CEO Spotlight Series: Exclusive Interview With Evan Kirkham, the Co-Founder and CEO of Outlier
You are a recovering securities lawyer. What attracted you to start your own sports betting technology platform?
I actually remember the moment pretty clearly. I was sitting across the table from one of the firm’s clients, who we were defending in a pretty straightforward commercial suit. Despite being in the unenviable position of being sued (I don’t suggest it), I actually envied the guy for fighting his own fights and controlling his own destiny. He was growing a company, motivating employees, testing assumptions, overcoming setbacks, and willing his vision into existence. I was sold. I wanted to take a leap of faith and transition from hired gun to business builder. And, why sports? Well, that’s because I’m a diehard sports fan—any and every sport (yes, even MLB and NHL). So, I knew the underlying industry would continue to energize me even when the going inevitably got tough.
Evan, in a nutshell, tell us more about Outlier as a betting tool and where you sit in the sports betting ecosystem.
Totally. So, Outlier is a sports betting platform that’s fairly analogous to an E-Trade, a Bloomberg Terminal, or a Robinhood for sports bettors. It’s really a one-stop shop for smarter sports bettors. On Outlier, bettors can go from ideation, to analysis, to execution—all in one seamless flow. We partner with all the major sportsbooks, piping their lines onto the platform, pairing those lines with contextually relevant and actionable data and insights, and facilitating two-click bet execution on any of the major books straight from Outlier. We’re leading in the sports betting “tools” space—currently marketing to intermediate and advanced bettors, but with an eye toward making our platform accessible and useful to even the most novice bettors.
What was the genesis of the business? More succinctly, walk us through your current business model, particularly as you pivoted away from your first concept, Colorcast a social sports talk app.
It would probably be helpful to explain Colorcast to contextualize the pivot. So, in 2021 and 2022, we built a social sports talk app called Colorcast that allowed anyone—anywhere—with no equipment to commentate on live sports (think Manningcast before the Manningcast). Instead of listening to Joe Buck and Tony Romo during Sunday Night Football, users could tune into a Dallas Cowboys superfan, a former player, or any alternative broadcast (colorcast) they found entertaining. We grew that product to about 10,500 monthly active users and were actually pretty proud of the traction we had achieved. But, we saw a macroeconomic shift coming, wherein the market would demand that startups generate meaningful revenues immediately. We decided the quicker path to meaningful revenue generation for us was to hard-pivot from Colorcast to a B2C SaaS sports betting product. This was quite a challenging moment for the company, as we had to throw away a ton of code, know-how, market positioning, etc., in order to chase a market we weren’t entirely sure existed. It is probably worth noting that Outlier didn’t come out of nowhere. We had preexisting relationships with the four major sportsbooks and were already starting to dig into their APIs—visualizing their data and the data that our existing sports data providers were sending us. Beyond that, we conducted nearly a thousand user interviews and surveys, trying our best to identify and stack rank consumer pain points. We continued to involve users and stakeholders at critical moments of product development as we dreamed up and built a platform we hoped bettors would pay for month after month. The result of that exercise was, of course, Outlier.
Outlier hasn’t had to raise much capital to get to its current scale. How have you been able to build such a unique and well-thought-out app with such little funding? Do you plan to raise additional capital to further scale the business, and how are you thinking about accessing venture investment in 2024?
I think there’s a common misconception that in order to be a successful business, you need to raise a bunch of venture capital, rapidly expand headcount, and pour resources into marketing efforts. We think about this a little bit differently. Product innovation comes from the customer, and a company’s ability to mine those innovations from the customer and bring them to market quickly is the real indicator of success. I’m not suggesting that a company’s product roadmap should be a pure democracy—populated and prioritized based exclusively on the demands of the customer. But, perhaps something more akin to a representative democracy, populated by the customer and made sense of/prioritized by the product team. What’s cool about this “product-led growth” motion is that it doesn’t require excessive amounts of capital to affect. We listen closely, iterate quickly, and turn customers into evangelists, which, in turn, reduces product development spend (we build the right thing the first time) and GTM spend (evangelists are free). As to the question of whether we’ll raise in 2024, the answer is…maybe. It really depends on where the macro environment is. Right now, capital is simply too expensive. Fortunately, we’re not up against any sort of financial cliff, so we have the luxury of taking a wait-and-see approach.
There are a number of well-established subscription betting tools like BetQL, Sportsline, Action Network, and others that have been around for many years and target retail gamblers looking for additional insights. How are you differentiating between your $19.99 (premium) and $79.99 (pro) products vs. these offerings?
There are three main ways we differentiate from the majority of competitors, including BetQL, Action Network, and Sportsline. First, we don’t make pick recommendations. We decided early on that we wanted to be an objective source of contextualized and hyper-relevant data—full stop. It’s easy to spot the competitors that didn’t draw this same line in the sand. The trouble is, it’s incredibly tempting to recommend picks. It’s a simple value proposition that mirrors much of what potential subscribers are seeing on Twitter and in their existing betting communities—$20 a month for five picks a day. But, however effective this approach is at acquiring users in the short term, we think that this approach is exactly that: short term. The reality is, the moment you make pick recommendations , you live or die by the success of those picks. We’re not playing that game. Second, our business isn’t built around first-time depositor affiliate fees. Play around with Action Network for a few minutes and you’ll begin to understand why that matters; you feel like the product, not the customer. Rather than being funneled toward smart sports betting opportunities, you’re funneled towards sportsbook signups and bonus offers. This is a poor experience for end users, hurts subscriber retention, and ultimately creates a brand that bettors don’t feel completely aligned with. Our product is centered on providing value to our subscribers. If any strategy or feature set conflicts with that philosophy, it’s not making it into the product. Finally, and perhaps most importantly, the vast majority of our competitors were built with a web-first mentality. We thought about this differently. One of our key business assumptions is that American sports bettors are mobile-first consumers and will demand first-class mobile products. As such, our iOS app is a natively built, first-class product.
