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- I feel like part of my job now is to actually bring together successful operators and entrepreneurs who have had success, ideally in tech, because I'm a little biassed, but who have some interest in this as a business, not as a charity. It's about the fact that three million people are tuning in to watch women play professional basketball. - Welcome back to The Deal. I'm Jason Kelly. - And I'm Alex Rodriguez. - Well, Alex, we are backstage at Bloomberg Power Players, the big event in New York City, and we've got Alexis Ohanian.
I consider him the GOAT of investing in women's sports. - He is indeed the GOAT and he can actually teach a masterclass in investing in women's sports. Around 2021, I though it was early investing into the Minnesota Lynx, the WNBA, but boy, he beat us all by a long shot. - We're going to get into the numbers with Alexis Ohanian. Welcome to the deal. We're so excited to be here, be back at Power Players. This is an annual event that, that we try and do our show.
We try and get a baller. So mission accomplished. - That's very kind. Thank you. - And you have done so much. And we were talking about with Alexis, where do you even begin? And I think we begin with women's sports, don't you? - Yeah. Absolutely. And Alexis, you know, this gentleman here can write a masterclass and really has his PhD in investing in women's sports. And there's so many ways we can go, but just starting at the very top, what is your general thesis? Because you've been going at it and you've been narrowing deep in the space for a while now. - Yeah. Look, I laid it out on Twitter in March of '19, and I went viral for all the wrong reasons.
I got trolled mercilessly. I mean, millions of impressions. - You got trolled on Twitter? That doesn't sound - Shocking. - It sounds weird. - But it was, it was, it was a great exercise because I was just stream of consciousness wondering how a team that had Megan Rapinoe at the time was selling for like $3 million. Because I didn't follow women's soccer, but I knew who she was. I knew who Alex Morgan was. And I knew the US Women's National Team was playing in a World Cup later that year that would have millions of people watching, top tier brands paying real money. And the value of that attention,
and again, as the guy who spent 15 years building and turning around Reddit, for me, social media is the battleground of attention. If you can win in the free market of social, millions of followers as these women had, you're valuable. You're for sure valuable. And for a team to only be worth three million made no sense. And I, at the end of my rant, I laid this all out and I said, "I'm going to start a team in the NWSL. One day it's going to be worth a billion dollars. And I think this is going to be one of the most obvious investments or businesses I'll ever start." And my point was simply attention is valuable.
These athletes had it. And, and you know, by January of 2020, I spent a little over a million dollars to start, that was the expansion feedback then in the NWSL, to start a team in LA called Angel City FC and, and learned a ton from that process. And I've gone on to, to do it a few other times. I own the Los Angeles LOVB team women's volleyball, also the TGL men's as well as women's, WTGL teams for LA as well and Tigers League. And then I started a league of my own for track and field based on the same thesis of like, this is one of the most important sports during the Olympics. Every four years everyone is watching these athletes and then they disappear. That doesn't make sense. And it's been a hell of a journey.
Look, it's always rooted in capitalism. Yes, like it feels good to me as a girl dad and obviously married to Serena Williams. It feels good to be making these investments and building these teams, but it's first and foremost the business decision. And, and these women have tremendous value that was undervalued by the market and that tweet has aged very nicely. - Yeah. - And, and now you have billion dollar women's professional sports teams. - I was going to say age nicely and profitably.
- Yes. Yeah, not mad. Not mad at that either. - Yeah. - I, I will likely make. I mean, it's. Well, I don't want to jinx anything, but I have a feeling 10 years from now, if you plot out where Reddit's share price goes and where the value of all these women's teams that I own go, I think I'll make more money from them than from Reddit. - Wow. - Wow. - And again, it speaks to the value of, of this and also the fact, and now you're seeing Vinod, Josh, you're seeing VCs now obviously moving - - Vinod Khosla. - Yes. Josh Kushner. - Josh Kushner. - Moving heavily into sports. Why?
