Monthly Archives: December 2012

stubhubStubhub is the leading secondary ticket marketplace in the US. The amount of ticket volume that it moves is incredible, and with a small tweak it could process even more highly profitable transactions. Stubhub takes 15% commission from the seller and charges at 10% buyers fee, plus on electronic tickets, it charges ~$5 per transaction for delivery. While this is a healthy margin, it’s only fair to point out that when you add in 3% for credit card processing fees, a new 2-3% rebate for their Stubhub Fan Rewards loyalty program, and large seller discounts of up to 5%, the gross margins aren’t as high as they’d initially seem. When etickets are uploaded by the seller for instant download, or the tickets have been dropped off at a Last Minute Tickets location, the listings (as of recently) stay up until the event start time. Previously etickets would have a cutoff time of two hours prior to the event, presumably for Stubhub to service customers who have run into issues before the start of the event.

I have watched many event pages over the two hours leading up to the start time, and I can confirm first-hand that a large number of sales are processed during this time. So while there may be a tradeoff of a small handful of customer issues that arise, there is a huge upside from all the additional transactions that occur in the last couple hours.

I propose that Stubhub continues to keep listings up after the event start time. There are often a fair amount of tickets remaining at the start of the event, and my hypothesis is that many of these tickets ultimately go unused. I understand that Stubhub promises that tickets will be delivered prior to the start of the event, and this makes sense in the context of buying tickets in advance. However, anyone who purchases tickets after the start time could be presented with a popup warning that the event has already started and will not be able to proceed without clicking a button to confirm. It has a similar process in place for listing tickets now that the end time of the listing goes until the start time. It’s hard to quantify how much this would be worth to Stubhub, but I think it would see a similar amount of activity in the 30 minutes after the start as it would over the last 15 minutes prior. This adds up across the thousands of events that they have listed.

The extended listing makes even more sense in the context of concerts, where frequently the main act doesn’t come on for a good 60-90 minutes after the opening act begins performing at the start time. In these instances I could see a lot more activity. The exception would be cases like MLB where Stubhub is the official secondary marketplace for the league and the teams are able to dictate the end time. This past season, only a few teams like the Giants chose to list up until game time, while others chose to cut off sales, trying to protect walkup sales.

One additional tweak that Stubhub could make to facilitate and encourage last minute mobile purchases is to help buyers overcome the significant impediment of printing electronic tickets. Most last minute buyers are in the vicinity of a venue are not near home or an office where they can print tickets. In the context of MLB or other direct partners, this could involve either including a will call option with the team or an integration with iPhone’s Passbook or the Android equivalent. It gets a little more complex when regular printing is involved, but I could see rolling out a partnership with locations nearby big event venues where buyers could easily send tickets to be printed via an app or mobile browser.

The beauty of both these product enhancements is that they both could be tested fairly easily in a contained environment with a limited number of venues where they could be monitored closely. If the tests show an uptick in sales, Stubhub would continue with the rollout. If they don’t move the needle, it could simply shut the projects down with minimal investment. The potential upside greatly outweighs the costs.

spgThis ski season I’m using the Mountain Collective pass, which gets me to days of skiing at four great resorts, 50% off lift tickets thereafter and lodging discounts. Eight ski days for only $349—awesome. The beauty of this pass is that it includes a diverse selection of resorts under different ownership including Aspen/Snowmass, Jackson Hole, Alta and Alpine/Squaw Valley. For people like me who don’t like to commit to a pass limiting you to just one resort, this is the perfect pass. Redemption of the pass is fairly straight forward in that you bring in a printed ticket to the ski area ticket office where you are issued a lift ticket.

With the precedent for this type of cross-resort pass, I see an opportunity for a similar type of pass, only driven by the Starwood hotel chain, which has several resort properties in ski areas across North America. In particular potential resorts include: Whistler, Steamboat, Vail, Aspen, Deer Valley, and Mammoth. While this may be less attractive to Aspen and Vail in that it’s competitive with the Mountain Collective and Vail’s Epic Pass, it still opens up a huge marketing opportunity for the resorts in that it would access SPG’s huge national customer base. The revenue split to the pass itself could be modeled after the Mountain Collective pass.

