How I Built This with Guy Raz - Fanatics: Michael Rubin

Episode Date: January 27, 2025

If you’ve ever bought sports merch or bet on a big-league game, you’ve likely spent money on Fanatics. It’s a massive one-stop-shop for sports, founded by a guy who could barely read growing up. What Michael Rubin did know was how to spin a deal: by 15, he was making thousands of dollars trading in closeout sporting goods, and by his early 20’s, he was CEO of a public company. Since 2011, when he acquired Fanatics, Michael has focused his relentless energy into building his $25 billion sports branding business. Michael says he’ll run the company until he dies, but first has to figure out how to sleep.  This episode was produced by Devan Schwartz with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Chris Maccini. Our engineers were Robert Rodriguez and Gilly Moon. You can follow HIBT on X and Instagram, and email us at [e-mail]. Sign up for Guy’s free newsletter at guyraz.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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And with Major League Baseball uniforms. It was the official Major League Baseball uniform. And the other players complained about it. Players complained. Fans complained relentlessly. They didn't, like, say a little bit. They said a lot. They spoke loudly.

They could see through it and all this stuff. Yeah. And for us, that was actually an incredible moment. We embraced the ass whip. And we said, we need to be a lot better. you know what, we got to speak up louder, we got to be stronger. We can't, you know, you can't just go along for the ride. So, like, that's why I'm so excited about this business because I get to learn every day.

It's a, you know, if you like action, this is the job for you. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Michael Rubin started his first business at age eight, made his first million in his teens, and then built fanatics into a massive one-stop shop for sports. We've had hundreds of brilliant entrepreneurs on this show over the past several years, and in each case, I've learned a lot from their experiences, and I imagine many of you have as well. But every once in a while, we tell the story of a founder who is a true entrepreneurial savant, a prodigy of Michael Rubin.

Michael Rubin was not a good student. He barely finished high school and only attended college for a single semester. So it's safe to say that as far as academics go, he was close to being a failure. But when it came to business, he was a superstar already at age 12. That's when he opened his own ski tuning shop. By 15, he had a brick and mortar ski shop on the outskirts of Philadelphia. Before he graduated high school, he had five of these ski shops, and before he turned 20, Michael was making hundreds of thousands of dollars a year, buying and selling excess sporting goods and footwear from big brands. As you'll hear in this conversation, what Michael lacked in academic prowess, he more than made up for an instincts and street smarts.

He figured out how to take big but calculated risks, risks that would eventually lead him to the business he's probably best known for today. Fanatics. If you're a sports fan and bought an officially licensed hat or jersey or collectible or even bet on a game, you have likely spent money on a fanatics product. Today, the brand is worth roughly $25 billion and it's still privately owned, though there are rumors it could go public. in 2025. As for Michael, he's become something of a brand himself. More than a million people follow him on Instagram where he posts videos and photos about his life and his business.

For the past several years, he's hosted an annual celebrity-filled party, the white party in the Hamptons, a party, by the way, not to be confused with another white party, the infamous one hosted by the now disgraced rap mogul Diddy? And Michael's net worth? It's estimated at around $10 billion. Now, not surprisingly, to fuel all that success, Michael has a restless, driven nature and a confidence so powerful that it can feel like a physical force. A force I certainly felt when I met him in the studio in San Francisco. And by the way, if you're listening with kids, Michael is pretty liberal with his salty language, so just a heads up.

But unlike some founders have spoken to who prefer to remain stoic about their struggles, Michael is pretty generous when talking about his personal challenges, his anxieties, and the sacrifices he's made over the years to build his businesses. And we'll hear about all of that a little later on. For now, what you need to know is that Michael grew up in a Philadelphia suburb in the 70s and 80s. And back then, he had trouble doing the things that came naturally to other kids, like reading. People don't believe me when I say this.

The last book that I read was the book called The Swish, the unauthorized story of Nike. I read it, I think, when I was in eighth or ninth grade, so it probably came out in the, in 1986, 1987. It's hard for you to concentrate on the page.

Yeah, I read a page and I have to, I read two lines, then I have to go back. We read it. Yeah. And today, you know, again, because I haven't read a book since ninth grade, You know, my reading comes in very short, you know, like kind of pieces.

If someone sends me an email that's, you know, three or four paragraphs, I'm 99% not reading it. Certainly 40 years ago was a lot less common than it is today to tell you about all the learning and the disabilities. But when you have a mother's a psychiatrist. Yes. Fathers a veterinarian, both go up very education oriented. And you have a kid who's just not kind of doing well in school. You know, they worry and figure out, like, how do we help them? What do we do?

Did you get in trouble at school? I was not a good student. I was not a good kid in school. I wasn't like a bad kid. It was more like I just didn't connect with school. So did I get in trouble? Yes, absolutely. Was I still well liked by everybody at school, including all the teachers and everything?

Absolutely. Yeah. So it sounds like you didn't feel like you were, or did you? Did you feel like, God, I'm failing my parents. And do you, do you remember feeling? Bad? It's a great question. I don't think, you know, I grew up in a family where they told you what you couldn't do, and then that just provided motivation to me of what I could do. Yeah. I had great, two incredible parents. They just, you know, it was kind of like they told you,

they told you all the things you couldn't do, all the things you couldn't accomplish. And to me, it's like, fuck that. Like, I can do anything I set my mind to. But as bad as a student as I was, and as much as I struggled in school, and even though it wasn't diagnosed at that point, real ADD, issues. I think I was equally bad as an athlete, okay? So I wasn't just failing in school. I was failing in sports. And that meant socially. Yeah. What that meant was I was always last to be picked on a sports team. You're going to pick, you know, 10 people on each team. I'm 10. You know, what that, I believe what that makes you do is you figure out, well, what are you good at? Where can you win? And to me, business and working was a place I always

excelled, I love doing it, it's a place where I could be number one. I could be the best that there was. How did you figure that out? What was the moment in the first time you thought, God, this is really fun. I'm good at this. I think I was born with it. But what happened? Tell me, because already at age eight you started selling.

