Hitting the HR Lottery

February 23, 2012

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Hitting the HR Lottery

Lottery

            Unless you live under a rock, it’s been hard to miss the story of Jeremy Lin of the New York Knicks.  In the span of just about 2 weeks, he has gone from a marginal NBA player sleeping on his brother’s couch to the lead story on ESPN every night.  He’s a great story of hard work and perseverance that epitomizes the classic American “you can be anything you want to be” ethos.   Behind the scenes, NBA general managers and business people everywhere are re-thinking their approach to talent evaluation and scouring their benches for the next Jeremy Lin.  It’s a great story; however, it’s a unique circumstance.  Not every organization has a hidden superstar, but with the appropriate systemic approach to talent management, you can make sure that, if you have one, they don’t stay hidden.

In the heat of a breakout moment, it’s always very easy to point to the things that were missed, and dismissively say “Who knew?”  The more important, and sometimes more difficult, exercise is to look at what was known that created the environment for hidden success.  Here are the 3 things we know about Jeremy Lin:

1)      There is a reason why some players are at the end of the bench.  Even as his star has risen into the stratosphere, Jeremy Lin has been prone to turnovers.  In other words, there are flaws in his performance that resulted in his previously limited playing time.  Just like NBA teams evaluate statistics like turnovers and field goal percentage, organizations should have defined performance evaluation metrics.  If employees are evaluated regularly and honestly according to these metrics, they will be in positions appropriate to their skill set and ability.  If they begin to exceed the metrics of their job, they should be summarily rewarded with expanded compensation and/or responsibility.   Compensation is commensurate with performance, and in Jeremy Lin’s case, until he received extra playing time, his performance was commensurate with his compensation.  In other words, both before and after his breakout moment, he was and is being evaluated based on a consistent metric tied to performance.

2)      It’s called a diamond in the rough for a reason.  When success is unexpected, it’s very easy to assume that there are many more.  However, every year, over 60 new players are drafted in the NBA and many more sign as free agents.  The majority of these players will be out of the league within 4-6 years.  These players, like employees, run the gamut from serviceable through superstar.  Some, like Jeremy Lin, may even start as expendable and end up being a household name.  Since there will be a range of skills and abilities within an organization, structured performance evaluation metrics help ensure that responsibilities are aligned with skills.  So, when you do find that one exceptional individual, he or she will have the opportunity to shine.

3)      A moment can make an individual.  I’ll leave it to the basketball folks to explain the X’es and O’s of Jeremy Lin’s success, but there are other factors too.  Injuries led to increased playing time.  J.R. Smith, a veteran whom the Knicks could have brought in to replace Jeremy Lin, was still playing in China after the lockout.  Circumstances aligned properly for success. When Soldout.com went out of business in 2000, I had similar good fortune that allowed me to launch Geode Software.  I had enough savings, I was still single, and I had no desire to take any of the jobs I was being offered.  If Soldout.com had failed sooner, I may not have had enough savings.  If it had succeeded, I could have been employee #30 at a billion dollar IPO.  Without an alignment of opportunity and ability, neither Jeremy Lin nor myself would be in the positions we are in today.

Of the 3 factors that contributed to Jeremy Lin’s overnight success, there is really only one that falls outside of organizational influence: a moment of opportunity.  It’s impossible to create overnight success, but it’s possible to create an environment to facilitate its development by establishing key metrics to ensure employees are in a position to succeed.  If employees are in a position to succeed when opportunity does arise, they are able to capitalize accordingly.  Jeremy Lin succeeded because he was in the right position at the right time.  Getting your people in the right position is a great business strategy; hoping to hit the human resources lottery is not.

The Inconvenient “Convenience” of Paperless Tickets

February 16, 2012

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red sox tickets

The Inconvenient “Convenience” of Paperless Tickets

Last week, the Boston Red Sox rolled out a new restrictive paperless, digital ticketing initiative for Upper Bleacher seats at Fenway Park.  As a ticket broker, paperless ticketing has been a source of conflict and consternation since Ticketmaster introduced paperless tickets in 2008.  What should be a convenience for consumers, has turned into a means to lock consumers into a purchasing decision and to force customers into particular ticket resale options.  Attempting to force behavior has created backlash in the marketplace from both consumers and ticket brokers.  Any time a customer is forced to do (or not do) something in order to do business with you, it creates transactional friction that diminishes the value your organization creates.

First, a quick primer on paperless tickets.  As the name implies, nothing ever gets printed.  At the time of purchase, tickets are “bound” to the credit card used for purchase.  To access your tickets, you present the credit card to the usher at the venue who swipes the card in a magnetic card reader.  The usher prints a receipt that indicates your section, row, and seat(s) and with that receipt, you enter the venue with your party. It’s that simple.  EasySeat’s customers that have used Flash Seats , a non-restrictive paperless ticketing option from Vertix, consistently tell us they’d never want to purchase a “traditional” ticket ever again.

