 From Boston, Massachusetts, it's theCUBE. Covering Activio 2019, Data Driven. Brought to you by Activio. Welcome back to Boston, everybody. My name is Dave Vellante, I'm here with my co-host, Stu Miniman, John Furrier, who's also here today. You're watching theCUBE, the leader in on-the-ground tech coverage. This is day one of Activio 19, Data Driven conference. Hashtag, Data Driven 19. Greg Karamaitis is here as the Senior Vice President of Fantasy Sports at DraftKings. Greg, thanks for coming on, what a cool title. Yeah, it's a joke with my wife. Anytime you can be working in fantasy sports, it's a great place to be. Everybody's a little bit jealous. So the formula's easy, right? Offer big, giant prizes, and everybody comes, and that's all there is to it, right? Yeah, anybody can come in. I just have the dream job right now. So hugely competitive market. You guys have become the leader. We hear you on the radio, we check out your websites. I mean, take us through sort of DraftKings and your ascendancy, how you got here. Gotcha, so companies started in 2012, initially around sort of the major big American sports. And then really, as we started to scale out, we saw there was a huge consumer interest in the product. Players that would come on were very, very, very sticky. And we'd just been kind of pushing on, pushing on growing that user base. So the initial founders are three former analysts that have come on. It's always been sort of a very analytically driven company. So they looked at what we were dealing with, we had LTVs that were way higher than our CACs. So let's keep marketing and growing and growing and growing and finding out ways to offer a better product. So over 2015, we did a major marketing blitz, blew up the company, absolutely huge. And since then, we've been just constantly innovating, adding new sports, adding new features, and adding ways to add on the product. And then even more recently, just about a year ago, we expanded also into online sports betting over New Jersey as that's become a legal product across the US. So it's been a great time to be at the company. A lot of fun. What was your first sport? Was it like Amazon started in books and then scaled out? What was your first sport? So it's actually the first sport was baseball because of the time that they actually launched. So it was the middle of April, sporting calendar's a little bit thin right then. So it was baseball to start and then once football season started, that's really when things take off. And you said 2015 is when you started the marketing blitz. And I remember just hearing the ads and it was just intense. I was like, wow, this company's going for it. So you sort of took all the chips and went all in and it worked. That's part of the lifeblood of the company. We're a company that ends up being taking risks but we take calculated risks. So at any given point you sort of say like, hey, what is the range of outcomes over here? We're not playing for second place. We want to be a market leader. So you have to take risks in order to be a market leader. So let's take calculated risks. Let's make sure we're not being insane. But we did the math. We figured out this is a worthwhile shot. We pushed in for it and it really took off from there. Love to bet on short things. Greg, we know the people that play the fantasy sports feel that data is what differentiates whether they're going to win or lose. Talk to us a little bit about the data journey inside your business and how that helps differentiate DraftKings in the market. Yeah, so we think DraftKings is one of the most analytically based companies definitely in the market but also in sort of like of general companies right now. We use our analytics platform to inform pretty much everything we do. And to your point, you're joking. It seems like fantasy sports is easy to throw out some giant prizes there and everything will take care of itself. Running a fantasy sports company, if you throw out a contest that's too big, you lose a ton of money. There's a lot of asymmetric risk in the business where if we're right, we make a little bit more but if we're wrong, we lose a ton very, very, very fast. So our ability to be very, very sound analytically is what allows us to sort of push the envelope and grow, grow, grow, but not lose our heads along the way. Some of the fun of that is really, when we first ran, I think one of the most game-changing contests we ran was actually back in October of 2014. It was the very first millionaire maker contest. I can still remember it was week five of the 2014 NFL season where we said, hey, this is crazy. We need crazy things to happen in order for it to work but if we run a $20 contest to enter with a million-dollar top prize and two million of total prizes, it could go viral, it could go absolutely crazy and if it loses, here's how it'll lose and here's how much it'll hurt us. It's a worthwhile risk, let's go for it. So that sort of energy of doing discipline analysis and constantly sort of then taking the risk on the back of it is what allowed us to grow a lot. And the brand value that you would've got out of that was sort of worth that risk in part anyway and you wouldn't have got too hurt presumably in terms of the financial situation. Exactly, we knew our downside and as long as you know your downside, you're normally in a pretty good spot to take those risks. So where do you see this all going? I mean, so the company has grown, you're at this