I mean, a lot of kids do lemonade stands. A lot of kids do, you know, car washing things. What was the thing that you started doing? Eight years old, when it would snow, I would go around. door to door sell the snow shoveling and then hire, you know, six kids to, you know, five bucks an hour to shove all the driveways. I mean, you would go door to door. Yeah.

You would say, hey, well, I'll shovel your price. Hey, would you like your driver shoveled? It's 20 bucks. And then you'd go fine, the kids to do the work and pay them. I had them follow me around and I was, you know, paying them five bucks an hour. Did you, do remember how you even thought about doing that? No, but I'll tell you one story that I do remember when I was 12. I really learned how to tune skis.

And a friend of mine said to me, like, hey, you love skiing and you love business. Why don't you start a ski tuning shop? And that's a great idea. And, you know, like an hour later, I had the Mike's ski tuning flyers made with the prices of, you know, all the different things you could do for ski tuning. So, all right. So age 12, you start a ski tuning shop. I guess you learned how to tune skis at like a ski camp you went to. Yeah.

And so you're in Philadelphia or outside Philadelphia, you open a ski tuning service. But I guess after your bar mitzvah you made a little bit of cash and you were able to use that cash to actually open a storefront, like a location? They had the ski swap every year where all the ski retailers in the Philadelphia area would bring their excess inventory to a ski swap. And I worked that swap the whole weekend, you know, just trying to help out the other ski shop owners. And then I said to one of the guys, this guy, Brett Baalman, who owned something called Balman's ski shop, I said, hey, you know, I live 45 minutes from you, so there's no competition. Why don't you lend me some of your excess equipment, and I'll pay you for it as I sell it? And he did exactly that.

And that year, at 13 years old, I did $25,000 in revenue. Selling it from where? From my basement of my parents' house. How did you get the word out? You would just tell people I'm selling skis. Yeah, school, flyers. You know, I actually, I remember, it's a great story. I don't think I've ever told this before.

there was a ski shop called Ray Pinellas Ski Shop in the Plymouth Meeting Mall. I buy these flowers I put on all the cars, thousands of cars in the parking lot. And I get home and my dad says, you know, hey Michael, I need to speak to you. He says, I said, like, Dad, what's up? He says, well, Ray Pinella, who owns Ray Pinella ski shops called to say that you were trespassing and that he was going to call the police and have you arrested for trespassing because you were putting flyers out in the mall's parking line. He has a ski shop in the mall, and he thought that you were unfairly competing.

I said, well, would you tell him? He said, I told my son was 13. If you need to worry about competing against the 13-year-old, you've got bigger problems. Wow. So you basically take out a lease on a location, on a brick-and-mortar store in your town. Was it Lafayette Hill? Ridge and Butler Pikes, Lafayette Hill, Pennsylvania. Okay.

So meant that your dad had to co-sign that, right? and you could take a lease out. First of all, how did you operate that business? I mean, you were a 14, 15-year-old kid. Like, you had to go to school during the day. So how did that work? Did you manage that business and also go to school? Yeah, so that school thing definitely got in the way.

And I definitely focused on business. You know, I actually had a – they had a co-op program. My school, you could get out at 11 o'clock if you had a co-op program in 12th grade. Somehow I talked our school, allowing me to do that in the 11th grade. getting credit for having like work experience. Yes. So my landlord just had to, so I just had to pay the run on time that he gave me an A for my co-op program. And that was like half of my curriculum.

Michael, how are you, first of all, at 15, were you, like, were you fully grown or were you still growing? Like, were you, were you short? Were you tall? Because 15 is young, man. Like, how did you have, how are you able to get people to take you seriously? because I didn't have fear and I just went for it and I think

you know so many people have ideas and they talk about what they want to do but they don't do it I was just always more of a person I'm gonna go out and fucking do it and if it works out great

and if it doesn't you know all good and so I mean you could go back to 1986 1988 1988 you know I remember

after coming to you know ski in the summertime I said well why did I build a ski mountain in the middle of the summertime? And I went out and I bought 40,000 pounds of ice cubes set up in a ski slope at 15 years old. Where did you set that up? Outside of my ski shop.

So I had a ski shop in Conchalk in Pennsylvania, Ridge and Butler Pikes. And you set up an ice jump. And I remember waking my mom and dad up at like 2 o'clock in the morning. I'm like, I got the greatest idea on the planet that. Like what? I'm like, sorry, I'm going to set up a ski mountain in the middle of the summertime. Like, go back to bed. What are you talking about?

Sure enough, a month later, I went out. It was like $2,500. I bought 40,000 pounds of ice cubes. Brandy wine ice company. I don't know how I remember this. I set these up, and every news outlet covered that this 15-year-old entrepreneur had set up a ski mountain outside of a ski shop, and that was my market. It's just a pile of ice? With hay on both sides, hay on each side, hay the bottom.

How do you ski down there? You just ski on ice. Yeah, amazing. Wow. So how was business? I mean, were you making money? So the first year I had the ski shop, we did great. We did like $125,000 in business.

I made about $25,000 profit. Second year, very good. I think we got up to about $500,000 in business and maybe made $100,000. You know, again, I'm 15 years old. This is pretty spectacular. But, right, think about this. This is also going back 37 years ago.