It's the ultimate anti-AI bet. And I can pull the clip from three years ago where I was on stage trying to tell a bunch of other VCs that every other form of entertainment was under threat from AI because the business model of movies, the business model of music was all going to be upended. But no matter how good that video got of a not real human making a game winning home run, it will not matter because it wasn't a human who did it. The whole point is that it's a human exercise and it's very clear that people are waking up to the value here in sports and it is the ultimate anti-AI bet. And just trust me, the way these teams are run today is so devoid of technology that as more
and more software levels up those businesses, makes them more efficient, makes the margins higher, makes the fan experience better. As they make the fan experience better, these businesses are destined to actually become even more profitable in addition, even more important at capturing attention. - Right. All right. So let's get into the capitalism of it all. We are at Bloomberg after all, and start to unpack a little bit of what's underneath these businesses because you're an angel investor, you're a growth investor, and the growth element of this is really interesting. What are the main characteristics you are looking for from a pure business perspective when you are assessing,
let's say, women's sports team or league? - So first and foremost, follower counts and engagement. Why do people watch sports? It's not for the owners, it's not for the teams, it's for the players. And so players drive attention. It's harder to tell, I think, when you're looking at the big four because you see these brands that people have tattooed on their bodies and you think, "Oh, well, it's bigger that." No, no. The reason why they tattoo the logo is because of the player. And in emerging sports, you have to think from first principles because you just show someone a logo, no one's tattooing it.
If you show them a player they love, then they might one day tattoo that logo, which is my personal test.That's how I knew Reddit was going to be successful is because four years in I saw a guy get the tattoo of the Reddit alien that I drew. And I knew we were going to be successful. Angel City got a tattoo probably a year in. LA Golf Club, actually we just saw. We have to tweet out the photo with the approval of the guy, but we actually saw our first LAGC tattoo. So the tattoo test is real, but the why is because of the players. And if you looked on social media thanks to NIL, you overnight had value creation
for those millions of followers. This is why, again, find the tweet, "I was trolling the NCAA when they weren't letting women use the weight room or they had a [beep] weight room during the tournament." You could even call it, was it March Madness? Didn't it March Madness? Because it would hurt the brand. Idiots. So I'm tweeting at them and I'm like, "You guys are so bad at business. You're not just sexist and racist. You're also bad at business. Sell me women's college basketball." Why? Because if I was an alien coming down from Mars trying to decide which of these things is more important based on
the free market of attention, I would not have to know anything about these names. Caitlin, Clark, Angel, Reese, Paige Bookers. I would just look at the data and say, "Well, obviously the women of college basketball have a much bigger following in the free market of attention known as the internet. So I don't care who decided who to put what on the Ocho or ESPN at prime time. That is an inefficient market. Put them where they belong and market them." That attention is valuable. And when you're an emerging league, we don't have the sweetheart media deal that the big four have yet. So the way you make your money is
through brand partnerships. What does a brand care about? Why was DoorDash the first ever seven-figure front-of-kit partner for any women's professional team? This Angel City back seven years ago. It's because we could show them the follower counts of Kristen Press and all of our stars and say, worst case scenario, you are getting attention on a torso that is being seen by millions of people who absolutely love this athlete. So it starts with the players, it starts with their follower accounts. Those are the things we look for, and then the brands are here.
The brands are showing up in a big, big way, and those dollars get our teams funded, they pay for our players and start the flywheel. - So Alexis, I love speaking in front of the Bloomberg audience because we can actually go deep. Let's talk a little bit about the numbers. - Great. - So I'm sure someone in our audience is thinking, first of all, what inning are we in and did we miss the boat? Because you're talking about years ago.
Number two, when you think about metrics, a couple of ones that you can't compromise. For example, you're looking at revenue growth. Are you looking at cash flow positive, break even? And if it loses money, how much pain are you willing to take and for how many years? - Yeah. Okay. So what inning? I think we're in the. I didn't play baseball. I'm really in a disadvantage here. - They're nines. - Third.
- They're nine. - Fourth. I think we are still early. 2019 was definitely first inning in America. I think in the United States, we're probably in the third inning, fourth inning. We have our first billion dollar team. It's not one of mine. But our president from Angel City went to the Valkyries where she's done an amazing job. - Jess Smith. - Jess Smith. - And so that's technically the first billion dollar team women sports. It's great. I said it would take 10 years.
I think it took seven. So thank you, Jess, for getting ahead of schedule. And I think we're probably in the third inning, fourth inning. I do think you will reach a saturation point where this kind of growth cannot go on forever because there's only so many new sports that can get invented. But I do think we're still pretty early, certainly in the United States. Globally, I think we're still in the first inning for much of this in women's sports, for sure. And part of that's to the progressive nature of the United States, which I love.
