How I Built a Fortune: DraftKings Co-Founder Speaks | Matt Kalish DSH #789
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So, yeah, things like that can just happen, I feel like. That's how I felt about the MVP this season because I wanted Luka to win it, but he wasn't even top two in most people's voting. Yeah. Luka's a major problem, I think, in the future. He's a serious candidate. Every year, I feel like he should be top of the list. Yeah, if they get one more piece, they could possibly give the Celtics a six to seven game series, I think. Yeah. Yeah, he's a big problem.

All right, guys, we got Matt, co-founder of DraftKings. Thanks for coming on today, man. Thanks for having me. This is great. It's been really cool to see the evolution of the company since I was in high school. Yeah, 12 years now, roughly, and...

We started with fantasy sports, and now obviously the culture in the country has changed a lot. So sports betting is in about 50% of the U.S., and being on the forefront of that, really, really amazing experience. And I think the best is still yet ahead as well. So it's been quite the ride so far, though. Was sports betting even in the picture when you started the company? Was that even on your radar? Yeah.

It wasn't. We played, initially it was fantasy sports. Poker had been a huge thing in the U.S. for probably the early 2000s up until around 2009 when it got shut down. And there was tens of millions of people playing internet poker and obviously tens of millions of sports fans that didn't really have any good way to predict things or engage in the U.S. Maybe it was an office pool or like a bookie or some kind of a legal offshore sports book.

but not a lot of ways to predict things in sports. And so we felt like the combination of those two worlds, like the skill-based gaming, poker, kind of with the lack of options in sports, was,

It was a good situation for a fantasy platform to really, I think, meet the need a little better, which was people wanted to play every day. They loved doing drafts. They loved predicting things. They wanted a chance to win big prizes as well. So all that stuff led to DraftKings initially when we launched and now.

There's really no path to sports betting, though, at the time. This was 2012. It was highly unclear how that would even come about. It wasn't legal yet. Yeah. And so I guess anything's possible, but there is no real way to know that that could ever open up in the U.S. Yeah. Who would have thought, man? So a mixture of good timing and then just being there at the right place, right? Yeah, definitely. I think we built up.

With just the fantasy platform, you know, in the first five, seven years, we built up over 10 million users on the platform. And the same people that were playing fantasy, you know, are highly... They have a lot of affinity for sports betting and other prediction games, too. So...

In the event that it ever opened up, I thought we had a really good audience. But yeah, we didn't sort of bet the company on that either. I mean, we weren't expecting it until it actually happened. How's fantasy these days? Is it still as popular as it was? Yeah, fantasy is still very popular. I think there's a lot of people who like the simpler predictions, though, that you find in a sports book. Just who's going to win or point totals and player props and things like that.

But fantasy hasn't slowed down a ton. There's still a tremendous amount of, I think, interest in DraftKings, but also the season-long formats that everybody plays. There's definitely been some new models, though. Like a lot of people have jumped into what they call best ball games.

Best ball is you just draft your team at the start of the year, and then you don't have to manage the team at all. And much more passive. You can just draft and then watch. And I've noticed that kind of like lighter touch fantasy game. That's become a little more popular recently. That would be my style if I got back into it. Because I used to play fantasy, and that was a full-time job, dude. You know, those waivers. Yeah. What got me into fantasy originally was baseball, too, which was I was a distance runner in high school and college. Oh, same.

Yeah, I did. What was your- 800 in a mile. Okay, yeah. I was even longer. I did cross country at least a mile, maybe two mile or 5K was my length. What was your 5K time? I ran 1550. Jeez. Yeah. Fast. I actually got into college off running, I would say. Wow. I had a 421 mile in high school. Holy crap. I ended up going to Columbia University.

Would have never got into any school like this. I mean, they were not looking at my academics, I don't think, on that. I was fine in school. I mean, I had maybe like top 20% in my class, but I wasn't the valedictorian in my class. You weren't Colombian. And so I needed the running. And yeah, I got in Columbia, which was a great, I think, situation. But on these runs...