kind of critical mass now. Like we said, highly competitive. If you knock down, if you take your eye off the ball. So how do you guys keep this going? So we have a huge challenge ahead of us over the next couple of years as sports betting becomes legal across the US. We need to make sure that we are one of the top competitors in that market. Sports betting in the US, we expect to be an absolutely enormous market. It'll probably be significantly larger than the fantasy sports market in terms of absolute revenue and even an order of magnitude more competitive. So we need to be executing at each step along the way. As markets open up, we need to be able to get into the market very, very fast. And that means our tech team needs to be working feverishly to make sure that we can hit the requirements that each legislator and each regulator puts on market entry in their state. We need to be making sure we're constantly figuring out what are the product elements that are absolutely critical for our users. Is it more around the live betting experience? Is it around the different markets that you offer? Is it around pricing? And how do we find these different levers and pull them to make sure that we're putting out a great product for users? And if we do that and throw a great product out for users, we're pretty sure we can make that market better. Maybe one-stop shopping, presumably, right? I mean, all sports, right? But then you've got these niche sports betting. I mean, the best example I could think of is horse racing, you know, where it's alive, it's got a video, it's got commentators on the ground that know the business really well. Is that, is it the strategy to go sort of horizontal and sort of be a one-stop shop or are you going to sort of pick your spots? What does the data tell you? You know, I think we're constantly talking about it. One of the things that allowed our fantasy sports business to grow so fast was going a little bit more horizontal. So we offered golf in mass at a time period when the primary competitor in the space, Fanduul, did not. And we built that product into one of our largest sports. It's, you know, right up there with MLB in terms of the actual size that comes in. As we've gone also horizontal, we've pulled in other places like NASCAR, MMA. Great sports that people are interested in. It gets more users into our platform. And honestly, if users are interested in a product, we don't want them to have to go elsewhere. We want to be able to have the offerings that any sort of, you know, critical mass type environment is going to have. Well, it's that experience, right? I like to shop at Amazon, you do too, because I trust it and it's the same user experience, right? Greg, one of the things I'm hearing from you is something that everybody tries for, but it's really challenging. That speed, how do you react that fast and move the company into new markets and new offerings and keep innovating? You know, culturally, you know, technology wise, you know, how does DraftKings do that? You know, I think as a company, you know, from really every single person that we recruit and hire, we've been actually executionally disciplined throughout the company's history. It's something that our founders did a great job of instilling in the culture right out the gates, and we've tried to foster all the way along the way, which is all the best strategies of the world, they're going to fail if you can't execute well, and every single person down the company knows that, and we try to, you know, enable each person to be as autonomous as possible in their ability to execute their portion of the business. That allows us to move really, really, really fast. You know, we disseminate that responsibility quickly, and each leader and sort of each person knows what they have to do to execute. There's a high degree of accountability behind that. You know, I'd like to say there's some magic recipe, there's some secret sauce, but it's a lot of just great people doing great work every day. Greg, you know, is there any of your competitors that they look at? You know, Boston's been doing pretty well in DraftKings' era, you know, for the last few years. So, Boston's been a great market for us. We've expanded a ton over here, and the sports teams have been fantastic. Although the Bruins, it was a little bit sad about Game 7 over there, but, you know, it happens. So, is MLB the flagship? I mean, is that? No, I wouldn't say that. MLB was first primarily just of the time of the year when we launched. NFL is always going to be, or not always going to be, but for the foreseeable future, is the dominant U.S. sport, and will remain the dominant U.S. sport. Yeah, the reason I ask is like, I mean, kids don't watch MLB anymore. Maybe the playoffs, I mean, the games, there was a game, I think on some Father's Day, it was like almost five hours long. You know, up against golf, right? You can come in and out, but, you know, what are some of the trends you're seeing? Soccer, is that growing? NFL, obviously, is huge. Do you see sort of niche sports like Lax coming on? So, you know, starting point, NFL has been huge. We actually launched a new product a little over a year ago called Showdown, which allowed you to start to do fantasy for a single game as opposed to the combination of games. Love it. That's taken off fantastically, because that's tapping into more of the, I'm going to sit down and watch this game, and I would love to have a fantasy