Dave McDowell podcast transcript

Interview with Dave McDowell of FSB Tech

RT: Ronan Tighe
DM: Dave McDowell

RT: Hi, I’m Ronan Tighe, and welcome to podcast 8 in our Innovations series. This week I’m joined by Dave McDowell from FSB Tech. First of all Dave, can I start off by asking you a little bit about your background and FSB?

DM: Yes, thanks Ronan for having me. I moved over to London from Michigan in 1993 to do my MBA, and then I’ve been doing start ups ever since. I found myself in the gaming industry from 2000, when myself and another London Business School graduate started GameAccount, and we really just fell in love with the industry there, it’s a great industry to be in. And FSB, I started FSB in 2007 with Sam Lawrence, who we worked together for about six and a half years over at GameAccount, and in 2007 we were looking for a new project to get started on, we researched the industry, tried to find an opportunity where we could exploit a niche within the gaming industry, we looked at poker, casinos, side games, and came up with the concept of what we’re offering to the market right now.

RT: And can you tell us a little bit about the product?

DM: Yes, we call it “performance betting”, and really it’s as simple as every football game that you watch, there’s a man of the match, but it’s always subjective, and it’s usually based on somebody making a decision in the last couple of minutes, and what we said is, there’s got to be a better way, we can make that objective, and so we were researching, what we came up with was the fans today, football fans follow the players as much as they follow the teams, if you ask any fan who their favourite player is, they can rattle it off almost as fast as who their favourite team is, and at the same time there’s a level of data available from every game, at such a granular level that we can offer new products, and we said, “How can we measure players’ performance using this new data?” – and we’ve got a data feed that tells us every touch of the ball on the pitch, and we’ve come up with a unique formula for the betting industry to measure players’ performance, and then once we had that, we call that “FSB points”, and once we had the FSB points in place, we just asked ourselves how can we create different betting models, how can you bet on a player’s performance? And the most obvious one is just betting on the man of the match. We call it Top Player – who’s going to be the best performing player in the game, measured objectively with our FSB points formula, and then we’ve got a whole host of other side games that we’re bringing out, a lot more fun, community-based games, things like Top Team, where it’s sort of a 90 minute fantasy game, I pick 11 players from the game, and go head to head against your 11 players; another one, Pass the Hat, is we’re just simply trying to recreate the way people watch the game, when 10 guys get together in the pub, there’s often a game called Corners or Pass the Hat that you play, where money changes hands, or this pot of money changes hands, every time the ball goes out of play, if you’ve got the hat in your hand when a goal’s scored, you get to keep it.

RT: And in terms of the algorithm – what’s it based on, in terms of the player’s performance at a game, what kind of things are you capturing?

DM: The formula’s very heavily weighted upon goals and yellow cards, obviously with the defenders you want to measure them on clean sheets and tackles, we also measure aggressive forward passes in the final area of the pitch, and what we’re trying to do is just really show a player’s contribution to the game, the formula can’t be too difficult, because the fans have to be able to understand it, but likewise if the formula is just goals, then you’ll never have something that you can bet on your favourite defender. We wanted to come up with a formula that, a defender is just as likely to win the man of the match as a striker or a midfielder, and what that does, having that volatility in the formula, also makes it a much better product to be able to bet on, because you don’t want to always have the favourite coming in and winning, or else you won’t get enough variance in who wins and you can’t make any money out of offering that market to the punters.

RT: And you talked a little bit about the community – can you tell us a little bit more about that?

DM: I think when it comes to creating a new product for the industry, there’s a real balance between revenue and retention, and right now products like the Top Player product are betting products, you can come out, we can offer them in a fixed odds format, and it’s all about generating revenue today, but we also have recognised that there’s a real cap in the market, there’s almost no community on your typical sports betting site, and with a product against the house, there’s not really a lot of room for community, so what we’re trying to do again is to bring these products that people play at home, and bring the sense of community into some of the product design, so that we can make sports betting a little bit more entertaining, a little bit more fun for the people who might not come in and have a fixed odds bet, there’s a much wider audience that we can also approach, and I think the introduction of community onto the sports betting sites is really something that’s going to take the next three years or so, maybe even five years, to really get in place, but the operators who start doing it now are the ones who are going to reap the benefits two, three years down the road with improved retention.