We were running 80 miles a week, so we would talk about baseball stats. That's when I got into it was a lot of the people on the team. They just knew every stat for every player, and we would talk for hours about that every week. From there, I kind of got into football and other sports. Did you start the company with your co-founders from the track team, cross-country team? No. After college, I had a few corporate jobs.

I started initially in technology and I got a computer science degree. And throughout my career, I moved sort of from very technical to a little bit more sort of marketing and creative and operations type jobs. But, you know, early on, I met my partners at first Jason Robbins at Capital One. We were in business analytics and worked together for three years.

built a really good relationship. We both had a lot of entrepreneurial interest, but just didn't have the right thing we wanted to work on. And then we moved together to this other company called Vistaprint. Extremely boring product, but what was cool was digital marketing. At the time, it was like a skill set that was very valuable. And this was, call it 2009, 2010.

There wasn't a ton of great companies where you could go and run digital marketing channels with a big budget and learn and test and build up that expertise. And so we went there, learned a lot about digital marketing and direct response, and then met Paul Lieberman, who's our tech founder. Got it. Paul still today runs our product in tech. And us three eventually ended up leaving Vistaprint and started DraftKings. Wow, the dream team. And the fact that you guys stayed together this long is impressive. Yeah.

Just that alone. Yeah. Yeah, I think we maybe got lucky with this, but whenever people ask me about founding teams or they want to start a company, I'd say the number one thing I notice is a lot of founding teams don't have a great tech founder. And we were very lucky with Paul that he coded our original site. He's not somebody that would be our CTO today. It's probably beyond what he would want to be doing.

But at the time, when you're getting the ball rolling, I just noticed a lot of founding teams don't have a great tech founder, and it holds them back a lot. They think that they can outsource it or whatever. And what's always been great about Jason, Paul, and I, I think, is it's very complementary in terms of our skill set and what we do for the company. So yeah, it did kind of end up being, I guess, a...

a dream team or like a very compatible team for sure. No, that's great advice because entrepreneurs don't really think about the tech side of things. Like when they're building a company, that's like kind of the last thing they hire, you know? Yeah, yeah, yeah. It's some teams too, I think, very technical, focused on the product, but don't know how to hit it with a market fit and really make it earn dollars, you know? So yeah, you got to have the total package, I think. You need both. Yeah.

Congrats on the Celtics championship this season, man. Thank you. Thank you. I was...

Believe it or not, even being up 3-0, I just knew what the consequences would be if they blew it. And look, Boston was not going to be okay if we blew that series. I think there have been some trades. Yeah. I think one of the Jalen or Jason would have had to go if they lost that series. Oh, my God. Yeah. I mean, that was the story last year. Yeah. We had like Robert Williams, Brogdon, Marcus Smart. They just said like...

we didn't win. We got to make some changes. Brought in Drew Holiday and Porzingis. Yeah, a lot of people, I think, around Boston were more than a little upset about the Marcus Smart trade. They really love that guy. And turned out to be probably the greatest trade in the history of the league. Yeah, Drew was a great pickup. Yeah, that was a crazy one. I mean, and you look back at the deal we got for Porzingis, too. We're getting picks. We're getting him. You know,

Really just masterful work, I thought, by the front office. And they're winners, man. They want to win. Well done. Yeah. There was this one story I read about Wick. Wick Grosbeck, who's the owner or the managing. I think there's like a few owners, but he's the managing operator as well. And he basically said, like,

to the ownership. He said, you guys all made your money somewhere else. This is not going to be about making money. This is going to be about parades. Like, expect to lose money on this investment that you're making. You know, it's like a culture lifestyle. Like, we'll do what it takes to win. And so I always thought they operate that way, like relentless. They need to win. They'll make the plays. They'll make the trades, do whatever it takes, you know? And

Yeah, finally this year that paid off. What a great mindset because a lot of teams are scared to dish out tons of money for players. Yeah, you see that for sure. Especially they got these crazy luxury taxes and everything now. You can pay, I think it's like...

If you go over a certain amount, you're paying 70% of that amount in luxury tax, $100 million plus. It could get expensive, but that's the culture. Yeah. It was one of the most dominant playoff runs I've seen in my lifetime. Yeah. They only lost three games. Yeah. Look, my wife and I, and I have four daughters. Two of them are too young to be going. Two are old enough.

