Betting on product to win in fantasy sports

JEREMY LEVINE: The Senate ended up calling an emergency session. It was Friday. So they weren’t even supposed to be in session. We had the whole company there watching the live stream from the Senate, as we were hoping they would take up the fantasy sports case. We didn’t even know if they would. And it ended up going into the night.

JEFF BERMAN: For Jeremy Levine, everything was riding on this late night legislative session. He’s a serial entrepreneur in the fantasy sports space, a category where I’ve spent a lot of time, both personally and professionally, and he’s learned to be nimble, as he navigates evolving regulation and fierce competition.

LEVINE: If you do the same things as market leaders, you’re not going to be able to beat them at their own game. But we saw the opportunity for a different game.

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BERMAN: This is Masters of Scale. I’m Jeff Berman, your host.

The NFL season kicks off this week, pun intended, which for me and millions of other Americans mean something very, very special. It’s fantasy football time. That’s one reason I was thrilled to speak with Jeremy Levine. He’s the founder and CEO of Underdog, a fantasy sports juggernaut. But even if you’re not into sports, Jeremy’s tenacious and innovative approach to building companies is full of valuable insights. His latest venture, Underdog, has scaled into a tech unicorn at remarkable speed. Jeremy, welcome to Masters of Scale.

LEVINE: Thank you.

BERMAN: I feel like we should be sitting in Cliff and Norm’s stools at Cheers having this conversation. You’re a Boston guy.

LEVINE: I am. I am.

BERMAN: And we’re about to talk about sports and tech and business.

LEVINE: Perfect. My favorite topics.

Copy LinkLessons from his first fantasy sports company

BERMAN: We’re going to get to Underdog, but this is not your first sports-related start-up, so I’m curious how you got started in sports and tech.

LEVINE: So, as a little kid, I was growing up in Boston and Cambridge. And my favorite thing to do as a kid was collect sports cards. And always wanted the rookie cards of the players I thought would be good down the line because I thought I could sell them for more.

BERMAN: Not just Celtics and Red Sox and…

LEVINE: No. And I unfortunately chose a lot of Vince Carter, not that he had a bad career, over Kobe. I think the financial results would’ve been very different if it was Kobe, but I became obsessed with Vince Carter cards, and just like rookie cards in general. Went to college at Syracuse. When I got there, I learned there was a major called entrepreneurship. I’m like, “Whoa, that’s cool. You can do your own thing. Work for yourself. Yeah, I want to do that.” I kind of had no conception of that before.

While I was there, I was like, “Okay, my final class is a business plan competition. What am I going to do?” The entire time I had this idea in my head of a sports stock market, because that’s how I thought about collecting cards. My dad’s a criminal defense attorney, I would ask him and a lot of his lawyer friends, “What do you think of this?” And they’re like, “It sounds illegal.”

BERMAN: Which potentially it was, depending on how you structured it.

LEVINE: A lot of people definitely thought it was. Then my senior year, another company called One Season, funny enough, because they lasted exactly one season, and launched a sports stock market, this is 2008, and they raised money from a great venture capital firm, Charles River Ventures. They’re on the front page of the Wall Street Journal, front page of Yahoo.com, New York Times. I’m like, “Oh, must be legal. This is what I’m going to do.” So I graduated college. Well, actually before I graduated, I tried to do that for my final semester, my senior class. And the professor I remember said, “It’s too hard. You can’t do that.” Made me do something entirely different.

BERMAN: Wouldn’t even let you do it as your project.

LEVINE: Then I graduated college, moved back home to Cambridge. Was living in my parents’ attic and trying to figure out how to start this thing. My whole second half of senior year I was doing that. So I remember I applied to every incubator there was, Y Combinator, Founder Institute, Techstars. Got rejected from all of them.

BERMAN: You didn’t have a technical background at this point.

LEVINE: Not at all.

BERMAN: So, when you’re applying for these incubators, accelerators, are you pitching yourself as, “I’m a dreamer, I’m an entrepreneur, I’m going to work my butt off, I’ve got an idea,” and hopefully I’ll find a technical co-founder?

