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Connect customers with entertainment in China

Podcast transcript #79: Connect customers with entertainment in China through a socialized approach

Find here the China paradigm 79. Today we are going to talk about a community-oriented ticket platform in China and the innovative way it connects customers with entertainment in China.

Matthieu David: Hello everyone. I am Matthieu David, the founder of Daxue Consulting and its podcast China Paradigm. Today I am with Greig Charlton. You are the co-founder actually I found out, of 247 Tickets. This is, and I am going to read how you introduce yourself – a full stock community-oriented ticket platform in China from promoters and event organizers.

You have started the business four years ago and now you are employing forty-two people in your team. When I learned about your business, I read online about your business – revenues; the money raised, I was very impressed. I didn’t expect that the foreigner and an overseas team could take space in this industry. It seems that indeed your position is very interesting, you have an average basket which is higher than the average in the industry of selling. You are doing a bit more than just the ticketing like Evan Bright, you are also promoting it and if I fully understand connecting customers with entertainment in China to provide it. Thank you very much for being with us.

Greig Charlton: No worries, thank you for inviting me here.

Matthieu David: So, the first question as always is about the size of the company. Could you share some numbers about the size of the company? Is the number of people’s accurate forty-two people, and about the revenues?

Greig Charlton: Yeah. It’s right. From the size of the company, I think we are about 42. We have been a little bit high-end this year and we have downsized slightly to focus on a couple of other things. But as you said, there is steady growth I think 2016 we were eighteen I think, So, we have grown fairly quickly over the last two to three years. Also, I guess maybe it will be quite interesting to talk about our journey; our revenues and things like that. Because I always find that is an interesting one. Because when we were in June 2015, we were doing about two million 2.5 million RMB a year, so very small and then last year 2018 we cleared nearly 40. So, we’ve had fairly good growth over the last few years and we expect that to continue and hope that continues.

Matthieu David: When you talk about the revenues – Are you talking about the growth value you are processing through your community-oriented ticket platform in China? Or are you talking about the commission’s you are taking?

Greig Charlton: We work in a couple of different ways. Obviously, we sell tickets and connect customers with entertainment in China; we also do other things as well. So, like you look at GMV as a metric and to allow us to see the health of the marketplace I guess and then we bring in all the other gross revenues and add to it. So that I think in 2018 it was 36.8 or something and that is GMV. So That takes into account all the ticketing, but also the gross revenue.

Matthieu David: I see. GMV for people who are listening to us is a metric that actually Amazon is using; Shopify is using because their model is based on commission. So, it’s more accurate to use a word of GMV than revenues. So, what about your business model? You are taking a commission on sales? You are taking a bit of money also to promote? What are your different streams of revenue?

Greig Charlton: Yeah, well, we’ve got quite a few. I guess the main one and the thing that people think about ticketing anyway is the commission on the ticket price. So, we speak to a promoter, we build the relationship with the promoters or organizers or venue and they essentially sell us that ticket cheaper than the market rate. We take that commission. It can be anything from twenty-thirty percent, even higher, sometimes all the way down to five-six percent depending on events and city, etc.

We then take a flat fee for promotion; we take fees for helping out, for example, we provide customer data for event promoters in China – we are one of the only I think, maybe the only foreign aid company that has what’s called a performance permit. Which allows us to be able to help promote certain shows. Cause obviously In China it’s a very regulated area around the cultural side. So, you have to be a company of a certain standing to allow you to be able to put on shows.

So, we help promoters; we help artists come to China. And we help out with the permitting and licensing to allow them to be able to come over-focused on the foreign side of things, the foreign artists and the foreign people that are coming in. So, we charge for that and we also charge for the promotion side. So, we have hundreds of groups on our community-oriented ticket platform in China; thousands of people within our communities and we help promoters activate them and engage them with their own content.

We are very transparent with our users and this is why – I am sure we will talk about it in a little bit, but the main reason why our average ticket size is much higher than with anyone else or our average transaction size is much higher than everyone else. Because we are very transparent with our users. So, we make sure our promotion is very, very targeted on the specific interest-based communities on Chinese social media. It means that the stuff that they are getting; the stuff that they are seeing is very much within their own interest. And everything is highlighted as this is a promotion, we never hide behind the – advertorial or anything like that.

