“I was immersed in the athletics industry and saw the inefficiency of the ticket market. When I dove into the details, a huge and consistent market pain became obvious. I saw an opportunity, a big one.” - Barry Kahn, Ph.D. Economics ’07
Qcue, founded in 2007 by University of Texas alums Barry Kahn, Ph.D. ’07 (Economics), Jitendra Dalvi, MBA ’07, and Andrew Mills, Ph.D. ’08 (Computer Science), is price optimization software that helps sporting teams and event promoters set and adjust ticket prices. By incorporating real-time market variables such as weather and performance, Qcue enables its clients to increase revenue and attendance.
Industry stats show that about 10 percent of tickets are sold by scalpers in the secondary market and about 40-50 percent of tickets go unsold. Kahn saw an opportunity to develop a new pricing model to capture this lost revenue for team owners and event promoters. “I applied my economics analytical skill-set to a new problem, one that most economists would not have thought about looking at.”
After getting positive feedback from multiple industry contacts, Kahn decided to move forward with his idea. “The industry feedback was overwhelmingly positive when we went to the market in the fall of 2006 . This was a pivotal moment,” Kahn said.
In the spring of 2007, while working on his dissertation, Kahn decided to take another business elective, New Venture Creation, where he joined up with his co-founder, Jiten Dalvi. In fall 2007, Kahn and Dalvi took the Advanced Venture Development Practicum. Both courses prepared the team to refine their business plan and get ready for the Texas Moot Corp Competition in January 2008. “This wasn’t a class project that evolved into a business. This was a business that looked to the university to find the resources that would help it work,” Kahn said.
Qcue won the 2008 Texas Moot Corp Competition and they placed fourth in the Global Moot Corp Competition. From their Texas Moot Corp winnings, they received office space and consulting support from Austin Technology Incubator.
At Rice University’s business-plan competition, they won first place and $330,000. (See 60-second video pitch for Rice Competition on CNN Online, sponsored by Fortune Small Business.)“The presentation skills I learned from business plan competitions were incredibly valuable,” Kahn said. “I got a lot of feedback after presenting the business to investors and to clients. Getting out there and seeing other companies pitch gave me a lot of insight and reinforced how important the credibility of the management team is in presenting the business to others.”
Kahn credits the New Venture Creation class for connecting them with Greg Holloway of Thompson & Knight. Holloway, who is now Qcue’s general counsel, was a guest speaker in New Venture Creation and spent many after hours consulting with them at Austin’s Magnolia Café. He also credits UT’s Athletic Department for introducing him to those who run UT’s ticketing and sales operations. “Being able to get in front of a real customer and flesh out ideas and have those kinds of conversations was incredibly valuable,” Kahn said. Even the company’s logo and tagline was designed by an advertising class which took on the company’s branding as part of a class project.
From the publicity and exposure Qcue received at business-plan competitions, the company received funding from several angel investors. In October 2009, Qcue received $1 million from the Texas Emerging Technology Fund.
Qcue’s first customer was the San Francisco Giants for a small portion of the ballpark in the 2009 season. The program was very successful, Kahn said. They are negotiating a multi-year deal and will be pricing the entire stadium for the 2010 season. Projected revenues are strong with a growing number of brand customers including the Dallas Stars and Cleveland Indians.