Ticketmaster’s Former CEO Talks About How He Acquired Companies

I invited Sean Moriarty to Mixergy to learn how he thinks about buying companies.

At Ticketmaster, Sean’s acquisitions included Paciolan, TicketsNow, Emma Entertainment and Echo Music. In this program, you’ll hear how he thought about he and his team thought about and executed some of those acquisitions.

Sean Moriarty

Sean Moriarty

Sean Moriarty is an Entrepreneur in Residence at Mayfield Fund. Previously, he was the President and Chief Executive Officer of Ticketmaster Entertainment, the world’s largest live entertainment ticketing and marketing company. Prior to serving as President & CEO, Sean served Ticketmaster in several roles of increasing responsibility, including Chief Operating Officer, and Executive Vice President of Product & Technology.

 

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Full Interview Transcript

Andrew: This interview is sponsored by Grasshopper, the virtual phone system that entrepreneurs love because you can use your own phones and manage it on the Web. Check out Grasshopper.com. It’s also sponsored by Wufoo, where you can go right now to get embeddable forms and surveys that you can add to your website for free. Go to Wufoo.com. And it’s sponsored by Shopify. When you go to Shopify.com, you can create a store within minutes and have all the support and features that you need to make that store grow. Check out Shopify.com. Here’s the program.

Hey, everyone. It’s Andrew Warner, founder of Mixergy.com, home of the ambitious upstart. Today, I’ve got with me Sean Moriarty. Sean is the former President and CEO of Ticketmaster, the world’s largest live entertainment ticketing and marketing company. The acquisitions he oversaw include TicketsNow and Emma Entertainment. He oversaw the company’s investments in companies like iLike and Echo Music. Today, he’s an Entrepreneur in Residence at Mayfield Fund and is a board member at CoachArt.org and Eventbrite.

I invited him to Mixergy because a mutual friend of mine, Ahmad, over at YellowBot.com said, “Andrew, you’ve got to talk to Sean about acquisitions. He looked at a lot of them when he was at Ticketmaster, and he made a lot of them at Ticketmaster.” So I invited you here to talk about acquisitions and to talk about your time at Ticketmaster. Welcome.

Interviewee: Hey, thanks, it’s great to be here. Yes, we’ll talk about buying stuff.

Andrew: Buying stuff, the big ones. The kind of buying that makes it to the cover of magazines and trade publications and people start talking about. But before we get into that, Sean, in this industry, we always say that entrepreneurs are like rock stars, you want to hire rock star developers. You’re a guy who’s actually been with the rock stars as the CEO of Ticketmaster. Did you get to meet any of your favorites? What was it like?

Interviewee: Yes. I got to meet a handful, and it’s a great experience. I’m a music lover and it’s an awful lot of fun to see folks in the cold light of day beyond the stage.

Andrew: Can you give me an example? Do you have a story that you can tell us about meeting somebody that you admired or had been a fan of for a long time?

Interviewee: Yes. I had the privilege, a couple of years back, of meeting Bono. He is as impressive offstage as he is on. He’s a big thinker with a huge heart. He’s the real deal.

Andrew: What was it like? Can you tell us the story of how you got to meet him? I want to be taken back a little bit to what it’s like to be the CEO of Ticketmaster, and then we’ll get into the business part of the conversation. We’ll spend a lot of time there.

Interviewee: The context was that I was introduced through a mutual friend who has business interests with Bono. He’s a partner at Elevation Partners. They were looking at wide-ranging opportunities across businesses, and we had the opportunity to meet and talk a bit about live entertainment. I know a fair amount about the kind of nuts and bolts and paper work and the unsexy side and he knows how to delight tens of millions of fans. So, I think I got the better part of the conversation sitting there as a listener.

Andrew: Let’s go back to how you got started with Ticketmaster. At the time you started it, my understanding is that Ticketmaster was called Ticketmaster Online Citysearch. This was back in ’97. How did you get started with the business back then?

Interviewee: Prior to Ticketmaster, I was at Citysearch. I actually joined the engineering team in those relatively early days. I think, Ticketmaster have probably been around for about a year and a half before I got there. I had been fascinated with the beginnings of what we now refer to as the consumer Internet but we didn’t really talk about it that way then. But I knew something really exciting was going on and was very much interested, at the time, and still am, frankly, in local content. I worked with the Citysearch team and then we went on a bit of, I guess, a rocket ship ride where Citysearch more of into this local services business. We did many acquisitions, found ourselves merged with the ticketing company. In the early 2000, I fell in love with the ticketing business at a time when it was moving from offline to online and decided that I really wanted to focus my efforts and really turning the Ticketmaster business into an e-commerce company, an online powerhouse.

Andrew: You said that at the time, at Citysearch, you, guys, did many acquisitions. What was your involvement with them at Citysearch?

