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When Sofizar won the MITCEF BAP a lot of people pointed to their click fraud and web traffic reporting products as the the possible reasons for their win, but as their CEO pointed out in the comments, that was not the case.

In fact they won the award because of a product that is a lot more compelling, and one that follows my general thesis for best practices of starting web companies.

TicketNest.com is like the expedia.com for tickets for any type of show, anywhere, globally. Say you’re willing going to be visiting London next week and fancy yourself a fan of orchestral music — you can search to see if there are any performances available and buy a ticket before you go. And not just to the event — you can find out the exact seat.

The demand of this business model was set in stone by Fandango, a movie theatre ticketing system available in the USA - what had started as an experiment with a crazy viral ad campaign, Fandango proved that there are a lot of people willing to pay premium pricing for the luxury of knowing their exact seat number before leaving their homes. Know before you go had fairly high demand all over the world.

But TicketNest does more than tap into a high-demand business. With very smart operations planning they are able to offer tickets a lot cheaper than any of their competitors, and offer it successfully to the long-tail.

Read on for screenshots, a more detailed look at their business model and why its such a perfectly executed web-based ecommerce offering, and the serious lessons entrepreneurs need to learn locally.

There are businesses — such as the online travel ticketing businesses in the states such as Expedia and others — where the biggest competitive advantage people have is market insight and access to supply.

TicketNest is one such system and because of this they’ve comfortably described their entire business model on their page. Even if you tried, you cant copy it without access to the right supply channels. Here is how it works:

The value-chain of the ticketing industry starts from the events themselves offering tickets. From there, brokers start buying tickets in bulk (at discounts), or from people who wont be attending the event (over Ebay etc) in an attempt to aggregate tickets. The reselling market is then controlled by trading between these brokers, who even group together into bigger and bigger aggregations of tickets to remain competitive.

After amassing an enormous amount of tickets as quickly as possible, the next step in simply a race of who can distribute and sell these tickets the most. This is where storefronts come in.

The online retail front allow people to have infinite shelf-space to sell items, and thus these stores dont have to worry about only holding popular or top-selling items. You will find that TicketNest can easily serve thousands of niches with a consistent experience, and thus the global online model becomes the best place to distribute these goods quickly.

Whats more, the Sofizar team realized early that the best way to compete would be to operate in the cheapest operational center they could find in comparison with other players — Pakistan!

By running operations from this country, believing strongly that a tiny team of experts can do more than a team of 50 duds, and stripping out all unneeded costs from their business, they have been able to offer much lower markups and margins on their tickets and still feel comfortable doing that.

What is the result of this? This is a team of 4 or so in Lahore that is making as much net income as companies with more than 500 — Jawwad called them a cash-printing machine, and elsewhere Zafar Khan has been quoted as saying “every morning when I wake up, I have earned $3000-4000″

This is brilliant execution and has lessons for all, but those lessons will have to wait for another post.