Company: RotoWire.com
Launch date: January 1997 (RotoNews.com); March 2001 (RotoWire.com)
Became full-time operation: 1998
No. of employees: 10 full time/85+ part time

In its two iterations, RotoWire (part of Roto Sports Inc.) has been a leader in fantasy content — from providing the basic template for the now-ubiquitous player update to saturating the annual list of Fantasy Sports Writers Association award nominees. President Peter Schoenke recently took the time to tell FSB.com about the company.

1. Were the three founding Northwestern grads classmates (and/or college friends)? If so, how much talk was there of going into business before the 1997 launch of RotoNews.com?

Herb Ilk, Jeff Erickson and I lived near each other in Chicago after graduation and were in the same fantasy baseball and football league I started in 1990 while at Northwestern. I quit my day job to join an Internet startup in the futures industry in 1996, and Herb was obsessed with starting a web business of his own. I learned Internet programming at the startup job and came up with the RotoNews idea during that time. I built it on the side with Herb’s help along with Jeff (who I roped in because he was the most knowledgeable fantasy player). Back then not everyone had a computer, so I actually started an Internet company with two guys who didn’t own a computer. They did things at the library and on the side at their day jobs.

2. What business(es) were the three of you in before that launch?

I was a reporter for Dow Jones, covering the futures markets in Chicago and occasionally getting my byline in The Wall Street Journal. Herb was an environmental engineer. Jeff had just graduated from law school.

3. What kind of startup costs did RotoNews generate, and how did you come up with the initial capital? How and how well did you cover the costs of the business back when your offerings were free?

Initially it was all sweat equity, and I just paid the hosting costs (which were not much) out of my own pocket. Then in 1998, when we exploded (climbing into the top-10 most trafficked sports websites), we bartered server and office space with a company who had management I knew from my work at the futures industry startup. We were just so busy with the site we didn’t even have time to raise money. It took off that fast. Whenever someone has a business plan in fantasy sports or an Internet startup idea, the first question I often hear is “what’s going to happen when I get so much traffic my servers crash?” That never happens. It’s always the opposite problem. I’ve seen only a few exceptions, and RotoNews.com was one of them.

4. How did you turn the site into a sellable commodity so quickly at a time before fantasy had really been accepted into the mainstream?

We helped lower the barrier to entry for fantasy sports by providing users with an ability to quickly get information to manage their teams and later low cost software to run their leagues. We were one of the sites at the forefront of the movement that made the hobby mainstream and it resulted in a surge of traffic that made us a valuable business.

The whole idea of “player notes” just took off, and the way we presented them with the “news” and “analysis” for each update quickly became the industry standard. Then in 1998 we added free commissioner services for baseball, football, basketball and hockey. We were the first site to offer league hosting for free and our traffic exploded.

5. Why did you sell RotoNews in 1999, and what involvement did the founders have under the new ownership? Things certainly seem to have worked out well, but do you guys ever regret selling?

We were chasing the dot-com riches like everyone else and just wanted to get public quick. But it didn’t go well. We were one of the top-10 trafficked sports sites on the Web, and I estimate that we hosted as much as 60 percent of all fantasy football and baseball leagues online. But the management at Broadband Sports ended up just using us to pad their traffic numbers and didn’t realize what they had. (Their focus was on athlete web sites for such players as Brett Favre and Anna Kournakova.) What would that share of the fantasy sports market be worth today?

We ran RotoWire.com for the parent company but saw very little of the $60 million they spent before going bankrupt. It was just a crazy time, like a lot of dot-com failures, with big expenditures on office space, unnecessary hiring and tons of waste. It was just insanity, but we sort of stayed off in the corner, below the radar, and kept running the site. When Broadband Sports went bankrupt, we basically lost the commissioner business, since NBA and NHL leagues went without stats during the bankruptcy process and since we couldn’t launch a baseball product in time for 2001. By that time in 2001, Yahoo! and CBS (for a season) went free and users moved there. So the opportunity we had to dominate the commissioner business was gone.

6. What went into the virtual relaunch as RotoWire in 2001, as far as necessary capital, staffing, rebuilding a reputation, etc.? Basically, how much were you able to pick up where Rotonews left off and how much had to start again from scratch?

After Broadband Sports went bankrupt, Jeff, Herb and I decided we wanted to keep RotoNews going, so we kept all the employees of the unit and literally walked across the street and started it back up. We had to change the domain name due to legal complications (later on we got RotoNews.com back), but most of our customers found us right away due to word of mouth. Other than the domain change, everything else was basically the same. We were able to raise the funding we needed based on our prior success.