Yeah. So half a million dollars in business, $100,000 profit when you're 15, 37 years ago. kind of insane. Well, the next year, we had a little bit of an issue. It didn't snow. If you're in the ski business,

it doesn't snow. That's not, like, an ingredient for, like, really killing it. But I also made a mistake. I got a little bit cocky, okay? And I was now 15, turning 16, but I went out and I bought a Porsche. That I went 50-50 with a neighbor.

I wasn't old enough to drive the Porsche yet, but I bought it and kept it down the street for my parents. So now the season ends, and I have $200,000 of bills, $80,000 in inventory, and half of a Porsche. And by February, all the ski vendors that had shipped me inventory, shipped me skis on open credit, wanted to get paid. But I didn't have the money to pay them. And I started getting sued.

I'd say the spring of the year that I was 16, I probably got sued 100 times. The sheriff became my friend. she'd come before I went to school and she'd drop off each day's lawsuits to me. And I thought I was complete failure. It was over. I'm never going to be able to be successful in business. Wow. You know, I prepared to go bankrupt.

And so I hired a bankruptcy lawyer and they said, hey, let's have a meeting with the creditors. All the people you owe money to all these people came around. And one of the questions is, hey, Mr. Rubin, how old are you today? I guess I just looked older than my age. and, you know, at this point, everyone assumes you were older. I said him 16. And the room were dead silent. I didn't know, you know, you weren't allowed to incur debt legally until you were 18.

Yeah. I think you were eventually able to settle your debts, partly because you made a deal with your parents, I guess, where they agreed to lend you some of the money if you agreed to go to college. And you kept up your end of the deal. You started at Villanova. but you barely lasted a semester, right? That's right. I'd say the reason I went to college

was because I gave my mom and dad my word that I would go to college. It was important. My mom's like, look, I'm a psychiatrist. I know what's best for you. You're not a normal kid. You need to be a normal kid. Go to school, play sports, have friends.

Why are you obsessed with this business thing? But I never got out of business. Like, you know, never shut the shops down. And then I basically became very big buying and selling excess footwear, sporting goods inventory, skis, buying and selling excess inventory, you know, primarily footwear and clothesouts. So by the time I got into college, the biggest member of you say, what do I remember about college? I remember cell phones at this point. So you're talking about 1990. Cell phones were gigantic. Yeah. And I remember always sitting in the parking lot of

Villanova on this giant cell phone, buying and selling things always like knowing that I had to get to class, but having no interest in getting to class because I was making deals. And, you know, I can remember times when I was making hundreds of thousands of dollars in a trade, you know, in the parking lot of Villanova, you know, before I go to school. So that was very difficult. And finally, you know, kind of part of semester, I'm just like, I'm done. This is it. College isn't for me.

What do you, when you started doing these things, right, and succeeding and selling stuff, what is it that you feel that you had? I mean, was it, because it wasn't like, you know, this, you know, this accounting ability or, you know, or, you know, this mathematical knowledge. But there was something that you had that clearly worked. What do you think it was? Common sense. Street smarts. Work ethic.

I would always work harder than that. I would always outwork my competition. And the ability to. to really build authentic and strong relationships. And, like, nothing insults me. You could say anything to me. You know, look, you can't be in sensitive, you know, and by way, you would, you know,

a lot of people in my family would disagree with this. They would say what? They would say, like, you know, it's okay to be sensitive. I'd say, like, that's bullshit. Yeah. Now, for some people, and, you know, an interesting thing about managing people and leading people is what works for different people.

You may go in a sports team to one person and you can beat the shit out of them and that makes them play better. You may take that same approach with somebody else and they're going to be dejected in the corner of the locker room. I was the person you could beat on that would do better through the beatings and it didn't bother me. Other people, I think, get dejected by that. I actually think in the hundreds of interviews I've done on this show with founders, I think a superpower of many founders is they don't get offended, that they'd also. don't hold grudges. There's like, they're desensitized. Yeah, I think I, I think that's accurate of a lot of good leaders and entrepreneurs and much

easier for a founder than a for hire CEO. Now, grudgers are different because there could be somebody I may not like. Yeah. Somebody who's done me dirty. I may have no problem working with them, but I'll always remember. Yeah. Okay. But you'll still work with them if you know that there's a value.

If it's in the greater interest of the greater good, I'll 100% work with them. But I got a long memory for people who have done me wrong. And I think that makes me smarter. That makes me better. That makes sure I don't, you know, get screwed multiple times. Yeah. All right. Let's get back into the story here because we're sort of in around 1990.

So this is still pre-internet. And at this point, you're sort of buying sports equipment and clothes and sneakers and then reselling it. So first of all, how did you even get connected with the people who had this stuff to sell? So I remember doing my first big deal. My first big deal was I owned, when I was graduate in high school, I had five ski shops at this point. I remember going in one of the ski shops, and they were selling these Umbro sneakers for, they were like soccer cleats. Yeah. And they were like 65 bucks.

They were on sale for $299. I said to the manager of the store, I said, oh, you know, these not selling me while. know we bought them as closeouts. I said, oh, how much did you buy them for? They say $11.50 a pair. I said, wow, so we're selling them for $2,9,000 a pair. Can you find out how many pair they have? So they called the person number and they said they had $12,000. So I just got on the phone with the person right then. I said, hey, you have $12,000? How much can I buy them for? They're like, you know, you can buy them all for $8.50? I said, how about $6? I said, can we agree at $5? I bought the $12,000 pair for $60,000 that day.

