Ed Vincent, Founder of festivalPass

How to Successfully Crowdfund, The Keys to Building a Marketplace

In How to Successfully Crowdfund & The Keys to Building a Marketplace, Ed Vincent, founder of festivalPass, joins host William Glass to discuss the keys to raising money from your customers and creating loyal fans. You’ll learn:

• “Always on” crowdfunding
• How to build a marketplace one geography at a time
• How to develop an innovative business model

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About Ed Vincent

Entrepreneur with over 25 years business, technology and management experience including 6 years banking and valuation experience. Founded an e-commerce business in 1999 which was sold to a competitor in 2001. Repeat Founder including SimplyEngage, myProducer, & Predict Ventures. Currently Founder & CEO of festivalPass.

Learn more about Ed Vincent and festivalPass.

Transcription

This transcription is autogenerated and may contain errors.

William Glass: [00:00:00] Do you love live events? Have you ever wondered how to successfully equity, crowdfund or interested in building a marketplace business and how that works? Well, so then this episode of the Silicon alley podcast is for you. I sit down with ed Vincent, he’s the founder of festival pass. And talk about all three things.

This is one of those episodes where you just come away learning so much, and we dive deep into the nuances of equity, crowdfunding, as well as how to build a marketplace for live events and creating community. While you build a marketplace, it’s really, really interesting. And you’re going to take a lot away that you can apply in your own business and life.

And that’s what this podcast is all about. It’s all about talking to VCs entrepreneurs and top performers to understand what it truly takes to grow and scale a business in this episode will not disappoint. If you haven’t already, please go ahead and pound that subscribe button or click follow on whatever app you are listening or watching this episode without further ado.

I hope you enjoyed today’s episode of the Silicon alley podcast, featuring the Ed Vincent. Are you interested in growing and scaling your business? Welcome to the Silicon alley podcast, where you’ll hear from entrepreneurs, venture, capitalists, and top performers on what it truly takes to grow and scale a business.

You’ll walk away with actionable insights. You can apply in your own business and life. Now to William Glass, the CEO and co-founder of ostrich and your host of the Silicon alley podcast. Ed, welcome to Silicon alley podcast. Super excited to have you on today. 

Ed Vincent: [00:01:28] Thanks Will. Yeah, absolutely. 

William Glass: [00:01:31] I want to start off.

You’ve done a lot over your 20 plus years as an entrepreneur, also on the investor side, advising side. But I’m really curious because the venture that you’ve started right now is called festival pass and it’s in the entertainment industry. But if I look back at your background, you actually have a finance background.

Can you talk to me about the, how you went from finance to entrepreneur and entertainment and media and creativity? 

Ed Vincent: [00:01:53] Sure. I mean, there there’s context, every story, of course. I came from the finance world as a finance major in college. , even sat for the CFA, if anybody knows what that is.

And then went on to be an investment banker first at KPMG, then a Toronto dominion bank. And you know, that was the full aspiration sitting in college and a state school in New Jersey, you know, to be an investor investment banker in New York city. It was like the, the, the. Until I got there and realized that while.

Yeah, it’s cool. And I’m sure if I stayed in it, it could have made a ton of money. But the reality is, is, I had the entrepreneurial bug since I was 10. Yeah. And it, it, it there’s there’s context to it. I started by, uh, throwing big new year’s parties in New York city with a buddy of mine. And,  one year probably, I guess it was 1999, we threw the party and realized that, Hey, there’s this thing called the internet where we can accept credit cards and actually pay for the tickets rather than running all over the five boroughs of New York and collecting cash on the street corner for new year’s Eve tickets.

And that was kind of the introduction to the internet. And from there things got built. 

William Glass: [00:02:59] Nice. So I’m assuming that wasn’t what the, where the bug started at 10 years old, but it’s how it developed a later. Otherwise you were very adventurous. Ten-year-old throwing parties in New York city. But talk to me about that initial interest that led  to, that decision and, and building the business around accepting payments.

Ed Vincent: [00:03:17] Yeah. I mean, if you’re talking about like the 10 year old that are, who are the 10 year tenure, I was like, I always say that I was a, a, a poor kid in a, in a rich town, meaning that I grew up in, on the Jersey shore in a really nice town and area, but we were the poorest family in the town. Various reasons along the way.

So even at 10 years old, I was putting newspapers together at the local luncheonette at secret luncheonette to get my $5 and a free breakfast. And that was always kind of the concept of being self-sufficient and you know, that rolling into, you know, working through most of my life. And then in college, I ran a real estate appraisal business out of my dorm room.

And, I was one of the few kids that actually have. Fax machine. And if anybody even knows what that is, the fax machine and a laptop in my dorm room, you know, working in between class. That’s awesome. Okay. 

William Glass: [00:04:09] So yeah, it sounds like you’ve you have that drive wanting to be self-sufficient as you said.

So talk to me about how that developed the 20 year old you, and then wanting to go in investment banking, thinking that was, you know, the epitome of success as being a big wall street guy, and then that translated into, you know, accepting some of these entrepreneurial behaviors that you clearly, you clearly 

Ed Vincent: [00:04:32] have.

Yeah. I mean, I remember when I, when I had the real estate appraisal business and this being a finance type show you there in the concept evaluation, you know, I say this then, and I’ll still say it today. There’s only three ways to value anything in life financially. I mean, Not talking about love and all the, uh, nice things that are valuable that aren’t financial related, but in the world of real estate, there was three ways to value a piece of property.

It was, you know, what is the discounted cashflow? What would it cost to build it from scratch? And what are other things like it selling for same, goes to stock. Same, goes to companies. Same, goes to anything in life, and I’d be hard pressed to have anybody prove to me differently that those aren’t the three evaluation metrics to create.

