive advantage in the industry. It has also but up another barrier for smaller firms hoping to gain more relative market share such as SeatGeek (Parnell, 2014).
SeatGeek is not in the driver seat here. This threat can have major implications on financial forecasts if the threat wasn’t considered strategically. In order to compete against an industry-wide threat, the firm needs to begin tightening their financials in anticipation. Though this deal is exclusive to the NBA, NFL ticket sales are the largest and most expensive of any major sport within the United States. This can be done by creating additional revenue streams as mentioned earlier while increasing brand awareness. There will always be a market of consumers that purposefully avoid using the major firm within any given industry based on preferences and elasticity. Those consumers should be the main priority for SeatGeek.
Justification: Minimizing the potential financial impact of the deal between the NFL and Ticketmaster by targeting price sensitive consumers and tightening up on finances. Firms that expect longevity need to approach these situations in a proactive manner.
R4, S2: Financial stability
SeatGeek has by no means been unsuccessful. They have a good slice of the overall market share in the industry and with their newest B2B enterprise, they have remained firm and solvent.
As mentioned in the financial analysis, the firm has a loose business evaluation of $199.5 million in assets and equity Brooks (2018). This is based on estimates from industry insiders since SeatGeek does not publicly releases their financial information. With an evaluation that high, it is evident the firm’s ability to maintain solvency is a clear strength. As a result of the firm’s financial strength, it is able to pursue new ventures within the secondary ticket sales market along with other industries through their B2B enterprise. The firm can capitalize on this strength by expanding their enterprises into other industries, as suggested previously.
Justification: The recent growth in the organization’s employees and services offered shows they are financially sound and capable of funding expansion.
R5, W1: Low profitability on sales
SeatGeek is a resale firm not possessing any inventory. Since they operate on a commission-based business model, their sales only result in a 20-percent ticket commission (Burleson, 2018). Though this undoubtedly creates profits, compared to other firms in the industry that possess their own inventory, the gains are low.
As a secondary ticket aggregator, the functionality gives users the ability to search for tickets amongst numerous firms to obtain the best deals. Other firms such as Ticketmaster and StubHub have their own allotment of tickets through agreements with venues and sports leagues. SeatGeek has attempted to combat this by entering the primary market as seen with their partnership with Sporting Kansas City (SKC) in Major League Soccer.
Justification: Other firms are gaining more revenue through possessing their own ticket inventory allotments. Lacking this attribute, the gains per sale do not allow the firm to maximize their inputs.
R6, W2: Ticket resale policies and fees
Consumers value ticket firms that keep their fees low. For sellers, SeatGeek charges up to 20-percent of their ticket revenue. This is amongst the highest resale fees in the whole industry, which is not a way to gain new sellers for the firm. This drives the more frugal sellers to seek out a different medium for their resale purposes.
Consumers like to speak amongst one another and share their opinions on certain organizations they deal with. The groundswell is typically started in online forums and blogs. The sentiment remains that organizations that attempt to extract maximum profit from users via fees are often avoided. As a firm striving to carve out more relative market share in the industry, this can be detrimental to attracting first-time and repeat users.
To minimize this weakness, SeatGeek should evaluate how to alleviate some fees. Similar to the low profitability on sales, in order to minimize these fees they can explore options in the primary ticket sales market or focus on their B2B enterprise to extract more profits.
Justification: Users denounce service fees. Keeping fees high will substantially affect the firm’s ability to attract first-time and repeat users to the site.
R7, T2: Consumer fear of counterfeits via online transactions
Counterfeits and scammers have huge impact on the industry because they undermine consumer trust and lead to repercussions to the firms within the industry. This includes affecting sales, consumer trust and firm reputation. Counterfeit tickets have cost the industry millions of dollars in unsellable inventory and potential sale from dissatisfied customers. This is a huge problem for the industry and specific firms within it.
Scalpers work against the firms in the industry by driving up costs and removing available inventory to resell. Bots, online scammers, engage unsuspected buyers and are able to steal their financial information. This poses a huge risk to buyers and sellers by frightening them away from using newer firms over fear of security.
To minimize the effect on the firm, SeatGeek can continue the drive the safety of their service within their marketing. SeatGeek needs to continue promoting their buyer guarantee as a strategy to attract more first-time users.
Justification: Consumer fear of online transactions threaten to drive users away from firms without guarantees or brand awareness.
R8, O3: Create a sustainable rewards program targeting millennials
Firms in the industry are realizing that users, especially millennials, are keen to reuse a service that provides incentive for their repeat business. With less brand loyalty than ever before, Millennials prefer to spend their money on experiences rather than material possessions. According to Forbes (Morgan, 2019), 74 percent of Americans are now prioritizing experiences over products. This creates a perfect opportunity for the firm to capitalize on.
Ticketmaster’s partnership with American Express is an example of a strategic alliance enabling both firms to gain users for a mutual gain (Parnell, 2014). Besides Ticketmaster, not many firms have such programs, which shows another opportunity to slight differentiate from other firms. SeatGeek should begin studying similar rewards programs that offer an added value to the user. First-time buyer discounts, repeat business discounts, and point accumulation programs have been successful in keeping users loyal.
Justification: With brand loyalty low for millennials, creating an incentive program would assist in drawing in and keeping new customers. Consumers appreciate reciprocity for their loyalty.
R9, S3: Proven management and reputation
D’Souza and Groetzinger have been able to utilize their expertise in technology into a successful, multi-million dollar firm. Their growth since inception has been largely due to their prowess in operating tech startups prior to the creation of SeatGeek. They have been the drivers of the organization’s strategic mission by staying involved in the day-to-day operations (White, 2018). Through their tutelage, the firm has gained a favorable reputation within the industry as an award-winning employer and B2B enterprise.
