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Nigel Eccles talks about the growth of Flick & the on-going litigation of FanDuel

by Sam Sethi
May 3rd 2020

Sam talks with Nigel Eccles about his new company Flick. A companion app for sports fans who want to watch a game while chatting online with likeminded fans and friends.

Nigel talks about how... More

Hello, everyone on. Welcome to Sam Talks Technology, Your weekly guide about all things tech on business with Sam Sethi. Hello and welcome to another in a series of sand talks technology. I've got a wonderful founder off a company called Flick His Nigel Echoes Nigel. Hello, How are you? Hi. Not so bad. Thanks for joining us. Now, where do we find you self isolating in the world today? I am in New York State. So I'm in Westchester, 40 minutes north of New York. Obviously New York being the epicenter. Currently off the covert 19 it is. I chat to a lot of my team in Edinburgh and and I think your experience is quite similar in that were locked down at home in the UK, I think is a little stricter and that you're only supposed to be out once a day. So we have a pretty similar experience. We go grocery shopping. Once awakened, we attempt to home school or three

Children with varying levels of success. I think most entrepreneurs, if you asked, have been self isolating for many years. We tend to work from home and do crazy hours. Anyway, the big change I think is that we have our kids here, So my team, my product engineering team, are all in Edinburgh, and so I've worked with them remotely for two years. I've had a lot of experience doing that. But having that and end three kids rumbling around the house is unusual. Now flicks your current company? What is Flick? So Flick is a group chat platform for sports fans. Our vision is to recreate the experience of being at the game, but on your phone. And so you're gonna be watching the game on television and this is an idea. It's like, Well, what happens at the stadium? Why is the stadium better? Well, here's some things that happened. The stadium. You can hear people cheering, you can chat to other fans. You can treat predictions and what's gonna happen. Those are things that happened at the game, and so we said, Well, let's look, putting

those things inside a nap so that I actually could watch again from home. I could sort of take the temperature. What's the rest of the crowd saying? Like people that I don't know. That's one of the great things were going to get yourself inside people. You maybe don't know. You can hear what other people are saying. Additionally, I could have a side conversation with groups of friends. We're putting that into the app that I could build together. A little group of five or 10 People are friends. We can chat at the same time on Additionally, I can cheer So we're building cheering into the app. You can actually hit a Nikon we've actually created for some of our more popular groups. We've created particular cheer modes which animated graphics that match with that team. That's brilliant. I'm a Liverpool fan and we use a WhatsApp group currently for sharing while watching the match. Now the stadiums are gonna be empty, so the atmosphere is gonna be zero. Wanna go to something like flicking Absolutely. My experiences when you join the group while you're watching the game absolutely lifts the experience because it's not just watching on television. You can actually the chat on the bander that

you get from going to the game. You're actually getting within the app. A lot of people you don't know and some of it's really funny and then some of it is your friends you can like job and you're getting that all in that experience in the app while watching on television. Two questions. How much does it cost me to join? Something like Flick. Okay, that then bodes the question. How do you make money from Flick? So we have a couple of different revenue streams. Some of the cheers we have is their premium chairs, and you pay for them. Now, what we do is we actually pass most of the value onto the host of the group, but we do take a margin on that. And then secondly, we're in the process of integrating with the number of sports books on. We do a revenue share with them because what we're finding is people are coming in and they want to make predictions. Started the game, so they'll go. Okay, I'm predicting this person's the first gold score. What we're gonna do with that and say, Well, you're predicting this person first gold score. He's actually treating it 5 to 1. So why don't you actually go through and make a bad? So

those are the two sort of me and revenue streams we're looking at on bond soccer for Americans. But football for us is that the only sport that you do multiple schools so the platform works with any sports were particularly optimizing for soccer on then. The three major US sports, which is football, basketball and baseball on, Do you do internationalization? So is there a German version of Spanish as well? It's not internationalized. There's very little text in the app. But you know, we already have German groups. We've got great groups. We've actually tested on with Arabic, and it works. So the products is internationalized itself, but it's not specifically internationalized those markets. So how many uses roughly do you have on the platform? Still very early. The moment it's in the there are tens of thousands of users. Obviously, we don't have any sport at the moment, but we pre covert. We were growing about 50% month on month. We're

