a16z Podcast - a16z Podcast: When Fantasy Football and Crowdfunding Collide

Episode Date: November 12, 2014

With 15 million fantasy football players angling for the win in thousands of fantasy leagues, ESPN joined Tilt.com for a discussion about how crowdfunding provides a platform for an obsessed community. The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. So I'm Michael Copeland. I'm with Andrewson Horowitz, and we are lucky today to have James Bischara, founder and CEO of Tilt, and Ryan Spoon, SVP, digital product of a network we all love, ESPN. So, and... We have one fan. Ryan, we're going to get to fandom. Ryan has been a startup entrepreneur, started and sold a company, worked at eBay, been a venture capitalist.

You've been busy. We're going to talk a little bit about fan. football. So that derelict pastime of some people I know. Anyone here play fantasy football? Raise your hand. On ESPN, I'm guessing, hopefully. Okay. So we're going to get into that. It might seem, at first blush, this is sort of an odd pairing. ESPN, big sports network, Tilt, you guys are a platform for crowdfunding, and yet you guys manage to pull off a project together. So I want you guys to just start about how did that project come together? What was it?

And we'll get into the details of how it worked. So, Ryan, how did you make this man's acquaintance? So probably like a lot of folks in this room, we were privileged to spend time at what I think you guys called the executive briefing days. Yep, the EEC. And a couple of us from ESPN flew out, spent a day at your lovely headquarters.

And in six hours, probably met 15 companies. this was one of them and we walked out of there actually with a couple deals, a couple interesting partnerships but that's how we first met at that day actually, you know, I think we'll talk

about it, but James and team threw out a couple ideas. This was the one we found to be most lasting, fitted into our calendar and built the relationship since. So James, like how did you know you walked in there, ESPN I know you're a big fan of just sports in general, but ESPN in particular.

How did you find a fit between what Tilt does, and you can describe that briefly, and what ESPN does? So TILT, we build crowdfunding software for the web, for the world. The two big differentiators between us and anyone else is we focus on the consumer side, smaller, more bite-sized crowdfunding campaigns that might be 15 people and a birthday, 20 people and a tailgate, 10 people in a fantasy football league. The other big reason or the other big differentiator we have is that we've been building these platform tools, these extensible tools for brands to be able to build on top of our crowdfunding software. So some really cool brands have built on top of it.

But going into the meeting with ESPN, what was so easy for us and what actually guides our partnership strategy is the behavior was already happening on tilt.com. There was already people pooling money for fantasy football leagues in troves. So that is such a great North Star for us to know where there's. There's going to be really interesting partnership. So people are already getting together on Tilt to put the muddy pot, whoever wins, gets X amount, and here we'll all. Big time.

It's one of the first things that we noticed when we built the site people were using it for. And so, Ryan, what made it a good fit for you guys? And I want to get in also to a big organization working with a startup, what that was like. But, you know, what did you see, and then how did you move forward? So I think the first, if you had a North Star, ours was, Fantasy for us has become such a fundamentally important part of our digital experience, and it is a massive population of highly active people, but in small pockets.

How massive? We'll have, I think, across all of our fantasy games this year, 15 million players. They make up, they are the most active users on the site. So as example, this past month was, across ESPN are historically great month, year over year across multiple, you know, measurements, 30, 40% growth. We did 10 billion minutes across all ESPN digital.

10 billion? Across all digital. And over one and a half billion of that was fantasy. I mean, it is a very significant, sticky, highly engaged. The other really fascinating part is the activity changes so significantly based on where you are and what time of day. So there's pre-season, there's draft,

and then what you do on Sunday is very different than Monday and so forth. And your behavior is, whether it's on a device, mobile, big screen, time of day. Our most active day of the year is Sunday. And coincidentally, we do not have NFL Sunday on our air. Fantasy makes up a big chunk of that. So what we, I think, collectively identified was, if you think about that calendar of fantasy usage, a very core part of the pre and draft

is how you collect a team together, how you collect 12 people together and facilitate that interaction. And that's something that, both that scale, but also as you divide it by 10, 12 users, it was a very natural fit. So what did you guys actually build or work together on? What did it look like, and then how did it work?

Yeah, so it's very super simple. Think of it kind of like just a bunch of, button that takes you to a group, kind of like a group PayPal, is an easy way to think about it. A button from ESPN and their fantasy football league that takes you to ESPN.tilt.com. That's a co-branded, really simple user experience for 10, 12, 14 people to be able to pay together for their fantasy football league. What's unique about it is it's something that group payments and we facilitate 5,000 people pulling together money for a crowdfunding campaign or 15 people.

