In Madrid we interviewed the founders of the secondary ticket market platform Ticketbis, Jon Uriarte and Ander Michelena.

On ticketbis individuals can buy and sell tickets.
Both founders shared their emotional story of how they got started, what the business model is, some insights on the ticketing market, and what it takes to become a great entrepreneur.

The transcript of the interview is below.

INTRODUCTION

Martin: Hi. Today we are in Madrid at Ticketbis, with Jon and Ander. Who are you and what do you do?

Jon: Hi. My name is Jon, Jon Uriarte, I am one of the CEOs of Ticketbis, I was born in Bilbao. I studied there and when I got my degree, I went to work in London. I worked most of the years in a ML, Merrill Lynch and I moved to Morgan Stanley, I worked in private wealth management department. After that, I was a bit tired of London lifestyle and banking style and I quit it and went back to Spain to start my own business, Ticketbis.

Martin: Cool.

Ander: My name is Ander Michelena. It was quite similar, I’m the other CEO of Ticketbis. Similar to Jon, I studied in Span then I moved to London to work in merger, at Morgan Stanley, merger and  acquisition of investment bank. Three years there, I got very tired of it, then I met Jon at an airport, actually, it was interesting. And we decided that it was time for us leave. We saw different opportunities and at the end, we quit our jobs and here we are now.

Martin: Great! How did you come up with this business idea of Ticketbis?

Ander: I mean, what we did – we looked at several opportunities. We knew we wanted to leave the bank and we had enough of investment bank. So we looked at several business that were very successful in the US, but there was no similar competition in Europe or Latin America. And so, we looked there for different business model and at the end we looked at 6 -7 different business models, and we realized that this was the one that have greater opportunity and that we like to pursue, we like the most.

So once we knew that, we quit our jobs and without presentation, we went back to Bilbao, our hometown.

Jon: Our hometown.

Ander: To his parents’ house, actually. And we make our office in his parents’ house and started the business.

Martin: What has been the major criteria for selecting this business idea over others?

Jon: First of all, because the weren’t many competitors, There were some and they were quite big, but they focused on developed countries such as the US and UK. Second one, it’s because that margins were very high, our commission were 25%. And third one is because financially speaking, is was a very good business. Because first, you get the money from the buyer, and then you pay the ticket seller. So you keep this money in your bank account. So this financially is really good. And then maybe the last one, it’s more like our feelings, it’s that this sector is very appealing because you are in contact with music, with sports, football games and we like it a lot.

BUSINESS MODEL OF TICKETBIS

Martin: Explain your business model. How does it work?

Ander: Well basically Ticketbis is a fan to fan exchange. So basically, we allow fans to sell or buy tickets. And we provide this technology, a platform, where the fans can get, if they have a ticket, an extra ticket for a game and they’re not going to go or they want to sell it for whatever reason, they can sell it simply in 2 or 3 steps. And if they’re not able to buy the tickets regionally because the event is sold out or maybe there is a ticket below face value in the platform, or whatever reason, they can buy and go to Ticketbis, look at the offer, buy the tickets they wanted and go to the event. So we give this chance to the fans.

Martin: This is kind of secondary market place for tickets between individuals. Matching the demand and supply, what is the typical ratio, you would say, from people who are just registered and interested in getting a ticket and people providing the tickets?

Ander: To be honest, this is a ratio that is mostly 50%, 60% people who put the ticket with details and everything, finally find a buyer for those tickets. But at the end, it really depends on the characteristic of the ticket, the event, the demand of the event, and the price. The price is the most important thing.

I mean, if you sell your ticket, you put a ridiculous price, you are not going to sell your ticket, right. It’s a matter of how much do you want back for your ticket. You put a price that is below face value, there is a big chance that there’s a fan who is going to buy the ticket. Buying it from you instead of buying it from the primary market, right.

Martin: And is it the people who are selling the tickets are putting a fixed price or is it auction based?

Jon: No, it’s not auction based. This is fixed price, but they can change the price. They start with a price and depending on the supply, they put lower.

Martin: They can change?

Jon: They can change. Because there’s like a competition among sellers. So if you have another seller who is putting a price lower than you, you need to lower it because you want to sell your ticket. So you can change your price.

Martin: Okay. I assume you are commission based?

Ander: Correct.

Martin: What is your average commission on a ticket sale?

Ander: Well, we charge 10% to the seller, 15% to the buyer. So we charge 25% total of the transaction. And it’s a standard commission in the market, I mean we copy the amount that is in the US that’s been working very successfully for quite a long time. We just copy that model, the commission based model. And it’s the same, all of our competitors use the same commission model.

