1 Man, $1M in Sales

EVENTBRITE OPENS THE DOOR TO COMPETITORS

Eventbrite has been around for longgg time.

The ticketing services company was founded in 2007, and is now entering its 17th(!) year of operation. 

In those 17 years they’ve made a profit for exactly…(checks notes)… none of them. 

As a quick refresher, Eventbrite is a ticketing services platform. They allow event organizers to sell tickets & market their events.

Eventbrite took on huge funding rounds early on, raising a total of $557M. When you raise that kind of money, you need to have a BIG outcome. Anything short of a multi-billion valuation would be a disappointment to their institutional investors.

In this scenario you need to grow at all costs - get extremely big and figure out profitability later.

The problem with this approach, is that sometimes your organization is fundamentally not structured for profitability after years of growth-mode. Drastic sacrifices are often needed and most commonly appear in the form of price increases + layoffs. 

After growing for years, Eventbrite had to do both. 

The ticketing platform announced in August that they would be reducing their workforce by 11%, around 100 employees.

Concurrently, they’ve instituted a series of price increases and feature restrictions over the years:

• 2007 - Eventbrite initially sets fees to $0.99 per ticket + 2.5% of the ticket price as a service fee. Capped total fees at $9.95.

• 2017 - Eventbrite raises the price per ticket from $0.99 → $1.99

• 2018 - Eventbrite removes the fee cap entirely, service fee increases from 2.5% → 3.5%

• 2019 - Eventbrite removes customer support unless users were signed up for premium plans (which cost a monthly fee)

• 2023 - Eventbrite again increases the service fee from 3.5% → 3.7%. Forces all North American users to buy the premium plan with a monthly fee. No longer offers refunds of ticket fees in the event of cancellation.

In summary, Eventbrite has increased the per ticket cost by 26% (even when accounting for inflation). The service fee has additionally gone up by 39%. A monthly fee has been added for event organizers, and features have been rolled back for premium users.

Each change has irked its customer base of event organizers, causing many to leave Eventbrite altogether:

It would be one thing for growth to slow - but Eventbrite lost 12,000 event organizers to competitors in their most recent quarter.

Eventbrite has sought to right the ship - reintroducing their free tier (no monthly fees), and lowering the per-ticket price to $1.99 → $1.79. But will this pricing hold if they still cannot breach profitability?

One thing is clear - Eventbrite’s costly fees have event organizers in search of less expensive alternatives.

EVENT ORGANIZER SPAWNS A COMPETITOR

Will Royall was one of the event organizers that needed a service like Eventbrite for his Backwoods Music Festival in Arkansas, a 4-day festival that attracts ~25,000 attendees.

Disappointed with the tools available at the time, he had built up many of the features in-house to promote the festival, as well as a venue he owned in Orlando.

His story closely resembles that of Tyler Denk, the founder of Beehiiv.

• Denk worked at Morning Brew, a newsletter that had built many email features in-house to power their business. He saw an opportunity - not every email newsletter would have the time or money to replicate the powerful features that Morning Brew had built internally.

• Denk spun all the powerful features into a platform that any newsletter (including this one) could utilize. And it’s crushing.

• ARR surpassed $1M/month, and I’m pleased to share that I invested in their latest community round (had to plug that).

Will Royall similarly took all the power features he had built, and melded them into a universal ticketing platform called PromoTix.

Instead of taking $557,000,000 in funding, he took $150,000 of his own money + $1.8M mostly from family offices to get PromoTix off the ground.

Without needing to pursue a ‘growth-at-all-costs’ model, Royall set about to PromoTix in a sustainable manner. While much younger than Eventbrite, Royall claims that PromoTix is now operating each month at a slight profit/breakeven.

While they’re not growing at all costs, PromoTix is growing:

• 2022 Revenue: $265,798

• 2023 Revenue: $693,244

• 2024 Revenue: $1M (projected)

• 2025 Revenue: $2.8-$3.0M (projected)

Perhaps most encouraging is how organically revenues increased 2.6x YoY. According to the SEC filing, PromoTix actually cut their Sales & Marketing costs in 2023 ($242k → $182k).

So what happened? PromoTix changed the organization’s entire approach as a business.

PRODUCT-LED FOCUS POWERS GROWTH

In 2022, Royall made the conscious decision to shift from a sales-led organization to a product-led one. For those not familiar:

• Sales-Led: relies on a dedicated sales team to drive customer acquisition and growth

• Product-Led: relies on the product itself as the primary driver of customer acquisition, retention, and expansion

A sales-led model can work, but it’s expensive (need to hire a big sales team) and is best suited for large, complex solutions. 

By switching to a product-led model, Royall kept costs low and let the product team dictate the product roadmap. As a result, PromoTix has been able to pump out powerful features:

• Event Livestreaming

• Spotify Listener Data (see exactly who your attendees listen to on Spotify to inform talent booking)

• Seamless Ambassador Program (similar to affiliate tracking)

• Event-Branded Mobile Apps (make a customized app in minutes for your event)

and so much more - their full feature list is super extensive.

All of these features have drawn event organizers to them like moths to a flame.

ONE MAN AGAINST EVENTBRITE

Will Royall has another trick up his sleeve, which allows him to offer cheaper fees in comparison to Eventbrite.

He doesn’t have any employees.

But he’s far from alone in his mission. Royall employs a small army of contractors, he has:

• Developers in India

• Designers in Poland/Alaska

• Customer Service in Boston/Arkansas

Reassuringly, these are not ‘one-off’ contractors, many have worked on PromoTix for a few years at this point.

Still, it’s pretty impressive that PromoTix has scaled to ~$1M in revenue without a single full-time employee. For context, Eventbrite has roughly 900 employees, and this is after they conducted layoffs.

This stark difference allows PromoTix to charge less, offer more, and reap higher gross margins. Whereas Eventbrite is operating at roughly 68% profit margins, PromoTix is seeing a healthy 82% gross margin.

COMPETITION THAT IS JUST UNFAIR

Another unique element here is that PromoTix is part of an economic development program in partnership with the University of the Virgin Islands.

The benefits of this program are greater than some of the most elite startup incubators on the market:

• Free Office Space

• 90% reduction in income taxes for 15 years

• 100% sales tax break

The tax incentives are massive - if PromoTix generates considerable profit during this period the tax savings could be upwards of 6 figures.  

AM I BUYING A TICKET?

It’s clear that I like this one a lot.

They operate lean, and have grown 2.6x in the past year.

Their main competitor is floundering as they struggle to achieve profitability, while PromoTix is already on the cusp of generating real income.

I’m scooping up shares before the early bird terms run out - for anyone interested in this deal I’ll link it below!