So, it allows us to be able to work with brands that have specific offerings very closely. We obviously charge money for that as well. We also have merchandise; we do our own live shows as well- so obviously we do the ticketing for our own live shows and how we do that is we look at the data in our groups and our communities,  we punch those numbers, we look at external trends, we look at various music streaming platforms in China and also internationally. Then we try and work out which artist or which type of events would be good here and then we go and create them. Small-cap events, nothing huge, that would have thousand capacity max, and then we promote them back into the communities so he wanted those things.

So, we obviously make money on that as well. And also, as I think any company – we also have a B2B arm, So, we do corporate sales and allow companies to get access to a large number of tickets, so group buys and things like that. So, that’s obviously another way in which they charge the subscription fees in that plus obviously commission we get from tickets.

Matthieu David: I see. It’s much more diverse from what I was thinking initially. So initially I thought forty-two people for software, I think that’s a lot of people. Now I feel, I found out that you don’t have enough people to do everything, do you? How do you organize your team? How many people are working in software? How many people are working on actually supporting offline events? How many are working on getting the traffic? One thing actually we looked at is the traffic on your website from Similar Web and it’s pretty sizable if it would only a software. Because you have two hundred thousand people according to the Similar web. Which is not totally accurate in China. But let’s get back to my question – how do you organize your team with so many activities?

Greig Charlton: So yeah. It’s actually a struggle because especially where we came from. We came from very much like a start-up, where everyone’s wearing different hats and trying to fill holes where you need them. And as we started expanding; as we started diversifying, it was a struggle because we were taking resources from one place and having to put it somewhere else. So, our team is – we have probably about fifteen core team members that can fit into a lot of different places. They project manage some certain things, for example, our BD team; our partnership team works very closely with the promoters.

They also do, stuff to do with merchandise; they also do stuff to do with life; they also do stuff with various other things. We also have a fairly big customer service team and admin team of about six people who focus on really making sure that our users; our interest-based communities on Chinese social media are being met with the service that they need. One of the differences between us is, for example, is that we focus on a niche. But the niche is sort of people that are generally looking for the best service; better quality.

So, therefore, to make sure that we keep those people happy we have to have a customer service team that is able to service those guys. And so, it means that the service side of staff from the very start we created a system in place to be able to serve quite well within that, know your software around customer service that I don’t think any of our competitors do. And it costs us more money but I think in the long run it helps us keep our customers and make sure that they don’t go anywhere else.

The rest is we have a fairly – we have so many transactions, we have fairly big finance team, concept team, product team and marketing team sort of make up the rest, and these all fit within one place. Tech obviously is slightly separate, but products marketing these operations all sit together and try and create; try and make sure that our product fits with what our user wants, our marketing is where we should be and where our potential users will be.

Once we have got our customer and one, we have got our users, then we basically never let them go. So yeah that’s where this purpose quite lies in the team as well. Yeah, the rest is sort of other functions – we have some sales guys, merchandise, etc. but we are very diverse and one of the things about us is that for example, we ran an event on a weekend. I think few thousands of people were there, we had finance there; we had our BD guys there, we had marketing there; we had operations there and we basically work together to make sure that we can produce or service the events that we were involved with, as well as we can connect customers with entertainment in China.

Matthieu David: So, we understand the size, forty-two people; forty million RMB last year of a course at RMB. And what about the product? Could you define the big model product? As far as I understand, there is a product which is ticketing so you actually process the payment for event organizers through your platform. Then maybe you can elaborate more on the offline perspective with the phone and the online. You are also helping to get actually the buyers of the event and you organize a little bit the event as well offline. So, would you mind explaining more about the product which is a technological product, the ticketing aspects?

Greig Charlton: So, let’s think about it this way, ticketing is obviously a transaction. Our main advantage and the thing that we do really well create interest-based communities on Chinese social media and help users get essentially what they want. Whether that’s social interactions with other people that want to do the same things or they have the same interests or it’s getting that ticket or getting those products that they need at the right price, that’s what we do. And ticketing, in fact, is just a part of that. Ticketing is the thing that we build our company on but it’s actually not our core.

Our core is our, in fact, our interest-based communities on Chinese social media and our social side of stuff that allow us to be able to kind of sell the best tickets into these communities. The product itself is a strange one because, obviously, we sell tickets. So, it has to be a product that helps our clients or partners as we call them the promoters and the venues and the event organizers. It has to be a product that they can use and is comparable to the market. But the rest of it we feel that actually in the market is not great. We feel that the products out there aren’t servicing the customer as well as they should be.