Like after COVID, when they started bringing fans back, we got season tickets and the Celtics were 40 to one, I think to win the championship. This was before like people on the team were like Dennis Schroeder and Jay Rich and some of these guys that ended up getting traded. And we brought in Derek White and kind of mixed up the team a little bit.

But we got the seats probably at the last minute. It would have been possible, especially in a city like Boston where the fan base is rabid. So we got these seats, started going to every game. This was our third season with season tickets, probably been to 150 games.

And the run they've been on is just crazy. I mean, two finals East, you know, we lost in the East championship last year in game seven, but yeah, it's such a time commitment and it's become just a huge part of my life. And my family loves it. I've met so many friends through just being out, going to the games. It's incredible. Future's bright, man. I saw Tatum's postgame speech and he was damn near crying. Yeah. I mean, it was cool to see him get one for real. He had a lot of pressure.

These athletes are under so much pressure to win. And only one out of 30 teams wins every year. Yeah. I feel like people would have been very happy to just write Tatum. Even now, you know, he wins the title and nobody really wants to give this guy any credit for, you know,

Basically, leading the team in every statistical category consistently throughout the last three years, throughout the whole finals run. He's got more points than anybody ever, under 27. He's pretty dominant. He puts numbers on the stat sheet. I don't know what else to say. This poor guy, man. Nobody wants to give him any credit. So I think he just has to keep proving it year after year and not expect anything from anyone else.

And, yeah, in the end, though, I think the numbers talk, the achievements talk, the rings, the, you know. Were you shocked you didn't win MVP finals? I kind of was. Like, I maybe saw it coming a little because of how the media was talking about it. Saw it coming. It was...

Look, if you're just looking at the stats, he was the MVP. But I think people wanted to put a lot of credit on the run Jalen has had, all these crazy clutch shots, even not in the finals, but against the Pacers, he hits this three with two seconds left to tie it, and they win in overtime. And the momentum swings, the defense, the intangible stuff, I feel like a lot of value got put on the intangible stuff. And...

That being said, both of them, I thought, deserved it. Yeah, it was close. I wonder how they picked that. Is it like a committee or do you know how it's picked? Yeah, it's writers. Oh, it's writers? Yeah.

I think it's 11 or 13 writers. These are people from like the athletic or ESPN or whatever. They all just vote and the majority wins. So in this case, I think it was like five people voted Tatum and maybe eight were Jalen Brown or something like that. That seems like a weird way to pick it to me. Yeah. You know what I mean? Because if you're a writer, you're going to have some bias.

Yeah, definitely. Like you're covering the game kind of emotionally. I noticed. There was this funny one. Marcus Smart got Defensive Player of the Year. Kind of a similar thing. It's the writers and everybody in analytics land was just baffled. How did Marcus Smart get Defensive Player of the Year? This guy, I really respect his analytics chops.

Haralibis Vulgaris. Haralibob on Twitter. Big name in gambling. One of the best, most successful NBA gamblers ever. He was on Mark Cuban's team on the Dallas Mavericks, helping him with analytics. A genius level stats analytics guy.

And he said, Marcus Smart's like the third best defender on the Celtics. Like, how did he win? Tatum, there was arguments for that. Like Tatum and Jalen Brown and even guys like Robert Williams, like people that you could make a real argument had more defensive impact. But still, though, I mean, I think writers, they see the game, they factor in intangibles a lot more. It's not just the stats and everything.

So yeah, things like that can just happen. I feel like that's how I felt about the MVP this season. Cause I wanted Luca to win it, but he wasn't even top two in most people's voting. Yeah. Luca is a major problem. I think in the future, he's a serious candidate every year. I feel like he should like be top of the list. Yeah. If they get one more piece, they could possibly give the Celtics a six, seven game series. I think. Yeah. Yeah. He's a big problem. I think Lucas, um,

There's a bit of a run of the centers, I feel like, taking all the MVPs. Yeah, Jokic and Giannis. Yeah, Giannis, like all these guys. And it's easy right now, I feel like, to give it to those guys when they're scoring 30 points and blocks and all the stats are crazy. So I get it. But yeah, if I could start a team with one guy in the league, it would probably be Luka. Wow. I don't know. I'm trying to think who else even has a really good argument for that.

