What It Means to Be a “Real” Entrepreneur | Michael Rubin, Fanatics

1. 0:00 – 3:47

   Why so many billionaires are boring

   1. DSDavid Senra0:00

      [typewriter clacking] Tell me why you find so many billionaires boring.

   2. MRMichael Rubin0:05

      I think when you look at all the people that lead so many different businesses, you can accumulate huge wealth, but that doesn't mean you're interesting. If you go out and talk to a general person, you're like, "Hey, here's some rich guy who made all this money on Wall Street," that's not interesting to most people. What people like to hear is entrepreneurial stories. They wanna hear, by the way, not about just all the good shit, but about the shit that went wrong. So I think someone who's self-deprecating, I'm one of the most self-deprecating people in the world, people like to hear the stories. They like to hear about the fuck-ups I've made, and the shit that's gone wrong, and the adventures I've been through. I think a lot of people are, they're kinda protective in their... I remember, um, I was doing CNBC four or five years ago, and I'd just been on the weight loss drug. I was, like, the first person. Like, they're like, "Michael, how'd you get so skinny? You must be working out like crazy." I'm like, "What do you mean? I took the weight loss shot that everyone's taking." They're like, "What? No one's ever admitted that before." And my PR guy's screaming at me saying, "You can't tell people that." I'm like, "Of course I can."

   3. DSDavid Senra0:58

      [laughs]

   4. MRMichael Rubin0:59

      And by the way, now everyone talks about it. It's just like, to me, it's just like being yourself, and a lot of people in business aren't their self.

   5. DSDavid Senra1:04

      Who are the people that you think do a good job of being their authentic self? Like, what entrepreneurs, like, do you like talking to, or you see, like, the stuff they do in media, and you're like, that guy knows what he's doing?

   6. MRMichael Rubin1:11

      Well, there could be, look, there could be certain people that I think aren't the biggest personalities, but just are super interesting. You know, I have so much respect for, you know, whether it's a Jeff Bezos, an Elon Musk, you know, people who have built amazing companies that I look up to and say, like, hey, you know, I'm inspired by what they've done. And I'm always learning from everybody around me, so I can take the things that people got right, and then also the people things got wrong, and then try to, you know, gain all that information for myself so I can be a better leader.

   7. DSDavid Senra1:37

      Say you have a, a difficult thing that's happening in your business, like who-

   8. MRMichael Rubin1:40

      That happens weekly.

   9. DSDavid Senra1:41

      Ex- Oh, okay, so like-

   10. MRMichael Rubin1:42

       Probably daily.

   11. DSDavid Senra1:42

       Oh, daily. So but, like, if you're like, shit, I need somebody to organize my thoughts with, I trust their judgment, I think they're really smart, like, who would you call?

   12. MRMichael Rubin1:48

       Well, it depends what the disaster of the day is. I mean, look, when you run a business like ours, we run a, I run a $14 billion revenue, one of the, I think, fastest-growing consumer brands in the world. In sports, which is, you know, an area we, we have billions of the most passionate fans in the world, when you get it right, they celebrate you. But if they don't like something, they bury you, and I love that, by the way, 'cause it makes you better. That pressure makes you better. So, you know, for me, you know, I go into it with expectations that we need to do everything we can to fulfill our brand purpose, which is to relentlessly enhance the brand ex- uh, the fan experience. But there's, you know, shit goes wrong, you have problems daily. And so for me, depending on what the issue is, is something, is it common sense to us on how to solve it, or do we need other people to give us input? I'm great at asking for input. Like, I'm, I am the least proud person in the world. I'm so easy to ask somebody for help. Matter of fact, from spending five minutes, if I had a, like, immediate thing I was screaming about in the podcast, I might be like, "Yo, how would you fix this?"

   13. DSDavid Senra2:53

       [laughs]

   14. MRMichael Rubin2:53

       Like, I'm always asking questions.

   15. DSDavid Senra2:54

       But is there a specific person that you go to? So, like, um, you know who Jimmy Iovine is?

   16. MRMichael Rubin2:58

       Of course.

   17. DSDavid Senra2:58

       Yeah, I fucking love Jimmy.

   18. MRMichael Rubin2:59

       Same.

   19. DSDavid Senra3:00

       Uh, he was on the show. We've become friends. He lives, like, a mile away from me. And I was at his house for lunch, like, a few weeks ago, and he told me in, in his life that he's like, David Geffen gives him the best advice. He's like, "I can come to him with a fucking, what I think is a complicated problem," and he says, "David gives me the shortest path. This is what he did on the table. He goes, 'From here to there.'" And he's like, "I, I think there's, like, six things." He's like, "David's like, 'None of that shit matters.'"

   20. MRMichael Rubin3:21

       So, so first, by the way, you, you asked me about interesting entre- entrepreneurs. I think Jimmy's an interesting entrepreneur.

   21. DSDavid Senra3:26

       Yeah.

   22. MRMichael Rubin3:26

       Like, I remember when he told me a story, and he had actually told me that he had a documentary made about him, and I actually went and watched a few of the episodes. I thought it was so interesting just to see kind of all the things he's been-

   23. DSDavid Senra3:37

       The Defiant Ones. It's one of my favorite documentaries-

   24. MRMichael Rubin3:39

       Yeah, he, he-

   25. DSDavid Senra3:39

       ... I've ever seen.

   26. MRMichael Rubin3:39

       And by the way, I watch very few, and I really liked it.

   27. DSDavid Senra3:42

       Yeah.

   28. MRMichael Rubin3:42

       I'm still one episode short. I gotta finish it.

   29. DSDavid Senra3:43

       Yeah.

   30. MRMichael Rubin3:44

       I think there were four episodes. I got through three-
2. 3:47 – 8:25

   Robert Kraft told him to sleep on it

   1. MRMichael Rubin3:47

      else. I think for me, to answer your question, if you'd say who's my go-to person for things to talk through, it's probably Robert Kraft. Robert and his oldest son, Jonathan, have probably been the two people that have been most helpful to me in my career of just really being invested in the growth of everything I'm doing, not because they, they had no agenda other than just, just be helpful to me. So I'd say, if you'd say, who are the people, who's the person I've asked the most, it's probably Robert. And one of the things for me is I think as a, I'm not young anymore, but I'm not, you know, Robert's 85. I'd say he just has more experience and, like, I remember being on a walk with him, and somebody did something that completely outraged me.

   2. DSDavid Senra4:32

      Can you say what that, how somebody, what the deficit?

   3. MRMichael Rubin4:35

      Um, they made a deal with me and then found a way to be very cute and violate it. And I said to, and it was a very important person in sports. And I said to Robert, like, "I'm really pissed off, and, like, I'm, I'm gonna be aggressive." And Robert's like, "Michael, take a deep breath. You're in this business forever. Like, don't have a reaction that's gonna create, you know, a negative consequence for the long term. Like, just, you know, like, settle down, sleep on it for a couple days, and then go deal with it." And by the way, a couple days later, like, the issue felt smaller to me. I dealt with it rationally and got to a great place.

   4. DSDavid Senra5:14

      There's a great line in Warren Buffett's shareholder letters where he says, "You can always tell the guy to go to hell later." He's just like, "Just sit with it for a few days-

   5. MRMichael Rubin5:20

      It's true

   6. DSDavid Senra5:20

      ... you'll, you'll calm down, and you'll be fine." You said something on another podcast, we were talking earlier before we started recording, that you don't really like doing podcasts. You're the most impatient person in the world. I wanna get to your impatience in a minute, 'cause I'm also impatient as hell, but you said something really smart on a podcast that's, that just came to my mind.

   7. MRMichael Rubin5:32

      That won't happen often.

   8. DSDavid Senra5:33

      What?