LEVINE: Yeah, basically. I mean, look, this was early. This was 2009, was when I graduated. I was finding everyone I could on Twitter, I was kind of stalking anyone who seemed like they could code anything, basically. I remember sending, I’d put together an executive summary at a pitch deck and I’d send it to any venture capitalist email I could find, and then every morning I check my mailbox looking for a check in the mail. I thought that’s how venture worked. I didn’t have a concept of how the whole thing worked.

Anyways. Moved back home, was still just trying to find any ways to make it. I had no technical, no money, no connections, had no idea what I was doing, put up job postings everywhere. Ended up getting a couple engineers off Craigslist to start.

BERMAN: Really?

LEVINE: So my first two engineers were off of Craigslist.

BERMAN: And were these students at MIT?

LEVINE: Yeah. One was a young, just graduated college, Carnegie Mellon. And another was someone who’s actually had been in software engineering for a while, and worked at some interesting companies, and they were moonlighting.

BERMAN: This was a side hustle for them.

LEVINE: Yeah. And it was 2009, so the start-up ecosystem, especially in Boston, wasn’t as thriving as it is now, but it was getting going at a crawl. And there were people who I think got excited, and kind of saw the vision like, “This sounds fun,” and started making some progress.

BERMAN: Did you afford to pay them?

LEVINE: Not at the beginning.

BERMAN: So it was literally like, “Here’s the idea, who wants to come with me on a journey?”

LEVINE: Yeah.

BERMAN: Wow.

LEVINE: Yeah. Ended up getting into Techstars the year after, and was able to get some momentum, and kind of just keep on going from there.

BERMAN: And what became the company and what was the core product that you were bringing?

LEVINE: So that company was called StarStreet. It started as a sports stock market, but very early on saw the early signs of growth in what we now know as daily fantasy sports. DraftKings didn’t exist, FanDuel was just getting going, and could kind of see the traction.

Copy LinkWhat is daily fantasy?

BERMAN: Okay. And so for the uninitiated, for the people who are not inundated with daily fantasy ads watching sports, what is daily fantasy, and how does it differ from what we know more popularly as fantasy sports?

LEVINE: Yeah. So, daily fantasy, there’s no single definition of daily fantasy, and there’s a lot of different games that can fall within what people may call daily fantasy. What I like to say is real money fantasy sports. And there’s different formats where you can build a team for a day, you can build a team for a week, you can build a team for a season. Sometimes you manage that team, other times you don’t. 

There’s a lot of different formats. The format back then that was gaining popularity was the salary cap format. You’d have a budget, you could use that budget. Every player was priced based on their expectations, and you used your budget to build a team. You enter that team into contests. We could play heads to head, we could each put in $10, winner would make 18, site would take two. Or it could be big tournaments. Now, we are running a season-long tournament this year that’s a $15 million tournament, so the biggest tournament in the history of fantasy sports.

BERMAN: Wow, okay. So what became of that company?

LEVINE: Yeah. So that company, StarStreet, started as a sports stock market. Became a very early daily fantasy sports company, built a couple different formats of daily fantasy games, and ultimately sold the business in 2014 to DraftKings.

Copy LinkNavigating a regulatory grey zone

BERMAN: Okay. I was running digital for the National Football League for a couple of the years that you were there, and this was of dubious legality at the time, right? There were real questions around this. For entrepreneurs who are considering going into spaces that are regulated and they’re skirting the edges, or sort of in a regulatory gray zone, how did you assess the risk, and then how did you manage that risk?

LEVINE: Yeah, I mean, there’s a lot of nuance to the question.  Ultimately, it’s work with a lot of lawyers, ask the right questions, get legal opinions, see what others are doing, and make sure you understand the laws. There was a lot of precedent for games of skill.

BERMAN: The most significant legal question facing Jeremy and others in this space, when does a fantasy sports game cross the line into gambling? Because of course, gambling is a highly regulated industry with rules that differ widely from state to state. It’s a question that casts a shadow over Jeremy’s ability to scale at StarStreet, and at the company he next founded. That was called Draft. He and his competitors have realized they need to work together on these legal questions.

