Goldstar, now the fifth biggest ticket seller in America, started during a carpool.
In 2001, Rich Webster, Jim McCarthy, and Robert Graff were working together at a start-up called Kiko. “We lived near each other and worked about 20 miles away from work, so we car-pooled,” says Graff. “That start-up was a classic dot-com bubble flame-out. We raised and spent more than 10 million dollars in VC money, ‘pivoted’ every time an investor had a ‘big’ idea, and never launched a product. I think at one point there were 80 employees and 0 customers.”
Meanwhile, Graff was helping out a friend at a different company that was also headed downhill. That company did online “papering” (i.e. giving tickets away for free to fill a venue). During one of their commutes, McCarthy and Graff started talking about the flaw in the ticketing business. “No venue wants to be told that their product is worthless, and no customer wants to go see a show that’s unsellable,” explains Graff. “So we had an idea. We’d do the same thing, but we’d target the best entertainment. The most popular shows have unsold inventory too, and instead of charging the venue to give it away, we’d sell half-price tickets online and actually pay the venue. In October of 2001, we agreed to do it. The website launched in February.”
After leaving a start-up that blew millions of dollars without ever accomplishing anything (Graff: “too many angels and VCs calling the shots and no real focus on the product”), the founders worked hard to avoid funding on their new project. “We purposefully didn’t want anyone else’s money because we didn’t want their advice. We started with $1,000 and immediately paid $800 to the state,” Graff says.
“We purposefully didn’t want anyone else’s money because we didn’t want their advice.”
He did the product development, programming and sys admin. McCarthy did the marketing and customer service. Webster did the venue outreach. The workload split worked well. Graff (right) says, “Luckily, the three of us have very different skill sets and, combined, we had almost all the skills we needed — except design. For that we called upon a friend to do us a favor, and when the business started to look real, we gave him equity.”
For almost the first year, the company was just the three founders. “We worked from our homes and got together a few times a week,” says Graff. “We then got a tiny office with three desks so we could work together. Now with 50 employees, about half our staff works in our office and the other half from home.”
A different approach to tickets
Goldstar’s approach contrasts with other ticket sellers. Conventional brokers buy high-demand tickets and sell them at a premium, sites like stubhub.com let people sell tickets at market prices, eBay lets them auction to the highest bidder.
Goldstar, on the other hand, goes after leftover seats – to sports, theater, concerts, comedy, and more – and sells them at half-price. Venues cover costs and use the unsold inventory as a marketing tool to reach new audience. Customers get to try new things without the risk of paying full price. Graff says, “When we get people to go out and see a show or band they wouldn’t normally have gone to, it’s a win — a win for us, for our member, and for our venue.”
According to Graff, the company sold almost $40 million in tickets last year and has about 1.5 million customers. It’s partnered with MLB, Cirque du Soleil, NBA, Broadway, the Improv clubs, Ticketmaster, Live Nation, and more than 5,000 other venues and ticket suppliers across the country. It’s grown 40-50% annually for the last several years and expects to match or beat that this year too. The company also plans on adding about a dozen markets this year and is constantly acquiring new partners.
The founders have no interest in exiting either. Graff says, “There’s really no planned ‘end’ for something like this, unless you’re explicitly planning to sell. And while we do get inquiries about that, nothing so far has seemed to make sense compared to just continuing to build the business.”
Attacking Ticketmaster
A key aspect of the company’s early strategy was taking on the industry’s reigning giant. “For the first few years, we picked a fight with Ticketmaster,” says Graff. “They claimed exclusivity and blocked their customers — our venues — from working with us. We never played the exclusivity game. Our partners can leave at any time. We work hard to keep them, rather than engaging in legal shenanigans to try to force them to stay. And now Ticketmaster is a partner of ours. In fact, I think we’re the only authorized third-party website that can sell Ticketmaster inventory.”
Forging its own path helped the company avoid the anger that’s often targeted at ticket sellers. “The ticketing industry has a bit of shady element,” says Graff. “People hate brokers. People hate Ticketmaster. But people love us. It pays to be the white hat.”
