A deal with Uber might save this startup from raising more money
There are lot of companies out there who want to sell you tickets. StubHub, Ticketmaster, SeatGeek, and probably tons more are all competing to sell you fundamentally the same product, driving margins down for everybody and forcing them to rely a lot more on annoying advertising.
SquadUP, a New York City-based startup, has a different approach to making money off of selling tickets. Rather than rely on advertising or grossly inflating ticket fees, both of which would send people to competitors, SquadUP is working with companies like Uber to offer customers a little something different and drive its margins way up.
And it's working so well that the company might just be able to forestall on raising a round of outside funding, or at least be in a better bargaining position when it does go out to the world of venture capital.
"We have historically operated on pretty thin margins and referral fees from Uber and other partners are affording us the opportunity to make more money on each ticket buyer," says CEO and founder William Litvack.
Currently, SquadUP has $1 million of seed funding, and Litvacksays the company has plans to grow — it's sold $2.5 million worth of tickets in the year and change it's been around, but thanks to those low margins, it would otherwise be tricky to grow without outside funding.
SquadUP quietly rolled out the Uber integration at the halfway point of SXSW Music, Litvack says. And without any marketing whatsoever, figuring it would just be an experiment, 158 Uber rides were booked via SquadUP.
"It's representative of how powerful this is," Litvack says.
The way the Uber integration works is pretty simple. Before your event starts, it asks if you want an Uber car to take you to the venue. More interestingly, a half-hour before the event is scheduled to end, it asks if you want a car home.
If you say yes, it gives you a fare estimate and tells you how long it would take before the car arrives. Accept, and it opens it up in the Uber app and you're off to the races (or your bed, depending which side of the transaction you're on).
Uber gets the lion's share of the fare, but SquadUP takes a cut. In the future, you may be able to book restaurant reservations or hotel stays around events through the app in the same way. You might even be able to use the QR code for your digital ticket as a paperless payment system at a concert's merch booth in the not-too-far-off future, Litvack says.
This was developed by SquadUP in conjunction with partner Button, which makes the "plumbing" between apps easy to build for developers. Button hasn't yet put in the new version of the Uber API that lets you call a car without leaving the app, and so SquadUP doesn't have it either.
This doesn't bother Litvack, though: People are so used to the familiar and slick Uber interface, he says, that he believes people would be confused and annoyed by any custom version SquadUP built right into the app.
So look to this as the future: As people figure out how to build crazy things on top of Uber, it's going to be up to app developers to figure out how to turn it into cash. For SquadUP, it found it by combining it with their data.
"It's the future of mobile monetization," Litvack says.