No salary, working out of a tiny office, long hours — many startup leaders are prepared for those and other challenges posed by building your own company. But what about getting caught in the unforeseen crossfire of legal and PR nightmares?
Adam Wexler, founder and CEO of SidePrize, experienced that crossfire firsthand last October when news started coming out about possible insider trading within the Daily Fantasy Sports industry. Two hours before he was set to present SidePrize at the Dodgers Accelerator Demo Day in Los Angeles the last piece of news dropped. “Needless to say, the moment I said the words ‘fantasy sports,’ my pitch would fall on deaf ears,” Wexler says.
Here, Wexler talks about persevering through this PR nightmare, what entrepreneurs should do to prepare, and how SidePrize is preparing for its upcoming season.
When did you know your SidePrize was in trouble?
We always knew SidePrize was a different breed from FanDuel, DraftKings and the rest of the Daily Fantasy Sports operators. To that end, I wouldn’t say we ever knew we were in trouble. More than anything, we just didn’t understand how all of the negative news was going to trickle down to us. We had been gearing up for fantasy football season all year long, and less than a month in, we basically had to put everything other than product innovations on pause until we had a better understanding of how everything related to SidePrize. Even if it was a remote possibility, we didn’t have the resources to get dragged into any controversy. It took us close to six months to finally understand how everything related to SidePrize.
How did you decide if you should keep working or close up shop?
The end of the year marked a great time for reflection and with football season wrapping up for us, it was a great time for the SidePrize team to take a step back and evaluate all options moving forward. And, when I say all options, everything was on the table. We had ~1/3 of the money we had raised left so we debated everything from returning our investors the money remaining, putting the business on pause, pivoting to an entirely new concept (I have plenty of other business concepts I could pursue), applying SidePrize to other verticals or just staying the course & pairing back.
All of the six full-time team members from the fall and our investors understood we had been blindsided. We discussed all the options internally and externally. When you get hundreds of opinions, you have to make your own mind up ultimately. When we decided to stay the course and pair back, we were faced with the consequence of cutting salaries or cutting people entirely. None of those conversations are ever easy, but we were transparent the whole time so everyone was understanding. In the end, all six of us are still friends and fond of the experience we shared collectively, but SidePrize has become a team of three people since the new year. The remaining three all took significant salary concessions, but we also all believed there was a light at the end of the tunnel.
The silver lining in our last six months was the train of events forced us to really dig deep to articulate what SidePrize was at its core, which is best described as a custom and integrated Venmo. For that reason, we also discovered promising new opportunities in other verticals for SidePrize to pursue when this fantasy football season wraps up.
What were some challenges that you were expecting to have as a startup? Did you ever see this particular issue coming?
Months of no pay is par for the course. My original co-founder and I had dabbled on SidePrize for a whole year without taking a penny. I could have never expected the extent of the fantasy sports fallout, but the incessant daily fantasy ads got us worried. It’s just a shortsighted shame that the investment community has given up on the fantasy category for the time being. When the new consumer numbers come out in June, and when fantasy football season is all the talk, everyone will wake up to the realities — this industry is not going anywhere, especially the season-long traditional fantasy variety that is increasingly a part of social fabric these days.
How did you prepare for confronting the media and fixing SidePrize’s reputation?
We never really had a chance to get the word out last fall so this fall is essentially a reset year for us. Our reputation is pristine within our own industry, evidenced by the three awards we’ve won including ‘Rookie of the Year’ even after the fallout. Additionally, consumers who became aware of SidePrize love the concept. The only place where our reputation has suffered is within the investment community, and for a consumer startup like SidePrize that would rather focus on growth more than profitability, we need some funding to hit certain goals we have in mind. That said, we know what we need to accomplish this year such as proving the business model, and we are fully confident we’ll be in a very favorable position in the investment community come this time next year. To that end, for those that want to get in on the best terms, we look forward to having new folks join the SidePrize Family that believe in me, the team and the BIG vision we have ahead of us.
Do you feel like you’re on the other side of the madness now? If so, in hindsight, what are some takeaways you have learned from this whole experience?
We’re on the other side of the madness in the sense that we have seen the whole legal and political process play out on a state-by-state level. We know the very minimal chance where we could be negatively impacted, and considering the likelihood is so minor, we’re ready to get as aggressive as investor capital will allow us. For example, we believe now could be a great time for SidePrize to make a scene in New York while FanDuel and DraftKings are sitting on the sidelines.
In regards to lessons learned, I would normally preach ‘ask for forgiveness over permission.’ The great majority of the time it is the proper mentality for successful entrepreneurs. The biggest opportunities are often in the grey area with the law (e.g. Uber, AirBnB) so don’t give up if you believe you’re in the right. At the same time, you have to be honest with yourself about how quickly the law can evolve to allow you to do what you need to do. Fortunately for SidePrize, the new fantasy sports regulation has little to do with us as we are not a fantasy sports operator, but rather SidePrize resembles a payment processor that augments the fantasy experience.
In general, as a three-time digital entrepreneur, I know *perseverance* is the name of the game, and SidePrize has brought that word a whole new meaning to me.
And finally, if an entrepreneur finds themselves in a precarious position as they are growing their startup, what should they focus on while trying to resolve the issue?
As an entrepreneur, two of my biggest strengths would be my hustle and bootstrapping capabilities. To the latter, you have to get so lean and mean. If an entrepreneur tells me, they’ve brought their burn down all the way, they don’t know what they’re talking about until they’re only paying for server costs. In terms of the hustle, there’s always subject matter experts on different hurdles that will come up. Find those people, get those meetings or calls, get your questions answered and move on to the next hurdle.
Authored by Associate Editor Muriel Vega. Interview and development by Editor-in-Chief Kiki Roeder.