So, we look at it from the perspective that we have a transactional product. I just want to buy a ticket; I know what I want to buy, I am going to go and buy it. And it needs to be a good price; it needs to have good service with quality guarantee. Then we look at it from another perspective. We look at it from – how do we actually connect customers with entertainment in China? How do people actually find a ticket if they don’t necessarily know what’s going on?

Yeah, there are hundreds of – in fact thousands of events that go on every year in China. And a very small portion of them are actually filled to the max, but they’re a number of them that are really, really good stuff and people just don’t find out, or they find out too late. So, what we try to do is we try and connect customers with entertainment in China; the good things that are going on. We do that by learning about our customers. So, our product is based around finding out as much information as possible from our users. And helping them deciphering, go through all the information that’s around there is a very simple way so that they can make an informed choice of what they do with us every time.

Matthieu David: Sorry to interrupt, but I feel I am not getting everything. You are talking about community and users but you are not on WeChat, you are not on Weibo. You are not like a community social app. So, people come to you – where do they go? Do they go on your app? Do they go on your website? I went to your website; I saw very interesting activities. Is it the way it works? Could you help us to understand how you create the community-oriented ticket platform in China and then plug them into the events?

Greig Charlton: We run on WeChat actually. We have hundreds of interest-based communities on Chinese social media that have specific people in there. So, I think we have a hundred and forty thousand people over all these communities. They are segmented and split for specific interests. For example, maybe you are into sports, actually, you’re into basketball or whatever, so you’re in the basketball group with the other people like-minded people and we have that overall the different interests that you could possibly imagine and every day there will be more and more and more. What we do is we then promote into these groups exactly what they are interested in.

Matthieu David: We are talking about groups. What is it exactly? Is it a WeChat group? I believe it’s not, but what is it exactly? Is it a channel for each group? What is it?

Greig Charlton: it’s a WeChat group run by essentially AI bots.

Matthieu David: Oh really, wow! That’s much deeper than I thought. So, there’s a lot to talk about here.

Greig Charlton: Yeah. So, these interest-based communities on Chinese social media and obviously we have our own team in there as well. But they are actually, run by AI bots that we created and put in there, one of them is called Tipsy and one of them is someone else. Basically, what they do is analyze all the customer data for event promoters in China. They make sure that there’s no spam or anything in that group, and they promote specific events and content into these groups to make sure those engagements. But also, to help people in those groups decide what they want to do. Then we follow them into the transactional phase.

So, we either follow more content within our official WeChat or we follow into our mini program or our website. And that’s where they do the transaction.

While that’s happening, you are also following them with our data. So, we connect people from our groups into the transactions there and when they file back into the groups, we know exactly what they thought and how they have interacted. So that we can then get better at giving them something that they want to do.

Matthieu David: Don’t you feel the name of your company is misleading then? Because I feel you are as much a social manager or group builder or community builder than a ticketing company. But maybe I am missing something, 247 maybe something linked to community or I don’t know?

Greig Charlton: Yeah. The thing is like we have always been a community-orientated ticket platform in China, from the very start. Often people say, hold on a minute, you’re into ticketing, and ticketing is like ridiculously compressive and it’s one of those areas that it’s all about spending money. So, you have the big players on one side, Alibaba, on the other side you have TenCent, on the other side you have Baidu, you are basically surrounded. But what we have done is we have actually created an ecosystem for ourselves to allow us to be able to take advantage of the fact that none of these companies are actually supplying what users really want, or focus on users.

Ticketing is our main source of revenue. Seventy-five percent of our revenue still comes from ticketing. But the idea is always being able to transition away from that because we think that ticketing yes, but connecting customers with entertainment in China is a lot bigger than just ticketing. So, for example, merchandise. For example, even just like experiences, so not just events, also experiences and destination travel. All these different things that our users, and if we focus on our users rather than what they are buying it makes it easier because then you are able to put different things into the interest-based communities on Chinese social media because you have them so engaged.

Matthieu David: But don’t you feel that doing so many things is actually slowing your possible of partnerships with event organizers? Because you are also organizing events to work with a social media agency. Because you are managing groups with AI and so on. Doesn’t it – to integrate vertically aren’t you a threat to actually many other players you may work with?

