Matt Kalish

could inspire you as well. Today we have Matt Kalish, who is one of the three co founders of Draft Kicks, the biggest online spantasy sports and sports betting website ever. And Matt is awesome, like down to earth, super nice Boston guy from Lowell, grew up outside New Hampshire, just like me right when I used to take summers in

New Hampshire. Really really really cool story and what we really hit on is not just the origin story which we go through, but how having that one solid idea and knowing yourself honestly and knowing what you're good at. That's what I want you all to listen to it so you can hear from someone who's done it, how you too can figure out what you're good at and what's your things could take that idea and take it to the stratosphere. So welcome to a brand new episode.

They kind of want to go through like the origin. So you and a couple of guys were working at Vista Print, right, that's correct. How long did you work there? Well, even before that, I met the current CEO of DraftKings, Jason Robbins, at Capital One, which was it was my third job in corporate America. But I was maybe two years out of college. I had a couple of short jobs and then Capital when I settled in, I had an analytics role nice in the American dream. Yeah, analytics

at a bank. Yeah yeah, yeah, exactly, credit It was lending business. So yeah, we were doing heavy numbers stuff like Excel models and all this kind of data analytics and trying to make recommendations to you know, marketing teams and stuff like that. So we were a couple of is into our career when we met, and we had

a lot of things in common, like fantasy sports. We both played poker, and then you know, just like softball and things like that would play together, so we spent a lot of time together in addition to just being on a lot of the same projects in the company. So Jason was like my closest work friend pretty much coming up at Capital One, and then after three years or so, that business shut down and then we moved

to visits that part of the business at Capital One. Yeah, they had like a specific lending business that we were a part of, and they just kind of wounded down, and so we ended up at Vista Print and that's where we met Paul. Paul Lieberman was our you know, third piece of the puzzle that really brought together the team that started DraftKings. Now what did you go to school for. I did computer science and economics and a double. Should have done that. I would have totally failed out

of college, but that's what I should have done. Yeah, I had. I had like a two point seven g p A. But I took like heavy corselow. I always felt like I was wide and not too deep on any of my courses. So I got decent understanding, but it never failed anything. I got a D plus in there's a class called graph theory. I got a D plus.

That was like my senior year. Remember that is still there. Yeah, the teacher wrote a poem about graph theory and it was just like he was so hardcore and I just didn't take it as seriously as he wanted us to. It's memorable. You remember you're talking about it to this day, Oh man, that you should n f t that that thing is probably still out there. And so were you entrepreneurial as a kid. Did you ever want to start your own business or build something or do you go

to school and think, Hey, I'm gonna go get a job. No. I always like wanted to find ways to make my own money. My family was both my parents met in the Navy. They didn't go to college, and after the Navy, my dad was a corrections officer and worked in a prison for twenty seven years, maybe twenty eight years, and then retired. My mom was a hairdresser and then she worked for a parks and recreation department, you know. So

they had these sort of blue collar jobs. And I never had that much money going around, so I was always looking for ways to make money. The first thing I did was, um, I just started mowing the lawn of I lived right next door to a seven eleven. I just like mowed the lawn one day, and then I went over and talked to the owners and was like, Hey, if you need someone to mow your law, just let me know. I'm around. I live right next door, and so I started doing that and I was making like

twenty dollars a week. Then it's I got like a little older. I found you know, a few little like I was doing restaurant jobs and things like that. But by the time I got to college, what really caught my attention was poker because I was like, this is a much more like intriguing way to make money to me. It's it's math, it's strategy, it's game theory. I thought it was fun. So the way I found out about

poker was Matt Damon's movie Round Round. I saw that movie right before I started my freshman year of college, and I was like, I'm gonna be in trouble because I'm not gonna be going to class much. I'm just gonna play internet poker. So I got to college freshman year, uh, and I was splitting my time between I was running track classes, and then poker and poker just started taking

