Death to scalpers

The winning team, qcue, from the University of Texas at Austin, helps promoters price events and resell tickets.

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FSB co-sponsored Rice University's prestigious national competition for the first time this year. The winners took home a total of $327,000 in prize money, plus priceless bragging rights. Meet all 36 semifinalists below. Photographs by Evan Kafka for FSB.

(FSB Magazine) Houston -- First place team: qcue
What it does: Helps promoters price live events and concerts and resell tickets
Founders: Andrew Mills, Barry Kahn, and Jitendra Dalvi
School: University of Texas at Austin
Launched: August 2007

Barry Kahn grew up hearing how his father, Richard, went bust as a concert promoter. He had been thrilled to book Bob Weir, the rhythm guitar player for the Grateful Dead, to play a club in Washington, D.C. But then the club's owner booked the Dead's famous frontman, Jerry Garcia, to perform a few days before Weir - who then played to a nearly empty house.

Like Kahn's dad, many promoters have trouble selling out live events: About 55% of the tickets go unsold. Kahn's startup, called qcue, hopes to slash that surplus by helping ticket sellers properly price their products. "While getting my Ph.D. in economics, I got really bothered by inefficient markets," says Kahn. "And the ticket market is as inefficient as it gets."

Qcue's patent-pending software helps promoters set and adjust prices for concerts and live events to clear their tickets, much as airlines have done for years. Qcue aims to cut out the middleman - including companies such as StubHub that sell unsold tickets, and scalpers - letting the promoters keep more profit for themselves. Scalpers, for example, have programs that can hack into sellers' systems and buy 1,000 tickets at a time. Let's say that scalpers start buying up $75 Springsteen tickets the moment they are offered for sale online. If, ten seconds after they go on sale, the tickets are being purchased at a higher rate than expected, qcue's software will instantly note the strong demand and raise the price of the tickets to, say, $200 each. The promoter, not the scalper, will end up with most of the profit. If demand eases, the software will drop prices to move the inventory.

Umesh Verma, an angel investor in Houston and a judge of the business plan contest, wonders whether qcue will be able to scale: "There will be vast volumes of transactions in a short period of time. Pricing algorithms need testing to make sure prices don't skyrocket or drop uncontrollably. There will also be security issues." Another concern: StratBridge, a software firm based in Cambridge, Mass., already offers a similar service directly to teams such as the Boston Celtics and is moving into the concert market.

Qcue is releasing a beta version of its product, qcue Festival, which is intended for festivals, nightclubs, and other smaller events. "We propose moving from 1,000-person events on up," says qcue CTO Andrew Mills. "No one starts out doing a Jimmy Buffett concert." To top of page

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