Tapping Into a Little-Known (but Billion Dollar) Industry: An Interview with Theatre Galleria Founder, Jackie Kroeger-Donovan

Few people know that the collective spend of every play, production, and musical in America means that the little old theatre industry is not quite so little after all. In fact, every production of Cat on a Hot Tin Roof, Mamma Mia!, and Little Shop of Horrors across local and school stages in communities across the nation equates to a more than 5 billion dollar industry. And, when you added in related markets, such as the film and movie industry, that number grows to more than 20 billion dollars.

Jackie Kroeger-Donovan grew up performing in plays and shows, and majored in vocal performance at New York University. In 2015, she and Theatre Galleria co-founder and fellow NYU vocal performance alumnae, Bryna O’Neill, saw an opportunity to make the theater industry more eco-friendly; an enormous amount of time and money was spent on buying, renting, or building props, costumes, sets, and other stage production materials that would be used for one show, then either thrown out or locked away in a storage unit. After being locked away, these props usually sit unused for years…even decades.

So, while Jackie was at NYU’s Stern School of Business and Bryna was performing around the world with the USO Show Troupe and in NYC with Broadway Sings, they started Theatre Galleria as a service project to help theaters reduce waste through connecting spare props and sets with the organizations that needed them for current productions. It was then that they discovered the opportunity that would lead to Theatre Galleria becoming the first theater-centric online marketplace in the world.

In an interview with Student Startup Madness, Jackie talks about founding Theatre Galleria, discovering the real problem that theatre professionals were having, pivoting towards becoming a theater marketplace, and how to pitch when investors assume that there’s no money in your industry.

How Theatre Galleria was founded

Student Startup Madness: What drove you to start Theatre Galleria, and how did Theatre Galleria get its initial start?

Jackie: For us, it evolved out of a lot of personal experience in the industry. I’ve been involved in theater for my whole life, got my undergraduate degree from NYU. Both my partner, Bryna O’Neill, and I have witnessed a lot of waste happening in this theater industry, so really that’s what motivated us.

(Photo Credit:Photo Credit: Mraz Center for the Performing Arts)

Right now if you’re doing a show, you’re either going to rent all the costumes and props that you need or you create everything that you need. So you’ll see that when organizations do Beauty and the Beast, they’ll create the enchanted rose with all the rose petals falling. It takes a long time and the roses are obviously super highly specialized but, at the end of the show, that same theater is not going to produce Beauty and the Beast for another 10 years. So there is really no utility in keeping the rose. So they either just throw it away or put it into long-term storage because they know it took a lot of effort, but it’s really never utilized again.

This happens to all sorts of props, sets, and costumes. Bryna and I both thought that it just didn’t seem right — that there has to be a better way. So we started the Theatre Galleria website initially as a small service project, just to help theatres be a little more green around their production materials.

And that’s where we uncovered the sort of greater need on the other side of it, where people who were searching for these items (especially teachers who are volunteers or working for a small theatre) are just kind of pulling out their hair trying to find what they need for their shows. So there was a disconnect between buyers and sellers.

Student Startup Madness: So how do you solve this disconnect?

Jackie: What we do is we provide a platform where anyone or any organization that is finished with a show or has extra large props or sets, can list them for sale or for rental. And then we provide a really easy store for people who are looking for things to get connected to those props and sellers.

Right now, what we realized is our primary buyer client is a high school teacher who has to just fill their entire shelf; they’re kind of the most desperate, they just don’t have a good solution. And for the sellers, a lot of universities or larger entertainment groups have a ton of props or costumes that are high quality, and they have $100,000s worth sitting there to date, and they just haven’t taken steps to do anything with them. So those are our primary sellers.

Proving the Concept

Student Startup Madness: How did you go about proving the concept behind Theatre Galleria?