out more share of my life. You know. So I see like Giovanni Rabisi and boiler Room, you know, in the middle of the night running like his underground poker den down there. Yeah, a lot of the people I would talk to. This was back in two thousand through two thousand four, and so it's like a O L instant messenger was a thing. And yeah, a lot of my friends I would meet them playing poker, meet some people from New York and we would meet up and just talk on aim while we're playing, and then would

meet up for games on Long Island and things like that. Yeah. I was started by learning limit hold him because that was what was popular in two thousands. Then it wasn't until like oh three when Chris Moneymaker won the World Series of Remember that Women Hold Them? Yeah, yeah, and so I was learning a little bit of everything. And yeah, by end of college, I was really thinking like should I play poker? Should job? Was that that was like a real thing. Yeah, I almost like didn't get a

job and played poker. And then did you think you might like move to Vegas and just like do it real or you're gonna do internet poker. I was gonna do like internet poker, got it and I probably would have, but my mom I just thought like wouldn't have really thought very highly of that. And so I was like, I'm gonna keep playing, but do it at night and get a real job. So I had a few jobs

that I didn't like. One was an engineering one was it was kind of like operations, I guess, but it was at Fidelity Investments doing benefits because you know, like a horizon or something to do their benefits through Fidelity. It was kind of like an operation job. Both jobs I didn't like. And then corporate analytics though I did because it had a lot of the poker you know, like you're looking through in complete data, you're trying to figure out, you know, trends or get insights from data.

And then that was a Capital one. Yeah, a Capital one, and I was good at that because like just poker conditions you to like look at the data you have evaluated,

make quick decisions that strategy. And there's also the accountability like you're really making money or you're really losing money, and there's like a balance sheet of life there that like you can't just be terrible and then you know, keep going like you're gonna eventually run out of run out of your bank roll if you're not making good decisions. What's the most amount of money you've ever made playing poker? Oh god, k yeah, never anything too insane. So then

Capital one that division you're working at shuts down. You guys go to Vista Print. You need the third party to your like fabulous trifecta. But did you know that you were going to start your own company or you were just hey, this is the next job, And like what was that genesis? When did that conversation happen? Yeah, like we we knew we were going to do something for sure, and Jason and I and then I wasn't that sure if Paul Paul had like a higher bar

to actually quit. And where I stood on it was I was almost thirty years old. I had done seven or eight years in corporate America. It was my fourth job. And I was, you know, if you just do your balance sheet again of life, I was like, Okay, I'm making whatever, seventy thousand dollars a year. Then there's taxes, then you know, house um, all this stuff, like you start taking it all out and you're not really saving anything.

I was paying off student loans and I had nine thousand dollars and I was like almost thirty years old, and so Jason and I were like, the corporate thing isn't really going well. You know, we don't feel like we're getting where we want, and we also just had that drive to do something on our own and we're waiting for the right idea. Paul jumped in, um, you know, very similar. He was just waiting for something like special

enough that it was worth it. So you know, he wasn't going to quit and start like a fast food franchise or something that just like wasn't where his head was. That he wanted like something that could be big. And so we we started talking about this idea for draft kings, which was fantasy sports. It was right after internet poker kind of fell to the side in the US. We're like, fantasy sports is really interesting because people love doing these drafts.

You can do it potentially every day. What if you just like reformatted it a little where you're drafting every day, you're playing just for one day, and you're playing against your friends or maybe against like thousands of people for big prizes. You know, it's pretty cool. And here's an inventing this in conversation. Yeah, like just like a total

what if situation. Yeah, it was like, what if we just built this thing that was you know, not not easily solved, like kind of a skill game around fantasy and so the thing we talked about the thing, The thing is the website, right, and then put the machine behind did and you're the computer engineer. It's what you went to school for, but it's a three of you. Like at night, you're going to work during the day and then at night you're coding. Is that what's really