That all being said fast forward to going into banking and realizing how fun it was. But I realized that even in banking, you’re always a service provider to the, to the leader of a business. And I loved being part of the transaction and helping people raise capital. And, but then I’m like, well, I kind of want to be that guy that I’m helping raise capital for.

And then that kind of. Was that inspiration and launch. And back in 1999, when I was mentioning we’re throwing these big new year’s parties, after realizing that there just seemed to be so much fun opportunities to take a business online and build it. And the first company was city stuff, dot com, where we sold things that made cities famous.

And that was an offshoot of our new year’s party. Nice. 

William Glass: [00:06:01] That’s awesome. Yeah. I love that kind of transition. And I guess, talk to me about the creativity side specifically, right? So you’ve got festival pass. You’ve decided, Hey, I don’t want to be in this, stuffy investment banking, kind of a world anymore.

I want to be the guy that’s getting the checks written or the entrepreneur. That’s kind of taking all the risks. So can you talk to me about, that, and then the first venture. As you, as you took the business online and start thinking about festival pass, 

Ed Vincent: [00:06:30] Yeah. So if I, if I could start with festival pass and go backwards, one of the things, and we can get into what festival passes, but I like to think that every entrepreneurial company that I’ve built in the past all led up to what festival passes today, and you know, On the outside people that I go, you know, it’s in live events.

I get that, but it’s much more than that. It’s, it’s very much a financially driven credit based currency model that all of my, finance background really helped drive. It has a lot to do with my agency. I had throughout the two thousands, I had a bout a 70% experiential agency called Minson partners.

And we, uh, Bring big brands to big events and help launch and build a few film festivals. We owned a film festival at, down in the Dominican Republic and all of that kind of love of live events is what kind of drove me to that path. Subsequently after that agency, I had a SAS business. Got me understanding the concept of monthly subscription.

And I was like, okay, I get this recurring revenue is actually a good business model. And then leading up to the next business I had, which was a data-driven business called predict analytics, where we helped a lot of big entertainment companies understand their consumer data. So if I look at what festival passes today, it’s a very data-driven dynamic pricing subscription-based model that I only would know about had I.

Been in the data business for five years, I’d only think about subscription. Had I been not been in the SAS business and then leading back into the product, which is live events themselves. 

William Glass: [00:08:06] Gotcha. That’s really interesting. So all of your experiences leading up to festival pass is really, what’s enabled you to get to the point to build the company today.

And I think one of the companies, right, that you consulted for in the data side was movie pass. Can you talk to me a little bit about, obviously very similar in terms of movie pass festival pass, there’s a naming there, but can you talk about how the business model is different? Because for those. Are familiar, you know, that the business wasn’t successful because of their business model had a ton of success in terms of consumers loving the product, but they didn’t have the economics.

Right. So can you talk a little bit about, the distinction between festival pass, movie pass and what you learned from that experience? 

Ed Vincent: [00:08:43] Yeah, so it’s a very different business. You’re right. The name is very similar and I did enjoy the experience there. Um, I was the interim chief data officer, so I was able to kind of get under the covers and had the opportunity to see what three and a half million subscribers look like in terms of the data.

But, um, it is a very different business model. And, you know, I like to use the, the John Bolton or Hamilton theory, whichever one analogy you want to use, but it was the room where, where it happened. I was sitting in the room watching a really great product market fit, but a very bad execution of a business model.

So it was a, it was a great learning experience. The core of the differences is festival pass is a credit based currency model. Yeah. I have no problem sharing that. We learned a lot about it from some others successes, like ClassPass, if you’re familiar with ClassPass, I like to, I like to tell people that it’s a, Airbnb meets ClassPass for live events.

If, if, if they can put their head around what that means. So it’s a marketplace utilizing a credit based currency for a subscription product that just happens to be live events. So the difference between movie pass is movie pass was an unlimited product based upon a industry where the, the actual person supplying the supply, the inventory, had no control over the pricing.

So think of a studio studios control the pricing of the ticket. The exhibitor, which is the movie theater,  has no control over the fact that it’s $15 in New York to see a movie at noon on Wednesday. And it’s still $15 on Friday night at eight to see a blockbuster film. So there was no pricing disparity.

The independent film is the same price as the big $200 million blockbuster. So that causes a lot of problems being able to. Play with, or even understand dynamic pricing for supply and demand. So on top of that, the, the core issue is that when you’re promising people and unlimited use of something that you don’t own, meaning you don’t own the inventory, you have a difficult model that you’re trying to accomplish.

You know, everybody tries to say, well, okay, it’s just like a gym it’s breakage. The truth is, is that it’s not breakage because in a gym it’s a self regulating. So you go to a gym, you pay 30 bucks a month. And all of a sudden at five o’clock it’s busy, what do you do? You stopped going at five and you go earlier or you go later.

So you, it eventually self regulates itself where supply and demand comes together. Problem is, and, and MoviePass business that didn’t exist. So they were subsidized. The customer for far too long, and that really hurt the growth business. 

William Glass: [00:11:24] That’s a really interesting distinction. The two pieces around not being able to control your pricing right.

And having control over, over that aspect of it, movie theaters, didn’t didn’t have that capability. And then the self-regulation, which is something that I hadn’t thought about. Can you talk a little bit about how that stiff. For festival pass and how you are able to work with venues and kind of talk through the model that you’ve developed, in a little bit more 

Ed Vincent: [00:11:50] detail.