pretty confident in sports comes back. We will then see that that rapid growth come back again. So when inflicts start, then you say it's pretty early days. So here's the funny thing. When I left Fantasy Sports Platform, which will talk more about shortly on, we're doing abide, but 1.5 billion per annum and entry fees. So how about 100 50 year in revenue? So this sort of real time financial exchange credit incredibly complex to build. And so I looked a group chat and thought, That's pretty easy, right? There is no money flowing through it. And what we discovered is actually very complex because you're building this aunt and group chat experience where you wanna super low latency you need to deal with because their public forums few people trolling, you need to be able to deal with that. You needed to deal with rich media, and so we started work on it early 2018, and we only really got the product working for sports by about September last year. And that's when we really started Thio scale

September onwards last year, but it really was about a year and a half of development before that, and you're fully funded. You've you've got out and raise funding as we raised 4,000,002 years ago, but we always kept our team very small. We did, even though we sort of thought it was gonna be easier than we thought. We should have said. Look, we need to give ourselves plenty of runway to build this product and get it right. I'll come back to Flick shortly. You mentioned it. Fanjul. You started Fanjul with your wife, Leslie. When did that start on? Do what was the concept behind that one? There was actually four co founders as myself and Leslie and three others who were engineer. So Rob Jones, who's also my co founder of Flick, Tom Griffiths and Chris Stafford. We started the company in 2007, actually based in Edinburgh. Originally it was, Ah, prediction market. We could trade predictions on mostly politics, but then we started going into other verticals like sports. And

what happened By the end of 2000, it we saw the sports was taking off. We also saw that our business model, which is obvious, wasn't very strong. And so we sat back and said, Wait a second, Good team. We know how to build this really fun product, but we probably need to pivot into something different. That's when we said, Let's look at fantasy sports and we looked at fantasy sports and we saw that this was a market at the time was with 25 million people playing it. But the games were quite slow. They would take all season. We thought, Well, what if we took this game that people loved and we made it much faster and said the games in the last one day you're gonna pick your team just for today. We're gonna have really money. So you're gonna put in antifreeze, You're gonna win a prize today, and then we're gonna make it fully mobile on that was our thesis. And we launched that in 2000 and nine and skilled it very, very rapidly thereafter. Now you went on something called Web Mission, which Ali Barrack was one of these people organizing. Three idea, I hasten to add

, but I will do it. It was a lunch meeting between me and Ollie. I'm going to take credit, and Ali will vouch for me. Yeah, I originally called it C two C coast to coast. Yeah, it was. It's original name, so I think he came up with a better name for it. So Ali took you guys over that what few friends on that time. So video Andy Docker and huddle on skim links or skin bit. What? What was the Web mission like for you? It was incredible. So, yeah, there's 20 companies there. We wanted to be a Silicon Valley startup. We didn't really know what that meant, but it looked cool. And, you know, we saw YouTube being bought for several billion and more, just like we thought. It was a really cool place, the like Bill company and that ethos. And we were like, we wanna build that sort of Silicon Valley type company in Edinburgh. And so it wasn't the first time I've been in San Francisco being a few times before, but it was a really great opportunity to meet entrepreneurs out there to meet investors and really kind of soak up that experience

and then build a network of other entrepreneurs. We were in very similar position, like us. They were like trying to build a product, trying to build a team, trying to raise money. And so it really built a network. For me, it was a core part of building the network for the next 10 years. I'm still in contact with a lot of those people who bean super helpful, just helping us. Who should be pitching. How should I manage this board member? All of those things that the people had, like, sort of first hand experience it really it was It was great. I'm still really good memories of that trip. So Webb missions happened. You're you've got Fanjul. It's accelerating rapidly now, you said in pre chat. He raised about 450 million funding. Oh yes, so? Well, I'd say with Fanjul, it wasn't an overnight success at all. Early on, we launched it in the summer of 2009, and I would say it was until 2011. 2 years later, after the launch of Fanduel and actually four years after we started Hub Tub, which was a