started it? Yeah. We fell into rules really quickly, which basically all of us learned something relatively new. Paul wrote the code for site. Paul was like not a software engineer, but he knew some stuff. I think he did electrical engineering and he was an analyst, and he just started reading books and figured out how to write code. He wrote our prototype it was C plus plus or something, and then we started doing investor pitches. Jason Robbins had to learn how to go do like a fundraise, so

he went out and started like building a pipeline. So you immediately wanted to raise money. Yeah, yeah, I would say within three or four months, we figured out if we don't raise money, we're never getting this off the ground. Got it? Did you know how much it was going to take you to get it off the ground, Like

how much we wanted to raise at the beginning. I feel like a lot of people do this, but we had a really stupid model, Like it was we thought we needed way less and it was like, I don't know, three hundred thousand dollars or something to build the first site and kind of get everything running. Yeah, our first pitch neck said we need to raise like three k and it will be profitable in like six months and all this stuff, and then we ended up raising one

point two million. We did forty pitches. Probably there was thirty thirty five knows. A couple of people were like, call me back if you have a lead for year round, but they didn't want to lead it. This is just seed money, right, You're just looking for people to help you start. Yeah, just like we were showing them our prototype and it's just the three of you. Yeah. And what was the prototype like a wire frame? Yeah, it was not an app. It was a website and we

would just load it up. It had a little bit of functionality, not much. There wasn't like live data from sports pumping into it. It was all like placeholder data, just the idea yea logo. Yeah, and Paul I can't over emphasis emphasized that he was not an engineer, so he didn't really know how to write code, so the site would just get the blue screen of death sometimes

on investor pitches and it was just broken. But it like worked enough, and he was getting better over the months and just like cleaning up and learning, and so it's just the three of you. Yeah, it was just the three of us. And then after we got line of sight to raising money, we brought on our fourth, you know, our first non US employee, and that that was somebody named Blake Dunkle, who was an engineer, like a real, real, real life yeah, someone who could come

in and help you bill this whole thing. So when did Draft Kings first go live? We want live in April. That was for baseball, and it was April, which is Paul's birthday. And I think he like deliberately launched it on his birthday, even if we could have went sooner, he was like, I just wanted to be on my birthday. So he you know, lined up all the stuff and that's when we went live. And how was that first

couple of months? It was good. At that time, there was probably like six or seven competitors that we knew of that we're doing fantasy that we're in the market doing something like kind of similar to what we were, but nothing was big at all. Maybe like tens of thousands of people at the most had ever tried like ten or twenty thousand, and so we came in and there wasn't It wasn't like just get people you know who are already in the market to try it. You

have to literally explain what the thing was to come here. Yeah, it was tough, and so our first day we had a hundred and seven registered users. I think we just did a free game where we gave away a hundred

bucks that's all for baseball. And it was a combination of like people that had heard of the industry and just like stumbled upon social media posts or friends told them or we posted on some forearms, but like random mix of a hundred seven people that kind of stumbled in, and you know, we're asking our friends to spread the word and everything and you know, invest any marketing for a couple of months, you know, so we were just really doing it. Yeah, Yeah, we just start doing emails.

We had like free games that people could jump in, and then we started testing some stuff on you know, like Facebook, digital marketing and stuff probably July, something like

in June or July. So it took a few months, and yeah, we had to clean up our product a little bit, made some changes, but we felt like by July we were okay, investing a little bit and we were really just getting ready for football season, which was you know, so that's why you did baseball first, because you were launching it in the spring, gearing up to then bring football in. Yeah, that's it wasn't even that strategic.

That's just like when we were when we were ready, and it's it's like their strategy, So why do you choose baseball first? When they write this story about draft kickings sometime in the future, they can say it was

like very strategic, But it wasn't. So we launched when we were ready and that was baseball, and then you know, we had a few months to build our football product, get that all lined up, and you know, we had at that point enough insight into like a little bit of marketing that we could turn on the faucet a little bit. And by the end of the year, we had something in the range of four or four and a half a million of revenue in twelve So we went from just starting at nothing to a few million

bucks of revenue. Crazy, And just in case anyone who's listening doesn't know exactly how how does draft Kings generate revenue or how did it generate revenue back then? It's just the difference between like entry fees into a contest and what gets paid out. So on average, it's like around ten percent in fantasy is what our revenue is.