team on this game. That's really expanded the audience tremendously. I thought that was genius, because look, if you're out of the running, it doesn't matter. It's a week. On top of that, NBA and NHL are on fire. The NBA has put out a great product as an actual sport league. You know, the finals were great. You hate to see the injuries, but it was a great final series, very competitive. The NHL finals has been very, very competitive. Golf is growing phenomenally as a sport. We saw a far more interesting golf than I ever anticipated when I had first started with the company, and it's one of the most exciting things. When the Masters comes each year, every screen is turned to it, and we see huge player numbers kind of coming into that one. Beyond that, NASCAR, what's been interesting, NASCAR's been having a tough couple of years, but the truck series for us, we launched it this year, and the trucks have been great. I don't know if you've watched NASCAR trucks, they're wildly entertaining. MMA, you got the big fighters, so every sport sort of has its moments. It's a matter of picking those moments and figuring out how to make the most of them. Do you see boxing at all, making the comeback? So we have thought about how to get boxing into a fantasy contest. We don't have it at the moment. We're putting a lot of thought into it. So we've been in the MMA space, and we've seen the growth out from there where that sport's doing great, and you look at places like Bellator, or the Professional Fighters League, as other leagues, and then boxing is the next step. There's a lot of interest there. I don't think they have the right products yet to be able to kind of engage with it that extra way, so that's one of the things we're working on. Also, you need a marquee fighter. You always need a marquee fighter to kind of help bring in the interest over on that side, so it'll be interesting to see with Pacquiao on sort of the downslide of his career at this point, and Mayweather hasn't been fighting much. It'll be interesting to see who's that next main fighter that emerged. Well, I grew up in an era of marquee fighters where they would fight, they literally fight six, seven, eight times a year, and you had huge names, and then MMA comes along, and it's really hurt this sport, but it feels like it's trying to sort of resuscitate. Yeah, I mean, I think these things can be a little bit cyclical. You get one marquee fighter out there, like, so my wife is Filipino, so I'm a huge Pacquiao fan now. We watch every fight, even when we were living in remote locations, that forced us to watch it at weird hours. He's a type of athlete that could bring popularity to the sport, so if there was a major US fighter that gains that degree of fame, people will be into it, I think. Do your analytics sort of have a probe into the activity at the fan level, at the sports level, not just the fantasy level or the betting level. Is that a sort of a predictor for you? Yeah, we see a lot of correlations between how many people play our sport, our fantasy game, and how many people actually follow the underlying sport. We can also see trends in terms of, if I'm from Boston, I probably pick more patriots in my fantasy lineups than the normal. And you can actually see that as people play different sports, that the number one QB drafted in Boston is almost always gonna be Tom Brady, and once you leave there, you start seeing Aaron Rodgers pop up the list really, really, really fast. So you see these little micro trends where it's like you are still a sports fan of your local team and your local environment, and it manifests itself in the fantasy play. So what do you think that is? Do you think it's fan affinity, or do you think it's this sort of lack of knowledge outside your sort of circle of trust? I think it's probably a combination. I mean, I could say is, following the Celtics in the mid-2000s, I knew the depth of the Celtics bench and how they would use their rotation better than anybody else, or probably better than anybody else, because the coaches would probably disagree. But it's like, I knew that James Posey was a huge value play on certain nights. Oh, he was awesome. I would feel the Eddie House nights. So, you know, on your local team, you probably know those players that are not the top, top echelon all stars, but the guys right beneath, you know them a little bit better and probably more comfortable using them. What's your favorite sport to participate in? So my favorite sport from a fantasy perspective is I play all the basketball. I play basketball just during playoffs, and I play baseball, but baseball, I'm strictly a fantasy player. I don't really follow the sport to play or play. I'm just playing fantasy. Okay. That's great. So what do you think of the conference here? Have you had any time to interact? I know you were swamped after coming off the stage. Yeah, you know, it looks like a great turnout over here. There's a lot of enthusiasm amongst the different people. I was a little bit late to the, late to show up this morning, so, and I got a bit swamped, so I'm eager to go and be able to catch up a bit more. Okay. Well, Greg, thanks so much for coming on theCUBE. It was great to have you. Really a pleasure meeting you. Great challenge, sir. Great challenge. All right, keep it right there. Stu and I will be back with our next guest, John Furrier is also in the house. You're watching theCUBE from Actifio, Data Driven 19. We're right back.