Why are gamblers choosing your products versus the competition, and are there any key metrics you can highlight around the number of subs as well as retention? What has been your secret to driving such strong viral adoption on very limited marketing? What do you see as the potential TAM for your product, and do you see betting tools continuing to grow with overall market expansion and maturation?
Much of the product differentiation and viral adoption was discussed above, credited principally to our product-led growth motion, attention to our customers, and quick product development cycles. But, just to further expound on our product led growth process, here’s what a typical development cycle looks like: (1) A subscriber in our Discord community suggests a new feature, (2) the suggestion is publicly acknowledged and the subscriber is thanked for their suggestion, (3) our product team is immediately alerted about the suggestion and determines how/if the feature will be prioritized, (4) the feature is released to production in a matter of days (not weeks), (5) the subscriber is made aware that their suggested feature is now available in the app, (6) the subscriber becomes a power user and an Outlier evangelist, and (7) the virtuous cycle continues as other subscribers witness the fact that Outlier actually incorporates user feedback. When was the last time you were able to affect the product roadmap of an app you downloaded from the App Store? Probably never. It’s a powerful moment for the subscriber and creates a whole ton of virality. Unfortunately, I can’t reveal too much about internal metrics, but directionally speaking: trial conversion rates exceed industry benchmarks, the product is sticky, user acquisition is strong and accelerating, sharing and referrals appear viral, feedback and App Store reviews are close to unanimously positive, lifetime customer value exceeds customer acquisition cost by more than 6x, margins are high, burn rate is low, and profitability is eminent just 11 months after releasing the product. Regarding TAM, I’d be kidding myself and our stakeholders if I said I could put an exact number on Outlier’s addressable market. That said, we believe that we’re in a multi-billion-dollar market with expansionary tailwinds, including bettor maturation (novices becoming intermediates) and jurisdictional expansion.
Outlier has ramped very quickly and is seeing meaningful revenue in less than a year as you have unlocked the consumer thirst for unique data and insights, particularly among prop bettors. How do you contrast your business versus those like Oddsjam or Unabated, which are offering substantially more expensive products that appeal to professional or semi-professional gamblers?
All of the competitive advantages addressed above apply equally to OddsJam and Unabated. But, specifically as to these two, whether you’re a novice, intermediate, or advanced bettor, you’ll find that Outlier is more powerful, simpler, and less expensive. Period. Give all three a try. You’ll see.
Walk us through your partnership strategy with sports books, as gamblers can click through the Outlier app and place bets. Are you taking affiliate revenue from these groups? Do you see affiliate as an important part of your strategy, or do you feel like you can build a sustainable business off of your subscription model alone?
We do not currently collect affiliate revenues from the sportsbooks. The sportsbooks like us and partner with us because we send them hundreds of thousands of bet slips every month through our quickslip functionality. Not only do we think that we can build a sustainable business based purely on a subscription model, but we believe subscription businesses are orders of magnitude more durable than affiliate businesses. Still, as addressed above, we believe user experiences suffer when the business is incentivized to convert first-time depositors rather than retain subscribers.
I have to imagine that pick’em products like PrizePicks, Underdog, and Sleeper are important to the overall demand for your product. Can you quantify how important the players that use these DFS platforms are to your business? Obviously, this segment of the gaming industry is under intense scrutiny right now. What is your take on how this shakes out over the next year or so?
So, we don’t currently integrate with any of the DFS 2.0 operators, but we are seriously considering it. The thing is, a PrizePicks user can research the relevant line on Outlier without us needing to be directly integrated with PrizePicks. All of the insights and supporting stats relevant to Kyrie Irving’s Points prop on FanDuel are equally useful to evaluating Irving’s Points prop on PrizePicks. The only difference is that, without directly integrating into PrizePicks, our users can’t take advantage of our quickslip functionality. But, even without this direct integration, we see a substantial number of subscribers located in DFS 2.0 states. It’s hard to say how the DFS 2.0 industry shakes out. Is DFS 2.0 “sports betting”? Probably. Are FanDuel and DraftKings engaging in regulatory capture? Probably. Will there always be a PrizePicks-style game type in the market? Yes. Will bettors in nonlegal states continue to be able to get action down (legally or illegally)? Yes. Will new game types emerge that, once again, stress regulatory framework? Yes. Is this type of innovation good for the bettor? Yes. Is FanDuel interested in acquiring PrizePicks and using regulatory pressure to drive the price down? Probably (my hottest take).
Football season is unfortunately winding down soon. How are you making your platform less reliant on the NFL, particularly as the industry (or at least sentiment) revolves around it? It would seem the NBA is tailor-made for Outlier. How has basketball season ramped, and do you plan to launch betting data beyond the Big 4 sports and college football/basketball?
You’re actually spot on. The NBA has been a boon for Outlier. Nightly games, tons of player props, robust supporting stats, hot streaks, cold streaks. We’re seeing a massive uptick this NBA season to such a degree that we’re not all that worried about the NFL wrapping up. We’d love to add sports like soccer, tennis, golf, and esports—all in good time.
Besides being a very prideful Dallas sports fan and quite happy about the Rangers winning the World Series, any other personal tidbits or fun facts you want to share?
I spend so much time thinking about Outlier that I’m afraid I’m not the most interesting person outside of my professional pursuits. Couple that with a new baby boy, and I’m not left with much time to do anything else. I spend the time that remains playing in an adult hockey league (made it all the way to the championship last season, but are currently in a 4 game rut), reading (massive fan of business bios), and trail running.