Most notably, their expertise was crucial in the creation of the aforementioned B2B enterprise. Their mission is to deliver memorable experiences to their SeatGeek users and B2B enterprise clients. They can continue to capitalize on their proven abilities to manage by continuing to work on the big picture strategies for the firm including expansion of their B2B enterprise and entrance into the primary ticket sales industry.
Justification: SeatGeek has grown year-over-year with D’Souza and Groetzinger at the helm. They should continue to lead the firm’s strategy and planning initiatives as they have proven their capability.
Financing recommendations
The recommendations will require capital in order to begin the planning process. In order to fund these, SeatGeek can continue to use their funding rounds as means to fund new enterprises. SeatGeek has been consistently raising funds via seed round investments. Their initial investing round with Accel Partners and other partners, such as Peyton and Eli Manning, SeatGeek secured a $35 million investment for the firm (Rey, 2014). In another round of funding in 2017, SeatGeek raised an additional $57 million from Glynn Capital, with participation from existing investors Accel, Causeway Media Partners, Haystack Partners, Mousse Partners, and Technology Crossover Ventures (FinSMEs, 2017).
Besides outside funding, the firm proved its ability to operate and remain comfortably solvent. The will certainly be using some of these profits to reinvest in the firm and backing new ventures such as these recommendations.
Timeline for implementation of recommendations
The following timeline has been put together to assist in the implementation of the recommendations:
Milestone
R1
R2
R3
R4
R5
R6
R7
R8
R9
Date
2019-05
2019-06
2019-08
2019-08
2019-11
2019-11
2019-06
2020-1
2019-5
References
Abstract
This paper will analyze the firm SeatGeek. The paper will begin by explaining the reasoning for my selection of the firm. It will then detail the industry analysis for the firm’s industry, which will discuss factors that influence demand and profitability along with explaining various threats and opportunities within the industry. Following the industry analysis, the paper will explore an organizational analysis of SeatGeek that will provide insight into the firm’s characteristics, strategy, financials, strengths and weaknesses. Lastly, the paper will offer recommendations for the firm on how to proceed going forward with a justification for the recommendation.
SeatGeek
SeatGeek is a mobile-focused, secondary ticket resale and search engine company operating within the secondary ticket marketplace industry based out of New York City. The company serves the global secondary ticketing industry by allowing users to search for the best ticket options amongst leading ticket sale websites such as TicketsNow, eBay, Ticketfly and more (SeatGeek Company, (n.d.).
Founded in 2009, SeatGeek was the idea of friends, Russell D'Souza and Jack Groetzinger, who were frustrated there wasn’t one individual website that would allow them to simultaneously search all secondary ticketing sites like Kayak.
The company holds no actual inventory however, it makes the majority of its revenue from the resale commissions. In 2016, SeatGeek became primary ticketing partner of Sporting Kansas City (SKC) in Major League Soccer. This marked their first move into primary ticketing (Perez, 2016).
Explanation of the selection criteria for choosing SeatGeek
The commission-based business model with no inventory
I chose SeatGeek for a few reasons however, most interestingly was there commission-based model that utilized other resale companies inventory. This sort of ingenuity, combined with the one-of-a-kind ticket search interface, allows the company to focus more energy into marketing and growth as opposed to maintaining a balanced inventory.
The differentiation of their product in an established industry
SeatGeek splashed into the online secondary ticket resale market after the likes of major players such as Ticketmaster (1976) and StubHub (2000). There differentiation within the industry was the creation of the first search engine exclusively for tickets, which allowed users to treat SeatGeek as a one-stop shop. There intuition provided a much easier entrance to the market even with the existence of much larger economies of scale. This alone, with no clear substitutes, helped them flourish to their current capacity.
Ability to operate within both the primary and secondary ticket sale industry
With their partnership with SKC becoming their first entrance into the primary ticket sales industry, this shows the company’s ability to scale and eagerness to grow.
Sources used in preliminary research
- Google Scholar. This assisted me in my initial search for the company and helped me to get some peer-reviewed research to provide accurate data.
- SeatGeek.com. I visited the company website to explore the interface and to get some company background information such as the founder’s names, location and mission. They also host their own blog, ChairNerd.com, with their most recent news and updates.
- Reputable News Sources. I used some information from reputable news sources to discover future plans for the company along with current business financials to judge success.
Industry Analysis
This section of the company profile explores the industry analysis of the secondary ticket marketplace industry. This section will be composed of five sections with each providing a different angle by which to analyze the industry. First, a description of the industry will be given followed by the various factors that influence demand for the industry. The analysis will then proceed in identifying factors that influence cost structures and profitability. Lastly, this section will outline the various opportunities and threats within the secondary ticket marketplace.
Description of the secondary ticket marketplace industry
Nature of the industry. The secondary ticket marketplace industry (hereinafter referred to as ‘the industry’) ‘is the ticket marketplace that exists between fan and brokers of event tickets after they have been purchased from the primary ticket market’ (SeatGeek 101, 2017).
Customers and channels of distribution. The industry’s customers are typically cost-conscious consumers who intend to find the best deal for their money. The industry operates through numerous distribution channels, both legally and illegally, including C2C (Consumer-to-consumer) sales via social sites (ex. Craigslist, Facebook), resale market scalpers (on-site scalpers), secondary no scalp zones (on-site, resales at face value), secondary ticket market websites (ex. StubHub, TicketsNow) and secondary ticket market aggregators (ex. SeatGeek).
Size of the industry. According to the Institute of Economic Affairs, the market for secondary ticket sales is growing rapidly in volume and is expected to show a compound annual growth rate of 19% and reach a global value of $15 billion by 2020 (Davies, 2018).
Industry Locations. The size of the industry is conducive to online retailers, providing both sellers and buyers with the furthest reach possible. In this online-dominated industry, this enable organizations to save on overhead, an option that numerous industries can’t replicate. Given the ease of ticket distribution, online transactions are the new norm within the industry. Though the industry is dominated online, in-person sales and secondary no scalp zones are exceptions.
