Shift into Drive: The story behind DraftKings’ sports-tech incubator
Drive is pledging to support sports tech start-ups through their initial stage of establishing a business. EGR NA takes a deep dive into the venture and the companies it is considering
Gambling companies have a long history of funding and supporting innovation beyond their capabilities and what they have initially set out to achieve with their products. It is largely because technology in any sector is an unlimited resource rife with cross-industry collaboration and, like anything else, online gambling can and has benefited from outside intervention.
Take Kindred as a great example. Its Kindred Futures arm has invested in areas like voice recognition and data collection through AI, both of which it has seemingly tied into its own work on sports betting and responsible gambling.
Betfair expressed a similar interest in outsourcing innovation in October last year when the firm launched a start-up accelerator to find new and innovative technologies to support its responsible gambling efforts. It interviewed potential start-ups before settling on AI-powered firm Mindway.
Meanwhile, across the pond, Boston-headquartered daily fantasy sports operator DraftKings has also moved into the incubator space, establishing a business arm that will seek to assist sports tech start-ups and athletes with aspiring entrepreneurial values to break into business.
Shut up and Drive
Unlike the other industry-supported ventures, DraftKings will not be adopting any of the start-ups or taking on any of the tech for its own use. Drive, as it is dubbed, is simply the firm’s endeavor to give back to the sports tech community and develop Boston into a hub for the industry.
“Drive is a separate company from DraftKings and it’s venture-backed itself. DraftKings is a percentage owner of the company and it is the largest shareholder but it’s not the only shareholder,” Drive founder Janet Holian tells EGR.
DraftKings has expanded its tech capabilities significantly in the last few years. With the sports betting ban in the states overturned last May, it has seized a significant market share in a number of open betting states, and most recently extended its physical tech reach to Las Vegas and Dublin, Ireland where it has opened two new offices to leverage local talent.
Drive is DraftKings’ opportunity to give back and offer up its vast expertise in the tech, branding and investment spheres, says Holian, who until very recently was the firm’s chief marketing officer.
The business arm aims to support seed stage start-ups and guide them through the most challenging phases of their journey, from sourcing investment to building out tech resources and firmly establishing operations.
“At DraftKings, we are very strong on the marketing side of things and that’s anything from customer acquisition to CRM, to keeping customers engaged and how to re-engage them. I think we can also provide some expertise on how to manage a seasonal business,” Holian continues.
“We certainly hope we’ve set them up for success and they can leave the programme with the knowledge and relationships they need, whether that is DraftKings’ relationships or external ones that will be helpful.”
Who’s running the show?
Although Drive came into fruition in August, it has already secured a handful of full-time staff. Managing director for the Venture Studio side of the business, Kiki Mills Johnston, joined from a similar start-up accelerator in Boston, MassChallenge, which sought to assist entrepreneurs globally.
Mills Johnston specializes in organizational leadership, strategic planning, strategic partnerships and public speaking and is tasked with building the start-up accelerator arm of Drive from the ground up. Holian says two staffers will likely be brought over from DraftKings full-time but otherwise the entire betting and DFS business is at the hands of the accelerator.
“There is expertise here that I haven’t seen at any other company I’ve worked for. The depth of knowledge goes across almost every function,” says Holian.
“We do have connections beyond that with the teams and leagues if they need an introduction. If there is an area of expertise that we can’t provide guidance for, we believe we can find that externally.”
Innovation in sport
The application process is easy enough. Applicants describe their business and product and may find themselves invited to a subsequent interview with the team. Holian says hundreds of applications have already been received in its three months of operation.
Some of the more innovative products that have passed through the Drive inbox include an app that tracks the performance of an amateur athlete and matches it to the performance of a professional athlete to help the user compare.
“It’s an app where you can video someone playing soccer and it analyses the quality of their performance through AI technology, comparing them to professional athletes and it comes back with a score grading their performance. It gives advice on how to perform better. I think that’s a really innovative idea,” Holian adds.
Unsurprisingly, many of the applicants are operating in the sports betting and DFS spaces but Holian insists there will likely be no conflict of interest with DraftKings and if the team comes across any, they won’t continue to work with the start-up.
“It’s a hot market so lots of companies trying to take an idea that’s already successful in the international markets or coming up with a brand-new idea,” Holian notes. If a start-up is approved by Drive, it will have a dedicated mentoring plan developed for it, covering all areas of business development.
The Athlete Network
The Venture Studio runs parallel to a network of athletes wanting to enter the business space as entrepreneurs, as well as those wanting to mentor start-ups and grant them access to the sports world.
It’s been proven in the development of sports betting in the US that sports leagues have a huge involvement in sports tech industries, be it through maintaining integrity or as a way to boost their own fan engagement, and the leagues want to be heavily involved.
And the Athlete Network aims to directly bridge the gaps between professional sports players, industry investors and technology innovators.
“We wouldn’t have started the athlete network without the Venture Studio so we definitely see the synergies. We find ways where there are connection points and bring them together,” Holian explains.
The network has over 100 athletes in it at present and is led by investor Rashaun Williams. It is in the process of assigning former professional athletes to venture capital funds as interns to gain investment knowledge and help secure significant capital in retirement.
The Venture Studio plans to take on three firms in its first year, but Holian says it is difficult to gauge how much of a workload the team can take on as each start-up’s needs will differ immensely. “We’ll start with three and within a year, which is the timeframe the program is designed for, I think we could handle maybe 10 with the staff we have right now but we won’t really know until we get started. We’ll see how much work they need and it will be very different per start-up,” she says.
It’s still very much in its early stages but Drive has the potential to make a huge difference to what is at present a very difficult to penetrate industry. It is certainly interesting that DraftKings has no selfish intentions with this endeavor, with no plans to adopt any of the products being developed.
Holian hints at the venture highlighting DraftKings’ ability to go beyond sports betting and DFS and be seen as a much more multi-faceted company.
“We’re committed to the sports betting product [but] we view DraftKings as more than betting too with aspirations to enter other markets. We have a large media side to the business and we really see ourselves more in the entertainment space,” she concludes.