It is, I think, a huge blessing that we went out of our way to celebrate these amazing women. And obviously tennis is the best example where I think everyone in the world understands that tennis is a globally recognised as sort of equally awesome women's sport as men's because of two women from Compton and then Billie Jean who made sure they got equal pay so they would want to play tennis. Of the last 10 years, seven of the US Open finals have had more people watch the women's final than the men in America. And that's the legacy of the Williams sisters, the legacy of Billy. And it's the fact that no one questions tennis is as great as a women's sport as a men's. And so that is a gateway to show that there are other
opportunities, there's other chances for leagues. But again, it's still early. I think America is very much at the forefront and profit is such a funny thing. I think you're talking to a startup guy, so our industry is notorious for putting off profitability for a long time as long as you're getting growth. And so the idea that I could have a business that would grow quickly, still grow revenues, but still not be profitable for a number of years doesn't make me flinch. And as I've spent time looking at the early and learning about the early NBA and the early NFL, those teams are also very unprofitable for quite some time.
What they didn't have was social media. So what they didn't have was an ability to really accelerate growth. And at a time right now where I think undeniably the next five years, we will see such a change in our algorithms. The things that we are getting spoonfed, the dopamine hits we will get at every screen we look at will continue to get better and better. You think TikTok and Instagram know you well? You think they're listening to you and know exactly what to show you because they kind of are.
- I was going to say yes. - It is the worst it will ever be. - Wow. - It will only get better. And the synthetic content is only going to get better at giving us that steady dopamine. - Alexis, I just want to share one data point that I thought was fascinating to me, which you probably already know. I did ESPN Sunday Night Baseball, it's been a property that's been around for over 35 years. On average Sunday, we'll have a million five viewers. If it was Yankee Red Sox or Yankee Dodgers, it'd probably get two.
Two, one. Indiana came to player WNBA Lynx and Caitlin Clark and Sophie Cunningham and we're in first place. It was a big game on ABC, not ESPN. We had 3.2 million people watching at the peak. That's an incredible data point. - And those are storylines built up - Through online. I mean, obviously women's basketball is particular having this sort of cultural moment. - And the reality is this is heat that comes from people who just really love this stuff instead of historically some editor or some producer saying, "You know
what belongs here at the primetime slot? It's this." And this is what makes me so excited about where we're going is the more that networks see the economic value of giving women's sports these platforms, the more it's going to happen. And it's just - A business decision. It's not about what feels good. It's about the fact that three million people are tuning in to watch women play professional basketball. - Right. - And I look forward to seeing that continue to grow. I just know 10 years from now, we'll probably be outside of this rapid growth.
I could buy an expansion now for low tens of millions of dollars and that expansion fee in, let's say volleyball or some of these other emerging leagues, that's only going to go up. And pickleball's doing its best. You'll be able to invent a few more sports, but I do think there's. I have a whole pickleball thing. Don't get me started. I'm a tennis husband, so I feel very strongly. - I was going to say, I think we know - - I feel very strongly about it. Yeah. But over the next five, 10 years, as you see more and more of this synthetic stuff, and there's going to be a cultural response to it.
I think it's the reason why live events are doing so incredibly well. We are hungry to commune. I think one of the smartest things baseball is doing right now, and it's so funny, obviously baseball plays a lot of games. It always struck me as interesting when people told me that we would never be able to fill a stadium for Angel City, that I'd be watching some of these mid-season summer MLB games with empty stadiums. And I was like, "Why aren't you guys criticizing baseball for not being able to show up to stadiums?" But what's so clever is - - Sorry, bro. - No one can deny the excellence of baseball as a sport.