Okay? That was the first time we got in the shoe business, buying and selling shoes shoes at the ski shops. Nope. I went to the yellow pages because that's how we found people then. I found this company called Boscov's department stores. I just cold called him. And I get this meeting with this guy, Albert Boscoves,

who owns Boscoves department stores. And he said, Michael, how much do you want for these? I said, 15 bucks a pair. He said, I'll take them all for 1150. I hadn't even got them in yet and I made 650 a pair on 12,000 pair of shoes so now I'm 18, it's like $70,000 or $80,000

but I haven't even paid for the shoes I bought yet. I got them resold to somebody else. So it was just, it was that instinct to hustle, that instinct to keep asking to never have a fear that worked for me. That was my first big bulk deal was buying all the shoes at five bucks a pair and selling them for $11.50 To Boston Department of store.

It must have been such a rush. It was. For me, who sucked in sports, who sucked in school, to know, hey, on one day I could see these shoes in a ski shop that I owned, find out there were a closeout, and make $70,000, you know, overnight without ever touching the shoes. That was pretty spectacular. And that's it. And that's the beginning. Okay. So now you've got this shoe experience.

But again, this is like pre-internet, right? It's all yellow pages and relationships and big block sales. phones, right? How are you going to the next? How are you getting the next connection? How are you finding the next place to buy bulk stuff? It wasn't even big black cell phones all the time. It was still pay phones, okay? Because I remember one of the quick story, I'll tell you that's a great story. And I bet you this guy's still alive. I remember being at something called the Super Show. It was a big show in the sporting goods business where all the big retailers went to the show. It was in New York? It was in Atlanta called the Super Show. And I think it was Xavier McDaniel.

He was a basketball player. Seattle Seahawks. Super Sonics. Yeah. So he had a shoe called X-Man shoes. Yeah. They didn't sell very well. So I bought 300,000 pair.

I would have been 18 or 19. Bought 300,000 pair for $9 a pair. So $2.7 million. Okay? I remember going to the pay phone. I called this guy Dennis Wazzluski. Okay, he was the banker from Continental Bank, my banker.

I said, hey, from the payphone. Like, you know, call, I said, Hey, Dennis, I got great news. I just made like a million and a half, two million dollars. He's like, what are you talking about? He says, yeah, I just bought, you know, 300,000 pair of X-Man shoes for nine bucks a pair. And I've got them, I'm going to, you know,

get them all sold to Models and T.J. Max and Marshalls and raw stores. And we get like 15 bucks a pair. So we'd make like six bucks a pair on, you know, 300,000 pair. I'm going to make like a million eight. He says, well, that's great. Why are you calling me? I'm like, well, how the fuck do you think I'm getting the money?

You're a bank. I need the money. He's like. To pay for the shoes. Yeah, I got to pay for the shoes. He's like, so you bought the shoes without me agreeing to lend you the money? I said, yeah, but you're going to let me the money because I'm going to make this much money and pay you back and be a great customer of yours. Sure enough, Dennis let me the money.

This was a different day. This was like, this was when banking was done on like honor back in the day. He said, no problem. They let me the money. I saw all the shoes and probably made a million eight. Wow. 18 years old, maybe 19. But then you're talking about places like T.J. Max.

You're talking about other retailers, marshals. I mean, these are today, at least, they're huge retailers, and I think they were pretty big in 1990. How did you even get into those places as an 18, 19-year-old just calling and asking for a buyer? Like, how did you even get into those places? Sometimes you'd know somebody that could introduce you. Sometimes you just cold call and get the person on the phone. Sometimes you meet them at a different choice.

trade show. And that's what you did. If you hesitate, if you don't take your shot, how do you get a chance to win? Did you grow up a crazy sports fan? Medium. Ish. A Philly sports fan. Yeah. But it wasn't like you lived and died. I did not. Yeah. But it was business that you lived and died by. Yes. So your business really, I mean, when you essentially realize college is not for you, you are in the business of buying overstocked goods. And you could do this, presumably in a pretty short period of time, you had the cash to back up these purchases. Or was it this kind of arrangement where you would... I had a bank. Yeah.

I mean, by the time I was 21, I bet you I owed the bank $50 million. Wow. Because I had a business that was doing $120 million, buying and selling clothesouts. I always had to finance the inventory and finance the accounts receivable. That's kind of crazy. Yeah. And it was because you had this relationship. They knew you and they had seen what you had done before.

Yeah. So there were times I would need to go in. I remember there was a guy above Dennis who was like, I think it was the CEO of Continental Bank. When I needed a lot of money, I would go to see him to explain like, hey, I've got this deal. I'm going to buy this. I'm going to sell this to why. Here's some of the purchase orders from some of the customers so I could show you what

I'm doing. I need this. Okay, great. Deal. Let's go. And by the other, there are times when I got in trouble with the bank, when I got, you know, over leveraged, too much debt. I go and see that same person and like, hey, I'm going to come through. And, you know, we got you, Michael.

And then, you know, I came through. So, you know, relationships are important in good times, but they don't really matter. In bad times, relationships with everything. How are you staffing your growing business? By 1993, you're doing a million or more in revenue. Yes. And the crazy thing is I have an assistant today. So we have a group of incredible assistants.

One of my assistants, Michelle Reardon, has been with me 33 years. Wow. She started with you way that day. She started with me in the Abington Ski Shop called the Ski and Sport Emporium and then came to my first office that I had where KPR Sports was. By the way, named after my mom and dad, Ken and Paulette Rubin. Yeah. All right.

So you got this office. And it's just growing very, very quickly. And I guess at a certain point, from my research, I guess it was around 95, you buy a big share of a women's shoe brand called Raika. And I don't remember this brand, but what did they, I mean, was it athletic shoes, running shoes, fashion? So I had an issue. My issue was I built this incredible business buying and selling closeouts. Yeah. Nine figure business, right?

over $100 million. I'm out 21. And was it profitable? Very profitable. But I didn't like it because I felt like I was living off of other people's mistakes. That's why I decided to get in the brand of footwear business. Do you want to make your own stuff? I want to make my own shoes and build my own brands.

