In this episode, we talk with RotoWire cofounder and President Peter Schoenke about the evolution of fantasy sports, growing RotoWire since the 1990s, and the industry’s response to sports betting legalization.
ABOUT PETER SCHOENKE:
Peter Schoenke is the co-founder and President of RotoWire.com, a leading content and technology provider to fantasy sports consumers and media companies including ESPN, Yahoo! Sports, NFL.com, FanDuel, DraftKings and Sirius XM Radio. Mr. Schoenke is also a board member of the Fantasy Sports & Gaming Association, where he heads up lobbying and government affairs and served more than a decade as Chairman.
Mr. Schoenke has led the FSGA’s efforts to fully legalize fantasy sports in all 50 states which has resulted in the passage of 25 state laws since 2012. He has testified in Congress and 10 state legislatures in support of fantasy sports and sports betting legislation. In 2011, Mr. Schoenke was elected to the hall of fame for both the Fantasy Sports Trade Association and Fantasy Sports Writers Association for his contribution to the growth of the industry.
RotoWire is a leading content and technology provider to fantasy sports consumers and media companies including ESPN, Yahoo! Sports, NFL.com, FanDuel, DraftKings and Sirius XM Radio.
Founded in 1997, RotoWire has been a pioneer in fantasy sports developing industry staples such as player notes and DFS lineup optimizers, while winning more writing and industry awards than any other company.
Welcome to Founder Chats by Baremetrics where we chat with founders and hear about how they started and grew their businesses. My name’s Brian Sierakowski, I’m the Director of Ops at Baremetrics.
This week I talked with Peter Schoenke, the founder of RotoWire. This week, we talk about man, really the start of SaaS.
Peter started his business back in the 1990s with a SaaS model, believe it or not. So we can learn a ton from him and what we can learn from history and I’m yeah, excited to get into it. Here is the conversation with myself and Peter.
Brian: Hey Peter, thanks for joining the podcast.
Peter: Thanks for having me. Appreciate it.
Brian: How’s your day going so far?
Peter: My day is going well. It’s fantasy football season. That’s the focus of our company in addition to sports, but our big revenue driver is fantasy football. Training camp has started, so lots of news and drafts and fun and excitement. It should be a good year.
Brian: Awesome. Is there such a thing as a good fantasy football year versus a bad fantasy year?
Peter: The fancy football year is when the players don’t actually play, which unfortunately was a real possibility last year with the pandemic. This year, it looks like it will be pretty normal, you know, there’s fans of training camp from the season, teams are all set to have pre-season games unlike last year, so it should be locked and loaded. We’ll see what happens.
You never know, but it looks like the NFL, like last year, will be able to pull it off and play all of their games.
Brian: Awesome. That’s yeah, I imagine that’s a big difference for you if the sport is actually played or not, it makes a big difference in your ability to deliver news depending on the sport.
Peter: Yeah, we’re completely dependent on that.
Brian: What did you do during that month?
Peter: We really tried to figure out ways to make that downtime be really effective in a bunch of projects that we always had on the back burner. We added a section on our website for sports betting, which is a growing area in the U.S since becoming legal in more and more states.
So we have content and tools for that. We really tried to put our time and effort towards being productive, so that was challenging. I think we did a pretty good job at that time, but it was definitely strange.
Brian: Yeah. I can imagine. I was wondering if you were going to say, “I went to the beach…” (laughs).
Peter: It was actually more stressful than running the regular business, just because it had so many unique new problems to solve.
I think for a lot of people it was watching a lot of Netflix or whatever. But for me, we had the opposite where we were trying to figure out how to plan ahead and figure it out how to use our time effectively, keep all of our fleets busy, all that kind of stuff. So it wasn’t comfortable.
Brian: I’m trying to remember back to that timeline. Did you know when you went into it, like “Hey, we’re going to be about a month without any sports,” or was it kind of like an open-ended thing of like, “Man, I’m really not sure when things are going to turn back on.”
Peter: It was pretty open-ended. There was a weekend in April, like the second, third week of April, 2020. There were a few sporting events in the world, and the only thing you could play was fantasy cricket from the island of Attu. They have a league there that’s like the equivalent of high school in the US and you play on a site.
There were a couple of basketball meetings in Africa and there was soccer in Butan if you know where that country is. t’s forced books actually offered audits. That was it. It was that low.
At that point, Korean baseball was scheduled to come back and they were in trade in April and it is actually pretty big. But everyone in sports thought [US sports] might come back. Certainly the NFL is the one to try and in our industry.
So it’s spring and we thought it might come back, but it wasn’t So yeah, it was definitely some nervous times, but luckily, once we got to early summer and saw some leagues come back,we said, “We’re gonna figure out how to do this, whether it’s a bubble in the NBA or the NFL.” They were going to just postponed games or move them around.
Brian: Yeah, I imagine there’s probably a mechanic there of “Well, you know that it’s a lot of money for them too.” So the leagues are like super, super motivated to play. Right. So maybe you at least have that in common. You’re like, “All right, well, I know they’re probably not going to leave us hanging.. Whatever the shortest possible timeline is, they’ll bring it back.”
Peter: The other negative is just fantasy football and fantasy sports, in general. You want to [your customers] have enthusiasm before the season and, you know, be pretty excited. We’ve dealt with that before, when there’s a threat of a strike or a lockout or something like that.
People are like, “Man, you know, I’m not going to draft with my friends this year. I’m not going to buy that preseason magazine, download that app, get my preseason work because they’re not playing. And as I mentioned, that means they’re less likely to play. So kind of that negative connotation [existed] too.
Like, “Well, if you read, the NFL may not actually finish the season and maybe they won’t even bother to play in the league.” We can see a little bit of that. But this year it’s not like that, you know. This year, I think everyone’s pretty confident that it’s going to happen that it’s all going to happen.
And even if we take a step back in the country with the virus and they have to wear masks or whatever, I think it’s pretty confident that the NFL in particular has it figured out for games.
Brian: Wow. Of all the SaaS businesses that I’ve spoken with, you’re probably by far the most affected by the pandemic. You were totally, totally shut down. I think like a lot of businesses did better, which I’m hopefully not rubbing salt in the wound for you.
