Interview: Jason Robins, CEO, DraftKings
Published 28th December 2014
What was your background prior to starting DraftKings, and how did you come to enter the daily fantasy sports (DFS) space and lead the business?
Before DraftKings, I led acquisition efforts at Capital One and Vistaprint. I started in marketing and analytics at Capital One, which is where I met DraftKings cofounder Matt Kalish, and then moved on to Vistaprint, which is where I met our third co-founder Paul Liberman. We were all big fantasy sports fans, and wanted to turn that passion into careers. Matt Kalish came to Paul and me with the idea; then we spent about a year developing the company before we quit our day jobs to do DraftKings full-time.
What do you see as the main factors driving the explosive growth of daily fantasy sports over the last couple of years?
Daily fantasy fills a unique space for sports fans. The product provides on-demand access, flexibility and the potential for near constant game play. If you’re a die-hard season-long player, daily fantasy offers the opportunity to stay in the game, and the constant excitement of a new draft. Casual fans also don’t lose anything by taking some time off and coming back to play when they can. So, it’s a pretty near perfect experience for players.
You launched later than most of the competition, yet are now firmly established as one of the big two in DFS. What exactly has DraftKings done differently to enable it to achieve this position in such a short time frame?
We came in with direct marketing and customer acquisition experience from the start, so we hit the ground knowing how to find and convert customers. In addition, we had a keen focus on customer experience from the outset. A game is much more fun if it’s accessible, easy to learn, and the technology is reliable. That led us to develop what we see as a best-in-class user interface, and to be the first to offer our games across the widest range of devices and OS. We remain the only major daily fantasy sports company with an Android app, and we were the first with an iOS app. Finally, we focused on providing breadth of experience, so we diversified into having the most sports, and a wide array of play options, including a weekly contest that awards $1 million. Generally, I think we did a good job of identifying what was important to our market, and executing on those things efficiently.You’ve been on an acquisition drive of late. Are there still some user databases out there worth acquiring, or is organic growth now your near-term focus? We acquired DraftStreet and StarStreet just this year, and we are seeing exceptional organic growth at the same time. However, we never rule anything out.
You have been taking advantage of the leagues recently lifting their ban on sponsorships with fantasy companies, signing with the New England Patriots among others. What is the significance of these new types of deal for DraftKings?
Inking deals with sports teams is extremely significant. As you mentioned, we signed with the Patriots, which made us the first DFS company to sign a deal with an NFL team, and last week we announced our deal with the Broncos. These types of partnerships are exciting for us on many levels. First, the brand exposure for us is highly valuable, of course. But in addition to that, it is a step forward in raising mainstream awareness of our product. Historically, DFS has been a pretty niche industry, understood by only a relatively small group of early adopters. Partnerships like ours with the Patriots and now the Broncos give sports fans a reason to explore and figure out what the buzz is all about, which is decidedly good for DraftKings, and the industry overall. Coming into the Pats deal, we actually already had a league partnership in place with the MLB, and since then we’ve announced a partnership with the NHL. We’re looking forward to aligning ourselves with even more professional sports leagues and teams moving forward.
How is user activity split among the different sports for DFS, and how does this compare to the fantasy sports market as a whole?
The top three sports are the ones you’d expect: football, baseball and basketball, but the same user typically plays more than one sport.
More media brands are entering DFS, and every major league is reportedly looking into the viability of their own product. Is this a concern for DraftKings, or do you see their entry as validating and growing the pie for everyone?
Ultimately, we’re focused on providing a premium experience for players, and working closely with professional leagues to deliver this. I think the growing interest in the space is great validation for what we’re doing. The excitement around daily fantasy sports is helping spread awareness of the space, which is great for DraftKings.
Would it be fair to say there’s more luck/ chance involved in DFS than its seasonlong counterpart, and that in combination with the prospect of big, instant cash outs, this has attracted a different, more speculative type of player?
Both season-long and daily fantasy sports have luck involved, to arguably the same degree. The main difference on the luck component is that you can recover in daily fantasy by drafting anew, whereas if a player unexpectedly gets injured or is otherwise unable to play after you’ve drafted him, your options are far fewer in season-long. The more important distinction is between customers who are comfortable with real-money gaming or not. If you play in a season-long league where each player contributes at the beginning and prizes are awarded at the end, you’re very likely to enjoy playing daily fantasy. The vast majority of daily fantasy sports players have rich histories with, and continue to play, season-long.
Only around 1% of the 42 million fantasy players in North America are estimated to participate in daily cash games (Source Eilers Research), so this audience is obviously ripe for conversion. What are proving the main challenges here? Is it just a matter of time, patience, and marketing dollars?
Daily fantasy sports didn’t exist until recently, and people are really just starting to discover them. In fact, we’ve had a 12-fold increase in paying users this year compared to a year ago. It is indeed a matter not just of time, but of timing, patience and judicious marketing spend to raise awareness.
You partnered with the WSOP last year. Is converting online poker players proving a fruitful strategy for DraftKings, and will you be repeating this sponsorship in 2015?
There is a measure of demographic overlap between the WSOP gaming community and DraftKings players, which made the partnership a natural fit for us. We’re looking forward to seeing where it will go in 2015.
“Historically, DFS has been a pretty niche industry, understood by only a relatively small group of early adopters. Partnerships like ours with the Patriots and now the Broncos are a step forward in raising mainstream awareness of our product.”
“There is a measure of demographic overlap between the WSOP gaming community and DraftKings players, which made the partnership a natural fit.”
“We’ve had a 12-fold increase in paying users this year compared to a year ago.”