Profit trends. As mentioned previously, the industry is expected to be worth $15 billion by 2020. This large increase is due to volume increase in demand and increasing prices that result. Unlike most resale markets, the secondary ticket marketplace typically sells their tickets at a marked-up price and includes higher fees, which are passed on to buyers (Davies, 2018).
Competitive nature of the industry. The industry is highly-competitive due to the high concentration of competitors within the industry. With surging demand for limited tickets and lack of differentiation besides price, the firms within the industry face challenges in increasing their relative market share. This large concentration of firms creates several entry barriers for new competitors wishing to obtain a piece of the market share.
Factors that influence demand
Demand for event tickets is cyclical in nature, which leads to both increases and decreases in demand. The factors that drive demand within the industry include trust, risk, time or availability (scarcity of tickets) and popularity of the seller (D'Agostino, 2016).
Typical factors leading to an increased demand in event tickets from the industry include the scarce availability of tickets, time left prior to the start of the event and preference of seller. As a factor of forecasts predicting substantial increases in the industry size, the competition amongst buyers has been steadily increasing. This competition has allowed firms within the industry to increase prices on tickets therefore isolating a high-dollar market during times of extreme demand.
Other factors in increasing demand is based on the time left until the event along with preference of seller. Demand increase sharply as the event reaches its beginning. During this time, sellers can benefit tremendously. Along with that notion, reputable sellers are often preferred as buyer’s like to know their purchase is guaranteed in case an issue were to arise. The bigger firms in the industry typically benefit the most during the late surges in demand prior to the event beginning.
To the contrary, the industry also has factors that lead to a decrease in demand. The risk associated with purchasing a ticket may be too much for the buyer to bear given the known uncertainty amongst unknown entities. When cost-conscious buyers prefer low-costs tickets, they usually prefer to shop their options before making a binding purchase. Often times, this delay and indecisiveness can lead to buyers foregoing the event altogether, resulting in losses for firms.
Why customers use the services. Greater demand is driven by a need for a product. Therefore in order to be sought after, the product must serve a function to the buyer. In the case of the secondary ticket marketplace, that function is the access granted to the specific event for which the buyer purchased the ticket by without the need for primary ticketing firms.
Stage in the product life cycle. As mentioned previously, the industry is projected to grow to approximately $15 billion by 2020 (Davies, 2018). This indication, along with fewer first-time buyers, advancements in ticketing technologies and high-margins for competitors in the industry, shows that the secondary ticket marketplace is currently in the growth stage (Parnell, 2014). Another indication of the growth stage is when weaker competitors go out of business, as was the case with TicketStumbler that closed for business in 2011 (“TicketStumbler”, 2019).
While considering factors that influence demand in the industry, it is essential to analyze the macroenvironment and the various forces, or trends, within it. These include the political-legal forces, economic forces, social forces and technological forces. In order for a firm to properly weigh its strategic options, all of these forces should be well understood (Parnell, 2014).
Economic Trends. The economic forces affecting the demand include a rising GDP, increase discretionary spending amongst most classes and the rise of the millennial generation. According to bea (“GDP”, 2019), the increase in real GDP reflects increases in consumer spending, business investments etc. This increase in consumer spending results in increased discretionary spending, which the event/ticket industry is a benefactor of.
Demographic trends. Demographic trends have also effected the industry significantly. Another large factor for increased demand includes the rise of the millennial generation who now represent the majority of consumers in America and have historically changed the landscape of spending for young adults. With less brand loyalty than ever before, Millennials prefer to spend their money on experiences rather than material possessions. According to Forbes (Morgan, 2019), 74 percent of Americans are now prioritizing experiences over products.
However, with the consumer-focus being on experiences, this can sometimes lead to buyers foregoing one-off events in order to save for longer, inclusive events and vacations.
Social and cultural trends. Demand is also driven by social values, the concepts and beliefs, that society practices. The demand factors here tie into the American Psyche (Goddard, 2017) of favoring societal values such as freedom, movement and happiness. The industry’s demand capitalizes on many of these values giving consumer’s convenience to book what they want when they want it.
With the rise of social media, social issues, including news, events, personal information, have been pushed in front of millions of consumers who form their own opinion on these issues. Social media allows users to share experiences and also allows users to follow their friends. This has undoubtedly sparked increased interest in events that may have otherwise went unnoticed.
On the other hand, social media trends have also had negative effects on demand within the industry. In 2019, the New Orleans Saints fan base publicly stated a boycott of the NFL’s most coveted event, the Super Bowl after a non-call in the NFC Championship game. This boycott stemmed from social media exposure and gained heavy traction, leading to numerous Super Bowl ticket-holders to return or forgo their tickets (Hider, 2019).
Political trends. Certain political factors have affected the industry as well. With the rise of the industry, numerous teams, band and entertainment venues began placing limitations on their ticket allocations to secondary markets. This places a strain on the market and for the individual hoping to buy a cheaper, after-market ticket. As can be seen, the relationship between the primary and secondary ticket industries can be love and hate. Fortunately, a recent bill was introduced in the Arizona House that will serve to ‘protect the rights of the secondary-ticket market’ (“Proposed”, 2019).
Technology trends. Advancements in technology have both assisted and hindered demand within the industry. Purchasing tickets is unbelievably easy with users able to open an app on their phone and within a few clicks, their tickets have arrived. The advancement of smart phones in society has been a large reason for the exponential growth in the industry. Before the advent of this technology, tickets were either purchased through a desktop computer, box offices and face-to-face exchanges, which was not nearly as convenient as today’s advancement in the industry’s technology.
Other innovations include large investments by both primary and secondary ticket sellers to increase compatibility on their sites. This has led to firms such as Ticketmaster, SeatGeek and Eventbrite to introduce “open platform” models that allows the sale of tickets on other popular sites such as Facebook and YouTube.