Peter: No, not all. In fact, the weird thing about it is that as soon as sports came back in summer and in the fall, baseball, we came back better than ever. I mean [out of] the last 12 years, [this year] has been the best year in our history.
And some of that might be because people are stuck inside so they’re watching sports when they would do other stuff. But there’s just a lot of enthusiasm [for] fantasy sports and sports betting. There’s plenty of options for consumers, you know, fantasy itself keeps growing. So yeah,it’s been great, a total roller coaster, but luckily it ended up [how it did].
Brian: Yeah. Maybe a little bit of a reset for people, you know, they’re into sports year-round and maybe they kind of just go with the flow. This was like, “Hey, we’re going to like make you forcibly take a vacation from sports.” And now that sports are back it’s like, “Oh man, I didn’t realize how important this was to me,” or yeah, to your point too, like people are just stuck inside. I think it’s like a, probably like a similar thing.
Twitch streamers and people like that have seen a big boost to their viewership because like, well, stuck inside, my entertainment options are limited. So I guess I’ll get into e-sports and fantasy sports. I’m sure everybody’s just trying to get into anything that seems remotely social at this point.
Peter: Yeah. Those are all good factors.
Brian: Awesome. So we talked a little bit before and I think you have a distinction to have like one of the earliest SaaS businesses, at least I’ve ever heard of.
I’d love for you to share your story of how you got into both the entrepreneurial space and the SaaS space. And maybe share a little bit of–nowadays, we have a lot of benefits. All of our servers are on demand and you know, people know what SaaS is. I think you had a little bit more of a challenge early on. So I’d love for you share your story of getting started as an entrepreneur and getting started into SaaS hyper early.
Peter: So RotoWire is a fantasy sports news and information, right? You get all kinds of news on the player that helps you play the games and fantasy sports contests. We have about 17 different sports. So you use [RotoWire] for news information and there’s tools to help you draft, rankings, import your team from Yahoo or ESPN, give you guidance with the pick up and you know how to monitor your team and see how you’re doing versus the competition.
So it’s very much like a SaaS business in that aspect, but it’s also a content business. It’s a little bit different than probably your normal clientele, but a lot of stuff is similar.
And the way it started was at Northwestern, I graduated with a degree in journalism. Out of school, I covered the financial markets for companies like Dow Jones in the Wall Street Journal and the futures and options and IPOs.
A couple buddies lived in Chicago. One of them in particular wanted to really start a business. Everybody’s getting rich on business like, “Yeah! We just went public.” It was like 1996. We came with a bunch of ideas, none of them were really good. And then eventually I said, “We spend so much time on our fantasy sports or fantasy baseball, fantasy football teams, you know, why don’t we do something in that area? You know, we love it. It wouldn’t even be that much extra work.”
And I said, “Why don’t we do for fantasy sports what I do for my day job? Which was covering it like a financial market. And so we invented something called Player News, which was a way for people to just get information on players. [For example], “Here’s what happened to this player… he got injured… or he got called up, or he had a bad game last night.”
Then we’d have a little bit of analysis attached to each one to say what that means. Like, “You should go out and pick up this backup, or don’t worry about him having a bad night. He’s the everyday starter, you know..”
That was kind of revolutionary at the time. We instantly just got a ton of traffic.
There’s usually kind of the opposite problem you have in launching an internet company. Usually you have a great product and you’re trying to find customers, right? We were sort of the opposite and we just could never keep the site running. And this is like way before the ability to play everything on, you know, AWS or whatever.
We were in the guts of the computers trying to figure out how to put in more processors, keep the fans running, all kinds of stuff. Eventually we sold it. We didn’t really have a whole lot of confidence in the product. We thought Yahoo or ESPN or somebody would just come along and do what we did and we’d be done.
So we decided to sell it too, unfortunately, in all too typical of the time of 1999, an internet startup company. And they went bankrupt a year later. We made the mistake of not having enough confidence in ourselves and the product. I’ve told entrepreneurs over the years, “It’s really hard for a big media company or big company to really shift gears and do what you’re doing. Especially if you already a name and some customers.
I know it’s changed a little bit in recent era, they tried tech. And so they create features and then Facebook just comes in and just does the exact same thing and sort of leaps ahead. But I think when you start to build a business, it’s got a good idea and a good base, interesting media where you’ve got some roots where the customers have loyalty to.
It’s hard for other companies to do what you’re doing.
So we sold it, they went bankrupt in a year, wasted all their money on, you know, ads and fancy office space and that kind of stuff. That was unfortunately, all too typical of that era. We took the company back out of bankruptcy and right at that time, the stock market crashed and the internet advertising market had crashed. We were getting something like $5 CPM for ads; then we were a free site and we were living on that. And then I went down to like, you know, 30 cents or something, and I don’t know the exact numbers, but it was that kind of decline.
We were like, “How are we going to keep this business going?” How are we going to make money?” And going to the advertising route. I mean, we just kind of live and died every month on this roller coaster. We’d go to the ad department and talk in the ad guys office and see, you know, “How are you doing? You got something more?”
It was a really hard way to run a business. So in 2001, October 2001, 20 years ago, we decided to make a radical move and actually charge money for our content and for our website. And that kind of actually got some press at the time. There were no major media companies really that charge for their content.
There certainly were no fantasy sites that charged for content. But it worked. We tried it out of desperation and we’d forecast our money every month, every quarter, you know, we can make plans and if people paid for it. And so we acted in that way, but yeah, we’ve got sort of a SaaS company in a way, maybe “publisher” with probably more seasonality than your typical clients.
But yeah, it worked pretty well. We were like a first mover intervener of our time in terms of building SaaS products and that kind of stuff. And even though there’s some differences, we still still use a lot of the same, you know, metrics and all that kind of stuff as far as customers renewing,retaining them, and how to bring them back, all that kind of stuff.
It seems very similar to your typical non-media SaaS company. I think there’s some differences too, but it’s been kind of a wild ride, but we’ve been doing it for twenty years.
