Monetizing sports fandom by turning data journalism into a game.
Given the changing and social media chokehold on day-to-day activity, most notably amongst sports of all nature, the prosumer (consumers + producers) has entered as the new future of sports fan.
Opposite to the fan-blogger like Bill Simmons, as the producer of the product and actively digesting the same content as the consumer reading it (playing Draftkings, etc.) – the engagement with subscribers or new followers has proven more effective by a prosumer.
We’re building a platform for content creators to own their content, protect their brand and monetize their products. Rewriting the brand-consumer relationship by adding in producers.
INDEX
Cover
Introduction
Vision
Problem
Solution
Why Now?
Insight
Market Potential
Flow of Capital
Creator Earnings
Token Utility
True Ownership
Financials
Community
Competitors
Product Market Fit
Team
Skill-Luck Spectrum
NFTs
Virtual World
Call-to-Action
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The emergence of legal Fantasy and sports betting has shined a light on the epidemic failure of today's sports media companies. They mistake faulty metrics for value which don't incentivize the information that really matters. Because those same metrics are the foundation of their business model, they are in no position to adapt. We saw a similar story over 100 years ago when the gold rush brought waves of immigrants to the U.S. The epidemic failure of the gold rush was the belief that the value lied in finding the biggest deposit of gold. Sure, some of them struck it big. But for most diggers - gold mining was unprofitable. Just as Billy Billy and Paul DePodesta were the first to take advantage of the inefficiencies they saw in their own industry, so did the entrepreneurs who made the largest fortunes in the gold rush. The one's that had true, sustained success did so not by digging, but by creating. They created the picks and the shovels that the ambitious miners would use for their gold mining lottery efforts. They armed the masses. And history is about to repeat itself… The picks and the shovels of sports media and fantasy are content-based applications of game theory, critical thinking and reasoning skills.
It might be one of the only silver linings of 2020. The recent deregulation of sports betting in the United States has accelerated the growth of online sports books and daily fantasy sports. We are in the midst of a paradigm shift in sports in which our core consumer is evolving. The line between sports media and sports betting continues to shrink. The industry giants have pivoted to sports betting as a long-term monetization strategy. Technology is changing fans so fundamentally, that the entire industry needs to rethink the sports business model. So that's exactly what we did.
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Our vision at roto.life is to make fandom profitable through sports journalism. To do that, we’re rebuilding the entire sports media industry as its’ own market-network. Now, users can put their money where their mouth is by investing in the creator and not just the content. The kicker is — you also get a share in their profit. On roto.life, users aren’t scored by status. But instead, by the only metric that matters in a community — trust.
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When advertising is your primary business model, you get paid based on the number of eyeballs that see your content. Popularity in numbers. The more people see your content, the more your ads sell for on your page. In the sports world this created a hostile environment not suited for building a loyal following. The business model of DFS analysts and sports cappers is to try to get as many people to see their content as possible, usually by flaunting their winning records or accomplishments. Short term profits are prioritized over a long-term commitment. They don't care whether their pics or advice were good quality because once they've made the sale their job is done. From the consumer side, there is no positive incentive for content curation. The money from the advertising goes directly into the pocket of the publisher. This can be applied to a large company like ESPN but also to a smaller individual who may be posting advice on Twitter or their own site. They may ask consumers for retweets in exchange for a discount on daily packages, which in turn gets them seen by more possible customers. But in both situations, it is at no cost to the consumer. They have no incentive besides just consumption. With the fall of advertising also comes the end of the information age. The internet has given everyone equal access to information. With that came the obsession with big data and machine learning, the focus on artificial intelligence over human intelligence. The phrase "knowledge is power" has fueled us for years, but in a world with an abundance of data the power begins to come from the ability to sort through knowledge and utilize it more effectively. It's the Age of Curation. Focusing on mind over matter, purposeful learning over mechanisms. Truth over chance.
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The best solution to any problem is to turn it into a game. And that's exactly what we're doing. We're turning sports journalism into an internet game. A game that makes trust a requirement to popularity instead of an obstacle to it. The game is based on the tokenization of content creators, and it's scored based on your communities trust in you. Tokens will be bought and sold on a marketplace run on a blockchain so transactions are transparent and verifiable. The more deposits made on your behalf, the more value your token will have and the higher up the leaderboard you will crawl. But the content producers aren't the only one's playing. Since token prices can rise or fall in value, so can the deposits you make. When every player has a stake in the game it assures that careful and critical curation will grade the content on our platform. roto.life is a platform that benefits all users, not just the one's who control the flow of information.
