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 / Autumn 2012 / Issue 68(originally published by Booz & Company)


Lessons from the E-Commerce Wars

Entrepreneur Jim McCarthy on why online innovations succeed — or fail.

As budgets tighten, many executives face questions about how to grow their business. In the booming world of e-commerce, such questions are coupled with a need to stand out from the crowd. Entrepreneur Jim McCarthy has been on the front lines of these decisions for 15 years. He cut his teeth in tech startups, learning from both failures (online calendaring venture Kiko Inc.) and successes (GeoCities, sold to Yahoo in 1999). Today, as cofounder and CEO of Goldstar Events Inc., a privately held half-price ticketing website, he’s found answers by forging a strong connection with the site’s members. Getting to know his customers — what they like, what they dislike, and what they might like — is key to Goldstar’s business model, and drives its innovation process.

When the startup launched in 2002, the economy was in recession and e-commerce was still reeling from the dot-com bust. Today, Goldstar has more than 2 million registered users and has established partnerships with thousands of venues around the country. Although relatively small — the company sold about US$50 million in tickets in 2011 — it is growing rapidly, and forecasts that its sales will grow by more than 50 percent this year. Jim McCarthy talked to strategy+business in February 2012, Goldstar’s 10th anniversary.

S+B: You’ve worked in e-commerce for 15 years, and have seen highs and lows. What are some of the key lessons you’ve learned?
One of the things that I’ve come to believe strongly is that many people claim to have expertise in a lot of areas, but the entrepreneur is in the best position to evaluate what works or doesn’t work for his or her company. Great people can be very helpful to you, but they can’t replace you as the entrepreneur when it comes to the big decisions.

You also can’t be taken in by things just because everybody is doing them. Otherwise, you risk pouring huge amounts of money into efforts that won’t work.

I’ll give you an example, based on something we learned about Twitter. Our first implementation of Twitter was traditional; followers could interact with us, and we would editorialize. That account is still active, and it’s fine. But we figured out that many heavy Twitter users just want information. We created automated feeds for different cities, such as @GoldstarLA. Nobody here touches them, we just take the data as a new event or new dates for events come onto the site, and it automatically goes into the feed for each city. Users can sign up for a feed for their city, and every time there’s an update on our site, they get a tweet with a link. Those are great links for generating ticket sales, and it’s very easy. We realized that we didn’t have to hire a team of people to fill @Goldstar with crazy, fun content.

I think the bigger point is, it’s possible that not using Twitter would work for a given company. That’s not to say that you shouldn’t try things or test things or explore things, but entrepreneurs should have the courage of their convictions about what they’ve learned. It’s hard to do that in the face of pressure, and if you have investors, they can put pressure on you, too. You have to resist it and do the things that are best for the company and for its customers and employees. You can constantly chase whatever’s shiny, but entrepreneurs only have so much mental bandwidth, so you have to use it in the right places.

S+B: What drives your decisions about innovation and growth?
Innovation is really only innovation if it serves a need that customers have or gives them something they want. Our job is not to find buyers for our tickets, it’s to find tickets for our buyers. Our innovation process revolves around evaluating what we’re doing for our members and then figuring out what we’re not doing as well as we could be. Sometimes those kinds of innovations are really simple and other times they’re more technical. But they always start with the customer.

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