Interviewee: I was, at that time, as a technology leader in the organization, I was doing a lot of technology do-diligence, looking at the various platforms, figuring out integration challenges.

minute 5 to minute 10

Interviewee: I was, at that time, as a technology leader in the organization, I was doing a lot of technology do-diligence, looking at the various platforms, figuring out integration challenges. Of course, everybody’s got an opinion on whether they like a business or not, so throwing me an opinion on whether this was a good business. But at that time, one of the things that I also learned was really the importance of assessing caliber of team and cultural fit, which has been part of the way that I’ve thought about acquisition since.

Andrew: How can you tell whether someone’s going to be a good cultural fit ahead of time?

Interviewee: I think it’s like anything else. First impressions, I think, are important, but they’re decidedly far from perfect. I think it’s important to really spend time getting to know people. I think socializing acquisition is really important, because not only does it give you time to understand the business dynamics, but you get to know the people. When you see people, sometimes, out of business context, you actually learn more about them when you do sitting in a boardroom or going over financials, for example.

Andrew: Can you give an example of somebody who you met back in the Citysearch days out of business context and what you learned about them through that?

Interviewee: That’s a great question, now goes back a dozen years. I don’t know that my memory was ever any good, but the tax(?) a little bit. Let me think for a second. (pause) I’m struggling to come up with a great example, I’ll probably give you a more recent one.

Andrew: Okay. Please.

Interviewee: Which was contemporary to, say, a couple of years ago when Ticketmaster acquired Echo Music. Echo, at the time, was a small team in Nashville, hardly an Internet hotbed, but certainly a music hotbed. I met a talented entrepreneur by the name of Mark Montgomery, who’d built a really strong team who’s building this platform which was driving great engagement between artists and fans. What we’re struck by, when we looked at the business, was not only did we want him build out the Ticketmaster platform and make it much more participatory for artists and fans and buyers and sellers. But, just the spirit of the team, the excitement, the fun, the informality was something that I believed to be of substantial value.

When you’re looking at a business, the business itself was one thing and it represents a point in time. The forward opportunity is all about the team that you’re going to be working with. How well do you fit with the larger organization? How well they’re going to operate in an environment which, no matter how much you militate against it, is a larger company, and it has the infrastructure. All too often, bureaucracy can take away some of fun, can take away some of the freedom that comes with working within small teams. When you see a team that’s having a lot of fun working together, moving quickly, and doing good work, those are the type of deals that you want to do. The reality is, when you buy a business, there will be substantial overhead and friction associated with integrating. So, if the thing is not healthy and vibrant on the way in, it’s unlikely that you’re environment is going to make it so.

Andrew: What was Mark like, the head of Echo Music? I’m trying to get a sense of what he was like and what it was about him that made you want to continue to work with him?

Interviewee: Mark was one of those people, he’s got tons of energy, loves what he does, will defend a point of view to the depth. He is deeply passionate about his convictions, and thinks about things that, perhaps, other people would seem to be improbable. He believes deeply that they’re not only improbable, but they’re necessary for progress.

Andrew: Can you give an example of that?

Interviewee: When you run into the right passionate people, there should be a little bit of the they-drive-you-nuts factor. They never turn off, they believe what they believe and they push really hard, and I find that actually infectious. That is what is precious in companies – that excitement, that conviction, and that passion. Those are the people you want to be around, those are the people who build businesses.

Andrew: What are some of the big ideas that you needed to push hard, that you need to have that kind of passion and determination to get done at Ticketmaster?

Andrew: What are some of the big ideas that you needed to push hard, that you need to have that kind of passion and determination to get done at Ticketmaster?

Interviewee: Sure, I think, you know, when you’re in a company that’s been around a while, you know, has been tremendously successful, so, Ticketmaster had been around years before I got there and was clearly the market leader. And, you know, the challenges when your company has that success, but there’s a future in front of it that is different from where it started, you know, how do you get the company to embrace this new world they perhaps know less about, that’s essential for them to continue to remain, you know, really in the driver’s seat. You know, and that, you know, that’s an awful amount of work. It’s a combination of persuasion, execution, being able to show people progress as you go. You know, it seems inevitable now, perhaps for a lot of people that, well gosh, Ticketmaster was the market leader really before the internet age, and, you know, still is, but making the transition to an offline company to an online company is profoundly difficult. You know, it’s– in most, you know, examples, offline companies have actually lost share as a result of the internet rather than grown share. You know, Ticketmaster is one of those exceptions and that was really because there was a really strong core team that understood the offline business and the business of client service and certainly of ticketing, who were deeply committed to winning, and, you know, added to that was a really strong internet team over time, and, you know, gave the company another great ten-year run.

Andrew: What did you guys do early on that helped set you up to be the dominant ticketing company online?

