Thank you for your interest in SEATXCHANGE. In response to some questions posed below, we felt it was necessary to provide a detailed account of our historical performance for everyone's consideration.
To say it’s been a wild ride would be a massive understatement. Our journey is defined by four very distinct phases that when put together explain how we got here, why this campaign, and the massive opportunity if we can raise enough funding.
Phase 1 (Prelaunch)
This phase covers Company formation (September 13, 2016) until Los Angeles public beta launch (September 2, 2017). Noteworthy Highlights: (i) Raised close to $1m in funding exceeding our goals; (ii) successfully recruited world-class Advisory Board each with specific relevant expertise; (iii) focused on providing the best user experience, designed and developed two native apps (iOS and Android); (iv) secured strategic relationship with NewAer for use of its patent-protected proximity detection and automation technology; and (v) launched website for pre-registration.
A major decision we had to make early on was selecting the right developers to build SEATXCHANGE. The selection process was guided by four factors: (i) faced with a saturated ticket market plagued by fraud, we wanted to build a compelling user experience (not an MVP) to attract users; (ii) we wanted to build native iOS and native Android to create the best user experience and optimal functionality using the NewAer proximity technology; (iii) iOS and Android apps had to launch at the same time to allow for in-venue seat exchanges; and (iv) maximum cash budget of $200k meaning the developers would need to take significant equity in lieu of cash for the remainder. We conducted significant due diligence connecting with some of the top-rated US agencies all of whom loved the idea and were willing to take significant equity, but with a total price of $600k+, they simply needed more cash than we could pay. That left us with two options. Ultimately, we chose Appster after being fiercely pursued and persuaded by their CEO and team that they were the right development partners. That turned out to be the huge mistake as explained below.
Phase 2 (Traction!!)
SEATXCHANGE beta launched (iOS and Android) on September 2, 2017, listing only events in Los Angeles occurring over the next 5 days. Our beta launch coincided with the Dodgers run to the World Series. Through a combination of large inventory at cheaper prices and an effective marketing strategy, we immediately gained historic traction for the secondary ticket market. For perspective, we grew so fast that one day, without notice and outside business hours, our ticket inventory provider which supplies inventory to StubHub and more than a dozen other major marketplaces, all of a sudden pulled our ticket inventory and demanded a six-figure reserve deposit to restore inventory. They apologized for not giving us notice during business hours so we could avoid disruption, advising they had never seen a company grow so fast and the requested deposit was consistent with the deposits required by their other larger marketplace customers.
Despite being a new startup and only listing Los Angeles events occurring in the next five days, in the first 60 days (September 2, 2017 through October 31, 2017) we: (i) exceeded 6,000+ fully registered users (growing 50%+ week over week) with a customer acquisition cost under $1.50; and (ii) processed more than $200k in valid ticket transactions.
Even more remarkable is that but for the significant unexpected technology shortcomings we encountered (as referenced in the campaign disclosures), we would have processed at least 200% more ticket transactions and sales. The traction immediately exposed multiple material technology and security deficiencies/mistakes in the software code. But for the tireless 24/7 dedication of our team during this time, each of these mistakes, on their own, could and should have put us immediately out of business.
Phase 3: (Fix and Test the Technology)
In early November 2017, despite the impressive traction in Phase 2, given the massive potential exposure created by the technology issues, we had no choice but to slam on the breaks in order to resolve the mistakes/errors in the software code to ensure the platform performed as we intended. We shifted from a growth and user acquisition strategy to product development. We searched for and found developers capable of correcting Appster’s mistakes. All marketing budgets and other applicable budgeted items were slashed to negligible numbers and funds were reallocated to fixing the technology. This process took several months (until mid-February 2018).
By mid-February 2018, the major immediate technology issues we encountered were resolved and we were ready to “relaunch” with a functioning app (which we believed we had back in September 2017). We also added our first revenue stream – low flat transaction fees into the new and improved app. Unfortunately, however, the significant delay, additional costs, and losses caused by the technology issues drained our resources leaving the Company crippled and unable to execute any legitimate business strategy. Despite the limited resources, we wanted to see if we could recreate traction to warrant raising additional funding to move forward.
Starting mid-February through mid-April we resumed a limited marketing campaign to drive growth. Given the scaled-back budget, we didn’t expect to hit comparable overall numbers, so we were focused on customer acquisition costs and week over week growth. Sure enough, we were able to produce nearly identical numbers as we had in September 2017.
Having re-reproduced the traction metrics, all we needed was to add fuel to grow. However, without the resources necessary to execute a sustainable user acquisition strategy, we spent the next few months identifying our technology advantages (features, Newaer patents) and revenue streams derived from those advantages (many of these are laid out in the “What’s Next” section of this Campaign). We then explored those opportunities with several industry leaders (e.g. Ticketmaster, AEG and others) resulting in significant advanced discussions with senior executives of multiple industry leaders.
Phase 4: (Raise Funding to Move Forward)
Having fixed the technology and proven we can re-produce traction, together with the significant opportunities created by our proprietary technology and positive feedback from industry leaders, we made a decision to seek additional funding and keep the dream alive. As stated in our Campaign disclosures, the Company currently does not have the funds to move forward. We are relying on the success of this Campaign to continue operations. If this Campaign is successful, then the upside ahead is massive. Adding to the difficulty is the negligible marketing budget we have to effectively market this campaign. Thus far, the Company has spent less than $600 marketing this Campaign. We are relying on people like you that read this page to get behind the vision and support us moving forward by spreading the word. There is strength in numbers!
** Having read the foregoing, here is a link to a chart from Mixpanel (data analytics) that illustrates our journey. https://www.dropbox.com/s/d461u9w12ah5dde/Screenshot%202018-12-16%2019.21.49.png?dl=0
Amir, Founder & President