But we're seeing this a lot, too, of these smaller groups, 8, 10, 12 people doing things together over and over and over again and collecting money is a pain in the ass. With ESPN and fantasy football, they have the core user behavior, which is the league, which is your draft, which is if you've ever seen it or done it, their tool is end-to-end the best out there for doing that. But this one little piece of payments in collecting the money for it was kind of a decision on their end.

Do they build or buy? Do they build it themselves? Or do they let someone else take care of this piece of it? And for us, it was just, honestly, it was a lot of luck in harmony in that they just took the courage to work with a two-year-old company. Yeah, so let's talk about that courage. Small company. You know what I mean?

A lot of courage. Yeah, you seem very courageous. But, like, what were you worried about from your end? And then how did you, as a startup, a two-year-old company, make him less worried, I guess, if, in fact, you were? so I was never worried about product fit right we identified this collectively it was a pain point and addressed the problem I was never really worried about how to integrate it and this is actually something we generally think a lot about where it would sit how it would fit what's

the friction etc the two things we always think about and we do a fair amount of work with you know startup younger companies the first is scale we are We're not the size of Facebook per se, but the scale we have is actually pretty complicated because it's very intense at an intense point in time and very data heavy. So we had to get comfortable with scale. And the second is, and this is what I, you know, on my side think a lot about, regardless of partnership, we live in a very calendared world in sports. NBA kicks off tonight.

There's also a game six. Fantasy football is starting and, you know, we launched in the middle of, July. You got to be there. It's going without you. And so we need to make sure that our product roadmaps, our business roadmaps, that those sync according to a schedule. It's not flexible. And how did you guys sink into that? Well, Ryan's downplaying it because I'd say him and George, George Limer is here somewhere. There's George. Those two guys, it's a lot more courage than what they're making it out to be. I mean, and we honestly, we worked. We met in and close the deal. I think once it launched, it was from the meeting, maybe 16 months.

But it was something to where, to unpack what he's saying about the intense moment. It is like a tidal wave to where they launch fantasy football and this needs to work. It's not this button that they add in. And on Thursday it's not working so they take it out or there's a bug so they roll it back. It was, you know, in all of their emails, it was on every single, it still is on every single page. And it really hits. you on, you know, two, three days. Right. And it's 15 million users across their fantasy products.

So it was something that it might not be the scale traffic of Facebook, but by far exceeds anything we've seen from any other site because of how intense it was. So for them, and I, you know, when you're in the moment, it's like, of course they should do this. Of course they should partner with us. But now, looking back, it's, it is, I've got to hand it to Ryan for just the courage of actually going with it. because a big company like ESPN has so much to lose, actually, in these moments where it's faulty, it doesn't work, or it is, you know, you're dealing with, you know, we're PCI-level-1 compliant, and we cross every T, dot every eye on everything we do because we're holding people's money. But that's a huge, huge, courageous bet.

Did you ever get nervous or have courage on your, question your courage? Let's see. I've re-questioned. Yeah, I was nervous for about seven weeks leading up to it. I mean, it's something we've worked with Microsoft, with exporting goods, with some really cool brands, Lulu Lemon. We've worked with some really cool brands. But that intensity and how it's, it is our core demographic. And our biggest demographic is 18 to 24-year-old.

So that is, it was going to be the perfect partnership if we were to outline one for us. And, yeah, I think I was pretty nervous. Did your own fantasy football league play suffer as a result? It has, it has suffered a little bit, and one of our guys, Brian is here, we're in the league together. It has suffered a little bit. I had to auto draft, but I'm actually having the best season I've ever had. Our software works. By auto draft, yeah.

The software works really well. Ryan, how's your team doing? When you work at ESPN, you get pulled into so many leagues that you're rooting for one play. and he's hurting half your team's beating half the... I don't know. I have a lot of teams. Hopefully not the Raiders, is my guess. So I want to get into the aspect of the community that you tapped

and why, I mean, at least from the outside, I think of sports fans as sports fans. Fantasy football is a completely different sort of, I think, category of sports fan. But why was this right for what James and Krelltoe was doing? in terms of like tapping into a community and leveraging that. Sure.

So there's kind of two parts to that question. The first is why was this right? And the answer, I mean, really simply is it's a known, clear pain point and it addressed something that was not an ancillary problem. I mean, you know,

it's commonly understood and identified. At the root of sports, sports are social at the root of fantasy is fantasy is inherently a community. It's a large community that is broken down into 8, 10, 12 at a time.

