Why SeatGeek walked away from going public with Jack Groetzinger

Speaker A: 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 it had all been. There had been no innovation for the prior decade.

Speaker B: Plus, that was Jack Gretzinger, co founder and CEO of SeatGeek. SeatGeek launched on the TechCrunch stage in 2009 with a simple idea to make buying tickets easier. Seventeen 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. And why expanding your vision can be more powerful than pivoting. I'm Isabel Johanneson, and you're listening to Build Mode. This season we're taking a look inside the fundraise. Hi, Jack, how's it going?

Speaker A: Going great. Thanks for having me.

Speaker B: 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, uh, TechCrunch 50, which we now call Startup Battlefield, with, you know, 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, uh, you know, 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?

Speaker A: We had no idea what would happen, is the honest answer. We have 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.

Speaker B: 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?

Speaker A: Yeah, the original product was actually even narrower. My name is Jack Ratzinger. This is my co founder, Russ D'.

Speaker B: Souza.

Speaker A: We are SeatGeek. SeatGeek is a web application that forecasts the price, uh, 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, uh, 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 call 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 theory of 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. Sort of 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.

Speaker B: 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?

Speaker A: 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 load bearing 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 metasearch engine, meaning we weren't actually selling anything ourselves. We were never the merchant of recording, but rather we were this 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, uh, 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 could we make it better? How can we use technology to do it? It only focused on that problem, didn't focus on anything else.

Speaker B: But those are some pretty major pivots to your business model and you know, 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 or investors are telling you that, hey, time to pivot. Uh, what was the chicken and egg there?

Speaker A: Yeah, we made a few. I think about them less as pivots and more expansions. Okay, just being semantically annoying, but, uh, you know, just to specify what they were specifically, we, we moved from being metasearch 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, uh, for major venues in the US and in each case the conversation with investors actually was quite positive because we, it was an ever expanding view for what Sikhi could become. And it was all built around Sort of the. 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, board of investors, who in each case saw it as a way to actually expand what we could become.

Speaker B: 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.

Speaker A: Yeah, for what it's worth, I'm not proud of how much we raised. I think some people maybe use capital raises, a vanity metric, but, uh, 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. So to get to the point that we are easily. And it was not close. The hardest raised round 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 had. 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 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. We had a 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 in 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.

Speaker B: Well, let's talk a little bit more about that Covid period, because, I mean, you know, your entire industry basically shut down for What, a year? How long was it really out of commission?

Speaker A: 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.

Speaker B: But how did you sort of manage both investor and customer relationships during that time? And also, I mean, your own Runway? Uh, luckily it sounds like you've closed a raise at the perfect time. Do you think that was a make or break?

Speaker A: 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 had to be launched into production in a world where people were spending many millions of dollars on SeatGeek every day.

Speaker B: 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, um, for founders who, you know, might not be familiar with that, why were you pursuing it and what were you hoping it would achieve that staying private couldn't?

Speaker A: 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 SPAC, 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 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 Red Ball 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. Red Ball was with us the whole way, kind of agreeing that that was the right choice given what was happening in the market.

Speaker B: So, I mean, in hindsight, what do you think would have happened to SeatGeek had you gone public via SPAC in 2021?

Speaker A: 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.

Speaker B: 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 in questions they're asking that you wouldn't have, you wouldn't know otherwise if you hadn't started going through that process. What does that process look like?

Speaker A: It's pretty similar to the process of going public via traditional, uh, ipo in terms of what you need from a compliance, uh, controls, regulatory standpoint. There's a, there were a few differences. The differences actually diminished over time and the two things became much more similar. So we were fully ready to list. We'd actually flown the entire company in for a bell ringing party. Oh, wow. The list on the New York Stock Exchange on a Friday, I believe. And I think on like Tuesday, I had to get up and tell Everyone that actually what you thought you were here for is not happening. Plans have changed. People were somewhat shocked, but we also, alongside of that had, had raised a. What became our Series E. And that definitely helped soften what was otherwise a pretty shocking blow because it gave us a really clear pathway. It also helped that at the time there was this weirdness where we as a company were performing really well, but this back market was going in the opposite direction. So it just seemed like in some ways, kind of a tragic way to list because we knew it would be really bumpy and we knew we didn't want to do that until we could feel good that it was going to go really well.

Speaker B: Interesting. So that obviously was a, you know, a very. Sounds like tumultuous time for the company between Covid and the SPAC and not doing the SPAC and all of these things. But let's go back a little bit more to, um, some of these earlier rounds that you raised. So, so, you know, through all of the expansions, as you called them, not pivots, but different kind of phases of seatgeek, at some point you entered into, you know, Ticketmaster territory and became, you know, more in competition with them. In an industry that investors might have reservations about backing a company in an industry that already has a major player, how, uh, what raise, what round are we talking about where those kind of questions started to come up and how did you navigate those investor conversations?