Greig Charlton: So, it’s an interesting one, because yeah one I think we have definitely been accused of before, of not focusing enough on the core business. And I think that’s a valid point. My argument is always that, if we focus on ticketing only, you are only ever going to make a certain amount of money, and you are going to have to – none of our competitors are making money, we’re the only ones. They are all hemorrhaging money. The thing is that – about out competitors or can we work with the promoters or whatever – We work with every single promoter we want to work with; we work with every single vendor we want to work with.

In fact, we even take work with the vendor you’re promoting directly and then distribute it to our competitors. Now one of the reasons for that is because we can do it all from end to end, we can do everything. And when we are talking about creating events, none of our promoters really care too much, because of we never really in their space. We’re not – none of our promoters work in this way, they go okay, I am thinking about a year in advance. Why do I need to bring in? Which artist do I need to negotiate with now?

Whereas we look at things a bit different. Do we look at what do our communities want? What type of event do they want? Which artist can we bring in to slot into that? So, therefore, we have to work with a lot of our promoters. For example, some of the events that we work, we do, we work with our promoters it’s just under a different brand. And the fact that we are building at this community that we can then use for them is the sort of sweetener as well because they’re thinking, okay the larger 247 communities get, the more we can leverage them for our own events. And it’s this sort of circle that we also help each other.

Our competitors, for example, you know our biggest competitors, we have other competitors we all work with them, we all work with – we’re supplying tickets, they’re supplying tickets to us, it’s all there because everyone is focused on their different things and we are no real threat. Because for example, Dharma, they focus on everything; they do every single part of the band and such and such, Whereas, we really only focus on the things that we know our user is going to want. Because there’s no point in putting up an event that is never going to sell. Just in the hope that someone is going to find it. So, what we try and do, is we look at our interest-based community on Chinese social media and go okay, what do people want. Let’s go and get that and then build up the community around it.

Matthieu David: So, to summarize from my understanding, you are the software processing payments with Alipay, WeChat I believe, maybe credit cards as well.

Greig Charlton: That’s right.

Matthieu David: So, this has been very competitive and you don’t want to stay here. Then you said we are going to create an interest-based community on Chinese social media. And to create a community, you plug like an integrator to be able to advertise on those events you are supporting and creating WeChat groups mainly or only I don’t know – where AI robots are going to interact with the groups; clean the group sometimes to say ‘hey, stop spamming’; also pushing some information about specific events in the category. I saw some events on your website to explore the city of Shanghai for instance. So, in this group that you would push job events and talk about this event. But only pushing about events; only talking about events. Not talking about the news; not talking about anything else. It’s purely about activities. Am I right?  

Greig Charlton: That’s right, so some of our groups, that we call informational groups; concierge groups and some of the groups are more of the community social; some interest-based communities on Chinese social media. So, the informational groups; the concierge piece we call them, they’re generally sort of like, ‘I want to see this event, what time does it start? Can I take my kids etc, etc’ and that’s the information that gets put it there? Whereas some of our groups, in fact, more of our groups are more about actual information in general. What’s going on with entertainment in general? Who might be coming; gossiping around and what that does, it helps us engage our users a lot more than just, for example, waiting for another promotional piece to come in and is that actually the hardest thing?

That’s sort of next level and that’s where we’re going really now. Now we have the basis of being able to form this community-oriented ticket platform in China and to bring people into the community. People understand what we are doing and they work with us in that way. We now need to make sure that we are engaging on a genuine level. Because of the difference and I think the advantage that we have is that people look at us and engage on its own genuine level. They know we sell tickets; they know we make money that way; they know that all are going to get promotional stuff. We never hide away from the fact that that’s how we make money. And we also never hide away from the fact that we generally do want a genuine relationship with the user. That’s what we try to do.

So, for example, we look at our competitors and you have a promotional post. This post is about this event, go and see this event. Everybody knows that the promoter is probably paid money for that.  Or they have done something to be able to get that. so, therefore users sort of look at it and go eh! I don’t know if I want to go to that and then they will look around and see whatever. And then you have the more convivence and more social sites and apps, where they try and monetize by saying ‘hey, look at this amazing new concert, oh, by the way, buy this.’ But people aren’t there for that.

So, therefore, they go, oh actually I don’t know, I don’t know if I want to transact with you, because I am there to be social with my community or whatever. So, they have trouble monetizing. Whereas we see in that middle where we say look, our relation with you is because you probably bought some tickets or because one of your friends has referred you to us. You are in one of these groups because you used the information or whatever. You know that the information coming through to you, some of its going to be promotions, some of its going to be to go seeing an event. But you also know that we’ll only ever show you the stuff that we think you are going to be genuinely interested in.