Martin: So basically, you collect the money 100%, you get 25%, you need to pay also the payment cost, PayPal, I don’t know, credit card.

Ander: That 25% covers everything. From sending the ticket from a seller to the buyer, to our guarantee, to keeping the ticket to transfer in the morning to the seller, dealing if there’s any problem, no money no problem, but if there’s  something, we’re dealing with it. So it covers absolutely all the service.

Martin: And the tickets are they all on a paper base, or also voucher tickets?

Jon: It depends on the country. For example, in Southern Europe and Latin America, they use more paper tickets, but in a more developed countries like Germany or France, you can see paper tickets but the trend is that they are going to e-ticket.

Martin: How do you acquire these fans to use your platform?

Ander: That’s a very good question. Well, at the end, when you enter any market, you need a seller, right. So what we do is, we went to market and we announced the platform is there, so there is people who can actually sell their tickets. Sometimes even at the beginning, we are the ones who provide the first tickets for our market. So we are providing the first tickets when we go to our markets so there’s some inventory in the market place, at the beginning. But then it kicked off very fast. Once the fans started knowing that there is a place where they can sell their tickets and buy those tickets, they started putting tickets for sale, fans can buy their tickets and it comes quite nice and quite quickly.

But then it’s a service that is needed, right. Before Ticketbis arrive to a lot of the market where there’s no, we don’t have any competition like in all Latin America and most part of Asia. There wasn’t a platform where you can do this. So the only solution to get a ticket from a secondary market was to actually go to the street, stand in front of a stadium and sell your tickets. You don’t really know what’s going to happen. Or the other option was to go to a forum, and Skype together with  the guy who sell you on, when he said I sell you the ticket for €100, and you meet him somewhere in the town, and he’s going to give you a paper ticket and you don’t know if it’s valid or not and you are going to give him some money, and let’s see what happen with the deal at the event, right.

So what we thought is, what we have seen is, the service is very well acquired in the market, fans really like it, because it gives another chance to get their tickets and to sell their tickets. So the time for the market to kick off in market where there’s no competition is quite  a lot, actually.

Jon: Answering your question, how do we get the buyer?

Ander: I thought you were saying the seller, I don’t know.

Jon: No, the buyer. You started with seller. We focus our marketing strategy mainly in online marketing. So we have, SEM, affiliates and also we do some, we have a communication team and with some PR. And now we are doing some test in offline marketing like advertisement in radios and newspapers and on TV.

Martin: But I think it’s a totally great move for entering a new market just for creating some kind of shelf inventory that yourself are becoming the trader. That’s quite related to your former work.

Ander: But you need to do it at the beginning for the market to start. Then you get out but it’s, the fans that’s selling the tickets or buying the tickets.

Jon: Because if you are the buyer and there is no inventory or no ticket, they are not going to come again to your site.

Martin: But when you create the first inventory, if you’re entering a new country, are you focusing on a specific niche, I don’t know, a specific artists, or specific sports type, or something like that. Because I mean, it’s quite a capital intensive to provide all.

Jon: No, we don’t. We start with the most demanded events, like the main singers or bands and the main football team for example. And then, the market start working where sellers start to come to our market and we don’t invest anymore.

Martin: Okay.

CORPORATE STRATEGY OF TICKETBIS

Martin: Corporate strategy. What do you think, what makes you special and create a competitive advantage if you are entering a market? So why should people continue buying with your platform or selling the tickets except of other platforms?

Ander: Well, what we do different than other platform is that, we have a global company with a local focus. In order to market, we have an office, we have local people. Here actually in Madrid, we have 29 different nationalities. So for us, opening in a market, is not only open the website. We have local guys in most of the countries, we have local entity as well. So we have, we are mixed between more global business but with a local component that I think is important. That’s one of our key difference.

Jon: Yes, and we are very strong in marketing. Our marketing budget is not very high. But we, our team does a very good job, so we can probably say that we are very good at that. We can compete against anyone. And then on the seller side, we think our relationship with our sellers is very close, very good. So they tend to stay with us.

Martin: Okay. Understood. Are you making money on the first client, or is it more that you want have a repeat customer basis, where you need at least, on average 2 or 3 purchases or sales in order to break even?

Ander: We always go for, with our marketing strategy, we go for a positive ROI. We don’t do any LTV of clients or anything, there’s nothing like that. So normally what we do is, our marketing budget is very low, as Jon was saying. What we’ve done is with a very low budget. But because of that, because we have a very strict and straight way to spend it and it has to be a positive ROI from day one. So that’s what we’ve been doing it, having been able to grow the business in a lot of countries with a little financing.

