Discotech: OpenTable for the $27 billion U.S. nightlife market

Ian and the team at Discotech have developed an innovative, revenue-positive business. The team has disrupted the large nightlife category and is poised for growth. They are great at UI and growth hacking. They have also pivoted well to include nightlife ticketing.

Matt Thompson

SVP of Skyview Capital, Member of Tech Coast Angels

Hi. I just invested a tiny amount as I just got back from Disneyland yesterday and over spent on a family vacation and got an email today from wealthy retirement about how to get into start ups and felt I had to invest something. I also invest monthly in an REIT. Please don't be offended but I would suggest some sort of platform that you can see who is at the club where you are and try to have a chat with people to make it a social experience as well, everyone who uses your app checks in and they have photos and a description where you can meet new people at the club as well as seeing where your friends are. I would suggest coming with heavy marketing at the colleges through social media as well as the best college clubs. I work in the student housing industry and the kids have tons of money and clubbing is a major player in the college life. They all want VIP. Gorilla marketing on campuses is how we do it as well as college housing fairs and internet google clicks. I know it's 5 employees right now but you could do promotions through social media such as whoever shares the app with more friends gets a free bottle or free shirt or entry or something. Well I wish you the best of luck and will be using the app on my next trip to Vegas. I really hope you expand into every city. You could just recruit people from every city to go into every major club and sign them up. Base what you pay on the average amount you make on smaller venues and give them a sign on bonus for each club signed up. I'm sure you guys probably already know all of this. But I had never heard of your app and was in Vegas struggling to find what was going on and had to go to every clubs website. This is why marketing is critical until it's a household name. I will stop rambling now. Hope you all have a great evening. Warm Regards, Amy

Amy Moreno

Boss and mom. Dabbling in small investments, REIT's, and 401k. Just started investing last year. Very new.

Ian Chen

Co-Founder and CEO

- UC Berkeley'08 (Industrial Engineering and Business) - Consultant at Bain & Co - Private equity associate at The Gores Group - Viral YouTube Video https://www.youtube.com/watch?v=j75eM-hCHUM

Investor Q&A

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What does your company do?

Discotech is a free mobile app and website that makes it easier for customers to discover events, reserve VIP tables, purchase tickets, and gain free guest list admission to nightlife events in different cities. We are the OpenTable for Nightlife. Our service makes it easier and more transparent for people to explore nightlife events without having to know a human club promoter. With Discotech, you can now browse through over 1,000 clubs in 50+ cities and enjoy the night seamlessly.

Where will your company be in 5 years?

Realistically, we would like to sell to a strategic acquirer within the next 3-5 years. We believe there are 3 channels that would make good acquisition channels: 1. Existing reservation platforms (Booking.com, Expedia, OpenTable, AirBnB). 2. Ticketing companies (EventBrite, LiveNation, AEG AXS). 3. Hospitality/Concierge Companies (i.e AMEX). Before this happens, we would like to continue to scale our venue partners and user base. We need to go from 400K users to 4M+!

Why did you choose this idea?

We built Discotech to solve a problem that we were facing ourselves when we were trying to go out. In our mid twenties, we were frustrated with dealing with club promoters to get access to nightlife venues. We believed that we could leverage technology to create a more seamless way for people to go out, and Discotech was the result!

What are you building?

Discotech is a platform / marketplace for nightlife experiences. We have developed 3 platforms for distribution, our iOS app, our Android app, as well as our web application. We are also building a B2B white label solution which enables other companies to sell our inventory to their customers. Our goal is to partner with other travel, hospitality, and ticketing companies to help us sell our nightlife inventory to additional end customers.

What’s the problem you’re solving?

We are tackling the inefficiency and non-transparency that has been plaguing the nightlife space. People currently have to go through these nightclub promoters, traditional middlemen who are very hard to get in touch with and aren’t professional or very transparent when it comes to pricing. Our app and website makes it a lot easier for our customers to get the information they need, such as accurate pricing, floor plans, menus, etc. Ultimately, Discotech makes it easy for customers to buy tickets, make table reservations, and get access to guest lists without needing to go through human promoters. Discotech also leverages our scale to negotiate exclusive deals such as ticket discounts, VIP table packages, and guest list perks to pass onto our customers. We save our customers money, time, and effort. I think our customers appreciate this because we have a 4.9 star review on both our iOS and Android apps.

