Maytal Ross interviewing Kevin Hartz, Chairman and Co-Founder of Eventbrite, about “When Covid-19 Kills Your Business: Crisis, Recovery and the Great Comeback”.
Kevin Hartz’s Bio:
Kevin Hartz is Co-Founder and CEO of one (NYSE: AONE) and Co-Founder, former CEO, and Chairman of Eventbrite (NYSE: EB). He is an early-stage investor and advisor to successful startups including PayPal, Pinterest, Uber, Airbnb, Trulia, Thumbtack, Gusto, Joby Aviation, and Newfront Insurance. He is also Co-Founder of Xoom (IPO 2013, acquired by PayPal). He received an undergraduate degree from Stanford University and a graduate degree from the University of Oxford. He serves on the Board of Trustees of the California Academy of Sciences
Maytal Ross (00:00):
Hi, everyone. It’s my pleasure to introduce Kevin Hartz, the Co-Founder, Chairman and former CEO of Eventbrite. Kevin, thanks so much for joining us.
Kevin Hartz (00:10):
Thank you for having me.
Maytal Ross (00:11):
Oh yeah, it’s our pleasure. So you have a pretty diverse and impressive background, from founding multiple successful companies to being an early investor in some of the biggest names in tech. Can you please share a bit about your background and what brought you to this point into founding Eventbrite?
Kevin Hartz (00:28):
Well, I would say that I’m just intentionally curious, and having seen a lot of other great founders and CEOs and investors out there, curiosity is really an important aspect of what drives the tech ecosystem. So both been learning through building companies, or whether it’s been learning through investing, that’s how I would say it has characterized what I do every day in my career.
Maytal Ross (01:01):
Yeah, that’s great. So I would love to talk a little bit more about Eventbrite, and obviously, there was a pretty big impact with COVID. So let’s take a step back to late February, early March 2020. Countries are gradually shifting into the lockdowns. It’s becoming clear that something is going on, maybe the start of a crisis. What are the first three things that Eventbrite management does as the largest live event ticketing platform?
Kevin Hartz (01:28):
Well, it was a time that we just won’t forget. It was an incredible crisis. I think that a live events business like Eventbrite, there wasn’t another business that was hit harder than Eventbrite was. And I was really impressed with the team and the CEO. I’m a little biased there, because the CEO, Julia is also my wife, really went into action. It was late February when we started to get concerns from our board of directors. Roelof Botha was on the board and hearing what was coming out of Sequoia China in terms of lockdowns and interruptions of the supply chain. We had a board member who is in the cosmetics business who saw a lot of disruption occurring. And so we got that warning, but we couldn’t have imagined what really hit in early March. And that was just a complete shutdown of the industry.
Kevin Hartz (02:32):
So in 2019 Eventbrite had transacted over $5 billion in ticket sales. In March of 2020, as COVID came on, we saw more refunds than sales. And so we actually had negative revenue from a largely scaled business and the team really adeptly went into what I would call different work streams of trying to address each issue. First being how do you take a lot of op-ex, operational expenses, out of the business in a short period of time? How do you shore up new funding when the company is burning an incredible amount of cash? And how do you diminish [inaudible 00:03:30] having paid out our event creators in having a couple hundred million dollar liability that we had to insure wasn’t charged back to refunds. And the team how they handled themselves was awe-inspiring. That team get through this incredibly critical time and now be on the road to kind of recovery and come back. It will be one of those great business comeback stories for a long time to come.
Maytal Ross (04:01):
Wow, that’s really amazing. And like you said, it’s an event by was clearly hit really hard and that was entirely crisis mode. So how did they handle that shift from crisis mode cutting costs to moving to, “Okay, what can we strategically do to get out of this?” Because there has been a shift more to online and how did they handle that to get out of this the way that they’re doing now?
Kevin Hartz (04:28):
Great question. That workstream was another. And we had a product that our third co-founder Renaud Visage had built, and that was an online events integration with Zoom in Vimeo. And he had built that the year [inaudible 00:04:47] is that when people were selecting when event creators were selecting the location of their event, virtually kept showing up as a very top piece. And that was an indication to build a virtual events product, one integrated with, as mentioned before Vimeo and Zoom. And as the crisis was coming on, that we just saw that side of the business really take off organically. In which case the team really leaned in and that was one of the pillars that’s helped support the business through this crisis.
Maytal Ross (05:26):
Yeah. That’s clearly amazing that they were able to switch gears. So what do you think the world of live events will look like post-COVID and who knows when that will be?