There are certainly drawbacks to certain technology factors in the industry. As stated with the political factors of demand, numerous primary ticket firms have been purposefully withholding large allotment of tickets until only days or hours until the event. They act in this manner so they can have tickets to sell when fans want to buy them the most. This has been labelled the death of the ‘sold out show’ and negative factor on demand (Lawrence, 2019).
Developments by firms within the industry. There have been several innovative developments by firms within the industry that have effected demand. The industry’s initial player, StubHub, owns the earliest title of a firm operating exclusively online within the secondary ticket market when they began in 2000.
Shortly after, secondary ticket market aggregators began to appear more frequently. These aggregators are able to search a multitude of websites for the best ticket prices similar to Kayak for travel. As the topic of this paper, SeatGeek, was one of the initial secondary ticket aggregators along with FanSnap and Tickex (History, n.d.).
Lastly, TickPick has integrated the Affirm payment option into its platform that will give consumers the flexible choice of paying for tickets over a 3, 6, or 12-month period (TickPick, 2018). This tactic targets individuals whom are both proactive and cost-conservative.
Pricing trends. The industry has its fair share of competition from numerous firms. The secondary ticket market buyers are already more frugal going into their ticket search. Though firms may not be as flexible on prices comparatively within the industry, they do have other methods of marketing themselves as ‘lower priced’ (TickPick, 2018). TickPick, a secondary ticket resale firm, positions itself in the market as the best resale site with no service fees upon checkout. This has enabled the company to gain traction amongst quick, impulse purchasers.
Factors that influence cost structures and profitability
Stage of product life cycle effect on financials. As mentioned earlier, the industry is currently in the growth stage as major players become settled with a distinguishable market share while smaller firms are having trouble gaining appeal or traction financially. The industry is now experiencing fewer first-time buyers, advancements in ticketing technologies and high-margins for competitors in the industry. Though in the growth stage, the industry is beginning to reach its plateau with the current entry barriers to potential firms (Parnell, 2014).
This stage has created steady cash flows for the well-established firms in the industry. The majority of their development efforts are now towards marketing and agreements with professional venues and teams. Though the business will continue to thrive so long as the event industry exists, it’s important to realize only a few large firms are reaping the majority of the revenue.
Competitive environment. While in the IO perspective, the various forces that drive competition can be summarized by using the Porter’s Five Forces of Industry Competition and the effects it has on cost and profitability.
Intensity of rivalries. The existing rivalries within the industry are mainly between larger, more established firms such as StubHub, TicketsNow, SeatGeek, Ticketmaster and Vivid Seats. With a lower concentration of competitors, these larger firms experiencing less direct rivalry rather they increase their marketing efforts to increase their reputation among other firms. This also true due to fast industry growth and low fixed costs for most online retailers.
There is however, one main factor that creates the need for firms in the industry to be proactive in their rivalry efforts. The lack of differentiation and essentially no switching costs, allows more autonomy for buyers but less brand loyalty for firms. This drives firms to use clever marketing to increase sales such as rewards programs and exclusive-access opportunities. For example, in 2010 Live Nation Entertainment, parent company of Ticketmaster, joined forces with American Express to offer rewards and presale access to big ticket shows to its card holders (Ticketmaster, n.d.).
Threat of entrants. As the industry is reaching the plateau of the growth stage, the larger firms have a stronghold on valuable market shares. This in itself has created higher entry barriers for competitors who will be faced with a daunting task of entering an industry with such economies of scale. Such barriers include the lack of infrastructure to serve the masses, insurance and permits for resale, lack of capital, access to existing distribution channels and perhaps most importantly, brand image.
Pressure from substitutes. Substitutes come from strictly outside the industry. Because of this, they cannot be identified until the industry is defined (Parnell, 2014). In the industry, there are no immediate substitute products that can replace event tickets. Looking elsewhere, substitute products are capable of satisfying similar needs of the consumer. The only alternative to viewing a live event in-person is viewing it on internet, television or radio. Though this has been available for some time, there pressure remain low from substitute products outside the industry.
Bargaining power of buyers. Buyers hold significant power within the industry. Buyers are cost-conscious, the product is undifferentiated and has low switching costs amongst firms. In addition to flexibility offered to buyers, the industry is also faced with other factors driving bargaining power consumers including a brand-free Millennial generation and C2C options such as Craigslist.
Bargaining power of suppliers. The suppliers in this industry can be considered the venues, teams, performers or organization that hold legal possession of the tickets prior to disbursement. For events, suppliers are much different than those suppliers operating in the tangible product market. The ticket, tangible in physical form, represents access to an event that must be possessed to enter. Therefore demand for the ticket can be much higher as the number available is predetermined and the exclusivity of one-off events create large masses of impulse buyers (Mendenhall, 2014).
Cost drivers. Though more established firms have headquarter offices and satellite locations, the large portion of the infrastructure needed to operate within the industry is web-based. Fixed costs for overhead goes mainly to labor and IT, online functionality. In the paperless world that has become so prevalent and with smart phones, paper tickets have all but become a thing of the past cutting down raw material costs to ticket suppliers.
It should be mentioned though that some firms within the industry, mainly secondary ticket market websites like Ticketmaster, do carry an inventory of tickets. This compared to several other sites that host resales and collect a commission (StubHub, SeatGeek etc.) makes the approach slightly different as the latter companies don’t face the possibility of a loss. Observing the cost drivers on the value chain, firms in the industry have low costs for creating value leading to higher profit margins.
Opportunities in the industry.
Within a perennial industry such as the secondary ticket market, there are opportunities available in the industry that can be capitalized upon. As the forecast shows, the large increase in market size shows there is several opportunities for firms within the industry to open new revenue streams. This inherently accredited to an increasing population and more dispensable discretionary income for buyers. With that, there are new event venues being built and larger demand for the events. Respectively, the opportunities that result from these factors include a strong increase in market demand, favorable demographic and technological trends.