pre company, did it really start to work to summer? September 2011 was the point where we really start to get traction. The next period, from 2011 to 2000 and 15 was a period of very fast girl. So every year we were growing about five acts year on year growth down to was it technology being much more? It was a combination of product and marketing. It was a great product. Users love the product. You know, people would come from having played fantasy sports, which they loved to see what it's like. Fantasy sports on steroids. It's like, you know, the experience just, like faster, more exciting. And they could do everything on their phone. So that was one part. But the other part was we had to get users to try it, and that was really marketing a very quantity of marketing approach. So we knew what our marketing team did is every year they spent and they could acquire user for, say, $50 we knew that user was worth maybe 405 $100. But

the marketing team would do is they'd go out and spend, say, a million dollars and they would say, Okay, we're splitting it between radio, PPC, TV, all these different channels. We can tell you exactly what our cost per acquisition in each of these channels and then the next year, what I'm gonna do is I'm gonna spend five acts. That and this is how I'm gonna allocated between those channels and these other things we've learned these things work. These things didn't work, and then we're gonna spend five million and then the next year. 15 million. The next year. 2014. I think we spent 70 million on then 2015. We spent 250 million. Wow. Now that's that's rapid customer acquisition growth. Yeah, what? Clearly it worked. So the company got big fast. You raised a lot of money. I'm assuming the story ended. Very well, then. Well, not really. And the story is not over. So the company itself has gone on to continue to be incredibly successful. So in 2000, early 2018, around April, the U. S. Supreme Court repealed pasta, which is a

law prevented States from it, will basically banned sports betting, regulated our legal sports betting Fanduel was built as a platform in fantasy sports. But we always knew that if sports betting happened, we would be an incredible position because we had these sort of young meal sports fans that wanted to spend real money on their sports knowledge. So very like sports betting. And then we will be in a great position to cross sale into sports betting. And and that's what happened. Fanduel. There's no Number one in that market. It's a market that is worth a billion dollars this year in revenue and is predicted to go to $20 billion. So yes, the company is going on and being very successful, the challenge for US finders and then the other ordinary shareholders was over that period of time. We raised about 450 million from venture capital and then private equity. And in 2015, the company

ran into a lot of legal and regulatory challenges. We had a work our way through that and which we did, and we really were kind of through that. By the summer of 2017, however, what became clear waas our private equity investors or board who were preference shareholders wanted to find a way that they would get all of the upside of the company, and they would sort of kick out the ordinary shareholders not being the founders, the angel investors on the employees, which owned up a 10% of the company. And so the way in which they did that and this is public because way filed a suit is they created a new company and what they did is they engineered for that new company to acquire Fanduel. Now that new company was buying Fanjul using equity. And so they had to then say, Well, okay, what is the value off Fanjul? What's the value of that equity that's buying Fanjul, or Preference stock was 559

million, which meant that if the value Fanjul was above 559 million able to share that with the ordinary shareholders was below that they wouldn't have to share. And so they the board, which was all representatives venture capital private equity ambassadors, decided that the value of Fanjul was 559 million and therefore they could wipe out the ordinary shareholders. They did that, and not only did they do that, but they did that about three weeks after the US repealed pasta. This ability for companies to enter sports betting that itself was a huge event for like, a huge valuation event to just give you an idea. One of our closest to wreck competitors, Draftkings who we previously this summer before we're going to merge within a 50 50 merger. RIAS money at a $1.5 billion valuation, and that current valuation is 646.5 billion on their current valuation is over. Yeah, is over six billion. So this board which controlled

it and where they did that was they misused a drag along right? Because really a drag along right? You can only be used whenever it's like an arm's length transaction. You can't use a drag along right to sell something to yourself for below its true value. That's called a You know that's a related party transaction. You basically have feet in both camps. Additionally, what the board should have done was they should have nominated a independent subcommittee and said, Look, they should look at themselves and said US board members air conflicted. We have thio. This is very common in US and UK law that as a board member, you represent all shareholders. You don't represent your own interests. You represent the shareholders of the company. You hear people talking about fiduciary duty. You cannot treat in your own interest over the interests of other shareholders as a board member. And so they didn't nominated independence of committee. They didn't put in Another alternatives you could do is like let's get an investment back toe like Thio put evaluation on

