A fast-rising startup in consumer tech just got bigger by acquiring a competitor. DraftKings, a Boston-based fantasy sports company, bought New York-based DraftStreet for an undisclosed sum last week. The move signals consolidation in the field and sets up a showdown for the number-one position.
DraftKings got started in 2011 and has raised some $35 million from investors including Atlas Venture and Redpoint Ventures. The company makes daily online fantasy sports games—for baseball, football, basketball, hockey, and golf—where players can bet real money or virtual currency.
With the acquisition, DraftKings is up to 80-some employees, split between Boston and New York, with plans to be above 100 by the end of the year, says CEO Jason Robins. He says the company’s games have hundreds of thousands of active players and more than a million total registrations.
As Robins puts it, the newly acquired DraftStreet, previously owned by Internet giant IAC, was number three in daily fantasy sports behind DraftKings and FanDuel, another New York company, which has been around since 2007 and currently leads the sector. But the idea is that DraftKings plus DraftStreet could move the merged company up the leaderboard.
“We get to work with the DraftStreet team. For a long time we felt like they have a great skill set,” Robins (pictured) says of the merger. “We’re always trying to get better and add great talent, and they complement our team well. We’ve seen an over-50 percent player base increase.”
Here are some more highlights from my chat with Robins:
—On a Forbes report that he misled DraftStreet’s staff before the acquisition: “I never told anyone there we weren’t going to combine the companies. There was some discussion about keeping both New York and Boston offices, but not keeping DraftStreet open.” So what was wrong about the report? “Everything.”
—On his first time playing fantasy sports: “I was 12 years old, it was a hockey salary cap-style game” on a website. (Oh for the days of paper leagues.)
—On spending less and less time as a player himself: “I’m down to a half-dozen football leagues, and some daily sports in the other ones.”
—On the competition with FanDuel: “Our technology is more reliable. Our differentiators are our product, mobile, and customer service.”
—On mobile in fantasy sports games: DraftKings’ mobile app “stands out not just in the [fantasy sports] industry but as a mobile game,” he says. “I think developing quality mobile apps has to be done natively. In our space it’s all wrapper-based.” He adds that mobile and tablet apps “opened up a new audience and allowed us to access customers 24/7. People always have their mobile device.”
—On his company’s culture and focus: “We’re a results-driven culture. It’s all about achieving results. We’re product focused and customer focused.” (The startup’s leadership came from Vistaprint, customer acquisition, and marketing.)
—On the technical challenges of daily fantasy games: “Operating on multiple platforms—it’s a tricky, complex product to operate. There’s money moving between different places, and tricky traffic patterns,” he says. “It’s all analytics driven.”