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Making money on sports is quickly becoming a reality for the entire sports industry. Consumer behavior is evolving, and quickly. The depth of fandom of sports fans is unparalleled. The individual is whats roaring back as a replacement for the institution. A couple years ago, Dapper Labs was quoted saying, "Sports will be the trojan horse for consumer blockchain adoption.” Since then, the company released their latest hit, NBA TopShot, has exploded within the sports industry and the crypto community. TopShot did so well, in fact, that Dapper Labs was able to raise a 350 million dollar investment round including former players, current players, coaches and entrepreneurs from around the NBA. The success of NBA TopShot showed that: 1. Sports makes work feel like play. 2. Similar customer base makes consumer mainstream adoption easier to scale. 3. The customer need (trust) and industry problem (transparency) can both be solved simultaneously. The shift from go, watch, play to create, earn, and learn is making sports media a money-making opportunity outside of sports gambling or daily fantasy. roto.life, we will to be the NBA Top Shot of decentralized finance within sports media. Using the surplus of daily content across the industry, we see a huge opportunity to allow all of these creators to do more with their content, with their brand, and with their bankroll.
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Reddit is one of the most misunderstood and undervalued companies in the world. The meme-capital of the Internet is quite literally a mapping of your interests. Reddit is a little different than other social networks. You don’t follow an individual (you choose to follow a community, and a community is only valuable once a certain number of users are involved. The destiny of every massive social network or marketplace is unbundling. It's a not a matter of if but when. Reddit is being unbundled as we speak. subreddits are becoming startup vertical communities. - Reddit is all about going deeper into the content, the comments, the multi-thread. - Session length is deeper because you're searching for something, for answers. - Usually involving a deep passion in which the knowledge depth is at a different level. - So even though it might be the same person, their mental state while within our content is SO valuable. Some examples of subreddits and their startup vertical communities: r/sports → Stadium Live (spaces for Gen-Z sports fans) r/streamers -- pipeline.gg r/lol -- Discord r/books - Goodreads
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Superstars in sports are becoming bigger brands than the actual teams they play for. Within each of their brands emerge new verticals for revenue opportunities. Anything from shoe deals, merch sales, music cameos, gaming live streams - if a pro athlete isn't doing everything they can to grow their brand right now they are falling behind. It's no different from what we're seeing with Instagram and TikTok influencers. Once you have the following the next step is to monetize. And fans are so quick to support something that they know their favorite star or influencer endorses. But why? It all comes back to curation. Why would someone take the time to filter through every pair of basketball shoes available for the coolest or best one's when they could just get the same pair as their favorite player, Steph Curry. The same reason that some teenage girl doesn't spend all her money trying every makeup product until she finds one she likes, and instead just buys the one Charli DMelio uses. It's because THEY are the star. Not us. They are the creator. We're desperately trying to find people who have sorted through information and thrived so that we too can thrive. We think that our creator economy can be no different. Sports betting is the biggest entertainment industry in the world, and so too could content creators and DFS players be stars. And down the line, their fans will come to them for more than just their sports picks.
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This is a diagram showing the flow of capital and user journey on our platform. As I mentioned earlier there are two ways to earn and participate in the network: producing or consuming content. So say User #1 signs up and writes an article about "why running backs should never be drafted before the 3rd round of an NFL draft" and publishes it as a free article on the platform. Next, a prosumer is surfing through their feed and stumble on the article, read it, and really enjoy it - they feel that it hold some value. They then can choose to make a deposit and invest in the token of the producer. The token prices will be determined by an on-chain bonding curve that automatically adjusts prices based on supply and demand. The deposit then goes into a decentralized finance protocol called Compound. I'll talk more about Defi on the next slide but the main point now is that those funds will be lent out to borrowers and accrue interest. The interest earned is what is then paid out to the producer whose token got the deposit. A key thing to note is that the money never goes directly into the pocket of the creator so it's not like they are just looking for one-time purchases, but rather want long-term commitments and a loyal following. Say the week after that the same prosumer read another one of user #1s pieces of content and was rubbed the wrong way, then they can go back to the market and sell back the token for a gain or loss.
