Immediately following the Friday morning presentation from the founder and CEO of Bunchball, Athlon’s Nathan Karp tweeted, “Great presentation on user behaviors and psychology by Rajat Paharia.”

Reminiscent of those old Micromachines commercials, Paharia (after admitting that he tends to speak quickly) tore through a very interesting session on engaging users — obviously a topic of utmost importance to fantasy sports companies.

His overarching message was that sites need to leverage human desires to foster connectivity with users. By catering to what he termed “irrational but predictable reactions,” anyone looking to grow an online audience can build customer loyalty and engagement.

Paharia’s primary examples included Dunder Mifflin Infinity, an NBC online game platform that accompanies The Office, and teen-targeted sites Espin.com and Takkle.com. What each does is present some sort of virtual rewards system — whether it be Dunder’s Shrutebucks, Espin’s bottlecaps or Takkle’s trophies for levels of interaction.

Although none of these online goods/rewards has any real value, users love to earn them and boast their “earnings” as symbols of status or identity within their site communities. Systems of points and rewards and things like forum hierarchies certainly exist already throughout the fantasy community of sites, but there is always room for more.

Paharia also pointed out that delivering such virtual rewards in smaller, more frequent doses is ultimately most effective. Traffic will also remain stronger if the reward cycles stay variable rather than fixed, he said.

Much of the crowd at each Fantasy Sports Trade Association conference is made up of industry veterans — people who have been attending for years and have made or are making their way in the business.

When Advanced Sports Media founder Ted Kasten asked how many out in the audience were in the first two years of starting up a company, roughly half of the 60 or so people in the room raised their hands. That’s what makes a panel such as Thursday afternoon’s “Fantasy Sports Business 101″ worthwhile.

Kasten was particularly candid about his experiences through the first five years plus of ASM, from discussing the benefits (cost) and downside (just about everything else) of hiring an Indian development team in the early stages. Although he preached thrift to anyone building a new business, he cautioned against looking solely at hourly rates — saying that more cost per hour doesn’t necessarily mean greater cost overall.

Lawyer Rishi Nangia of Winson & Strawn opened things — following an intro by Geoff Stein of Mock Draft Central — by running through the various ways of setting up your company and some good and bad features of each. Many single-person startups might favor a sole proprietorship and its dearth of necessary legal paperwork, but it’s an area that new companies need to consider carefully.

Some key reasons to do so came from panelist and accountant Kipp Imel of Professional Practice Consultants. Imel pointed out that incorporating in some way can bring with it legal protection, audit protection — he said sole proprietorships are seven times more likely to be audited by the IRS — and sheer legitimization.

No matter what route a company chooses, though, Imel cautioned to keep focus on debt management, which he called “the No. 1 killer of any business.”

Tai Ward of Fantasy Coverage spoke to the tech side and warned — as Imel did about hiring an accountant — that one needs to gather as much info as possible on potential design or development companies. Seek out recommendations, ask for samples and make sure that anyone you might choose to work with understands and fits within what you’re trying to do.

The fantasy sports industry is awash in startups and small businesses. Besides presenting a good product, those that make it will be those who are smart about the choices they make when getting going.