Sure. So first of all, a lot of people don’t realize how big of a business, the, um, live events businesses. So it’s a $200 billion global business. And also sometimes people confuse the fact that we call ourselves festival pass with the assumption that it’s only for festivals. That is not the case. I mean, we chose that brand name just because it evokes some kind of emotion, especially for kind of the millennial and gen Z said, it’s that experiential thing that you feel when you’re at a festival?

But we’re all live events. And when you look at the live event, spectrum it’s, it’s movies, it’s concerts, it’s festivals, it’s food and wine events. It’s feeder, it’s sporting events. It’s, it’s pretty much everything that is alive event. So globally it’s a huge business. The other misnomer that a lot of people forget is that everybody thinks of the large companies that control a certain portion of the industry.

So I’m sure you, you know, some of the names, live nation, a few others. But the truth is, is they don’t control as much as everybody thinks globally. You know, there, there are a small percentage of the overall live events market, meaning that there’s tens of thousands of producers, venues, event owners, rights holders, all the above.

So when you take a market where you have tens of thousands of people contributing the inventory to that money, it’s a ripe for a marketplace business model. So that’s one of the key things. And then the second key thing was the credit based currency model. So the way festival pass works, which is not the way a movie password is that people sign up and pay a subscription fee, whether it’s nine or $99 a month.

And they get a certain amount of credits for that. So if they’re willing to commit to $99 a month, they pay less per credit for the credits they’re buying. And then once they have those credits, They can choose to use those credits to go to as many live events as they can can for that amount of credits.

So I liken it to the you’re probably too young to remember this, but the old world or the arcades. Some people might remember Dave and busters these days, but the old world of their kids is you go in and you put $20 in the token machine. You get some tokens. And the cool shoot ’em up game is four tokens and the pinball is one token.

So you can choose how you spend that money. So for us, there’s a couple of things we’re solving, is one. We allow people that commit to a higher monthly, ongoing subscription to effectively attend events cheaper because they’re paying less per credit. And then we’re also solving for a lot of the friction that has existed in the business for a long time.

Nobody likes paying ticketing fees. They don’t like, you know, a hundred dollar fee. And then on the way out, it’s an extra 20 bucks. It’s just, a lack of transparency of the market has been dealing with for decades. And it almost doesn’t matter. The consumer, the price they’re actually paying.

It’s just, it’s just, they don’t like that extra surprise at the end, but not only are we moving to a model where there are no ticketing fees, we’re also making sure when people are getting events, they’re going to be costs less than they will elsewhere because of the fact that. We can have predictable revenue with the ongoing recurring revenue sessions.

That’s awesome. Yeah. 

William Glass: [00:14:57] And thanks for diving deep there, ed. So you’ve got to really get the venues as well, because as you said, this is a marketplace, right? So the reason that you’re able to the credit based business model works is because you have both sides of the marketplace. Is that correct? Cause you’re being, you’re able to.

Provide some sort of service or benefits to the venues, the producers, the people that are putting on the events, as well as the consumers that want to go to live events. And as you said, not have to pay fees, which I hate fees, bank fees, any kind of fee I had to pay a fee to earlier today. And I was really upset.

It was only like a dollar 50, but I was still upset. So I completely get that. So that’s why this works though, right? It’s because you’ve got the, both sides of the market. 

Ed Vincent: [00:15:36] That’s correct. Yeah. So there’s a, there’s a lot of ways to the consumer side is easy, is the wrong word. But in the world of today in digital marketing, it’s easy to reach a lot of people to let them know about your offerings and to have a little.

Discipline over the price, you’ll pay to reach them. So we, we, I wouldn’t say we have that down at scale yet, but we have pretty consistently know how to fill the funnel where as long as we tell people what we’re doing, we’re getting a big, huge response of people wanting to come and join festival pass initially as a free member.

And then when they see an event, they like moving into a paid membership. So, the consumer side, I think we have solved in terms of the brand, the promise, the value prop on the flip side. We need the inventory right? To, to make people be able to use those credits and still be excited to continue to stay on month to month.

So there are, there is an interesting way to gather a lot of this inventory. So we have partnerships across the board. So we have partnerships with some event producers. We have partnerships with some venue owners. We have partnerships with some ticket aggregators. We have partnerships with some primary ticketing companies.

We have partnerships with, Overall, how do I call it a data feed supplier of event listings? So what we do is pull all of these mechanisms together, and then bring it into our database. So we can actually showcase these thousands of events for our, for our users. 

William Glass: [00:17:03] Gotcha. So that makes a lot of sense.

So the value prop for venues is being able to sell out essentially right, being able to sell all their inventory, make sure that they put on really great events. And I’m assuming essentially partly marketing, right? If you’ve got this huge consumer base, the benefit is I don’t have to go list it on, you know, live nation and meetup and all these other different websites where you can Facebook events or all the, all the different places now where you can put an event.

It’s you just go to festival pass. And it’s, it’s done. You sell your. 

Ed Vincent: [00:17:34] Yeah. So there’s a couple of things is one. Yes. We, our members tend to be high frequency event. Goers becomes a popular group to present information to. It also is very helpful that we’re building this recommendation engine that really doesn’t exist anywhere else.

So kind of like a Netflix like recommendation engine. So as our members join, we know a little bit about our members, you know, I come from a data background, so I know. How do, how do I say, provide more insight into who our members are. And then as they create behavioral aspects within our environment, we start to learn a little more about, do they like rock and roll?

Do they like country music? Do they like soccer? Do they like football? And what that allows just like Netflix is when you have thousands of opportunities to choose from, how do you show.  Will the right 20 events on the right day at the right time. And, and how to ed, how does that get different events then we’ll get based upon the location based upon the interest.