   9. MRMichael Rubin5:34

      That I said something really smart.

   10. DSDavid Senra5:35

       No. [laughs] But, uh, that, that's related to what you, you just said. You're like, "When things are bad, things are going to shit, relationships are everything."

   11. MRMichael Rubin5:43

       Yeah.

   12. DSDavid Senra5:43

       What did you mean by that?

   13. MRMichael Rubin5:44

       Well, I think, first of all, relationships are really important in business. And I don't understand how that's not just something so easily understood. So I think by our nature, I try to make Fanatics a very relationship-driven business, so even though we have 14 billion in revenue this year, 22,000 employees, a global business. I think, you know, w- we have over 100 locations throughout the world that, you know, our, our people work from. You know, I recognize we wouldn't have a business without the athletes, the tens of thousands of athletes that play on the field, the court, the ice, the pitch every single day. We wouldn't have a business without the incredible sports properties and teams that we work with. So we're humbled by that. So we really wanna make sure we have great relationships, but I think the reality is when shit's going well, those great relationships, well, of course, it's all good.

   14. DSDavid Senra6:37

       Mm-hmm.

   15. MRMichael Rubin6:38

       Everything's going well. When something goes wrong, that's when relationships get tested, and I think if you have great relationships, as I just gave you that example of, you'll get back to figuring out how to work to navigate these tough situations if you have the right relationship. And one thing I know in business, nothing goes straight up. Things go wrong all the time. Anyone who tells you, like, "Oh, it's just, it's easy, it's, you know, it's straight up," that's like a Disney movie. We're not here to talk about a Disney movie.

   16. DSDavid Senra7:03

       We were talking before we started recording that I've read, you know, for the last, spent the last 10 years on my other podcast called Founders reading, you know, hundreds of these biographies of history's greatest entrepreneurs. What's remarkable to me is how many times there was a key relationship in the entrepreneur's life that was financial in a means of, like, an investor, a bank or something like that, that this person found themselves in a shitty spot, temporarily squeezed, could be a lot of debt, they may be over-leveraged, or it could be a, like, um, like a recession or something like that, and the institution said, "No, cut this guy off," but the relationship superseded that. It's like, "Yo, I'm putting myself on the line." Phil Knight in Nike has this example. This, uh, I think Ari Emanuel in his new book talked about that. You see this over and over again. Do you have anything like that?

   17. MRMichael Rubin7:41

       I, I mean, look, here's the reality. Unfortunately, I'm 54, so I'm not a young buck anymore. Anyone who's been in business for any period of time has been through many difficult periods. I mean, I've been through COVID, was really complicated. I've been through the financial crisis of 2008 and '9. I've been through the internet bubble bursting in 2001. And to me, those difficult times have actually always been the most interesting times for us to grow through, to use to build a better business, and I like those times. Yeah, I've seen death in its eyes in business so many times, you know, from the time I almost went bankrupt for the first time at 16 years old.

3. 8:25 – 11:44

   How he almost went bankrupt at 16

   1. DSDavid Senra8:25

      How do you almost go bankrupt when you're 16?

   2. MRMichael Rubin8:27

      Pretty easy answer. You overextend yourself, get arrogant, and fuck up, and then it doesn't snow. I was in the ski business, and-

   3. DSDavid Senra8:35

      [laughs] It doesn't snow

   4. MRMichael Rubin8:37

      ... um, you know, if, if you're in the ski business, and I, you know, I started, it's a, I think, a pr- pretty well-known story, but I started in the ski business when I was 12 years old, opened an actual ski shop in my parents' basement when I was 13. By the time I was 14, I had a ski shop at a shopping center about 10 minutes down the street from my parents' house, and everything was great at 12 when I had the ski tuning shop. Was great at 13. It was great at 14. It was great at 15. Then at 16, I thought I was rocking. I was believing all these articles, all these newp- news pieces about, "Here's this young whiz entrepreneur killing it." And by the way, I went out, I bought half a Porsche before I was even, with a friend of mine, before I was even allowed to drive, and I went out and I, you know, I was spending money like I was, you know, really successful, except for I wasn't, and it didn't snow that year. End of the year, I had $200,000 of bills, $80,000 of inventory, and I was sitting right in front of bankruptcy and thought I was going bankrupt for the first time. And the thing that was great was hired a bankruptcy attorney, ended up realizing you can't even legally incur debt until you're 18.

   5. DSDavid Senra9:38

      [laughs]

   6. MRMichael Rubin9:39

      Settled my debts for $35,000, and then found another store that had gone bankrupt. Their stuff got auctioned off, $200,000 of inventory. Bought it for $13,000. Went neighbor to neighbor to borrow that money. Found someone to lend it to me for $1,000 a week interest, which I thought was a great deal for a $13,000 loan, and ended up within three weeks being able to pay all the money back, the principal and the interest, and that got me in the closeout business. Five years later, I'm doing $150 million a year as a 21-year-old, making, you know, 10, $15 million a year, and I was the biggest buyer and seller of closeouts. The reason I tell you this story is I went from death in its eyes, bankrupt, thought I was a complete failure, giving up on entrepreneurialism, to five years later, doing $150 million, making $15 million, 10, $15 million a year as a kid. And so to me, each disaster, if you learn from it, leads to your nest success.

   7. DSDavid Senra10:29

      100%. So you're clipping 10 to 15 million a year. You're taking that as in dividends?

   8. MRMichael Rubin10:33

      I mean, we were actually building the business, so I was probably investing back in inventory too-

   9. DSDavid Senra10:37

      Okay

   10. MRMichael Rubin10:37

       ... 'cause, but I was making, as a, you know, 21-year-old, making real money at that time.

   11. DSDavid Senra10:40

       Yeah.

   12. MRMichael Rubin10:40

       And by the way, let's go back. This is 33 years ago, too.

   13. DSDavid Senra10:43

       Yeah, it's like add a zero [laughs] to that.

   14. MRMichael Rubin10:45

       Add something.

   15. DSDavid Senra10:46

       [laughs]

   16. MRMichael Rubin10:46

       A couple times at least.

   17. DSDavid Senra10:48

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4. 11:44 – 15:20

   Hours from being margined out in 2009

   1. DSDavid Senra11:44

      You had a couple experiences like this where you were, um, I, I heard you tell this story. It was like you need, like, something like $50 million or something, and you had to call, like, one of your bankers or something, like, I don't know, 50 times. Or the 51st time, he finally picks up.

   2. MRMichael Rubin11:56

      Yeah.

   3. DSDavid Senra11:56

      He's like, "Goddammit, I'll give you your, give you the money." You were much older then, though. This was during, uh-

   4. MRMichael Rubin12:00

      That was only-

   5. DSDavid Senra12:02

      That was-

   6. MRMichael Rubin12:02

      ... 17 years ago.

   7. DSDavid Senra12:03

      But this was-

   8. MRMichael Rubin12:03

      2009 financial crisis.

   9. DSDavid Senra12:05

      Okay.

   10. MRMichael Rubin12:05

       We were a public company The stock that I personally owned was worth about $250 million in 2007. I was borrowing money from one of the big banks against that $250 million in stock, and I was investing that money in the market, 'cause that's what, kinda how I was living. And that worked from 1999-

   11. DSDavid Senra12:22

       [laughs]

   12. MRMichael Rubin12:23

       ... until 2007. And then when the financial crisis happened, stock went down by 90%. My $250 million stock's now worth $25 million. The advance ratios went from 40% to 15%, and now I'm able to borrow $4 million instead of the $50 million I was able to borrow before. Well, I did a great job getting most of the money back, 'cause it was all, all my money was invested in different hedge funds, mutual funds. So I got the money back, I got down to $3 million, couldn't get another penny out. And there was one guy I gave $5 million to start his hedge fund. I called the guy, I think 50 times is an understatement. I probably called him 100 times. He's like, "I can't give you the money back, I can't give you the money back." And finally he's like, "Just stop fucking calling me, take the money back." And by the way, I was like, not days or weeks or months from being margined out of my company. I was hours. And the crazy thing about it, I loved every bit of the experience. It wasn't scary to me. It was intellectually interesting. It was fun. Like, I liked, I liked the adrenaline of, like, fighting for my life.