So what’s in it for Starwood? Hotel bookings. There are typically a ton of options when it comes to ski lodging from independent rentals by owners to hotels. A pass with an SPG lodging discount and perhaps some add-ons such as a free breakfast or a spa credit could lure skiers to resorts where Starwood is present.

Now imagine bringing in another existing SPG marketing partner, American Express, which offers an SPG credit card. The partnership would give Amex an opportunity to market the SPG card to pass holders and would further extend the marketing reach for the pass.

The structure for an offering like this is in place. Many of the hotels already offer packages including lift tickets, so it then becomes a matter of taking the relationships to the next level.


Photo credit: EpicMix

I love to ski. In a good year I’ll get to the snow three or four times a season, enjoying a dozen or so days in the mountains. There are plenty of better skiers out there than me, but I am fairly aggressive on the mountain and will go on pretty much any run in bounds. I am heading to Aspen this weekend with a non-skiing friend, and I would like to connect with other skiers who will be there at the same time. But how can I do this? Somewhat frequently I find myself in similar situations where due to various reasons I do not have a ski partner at my same skill level. I have found jumping on a snowboard to be a decent equalizer for skiing for more intermediate skiers, but if I really want to rip down the mountain, I’m on my own. On the flipside I know there are other mixed level groups of people with people in the same situation in terms of varied skill levels—this is where social networking technology can intervene.

Skiers need a way to efficiently connect on the mountain with other skiers at their skill level. If a website, or ideally a mobile app could serve as a matchmaker, this functionality could be a great user acquisition tool. Here’s how it could work in the best case scenario:

Users would enter their skill levels, available dates, and location into the app. If there is a match right away, the app would highlight those users and you could direct message that them via the app. There would be a listing by location that can be searched for other skiers in the same place at the same time. You could also set up push notifications to tell you when a new match enters the system. Of course, this would all be built with Facebook integration so you could see if you and your match know people in common. There could even be privacy settings that only allow you to be seen by people within a certain number of degrees of connection to you—friends of friends, etc. You could enter your information prior to your trip or right on the lift on your first run of the day.

So what’s the revenue model here, and why would a company want to do this? There wouldn’t be any direct revenues associated with this feature, but this would be a compelling reason to download an app with other monetization channels. A couple initial examples that come to mind: Liftopia and the EpicMix, by Vail Resorts. Liftopia’s app includes snow reports, ski conditions and sells discounted tickets and lodging to many ski resorts. Since Liftopia’s business is all about e-commerce, the cost of acquisition is likely fairly high. A high utility feature like this could be a great draw to pull in qualified leads for their primary sales offering.

EpicMix already has Facebook integration and links you to your friends that are also on the app, so it’s not a huge stretch to allow people to opt-in to sharing their trip timing and skill levels as mentioned above. Not only could this help with adoption of the app, but it’s a potential differentiator for its resorts. Consider the scenario a group wants to go skiing and there’s one odd person out in terms of skill level—could be much better or much worse. If this group is deciding between Northstar (a Vail Resorts property in Lake Tahoe) or Alpine Meadows, a competing nearby resort, the ease of meeting up with compatible skiers could tip the decision in the favor of Northstar. This may be unlikely to the most important deciding factor of resort choice, but it could be influential.

Skiing is a social sport. You might spend as much if not more time sitting with others on the lift as you do on the mountain. Someone needs to build this feature. Who’s going to make it happen?

muncheryMunchery offers a healthy and affordable alternative to restaurant takeout/delivery for Bay Area residents. It has partnered with dozens of personal chefs to prepare gourmet meals, offering a handful of choices for delivery Monday-Friday. Entrees approximately range in price from $9.99-$15.99, which is competitive with many restaurant delivery options. Delivery varies slightly depending on where you are located but costs in the neighborhood of $3.95 as a flat fee. Orders can be placed for same day order delivery by 4pm, and you can choose among one-hour deliver windows. There’s also an option available for cooler drop-off service if you won’t be there to take delivery. The food comes almost ready to eat, with only a quick heating in the microwave or oven required. All-in you can get a nice meal for two for under $30.