What problems are you solving?

Not only are we a good solution for the end customer, but we also make things a lot easier for the nightlife venue. Club owners/operators find promoters to be a pain point. There are a lot of them (promoters), they’re highly fragmented, there is high turnover, and their loyalties are not steady. We make it easy and streamlined for the club to source customers without having to interface with so many different middlemen. Discotech is a non-biased marketplace, and we are much more professional to work with.

What do you have that traditional promoters don’t?

There’s a lot that we do that traditional promoters cannot do. One of the main differences is access to data analytics that comes with our app. We are able to see trends and analyze data based on which DJs are hot and which shows are successful. We can do a lot more for the club in terms of these data analytics but we can also help them as a CRM system because we can reach out to our customers via push notifications which clubs cannot do themselves.We also work with clubs in Los Angeles to provide an exclusive loyalty platform where our customers are able to accrue loyalty points and, just like airline miles, exchange them for rewards. The clubs allow us to do this because they trust that we can keep accurate tabs on customer spending whereas a human promoter may not be the most trustworthy.

How will you incentivize referrals?

We don’t currently have a referral reward system but it’s something that is very high in our to do list. We really want to go the Uber and Dropbox route where customer can get rewards or get incentives for sharing Discotech with their friends and also for inviting people to the party and doing different actions on the app.

How did you guys get started?

The idea for Discotech really came to us as a team. We’re three guys from UC Berkeley, friends since college. None of us worked in the nightlife space so the idea came to us from the customer’s perspective. I think four or five years out of college, we were convening together in Las Vegas and we had spent a couple of hours tracking down different promoters and talking to them. We finally agreed on a price and then on the night of the event, we showed up as scheduled and we were told that our promoter had misquoted us. We don’t know this was an intentional bait and switch or if the promoter had just made a mistake.Either way, we were in a really tough spot. We actually ended up paying the extra amount that night but all the guys were just furious. We weren’t really having fun because we were bitter. While we were having drinks, we were just talking about how bad it tasted and it was really that experience that inspired us to search online to see if there was a company that was already solving this problem so that we as customers wouldn’t have to deal with this again.It was during that exploratory phase back in, I think 2013, that we saw there wasn’t anyone really solving this problem in a meaningful way by leveraging technology. We decided to do this as a side project at first. We built a demo for some of our friends and then got a lot of approval from the big nightlife players in Los Angeles where I was based at that time. It was from that point, we realized that this thing had legs and we quit our full time jobs and the team moved from San Francisco down to LA. We’ve been hustling ever since.

Who are your customers?

Initially, when we started the app, we were focused on solving bottle service only so that target market was much smaller--typically wealthy males who spend a lot of money. We’ve since democratized the product, added on prefilled ticketing to our app, and also VIP guest lists. From there, we now target anyone who wants to go to a club at any point whether they want to get them for free, whether they want to pay for a ticket or whether they want to do the VIP bottle service which is the high-end package. We really make it accessible to everyone. Our demographics are split pretty evenly, slightly more men than women but it’s pretty close to 50:50 now. We see people of all sorts. From ages 21 to 35, I’d say is our target group but really people of all ages.

What’s the market size?

Our address market currently includes: Nightclubs, lounges, bars, music festivals, concert venues, and pool parties. IbisWorld estimates the US Bar + Nightclub industry to be worth $27B domestically. Statista estimates the US Music Events Industry to be worth 8.6% domestically and is growing at 12.2% YoY. While not all bars are relevant to our platform, and not all live music events are addressable either, our overall market is very large in the U.S alone. Discotech is already live in over 13 countries, so the global addressable market is quite considerable.

How do venues use your app?

To get on board the app is pretty straight forward. Once we give them the go-ahead, we simply need them to fill out a two-page venue sign up form which we provide online. The venue provides us with high resolution images that then get loaded into our platform. In regards to getting weekly event info, we either scrape them directly from their event APIs, if they have them, or we have a scraper built that pulls them automatically from their website.

