The Sports Loft podcast brings industry leaders together with senior leaders from the Sports Loft member companies to discuss the topical issues in sport, entertainment, tech and investment.

In the latest episode of the Sports Loft podcast we get to know our tenth and newest member, Slate, by chatting to their co-founder and COO, Eric Stark. In conversation with our Yanni Andreopoulos, he discusses the company’s founding and how it arose from Eric’s background in running social media for the NFL.

Slate works with an impressive range of teams across the NFL, NBA, MLB, NHL, MLS and Premier League to seamlessly integrate brand assets and maintain brand consistency across social channels. From experience Eric knows that "social media managers need to be copywriters, video producers, graphic designers and a PR person all in one. And they need the tools to be able to do that really quickly."

If teams embrace the change accelerated by covid they should expect to increasingly monetise social media by integrating sponsors into content and proving the value to them. Eric has seen “investment in social media increase in the last five years, but not (yet) to where it needs to be to make money.” Though that may be changing now.

“Teams were forced to see the importance of social media over the last five months because it was the only touchpoint they had to fans without games.” This has also changed sponsor relationships because teams have needed to offer different inventory as stadium signage wasn’t available. Eric thinks “sales teams will see how social is a valuable asset of itself and not just an add on.”

Listen to the full episode or subscribe on Apple, Google or Spotify. All previous episodes are available on our site.

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Two conversations with founders this week got me thinking about how we judge whether a company is getting traction in the market. The aim of this post isn’t to say what “good” metrics are and what metrics should be used by founders when presenting their company to us or anyone else, but rather to articulate some of the thought processes that we go through at Sports Loft in evaluating companies in front of us and how the things we look at change between a B2B or B2C company.

The first company, a consumer facing app, told us “we’ve got 1,000 users...without any marketing spend”. Was that good? What if it had been 500 or 5,000 or 50,000? A number without context is meaningless. “10% of users upload an activity to the platform everyday” they added. That’s 100 people per day. What if daily usage grows as the userbase increases with network effects or, on the other hand, what if it that percentage drops as the hardcore users become a smaller part of the entire population? Strava has 19 million “activities'' uploaded every day and Twitter has 145 million daily users. These are established companies. What would be a fairer comparison, perhaps the early usage rates at MapMyRun, Nike+ or Endomondo? or the usage rates of other companies currently starting up in the same space? 1,000 users is small, but everyone has to start somewhere.

What about the growth rate? “It’s consistent, with the same number of people being added each week”. Naturally we prefer accelerating to linear growth. “But when we add feature X, the growth will increase” they said. I’m not a fan of the “silver bullet” feature that will be the miracle cure to growth problems and typically treat it as a warning sign. However, In this case it was the ability for users to bring their friends into the platform, something that was hugely successful for companies such as Dropbox, Airbnb and Harry’s. What if every user then brought three new users to the platform? What if they each brought 10? What if 10% of users referred their friends? What if it was 60%? Would it change my opinion that 100 users per day felt small if they all ended up referring like crazy? Equally, what part of the product functionality would make people refer? A referral mechanism is fine, but people need to think that their friends will get genuine value from this product if they are going to refer them. So what is so viral about the product?

What about how active the users are? “Our top 20% most active users all post an activity at least four times per week” That sounds like very strong engagement. However, what happens to the remaining 80%? Do they lapse? On Twitter, in the US, 10% of the users contribute 80% of the tweets and on Instagram, 63% of US users return daily. Twitter now reports “monetizable users” in an effort to reflect the difference between people that use the platform and those that are just registered. The hard bit is getting benchmarks that are genuinely comparable across different companies, and often different industries.

These are three examples of the discussions we had when looking at whether this company was getting “traction”. At this stage, it feels too early in its development for Sports Loft and how we can best help them, but I like the proposition, the founders and where they want to go. I’m not sure how they monetise their audience, but let’s give them a chance, they’ve got to grow the audience first. If we were early seed stage investors (we’re not!) this could be interesting, but for us it’s a “watching brief” over the next six to 12 months.

The second company was a B2B product selling into the performance groups at teams in multiple sports. They told us “we’ve got twelve customers across three sports...all of whom are paying a fee”. Big tick, customers are seeing enough value to pay for it. Everybody likes that. The number of customers is hard to judge. There’s 20 Premier League teams, 18 in Bundesliga, 20 in La Liga, 20 in Ligue 1 and 20 in Serie A; plus 30 in MLB, 30 in NBA and 32 in the NFL. So almost 200 teams across these elite leagues. So 12 isn’t a huge number, but it’s a very good start and they’ve shown real “hustle” to get those along with a number of others in the pipeline. For context, Catapult has almost 3,000 clients. One immediate question was whether having 12 customers across three sports meant they were spread too thinly at an early stage and whether they were better off concentrating on one sport? It’s also worth looking at whether they were trying to target the elite teams, the next rung down or the mass of teams. There’s a big difference in selling to the top six in the Premier League and the rest.

“The last three clients came to us” they said when talking about the sales process. This is great and shows that they are getting recommendations within the industry. It can also speed up a notoriously slow sales cycle in elite performance sport. The performance community is both tight-knit and competitive, if they can get performance directors thinking “I can’t be the one without this technology” then the numbers will grow quicker. They also had a client who left one team and joined another, subsequently introducing the technology into the new team, another big plus as it shows that this person felt they were getting good value.

Usage of the product is always an important factor for us. It’s one thing selling the product “vision”, but another thing to get people consistently using it. Are the users logging in regularly? If they are not using the product, then it won’t generate the case studies and they won’t get renewals from the teams. Are there multiple users across the organisation, showing that it is being more ingrained with the team than just one champion? In this case, there weren’t lots of users at each team, but those who did were using it heavily. “We’re making their jobs easier” they said, which has been borne-out by some initial inquiries we made. That’s good. If the users feel threatened by it they would not advocate for it.

