Rates & Barrels - Bonus Episode: The Athletic’s Small Business Story | Part 1 of 3

Episode Date: May 15, 2021

Part One of The Athletic’s Origins story for Dell Technologies ‘Small Business Podference’ series. In this episode we hear from The Athletic’s co-founders Alex Mather and Adam Hansmann about how they met, how an idea for better sports coverage materialized into a significant media player in the sports landscape and the spirit at the heart of The Athletic’s culture. For the complete lineup of episodes, visit delltechnologiespodference.com Learn more about your ad choices. Visit megaphone.fm/adchoices

We don't ask for permission to do things here. That's an important aspect to our culture. If you want to do something, I don't want to hear about it. Just go do it. Hello, everyone. I am Jade Hoy, executive producer for the Athletic Podcast Network. And you are listening to a special presentation brought to you by Dell Technologies Small Business Podfriend Series.

Of course, as you may have heard, many small businesses are looking for new ways to enhance their business strategies during these uncertain times. For the second year in a row, Dell Technologies has assembled an amazing list of podcasters to create a virtual conference to share advice, inspiration, and stories on navigating companies now and into the future. Here at The Athletic, we decided to share the story of how our company was created. Going all the way back to late 2015 with the founders of the company. Alex Mather, co-founder and CEO of The Athletic.

And I'm Adam Hansman, co-founder and president of The Athletic. In these three episodes, we will take you through how The Athletic began. A simple idea that was to deliver quality journalism to diehard sports fans. How that idea came into existence, the trials and tribulations along the way. Working together towards one goal, team building, journalistic and artistic freedom. Reading the landscape in an ever-changing market space full of big players that form a niche for which to grow into the future. How did you all meet?

Yeah, so Adam and I met probably 2015 or maybe at the end of 2014 at a company that we both previously worked at called Strava. Strava is a social network and subscription business for endurance sports nerds. I was on the product team and Adam was on the finance team and through a series of meetings together, developed a strong working relationship that led to some conversations. What were those conversations? Were you talking just regular sports talk like you would with a friend? You know, probably, you know, the rare thing at Strava was there actually weren't that many sports fans there, non-endurance sports, like pro sports fans. And so I probably had a Phillies hat on.

He's a Bengals fan and we probably got to chatting. But where it probably got more interesting is when I resigned from Strava in September of 2015. One of the first emails that I got after I resigned and my ambition was to start the athletic and I was alone. And, uh, one of the first emails I received after, after resigning from Strava was from Adam saying, grab coffee question mark. Hey, where'd you go? What's happening? Adam, what were you thinking? Did you know that that resignation was being tendered? Yeah. So I suspected that this was Alex's kind of moment to look at starting in something of himself.

And, you know, we had sort of not had any kind of serious discussions about, you know, entrepreneurship. We're both like very hardworking people and just had that kind of rapport from, you know, being together at Strava that I figured I would check in, see what he's up to. Figured Alex would have a bunch of different opportunities. Was actually quite surprised when I heard that he was interested in starting something in the sports media space. Because like Alex said, when we were at Strava, when we say sports or when we say athlete, we mean runners, cyclists, endurance athletes, right?

Both Alex and I, as we would sort of discover, it means some player on a field trying to catch a ball or throw a ball. And our lives revolved around those people throwing and catching balls. It was sort of one of those, just like a moment that was a spark. And I believe we met actually Alex in the Darwin Cafe behind Strava's building, we had to be off the premises because I think Alex might have had some non-competes. I think it was a full 10 feet from the back door of Strava's office through an alleyway to a cafe. And Adam passionately told me that he was editor-in-chief of his grade school or was

it high school? I was the editor of my high school paper. So I felt like that was enough to get into the conversation. How is it you go from just an idea you're walking down the hall with to forming the company? I mean, this is the craziest moment of any startup, whether it be the athletic or a podcast, it be the athletic or a podcast, it has to translate from ideas that roam around your head into ideas that you communicate to others. And they were so good in your mind and you had it all figured out and then you start talking about it and you realize, wow, I've got a long way to go to figure this one out. This turned out to be as I got to talk over and over with Adam,

generally over coffee, that it just kept gaining steam in how we might do it. And for me, I had previously been an engineer in my career, had not written code for a decade. And I remember Adam saying, we don't need another engineer, you can just write the code. He had no idea what he was talking about. He had no idea that I had taken a decade off. He just assumed I could write the code. But you did. And I think that blind confidence in me propelled me to write the first 8,000 lines of code for The Athletic.

