FanDuel

“20,000 users per month who have placed more than 65,000 bets worth more than $1 million to their winners since play started”

“I know a major newspaper in London that makes $15 million a year from sports betting alone.”

Steve Blank’s blog

The key points of Customer Development are:

1. Get out of the building. Very few technology startups fail for lack of technology. They almost always fail for lack of customers. Yet surprisingly few companies take the basic step of attempting to learn about their customers (or potential customers) until it is too late – it’s just so easy to focus on product and technology instead. True, there are the rare products that have literally no market risk; they are all about technology risk (i.e. life sciences and a “cure for cancer”). For everyone else you need to get some facts to inform and qualify our hypotheses (“fancy word for guesses”) about what kind of product customers will ultimately buy.

2. Theory of market types. Market Types is a theory that helps explain why different startups face wildly different challenges and time horizons. There are three fundamental situations that change what your company needs to do: creating a new market, bringing a new product to an existing market, and resegmenting an existing market. If you’re entering an existing market, competition comes from the incumbent players. When creating a new market, it may take years before you get traction with early customers.

3. Finding a market for the product as specified. Customer Development tries is to find the minimum feature set required to get early customers.

4. Phases of product & company growth. Customer Development posits that startups go through four stages of growth; Customer Discovery (when you’re just trying to figure out if there are any customers who might want your product), Customer Validation (when you make your first revenue by selling your early product), Customer Creation (akin to a traditional startup launch,) and Company Building (where you gear up to Cross the Chasm and realign management.

5. Learning and iterating vs. linear execution. In the early stage of a startup companies s are focused on figuring out which way is up. They really don’t have a clue what they should be doing, and everything is guesses. In a traditional startup model, they would probably publicly launch their product and company during this phase, failing or succeeding spectacularly. Only after a major, public, and expensive failure would they try a new iteration.

6. Premature Execution. An insight of Customer Development is that startups need time spent in a mindset of learning and iterating, before they try to launch. During that time, they can collect facts and change direction in private, without dramatic and public embarrassment for their founders and investors.

Next: Steve Blank on entrepreneurship and startups

Nigel Eccles:

Thanks everyone for the comments.

Regarding the ‘How is this different from X’ questions:

OneSeason – We are big fans of OneSeason and the team behind it. I think it is a pretty revolutionary idea however it is completely different from Fanduel. OneSeason is a stock exchange for sports stars. Fanduel is daily draft fantasy sports game.

Citizen Sports – Again some great products (particularly ProTrade) but as far as I am aware all of them are free, ad supported products. Our own experience is that it is very hard to offer significant prizes to users when your only revenue stream is advertising.

DraftMix – DraftMix is similar in that it is a daily draft game. The key difference is that DraftMix required all players to be online at the same time to complete a live synchronous draft. FanDuel is asynchronous (like most successful social Facebook games) so users can draft at any time they want.

On the legal side, FanDuel is structured the same as any other premium online fantasy sports game (for example CBS who offer $500 to enter games). We have taken significant legal advice and are comfortable that it is legal in the 44 States where we offer paid for games. And no, you can’t draft all the players from the same team…

Previously: HubDub launches FanDuel exclusively thru TechCrunch UK, which is, of course, upbeat on its future. Here’s a more critical take.

- FanDuel, on the other hand.

Makes no sense at all.

Nigel Eccles and Lesley Eccles

Previously: HubDub launches FanDuel exclusively thru TechCrunch UK, which is, of course, upbeat on its future. Here’s a more critical take.

The problem with FanDuel‘s simple business model (selling social gaming services over the Internet) is that, unlike HubDub (which is free to play), there won’t be free publicity generated on the Web —other than the TechCrunch UK post. Just because you have a business model does not mean that you have a marketing strategy.

The best marketing strategy you can have on the Internet is a dual one:

1. Give away content, software, or means for people to connect with each other;
2. Sell something else (to the same people or to other people).

Since FanDuel won’t be free, it won’t generate any buzz on the Web. [UPDATE: See Nigel Eccles's comment, just below.]

Nigel Eccles is proud of the fact that his team crafted FanDuel in a matter of weeks. But have they thought long enough about marketing strategy?

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Addendum:

The FanDuel press release:

SHAKING UP THE FANTASY SPORTS INDUSTRY

New Fantasy Sports Game Lets You Play Today, Win Today

There are at least 20 million of us playing fantasy sports every year and yet in recent years it has seen very little innovation. For many, one of the major problems with fantasy sports is the huge time-commitment involved – when you play fantasy, you have to play for the whole season – no breaks, no holidays, no excuses. However, in this era of Facebook and Twitter, people want instant gratification.

This issue is tackled head on by FanDuel.com, a new fantasy sports game which launches today. FanDuel.com lets us play and win in a day instead of waiting the whole season. Players can draft a new team at any time, and pitch it head-to-head against an opponent – a friend, or another FanDuel player – for real money. The player whose team has the most fantasy points at the end of the day’s games wins the cash prize. It’s purely fantasy baseball right now, but the fantasy football game will launch with the start of the football season.

Clever integration with sites like Facebook means that picking opponents is slick, as is bragging about your wins. This is a first for the fantasy sports industry which has been dominated by the big players such as Yahoo, CBS and ESPN for too long.

The game is a competitive draft rather than salary cap – making it much more challenging. However unlike traditional competitive draft both players don’t have to draft at the same time. The way it works is one player drafts their first pick and a back-up for each position. They then order their draft and submit their roster. When they are matched with another user (a friend or another FanDuel user) the system works through each player’s draft in priority order. You get an email telling you and your opponent’s final roster and then you can watch the live stats on both fantasy teams update in real-time as the games progress.

Online social gaming is already well developed but the daily fantasy sports market is quite new. Nigel Eccles, CEO of the company behind FanDuel, admits, “After playing Mafia Wars and other social games on Facebook, going back to playing traditional fantasy sports on CBS felt like going back in time. We felt we could build something faster, more social and exciting.”

Thanks to the fantasy sports carve out of the 2006 Unlawful Internet Gaming Act [Unlawful Internet Gambling Enforcement Act of 2006], FanDuel.com is perfectly legal to play in the US – something that the team behind FanDuel have been very careful to adhere to. FanDuel offers free and paid entry games with users able to enter $5, $10 and $25 competitions.

http://www.fanduel.com/

- HubDub did that a lot more.

Nigel Eccles for President…!!!…