“Ad-based model was not working. We pivoted to freemium model”

Dream11 has built a name for itself in fantasy gaming. The brand, which comes under Dream Sports, was founded in 2008 by Harsh Jain and his school friend Bhavit Sheth. The Mumbai based company has over 125 million users. Its flagship brand, Dream11, has over 110 million users.

Dream Sports reported a profit of ₹180 crore in FY20, making it a rare Indian tech unicorn that is profitable. The company — which is valued at $5 billion and has been funded to the tune of $200 million — saw an over 2.5 times increase in revenue to ₹2,070.4 crore during the year.

The Idea!

Harsh Jain (H.J.): Bhavit and I have been friends since school days. Our group of friends has always bonded over watching and playing sports, including too many video games, like FIFA, etc. In 1998, I went to the U.K. for high school, where I got introduced to fantasy sports. I fell in love with it and got my friends, including Bhavit, hooked on to it. Then I moved back to Mumbai and after a short stint at Microsoft joined the family business.

Bhavit Sheth (B.S.): I had a short stint at Godrej and a financial research company. However, both of us were not happy with what we were doing because we were interested in gaming, in tech, and in sports.

H.J.: We finished engineering in 2007. So, when IPL was coming, I told these guys — let’s do it. We are engineers, we don’t enjoy our jobs, so let’s do it. Everyone agreed, everyone said let’s do it, and then everyone went home! I could not stop thinking about the idea. So, we started doing some research, and then Bhavit and another friend of mine started thinking about it. I just said, “I am going to go ahead. So, who’s with me?” Bhavit was the only one to join me in this venture. Everyone else thought it was a fun idea but there was no business model around it. But we were convinced and in 2009 launched with fantasy sports, sports content, sports forums, sports trivia and gaming. Basically, everything about sports, but with fantasy sports at its core. It was a free, advertisement-driven model. Everyone told us it was a bad idea. But we were stubborn and went ahead, only to find out that it was a bad idea. Indian advertisement rates were nothing compared to the West.

B.S.: It was a niche product, so we didn’t have huge traffic either.

H.J.: Nobody knew what fantasy sport was. Were we fantasy sports, was this traditional gaming? So, there was no product-market fit.

B.S.: We realised that the ad-based model was not working. We pivoted to the freemium model. We grew it to 3,00,000 over a couple of years.

H.J.: In India, you know how difficult monetisation is. We had to pivot many times to reach a stage where users see value and are willing to pay.

Early Struggle

H.J.: We stuck with this for around a year-and-a-half and burnt all the funding we had raised from friends and family. But we were too stubborn to go back to the family and say we were wrong. In 2013-14, we got rejected by 150 venture capitalists (VCs). We kept pivoting. We launched a social media agency.

B.S.: In our social media agency, we were fortunate to get Mumbai Indians as a client. We were able to get them one million followers on Facebook. Adidas, the sponsor of Mumbai Indians, saw this and wanted to tie up with us. This brought in other brands — Monginis, PepsiCo, etc.

H.J.: We had 80-100 people in the agency and only eight-10 people working on Dream11. But the moment we had the product-market fit with Dream11, we sold the agency. We ran Dream11 for another couple of years, scaled up the product-market fit. A lot of people told me this is a U.S.-centric concept. So, when I went to Columbia Business School for my MBA, I started pitching to American VCs, who started educating me about what was wrong in the business. They told me I should pitch it in India!

B.S.: The biggest learning from early days was persistence and perseverance. The VCs are always meeting the smartest people and know what they are talking about. We learnt every time we were rejected. And we got better with every rejection.

H.J.: Banks initially even refused to open an account as they had this notion that ‘gaming’ is gambling.

Managing Investors

B.S.: But by 2014, we had scaled up and our numbers were good. So, I met Vani Kola from Kalaari Capital and Shashin Shah from Think Investments. Vani loved the idea despite not being a sports fan. She realised it was a good team and had a big TAM (Total Addressable Market). So, our Series A happened in 2015.

Make Or Break Moment

B.S.: The moment we got our first funding. We realised we have the capital to scale up.

H.J.: More than the money, it is what the money represents. Series A is now different from what it was then. Today, sometimes, even if you don’t have a ‘well fleshed out’ idea, you can still receive it. But those days it meant that something we were doing was right.

In fact, one of the most nervous moments was when people started asking whether this is a game of skill, or whether it was legal. And no matter how much research, data and global examples you put out, only one institution can have the final word on it, and that is the court of law. In 2017, someone went to court against us in Punjab and Haryana, where we could show that it was a game of skill. That was one of the biggest making points for us. The high court victory was recently affirmed by the Supreme Court.

The Business Model

H.J.: We were fixing the product in small ways every day. The seasonal fantasy was replaced by per-match fantasy. The ad-driven model was replaced by a premium business model. And all other sports stuff went away and was replaced by fantasy sports.

Tech Challenge

H.J.: Every year, during IPL, our site crashed, till as recent as 2017. Plus, five-seven years ago, the tech talent which could handle scale was in Bangalore, not Mumbai. What happens is that we see a lot of interest during half an hour before the match starts. So, you’ll see a huge spike. The edge, therefore, lay in servers which could withstand a 100x, sometimes even a 1,000x, jump only for five minutes. But every year, our tech talent got better, our understanding of scale and cloud got better.

HR Challenge

B.S.: In the beginning, when you are not funded, it is a different hustle to get people on board. I mean the first CTO and CPO we hired, Harsh chased them for six months.

H.J.: Back in the day we followed a simple mantra: if your experience is good enough, we will get whoever we can, whoever we can afford. Over time, we have understood that culture is more important. So, hard work, integrity, agility, these are important qualities, along with some experience, rather than one’s school.

Managing Investors

H.J.: We were fortunate enough to have funders who believed in us from the start and backed our ideas. On a personal front, Vani Kola of Kalaari Capital helped us mature a lot as founders. In one of the funding rounds, Vani had to literally tell me that I need to just calm down.

Marketing & Sales Lessons

H.J.: The core marketing and sales lesson is to be real. Market to people like you’re talking to them. Our campaigns are colloquial. It is about gully cricket, love for sports, and breaking sports down to the basic unit.

Future Plan

B.S.: Over the last two-three years, we have been thinking about what more can we add. That is when the idea of Dream Sports evolved. We have branched into sports content and commerce, DreamSetGo (sports travel and experiences) and a bunch of other companies. The plan is to see what other value we can give to sports fans and keep on growing as a sports technology platform.