And, you know, I ended up with three footwork companies. That got me to about $180 million in revenue. Call it like we maybe added another $60 or $80 million in revenue to the close-up business. And that's what the business was in 1998. By way, we were a public company. You were running a publicly traded company. I think you were like 23. I think I was the youngest person ever run a public company at that point, I think, in the world.

And you had designers. It was everything. We had two divisions, the close-up business. And then we had the branded footwear business. And how did the brand and footwear business? I mean, the close-out business, to me, seems like a great business because you know you're buying low. You're going to sell high. You've already got the people who have committed to it.

But making and selling your own brand is a different beast. Yeah, you know, it was a 23-year-old competing against Nike and Reebok and Converse. That was not pill battle. But I did what I wanted to do. And when I was building my own footwear brand, the number one thing I'd like to do, I would just walk around and look at people's feet. Like it was crazy. I would literally go out for hours of time and just look at what people are wearing so I could learn.

By the way, I still walk around sometimes and just look at people's feet because that's the way I was programmed as a, you know, early 20s kid in the footwork business. How much was money a motivator for you? You were already making a lot of money, $10, $15 million a year at such a young age. Were you looking at that and saying, okay, we're going to make more and more and more?

Some people will believe this. Some people won't. I didn't give a fuck. Like it never, ever did I look at this and say, like, I want to be rich. It was never a motivator. It was that I was a bad student. I was a bad athlete and I can play my game here and win, and I want to win.

I want to keep putting up a lot of points each day and winning against my competition. That's what I love because that's how I got my satisfaction was by winning. When we come back in just a moment, how Michael moves into e-commerce and why one of his investors actually tells him that he's not losing enough money. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's around 1998 and Michael is running a successful business buying and selling other people's brands and thinking of starting his own. And then one day, a market analyst calls him up to ask about the Internet. And he says, hey, what are you doing about this Internet thing? I literally said to him, fuck the Internet, fuck all these young kids. They're all nerds. They just lose a lot of money. I don't want to hear any of this. and I hang up on him.

Okay? He calls me back an hour later. He was like, Michael, I really think you should think about this internet thing. I'm like, what do you mean? I didn't even know. Like, I couldn't at this point. I couldn't work. Email.

It was just starting. You know, I was not a technology person. But I did what any entrepreneur would do. After putting my head, I went, I called the CEO of the Sports Authority and the CEO of Dix Sporting Hoods and the CEO of Sports. Hey, what are you doing about this internet thing? and everyone said the same thing to me. They said, you know, we get a lot of pressure from our boards to figure out how to handle this.

But if you have any great ideas, call me. And literally, I went away that holiday break of 1998, and I wrote the plan for GSI Commerce. What was the plan that you wrote? The plan was to go out and get all the sporting goods retailers to give me all of their rights to run their Internet business. I'd buy one inventory and leverage it across all the sporting goods retailers because they also. sold essentially very similar merchandise. So you'd go to Dick's sporting goods and Sports Authority and whoever? Yeah, and say, give me your internet rights and I'll operate your e-commerce business.

And before I even started, I was able to get the Sports Authority, Sports Halle, Dunn's Sports, and MC Sports to give me all their internet rights. And then within the next year or two, I got Dick Sporting Goods and several others. That was the original business running the sporting goods, e-commerce business of the biggest sporting goods retailers in the country. Even though it was basically a fraction of a fraction of a percent of their business initially. Right. But by the way, by 2001, so we did it from 99 when we launched until 2001.

I think we did 100, 200 million dollars in online sales of sporting goods 22 years ago. And then the bubble bursts, the dot-com bubble burst in 2001. What kind of impacted that have on the business? Because from what I've read, there were many years where it was operating at a loss. Yeah. I loved those periods of time. Because to me, every period of controversy, every period of tough times, that's a big opportunity. So for me, what did I do in 2000?

So, you know, when the bubble burst in 2001, what did I do? I bought competitors at much lower prices. I focused on really locking into how we ran our business. You know, our best years came from that first. That was my first kind of big implosion. happening around me. And, you know, our stock price went from $30 to $3 to share. We just focused on the business and we build a much better business during that period of time. So, all right. Let's kind of drill down on this for a moment. I mean, you were a really young

CEO for the first time, right, when you're like 23, which, you know, requires leadership abilities and some people have them and some people develop them. Yes. How do you, what do you remember about just being a manager? of people and like just knowing how to organize and interact with people. Did it come easily to you or was it hard? I think a lot of it was somewhat natural for me because I was fortunate where I wasn't able to read, speak so well, focus. I had some natural leadership skills and I had a nice way about me and so I think it

generally worked well. And what about operationally? Did you... I was always a shitty operator. So what did you do for that? How did you... Found great people to support me. Yeah.

Like I was never... Like I could never add value and I still couldn't today like, hey, here's how to make our platform better. Or here's how to... Like, I just, I wasn't strong in that area. So I'd say I was always like good at developing the idea, the vision, the strategy and then leading to get the people around me. I was always less good at like, hey, you know, how do we make the trains run on time? That wasn't what my strength was.

You know, it's amazing to me because, you know, when you look back on this period of time, right, like now, I think most people say, wow, that was a really smart way to think about how to run your business. Acquire other companies at lower prices, build up the portfolio. But, like, you guys lost, like, $150 million in the four-year period. But still, you, you, from the way you remember that time, it wasn't, you, you, you felt like it was going to be fine. I remember having the founder of SoftBank, Masayoshi's son, tell me in 2000 that we weren't losing enough money. Wow. That we weren't being aggressive enough. That we weren't moving quickly enough.