And what that does is it really puts the right opportunity in front of the right person. So when you talk about the marketing aspect, that is absolutely part of the case, right? So we already know. Our members are high frequency live event goers. We already know that if I list or have a partnership with festival pass, my event’s going to be shown to the right people at the right time.

So yes, the idea is over time, we’ll be able to drive as many people to that event as desired based upon the capacity for an event, either sell it or not sell out the one thing, add to that, which is interesting and why. Event producers, the venue owners kind of like what we’re doing is because we’re a membership based community.

And because we are credit-based currency, it doesn’t cannibalize their full price ticket sales. So a lot of times in the past, Somebody has a, an event. And they’re like, okay, well, we can fit 5,000 people at our event. And I know typically I’m going to sell 4,000 tickets or 3000 tickets, and I’d love to get an additional 500 people there or another a hundred people, whatever the number is.

In the past, the way they would do that is they go to a group on, or a couple other different venues and they’d listed for 30% off. And people come in and get a ticket for a discount, which is great. They fill, fill the seats. But what that does is it creates a problem for anybody coming and buying that full price ticket.

Because it’s public because now people see it’s discounted on Groupon. Why would I ever go buy it for full price? If it’s just Canada and Groupon. And because of the way search engines work, Groupon will come up just as quickly as the a hundred percent ticket. So in our worlds, it’s a membership. People are pre committing their dollars to pre committing to be a live event goer, and it’s not available for a discount to just the general.

William Glass: [00:20:19] Yeah, no, thanks for pointing that out because it’s a really interesting point that you made, because I think about like the, the subscription food delivery services, I don’t know, like hello, fresh and blue apron. Like I think I will never ever pay full price because I get so many coupons and discount codes.

And part of that is a little different right. Where everyone’s fighting to get market share, and they’ve got billions in their coffers from VCs. So that’s part of it. But as a consumer, once I know that I can get, you know, the meals for half off, why would I. Pay full price. And I think that’s a really, a really important point from both the consumer perspective and the model that you’ve got set up towards credit based.

So I I’m getting a discount, but the public doesn’t necessarily know that. And then also protecting the venue and the integrity of the venue to still be able to incentivize people to, to go to the event that wouldn’t necessarily, and they’re getting a discount, but it’s a way to kind of mask that discount.

Yep. So really, really, really interest. Perspective there. So I’m going to assume this answer, the biggest challenge so far, it’s probably, yeah. Pandemic and no live events going on for, you know, a better part of a year, longer than a year. So I definitely want to touch on that, but I also am curious to think about moving forward, building a marketplace, building this credit, as you keep saying, credit based this currency as well.

You know, the overall, the overall business, what are the kind of the biggest challenges that you’re tackling today? 

Ed Vincent: [00:21:44] Yeah, so I do think. Yeah, full transparency on it is, is when you have a marketplace, you do have to fill both sides. So it’s about filling ’em in the right time, in the right place. So in, in the concept of a marketplace, you either have a route density or a global density marketplace.

The analogy would be like Uber or Lyft. As long as there’s enough drivers and passengers in one market, you can have a route density marketplace only in New York, only even Queens, and still have a successful marketplace, as long as. Buyers and sellers are meeting there. So in that capacity, as we go fill more and more live events that are in our network, we’re doing so in geographical, areas.

So, you know, right now, central Texas is important to us. New York’s important to us. South Florida is important to us. LA is important to us, Phoenix and Nashville, But eventually we want to make, we want to have events in every major city throughout the country that are enough to sustain somebody’s desire to be a subscriber.

But that’s the challenge is, is to, to focus on meeting the needs of people where both sides of the marketplace are growing. It’s a similar capacity, making sure our marketing span is going where our events are. 

William Glass: [00:22:51] Perfect. It makes a lot of sense. And I like that you brought that up the route density. So you can have a successful marketplace in one location and you don’t have to worry about trying to, you know, make your Toronto subscriber happy, even though you haven’t, you don’t have any venues in Toronto because you’re focused on U S markets and specific locales.

So it’s a really interesting way to think about it. 

Ed Vincent: [00:23:08] It also helps us in the future for global growth. So it’s easy for us or will be easy for us to say, okay, now we have hundreds of thousands or millions of subscribers in the us. Let’s just do Germany. Okay. And let’s spend six months building a route density marketplace just in Germany.

So then let’s go to the UK, then let’s go to Australia. We can do that because you only need, tens of thousands of users in each market in order to support a route density market. 

William Glass: [00:23:35] Gotcha. Yeah, that makes a lot of sense. And I’m assuming, there’s probably large companies that own venues or put on events and multiple locations.

So if they’ve already having success in one market with festival pass, it’s probably easier to get that, that same provider to open up. And as you said, Germany in Munich or wherever, wherever that is. Agreed. So ed, one of the things that you’ve chosen to do as well is, use equity, crowdfunding. And I’m curious if you could talk about why you chose to do equity crowdfunding pretty have a pretty good pretty suspicion as to why, but we’d love to hear your rationale of why you chose to go that route in terms of raising.

Ed Vincent: [00:24:17] Sure. So a lot of it is, explained if anybody wants to read an article, I wrote called zero to a hundred million dollars in revenue with no VC funding. You can just type a type that in, Google and it will show up with my name. But it, it just really explaining the concept that today there’s just so many more sources of capital and it’s not that I dislike.

VCs, it just comes down to there’s so many, sources that can allow so many other people to participate. So in my kind of 20 years of going through the process, I I’ve raised capital from VCs have raised a bootstrap companies have raised capital from private equity groups and each one comes with a different flavor of, uh, how do I say.