Brian:That’s awesome. Did you find that there was a lot of overlap with your experience in financial analysis with the fantasy sports world?
Peter: Yeah. Fantasy sports are, in a way, like the stock market. You’re picking individual players and their value or it goes up and down based on their personal events and perceived performance. So when you’re doing these drafts, sometimes there’s auction formats where you might have a mythical budget that you spend a certain month on each player.
It behaves very much like that. The concept when we started was to have a news wire and then just report all this stuff that the fantasy sports people care about. If you’re an average sports fan, if a third wide receiver pulls a hamstring in practice, that might make it in the newspaper and might hear about it, but that doesn’t probably really impact you.
But for fantasy, that’s everything. Like, this guy’s not going to play this week. The fourth receiver’s going to have a chance this week, he’s really good, [the other guy] might not get the job back. He might get the number two spot now.. It’s almost like a stock market, you know what I mean? In terms of evaluation and all that kind of stuff.
The idea was to treat [fantasy sports news] the same way that you have financial reporting. That came in very handy. I think my background in journalism gave us a leg up too, just in terms of the content, the editing of it, how it appeared, this sort of reporting style.
A lot of the other fantasy competition that approached it from a different kind of perspective. They didn’t have some of that mindset. Now it’s like talking about the civil war.
To go back that far, it’s hard to explain, but it used to be that you played fantasy sports if there would be a clear call out from the minor leagues in baseball. And let’s just say that that actually happened like mid day on a Wednesday, maybe it would be on TV that night if it was like a really high profile player, but probably not.
There’s no newswire unless you were one of the rare people that had access to like the AP news wire, which at that point you would be a professional looking at it as an organization probably. It might show up in the paper the next morning, you know, maybe in the back in the aggregate that shows the transactions made in the reporter’s notebook. But usually that was published online only a couple of times a week.
So it literally might be days before you even knew that some really great player got called up. When we did this, this newswire, you know, some of that reporting that was 12 hours to 24 hours old, it was revolutionary.
Everyone was like, “Oh my goodness. I’m getting this [information] days faster, weeks faster than I can get it into print media. Nowadays, flash forward, everything in the world breaks on Twitter first.
That exact same transaction for this minor league prospect who’s pretty good gets called up and it’s on Twitter within like 15 minutes at the latest. It’s out there so quickly and it wasn’t like that when we started a long time ago. And yet we’ve been able to, with every innovation that comes along, stay ahead of the curve a little bit and still provide a new service that provides a lot of value.
Now there’s not as much value in terms of being with time like, “Oh, wow, I found this news on RotoWire.” It will show up in USA today or the Chicago Tribune tomorrow or two days from now.
Now it’s more like, there’s just so much info. Twitter is definitely the medium where you want to find anything. But if you’re like playing fantasy football and some player hasn’t really done much lately and you’re trying to figure out what’s going on with the first baseman for the Twins.
You know, there’s no real news. He hasn’t been hurt or whatever, but he just hasn’t been playing much. What’s going on? You can search Twitter and the internet and spend like a ton of time trying to find it. And so we have all that information, it’s very easy.
You can just go into RotoWire and type it in and boom. We have a note for him almost every day saying what he did, what his season is like, and relevant stats. It saves you a ton of time. It gets right to the point.
It’s coming from breaking news to editing it all down to something concise and simple.
That’s what happened over the years, and it’s been a real journey. If you look back at the beginning and if I’m trying to tell people who are younger who work for us… We were adults back in the nineties, so I’m trying to relay them how it was… it literally is like I’m talking to them about, you know, 1868, right? But it wasn’t that long ago.
Brian: It’s funny. It’s like you have the opposite problem now than when you launched. It’s like when you first launched, you were like, “It might take a week to, to hear about something.”
And now it’s like, you hear about different events and kind of quote, unquote “newsworthy” things like 12 times a day. Probably more than that. Probably like 1200 times a day.
So it’s like you went from having no information to information not showing up fast enough to now, well, now you’re inundated.
Peter: Yeah, it’s too much. Sometimes what happens for fantasy football, as an example, there’ll be rumors and a whole bunch of reports in terms of someone going to be traded or called up or he’s injured today. And you go to Twitter and there’s like 16 different reports.
And it’s like, “Okay, which ones of these are reliable and accurate? Is this Twitter account just a random person? Or is this a reporter? If he is a reporter, is he even reliable?” Stuff like that. It’s one of the things that we add value to, just knowing sources really well, and being able to say like with all these reports, “This guy is gonna get called up or traded or he’s suffered a serious injury.” You might say, “Wow, this guy is reliable. This source is really reliable.” So you should bank on it, or here’s this other source [where you might say] “I’m not really sure”- things like that.
That’s part of it now. It’s like too much information versus not enough information. So now we add value by getting right to the point for what you need.
Brian: I didn’t think about that, but yeah, now we’re in a world where there could be something that’s like quote unquote “news”, but it’s like just somebody.Somebody just made it up.
Peter: Yeah. I’ll give you another example. In college football, there is no requirement for reporting from the teams. So it just becomes a free-for-all. And these kids are on college campuses, so there will be something on a social media post or message board.
It’ll say something like, “Today that starting quarterback was on crunches.” It could be true, could not be true. But you know, it’s not true a lot of times. You really got to know where the sources are, what the sort of background is. “Is there a possibility that he got hurt? Oh yeah, there was a report that he’s not at practice, so maybe it’s possible.” You know, things like that.
Most people who are playing fantasy football, betting on games, doing any kind of gambling or activity with sports just don’t have the tons and tons of time to watch every team and be on Twitter all day and watch all the shows and the games themselves.
It’s usually a hobby that they want to put a lot of time into, but not that much time into… We do a good enough job that people pay some money for.
Brian: I feel like your early years were a combination of journalism, which really helps you both craft a narrative and also probably evaluate the trustworthiness of a source. And then, the financial analysis that goes directly into the domain. It almost feels like you have the perfect combination of skill sets that make you great at this type of business.
How did you get from the journalism side to financial or was it just that the journalism gig was available to you? Was it something you specifically sought out?