Jackie: At the time, I had a restaurant in the city, and was going to business school and kind of stepping back from the restaurant. And so I had this idea in my break a couple months in-between those two things. And so we got started with a lot of tests. We launched what we thought was going to be a fully flushed out marketplace and what it ended up being was a glorified landing page (and we got a lot of customer input from there). And so kind of slowly, step-by-step, the business sort of evolved into what people were asking for. But I was in business school at the time, so it’s been kind of slow in the beginning. We’ve been full time now for about a year, so that has helped us kind of move and get things done.

Becoming Asset Light

Student Startup Madness: So does that require you to have a lot of warehouse space to store the items?

Jackie: In the beginning of the business, we thought the right way to do this was when the show was done was for us to buy and hold the inventory and find the buyer that way. We did have a warehouse, we did deal with the logistics. And what we found was, there were already people who have storage space, and were holding on to these items, and they were a lot better at selling themselves. And so our best value was just being a really efficient coordinator, where we can come in and be adapted to how people are already holding their inventory.

So right now either we’re acting as lead generation for larger scale rental operations and, for someone who’s never listed or sold anything before, the website listing process becomes their inventory management system. But currently we only exist in the virtual space. Theatre Galleria naturally became an online marketplace…when we were holding inventory, people would actually come to us looking for certain items and, when we didn’t have the item, we would actually point them to the right buyer or seller. So very manually we became a marketplace and then found we found that actually 90% of our transactions were happening with other sellers and so it just didn’t economically make sense to hold inventory.

Balancing School and Business

Student Startup Madness: Theatre Galleria was founded when you were at NYU’s Stern School of Business. What was it like balancing business school with a brand-new startup?

Jackie: It was crazy. I feel both ways about this. There’s no better place than a school to experiment and start a company. Especially at NYU, as there are so many resources, including Dorm Room Fund, which was such an amazing funding partner for us. And Student Startup Madness (which only allows college students to compete) was also such an epicly cool experience for us and just the exact right time that opportunity came along.

So there were so many benefits of doing business school and the startup together. But definitely as things start to go, it is hard to balance the needs of both programs. So I’ve taken a leave from business school just so that I can be 100% committed to one thing, which is Theatre Galleria.

Theatre Galleria’s experience at SXSW

Student Startup Madness: Theatre Galleria was one of the “Entrepreneurial Eight” final teams at Student Startup Madness 2016–2017. Can you talk a little about your experience at both Student Startup Madness and South by South West?

Jackie: Neither my partner nor I had been before, so it was certainly a new experience for us. SXSW is such a cool environment to be in — there’s just so many cool intelligent people to be around. It also gave us the opportunity to pitch and meet people who would not normally be in our network — it was a huge expansion of my network. Plus, at SXSW, you’re pitching your company for hours straight. So it’s definitely a place to hone that skill.

And pitching in Student Startup Madness was just awesome. I mean there were so many investors in the room, there were people watching on Facebook Live… it was an overwhelming experience, but it was absolutely awesome. And there was something to do every minute of the trip that was advancing our business.

Challenges: Changing the Perspective

One challenge that we’ve experienced is that there is not a lot of transparency in the finances of theater. There’s a lot of assumptions that because theaters are mainly non-profits and don’t make money, they don’t spend money.

Student Startup Madness: What are some of the challenges that Theatre Galleria has experienced so far?

Jackie: One challenge that we’ve experienced is that there is not a lot of transparency in the finances of theater. There’s a lot of assumptions that because theaters are mainly non-profits and don’t make money, they don’t spend money. And so for us it’s really about coming out there and framing the business as a business first. There is also an art to getting your pitch right and getting your story right so people pay attention to you.

It is easier to get people to invest or get behind things that they have a personal attachment to. I think especially in our early stage that it was really helpful to hear from other people who had been in what people considered to be “niche” businesses and hear how they framed their fundraising story, how they framed their journey.

We’re in an interesting space because we’re largely profiting of the transactions in an enormous amount of spend from mainly non-profits, so it was very helpful looking to other people who have dealt with nonprofits or dealt with nonprofit buying structures or raising money.

Market Size

Student Startup Madness: How big is your market?

