How FestivalPass CEO Ed Vincent grew to $5.7M revenue and 200 customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is ed vincent he's an entrepreneur with over 20 years of business technology and management experience having founded and exited several companies in that time including helping to launch film festivals in multiple locations and creating the concept for a maxim branded hotel in the caribbean he's a former head of data at moviepass now building something called festivalpass.com are you ready to take us to the top i am let's do it all right by the way why move on from moviepass a lot of people would say that thing was a rocket ship you just figured you learned everything you could yeah i was i was a contractor brought in to help them with their data and um moviepass has an interesting story in itself for the good or the bad i think a lot of people know some of the good and some of the bad all right let's go to festival pass what's the company doing what's the revenue model is it per place ass sure no it is a subscription marketplace um so so uh different than when you think of marketplaces in general a lot of people think of the ubers and airbnbs and postmates and other other type of two-sided marketplaces and when we think of festival pass it is a two-sided marketplace you have the consumer and then you have the event owners the rights holders that have a lot of these live events um in the festival space music film food and wine tech and innovation and both sides of the marketplace need to be fulfilled okay so tell us what you do for both those sides so what do you first off who's paying you more are the consumers are the festival organizations yeah so it's uh it's a consumer play right so consumers pay a monthly fee and for that monthly fee they get credits they can then use those credits to attend thousands of live events throughout the country okay uh what do you do for the festival organization um so for them uh it's it's a a couple pieces to it the the number one piece is additional distribution so the ability to allow our members to be able to attend their events is is the first the second uh coming from a very stringent string is the wrong word very a robust data background um i really understand the whole consumer data play especially in the entertainment space and what i find is outside of the very big players in the live event space the live nations of the world and a few others um data is is a little disparate um only one in ten uh in venues most venues they only know one in ten people in the audience interesting okay do the festival organizations pay for this or it's just the consumers paying uh the consumers are paying the festival uh the festival owners are sharing revenue with us uh in the form of a discounted access to to the event okay so let me try and get a real example here just to make sure i understand um name a festival that works with you coachella uh good example coachella soon at some point will uh so we're talking to some of their parent companies they're not on board yet um think of south beach food and wine southern beaches and wine big hundred thousand person festival every year in february okay so what do they charge for a ticket like direct on their site yeah and it's hard to get the exact dollar amount because they have over a hundred different mini events within the overall big event some are fifteen dollars some are two hundred dollars some are three hundred dollars and that that really plays into why the model for us makes a lot of sense we look at it as a gross margin economic uh union economic model so um people on the show yourself would probably be familiar with how class pass works have you ever seen how class pass works and what they did well and one thing we learned from them is building a credit-based system allows us to manage for gross margin positive unit economics okay so let's try and run an example here let's just say the south beach food and wine ticket is a hundred dollars you use your consumer play to sell one of those tickets what will south beach wine pay you on the 100 ticket sale yeah so our average gross margin across all events i'm not going to specifically talk about each event is we target at 30 gross margins so in theory across the board if it was 100 ticket we'd be paying the event 70 and we'd be keeping 30 dollars um that margin then allows us to maintain how we put it to the customer and how at what price we want to offer it to the customer okay got it let's go back to the flip side of this and put this on a timeline real quick when did you launch the company what year uh just last year so so this is it it's still early stage like 2019 or 2018. 2019 we're still in the very beginning stages um but what having all the background i have and having an experience i've had with other models that are similar um we've been able to kind of jump start the process in terms of really uh getting involved with some of the big players so right good no no i didn't mean to cut you off i was just going to try and get a sense of on the consumer side are these like college students or young professionals or like older folks going to festivals how many what are they spending per month on credits on average so great great conference great question so um i'll tell you about the pricing and then i'll tell you the target audience so on the pricing side we have packages that go from nine dollars a month to 29 a month 49.79 and 99 a month so for each of those different price points you get a certain amount of credits obviously the more you commit to on a monthly basis the cheaper per credit price you have therefore you attend events more cheaply um in the uh on the targeting side um when we think about we're crop we're the only festival subscription service that's across the genre so we have music and film and food and wine tech and innovation eventually we'll have sports and other kind of concert events and other things but uh when you have that cross section we will eventually hit different target demos of course millennials have tended to be uh the the focus of our of our uh go to market because of the fact that they'll