Obviously, there's a lot of games on the calendar, but what I love is that now you're seeing more and more teams coming up with different reasons to get people into stadiums for the experience. And I think as we have our screens get better at pulling us away from each other, and again, this is the optimist than me, I think probably 80% of us, not all of us, but 80% of us will yearn more for IRL, for in real life, for experiences that bring us together that allow us to basically make enemies with someone for the day in the spirit of fun, sports rivalries, and feel the stakes of being alive. We are here because we endured or some ancestor of ours endured hard things and overcame them. And I don't want to believe our species goes out just
pushing the button to get the sugar. And I know there's probably some part of society that will ultimately just keep pushing that button for the sugar, but I need to believe in my heart and the world that I want my daughters to have, that actually the thing that makes us human is not always getting what we want. The thing that makes us human is learning a new thing, is struggling, is triumphing. And those stories, I think, hit even more in a world where you can just kind of push the button and get the sugar. - Yeah. There's a lot of optimism, I think, among all three of us for women's sports. What do you worry about? What are the things that could get in the way of the growth, and especially from the business side?
What are the sort of business dangers here? - Our biggest challenge right now, and we've got some clever ideas to solve it, because I don't like just having problems, but one of the big problems right now is even just you have this interim where there's a lot of energy from brands. Even if you look in aggregate of the media around women's sports, it's very fragmented. If a brand wanted to show up, great, you can be a part of a team, you can be a part of a league, but if you want to buy ads on the home of blank for women's sports or be a part of that bigger media story, there's not a critical mass yet. And I think it's going to be some combination of the, whatever, ESPNs, Yahoo Sports, the incumbents of the world
leaning more into the women's sports stuff. ESPN just turned on their Sundays. I think there's not enough inventory right now for all the brand demand that exists in women's sports. And as a team owner, we have some ideas that we'll probably start unveiling in the coming quarters for how to fix that. But that's one of the big problems right now because you can only justify so much of a bigger sort of front of kit deal. You can only put so many spots on a jersey for a logo. And then the other weird juxtaposition is the big four traditional sports ownership structure is still very.
It lives in a different universe. - Yeah. - In women's sports - - Alex lives in that universe. - Lynx too, but like you, you've certainly very much lived the establishment world of like. I'm sure you all see this with the Lynx. You have to build in a very different way. The people who are responsible day-to-day for the success of your W team have to have a very different DNA and a very different way of moving than the folks who are responsible for the MNBA team. Like that? The men's NBA. Okay. The. And that's simply because, right, it's the difference between someone who has to wake up every morning and say, "Okay, I need someone to one day tattoo this logo on their body.
That's my metric. How do I tell the story of my athletes every day they're not on the court so that people care when they are on the court?" - Right. And you really have to build it in a way that's very different where you have an established property like the Timberwolves and you have superstars with brand deals who don't even need to show up for a content shoot because everyone already knows their name in a way that when women athletes show up, man, I mean, they are there. They are locked in. They realize that they are stakeholders in their success because they're not entitled. I'm not picking on all male athletes, but you can just see the difference.
- What advice would you give someone that wants to get into investing? I mean, do you go get an investment bank? How do you get it to be an LP and a franchise that you admire? - Since Angel City, and I remember a couple of my other tech execs who I was calling up in 2019, 2020, who turned me. I was like, "Dude, please just buy a team in this league. We need owners that are builders. We need owners that have some money that want to invest it." And they were like, "Nah, bro.
I'm going to start a pickleball team." And I'm like, "Dude, it sounds like a condiment. You really believe that's going to be as big?" Women's soccer. I mean, soccer's the biggest sport in the world, and the Americans only think of women as being great at it, so this isn't hard. And anyway, they didn't see it. They still don't see it. I still lorded over them. I feel like part of my job now is to actually bring together successful operators and entrepreneurs who have had success, ideally in tech, because I'm a little biassed, but who have some interest in this
as a business, not as a charity. And I'll hold dinners, literally, with four, five, six folks where I'm just almost like a Mary Kay salesperson, just being like, "You got to buy a team. You got buy a team, you got to invest." And to try to demystify it-You're like, - "Here's what I have in volleyball." - Well, listen, and it probably. I'd have to do more research of what it was like in the early days, like the MLB or NBA or whatnot, but I need other owners that are great. And you could see the difference, right?
Michele Kang bought into Washington probably six months after I started Angel City. And then you started to see this compounding of new owners who came in saying, "I want to invest. I want to win. I want to be great." And I remember when Alan Waxman pulled up, he was the first owner who used enterprise value in a sentence during a board meeting other than me. And I was like, "Oh my God, you actually want to build something that has tremendous enterprise value in the future." Whereas historically, people were just very happy to lose money every year, so they could use that to offset taxes elsewhere. And that was the mind shift. And I do think.