Goldstar 101
The Goldstar workplace is a streamlined one. “Our goal as a company is to get people to go out more, so we don’t have a foosball or ping pong table,” Graff says. There’s no Xbox 360. We don’t do laundry or have a cafeteria. Everyone works hard and gets home to their lives. I’ve previously been at jobs that required 60-80 hours a week. We don’t do that. We work smarter, not longer. But we also have fun. Employees get comp tickets to shows. Plus our venues are constantly inviting us to some great events, so we go out a lot too.”
All employees get trained across the company too. Everyone sits down to do customer service work during their first week. Everyone hears how the venue relations team works. “Everyone learns ‘Goldstar 101’ to make sure we all share the same values,” explains Graff.
First, if you’re going to start a business, make it your business. Don’t take capital or lose control of the company before it’s even off the ground, because if it fails — most do — you’ll never know if, done your way, it would’ve been a success. It’s relatively easy to get money for a start-up, but usually the founder is risking a lot more: his time.
If someone wants to buy your business using mostly an earn-out, that’s not buying your business, that’s hiring you on commission.
Finally, be patient and focused. It takes time to build a business. Know what you’re trying to do, and do it. Pivot only if it becomes so stupidly obvious; otherwise, you’ll just pivot in circles.
Why is this cross-training so helpful? “A number of our teams are entirely remote. This early training helps introduce everyone to the rest of the company,” Graff says. “It also makes everyone empathetic to each other. As a new employee, you learn to appreciate the expertise of others. When a programmer is helping customer service resolve an issue, the programmer can sympathize with the customer service agent who is talking on the phone to a frustrated customer. In a lot of ‘enterprises’ you find that one team is seen as more important than the other, marketing or sales usually. We don’t want that culture. If any one group is more important than the other, it’s our customers.”
Graff says A/B testing and a focus on data is a big part of Goldstar’s success. “Lots of A/B testing makes it easy to ignore opinion,” says Graff. “People tell us our emails are too long. Testing shows they’re just the right length.”
The company also avoids putting any third party ads on its site. “People tell us we can make a little extra money by putting ads on our site. Everything on our site is an ad for what we sell. We make more money from people clicking deeper-in than we would from them clicking out. Pass on that advice.”
“You gotta get it right”
Owning the whole experience is another challenge for the company. “Our business is hard. People buy tickets from us, make plans and drive to a venue. If it goes wrong, they’re mad, and just giving them their money back doesn’t fix it. They might’ve paid a babysitter or been embarrassed on a date,” Graff explains.
The site offers tips on what to wear, where to park, and more. Above, suggestions for the Toyota Grand Prix of Long Beach.
“Our median response time to customer emails is under 10 minutes most days. Like most sites, we have member-contributed reviews and photos. But we go beyond that and have tips on what to wear and where to park, little things that make your night just a little bit better. Our editorial team writes copy and checks all the details of an event. If a show’s cancelled, we email and call the customer to make sure they don’t waste time going to the venue, and we give full refunds.
“In our business, you gotta get it right. From the very beginning, we knew we were selling a half-price ticket, but it couldn’t be a half-price experience. We want our members to have a better experience than if they paid full price.”
This Medieval Times/Goldstar video offers a look at the Goldstar office and team.
(Note: Goldstar’s Robert Graff answers reader questions in the comments section.)
Related
Goldstar.com
Nights Out in New York Just Got Cheaper [NY Times profile of the company]
This is part of our “Bootstrapped, Profitable, & Proud” series which profiles companies that have over one million dollars in revenues, didn’t take VC, and are profitable.
Ram
on 11 Apr 11Great to know your story and its Awesome. All the best and happy growing.
My question to Geff: How did you start acquiring those early customers, as you would have been an unknown name in the market, relatively with no experience or previous sales data?
Robert Graff
on 11 Apr 11Acquiring customers was really slow going at first. We had a program called “Company Nights Out” where we went to large employers in the area. We’d pair suppliers with companies (“Earthlink Night at the Improv”), the company would promote it to their employees, and to go you had to join Goldstar.
That was one of the many things we did on the cheap to get our initial members.
Dan
on 11 Apr 11@Goldstar
I live in Dallas / Fort Worth (top 5 metro in the US).
Goldstar only has 21 events!
... and most of the 21 events are just small comedy club gigs.
I was hoping to find sports, etc.
Wish you guys the best, seriously, but it’s currently unusable for me in DFW.