spend more of their consumer dollars on experiential uh activities than they will on hard consumer goods um 75 million millennials in america and north and in north america as well um it's that's the path that they choose to spend their discretionary dollars however when you think of food and wine you think of something like south beach or aspen food and wine or veil food and wine or new york food wine you're talking about slightly higher not not that millennials don't go to those as well but uh it tends to skew a little older where you have 40 50 60 year olds uh happily attending these major festivals throughout the country so your economies of scale look something like this at a nine dollar a month plan for six credits called a dollar fifty per credit you get all the way up to scale at 100 bucks a month or 99 it's basically a dollar per credit is that do you think you're going to change that kind of arbitrage spread over time will your per credit pricing come down or is that really what you're going to stick with for a while yeah i think we'll stick with that from a business perspective what gets really interesting about this whole credit model and i'm still shocked that more marketplaces and subscription businesses haven't adopted it and i give class pass a lot of credit for for pioneering the way is uh what it allows for is it really builds in a reverse dynamic pricing process so we don't have to change the per month fee we don't even have to change the per credit fee what we can play with is using data from hundreds of data points to be able to identify what is the credit cost of an event so you who might tend to go to music festivals at average 50 per you know per festival or use that example you know somebody else might um actually prefer food and wine festivals at a 200 per ticket typical uh concept i'll know over time what is my lifetime value of you as a customer i'll know um how much i want you engaged in in the activity and i may choose to offer the same event to you for slightly different in credit pricing than i might somebody else based upon all your behavioral aspects yeah and just to be clear so i mean at someone that buys a hundred credits from you right for a hundred let's call it a hundred bucks make the math easy that then uses that on the food and wine festival that we just talked about you're essentially making you know 30 cents per credit right effectively that's the goal yeah correct well what i'm saying is when you have a any kind of um super popular festivals that are typically going to sell out anyway it's unlikely the rights holder is going to give us such a large discount to drive that however if you if you look at the collection of thousands of festivals eighty percent of them go un unsold so of course coachella is going to be very difficult to get a 30 margin on um but in order to get it on the platform we might do it for a 5 margin knowing that they also are running 2 000 other festivals and they'll give 50 margin on those lost leaders yep okay give us some give us some metrics if you can on the consumer side how many consumers have signed up for you to pay at least a dollar yeah i mean it's it's different because we're in an early stage i can't really put an exact amount we have thousands of people who have signed up to engage in the platform um we really only started offering a collection of events uh very recently so we can say less than 1k paid is that fair yeah it's fair okay cool now how have you gotten the it's this is like the most beautiful step in any starter in my opinion right or the first couple months you said you've gotten several thousand to just at least sign up and express some form of interest even if they're not paying what mousetrap have you used to get that sign of interest sure many so so we've started to test different marketing channels right so i come from a background where um understanding cost per acquisition and data metrics are super important to me so we've been building kind of our network of media partners in order to engage in that so we have some media partners that have tens of millions of emails that they're going to use on our behalf as we go into 2020 to engage on a local level to drive people we've begun testing a few different partner festivals where we said come in and sign up for free um and you know you'll get a free ticket to a taco and tequila festival in los angeles um so we're using some of our partners tools in order to drive interest initially um we also have um these partners are people like festival squad 1h these kinds of people uh well 1h wouldn't be because 1h is it's more but that's more of a an investment-based vehicle but uh festival squad of course yesterday they wrote an article on us um i'm talking more about big media partners uh uh we're working with a few that manage all the digital properties for um hundreds of radio stations and hundreds of television and local television stations what's in it for them uh what's in it for them is the ability to create live content within their environment so we're going to begin to offer um all of our inventory showcased within their media pages through which they can then sell advertising around so it creates content for them interesting yeah really interesting okay going to the flip side how many uh organizations do you have sorry how many events do you have committed to the platform yeah so we have hundreds um so there are some one-offs that have come on and want to be a part of it that we put on um but we're also right now we're we're in deep talks with numerous of the uh big guys um you know i guess i could talk about strategic relationships even though they're not finalizing close but you know we've been talking to i heart radio for for for months upon months and they they run 20 000 events uh across uh across you know different cities throughout the year um we're working to get them on the platform town square media runs hundreds of events we're looking to get them on the platform we're working on partnerships with other ticketing companies that already have tens of thousands of events to make their events available on our platform so we're very