The counterintuitive thing about raising money against a monopolist is that once an investor actually believes you can win, the upside is insane because it means there's a lot of white space that no one has occupied other than said monopolist. For us, the strategy was rather straightforward. We knew we could create a much, much better product and we knew that if we could do that and actually get people to adopt, there was this huge opportunity because there had been no innovation for the prior decade plus.
That was Jack Groetzinger, co-founder and CEO of SeatGeek. SeatGeek launched on the TechCrunch stage in 2009 with a simple idea to make buying tickets easier. 17 years later, after raising nearly $400 million, walking away from a planned IPO and taking on one of the biggest incumbents in live entertainment, SeatGeek has grown into one of the industry's leading ticketing platforms. In this conversation, we unpack all of that and what founders should know about staying resilient through market cycles and why expanding your vision can be more powerful than pivoting. I'm Isabelle Johannes and you're listening to Build Mode. This season, we're taking a look inside the fundraiser. Hi Jack, how's it going?
Going great and thanks for having me.
Yeah, welcome to Build Mode. We're very glad to be talking to you today. You have had a very interesting and long journey in the world of startups. You launched SeatGeek back in 2009 at TechCrunch 50, which we now call Startup Battlefield, with some seed money and a ticket search engine. But 17 years later and hundreds of millions of dollars later, you're still independent, still private, and still fighting. So, let's talk about how you actually built and founded a company that most investors might have said was impossible in a market like this. So, take me back to the day that SeatGeek actually launched in 2009. What were you hoping would happen and what actually happened?
We had no idea what would happen is the honest answer. I've always taken the attitude that most startups fail and I've had a few startups that have failed and went into it hoping for the best but expecting the worst in that sense. We badly wanted to build something that was just useful at all to anyone and figured if we could do that then we hoped we could somehow iterate our way to being more useful and expanding the scope of SeatGeek and that actually is what's happened over the last 17 years.
But so the original product was more of a ticket search engine, right? Basically a Google for tickets, but that's very different from what SeatGeek is today. What did you understand about the market in 2009 that made you think that was the right entry point?
Yeah, the original product was actually even narrower. My name is Jack Groetzinger. This is my co-founder Russ D'Souza. We are SeatGeek. SeatGeek is a web application that forecasts the price of sports and concert tickets sold on the secondary market. So the idea would be, let's say Isabelle's thinking about going to a San Francisco Giants game and she's not sure when she wants to buy. We would tell you you should either wait to buy or you should buy now. So that was what we launched with. We realized pretty early that it wasn't that compelling in part because prices often drop which as an e-commerce site means you're telling people not to buy but also I think more importantly because it was less about figuring out when to buy and what was much more important, it would save people a lot more money, was knowing which ticket to buy, what was the very best deal. So we created this feature we called deal score which basically would take the thousands of tickets available for that game, would rate each one based on how good a value it was given the specific seat and surface their best deals. And all of this was we did because we thought there was this weird dichotomy where on one hand going to a game, going to a show can often be one of the best moments of someone's year. So this magical life affirming thing in its best form and yet the process of actually buying tickets to that thing was and unfortunately to some extent in some places still is known as one of the worst experiences that people have to have on the internet. So, we thought that tension was odd and figured that transparency, data, helping people find good deals was at least one way of trying to make it better.
Yeah. I mean, I think we've all been in that situation of waiting in a queue to buy tickets to your favorite concert and not getting them and being bummed about that. So, very relatable problem, but a problem that was already being tackled by some major incumbents in your industry. So when you started building in this space, what did you think about some of the existing players and how you would approach that competition?
It was there was some competition. There's quite a bit. It was pretty broken in terms of user experiences. And interestingly, some of that brokenness was kind of loadbearing, meaning it was intentional because it helped incumbents make more money via opacity or via users not knowing quite what they got. We made a choice early on that ended up being quite important which is that we like you mentioned we pretty quickly after the forecasting thing moved into being a ticket meta search engine meaning we weren't actually selling anything ourselves. We were never the merchant of record but rather we were the UI layer that people would use to search for different tickets and then when you actually wanted to buy you click a button and you could buy it somewhere else. That was important because it meant we didn't have to worry about all of the complication of actually running a two-sided marketplace out of the gate. We could just singularly focus on making the front-end ticket search experience really, really good. And many years later and we did get into running a marketplace and it's much more complicated. You have to deal with customer service and chargebacks and credit card processing and fraud and all this other stuff which is important but early on I think if we had gotten bogged down in all of that we would have not built the user experience that we did. So, you know, you're asking about kind of how we compared to competition. And I think the key thing we did was just singularly focus on people don't like this purchase experience. How can we make it better? How can we use technology to do it? Only focused on that problem. Didn't focus on anything else.
But those are some pretty major pivots to your business model and even how your customers interact with the product. So at that point you already had investors on board. When you made some of those major pivots, how did those conversations go? Did you come to them and say, 'You know what? We've decided we need to pivot.' Are investors telling you that, 'Hey, time to pivot.' What was the chicken and egg there?
Yeah, we made a few. I think about them less of as pivots and more expansions.