Opportunities and challenges. So part of it is really understanding what capital sources, right? For what stage of a company and today with equity crowd funding, where you can raise up to $5 million a year with reg CF and up to $75 million a year with a reggae. It becomes this really amazing opportunity, especially with a consumer product to allow your members to actually own part of the experience.

So I just have always loved the idea that a member of festival pass can actually be an owner of festival pass and vice-versa and owner can be a member. And as, as time goes forward, those who are investors and owners are going to be much more likely to be the biggest fans and biggest influencers telling everybody else to participate.

So that’s one big piece. And then the other really is, is the idea that, I’ve always believed that main street investors should have an opportunity to be a part of something that has the capacity to grow to multiple hundreds of millions of dollars before it goes public. So not just waiting till Airbnb goes public and, and then having the Robinhood investors come in and pay five times as much as all the VCs did originally.

So I just have that kind of. Democratized way of thinking about how investing works and that’s, it’s Democrat democratic with a small day, but I’ve always wanted that. So, and just to share with everybody is, we have a multiple prong approach. Yeah to our capital raising. So we do have a crowdfunding available as we speak today, probably be alive for another month or so, for this first campaign and we’re planning to do an always-on equity crowdfunding campaign.

So we’ll never not be raising money. It just, every quarter to valuation is going to go up. So we’ll go up to match the fundamentals of the business. So in the process of that, I look at capital from three sources. One is equity crowdfunding. The other is strategic equity. And I’ll share in a minute, we have a lot of amazing individual investors that are part of it.

And then the third is low cost debt. So up until a couple of years ago, there wasn’t the ability for direct to consumer companies to go access low cost debt capital, you know, in the hundreds and the tens of millions or hundreds of millions of dollars for digital marketing. So when I look at all of our future growth dollars that we’re going to use to acquire new customers, it’s all going to come from low cost debt.

And then we’re going to use our equity, crowdfunding, and strategic investors for operational capital. Got it. Okay. 

William Glass: [00:27:34] So that’s, that’s very interesting. So can you talk, so a couple of things that I want, I’m wanting to dig in on, I guess the first is this, you mentioned something that was interesting. I don’t think I’ve heard anyone talk about it before.

Is this always on. Funding. So, can you talk about what you mean by always on crowdfunding? 

Ed Vincent: [00:27:50] Yes. Usually what happens in the crowdfunding space, and this is something that I haven’t seen yet either, but hopefully it will work is, people have a campaign and they say, okay, we’re going to go out and raise a million dollars or $5 million.

We’re going to do it over three to six months. And when it’s over, it’s over and then maybe a year or two from then they’ll come back and say, okay, Maybe I’ll try and raise more money. And then there’s been companies that have been successful in doing that. And most of the ones that have gone on to raise tens of millions of dollars do so through a reggae.

But what we’re doing is we have a campaign that’s live now and we’re raising at a certain valuation and we’re building the company. But within that three months that the campaign went live to one we’re going to complete. It is a, there’s been a lot happening in the company in terms of growth. So. After the three months, we’re going to pull the campaign down and then we’ll go live with another campaign immediately or within a few days.

And the valuation will match the current valuation of what the fundamentals of the business say it should. So I’ll give you a random example. Like right now we’re raising money at a $20 million evaluation on start engine. Once we do the second campaign, maybe it’s a 25 million or $30 million evaluation because now we have 50,000 more subscribers.

Now we have a thousand more events. Now we have, you know, X amount of people that are, paying $50 a month to be subscribers. So when we can match the valuation with it, what it does is it creates a mark to mark a value. So I know if I came at $20 million valuation and now it’s trading at a $30 million valuation, but as an investor, I’m excited because I saw, okay, cool.

You know, it’s on paper, but I now have 50% increase in the value of my investment. In the traditional private company world, it’s very difficult to understand what something’s worth. So this creates a quarter to quarter mark to mark valuation. It also helps with outside strategic investors.

So we’ve raised a bunch of money from some really influential people. And a lot of times they’re excited to invest because they know within a few months we’re gonna, valuation is gonna increase again. 

William Glass: [00:29:55] Got it. That’s really interesting. And. It’s just something that I haven’t heard anyone doing.

Cause typically it’s, you know, at least in the VC world, every 18 months, you’re raising, if you’re doing really well, maybe it’s it’s sooner or if you’re not doing so well, you’ve got to do a bridge round to get to the next round. So you’ve essentially just kind of turned on this, way to allow mainstream investors.

But also it’s a way to kind of always have continuous funding for the business as you’re building. What about giving away too much equity? Is that a concern of that? You’re going to dilute yourself out if you’re always raising or I guess curious about how that piece works. 

Ed Vincent: [00:30:31] Sure. So, so it’s, it’s actually the exact opposite because if we had taken traditional institutional VC money early on in the C seed stage or the classic kind of series, a worlds that comes with a lot more restrictions to say it lightly, and there’s, there’s a lot of different ways.

Some institutional investors require their investments to be made that protects them. I’d say from. And anti dilution, but also, ends up diluting some of the initial investors. So what happens in this concept of crowdfunding is because on a quarterly basis, the valuations increasing the you’re never really been diluted at all.

So it’s funny when people in the world of dilution, sometimes they don’t understand the concept. Sometimes they say, oh, well, I used to own 5%. Now I own 3%. That doesn’t matter. The concept is, is, is the money that you pay. At 5% now with more in total than it is at 3%. So as long as the valuation’s continuously increasing, you’re not really being diluted.