RT: And you offer a number of different products, in terms of integrating it with the operator’s site, how do you see that working?

DM: Well, every sports book is different, and when we go into talk to our potential licensees, we’ve got to first find out what parts of our product they like, it’s almost like choosing off of a menu, and we’ve got some operators that just want a live points feed of our FSB points as the players accrue them during the game. We’ve got others who’ve said we want you to offer us, tell us the players in the fixed odds market, price the product for us so that we can apply a margin, and integrated on our existing sports betting platform. We’ve got another licensee who says, “I love the product, I want to offer the Pools-based product to my non-UK operators”, and then we’ve also got some operators who we’re working with to offer the Top Player FSB points market on an in-running basis, so from an integration standpoint, if you like it, you have the cookie cutter approach, where one size fits all, but in reality every licensee has their own requirements, every licensee has a different customer base that they want to try and match the product up to, and it’s our job to just make sure that we can offer them the solution that they want to put in front of their customers.

RT: And have any operators put alive at the moment?

DM: We’ve got about three operators that’ll be going live in August.

RT: Can you name them?

DM: I can’t, only because we’re in the middle of putting together an exclusive press release.

RT: OK. Well maybe you can let us know, when that happens. In terms of your main competitors, do you have any at the moment?

DM: Well, I wouldn’t say there are any direct competitors with the way we’re measuring players’ performance and coming up with these new betting markets, but I think we’ve got to recognise, as a software supplier to the industry, any other software supplier out there really is our competitor, because what we need to do is, we need to make sure that the licensees see our products as the products that they want to promote to their customer, and they can only promote one product at a time, we’ve got to make sure that it’s easy for them to promote it, that it generates the revenues, so that they want to get behind it, but you’ve got, whether it’s a fixed odds gaming site or a bingo site or poker or a casino, all these guys are fighting for a share of the wallet of the end user, they’re all fighting for marketing space, everyone wants to be on the home page, and that’s really it, those are really who our competitors are, we’re fighting against how can we get our product in front of the end user, and as a B2B supplier, we’ve got to do that in partnership with our licensees.

RT: What’s been the biggest challenge so far in getting the concept off the ground?

DM: Two things really do come to mind: the first is, you mentioned the fantasy sports – a number of people take a look at our performance measurement, and the first thing that they come to mind is, they think that we’re another fantasy sports site, which we’re so far away from a fantasy sports site, this is all about generating betting revenue rather than occupying a player’s time. But I think the biggest challenge, longer term challenge over the past two years, has been all about product design, because you’ve often heard “the devil’s in the details”, and you can be so close with a really good innovative product design, yet it doesn’t work, and if you just would have tweaked one little thing, you would have had a completely different product that would have taken off. Often the difference between success and failure is miniscule, and really what we’ve been trying to do over the past two years is constantly keep a balance between sticking to our guns, sticking to the plan that we put in place, we did our research, we’ve talked to the consumers, we’ve got a product that we believe is going to work, but we have to balance that with what the market is telling us, what the licensees are ready to put in front of their customers right now, and that’s probably been, with product design I’d probably put up there as the biggest challenge, because it’s so hard to just get the product perfect.

RT: You said you’d talked to the consumers, and in terms of that, first of all, who are your target audience, and how did you involve them during the development process?

