By early 2009, Eventbrite had been turned down by practically every venture capital firm in Silicon Valley. The economic downturn had taken its toll, and Co-founders Julia and Kevin Hartz and Renaud Visage had a choice. They could give up, or they could continue to bootstrap and grind as the only three employees — like they already had for the previous two years on less than $250,000.
Ultimately, they chose to stick it out. And while things have turned around, and the company has seen explosive growth, the founding team came out the other side with a battle-tested commitment to efficiency, a healthy sense of paranoia, and a plan to turn their competitive advantages into sustainable advantages.
Recently at Stanford’s Entreprneurship Corner, the Hartzes shared what they learned from this experience, the qualities they believe enduring startups must have, and how founders should capitalize on their early days to secure long-term success.
KNOW YOUR NUTRIENTS
The chief metaphor Julia and Kevin use to describe building a company is designing an organism. This has defined their approach to growing and nurturing ticketing startup Eventbrite. If you look at it this way, they say, you’re much more likely to create something that can adapt to shifting environments and survive without micromanagement. Like any organism, a startup will die if it can’t properly identify and leverage nutrients.
Your First Customers
At the beginning, there was nothing. No team. No product. No revenue. Eventbrite had to figure out a way to get its flywheel turning from zero, and it all started with customers. Diving right in, Julia took charge of marketing, customer service and finance, while Kevin managed product development end-to-end. Together, they created an extremely tight feedback loop that empowered customers to rapidly influence the service. And when it came to finding these customers, they turned first to their own backyard.
“Our early adopter group included tech bloggers and all these people gathering around meetups and conferences and talks, but we knew that anyone could apply these tools, so there was all this horizontal opportunity,” says Julia. “Our strategy depended on staying close to these customers and really building those relationships from the beginning. I was literally answering customer service emails from the delivery room when we had our first child. They had to take the computer away from me.”
Your customers are your lifeline. They give you direct feedback to build in real-time and allow you to future-cast what they will need as you grow.
Capital (and Not Using It)
“If customer feedback is your high-protein most nutritious resource, capital is like sugar,” says Kevin. “It gives you a burst of energy, but you can’t survive on it on your own over years.”
At his prior startup, payment transfer company Xoom, Kevin says that fraud attacks and unforeseen problems meant they were always on their heels when raising much-needed capital. He knew that his second act, Eventbrite, would need to be so capital efficient that they could lean forward and go after funding when they needed it. “There’s that adage that capital is always there when you don’t need it, and when you desperately need it it’s not available. So we built ourselves into a position where we didn’t need it.” This happened to coincide with the collapse of the market, and all those no’s they got from investors. It was deflating but not fatal.
“We got to this point where we just said, ‘Well let’s put our heads down and build the business with what we have,’” Kevin says. “We took on a little bridge money and eventually the business took off. I really think that was because we had been so customer-centric for years. That’s why the business blossomed when most others that had been bloated and reliant on capital failed.”
By weathering the storm and showing growth during tough times, Eventbrite was able to land $6.5 million by the end of 2009.
Talent as Fuel
In its third year, Eventbrite expanded the team to 15. The effect was transformative. When it was just the founders, they weren’t able to focus on anything outside of product and customers. Once they brought fresh talent on board, they were able to extend their capabilities exponentially. Two things helped them get the most out of working with smart people:Knowing where to find ideal Britelings (the insider term), and dedicating a founder to all things talent.
“In 2006, founding a company in San Francisco was actually contrarian — the conventional wisdom was that you wanted to place your company on the Peninsula near Stanford, but we felt this inherent pull toward the city,” says Julia. “A) We wanted to be contrarian, and B) We wanted to be near what is crucial to our business, actual live experiences. It gave us a change to be close to our subject matter, but it also helped us access talent that wanted to be a part of our vision — who were sold on the vision of bringing the world together through live experiences.”
This ended up being a turning point for Eventbrite. It became clear to the founders that the company wasn’t something they were building to flip or for revenue's sake. Finding talent that energized them about the core mission made they think about a sustainable future.
Today, Julia Hartz, is Co-Founder and President at Eventbrite. Previously, she managed television series for FX Networks and helped develop series for MTV Networks.
The nutrient of great talent is very, very, very important. I can't stress that more.
“Really understanding where you can access talent is extremely important, and we took a bet on San Francisco,” Julia says. “Now when you look at the trends and how abundant the talent is here and how fierce the competition is to get talent, it’s clear what a crucial nutrient it is for a startup organism.”
To get into the right mindset, she advises startups to not just think of their competitive advantages in terms of technology or business practices — talent is one of the greatest competitive advantages you can possibly have if you can bring it in and retain it. To make sure Eventbrite was able to do this, Julia pivoted her role fairly early on to focus exclusively on the company’s talent. “We look back at when we didn’t have that luxury of one-third of the founding team spending all their time on this and we can see it’s been a game changer in building a people-centric company.”