LEVINE: Ultimately, in 2015, the New York Attorney General said that daily fantasy sports were illegal. Over the course of the next six months, 13 other attorney generals said daily fantasy sports was illegal. And we as an industry came together and worked to go past legislation clarifying the legality of fantasy sports, and ultimately we did that. Now, I think there’s legislation in over 20 states clarifying the legality of fantasy sports, saying that if it’s a game of skill based on accumulated player statistics with players for more than one team, it is clearly legal.

BERMAN: Help us understand that. I mean, you’ve got state attorneys general saying, “No, no, no, no, this is gambling. This falls in different bucket.” The industry comes together arguing actually a game of skills should not be regulated the same way. Number one, how did you get competitors to come together around this? And then two, what were the arguments that were persuasive getting the regulators to say, “Actually this is acceptable”?

LEVINE: Yeah. So back then it was FanDuel, DraftKings, my company Draft was third. There was this body, the Fantasy Sports Trade Association that kind of helped bring everyone together. I was on the regulatory committee of that. And we all knew it was existential to the businesses, and we needed to make sure that our games were in fact legal like we thought they were. So we actually worked with legislators to get legislation passed to clarify the legality. Back then there weren’t specific regulators for the games, yet now that created regulatory frameworks. So now there are regulators for fantasy sports, and now it’s pretty cut and dry, and obvious that fantasy sports is legal.

BERMAN: So one of the things that we’ve seen over the last, let’s call it 15 years, as Uber and Airbnb have risen, and most recently TikTok with the impending TikTok ban, is consumer companies using their apps, their direct relationship with the customers to activate them to affect policy change, regulatory change, et cetera. Was that part of the strategy that you guys implemented? I’m just curious how you guys actually got there with the regulators.

LEVINE: Yeah, it was back then. I mean, the customers wanted these games, right? People love playing fantasy sports. And ultimately, as the industry went to politicians and said, “Hey, this should be legal and it should be clarified,” it’s ultimately what do the constituents want. And over 60 million people play some form of fantasy sports. It’s kind of a pastime. So, there was a lot of groundswell and a lot of excitement to have those games from the customer perspective. And that really helped.

BERMAN: Jeremy, was there a tipping point where you saw the traction, you realized that you could actually win this battle with the state legislators to effectively overturn the rulings of the state AGs?

LEVINE: The real big battleground was New York, because New York was the first attorney general to say it was illegal. And a lot of the industry focus became on New York.

BERMAN: Also, one of your biggest markets.

LEVINE: Big market, of course. And I remember that day in 2016 as we were trying to pass legislation, the Senate ended up calling an emergency session. It was Friday, so they weren’t even supposed to be in session. We had the whole company there watching the live stream from the Senate as we were hoping they would take up the fantasy sports case. We didn’t even know if they would. And it ended up going into the night, it was 10:00, 11:00, 12:00, 2:00 A.M. is when they ended up calling it. They voted in favor, and ultimately legislation passed in New York clarifying the legality of fantasy sports.

Copy LinkLessons from his second fantasy sports company

BERMAN: I could spend two hours just talking about the legal and regulatory. Let’s go back for a second. So, StarStreet you sold to DraftKings. Why’d you decide to sell to DraftKings?

LEVINE: We kind of saw the writing on the wall for what was coming in the industry. FanDuel and DraftKings had both raised a bunch of money, and we’re going to go spend aggressively. And we didn’t know if it was going to work for first or second place, let alone third. And then at that point we were in third. And we saw the opportunity for a simpler game, and that’s ultimately my next business called Draft. We went to build a mobile game, a simpler game, a more intuitive game, focused on doing the draft. And we kind of said it was like words with friends for fantasy, where you’d do a draft and you could put money on it if you wanted to.

BERMAN: But you didn’t stay at DraftKings to do that. You sold the company, and you basically turned around and said, “I’ve learned a lot, I know what the next thing is, I’m going to go do that.”

LEVINE: Yeah, that was always what we were doing then, was saying, “Hey, we’re going to sell this off to go build this.”