It's probably Luca. I mean, he's a serious problem. Yeah. Do you sports bet at all? Are you allowed to? I do. You know what's funny is probably one of my least forms. I love gambling. I mean, I'm in the industry, obviously, but it's because I love the products. But I love casino games. I love fantasy. I probably sports bet the least of anything in terms of gambling, to be totally honest.

I'll do the big events. I had a Celtics feature, so I finally hit that. Oh, nice. When did you put that in? I had a couple. I did one that was like the Michigan college football parlayed with the Celtics, and I was just sitting on this thing. And so I had a couple of things like that where I just work it into bets and try to build up a little bit of a position there. Yeah.

And that was a nice one. That was a six figure, like my biggest win ever on sports betting. So that was really cool. But I would say I play like more blackjack or, um, I've been with my wife. We'll play slots or whatever. I mean, everything. Yeah. I hate slots. Yeah. The girls love it though. It's entertaining. I feel like, um, I feel like the argument for slots is you don't have to make a lot of decisions, um,

Very entertaining. The bonus, all the creative work that's gone in, the kind of like activating IP or coming up with cool bonus rounds and things, I feel like has made these games really entertaining. So like I could sit there and just, you know, you hit the button. It's fun. Yeah. You gamble on crypto at all? Yeah, I've had my crypto runs. I would say, you know, during COVID, that became a pretty big... I went super deep. I mean, 2001...

to 2002 extremely deep. And look, I, through that experience, I think I decided it's not going to be a major part of my life, but it's a, I would say hobby. I mean, like I follow the markets. I still have a lot of different like holdings. Um, but yeah,

I just felt like the way it sort of like interact with my ADD stuff or whatever, it was just not great. Like the NFTs and everything. I just found like collecting – at the time, I had like sports cards as well. Yeah. I feel like the way it just interacted with my brain was a little bit like –

I don't know. I always felt like a little bit disorganized, cluttered. I'm like, I have thousands of things all over the place. I have to do taxes. So it was all the overhead of managing all that stuff just kind of made me want to get simpler with my life. So at this point, I feel like with crypto, I'd rather just either invest in something someone's doing, like a product or a business, or

Or just keep it pretty simple with like, yeah, have Bitcoin, have like some limited amounts of like premium NFT stuff or whatever, like stuff that's maybe less onerous to manage. I got wrecked on NFTs. Oh, yeah. And sports cards. Yeah. You know, the person who got me into NFTs was Gary Vaynerchuk. He sent me, and to his credit, he sent me CryptoPunks and he sent me a couple other things initially. Nice.

I'd say the one thing I made a lot of money on in NFTs was CryptoPunks. Did you sell it, though? Because they're down. I still... I mean, I've sold a lot. Like, I have probably 10 right now. Oh, you've got a lot. Yeah, I still have 10. Damn. Yeah, they're down to 25 Ethereum right now. Yeah, yeah. I think it's like a little under 100K market cap. Or, sorry, like the floor price. Yeah. And I think it was 200K a month or two ago. So it definitely has...

With the shitcoin and the Solana meme coin booms and everything, it's definitely not the focus for people. And yeah, if that's happening to CryptoPunks, everything else is decimated. I mean, stuff is worth zero practically. It's a really tough market, you know?

Like what I liked about NFTs and what I always thought was the potential was I just didn't believe that the raw material of like physical cards or like it's so not valuable. Like the one cent of making a baseball card, that is not expensive. So the value has to be in the art, the scarcity, like the demand, you know, like there's some other form of value that's not the physical material, right? So-

Therefore, what's the difference between digital or physical? To me, that was the, I guess, bold case. So I really still think that's true. But the blockchain, like NFT stuff with all the... There was just a lot of, I think, technical-wise, a lot of complexity to it. Hard to pick up in mainstream platforms.

