eBay buys StubHub for $310M!

Hot off the press is the announcement that eBay is paying $310M for StubHub, the online market enabling ticket sales between consumers (some call it scalping!).

This is a natural play for eBay, picking up a company that is well versed in the 'sales enabling technology' space, a company that has been doing quite well.

But it wasn't always easy for a group of really smart guys at StubHub in San Francisco.

The StubHub Founders, especially Jeff Fluhr, CEO, are bright guys who came up with an excellent idea and ran with it. When their first idea (that the Sports rights holders would want to tap into the market and share revenues and drive toward an IPO) failed because the rights holders flubbed the handoff, Fluhr was brilliant in recognizing that he had to change what he was doing and avoid partnerships unless they were on equitable terms with reputable organizations. Otherwise, with the waffling 'partners' who really might prefer he fail (e.g. NHL, MLBAM), Fluhr decided that StubHub would pay the freight for advertising on their sites and keep all revenues from StubHub sales.

In short, StubHub started out with a strategy to provide a service for the obvious beneficiaries (the Sports teams and leagues) with a rev share for successful sales. When the Leagues did not cooperate, Fluhr abandoned the services play even though he was four years into it, and went with an 'in your face' strategy, taking them on in Court (Patriots and Yankees) and paying the freight to get fans to his site to buy and sell tix. Almost immediately the site turned around and started making $. How close was StubHub to being stubbed out? We'll never know the real deal, but it was close enough that employees were jumping ship, including co-founder Baker.

What amazes me is that once again the Leagues and rights holders missed out on an opportunity to build a business with a smart, willing service provider. All they had to do was provide traffic and cooperate in enabling a market that everyone knows exists. They could have shared in ticket sales revenues and gotten big equity kickers in a very big business. Instead they underperformed on obligations where they worked with StubHub and did everything they could to turn the market into one where StubHub competitors like Ticketmaster paid rights fees to play in the rights holder ballparks, the only model that the rights guys seem to be comfortable with although they continue to give lip service to visionaries like Fluhr.

So, they almost killed StubHub, then missed the gravy train and watched as a really smart guy (Fluhr) made it happen anyway! His original strategy should have been a multi-billion dollar play with leagues and teams as partners. Instead, because of stubborn, arrogance born stupidity, he and his investors took 100% of a smaller play and the Leagues and teams got zilch!

Will they ever learn? Unfortunately for the financial stakeholders, it seems the answer is no...

Congratulations to Jeff Fluhr and some really smart advisors, including Steve Young, Dave Checketts, Brian Bedol, Allen & Co. and Frank Biondi.

Sometimes in the Internet it's like a toboggan ride down a steep ski slope. You need to hang on tight for your life while you fly in directions unknown and be willing to crash, then pick up the sled for another ride down!