How do guestlists work?

Every club is slightly different but for the most part at a certain time, we provide the club with a list of names for the guest list and that list is literally printed out or the doorman will have it on an iPad and then as customers come in, they’ll get checked off the list and then they’ll be given free admission or discount admission--whatever that guest list perk should be. Bottle service works the same way.

How does your app attract customers?

We offer services that no other traditional promoter could. We have the most efficient, streamlined system out there and we give customers the experience of being treated like high status royalty. For example, in Vegas, because there are a lot of venues, we will actually provide the customer with a dedicated VIP host who will contact the customer and set up a time to greet them in front of the venue. The host will then walk them into the club so that they don’t have to wait in any line. They’re getting the highest VIP experience. At other clubs, we book tables for them. They’re in the system, and then when people show up at the door, they’ll check in with their first and last name and just pay at the venue.

What can you do that traditional promoters can’t?

One thing that we do that a traditional promoter can’t do is actually just sell tickets, pre-sell tickets. The incumbent way of buying tickets would be to go to different websites and checking out the prices and then purchasing them online. We make it very easy to buy tickets in a few clicks. The QR code is stored on the app so you don’t need to print anything out or find it in your email. This makes it very easy since there’s a scan at the venue that reads the tickets that you bought on our app.

How did you guys start onboarding venues?

We launched and started off in Los Angeles. From LA, we branched into Las Vegas which is the largest market in the United States. That was really done through the connections that we made here in LA. For Las Vegas, the team actually moved to a suburb of Las Vegas near the strip. We lived there for seven months. During that time, we on-boarded all the major players in Las Vegas onto our platform. The sale process initially was a lot more difficult. Getting the foot in the door wasn’t that easy when we didn’t really have traction in customers and customer referrals to back us up. Once we are able to get the foot in the door, the sales process is pretty straightforward. There’s really no risk for the club to be a part of our app because we don’t take an upfront subscription cost or a service fee. We only eat what we kill, the same way that traditional promoters do. For that reason, when we make the presentation to the clubs, they’re pretty receptive to us because they don’t really have anything to lose. After we started to get more traction, it became much more easy for us to sign up venue partners. Most of our new venue partners today actually come to us. (They reach out via an intro, or they apply directly via our website). We have also signed up much larger enterprise partners such as EventBrite, LiveNation, Insomniac, and AEG AXS.

What’s the growth like?

You can check out the growth rates in our deck!

Who acquires the user base?

The vast majority of growth comes from organic sources. Word of mouth is definitely our number 1 source of growth. Search Engine Optimization (SEO) is our second largest source of growth, we rank very highly for many search terms on Google. This is due to the fact that we have many venue partners, have a lot of unique content on our website, and because we have been in business for many years. We also acquire customers through paid marketing channels (mostly digital), though this is a smaller piece of our growth strategy now. Lastly, we also throw Discotech sponsored events from time to time to grow our brand and awareness.

What’s the value per customer?

Our average LTV for customers now is between $9-$10.

How much do you guys make?

As far as we know, it’s pretty comparable to what promoters make. Right now, we are much more focused on growing users and building relationships with the clubs rather than maximizing our cash flow. We’ve kind of taken what was given to us, and we’re usually making between 10-15% commission on the traffic that we bring in.On the revenue side, growth has been great. Year over year, I think we’ve grown over 3x from where we were. I think around January of this year, we were probably doing around $100k in gross merchandise volume a month and now, we’re doing over $100k a month. We’ve definitively come a long way and we see that number continuing to grow especially as we gear up to launch our web app which we think will show an increase in our metrics.

How do you plan to grow and expand?

For us, we haven’t really been leveraging digital and paid marketing just because we’ve been very conservative and lean as a startup. We’ve been bootstrapping it. Where we really see the growth coming in is as follows:Continue to invest in the product, building out social features because nightlife is ultimately a social activity. You never do it by yourself; it’s something you do with your friends and the ability to see where your friends are going, invite your friends to events or parties--these are all part of the experience. Building in a referral program is something that we think would supercharge this organic growth that’s really been taking off for us.We want to get back involved in digital marketing and paid advertising. One of my co-founder’s backgrounds was doing that for five years at Zeus which is the online dating site. We think that we can do it in a very calculated and efficient manner. Lastly, we think that hiring the right people to help with community engagement, management, and social media would also be a big help for us because currently, we don’t have the human resources to really take full advantage of that and that’s something we’d like to look into.