There's also a lot of scams, a lot of people just losing assets or somehow, some way just getting scammed or frauded or whatever. And it's tough. I think current tech and how that worked with the collectible space just wasn't good enough and it just couldn't hold on. So yeah, I don't know what will happen in the future there, but I think...

if they can't get to a sort of tech and a user interface, that's more easy for people to just adopt that feels as easy as opening baseball cards and putting it in a plastic holder. And like,

if it can't be that easy and if there's this many scams and this many people like losing money to fraud or tech problems or whatever it's just not I think ever going to get to that level so great yeah we'll see what happens I was really pumped for the metaverse I even bought the quest I used it once I haven't used it I mean I was just disappointed yeah it was super blurry the graphics were old and

And the metaverse I was really pumped about and just seemed to be a letdown for now. Yeah. Yeah. I think so too. We'll see what happens. If you think about it, like most people spend so much of their time on the internet anyway, like metaverse. I played 30 days of game time in World of Warcraft when I was in college or like the first year out of college. I probably could have played it forever. I quit because I was like, oh my God, I spent 30 days of my life in this game. And...

That was 2004, maybe? Yeah. Why is that not metaverse? What are we even really talking about here? And I just feel like people spend so much of their time on internet platforms, social, anyway. I don't really understand the vision of what people are moving towards in that world that's distinct maybe from...

And I'm not saying nothing will get created that's exciting in this space. I just kind of decided I don't think I'm going to spend my time there in a big way. And I'll follow it. I'll just kind of follow it and see if somebody does something that gets my blood pumping. You know what I mean? Yeah, absolutely. Anything exciting for DraftKings coming up that you're working on? Yeah, DraftKings is insane right now. The 2018 was when we launched sports betting. And...

At the time, nobody really knew who was going to have the leading platforms in sports betting. A lot of people thought casino companies like MGM, Caesars.

A lot of people thought the European gambling operators that were really big, like the whatever, Bet365 or like these companies, William Hill, the ones that had decades of experience in the space. And the way it turned out, it was really DraftKings and FanDuel, you know, like the ones that had the big existing fantasy player audiences in the U.S. that had maybe like five to eight years of experience.

relationship building with that audience. We were really in a great position. So as states started opening up, initially it was just Jersey for 2008 and a lot of 2009. And a couple more states come. Now we're in the majority of the country. We're in just crossed 50% US population coverage with sports betting. And

The frequency that states are just popping up and launching, it really is a state-by-state launch. It just keeps us incredibly busy. Even though we're pretty scientific with it now, it's been just persistently just crazy. And then it's also an industry that's very competitive. It's probably one of the most competitive, most heavily regulated industries. There's always changes in technology.

The thinking about how it should work in the US, the rules can change, the type of media the industry gets is always evolving and changing. And it's just never a boring day, pretty much. Yeah, I bet. Are you guys scared of any AI coming in and just wiping all the bettors out? Because they're so good at sports betting. Not so much. I mean, I guess who knows? Because I don't want to predict everything that could come up in the future. But...

We have pretty great tech. I mean, our tech is strong. I think anything that comes from an innovation standpoint in the same way that, you know, it could help and hurt, right? Like it could help our company be more efficient with how we set odds and everything in the same way that it could help anyone, you know, with precision on their end. So,

I don't know exactly like all the forms that that might show up, but I think most of the ways that the AI kind of momentum has been hitting us is, um, how we can operationally be better, like better quality, better quality assurance, um, copywriting, marketing, customer support, customer service, like a lot of areas that I think are repetitive, heavily manual sort of tasks and things like that. Um,

I've just noticed like impact from some of the current tools and resources out there. Yeah. You know, a lot of this stuff we use in marketing and other functions like those platforms, a lot of them are integrating AI solutions as well into the platform. So you kind of like automatically, you know, the company's getting better through that technology automatically in a lot of ways. I've had some of the top sports bettors on the show and some of them use AI and they'll give them like a one or two percent edge. It's pretty fascinating. Yeah. Yeah.

Yeah, it's... Look, I mean, that's a fascinating business. I used to play a lot of poker. I used to try to, like, make money. I wanted to make money playing poker. There's always an appeal to...

Like to me, because I thought that that was such a tough thing to do. Like you're kind of going out, you're playing games that aren't really designed. It's not a job, right? Like sports betting is not a, it's not built to be a career for people. It's sort of like some people though find these sort of like slivers through which...