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Decentralized finance, or DeFi, lets everyone be their own bank. Within it are protocols that allow you to lend out your tokens to others who want to borrow. It is the same thing as putting your money into a savings account but instead of earning less than 1% and the bank taking the rest, you can get interest rates anywhere up to 10 and even 15% on some platforms depending on the token type and hold period. The current APY at compound is just under 3%. So can someone really make a living off an annual income from roto.life? The short answer is yes. But like anything in our industry you don't win by taking shortcuts. You'll have to commit to it, build a community that trusts you, and prove it on the field. As you can see here a creator with $1 Million in deposits would earn just under $30,000 in a year. So how do we get to $1M? Using the 100 true fans model you would need each of your true fans to invest $10,000 in your token to get there. Now $10,000 may sound like a lot. Most people can't even afford to invest $10,000 into a company on the stock market let alone a fantasy sports analyst. But this is different from the stock market. Unless a stock pays you dividends it doesn't provide any value to you until you sell it. Depositing funds on a creator's behalf and owing their token not only ties you to their long-term financial success but also gives you the utility value of that persons knowledge and thought processes.
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I just mentioned that the utility value of owning tokens so what did I really mean? Access to Community — Owning our network token is what allows you to participate. This helps to align all users with the best interests of the network. Access to Content — You bought the creators token for a reason - because you believed in them. Now use the information they give you to win fantasy contests and bets outside of the platform. Positive-Sum Games — Daily/Weekly fantasy contests played with your creator tokens. DeFi technology allows for the games to be positive-sum. That means winnings aren't paid out of the pockets of losers - but by the interest accrued from the pool entries. Sponsorships.
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So what is True Ownership? Well, today it doesn't exist. Today: Digital companies and platforms retain control of in-app items and users have no agency over their purchases. Future: Fans truly own their in-game assets, which are verifiably scarce and exclusive by the transparency and immutability of the blockchain. The most obvious instances would be things like cash or virtual goods which are all housed and facilitated from that platforms servers. So you may pay for a good or service but you don't truly own it. True ownership of assets isn't really the problem that we are trying to solve though, as other blockchain firms already have. Cryptocurrencies and user-friendly wallets now allow anyone to securely own and operate their own assets and not rely on a bank to store and secure their funds. True ownership comes in the form of choice. Creators will have the power to choose how their content is seen. They are no longer restricted to the business model of the platform they use. A smart contract builder will provide secure, automatic access to content and tools. If they want to create a freemium model that provides premium access for users who own x number of your tokens, they can. If they want to auction off some piece of content to a set number of buyers, they can. True ownership gives the power back to the creator.
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We have been offering our creators content for free on the site and as such are pre-revenue. The pre-seed investment we are looking for will be used for the development of our beta product. As a pre-seed investor in a crypto startup your investment will be realized in the form of our network token upon minting. Our founding team is still new to the blockchain and crypto space so we recognize the necessary importance of whoever we bring onto the team having experience launching blockchain projects. We are a young company and there is much work and research still to be done if we want to get to where we know we can. So although we are asking for a financial investment we also require that you share the same passion that we have and see yourself as an integral part of our path forward.
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The next stage of our internet is about togetherness. We're here to echo this need through sports. Community is the future of sports for the internet. In the new age of media, audience is the new currency. Looking at our data from the first year, our product saw over 100k new users. The high number of sessions per user indicates a definite need in this market for more quality content like Bathrobe. What we were most proud of in our first year was our bounce rate at 34%. The lowest I've ever seen in my 10+ year career. Ironically the name of our industry says everything you need to know about the behavior of our users. Daily. Fantasy. Sports. It's a 9-5 job where the closing bell transitions into your own form of entertainment at night. It’s played each day. The name of the game is strategy and process. So information is currency and the more you know the better chance of finding value over your competitors. But sometimes, things don’t go your way. And you’re left wondering if all that time you put in was worth it? Well, what if we could make it worth it? The community has spoken.
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Our competitors are split intro three categories. The first, incumbents, include companies that either still use advertising as a business model, they're not built with web3 technology, they monetize touting, they mine your data or...they're publicly traded. The second category is status quo. These companies are either obsolete or they're not designed for the problem. The third category is direct rivals. These are companies that either provide an inadequate solution, a weak business model or have the wrong team. With the legalization of sports betting it as obviously brought a lot of players to the industry. But everyone is trying to do the same thing. And nobody is using blockchain.
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When the sports world was put on pause in March, sports bettors, DFS players and fans alike looked to fill the “skin-in-the-game” void. The result was the adoption of retail trading. Robinhood’s interface made the transition from sports betting to trading seamless - and players everywhere flocked. Just look at Dave Portnoy. Because of the overlapping demographics, DraftKings worked itself into more Robinhood portfolios than practically any other stock over the months of May and June. This is what makes us so confident in our product. A platform that turns sports knowledge into a stock market style game is every sports fans core desire, whether they know it or not. At the end of the day every competitor wants an opportunity to prove they are superior. Now they can.
