From red balloons to blue-chip brands: how FEVO made the online shopping cart social
Nightclubs and the US Department of Defense might not appear to have much in common, but both played a big part in the creation of FEVO – a social-buying start-up that Ari Daie founded in August 2016 and now has clients in everything from sports and concerts to fashion and beauty.
Ari, a serial entrepreneur who dropped out of Harvard aged 19 to start his first company, had been heading up M&A and partnerships for the Ticketmaster side of Live Nation when he stumbled upon a small company called Host Committee. Its whole business involved rewarding clubbers for getting groups of their friends to also buy tickets for a particular nightspot – a group of 10 might qualify them for a queue jump, while 20 would mean a free bottle of champagne and a private table.
Ari saw the nightlife market as over-crowded but Host Committee’s group-based ticketing reminded him of a competition that the Defense Advanced Research Projects Agency (DARPA) ran in December 2009 to mark the 40th anniversary of the internet. Participants were tasked with finding ten red weather balloons that DARPA had moored across the United States, and a group of students from MIT won the $40,000 prize by doing something very simple: they created incentives for people to share their quest with others using social media.
“If you found a balloon you got $2000, but if you invited your friend and they found the balloon, they’d get $2000 and you’d get $1000,” explains Ari. “If your friend didn’t find the balloon but they invited somebody who did, that person got the $2000, your friend got $1000, but you still got $500. They’d accidentally figured out how to roll group-based incentives into a marketplace strategy.”
DARPA’s Red Balloon Challenge was designed to explore how the internet could mobilise people in the event of a terrorist attack or natural disaster, but Ari saw a far less distressing use for the concept. Backed by a group of investors, Ari took over Host Committee, rebranded it as FEVO (“The name means nothing, I just wanted a four-letter word that starts with F because I like to curse a lot,” he says) and started targeting blue-chip sports brands like the LA Dodgers, Chicago Bulls and Kansas City Chiefs.
The logic behind it is obvious. Sporting events are inherently social – people don’t tend to go alone – and all teams have their fair share of hardcore supporters whose passion can be harnessed by Fevo’s ‘social buying’ tools to get other, less dedicated fans to go along to the game too. In the past, the burden to buy for a group would fall on one person, if only to ensure everybody could sit together, but FEVO generates a unique link that can easily be shared with friends to ensure they get the seats around the original buyer.
Whenever Ari meets a prospective new client he always asks them one question: what was the last event you went to that wasn’t your own? “75% remember which teams were playing, half of that number remember who won, and only about 1 in 100 remembers the score – but everyone remembers who they were with,” he says. “That is fundamentally what we're trying to do at FEVO: make you leave with a memory.”
Of course, as some of the biggest sports franchises in the world, not all of them will need any help filling seats. Teams in the NFL only play eight home games per season and some have season-ticket waiting lists that can take well over a decade to reach the top of, but Fevo can also help to shift parking, merchandise and refreshments by bringing these normally disparate purchase paths together.
Even the most innovative sports teams don’t tend to have their own teams of engineers; they source third-party platforms to handle their various inventories – but Fevo isn’t trying to replace any of these. “We don't in any way interfere with those legacy systems,” says Ari. “Our core value proposition early on was to become master integrators. If you're a hardcore fan and you just want your seat it's two clicks. But if you want to add parking, merch and have pre-paid food delivered to your seat, you can do that all in one integrated transaction.”
In those early days of FEVO, Ari and his team decided to target the thought leaders across the different leagues, so they identified the two or three most innovative franchises in each one and approached them with a proposition. They hit the jackpot straight away. “The Yankees were our first client,” says Ari. “The most storied team in baseball said: 'Yeah, we'll take a chance with you.'”
Without paying a penny upfront the Yankees ran a campaign with FEVO to see what its tools could do. As a result, conversion rates went up, buyers were more likely to invite their friends and 75% of the people who made a purchase had never been seen before by the Yankees – pretty impressive for a team with a database as big as the Yankees. Other teams really took notice of that and soon FEVO had also signed up the Miami Dolphins in the NFL, the New York Knicks in the NBA, and the Rangers in the NHL. Four years later, the company has over 600 partners and nearly 90% market share.
And it’s not just about selling more stuff either – that domino effect also works on the atmosphere inside the stadium. In 2016, the Yankees gave FEVO a block of tickets to sell for their game against the Red Sox – Ari went along. “Our section had about 85 people in it and it was alive,” he says. “Everybody kind of knew each other, so they could let their guards down a little bit. They were singing, chanting and high-fiving, tossing hotdogs at each other. There were two kids with their parents in the next section asking if they could come over into our one."
One of Fevo’s more recent clients is St. Louis City SC, who will join the MLS in 2023. So what can the company do for a side that hasn’t even set foot on the pitch yet? St. Louis City’s owners had done their homework and seen how Fevo had helped previous MLS expansion teams run their season-ticket deposit schemes. DC United, Austin FC and Charlotte FC had all shattered the previously held sales record and sure enough St. Louis City followed suit, securing 30,000 FEVO-powered deposits within the first 15 minutes and 50,000 after the first 24 hours.
Pre-pandemic, FEVO’s plans for 2021 included significant international expansion. A deal was signed with City Football Group, owners of 10 clubs around the world including Manchester City, Melbourne City and Girona, and another round of funding was raised, bringing the total so far to $65million. Covid put a pause on getting things up and running abroad but Ari is still actively recruiting in the UK, has another big-name Premier League team partnership to announce soon, and is also working on a massive acquisition that could see FEVO expand into 50 new geographies across continental Europe and in emerging markets.
“We are very serious about expanding internationally,” he says. “We're not just going to plant a couple of sales guys over there and say we've planted a flag. We'll have local business development, client support and consumer support. We're just waiting for the venues to open back up and the world to get back to some semblance of normality.”
Having experienced multiple global financial crises in the past, Ari already had a plan for how FEVO would deal with Covid before it had even hit US shores, but he still had to make some difficult decisions – and he says the important thing was to be “hyper-transparent” with everybody. While there were unavoidable salary reductions and furloughs, and the FEVO team dropped from 120 people to 60, Ari made sure anyone who wanted to leave had help landing another job and that those who stayed would be rewarded with a big stock bonus.
The pause on live events also allowed the team to take a step back and refocus on what they wanted to be really good at. “Before Covid we were on a rocket ship,” says Ari. “We had grown 3x year-over-year and had so much activity we couldn't focus on building; everybody was busy making sure the clients were happy.”
Covid gave Ari and his team time to really concentrate on the product and prioritise infrastructure, scalability and security. “As a start-up you're typically gunning for growth, which means you can sometimes deprioritise these things,” says Ari. “About 90% of it was stuff that was already on the roadmap that we brought forward, so we have a tonne of new technology and features being released every week now.”
Ask Ari what his most important role during this period was and he’ll tell you it’s not about him. FEVO’s philosophy of benefiting the entire group, the one Ari picked up on all those years ago when Host Committee reminded him of DARPA’s Red Balloon Challenge, extends right through the company.
“Our people are the real leaders of this company and our culture is to help each other do better,” he says. “People really came to each other’s sides during Covid and that’s a testament to who we've hired, not to me at all. It’s about the group and being in it together, not the cult-like leadership of the Adam Neumanns and Elizabeth Holmeses of the world. That shit's over, man. It's about what you do for each other.
The most storied team in baseball said: 'Yeah, we'll take a chance with you."