Peter: Well, when I was in college, I was an economics major in undergrad and journalism for grad school. And I actually worked for the Daily Northwestern, which is the school’s newspaper. I liked finance and that kind of stuff. But when I was at the school newspaper, everybody said, well, “The way you get a job in journalism is to go and cover the markets and cover business. Everybody else went into journalism in college because they didn’t like math.
And that’s probably still true. I mean, I’m not as in touch with the younger journalism students at colleges, but that’s probably still the case. So you should probably get a job covering wall street, financial markets, business– it’s probably the easier way to get a job. I kind of backed into it.
I always liked that stuff, but I was always a huge, fancy sports player. I started my first league in 1990. Back then it was very, very difficult. I actually wanted to start a league in high school in the mid eighties and it was very difficult to even get 8-10 people to play, because it was such a big commitment and there was no information. People would say, “I don’t even know who the players are. How can I get a draft?” You know, there weren’t magazines and cheat sheets and all that kind of stuff.
I finally cobbled together eight people to play a fantasy baseball league and dragged the last one, a guy [who lived] next door to me in the dorm. I’ve always had to pay him to be in a league and draft. But everybody liked it. And two of the people in the league I’m still in business with today.
We were always really into sports and fantasy sports. So when we got to the age to do a business, it just made sense. I mean, I was already super passionate about it. That’s one thing I tell entrepreneurs and people is that: you just have to be really passionate for the business, if not the subject matter, at least, you know, running the business because you’re always going to hit the skids at some point. You’re always going to hit a point where it’s super stressful. And if you’re not really all in, you won’t survive. I see it all the time.
People who are just super passionate about it, will figure out a way to overcome a lot of hurdles. And people who are not… whether someone’s going to succeed or not, that’s usually a big factor.
Another factor in addition to running RotoWire, I’m also heavily involved in the trade association for the fantasy sports industry. I was the chairman for over a decade- it was called the Fantasy Sports Trade Association. Now it’s called the fantasy sports and gaming association. And so I worked with a lot of startups because they joined the association. That’s a great vehicle to get in the industry.
I’ve worked with a lot of startups over the years to help them connect with the other people in the industry. Selfishly, a lot of them become our clients at RotoWire. We also syndicate news and information to other accounts– just about every media company, ESPN DraftKings, FanDuel, nfl.com.
We have two revenue streams. One is a SaaS-type business and the other is sort of a business-to-business type business. We work with a lot of startups. And so you kind of, you know, I got a good idea of handicapping: what’s going to survive, what’s not going to survive.
I always tell [people], at least in the fantasy business, “If you can just make it to year two, you’re probably going to be okay because in year one, you start your business, you have a new product, maybe like a game or something. You’re going to stink and you’re going to have lots of problems.
But usually in fantasy sports, if you succeed and you make it through the season, those customers will come back with you the next season. And then you’ll improve the product a lot. It will be better. And then in year three, you know, you’re really getting going and that’s when you can apply a lot of marketing.
Usually anybody that tries to break that mold fails.The people who go into year one thinking they have the greatest idea ever, and trying to get everybody to sign the NDA before they’ll even have a conversation with them because their idea is so good. That’s usually the biggest sign that they’re going to be a failure because it’s not really ever about the idea.
In fact, just about every single time anyone’s ever called me for fantasy sports, I’ve already heard the idea before. It’s exceedingly rare that someone’s never thought of that. It’s not about the idea, it’s about the execution, and getting it to market and having customers. Even just figuring out the problems that somebody had the idea before couldn’t couldn’t solve.
We’ve worked with a lot of companies [that experience that]. And we probably went through the same pitfalls ourselves. We’re just passionate enough.
Brian: I don’t know if this question is answerable, but do you know what it is about fantasy sports that just grabbed you on such a fundamental level?
Peter: There’s a couple of things.
The first thing would be sports. I’ve just always been a big sports guy from the day I can remember. You know, the baseball cards, football cards, playing in parks. So I’ve always been super passionate about sports. And when you have all of this sport knowledge in your head,
[fantasy sports] is a great way to apply that, right?
I’m not the general manager for a baseball team. I’m not playing quarterback for a real team. None of those things are gonna happen. But I have all this knowledge in my head. I think I know a lot about players and what the manager should do.
Like, as a General manager that was a dumb trade. They should have this instead. Why apply that knowledge? Well, fancy sports gives you an outlet, right? You can manage your own baseball team. If you think that the GM of this team made a mistake by not signing this player to a free agent contract, well, you can do the exact same thing.
Another thing is that it’s a great community where you can meet and interact with people. I like to say it’s one of the better competitive things, competitive pastimes that you can do in America because the person that’s super passionate and just super into it will have a fun time in a league.
Even if they’re in a league with somebody who is a total novice. And that’s because it’s structured where the novice will actually win sometimes. Everyone has a chance, because there’s enough luck in the contest. Once a decade, once every 15 years… Someone who doesn’t take it as seriously, will win and have a fun time.
And then the one who’s super serious and studies hard and just spends lots of hours and then will win more often, but not every single time. That’s kind of rare. Like if you and I play golf with Tiger Woods, it’s not going to be fun, you know? I mean, he’s just going to destroy us. And we’re going to be terrible.
I mean, I’m not much of a golfer. Maybe you’re not a golfer at all, it’s possible it’s brand new. new. You know, they’d have a terrible time. If you think of other competitive pastimes, getting these contests… that dynamic is tough.
It’s tough to come together. That’s why, in your office or with your friends, it’s easy to join a fantasy football league and have a good time. It’s not that much of a commitment, but the people were super into it. You can still have a good time.
Then obviously there’s other fantasy sports that are a bit different.
I mean, baseball is much more of a commitment where a novice might not have as much fun, but it’s possible. You can play for a lot of money. That’s not as much fun for some people, more fun for others, you can play for free. So there’s a wide variety of contexts and ways to play, but it’s sort of just your average fantasy football league.
They have a really good social mix. The other thing about it was like, the fantasy sports industry, we were sort of a social network before there was social networks. We were online and the industry built all these tools in the late nineties/early 2000s to run leagues online. Our company was kind of at the forefront of that.