   13. DSDavid Senra13:22

       Say more about this.

   14. MRMichael Rubin13:23

       I mean, what do you say? Like, if it's, if it's the same shit every day, that's boring. Like, you know, business is a rollercoaster. Business is an adventure. And you know, if you're a real entrepreneur, you like that, you thrive on that, you know? You know, look at what ch- the changes that happened in the marketplace, you know, two years ago. I mean, you know, you could have a red hot company one day, and three years later that could completely change. Now, I like having to be on top of your game all the time.

   15. DSDavid Senra13:47

       This is the same company where it's like close, you were close to, like, losing it, and then, like, is this the one that 18 months later you sold for, like, $2 billion?

   16. MRMichael Rubin13:54

       Point five billion, yeah.

   17. DSDavid Senra13:54

       Yeah.

   18. MRMichael Rubin13:54

       It was, I-

   19. DSDavid Senra13:55

       What was the, the timeframe there?

   20. MRMichael Rubin13:57

       So spring '09, I was going down. I owed $50 million to one of the big banks, which I got down to $3 million personally. Didn't think I could get the last three million paid back, which seems crazy, but I couldn't get the last three million. Again, 2009. They were gonna mar- they were gonna start selling the shares to pay the margin load off, and got that last three million back with hours to spare, not days.

   21. DSDavid Senra14:31

       Hours?

   22. MRMichael Rubin14:31

       Hours. And then March of 2011, eBay bought the company for $2.4 billion.

   23. DSDavid Senra14:37

       How does that happen in just such a short amount of time? Like, what did eBay see that was so valuable?

   24. MRMichael Rubin14:42

       Well, financial crisis was over.

   25. DSDavid Senra14:44

       Yeah.

   26. MRMichael Rubin14:45

       And eBay really wanted to offer all of the e-commerce services that we offered to big retailers and big brands that they could then get into their marketplace. So they had a sound strategy for wanting to do it. But the thing that was interesting for me was seeing, you know, some of the darkest days of my business, but I was never frazzled. I was never nervous. I just kept working. Like, to me, if you keep working a problem, working a problem, working a problem, you can generally get to the right place. A lot of people give up too easy.

   27. DSDavid Senra15:14

       I agree with that. Uh, I, that leads me to, like, the next question where you just mentioned. You said if you're a real entrepreneur.

5. 15:20 – 17:21

   What a real entrepreneur is

   1. DSDavid Senra15:20

      How do, how would you, like, describe what you feel, feel is, like, a real entrepreneur? Like, what are the traits or, like, what comes to mind when you, when you think about a real entrepreneur?

   2. MRMichael Rubin15:27

      I think a lot of entrepreneur is something you're born with. Now, that doesn't mean it shows it all the time, but I think you're kinda born with it. Like-

   3. DSDavid Senra15:33

      I'm gonna pause there. On the ride over, I, what did I fucking, what'd I say about him? I go, "This dude's a born entrepreneur." I used that exact fucking, uh, phrase.

   4. MRMichael Rubin15:40

      Well, the thing is also, like, if you keep this real, I'm like a OG entrepreneur, [laughs] because now it's like you can go out and you can look at some 17-year-old kid who's gonna use AI or do something in AI that's gonna, like, reinvent the world in some really interesting way. I was an entrepreneur when the, the, the internet didn't exist when I started, okay? There wasn't even an internet. Forget about-

   5. DSDavid Senra16:03

      [laughs]

   6. MRMichael Rubin16:04

      ... you know, AI. We didn't have the fucking internet.

   7. DSDavid Senra16:06

      [laughs]

   8. MRMichael Rubin16:06

      Okay? So you know, I was in the real physical world, and so when I started as an entrepreneur, if you look back and you look at Michael Rubin in the, can't believe I'm saying this, mid-'80s, okay, late '80s, there weren't, this was such an uncommon story. So I always love, look, you gravitate to what you're good at. I sucked at school. I sucked at sports. I loved to work. I've always been a workhorse, and I've always, like, loved every, every moment of the action.

   9. DSDavid Senra16:36

      Okay, but tell me more about, like, what you see, like, how would you define, if somebody said you have to define what a real entrepreneur is, what would your-

   10. MRMichael Rubin16:42

       I'd say a real entrepreneur, one, they're born with it. Two, they love it. Three, they can't stop. They're addicted to it. Thinking of a nameless entrepreneur right now who I have a lot of res- respect for, but maybe they're really not an entrepreneur, 'cause they sold the business for $20 billion. They then took stock in the company that bought them, doubled it, and they made double their money from that. The person made tens of billions of dollars, but they don't, they're not an entrepreneur anymore. They, they don't care. They don't, like, they're not, they, so to me, if it's in your blood, it's in your blood. Like, I'm gonna do this till the, you know, last day I can possibly do it.

   11. DSDavid Senra17:17

       Yeah, you're gonna die at the desk.

   12. MRMichael Rubin17:19

       Yeah. Why not?

   13. DSDavid Senra17:20

       Yeah.

   14. MRMichael Rubin17:20

       It's fun.

6. 17:21 – 21:03

   "I'll stop playing when my heart stops beating"

   1. DSDavid Senra17:21

      Yeah.

   2. MRMichael Rubin17:21

      You know, one of the great things about being in business, so different than being an athlete, you know, LeBron James is doing amazing. His birthday's in December. I think he's 41, turning 42. He's eventually gonna have to stop playing in the NBA. Tom Brady eventually had to stop playing in the NFL. I'll stop playing when my heart stops beating.

   3. DSDavid Senra17:40

      I love that. What do you, you spend a lot of time with these world-class athletes, they're the best in the world at what they do. They go down in history as, as such. Like, do you learn any, do you take anything from, like, their approach to their craft that you apply to yours?

   4. MRMichael Rubin17:52

      So much. I mean, first, I can now tell you when, it's, it's interesting, 'cause I didn't know this 10 years ago. I think when you study an athlete, you can really figure out very quickly what they're gonna accomplish. Like, there are so many athletes That are so fricking talented, but they don't have the killer instinct, okay? And so they're always gonna come up short. There are so many other athletes that are really gifted but maybe not as much as the other person who's even more gifted, but they're killers, okay? And so to me, what I love is studying the people who just always find a way to win. And like I know, take someone who, you know, look, everyone knows, you know, Brady's a, you know, a super close friend of mine. Knowing him now as well as I do, it's so obvious why he won seven Super Bowls. Knowing him the way I know him, he's still mad he only won seven Super Bowls, okay? And we joke about it now. We're like, "How'd you lose that one? How'd you lose that?" And he's an- by the way, he'll tell you the story. He's, he's angry about whichever one he didn't win. He's not happy about it 'cause he's that competitive. You know, for me, I see that same work ethic that made him who he was on the football field in business, and he is a killer in business 'cause he's outworking everybody. His hustle is infectious. You see the same thing with Bron. You see the same thing. Any incredible athlete who's just got that killer instinct, they're gonna be really successful for what they do post their playing career 'cause they're gonna take that same, you know, kinda attitude and instincts that made them succeed in sport, they're gonna put that toward business. I see that translate so well.