And then at that time, though a lot of the time we would just be we wouldn't get enough entry fees and there was like more prizes than the entry fees, so sometimes it was even like would run a contest that we lost money on. But it was all part of just building our audience, building the business up. So the two their team is just adding more sports, right, Yeah, we added sports. We a couple of big things. We

did a deal with Major League Baseball. It was like the first league deal in our space, and that was the first time in fantasy in your space ever. Yeah, like you guys were the first, Yeah, and we were we were thinking like, wow, this is great major League Baseball. Yeah, I never would have thought that that quickly we would

have got support. But the data around fantasy is really compelling. Like, people really watch a lot of sports when they're playing fantasy, and they watching Yeah, yeah, if you're just watching the score and it's forty two seven, like the Patriots last week was like forty five to seven, nobody's watching that if you just want to know who's going to win

the game. But like if you're in fantasy, then you're watching, like is Mac Jones running up, you know, three hundred plush past yards and another touchdown and whatever, and it all adds up to your score. So people just keep watching. And the league's understand you know, the fantasy players probably like their best you know, that's the best sex to their audience, you know. So I wanted to make some some investments in building up fantasy, and Major League Baseball

really went first, so we did that deal. Another thing was we did an acquisition, which was we were the third biggest probably fantasy provider, and we bought a company called Draft Street, which was based in New York. They had maybe twenty employees. We had probably forty. So suddenly we like doubled the team size and we about doubled our customer base, doubled our revenue. So by the end of we had uh it was like thirty million of

revenue from four the year before. And you know that also meant our prizes got bigger, so it's like more attractive of and offering. Uh So that that deal made it where it was kind of us and our main competitor,

Fan Duel, were really rivals from that point forward. And what were what was your specific role during this whole time, right, like what was like your day to day I've taken on a lot of different roles, and all of it has always been sort of customer facing in market, but early on I was building sort of products, specs and

operating the games themselves. So literally like I was like coming up with the salaries for the players that people were drafting, like Tom Brady is eighty nine hundred dollars and you know Aaron Rodgers is seventy eight hundred and whatever, right like doing that, and I had a team that I started building up that you know, had a lot of expertise in each of the sports we were doing.

And over time it was less reliant on me, But early on I was making them in an Excel spreadsheet and then I was like uploading them into a database and doing a bunch of that I was doing our email marketing personally, it's like making templates and you know, filling them in and trying to drive drive interest. I spent almost an entire year building and analytics team, so we had all just like marketing and operators and uh, I pretty much focused entirely on analytics and just building

up that practice. And then by end off and I was back into like a heavy operational like product operations role,

you know, driving the fantasy business again. Uh. And yeah, what that's developed into now is we just keep offering more products, so like the role just keeps scaling with um not to jump ahead too fast, but it's just like quite scalable to just keep keep bringing on experts in each of the products we want to offer and keep the same core like relationship between Jason Paul and I. What does it feel like to go from you know, like capital one to having this idea for sports betting

to now building this massive, massive business that's now public where you're known by millions of people around the world on top of millions of a millions. Like do you ever to sit and think and just say, like, how how did this all come to be? Or is it just like, hey, we worked really really hard. We had a cool idea and it worked. Yeah, weird. It's definitely

strange to think about the the impact. We have over ten million US customers now in our our database that we serve, and I just think about the number, like that's a lot of people. That's a lot of people. Yeah. You think about the scale of how many people have ever tried the thing that we built, and that's probably the thing I think about the most. It's just like a very few companies ever get to the point where that many people like try the thing that you've worked on.