Interviewee: Yeah, so, most of the transition was really in, you know, deep investment and focus in building-out the online business. Because we– one of the things we had the virtue of was deeply established relationships with clients over years, and also long term contracts. That gave us the benefit of time. What a lot of people have underestimated, and I think continue to underestimate, is the difficulty in building out scalable e-commerce platforms for the ticketing business. And the reason for that is that most of the complexity of ticketing is beneath the surface. The way that people look at ticketing from a complexity standpoint is typically from a consumer perspective. They go onto Ticketmaster.com or they pick up the phone or they go to an outlet and they say, “that seems pretty straightforward, it can’t be that hard to do.” And the reality is, when you’re selling perishable and scarce resources, that are sold under conditions where there’s tremendous volume for very short periods of time, that’s incredibly hard to do. Marry that to being the back office provider for, you know, eleven-thousand clients in twenty countries, and you find yourself in a really complex infrastructure business where you’re the exclusive retailer on behalf of these thousands of clients, in a world that’s extremely fluid. So I think, you know, the success of Ticketmaster online was really a credit to the strength of the Ticketmaster business, when we got there, at the core level, with respect to client service and the quality of the core inventory management system, coupled with a great team of online folks who built– were able to build-out this channel in a really harsh operating environment. And one of the great things about working in a business like Ticketmaster is that it’s so operationally intense, you learn an awful lot.

Andrew: Let me see if I understand this. It seems to me that it is a really easy, straightforward business. You’ve got the contracts in place so you’re– so your competition can’t come in and get the hot shows, you guys already have the contracts with the venues, that gives you time to build-out the website, give you time to build-out your strategy, while you’re figuring it out you’ve locked-in your supply, the product is something you’ve made up yourselves, you make up the tickets — where’s the complexity there? I’m not saying there isn’t, I’m saying as an outsider, like you said, I just don’t see it.

Interviewee: So, it’s in several areas. You know, let’s start with the back office system. So if you’re servicing a professional sports venue, that’s not only is anchored by a professional sports team, but also does entertainment of all kinds, so everything from concerts to ice shows to everything else, you have to provide solutions for season ticket sales, for group sales, you’ve got to be able to support very high demand on sales, which means you need a lot of infrastructure in place. You’ve got to have marketing prowess, multichannel marketing prowess to help drive demand on behalf of your clients. [Section ends]

Interviewee: …multichannel marketing prowess to help drive demand on behalf of your clients and the notion of a multi-year contract, well it seems like, yeah well it gives you time to get everything right and on one hand that’s true but every single day your clients lifeblood, right, the people buying tickets to come to the venue is in your hands and if you make mistakes you create real pain for them, right? You have upset customers, you have business processes that aren’t smooth so every single day in the business, you’re earning your right to continue the business. Then if you look at having a business that has thousands of clients over time, the challenge is that you’re also in a renewal business so let’s say the average contract is in the neighborhood of four years.

Andrew: Oh we just lost the audios. I don’t know what happened but we just lost your mic there. Ok so we lost the connection but we’re back. What…can you take me through one of your acquisitions from when you decided to look at the space to how you pick the company that you acquired to how you did diligence and then integrated them? Is there a company that fits…that has that A to Z transition?

Interviewee: Yeah, let’s see…what’s the best acquisition example…

Andrew: I could say Ticket Now is one example. Echo Music I think you guys invested on early on, right? Before you bought them.

Interviewee: Actually, you know Echo wasn’t an outright acquisition that was certainly relatively late in stage. You know, I can talk to a couple of different acquisitions that I think are representative of the way we thought about the businesses. Tickets Now is really an interesting one. It happened relatively late into my time at TM. I left, you know, probably a year after that businesses was acquired but it was a space that we had looked at for an awfully long time and Ticket Master is in the primary ticketing business. The resale business had really grown up outside of the industry over many years. It was a source of tons of internal debate. When should we get into the resale business? Should we get into it at all? What’s the best approach for us to do it? How do we do it? And lots of controversy and for several reasons. One was the fact that brokers and scalpers had always been around but existed largely outside the industry. Second was, there were, you know, since almost the dawn of time many states had resale laws that procluded resale of tickets above face value and as reselling moved online, most folks chose not to pay attention to those laws, right? They became kind of outmoted and ignored yet they were still…they were laws that people were breaking. Then you had the fan demand which appeared to be growing where people wanted the convenience to find tickets they wanted at prices they were willing to pay all through the event cycle and, you know, we had to look at that and say well the consumer is saying they’d like to have optionality with respect to buying tickets from many different providers all along the cycle and at various price points. They’re willing to pay quite a bit in many cases late in the cycle for hard-to-get tickets, they’d like access to discount tickets and we started to realize, obviously, that tickets were becoming like options and the resellers moving online were marketplaces. But we had regulatory challenge and we had the challenge that…to our clients for many years we were, you know, primary ticketers and, you know, the notion of resale came with it an awful lot of fears within the industry. Does it lead to cannibalization? Is it going to lead to buyers remorse? All sorts of issues that, you know, are still, you know, in the process of being resolved. And, you know, I think the first time we looked at, you know, getting into, you know, the resale business was very early 2000’s. In fact, Ticket Master launched it’s first resale project in 2002 with Team Exchange and, you know, it was really slow as an incumbent trying to drive change into an industry that was uncomfortable with it and, you know, when you watch the velocity of growth of companies like Stub Hub and you realize the limitations you have as an incumbent, you know, you have to make some difficult choices, you know, we got to the point, I guess, in late 2006

Interviewee: …early 2007 and said, look, the world has changed. Our clients know it’s changed. There’s a couple companies who’ve become rather large businesses even though they’re now only about 10% of the size of ours, but they’re category leaders and they’re building brands in resale of businesses we need to be in.