7. How much difficulty did you have building the subscription base once the site content went to a pay model?

It was a difficult and somewhat radical decision to switch to a pay model in 2001. After all, we were the champions of free fantasy everything when we were RotoNews.com. But we quickly realized after the dot-com crash that advertising just wasn’t paying the bills. We went mostly pay in the fall of 2001 and probably lost 90 percent of our traffic. But it worked. We instantly became profitable, and it’s been a business model that has consistently worked for us since. Plus, it really allowed us to invest more into the quality of the product since adding even the smallest improvement or new content area would add a small amount of paying subscribers that would make it profitable (unlike a free site, which doesn’t have much to gain from the little extra traffic they get for smaller content additions).

It’s funny because I used to get mocked at the FSTA conference for being the “free” guy. We’d have panels where all the commissioner and game providers would basically yell at me for offering the product for free. Now at the same conferences I’m the pay guy and most of the commissioner products are free. The free vs. pay debate continues to rage in the fantasy sports business (and elsewhere on the Web, if you’ve seen all the articles about Wired magazine editor Chris Anderson’s new book, “Free: The Future Of A Radical Price,” such as Malcolm Gladwell’s piece in the New Yorker). I’m definitely a former free guy who’s seen the light of the pay model.

8. How much does RotoWire rely on subscription fees for revenue, and how much is supported by advertising and business partnerships, such as the farming out of player updates?

Selling subscriptions to RotoWire.com is our primary revenue source. We’re focused on offering products that fantasy players are willing to pay for to give them an edge in their leagues. We do have additional revenue sources, but they’re byproducts of keeping the content strong enough that people will pay for it.

9. RotoWire has won a slew of fantasy writing awards. How do you manage to lure, discover and/or retain such high-quality writers?

I think that’s where our lengthy experience in the business has paid off. We’ve made a lot of good connections and have figured out how to build and manage a large, skilled staff. But really it comes down to the quality of the staff we have that manages our writers.

10. RotoNews/RotoWire has given us such things as the player news template, the first free online commissioner product and the first mobile player update feed. What kind of innovations can we expect to see from you in the near future?

There are three areas where we try to constantly innovate. The first is delivering our fantasy news via new technological mediums. The hardest part of the business is keeping up with the technological innovations. We used to just have our website. Now we’re sending news via SMS text alerts and we’re on Twitter, Facebook and mobile platforms. It’s all an effort to get the fantasy player the news he needs where he can best put it to use. We just launched a Blackberry app, and an Iphone app is on the way.

The second is the way technology is altering how fantasy players prepare for their drafts and how they play the game. An example here is how our draft software continues to innovate in how to process the vast amount of information and news you need to sift through to beat the competition during a draft or auction.

Lastly, we constantly try to expand the depth of our coverage and to add new sports.
I think as the fantasy hobby continues to grow it’s going to catch fire in other sports, particularly soccer/football. As a result, we’ve become the leading fantasy soccer resource, covering the sport on a global level. We think that will pay dividends in future years as fantasy games find formats to better connect with soccer fans and international fans learn from their American friends that fantasy sports is a way to enhance their fandom. We’ve also ramped up college football since I think that sport is set to grow with major media sites now running leagues.

For the established sports, we’re adding new areas of coverage such as international baseball where we expanded our Japanese and other foreign league player news and have international player rankings.

You’ll continue to see new ideas from us in all those areas.

Company: Draft Sharks
Launch date: June 1999
Became full-time operation: 2000
No. of employees: 4

Back before he co-founded the World Championship of Fantasy Football, Lenny Pappano launched his fantasy football content site, DraftSharks.com. Although much has changed throughout the fantasy industry since then and free content abounds, Draft Sharks has stuck to what it set out to do: direct its unique brand of fantasy football insight to a smallish, loyal set of paid subscribers. Pappano recently took the time to answer some questions for FSB.com.

1. What led you to create Draft Sharks back in 1999? Why did you settle on that name for your site?

At the time, I was working as a copywriter at a political fundraising firm in the D.C.-area (part of the vast right-wing conspiracy). It struck me that a lot of the fantasy sites that existed were being run by tech geeks and not by anyone who could write well or had any background in journalism. I convinced my wife to drain our bank account to build a site and put some ads in a couple fantasy mags. We got a fairly large and loyal following in the first few years, and the rest, as they say, is history. We came up with the Draft Sharks name because I also moonlighted as a hold ‘em poker player 4 or 5 nights per week (back in the day of no kids). So I went from being somewhat of a “card shark”… to being a “Draft Shark.” The name had a ring to it, and a friend of mine came up with a pretty sweet logo, which we still use today.