Martin: That’s great.

Jon: We haven’t reached the break even point yet, because we have been very aggressive. If we are only in Spain or in a few countries, we would reach positive number for sure. But because we have opened in many countries in the last few years, we are around in 20 countries right now. And when you open in a country, it’s an investment. You need like between 8 – 24 months in order to…

Ander: To make it profitable.

Martin: Totally.

MARKET DEVELOPMENT

Martin: How do you perceive the market development for the primary ticket market and the secondary ticket market in the Spanish speaking countries?

Ander: I mean, the model we look at was in the most developed market, in the US. In  the US you can see the primary market that was the only thing that exist in 2001. When the first website was created it was called Step Up, which was actually by eBay a while ago. And what they were able to do is put the demand on the customers, that tickets are sold out, there’s another way to get those tickets. That has made the US market, the secondary US market to go from 0 and in 10 years to 4.5 billion last year.

You compare it to the primary market, the primary market is around 2 billion. So it’s  4 to 22 but the difference is in the primary market the commission is 6 – 7 %, secondary is 25%, right. If you look at the revenue based, they are not that far away.

In Europe, Latin America or Asia, the secondary market is still very-very little. I mean, except in the UK where it’s more developed and Germany is getting there as well, the rest of the countries, the secondary market is very unknown by the population. The population don’t know that they have a safe place where they can buy tickets or anything. It’s not known.

That makes the people when the event is sold out, or even when they need to find a ticket, they don’t go first to the secondary market to see if there’s a price which is below face value or anything. They’ll go directly to primary market and don’t look that much outside of it. But this trend is changing of course. The secondary market is developing very quickly in Europe, Latin America and soon Asia, hopefully, because we are starting there.

We have seen the trend that this is growing much-much faster than the primary market. Primary market is stable, the secondary market is growing very fast. Just to give you  a sense, I mean, in the time we’ve been operating the company, first we did €1 million in gross ticket sales, second year we did 5, third year we did 12, fourth year 28, and this year we’re going to be over 60. So it’s growing very fast.

Jon: Hopefully.

Ander: Hopefully if everything goes as planned.

Jon: 55-60.

Ander: As you see, the development is always doubling very year and we don’t see an end to the trend in a short term, to be honest.

Martin: If you look at this secondary market, what is the major driver? Why  is it not as develop as the primary? Is it because the people don’t trust it yet or because they don’t know about it, or is there another reason for it?

Jon: It’s a mix but. First of all they don’t know about it. If you go here in Spain on the street and you ask, “Do you know a place to buy tickets for a sold out event?” Most people have no idea about it. They say, “Okay you have to go to this street.” That’s wrong. That’s the first point.

Then the second one is trust. Before Ticketbis arrived, people use to use second had website or classified website. So there, you contact a person, you call him or her, you have to meet this person on the street, maybe the tickets they give you are fake. So people, this type is not trustworthy.

Ander: Correct.

Jon: So they say, for us the key factor is trust.

Martin: Okay. From my point of view, it’s just lowering the transaction cost because as you said, the former times the people go to a forum, spent time, call people, spend money for the telecommunication, meet this guy, that all compared are high opportunity costs. And if you now make it possible with trust system, maybe some rating of the sellers, etc. to lower this kind of transactions cost, maybe that’s why the  people are buying.

Jon: Yes, definitely.

ADVICE TO ENTREPRENEURS

Martin: We always try to share some insights with our readers from entrepreneurs like you. You made  a lot of mistakes.

Ander: Of course, like all entrepreneurs. We  make a lot of mistakes.

Martin: But we always want to share to help people become better entrepreneurs. What are your top 4 or 5 mistakes that you made and what should other first time entrepreneurs do in order not to make that?

Ander: First one I would say, the easy one for me, focus. Sorry think another one.

Jon: Thank you.

Ander: I mean, when we launched the business we have  a lot of ideas. We start with the secondary ticket platform with Ticketbis, by the same time 6 months later, we launched another website, that was called Eventbis, basically it’s a Eventbrite, I don’t know if you know Eventbrite. It’s like the copycat of Eventbrite, a do-it-yourself ticketing model for primary market. And we launched it in Spain, at some point we even have it in Italy, working in Mexico, and then in several countries. And we did that in parallel with Ticketbis. To be honest, it didn’t work.