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I’ve come to believe that founder/company fit is as important as product/market fit. Our founders have been playing DFS since its' inception a decade ago. Our specific knowledge in digital media, economics and journalism provide the necessary tools to take on such a weighted market. Over half of our team hails from Chicago, IL. The city runs in our blood. It's a sports mecca, the basketball capital of the world. We have all the major sport teams, a bevy of D1 schools and sports betting and DFS are already legal. It's also the home of behavioral economics and the Board of Trade. Chicago has already been called the sports betting capitol of the Midwest. Illinois is of the nation’s most populated (and sports-crazy) states. For these reasons, we believe Chicago has the potential to become the sports blockchain capitol of the world. And thats why were building roto.life here.
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The existence of touting hinders the ability of honest and hardworking content creators to build a loyal following. This again goes back to the culture created by the advertising model and it is precisely why cappers and DFS analysts aren't taken seriously on current platforms. It's a popularity contest, even the consumers know that - which is why they are hesitant to give out their trust. There's no credibility in someone with a few thousand twitter followers, but there is in someone who has a hundred thousand dollars invested on their behalf. So why are certain stock pickers credible? Because they've made people money. Why can't content creators gain that same credibility by winning money for their followers? If someone can have a career managing someones money in a mutual fund, why can't someone else be a professional fantasy player? This study from MIT that was funded by FanDuel amidst a regulatory battle says determining the outcome of fantasy contests requires more skill than a Mutual Fund. Societal bias will tell you that fantasy sports are a children's game. And frankly we don't care whatever you want to call it. What we call it at roto.life is a career.
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In a 2020 survey by PwC, the top two opportunities to increase revenue in sports were identified as enhanced digital media fan experience and creation and monetization of digital assets. Non-fungible tokens can take the form of collectors items for users to show off exclusive creator-specific skins and successes in roto.life tournaments. This marketplace of digital assets will serve as an additional revenue source for creators. Again this brings us back to the paradigm shift where fans want to create and earn using exclusive digital assets. These are secondary, more forward looking ideas on top of our primary DeFi earnings and token market economy.
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What people do on nights and weekends eventually will be what the world does in 10 years. Every new invention looks like a toy at first. Video games are the new social media. If e-sports (competitive video gaming) is deemed an olympic sport, then daily fantasy sports could be too. We have the gladiators, we just need to build the arena. Down the road we envision a casino/sports bar style virtual world like Decentraland where players can sport their skins, talk shop and bet p2p. Viewership contracts with networks to stream games within the world will be one of our biggest revenue streams. We want to build a platform for content creators to own their content, protect their brand and monetize their product. Rewriting the brand-consumer relationship by adding in producers.
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In the creator economy, IP is produced digitally as media and code. The value of each creator’s IP is depicted by the size and strength of their community. Within the fantasy sports industry, no platform is able to truly capture that value and return it back to the creators. At roto.life, we understand the power that a community can bring. By separating ourselves from the advertising model we diminish the importance of fluffy traffic metrics from mostly passive users and focus on what really matters: engagement and trust within a community. That’s why our valuation is what it is. We’ve built an eager, committed community around just a single content creator. We have recently added two more, and once the site is live allowing any existing creator can join there will be a compounding effect. Our revenue model is such that we take a 1% fee on all marketplace transactions. Over time we will gradually decrease the amount taken by the site and instead start to burn the tokens for the health of the network. The fantasy sports and betting markets are difficult to get any consumer data on as they are in their initial development and much of it is still unregulated. A study done last year by the Fantasy Sports & Gaming Association polled season long fantasy players and estimate that the average player will spend $650/year on league buy-in fees. Now, that number isn't what we would necessarily expect each roto.life user to transact on the platform each year as there are benefits beyond just participation that we've talked about in previous slides. But so we don't just use any arbitrary number lets use $650 as an example for the average spend of each user. Taking our 1% fee we would need just over 46,000 users to spend the average in the first year to break-even on the $300,000 investment. The graph in the bottom right is there to show how that break-even user number changes based on a range of average yearly spends. If the average yearly spend is higher than that estimate like we expect it to be - like say $1000, then the break even number of users drops to 30k. With a $2k average spend, 15,000 users would break-even. One of the reasons we have faith we can reach those targets is our bounty program for creators. Once the site is live, existing creators can refer new users to earn network tokens. There are thousands of other creators out there like Bathrobe all with loyal followings who will be able to quickly monetize their brands form the start.
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Innovation is driven by incentives. And incentives come in many forms. But it’s obvious the regulated space won’t allow for rapid innovation without knocking down doors.
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