I feel like I have an edge here or whatever. And so it's kind of like not inherently how the product's designed, but it creates opportunity for people to build those sort of things, strategies, tools, whatever. And

and try so I always thought that that was fascinating like like it's like sole proprietor mindset where you just go out and you're like I'm just gonna figure out how a way to make dollars off this like uh but that's a tough business man I mean that's really tough I feel like a lot of people on the internet try to make that sound easy you know the buy these pics like Vox or something no that's that stuff's like to me that's the worst like

I think it builds some false hope in people's mind. Like, oh, I can just read an internet article for two seconds and print money. But you can't. You can't. If you gamble, you're going to lose money pretty much. So I always, though, have been very impressed with people that can find a way to make a living off gambling.

those things. Very few people. Yeah, it's like a tough thing to do. Really tough. And they stay silent for the most part. The ones that are gassing up their numbers are usually just making money off picks. Yeah, yeah. Were you a profitable poker player? I was for a minute. Well, I never played for a lot of money. I'd never really had money my entire life, to be honest, up until DraftKings going public three, four years ago. Because when I was growing up, my parents were in the military. My dad worked in a prison. My mom was like a hairstylist.

very, this was in New Hampshire. I grew up combination of mass in New Hampshire, like in suburbs. The first time I even like knew about Ivy leagues or like cool colleges like that was through running. Cause I was getting recruiting calls from the coaches and I'm like, Oh yeah, that sounds like a good opportunity for me or whatever. So I think it was really like after college, I started like, um, getting a bit, a bit more of a horizon on what's even possible out there or whatever. And, um,

I just didn't have any money, though. I didn't know ways to earn money either. So poker I liked because I could put in maybe like 50 bucks. I could study the game and try to win. But I was playing cheap, like low match. Like 1-2.

Yeah. So I would say in like five years of poker, I probably won $20,000. Oh, that's it? And playing very low stakes. And that mattered to me a lot. Yeah. It wasn't really till like my corporate career started kicking in that that didn't matter. Yeah. Yeah. That must have been a crazy moment then going public. Yeah. Yeah. That was nuts. It's definitely a big...

The guy underestimated how much life, how much overhead there is as well to being in a situation like that. All the systems, all the, you need tax person, you need whatever. All this finance stuff that comes and hits you. Yeah, I don't know. They change overnight, right? Yeah, it's like a change to lifestyle and change to...

how to even like operate your house and stuff. So yeah, I feel like a couple of years were just chaos, you know, and just getting infrastructure set up and everything. And, and, you know, now I feel like we got a good grip on it, but I learned a lot about like how there were options and all these different things work. But, um,

Yeah, that was pretty crazy. The biggest thing I did after we went public, the one splurge was the Celtics tickets. And that's the one thing I'll never sell, probably. And everything else, though, I was kind of... But that probably leads to opportunities, too. The people you meet, and it's a family experience. Yeah, yeah. I noticed that. It's a lot more like you see the same people 10, 20 times. The relationships start getting really good. And I've met a lot of people like...

I don't think I would ever really be talking to otherwise through the Celtics, traveling for games, all that stuff. Spend a lot of time with their owners. Spend a lot of time with just different, you know, the restauranteurs, the people that are influential around Boston. I feel like I just know the city way better. Plus it feels good when the team's doing well. It gives you something to root for. Yeah, absolutely. Matt, it's been fun, man. Where can people find you and get started with DraftKings?

Yeah. Uh, I usually use, um, sort of on Instagram, Matt Kalish or on X, um, uh, Matt Kalish as well. And then DraftKings, you know, we're in the app store. It's really easy to, to get, you know, you go to DraftKings in the app store, download the sports book. We give free bets, like just to start your account, you know, you get a free credits just to try it and see if it's for you. So, um,

definitely easy to pick up and suggest everybody at least does that you know get a feel for the platform and think even if right now it's not the best time with football coming around the corner that's really like the main peak you know september when football launches that's like far and away the biggest season yeah we'll link your stuff below thanks for coming on man that was fun yeah great meeting you absolutely thanks for watching guys as always check out draft kings below and matt stuff see you next time