I go out of my way and say, please, I'm an open book too. If anyone wants to, I'm very happy to try to indoctrinate. And I do think you have. Probably the best way that I've guided folks in is. There was a woman in Chicago, actually, who was looking to dip in, and I introduced her to all of the emerging team owners and a couple of the big four team owners to say, "Hey, look, here's Jane Doe. She's great. Here's her background." If an opportunity comes around for her to be able to invest, even as a minority investor, I think y'all should meet her.
I think she could be a great team owner one day. And it's a nice, easy way to dip in where you can get access basically without the pain of actually having to run the thing and lead the thing, you get the education. And chances are it's actually probably also a really good investment too. - Right. James, one more data point. You're Mr. Datadog today. - I am Mr. Data. I've been researching. But you can say in the history of sports, and it's not a fact, is what I'm just thinking off the top of my head, the fastest captured of enterprise value, a billion dollars, has been the Valkyries. Golden State Valkyries, which is the sister company to Golden State Warriors. But in a year and a half, they already have surpassed the billion dollar mark.
I don't remember any male sport, women, any sport that went that fast. - I think the published number at least is like 80 million in revenue, 8-0. So I mean, it's a little bit of a revenue multiple bump, but that's still real money. I mean, even if we'd say maybe 10X, 11X revenue for most of these teams, but again, it's Golden State, you get the premium. I'm not arguing the billion dollar valuation, but $80 million of revenue, first season. - So as we wrap up here, beyond teams, again, this is an ambitious audience. And one of the things that I think you've also done very
well is look at the broader ecosystem of sports. Obviously, the team stakes sort of gather a lot of the attention. What are some of the other opportunities that people should be thinking about that may not involve going in as an LP, but still sort of get some of that sports bump? - So I was in the first batch of Y Combinator in 2005. So when I was starting Reddit, was very lucky to be in the first batch with Sam Altman. I've got stories, but that's another podcast. And then I was a Y Combinator partner for about four years, from like '08 to '12.
Saw a lot of companies there, Stripe, Airbnb, all that stuff. And then I've been doing VC off and on basically for the last 15 years. Up until three years ago, I did not do a single sports tech deal because the consensus view in Y Combinator, in tech and everywhere was you have a market of only a few places you can sell it, and these are irrational buyers who have no interest in best-in-class technology. And so no plucky founder that wanted to build the next fill in the blank even tried in sports because it was a dead end. And so in the last few years, what changed was
because of emerging sports, all these smart, successful big four team owners now were like, "Oh yeah, let me try a women's soccer team or a women's basketball team or a women's whatever team." And they hired a new president to run that team. And that president showed up on day one, hopefully from maybe like tech or whatever the sort of business world and said from first principles, "Okay, what's the best software for me to use for blank?" And for the first time asked the question of like, "What's actually the best thing in the market?" And so I lived this because my CMO at Angel City, she was showing me, I won't say the name of the company, but she was showing me the best-in-class software for managing all these photos and videos.
And I nearly threw up in my mouth and I said, "I will never use this software. You could not pay me to use this software. It is so offensive that this is actually what the best teams in the world use. We will either build it ourselves or we'll find a company doing it, fund it, and then bring it over." And we did the latter in that case. It was a company called ScorePlay. And within six months, half the NWSL was using it. Now, probably a third of the NBA is using it, all the major Grand Slams are using it.
It's just sports infrastructure software that never could have been built or could have been built, but never could have been a viable business until this emerging sports boom. And so there is a gateway now, again, probably over the next five years where if you want another foothold in, technology that is serving sports, if you believe it to be true that this is the ultimate anti-AI bet, and you know just how much room for improvement there is. And Jump is a company that we did together, A-Rod, that is going after Voldemort basically, Ticketmaster. And basically saying, "What if we dared to make a better user experience for fans?
What if we had the audacity to make a ticketing platform that treated fans well?" Crazy thought. And what's exciting is you're starting to see this pickup because fans actually want to be treated well. Teams want to have the data about understanding their fan base and hopefully the rest is history. - Well, unfortunately, we have to end it there. We loved having you. Thank you so much. - Thank you. - Alex, thank you. Alexis, thank you. And thank you all for being here.