It didn’t work because we were a small company and we didn’t have the focus on both things. It was impossible to have the resources for both things. At the end what happen is, two models are different. Ticketbis goes very fast, you get revenue quite easy and it was working very well. The other one is a medium term business, where you need to get all the promoters on board and little by little you make a small base growth every year, right. There were two completely different business. So what happen at the end with the team is they tend to go to one that’s going faster, and the other one little by little we abandon it. At some point we decided, Okay better kill it because we are losing focus.

Martin: And with focus, do you mean like time or money, or both?

Ander: Both. If you have an idea go for it until the end. Don’t start thinking…

Ander: In the end. If it works…

Jon: If it works, go go go. If it doesn’t work, you can try to  find something around. But if it works, don’t start thinking of other ideas that might work. You have something that works, go for it.

Jon: The problem is, when you are an entrepreneur you always have many ideas. In the beginning, an idea is a opportunity for you. Okay, you are doing this, but we can do that and this and that. And you feel, all of them are opportunities that if you don’t do, you’re going to lose them. So you try to do all of them. Exactly. It doesn’t make sense. You have time, you have money, you have experience, so that was a great error.

Ander: Imagine, we have raised until now, until now we have raised €4.5 million in equity, that’s what we have raised. And that, at that moment, for the last first 2 years, we spent at the end, we made a calculation around 1 million on this part of the business.

Jon: Half a million, 600 thousand. It’s a lot of money.

Ander: A lot of money for us, it was a lot of money. A lot of time we were thinking, what would have happened if I spent in growing faster Ticketbis, where would we be right now? I’m sure we’ll be doing much bigger than what we are doing right now. So that was one of the furthest thing. Now it’s your turn.

Jon: The second one is focus. 🙂 No, the second one is, in the first stages of the business don’t focus too much on product. Try to spend your money in other things, especially in sales, marketing, and people. Because when you start, for example, in an online business, you start preparing the site and instead of launching it and improving it, you want to launch  a perfect version of it, because you think, my friends are going to look at it, my mom, my family, you think you are going to get a lot of traffic from the very beginning. That’s not true. Maybe like one person is going to visit your site, and it’s your brother, your mom. So no problem in launching a not very good version. And instead of doing that, you should only invest that money on people, on talent. That’s the right investment and in marketing and in sales.

Martin: So these are the first two.

Ander: It’s getting interesting. Okay, third one, another one. This time it’s not focus, it’s something different. I will say, because this happen o us when we launched in another country, one of the things  a lot of people tell you is to register the brand. At the beginning we didn’t believe them, so for example we launched in Mexico and 6 months later after we launched in Mexico, the business is going good, let’s register the brand because for us spending €1000 at that moment was like, I don’t want to spend €1000 in registering brand. That’s stupid. We didn’t do it. 6 months later when we try to do it, somebody has registered the brand. It was a primary ticket company. We are not direct competitor but they’re a ticketing company and they register the brand.

So now we are in a lawsuit to get the brand back and everything, so instead of spending 1000, I spend 50 or 60 thousand to get the brand. So, I don’t know. We don’t know yet what is going to be the final bill, but it’s going to be. Much more than the original one thousand euro, that’s or sure. I know the advice is believe in people who tell you to register the brand, you have an idea and you use a more or less that is working, register the brand quickly.

Martin: Okay. It totally make sense. I would compare how much investment am I putting into this market, and if it’s like €50 or 100 thousand in advertising, building a brand and I didn’t protect it.

Ander: Exactly.

Martin: I am at risk. And the question is how high is the probability of me having to go to court for the loss. 2 to 1 right.

Ander: Come on, Jon. Pressure.

Jon: Okay. Fourth one.

Ander: Last one right?..

Jon: I have another one. Let me explain it.

Martin: This interview will go a little bit longer, like 2 hours.

Jon: They say I’m there. Fourth one it was a huge error. It’s the partner. I’m joking. This is advice, this is not an error. But in the partner, you can do it on your own, but I think having a partner is really good because like starting your business is every time up and down, up and down. And you need someone to compensate it. Especially if it is like a positive person like Ander.

Then if you choose a partner, I want to do it with a partner, you should try to pick a complementary, compatible partner. You have strength and weakness. And your weakness should be compensated by your partners. So you have to choose the right one. And be careful with your friends and your family because maybe they think, this friend is going to be the first partner, I mean he’s not. You lose a partner, you lose a friend or you lose a family.

Martin: That’s right. Okay. Thank you very much Jon and Ander! And maybe next time when you buy a ticket, buy at Ticketbis.

Jon: For sure.

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