And we've thought a lot about what community means to us and without a kind of deep interaction with it or moderation is the wrong term, but it can quickly devolve into go cowboys. I hate the cowboys. And it kind of

breaks at that. And what you see with fantasy is just really deep engagement. A lot of it's happening on ESPN. A lot of it happens offline. That's great. And what we've tried to address community for ESPN is how do you elevate the conversation? How do you make it personal? And there have been two really, or three really kind of key things that we've worked on that have worked. The first is a move to identity. So obviously we put out a ton of content on a daily basis, editorial team and talent is unmatched across anything else in sports. And simple things like using Facebook as a qualifier for conversation, it lifts the quality of engagement. The second and the most impactful thing that we have done from a social

and community perspective is while yes there's a focus on enabling, sharing, and making it as frictionless and fast as possible, our focus has been. been what happens in those native environments. Making sure that the Twitter card itself is beautiful, it's fun, it's unique, and fantasy is a great example of that. So during your draft, one click share to a Twitter card that shows your roster, solicits input, who should you start or sit on Monday night? And we have celebrity athletes saying, the interactions with...

You should sit me? Yeah. Fastest growing part of our video business is, you know, again, frictionless, one-click video play within the Twitter feed. Making sure that our stuff natively ports. And then the third is, and you hear people at Facebook talk about this all the time, what are the special moments? And those special moments, that's when you induce the sharing and so forth. And for us, fantasy has tons of them, right? Right.

it, I beat you, I have a logo, I created a logo, and take advantage of those moments to force the sharing and the social activity. So that community, again, is especially well suited to things that like Tilt and other sort of forms of community and sharing. James, for you guys at Tilt, how are you seeing your platform and crowdfunding moving outside of sort of the places that we usually associate with crowdfunding? I think it's, it is something that it's, you know, the way talk about the way we think about it is this is the next layer of the web that we're watching being built and we're part of building it to where you have these communities online that want to do things together offline. And you have things like us, other crowdfunding platforms

that allow communities that exist on a Facebook group and a Twitter following feed on an ESPN Fantasy Football League. You have 12 people, you have 1,200 people that want to do something as a group. They're already self-organizing on these platforms. forming these communities but invariably they will want to do something offline together with fantasy football it's been so cool to watch

and this is what's just so cool about Tilt and in general you get to watch these communities that most of the time they just exist online do things offline together like for example for example fantasy football they'll collect their money for their league through Tilt and then

three days later they'll collect money for their draft party and this epic draft and you just look at these draft parties. And you can tell that, you know, they're putting $900 into a three-hour event, renting a back room of a bar. And, you know, from us, we're constantly elated when we get to see these communities and these ties that exist online turn into really offline special moments and experiences. And you see some days, there was a draft party. I think we saw one that was like $6,000 to rent out an entire bar because it had the biggest, like, 120-foot big screen

that they wanted to use for their draft. That was like 12 guys that decided to have a night of their life that they'll probably remember forever. And just having that tool, having the community that exists and then having a tool to be able to do something cool offline. James, you had another suggestion for another product, which I think both of you are excited by, but the lawyers at ESPN may not have found so palatable.

Just tell us what that was. Someone was telling me to tiptoe around this question. A lawyer probably. Yeah, well, the actual answer was, and the idea was very simple. And I thought it was, you know, in my exuberant youth, I was like, they're going to love this idea. This is social media gold. It was to have, in some weekend last year, Magic Johnson said he was going to put up a million dollars for LeBron James to do the dunk contest.

And then his Twitter feed just started blowing up of people saying, I'll put in $10, I'll put in $50, I'll put in $100, I'll put in $15. And then you had Kevin Durant, say, I'll put it in $50,000. And you had Richard Sherman, say, I'll put in $50,000. And that is the, I mean, that's why we're building tilt, is you have this disparate disconnected demand within a group around an objective and no way to aggregate that demand. Tilt is built for that.

And so we mocked something up overnight and sent it to Ryan. I was like, we need to do this to where Magic Johnson is hosting a crowd. funding campaign, branded ESPN for LeBron to do the dunk contest. I thought it was slam dunk. Actually, that was no pun intended. But I thought it was going to work out really well. And Ryan was like, we talked about it. It was like, no, it was a very curt reply. It was like, no, I don't think so. Fun idea. I think we happened upon something a little more lasting. Yes, it was much more substantial. So let me ask you, Ryan, and James, you two, but let's start with you, Ryan.

You have these hardcore fans and viewers and watchers of what ESPN does, and you can collect data, and this gets to a little bit about what Jeff and Tim were talking about, how, you know, if you're taking more than you're given from a data

perspective, you're probably doing something wrong. But what I want to know is what you can know about your fans and your audience, and then what you can use to to monetize that. And how do you think about that?