You might own less percentage of the company, but you’re whatever you own is worth much, much. Yeah, 

William Glass: [00:31:41] I appreciate you explaining that because I think that’s the common misconception is, is you typically don’t want to phrase it a lower valuation, then that is not the case, but as long as your valuation is going up, then the fact that you now own 3% set of 5%, you should have, it should be worth more in terms of value.

So, what is, I guess, success look like for festival pass? Right? We’ve kind of talked a little bit, and I alluded to some of the things that you’re thinking about in terms of, you know, where you’d like to be globally, but, you know, talk to me a little bit about the future festival pass and what successes.

Ed Vincent: [00:32:15] Sure. I mean, for me, it’s about having this, this way for people to connect live. Like, the overall mission really is about getting people to connect with humans, more often and more regularly and build that community. So that’s what always has driven me. That’s what I’ve always loved about live events.

It’s a once in a lifetime experience, no matter what event you’re at, it will never happen. So the, the people that are at a specific event at that specific time is a magical experience. Whether it’s a, you know, a football game or, or a cool little concert in a dive bar, they’re all really cool experiences.

So I think the dream or success to me is when, you know, I can see somebody, I don’t know, looking at festival pass. You know, really enjoying the fact that, you know, here let’s as an example here in, in Austin, maybe they’re looking at ACL, which is one of the biggest festivals here, and they’re like, cool, I’m going to ACL.

Cause I got it through festival pass and there’s 50 other venues in town this weekend. And there’s a band playing at each of these 50 venues. And I can look at the app and plan my entire weekend just by using festival pass, knowing I’m going to go to. The show at X X venue, I’m gonna, you know, whatever the, the concept is.

I just want people to be able to experience that discovery, and to be able to do so. 

William Glass: [00:33:39] Love it. Yeah. It makes a lot of sense. I think that I know when it comes to live events, if it’s not a big market event, like an ACL, but even with ACL, there’s obviously, you know, nuances of how do you actually create a great experience?

Because there are so many performers that are playing at different venues at different times. Sure. But it’s also just like, for me as a consumer it’s discovery, right. I mean, there’s just. You know, H how do I know which event or live event to go to? And I, you know, you go do a quick Google search and it always returns results that are old, or they’re only on, you know, one type of event.

And I’ll see all the events for networking events around entrepreneurship, but I actually wanted to go see something else, but that’s just what meetup or whatever Google, you know, shot back at me. So I really like the fact that you’re, you’re really focused on this, connecting people with events that are meaningful to themselves.

Ed Vincent: [00:34:27] Yeah, it’s fun. And like all of the, there hasn’t been that many social experiences in the life of them business. So, you know, there’s a couple of ticketing companies that have tried a social approach, but you know, the way I look at it is I want to see when I log in a festival pass and that these are features that are a few months out, but you know, I’ve interconnected with 500 people on festival pass that are all also members because I’ve connected my Facebook or Instagram or whatever, chosen social network.

And now I flip up an event, let’s say, this event is. I’m trying to think of an example, city winery in New York and it’s, you know, for the old people out there, it’s Joan Jett playing or whatever, or for, for young people, it’d be somebody else. But now I can immediately see these little faces on this event page and be like, oh, okay.

10 of my friends that I know are totally going to this. I’m going to go to, and now it creates this ability for us to interact pre show after show, during show, we’re going to let people be posting, you know, photos from shows and then kind of creating this experience that people want to be, on festival pass pre during and post the entire live show.

William Glass: [00:35:30] Yeah. Not like that at it. Cause I think you’re, it sounds like you’re tapping into something that the social media platforms used to be good at when they were smaller. Right. Where you could discover that a friend or someone was going to be in the same place or same event venue. And now there’s just, you know, you’re inundated with so much stuff that you, you know, you might find out a week later that someone was at the same event as you.

And you’re like, man, we should have connected. So I love that you’re creating that ability again. 

Ed Vincent: [00:35:54] Yep. No, I agree. It’s really just about connection and community and having a frictionless approach to, to experiencing live events. Awesome. 

William Glass: [00:36:02] Well, Ed, I want to transition now and talk a little bit about personal finance as someone that’s been on all sides of the equation.

It sounds like in the entrepreneurship and entrepreneurial world, I’d love to get your take on personal finance. And specifically I’d like to start with your relationship with money. How would you describe that? 

Ed Vincent: [00:36:21] Yeah. I don’t know how to answer that question so much. I mean, I have three daughters and an ex-wife, so there’s been a process along the way, but, I do realize that, in and of itself, as an entrepreneur, for me, I constantly reinvest in, in what I’m doing and in myself and my time, as well as capital in order to kind of explore what’s important for me in life.

So. While I’ve had many successes in the past, the actual dollar amount of money. Isn’t that important to me what’s always been important is to, you know, wealth, to me is being able to kind of experience what you want to experience when you want to experience it without any, you know, weight of financial.

William Glass: [00:37:03] I love that. Yeah. It’s that, yeah, that kind of like capturing your time. Right. Being able to in the live event space, right. Go and have experiences with the people that you care about and when you can and not worry about, am I going to be able to keep the lights on or, you know, feed the family? Exactly.

And what would you say is the best investment that you’ve made? 

Ed Vincent: [00:37:25] Yeah, I, I guess I can go there. There’s some good ones and bad ones. So at the end of the day, there’s public market investments that are as good, which are interesting. And then there’s, just entrepreneurial investments. So in investing in myself and time, Here’s one example, I would say, and it’s not even a classic financial investment, but I’m part of a, an entrepreneur group called EO.