The strong market demand allows firms to position themselves to capture repeat business and first-time buyers. These are done in unique ways however, more prevalent processes include discounts for first-time buyers and rewards programs for repeat buyers. This also creates opportunities for firms to create partnerships as official ticket partners with new venues to expedite the ticket process.
As stated earlier millennials are not loyal to brands for the most part, which does effect the industry. This is changing the industry demographics. This is a challenge to most firms looking to increase sales to repeat customers. However, while the millennial generation is experience-driven and with the demographic trend driving demand for event tickets, this is an opportunity for firms to increase their visibility and more youthful events. Firms should properly research social trends for millennials and other experience-driven buyers to see what is the most popular and desired. This can benefit firms marketing efforts to target the demographics more likely to buy-in.
Lastly, we see technological advancements with the smart phones and paperless tickets that offer opportunities for firms to be innovative in the industry. These opportunities are available to firms of all sizes, which may provide potential firms a chance to enter the market. For example, Blockparty, a recent innovation within the industry, is a blockchain based live event ticketing system that eliminates fake and counterfeit tickets off the market. This is certainly an opportunity for the industry to remove public doubt about trustworthiness of firms in the industry. It also gives firms the opportunity to adopt and utilize the technology. (Bitcoin, 2018).
Threats in the industry. Threats are prevalent within the industry given the web-based nature. Namely threats include bargaining power of the suppliers and negative technological trends like counterfeits and scalpers/bots.
As mentioned earlier, suppliers of tickets have been known to deliberately not release ticket allotments to firms and buyers alike. Suppliers have sole possession of tickets and sell them via their contracted resellers, typically Ticketmaster within the primary market. Instances such as this effect market prices and usually shift the cost burden to its consumers.
Counterfeits are a major pain to the industry because they undermine consumer trust and lead to repercussions to the firms within the industry. Counterfeits tickets have cost the industry millions of dollars in unsellable inventory and potential sale from dissatisfied customers.
Scalpers present threats to the industry by both in-person and online via bots. Scalpers, though in the industry, do work against the firms by driving up costs and removing available inventory to resell. Online, bots threaten the industry by scamming buyers. They are also highly prevalent within the ticketing industry. These usually occur on non-competitor sites such as Craigslist and Facebook. Bots engage unsuspected buyers and are able to steal their financial information. This poses a threat in itself but also by taking advantage of unsuspected buyer which leads to another big threat in the industry (Steiner, 2017).
This industry analysis took an in-depth look into the factors within the industry that influence demand, cost structures, profitability, along with opportunities and threats in the external environment.
SeatGeek Organizational Analysis
This section of the company profile will research the organizational analysis SeatGeek’s. The organizational analysis will examine the company’s mission, characteristics, culture and assets. This section will also dissect some financial information and how it compares to other firms within the industry. Lastly, we will identify various strengths and weaknesses of SeatGeek and how it effects the firm.
Company Description
SeatGeek is a mobile-focused, secondary ticket resale and search engine company operating within the secondary ticket marketplace industry based out of New York City. The company serves the global secondary ticketing industry by allowing users to search for the best ticket options amongst leading ticket sale websites. This portion will explore the organizational structure, mission and other characteristics associated with the way conduct business. . The company operates within the secondary ticket marketplace and has recently moved into selling within the primary ticket sales industry as well.
The Mission. According to ChairNerd, SeatGeek’s blog, the mission of the firm “is to build software that enables that happiness.” (Groetzinger, 2015). This mission speaks for the company by identifying means of the organization and stating the purpose though it does miss the element regarding tickets. They have continued to stick by this mission and develop new technologies as they continue to go. SeatGeek has certainly been at the forefront of the industry’s biggest technology breakthroughs such as their featured ticket search engine. Notably, they recently became “the first ticket buying experience on the Snapchat app, and one of the first e-commerce offerings within the mobile messaging and discovery service” (SeatGeek, 2018).
Characteristics of SeatGeek, Inc. Now in its 10th year, SeatGeek was founded in 2009. SeatGeek seems to value a strong, interpersonal company culture. From their website, you can notice that under the ‘Our Team’ tab, they feature each department then individual ‘personal’ photos of all their employees. This alone seems to highlight they are investors in human capital and appreciate the results of it. They also have numerous organizational events that can be viewed from their website along with employee spotlight write-ups (SeatGeek, 2017). SeatGeek has made stellar reputation for its workplace environment, which led to the firm making Glassdoor’s list of Best Places to Work in 2017 and 2018 (Turner, 2017).
SeatGeek is a private company so much of their financial data is not disclosed. In an article written by Amplify, SeatGeek was going to deal out an equity stake worth $30 million in part of a larger deal with the Dallas Cowboys. Though it was unclear how much of an equity position this equals, and industry analysis stated this was roughly a 15% stake (Brooks, 2018).
If this prediction is close to the mark, that would give SeatGeek a $199.5 million evaluation.
According to PitchBook, SeatGeek has anywhere between 201-300 employees, however after examining the company website mentioned earlier it appears to be closer to the latter (SeatGeek Company, (n.d.). If the financials aligned, this would show a company operating with a substantially large assets and equity pool. SeatGeek’s primary location and headquarters is in New York City but since they mainly web-based, this does not limit their reach in the U.S. or around the world.
Pattern of past objectives and strategies. SeatGeek has kept focused-differentiation strategy (Parnell, 2014). Their technology is at the forefront of their innovation and strategic efforts since the firm’s inception. In the first three years of business, SeatGeek introduced various technology programs aimed to enhance the customers experience on the website. Soulmate, coding application for fast autocomplete during texting, was one of their first releases.
Another example is Tracelytics, a highly-advanced troubleshooter able to trace layers of software to root of the problem (Category, n.d.). These continued advancements began to shift to towards application within Android and IOS systems to enhance the consumer’s mobile ticket purchasing experience. Given the rise in usage of Smartphone in the last decade, this inevitable shift in focus for the firm was part of a larger objective to integrate their technology on all operating systems to compete with bigger firms and establish a niche. SeatGeek’s strategy has always been focused and differentiated based on their prowess with technology for the purpose customer experience.