DM: Well, the target audience again, we’re a B2B supplier, and we’re looking to license with all the sports betting companies, so our end user, our primary target market, is the person who’s already betting on sports. They’ve already been on the site, they’ve already opened up a wallet, I think that our product will really appeal to any players who have lapsed, and so I think we’ve got a great retention for reactivation, I think we’re great for retention, but it’s all about the sports punter. There’s a wider market, and again as we build community products over the next couple of years, as we build out the relationship, I think we can expand the market into other sports fans, and obviously that includes the people who are playing fantasy sports. You asked who we’ve actually spoken to about the product design, and as I say we’ve gone through this research feedback loop five times already, and it started with the concept back in 2007, we surveyed about 25 different people who played fantasy sports and who bet on sports, and we put the concept in front of them with the survey, and that helped us form the initial opinion of what product we wanted to build. The second loop was we went to ICE in ’08, and we put the prototype in front of some people we knew in the industry, we got their feedback, we incorporated that feedback, went back to the drawing board, brought some investors on, and the investors said, “Let’s come up with a product suite that we can put in front of the end users”, and so the third time we went around, we had Mark Blandford and Richard Glynn, who were on board as shareholders and advisors, and we sat down and we looked at 20 different ways we could come to market with performance betting, and we identified what we felt were the three strongest products. Went out to the market, in February we put up an alpha test, so from February we’ve been running some of these products alive on our alpha test website, and for every premiership game we’ve been tracking the FSB points live and resolving some of these Top Player and Top Team markets, we took a lot of that feedback into account, and then really the fifth loop has been an ongoing one, where after we launched it, after we put the product out there in front of the industry, the EiG launchpad, we’ve been collecting market feedback for the past six months, and really the biggest thing that we’ve heard from the market is, we needed to incorporate a fixed odds product, and so we’ve spent the last three months working on a pricing model, and now we’re offering a fixed odds product to the market.

RT: So what are your short and long term goals?

DM: Well, the short term goal’s obviously to get the product up there, get trading in August, start generating some revenues and get to the point of profitability; longer term, we’ve got shareholders that are going to need to see a return, we obviously want to make sure that they’re well taken care of, but in terms of FSB, really we want to turn FSB into a technology supplier of choice for the sports betting industry – when somebody wants to build an innovative product, whether it’s anti-post or it’s an in-running product, we want to be the first company that you think of. We’re not setting out to build an entirely new sports betting platform, I don’t want to try and compete with the likes of the Orbis or the Finsoft to build an all-singing, all-dancing platform for retail and telephone betting and online, but we’ve got a really good technology team, and we’ve got the ability to come up with innovative products and then execute them, and we want to be the first name that people think of when you think of innovation within sports betting.

RT: Just to finish up, what’s your current take on the amount that the industry is currently being innovative? – do you think sites are currently competing on that basis?

DM: Well absolutely, I think this has got to be one of the most innovative industries, and sometimes it doesn’t come through in the product design, but once you start looking at what this industry is doing for customer acquisition, with 3D graphics, tournament structures, loyalty programmes, bespoke products – it’s all innovative and it’s all about the customer experience, because ultimately a lot of what we have to compete on is commodity pricing – there is a fixed set of odds or a rule set in most of the games, and with the internet and odds comparison sites, everybody knows who’s got the best prices in sports betting, and it’s really the innovation and the competition is all about the customer experience – how can you keep that customer around longer, and keep them from going over to one of your competitor’s sites.

RT: And is there any other companies that you see out there that are innovating at the moment that will change the experience for users in the future?

DM: Without naming names, and obviously we think what we’re doing in the sports betting industry, with focusing on letting people bet on a player’s performance, is going to be a major change that hopefully the industry will embrace over the next year, but really where I think the innovation in the sports betting’s going to come from has to be in the in-running and in the in-running interfaces, I think in-running has really been a fantastic growth area over the past two or three years, but really in terms of usability, of what’s out there, there have been some fantastic things that people have done and put out there, but again it’s only been out there for a couple of years, and there has to be room for improvement, there’s got to be some really interesting things that people can do with the usability, and then again we mentioned community early on, I think bringing community into an in-running product, where people actually have bragging rights, because I think a lot of people really enjoy the bragging that comes from winning a game or winning a wager, that’s really where I see a lot of the innovations in sports betting coming from in the future.

RT: Dave, we’ll leave it there – thank you very much for joining me today, and thank you all for listening. Come back to Foviance.com next week for our next podcast.

DM: Thanks for having me.

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