BERMAN: And in a world where you understood that DraftKings and FanDuel had just raised bus loads of money, and they raised a fortune, and they were spending ungodly sums, right? Their customer acquisition costs were through the roof, you almost couldn’t imagine competing with them. What gave you the confidence to say, “Oh, I can go do this again in a different way and either take part of the market that they’re not even going to pay attention to, or I can beat them at their own game”?

LEVINE: Yeah, it was building a different game. Back then, there were probably a hundred different companies that tried to build a salary cap daily fantasy site. And look, if you do the same things as market leaders, you’re not going to be able to beat them at their own game. But we saw the opportunity for a different game. And so we wanted to focus on that, and had confidence, “Hey, if we build a game I love, we’re going to build a game people love, and we’ll be able to get traction that way.” And we did.

BERMAN: I’m imagining being an investor and having you come in and say, “Here’s what I want to do next,” and going, gosh, I love the experience, I love your expertise, I love what you’ve done so far, but Jeremy, if you start to get traction, DraftKings or FanDuel is just going to copy you, and they’ve got the install base, and they’ve got the dollars to swamp you. Why did investors bet on you? Why did you want to bet on yourself in this play when you were facing the risk of the tsunami from one of the big players?

LEVINE: We had a real focus on product and customer experience. And that’s something I always believe in, is focus on building the best product. We’ll talk about underdog in a second, but it’s kind of what we always focus on in Underdog, is product velocity. We believe there’s so much more still to be built for sports fans in America. And if we can be the best at building product, we’ll build the biggest company in this space. And back then it was a similar thesis. There was more to be built, and we can build something different. While the other businesses are focused on something else. Those companies, they weren’t really focused on product. They kind of built a single product and they were focused on marketing that. Just knowing the insides of those companies and knowing the opportunity that was there, we saw a lane.

BERMAN: So what happened with Draft?

LEVINE: We ultimately sold Draft to the business now known as Flutter in 2017. At the time, it was the largest exit in the history of fantasy sports. And then help Flutter ultimately go acquire FanDuel.

BERMAN: Why sell then? I mean, you’ve already sold once, you’ve built a company, you’ve got traction. Why sell a second time?

LEVINE: There was a real opportunity to build what we thought would be the future of sports betting in America with what now is obviously the market leader. All the investors made good money, and there was a lot more that we could earn, and a big future. And the person that we sold to, I trusted him, believed in him a lot. He’s now become a real friend and a mentor. And we thought we could go build the future of sports gaming in America.

BERMAN: But you didn’t stay. How long were you there?

LEVINE: No. So ultimately, DATCO left and UCO came in. They ultimately acquired FanDuel, which had started as my idea, but I thought it was going to go a little bit different when it happened. And when that happened, Draft got forced to merge into FanDuel, and that was pretty obvious that it was kind of the beginning of the end for Draft and our vision there. So, I left soon after that.

BERMAN: It’s an interesting question, anyone who is selling a company, has sold a company, or is thinking about selling a company to an acquirer in terms of what the promises are, what the assurances are, Instagram, and that is a great example of where everything was great until it wasn’t. We recently had Austin Allison who’d sold DotLoop to Zillow on, and that was an incredible fit where he stayed for years with Spencer Raskoff there. Now they’ve got a company together with Picasso. If things had gone differently, do you imagine you’d still be there running FanDuel?

LEVINE: I mean, the CEO who acquired us, he ultimately left. That’s what changed everything. And so I think about it now as if we ever look at M&A, or when we do, it’s kind of just like when you go to join a company as an executive or as an employee, I think, most important thing is the leadership and who’s running the business. And I think with M&A it’s the same thing. It’s, do you believe in that person and do you believe they’re going to be there in the long term? And if so, if they give you their word, then I think you can believe that. But if they’re not going to be there for the long term, then things are going to change.

BERMAN: Still ahead, how a relentless focus on product has helped Underdog stand out.

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Welcome back to Masters of Scale. You can find this conversation and more on our YouTube channel.

So, this all plays out with FanDuel, you leave, and you’ve already done it twice. You’ve got a third one in you. How does Underdog come to be?