Strategy success. The overall strategy of the firm to continue delivering up-to-date products while keeping its focus on the Android and IOS has been largely successful. The firm has been able to stay ahead of the game in development by anticipating both consumer preferences and interface changes. The firm would do well by keeping with this strategy however, they will need to continue fine-tuning this strategy as market conditions change.
Financial Analysis
Financial ratios. Differentiated firms tend to fund enterprises associated with quality improvements such as SeatGeek aims to do with customer service. SeatGeek doesn’t release their sales or revenue numbers. However, reliable financial sources provide close estimates to actual numbers. As Brooks (2018) analyzed, the company has a loose business evaluation of $199.5 million in assets and equity.
The growth of SeatGeek year-over-year has been increasing substantially. Forbes analyzed SeatGeek in 2015 estimating it had nearly doubled its annual revenue to $25 million with an 8% sales commission. They estimated the firm would be worth $70 million 2017 and $125 million or more in 2018 (Feldman, 2017). Given the estimates available for 2018, if we were to assume SeatGeek’s sales commission stayed at 8% and the estimated revenue was $125 million, which would indicate the firm netted a profit of $10 million in sales alone. With ticket sales only equating to $10 million in profit, this would indicate SeatGeek’s other revenue streams such as new technology innovations and ticketing partnerships are responsible for more than 50% of the firm’s inputs.
In regards to the firm’s financial trends, their initial approach during the startup stage was aimed at building capital through funding rounds to advance their strategies into the broader marketplace. Since establishing themselves as stout competitors in an industry of many but few dominant players, they have begun to be more aggressive in their use of assets. The deal with the Dallas Cowboys was estimated to be a 15% equity stake worth $30 million showing they are no longer in their infancy in the industry life cycle. This shows they have moved out of the startup stage to the later phases of the growth stage (Parnell, 2014).
Organizational Strengths
This section will look into the various strengths of the firm. This will layout various strengths along with their application of them into the continued growth of the firm.
Financials. As mentioned previously, there is no a lot of existing financial information in the public domain. However, based off of what is available from the sources above, the company looks to be in a very comfortable financial position. As Brooks (2018) analyzed, the company has a loose business evaluation of $199.5 million in assets and equity. This will allow for more flexibility with new initiatives and endeavors.
Reputation. SeatGeek was the first ticket aggregator in the secondary ticket market. They have kept their first-movers advantage by continuing to fine-tune the functionality and customer experience on the site. Their industry reputation is good and there are no issues regarding ethics or business-conduct. They are however, constantly fighting for more relative market share as the titans, StubHub, dominate the market.
In the secondary ticket industry, reputation is everything. Users want the guarantee that they are safe when purchasing tickets and that safety comes in no bigger form than the company’s name. Therefore, there current strength of having a good reputation is certainly a kick start to bringing in more business. The firm is continuing efforts through marketing and advertising to increase its reputation amongst the industry’s leading firms.
Economies of scale. SeatGeek has been able to reach a fair reputation in the market that have enabled them to scale at safe yet optimistic way. Through their well-timed strategies, they have been able to increase their number of employees while also driving more sales through the website. They have also been able to support their forward-thinking approach by receiving more funding via multiple rounds of venture capital investments.
The growth of both operations and funding simultaneously, has benefited the firm to begin drawing more profits from sales by reducing cost per sale. Though the cost is minimal, this reduction in cost has been the driving factor for continuing to scale the business. They were notably gaining traction in the market so much so that discussions of an acquisition from Ticketmaster was discussed in 2014. This was prior to SeatGeek securing a $35 million investment from Accel Partners and other partners like Peyton and Eli Manning (Rey, 2014).
Proprietary technology. As previously discussed, SeatGeek’s biggest advantage in the market is their various proprietary technologies such as Soulmate and Tracelytics. The firm was founded by Russell D'Souza and Jack Groetzinger from DreamIT Ventures, which was an early tech startup. Operating within the tech sector allowed the two to move into the secondary ticket market rather seamlessly as they possessed the acumen to launch and scale.
The proprietary technology has allowed SeatGeek to standout as the innovators within the industry. There technologies and applications are so highly-coveted that they launched a B2B/ enterprise side of the firm to work directly with the content providers. SeatGeek’s ingenuity allowed them to begin selling their services to other organizations. This was possible when they purchased the Israeli-based software company, TopTix, for $60 million. As D’Souza stated, “Having both a primary brand and great B2B technology, coupled with a consumer-facing brand, has allowed us to go out and win new business” (White, 2018).
Proven management. Running parallel to their efforts, is the proven management by D’Souza and Groetzinger that had pushed the firm into B2C (previously referred to us C2C since the tickets are sold between individuals) and now B2B. “We are at a compelling point in the history of SeatGeek. Our B2C product is doing very well and now we are making progress on the B2B side of the business. Abroad, we don’t even have a consumer brand. Now that we have all of these pieces in place, the goal is to put the puzzle together and deliver the best experiences possible for both our users and our enterprise clients,” said D’Souza (White, 2018).
Organizational weaknesses.
This section of the company profile will highlight the firm’s weaknesses as they operate within the industry. These weaknesses are going to provide insight into potential corrective measures in the recommendations section.
Low profitability on sales. Though the company has been growing indefinitely and raking in large profits, the difference remains that SeatGeek does not possess an actual ticket inventory. Since they operate on a commission-based business model, their sales only result in a 20-percent ticket commission (Burleson, 2018). As compared to ticket companies that hold their own inventory, SeatGeek comparatively makes very little back per sale. Though the profit per sale is low for the industry, their volume of sales and their success in scaling has helped to alleviate low inputs from sales. SeatGeek has begun to slowly move into the primary ticket market, as a way to combat this.