Jeremy Ricketts
on 11 Apr 11Robert and the Goldstar team: just wanted to say I’m so proud of you guys (in a hey-I-worked-with-those-guys way). I learned so much working with Robert and for the better part of a year. Goldstar was my first full time job as a bonafide web developer (a job I actually found on the 37sig’s Job Board. HA!).
Other things to note as a former employee: - They allowed time for personal growth and learning. This is when I picked up my first book on Rails. - Goldstar is technically scrappy. And not in a “we’re too cheap to pay for it” sort of way, but in a “I bet we could build a better one” way. It works well. They manage their own servers, roll their own phone software, emailing systems, load balancing, etc. It’s really amazing what they have accomplished with sich a small team. Their main sys admin guy is a merlin class wizard. - Goldstar is a great place to work. Employee retention is high and people are given a lot of autonomy to make things better, raise issues, etc. - With a small, agile team, things can be stressful at times. Robert doesn’t let the dev team get bombarded with every little request that comes in. Sometimes being a good manager means running defense so employees can get their work done. - The founding team is a perfect trifecta. You have the sales/marketing guy trying whacky stuff and landing promotions. The tech/biz-dev guy who builds it all and makes technical strides both in house and with partners. And you have the business-ops/HR guy who keeps the engine greased, the employees happy, and the lights on. - The company’s mission permeates throughout the company. “Get people to go out more.” - It’s the only company I’ve ever worked for where, if you say where you work at a social gathering, and at least one person in the group lights up with “OMG you work for Goldstar? I love them!”. Always liked that.
VIVA GOLDSTAR!
Robert Graff
on 11 Apr 11Dan,
We just launched Dallas. We’ll be expanding quickly there, so stayed tuned.
-Robert
Nathan
on 11 Apr 11@Matt Errors in bold
Why is this cross-training so helpful? “A number of our teams our entirely remote.
If anyone one group is more important than the other, it’s our customers.”
ML
on 11 Apr 11Thanks Nathan, fixed.
Brendan
on 11 Apr 11@Robert Graff, congrats on the success. How do you guys determine which cities you will launch next?
Mark
on 11 Apr 11Like Dan said, where’s the beef?
In the next month in Houston (4th largest city in the nation) there’s 23 events (less than one a day) and half of them are Astros games or Houston Improv.
How do you plan to differentiate from groupon who has 50% more deals/month?
Nathan
on 11 Apr 11Hey Matt, sorry to keep bugging but look at this sentence again: “If any one one group is more important than the other, it’s our customers.”
I can’t help it.
Sarah
on 11 Apr 11@Goldstar / Robert
The service has been around since 2001 (10 years) and you only recently added Dallas?
Seems odd, no?
jim winstead
on 11 Apr 11i don’t find it odd at all that a company that clearly needs boots on the ground in each city it expands to (managing venue relationships, at least) would take its time entering new markets. growing into a new state and facing a new set of labor and business laws can be another challenge.
Robert Graff
on 11 Apr 11Houston (like Dallas) was also just recently launched.
We didn’t feel rushed to launch every market immediately. This year, we’re doubling the number of markets because we can afford the investment.
The decision to add markets is interesting. Every market takes resources, so do you spend your money launching Houston or go deeper in Chicago? If you’re willing to lose a lot of money, you do them all. If not, the choices are hard.
We select new markets based on a lot of factors, not just population. San Jose has more people than San Francisco, but San Francisco is more dense with lots of live entertainment options. Austin has a lot venues, but they’re relatively low-cost tickets where half-price doesn’t help much.
-Robert
Nathan
on 11 Apr 11Thanks for answering that. Really interesting answer and it seems to show you guys are taking the long view.
Matt
on 11 Apr 11what technologies do you use to facilitate communication for those employee who work remotely? Do you limit the option of working remotely to only a few teams? ive found that collaboration can be difficult for remote teams. do you have any suggestions? my background is in software engineering.
Robert Graff
on 11 Apr 11Matt,
Most people do their jobs entirely online. The Editorial, Customer Service, and Venue Relations use an internal helpdesk/ticket system where the work can be assigned in the group or moved into another queue for another team. For example, Venue Relations is working on a deal and then assigns the case to Editorial to have copy and images prepared. Development uses Pivotal Tracker. These tools facilitate the coordination of who’s doing what.