We actually had the first ever free… and bulletin boards, you could post photos- that kind of stuff. And it was kind of a way for you to keep in touch with your friends. Certainly for myself, you know, being in these fancy leagues, it was a great way for me to keep in touch with a lot of my friends from college.
I don’t know if I would have kept in touch with them as much if I hadn’t had that connection through meeting them in person or online every year in a draft and then talking to them all year. I think a lot of us, myself included in the history, like, yeah, “Why didn’t we think of that- turn into Facebook?”
The social aspect about it. So yeah, that’s, that’s how it got into it. I’m a huge sports fan, it’s a great social outlet to stay in touch with people. It’s a good competitive endeavor and it’s fun.
Brian: Yeah, that’s cool. There’s that running joke of the person in the office in the fantasy football league, where if they don’t know anything about football and they just kind of pick their players at random and they’ll show up to work on Monday. And then, somebody will be like, “You won this weekend.”
And they’re like, “Oh really? Oh, cool.” And then they just soar through to the end, like soundly destroy everybody. Just randomness.
Peter: Yeah. That’ll happen enough where that type of person will still join for a fun time. Over time, that person will not win, or just win infrequently because it is a skill game.
The one thing people have said about fantasy sports, especially fancy baseball, is that you can’t play that. It’s just too much work, you know? It’s a sign of a skill contest because you’re never like, “Hey, want to go play slots or roulette with us?” It’s too much work to study and know the players. The study does play off in the long run.
In the short term anybody can be competitive. The other thing about fantasy football that’s great is that people can build from full novices and not know what they’re doing and, get into it, do a lot of research and spend the time.
And it’s only if they have affinity, and then some skill and next thing you know they’re dominating the league. It’s not like you have to be seven feet tall and press 500 pounds or whatever, you just gotta be into it, be smart and next thing you know, you’re a really competitive player.
Brian: For sure. I think it just goes to your point about why it’s such a cool, social competitive game. More often than not that person who doesn’t know anything, like they’ll come into the office on Monday and they’re like, “You lost.” And they’re like, “Okay.” And then the next week, like “You won,” and they’re like, “okay.”
There’s like an ability for passive participation from somebody who doesn’t really know what they’re doing, but yeah, like you’re right. Like sometimes they get lucky. Sometimes the dice are going to roll in their favor, but the people who are trying really hard and they get beat by somebody who’s not trying, will feel annoyed. Or maybe it’s going to be very motivating as well, too. Like, “Okay. I’m really gonna dig in and you know, my tight end totally didn’t score any points..let me do the research and figure out like the best tight end for this next week and who are all the match-ups.”
For the type of person who wants to be motivated and the person who wants to actually do well, there’s a pretty big ceiling.
Peter: The industry has grown enough where 20 years ago, if you were super into it and somebody asked you to join a league and then you lost a couple times. And then you’re like, “I’m gonna need to get good at this.” And you start reading magazines and buying books and going online. And now it’s all online and on apps and that kind of stuff.
You know, if it’s near you can join a couple of leagues. Eventually, more leagues came along and you could put an entry fee in it like $1,500 and win like $300,000. And then there’s daily fantasy sports, where you can compete against the best players in the world who are doing it full-time.
If you want to get in that ring and try to compete with them, you can win a million dollars almost every day right now playing daily fantasy sports, which is just amazing. It’s so much bigger than I ever thought it would be. People’s capacity to be competitive and want to play the game and get in the ring with people that are really good seems to have no end.
And that’s fun. It’s created a lot of fun contests. I’ve been in a lot of those. They’re fun too, you know, but I like playing free league with a bunch of novices and, you know, just people in the neighborhood all the way to the highest level where you’re putting in a lot of money, trying to win a lot of money there.
They’re all fun, right. Different competitions and different skill sets and that kind of stuff. But it’s just been a great industry where the origins of the industry and the different types and variety and, you know, competitive levels- they continue to expand as in has been really fun to be a part of.
Brian: Cool. That totally tracks how you wound up in fantasy sports. I think that makes sense. I’m curious about-you mentioned you were post-college moving to Chicago. Then it kind of sounded like you were in this mindset of wanting to do something entrepreneurial. What was going on in your head during that point?
Peter: Yeah. I think throughout college, I always kind of envisioned myself starting my own business. I don’t think I was necessarily totally all in as a journalist, like what I wanted to do with my life. But I also saw that in journalism back then, you got ahead by jumping from one job to the next.
At the time I was like, “I’ll try business.” You know, I was in my twenties, didn’t have any kids didn’t have any huge obligations. If this thing fails, I’ll just go get another journalism jobs somewhere. Maybe I was being too cocky and overconfident, but that was kind of the attitude at the time. I wanted him to start a business. At some point I’d always kind of envisioned that.
So I kind of had the bug and all it took was my friend egging me on saying like, “Look at all these companies that are going public.” Or “These people are creating. We should be able to create.”
It was definitely a lot more difficult than I would have ever imagined. But yeah, I always had the itch to try and start a business.
Brian: Is there anything you did before college– did you ever do the lemonade stand or anything like that early on that kind of scratched that itch?
Peter: Less on the business side, but more on the stats side– that was my itch. When I was a kid growing up from nine all the way through college, I played football with my friends all of the time. I kept all the stats. I have the computer with the stats and I kept them all and I did all that kind of stuff.That ended up being the background of learning.
So when I learned how to self-program computers and do all that kind of stuff, I sort of had a headstart in some of the status sports stats and information side of what I’m doing. And it kind of formed the basis for creating the fantasy league. That’s not really a business, but you still have to learn how to run that organization and the importance of getting people on time, getting them to process reports and all that kind of stuff.
That was probably more my background, less than running a business. I was trying to say before that I didn’t have a background like creating some business when I was in high school or something like that. I just organized all these leagues. And I think that became the basis for the company itself.
Brian: That’s awesome. When you were post-college, you wanted to get into something and you decided to combine your journalism training and the financial analysis into your passion of fantasy sports.