   5. DSDavid Senra19:33

      Yeah, I think it, it's a sign of, uh, like, a lot of, like, practical intelligence to realize, like, the same principles that let, let you succeed in one area, if you apply them in another one, you'll probably succeed in that. There's this great book written by Arnold Schwarzenegger. It's like, it's called The Education of a Bodybuilder, right? And the first 114 pages is essentially, uh, serves like an autobiography of the first 30 years of his life, and he's like, "Hey, you know, I grew up in Austria right after we lost World War II. Everybody in my village was a loser. My dad was an alcoholic. Everybody was pessimistic." He goes, "I just needed to get to America. I needed to find a vehicle to get to America. I realized bodybuilding was that, that vehicle." And he explains in detail all the crazy approaches he did to get to the top of that profession. Then at the end of the book when he's only 30, he goes, "The same principles I got to the top of this profession I'm gonna use to go to America to build a business empire and to become the highest-paid actor." And he literally just calls a shot, and then he's just like, "It's the exact same thing. I just had to apply it and change the dir- what, the, what I'm aiming at."

   6. MRMichael Rubin20:24

      And I never knew any of that story, but here's what I love about that story. So many people would say they give you the excuse about, uh, you know, you said his father was an alcoholic and, you know, all these different things went wrong in his life. And the question is, are those excuses or is that motivation? I look at all that as motivation.

   7. DSDavid Senra20:43

      Yeah.

   8. MRMichael Rubin20:44

      A lot of people look at that as excuses. The entrepreneur looks at that as motivation. They don't give a fuck what's getting in the way of them. They're gonna find a way to persevere. They're gonna find a way to win. They're gonna find a way to do better. They're gonna find a way to innovate more. They're gonna find a way to not be run over.

   9. DSDavid Senra20:58

      Yeah. You, you give me the vibe that, like, you don't want things to come easy.

   10. MRMichael Rubin21:02

       It'd be boring.

7. 21:03 – 25:12

   The litigation, and why he loves the fight

   1. DSDavid Senra21:03

      Right now going on in your business, what is, like, occupying most of your mind share?

   2. MRMichael Rubin21:07

      We have this crazy litigation going on between us and one of our rival competitors. If you look at our business today, we have three primary businesses, right? We have the business we started in, which is the Fan Gear business, Fanatics Commerce. Um, started that, you know, really in 2011. It's about a $7 billion business today. We have our betting and gaming business, which is the fastest growing sports book and casino in the country. And then we have our collectibles business. The betting and gaming business, much harder than we thought it was gonna be because you've had the advent of prediction markets which didn't exist, you know, really even two years ago in any real way. And now, you know, they're injecting... billions of dollars are being spent in a finite advertising market, and that's made the business far more complicated. In our collectibles business, we actually got in a business where so many competitors, but so many of them are so bad and so, so uninnovative. And so we got in the business, and we innovate the product like crazy. We marketed the hobby for the first time. You know, we got athletes that never cared about this hobby before to be so into it, and you see it's why the collectibles industry is growing so quickly. We reinvented the model. We made it better for everybody involved. We made it better for the athletes. We made it better for the hobby shops, the breakers. We made it better for collectors. We made it better for the sports properties. And, uh, there's a company that used to have really the same set of rights that we have today they had before. And when they had them, they said they were the global leader in sports entertainment collectibles. And now that we have them, they've told us we're a monopoly, and they're suing us. And the interesting thing is it's so intellectually interesting for me. I love the fight.

   3. DSDavid Senra22:48

      Out of all your businesses, the collectible one is the one I, uh, understand the least. Why jump into that business? What, what did you see before you got into it?

   4. MRMichael Rubin22:54

      So really what happened was we built the, again, we call it Fanatics Commerce, the Fan Gear business from 2011 until 2020.

   5. DSDavid Senra23:05

      And this is selling like licensed clothing-

   6. MRMichael Rubin23:07

      Yeah, we're the, we're, yeah, we're the designer, developer, manufacturer, and seller of other people's licensed products. We're the biggest seller of licensed products in the world, leading company-

   7. DSDavid Senra23:15

      For all the sports leagues are the, the big ones?

   8. MRMichael Rubin23:17

      For, for, for many sports properties.

   9. DSDavid Senra23:19

      Yeah.

   10. MRMichael Rubin23:19

       And so, um, we al- so fanatics.com is where you go, which has, uh, really, you know, everything that we sell. And by the way, we sell things from partners like Adidas that we don't make or partners like New Era who are, you know, great third-party, you know, suppliers to us. And then we make a lot of what we sell as well, um, you know, in the business, whether it's the Fanatics hometown remixed jerseys that we launched last week or whether it's, you know, we happen to make the Nike NFL merchandise or the Nike baseball merchandise or Champion merchandise that we make. So, you know, we design, develop, and manufacture many leading products. We also work with so many great brands that we buy from on a wholesale basis and sell at retail. That business, uh, is mostly direct to consumer. Uh, it's mostly through the internet. Uh, Fanatics is the biggest site, but then we operate the NFL Shop, the NBA Store, MLB Store, NHL Store, and we have hundreds of college and professional, uh, individual team sites that we operate. And then we own Lids, the headwear retailer as well, and then we operate, uh, hundreds of venue and college, uh, bookstores and, and venues as well. So if you go to San Francisco, we operate the 49ers venue, the, um, Giants venue, the, uh, Golden State Warriors venue, the Earthquakes venue, all in San Francisco. So we are a real leader in that business. That's where we started. We then in 2020 realized that the most Important part of the company wasn't the commerce business, it was that we had an amazing relationship with, at that point, 70 or 80 million sports fans. And we said, "Well, what else could we do?" And we started looking at different categories, and we entered the betting and gaming business, which is, you know, we are the fast-growing sportsbook you see in the country. We've gone from no market share to about 10% of the sports market, of the regulated sports market in the last three years. But super competitive. But what we've done is make it better for the consumer in everything we do. So when we launched that business, we didn't say, "Hey, how do we just do what FanDuel is doing? How do we do what DraftKings is doing?" We said, "How do we make it better for the fan?"

8. 25:12 – 29:37

   "It's a currency of sports"

   1. MRMichael Rubin25:12

      And we launched with two big differentiators. The first was we said, "Every time you bet with us, win or lose, we're gonna give you fan cash that you can then use to, um, buy merchandise, make more bets, get collectibles, go to leagues-"

   2. DSDavid Senra25:26

      It's like your own currency?

   3. MRMichael Rubin25:27

      It's like our, it's like, it's the currency of sports. Our own currency.

   4. DSDavid Senra25:29

      Okay.

   5. MRMichael Rubin25:30

      We're gonna give out over a billion dollars of fan cash this year, and that gets... And by the way, more than 90% of it gets redeemed within the year. So people love that. So you're kind of like, if you bet on sports at a regulated sportsbook, you're kind of leaving money on the table. And that's smart if you don't use Fanatics, 'cause it's a better deal because we give this fan cash, over a billion dollars of it this year. The second thing is, the number one complaint we heard from bettors was, "Oh, my player got hurt, and I lost the bet 'cause they got hurt. So, you know, I thought that, you know, this player was gonna get, you know, 50 yards and, you know, they got hurt in the second quarter of the NFL game," or, you know, someone gets hurt in a game. So we said, "Look, any time your player gets hurt in a game, we're gonna take them out of the player pop, and bets that would've lost now don't lose." And tens of millions of bets that would've lost now don't lose. So we made it better for the gambler by doing this, and I love that we can do that at Fanatics. So everything we're trying to do is how do we relentlessly enhance the fan experience? If we can't do that, then we gotta keep thinking about it. How do we do that?

   6. DSDavid Senra26:26

      If I understand this correctly, your, your idea is like, "Hey, we have 70 to 80 million customers already."