FIND THE RIGHT HABITAT
When the Hartzes and Renaud first started formulating Eventbrite, they took a long look at the existing ticketing market. Immediately, they spied the opportunity to democratize and disrupt. The incumbents were providing poor customer service, charging high fees, and weren't innovating.
“To us, that was sort of a green light in terms of opportunity, and we could have said we’re going to go after and disrupt Ticketmaster and take their market share,” Julia says. “Thankfully we thought better of that. We saw this gap between people who were using Excel spreadsheets, email and paper checks and cash at the door, and events like Jay Z concerts at AT&T Park — there is this huge gap. We realized the long-tail of ticketing was enormous.” This long tail became the habitat that would allow them to thrive.
They were able to list a number of events that weren’t currently ticketed but could be: cooking classes, yoga seminars, food and wine festivals, etc. But at the beginning they didn’t know how many categories would be interested in the platform. Their answer was to let their customers tell them. Many of the events that popped up were small and not exactly glamorous, but they boosted the numbers.
“We didn’t try to go deep into one category or one geography or one size of event — we let it just organically evolve,” says Julia. “Because we went after an underserved market of people, we actually had this amazing greenfield to grow into over the years.”
Kevin Hartz is Co-Founder and CEO of Eventbrite, and started his career in product management. In 2001, he co-founded and led Xoom, the digital money transfer service that eventually went public in 2013.
Capturing opportunity that wasn't necessarily attractive from the get-go is why Eventbrite is here today and has been able to grow.
CULTIVATE HEALTHY PARANOIA
“Healthy, productive paranoia is incredibly important for setting yourself up to endure extreme seasonality,” says Julia (extreme seasonality meaning good years and very bad years). “Building Eventbrite in an efficient way, because we really didn’t have much money to spend, and thinking in a lean way really did set us up for success.”
Their paranoia was a forcing function for high efficiency and helped them outlast the financing shortage — but it also helped them feed their business against all odds. By taking on a rigorously realistic view of the economic downturn during 2009 and 2010, Eventbrite’s founders were able to spot a huge opportunity that they might have missed: “People came in droves to adopt the platform to generate revenue of their own — people who had left or lost corporate jobs due to the economic environment started using Eventbrite to teach classes based on their skills or gather people around common passions to make money. Do-it-yourselfers became a massive trend, and we were really able to understand the enablement market and lean into that opportunity.”
Big picture when it comes to seasonality: You should always be expecting the worst.
Healthy paranoia is not about being in a constant state of fear, Kevin emphasizes, it’s about being aware that your startup organism needs to be able to survive in different environments. “You can be a very happy critter, then all of a sudden find yourselves in a desert, like when the economy swings in the other directly. Conditions change and you don’t want to be non-adaptive during one of those periods,” he says.
When things are going well, capital is flowing, and business is blowing up, you should take advantage of that time. “That’s when you should be thinking about every way you can continue to increase efficiency. Building an efficient organization is about having optionality — not being dependent on your next $20 million venture capital raise that you planned before the market dries up. You need to have options A, B and C, not just A.” Times of plenty are when you should be working on plans B and C.
ADAPT OR DIE
Kevin cites several attributes Eventbrite acquired in its early days through testing and iteration that helped the business later on. All of these traits represents adaptations to the market as economics shifted and the company learned more about its audience and their interests.
“If you don’t charge anything for your tickets as an event organizer or host, you can have an event for free — and that was an accident,” he says. “We didn’t intend to build free event functionality. We wanted people to have the option to make tickets free for a segment of their audience, but then people started publishing free events in far greater numbers and percentages than the paid events. At first we were aghast, thinking, ‘They’re using our product and we’re not being paid!’”
Initially, Eventbrite’s founders set out to build an enterprise company that would help other paying companies and organizations produce events. But once the tools were out there, the potential to become a major consumer play took hold.
When they took a closer look at the content being produced, they saw the benefits immediately. All of the pages created by users were indexed by Google and other search engines, dramatically increasing Eventbrite’s discoverability. “The awareness that was being raised by those using Eventbrite for free — when we looked at it quantitatively — it was actually fueling growth of the business,” Kevin says. “The more free events, the more the virtuous cycle grew.”
Another metric that stood out was the number of event attendees that automatically went on to become paid organizers, saving the company precious marketing and sales dollars. “When cost of user acquisition went toward zero, we were able to take that money we would have spent on sales and invest it in engineering, innovating more on the product, offering outstanding customer service.”
We have a motto of relentless evolution because complacency is death.