And we realized that our own build efforts weren’t moving quickly enough and we decided to buy. And you know, we’d been looking at TicketsNow for a while. It was a top-10 brand with several million uniques. Respectable business from a financial perspective. And our fundamental belief with TicketsNow was that we could take it the Ticketmaster platform with its tremendous audience and some 12 to 13 million users per month, align that audience with not only primary inventory, but in cases where we didn’t have primary inventory consistent with what the consumer was looking for, resale inventory that often was consistent with what they were looking for.

And we knew that that audience advantage was significant. At the time, I’d say StubHub was probably 25% of the size of Ticketmaster from an audience perspective. We also had 25 million customers in the database. We could email them about tickets. And we also knew that since we were the original issuer of tickets, that we could provide barcode validation and delivery to make resale safe to eliminate double selling of tickets, and provide almost instantaneous delivery to sell right up until show time.

So that was a combination of realizing there’s a market moving profoundly quickly away from you, knowing that you have embedded competitive advantages if you acquire the business and integrate it well, and being willing to take on some of the controversy that comes with moving beyond your core business and extending it into an area that had been…not only was it quickly growing, but it was also quickly in controversy and from a perception standpoint, somewhat problematic.

Ultimately, when you’re moving into new markets you’ve gotta make tough calls. You wish they weren’t as tough as they are, but they are so you do.

Andrew: So at first you guys were battling internally about whether you should get into this space as you said. What were the reasons against it?

Interviewee: So, the reasons against it were at the time mostly — and they were really valid reasons — how much stress would it put on our existing client relationships? So, you know, take a simple example. There was a time when Ticketmaster was doing nearly a billion in ticketing revenue, and as far as we can tell, the larger reseller was doing somewhere in the neighborhood of 60 or 70.

So how much of your near billion dollar business do you want to risk for a business which is not 10% of your core business? And that dilemma, which is you know that it would impose some risk intention on your client relationships, you also know it’s where the future is going, and ultimately in a world where resell is pervasive and it’s a consumer expectation and you’re the largest ticketer, how can you not be deeply in the business and how can you concede it to someone else?

But the reality is that those conflicts do exist in businesses particularly at times of transformation. And one of the things I’ve learned, it’s easy from the outside to talk about how successful, existing businesses faced with potential for creative destruction should just jump headlong into innovation, core business be damned.

At the same time if you ask a lot of those folks who make those type of statements, would you trade a billion dollar revenue stream for an 80 million dollar revenue stream now? Most of them would say no or would say yes, but if you really put the question to them where it was on them to do it, they’d think twice about it and probably wouldn’t pull the trigger.

Andrew: How then are you able to reassure those partners? You eventually did the deal. Is it that by the time you did the deal the issue went away, that it was an accepted market practice?

Interviewee: There was certainly I think plenty of evidence that you know, this business was not only going away, was growing very quickly. And it represented an option that consumers want, right? So if consumers are demanding something, and you’re unwilling to provide it to them…

Interviewee: and you’re unwilling to provide it to them and you’re in a consumer business, you’re gonna get killed, and you should. The other thing that was happening is that Ticketmaster clients started realizing, gosh this is a large and growing space and we should be getting paid for it because ultimately these are our events and our tickets. And what started to happen was Ticketmaster clients who had been unwilling to or only partially participating in the resale markets with us, actually went out and took large checks from StubHub, Razor Gator and other folks. So it became at least semi-legitimate to say, hey we are principles in the live entertainment business and we’re monetizing the resale business. So, it wasn’t perfectly clean. But if you wait until all the evidence is in doing transitory times– you know, you’re lost.

Andrew: I interviewed the founder, the cofounder of StubHub, Jeff Fluhr. What was it about him from your point of view that made his business successful? What was it about StubHub itself that made him successful?

Interviewee: Sure, a few things. Jeff, super smart guy, saw an opportunity to disrupt. He saw an industry that was incredibly unwilling to change or embrace the new technology, but knew that consumers were demanding resale and that there was tremendous off-line supply held by brokers and scalpers that could move off-line if he created a marketplace. So, he built a team against that opportunity and they stuck with it for a long time. StubHub had been around for a while before it started to get traction. So I would say create original vision, persistence along the way and then tremendous marketing. Mike James who was Chief Marketing Officer there and is now the CEO at Fan Snap, which is a meta-search startup for tickets, is a tremendous marketer and they just did an extraordinary job building that brand for consumer residents.

Andrew: How did they market? I know that they were doing Google Ad Words at the time before Google Ad Words were popular. What else did they do?