   7. MRMichael Rubin26:31

      140 million now.

   8. DSDavid Senra26:32

      Oh, but back then-

   9. MRMichael Rubin26:32

      Yeah

   10. DSDavid Senra26:32

       ... we can do this. I think I have so, uh, uh, area one or two ways to differentiate, you know, against, uh, the existing sports, uh, betting, right? And-

   11. MRMichael Rubin26:41

       I'd say-

   12. DSDavid Senra26:42

       I already have-

   13. MRMichael Rubin26:42

       I'd say better than differentiate, to be better. To be better than the competition.

   14. DSDavid Senra26:45

       But one of your massive advantages is the fact that you already had this existing customer base-

   15. MRMichael Rubin26:49

       For sure

   16. DSDavid Senra26:49

       ... that trusted you, had already purchased products for you, and so you're, then it's just extending that relationship and offering them another, uh, s- like, business line.

   17. MRMichael Rubin26:56

       Yeah, that's right.

   18. DSDavid Senra26:57

       Okay. Where, like, these other, your competitors would have to, obviously they have to advertise for a lo- a long period of time. They have to build up their own customers, but you already had them.

   19. MRMichael Rubin27:03

       Yeah. Fanatics has really become a digital sports platform, that today we have 140 million fans that do many different things with Fanatics. Whether they buy merchandise, buy trading cards, trade trading cards in a marketplace, you know, go to Fanatics Live and do group buying. Whether they bet on with us, go to our casino, go to Fanatics Fest. They do many different things with Fanatics, and our best customers are people that do things across multiple different businesses.

   20. DSDavid Senra27:30

       Okay, so if you think of Fanatics as a platform, then you're offering all these other businesses. How many of these businesses are you growing by acquisition? Are you creating these products from scratch yourselves? Like, how do you, how do you think about this?

   21. MRMichael Rubin27:39

       We're not that acquisitive of a company. So if you look at, like, this year we're gonna grow by 40% plus. It's all organic. So have we bought capabilities to be able to move more quickly? Absolutely. When we got into the collectibles business, we bought a few assets to help us to grow more quickly, that we could then take those assets and materially improve them and invest more aggressively in them. So in the sportsbook, we bought a small sportsbook called PointsBet in 2023 that had, like, 1% of the market or 1.5% of the market, just to help us to move more quickly. So, but in the last couple years, you know, we've bought, you know, very few things and nothing of materiality.

   22. DSDavid Senra28:24

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9. 29:37 – 32:42

   Selling more products to the fans they already have

   1. DSDavid Senra29:37

      Do you know Nikesh Arora?

   2. MRMichael Rubin29:39

      I know the name.

   3. DSDavid Senra29:40

      Palo Alto Networks. So he was, uh, at Google for a long time, and then you know Masa 'cause you raised money from Masa.

   4. MRMichael Rubin29:45

      Of course.

   5. DSDavid Senra29:46

      Masa recruited him out of Google.

   6. MRMichael Rubin29:48

      Yeah, yeah, of course I do.

   7. DSDavid Senra29:48

      And he, he was like, "Hey, you can be the next CEO 'cause I'm not gonna be here forever," and you know entrepreneurs never fucking quit. And Nikesh was smart. He's like, "I don't know about this. I'm gonna leave Google," which at the time was the best business in the world. "But if you, if I don't become the next CEO or you fire me, you gotta pay me $250 million." So Masa, he's, he's [laughs] ... Well, Masa said he was gonna step down when he was, like, 60. I think he's, like, 59. Nikesh is like, "All right. Well, let's, uh, transition." And he's like, "There isn't any. I'm not leaving." And so anyways, uh, Ni- Nikesh leaves, uh, leaves SoftBank with 250 million, gets recruited to this essentially single product company called Palo Alto Networks. They, I think they have one business. They sell you a fucking firewall. It's 18 billion. It's a public company. Nikesh takes over, and now it's 200, as of today, 268 billion. And he was just on the show. He said, very similar to what me and you were talking about now, he's like, "Problem is, like, I'm knocking on somebody's door, I have one product." He's like, "All the best, the biggest businesses in the world have to sell multiple products to the same customer." And so now he's done 40 acquisitions, and he, he grew by acquisition, and now he's, he can sell, you know, 30 different products to the same customer.

   8. MRMichael Rubin30:50

      So one of the really interesting things for us, we do a leadership meeting once a year with kind of- Many of the most important people in our company. And when we did that this past September, we actually studied how much a company accomplished in the first 15 years versus today. And what you see is that so many of the companies that are really successful today, whether you wanna say it's Apple, Apple, Amazon, Google, Meta, so much of the growth has come kinda after this first 15 years, and so much has come by adding additional products to the business. So I'd say for us-

   9. DSDavid Senra31:26

      That was like Kesha's point.

   10. MRMichael Rubin31:27

       Yeah, yeah. And, and he's 100% right. So when we look at Fanatics today and we say a customer can do so many different things for us, that's certainly a real strategic advantage. When I think about our business opportunity, we used to dream about being the most important company in sports. Well, we have huge respect for that, and our aspirations are much bigger than that. We wanna build, you know, one of the most important consumer brands in the world. And for us, you know, the opportunity is so massive to serve the two billion global sports fans with many of the things that they need digitally. And so every time we add a product, it makes our opportunity that much more interesting. I'll say a lot of this we can do organically, though. So when we got into the betting and gaming business, sure, we bought PointsBet, which has gave us a little bit of capabilities. We got in prediction markets, we bought a couple small pieces. When we got in the collectibles business, we bought a couple small pieces. But we have very much been much more of a organic grower that sprinkles in M&A to help us to get a capability more quickly than maybe we could do it organically.

   11. DSDavid Senra32:28

       Yeah. Nick, Nikesh, he was saying, he's like, "People come up to me 'cause I bought 40 companies. Like, what's your M&A strategy?" He goes, "I don't have one." He goes, "I don't go out, I'm not trying to buy companies. I just see where I'm, if I discover we're weak in an area and somebody else is better, I wanna be either number one or two, so then I'll just figure, like

10. 32:42 – 33:48

    "Number 3 is irrelevant, number 2 sucks, number 1 is everything"

    1. DSDavid Senra32:42

       I'll buy the company and do it that way."

    2. MRMichael Rubin32:42

       So, so that was the other theme of our last offsite, it was that number one is everything. You know, kinda like number three is irrelevant, number two sucks, number one is everything. So for us, I think you need to force yourself to be better, to innovate, to figure out how to be number one. And I like, like there's certain places where we're a real leader today. There's other places where, like in the, in the betting and gaming business, we're a distant three today. And I like that challenge to figure out will we get to number one or not? Will we succeed or not? I like the, like that's fun to me. That's, you know. One of the, and people could say, "Oh my God, look at the betting and gaming business today. It's an absolute fucking mess." You got DraftKings and FanDuel taking their numbers down, investing more money like crazy. You know, lack of growth in existing regulated markets, new markets not regulating. You got the prediction market guys coming in, spending billions of dollars in advertising, everyone fighting for the same customer. I'm like, "Yeah, I wanna be at that party. That's fun."

    3. DSDavid Senra33:37

       Are FanDuel and DraftKings founder-led?

    4. MRMichael Rubin33:39

       DraftKings is founder-led with a really good founder, Jason Robins. Uh, FanDuel is not founder-led. The, uh, person who really built FanDuel is, uh, actually runs our betting and gaming business, Matt King.

11. 33:48 – 35:49

    "0.0 chance" he'd invest in prediction markets

    1. DSDavid Senra33:48

       Okay, interesting. What do you think of the prediction markets?