Ultimately in a B2B product with a relatively small number of customers, we always look at their case studies. Are they delivering value for the customers in a way that absolutely justifies the spend on the technology? At Sports loft, Satisfi have shown that they can create new sponsorable assets for clients and create new revenue, Spalk have shown that they can significantly reduce costs for broadcasters, Fevo have shown that they can increase ticket sales numbers, Zone7 have shown that they can reduce the number of days lost to injury and the list goes on… How easy is it for the client to make a business case for using the technology? In this case, the product provides a clear benefit to the teams from using the technology but it is hard to put a precise monetary value on it, often the case with performance technologies. The case studies they have are compelling and I can see why other teams would follow. Early-stage companies often struggle in regard to case studies, as the clients are often hesitant to talk publicly about the value that they are getting.

So will this one become a Sports Loft company? There’s a real possibility. The case studies are strong, the management team know how to sell in the club environment and they are evidently getting talked about amongst the teams.

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The opening statements by the CEOs of Apple, Facebook, Google, Microsoft and Amazon to the US House Committee on the Judiciary may not be the most obvious of page turners for the summer, but I think they are very valuable reading, especially the statement by Jeff Bezos.

All the companies predictably talked about their products, what those products had enabled people to achieve and how their innovations would not have been possible outside of the US. However, Bezos’ statement in particular stands out for two main reasons. I think it is useful to see how it can be applied to the sports & media industry, where Amazon is increasingly becoming an important player and also how it relates to what we are building at Sports Loft:

Firstly, Bezos’ statement puts an interesting slant on the often-heard notion of being customer focused. In particular, how Amazon’s version of customer focus means identifying what consumers need before they even realise they need it. This could be seen with AWS: “no one asked for AWS. It turned out the world was ready and hungry for cloud computing but didn’t know it yet.” And Amazon Prime: “no customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it”. As Bezos put it “by focusing obsessively on customers, we are internally driven to improve our services, add benefits and features, invent new products, lower prices, and speed up shipping times—before we have to”. It is the last part of that sentence that is key – “before we have to”. Amazon could have continued to make $millions from its customers but they found new ways to bring new services to customers and to deliver value to them.

Contrast that to the many conversations that are heard in the sports and media industry – “we’ve been doing it like this and it’s been working, why change?” Or “we can keep milking this for a few more years yet”. The prime example of this may be reluctance to adopt direct to consumer content channels but it can just be as easily applied to ticketing, where fans have been buying season tickets in the same way for years, but what if they were able to have greater flexibility in the games they attend, who they attend with and how they pay? In sponsorship, despite its shortcomings, many brands have continued to accept equivalent media metrics to evaluate it, but what if they could genuinely start to value a partnership’s impact on their business? How do teams grow new fan bases? Fans aren’t demanding that their clubs get involved in their kid’s football skills, fitness and education, but what would be the impact on building loyalty with young fans if they did?

For investors this is risky stuff. How can you be expected to evaluate something that customers don’t even know they want yet? But isn’t this part of what early-stage investing is all about? At Sports Loft, we have the same debates about which companies we should work with. It’s easy to concentrate on companies that are getting traction in an area that is predictable but the real value is trying to find the companies that are identifying what the industry needs before the industry realises it. How many performance directors knew that they needed an algorithm to help identify players at risk of injury until Zone7 came along? How many content managers were asking for a better way of sharing content with the players until they saw Greenfly? How many broadcast managers were wanting to have commentary done remotely until they saw Spalk and then Covid hit? How many marketing managers were thinking about the exact times to send individual pieces of content to consumers, and at what length, before they saw Covatic?

The second part of Bezos’ statement that stood out is the storytelling. Now some of the style is a bit folksy for my liking but he really manages to convey the company’s origins and rationale, often in very personal ways that people can relate to and easily understand. From his personal desire to build a company: “most of our regrets are acts of omission—the things we didn’t try, the paths untraveled. Those are the things that haunt us. And I decided that if I didn’t at least give it my best shot, I was going to regret not trying to participate in this thing called the internet that I thought was going to be a big deal.” This continues to how he portrayed the threat to Amazon from established competitors: “smart analysts predicted Barnes & Noble would steamroll us, and branded us “Amazon.toast.” Finally, his defence of big companies: “just like the world needs small companies, it also needs large ones. There are things small companies simply can’t do. I don’t care how good an entrepreneur you are, you’re not going to build an all-fiber Boeing 787 in your garage.”

Ironically, in an industry such as sports that is full of emotive stories, the technology companies that serve it rarely do a great job of telling their own stories. A great product and technology are vital but will only get you so far. You have to be able to tell the story of why the product is so useful and in many cases it is the personal stories that really resonate. Why did the company get founded? What challenges did the company face along the way? What went wrong and what did you learn? Rightly or wrongly, the companies that often attract funding are the ones that are the best storytellers, painting a picture for investors of a world that has benefitted from their product. Investors and customers are often looking for a narrative that they can buy into.

At Sports Loft, part of our role is to help our member companies tell their stories to our audience of investors and senior industry execs through our podcasts, newsletters, social channels and website. These are great companies with fascinating stories to tell from Donny White searching for bacon on a stick at Citi Field that led to the founding of Satisfi, to the insights from the My Kicks app that led to the thinking behind Formalytics and seeing the opportunities with first party data that led to the creation of Pumpjack. We will continue to do more to bring out the personal stories that really give an insight into the companies at Sports Loft and the people who are building them.

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