2. What led you to charge for access to Draft Sharks content when so many free sites exist?

Back in the late ’90s, almost every fantasy site was free. I guess I’ve always felt that our opinions and analysis were worth paying for. And I never wanted to have 100,000 people following us. I always envisioned our community being a bit more exclusive, and one way to do that is to charge. At bottom, if you’re giving advice to everyone for free, what good are you doing your readership? Anyone and everyone can come and read your stuff — and they’re competing against each other, so there isn’t a competitive advantage for your readership. I understand the free model, I’ve just never been a big fan of it.

3. Has it been difficult at any point to stay the pay route? Have you considered turning free?

Nope, never really considered it. It always seemed to me that counting on ad revenue to pay the bills was a bit too unnerving for my tastes. And again, I didn’t want a community of “anyone and everyone.”

4. What kind of costs (in time and money) went into launching the site? How did you go about introducing your site to the marketplace — to potential subscribers?

A lot and a lot. Our model was to have a small selective group of writers. The downside to that model is that it takes a lot of time to produce content. But I have to say that it is very gratifying. As for introducing the site to the marketplace, we dropped close to six figures in the first 2-3 years on advertising. Word of mouth also helped a lot.

5. Looking back, was there a particular event or time that indicated Draft Sharks had “arrived”?

Yeah, in the very first year, I wrote what has been become one of our marquee articles — our “First Round Bust Candidate.” We called out Steve Young, who was coming off a monster year in 1998, and warned our subscribers away from drafting him. That preseason, we started to get some emails from readers who loved the pick — and some flames from readers who thought we were nuts. I knew then that we were relevant and that folks were reading our stuff — and it was making them think outside the box. As I recall, Young got knocked out by the Cards on a Monday night game in Week 3 — and that concussion forced him into retirement. I actually cheered when it happened. I met Young 5 or 6 years later. And after talking to him for a few minutes, I didn’t feel bad for having cheered when he got hurt!

6. What other sources does the site derive revenue from beyond subscription fees? What kind of business partnerships have you had along the way, and what role have they played in revenue generation?

Our revenue beyond subscription fees is minimal. We’ve gotten a few advertisers here and there for 2010, but after trying to capture advertising revenue the past couple years, we’ve come to the conclusion that it simply wasn’t worth having the site look like a banner farm.

7. How important are the customized cheatsheets to your platform? How long did that system take to develop, and how quickly did it catch on with users?

It’s pretty popular, as we get quite a bit of positive customer feedback on it. The rankings are based on a Value Based Drafting system — which is to say, it measures relative player scarcity at each position based on the particular scoring rules of your league. Conceptually, it’s something that came from Rotisserie Baseball and was introduced to fantasy football by Joe Bryant. I think I’m right in saying that Draft Sharks was the first site to have a VBD tool, as it was part of our original site in 1999.

8. What was Draft Sharks’ relationship with the WCOFF when you co-founded the event and during your run as co-owner?

Ironically, there really was no relationship to speak of. The WCOFF advertised with Draft Sharks, but Emil (Kadlec) and I made a conscious decision not to co-brand our other businesses or to leverage those brands to help the WCOFF. One of the reasons is that I didn’t want to blur the line between Draft Sharks as a content site and what the WCOFF did. I’ve always been diligent in keeping Draft Sharks as a fantasy football content site only. Again, I want Draft Sharks to have the best fantasy football analysis and content available — but I’m not trying to be all things to all people. That might not be the smartest business model, but in the long run, I think it’s only fair to your customers to have a single focus.

9. How have things changed over the years in terms of what customers expect and what your site has to do to stay competitive? Have there ever been thoughts of expanding to include other sports?

People are far more tech and Web savvy then they were a decade ago. We took a long, hard look this offseason at where our site was in terms of design and functionality and found there was a lot to be desired. We did a complete redesign of the site this spring and just re-launched this week. So far, the response has been fantastically positive. As for doing other sports, we had a sister site for a few years that did fantasy baseball. In the end, we decided it was best to stick with just fantasy football — since that was our passion.

