Viagogo: Eric Baker
Baker talks about fending off the competition and securing high-profile partnerships
Every once in a while there's a live event you don't want to miss, but usually, bagging a ticket is about as likely as England winning the World Cup. Once, all you could do was take your chances on eBay, or go to a tout, where there's a fair chance you'll be ripped off.
But now there's a third option. After spearheading an industry for legal secondary ticketing in the US through his lead role in the growth of StubHub, Eric Baker is now doing the same here with Viagogo.
Like many entrepreneurs, the idea for StubHub came about when Harvard graduate Baker ran into this problem himself, while trying to get tickets to see The Lion King in New York in 1999. With tickets like gold dust, he ended up being stung by a tout, and began to wonder why ticket resale didn't exist online.
Surmising there was no good reason why it didn't, he also saw drawbacks for potential rivals eBay and Ticketmaster getting a slice of the action; the former “doesn't work well for time-sensitive items”, and the latter, as a primary ticketing company, faced “major conflicts of interest” by entering the resale market.
So, along with Jeff Fluhr, the business partner he met at StanfordBusinessSchool, Baker saw the chance to create an online space where fans could resell tickets if they were unable to attend an event. They launched StubHub in 2000, a site designed to give people a secure way to trade tickets online, where “the buyer knows they're going to get the ticket they wanted on time, and the seller's going to get paid.” In doing so, they created an industry: ‘secondary ticketing'.
Baker left the business in autumn 2004 following differences with Fluhr, but not before growing it to a stage where millions of dollars worth of tickets were being traded each year. Wisely, he retained a 10% stake in the business; it was sold to eBay for $310m last year.
“Two months later it occurred to me that the concept of ticket resale is not uniquely American, it's global,” he recalls.
Baker spent 2005 researching the UK market, before setting up in Hammersmith, London in January 2006. Armed with lessons learned from StubHub, he found himself in a strong position to build a business that was better equipped for growth.
“The technology for StubHub was built with rubber bands and scotch tape!” says Baker. “Someone would say: ‘What happens if we start selling a million tickets a day?' And we'd go: ‘We'll deal with it then!'”
Viagogo's platform was built to be scalable from the word go. As a result, it is growing exponentially, and at a much faster rate than his previous venture. But let's not detract from StubHub's phenomenal success. Viagogo has inherited many of its founding principles, and the business model is very similar. “Think of us as a transactional business almost like a stock exchange,” says Baker. “We charge 15% to the seller, and 10% to the buyer.”
Like StubHub, Viagogo's safe, secure and guaranteed, something Baker is keen to stress. All deliveries are tracked and every user must register their card details. If a seller forfeits the deal, Viagogo will source replacement tickets for the buyer, with any extra cost shouldered by the seller.
Viagogo launched before StubHub was sold, so growth was funded by £50m venture capital investment – a field Baker has much experience in, having worked for US VC firm Bain Capital prior to doing his MBA. His investors have been invaluable mentors on doing business in Europe, and his backers and advisers include e-commerce experts such as Lastminute.com founder Brent Hoberman and Danny Rimer, an investor from Index Ventures, the portfolio of which includes Skype, ISQL and Betfair.
When you create an industry, it's inevitable others will follow. A number of ‘me too' brands have emerged, but Baker insists that in this kind of market, the first player always has the edge. “In what we call a network effect business, where someone has the first-mover advantage, the largest scale and the best partnerships, it's virtually impossible for others to catch up.”
Viagogo's partnerships have catapulted the growth of the business. It has just been chosen as the official UK premium and secondary ticketing partner for Madonna's upcoming Sticky and Sweet tour in a groundbreaking deal which marks the first time a major artist has openly endorsed secondary ticketing. The industry has withstood much criticism from music agents, including Harvey Goldsmith, who have complained that artists should be given a cut of resale profits. Viagogo will instead pay a rights fee to Madonna and concert promoter Live Nation, which signed a 10-year deal for her albums, tours and merchandise last year.
Baker also has partnership deals with a number of Premier League football clubs. The UK's anti-hooligan laws dictate that it's illegal to resell football tickets, but Baker has neatly sidestepped these by striking exclusive deals with clubs, such as Manchester United, meaning Viagogo is the only place where you can legally resell a ticket, giving the team a share of the revenue or money via sponsorship.
Despite the growing success, Baker has faced his fair share of critics. One of the main challenges is in education. He does not take too kindly to being called an online tout. “Tout's a very charged term,” he says. “People have to understand we're a solution to touts.”
But as long as there are touts, Baker will have to re-educate consumers. When we meet, he tells me he's just stepped in to help a man who went on the radio when a website sold him tickets to a gig that never materialised.
When asked to comment by the media, he seized the chance of a little PR by offering replacements. He insists his aim was to draw a distinction between these sites and Viagogo. Partnerships with the likes of Manchester United and Chelsea won't have done any harm on this front.
Viagogo now sells tickets across Europe and has bases in Germany, France and Holland. Baker has recently taken the company Stateside, where it is going head to head with StubHub. While acknowledging that StubHub has the same first mover advantage Viagogo has in Europe, he believes there is scope to do some “interesting things” over there, and has already partnered with the Cleveland Browns.
Numbers-wise, he's playing his cards close to his chest, but he'll say enough to confirm that Viagogo is already doing phenomenally well. The business is selling tens of millions of pounds worth of tickets annually, and after one year, had sold more tickets and generated more sales than StubHub had after its third. To put that in context, StubHub now sells around $1bn worth of tickets annually.
“Any time you do something the second time, you'd hope you can do it better,” he says. “We think there's a huge opportunity here in the European market and, ultimately, globally, so it's very exciting.”