Copy LinkThe origins of Underdog

LEVINE: So, we had a game we built at Draft called Best Ball that people absolutely loved. Best Ball is a form of season long fantasy, where after the draft you do no management. So there’s no setting your line-up, no waiver wires, no trades. Each week you get the points at your starting position for the player who scores the most points. So, it’s this beautiful game that’s both really casual. You can just do the draft and never have to check it again, or never worry about it again. But hardcore players love it, because they can do hundreds or thousands of them, and build a portfolio of sorts during an off season. It makes the whole off season really interesting.

BERMAN: And again, for people who are not avid fantasy players, one of the downsides here is, look, if Lamar Jackson to your point gets injured and he’s out half the season, he’s not in the play. On the other side, in regular fantasy, and most regular fantasy leagues, you’re starting one quarterback each week. And if you’ve got two good quarterbacks and you bet on the wrong one, you’re killing yourself for leaving the wrong quarterback in the starting lineup. Jim Lanzone, who now runs Yahoo, makes this mistake all the time in our fantasy league. It’s why he lost to Peter Pham in our league. This is a whole side story.

LEVINE: He should be playing Best Ball.

BERMAN: He should be, right? Okay, so you had Best Ball at draft, and was that the kernel of what you were going to launch Underdog with?

LEVINE: So, Best Ball was a game that people really, really fell in love with. And as Draft got forced to merge into FanDuel, FanDuel was going to shut down Draft. And when that ultimately happened, it was a really bittersweet day on the internet for me. I mean, there were over a thousand tweets of people just saying, just devastated like, “This sucks.” People were really bummed. And that day we were in a text thread with a bunch of the early folks from the Draft team, and Brandon, my co-founder at Underdog was just like, “Let’s go build this. Let’s do it again.” And I knew that Best Ball itself wasn’t big enough on its own, but there were these other forms of fantasy that we knew of that we had built in the past that we could add in. And now sports betting is here, so the market just got way bigger.

Copy LinkInside Underdog’s fast growth

BERMAN: Yeah. You launched it in 2020, right?

LEVINE: Yep.

BERMAN: And by 2022 you had a valuation of…

LEVINE: 485 million.

BERMAN: That’s a pretty fast rise.

LEVINE: It went quick.

BERMAN: That’s fast scaling.

LEVINE: It went quick.

BERMAN: What happened between ’20 and ’22 that let you guys make that happen?

LEVINE: Yeah. I mean, we had a lot of advantages because of the team that came together. I mean, the founding team was seven from my last company Draft. And we knew exactly what to build.

BERMAN: I think the other thing that struck me when I first discovered Underdog was how great the app is designed. If you’re not visualizing it and you’re not a sports nut, it may be hard to fully grok, but once you open the app and take a look at it, it is dead simple. It is really easy to use. And as someone who’s worked in consumer tech and worked specifically in sports tech, I know how hard it is to do that.  It’s the biggest softball question, I’ll be like, “Why are you so great at that? How did you guys get so good at doing this?”

LEVINE: Look, it’s what we prioritize. The company’s sick of hearing me say this because I say it every two weeks when we have a company meeting. The things we focus on, the things we prioritize above all else are our people and product. And a company’s a collection of people. You need to have the best people. And we focus relentlessly on product. We prioritize product velocity above all else. And again, we founded Underdog with this really simple thesis, it’s so much more to be built for sports fans in America. If we can be the best at building product, we’ll build the biggest company in this space. And we’re just over five years old, and we’ve been the fastest growing sports gaming company ever, zero to five, to well over 400 million in revenue this year. And we believe that more than ever.

BERMAN: And you now have a valuation of most recently-

LEVINE: 1.3 billion.

BERMAN: 1.3 billion with a B. Where’s the white space? Where’s the opportunity?

LEVINE: There’s so much of it. We often say games, not transactions. If you think about sports betting, people normally go to the sports book. And the sports book is a product that was brought over from the UK and Europe. And they’re effectively all the same. In our investor deck, I have a slide, which is the top seven sports books in America, and I ask investors, “If you had to choose one of these, which would you choose?” And they kind of stare at it dumbfounded and then say, “They’re all the same.” Exactly. No one has really focused on building something net new for the American consumer. And Americans and how we engage with sports are very different than any other country.

BERMAN: How so?