Because you had raised like 80 million from them. 80, the first time. but then we raised more. And, you know, I mean, we raised hundreds of millions of dollars in total. And so for us, when you look at the $150 million that you mentioned during those four-year period of time, that's nothing relative to what, you know, we had peers that were losing, a billion dollars, billions of dollars. So I'd say we were probably the most entrepreneurial of that group of competitors. Hmm.

All right. So I guess sort of through the early 2000s, you guys continue to expand, right? You do all these different partnerships. And then you also acquire the e-commerce rights for the major professional sports leagues, right? Which was massive. I mean, what did that mean? Yeah. So we kind of ran the e-commerce businesses for the NFL, the NBA, major league baseball, and the NHL.

You were doing all the back end. You were doing the buying and the selling. We were doing everything. We were kind of the licensee that ran that business. You know, we were kind of the owner of the e-commerce business of the four leagues that where we paid them a row to. We licensed those rights from the leagues. But you weren't making the products.

Not at that point. We were not. Got it. Okay. So now, let's focus on one thing that we most know you for today, right? Which is Fanatics. And Fanatics was actually found by two brothers as it was a brick and mortar store in Jacksonville, Florida. Yeah.

And then it grew into an e-commerce business, I think, especially mainly for college sports initially. Anyway, you, GSI Commerce, you wound up acquiring them for about $277 million, right? Yeah. So our strength was in pro sports and fanatic strength was in college sports, and we thought it would be great to put the two businesses together. So the purchase goes through in 2011. but later that year, GSI sells to eBay. All of the brands. Everything goes to eBay.

$2.4 billion. Yeah, well, what happened was eBay came to and said, look, we want to acquire GSI commerce. They had two businesses, the eBay marketplace and PayPal. They said, we want to have a third business that basically runs the e-commerce operations for big retailers, big brands. That will also allow us to get these brands.

into the eBay marketplace. So really what they want to do is buy GSI to get in business with all the big brands and retailers that we worked with. But eBay, as everyone knows, doesn't own inventory. So they had no interest in owning the Fanatics business, which was the only business that GSI owned

that owned inventory. So they said, hey, Michael, we'd like to buy GSI overall, but we'd love you to buy this back if you wanted to. That would help facilitate the deal. Yeah. And so we bought back Fanatics, including the license, business that GSI had for 330 million bucks.

You basically buy this back from eBay. And what was the vision that you had at that point? I mean, this is 2011. What did you think you were going to do with it? So when I bought Fanatics back, I said, I'm going to lock in on this business. It's the only thing I'm really going to do. And then we're going to be great at this. And what was it going to be?

It was going to be... Well, you got to realize, when you think back to Finanics, when I bought it back from eBay in 2011, It was a completely undifferentiated retailer of licensed sports merchandise. And so it was a small business. They were just getting, and they weren't, it was not vertically integrated. It was not. They were just like outsourcing their designs.

That's right. They bought merchandise from many third-party vendors, whether it was a new era, 47 brands, a majestic, Mitchell and Ness, whoever was. They bought from lots of other brands. And you wanted to do something different? Well, I think I recognized that sports had a ton of secular growth. behind it. Like just, is sports going to grow? Yes. Is fan of going to grow? Yes. At the same time, I had watched Amazon and Alibaba disrupt retail in such a meaningful way that I knew if we didn't

really differentiate the business, that it wouldn't exist long term. And so we had a vision for really working very closely with sports teams and sports leagues to come up with a business model that was better for them. They would let them build their direct-to-consum. business, build how they communicate directly with fans, you know, that was kind of the beginning of really growing the fanatics business. Essentially, if I'm hearing you correctly, what you're saying is, if all we did was just sell licensed shirts or, you know, hats, and it was also available on Amazon, we're cooked. We can't compete.

Yeah, if we're selling merchandise that's readily available, you know, at other places, I don't think, what makes it special. What we said is we wanted to do is we weren't to do something that would be special. We want to have a broader assortment of merchandise. I think what we wanted to do is create a better model with the sports properties to where they benefited from the growth of the business. When we first started, really all of that licensed sports merchandise that was sold through traditional brick-and-mortar retailers.

What the leagues wanted to do is no different thing that any brand want to do, no differently than what Apple would want to do is to build more of a direct-to-consumer business themselves. And we really, by working with the leagues, gave them the ability to drive a much bigger percentage of business through their own direct-to-consumer business. So put in perspective when we started, it might have been one or two percent of business would go through the NFL or Major League Baseball, MBAs direct to consumer business. It's about a third. We'll go through their own direct to consumer business.

How did you get the leagues to agree to work with you? I mean, to sort of buy into this idea in 2012 when there were already other brands out there. There were already other, they were doing licensing deals with other. Yeah. I think the leagues recognized that they make most of the. money from media, from selling the media rights, and that they want to find other places to further monetize in this consumer products area where taking care of the fan is so important that they realize that if they could get a new model, you're a better model, that they could,

you know, take better care of the fans and make more money as a sports property. So I guess from what I understand, one of the differentiating factors is also this ability to respond and react quickly, right? to like the stories in sports. Well, think about what's going on right now in sports. You just had Otani that goes to the Dodgers and everyone's so excited he gets to the Dodgers. Okay, everyone wants his products.

They did something nobody else had done. He hits 50 home runs and 50 solar bases. We make so many products around that in real time. And then, my God, they win the World Series. And so the ability for us to respond and handle that consumer demand will probably service just in North America just this month, between now and the end of the year, I think we'll probably service a million different Dodger fans online.

We've been able to capitalize on that in a way for fans. Yeah. That said, the thing that's scary when you hear the, and I listen to myself, talk, I'm like, the biggest thing I've been thinking during this whole conversation myself is, man, I've been doing this stuff for 40-plus years. I feel like we're just getting started. I'm going to leave here.