Interviewee: They did a lot of things well. They did certainly a good job with online marketing. They did a great job using sports radio because they had a lot of sports inventory and their creative on sports radio was tremendous. And that’s a highly engaged enlarged audience. They did a really good job with sponsorships. The major league baseball deal, I think the economics are thin. But the mind share from a deal like that where you’re seeing StubHub peppered in dugouts everywhere. That was just a stroke of genius because there are tons of viewers online. You know what I think, they struck the right balance which was to say, we recognize our business is about two things: providing a really strong marketplace that allows sellers to reach buyers in a medium that they previously had been using so we can provide this platform and we would also need to do a lot of brand marketing to let the masses know who we are. So as much as it was a pain in the ass to compete with them, I tip my cap to them because they built a really good business and did a really great job.

Andrew: Did you guys at Ticketmaster try to buy StubHub?

Interviewee: We had conversations with them along the way. I won’t speak more words than that. But we engaged in conversations over years about what might make sense. Ultimately, eBay bought the business; we bought Tickets Now not too long after that.

Andrew: Why did you decide on Tickets Now?

Interviewee: A couple of things. One was, if you looked at the online brand land was actually meaningful. So relatively high brand awareness in a category that still had relatively low brand awareness. Good solid traffic, unique users, and solid financials. I mean it was a real business when we bought it.

Andrew: I see. What were those financials? What did they look like?

Interviewee: You know, that’s not something that would be for me to discuss.

Andrew: What was it about them that’s exciting without getting into the specific numbers?

Interviewee: The financials show significant revenues and profitable in a space that had been increasingly competitive. So the cost of customer acquisition was going up. Yet they were growing revenues, and growing profit, and growing mind share. Certainly behind StubHub. But we felt with incumbent advantages that T.M. had putting the two together would certainly accelerate our pace in resale

Interviewee: at the time I felt it would certainly, an area where we could … not only compete, but lead.

Andrew: Those controversy (??) about this deal after it was done… did… what did you anticipate? What kind of controversy did you anticipate before you did the deal?

Interviewee: Yea, so ya know, I think it actually ran pretty true to form. We expected that there would be people who would, ya know, make the argument that if Ticket Masters (??) is in the primary business they shouldn’t be in the secondary business. We expected that people would say that if you’re featuring primary inventory you shouldn’t show secondary inventory or links to secondary inventory because you’re primary mission should be selling the initial ticket on behalf of your clients. Which, I actually understand and agree with … but, ya know, and we knew there would be bumps and hiccups along the way. Not quite what they be, but kinda the nature and tone of them. No one likes to see a category leader gain traction in the new, exciting category besides the category leader. So, that was the reality but we felt like, ultimately, we would be better serve our clients and consumers and that if we were willing to take some of the bumps and bruises along the way when a category leader pushes into another space to lead that, that ultimately those things would all resolve themselves over time.

Andrew: Now, Ticket Master is where I would go to buy tickets to a U-2 concert. If I couldn’t go to that concerted and wanted to re-sell those tickets, TicketsNow is where I would go and that’s the difference between the primary and the secondary market, right?

Interviewee: Essentially –although those lines are blurring, right? Because now, I think what’s happening because of the rise of resale businesses and people starting to get this sense that there’s generally tickets available all the way through the lifecycle at a particular price point. Sure, theirs folks out there who are saying, hey look I’m not price sensitive, I don’t want to buy during the on-sale, I’ll wait until shortly before the actual event and I’ll go to StubHub because they’ve got a great selection of inventory. And so, one of the … when you’re a retailer, one of the things you’ve got to be mindful of, if you want to be a market place, is that you have the appropriate stock for what people want all through the particular sales window. And it’s interesting because we were starting to hear and it was something that started to concerned me, people saying yeah, ya know, for popular stuff it’s hard fine the ticket at Ticket Master. You’re just way over subscribed tens of thousands trying to buy low thousands or high hundreds of tickets. And, there is no doubt in my mind that when people have that experience, ya know, they also look elsewhere and the web is the greatest place to comparison shop ever invented. So, having full spectrum inventory for live entertainment, I think is essential if you want to have the mindshare that allows you to be the default when people think about tickets.

Andrew: Dan in the audience was asking, who’s not price sensitive? And I’m going to tell you, I’m not and I’ll tell you why. I’m more sensitive to when I have to commit to buying those tickets. I’d much rather wait till it’s closer to the event date and buy the ticket even if it means paying a little bit more then have to commit early on and that’s what you mean. The issue though was that, if I’m right here, the issue was some people said well Ticket Master now has an incentive to take these lower priced tickets hold them and then move them out into the market place on TicketsNow and that way you could get a higher price for the same tickets.

Interviewee: Yea, that was something that Ticket Master did not do and would not do. Are fundamental belief was really born of a couple of things, right. One, we knew that the best inventory is chronically under priced. Tickets are sold for $100 and they’re resold at $300. That happens all day long and it continues although there is more efforts I think now and more interest in true dynamic pricing. The other challenge you face is awareness, so beyond the initial on-sale. How are you reengaging customers to know that there’s still inventory available for shows where they may have perceived to have sold out quickly or don’t have good inventory remaining. And ultimately a market place solution that reflects the value of a ticket as it waxes and wanes over time and there’s all sorts of reasons for a ticket’s value to change over time is the best way to provide optionality (sp??) to the widest pool of buyers. I mean

Interviewee: I mean, I see it as inevitability. Look, we’re all price sensitive, there’s just different points based on our individual circumstance where we become sensitive to price. You know, there are people who will pay happily, thousands and thousands of dollars for tickets to events that are extremely important to them. That’s a relatively small population. There are lots of folks who’ll pay beyond face value. And there’s also a lot of other folks who are gonna look for discounts and that’s true of any marketplace.