Open communication among teams is also crucial. Most teams have a campfire room and we promote that people drop into different rooms if they have a question for another team.
Some teams also communicate using: basecamp, yammer, skype, adobe connect (large video stand-ups)
-Robert
Rishi
on 11 Apr 11wow! These guys are seriously awesome. Great quotes in this article.
My favorite was “People tell us our emails are too long. Testing shows they’re just the right length.”
Gene Chuang
on 12 Apr 11When are we gonna see Lakers tix? :-)
Adrian
on 12 Apr 11Isn’t this exactly the same business model as the theater ticket stalls in London (last-minute, half-price tickets to big/all shows)?
With a twist on distribution channels (online vs. walk-up-and-pay)....
That being said, kudos to Robert and the team – I’ve always liked the model and it’s win-win (customer/venues) :-)
Robert Graff
on 12 Apr 11Adrian, it is very similar to the half-price ticket booths, except we don’t do last minute. We work in advance to build up buzz and generate interest in the show.
Gene, my friend and Kiko compatriot, we had a few Lakers games at the beginning of this season. :)
-Robert
Krish
on 12 Apr 11Amazing article. Just love the way Robert has put forth his opinions and how they run the company – so down to earth & with a long term vision of how to go about building a business. You guys are amazing. Thanks for sharing.
John
on 12 Apr 11It’s relatively easy to get money for a start-up, but usually the founder is risking a lot more: his time. I really agree with this, for a founder, nothing is more frustrating than spending several years working for his or her startup which went bust, while founder does not know why.
Derek
on 12 Apr 11@RobertGraff…Congrats on the biz success! You have to wonder… if you had taken VC money to grow quicker in 2001 if there would even be a Groupon today.
That being said, as former venue manager and promoter I like your business terms much more as you allow for your clients to actually make money on their sales. This “little fact” may make your model more sustainable as you are a true marketing partner for your clients.
Stuart Gray
on 12 Apr 11Great company I have a few questions for you. 1. Any plans for UK? 2. For your training of remote employees, is that online/skype/video or is there any person meetings? 3. How do you decide if new employees are likely to be suited for remote working?
Mark
on 12 Apr 11So when I signed up with Goldstar I chose not to receive any emails (chose skip on the screen with the checkboxes to choose your announcement), and surprise this morning there’s some weekly spam sitting in my inbox. Not cool.
Stella
on 13 Apr 11Very interesting article! I joined Goldstar several years ago while living in the DC area – never took advantage of the deals, but saw many that were definitely interesting! Any plans for coming to Jacksonville, Florida?
Servio
on 13 Apr 11Dear Friends I love the article. I can see when somebody has a lot of passion and i’m totally sykd with it! I will tell you my experience from living in Poland for 23 years. From one side i say ‘WOW, that’s a really neat idea’, but from the other ‘I don’t get it’. The wow part is natural and everybody get’s it. The ‘i don’t get it’ come because i read one of your comments Robert which furthered my hmmm doubt(?). Let’s say there is a HipHop concert in my city…they sell tickets obviously via normal ways…and increasingly more in the net…but there is also an option to buy the ticket while entering the club (it will be few bucks more)...so i don’t get how the seller would know how much of the tickets to give for this half price thing, since he doens’t know how many tickets he will sell..he may only speculate.
Thanks
Robert Graff
on 13 Apr 11@Mark, all members get our weekly newsletter. You can unsubscribe by going to http://www.goldstar.com/unsubscribe and there’s a link.
@Stella, Jacksonville may be this year. Not 100% sure.
@Servio, producers and promoters are really good at estimating their sales walk-up sales based on their advance sales. The best ones know what they’re going to sell before they put any tickets on sale.
-Robert
Dakota
on 13 Apr 11Mr. Graff,
Not wanting anyone else’s money proved to be on target. Would you suggest smaller projects first for those of us with limited funds? Thanks.
Robert Graff
on 14 Apr 11Dakota,
We started off spending very little money in the company. We mostly spent time. If you have limited time, do something smaller. Not mentioned in the article, but I kept by day job for the first six months and then did contracting for a year after that.
My best advice would be to take whatever you want to do, whittle it down to the smallest thing possible, do it and get users whatever way you can. The hardest part will be the doing.
-Robert
This discussion is closed.