    2. MRMichael Rubin33:51

       I think that it's unlikely that the current construct will be the construct a couple years from now.

    3. DSDavid Senra34:00

       Meaning that they found this, like, loophole to-

    4. MRMichael Rubin34:02

       I like the two entrepreneurs who run both Kalshi and Polymarket a lot. They're, they're, they're very different, but both very sharp. I've spent real time with each of them. I'd say it's been very easy for me to look at markets and make predictions about, like, like I feel like we live inside a company, so I can look at something and say like, "Man, I know this thing is going the wrong way," and, you know, without calling out people 'cause I'm friends with a lot of people. Like, I've had some pretty big companies that I'm like, "This is a train wreck," and people are missing it, and a couple years later, the stock is, you know, down 75% and still falling. There's been some, like some obvious things to me. Prediction markets, I think they found a way to, you know, work within a set of laws that I think allow them to do something that's, that's quite frankly good for us in the near term. But when someone says, "How much similarities are there between regulated sports betting and prediction markets and sports?" which is 80% of the prediction markets business, like let's not bullshit each other. There's a lot, okay? So do I really sit here today thinking a couple years from now it's likely that the market construct will be the same? I don't. You could have state regulation. You could have taxation at the state level. You could have just people feel different ways. I mean, that's, you know, and that's part of like we s- at Fanatics, we stay out of politics, but like politics change, things change and, you know, you know, we know today investing, you know, hundreds of millions of dollars in prediction markets, that if I had to predict, the construct of the market will not be what it is today in a few years from now.

    5. DSDavid Senra35:33

       So would you put your own personal money into any of those two companies at the valuations they are now?

    6. MRMichael Rubin35:38

       0.0 chance.

    7. DSDavid Senra35:39

       I thought so. [laughs]

    8. MRMichael Rubin35:40

       Highly short. And by the way, I like them both. I say this with love to, to both Shayne and Tarek. They're both great guys. They're both great entrepreneurs. They're both great capital raisers. No. Fuck no.

12. 35:49 – 39:57

    $5.5 billion in collectibles

    1. DSDavid Senra35:49

       You were explaining to me what I said was, like, the least understandable part of your business, which is the collectibles. Like, I was a kid, I played baseball, played basketball, collected cards. Never thought to do anything with them. I didn't even know, like, there was still, this thing was still going on. And I think I heard you on a podcast where you guys are doing, like, three billion a year in-

    2. MRMichael Rubin36:06

       Five and a half this year.

    3. DSDavid Senra36:07

       Okay. What the, what the fuck's going on? Explain this part of your business.

    4. MRMichael Rubin36:10

       Yeah. I, I, I think when we got into the collectibles business in 2000, so I, the idea first hit my brain in November of 2020. We launched January 1st, 2022. I'd say the market had really, it had consistent growth, and then it was really exasperated through COVID, which, you know, people were inside, they were looking for things to do, and it was a real CO- COVID beneficiary. At the time we came up with the idea, and I remember going to the people that ran the sports properties, both the players associations and the leagues, I kinda said to them, "Look, trading cards are at an all-time high, really benefited from COVID, but there's been so little to no product innovation."

    5. DSDavid Senra36:55

       Were the leagues making a lot of money from this?

    6. MRMichael Rubin36:56

       They were making a medium amount of money, not a lot of money. So to put it in perspective, you know, the average league might've been making 20, $30 million then and they could be making-

    7. DSDavid Senra37:06

       A year?

    8. MRMichael Rubin37:07

       A year from the trading card companies.

    9. DSDavid Senra37:09

       Okay.

    10. MRMichael Rubin37:09

        Or the average union might've been making that. And, and if you think about FIFA, um, or Disney, which are like, when you think about the, the collectibles market, I mean, it's a, you know, the market is, you know, sport- it's, you know, kind of really global sports and entertainment, um, collectibles market. So, you know, Pokemon's the number one trading card company in the world, okay? Mag-

    11. DSDavid Senra37:28

        How much money do they make?

    12. MRMichael Rubin37:30

        We don't know their exact numbers. I'd say they're more than $5 billion just from Pokemon. With, by the way, they're, uh, they don't need players to sign autographs.

    13. DSDavid Senra37:38

        [laughs]

    14. MRMichael Rubin37:38

        You know, nobody gets in trouble. Um, very, very peaceful. You know, all the characters, you know, are, are, are perfect characters.

    15. DSDavid Senra37:45

        [laughs]

    16. MRMichael Rubin37:45

        Um, so you know, they're the number one company in this, in, in this space. We look at them with great respect and admiration. Uh, Magic The Gathering, which are owned by Hasbro, another, another great business. Um, but for us, when we looked at the business, what we saw was multiple companies that were for sale, right? The, the leader at that point, Panini, they had been for sale for somewhere between 15 and 30 years straight, literally always for sale, okay? But-

    17. DSDavid Senra38:11

        Are they getting bought and sold over and over?

    18. MRMichael Rubin38:13

        No.

    19. DSDavid Senra38:13

        No one's buying it.

    20. MRMichael Rubin38:13

        Ne- never transacted, always for sale.

    21. DSDavid Senra38:15

        [laughs]

    22. MRMichael Rubin38:15

        Now, if you're in that, if you're in that situation, you're not thinking about how to invest in the product-

    23. DSDavid Senra38:20

        Yeah

    24. MRMichael Rubin38:21

        ... how to invest in marketing, how to really build a business. You're thinking about how to get the check, okay? So time spent on selling was their focus, not time spent on innovating. And by the way, Topps, the other company, who was owned by Michael Eisner, is a guy I have huge respect and admiration for. You know, he was taken public in a SPAC, and I'd say, and, and I like Michael Eisner a lot.

    25. DSDavid Senra38:39

        What? He, wait, he was taken in public in a SPAC?

    26. MRMichael Rubin38:41

        Yes, he was taken public in a-

    27. DSDavid Senra38:41

        Why? [laughs]

    28. MRMichael Rubin38:42

        'Cause he wanted to take... Well, look, he'd owned it for a while and he wanted to take it public. You know, you have two guys that were in their 70s that owned these companies that were more about, like, getting cash out of the companies than investing. We looked at the business, kind of crazy. Put yourself back, 2021, COVID high for the collectibles business. Everyone said this business is gonna kinda go backwards like the way it has in the past, 'cause it's always been a cyclical business. And we went to the sports properties, to the unions, the leagues, and said, "Look, we'll guarantee you the high watermark of the business. We'll give you a minimum guarantee for what you're making right now, 100% of what you're making. We'll give you a higher royalty rate. By the way, you're not making any money from the sales that happen to eBay. You're not making any money from the sales that happen at whatnot. We'll cut you into all of that, all these ancillary-

    29. DSDavid Senra39:23

        Oh, so-

    30. MRMichael Rubin39:23

        ... businesses we're gonna cut you in on."
13. 39:57 – 45:14

    The debut patch: a $50 million card

    1. MRMichael Rubin39:57

       Our team came up with this idea of developing this debut patch when a player played their first game. It started in baseball. It's now in so many sports across the world. It's now in baseball, the NFL, the NBA. Just had it in FIFA, Champions League. You play your first match, play your first game, they put a, a patch on your jersey. Soon as you get done playing the game, you take it off the jersey, it goes in a one-of-one card. There's only one in the world. Could you think about if you had Michael Jordan's-

    2. DSDavid Senra40:24

       Yeah

    3. MRMichael Rubin40:24

       ... debut patch?

    4. DSDavid Senra40:25

       Yeah.