And we have had problems before where our AI bot has become a bit mad and had sent links or content into groups that shouldn’t have got that specific content, and it’s bad because people are like, ‘wait, hold on a minute, the deal that we had was that I will look at the stuff you do, and then I will interact with you. But the stuff you are sharing to me have to be of interest to me.’ So, we just have to be very careful about that. but that’s what we are and that’s why we are very careful with it. But that’s obviously the challenge as well because we need to make sure of that, but making sure that we’re still connecting customers with entertainment in China and keeping this genuine connection.

Matthieu David: That’s a big challenge to be able to scale; finding patterns; making it in a scalable way and still being genuine. So, I understand that you are mainly interacting with your community through WeChat groups. How about creating these interest-based community on Chinese social media? Are you communicating on Weibo? On WeChat channels, your program, are you plugging into another website, which is actually selling activities, JianPing and others? Like being an integrator? Could you tell us more about how you create a community? I understand how you moderate, but how do you create it?

Greig Charlton: We have various ways. We have an affiliate network; we have ticketing and we have a promotion; marketing within our affiliate network. So that we help other websites in that to sell tickets that allow them to make money for themselves. We are also able to leverage their marketing side. As you said, we work with Weibo, people like that. so, we provide them with the events and experiences. We also take them from – take stuff from them as well.

And one of the things that we do is, you can basically get into our interest-based community on Chinese social media within three ways. You can buy something from us and after you have purchased you will get – or within the purchase cycle, you will get a few of our codes to join our groups. Probably, with specific people that going to that event and then they are converted into interest-based communities on Chinese social media after the event. The second thing is that you can organically be brought in, So, one of your friends in the group say, ‘hey, you need to be a part of this group, because of XYZ.

And the third way is where we advertise these groups, not as like an event. So, we say, ‘hey, here is a list of interested based groups that you can join; you can work and you can interact with the people that have the same interest as you’ and we moderate so you don’t have to worry about all that.

Of course, the thing is that with WeChat you’re obviously limited to certain things, you can’t do a lot of things. So, for us, the next step is pulling all the good bits from these communities and then creating our own community-oriented ticket platform in China, bring them into our own ecosystem and creating our own app. That allows us to be able to leverage the fact that these communities do want more stuff.

For example. They do want to run their own communities. That’s the dream that is able to help community leaders, who are already doing a lot of this stuff in the communities. Self-moderate and be able to interact with their communities in a safe place, to allow them to be able to like incentivize their community with the early access to things; group buys and all these different things that you can’t really do in WeChat. WeChat groups are always going to be a very, very important thing for us.

To bring new users, to keep them engaged, obviously, every single person in China uses WeChat however many times a day, there’s a big list of things that would be a big part of your marketing and your user operation site. But we feel that we offer something more, that’s why we need to pull people into these interest-based communities on Chinese social media and offer them something that they want. The thing is how we get people to use our app. You give them something but they need and they know what they want. That’s the idea of where we are going next.

Matthieu David: You talked about the affiliate program. I understand the affiliate program from the west. You put code from Google on your website. Because the west is based on websites, they are on the search, but China is not, it’s based on social; it’s based on WeChat. So how do you build your affiliate program based on the fact that China is organized in a very different way?

Greig Charlton: Yes. So, there are a couple of different ways. We connect even with Meituan. It basically means that there whoever’s showing that data or showing that thing, they can either be their own ticketing site. It could be like whatever ticketing and it’s us behind the scenes, running it all and making sure that everything is going okay. Or as some partners prefer, they prefer that such and such ticketing powered by 247.  And so, allows us to be – then we just use our API; we have got a very good API that allows us to be able to share customer data for event promoters in China but also kind of take –

Matthieu David: I see. You are talking about a big platform that has its own API and not like the smaller or medium-sized website. Where they would put a banner and actually get a referral fee which is usually between eight to fifteen percent in the West. I see I understand it’s much more massive through API.

Greig Charlton: Yeah. and also, for us as well it’s important that the people within the community have an incentive to be able to share that as well. So, what we do is that the site is capable of producing specific QR codes that link to you. So, for example, if you are really interested in basketball or something like that, you then would be able to create a QR code about the certain event and anyone that then follows that and buys something, they become part of your friends or the part of your community on the site or on the mini program. And you also get a kickback. So, you are also able to earn either money or status or whatever you prefer.  I think it’s like a lot of these community leaders they don’t know, if you said to them influencer or KOL, they have no idea and they are not interested in money.