That makes perfect sense to start there as a business. I would ordinarily ask what kind of cool lessons do you have from that? And I could still ask that if you have a good answer, but it almost seems like things were just so different then, like what was required of you. It almost seems like there was no real model to follow. You kind of had to write the playbook as you were getting started.
Peter: One example I give for that is there was a site called fastball.com. It was owned by the company that owns the Atlanta Journal constitution, or at least they did at the time. I think it was. They were the first ones to have the AP news wire on the internet. So you can actually see all the articles, maybe newswire, again, this is like me talking about the Telegraph or something. There was a gentleman who ran it, a nice guy, and I met him in person. He really liked our website and we were trying to figure out how to work together.
And he was like, “Okay, well, I’ll take all my information and you’re going to put it on the page on RotoWire.” I’m like, “Oh, that’s great.” You know, I’ll put it on there. We loved it. We sat down and started talking to deal points and he’s like, “How much are you going to pay me for that?” And I was like, what do you mean? How much are you going to pay me for that?
There’s no proven business model at the time, right? Eventually we sort of figured out that we would each run ads on there, 50/50 and split in or whatever. But yeah, there were a lot of things like that. Like, no one knew how to make money on the internet or a lot of this stuff.
It was just the wild, wild west. Everything was kind of crazy. It took a while to figure it all out. Like I said, it took a very strange path for us to get to a subscription business and really out of desperation. And now if you look back at it now, you’re like, “Well, of course, Why didn’t you just do that from the get-go?” But it’s really hard to put yourself back into the mindset of what it was like in the early days of the internet, when there were no proven paths or ways to make money other than just getting a lot of traffic and going public and making money.
People thought, “Wow, these people got a lot of traffic. Let’s figure out how to make money on it.” That was the only way you could make money. It took a lot for them to sort of figure it out.
Brian: Do you think there were any benefits to, learnings that you took with you from starting a business in the wild west?
Peter: We learned a lot of things along the way that put us ahead a little bit ahead of the competition. We always tried to figure out what the next technology is. Is it apps? Is it Twitter? That was one of our mantras- we were always looking out for the next thing because it impacted our business. How do we take advantage of this new game concept?
We were always trying to be really aggressive in making sure we’re one of the first people out there offering a product in that market or working with certain companies because the market was evolving so fast and we didn’t know what direction it was going to go.
So we might’ve learned that from the early days when, you know everything. It’s hard to figure out how to make money, so we tried to just get tight into the ground and take advantage of every opportunity that came our way, because we didn’t know what was going to be the big one.
Brian: Yeah. I imagine that you probably have that built into your DNA, right? I can’t imagine you ever saying like, “Well, you know, this is just the way that this has to be done, or this is just the model.” Everything you needed to build you had to build from the ground up.
Peter: One of things I’ve done over the years, and this is probably true for other entrepreneurs, is to not really think about how big this market can be. Fantasy sports got so much bigger than anyone possibly imagined.
I remember I met these two guys that came up from Scotland and they had this concept for a fantasy football contest. And I was like, “Who are these guys from Scotland? They’re going to start a company about the NFL. What do they know about football?” But hey, they were nice guys. I worked with them, helped them out, and gave them a real shot.
They ended up being the founders of Fanduel, which is now a multi-billion dollar company.
Brian: Yeah, that’s a good one.
Peter: There were these other guys who came over to our conferences and were going to start a cricket website, and we were really trying to help them out a lot. Sort of like, really? Fantasy cricket? It seemed kind of crazy.
Now it’s a company called Dream11 and they’re worth like $5 billion. They have a hundred million people playing their platform. So you just never know. Both of those companies, I think if I had to go back in time and what their odds were for being successful, I probably would have said pretty well.
So I think you just gotta be open to ideas and not really dismiss anything. Especially in the early days of the internet, but even with those companies, you just never know. Both of those groups of people were really bright and really passionate, and just really figured out a way to make it work. Luckily for then, RotoWire has worked with them early on and we’ve had good partnerships with them ever since. It’s worked out pretty well.
Brian: That’s awesome. It really feels like that leans on your background. If you’re analyzing a company, you need to look at the numbers and say, “Okay, what’s the current state?” And like you said, “Let me put up around a roundish figure on what I think their chances of surviving are.” But there’s also that component of the X factor, what’s the upside.
And it sounds like you’re just generally sort of aligned- it’s a huge market now, but it’s still kind of small, it sounds like. You know, like there’s a finite set of players. So you’ve always sort of had that alignment of like, well, I’ll do my analysis, but what does it really cost for me to help you out, especially your model where every person in the space could potentially be a customer too. So worst case scenario, I make a new customer.
Peter: Yeah. In the case of Dream11, you know, they were to create a market for fantasy cricket, because there really wasn’t one, and they turned it into something humongous. The benefit for me and RotoWire is that right now we have fancy cricket using information, and same with those other companies like Fan Duel. They took off with their daily fantasy sports concept, which was kind of out there, but they’re the ones who really brought it into the mainstream. There’s benefit for us too.
So yeah, we’re definitely looking out for all of these guys. If they actually execute another play and it takes off, you know, that’ll be beneficial to us. You have to kind of just always keep that in mind. Over the years, I’ve learned that I can tell who’s going to succeed probably pretty well, but at the same time, you never want to limit the possibilities. I’m sure that’s the way in other industries. It’s certainly that way in tech, right?
You’ll see some tech thing and be like, there’s no way that somebody is going to go online and put 60 characters on what they did for the day. That just seems so boring, you know? And the next thing you know, was Twitter.
Brian: It feels like a tightrope. I’m a little bit more fixed in the tech world. And it does feel like there are these ideas that come up that are nonsense. Then there’s another set of ideas that are like game changers. It feels to me, and I don’t think I have a particularly good sense of like dividing the feature in that way, like the nonsense and the game-changers look effectively identical to me at an early stage. Even with current things of NFTs and things of that nature. I’m kind like, I don’t think this is a real thing. I don’t think this is a thing we’re looking for. But I guess I wouldn’t be surprised if in five years, NFTs are the major asset, commodity-traded and paid for online. That seems like a reasonable thing, too.