Have you focused on specific types of nightlife venues?

We’re pretty agnostic. We like to start with the best clubs, the most popular ones in each city, largely because once you get the big guys on board, that addresses the most customers and other venues will typically follow if you get the big players on. They’ll say, “if you’ve got those guys then I need to be on this app, too.”

What’s the biggest challenge for you guys?

The most important thing for us is getting the users. I think we got the club on-boarding part down, at least for now. I think the hardest thing is just getting the word out, building a brand, and communicating that brand to our customers. Once you have that initial critical mass, things definitely get easier because when you’re discovering Discotech from your friend, you’re much more likely to trust that brand and that product than if you just saw it on a Facebook mobile ad or a Google ad. For us, we want to do things that build a strong initial following and then grows off of that. We want to take the strategy that we’ve used in LA and apply it in the different new cities that we’re launching in.

What are your plans for the future?

There are a lot of plays that we can do that don’t currently exist. For example, a “Hotel Tonight” type of play with last minute deals because ultimately, a club operates very similarly to a hotel. They have a lot of overhead but selling a table or selling a hotel room doesn’t really have any incremental costs for them. They’re all about filling up that inventory. With the right data and the right connection to the customers, we can help clubs fill out, unfold inventory and have dynamic pricing like Uber.We want to incorporate surge pricing based on demand and inventory remaining. I think that is a really cool opportunity that would be disruptive in the space. People might possibly even bid on certain tables with customers being able to bid down or up. That’s something that doesn’t really exist today. For us, we also just want to make it a one-stop shop where people from different countries can get on one app and just make it very easy for them to get information and get onto the platform.There’s actually a few other potential things that we could be doing with the technology that we have. One of them is leveraging location based technology. For example, if you’re on the strip and you’re walking around and we know you open the app, then we know which clubs that you’re closest to. We could send you an exclusive deal or package. If it’s close to your birthday and we know that information, we can ping you in advance with a push notification offering you a special from the club that has birthday specials. There’s definitely a lot that we can do with customer data and location data to help with hyper targeting.

Who are your competition?

We are the largest nightlife specific marketplace / app in the space. Historically, our largest competitor was TableList, which is based out of Boston/NY. However, they have pivoted away from their consumer facing app after they got brought down by their involvement with Fyre Festival. (You can google this pretty easily) They are now focused on building out a back end venue management platform, and we have actually partnered with them as affiliates. Many of our other direct app competitors have closed shop. You can see the competition slide in our deck to learn more.

Tell us about the team.

The team is comprised of three founders. All three of us are UC Berkeley graduates, class of 2008. I (Ian) graduated from Berkeley with a degree in industrial engineering and business, and then started my professional career at Banning Company which is a management consulting firm. My office was based in San Francisco. After two years there, I moved down to LA and joined a medium sized private equity firm called The Gores Group which I believe had between $4-$5 billion of assets under management. Spent about a year and a half doing traditional M&A due diligence, mergers and acquisitions and then from year 1.5 to 2.5, I transitioned to an operational role at a couple of their portfolio companies. Our CTO Ian Bushong is an electrical engineer computer scientist graduate from UC Berkeley. I think he’s a region scholar and he started his career at a company called Ambarella. They’ve since gone public. They do semi conductor chips and software for video processing hardware and their biggest customer is GoPro. Our third co founder is named Mark Wu. After graduating from Berkeley with degrees in business and economics, he joined Zeus which is the online dating company and there, he specialized in digital marketing, user acquisition and search engine optimization. As CEO, I handle most of the business development for the business. Mark who’s our COO does a lot when it comes to design and helps with product management. Ian Bushong, our CTO, manages the product and the technology. We’re bringing on another full time developer very soon who is the former co-founder and CTO of a tech incubated company called Planted that raised over a million dollars. We’re really excited to be bringing him on board because he’s got a lot of relevant experience and we think he can hit the ground running. Then we also have interns who help us with operations and marketing. We also have contractors who helped us with tech development products from time to time as well.