I recently tried the service myself, and absolutely recommend it. The order process was simple, delivery was seamless, and the food was tasty. I certainly plan to order again. So how can Munchery encourage repeat orders? Offer subscriptions. Now this idea isn’t new, as it was mentioned in Brenden Mulligan’s TechCrunch piece back in June. I’ll take the concept a step further and suggest some thoughts around how this might play out. I will also preface this with the fact that I don’t know Munchery’s profit margin on the dishes and what delivery costs net out to be, but I imagine that the general modeling of the meal plans could be adjusted to be net positive after a certain number of orders have been placed.

The “Prime” Model – Similar to Amazon Prime, Munchery could charge an annual fee that covers all deliveries. If a customer were to place two orders a month over a year, that would cost approximately $95 in delivery fees. For someone who is interested in repeat ordering, doing so twice monthly as a breakeven point feels attainable. There could also be a bonus item—bread, a cookie, etc—included as a bonus for these members. To limit exposure it could require a certain minimum order amount.

The Monthly Pre-Pay Model – This would involve prepaying for a minimum amount for a monthly (30 day) period and in return for this commitment you get free delivery (again with a minimum order amount) for the duration of the 30 days. Assuming that for this to work something in the neighborhood of two entrees, or around $25/order, a starting point could be a $100 monthly prepayment, which would net out at ordering once a week for two. This would be set to renew automatically.

Munchery already has a built-in group that they could test this against in VIPs from the program they launched in August, in which members get 10% off all orders. Ultimately the people that join one of these plans are going to be brand ambassadors and be the ones most likely to recommend the offering to their friends. Even if the margins get really thin, or at breakeven, Munchery will have loyal cheerleaders, more frequent regular customers, and happy chefs since it will mean more meals sold in the long run.

Eventbrite logo

It’s no secret that Eventbrite is killing it this year. In June they crossed the $1 billion in total sales mark, and as of August they have sold over 83 million tickets cumulatively (just check their homepage for the latest count). Operating 174 different countries, it is expanding rapidly. Eventbrite provides a plug and play ticketing solution to event organizers, taking a modest cut of the ticket sales. While there is still plenty of opportunity for additional growth in pulling in new event organizers, Eventbrite has some big opportunities to add revenue streams from their existing organizers.

The first opportunity is around helping organizers promote their events. Eventbrite already does a good job of leveraging Facebook to surface events for users that their friends are attending and also has an algorithm to recommend events of potential interest. What if Eventbrite offered premium placement of sponsored events on both the website on their email outreach on upcoming event? I could also see a lead generation scenario where organizers could enter a revenue share agreement with Eventbrite with a similar structure to the deal sites in which a promo code is offered to entice users. As an event organizer on the platform myself via Bottlenotes, I would gladly welcome this type of promotion, as it’s something we do anyway outside of the Eventbrite system. Why not leverage their 20 million person user base?

Will this hurt the integrity of the recommendation engine? Not if it’s done in a way that the sponsored events are simply being more prominently placed for people who would have it recommended anyway. Additionally users are accustomed to this type of sponsored placement on sites like Google and Yelp.

Another opportunity that Eventbrite is uniquely positioned to address is the secondary ticket market. Stubhub owns this space for larger events, but often does not even list smaller events that fall in Eventbrite’s sweet spot. The advantage here is that since Eventbrite is the ticket issuer, it can validate sellers’ tickets and re-issue them to the buyers, similar to how Stubhub handles Major League Baseball tickets. Users would be able to post tickets directly from their accounts. The fee structure could include the 15% commission on the seller side, like Stubhub, and could be split with the event organizer in some fashion. The buyer fees would be the same structure as with a regular purchase only relative to however the seller sets her price. To address organizer sensitivity to secondary sales if the event is not sold out, Eventbrite could allow the organizer to opt-out of listing a secondary market place, or to put a floor on prices.

Creating the secondary marketplace would benefit all parties involved. The attendees would be able to more easily and safely be able to sell unneeded tickets. The organizers and Eventbrite could capture a cut of secondary sales which would happen anyway through other channels such as Craigslist. Lastly, in the case of sold out events, the organizer can collect valuable demand data via the secondary market clearing prices, allowing them to improve their pricing strategy for future events in the same market.