I'm going to go spend the afternoon and evening with the CEO of FNAX Commerce, which is our entire fan gear business. We're talking about all the things that we're not doing well and what are the things we need to do better? And even though the business's grown from $250 million when I bought it back from eBay

to this year that division's like a $6.7 billion business, okay? We're not thinking about what we're doing well. We're thinking about what we're not doing well. Where can we be better? What do we need to keep enhancing? What do we need to fix? And by the way, there's a lot we need to do.

That's what gets me so excited is like, I've been at this for a long time, but I still feel like a startup. When we come back in just a moment, Michael talks about the sacrifices he's made to always be in startup mode and how he's finally forcing himself to sleep. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to how I built this. I'm Guy Raz. So when we last left off, Michael was saying that even though he's been running fanatics for 15 years, he still feels like he's building a brand new company. Yeah, I mean, look, we're, we have three businesses today. Our first business is the one you've been asking me questions about Fanatics Commerce.

And that includes, you know, today we have, we run the e-commerce businesses of the NFL, the NBA, Major League Baseball, NHL. We have about 900 individual team sites that we operate. We operate the flagship fanatics website, which is the single big site that we operate. We own Lids, which has 1400 headwear stores. We operate the college bookstores for their apparel. We own Mitchell Ness, the apparel brand. You know, we make all of the Nike licensed sports merchandise in NFL, college, major league baseball. So that's the business people think of us for.

But when you really look at that business, even though it's grown from a $250 million business in 2010, the year before we bought it, to this year we put it all together. It's about a $6.7 billion business. Wow. Look, I think we've become a decent-sized company. We haven't become beloved. I want to be beloved by sports fans, and we need to be better to be beloved by sports fans.

So there's so much to do there. I think in our newest business, collectibles, where we own tops and we have, you know, the official trading card rights to, you know, many of the biggest sports properties in the world. That business, we bought it. And then we just got into the sports betting business where everyone's betting against us.

And I love that. Love being an underdog. Because Kraft Kings has been the dominant play. Fandonged on Draft Kings are the dominant two companies. And for me, people like, oh, you're the leader in Fangare. You're the leader in trading cards. Why are you getting into that? You know, you're the underdog here.

Guess what? If you want to ask me what gets to be most turned on, being the frickin' underdog, man, that is fun. To have everyone betting against you to say, you can't do this, great. You know what the same way my mom told me I couldn't do something. And my dad told me I couldn't do something. I was told his little kid, you can't do this. Let's see how it plays out. Where do you, I mean, presumably, I mean, sort of the sports betting market is a massive, massive growth opportunity, right?

I mean, when you say we're just getting started, I mean, is that sort of where your head goes to, in particular to that part of the business? No, my head goes to we're just getting started in all of the businesses. Even in our finance commerce, $6.7 billion in revenue this year. Yeah. So right now we are so focused. Like, we had, look, this is no secret. We went through a, you know, tough experience earlier this year in our partnership with Major League Baseball and with Nike where, you know, Nike redesigned a jersey that we'd been making for eight years. And, you know, there was a really negative reaction to it.

And with Major League Baseball for the uniforms. It was the official Major League Baseball uniform. And players complained about it. Players complained. Fans complained relentlessly. They didn't, like, say a little bit. They said a lot. They spoke loudly.

They could see through it and all this stuff. Yeah, and for us, that was actually an incredible moment because we could sit there and say, hey, well, we've made lots of mistakes. This is one thing where, you know, we didn't lead it. You know, we kind of got, you know, stuck in the situation. Or you could say, you know what? How do we use this to make our company better? And we actually came up with a brand purpose that said we were going to relentlessly enhance the fan experience and everything we do. And if we're not, we're not going to do it.

We embrace the ass whipping. We said, we need to be a lot better. You know what? Even if we're not designed in the jersey, we had people inside of Finnax that were saying, hey, you know, people may not like the smaller letters. They may not like this. They may not like that.

Well, you know what? We got to speak up louder. We got to be stronger. We can't, you know, you can't just go along for the ride. So, like, that's why I'm so excited about this business because I get to learn every day. I get big challenges. You know, it's a, you know, if you like action,

this is the job for you. So, all right. If you think about it, it's just 12 years ago, right, where you essentially, about 12 years ago where you really kind of, Fanatics really kind of has its rebirth and it becomes what we know about today. And that's not that long ago, right? And yet the business of sports and sports apparel has just exploded even more. And while so many other content and media businesses have had challenging times and we're sort of starting to see this kind of over saturation with. content. Sports just, it's just moving in a, in this like hockey stick direction. Look, I think it's obvious to know that there's secular growth behind sports.

I think we've helped to accelerate the growth of this category, but it doesn't mean, you don't look at yourself and say, not what have we done well, but what are all the things we haven't done well? What are all the things that, you know, we didn't get right? Because that's the way we think. If you sit there and you're satisfied, you're dead. So you, so, I mean, I hesitate to ask you this question because I think I know the answer, but like, you don't see, you see yourself involved with this for the long haul. Like, you don't. Forever. Forever.

Forever. I'm never saw on this. You're, you are going to be at the helm of this thing. Until I die. So you die. Yep. You know, one of the, I mean, you know this, that there are a lot of sacrifices that a person makes. And one of the things that I do on the show is emphasize that entrepreneurship is not a hustle culture. It's not a hustle culture show.