LEVINE: So first off, we didn’t grow up with sports betting here. And so we’ve created all these games of substitutes, all these ways to express opinions on sports. Over 60 million people play fantasy sports. Every year there’s over 90 million March Madness brackets done. We do Survivor Pools, Pick’em Pools, Super Bowl squares. We collect sports cards, we even buy sports NFTs sometimes. There’s all these ways we’ve created to express opinions on sports. Those are all really distinctly American, right? There’s almost no fantasy sports or March Madness brackets anywhere else in the world. And so we grew up playing games.

Now, the games are largely, and I think about fantasy, largely player-based. We care a lot more about players and stats, here, where in other countries, their sports fandom is way more focused on teams. And the sports are just different. Our sports, if you think about it, there’s off-season news cycles, the sports themselves, they’re very stop and go. Where most of the popular sports overseas are continuous in nature, you think of a soccer game, or you think of an F1 race, there’s no stops. They just go. Our sports are almost all stop and go.

And you just think about the place and time, right? Sports betting was built to take what was in a smoky retail shop and bring it online in a desktop world 25 years ago. Or that’s what sports books were built for. And that’s the foundation of sports betting in America still today, because that’s where the tech came from. We’re not in captive retail shops anymore, and quite the opposite. We’re all on mobile devices, largely distracted, with breaks in our sports. Used to playing games way more focused on players, and you can see how the products that are really going to resonate with American consumers are going to be so different than what was built in other markets.

BERMAN: So, I’m curious about this focus on players, because I see this with my youngest, for sure. I mean, he doesn’t really have a professional basketball team so much as he roots for the Warriors because of staff, or he roots for the Bucs because Giannis or whatever it might be. And when I worked at the NFL, I really understood that it was club, player, league in that order for the NFL at least. Are you saying that it’s actually player, club, league for most of the US?

LEVINE: It’s definitely more player-focused than any other country, and I do think we’re seeing fandom for players start to transcend fandom for teams.

BERMAN: Is that generational?

LEVINE: I think so.

BERMAN: Why do you think that is?

LEVINE: It’s easier to follow players now. Players move around more often. And if you think of social media and you think of the way people consume sports, I mean, it’s way more, anyone younger is following their favorite players on social media, and the players have way more followers than a team does.

BERMAN: Yeah. Athletes are now media companies. I mean, LeBron has a media company, and Steph is a media company, and Alex Morgan and Sue Bird have together along with Chloe Kim and Simone Manuel and some others. But players go on social media, to your point, they can reach 5, 10, 50x what their club can reach, what the league can reach. What is that change about how you market both the games themselves that you’re offering and Underdog itself?

LEVINE: Well, our games are very player-driven. So they play perfectly into the narrative fantasy is, by default, player-driven. People want to pick the best players. And so that’s what we make kind of simplest and easiest, right? If you think LeBron James is going to have a great game tonight, Underdog’s the easiest way to express that opinion.

BERMAN: And does that drive how you market to your customers? Is it player-specific?

LEVINE: Yeah.

BERMAN: When you’re talking about acquiring a new customer as opposed to marketing to an existing customer, how does this insight, does it affect how you’re going out to acquire a new customer?

LEVINE: Yeah. I mean, look, in different states we’ll market the popular players in those states. So it’s absolutely people care about the players. I mean, when Luka was traded to the Lakers, we saw a real kind of bump in intrigue in Luka in LA, right? Makes natural sense.

BERMAN: Makes sense.

LEVINE: That’s what people are focused on.

BERMAN: Yeah. Okay. I want to talk about two emerging trends in sport and how you’re thinking about those. The first is NIL name, image, and likeness for collegiate players. Is that having an effect on the Underdog business?

LEVINE: Not much. Because of the regulations, we don’t really market college sports.

BERMAN: Okay. What about the rise of women’s sports in the US?

Copy LinkThe Caitlin Clark effect

LEVINE: The Caitlin Clark effect is real, and is one of the best things to happen to our business.

BERMAN: What are you seeing there?

LEVINE: Last year versus the year prior, we saw, I think it was about 4x the interest in entries in WNBA as the year prior. And we’re definitely seeing it on the nights Caitlin plays, there’s a lot more people playing.

