Lecture Notes: Huddle Tim Pool Interview with Steven Souls, CEO of Rivalry

Introduction

• Host: Tim Pool, Editor of Gaming Insider
• Guest: Steven Souls, CEO of Rivalry
• Topics Discussed: Millennials, Gen Z, Esports, Casino, Company Strategy

Company Overview & Target Demographic

• Rivalry: Built predominantly for Millennials and Gen Z
• Staffing: 80% Millennials and Gen Z
• Company Vision: To cater to the unique consumer experiences of Millennials and Gen Z, who grew up on the internet
• User Experience: Onboarding, KYC, depositing, withdrawing, and betting slip designed to appeal to target demographic
• Marketing & Customer Support: Tailored to be engaging for younger generation

Challenges & Learning in Online Gambling

• Backgrounds of Founders: More in consumer tech and video game industry, not in online gambling
• Initial Challenges: Underestimating complexity of gambling products
• Market Realization: Need to offer a full variety of options (esports, traditional sports, casino) rather than a curated set
• Regulatory Challenges: Learning the complexities of regulations in gambling industry

Strengths from Diverse Team

• Team Composition: Advantages of having team members from adjacent industries (tech, gaming)
• Innovative Approach: Bringing best practices from modern consumer experiences into online gambling
• Marketing: Non-traditional marketing strategies and channels
• Talent Attraction: Rivalry’s unique approach and culture attract high-caliber talent

Public Listing via Direct Listing

• Reason for Direct Listing: Flexibility in accessing capital markets during favorable conditions in early 2021
• Financial Performance: Some disappointment but relative outperformance in their sector
• Challenges in Market: Rising interest rates and broader market conditions affecting tech stocks

Q3 Results & Financial Performance

• Growth: Betting handle up 50% year-over-year, tracking over 100% growth for the full year
• Customer Economics: Cost of customer acquisition down 20%, average wagers per customer up 30%
• Operating Expenses: Stable despite growth in metrics
• Path to Profitability: Improving customer acquisition metrics and operational leverage

Observations on the Market

• US/ON Market Strategy: Focus on under 30 demographic, not competing for older demographics
• Sportsbook Top of Funnel: Esports, leading to traditional sports and casino play
• Product Balance: 50% casino, 35% esports, 15% traditional sports in terms of wager
• Esports Popularity: Older esports titles like Counter-Strike more likely to cross-sell into casino

Future Vision & Market Positioning

• Esports vs. Traditional Sports: Esports unlikely to surpass traditional sports in handle volume soon
• Growth Factors: Consumer education, regulatory buy-in, publisher partnerships
• Demographic Focus: Continues to prioritize under 30 demographics, leveraging esports and gaming

Final Thoughts

• Industry Trends: Observations on new entrants like Fanatics and ESPN in the market
• Longevity of Rivals: Question on long-term retention post-launch incentives
• Market Insights: Importance of niche demographic targeting for sustained growth
• Conclusion: Rivalry's emphasis on demographic led approach beyond just focusing on esports