So, if it’s that easy, why all the consternation?  Under the Ticketmaster paperless ticketing and the Boston Red Sox Tickets @ Entry systems, the tickets are locked to the credit card used to purchase the tickets.  Even if the credit card has expired or you close the account, you must retain the card in order to gain access to the event.  And, unless you want to loan your credit card to someone else, these tickets cannot be resold or transferred.  Well, that is unless they are resold via Ticketmaster.

That brings us to the root of the problem with a restrictive paperless ticketing policy.  The stated goal is to provide security and simplicity for ticket buyers and fans, however, as implemented by Ticketmaster, it’s really just a methodology to capture a larger portion of the resale market.   The implementation undermines the very value proposition they claim to offer: convenience.  This, in turn, creates opportunities for ticketing companies like Vertix and ticket brokers like EasySeat to provide the value that Ticketmaster has failed to deliver.  If EasySeat can simplify the process of buying and selling restrictive paperless tickets by meeting customers at the venue, for example, EasySeat has created incremental value where Ticketmaster has taken it away.

This situation reminds me of a conversation I had with one of my programmers.  He was befuddled that I was training a large customer to do work that, to that point, Geode Software was being paid to do.  In his mind, with training, the client would eventually lose their need for Geode’s services.  I explained to him that our role, as a service provider, was to meet our customer’s needs.  If we make using our services difficult or withhold services altogether because it’s in Geode’s best interest, the client will find another service provider that will deliver in a manner that suits their particular needs. 

That same, simple principle from the IT services industry is exactly what is playing out with paperless tickets: it’s in Ticketmaster’s best interest rather than the consumer.  Since EasySeat is not the artist or team that produces the product, we, like Ticketmaster, are a resource that contributes incremental value to the ticket buying process.  That value is delivered in the context of convenience.  Any policy, such as resale restrictions, that diminishes convenience in turn diminishes the value to the customer.  In any service-based or value-added business, it’s important to understand how your policies impact the consumption of your services.  A travel or delivery charge may help cover operating costs, but it may impact the ease of doing business with your company and, in turn, the value you create.  Don’t make your customers do what’s easiest or best for you, because if you do, you’ll find that there’s an EasySeat in your industry that’s ready, willing, and able to what is best for the customer.

Expose Yourself Like Madonna

February 8, 2012

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Madonna Superbowl

Expose Yourself like Madonna

The moment that Madonna was announced as the halftime performer for Super Bowl XVLI,   I told everyone that Madonna would go out on tour in 2012.  And, as announced the day after the Super Bowl, Madonna is launching her first world tour since her Sticky & Sweet Tour in 2009.  How did I know she’d go on tour? The last time the halftime performer that was not either on tour or going on tour was Prince in 2007.  Every single artist, from The Who, The Black Eyed Peas, and The Rolling Stones, all took advantage of the publicity bump that comes from being part of a worldwide television event.  A watershed event like the Super Bowl is a great platform to sell additional tickets or re-start stalled ticket sales.  On a smaller scale, a bump in visibility can fuel growth of a startup.

In terms of visibility, Madonna’s halftime show it about as big as it gets.  With over 110 million viewers, nearly 1 in 3 people in the US were watching the game and more people were watching Madonna’s halftime show than the game itself.  Almost 4 years since her last album and 3 years since her last tour wrapped up, it’s the perfect moment to catapult Madonna into the headlines.

But, Madonna is a worldwide superstar; mention just her first name and people around the globe know who you are talking about.  How could she possibly need additional exposure?  The answer is simple: to sell tickets.  Without the Super Bowl, she’d sell tickets, but this kind of exposure will be necessary to capture the prices for this tour.  Using Boston’s TD Garden as an example, the majority of the Floor, Loge, and Club levels will be priced between $170 and $355 per ticket before fees, and the Balcony level will range from $45 to $90 per ticket before fees.  These prices closely match the ticket prices in 2008-09.  While her 2008 tour was on top of the secondary market, the average ticket price was only $306.  For a concert in which the majority of lower level seats were between $150 and $300 face value, that doesn’t represent much of a premium.   When the premium over face value is small, it means that marketplace demand wasn’t much beyond the asking price, and possibly even less.

It’s pretty easy to draw the conclusion that the world’s most watched television event will help sell tickets, but not everyone can perform at halftime of the Super Bowl.  It doesn’t have to be this large of an event to benefit a small business.  In 2010, EasySeat was ranked #176 on the Inc 500 list of fastest growing private companies in America.  Being part of the Inc 500 is the closest equivalent to playing Super Bowl halftime that you can find as a small, private startup.  Realizing that EasySeat had a big moment, I decided to try to capitalize on it by trying to sell the company.  In the midst of the Great Recession, it was a stand-out moment that could be used as additional leverage over and above our great financial performance.  The moment never led to a sale because the additional publicity fueled additional growth that made selling the company a far less attractive option for me.