What they are interested in is being seen as someone that – as a leader in the community and furthering their interest in what they are wanting to do. So, what we do is we based on things people look. We can – do you want to go backstage; do you want to get early access to events? What do you want to help you and then we will – because of our relationship with promoters, we are able to do pretty much anything they want; and it builds that really strong relationship between us and the communities because we are not just saying ‘hey, we’re just going to pay you something and whatever, We are saying ‘hey, look we can actually work with you and we can help to do the things that you want to do and you can help us by doing this’. So, it’s a very open; very transparent relationship we try to build.

Matthieu David: I feel that you are dealing with people who are maybe offline organizing events and so on, who may not be very knowledgeable about how to get people from online and How to interact with QR code and so on and you are supporting all, everything linked to the digitization of the event.

I like to go step by step, deeper into the technology you are leveraging. You mentioned in another podcast that you have raised money – actually something I didn’t mention is that you have 2.5 million USD according to the country base and other websites – 2 to 2.5 million in total. And one of the objectives of the recent fundraising was to build an AI. And I feel the AI is already at stake; it is already working for the interest-based community on Chinese social media. I’d like to understand how you built that and how WeChat is allowing you to create a bot within their platform? So how does it work? Is it a profile that you have made it into a bot within the profile that creates the group? Which is actually becoming a bot or is it something more standard that actually WeChat is also resizing with an API?

Greig Charlton: We have individual accounts that we – So, the thing about WeChat is that if you try and maliciously do something if you try and bend the rules or break rules or find a loophole they will find out and they will close you down. What we do is that our bots are there purely to make life better. They are not there to promote stuff; they are not there to sneak into the groups and be malicious or like sense them or whatever. So, our relation with WeChat is one of the – we are doing this to help these communities and these people, and as long as we stay within these rules, that’s okay.

So, what we do is that we – our AI basically does a few things. I have mentioned before it stops span, so that’s something that WeChat is very interested in. so it also helps people who come into the groups to understand what these groups are about. So, they go in and the first message they get is ‘hey, this group is about this, and they can interact with the bot and say okay, or ask questions, it will even scrape our database so that people can say, what do I want to do, or what should I be doing this weekend?

Right now, it’s not clever enough to understand yet what you specifically want. But even you can ask questions so it can drill into things that you might find interesting. The hope is that one day we will be able to create user profiles and then if people want us to obviously, we have to work within the confines of what people want to share. It’s not miraculous that we can take data that they don’t want to give, but if you let us, we can then create profiles that are around you, to not just say what your interests are, but even look at your circumstances.

There’s one of the things that I think a lot of people forget is that in this world especially, the focus is our users from about twenty to thirty years old. In fact, eighty percent of our users are about twenty-five to thirty.

so, what we try – these people are in flux. On Wednesday they might like to go clubbing; on Friday they might like to go for a nice dinner or a nice event with some work colleagues. But they also have a kid, so on Saturday, they want to go to kids’ barbecue or whatever. Now, what a lot of people forget is that that doesn’t – by just looking at one of those things you go, okay this person really likes clubbing; therefore, let’s give them loads and loads of clubbing stuff. Of course, this person maybe likes clubbing like once a month. They forget about everything else.

So, for us it’s about making sure that we understand not only the user and what they’ve purchased, but also their interaction with the WeChat groups, but also their circumstances and learn about what they like to do on weekend; what did they like to do on Wednesday; what they like doing on Monday. Whatever it is.

Now with AI, we can build up that profile with permission. And therefore, when you ask Tipsy or when you ask one of the AI bots ‘what should we do this weekend’ what we hope is that without any other information from you, we are able to provide you with three or four choices that you might like. Then be able to share that with your friends. So even with Tipsy; or with our AI bot, although it’s in the groups with them, our own created groups. You can also invite it to your own group. So, it allows you to be able to leverage our database, when you are deciding what you want to do with your friends or family or whatever, from wherever you want to do it.

Matthieu David: I see. Because actually on WeChat, Weibo and all the social platforms, you’re socializing a lot with people you already know. Only Twitter makes it possible to socialize with people you don’t know. Here with the groups, you are enlarging the circle of people through a specific topic; through a specific interest. A bit like a meet up, but purely online. To talk about your AI robot you have built. Is it something you do through the API of WeChat, or is it something you actually have a robot going on the platform and through actually the window of WeChat, interacting directly? How does it work in terms of development?

