Sramana Mitra: What happens next?
Manick Bhan: We figured out how to rub these two stones together and kept building up this small fire. We were doing maybe $50,000 in sales a month and slowly growing. By the end of the year, we had hit $1 million ARR (Annual Revenue Rate). In that process, we focused on the two fundamentals of what it takes for the solution to be successful. Understanding organic search is hugely important. You can’t just read it online and learn it. You have to be doing it and running experiments. We were running several experiments.
We started to grow and build our initial growth model. If I can buy 100 users for $100 and some percentage of those users end up transacting and buying something, how much money do I generate right out of the other end of the funnel? We continue to focus on that unit economics. We began looking at retention. If we pay $10 per active user, how many transactions can we expect from them over the next six months? A lot of people talk about this a lot and they do a good job with it.
In our business, since we are a marketplace, our suppliers are really important. We continue to forge deals and make relationships on the supply side. When $15 billion of tickets are sold, these are the guys who own them before they are sold. We were striking deals and making relationships, and trying to get these things happen. The challenge was none of them took us seriously. If you’re selling tickets worth $10 million, a small tech startup that’s going to sell tickets for maybe $1,000 is just not interesting. We had to adapt our strategy.
We ended up building a very simple tool for them so they can see how tickets across the industry was changing in price. They never had that before. That’s how we got our first $50 million of direct inventory. Now we have over $1 billion. We just continued to focus on these kinds of early business fundamentals. We had enough there that we could raise our first funding round. These were actual investors who knew what they were doing and were generally very well connected in tech.
Sramana Mitra: From whom did you raise that round?
Manick Bhan: We raised that round of funding from angel investors and some venture capital firms in New York City as well as a lot of the strategic partners who were uploading their inventory to us. They thought, “Maybe they’ll make it. Why don’t I invest a little bit?” They were great partners in both ways. We even had the owner of a professional sports team investing.