Jayesh Parmar and his company, Picatic, had a product that looked good, that users liked, and was profitable. But the fact remained that it was what he calls a "me-too" product: It was a web service that managed event ticketing – and the Internet was already home to plenty of firms that did just that, all of them competing against existing ticketing giants.
So, last year, Parmar went back to his investors with a new scheme. Most ticketing companies make money from commissions and service fees, most offering similar features. Parmar proposed something riskier: Picatic would make money by letting their customers decide how much to pay. His investors took some convincing – Parmar says it took three or four meetings before they signed off. But once Picatic retooled their platform and launched the service in beta, they made a surprising discovery: It worked. In fact, in beta, 68 per cent of users ponied up, to the tune of 3.1 per cent of their net revenues.
"Our mandate is, if you lose money on our event, don't worry about us. Pay us next time," says Parmar.
Aimed at venues, event organizers, and artists, Picatic is a web service that manages ticketing and registration, signing people up for events, issuing tickets, and keeping tabs on numbers and revenues. Under their newly-launched pay-what-you-want model, organizers are presented with a slider that lets them choose what percentage commission of their sales they'd like to give back to the company.
"At the end, when they're all done, and they have the money, they decide on a sliding standard what they want to pay us," says Parmar. "It can be zero, it can be market value, it can be above market value."
Free, "freemium," and ad-supported products went through a vogue in the mid-2000s, as authors like Chris Anderson extolled the virtues of business models that put user choice ahead of fixed fees. Since then, more conventional ways of paying have reasserted themselves, especially since online advertising failed as a commercial cure-all.
But the ticketing space was ripe for a shake-up, says Parmar. Anyone who's purchased a ticket knows why: Euphemistic "convenience fees" and service charges drive up the cost of tickets and infuriate customers. What's more, it's hard for new entrants to break the incumbents' lock on the market, because ticketing companies have been in the practice of giving some of these fees back to venues.
Parmar says that, despite the cash incentive, venues and event organizers are weary of the onerous contracts that come with them, and are looking for something simpler. "Our hypothesis is, people are tired," he says.
The Picatic team, a crew of born-and-bred Saskatooners who have taken their company through incubators, accelerators and funding rounds in Toronto, New York and Silicon Valley to their current home base in Vancouver, have event-running in their blood.
The company was borne of a DJ and music outfit that Parmar used to run as a Saskatoon student looking for an excuse to "drink beer and meet girls" – a venture he founded on the back of a $6,000 BDC loan. But that company needed a ticketing solution, and when Parmar built his own, he discovered that others needed one, too. As Picatic grew, it started offering crowdfunding for event organizers, letting them host an event only if – Groupon-style – a certain threshold of tickets were sold.
But the crowdfunded ticketing market is $1.5-billion, he says, next to the $18-billion ticketing space. And he's betting that reworking his firm as a pay-what-you-want offering is a maneuver that giant ticketing firms, with their fixed costs and institutional inertia, won't be able to match. Besides which, giving customers a say in the price gives Picatic extra incentive to perform.
"Every event that's on our platform, we have skin in the game."