Greig Charlton: We do both basically. We interact with the API and quite a few things, like for example; they will pull the data, the general data that we use an API.  And then we also have created ways of interaction that don’t just use the generals of WeChat as a user. Again, like as long as you go within the rules, you are fine. Whatever people say, oh well you won’t be able to do it. You are able to do it; you just have to make sure you are following with the rules and you are also asking for the feedback.

Matthieu David: I see.

Greig Charlton: It’s very much like a cutting edge of what you can do with customer data for event promoters in China. So, it means that we are very open to what we do. In fact, even with our mini-program, we put certain things into a mini-program that WeChat was like -look, this doesn’t really fit where we like things to be so, we’d have to take the reject things and take things out. We never try and – because so much takes place on WeChat, we never take chance with the fact that WeChat can turn around and go, hey actually you’re not allowed to use the mini-program or whatever, so we’re very careful with that. And then we also have another AI that we built, which is on the recommendation side of stuff. That pulls in all the data from the other AI, it pulls in all the data of purchases and interactions on the site;  and the mini-program and the groups and the official account and all of these different things, to be able to like show you something different when you go on to sites, or onto the mini program.

Now the hope is that fairly soon next six months or a year that what you see on the mini-program; or the site or the app is completely different from what your friends see or what I see. We personalize everything, so again, our whole thing – and this is why sometimes our investors are like; don’t do that, because the whole thing is that, we want people to spend less time actually searching for stuff and interacting. Want them to spend more time going out and doing stuff. Because if you are doing that, it means we are doing our job and hopefully means you are going to come back and build loyalty with us.

So just because we are not going to create something to go down a rabbit hole and then continuingly kind of can’t find your way out, and so many choices that you kind of get confused. A lot happens in the business. We are really looking at it from the point of view is that at some point we should be able to narrow down to something like four or five choices. Then you can make that decision and then you can go out and enjoy yourself. Rather than sitting on the app or looking at your computer trying to find what you should be going to see.

Matthieu David: One element which is also very specific, very unique in the business you have built is that most of your users are Chinese and they used to be most of them foreigners at the initial stage in 2015 when you started. So how did you see the change from mostly expat foreigners in China to local people – Chinese? I think it’s like now eighty-five percent of your users or customers – I don’t know which one but basically users, end customers which are Chinese when in 2015 it was 90% of them where foreigners.

Greig Charlton: Okay, so it’s about eighty percent. I think in August about eighty percent of our users were Chinese and around sixty-five percent or more were customers were Chinese. So, you have a slightly different conversion rate for Chinese and for foreigners. The plan you know from the very start was what we felt would drive users more than anything, and this is why when you talk about ticketing as such an interesting place is that people will go to events. Therefore, wherever you have advertiser events and wherever you’re actually transacting about those events of those tickets, people will go to.

So, for us the strategy was to build the relationships with promoters; show them what we can do with customer data for event promoters in China, allow them access to that data, because no one else is doing that, and help them get better. So, we sign long-term agreements, it means that we can work with promoters continually over months and even years. And you help them get bigger and better and allow us to get bigger and better, and that was the strategy. So, at some point, you have to then move towards Chinese because you are going to saturate the market of expats and I think we got to – I don’t know what we are now, but 70 – 80% market share are foreigners.

So, for us it was like, then we get better events and then we learn how to market to Chinese a lot more and because of our offering, which was policy and it was about serving our customers better than anyone else. More and more we started seeing, more and more, for example, internationalized Chinese. People that were interested in what our offerings were, because remember, most of our events on our site are mini-program, they are foreign IP; foreign promoters; international promoters. The makeup, I think about ten percent of the events nationally. Which is still something crazy. Thirty thousand or forty thousand events a year.

 So, for us, it was like building up the community-oriented ticket platform in China and as we built that up and actually got a better reputation, we started getting exclusivity to certain events that were very sort of Chinese and we started getting more and more Chinese users. And as we got that we just made sure that we offered them the things that they needed to see.

