As with other Founders Corner blogs, I like to write these blogs to help myself make sure I am thinking about things clearly, as well as communicate important information that I want available to all employees and customers so we can get feedback and we all understand the path forward. I’ve written about pieces of this before, but we pivot and evolve our strategy as we learn and grow so I thought it was a useful exercise to review our company strategy from soup to nuts at this point. (As an alternative overview of our business, William Blair wrote this overview of our company).
We have always been a technology first company. When RunSignup first started, we thought that the technology solutions in the endurance market were not very good, and the vendors often had cross purposes like selling ads that confused the core mission of delivering technology to help events. We felt there was a need for a company where the sole mission was providing good technology and payment processing to the endurance market. We were inspired by Open Source type principles where we shared things openly, brought an Open API to the market and were focused on solving the problems our customers had.
Over the past 5 years, the term “Product Led” (Google will lead you to explanations like this and this). I define it as a business model where the product functionality solves customer’s problems so well those customers become your advocate – bringing new ideas and new customers to the company. This is a very efficient model where the business spends less on sales, marketing, support and operations and more on the product development. Marketing becomes more about educating customers on how to gain maximum value from the product, Sales is focused on understanding customer problems and providing solutions via a standard, self-serve product. Customers have all the tools they need in their own hands to control their own destiny. And the number of customers who want to control things themselves is growing, which only reinforces the model.
One of those virtual cycles I like to talk about with our Guiding Principles, only applied to the sales – use – support – refer cycle.
Being Product Led was what led us to our TicketSignup offering we introduced this year. And being product led is what will differentiate us from the Eventbrite’s in the ticket market. They spread themselves thin, have unstable technology (see their Twitter feed), and how they are now more interested in promoting themselves, and charging customers for basic functionality like email that helps increase participation and helps the customers and them. And how their ad strategy will drive event directors away from their platform.
Payments as the Revenue Stream
Our revenue comes almost solely from the processing fees that are paid when we process transactions for our customers. Our pricing is $1 + 6% per transaction for registration and tickets, and only 4% for donations in an effort to help our nonprofit customers. The registration and ticket pricing has a revenue share component for organizations with over 5,000 registrations/tickets per year.
This is a very interesting business model for several reasons:
- We sit on the same side of the table as our event director customers. If transaction $ grow, we both make more money. This alignment is a key driver for our motivation to keep making our software better for events.
- We manage the money flow. We are a Payment Facilitator, which means we are authorized by the credit card networks to onboard all customers and control the flow of funds. So we never have to invoice our event director customers, and are the ones that are sending them the money. This creates another positive relationship between our company and our customers.
- Participants pay the processing fees. We owe a lot to Ticketmaster and early pioneers of online ticketing where a processing fee became the norm. So our event directors do not pay us – we take our fee and pay the credit card companies and send the full registration or ticket fee to the event. And since our fees are lower than Ticketmaster and Eventbrite, participants really do not care.
The net of all of this is that we have a very efficient model that scales as our customers grow. Which works, except during pandemics….
Three Businesses, Leveraging Common Technology, Process and People Platform
Our first decade was focused on building a core platform and technology for endurance events. Many of those endurance events had fundraising needs that we built technology to help. That has become our GiveSignup business that helps Peer to Peer events. We also saw needs from a number of our customers to help them with ticket events, and that has led to the TicketSignup business. The common thread is Events!
This is very interesting from a business perspective because we are able to leverage a lot of core technology (infrastructure, payment processing, email, website, etc.) investment across three markets. The multiple markets allow us to afford to invest more than competitors in a single market to have better core technology. This gives us great efficiency as a business, and allows us to distribute the cost of developing major features like our next generation Free Event Websites and Free Email across the multiple markets.
We then build in specific technology for each market we pursue (RaceDay Scoring, Ticket App with Checkin and Point of Sales, Calendars, etc.) that allows us to give customers in that market exactly what they need. Each of these markets is at a different stage in our business:
Endurance – RunSignup – Mature. We have done very well over the past decade in this market reaching about 35-40% market share in the US. The keys were superior product, low pricing and treating customers fairly. The plan is to keep and grow market share by providing a complete solution with a particular focus on race day, where there are no real competitors. In addition, continued improvements in our technology stack like the next gen websites and email capabilities we are providing our customers for free.
Peer to Peer – GiveSignup – Natural growth market beyond Endurance. Nonprofit Peer to Peer events are a natural extension of our endurance market. There are a set of common needs based around knowing each participant. This market is dominated today by either old systems, or systems that focus on CRM capabilities rather than the event and fundraising optimization. We bring modern, advanced, differentiated technology that actually helps improve the Peer to Peer event as well as the fundraising. And we cater to those customers who want control and freedom.
Ticket Events – Ticket Signup – Huge market. This is a small business for us today that offers many opportunities for growth. We are finding specific markets. We started with ticket features for nonprofits – like having donation discounts for a ticket (Donate $100 and get 50% off your ticket price). This year we have found there is a market for multi-day/timeslot events, particularly outdoor like farm events and Halloween Haunts that are a perfect fit for our technology solutions. Just like we did with endurance, we are drilling into the specific needs of these markets and building capabilities like self-serve ticket transfer when there is a rain out. Our event day technology expertise in endurance is also coming into this space and our TicketSignup App has quickly become a favorite reason to switch to TicketSignup.
Revenue, Growth and Profitability
As you can see, the next couple of years will have moderate growth. This is partly because our endurance business is so large, it is tough to have big growth on a big number. Our ticket business will likely double or more each of the next several years as it is easier to grow a small base. Averaging them out, it will take us several years to really get to a place where the growth in the large ticket markets that we enter (for example, Halloween is roughly the same size as the Endurance market – each about $1B a year in transactions in the US). The net of this is that our revenue growth will be solid, but not spectacular, and we are fine with that.
We have also reached a level of maturity in our systems and processes and customer base that we are profitable. We want to remain profitable rather than over-invest in sales and marketing to try to grow our business too fast. I call this “Pushing on a String” – one of my favorite terms.
The Three Leg Stool – Employees – Customers – Owners
All of the above is the structure of the business – but nothing happens without employees, customers and owners – and there needs to be a balance between all of that. We are lucky to have a bunch of people join us over the years who are talented, who care, and who respect the contributions of the rest of the team. Likewise, we have a great set of customers who have partnered with us over the years. There is a great mutual respect between our customers and employees – I like to think of ourselves as peers just trying to solve problems and making events better.
In terms of ownership, less than 10% of shares and options are owned by outside investors, with the rest owned by my family and each employee. I like the idea of having each employee feel some real ownership for the company. In the future, we may continue to stay a private cash flow based company with profit sharing and dividends to owners. Or we may take more capital to grow the business faster (likely to do acquisitions in the ticket space since we really don’t need capital for our own organic growth), or to provide liquidity to existing owners – for example I or some employees might like to trade some ownership for some cash at some point. We are not in a rush for this and if we do make a move like this it will be done carefully and with thought.
We are a long term thinking company. I wrote about this and how it gives us an advantage over companies tryin to make a quarter, or serve some sort of large corporate strategy, or those hungry to make a buck. It brings stability to our employees, customers and owners – everyone knows what they are getting because we operate so openly.
We are also a company that likes to Get Stuff Done. Things like doing 2,000 releases per year are what help to differentiate us by striving to Continuously Improve.
My conclusion of this Strategy Overview is that we learn and pivot, but the foundations of how we operate continue in a consistent framework.
My other conclusion is that I am super excited about the future!