    5. MRMichael Rubin40:26

       Okay? There's one in the world. That's a $50 million card, okay? If you had O- maybe more, by the way. If you had Ohtani's debut patch, it'd be insane. Tom Brady, LeBron James debut patch. So we started creating these patches and now each year there's thousands of these cards because we're doing them in so many sports. You know, it's the number one most desired product. Everyone wants to get the debut patch 'cause there's only one in the world. Then the really odd thing was nobody cared about achievement in trading cards. It didn't matter if LeBron James had an incredible career or if Tom Brady had an incredible career. People always wanted the rookie cards. We said, "Well, let's add achievement to trading cards." So now when you, you know, win MVP, Aaron Judge's Batman changed to gold color, okay? Then that goes in a one-of-one card. Ohtani had a card that we made last year, 'cause he was MVP, had patches from each of the past two seasons. That card someone bought in a $1000 box of cards, and it got auctioned off for $13 million, it got sold for $13 million, okay? That one card. So creating these debut patches, creating these, you know, making achievement part of trading cards, and then you start marketing. There was no marketing. I just saw a stat that the social media reach of Fanatics and Topps, say, for trading cards is 100 times what it was three years ago, 'cause people are interested. Then you look at all the athletes that care so much about this. You know, Kat, I think about, Kat spends five, 10 hours a day collecting cards. He's so into it. He now owns hobby shops. He, he-

    6. DSDavid Senra41:54

       Wait, who's Kat?

    7. MRMichael Rubin41:55

       Karl-Anthony Towns.

    8. DSDavid Senra41:56

       Okay.

    9. MRMichael Rubin41:56

       Basketball player.

    10. DSDavid Senra41:57

        Yeah, okay, got it.

    11. MRMichael Rubin41:57

        You heard of him?

    12. DSDavid Senra41:58

        Yeah.

    13. MRMichael Rubin41:58

        You have?

    14. DSDavid Senra41:58

        I, I only podcasts. I read books and podcasts.

    15. MRMichael Rubin42:00

        Only podcasts. That's it. Okay.

    16. DSDavid Senra42:01

        But, yeah.

    17. MRMichael Rubin42:01

        So there's this team called the New York Knicks.

    18. DSDavid Senra42:03

        [laughs]

    19. MRMichael Rubin42:03

        They won the championship last year.

    20. DSDavid Senra42:05

        I am-

    21. MRMichael Rubin42:05

        This guy, there's this guy called Ka-

    22. DSDavid Senra42:06

        I think I heard about that

    23. MRMichael Rubin42:06

        ... there's this guy called Karl-Anthony Towns on the team.

    24. DSDavid Senra42:09

        Yeah.

    25. MRMichael Rubin42:09

        And he actually told me one, one of the games he won in the finals, he was so excited to go win an auction on Fanatics Collect, he ran back off the interview to go see if he won the auction in the locker room in the middle of the finals. Okay?

    26. DSDavid Senra42:18

        So the players are making a lot of money off this now too.

    27. MRMichael Rubin42:21

        I think some players are making a lot of money from it, but much more important than that is how much some of the players care about it. Cooper Flagg just opened a store where he's from in Maine. Lewis Hamilton's opening stores in, in, uh, Abu Dhabi and in Germany and in England. And you got Tom Brady's got 20 stores now. He had three stores a year and a half ago. So you've got the people that we look up to that's, that's make these cards that are now participating in helping drive the industry. So I'd say our focus on product innovation, marketing, having the athletes really engaged in making the product special, like the athletes didn't have something to really care about, now so many athletes wanna get their own debut patches. I hear all the time about stories about an athlete who's like, "I'm getting my debut patch. I wanna go chase that card. I'm interested in that card." So you know, for us, it's fun that we were $500 million our first year- Five and a half billion dollars five years later.

    28. DSDavid Senra43:10

        Wait, wait, wait.

    29. MRMichael Rubin43:10

        We're just getting going.

    30. DSDavid Senra43:11

        Okay, so, uh, you mentioned Apple earlier as, like, one of the greatest companies. Um, I've read every single-
14. 45:14 – 50:00

    "There was never an easier conversation"

    1. DSDavid Senra45:14

       for doing this?

    2. MRMichael Rubin45:14

       In my life, there was never an easier conversation. You go to somebody and say, "Hey, collectibles are at an all-time high in the market. It's been a category that historically has gone up and down. I'm gonna guarantee you the high watermark. I'll give you a long-term commitment of-"

    3. DSDavid Senra45:30

       Define long-term.

    4. MRMichael Rubin45:31

       Some of the deals are 10 years. Some of the deals are 20 years.

    5. DSDavid Senra45:33

       Okay.

    6. MRMichael Rubin45:33

       Some of the deals are eight years, but I'm gonna give you a long-term commitment. That's gonna allow me to go back and invest aggressively to innovate the entire business.

    7. DSDavid Senra45:40

       Yes.

    8. MRMichael Rubin45:40

       Okay? Then I'm gonna give you a higher royalty rate than you're currently making.

    9. DSDavid Senra45:43

       Yeah.

    10. MRMichael Rubin45:43

        Okay? Then I'm gonna set up a new company, give you equity in that new company, okay? So now you're gonna profit not only from the higher royalty rate, the guaranteed revenue, but I'm gonna give you equity. And oh, by the way, you don't make any money on the secondary business. All billions of dollars happen at eBay. They make nothing. I'm gonna start a, you know, a, a new business that's gonna, you know, be in that marketplace business. And today we start Fanatics Collect three years ago. We'll do six to $7 billion in GMV next year. We started three years ago, okay? And so we said we're gonna cut you in on that, so, um, one, you're gonna make money on all these secondary and ancillary business you're not doing today. We're gonna give you a higher royalty rate. We're gonna guarantee you the high water- watermark. We're gonna give you equity in this business. And oh, by the way, we're gonna innovate the product like crazy. We're gonna market it like crazy. We're gonna get the athletes involved. I mean, you know, I remember many of the people in this business saying, like, "Hey, how long do you wanna go?" I'm, "I don't know. You wanna go 10 years, 20 years?" They're like, "I wanna go as long as you'll go." Because they looked at this and said this is almost, you know, too good for them. They had a category that wasn't historically a material category. We're coming and saying, you know, we're gonna guarantee and do all these things with our partner they knew so well 'cause we had such a big business with the sports properties, with the unions, with Fanatics.

    11. DSDavid Senra46:51

        One of my all-time favorite quotes is from the book Zero to One, and it says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water, and you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So you wanna get started quickly before all of your competitors are on AppLovin, and you can do that by going to applovin.com. That's applovin.com. Okay, you just said something interesting. It was historically, like, almost immaterial to them. So educate me about the sports business in general. If I'm a, the league, is o- 80%, 90% of the money I'm making from media rights?

    12. MRMichael Rubin48:06

        Yeah, so I think sports properties globally, okay? So I'm including, you know, you know, look, soccer. You know, as I call it now football, but it's soccer to everybody here in America, you know, that's the biggest sport in the world. College, another massive sport. Um, NFL, massive. Ba- I mean, there's so many big sports when you think about it. Like, we don't, you know, you s- you know, we've used examples of, like, you know, football is the ... I, when I say football, football being soccer-

    13. DSDavid Senra48:28

        Yeah

    14. MRMichael Rubin48:28

        ... is the business I've learned the most in the last couple years, and we really, you know, we have a massive partnership with Cha- with Champions League, with the Euros, with FIFA, with Premier League, but there's so many other leagues to this. LaLiga. There's Serie A. There's, you know, there's, each country has their own separate league for each, each of the teams in, in each country. I'd say probably each sport is different. Some sports have more local revenue. Some have more national level. Probably the sport with the most national revenue is the NFL. And I'd say if you look at their entire business, uh, probably more than 50% of the revenue alone is media. Then you have a lot of local revenue 'cause you have ticket sales-

    15. DSDavid Senra49:04

        Yeah

    16. MRMichael Rubin49:04

        ... locally, and then sponsorship and- ... consumer products, which is the business that, you know-

    17. DSDavid Senra49:10

        The, Fanatics

    18. MRMichael Rubin49:10

        ... the we're, yeah, yeah.