So again, it was getting them into the community; again, it was making sure that they were getting right things promoted to them; again, it was making sure that we were getting the right events and that’s obviously a continuous struggle because you are against the other bigger players who would just pay money. But most of the promoters understand, that if you come along with lots of money and buy lots of tickets, it doesn’t mean you are going to get people at your event. And the biggest thing for promoters is that they need to see; they need to show their backers that they are getting the right people because a lot of events, for example, they might not make too much money on ticketing, but that will make a lot of money through sponsorship, etc. And the brands don’t care how much money you got from the ticketing if they spent loads of money on you, they care about their demographic who are seeing their brand.

So, the promoters are often not just about someone coming along and paying lots of money for the tickets. It’s more about actually making sure that the users and customers that are going, fit brands that they work with.

Matthieu David: The last topic I would like to talk about because I think it’s remarkable as well on your story is about – how you raise money? When did you start to raise money? How you started the business and when you started to raise money? As a background I feel, you are connected with China Accelerator, their ecosystem and you got investment from Geoffrey Handley, we actually interviewed before with Haitao capital. Could you tell us more about how it worked for you?

Greig Charlton: So, in 2015 we were bootstraps until then. And then there was a sort of the change in us. So, I and co-founders and some of the early employees, we sat around in 2015 and we just won a big client. We had done something pretty good and it was way above our way. We sat there and thought to ourselves what we do here. We have got to roads that we could go; we can stay like this and maybe a nice little business, and make a little bit of money with it, but it’s not going to get big. It’s just going to be a normal business – or we can look at raising money. Because we feel that we have got something. At that point very few of our customers were Chinese.

So, the daunting sort of things like – what investor is going to look at us in China and think okay, yeah, I am going to go for the expat audience, when you have got however many millions of Chinese within your attachment. And this decision was made within the group that let’s see what we can do in a year. Let’s see whether we can raise money in here; what we can do. So, I went off to Rise, like Rise a conference in Hong Kong in 2015, end of 2015 or whatever with the sole purpose of trying to find someone who would listen to me and to give us a little bit of cash. We didn’t need a lot we knew that we just needed something to test the market. And that’s when I meet William Bao Bean from China Accelerator, and then I had a conversation with him and I came back to Shanghai and I had a bit more conversation, we entered batch 10 of China accelerator which was July 2016.

And then we just I think went crazy, because what we got was – we got some money, a few hundred thousand dollars the US or something to help us get some market feeling to expand the product. But more than that we got so much of advice; so much coaching; so much mentorship that allowed us to be able to really drill in and see what our product should be like and also tap into so many different channels with their help.

When we came out of China Accelerator, we were a very different company. We had already raised another three hundred fifty thousand US to kind of expand. We were then seeing that our Chinese users are getting more and more, our relationship with promoters was getting much better. That’s when the point was like okay, we will raise a little bit more money. We will try and focus on Shanghai and we did a little bit in Beijing, we were not really anywhere else. And we will focus on making sure that we can expand our reach within promoters; we can expand our reach within our Chinese audience.

That’s what we did basically, we leveraged again all the relations with China Accelerator and then it got to the year 2018, again we were at the crossroads. We were like we can become profitable now; we have enough users we have enough transactions to become profitable. Or we can get to the next step, and that was when the communities were really starting to start doing things.

Our retention rate was much higher than anybody else. We have identified certain channels, that are the loudest to be able to bring users and then convert them very quickly, a higher transaction value. And also keep them within the communities. So, we felt, this is the point where we jump again and then yeah once we started working with Geoffrey and it was instrumental in a lot of decisions that we made. Obviously, he invested in us and along with Artesian who is a China-focused Australian venture capital firm and also SOSV who run China Accelerator and plus about four-five other Angels that wanted to be part of our journey.

That was in September last year, since then we have just grown a lot. We have gone to three hundred thousand active users on the site, back up from about thirty thousand I think this time last year. 2019 has been a year I think for everyone.

I think a lot of big events haven’t happened, because of certain things. But I think we were quite lucky in that, we diversified enough at the start of the year into a smaller event but more of them that allowed us to be able to keep growing the way that we needed to, to go to the next-gen. Which is happening now. We are raising money again now to go to the next level. We have identified some really great channels that we want to double down on and the money-raising now is all about creating,  As I was saying earlier, pulling all the great things from the communities into our ecosystem, while still helping our promoters and venues and our organizers to reach users that they need to be successful themselves.

Matthieu David: Thank you very much for sharing with us today. I hope you liked it, and if you are listening to the show, please if you liked it, like it online as well. With stars and with comments on any apps you use. I mean, iTunes, Shopify or Ximalaya. Thanks, everyone for listening.         

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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