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Comment by rorrr | Hacker News Reader

I watched your pitch video, and it indeed was painful. You didn't have the answer to an important question, and you still don't. "We don't want to be a hedge fund" is not an answer. If your prediction software works, you are sitting on a gold mine, and you DON'T need a huge amount of cash.

If ticket prices fluctuate 40%, and you're right 80% of the time, and half the time the prices are going up, your potential gain is

    0.4 * 0.8 * 0.5 = 0.16 = 16%

Which is twice as good as your fee margin of 7%.

EDIT: And what's more important, your volume is not limited by the percentage of your site visitors who make purchases, you are limited by your money, which will grow exponentially, more or less. 32% average profit (minus fees) on each buy/sell is fucking HUGE, it's unbelievable you're not doing it.

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I don't know if this would have an important effect on the business model (or if it's part of the reasoning of 'not wanting to be a hedge fund'), but being in that position is going to give you a very hostile user base.

As a music fan, I can't stand scalpers. I understand the principles of supply and demand, but scalpers subvert this because you don't necessarily have to resell all the tickets you purchase to be profitable - just enough that your margin covers the unsold ones. The only people losing are the fans, who can't get affordable tickets, even when the venue is half full.

I had no idea how bad the scalping situation was until I tried to buy tickets to a show in Chicago (in Australia where I live, it's a problem, but I've never been in a situation where I couldn't get tickets by buying them when released). I stayed up late (in my time zone) to get tickets, and missed out because the website wasn't dealing well with the load. Next morning, I got up, and there were 400+ tickets for sale on StubHub. For a 1300-person venue. Even if 100% of scalped tickets went on sale, on one website, within 10 hours of the event going on sale, that's still 30% scalping rate.

There are a number of solutions both easy (printing name and date of birth on the ticket, which is matched to ID at the gate) or difficult (personally I like the idea of taking 'bids' for tickets - the maximum someone is willing to pay, and then at a cutoff date taking the nth person in line's bid (of an n capacity venue) and issuing all tickets at that price. Minimal risk for promoters as they can cancel if they can't manage a reasonable margin, and no one overpays for tickets).

Anyway, I digress. My point is, I think potential sellers would see this service as ripping them off, and would be hesitant to list tickets unless they weren't confident they could resell them, and buyers would resent them because you're essentially taking a large margin for almost no service. If the algorithm works there's minimal risk for the company, you'd just be taking free cash. I could see myself as a buyer actively avoiding using this (hypothetical) service where possible because of it, and sellers also avoiding it as they perceive an offer from you as a way sign that value would go up and they shouldn't sell now.

As an aside, when I was in the US I got a ticket to see the SF giants for about $10 for great seats on SeatGeek. Was super happy with the experience (and the people next to me who so generously offered rules clarifications for me).

It's really just market making. If the venue sells the tickets for much less than people are willing to pay it's very reasonable that people will buy them to resell them. Want to stop resale? Price the tickets closer to the real value.

That was why I made the suggestion that you ask the maximum people will pay and charge at at whatever rate fills the venue (though I suspect that people would be likely to underbid compared to if they were told the ticket price, but at the same time they know that if they do not bid enough they are guaranteed to miss out on tickets, which might counterbalance it). It would certainly sort out the glut of music festivals with diluted lineups that Australia is seeing.

But anyway, take it from me, music fans are irrational types who won't see it that way. I've encountered significant resistance at my suggestion of dealing with the scalping problem. An idea exists that the 'real fans' should be able to get tickets at a price they can afford, for whatever definition of 'real' means that the person speaking falls into it.

Plus, sometimes tickets can be sold at market cost, but by taking advantage of the upper end of the market and by limiting supply, scalpers can still be profitable even when only selling a small proportion of the tickets they purchased.

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