Key players: Paul Charchian, Tom Doering, and Christian Peterson
Web site: leaguesafe.com
If you're a fantasy sports fan in Minnesota, you’ve probably heard of Fanball.com. And there’s a good chance you’ve heard Paul Charchian. That’s because, in addition to being the founder of Fanball.com, he’s also a well-known sports radio host on 1130 KFAN.
In 2005, Charchian successfully sold Fanball.com and started working on his latest venture, LeagueSafe. He saw an opportunity to help fantasy sports players manage the money that exchanges hands before and after each season.
The solution was to create a service that allowed fantasy league commissioners to securely collect, protect, and disperse the entry fees and winnings to each player—at no cost to the team. Charchian and his partners have been running for the past two years as a local proof-of-concept, and are now ready to take it nationwide.
Charchian explains more about LeagueSafe and offers great advice for entrepreneurs:
Explain how LeagueSafe works.
Most fantasy leagues have an entry fee. The fees ensure that everyone has some skin in the game, and that everyone continues trying to win throughout the season. (If you’re wondering, fantasy sports aren’t considered gambling. But that’s a story for another day.)
LeagueSafe is not a bank or financial institution; it’s an information technology company that allows fantasy players to deposit funds into a third-party bank account, where it is stored securely until the end of the fantasy season when it is ready to be distributed.
Players deposit fantasy league fees at the beginning of the season. It locks down the funds throughout the season, and league winners are eligible to withdraw funds at the end of the season. 100 percent of the entry fees go back to the winners. This product augments the services provided by online fantasy league administration sites such as ESPN, Yahoo, and CBS Sports.
What opportunity did you see in the fantasy market?
The fantasy sports marketplace has matured significantly since I started Fanball. At the dawn of the Internet age, there were dozens of areas of dire need for fantasy players. That’s not the case any longer. Big portals have sophisticated applications that meet the needs of most fantasy leagues, and increasingly, these products are free.
As I looked at the industry in 2007 to 2008, the only area of fantasy play that hadn’t seen an online solution was entry fee management. A value proposition began to crystalize.
Without LeagueSafe, league commissioners (who manage the league) are still dealing with checks, cash, IOUs, and promises of payment, just as they were 20 years ago. LeagueSafe simplifies all of those issues by allowing online payment processing with the ease of buying a book on Amazon. Plus, winners can finally rest assured that they’ll get paid. Traditionally, most commissioners co-mingle league funds into their household bank account.
With your service being free to users, how do you generate revenue?
When I was developing LeagueSafe’s business model, interest rates were at 4 percent to 5 percent, and a free model was easy to cash flow. Since then, interest rates have nose-dived. It challenged our management to find alternative revenue streams while retaining the ability for site visitors to use LeagueSafe without fees.
Using LeagueSafe default options, the service continues to be free to the end user. We’ve added optional functionality that generates revenue for us. One example is a nominal late payment fee, which allows deadbeats to make payments after the normal deposit deadline. Another example is our express payout option, which allows for funds to reach winners in two to four business days.
You’ve successfully positioned yourself as an authority in fantasy football. How has that impacted your business success?
My career has been significantly aided by two areas outside of my day job. First, as the host of KFAN’s Fantasy Football Weekly radio show, I’ve gotten to interact with thousands of listeners since it started in 1995. It’s helped me keep me on top of the evolution of fantasy sports.
Also, I’m the president of the Fantasy Sports Trade Association, an industry group composed of 110 member companies in the fantasy sports space, from ESPN down to start-ups.
What are the keys to successfully raising money?
LeagueSafe’s value proposition is straightforward, and its revenue streams aren’t complex. Calling your product “understandable” almost sounds patronizing; but in reality, investors like knowing that they fully understand any company they’re involved with.
Also, people can easily appreciate the size of the fantasy sports marketplace because they know dozens of people who are playing. It certainly helps to raise money from someone who already knows, first hand, that there is a sizable market already in place.
As someone with so much start-up success, do you have any words of wisdom?
I’ve taken plenty of jumps over the years, so I have plenty of blunders to draw upon. Allow me to offer two (highly compressed) areas of advice:
First, ask yourself if your idea is a solution looking for a problem. If you’re not ready to solve an existing problem, it’s probably going to be tough to materialize a market out of thin air. Here’s an example: In 2000, I built a fantasy football auction game called Bid2Play for Fanball. It merged eBay-like bidding with fantasy football. It was a great game. But back then, fantasy players weren’t auctioning (they are now), so the game felt foreign, and it never gained critical mass. Bid2Play was a solution without a problem.
Second, as you start building your great idea into a viable product, be ready to adapt. A lot. Often, the pride of authorship results in an unwillingness to iterate ideas. Any start-up needs tenacity. But not when it comes to reshaping and rebuilding your idea. Your friends, family, users, and customers want to help. Let them. And listen to them. Be willing to throw out all of your preconceptions.
Learn more about LeagueSafe at leaguesafe.com.