And so you know the fact that we've gotten that many people to try the product and that generally, like the feedback is so positive, and we have such an exciting roadmap to like looking forward, so many ways to

expand the relationship with our audience. Like those things are it's like jaw dropping, but also keep us very busy, you know, Like we're very when we think about DraftKings, like strategy or what we what we want to do next at any given point in time, it always starts with one I DEA, which is like, Okay, we have a large audience of what we call skin in the game sports fans. It's like people that don't just watch the TV, you know, they don't watch the game on

TV with no rooting interest. They like to predict things. They're playing fantasy or doing sports bets. They want to like bet against their friends, um different forms, Like everybody has preferences like parlay bettors or people who like fantasy more. But you know, that is our core audience. It's like a risk reward type audience, right, And there's a lot of things that those people are interested in that aren't

just what we're doing today. You know, we recently launched draft Kings Marketplace, which is like an FT platforms for collectibles, and all of this is driven by just insight into who our customer is, and we we believe we could represent a decent share of like the kind of recreational time, the attention that gets sprayed everywhere if we just continue to understand our audience and build things that they're spending their time. What advice would you give to any aspiring entrepreneur,

Like what have you learned in your journey now? Right, which is now almost basically like this year from when you guys started, you know, next year as you're coming up on your tenure anniversary right in April two of Draft Kings. So you've been this entrepreneur has built this

massive company over the last nine years. Like what's What's something that you've taken away that you wish you had known back then that would be good for other people to know a couple of things, Like first, just being honest with yourself about what you can do, what you do best, what you're your interests are in terms of

what you want to do in the future. For example, like I don't want to be the CEO of a company ever, so I'm just not who knows, but like I don't think I'll ever do that, And I just don't think that's an attractive job. And I think it's actually kind of awful to me. Like when I look at, you know, the job of being a CEO, it sucks. So I'm like, I don't want to do that. I want to be customer facing. I want to work on

projects that I think are like awesome. I want to be like be the customer, you know, be in market. So like, if you're not honest about what you want to do, you can find yourself in Like I have a great business idea, so I guess that means I'm the CEO of it, and like, no, it doesn't. It's not what the original idea of doing Draft Kings I came up with, right, But I talked to Jason, talked to Paul. We quickly norman two rules. I'm like, I would never want to be the CEO of Draft Kicks.

I just wouldn't, you know. I love what I do. I have like the best job in the world, and Jason has to him the best job. It's like, you just have to be honest about the role that you really want to play. And if it's not that, then don't like you can always team up with the right people. Um, I would say, like, if you're a tech business, you really want to have a tech founder. That's another thing. Like Paul figured this out and we were flying close

to the sun. But um, a lot of people with tech ideas, like they want to create an app or something, They're like, I'll outsource the coding. We don't know how to do the coding. We have a product idea we want to do, try to outsource it. It's just not a thing like you really want to have a tech founder that you get engaged. Yeah, and the last thing is like always be willing to give up some equity, Like, don't be afraid to give up some equity to get

people engaged in your idea. So often I think it's like people want to own or whatever of their company, and you might end up owning of whatever, like three million dollar company, when it could be you own five

percent of a multibillion dollar company one day. Right, So it's like, I know there's different scales here, but if you can get somebody committed to like helping you on your project, and you think that they can help you, and they're willing to do it, and all that's between making that happen is some equity in your company, Like just give them the equity, you know, give up a little bit quitty to get people engaged. And you know, what's the draft Kings evaluation right now? Like three three

three billions something like that. That was when we went public. Now we're in the teams somewhere some way off crazy. Yeah, it's been quite nice. But yeah, when we did our deal to go publicly that all the media said it was like a three point three billion and Indian a year. It's quintupled. I mean like it's crazy, Yeah, nuts getting sports came back. Yeah, well, I think it's also draft Kings have a really interesting profile because it's a giant industry.

