I recently interviewed Nigel Eccles, CEO and co-founder of FanDuel - Fanduel is an entirely new way of playing fantasy sports, FanDuel.com lets you play and win at fantasy sports in a day instead of waiting the whole season. Players can draft a new team at any time, and pitch it head-to-head against a single opponent - or a league of opponents - for real money. The player whose team has the most fantasy points after the games have completed wins the cash prize.
Before co-founding FanDuel, Nigel spent 4 years with McKinsey & Co, and prior to this ran Flutter.com, a betting exchange company which was acquired by Betfair.
In our interview below, Nigel talks about how the idea for FanDuel came about, how the whole game works, challenges running the business and key advices for aspiring entrepreneurs.
Hi Nigel, How are you doing, great to have you on YHP? Could you quickly give us some background information about yourself?
I’m the CEO and co-founder of FanDuel, which is a daily fantasy sports game. We launched in 2009 and in 2011 we moved our HQ to New York. We have 20 employees split across our New York and Edinburgh offices.
How did you get involved in entrepreneurship? Were you exposed to entrepreneurship as a child?
I grew up on a farm so I guess I was exposed to being part of a small business. One of my older brothers, Alan, was always a lot more entrepreneurial than I was though. He was always starting small businesses like buying logs and then chopping them up and selling them as firewood. I tended to be the employee (unpaid!).
So tell me about FanDuel and how the idea came about?
We launched the company in 2007 as an on-line games development business. Our first game, Hubdub.com, was an on-line news prediction game. It grew really quickly, attracting about 250,000 users at its peak but we could never figure out a good way to turn it into a business. So in early 2009 we decided to launch a new game. I knew our sports fans on Hubdub were the most passionate and we thought fantasy sports was an interesting market so it really grew from that.
What is FanDuel and how does it work?
FanDuel is a daily fantasy sports game. In traditional fantasy sports players pay an entry fee, draft a team for an entire season and then score points based on the performance of their team. The player whose team scores the most points wins a prize. FanDuel is the same only instead of a season the games only last one day. We offer the four major professional US sports, NFL, MLB, NBA and NHL, and college football and basketball.
What is your business model?
Each game has an entry fee and prizes. We structure each game so that the prizes equate to around 90-94% of the entry fees and we take the remainder.
How did you initially attract users to FanDuel, and how do you do it now?
We use a variety of ways to market FanDuel: PPC, print, radio, affiliate and partnerships. Additionally we reach a lot of users through viral and word of mouth marketing. At the very start our main means of customer acquisition was PPC.
What makes FanDuel different from any service out there? What problem does it solve?
Our biggest competitor is traditional fantasy sports which is played by 32 million people in the US and Canada. FanDuel offers three advantages over traditional fantasy sports:
1. Play today, win today – FanDuel games only last one day so you don’t have to commit to an entire season
2. Significant cash prizes – you can play in tournaments starting from $1 and win huge prizes. Our FanDuel Fantasy Football Championship last year saw 12 finalists flown to Las Vegas for an all expenses paid trip and the chance to share in a $250,000 prize pool. All that for a $10 entry fee.
3. Variety – we offer head to head games, 5 player, 10 player and 500 player plus leagues. We offer leagues with 50/50 pay-outs (i.e. finish in the top half of the league to win) and leagues with live finals. Entry fees range from $1 to $500.
What are the most crucial things you have done to grow your business?
Continue to invest in product and marketing. Our product experience is several magnitudes better today than 12 months ago. In 12 months time it needs to improve the same amount. On marketing we have continued to spend on acquisition as we need to convert more of that 32 million traditional fantasy sports players.
What was the most challenging part of starting the business?
Getting product/market fit is the hardest part of growing any consumer tech business. Prior to product/market fit progress feels really slow and painful. Failure to crack product/market fit means you completely fail so it is very binary. The challenges post product/market fit have been around growing the user base quickly enough and financing our growth.
Would you say the business has changed from the first initial idea?
It changed very rapidly in the first six months as we got feedback from users. Since then it has evolved and we have added more variety and depth to the product.
Who are your competitors?
Our major competitors are the traditional fantasy sports operators, CBS Sports, Yahoo and ESPN. Daily fantasy sports is complementary to traditional fantasy sports but we are starting to see more and more users completely switch to only play daily fantasy sports. That is particularly noticeable with younger users.
What were you doing before you founded FanDuel?
Prior to FanDuel I was with McKinsey & Co for 4 years. Prior to that I was a product and project manager for Betfair and Betdaq.
How have you been able to fund the business?
Over the past 3 years we have raised $6 million in venture investment from Pentech Ventures, Piton Capital and the Scottish Investment Bank.
What can we be expecting from your company in 2012?
In 2012 our aim is to take daily fantasy sports to the mass market. To do that will require more refinement of the product, development of mobile and social, and also further investment on the marketing side. We will also have to significantly upgrade our support infrastructure to handle the projected growth.
What three pieces of advice would you offer entrepreneurs starting out today?
There is lots of good advice out there on-line so number one is to read widely. Number two is network and to reach out to more experienced entrepreneurs for help. The third piece of advice is in the early stages focus relentlessly on getting product/market fit and working out your business model. Prior to achieving that nothing else really matters.