10. What do you envision for the future of DraftSharks.com?

Good question. I’ve seen a lot of changes in the industry since 1999, and my biggest concern is that the industry used to be defined by a bunch of regular guys who were passionate about fantasy football. What I see now is a corporate takeover of the industry. Look at how many sites have been bought out by billion-dollar, multi-media corporations. Look at how ESPN, NBC, CBS, and even the NFL itself, have entered into the marketplace. Maybe it’s me, but it just rubs me the wrong way at times. There seems to be a “sameness” that infects the landscape of fantasy football content. That said, maybe all the movement toward the corporatization of the hobby has helped more clearly define who we are at Draft Sharks. We don’t want to be everywhere on the Web. We don’t want to be all things to all people. We don’t want to become a mega-site that churns out words by the pound. In the end, we’re just a small, tightly knit group of writers who drink beer in the office, work crazy hours, and absolutely love what we do. I always tell our writers: “Think outside the box. Be bold. Make people think. Tell them something they don’t already know.” We’re a bit like the show LOST. If you get it, you’ll love it. If you don’t, you’ll walk away scratching your head. And, ya know what? I’m good with that.

Company: FantasyPros
Launch date: July 1, 2010

With so many folks strutting around the Internet claiming to be fantasy experts these days, it’s only natural for some to start testing their merit. An increasing number of outlets have started to do just that, but David Kim says FantasyPros.com goes beyond that. This week, he took some time to tell FSB.com some specifics.

1. What was the impetus for creating FantasyPros.com?

A couple years ago, we thought it would be cool to track and score the advice of a few popular experts (just to be able to dominate our own fantasy leagues). After pulling together a monster spreadsheet for just a couple experts over a couple weeks, we had two major takeaways. First that the data was very cool, and second that no one in their right mind would do all this work just to figure out which expert to trust! Anytime you find something very valuable but tough to do, it’s a sign of a potential opportunity. The idea really took off (in our heads) when we later realized that accuracy was just one use for the data. We figured out that we could aggregate and organize the information in a way that made it faster and easier for players to get the specific recommendations they needed. As recent dads with less time for fantasy but no less desire to win, we knew there would be a huge market for tools that could save you time and make you more competitive.

2. Aggregating, tracking and grading a bunch of self-proclaimed fantasy nerds seems even nerdier. What kind of background and skills did you bring to this effort?

Hey, are you calling us nerds? I guess our backgrounds are a bit nerdy, so I won’t argue. We’ve run a successful consulting practice for the past five years that helps clients find and exploit opportunities to generate website traffic and optimize conversion rates. Prior to starting the consulting firm, we both launched successful internet businesses that focused on aggregating and organizing information. I was the VP of Online Marketing at Hotwire.com, a subsidiary of Expedia Inc. My partner was also on the launch team at Hotwire.com, and later co-founded Gifts.com, an IAC company. The travel and gift industries are obvious examples of how services that simplify the research and buying process can be very successful, as long as they provide value to both customers and suppliers. We hope to take a similar approach - we want to help both fantasy players and fantasy professionals, by making their “jobs” easier and more rewarding.

3. How have you chosen which analysts to include, and how is their material collected?

We identified the most popular experts based on reputation and traffic to their sites. We also included a few favorite “bloggers” that may not be as well known but offer a good amount of weekly fantasy advice to their readers. Now that more experts know about us, we’ve been receiving a lot of requests for inclusion and we’re excited about expanding our reach next year. In terms of how we collect the rankings, we have some partners that provide a feed to us, some that use our proprietary ranking tool, and others that we pull in through our own automated tools. I should note that we ask for explicit written permission from sites that require a paid subscription to access their rankings. We’ve been very pleased with the response we’ve had from the expert community.

4. What do you offer to consumers beyond ranking the “experts” for accuracy? Is there anything in it for “experts,” particularly those not lacking for online exposure?

Accuracy scores are really just one component of what we offer to fantasy players. Our most popular product is a start/sit tool that instantly shows which player each expert would start, along with other helpful information in a side-by-side comparison. We’re on pace to do almost one million “Who Should I Start?” requests in our first season! Another popular tool is our Cheat Sheet Wizard which lets users create custom consensus rankings from a combination of experts that they choose to include. We also recently launched a fantasy advice portal that aggregates and organizes news, articles and tweets from over a hundred sources.

For fantasy professionals, we offer a level playing field, exposure and referral traffic. We also offer a few tools to make their jobs easier, such as a drag/drop player ranker to quickly create and publish weekly rankings. For experts that don’t need any of the above benefits, we offer an unbiased way of earning some “street cred” from naturally skeptical fantasy players and industry peers. Also, we believe that fantasy professionals have an inherent desire to compete, no matter how popular they are. Tiger Woods doesn’t need the money or the fame, but he plays in golf tournaments to compete against the best golfers in the world. I don’t think it’s a stretch to assume that the best fantasy minds want to compete against their peers as well. Oh yeah, we’ll be offering shiny trophies this year too.