Speaker A: We actually had. Yeah, so it would be what was our Series D, which would have been around 2017. 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. There's no real second competitor. So it's not like, uh, right now, if you're starting, I don't know, an AI note taking Apple. There are quite a few people doing that. It's not obvious what your advantage is. For us, the strategy was rather straightforward. Uh, 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 it had all been. There'd been no innovation for the prior decade plus. The question was just, could we get people to switch? Because there was so much inertia and so much psychological fear around switching. And once we got some proof points, it still took leaps of faith, um, on the parts of investors. But once we got a few clients to do that. I think smart folks could sort of see how this could play out and see how much opportunity there was if we were able to continue to build something that was much better.

Speaker B: Have you ever worked with another founder, maybe an emerging founder, who's kind of faced a similar challenge and asked you for some advice? Because I'd be curious what, what, what the kind of go to party line is. Right. How do you face a monopolist and how do you actually convince investors and convince customers that you have something different and unique when there is a status quo in that industry?

Speaker A: I think it's helped a lot for us is to have clients that don't just like you, but are willing to get on planes to talk to other prospects or investors who are sort of so passionate about what you're doing that they will sell for you. And we're very lucky to have that. And as we've raised rounds, that's absolutely been an important part of the process where an investor would want to talk to current clients. We're in an industry where we have a relatively small number of clients on a numbers basis, but each of them are rather large. So that also helps because I think if you were selling SaaS that cost $20 a month, it might be harder to get people on a plane to help you. Uh, but it's been really impactful for us. And it also creates these client relationships that are, you know, they become much more than clients. They become friends and important partners.

Speaker B: Yeah, I mean that, that uh, sounds amazing to have customers who are willing to get on planes to go and pitch for you. I think there's a lot of early stage founders who, who can only hope to get to that point. What would your advice be to yourself? If you could go back 17 years to that day that you pitched on the TechCrunch stage, what, what would you tell yourself?

Speaker A: Made a lot of bad hires early on. We made some great hires too, but I wish early on we'd been more intentional about how we built our team and really thought through that almost as like the most important problem versus just focusing on the product itself is the most important problem. I think the team itself early on is just as important and eventually we realized that, but it took too long.

Speaker B: What were some of the mishaps in the hiring?

Speaker A: It's not that much rigor, scrutiny, kind of like. And I think one mistake I made was assuming that if it didn't work out, you could always just part ways with someone and move on. But the issue is they've probably already written a lot of code and they might have pissed off some other people on your team who are really good and caused problems that have tentacles much broader than just a single term can fix.

Speaker B: We had a, uh, whole season about hiring on Build Mode last season and so we've heard all the horror stories. Do you have any particular examples of how hiring for an early stage founder can make a break?

Speaker A: I think it's as important as the can this person literally do the job question is the culture question is important too. And, uh, we didn't really realize that the first five hires we made would basically set the culture for the next 500, but I think they kind of do. It is so hard to change culture once you're big. It's pretty freaking easy once you're, when you're really small. And ultimately culture is people. So the people you hire are going to define that. If you hire someone who's 9 to 5 ing it as your first hire, you've just made your job so much harder. I don't think we realized that we had to go through some churn early on before we got to a good spot. And thankfully we did. But we could have been a lot more intentional about it.

Speaker B: So you've been at this for 17 years and I think, you know, a lot of founders would sell or burn out or go public before that. What has kept you going through all of these moments when walking away or selling might have been, you know, the easier choice.

Speaker A: I love my job. I love our team. I really believe in what we're building. All of this sounds trite, but it's honestly the truth, uh, is I think we're building something really important. I think the live entertainment market in the US is much smaller than it should be and better technology is the best way to fix that. And recently I've been particularly energized and excited about where our industry is at and also what we can do with AI because 2026 is a massive reset year for our industry. There's been a bunch of regulatory things that are hopefully increasingly opening it up. And then on top of that, you have AI changing industries everywhere. And it's particularly important for us because we've spent the last 17 years building a technology company that happens to sell tickets. That's how we like to think of ourselves. But this very flexible foundation on which we can ingest AI and use it in the product much more easily than a, uh, less technology centric company could. So we're holding ourselves to a pretty high bar. We basically expect that if buying and selling a ticket on SeatGeek is not meaningfully different, really different, in a few years, then we failed. Like, there is a huge window right now to define what AI and live entertainment looks like, and it's open and we intend to be the company that defines it.