Jackie: In our very beginning market, as a provider for educational and amateur theaters, we have about 35,000 theaters in the US who do on average about 8 shows a year. So just that piece is about $1.4 billion. $5 billion is spent on costumes in the US every year specifically for theater and if you extend that out into the sister production community (television and film) you’re looking at $20 billion spent on production materials. So it’s not small, and that’s an assumption that we’ve had to challenge.

It is common for people to assume that the theatre market is small. It’s helpful to know when to use that fact. And that tends to be right up front. So although you, the investor, may not be listening if we just talking about helping nonprofit theatre companies connect to props…just so you know, there is a huge opportunity in a billion-dollar industry that hasn’t been tapped yet and we have two people leading the company who have a ton of industry experience and access to the that world.

And that’s a more powerful entrance for us.

Student Startup Madness: That’s a great intro. How quickly did you learn to hone your pitch to be “this market is huge, this market has billions in spend per year, and we’re experts in it” versus telling the story of helping schools connect to props?

Jackie: I had a marketing prof, Professor Jeffery Carr, in NYU and he sat down with us and about 30 minutes into our meeting, he narrowed into the fact that we hadn’t really told him about the market size yet. So we learned that needs to be the first line of our pitch no matter what.

I was super grateful for the professor to sit down with me because it led us to so many positive things. And especially when you’re new to pitching, having an anchor like that at the beginning is really helpful.

An Actress’s Advice on Pitching

Student Startup Madness: Do you have any other tips and tricks for pitching?

Jackie: I spend the first half of my life as an actress. We tend to be pretty comfortable in terms of getting up in front of people, but I think the best thing you can do is just take a step back and think about how someone is going to interpret this information who may not understand your industry or even care at all. How do you draw in their attention? And that’s what we attempt to do. Our goal is to put ourselves in someone else’s shoes and include the minimum amount of info you need to know to understand exactly what our business is and what is our potential market is.

Jackie’s Advice to Founders: De-risk to de-stress

Student Startup Madness: Do you have any advice for student entrepreneurs, or any entrepreneurs, today who may be feeling nerves or hesitation, or like their idea is not good enough?

Jackie: I think the best thing you can do is de-risk every function of your business. And the more you can de-risk your business by running market tests, not only are you getting experience and useful information for creating a pitch, you can say this is more than an estimate of my potential customers because I went and ran a test and this amount of customers clicked on it, and this is how many people took action on it. That to me is de-risking an assumption.

And as much as you can do that, the easier it is to take an enormous amount of risk and a leap of faith into making that a reality. Because at the end of the day, starting a business can be really expensive, and there are sacrifices you have to make to be an entrepreneur, especially to people who are graduating and have the tempting comfortable life always there as an option.

So I think in addition to de-risking, you need to have a conversation with yourself about what you’re willing to do for the business. Are you willing to work part time at night to build. Do you have the ability to build/go for a year? At what point can you do that? The more you can make it real, the more you can take steps to go down that path. IT takes a lot of the fear out of it if you have a plan. And you know what your boundaries are around that plan. The sacrifice right now is real. But my business has passed the test to continue making it. So I feel comfortable within the boundaries that my business partner and I have stated for ourselves.

Future Expansion

Student Startup Madness: Beyond being a marketplace for theater props, settings, costumes, and physical objects, do you ever see yourself expanding into other theater categories or services?

Jackie: I think there’s two ways to go here. We could expand into the sister communities in the physical production space or we own the theater market and make it a one-stop-shop for productions. I am super-interested in seeing how newer technologies come in and add more efficiencies to the theater industry. We’re interested in seeing if 3d printing can be incorporated. That would be good for us. But at this point, we’re all about transactions, getting inventory on the site, and getting the gears moving.

Student Startup Madness: How much inventory do you have currently?

Jackie: We have about $250,000 worth of inventory on the site. We have 3 larger enterprise clients and about 10–20 smaller theaters. So hopefully we can do them justice and be successful.

Student Startup Madness: That’s awesome. I’m sure you will.

Jackie: Yeah. We’re almost there.

Theatre Galleria recently launched a new and improved version of their website. Visit it at TheatreGalleria.com!

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