I don’t know if you’ve heard of EO entrepreneurs, organization. There’s a there’s YPO and EO, which are two very similar organizations and one is for entrepreneurs and one’s for presidents. Anyway, it’s a, it’s a global organization of 14,000 entrepreneurs, and I’ve been part of it now for about 14 years and, you know, costs X amount of dollars, every year for dues.

And, there’s an investment into participating in a bunch of the events. I was lucky enough through the program to go to MIT for three years for an entrepreneur master’s degree with 70 other entrepreneurs globally. But, but going through and investing in that process of, being a part and spending the thousands upon thousands of dollars necessary to do it was, you know, the return that I’ve received from that organization has been a mess.

That’s 

William Glass: [00:38:33] awesome. Yeah, no, I love that. And I’m glad you brought that up because I think that there’s that opportunity to connect with other people. And as you said, the organizations that are really focused on development and it’s not just, I got X amount of money for, investing in this stock or this startup it’s, the kind of those intangibles, going back to the things that we can’t value, right.

That are harder to value. 

Ed Vincent: [00:38:55] Yeah. No, it just goes back to the place where some people might get an initial financial return from, as you said, a stock or something else, but having built their capacity to earn any more so than anything else. And, you know, at some point in time, the market might go down or, an investment might not pay off as well as it can be.

But when you continue to invest in yourself, you’re, you’re always have the capacity to earn perfect. 

William Glass: [00:39:20] So ed not all the decisions we make are always good. So I’m curious to get the flip side of the coin. What would you say is the dumbest money mistake that you’ve 

Ed Vincent: [00:39:28] made? Yeah, I think I’d have to say when we had city stuff back in the day, we ended up selling at a time where it was a fear-based sale because we’d, we’d launched in 1999.

It was a 2001 and you know, the internet 1.0. Bubble turned into a bust. And, we didn’t know if we’re going to need more capital. We didn’t know, how we’d continue to run the company, even though we were successful, we had all these great, you know, you being from New York, you would recognize it.

You know, Junior’s cheesecake from Brooklyn. Yeah, absolutely. So we have juniors chase. Can we sell millions of dollars of cheesecake through city stuff? Because that was before juniors had their own website. Right? So they, they were doing mail order and you know, around the holidays, we would just crank out, you know, cheesecake orders amongst other things like H and H bagels and all the other great things in New York.

But, and this was all. Put the timing and perspective. This is all before Google and Facebook even existed. So the way you get information out back then was all about PR. It was all about, let me, let me, uh, hold a big sign in front of a today show or good morning America with city stuff, dot com, which we did many times, because you couldn’t just go to a search engine and find it.

You couldn’t, you couldn’t buy media through Facebook to get to people. So it was a different experience, but at the time we ended up selling to a company. And Connecticut for what I thought was a great deal. It was stocking this other company. I was worth millions by millions of dollars on paper at 25 years old.

But then subsequent events happened nine 11 came, in New York, the economy dried up, especially in Manhattan. Things came to a big halt, all that millions upon millions of dollars, you know, basically went to zero. So it was an experience that I wish we, I wish we didn’t. And, cause if we just held on, even if we had a kind of reduce expenses and kind of reformulate the team for a period of a year, on the other side of it, everything started growing again.

Google actually came to be, all these other things that would have easily excelled us to, a different level. The reason why I bring that up as it was a bad decision, but also a bad investment of money or a depletion of value. But even today with festival pass, we launched festival pass prior to the pandemic, you know, nine out of 10 other entrepreneurs, maybe not entrepreneurs, but, had we taken, institutional investment capital prior to, we would have been told to shut down.

We would have been told you can’t start a, a new company. Based upon live events when we don’t know if live events will ever come back. And that was a learning experience that came from city stuff, which I said, well, no, what we’re going to do is we’re going to take the money we have today. We’re going to spend it wisely.

We’re going to keep building infrastructure and we’re going to be ready. Thanks come out the other side and that’s what we did. And right now it’s awesome because it says the roaring twenties are coming back. We’re just, uh, we’re in a place where the economy is good or growing live events is, you know, one of the biggest businesses, you know, for the next 18 months, it’s going to be crazy and we’re ready because we have the tech built and we have the partnerships in place.

So we’re excited to go on this ride. That’s awesome. Yeah. 

William Glass: [00:42:47] I love that. I love how you were able to take that, that, that lesson. And from city stuff and be able to apply that to a festival pass and hang in there and not, not take that fear-based approach, but really think about where are we going to be in the next year, 18 months and prepare for that eventual future in reality.

So ed, one thing that I, that I missed that I wanted to dig in on is that you kept using the term, this credit based currency, and you’re also, work with a blockchain incubator. Is there, is there some future plans where you’re going to turn, where you’re going to take what’s going on in the crypto and blockchain space and utilize that with festival pass.

Just a shot in the dark here, but I’m just curious, based on your background. 

Sure. 

Ed Vincent: [00:43:32] So it’s a good question. And there will be some. Integration with the concept of blockchain in the future? Not probably not in the way you’re thinking now. So the credit based currency that we’re using internally, it’s important to understand the way cryptocurrency or any kind of currency works on the blockchain is that there’s either decentralized or centralized, um, uh, govern governance.

It’s important for festival pass to have centralized governance because we’re actually maintaining the value of the currency. So for us to be able to have gross margin, positive metrics on every transaction, we need to be able to manage that supply and demand and the dynamic pricing that enables our consumers to get the best deal and enables the event to sell the product at the right value and for us to get a margin.

So the answer is. Our credits likely will not turn into cryptocurrency in any capacity, but where I do see a lot of value is the ability to create a couple of things. One is rewards programs within a crypto environment. So will there ever be a festival past coin maybe, but it won’t be the core coin that drives the ticket pricing.