In another boldly adaptive move based on user trends, Eventbrite decided to open up its API to allow thousands of developers to build niche features and services the company wasn’t going to build. “We really focused on driving organizers to this platform to understand everything they could do on Eventbrite to sell more tickets and promote their events. And then something really interesting started to happen,” says Julia. “Last year we had 1.1 million attended events on the platform and two-thirds of those were free. Out of the one third that was paid events, we generated $1.1 billion in gross ticket sales for organizers. We realized we had built something that was scaling and global. We ticketed events in over 190 countries last year.”
Observing this pattern of growth, Eventbrite realized it has a massive opportunity ahead of it to create a worldwide marketplace for live experiences.
There is no greater satisfaction as an entrepreneur than to disrupt yourself.
“Today, our team of 450 Britelings across eight worldwide offices are stretching themselves to imagine a future where we are the de facto place that you come to find live experiences. We have to become a consumer habit to really achieve this idea of the marketplace and nail liquidity.”
In just the last couple years, the company has had to sprint to adapt to mobile-first users as well, especially given the global focus. To make this happen, the company dedicated a huge chunk of time and resources to get everything right from the start when it came to responsive web design and quality native apps. There was no scrimping in this arena, with everyone realizing how valuable mobile would be going forward.
TO COMPETE, DIFFERENTIATE
“Differentiating yourself from the rest of the market is a competitive sustainable advantage,” says Kevin, relaying the following example.
Because Eventbrite moves so much money around the world in small amounts, it could have been a real honey pot for hackers and fraud scams, he says, but they were able to catch this early and use it to develop a secret weapon. “We built a fraud detection and deterrence team of engineers and operations that we consider very proprietary,” he says. “When we see new competitors entering the space or trying to gain any kind of scale, fraud really acts as an air cushion. We’ve effectively deterred fraudsters from our site so they swarm over to competitive sites. We were able to create a silver bullet to stop the bad guys but not stop our self-service customers.”
But differentiation shouldn’t be relegated to product. One of Eventbrite’s core differentiators is its focus on employees: Finding the right ones first, and then immersing them in a culture that both supports them and pushes them to achieve.
“When we raised our $6.5 million, we were at a stage where we knew exactly where we wanted to go and who we needed to get us there,” says Julia. “The plan called for us to grow the team from 30 to 100 in less than a year. At the same time, we were watching other tech entrepreneurs go through their own hyper-growth phases and come out with broken cultures, loss of identity. They had to go back and self-correct some of the hiring mistakes they made. They lost their way in terms of the soul of the company.”
To dodge this fate, Julia knew that she had to dedicate all of her time and energy to thoughtful growth, and that would start with making people feel great about working at Eventbrite. “What I’m most proud of is not how cool our company is, it’s that we’ll always do the right thing for the people we work with,” she says.
We put our people before the company and the company before ourselves.
In practice, this isn’t the easiest way to operate. "We do things the hard way. We take windy paths. Things are not always clean or streamlined. But ultimately it’s our team that is going to give us the opportunity to be an independent standalone company for the long haul. One of the things that definitely differentiates us from other tech companies is this idea that our culture is designed to be sustainable.”
Julia has spent years architecting Eventbrite’s culture to make this possible. To start, she borrowed from a branding exercise they were running to see what adjectives their customers used to describe the service. “They came back with words like accessible, genuine, empowering, innovative,” she says. “When I looked at that list, I realized it actually described the team and how cool that was that the two were intrinsically linked.”
Now as Eventbrite brings people on, they have guiding attributes. “The people should reflect the product and vice versa. Instead of reinventing the wheel and trying to come up with core values or a mission statement, our culture became defined by these tenets, and we used that list to start hiring,” Julia says.
When the company first hired employees beyond the founders, she knew that a sustainable culture would not be defined by one person or a group of people. It would be defined, cumulatively, by everyone at the company.
“A lot of that year of growth I spent observing and finding moments where I could provide a resource or a tailwind or encouragement to somebody who was giving back to our culture, and I think that’s how we started to create sustainability,” she says. “Culture is so overused as a term it’s hard to know what it means anymore, but I think it’s really what keeps you centered. It should be a centering force for the company.”
It's also major source of employee happiness and satisfaction. Their focus on this component got Eventbrite named one of the best places to work in the San Francisco Bay Area four years running.
No matter how good or bad things get, if you have a sustainable culture, you should be able to stay centered.
“Our culture is manifested by every single Briteling, so if we make hiring mistakes, we see it in our culture,” says Julia. “And I want that to happen. I want that mirror. It’s a work in progress, and I never want it to be over.”
To watch the original video of Julia and Kevin Hartz speaking at Stanford's Entrepreneurship Corner, click here.