Russ: This is the BusinessMakers Show heard on the radio and seen online at TheBusinessMakers.com. Guest time on the show and I'm very pleased to have with me Ben Lipson, the founder and CEO of Sports Tradex. Ben, welcome to The BusinessMakers Show.
Ben: Thanks for having me.
Russ: You bet. Well, tell us about Sports Tradex.
Ben: Sports Tradex is a virtual stock exchange for predicting performances for sports teams and for players. Users come to our site. They participate in contests where they trade in a marketplace using virtual currency to predict whether a team is gonna win or lose that given week's game, what a player might do in an individual game or over the course of a playoffs and they compete for cash prizes and, really, one of the major distinguishing factors is that our marketplace is open 24/7 in real time. There's a lot of predictive information that comes from the site about what the market feels the chances are of a team or a player performing a certain way, the outcome of an event, and then individual plays or events that occur during a sporting event you can kind of value those by price movement in our marketplace.
Russ: Okay, so this predictive information surfaces on your site based upon the side that people are taking on any of these contests, correct?
Ben: Exactly. It all comes from participants in the market. There's always one buyer and one seller for a transaction and in the recent Texans/Patriots game we saw that come to fruition as it was considered pretty much a coin flip by the Sports Tradex marketplace -
Russ: In the beginning.
Ben: - at the beginning of the game -
Russ: Yeah, yeah.
Ben: - at kickoff. The obviously -
Russ: That evaporated pretty quickly, too.
Ben: Unfortunately for Texans fans -
Russ: Yeah, right, right.
Ben: - that didn't last long -
Ben: - and when the Patriots went up 14-nothing -
Ben: - and then 21-nothing, you saw their odds change in real time to about 90 percent to win the game.
Russ: Okay and the odds, just based upon who's gonna win and who's gonna lose?
Russ: Okay. Now you've mentioned virtual money and you mentioned real money so help us understand that.
Ben: It's a virtual currency game. It's a virtual stock exchange, so no real money being used in the marketplace.
Ben: But the site obviously needs to make money and people want an incentive to play. So like a lot of fantasy sports sites, we have entry fees to play certain contests -
Ben: - and we award cash prizes to the top finishers.
Russ: Okay, okay and so you used this sort of NFL example, the Patriots versus the Texans, so every week, is every NFL game on your site?
Ben: Not every game but we feature the big games.
Ben: Usually six to seven a week. We'll also have playoff competitions. We'll have individual competitions where you're looking at player statistics like fantasy points or total yardage and those types of categories.
Russ: Wow. I'm sure that there's a big market for this but from what I also understand, you're pretty new, right?
Ben: We've been live for three weeks.
Ben: There is a huge market and there's nobody that's doing, that is attacking it quite from this angle -
Ben: - that's making a marketplace for sports team and player performance and allowing trading to occur in real time, so we have people, 48 percent of our market as a matter of fact, that report using a mobile device or an iPad when they're watching sports and this is just a level of additional engagement where you can be active during the game by trading teams during real events.
Russ: Okay, so this example you gave while ago, in the Texans/Patriots game, means that say I'm a member of Sports Tradex and I decide to bet on that game - and I'm just, in this example, just kinda putting my bet, so to speak, on the team that I think's gonna win, and during the game, as the game changes, I can take that bet and sell it to somebody, is that right?
Ben: It's a fairly liquid market -
Ben: - and you have the ability to transaction any time while an event is going on.
Ben: You could take that and you could start with by owning the Patriots or owning the Texans and then in the middle of the game, you could decide, "I don't like that anymore," especially if you had the Texans -
Ben: - hopefully not in the future, though -
Russ: Right, right.
Ben: - and just take the other side.
Ben: Or just be done.
Russ: Okay and if you are selling it, you're selling there for virtual money because the contests that you have that award real money are based upon who ended up with the most virtual money at the end of the contest, correct?
Ben: That's correct.
Russ: Okay, this is real cool and interesting. So I've got to ask, though, Ben, tell us what was it that stimulated the idea to start this?
Ben: I have a background in a few different things and have always had that entrepreneurial spirit.
Ben: But most recently, I was working as a commodities trader -
Ben: - and I thought, "What would be more fun than trading commodities? Sports."
Ben: And I like looking at things where there's an illiquid market. We can't do it for, as a real cash market in the U.S. -
Russ: Right, right.
Ben: - due to gambling laws.
Ben: Everything on the site is completely legal but what we're trying to do is create an efficient liquid market for sports teams and player performance, a type of futures market, if you will.