BERMAN: And is that also broadening the demographic of your customer base?

LEVINE: Definitely somewhat, but it’s bringing people into that sport that weren’t playing that sport prior.

BERMAN: Okay. You’re still in an incredibly competitive category.

LEVINE: Oh, yeah.

Copy LinkCompeting with giant incumbents

BERMAN: You’re still in a world where DraftKings and FanDuel exist, and they are 800 pound gorillas. ESPN has entered the space with mixed results. Outside of your relentless focus on the customer and creating a world-class product, how do you all win?

LEVINE: Well, those matters. Those are the important things.

BERMAN: Well, dollars matter.

LEVINE: Yeah.

BERMAN: I mean, dollars matter for sure, right?

LEVINE: I mean, there was, to a point earlier, it was a period of time where you could not watch, I mean, literally a single ad break without seeing a commercial for one of the big players. 

BERMAN: Can you compete against the big players?

LEVINE: Yeah, we’re doing it. Product, the best product. I mean, what do customers want? We believe product wins. And I can give example after example. Even in this space of product winning, and that’s why Underdog has been successful so far, and that’s why we’ll continue to be successful. I said earlier, we believed if we could be the best at product, we’ll build the biggest company in the space. So the question is, how we be the best at product?

Well, obviously it’s something we focus on. We hire for, we talk about all the time. But a really key part of it is we have the opportunity to build our own technology. When this industry came to be, when PASPO was repealed and New Jersey was launching 31 days later, anyone who wanted to be live for the start of sports betting in America had to make a really consequential decision. They had to bring already built tech over from overseas so they could launch in 31 days. And we didn’t have to do that. We knew we could build an advantage through fantasy sports all while building our own technology, and our own licensed regulated technology for sports betting, which is the future. We want to offer as much product as we can to customers in any regulatory framework that’s possible so long as it’s legal. And the opportunity to offer sports betting is something we look forward to because it’ll allow us to offer even more products to our customers, more games and experiences to our customers.

BERMAN: What are the products that you desperately want to launch that you for one reason or another haven’t been able to launch yet?

LEVINE: The simple answer is teams, right? Do you want to take Luka to have a great game tonight? Well, right now you need to put a player on the other team into that entry. You may think the Lakers are going to win and Luka’s going to have a great game. You can’t express that opinion today on Underdog.

BERMAN: And that’s a regulatory restriction?

LEVINE: That would be sports betting.

BERMAN: Gotcha.

LEVINE: And so customers want to express that opinion. Right now we have to offer basically less options and more restrictions than we could if we offer sports betting. So now, as we’ve built the technology that is licensed and regulated, and has been licensed by this test lab, that license every single slice of it, that regulators then rely on, now we can go and get sports betting licenses in states, and offer more product to more customers.

Copy LinkManaging the seasonality of sports

BERMAN: One of the challenges that, we lived this when I worked at the NFL, I have to imagine, given the fact that the NFL is an 800-pound gorilla in American sports, you must experience this seasonality.

LEVINE: Oh, yes.

BERMAN: How do you manage the business with what I mentioned are extraordinary peaks in NFL season and some valleys outside of it?

LEVINE: Yeah, our calendar is largely built around, well, it’s built around the sports calendar, and largely built around NFL season. Beginning of September, that’s go time. And go time goes all the way through really the Super Bowl and then the end of NBA season. We built our calendar around that. It works out nicely where there was kind of that prime time from September to March. February, March, then there’s kind of the summer to really rebuild for the next season, and build more, and then it’s go time again.

Copy LinkAdvancing responsible gaming

BERMAN: Yeah. Jeremy, if you listen to sports podcasts, you listen to ads for companies like Underdog, and then you listen to seven minutes worth of disclaimers and phone numbers to call if you have a gambling problem, et cetera, talk about how Underdog approaches responsible spending of dollars gaming.