quickly within within this next quarter in 2020 there'll be thousands of events and that's when we'll really kick in the marketing efforts to to drive people just like any marketplace nobody wants to sign up unless there's a lot of uh products yeah i was gonna say you have the chicken and egg problems so your email to event to iheartmedia when they say who are you you're a small player why do we put our events on your platform your response is well we have media partnerships with 10 000 radio stations that are going to pump traffic in q2 so you better get listed before they do that that is correct yeah and so you're kind of managing this two-sided thing now have you raised capital to help do this to give you some leverage or are you bootstrapping yeah so we brought in some seed capital from some other entrepreneurs and strategic partners early on um we're in the process now really closing out kind of a seed round and we have a ton of interest from in the institutional side for series a um i've since i've been an entrepreneur for 20 years i've been through every type of capital raise you can imagine i've done traditional bc i've done family office i've done bootstrapping i've done you know pure angel money and if you ever use debt um yeah yeah very much so i have used that and uh one of my every entrepreneur has a dream on how they want to thread the needle to still maintain control and still find a way to not dilute the company so my perfect goal i i have a plan a a plan b and a plan c so plan a is just finish out the seed round which we should do in the next two weeks or so uh then we'll grow uh the lever of the marketplace into q1 q2 and then you're probably familiar with a lot of um growth financing alternatives like clearbank or bravo or any of those guys they have hundreds of millions of dollars sitting on the sideline right now to provide money for social media spend for advertising spend um so ideally i'd love to have an operating budget on one side that runs the company and then a growth budget that comes directly from low-cost debt capital so you know we can spend promises that stuff is not low cost right so a deal from clearbank is going to look something like 1x your monthly revenues on a two-month term with an interest rate of two percent per month right i mean and that's on the that's on the bottom side that's a 24 apr essentially that's expensive it is i would not go to 24 um some of the conversations i've had uh with providers like that tend to fall on the six to twelve percent um so any anything over 15 percent i wouldn't do well who are i mean i have a lot of people interested in this kind of thing i have spent a lot of time researching these costs of capital i have not found somebody that's willing to provide debt capital to a startup at a six to 12 percent rate well we'll see like uh some of the ones i mentioned like a clear bank or a bravo or others do fall in that with uh credible companies that have proper kpi metrics one of the great things about our subscription-based model is that um if you think about what we're doing right so the the ability to spend if you have a traditional retail company and i have a 50 product the margin on that product that best is call it 50 um i can't spend more than you know even the cost of the margin to be able to acquire them when you have a subscription-based model let's say we're trying to acquire somebody at 50 a month and that's the beautiful thing about events it costs more so like in the old days the movie passed we were talking about a 10 a month charge when you're talking about events where things can be 100 or 200 to go to a single event it's not unlikely for people to put up 50 or 99 a month to actually um dedicate their experiential budget to that so if you're at 50 a month at assuming you have a 6 to 12 month lifetime value of that consumer you're talking about um three to six hundred dollars uh of an annual money coming in from that user at our at our 30 um margin we're hoping for it's like 200 yeah i'd be happy to pay 200 to acquire somebody i think is going to stay on board for for a year but that's the problem right is this is why a lot of these companies providers can't be helpful to bootstrap sas or even marketplace founders is you just don't have historical economics built out now now by the way if you go out and get an equity sponsor everything changes because then there's covenants about cash balance in your bank and maybe you do get down to six to twelve percent but it's very different than a bootstrap person trying to do this agreed agreed and that's why when i say my perfect scenario finish my seed round uh you know reward the people that really put money in early um get to a place where we're you know borrowing you know half a million dollars spending it getting another half a million spending it um and getting to a place where we're not diluting those initial uh investors plan b i mentioned there's a plan b the plan b is um we have a a lot of interest from some of these strategic players so when i talk about the ihearts or the townsford medias of the world um they they really when we get to a place where they feel it's a little less risky than truly early stage and when they agree to put their events on our platform they also want to then participate um so they're at a place where they say hey love what you're doing i'm going to take a risk and put our events on your platform but by the way i also want to put a couple million dollars in yeah and uh there's a balance of when that happens so ignoring the thing you're currently working on to close how much total capital the company to date um only a couple hundred thousand dollars okay couple hundred and what are you targeting in your seed uh we'll close it at 500 000 around okay got it so you'll have somewhere around like eight hundred thousand ish total raised ideally after the seed yeah that sounds about right yeah okay interesting and what flesh out the team for me today how many folks yeah so there's about eight um they're they're all distributed globally and one one thing it gets exciting is the first time in my entrepreneurial career that i was