Why Consumer-First Innovators Always Win
By Ramzi Ramsey
As an investor in consumer-facing Internet, mobile and software companies, I often find myself drawn back to something Steve Jobs famously told BusinessWeek: “A lot of times, people don’t know what they want until you show it to them.”
This insight about companies that are breaking new ground — those that are either trying to redefine existing categories or the few that are working to create new ones from scratch — rings true as ever nearly 20 years later.
While I firmly believe companies must continually listen carefully to their customers, Jobs reminds us that winning businesses cannot afford to simply follow consumers’ needs, wants, and habits prescriptively.
Technology is often about meeting the modern consumer’s wants and needs, and people clearly crave these solutions. And, there is a higher order wish for everything to be faster, easier, and more convenient. However, people may not know exactly what that actually looks like. Successful businesses are those that are hyper-focused on the consumer — especially when their vision for what people want is ahead of the curve.
For example, take Netflix, a company TCV first invested in back in 1999. Years later, as pundits predicted its impending death at the hands of Walmart, Apple, and Amazon, the company acted on its belief that movie and TV lovers would want to stream video content anywhere, at any time, and on any device. This was a radically new idea in an era when the DVD reigned supreme. But Netflix’s digital distribution both fundamentally changed the way people consume video while also launching the company into its next stage of hyper-growth. In contrast, cable operators, HBO (at first), and others were slow to invest in Internet-enabled solutions, leading to the cord-cutting challenges they face today.
Likewise, Spotify, another TCV company, believed that customers would want easy access to listen to, share, and engage with their favorite music when and where they wanted. At the time, paying for a song — or at least an album — was a standard and expected practice. By giving users access to more music at their fingertips and greater control of their libraries than they could ever imagine, Spotify launched the world into the streaming era of today and revolutionized the way we listen to our favorite artists.
Since joining TCV a little over two years ago, I’ve spent quite a bit of time meeting with and engaging with ticketing companies — most recently as an investor in SeatGeek, one of the largest and better-known aspirants to the Ticketmaster throne. As far as industries go, live events is a particularly complex one, and one with practices that are decidedly anti-consumer. Over its many years of growth and success, Ticketmaster has built its empire around a model that is decidedly closed, by methodically restricting teams and artists to selling tickets only within locations that it owns and controls. With restricted points of sale, it shouldn’t surprise us that more than 40% of tickets go unsold in the industry. SeatGeek has a starkly different view of how ticketing can work, one that aligns with the new reality that people — especially Millennials — are using more devices and visiting more websites than ever before.
SeatGeek’s open distribution model will allow tickets to be bought and sold across any e-commerce platform or social media network. Imagine buying or selling a ticket while shopping for team gear on Amazon, renting an apartment on Airbnb, checking out a player or artist profile on Snapchat, or within any of the other thousands of online places we spend our online time. This new concept of distributing ticket buying across the web, and making attending live events easy and on-demand in the process, is something fans have never seen in this industry. It has been hard to imagine why it has taken this long, but it’s a win-win for both consumers and rights holders, and I think it has the potential to break a company’s monopoly hold on the industry the way Netflix and Spotify have. Major League Soccer, for example, which shares the vision of open distribution, signed a landmark, first-ever league-wide ticketing sponsorship with SeatGeek — not Ticketmaster this summer.
Over the years, Netflix’s and Spotify’s respective industries have adapted to the new realities those companies have put in place. Video competitors such as Amazon and Hulu, as well as Apple Music and Tidal in the audio space, have followed with similar offerings. We are starting to see a similar trend in the live events space, as Ticketmaster is finally starting to engage in dialogue about open distribution, and we may be on the verge of a positive sea change in an industry that is ripe for a better, technology-driven solution.
Undoubtedly, these three companies listened to and continue to listen carefully to their consumers. But what makes them distinctive is their vision for using technology to address customer needs in ways the legacy players didn’t see or refused to accept.
Ramzi Ramsey is a vice president at TCV and spends time primarily sourcing, evaluating and executing investments across the Internet, mobile and software sectors. He has been actively involved with TCV companies including Avvo, Rover, SeatGeek, TechStyle, Varsity Tutors and Zillow.
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