Ticket resale policies. SeatGeek has taken some criticisms due to their high commission fees for sellers. Sellers have to give up 20-percent of their ticket revenue if they choose to sell on SeatGeek. This situation makes the more frugal buyer seek a different medium to sell. It is among the highest resales fee within the industry. This matters more too lower-priced tickets as sellers don’t want to give up that large of a stake in their potential profit (Burleson, 2018).
No rewards program. More and more firms within the industry are beginning to create reward programs as a way to combat the transient, one-off purchase nature of the industry. As noted in a previous section, Ticketmaster teamed up with American Express as a way to reward members by granting early access to highly desired tickets. Beyond Ticketmaster, only a few other companies have attempted ticket reward programs however, none have found it sustainable to continue. SeatGeek may take a closer look into this option as a way to attract and keep consumers (Burleson, 2018).
SeatGeek Recommendations
This section will discuss my recommendations for SeatGeek to capitalize or minimize their various strengths, weaknesses, opportunities, and threats discussed in industry and organizational analysis. This section will be addressed in sequential order based on the degree of importance and detail of the various SWOT elements. Each recommendation will include either a justification for the commendation or a defense on why it should not be engaged. The following format will be used to abbreviate the various SWOT factors: (R): Recommendation, (S): Strength, (W): Weakness, (O): Opportunity, and (T): Threat.
R1, S1: Creation of proprietary technology
Known on the surface as a primary secondary ticketing firm, perhaps the best strength of SeatGeek is their ability to create proprietary technology applicable to a multitude of firms and industries. The ingenuity of the firm has created new revenue streams, which are essential for businesses that hope to sustain competition and increase their relative market share in the industry.
Tech savvy founders, Russell D'Souza and Jack Groetzinger, have largely invested in this strength most notably by purchasing the Israeli-based software company, TopTix, for $60 million (White, 2018). Currently, the firm is successfully operating both a primary brand through secondary ticket sales and a B2B initiative to equip various firms with their technologies. This invaluable strength should begin expanding into even more industries. As technology usage is only growing amongst consumers, firms within other industries are looking for new ways to complement their own services online whether it be for proprietary and/or security purposes.
Justification: The B2B side of the firm has gained notable traction and praise amongst technology-seeking industries. This expansion would benefit the firm’s financials and brand reputation amongst consumers.
R2, O1: Licensing proprietary technologies
SeatGeek’s ability to produce proprietary technologies gives it a unique comparative advantage (Parnell, 2014). They standalone as the dominate firm in terms of production, which has given them an opportunity to open a new, robust revenue stream with their B2B enterprise. This creates a clear opportunity for the firm to begin strategizing about the implementation of technology licensing. Consumer demographics are typically tech savvy and will expect their ticket provider to offer a service that satisfies their needs.
This can also be seen as a long-term strategy as typical licensing agreements include royalty payments, which can create a constant revenue stream for the firm. Additionally, the firm can decide to produce online-based technologies for other industries that operate online. There current technologies can offer advanced troubleshooting, security and search functionality to firms in other industries. They have proven the concept with their B2B enterprise but should begin expanding while they continue to scale the secondary ticket sale business.
Justification: SeatGeek needs to capitalize on their proven talent to produce novel technologies. Ticket purchasing along with nearly numerous other industries have migrated their operations online, which offers SeatGeek the target audience. In the long term, this will create a new sustainable revenue stream to fund future ventures and operations.
R3, T1: Exclusive partnerships between competitors and venues
As mentioned in the company overview, SeatGeek recently penned their first exclusive primary ticketing contract with Sporting Kansas City (SKC) Major League Soccer season (Perez, 2016). Though this was an opportunity SeatGeek couldn’t pass up, the main player within the industry has begun partnering with venues and professional leagues to avoid competition from small firms.
Ticketmaster has the largest presence and reach within the industry allowing them to expand into these sort of agreements with leagues, teams and venues. In 2017, Ticketmaster signed a new 5-year agreement with the NFL and vowed to offer the “first open architecture, fully digital ticketing system in sports” D. B. (2017). Currently, Ticketmaster is the only NFL licensed marketplace for primary and secondary ticket sales. This threatens all other smaller firms within the industry as it doesn’t provide the same guarantee, which is the most important factor to consumers given increases in counterfeiting and digital scalping (Steiner, 2017). This has given Ticketmaster both the comparative and competitive advantage in the industry. It has also but up another barrier for smaller firms hoping to gain more relative market share such as SeatGeek (Parnell, 2014).
SeatGeek is not in the driver seat here. This threat can have major implications on financial forecasts if the threat wasn’t considered strategically. In order to compete against an industry-wide threat, the firm needs to begin tightening their financials in anticipation. Though this deal is exclusive to the NBA, NFL ticket sales are the largest and most expensive of any major sport within the United States. This can be done by creating additional revenue streams as mentioned earlier while increasing brand awareness. There will always be a market of consumers that purposefully avoid using the major firm within any given industry based on preferences and elasticity. Those consumers should be the main priority for SeatGeek.
Justification: Minimizing the potential financial impact of the deal between the NFL and Ticketmaster by targeting price sensitive consumers and tightening up on finances. Firms that expect longevity need to approach these situations in a proactive manner.
R4, S2: Financial stability
SeatGeek has by no means been unsuccessful. They have a good slice of the overall market share in the industry and with their newest B2B enterprise, they have remained firm and solvent.
As mentioned in the financial analysis, the firm has a loose business evaluation of $199.5 million in assets and equity Brooks (2018). This is based on estimates from industry insiders since SeatGeek does not publicly releases their financial information. With an evaluation that high, it is evident the firm’s ability to maintain solvency is a clear strength. As a result of the firm’s financial strength, it is able to pursue new ventures within the secondary ticket sales market along with other industries through their B2B enterprise. The firm can capitalize on this strength by expanding their enterprises into other industries, as suggested previously.