this company. They didn't do that. And then, lastly, to just combined it, they didn't actually share the documentation with the shareholders. And so many shareholders didn't even know what they had done until after the transaction had taken place. So, you know, illegal, unethical on what happened immediately afterwards. Or actually, even before the transaction closed, we filed suit basically to the company and say, Stop like this is what you're doing is a clear breach off the fiduciary duty towards your shareholders. And then more recently last two months ago. And we filed suit in New York against the board members, laying out the breach of fiduciary Julian that is public. And if there's an entrepreneur who is concerned, you know, once understand why there's things that control rights or high board can act. I would read that lawsuit because I think it's a very good kind of this is what potentially people could do. You know, this is what they did in this instance. It just it's

so immoral. I know it's about money on. I know entrepreneurs go in to make money, and we are passionate and who VCs are known as vulture capitalists and not all of them are bad. There are some very good ones, but this plainly feels like a totally immoral act. Thio sideline the founders who created the value in orderto upside themselves, and it just feels wrong. Yeah, it absolutely is. And not by no means all investors air like this. I think this actually is an extreme. Plenty of friends have had bad experiences, but this is pretty is really up there. It's probably one of the most extreme nights that I've ever seen. Not only the thing that sort of sticks with me is not only did they do this to the finders or some angel ambassadors they clearly didn't care about, they did this to 404 150 employees who were still in the building. So we have these people in the building who watched their board members make millions of dollars

the executive team, as it were, because we had the finders that laughed. At this point. The executive team make tens of millions of dollars while they were told that the value of the company was zero and some of these people had put their hand in their pocket and like spend $5000.1 of my former colleagues, he borrowed $5000 from his dad to buy his options, and the same in the same transaction that made millions of dollars for the board members and the executive team. He was told that his $5000 worth zero any company that is worth billions of dollars, nine and was worth billions of dollars then that's why this is in court. It didn't everyone just walk off that they you know, it's very tough for like there was like a lot of people laughed pretty soon afterwards. But it's tough, right? You not only have you senior equity wait day, but you're also gonna lose your job. Certainly. Ah, lot of people laughed over the following year on morale

, certainly from what I can see, really. You know, you could imagine what happened Morale. But it absolutely tanked. So yes, they did leave in time, but they don't They don't really have a recourse. And that's why I started the process off litigating it. And so not only am I litigating and I actually have 100 other co plaintiffs of which are a 90 of those air former employees. So former employees of companies who were the biggest shareholders I was. But it's, you know, similarly were affected. Went through this transaction. Well, good luck with the outcome of that one, Nigel. I'll certainly be keeping an eye out for that on DWIs you. Well, now, I guess that stops by you doing the legal litigation action that stopped any merger between Fanjul and Draftkings? Oh, no, that was the financial Draftkings merger was in. It was before that. So what happened? It was in 2016 we agreed to merge with draftkings. We had formally agreed on

we were eating FTC clearance, But then in June of 2017, the FTC block that merger Oakland offer separate ways, as you know, the draftkings in the summer of 2018, raised at a $1.5 billion valuation on last week when public at a $6 billion valuation to draftkings again is also being very successful. But like just another very good example is this this 2018 incredibly valuable company even more valuable today. Okay, well, let's move on for flick. You know, you've grown it. It started. It's had a little hiccup because of coded 19. But as you said earlier, when sport does come back and it will eventually it will be very different to begin with but eventually overturned. Actually, the environment that we're headed into is sports of advance and stadium flex optimal for that. You know, we know I have a situation

where you have 50,000 people who normally would go into a stadium and hang out together can't do that. In fact, they potentially even can't go to a sports bar and hang out together. They really will have to watch it from home. And we're recreating that experience at home. And so actually, we think the demand for Flick is going to be sort of tan X. What what it would be before Cove in 19, I was reading a report from the mayor of Liverpool who is trying to get the season ended on. But of course he's never turning, and so he would wonder. But his argument waas that fans would congregate outside of ground because they're not allowed in grounds and just simply create the atmosphere outside of the ground. Or if they weren't allowed in the bar, they would just do it. You know the street again. As I said, I think you're right. I think Flick, if you can get that sort of marketing cake I thought that ridiculous like we do have