LEVINE: Yeah, look, it’s a really important topic, and it’s something that our industry is starting to get better focused at, I’d say. But it was something where I think the industry really needed to course correct. And I think has in recent time. We think about it in a lot of ways. There’s of course kind of the enjoyability of our product. I mean, our mission is make sports more fun. And we really build our games and our product for the sports fan. Not really for the kind of financially minded customer, but more for the customer who’s watching the game tonight and wants to be able to have more fun with that game, or wants a reason to watch the game. Our average entry is $13. So we think about it in the games we build, and the product we build, and how we market it, and then we think about the industry and how can we help advance the industry. We started a program about two years ago that I’m really proud of that we think has a lot of potential, it’s called GuardDog.

BERMAN: Great name.

LEVINE: And GuardDog, it’s a fund that invests in companies that are using technology to advance responsible gaming. Because what we realized is, in a competitive field, a lot of companies will default to the bare minimum. And ultimately, what’s going to be necessary to keep customers really safe and enjoying the products is technology and the right regulations. And so those are the two things we really focus on from an industry perspective, is working with regulators, and working with companies that can work across all the different operators in the space, and then work with the regulators.

BERMAN: So these are for-profit companies you’re talking about here.

LEVINE: They’re for-profit companies we invest in, and we do our best to help them. We kind of provide mentorship, we have a bunch of mentors, some ex-regulators, some responsible gaming experts. And we try to help these companies. We plug them into our business, we plug them into our product and our customers, we try to give them as much data as we can to help advance them and their causes, and we’d make introductions and do what we can to help them. It’s kind of the techstars model.

BERMAN: It’s not obvious to me that that’s a lucrative category to be in. What’s an example of a company that’s in responsible gaming that you all have backed and you believe in?

LEVINE: So, there’s a few. One is a company called IDPair, and that’s one where we’re working to bring unified regulations of what customers can do when they opt out, let’s say, right? So we’ll have customers who sometimes say, “Hey, I want a self-exclusion period, and I don’t want to be marketed to, I don’t want to receive notice from the company.” And they’ll be able to opt out for say, 60 days, or in perpetuity. And IDPair is technology that works across operators, and we’ve partnered with other fantasy companies now to institute it where that will then be shared. They can share that with one click across all the fantasy operators. So, it’s not just us, it’s the industry as a whole.

BERMAN: Right, right.

LEVINE: So that’s one example where we’ve worked in a couple states to pilot that with regulators and across a bunch of different operators.

BERMAN: Industry-wide opt out for a period of time effectively.

LEVINE: Exactly.

Copy LinkAdvice for young people interested in sports

BERMAN: Okay. I want to close by asking you for a piece of advice for my sports-obsessed 15-year-old. If he wants to pursue a career in or around sport, where would you suggest he think about starting?

LEVINE: God, there’s so many right answers. Start where you love. I mean, I remember at that age I was collecting sports cards, I was building off-season plans for the Red Sox. Find something you love and engage with it. I was doing Madden franchise mode every night till 4:00 in the morning. I think it’s just follow your passion.

BERMAN: All right. Oliver, you heard that, I hope. Jeremy, thanks for being on Masters of Scale.

LEVINE: Of course. Thank you. This was so much fun.

BERMAN: Jeremy Levine’s journey as a serial entrepreneur is fascinating. From starting his first scrappy company with engineers he found on Craigslist, to deciding when to sell and start again, to banding together with competitors to reshape regulation, he has learned at every step. Now he’s putting all those lessons to work at Underdog. In fact, after we recorded our conversation, Underdog announced a new offering in partnership with Crypto.com. Underdog users will now be able to put money into sports prediction markets. Here’s what Jeremy had to say about it earlier this week on CNBC.

LEVINE: Underdog to date historically has almost entirely been about players. Today, by offering prediction markets, we can now offer teams. So teams has been our top requested feature by far, right? Our customers want to be able to pick teams. There are states where sports betting is legal, there’s states where sports betting isn’t. Prediction markets are federally regulated now, and we’re going to be offering that soon across the country.

BERMAN: This move makes Underdog the first in its category to offer prediction markets as part of its offerings. It’s worth noting that prediction markets for sporting events are another example of evolving regulatory and legal frameworks. Jeremy is no stranger to navigating those risks, and I know one thing for sure: I would never bet against Jeremy finding new ways to push forward. I’m Jeff Berman. Thank you for listening.