It's not get rich, quick scheme show. It's a, it takes a long time. It's a lot of work, and there are a lot of things you have to give out. Yeah. You've benefited tremendously from it. Obviously, you're, you know, have massive wealth. But there are also things that you've sacrificed. And again, I don't know if people are going to, you know,

they're not going to play a violin for you necessarily. But like just being young, just being a young kid hanging out and doing stuff like you were working. You didn't have like a teenage college experience. You weren't in your 20s hanging out, hanging out with friends, like you were working. Look, I agree that there's lots of sacrifices that I've made and will continue to make, but they don't feel like sacrifices to me

because I'm doing what I love. I mean, you know, if you ask Tom Brady, did he make sacrifices to win seven Super Bowls? I don't think he's taking anything back because he won seven Super Bowls. And by the way, the only thing he's mad about that he lost the Giants twice and, you know, didn't win more. So, you know, that's my mentality.

What about as a parent, did you have to, presumably, it's a sacrifice time with your kids? I have and I do. But what I try to be there is for the things that really matter. And no, I'm not like, you know, look, I have, you know, two young kids now as well. And, you know, I think, you know, when Camille and I had, you know, when we had Romy and then Gemma are the two,

young ones. You know, she knew that, like, I'd be there when it matter, but I'd like that I'm like, she knew that I work 17 hours of most days. So, you know, this morning when I woke up and the kids were up, you know, 5 o'clock in the morning, I went down and played with the kids for 10 minutes. And I went to work at 5 a.m. in the morning and I get home, but tomorrow morning I'll go see him for 10 minutes. And, you know, but I'm there when it matters. And I'd say with my older daughter. Who's now 18. Yeah, who's now 18. This is from your first marriage. Yeah. Yeah. And we have, our relationship is spectacular. If I go and at my phone right now, she will have called.

Yeah. You know, it's like we just, we make it work. You kind of figure out what you got to do and you kind of make it all work. And, you know, it's, you know, nothing simple. But look, are there much better parents than me? Absolutely. And yes, you know, does Camille want to kill me sometimes because I'm just not mentally available?

Sure. But like, I'm doing what's best for me and I love doing what I'm doing. Given that your mom was a psychiatrist, I imagine that. that she encouraged you to talk about things on your mind. Did you have you ever benefited from therapy? I have gone to therapy off and on over my entire life. You know, as a kid, hey, you're broken. So I was probably sent to a therapist from the age 10 or 12 off.

Did you hate it when you were a kid? Hated it. Didn't dislike it. I hated it. But I'd say I've never really been a great patient of a therapist. But what I am really good at is talking through my issues with people that I'm very close to. Do you ever remember feeling anxiety or depression? Not depression, but anxiety, yes.

Anxiety about what I need to get done, pressures that could be on me. Yes, never depression. Anxiety that would, like, cause sleepless nights? Well, I have one of the worst I mean, so, look, there's something in my, in my, like a tube in my chest. Yeah. Where it keeps in large, every year it's enlarging.

Over the past, five years is enlarged about 40 bibs. And they said if it goes another 50 bips, you have to get open heart surgery. And they said the only way to fix it is sleep. Okay? And I used to think I was so tough to sleep as little as it could be. My sleep, if you look, if you average the last 20 years, it's probably four and a half hours a night.

And now, I've got to swoop on my wrist. I'm trying to figure out how to sleep seven hours a day. By the way, it's really, really hard because I wake up every one to two hours throughout the night with a dry mouth thinking about work. Do you grab your phone? Always. And I know I shouldn't.

You shouldn't sleep. It can't be in the room. Yeah, well, thank you, Mr. Office. So if I had sleepless nights more than you'd ever know, have I stayed up thinking about what do I need to do? How do I compete better? How do I do better for our fans all the time? You know, you mentioned that the last book you read was when you were ninth grade, and I think that's in part because it's just hard. It's hard for a lot of people to just focus on a page.

And so some people can listen to a book, some people just... I don't listen to them either. Talk about something really weird about my brain, okay? This is going to sound crazy. I don't know the alphabet. I get stuck around MNP, and I've never, and I've kind of decided that I'm not going to relearn it, because I kind of like that I could not be able to do the alphabet legitimately.

So, you know, I kind of accept my brain. Like, my brain's, it's weird, but like, you know, I'm pretty good at certain things and pretty shitty at other things. I just focus on what I'm good at. Yeah. So, all right. How much of this, of all this do you attribute to just the grind? and how much do you think has to do with getting lucky?

Well, anyone who says that you don't need luck to be successful in business is full of shit or doesn't understand. You definitely need some luck to go with you. Luck and time are a very important ingredient. That said, I attribute 100% of it to the grind, not 99%. I am a top grinder. I'll out work. I'll out hustle. Anybody.

It's fun for me. Like, I don't look at it as grinding. I look at it as like, if you, asked any athlete in the world if they could have their career gone forever in perpetuity at the top of their game, who wouldn't wish for that? And I can do that in business, I think. And so, like, why would I ever give that up? That's Michael Rubin of Fanatics. By the way, in case you missed it, back in September, Major League Baseball announced that it was getting rid of those embarrassing see-through uniforms and returning to the old ones.

And one more thing? Michael recently announced that he's no longer going to throw his annual white party, the big bash at his Hampton's estate where celebrities would dress up in white and pose for paparazzi. Michael felt like given the notoriety around another famous white party, the one that used to be thrown by Diddy, that the whole concept has kind of been tarnished. so he's decided to focus more on charitable events in the coming years. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app

so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gairoes.com or on Substack. This episode was produced by Devin Schwartz with music composed by Rumtine Arablewee. It was edited by Neva Grant with research help from. from Chris Messini. Our engineers were Robert Rodriguez and Gilly Moon. And our production staff also includes Alex Chung,

J.C. Howard, Carla Estevez, Sam Paulson, Catherine Seifer, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.