And the challenge for any platform provider is to meet the needs of all the participants in that platform consistent with their ability to find supply and match it to that right buyers.

Andrew: All right, apparently somebody in the audience said that he paid $2,300 to attend an Alicia Keys concert, front row. That’s where I am price sensitive, at some point I do stop.

All right, you said earlier you have to socialize an acquisition. How did you socialize this acquisition?

Interviewee: Well this one was a little bit easier because we actually…Cheryl Rosner was running the company at the time, and Cheryl was someone we knew because she had run Hotels.com and Hotels and Expedia were sister companies within IAC of Ticketmaster. So, Cheryl was someone we knew, but the key to socializing any acquisition is spending enough time to be able to do two things.

One is get an understanding for the team and figure out how well they’re gonna fit into your culture. Are they gonna be adequate to it? Are they gonna enjoy working in it? Are they gonna be able not only to retain these people, but have them as active participants and hopefully over time move beyond the acquisition itself and become senior leaders in your business?

The second part of that is to give the team enough time to see you and what your interests, and philosophy, and desires are for the business, so they’re excited beyond the transaction itself to be part of the team.

Andrew: So how’d you do that? How’d you keep them excited about the business?

Interviewee: Yeah, so I think it’s probably easier to ask the folks that are on the other side, but my approach and my belief is that you’re accessible, you be yourself, you’re very candid about what you’re trying to do with the business, and where you think it needs to go.

You know, I think one of the challenges in many companies with respect to M & A is there’s a feeling of the victor, the vanquished, or the buyer is more sophisticated, intelligent, and capable than the seller or else they wouldn’t be buying the company. And that’s dead wrong.

I think humility and listening goes an awful long way towards getting people to say, gosh, if there’s multiple folks we can sell this business to, we want to sell it to these people because we’d actually like to work with them and we trust them.

I think it’s incredibly important to spend enough time with people so they can come to their own conclusions about whether you’re the type of people they want to work with or not.

Ultimately, over time when you’re in a market as a buyer, it should encourage some real selection bias because you have a body of work around acquisitions where people say gosh, you know what, these people come in and they’re thoughtful. They’ve got some humility and they’ve got a plan for the business. And then the track record for acquiring and integrating businesses and the people who are part of those acquisitions growing within the company who can say someone you’re contemplating acquiring, you know what, we were part of an acquisition and what these people told us about what they were trying to do around the business and what they wanted to create for us, they actually delivered on.

So, that’s one of things I think is very important if you’re in a business that will be inquisitive over time, every interaction is a piece of a reputation that is ultimately going to work for advantage or your disadvantage.

Andrew: So let’s talk then…I’m sorry.

Interviewee: The more you do, the more that will help or hurt.

Andrew: Let’s talk about another acquisition that you did. Can you take us through another story of an acquisition from the decision process to the execution? Echomusic maybe? We talked a little bit about EchmMusic. How about another one? I can go through the list here and see if there’s one that you want to talk about.

Interviewee: You know actually, there was an acquisition, but I want to use it…it was an investment we made in iLike. And I’ll talk about that because 1) it was to some folks a bit far out field. So, you know, why does…

Interviewee: So, you know why does ticket master and e-commerce company and the live entertainment business get into you know, a social music discovery as an investor and two it was a business run by two very sophisticated capable entrepreneurs who had lots of options in funding their business. You know so, ticket master at the time this was probably early 2006, you know we certainly wanted to make the brands and the platform stand for something beyond just straight up transactions which we knew was important but we felt the ticket master platform had tremendous reach and we also felt that the world was becoming much more participatory. And rather then have a completely out sourced service model where ticket master is basically saying to its clients, look we have all of the tools to manage your consumers and interact with them, and we’ll be the ones operating them. We felt like we wanted to bring this notion of self service, give our clients tools so they could do a lot of this work themselves. And interact directly with consumers, we really participated in building out this platform. And one of the things that we knew was really valuable was bringing on board the listening audience which was huge, and understanding how peoples listening behavior may actually drive them to buy tickets. Sounds pretty straight forward, but those worlds hadn’t really been put together. And, you know I think if we had approached Batrovis with a, hey what your doing is really cool and we think it can be worth a lot of money so let us invest. Um, their approach would have been one of thanks but no thanks, there’s a lot of people that are willing to write us checks. As we talked about how we felt, that you can make this e-commerce platform into a more participatory platform and more deeply understanding peoples listening patterns and behavior and offer them based upon that knowledge, opportunities that they may not be aware of right. So start taking music discovery from a listening mode and turn it into music discovery from an attendance mode, around the live experience. There’s tons of good stuff going in major cities, if you look at the awareness even amongst musics except for the most hardcore they are not aware of the shows and I think that notion of building something new and stitching it together, but allowing companies to breathe was you know paramount to us being able to make that investment.

