How the backlog issues prioritization saved the company from closure during the pandemic. Stories of launching three products. Part 1

I first met Vitaly almost five years ago in Palo Alto when he was participating in an acceleration program at 500 Startups with a product called Concert With Me (an event recommendation service). Over the next two years, the service reached a multimillion dollar annual revenue, but then shut down due to unexpected changes in Facebook’s policies. Then the team created a new go-to-market strategy and released Tendee, a SaaS marketing automation product for the event industry. It met a product-market fit in Europe and the US and brought several large customers and reached dozens of thousands of dollars in MRR. But it had to be put on hold due to the Covid19 pandemic.

In need of a survival plan, the team decided to introduce to the world the prioritization tool they had used within the company for almost two years.

The new product led to striking results, as well as some curious realizations and insights into how sharply the experience of product development differs in conformity with the added value level and market type.

I got in touch with Vit a week ago, and he shared his story with me. It was a gripping conversation, so it occurred to us we could develop it into an article where Vitaly would share his experience in the product development process, as well as reflections on the fundamental differences between the launch of his latest backlog-grooming product (Ducalis.io) and previous event marketing products.

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Growth and development in a competitive market: On the importance of distribution channels and platform independence

Tell me shortly about Concert With Me?

We developed a classic ticketing eCommerce platform for the western market. The product didn’t differ much from most of the usual sites selling concert and event tickets, but we had a distinctive feature in the customer acquisition model. It was the unique growth model that allowed ticket sales to rocket to several million dollars in a very competitive western market in just a few years.

What were the product-market fit conditions for Concert With Me?

The usual thing: discover a channel with cheap traffic that your competitors have missed. We managed to build a large automated system for traffic acquisition via Facebook. For the most part, it operated thanks to the hidden potential of Facebook Events, where the vast majority of the traffic came from.

The standard pay-per-click ad on Facebook cost us a dollar or more as we had to compete for every click in a heated auction. But in the model with Facebook Events, website visits only cost a few cents per click.

The traffic didn’t land at the site immediately, but at a Facebook event. It was better for a number of reasons:

1. It was much easier for the target audience to click Interested or Going in their newsfeed, and that was it. Facebook sent out notifications about each post to every event responder (now selectively).
2. The Facebook newsfeed gave away a lot of viral impressions if people gladly engaged with our events.
3. The established strategy of the traffic exchange — cross-posting across all our events — made it possible to start selling tickets without initial ad investments.
4. The net profit from each ticket sold was re-invested in the advertising of the corresponding event, which further strengthened the organic growth and, as a result, paid marketing and sales.
5. And so it went in a continuous growth cycle.

It was so awesome that I even decided to demonstrate our results to one of the biggest ticketing companies in the world. I showed their marketing department how we could gather an audience on Facebook Events and convert it into tickets — we had many more attendees and engagement with similar events than the industry leader. I tried to sell our marketing technology, but it didn’t work out.

How did the Cambridge Analytica scandal affect Concert With Me?

After the Facebook shock caused by the Cambridge Analytica scandal, Facebook CEO Mark Zuckerberg first froze all the API integrations of the platform. Then the company simply cut out all the useful features and updated the algorithms. The changes hit hard on the technologies we had built to promote events.

Facebook also updated the company’s policies, and after a while, it limited event promotion in our segment. All the above caused a drop in our traffic and pushed our product out of business.

All in all, deep integration with a large platform allowed you to shoot upwards, but the strong dependence became devastating. What did you do next?

This became our rebirth strategy: Keep the best parts of our experience and throw away the worst.

We separated all the marketing best practices from B2C, reassembled them into a B2B product, and went to offer it to former partners, competitors, and friends in the event industry.

This is how Tendee came into being.

Uncover the history of Tendee.

Tendee is a digital marketing toolbox for events.

Originally we wanted it to be a self-service SaaS, but the product was too complicated for customers. Over time it became a hybrid of SaaS, software integrator, and marketing agency.

The majority of B2B products in the event industry are ticketing systems (stock taking, payment processing). Specialized marketing tools, however, are hard to find, and the level of automation and use of promotion services is lower than, say, in the classic e-commerce. This is where we saw our opportunity.

Personal contact was the main sales channel. We used to start cooperation with our customers as a marketing agency, set up all the systems and integrations, and then gradually teach their teams to use the product on their own to save hundreds of hours of manual effort by automating the event promotion process.

The event market is not so broad. The client’s onboarding was always manual, and every time they had lots of unique feature requests. This created problems at the level of issue prioritization and the company’s strategy identification.

What was key to Tendee’s growth?

For a B2B company in a relatively closed and well-established market, the world revolves around direct sales with “cases and logo” being a matter of life or death.

Cases are about your relationships with the industry’s well-known companies — for whom, in what market segment, and how much you’ve increased the profits. And all the customers have their own boundaries of market segments. As Eugene Lisovsky from Maps.me says: “Clients have ‘shelves’ to classify products in their heads. If they don’t understand which shelf to place your product on, they will simply throw it out of their heads.”

Since there wasn’t a shelf for Events Industry Digital Marketing Automation, we chose Facebook Event Promotion Specialists as our category. Pitches with that leitmotif worked well.

Logos are companies you’ve worked with or industry-known people who can refer you. “I know person X,” “We were doing a project for company Y.” Every industry is a small village, so everyone knows each other. But if you’ve wrapped up a few big deals, you ace the Social Proof stage with potential clients.

Obviously, for the offline event industry, networking at offline conventions is the best growth factor. You can meet decision-makers at industry conferences and meetups several times a year. They all know each other well, happy to meet again, and they’re curious about what new tools they can try for their theater, stadium, or promotion company.

(pictured with Russ Stanley, VP of ticketing, the San Francisco Giants baseball team, January 2020).

What happened to the event industry after quarantine measures were adopted because of the coronavirus? How did it affect you?

Each and every event was canceled or postponed, and customers began to demand refunds for their tickets.

The vast majority of events are funded with upfront payments than with early bird ticket sales and/or promoter money. The event financial model assumes some small percentage of refunds, but these are tiny numbers. Therefore, mass refunds are fatal for the whole supply chain.

In the US, it is a bit easier as most event tickets are legally non-refundable, and one can only resell them. But in the current situation companies had to make a difficult choice: lose money or lose reputation.

For example, Live Nation declared: “Where an Event is cancelled, rescheduled, or where there is a material change to the programme of the Event, You will be entitled to a refund.” And StubHub stated that if an event is canceled, customers can opt to receive a coupon valued at 120% of the original purchase, and this coupon can be applied toward a future event of their choosing.

These decisions have led to a domino effect, with bad things begetting even worse ones — layoffs, salary cuts, lawsuits, bankruptcies, and ruin.

Marketing budgets were the first to get slashed. All our current and future projects instantly came to a stop until further notice.

Half of the industry simply hoped to survive the quarantine, and an optimistic mindset I found in only one of a hundred said: “I wanna be prepared for a brighter future, explore automation tools, set up analytics, and look for other interesting solutions while the world is in panic.”

The opinion of the American event industry about its future from one of the online meetings (March 2020).

Everything indicated that we would probably share the fate of companies that won’t survive the pandemic.

To be continued…

P.S. If you want to learn how data can help you build and grow products, take a look at Simulator by GoPractice!