You start to go and say, okay, well, what do we need from a team perspective? What do we need from a capital perspective to see if this thing has legs? Pretty quickly, working with Adam, I realized that there's not a ton of overlap in a good way, which is the things that I could provide to the company in terms of my experiences in the tech world and media world were very, very different than the things that Adam brought to the table. were very, very different than the things that Adam brought to the table. And that's where it started to go from idea to buying a domain name to how much money of our own are we going to spend on this thing. And so it feels like this is not an exaggeration.

It feels extremely fragile, almost like the creation of life on a nature show, that anything could dislodge you from this idea. Even just one stray thought could kill the company before it starts. But day by day, it gets stronger and stronger. All that took place a few months towards the end of 2015 with Adam. Yeah. And the other thing I would call out in the early days, Alex and I coming from Strava, which had raised a couple of fundraising rounds, we thought, hey, we're Strava alums. This raising money thing, how hard could it be? In addition to even just trying to launch our first market, which we did early in 2016, spent most of that first 12 months really out trying to raise money. of that first 12 months, you know, really out trying to raise money. And there's pros and cons to obviously trying to raise outside, you know, investment sort of when you're starting a company.

But, you know, Alex and I didn't come from means and, you know, wanted to sort of move aggressively with our idea. And we just fell flat on our faces. Investors were not about the athletic in the early days. Rewind back to 2015. Sports fans were going through a period where you had local newspapers focused on game recaps, doing things the way they've always been done. Journalism has had revenue problems for years, and we're starting to see as the conversion over to digital for many of these properties, many of these newspapers, just isn't the same. But many outlets were already cutting resources, depleting sports departments. Major players like ESPN and Bleacher Report were focused on the

major stars like LeBron James, Tom Brady, or Tim Tebow. The space for all other sports was getting smaller. I don't watch football religiously. I know who you are. You are one of the biggest sensations this past year. It goes well beyond football. So you know people either love you or they hate you. There felt like a gap in between, both with the local newspaper doing and ESPN. And then there's like great sites like Bleacher, Bleacher Report out there. But they're more focused on the ad supported business model.

And I kept coming back to this idea that like if you hire some of the best, smartest sports writers and made them like rethink what they do every day, like you don't need to go to every game. You don't need to be the 10th microphone in someone's face. What if you just tell great stories, do stuff other people don't, figure out what fans want, iterate your way. There would be something that you wouldn't need a ton of subscribers to make it work financially. It really just started as simple as that. How can we prove out that we can hire five people in Chicago, that we can then get enough subscribers to pay their bills without ads, without... There's the era of auto-playing videos, the era of pop-up ads. It was tough reading sports media for many, many years.

And if you clicked on a link, it might make you click 30 times through a slideshow to see your article. And so it felt like there was an appetite for a portion of the sports fandom out there that would appreciate great work, that would be willing to pay a little bit of money each month to not have ads, to not have pop-up ads, to not have autoplaying videos and support great journalism. And that was really just the simple seed of the business. Yeah. I mean, I think what struck me as an expat fan like Alex... So I grew up in Cincinnati, Ohio, big Reds, Bengals fan, living in California and just seeing in the industry a lot of innovation happening. And so there were sites emerging around that time, like your 538s, Fangraphs. Grantland was going strong circa late 2015.

