Business Breakdowns
Episode 51 Fanatics: Growing the Sports Economy
Business Breakdowns

Episode 51: Fanatics: Growing the Sports Economy

Business Breakdowns

Episode 51

Fanatics: Growing the Sports Economy

Deven Parekh is Managing Director at Insight Partners. We cover Fanatics' unique commerce model, how the company is aggressively entering the NFT market, and other prospective areas for expansion.

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[00:02:40] - [First question] - What is Fanatics and the scale of the business today

[00:04:26] - What the core business of Fanatics does

[00:05:41] - The history of Fanatics and what led to its success

[00:10:59] - Michael Rubin’s story and the role that GSI played in Fanatics’ growth

[00:13:58] - How the licensing business works and how Fanatics’ relationship with the leagues differs from their competitors 

[00:15:34] - The landscape of this industry before Fanatics

[00:16:36] - Why the change from the best commerce experience to a broad digital sports platform

[00:19:02] - Differences of Fanatics’ P&L compared to others in the industry

[00:21:05] - How the real-time advantage helps drive growth in the business

[00:23:12] - Whether or not the leagues participate in gross margins and how much of a focus they place on cost optimization 

[00:25:25] - Distinctive things about Fanatics from an investor’s perspective  

[00:26:22] - Why hasn’t Amazon stepped into this space yet

[00:27:30] - Which leagues have opted out of working with Fanatics and interesting team and player dynamics

[00:28:59] - Reasons behind getting involved with NFTs, trading cards, betting, and how it might evolve in the future

[00:32:22] - Ways they’re taking the core business and augmenting other branches

[00:34:36] - What will have gone right over the next five years for Fanatics to continue growing at the pace they are today

[00:37:59] - What will have gone wrong over the next five years that will hurt Fanatics’ growth

[00:39:59] - Lessons for builders and investors when studying Fanatics’ story 

Fanatics: Growing the Sports Economy

Introduction

Jesse
This is Jesse Pujji, and today we are breaking down Fanatics. If you've recently bought sports apparel online, you interacted with Fanatics. They power the entire digital commerce experience for the NFL, MLB, NBA, NHL, and hundreds of other sports leagues around the world. To break down Fanatics, I'm joined by an early investor, Deven Parekh from Insight Partners. Deven has been an investor in Fanatics since 2011. We cover Fanatics' unique vertically integrated commerce model, how they redefine their TAM, and how the company is aggressively entering NFTs, real-money betting, and other expansion areas. Please enjoy this Business Breakdown of Fanatics.

Jesse
Okay. Deven, welcome to Business Breakdowns.

Deven
Jesse, thanks for having me.

Fanatics' Size, Scale, and History

Jesse
I'm really excited of about the one today because I actually met the entrepreneur and the founder when I was a 17-year-old at a pre-college business program. And I remember going to the offices, and we'll talk about who it is in a second, and hearing his story and just being like, "I want to be just like that guy one day." I can very much remember it so I'm really excited about the episode today. We're talking about Fanatics. That's the business we're breaking down. So let's just dive right in. What is Fanatics? Explain the business to us and give us some sense for its scale.

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