i actually built a virtual company and i love it um so you know i think five years ago you know there wasn't really slack there wasn't the ability to find best debris talent so i have my engineering team based out of detroit how many engineers um i have a head engineer a full stack developer and then other people that participate in you know part-time projects to really facilitate it i have a database engineer at a lisbon um we did our ui ux uh through a great team of three people um at a bali um great what's their agency what's that what's their agency name uh yeah i do studio moku okay moku so they're great danielle thompson runs it um and what i love about it is uh bali tends to be this um a digital nomad space where a lot of people have come from north america so danielle was originally canadian and has been in bali for a few years and she built this amazing freelance agency and they do he's not talking about uh indian outsourced costs i mean it still costs money but probably at half the cost you would pay in north america yep um and then i have i was just going to finish out the team i also have uh um uh some great business development folks down in florida okay eight people three three ish it sounds like full-time engineers and then a mix of the rest unit economic wise so you let's just stick with your 50 number you were using earlier to sign up a consumer that's going to pay you 50 a month to get somewhere between 30 and 60 credits what are you going to pay to acquire that customer based off the cup you know maybe a couple hundred you have paying right now yeah so so our target and we'll see if we can do it at scale is to make it um cost effective from the gross margin so assuming it's 50 assuming um we're getting thirty percent gross margin on on the product um i would look at that and say i'd be willing to pay two months of gross margin so if too much of gross margin is a hundred bucks i would happily pay thirty dollars to acquire that person last question here a lot of companies that start off with these market did i lose you no i'm here oh a lot of companies that start off with these marketplaces you know you talked about iheart and like getting their permission to list their event what a lot of these companies they just they just go scrape the iheart events and they list them on the platform and risk the lawsuit they can't there's you have nothing to sue against anyway but then if you send an email and says hey we've sold 100 tickets to this random iheart event in kentucky you basically pre-buy the tickets yourself and then you basically use your sales leverage to get them on the platform that's a great way to like arbitrage this why haven't you done that yeah so so we have but we haven't done it to the big players we actually want to work with uh strategically so uh i i've known the ir folks for a long time and i have a deep relationship with their corp dev and venture group so i just don't want to quote unquote piss them off um we did we did scrape about 8 000 events that we actually have in our database and and we actually produce on our platform part of that was from an seo play and we also enable if you look at the site you'll see a lot of these smaller events we just don't want to put the sales efforts into calling all these individual small events so once they're listed on the platform we actually have a crm program uh that we're about to roll out where they'll receive an email from us let them know the event is listed they can go to the page on the platform claim their event and once they claim their event they can sign an agreement to uh to actually abide by our terms and then we'll list their product on the site for our consumers yep very good ma'am all right let's wrap up here with the famous five number one favorite business book sure uh i love uh measure what matters um from john dora are you familiar with that yep great book number two is there a ceo you're following or studying yes uh um do you know who fabrice grinder is so uh he started a company called olx in zynga he runs a venture group called fj labs uh just inspiring guy love what he's done he's been an entrepreneur he's been through the grit and uh and came out and it has invested in 400 companies since number three what's your favorite online tool for building your company slack number four how many hours of sleep every night uh seven eight i'm pretty good on sleep yeah that's good and what's your situation married single kids uh separated three daughters live in new york city um busy man as long as i get my sleep i'm good yeah that's good all right and how are you ed 46. all right take us home what do you wish your 20 year old self knew uh i would say uh integrity over speed um you know i've been through the process and sometimes you just want to do something because it's fast i've taken money from the wrong investor in the past i've chosen the wrong employees to help grow things so learn integrity take your time go with people that uh you know will hold true to loyalty and integrity over time and it's it beats it the turtle over the over the hair every time guys there you have it eddie's building essentially a festival version of class pass right he's got several thousand consumers that have expressed interest maybe a couple hundred paying right now on their credit based system several hundred organizations and events on the platform as well optimizing for a 30 gross margin so if he sells 100 ticket through the platform he likes to keep 30 bucks the event organizer keeps the 70 and they scale that way he's trying to get his economics to work on that 30 gross margin level as he's going into a series or a seed round right now 300 000 raised right now again targeting a 500 000 seed eight people on the team right now split obviously between out three engineers and then the rest kind of mix between business and sales willing to spend up to uh two months essentially that gross margin to acquire the customer again scaling up the economics like he's done in the past at companies like moviepass ed thanks for taking us to the top appreciate it these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now