Justification: The recent growth in the organization’s employees and services offered shows they are financially sound and capable of funding expansion.
R5, W1: Low profitability on sales
SeatGeek is a resale firm not possessing any inventory. Since they operate on a commission-based business model, their sales only result in a 20-percent ticket commission (Burleson, 2018). Though this undoubtedly creates profits, compared to other firms in the industry that possess their own inventory, the gains are low.
As a secondary ticket aggregator, the functionality gives users the ability to search for tickets amongst numerous firms to obtain the best deals. Other firms such as Ticketmaster and StubHub have their own allotment of tickets through agreements with venues and sports leagues. SeatGeek has attempted to combat this by entering the primary market as seen with their partnership with Sporting Kansas City (SKC) in Major League Soccer.
Justification: Other firms are gaining more revenue through possessing their own ticket inventory allotments. Lacking this attribute, the gains per sale do not allow the firm to maximize their inputs.
R6, W2: Ticket resale policies and fees
Consumers value ticket firms that keep their fees low. For sellers, SeatGeek charges up to 20-percent of their ticket revenue. This is amongst the highest resale fees in the whole industry, which is not a way to gain new sellers for the firm. This drives the more frugal sellers to seek out a different medium for their resale purposes.
Consumers like to speak amongst one another and share their opinions on certain organizations they deal with. The groundswell is typically started in online forums and blogs. The sentiment remains that organizations that attempt to extract maximum profit from users via fees are often avoided. As a firm striving to carve out more relative market share in the industry, this can be detrimental to attracting first-time and repeat users.
To minimize this weakness, SeatGeek should evaluate how to alleviate some fees. Similar to the low profitability on sales, in order to minimize these fees they can explore options in the primary ticket sales market or focus on their B2B enterprise to extract more profits.
Justification: Users denounce service fees. Keeping fees high will substantially affect the firm’s ability to attract first-time and repeat users to the site.
R7, T2: Consumer fear of counterfeits via online transactions
Counterfeits and scammers have huge impact on the industry because they undermine consumer trust and lead to repercussions to the firms within the industry. This includes affecting sales, consumer trust and firm reputation. Counterfeit tickets have cost the industry millions of dollars in unsellable inventory and potential sale from dissatisfied customers. This is a huge problem for the industry and specific firms within it.
Scalpers work against the firms in the industry by driving up costs and removing available inventory to resell. Bots, online scammers, engage unsuspected buyers and are able to steal their financial information. This poses a huge risk to buyers and sellers by frightening them away from using newer firms over fear of security.
To minimize the effect on the firm, SeatGeek can continue the drive the safety of their service within their marketing. SeatGeek needs to continue promoting their buyer guarantee as a strategy to attract more first-time users.
Justification: Consumer fear of online transactions threaten to drive users away from firms without guarantees or brand awareness.
R8, O3: Create a sustainable rewards program targeting millennials
Firms in the industry are realizing that users, especially millennials, are keen to reuse a service that provides incentive for their repeat business. With less brand loyalty than ever before, Millennials prefer to spend their money on experiences rather than material possessions. According to Forbes (Morgan, 2019), 74 percent of Americans are now prioritizing experiences over products. This creates a perfect opportunity for the firm to capitalize on.
Ticketmaster’s partnership with American Express is an example of a strategic alliance enabling both firms to gain users for a mutual gain (Parnell, 2014). Besides Ticketmaster, not many firms have such programs, which shows another opportunity to slight differentiate from other firms. SeatGeek should begin studying similar rewards programs that offer an added value to the user. First-time buyer discounts, repeat business discounts, and point accumulation programs have been successful in keeping users loyal.
Justification: With brand loyalty low for millennials, creating an incentive program would assist in drawing in and keeping new customers. Consumers appreciate reciprocity for their loyalty.
R9, S3: Proven management and reputation
D’Souza and Groetzinger have been able to utilize their expertise in technology into a successful, multi-million dollar firm. Their growth since inception has been largely due to their prowess in operating tech startups prior to the creation of SeatGeek. They have been the drivers of the organization’s strategic mission by staying involved in the day-to-day operations (White, 2018). Through their tutelage, the firm has gained a favorable reputation within the industry as an award-winning employer and B2B enterprise.
Most notably, their expertise was crucial in the creation of the aforementioned B2B enterprise. Their mission is to deliver memorable experiences to their SeatGeek users and B2B enterprise clients. They can continue to capitalize on their proven abilities to manage by continuing to work on the big picture strategies for the firm including expansion of their B2B enterprise and entrance into the primary ticket sales industry.
Justification: SeatGeek has grown year-over-year with D’Souza and Groetzinger at the helm. They should continue to lead the firm’s strategy and planning initiatives as they have proven their capability.
Financing recommendations
The recommendations will require capital in order to begin the planning process. In order to fund these, SeatGeek can continue to use their funding rounds as means to fund new enterprises. SeatGeek has been consistently raising funds via seed round investments. Their initial investing round with Accel Partners and other partners, such as Peyton and Eli Manning, SeatGeek secured a $35 million investment for the firm (Rey, 2014). In another round of funding in 2017, SeatGeek raised an additional $57 million from Glynn Capital, with participation from existing investors Accel, Causeway Media Partners, Haystack Partners, Mousse Partners, and Technology Crossover Ventures (FinSMEs, 2017).
Besides outside funding, the firm proved its ability to operate and remain comfortably solvent. The will certainly be using some of these profits to reinvest in the firm and backing new ventures such as these recommendations.
Timeline for implementation of recommendations
The following timeline has been put together to assist in the implementation of the recommendations:
Milestone
R1
R2
R3
R4
R5
R6
R7
R8
R9
Date
2019-05
2019-06
2019-08
2019-08
2019-11
2019-11
2019-06
2020-1
2019-5
References
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