5. What is PAY?

PAY^TM stands for “Prediction Accuracy Yield.” It shows how much benefit the expert’s predictions provided on meaningful start/sit decisions. Our system turns each expert’s weekly rankings into thousands of individual “who should I start” recommendations. We then score whether the expert’s picks were correct and how beneficial the advice was, based on the net fantasy points obtained by picking the right player. A 100% PAY^TM means the expert selected the right player for every meaningful start/sit prediction. A “meaningful” prediction is one that is not unanimous among our experts. We do this so that we’re scoring advice that you realistically might seek out (not obvious advice like starting Chris Johnson over Donald Brown). This is why PAY^TM percentages tend to be lower than what some people would expect.

6. What is FAST?

FAST^TM stands for Fantasy Advice Search Tool. We’re working on integrating several of our current products and adding in some new features to create one cohesive search tool. This is a product that’s currently in development.

7. How have you gone about positioning your site in front of consumers and those around the fantasy industry?

It’s a cliché, but based on feedback from our members and our high repeat usage rates, we really believe that our product markets itself. From an awareness perspective, we’ve been very fortunate to be featured in articles and e-mails from Yahoo!, FootballGuys, NY Times and a number of popular fantasy blogs. From a positioning standpoint, we let consumers and industry professionals know that we’re an unbiased third party. We want to objectively promote the best fantasy experts in the industry, which is why we’re excited about presenting our accuracy awards at the next FSTA conference in January (primarily because the FSTA provides a large audience of fantasy professionals, but also because the conference is in Las Vegas!).

8. FantasyPros.com says in more than one place that services are “currently” offered for free. Is there a plan for that to change? What kind of paid subscriber base do you think you could realistically expect? What other methods are in place or in the plans for generating revenue?

There’s no plan for charging for what we currently provide for free on the site. However, we do have several new products and features that we’re developing that could require a subscription next year. This inaugural season was all about proving our concept and generating significant organic growth. We exceeded our own aggressive expectations for these two objectives, but we know we have a ton of work to do in the off season to be able to keep the momentum going. We think there’s a large opportunity in the space to create significant value for both consumers and fantasy professionals. As long as we can demonstrate this value, we’re confident that there will be multiple revenue streams available.

9. What differentiates FantasyPros.com from other “expert”-tracking sites that have arrived over the past year or two?

We don’t know of any other sites that offer the type of aggregated and organized advice that our core products provide, but we do know of a small number of sites that track expert accuracy. Regarding accuracy tracking, our main differentiators are:
- We are completely open about our methodology, while other sites consider it to be a “secret sauce” of sorts. We believe that if we’re going to grade the experts, it’s only fair that we tell the experts how we’re coming up with the grades.
- We do not claim to offer better advice. Instead, we seek to organize the best advice from the best experts in a way that provides value to both advice seekers and advice providers. Sites that claim that they offer xx% better advice are always welcome to participate in our accuracy study to prove it.
- Whenever possible, we try to track the individual expert that’s creating the rankings and projections, instead of just the site. For example, “Andy Behrens” instead of “Yahoo!.” Getting down to the expert level helps provide year-to-year continuity.
- Our service is FREE. From what we can tell, all the other sites we know of all charge for their accuracy information.

10. What is the ultimate goal for FantasyPros.com?

We want to become the hub for fantasy advice. A site that helps advice seekers and advice providers share fantasy insights and recommendations in a much more efficient and effective way. Our current tools reflect a small but significant step towards this vision.

A roundup of items recently posted on the FSB News page.

- Major League Soccer has collaborated with Big Lead Sports (nee Fantasy Sports Ventures) to create its Pro Soccer Picks platform. The new game presents a fantasy component watered down significantly from a previous MLS offering that reportedly didn’t find much success. (The downfall? Our guess would be the whole soccer affiliation.)

- Supporting the recently announced FSWA voting results, Rockies outfielder Carlos Gonzalez reportedly proved the winningest player in Yahoo! fantasy baseball by appearing on 53.4 percent of Yahoo!’s top 500 public-league teams. Buster Posey (the FSWA’s fantasy rookie of the year) came in second at 34.2 percent.

- Fantasy veteran Sam Hendricks has released a new book called Fantasy Baseball for Beginners. (No word yet on what subject the book covers.)

- Fantasy Healthball has been making its Internet rounds for a couple of years now. The effort that combines fantasy football with personal fitness recently got a full treatment from the San Francisco Chronicle.

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