1	1000+ nightlife venues in over 50 cities. Our partners include the largest clubs, concert venues, and music festivals in the country.
2	Over $7M in gross revenue with ~$875K in gross profit in 2019
3	~60% YoY revenue growth in Q4'19
4	4.9/5 stars on iPhone and Android app stores. Over 410K registered users.
5	Recently partnered with a major credit card company to become the nightlife booking solution for their concierge program.

1	1. Economic/Market Risks - Although the nightlife industry has been on a steady rise over time, it is susceptible to broader changes in the macro-economic environment. Because nightlife is often associated with the luxury and discretionary spend category, significant declines to the domestic/global economic health could reduce demand for nightlife spend.
2	2. Competitor Risk - There is a risk that larger reservation platforms such as OpenTable or Priceline could enter into our space. (We believe they are more likely to acquire into this space rather than start from scratch, but its a possibility) Furthermore, Discotech competes with other start ups that are also competing to disrupt the nightlife space.
3	3. Talent Risk - A key assumption to our growth is the ability to hire and bring on talent that will help us improve our product, operations, and marketing. Finding the right employee fit for Discotech takes time, and a delay in the recruitment process could hinder our growth.
4	4. Privacy Risk - Discotech stores customer data on our servers. While we treat this data with the utmost importance and take measures to safeguard this data, there exists risk of data breach / hacking that presents itself as a risk to our business.

Director	Occupation	Joined
Ian Bushong	CTO of Discotech @ Discotech	2014
Mark Wu	COO of Discotech @ Discotech	2013
Jonathan Funk	Investor @ Ocean Road Partners	2017
Jeffrey Ian Chen	CEO of Discotech @ Discotech	2013

Holder	Securities Held	Voting Power
Mark Wu	7,154,089 Common Stock	29.0%
Ian Chen	7,632,119 Common Stock	31.0%

Date	Amount	Security
06/2017	$1,200,000	SAFE
10/2016	$125,688	SAFE
08/2016	$45,000	SAFE
07/2016	$35,000	Convertible Note
02/2014	$400,000	Convertible Note

$100,000	1. Hire full-time software developer to support our development of web application and new features for the app.
$250,000	1. Hire 2 full-time software developers1. Hire 1 full time operations / business development employee
$400,000	1. Hire two full time software developers2. Hire 2 full time operations / business development employee3. $100K Customer Acquisition and Marketing Spend
$600,000	1. Hire two full time software developers2. Hire 2 full time operations / business development employee3. Light Customer Acquisition and Marketing Spend4. $60K salary per founder
$1,000,000	1. Hire 3 full-time software developers.2. Hire 2 full time operations/business-development employees. 3. $60K salary per founder4. $400K Customer Acquisition and Marketing Spend

Class of Security	Securities (or Amount) Authorized	Securities (or Amount) Outstanding	Voting Rights
Debt Securities	0	0	No
Preferred Stock	0	0	No
Other	0	0	No
Common	24,628,771	24,628,711	Yes

Issued	Amount	Interest	Discount	Valuation Cap	Maturity
02/22/2014	$400,000			$4,000,000
07/23/2016	$35,000			$5,000,000

Why you may want to support us...

Why investors us

we've raised $1,806,788 since our founding

Our team

And Our Major Accomplishments

In the news

Downloads

The Nightlife Market is a Mess

Promoters Don't Work

So, We Built the OpenTable for Nightlife

How it Works

Our Customers Love Us

The Largest Network of Nightlife Venues

Proven Revenue Model

User Adoption is Accelerating

Party Like a Pro

Investor Q&A

Financials

At a Glance

Risks

Details

The Board of Directors

Officers

Voting Power

Past Equity Fundraises

Convertible Notes Outstanding

Outstanding Debts

Related Party Transactions

Use of Funds

Capital Structure

Form C Filing on EDGAR

Discotech has a strong close to 2019

Discotech selected as a finalist to pitch at Vator Splash on 10/13/16 in Santa Monica

Discotech CEO interview on NextGen Crowdfunding

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