Speaker B: Talk to me a little bit more about that. So what do you expect to come out of for the live entertainment industry and AI? What, what kind of trends or, uh, new user experiences do you think we can expect?

Speaker A: So we basically have two parts of our product. If you've ever bought a ticket on SeatGeek as a fan, there's the fan facing part, and then there's also a much more complex product that venues use. Some of the largest venues in the world use to sell tickets and run their business. In that latter case, the venue product, it's actually pretty straightforward what we can do. And there's so much opportunity right now if an artist announces a new tour. This is more in the weeds than you probably want to know, but there's something called a ticketing letter, which is this long document that defines exactly where the seats are going to be and where are their VIP sections and what does everything cost. It's just very complex and it might take someone a week or more to encode all of that into, uh, our platform and via AI, you can do it and you just upload the letter and it's done in five minutes. So there's, there's lots of use cases like that that are pretty straightforward. I should use this word straightforward loosely. There's obviously a lot of work that goes into making that happen, but you don't have to be a genius to figure out where we might be able to use AI to meaningfully improve the product. On the consumer side, it's less straightforward, but I think in many ways less, more interesting as a result. It's interesting to me that despite how ridiculously magical LLMs are, you haven't seen E commerce or marketplace experiences change a ton for consumers. Like, if I think of the, the places I spend money online, it's basically the same user flows that existed four years ago. And I think that will change and I hope that we're a big part of changing that.

Speaker B: Interesting. I, you know, I'm a big E commerce gal myself, so I, um, look forward to seeing where, uh, some of these changes go. And I think a lot of people are talk to me a little bit more about this regulation. I would be remiss if I didn't touch on this. So I understand that there Are some changes coming? I understand that you're involved in some of these changes as well. What do you hope and think that is going to come from some of these trials?

Speaker A: Yeah, there was a jury verdict last month that hopefully will be quite consequential. Uh, we're in a very different moment in our world, in our industry than we were three years ago where there have been these very structural problems in our market and now they're out in the open in a way that they never have been before. It does not mean that things are fixed yet and fans still pay way too much and venues don't have enough choice and there's still not nearly enough innovation. But at least we are now on a path to hopefully making things much better. So that verdict validates what we've been saying for a long time and what we've heard privately from many, many, many clients and venues for a long time. But on the flip side, like, we, we very intentionally built SeatGeek in a way where we need to be successful because of what we build. And that needs to be the case regardless of whatever happens from a regulatory or judiciary standpoint. So I think it's important that like, insofar as there are injustices that we are seeing, that we call them out, but also try to build the company in a way where we're going to be successful no matter what. Because I think if we have a product that's 10 times better than our competitors. I've always thought that I want people to feel like if you're thinking about SeatGeek or uh, our competitor, that you're risking your job by not moving to Seat because the product is so much better that it is that kind of decision.

Speaker B: M. Okay. And to wrap up, we see a lot of entertainment related startups emerging, especially with the AI boom with what do you either hope to see in some of these younger startups or, you know, what have you been seeing and exciting trends in the industry.

Speaker A: One thing, I don't think anyone's cracked it yet, but I think there's a really big opportunity once you're actually at an event. Currently, people are, you know, just think about like last time you went to a Giants game or you know, uh, a concert, how much time you literally spend figuring out how to navigate around the venue and get to where you want to go. It's. So we're spending a lot of time focusing on that in venue experience. How can we use wayfinding to help people know that, oh, I'm about to go get beer and the line at this place is 5 minutes, and the line at this place is 15 minutes. So I'll go here. Or where is the nearest bathroom? Or what entrance should I go into? Or I, uh, want to upgrade my seat. What else is available? All of that becomes a lot more interesting, I think, with AI layered on top of it, because it can sort of exist as like, a interactive companion while you're at a game or while you're at a show.

Speaker B: All right, well, thank you, Jack, for your time and insights. Um, it's been really, you know, awesome to watch your journey all the way from 2009 until today. Very much a household name, and we're very proud to have been part of that journey at TechCrunch. So thank you, um, for joining us.

Speaker A: Grateful to have launched TechCrunch 50, and great to talk to you today.

Speaker B: Build Mode is a TechCrunch podcast. Each episode is produced and edited by Maggie Nye and hosted by me, Isabel Johanneson. Our art and design is also by Maggie Nye. A, uh, big thanks to Morgan Little, who leads our audience development, the Foundry and Cheddar video teams, and most of all, to you, the builders, and everyone else in the wider startup community. We'll see you back here next time.