Russ: Wow. I would take it, to some degree, you know, you're competing against Las Vegas for interest basis, at least, right?
Ben: Absolutely and I like to think that we're a legal alternative to sports gambling. Las Vegas is there for the people that go to Las Vegas for a weekend -
Ben: - or live there -
Ben: - but for the rest of the country, this is an opportunity to capture some of the same excitement, have some fun while you're watching sports -
Ben: - when you can't really gamble on -
Ben: - on sports.
Russ: Okay but how do y our, you know, kinda prices, how does your market produce prices compared to Las Vegas? I mean, it's gotta be some similarities, right?
Ben: There's definitely some similarities -
Ben: - and I think people that use our site and compete in our markets like to look at Las Vegas for guidance.
Ben: They've certainly been around longer and they're very good at what they do.
Ben: But there are interesting times when our market is different from Las Vegas.
Ben: And what we're really anxious to see is how often we're accurate when there is a difference between us and Las Vegas where there's some space. And one example is a few weeks ago, in a Monday night game between the Giants and the Redskins, our market liked the Washington Redskins, whereas Vegas favored the Giants.
Ben: And partially luck or maybe the market was onto something. The Redskins ended up winning the game and we'll take that.
Russ: Well my God, they had RGIII at the _____ - Okay, so you've mentioned cash prizes, like what's been a big cash prize, the biggest cash prize so far?
Ben: The largest prize to this point has been $1,000.00.
Ben: Currently, our weekly NFL contests are giving away $275.00 in cash every week. We have a bunch of stuff planned for the NFL playoffs and our cash prizes are only gonna go up from here.
Russ: Okay. What kinda contest was it that won the $1,000.00 prize?
Ben: It was for the baseball playoffs.
Ben: It was -
Russ: Was it just picking a winner of the World Series or -
Ben: The ultimate value was tied to who was gonna win the World Series.
Ben: But the market was open 24/7 over the course of the entire playoffs.
Russ: Right, okay.
Ben: So you certainly could -
Russ: So people are trading and changing positions the whole time, right?
Ben: The whole time -
Ben: - you didn't need to pick it from the outset.
Ben: And theoretically, you might not have even owned any shares of them at the end.
Russ: Right. Is it true that as your membership grows, maybe the size of the prizes will grow as well?
Russ: So this could get pretty big?
Ben: Oh yeah. We consider fantasy sports probably our closest competition -
Ben: - although there's like I said earlier, there's nobody doing it quite the way we're doing it.
Russ: Right, right.
Ben: But some of those sites give away millions of dollars a year in prizes -
Ben: - and we hope to be one of them.
Russ: Okay. This is a business show and even though you're giving away money and you're trading virtual money, you're still there to be a profit, correct?
Russ: Okay and so how specifically do you make money today?
Ben: We're gonna make money off of entry fees -
Ben: - for certain contests, ranging, for the most part, between $5.00 and $25.00 -
Ben: - to enter a contest.
Ben: And also through advertising.
Ben: That will be Phase I of our revenue plan. Later on, I think that we might be able to some other things that are premium content on the site but for now, maybe a subscription model, but for now, advertising and entry fees for certain contests and we believe we can be quite successful doing it that way, especially given that our advertising opportunities are very targeted. You're gonna know what city somebody is in, what game they're watching, what team they're fans of, and I think that really differentiates us from a traditional, from just the standard advertising model.
Russ: Okay, I would say so for sure. So now I understand - this is how you got on my radar - that you've already sorta won some recognition related to an MIT event?
Ben: That's right. We're very excited. I should mention that I've got two business partners -
Ben: - so we have a Sports Tradex, very competent Sports Tradex team, but we're gonna be at MIT for their sports analytics conference in March. We were one of only 12 start-ups invited to the conference which is the largest sports business conference in the world.
Russ: Wow, congratulations. That's pretty cool.
Ben: Thanks and we'll be participating in their blitz competition, which is an opportunity to present our business plan and hopefully win some money that can be invested into the business.
Russ: Okay. Well I gotta admit, this is unique for The BusinessMakers Show, a guy, graduating from a commodities trader to a fantasy sports trader but I really appreciate you coming and sharing your story with us.
Ben: Well thanks so much for having me on and I'll keep everyone posted on our success.
Russ: Please do and it's sportstradex.com?
Ben: That's right, sportstradex.com.
Russ: All right and that's Ben Lipson, the founder and CEO of Sports Tradex. This is the BusinessMakers Show heard on the radio and seen online at TheBusinessMakers.com.