Losing millions of dollars at the age of 24 was a defining moment for entrepreneurs Harsh Jain and Bhavit Sheth.
It was “very bad,” Jain said. “There is no other way to put it.”
“Every founder, when you start something, you really believe that this is going to blow up, you’re going to change the world… and ours crashed and burned.”
But the duo from India also know all about bouncing back from failure.
Ten years after it was founded, their Dream Sports company is now valued at $8 billion, with 160 million users.
Dream Games is a gaming technology company from India that owns Dream11, the largest fantasy gaming platform in the world.
Every sports fan has an opinion on how games should be played, or which player should be chosen, whether the idea of the game was good or bad.
Co-founder and COO, Dream Sports
Fantasy games are online games where participants can create a real team of agents who follow real sports players. Participants will earn points and win cash prizes based on the global performance of these players.
“Everyone who is a sports fan has an opinion on how the games should be played, or which player should be selected, whether the idea of the game was good or bad,” said Sheth.
“It tries to make fantasy games to capture that perspective in a more systematic way.”
Jain added: “I keep comparing fantasy games to your movie popcorn. You have popcorn because it makes your movie better. Fantasy games do that to sports. It deepens your involvement and makes that gaming experience 100 times more fun.”
The two men, now 36, spoke to CNBC Make It about how they became pioneers of a multibillion-dollar industry in India — and turned their imagination into reality.
How it started
Jain was first introduced to fantasy sports while studying in the UK. See the article : ‘This is a Matter of Equality’: Maryland Law to Allow Religious Garments in College Sports. in 2001, especially the Fantasy Premier League.
“I came to know about this thing called fantasy football… and I got all my friends back home involved in it. Bhavit was one of them,” he said.
When Jain returned home in 2007, he started looking for cricket platforms – given the popularity of cricket in India – but the search was fruitless.
He decided to take matters into his own hands.
“I told my friends that we have to solve this problem…
Harsh Jain and Bhavit Sheth started their startup Dream11 when they were 22 years old – but it quickly “crashed and burned.” Jain said: “Every founder, when you start something, you really believe that this will explode, you will change the world.”
Jain teamed up with his childhood friend Sheth to start Dream11 in 2008 – offering fantasy cricket that was free-to-play, relying on paid advertising.
It also enabled players to create a fantasy team for the entire season.
They received “millions of dollars” from family and friends as start-up money, but after two years, they found themselves strapped for cash.
“Advertising money was not coming in because… producers in India did not understand fantasy sports. They had to be educated,” Sheth, who is also the company’s chief executive.
“At that time and over time, we were wondering, what do we do now? We knew that fantasy games for example should work… there must be another format that should work in India, we just didn’t know what it was.”
From ad-driven to ‘freemium’
Jain and Sheth decided to start a digital company called Red Digital, which they could “monetize. This may interest you : MLB praises CBD sponsorship as an important change for sports leagues.”
“It was a difficult time, to find something that would help us survive at that time when we had no money,” said Sheth.
According to him, Red Digital has become one of the largest digital agencies in India – which, in turn, has helped boost Dream11’s growth.
In doing so, the partners have decided to turn the playing field from a reliance on advertising to a so-called “freemium” model.
“On the monetization side, what we’ve done is built-in contests that you have to pay to enter … and we’ve built a prize pool,” Sheth explained.
Many entrepreneurs forget that money cannot be taken for granted.
Co-founder and CEO, Dream Sports
“If you win, you win the prize money. Fortunately, every time someone enters the contest, we keep a portion of the money the user pays.”
Dream Sports said the average ticket price is 40 rupees, or half a dollar, and the top player can win up to 250,000 dollars.
They also switched Dream11 from a season-by-season to a one-match format, which helped reduce the commitment of users from months to a single day, Sheth said.
Jain added: “That’s how we’ve been doing so far, we don’t have ads on Dream11, we haven’t had any… since we took this model.”
Dream Sports claims that only 20% of its users are playing for real money and there are safeguards in place to ensure safe play. “There are some tournaments that have 10 million people playing against each other. We always try to make sure that more than 50% of them win their money back so they can continue,” said Harsh Jain, co-founder and CEO.
Nurphoto | Nurphoto | Vadivelu Comedy Getty Images
In 2013, when Dream11 started to see strong retention, Jain and Sheth decided to sell their digital agency, Red Digital, to focus on building Dream11 instead.
“If we had to double down on one business, which one would we choose? We both liked construction products – we’re product guys and we didn’t like doing a service business too much,” said Sheth.
The digital agency was sold for $800,000, which the duo reinvested into their fantasy gaming platform.
‘Money isn’t free’
Over the next seven years, Jain and Sheth began to see the fruits of their labor. Read also : The NFL season begins with a Chiefs win and, in Kansas, legal sports betting.
In 2019, the Mumbai-based startup finally joined the Indian unicorn club – the first sports tech company to do so.
According to news tracking site Entrackr, Dream Games has become one of the rare unicorns in India to make a profit. In fact, Jain and Sheth say their company has been in the green since 2020.
“A lot of entrepreneurs forget that money can’t be taken for granted. Every round of money we’ve ever had, it’s always had us showing a 12 to 18 month runway, and then flipping to breakeven and profit,” said Jain.
Unfortunately, that’s a very hard lesson to learn, one that most startups have to learn – that money isn’t free.
Co-founder and CEO, Dream Sports
“If your unit economics don’t lead to that, then your valuation is wrong, if the amount of money you’re raising is wrong, your business principles are wrong.”
That’s something they learned from losing a lot of money in the early days of their company, Jain added.
“Unfortunately, this is a very hard lesson to learn, which most entrepreneurs have to learn – that money is not free.”
This insightful vision fueled the growth of Dream Sports. Dream Sports’ investors include Chinese tech giant Tencent, as well as American hedge funds Tiger Global and D1 Capital.
In 2021, Dream Sports said it raised $840 million, valuing the company at $8 billion. In the same year, the company said it had a revenue of 332 million dollars, and a profit of more than 40 million dollars.
Overseas expansion?
Jain and Sheth are far away.
Looking back, they said it was “persistence” that got them into trouble.
“It was seeing a problem… And being very passionate about it yourself. I think that’s what startups need,” Jain said.
Sheth interjected: “Maybe some of it, you learn along the way.”
Dream11 now offers a total of 11 fantasy sports, including cricket, basketball, football and baseball.
The secret to Dreta Sports’ success? “It was seeing a problem… And being very passionate about it yourself. I think that’s what startups need,” said Harsh Jain (left).