Kevin Hartz (05:39):
Well, humans innately want to gather, and it’s part of what defines social [inaudible 00:05:48]. So it’ll be back and it’ll be back stronger than ever. If you look at the Spanish flu at the late 1919 and so on, you had the roaring twenties follow and that was a very similar situation of people sheltered in place, isolated. And then there was a lot of excitement to get back together, to celebrate. You saw jazz come out of that period. You saw a lot of art and movement and we think you’ll see quite [inaudible 00:06:27] when we come out of this. We can’t predict when we’ll come out of this, but Eventbrite has shored up the business and just know we’ll be ready when it does come back.
Maytal Ross (06:38):
Okay. So I’d like to shift gears a little bit now and maybe wearing your investor hat would be happy to ask if you could tell us a bit about what you look for when you invest? What do you look for in a company? What you look for in an entrepreneur?
Kevin Hartz (06:53):
On the early stage, I invest both early and late stage, on the early stage I think is interesting because I’m looking for what motivates a founder, in terms of what they’ve built or because they’re generally first-time founders. Because what I find is that they’re really swinging for the fences is the expression that they see the world in a different manner than most people. They see what’s coming in the future. And so working with first-time founders has been a pleasure, and I can also have [inaudible 00:07:36] impact. But what I look for is the intellectual capability, capacity of that founder. Did they grow up in a family that had scientists, doctors, and so on that had a competitive spirit in the family? And I find that greatly correlated with success. Another area is did they overcome obstacles? And you find that in a lot of immigrants in the United States and elsewhere where I’ve invested in the early stages.
Maytal Ross (08:16):
That’s great. And I think you mentioned also that you do invest at the late stage and maybe this is a segue into there, but you recently formed a SPAC and this has clearly been a hot topic recently. So I would love to just get, I’m sure this could be a whole other conversation, but maybe just your brief thoughts on the space and why you think they’ve made a comeback at this point?
Kevin Hartz (08:38):
That’s correct. SPACS have been around for quite a while, but it was like the internet before the 90’s. They were the thing, in the case of the internet was created by the defense department and used in very specialized in a small corner among academics and intellectuals. And took off in the nineties for various reasons.
Kevin Hartz (09:08):
And 2020 is very much the year of the SPAC. There’ve been a lot of tailwinds. I would say, even as much as this realization that this is a great instrument for getting tech companies out in the public markets is the primary motivation. And there’s secondarily a lot of the challenge that would have come with launching SPACS actually diminished during COVID. And so the fact that you could do a road show, just as you [inaudible 00:09:48] meet with dozens and dozens of investors. You can do that all from Zoom. You have literally hundreds of documents to sign and in the past you’d have to sign and have them Fed Exed or so on. And here you can do this all with DocuSign’s. So it has really served as a tailwind to buffer the SPAC movement.
Kevin Hartz (10:12):
And then there was a moment where you’re seeing really strong operators and investors in our tech ecosystem participating in launching their own SPACS. So Mark [inaudible 00:10:31], Ribbit Capital, Reed Hoffman just to name a few. There’s some really great operators and investors that really know the space. Whereas, five years ago it was just a few outsiders. It was an undesirable asset class. And now that has been a 180 change, even in the last six months the reception of SPACS has grown tremendously.
Maytal Ross (11:00):
Yeah. And when you’re looking at investing, either on the early stage or SPACS, are there specific areas that are really you’re most excited about?
Kevin Hartz (11:10):
Well, any enduring business is really exciting to me. I’m taking the same method of investing, of finding great teams, finding large markets in finding business edge. I tend to like higher margin businesses. I tend to, of course, to like fast growth businesses. And what we’ve seen also is another tailwind to SPACS is that companies are going public earlier. We intentionally raised a smaller SPAC 200 million, but that’s on the lowest end of the spectrum for size and so we could reach a 800 to a billion plus company. We could also flex up with what’s called a pipe and reach a much larger company, but we think there’s what we’re seeing is going out the gates earlier in.
Kevin Hartz (12:10):
And it’s a big change from what’s happened in the last 10 years where the conventional wisdom has been to stay private at all costs. That it would hurt the future and company’s prospects, that it would diminish innovation. When in fact, if you look back at a company like Amazon, which was created in 1993 and went public in 1996, that company went public after three years of existence, it had a $500 million market cap and just sold books. And now we look at this [inaudible 00:12:47] trillion dollars, but that aside innovation has steadily occurred or has been explosive from Amazon over those years. And that’s what founders and CEOs are realizing.
Maytal Ross (13:00):
Yeah. That’s great. So thank you so much for your time. I really appreciate it. This has been a great conversation.
Kevin Hartz (13:08):