Digital Social Hour: How I Built a Fortune – DraftKings Co-Founder Matt Kalish | Episode #789

Release Date: October 7, 2024

In this engaging episode of Digital Social Hour, host Sean Kelly delves into the journey of Matt Kalish, the co-founder of DraftKings, exploring the inception, growth, and future of the company. The conversation seamlessly blends business insights with personal anecdotes, offering listeners a comprehensive view of Matt's path to success and his perspectives on the evolving landscape of sports betting.

1. The Genesis of DraftKings

Matt Kalish opens up about the early days of DraftKings, highlighting how it began as a fantasy sports platform before transitioning into the booming sports betting industry.

"We started with fantasy sports and now obviously the culture in the country has changed a lot. So sports betting is in about 50% of the US and being on the forefront of that really, really amazing experience." [00:34]

Matt emphasizes that sports betting wasn't initially on their radar. Instead, DraftKings was born out of combining the engaging elements of fantasy sports with the vast, untapped potential of sports prediction.

"There was really no path to sports betting. Though at the time this was 2012, it was highly unclear how that would even come out." [01:49]

2. Building a Robust User Base

During the first five to seven years, DraftKings amassed over 10 million users. This substantial user base, primarily composed of fantasy sports enthusiasts, provided a solid foundation when sports betting finally gained legal ground in the U.S.

"We built up over 10 million users on the platform and the same people that were playing Fantasy, you know, are highly... have a lot of affinity for sports betting." [02:06]

3. The Importance of a Complementary Founding Team

Matt attributes much of DraftKings' success to the complementary skills of the founding team. He highlights the pivotal role of Paul Lieberman, the tech founder, whose technical expertise was crucial in the company's early development.

"A lot of founding teams don't have a great tech founder... what always been great about Jason, Paul, and I... is very complimentary in terms of our skill set." [06:18]

Sean adds valuable advice for aspiring entrepreneurs, emphasizing the necessity of a well-rounded founding team that balances technical prowess with marketing and operational expertise.

"A lot of founding teams don't have a great tech founder... you got to have the total package." [07:23]

4. Personal Connections to Sports

Matt shares his personal journey with sports, revealing his background as a distance runner in high school and college. His deep-seated passion for sports naturally intertwined with his entrepreneurial ventures.

"What got me into Fantasy originally was baseball too, which was... I got into college off running." [03:44]

This passion extended to his support for the Boston Celtics, where Matt discusses the team's strategic trades and championship run, reflecting his personal investment in the sport.

"Congrats on the Celtics championship this season, man." [07:40]

5. Navigating the Sports Betting Landscape

DraftKings' strategic entry into sports betting in 2018 positioned it as a leader alongside FanDuel. Matt discusses the competitive nature of the industry and the challenges posed by heavy regulations and evolving media landscapes.

"It's probably one of the most competitive, most heavily regulated industries. There's always changes in... it's just never a boring day." [22:33]

He also touches upon the integration of Artificial Intelligence (AI) in enhancing operational efficiency, from setting odds to improving customer service.

"Our tech is strong. I think anything that comes from an innovation standpoint... can help our company be more efficient." [24:19]

6. Insights on MVP Voting and Player Performance

The conversation shifts to Matt's views on MVP voting and player performance in the NBA, particularly focusing on Jayson Tatum and Jaylen Brown of the Celtics. Matt critiques the subjective nature of MVP selections, advocating for more objective, stats-based evaluations.

"If you're just looking at the stats, he was the MVP. But I think people wanted to put a lot of credit on the run." [12:09]

He also praises the Celtics' front office for their strategic trades, which he believes were instrumental in their championship success.

"They are winners, man. They want to win. Well done." [08:49]

7. Personal Gambling Practices and Views

Matt candidly discusses his own gambling habits, revealing a preference for blackjack and poker over sports betting, despite being at the helm of one of the largest sports betting platforms.

"I probably sports bet the least of anything in terms of gambling, to be totally honest." [15:33]

He shares his experiences with NFTs and cryptocurrencies, expressing skepticism about their long-term viability due to technical complexities and security concerns.

"The blockchain, like, NFT stuff with all the... scams and... it's just not going to get to that level." [18:26]

8. The Impact of Going Public

Reflecting on DraftKings' IPO, Matt describes the overwhelming transition from startup life to being a public company. The sudden influx of wealth introduced new challenges, including managing taxes and personal finances.

"Going public... was nuts. It's definitely a big... change to lifestyle and change to, like, how to even operate your house and stuff." [29:01]

Despite the chaos, Matt highlights the lasting value of personal passions, such as his Celtics season tickets, which facilitated new relationships and a deeper connection to the community.

"The biggest thing I did after we went public, the one, like, splurge was the Celtics tickets." [29:26]

9. The Future of DraftKings and Technology

Looking ahead, Matt is optimistic about DraftKings' trajectory, especially with the upcoming football season poised to be the biggest for the company.

"With football coming around the corner, that's really, like, the main peak, you know, September, when football launches, that's, like, far and away the biggest season for us." [30:08]

He also discusses the potential of AI and other technological advancements to further enhance DraftKings' offerings and operational efficiency.

"Most of the ways that the AI... momentum has been hitting us is how we can operationally be better." [24:30]

10. Final Thoughts and Closing Remarks

As the episode wraps up, Matt provides listeners with information on how to connect with him and get started with DraftKings, emphasizing the platform's user-friendly nature and promotional offers.

"You go to DraftKings in the App Store, download the sportsbook. We give free bets... so definitely easy to pick up and suggest." [30:46]

Sean concludes the episode by expressing gratitude for Matt's insights and encouraging listeners to explore DraftKings.

"Thanks for coming on, man. That was fun." [31:32]

Key Takeaways:

• Strategic Pivoting: DraftKings successfully transitioned from fantasy sports to sports betting by leveraging its large, dedicated user base.

• Founding Team Synergy: A complementary founding team with strong technical and marketing skills is crucial for startup success.

• Passion-Driven Ventures: Personal interests, such as Matt's affinity for sports, can significantly influence and drive business decisions.

• Navigating Regulations: The sports betting industry remains highly competitive and heavily regulated, requiring adaptability and robust technological infrastructure.

• Personal Resilience: Managing sudden wealth and the challenges of going public necessitates strategic planning and personal discipline.

• Technological Integration: Embracing AI and other technologies can enhance operational efficiency and customer experience in the sports betting industry.

• Community Engagement: Building and maintaining strong community ties, exemplified by Matt's involvement with the Boston Celtics, can foster lasting personal and professional relationships.

Notable Quotes:

• "We built up over 10 million users on the platform and the same people that were playing Fantasy, you know, are highly, they have a lot of affinity for sports betting." — Matt Kalish [02:06]

• "We weren't expecting it until it actually happened." — Matt Kalish [02:20]

• "It's probably one of the most competitive, most heavily regulated industries." — Matt Kalish [22:33]

• "If you're just looking at the stats, he was the MVP." — Matt Kalish [12:09]

• "Going public... was nuts. It's definitely a big... change to lifestyle." — Matt Kalish [29:01]

Connect with Matt Kalish:

• Instagram: Matt Kalish
• Twitter (X): Matt Kalish
• DraftKings App: Available on the App Store

Whether you're an entrepreneurial spirit, a sports enthusiast, or someone intrigued by the intersection of technology and betting, this episode offers invaluable insights into building a successful company from the ground up.