Andrew: Okay, so I can see now the reason for getting into that space, why not build it out yourself, why not build out a social network around sharing music, or listening to music or something else?

Interviewee: Yeah, so a couple of reasons. One generally speaking you have business like ticket master, you always have a certain level of resource constraint because its highly complex, your working on awful lot of projects and your highly attentive to your core business and the needs of your clients as you should be. Innovation within larger environments is always really difficult because all of the corporate noise and mass, so trying to take existing resources and carving off a safe place with an enterprise, really tough to do. Second of all, I’m very skeptical about me too approaches where business with large audiences decide they would like to create a new context for their costumers, within their existing platform. You know its pretty interesting if you look at the social graph, the initial design and then the audiences behavior upon on that design determines the context and its really hard to play me too in that space. You know if you look at the Facebook context about interacting with your friends, this is social and personal and then linked in context around your professional network and the fact that their freestanding and exist like that I think is really a consequence of users demanding a clearer context in which to participate. So we looked and said gosh, can you truly make ticket master social as it is, ticket master.com which is a e-commerce site designed to provide information and call to action of selling of tickets and get people to embrace as deeply as what we are already seeing happening in a place like Ilike, I’m just skeptical that you can do that, but if you integrate well with people that our unencumbered with your context I think you get much more advantage.

(minutes 45 to 50)

Interviewee: …designed to provide information information in call to action in selling of tickets, and get people to embrace it as deeply as we’re already seeing happening in a place like I like. I’m just skeptical that you can do that but if you integrate well with people who are unencumbered with your context, I think you get much more advantage.

Andrew: I’m look at some of the questions from the audience to see what they have to say about it. Actually, here’s a question that people keep asking in the audience: Why do venues keep going back to Ticket Master and the other big ticketing sites?

Interviewee: So again, conventional wisdom is “Gosh, what’s the trick to Ticket Master being so successful with their renewals?” The last year I was at Ticket Master, Ticket Master renewed somewhere between 98% and 99% of the business up for renewal in the last eight or nine months. It’s huge, and that means the switching costs are real and then the question is, what are those switching costs? So then you have to ask why do clients choose Ticket Master? And realistically, the factors they evaluate are the technology (both the feature set and reliability), the distribution capability (how many people can you make aware of my events, how many people can you reach for them to transact), they certainly review the economical component (how much money am I going to make working with Ticket Master vis a vis other competitors?), and they look at the service (how good service day in day out am I going to get in a business where I have an exclusive agent selling all my tickets for multiple years?). And depending on the type of client you are, if you are a client that is a marketing venue in a huge market, then distribution matters a bit less to you, because you’ve got tremendous name recognition and audience. Economics matter, Ticket Master’s competitors always competed on the basis of low price. Technology matters, if you’re selling two or three back to back concerts in very high demand, the last thing you want to do is work with a vendor whose site falls over. And so everybody kind of does that math their own way. They’re going to weight distribution over technology, or they’re going to weigh service because of the nature of their business over other factors. Ticket Master, in my opinion, absolutely over time, offered a better combination of all those things than any of its other competitors. I truly believe, and I saw this time and time again when I was there, Ticket Master, had a superior offering for its client base than its competitors. And its clients every four years voted on that, and they continued to vote on that in the same way to where Ticket Master was never alone on its table. The question is, what do the next ten years look like, and the answer is, I don’t think anybody knows, but the technology curve makes it easier to innovate and bring features to the table, but it doesn’t necessarily make it easier to scale or to provide high touch service across large geography and to hundreds if not thousands of clients.

Andrew: I’ll let you plug in your computer before firing off the next question. Guys what are you thinking? Let me see what questions you have. I know that we don’t have much time, so I won’t be able to get to all your questions. What about the artists, don’t they have any say anymore? I don’t want to get too deep into the mechanics of the ticketing business, that’s why I’m not asking more of the nuts and bolts questions here.

(some few seconds of exchange about plugging in equipment, not important to the interview)

Andrew: …over your head.

Interviewee: How’s that?

Andrew: Yeah, perfect. All right, I’ve got an audience of people that are building internet companies. If one of them wants to get a hold of you at your next business or the person who’s running Ticketmaster, or any other major business, how do they get a hold of them? How do they connect with them and say here’s my business, let’s see if over time this makes sense for us to partner together?

Interviewee: Sure, I’m pretty easy to get a hold of. You can find me on LinkedIn or Facebook, and you know, send me a note. I wouldn’t say I’m the quickest on the draw in responses, but I’m pretty thorough, so.

Andrew: I don’t even want to invite that because I don’t know who we’re gonna open our ourselves up to and what kind of emails you’ll get.

Interviewee: The reality is it happens anyway. If someone knows my name, everything else follows.

Andrew: So you, when you were running Ticketmaster and today, answer your own email and see if the opportunities that are sent to you make sense?

