On May 13, 2016, the first dynamic ticket priced by Dynamitick was printed. It was the ticket for Money Monster at Plinius Multiplex in Milan.
Three years after that date, historic for Dynamitick and important for the entire Italian entertainment market, our CEO Federico Quarato gives us 10 answers about Dynamitick.
Some time has passed, but do you remember the first interview as a founder of Dynamitick?
The first time I talked with the press about Dynamitick was during the period of acceleration in Luiss Enlabs. An Ansa journalist heard about us and was intrigued by our business idea. At that time we planned to bring Dynamic Pricing to the ticketing industry and mainly to the sport, starting from the awareness that Italian stadiums were on average empty for half of their seats and that a dynamic pricing model could bring back a part of the fans to the stadium and better satisfy those who were already there. This was the case in 2016. In a real stadium, we got there, in Serie B with Virtus Entella, but so far football has not been our main field of application. A certain elasticity allowed us to take our solution to market segments that we realized, as we went along, that we were more ready to accept our technology.
How different is this Dynamitick from the one you imagined at the beginning?
Like so many “startuppers”, after the first round of investments in which we raised 493 thousand euros, I thought the magic formula was to hire people and see the numbers grow exponentially. But then I started to crash into the wall of errors that inevitably occur, and in the case of startups, sometimes risk costing dearly. Among the many lightnesses of the startup phase, there is the overestimation of the traction and a certain commercial bravado that clashes with the reality of the sales funnel. In our case, for example, the sales cycle is very long: a situation that has led us to spend several weeks without closing agreements, without invoicing. And in that period, the risk of entering into a negative spiral fuelled by dissatisfaction is real. I was thinking of vertical growth that didn’t happen. But with determination and thanks to our daily work, at a certain point, we managed to turn the wheel, setting in motion a slower, but steady and structured, growth process. In 2016 I thought we would be more successful in the world of sport, a market where I had not reckoned with the overwhelming power of ticketing companies that did not welcome us as a strategic partner but as a potential disturbance. When I tell my American and European competitors, they laugh behind me. On the other hand, we have signed agreements with some very important amusement and water parks in Italy, a growing market where we are working with capable partners and stimulating customers.
Unlike many startups, changes of direction, Dynamitick is still there after three years.
The mortality rate of startups in Italy is certainly very high. Dynamitick has passed a critical phase, that of the first three years, but the time of challenges do not end here. We blew out the third candle with the knowledge that we have a solid team and a strong technology, a situation that in the long run is proving us right in the market. It hasn’t been easy to get here, but we are working towards more ambitious goals.
In other words, what does Dynamitick do and what are your target markets?
Dynamitick relies on proprietary technology based on artificial intelligence algorithms that allow for price discrimination in different market segments. To simplify, our business can be divided into three lines of business, the first more traditional related to the advice we give to companies that want to change their pricing models, the second is the most important one that involves the application of our Dynamic Pricing integrated to the technological environment of the customer, the third is the one that involves the construction of ad hoc software for the management of pricing of large companies that need a customized solution. Today, our main market remains ticketing, in which we are the leader in Italy with a turnover of dynamic tickets that in 2019 will reach about 45 million euros. In the world of entertainment, we work with amusement parks, water parks, theatres, cinemas and to a lesser extent in sports. But we are also developing an important customer portfolio in tourism. This is a much more mature sector, in which it has been more difficult to affirm our technology.
Now, what are you aiming for?
We still have a lot to do in the markets where we are already present, but we also have a great interest in testing our technology in sectors such as large-scale retail, where the perishability of the product is a variable on which to make dynamic pricing at the supermarket, and healthcare, wherein private healthcare spending out of pocket increases, along with the attention of families to the price of non-urgent health care services. In our opinion, therefore, Dynamic Pricing can have potential in this sector and we are closely observing the development of similar technologies overseas. Of course, we are also thinking about foreign countries. One of the great challenges for a startup is to get the nose out of the domestic market. The investments that you can collect in Italy are not always enough to think of an internationalization strategy and to compete with their competitors outside the national borders, but we have some ideas, maybe with the next round of investments or more slowly relying on organic growth of the business.
After three years of experience in the sector, you have published the book Dynamic Pricing. Logics and tools for variable price structuring, written by you and Massimo Dell’Erba, another founder of Dynamitick.
Talking with the professionals of large companies in entertainment and tourism we realized that we have become a reference point in Italy when it comes to artificial intelligence applied to revenue management and price discrimination. This makes us very proud and has led us to publish a streamlined text that wants to be the foundation of this subject, at least in Italy. We must say that it has given us a lot of satisfaction and, above all, we were pleased to find it on the desks of potential customers, without having sent it before. This confirmed that sharing your knowledge and know-how can be a good way to get in touch with potential customers.
Compared to when you started, does the market seem to you to be more ready to accept Dynamic Pricing and more aware of what it is about?
Surely a lot has changed. Before when we approached a customer, especially in the entertainment world, the answer was “I don’t know what dynamic pricing is” or “it seems to me a suitable thing in the United States, futuristic, but not feasible today”. Now when we sit at the desk of a potential customer in this sector, it’s hard to imagine that he hasn’t already read about it. They often also know some of our international competitors or have read about what we do. There has certainly been an important step forward in the awareness of the potential of an instrument like ours and it is the result of the great work that some companies, including ours, are doing to grow the culture of dynamic pricing and revenue management in general.
Over the years you’ve met many potential customers, is there an episode that has remained impressed?
There are many of them, of course, and they’re also a lot of fun, but it’s better not to tell them about them. But I remember when the marketing director of a large enterprise decided to listen to me in Enlabs in Rome, where we worked then, giving me time to get off the elevator. And it’s not to mimic the legend of the elevator pitch, but because we were physically in the elevator and in those twenty seconds, from the third floor to zero, I tried to intrigue him. I think I made it, not only because three years later this company became our customer, but because when I got to my destination he said “well, accompany me to the car” giving me a few more minutes to give strength to the concepts that I wanted to pass.
What weapons do you use to convince a customer to adopt your technology?
Today it’s easier than three years ago because to convince a customer I don’t have to do too many pindaric flights. Depending on the market in which it operates, we have a case history with numbers that testify to the effectiveness of our technology. Today I speak much less and I get more data to speak.
How do you see Dynamitick in three years’ time?
It’s hard to answer this question because, looking back, three years ago I couldn’t have designed this kind of future for us. Three years for a startup is really a geological era. Having said that, I hope that, wherever we are, we will have achieved a part of the goals we are setting ourselves, which are very ambitious but for which we will continue to work hard.