And when Grantland, when someone there would write about the Bengals or the Reds, you sort of would go crazy. So just seeing editorial models that did focus on quality, but not for local. That was really our initial, you know, the itch that we were trying to scratch both as founders, but also like that was the pain point that we felt as sports fans was, you know, there are some cool things happening. There are a lot of kind of gross things happening with all the, you know, the autoplay and the slideshows and what have you, but real innovation taking place in the space too. And we thought we could apply that for local fans.

Does it sound like I'm talking into my mic? You know, I think back to many of the fundraising experiences, the thing we kept hearing over and over was there's just so much free content available. How are you going to get anyone to pay? But it just feels more like an idea or a concept or a dream than actually something real. It's the first thing that like when we went out fundraising, everyone kept saying the same thing is no one's ever going to pay for content. And so this is the beginning of 2016. At this point,

maybe the New York Times had a million subscribers, something like that. There weren't a lot of case studies in media companies getting folks to pay for great content. There was a lot of skepticism from the venture community that no one was going to really take off. It's been exponential for Spotify and Netflix and Apple Music, Disney Plus and all these things. Now where it seems very obvious, if you go back and try to watch a television show or a movie with ads, you're like, I'm going to just restart this movie on Netflix. Can you imagine any other business that's like, oh, did you like this ice cream? Come back next week for another scoop. And you're like, but I'm willing to buy three scoops right now. I want it all right now. What was very clear is if you really pushed the person telling you that, okay, well, what do you read? Tell me. And then they would start to spout off the websites and say, well, do you get anything

on this team? Where are you from? And you would actually like interview them and they would arrive at like, yeah, you're kind of right. There really isn't great stuff on many of the sports teams out there. It was a great learning experience. And the fact that we had to figure out how to position our product. And I think that like really translates into an important story at The Athletic, which was we launched the business in January of 2016, and we cover sports in the city of Chicago. It was a game that will be emblazoned on the souls of Cub fans forever. A turn of events that made grown men sob with relief that the burden borne by their parents and grandparents had finally been lifted from their shoulders. You may remember, 2016 was the year that the Chicago Cubs broke the curse.

And there was some really interesting things that we saw in our data. During that World Series run, where we're all watching the Cubs break a curse of epic proportions. We see our data around the Chicago Blackhawks. Our stories for the Blackhawks were, in many cases, outperforming the World Series stories. And what it was, in our minds at that exact moment was, whoa, hockey fans don't get enough coverage. There's 90 people in the press box at Wrigley. They're all covering the same game. There's like two people in the press box

watching the Blackhawks. There's just an unbelievable opportunity for us to cover the things that other people aren't covering well. And that was a really big moment for us. And that really drove, I would say, two years of strategy. So we looked at things like hockey, baseball, college basketball, college football. At that moment in time, those were the things that other people were pulling away from digitally.

Because you had the NBA and NFL really taking up a lot of the oxygen. And so we started to cover the things other people weren't. And that was a really effective strategy through 2017 and 2018. Fast forward slightly, I think early days, we saw this idea of covering teams and leagues that others were sort of... It wasn't big enough for them from an ad-supported model. But for us, I don't know how many people on average go to a Chicago Blackhawks game and maybe it's 15,000, 20,000 people. A small fraction of that, of just one game of people that are at a Blackhawks game at the United Center can pay for a writer's salary

and can pay for that writer to go on the road and tell interesting stories. That subscription model where you can go big by going small. It's a very counterintuitive thing, but we really lean into that. Then I think the next big step for us was other outlets, the ill-fated, infamous at this point, Pivot to Video, allowed us to start to hire bigger name talent. And so we were our way up the ladder, climbing up the side of El Capitan was... First, it was hockey, then it was college football. And then you start gaining that momentum. And this idea that would have sounded crazy to us in 2016 of hiring Ken Rosenthal or Seth Davis or Dana O'Neill, then it becomes real.

or Seth Davis or Dana O'Neill, right? Then it becomes real. business in our current environment from top podcasts like Jill Schlesinger from Jill on Money, David Brown from Business Wars, and Gabby Dunn, Bad with Money. For the complete lineup of episodes, visit delltechnologiespodference.com. I'm Jade Hoy for The Athletic Podcast Network.