, you know, we've been incredibly good compliance, and there's been a few instances where people have not been compliant. It's like treating sports fans like their complete idiots. You know that if they could be compliant without sports and you tell them, Hey, guys, their sports was gonna come back. But you're gonna have to adhere to these rules. And if you don't adhere to these rules, they're going to go away again. I think we're all gonna go. We'll sit at home. You know, it's not that hard, you know. It's not like it's not like, you know, we're making this great sacrifice. Were like, Okay, we'll sit at home and watch it on television. We're just thankful it's back exactly. I think at the moment, the only country playing football is Belarus, right? Yes, yeah, in America it's like we're everyone's. We're watching Belarussian soccer. They're kind of trying to learn the league and that and, uh, South Korean baseball. And I think Ping pong and marble racing. My word. We really need sports to come back now. E. Sports itself Do you have a big plan? That

market? Where does the E sports fit into Flick E Sports is a fascinating market, and actually, we've learned a lot from the sports. We spent probably the first 6 to 9 months of flex life actually looking at E sports and learning from it what we discovered. Well, one thing we discovered is very different from sports is very different demographic. Typically, people who watching sports, do not watch traditional sports. And even today I know ESPN ist try a least sports and not a good experience. And the reason is that people are gonna watch E sports not watching it on ESPN. But one of the things the spirits does have is great tools. They have great platform. So any sports twitch is such an incredible platform as a way to have live engagement to have live chat around a particular streamer, and that's gonna create ecosystem. Another product is called Discard, which is a child platform for gamers, so they can one. Whenever they're getting together for a group

game, they can all chat at the same time, but it also works in Mobile. You get text. It's good. All of these different communities incredible number of communities across different servers. And so we looked across discard Onda Twitch. And we were like these Incredible. What's the equivalent for sports? We're like it doesn't exist. And that's what really was the genesis of FLEC. Which waas Why can't we have the same tools that they have any sports? Why can't when I'm watching the game quickly pull up a chat platform of other fans and, like chat about that goal, that offside call? Why can't I easily chatting my friends? Why doesn't it give me the live scoring? Why can't I cheer? Why doesn't give me the most recent news reports, you know, And so that was kind of the genesis, and we see it and discard and twitch for esports. It just didn't exist for sports prior to flick so beyond e sports and beyond sports returning. Where do you see flick going? What are the features function to you planning on the road map? So we

just really wanted to go much deeper with sports. The other thing that we're seeing a poll for is more integration with betting like we're seeing users or wanted to make a prediction. They wanna predict first goal score. So it's kind of natural to say, Well, you know, you're predicting first gold card. He's actually 5 to 1 on, you know, William Hill or Ladbrokes. And so we're looking at a deepening integration. Their sports betting in the U. S. Is, as I mentioned this year is a billion dollar market. It's it's going to be probably a $20 billion market, so we're really interested in and integrating much more deeply with that. Also, we're excited, International market. So like soccer and the major U. S. Sports focus right now. But we already do have cricket groups. We already have, you know, groups for other, like multiple other sports. We really want to grow those out as well. India would be a massive market for cricket. I can imagine it's interesting in India. There's already huge number of what's up cricket groups, but what saps not really built for it, like each group caps out of 256

users and it doesn't really scale that well. The reason the capital because it's not built for bigger groups. Our biggest groups have got over 10,000 users in them because it's built for these really big, big groups of, like, continuous scrolling and sort of multiple chat topics. And so will we be really excited. Kind of bringing that into, like in India market, where you can actually have 10,000 people in the group. 50,000 people in the group chatting about cricket. Please don't show it to Mark Zuckerberg. He will try and copy it. He's probably looking at it already. Nigel, thank you so much for your time. It's been fascinating talking to you now, before Ugo remind everyone again where they could go to sign up for flick, please. Yeah, absolutely. So Flick is It's on the APP store. If you search for flick chat, you'll find it. And in our directory, all the different teams we cover or you could go to flick up dot com on Basically, find more about the company and link through the into the app. Nigel, thanks so much for your time. Good luck with that court

case on hope to catch up with the scene when we're allowed out, you see. Thanks very much. Thank you, Sam. That show was amazing. Don't forget to visit San talks dot Technology to discover Mawr Great shows. See you next week. Same time, same place.

Nigel Eccles talks about the growth of Flick & the on-going litigation of FanDuel
Nigel Eccles talks about the growth of Flick & the on-going litigation of FanDuel
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