Peter: Yeah. I mean, if you could go back in time.. in terms of just how new they were and people were trying to figure out how to make money on it.. And like, people are passionate about it, you know, fantasy sports and NFTs, or, you know, fancy sports or like, you know, e-sports, we’re kind of similar.
Especially esports. People that are super passionate, but it’s like, what does that mean? How do you make money? How does this work and? People figured it out eventually.
People who have real businesses are going to come up with real businesses. People who are really passionate and focused and able to react and things like that are the ones that are probably going to succeed.
I think the NFT in general… people probably will be having collectibles and things like that online. You just don’t know which one’s going to succeed in the short term. I think eventually it will, but it’ll be a fascinating market to watch.
There’s a lot of similarities to fantasy sports, especially in the early days where there’s a ton of ideas. People kind of knew that there was a passion for it, but didn’t know exactly how it was going to bounce off and shake out.
Brian: Yeah, it reminds me of crypto, as well. I have a friend who runs a company called Nomics, which is like the index, like the Bloomberg for crypto. So if you want to know trade volumes and stuff like that. And he and I play games every once in a while, and every so often I’ll think I understand crypto, and then I’ll chat with him and he’ll explain something to me, and I realized I have no idea. The more that crypto is explained to me, the more confidence I have that I literally have no idea what’s happening. And it’s really deep too. So that’s another example. I think crypto has been around for long enough at this point that we can safely say there’s something there. Like it hasn’t, hasn’t gone away yet. I think it’s just really challenging to forecast out. Or if you wanted to kind of include that as a part of your business offering.. I’ve seen a lot of companies that have included crypto in their business offering. They’ve been really successful.
Peter: If you want to take yourself back in time..with fantasy sports now, it seems that there’s 60 million people in the US and Canada who play in the mainstream. It’s like, how could it ever have been that people didn’t know how to make money on it? Crypto and that kind of stuff are a good example of how 20 years later or something, you know, that’s how it looks. That’s how chaotic and uncertain it was 20 years ago, as far as how to make money. I mean, 20 years ago for fancy sports, the leagues themselves didn’t like us we were quasi-gambling, or at least that’s what they thought.
And the major media didn’t like us because we were a bunch of nerds. You know, ESPN didn’t have shows, didn’t even talk about it. Keith Olbermann in the early nineties mentioned fantasy baseball was on Sports Center and we’re all like, “Oh, this is so awesome.” Then he actually talked about it. It was just that different.
Those are good examples of how to put yourself back in time and what it was like back then. This sort of uncertainty in the outcome and how to make money and things like that are very similar, even if the products themselves are very different.
We were able to read and react and figure out a way to keep sort of having that “best in class” information that people would pay money for over the years and stay on top of every new twist and turn of technology and new games. You know, stay ahead of that.
I think that’s what you have to do as an entrepreneur, just constantly look out for everything that’s new. Keep an ear to the ground, because if you don’t, you get old pretty fast and it happens.
Brian: Is there any technology that you have your eye on right now that you think are maybe opportunities for you?
Peter: The biggest opportunity for us is sports betting. It’s not so much technology. Maybe the people listening to this podcast aren’t really into that or know as much, but in the US, sports betting was essentially illegal everywhere, but Las Vegas. It’s a little bit more complicated than that, but the Supreme court three years ago overturned a law that overturned a law and made it so that every individual state can now decide whether they want to legalize sports betting or not.
Over 20 states have legalized, passed laws, or have laws on the books from before they dug up and are now kosher to bring out fantasy sports betting. And so you’re seeing states like Michigan, New Jersey, New York, Louisiana who have all added sports betting.
It’s this big growing market for information. It’s a big land rush of opportunity. There’s a number of European companies coming into the US as a result because they have a lot of experience there, where it’s legal.
The online part of that is the big growth area. In New Jersey, 90 to 95% of bets that are made in New Jersey are all online as opposed to in-person because it’s just so much more convenient. Some states have online and some don’t so you just have to do it physically.
A company like mine is trying to figure out how to take advantage of that because a lot of the news information that we do for fantasy sports also resonates for sports betting, like who starting, who was hurt, what’s the projection for this game in terms of what’s going to win out the players going to do that kind of stuff. There’s a lot of similarities and there’s definitely some differences too, as you’re mostly going head to head against others, other people, individuals, it’s peer to peer support sports betting against the house.
You’re also going against the market maker, book maker. That’s not always the case, there’s different formats. But legality-wise, I would say there’s no fantasy sport that’s not considered gambling. They’re considered games of skill. So they’re legal. In some states where you spend for a game of chance, it’s therefore not legal in most states.
There’s some differences, but for us, it’s a big market opportunity to build tools and content and connect with the customers who are in sports betting. There’s a huge overlap between fancy sports and sports betting. Usually if you’re in fantasy sports, you also will bet on sports if there’s an opportunity.
So that’s really the main thing. It’s not so much the technology that’s changing. It’s not some big platform or whatever, but rather the data and sort of information that they need to come up with and sort of give them to innovate.
Brian: Cool, awesome. This is really helpful. There’s almost like a historical context to this technology that we’re dealing with now, everything that’s new and interesting and exciting. And we’ve been through waves like that before.
It’s actually really interesting to think about that. It’s not like we need to consider a lot of these trends on their own. It’s just really helpful talking to you thinking like, “Well, we can just look back at what was the most similar thing to this, or what was the most similar timeline. What happened there?” Could help people focus on what needs to be true.
To your point, it’s really smart for companies to stay present and up to speed and current. Like you said, you don’t want to get old and you don’t want to be like aging technology. But I also imagine that jumping onto the wrong thing is probably not good either, but you don’t want to spend all your time kind of spinning your wheels and chasing your tail on the new technology.
Do you need to definitely have to kind of pick your spots?
Peter: That’s one thing we learned. I listen to a lot of the podcasts that you have I’ve been a fan of it. A lot of new entrepreneurs have great ideas, the one thing I thought I might be able to bring to the podcasts (and I’ve been doing this for 20 years) is our mistakes. We definitely made a lot along the way. And if I’ve seen patterns of people that are successful. So I thought if I came on and talked about that, maybe that’d be helpful because you’ve got a lot of people using their platforms that have really successful businesses and are really weighing on those successful business.
