Scottish Entrepreneur interview: Lesley Eccles, co-founder of Fanduel, the fantasy sports app recently valued at $1billion

Lesley Eccles

FanDuel nearly didn’t happen…

The five co-founders of the fantasy sports app recently valued at $1billion got 86 ‘no’s before finally finding the ‘yes’ that lead to the investment that saved the company.

Lesley Eccles, the Forfar-born co-founder, described the relentless search for a backer in both the USA and the UK.

“They always had reasons: it was too niche a market, there was no market, the economics wouldn’t work when you scaled it up… Finally we got one yes – from a London-based company,” she said.

But it didn’t end there. Almost simultaneously, something happened that they could never have anticipated. All the NFL and NBA players went on strike. For a company that relies on the American basketball and football games to provide the ‘contests’ in the app that allow players to win money, this was a fundamental issue.

“It was summer 2011, we had no money, no investors and no product. I’m really grateful to say we never missed payroll,” Lesley said.

Luckily for the nascent company, the strike was called off, the investor came back on board and the product went from strength to strength.

The pace of success of the Edinburgh-based startup has taken everyone by surprise, not least Lesley. Between 2014 and 2015 the headcount went from just under 100 to 400 staff through both organic recruitment and several acquisitions.

“It was insanity. I can’t tell you how crazy it was,” she said. “I often joke that if anyone had walked into our offices last summer no one would have batted an eyelid – it was just a sea of new faces.”

Not bad for a company that started, in Lesley’s words, “like a bad joke” – an Englishman, an Irishman, two Welshmen and a Scotswoman sat round an Edinburgh kitchen table in 2007.

Their first business raised £1.2m in venture capital but after two years it became clear things weren’t working.

“So we had to pivot - which meant we failed,” Lesley said, honestly. “We said to each other, ‘we’ve got to stop kidding ourselves’. We had to come up with a new idea.”

At that time, the tech scene in Edinburgh was in its infancy, the support wasn’t there, though Gareth Williams, CEO of the other ‘unicorn’ to come out of the capital, Skyscanner, was a great help to the budding entrepreneurs.

The team headed out to Texas to the South by South West tech festival and brainstormed. They stuck post it notes on the side of a shed and, eventually, FanDuel took shape.

“We saw it was a big market and felt the existing products weren’t great,” she said “This was about thinking big: 200m sports fans across the US. When you ask people who like fantasy football when they’re going to stop playing they say never. Historically the fantasy sports industry has been very static. It came online 20 years ago, nothing much happened to the industry in terms of innovation - it was ripe for disruption and it’s still a rapidly growing market. But I’m not going to kid you, it was ambitious to try to do that.”

The three biggest challenges they faced were money, how to scale properly and how to shape this new industry. Following their London-based investor, they found their first American investor in 2012. This was a major turning point for the company which had found itself between a rock and a hard place.

UK venture capitalists were reluctant because they didn’t understand the marketplace and their US counterparts were suspicious of a European-based company. It was a significant hurdle to cross and smoothed a lot of things out.

“The less you need the money, the easier it is to get it,” Lesley deadpanned. After this point, they found they could almost choose their investors and take full advantage of the additional support they could offer in terms of networks, skills and expertise.

But as the money became available and the company’s growth accelerated, the challenge of expanding the workforce became more pressing. The original founders wanted desperately to hang on to the culture of being a start-up, with all the drive and ambition that involves.

Their solution was to hire based on cultural fit, rather than skillset. Every newbie was grilled with the same set of questions to make sure they were right for the company. Trust was an important issue.

“We’re across different many different time zones, from California to New York and the UK. If you wake up in the morning to a disastrous email you need to know, deep down, that your team has probably done the right thing,” Lesley said.
One of the tactics FanDuel uses to encourage an element of start-up attitude is an experimental marketing budget.

Failing fast and learning lessons is a crucial part of the entrepreneurial process – but when billions of dollars are flowing through a company that simply isn’t possible.

“We had to tweak things, so that there is still the same mindset but things aren’t actually failing,” Lesley said. “With the bucket for experimental marketing so that if it doesn’t work, we learn our lessons and try something else.”

She admits one of the company’s shortcomings is not making enough time to celebrate success. The pace of growth has been so rapid it hasn’t left a lot of room for pausing to appreciate each stage.

Despite being a household name in the United States, with 83% brand recognition, FanDuel is relatively unknown in its home country.

“It’s not something that I’ve spent much time thinking about to be honest though I do really love it when I’m in the States and the taxi driver or waiter starts telling me how much he (or she!) loves playing FanDuel,” she said.
With the relative anonymity here, the British are likely to be unaware of the political and legal battles Lesley and the team have been facing recently.

Whether FanDuel is a game of skill or simple gambling is the crux of the matter, because internet gambling is illegal in the United States.

“When you’re fundamentally disrupting an industry there will always be challenges,” Lesley said. “For a long time now we have advocated the need for strong consumer protection regulation in our industry, if it’s to continue with the rapid growth. Last year our industry spent a lot of money on advertising, when you stick your head above the parapet like that people notice and law makers notice.”

The laws are different from state to state and, according to Lesley, they are seeing bills in approximately 20 different states right now progressing.

“I know when we get through this process and to the other side we are going to be in a phenomenal position, the future is very very bright,” she said.

So bright, in fact, that FanDuel is coming home. This year will see the launch of a brand new app designed for the UK market.

“It will take all the best bits of what we know works in the US, but ensure that it is very much a UK product. It will offer fantasy football (football/soccer) rather than American football, and have some very cool innovations. We couldn’t be more excited about it!” she said.

For all the time she spends across the pond, and with an accent that sometimes lapses into American inflections, she remains a proud Scot.

“The access to tech talent here is terrific,” she said. “We have also had a tonne of support from Edinburgh Informatics, and also Scottish Enterprise - their Co-investment Fund was critical to us in the early days.

And now, all our American partners love coming to visit us to play golf!”