What it may be as a rewards mechanism that can be tracked or converted into festival pass credits. So there is value. So that’s one aspect. And the other one, whereas more likely is in the, crowdfunding world. So there are, as you can imagine many marketplaces that in the future of the next call it one to three years, we’ll provide, more and more exchanges available for privately held companies.

Some that may be blockchain driven, some that may be crypto driven. So. Another strategy to this overall crowd funding concept really is, is as we have tens of thousands of investors in the company, we will be having secondary markets for our shares. And that can happen on many different exchanges. Some of which will be blockchain.

Gotcha. 

William Glass: [00:45:36] Thanks for explaining that. And delineating between blockchain and just a centralized and decentralized cryptocurrency, because I think that’s a really, important, uh, important thing to note. And I noticed that you’re on start engine now, but had you used other equity crowdfunding platforms?

Is that because start engine now has the ability to trade shares, secondary shares, and you’re going to have this kind of always on 

Ed Vincent: [00:45:55] model. It’s a great question. And you are right. That was a big factor. When we chose to go with start engine. However, what I’m realizing is over time, start engines. Great.

I’ve no issues with start engine, but I’m realizing all of them will have that secondary market. Anyway, it was just start. Engine was better at marketing it initially. And I think over time, We’ll see how long the process will go. There are a lot of other opportunities to manage crowdfunding without a traditional marketplace.

Or how do I say, a traditional company, like a start engine or others? I think once we’re past, you know, call it a year or two from now, once we’re in a place where we already have tens of thousands of investors, we may be able to manage that whole system ourselves through a white label process so that we’re not always, and then the core reason, and I don’t know why I’m being so transparent right now, but the core reason is I’m a consumer marketing conversion guy.

And when you’re, when you market and tell people to come in and learn about your process, and then you ask them to invest. And they have to then sign up for another platform in order to get to the place of making that investment. It’s like the old Amazon, you know, reduce the clicks. So I just want to create the least friction and letting a main street investor participate in the auction.

William Glass: [00:47:14] Yeah, no, that makes sense. And I appreciate you being very transparent of look, I’ve personally spoken with a lot of these different platforms. So just curious as to your decision-making and as to why you chose to go that route. And then the last thing I’ve got just around festival passes is their ability to transfer credits, or is that something that might be on the roadmap?

Because I could see that where it’s like, I want to gift credits too. You know, a friend or  maybe I got sick and I can’t go to any live events for a while. So, you know, I still want to continue to be a consumer and get value, and be a part of the community, but can I, you know, trade or sell or gift 

Ed Vincent: [00:47:50] credits?

So the answer is you’re right. It’s on the road. It doesn’t exist today. And there are a couple of nuances, especially with the understanding of data. And this is something I did learn at movie, which was very important was that having a deterministic dataset is important. So we, we want to know and be able to provide even anonymously who goes to what event.

So we all always want to try and. Make sure that somebody that’s using one of our tickets, is actually, a user. Even if they’re a free member of festival pass, we at least want to know who they are, what their email address is, et cetera. So what we’re going to be doing is allowing people to that are on the platform connect.

So almost like a social network where you and I are now both festival past members and we’ve friended each other, if you will. So once that has happened and we’re kind of interconnected within festival pass together, we then will allow you. To transfer credits to me because we’ve chosen to be connected in our environment.

And that will, I think, facilitate some of the kind of group planning. And we’re also looking at things where it’s not necessarily the transfer of credits, but you might say, Hey, I just got a ticket to black Pumas. And, I want these 10 of my friends that are all on festival pass to go with me, click a button and they all get an invite to say, Hey, let’s all go to Blackpool.

Cool. 

William Glass: [00:49:15] Okay. That makes sense, ed, and yeah, I appreciate you on the roadmap. I assumed that it was probably a future thing based on, based on what you shared or the challenges and kind of focus at the time of the business, but that’s awesome. I’m really excited to, and I appreciate you sitting down and this has been a lot 

Ed Vincent: [00:49:30] of fun.

Thank you for having me. This has been awesome. 

William Glass: [00:49:32] Yeah, absolutely. So, I’ll leave it at the last word. If there’s anything that you want to leave the audience with, and then please, let us know how folks can connect with you outside of the box. 

Ed Vincent: [00:49:42] Sure. So, I just think for connection, I mean, festival pass.com is the easiest way to go sign up, be a free member.

Even if you don’t see an event you like today, you will, there were new events coming every day. And then, on social Instagram, tick-tock you name it? Facebook, all the above, depending upon,  what your preference is. And then if you go to invest.festivalpass.com, if anybody wants to participate more only going to have that campaign open for another month or so before.

Raise the valuation and go to the next, that’s just a great way to participate early on. We’re excited about building this and the next 18 months is going to be a lot of fun. 

William Glass: [00:50:18] Awesome. Well, thanks so much, ed. And again, appreciate you sitting down. 

Ed Vincent: [00:50:22] Cool. Thanks, Will. Appreciate it. On your way out. 

William Glass: [00:50:24] Please share the podcast with others.

That’s the only way that the community grows and others hear these incredible stories from entrepreneurs and top performers. And of course, pound that subscribe button. So you’re notified when new episodes drop every Friday, I’m William Glass, CEO and co-founder of ostrich. And of course you are the host of the Silicon alley podcast have a very profitable.

You got no time 

Ed Vincent: [00:50:46] to waste, but still you say caught in a circle say, and I’ll never leave this place.

Go to such a vulnerable right side over, over.

End of Transcription

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Tagged : Crowdfunding / Entrepreneurship / Startup / Technology