Interviewee: Sure. I mean you gotta remember, we service millions of customers a year and in an internet age, every morning I got emails from customers about the nature of their interactions with us. So, it’s something I guess we all get used to.

Andrew: All right, and you actually would go through them. Have you followed up, have you partnered up with anyone that randomly emailed you?

Interviewee: Not off the top of my head. I have referred people who have d one things that are interesting, but perhaps not right for me onto people where I think it might be more relevant.

Andrew: What’s the more common channel? Is it that their investors might contact you? That a mutual friend or mutual partner might introduce them?

Interviewee: No, you know actually, my experience in what I’ve gotten over the transom stuff is usually pretty straightforward, earnest nots that say, hey look, I’m interested in doing this; and I heard you speak here or someone recommended that I reach out to you. Do you have time, would you be interested in learning more about my business?

In my experience, people generally…look, there’s some noise out there and there’s some folks who are a bit different. But in general, it’s earnest people who would like some of your opinions and some of your time if you have it to offer.

Andrew: Kevin Hartz, founder of EventBrite, how did he meet up with you?

Interviewee: Awesome guy.

Andrew: Awesome guy. He didn’t interview here with me. I met him through a mutual friend who’s company he’d invested in. How did you connect with him?

Interviewee: Yeah, I met Kevin I guess last Fall. He’d been out doing some fund raising and I’m an ERI at Mayfield. And Kevin sent me a note and said hey, I’d love to talk. We talked about his business an awful lot, which honestly I didn’t know a whole heck of a lot about at the time. But I was very impressed with the success they were having.

And more importantly, more impressed with him. He asked me if I’d continue the conversation and I met more of the folks on the team; and I just came away with that pattern recognition. You know, gosh, super people, very smart and capable, working on a dimension of a problem that I hadn’t thought that much at all about. How do you provide event organizing tools for the masses in the same way you provide professional event organizers, and what happens when you do. And certainly some substantial early success.

So as those conversations progressed, Kevin asked me if I’d be interested in getting more formally involved in joining the board, and I did. I’m happy I did.

Andrew: Yeah, great company. What about YellowBot, the company that introduced us? What advice would you have for them? YellowBot is online Yellow Pages. They comb the internet to get reviews. They also have a system where people could review restaurants and other venues on their website. What advice would you have for them?

Interviewee: Focus on product excellence. So the YellowBot guys, tremendous engineers, Ask Bjorn Hansen, Ahmad Finu [? 54:23]. I mean, they are as good as it gets online from an engineering perspective. You know we’re living in a world where people are building, not all the time, but a lot of the time, really good looking, easy to use products. Simplicity, elegance, even beauty, I think that wins. I think consumers are much more sophisticated.

When they look at good interfaces and they experience them on a daily basis, if you’re going to build that next product they’re going to compare you to that last product they used and they loved. Whether they…

Interviewee: …whether they know it explicitly or not. And their reaction if it’s not easy to use, if it’s not beautiful, it’s gonna be less than what it should be. Hard to build great consumer businesses now in my opinion without great UX-UI.

Andrew: Yeah. What about you? What’s next? What are you curious about?

Interviewee: Yeah, so you know, don’t know what’s next. I’ve also liked to have you know, be surprised by the next opportunity and been of the belief that you spend your time talking to smart folks and put yourself out there, the opportunity finds you.

So I’m kind of taking a fair amount of time with my family, working with entrepreneurs and looking at a lot of things. We’ll see, but at some point I’ll go back to operating a business again. It’s an awful lot of fun building teams and building products.

What’s interesting to me? Certainly social graph. I continue to be very interested in the local services base from my time at CitySearch. There’s a lot of opportunity for innovation there.

Mobile is definitely an area of interest. I mean it’s a massive game changer when you’re talking about a world where you know, your consumer access is pervasive. It truly changes the nature of the type of service you can offer and how you can offer them.

But my interests are always pretty far ranging. So there’s a lot that I’m interested in.

Andrew: And any one of these interests could end up being your next company? Could end up leading you to the next company?

Interviewee: Certainly.

Andrew: All right, well looking forward to seeing what you’re up to next. I’m really curious myself.

Interviewee: Me too.

Andrew: I’m a fan. I’m really glad you were able to come on here and do an interview with me. Thank you.

Interviewee: Yeah, no I appreciate the time. It’s great to talk to you. You ask great questions. It’s been a lot of fun.

Andrew: Well thank you and guys, thank you all for watching. And if you’ve been curious about some of the interviews I’ve mentioned here, including with the founder of StubHub or Eventbrite, Kevin and I actually just did an interview a few weeks ago…it’s all up on Mixergy.com and I hope you guys go out there and check it out.

I’m looking at you, Sean, but I’m talking directly to them too. I will say one more thing to you directly, thank you again for doing this interview.

Interviewee: Thanks so much. Pleasure is all mine. Take care all.

Andrew: Thanks. Bye.

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[This interview was suggested by Emad Fanous co-founder of Yellowbot.]

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