So I have the luxurious position, ESPN is the luxurious position of fans want to tell us their interests. And they declare it. And that's different than a lot of other places. It's easier for us in that regard. Now, I don't think we've done a great job historically of rewarding you for doing so. So we've asked you to register, we've asked you to personalize, people go that, take that step, and things haven't changed a ton. And we've started to, over the last year, we put a gate up in front of our largest mobile app sports center. And in a year, it went from 0% of people logged in because they were customizing to the device as opposed to the username.

And it's now, you know, around 70% of users are logged in, which for us is a pretty meaningful. milestone. The next step is doing that on the site. And we're in the process, and it's in beta now with about 100,000 randomly sampled users. But we're going to totally redesign ESPN.com. And a very significant chunk of the real estate across all pages is specifically for you versus me. So our experience will be very different. How that relates to how that relates to monetization, A couple ways. Our, you know, what we are great out on monetizing, you heard it earlier when Chris and Jonah were talking,

videos really, really key to us. And we know when we put the right content in front of you, video consumption goes up tremendously. On Saturday, we will cut 1,000 live clips from football across college football, and will buzz your phone within 15 seconds of those plays happening on the field. If you're a fan of Stanford and I'm a fan of Duke,

we're going to buzz with different content, but we're going to enjoy it and open it. So we use it really to drive consumption, and yes, we can work with our partners, advertisers to alter how that content looks or is modified based on geography, preference, etc. But really, what I spend my time thinking about is how do we

reward people for the action of personalizing, and we're getting better. We've got a place to go. How do you think about distribution? Jonah and Chris were talking about how they target Pinterest with this and Facebook with that And people don't go through the front door of BuzzFeed. Do you guys have a front door?

How do you, what relationship do you want with your audience? And is it different than what was being described by Jonah? So we are fortunate to have a healthy, if you're a sports fan, it is an important front door of your day, ESPN.com. That's not to say that we don't think about or talk about how do we create your first experience is really your homepage. Instead of ESPN.com, what you come through, whether it's Twitter, Facebook, email. The other complicator for us is your front door no longer is necessarily on a big 20-inch browser. You know, last month, 55% of our users exclusively accessed us on a mobile

device. That's a very, and that acceleration over a 12-month period is pretty wild. So the front door on a native app versus a mobile web versus big screen whether it's fantasy it's a different front door than if you're live streaming the game last night

we're trying to make them visually and from a user experience perspective as consistent as possible but we also have to honor that your front door within fantasy needs to tell you one thing and it's how you're doing

and your front door during Monday night football should be the game as frictionless as possible so James again knowing what you can know about your customers that you, the folks that use Tilt, how far can you go with that knowledge and how do you use it and how do you sort of, I guess, hold back to at the same time?

I think right now, especially with, so our platform grows pretty virally, you use it for a fantasy football league and out of those 12 people, two will split off, start their own campaign, and they'll do it for a draft party, a tailgate, a late night party, a group trip or something like that. So really, our biggest focus is retention of that virality and not to try to maximize the acquisition of new users by using that information against them. We really just want them to naturally, it's a testament to the product, just naturally use and love the product without us getting too much in their face. With ESPN, specifically in the partnership, it was the way that it worked, it was pretty, and Ryan was just saying this backstage, that

it was really seamless to where there wasn't much of a passover of information. it really was you use fantasy football here click on this button go over and start collecting your money over there and it's and it was a pretty seamless transition there wasn't much being passed on did you I mean did people spin out then to other tilt campaigns because of ESPN and yeah they did you get tilt people on ESPN I don't know doing something else I I don't know if you guys got tilt traffic going back to ESPN but I know that it was a huge differentiator from other fantasy football platforms that don't provide this ability to collect your dues. And it was, I think the CTO was, on the all side was telling us that it's one of the highest,

maybe highest uptick in a brand new feature that they've seen. So it was a really, really exciting moment to see their adoption just be so high. But you're distributing this link, ESPN.tilt, everywhere with the ESPN logo. and it's further, and a lot of people, I don't know, the numbers on it, a lot of people are in multiple leagues across different platforms, and if they see that one has ESPN logo

for this functionality, and the others don't, I think that would have a big impact on them. All right, final question, gentlemen, any football predictions? I'm a Patriots fan, so. I'm a Cowboys fan. And I'm a Cowboys fan,

so we'll win, I think, the next seven Super Bowls, if we just model this out I'm just kidding we lost pretty terribly last night our quarterback almost died so that's not that's not good good luck to your sad teams

I'm sorry James thank you Ryan thank you so much Michael thank you thank you thank you