The stage doesn’t need to be as large as the Super Bowl or even the Inc 500.  In 1996, when running my first business, an exterior painting business, we were featured in the Patriot News .  This one article was the single biggest source of new sales leads for the year.  The lesson embedded here is that anyone, even cultural icons like Madonna, can use additional exposure to achieve business goals.  Additional visibility can be used to fuel growth, increase sales, or penetrate new markets.   The only thing not to forget is that attention can be fleeting.  Madonna’s 2012 World Tour was announced less than 24 hours after her Super Bowl performance; I started seeking potential acquirers before the Inc 500 list hit newsstands; incremental sales from the article in the Patriot News were confined to one year.  Find your moment in the sun, and capitalize on it quickly because the sun sets at the same speed it rises.

The Bruce Contingency

February 1, 2012

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Bruce Springsteen Wrecking Ball 2012The Bruce Contingency        

For the first time in nearly 3 years, the Boss, Bruce Springsteen, is heading back out on tour with the E-Street band.  The tour was announced on January 24th and went on sale to the public only 3 days later on January 27th.  Like any Bruce tour, he’s playing 6 shows in the New York Metropolitan area, with 2 shows apiece at Madison Square Garden and Izod Center and 1 show at the Prudential Center.  Each venue seats a total of about 20,000 people for concerts, which equates to approximately 120,000 tickets for these shows.  Just over 100,000 tickets for a Springsteen-crazy region that, according to the 2009 census, has a population of over 22 million people.  Simple math will tell you that there’s a potential for a supply issue, and not surprisingly, tickets sold out in minutes.  EasySeat has tickets for Bruce Springsteen because, understanding the potential pitfalls, EasySeat planned for all possible contingencies, especially the biggest of them all, The Bruce Contingency.

Ticketmaster, however, did not seem to have any contingency plan for the potential demand these shows would create, and as a result, experienced some major technical difficulties during the public on sale.  In an announcement on Friday, Ticketmaster claimed to have been hacked.  From years of experience in both the ticket industry and IT, I can tell you that this is just misdirection from a bad public relations moment.  As of today, there are currently less than 3,000 tickets available on the secondary market for SIX New York area shows.  That’s less than the 2,262 seats that Bruce Springsteen and his management group held back from the public for TWO shows in 2009.  So, if there was a hacker attack, it did not result in tickets ending up on the secondary market.  To the contrary, it would seem that Ticketmaster’s web site problems have REDUCED the number of tickets available on the secondary market.  This dearth of tickets is what has led to higher prices.

So, if they were not hacked, what actually happened?  In simple terms, Ticketmaster’s systems could not handle the load due to lack of resource planning.  In most cases, when a major event like Bruce Springsteen goes on sale to the general public, ONLY that one event will be made available for sale.  For example, when Van Halen’s tour dates on the east coast went on sale on January 14th, it was the only major artist that went on sale that day.  Conversely, on January 27th, in addition to Bruce Springsteen, Elton John, Van Halen, Red Hot Chili Peppers, Daughtry and Death Cab for Cutie ALL had multiple dates for the east coast alone that went on sale on Friday.  The Bruce Springsteen shows were interspersed throughout the day rather than all going on sale at the same time, but the Boss still managed to drag down the purchase process for every east coast concert that went on sale that day (concerts in other regions appear to have been unaffected).

All in all, it just appears that there was poor contingency planning somewhere in the process at Ticketmaster.  EasySeat, however, did not make that same mistake for a critical event.  As a company that focuses on the Northeast market, Bruce Springsteen is a big event, so EasySeat pre-arranged multiple methods for obtaining tickets.  No, EasySeat didn’t have any “sophisticated computer programs” to hack into online systems.  But, EasySeat did pay college students to wait in line in ticket outlets and a handful of stay-at-home moms to sit at their computers and buy tickets.  The result of this planning was that EasySeat ended up purchasing between 12 and 16 tickets per show. That’s it.  No massive hoard; No back room deals.  However, thanks to proper planning, EasySeat will be able to serve its customers.

In a case where there is a single, critical event for your business, you must have a contingency plan.  If you have a single supplier for your inventory, what will you do if that supplier goes out of business or is impacted by a natural disaster like Hurricane Katrina?  If you have a key employee, what do you do when he or she takes another job or relocates with a spouse?  Identify the Bruce Springsteen in your business.  Whether it’s having a backup supplier, like EasySeat did, or documenting operational procedures such that anyone can use them, part of your job as a business owner is planning for contingencies.  With the proper planning, when the Boss shows up at your place of business, you can still get tickets, metaphorically speaking.

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