Just being semantically annoying. But, you know, to just to specify what they were specifically, we moved from being meta search to actually being a marketplace ourselves. We went all in on a mobile app before that was a brain dead obvious thing to do. And then probably most consequentially, we decided to launch our own primary ticketing platform which competes with Ticketmaster for major venues in the US. And in each case, the conversation with investors actually was quite positive because it was an ever-expanding view for what SeatGeek could become. And it was all built around sort of the place we were at previously. Meaning if we had started out of the gate trying to compete with Ticketmaster for major venue deals, we would have had zero shot whatsoever. But once we had many millions of fans already depending on SeatGeek and loving the buying experience, it made more sense. So we've been lucky to have supportive boards, supportive of investors who in each case saw it as a way to actually expand what we could become.
So you have raised nearly $400 million across many rounds and many years. Talk to me about how that fundraising journey evolved over the years. What was sort of the hardest round to close and what made it so difficult?
Yeah, for what it's worth, I'm not proud of how much we've raised. I think some people maybe use capital raise as a vanity metric, but as far as I'm concerned, the less the better. And we've had to raise as much as we have because we're in a market that required a lot of investment in product and user acquisition to get to the point that we are easily, and it was not close. The hardest raise around we raised was in 2020 for reasons you can probably imagine. Selling live entertainment tickets during a global pandemic. Not a great business. And we were lucky that coming into COVID, we were going through one of the strongest periods of growth we'd ever have. So, in some ways, that round, you know, in the eyes of investors became kind of a referendum on where you thought the world was going to go. Meaning if an investor thought that things were going to normalize within a year and live events would be back then it was a pretty easy bet because we did what ended up being much less of a markup in terms of price than we otherwise would have done. So, it was a deal if you believed that live entertainment was coming back. But, you know, if you transport yourself back to April of 2020, there was a ton of uncertainty and people did not know what was happening. And we were lucky to be able to round that was led by Seth Levine at Foundry Group who has been amazing to work with. They had a view that the world was going to normalize and that believed that SeatGeek had a differentiated product that ultimately could win. So we closed that pretty early during COVID and then were able to use the rest of the pandemic to just put our heads down and focus on building products that would be useful afterwards.
Well, let's talk a little bit more about that COVID period because I mean your entire industry basically shut down for what a year. How long was it really out of commission?
Yeah, I think I blocked it out of my mind. It was about a year. I think by the end of 2020 we started to see a trickle of things coming back and that accelerated really quickly in 2021.
But how did you sort of manage both investor and customer relationships during that time? And also I mean your own runway luckily it sounds like you closed a raise at the perfect time. You think that was a make or break.
The perfect time would have been February of 2020. So unfortunately I think it was like June of 2020 or something like that. But you know obviously at first it sucked a lot. I was mostly worried about the team and what it meant for SeatGeek, what it meant for what people were going to work on. Obviously, a really scary time if you're working at a live entertainment company. So, we spent a lot of time talking to the team about what we knew, but also what we didn't know. There was a few people within the company that became amateur epidemiologists and reporting on what they were seeing on a weekly basis. Basically, our mindset was we believe the world's going to return. We believe live entertainment is going to be more important than ever. And also counterintuitively it's actually the best time to build products because normally in the ordinary day-to-day when we're operating you have a large amount of people relying on SeatGeek every day and that is to some extent a constraint. You can't break things because the consequences are quite bad. You can't try out brand new things because it might defy what a client expects. That was a period where we had almost no one buying anything. So we did a ton of refactoring. We ripped out a bunch of stuff. We built things much more quickly than we normally could have if they had to be launched into production in a world where people were spending many millions of dollars on SeatGeek every day.
Yeah. Interesting to kind of think of that hibernation period almost as a coming out of a cocoon, right? Better and ready to scale. And speaking of scaling, I mean in 2021 you announced plans to go public via SPAC merger. And for founders who might not be familiar with that, why were you pursuing it and what were you hoping it would achieve that staying private couldn't?
Most people probably know this, but where an IPO has been the traditional way to get public, in 2021, there was lots of talk that actually SPACs were the new way that people were going to get public. You know, investment bankers and investors saying that this is actually the new IPO. It's going to replace the IPO. And the deals were very attractive. There was a ton of money flowing into SPACs. And we also were thinking about becoming public then anyway. So, it became a very natural thing for us to do. And we signed a deal with a SPAC called RedBall and got very close to the finish line before deciding ultimately that and I can talk about this more but the SPAC market ended up being a bit less perfect than everyone thought and was driving itself off a cliff pretty quickly. So at the very last minute we made the decision to pull the deal and we did that. RedBall was with us the whole way kind of agreeing that that was the right choice given what was happening in the market.
So I mean in hindsight what do you think would have happened to SeatGeek had you gone public via SPAC in 2021?
Yeah would have been good. I mean very few SPACs, there certainly are some and I'd like to think we would have been one of them but most of them struggled quite a bit and there was this issue where just being a SPAC became this scarlet letter that you had to deal with because you were kind of just lumped into this bucket and part of that was because there were a lot of companies that were not ready to be public that went public anyway via SPAC. So, I think we'd ultimately be okay because we're building stuff that matters and have a big technology advantage, but I'm sure it would have been a lot bumpier for a few years than it was given that we pulled it.
So, talk to me about that process. I'm guessing there would be a lot of scrutiny and the company and a lot of things that they're probably digging into before going public and questions they're asking that you wouldn't have, you know, otherwise if you hadn't started going through that process. What does that process look like?