We're serving a customer that is like very coveted, amazing customer base, you know, and it's a founder lad company where we still drive the operation. The vision that we've had is it's not like a private equity company coming in and taking it over and executing. And that's what a lot of like our our current competition looks like. Right. It's it's an entrepreneurial company driven by founders who still control eighty percent of the team's report to me or

Paul or Jason, and we control the roadmap. We did go public, but we have you know, we have the reins on bringing our vision to life, and I think a lot of investors find that really attractive. Like the idea of like these founder lead If you think about some of the most valuable tech companies in the world, for the most part, their founder lead. Yeah, it's it's founder lad, founder controlled. So the thinking is like, Okay, well, if they got their vision here in nine years, what's

going to happen thirty years from now? It's gonna be an awesome company. So as long as you keep being sort of right often enough, executing well, having the right proof points, building credibility, I think we'll, you know, continue to see a lot of success hopefully, you know how. Proud of your parents, quite proud. My dad actually got me into UM. Like, the way I learned a lot about math was from my dad, because he would show me stuff like blackjack. For example, It's like, here's when

you hit, here's when you don't. And then we're like, why why don't I hit on seventeen? That's not a good number. He's like, well, you don't because it's like the three cards in the deck are good and ten are bad and one is a you know, so whatever. He would explain it simple, and then as I was getting older, it would be like, okay, I'm actually like sixteen point seven percent of this or what to get this? Um?

So yeah, he would we would go to like watch horse racing, we would do um pick them pools at his work, stuff like that. So he got me into that kind of gaming. That then became how I learned math and how to apply math. And then when I got into poker, he was kind of like right there with me. We were both playing, you know, something to talk about. So being like this far along as an operator of a business that's like aligned with our passions

like that, he just absolutely loves it. He lives in Seabrook and we have a Draft Kings sports book in Seabrook, New Hampshire, so he just like goes hangs out there. Sometimes. I just like, hey, my son is like he is he's like at Draft Kicks. Yeah. Yeah, my dad's like a military guy and was worked in a prison, so it's like very He just hangs out with his friends who are cops and stuff like that at the sports book. It's fun. So yeah, it's become like a decent part

of the lifestyle of our family. And yeah, really special. Like my my last question for you and this has been really really awesome, so thank you for taking the time. Is what's what's something about DraftKings that people don't know? What's something that might have happened in the last couple of years or in the process to going public or in the founding that like if no one has any idea because you haven't told him yet, I don't know

about something nobody. I wonder if anybody really knows this, probably very few, if anyone, But a lot of the time when you're when you're raising money, you deals aren't like done until they're done, right, Like until it's literally like your money's in the bank. Deals aren't done. And yeah, I remember this, like probably five years ago we were raising money. It's like our Series C, we probably people,

we need private company and whatever. So probably like a month of runway on the company, we had a deal all lined up. Yeah, probably something like that. And we're also about to go into football season where we like we really want to be in market and testing growing our audience. So we're like, okay, rounds in good shape. Whatever. Then like Lead dropped out, probably two weeks before our

runway was out. Jason like somehow figured out a way in three days to raise the same amount of money at a higher price with two weeks of runway with new people. Yeah, with led by yeah, yeah, led by a new outside and wrestler and multiple insiders. So it was like, yeah, it's just figured out a way to still raise the capital on a higher valuation somehow. Which is that happened? What would happened in two weeks? It would have been fine, we would have probably bridged that

needed some bridge money and figured it out. But like though you never know until it's until it's done, it's not done. So it's like a really interesting kind of aspect of fundraising. It's probably closing a deal on a house to you know, it's like you have it's like kind of done, but like things fall apart all the time to write and so you have a plan B right, and yeah it's insane. Yeah, I've never done. Big Money

Energy is hosted by me Ryan Sirhan. It's produced by Mike Coscarelli and Joe Lorresca and executive produced by Lindsayman. Find more podcasts like Big Money Energy on the I Heart Radio app or wherever you get your podcasts.