And it’s great to hear those stories, but we probably don’t really hear as many stories where people screwed things up, you know, like “I sold the business to the wrong person.” They failed, we tried to get for free and that didn’t work. We went with paid just kind of out of desperation…
We’ve tried all kinds of things and have probably failed like a million new product ideas, things like that along the way. At one point we had the biggest commissioner service in all fancy sports since 1999. And it was free. So we had more people using our platform to run the content, and also wrote for Yahoo, ESPN, and really took over the whole market.
And then when we sold it to that company, and unfortunately they didn’t pay for the stats or staff providers and they went bankrupt. And so all of the leagues left and went to Yahoo. If I think back now, that’s a, that’s a product of wondering if we had kept it running and kept that same market share for 20 years, which obviously is theoretically not really possible.
You know, it would be worth like, billions of dollars. I like to tell everyone that I’ve probably lost more money than anybody has actually made in this industry. I’m like the biggest loser, right? If you want to do a balance sheet of like, oh, this guy could have made billions of dollars, but he didn’t. That happens.
You can’t really beat yourself up on it too much, especially when you’re in a market at such an early stage. Kind of like how you talked about NFTs and in crypto, the early days of that stuff. You can’t beat yourself up on the mistakes you made or opportunities that you lost.
You just gotta stay focused and keep trying until you eventually hit something.
Brian: Having gone through this a few times, is there advice or feedback that you give to somebody who doesn’t have experience going through this and is trying to make a decision in that specific scenario of like, “Do we double down in this area? If you have multiple business lines, do you let one of them go, should you keep it going?”
How do you coach people through that as somebody who has potentially let lines go?
Peter: Yeah. Usually people fail on product lines or areas where they haven’t done their homework, and figure out like, why hasn’t succeeded before, that kind of thing. So if they haven’t figured out the problems that were there before, that is how you should approach coaching them. Something that everyone tried to do in fantasy sports is to have an in-person conference, kind of like a comic con for fantasy sports.
And it’s been like a failure every time. Someone tries it every three or four years, and it never works. I actually say, “You got to go back to those other ones and ask around and figure out what happened. Why didn’t it succeed?” That kind of stuff. Most of the time they don’t. So I would say then, how passionate you are about it, you know?
If it’s something that’s really kind of a drag and you don’t want to do it, eventually, you’re not going to probably do it. So, I mean, those are kind of just super general examples.
That’s kind of been the way for us. We had a lot of opportunities we probably could have, you know… For example, basketball drafts are big in fantasy sports now. We’re really doing well, understanding that terminology where you just kind of drafted once at the start of the year but that way you can make a lot, make you can do a lot of drafts.
People will put a lot of money in that, it’s fun. We bought a platform 10 years ago or so, we were kind of like pioneers running those. We probably could have made a lot of money, but we eventually didn’t want to rebuild the software from a company to be acquired because it’s just too much work. I think we, in hindsight, missed on that.
But we just weren’t really passionate about it. It wasn’t really something that was a pain, you know, with a lot of customer support involved. We had other things, opportunities that we thought were better at the time. And so I think that’s an opportunity- I don’t think we actually get a poor choice there. I don’t know if we would have succeeded on capitalizing on the opportunity if we had even realized it. It came down to just how passionate we were about it and how we were oriented as an organization.
Brian: Awesome. I want to bring us in for a nice soft landing here. I feel like at this point, if anybody who’s listening is either interested in fantasy sports where maybe we’ve gotten them interested in fantasy sports at this point.
Can you talk a little bit about your business and maybe some thoughts about how they can check in with you or any other resources you want them to check out?
Peter: Yeah. So again, RotoWire’s fantasy football and fantasy sports contest. Right now it’s fantasy football season and that’s what most people probably go buy. So yeah, we have everything you need to win your league: rankings, cheat sheets, news, and information. It’s mostly a pay site but there’s some free stuff.
If you want to start a 10-day free trial, you know, on this podcast, goto rotowire.com/radio, and you’ll get a free 10 day trial, no credit card required. That’s one of our things we do, I guess we should be sort of like a SAS type business where we try to get people to sign up and try us out for 10 days.
We’re confident that after you use this for your draft and help run your league after 10 days, they’ll stick around, find the value and start paying for it. So if you’re into fantaSY football at all, check out rotowire.com or find me at email@example.com. Email me and I’d love to help you out, you know, give you some sleepers, give you some tips.
And if you’re interested in the industry or writing, we’re always looking for writers. For fantasy football, if you’re tempted to try it, give it a shot, like I said, it’s great entertainment. If you’re brand new and join Yahoo or ESPN or nfl.com, you can learn pretty quickly and up front, and it’s great to play with your friends.
Rotowire.com could be a great resource for you.
Brian: Awesome. All these startups are always looking for something that they can relax and have fun and you’re kind of like a cultural component. It sounds like this might be a fun one for everybody to try out, get their head out of the day-to-day and have a fun activity that everybody can compete in.
And the people on the team that want to get serious about it can go to RotoWire and get the data that they need to crush everybody else, maybe have a little bit more fun with their experience.
Peter: Great. Check us out. Like I said, if you have any inclination to play fantasy football, definitely check us out.
Brian: Awesome. Well, thanks so much for being here on the podcast. We really appreciate it.
Peter: Yeah. Thanks a lot. Thanks a lot for having me. It’s great to be part of this. Like I said, I’ve been a fan of them before, so it’s definitely fun to come in and tell you about our business.
Brian: Awesome, thank you. That was our conversation with Peter Schoenke, Founder of Rotowire. If you’re a fantasy player looking for the best possible information, check out Rotowire right away. If you’re a business or maybe you’re looking to start a fantasy business, check out rotowire.com. If it’s a SaaS analytics tool that you’re looking for, well, check us out at baremetrics.com.
Hope you enjoyed this episode and we invite you to check out our other Founder Chats. If you’re able to share with a friend or leave a review, it goes a long way. Thanks for listening.