    19. DSDavid Senra49:11

        Original products.

    20. MRMichael Rubin49:11

        'Cause the business we're in, the industry we're in, the market we're in is consumer products, right? That's what a jersey is, that's what a T-shirt is, that's what a trading card is, that's what, you know, a hat is. That's consumer products, okay? And that's the business-

    21. DSDavid Senra49:22

        But you don't think about collectibles different from the, like, the merchandise, like the actual clothing?

    22. MRMichael Rubin49:26

        A big part of the consu- The way I think about it is, so it's the consumer products industry.

    23. DSDavid Senra49:29

        Okay.

    24. MRMichael Rubin49:29

        Okay? And so we think about that industry. Video games are in that industry as well. So you just think about, what are the different consumer products? That's the way the league, e- every sports property organize it by the consumer products business, okay? And within that you have video games, you have collectibles, you have apparel, you have headwear, you have hard goods. And then things, by the way, some things come and go as well. Digital NFTs, they came and went pretty quickly.

    25. DSDavid Senra49:52

        You went in and out of that business pretty quickly too, right?

    26. MRMichael Rubin49:55

        You know, I didn't think I was that fast of a person. It was pretty fast.

    27. DSDavid Senra49:57

        [laughs] Couple months?

15. 50:00 – 53:26

    "This is stupid": raising over $100 million and giving it back

    1. MRMichael Rubin50:00

       I got in the business, we raised over $100 million from incredible investors, and like three months later I'm like, "This is stupid. This is not a business. At best it's a product, and I'm gonna give the money back to investors," which is what we did. Probably the only person to give money back to investors, so no one with us lost money. We gave them all their money back.

    2. DSDavid Senra50:21

       Okay, so the reason I keep asking all these questions about how these people make, uh, how the sports leagues make, uh, the majority of their revenue, I, I'm still interested in what you saw with collectibles. It's like immaterial to their-

    3. MRMichael Rubin50:31

       Y- yeah

    4. DSDavid Senra50:31

       ... uh, overall financial picture, and yet this is where the opportunity was because you could take this, like, kinda stagnant market-

    5. MRMichael Rubin50:39

       Look, look-

    6. DSDavid Senra50:39

       ... that's still doing tens of billions of dollars with shitty people running it, and be like, "I can make this five, 10, 15 times bigger."

    7. MRMichael Rubin50:45

       Yes. Check.

    8. DSDavid Senra50:47

       Okay.

    9. MRMichael Rubin50:47

       Okay? So when we decided to really reinvent our business from starting in the commerce business, what we call fan gear, to really become a digital sports platform, we, we had two immediate initiatives: getting into betting and gaming business, and getting in the collectibles business. Betting and gaming we knew, highly competitive, but we had a huge strategic advantage because we had tens of millions of customers of Fanatics. And then we said, "How do we make it better for the bettor or the fan?" By giving fan cash on every bet and by creating fair play.

    10. DSDavid Senra51:21

        Yeah.

    11. MRMichael Rubin51:21

        Okay? In the collectibles industry it's what you said. We said, "This is a big business that everyone thinks is gonna go backwards, but if we actually get into it and we innovate the product and market it, and really get the athletes highly engaged," the, we thought it was such a big opportunity going forward, and we've been exactly right. And it's been the same thing whether it's sports or entertainment. I mean, the, the biggest growth we're seeing right now is in our entertainment properties, Disney, Marvel, Star Wars. I mean, massive growth in those businesses.

    12. DSDavid Senra51:48

        Wait, I don't know about this. What is the entertain-

    13. MRMichael Rubin51:50

        Disney trading cards, Marvel trading cards, Star Wars trading cards.

    14. DSDavid Senra51:53

        Oh, this has the characteristics of almost like what you were saying with Pokemon, where it's-

    15. MRMichael Rubin51:55

        Absolutely

    16. DSDavid Senra51:56

        ... just like, my, this guy's not gonna get arrested [laughs] .

    17. MRMichael Rubin51:58

        Yeah. Well, we prefer none of our players get arrested, but that does, does happen-

    18. DSDavid Senra52:01

        [laughs] But like, yeah, you have control over what happens-

    19. MRMichael Rubin52:03

        It does happen

    20. DSDavid Senra52:03

        ... what Mickey Mouse does. [laughs]

    21. MRMichael Rubin52:04

        Mickey Mouse is very well-behaved.

    22. DSDavid Senra52:06

        Yeah.

    23. MRMichael Rubin52:06

        Uh, I took my kids to Disney this weekend, and, you know, Mickey was medium behaved.

    24. DSDavid Senra52:09

        Wait, wait, wait. So hold on, hold on. How long were you in the sports game before you, you branched out into the entertainment one?

    25. MRMichael Rubin52:16

        We've always had a relationship with Disney. We did collaborations between Disney characters and sports properties, 'cause it was always, like, a great tie-up, um, you know, back 10 years ago. And when we bought Topps to help accelerate our growth in 2022, uh, they had already worked with Disney and Star Wars and Marvel, and had been a, um, you know, really important part of the business. You think about Michael Eisner and his great history, you know, running Disney. I think for him, when he, and I don't even know the history of when Disney started with Topps, but I'm assuming it's one of the things that got Michael Eisner interested, 'cause he ran Disney and then ultimately owned Topps.

    26. DSDavid Senra52:52

        Okay. Well, you were saying this part of the collectibles is the fastest-growing?

    27. MRMichael Rubin52:54

        Our entertainment properties are some of the fastest-growing, and probably even growing faster than sports 'cause it's a smaller base. But it's really, you know, what we see that's so interesting is, is, you know, someone walks into a, whether it's a Target or a Walmart or a Brady by Card vault, and someone's a Pokemon collector, that's a NFL collector, that's a global football collector, and is a Disney collector, and you see, you know, lots of people collect different things. Very few people collect only one thing. So many people collect across different, you know, sports and entertainment properties.

16. 53:26 – 59:37

    "It's art for sports fans"

    1. DSDavid Senra53:26

       What do you collect?

    2. MRMichael Rubin53:27

       I'm a real art collector, and what's interesting to me is it, it shows you how I can turn on a dime. So when I bought my apartment in New York City in 2019, I remember a good friend, friend of mine saying to me, "Michael, you need great art for these walls." I'm like, "Man, I'm not spending any money on art. This is a joke. Like, I don't get it."

    3. DSDavid Senra53:47

       What year is this?

    4. MRMichael Rubin53:48

       2019.

    5. DSDavid Senra53:49

       Okay, okay. [laughs]

    6. MRMichael Rubin53:49

       Okay? I'm shitting all over art. They're like, "No," like, "You gotta get art," and they talked me into spending what's a lot of money, but in the grand scheme of things nothing relative to what I've spent on art in the last four years. And I bought a bunch of art which ended up being some of the shittiest art I've ever bought, was what I bought in 2019. And then when I got in the collectibles business, and it was really in, in 2022, I'm like, "I wanna learn from the artists and then bring that into the-

    7. DSDavid Senra54:17

       Okay

    8. MRMichael Rubin54:17

       ... collectibles business."

    9. DSDavid Senra54:19

       I could not figure out the collectible business, 'cause I did, I collected cards. I didn't do anything. I like threw them away, put, we used to put them in the, um-

    10. MRMichael Rubin54:25

        In the spokes, in the, yeah

    11. DSDavid Senra54:26

        ... no, the, uh, in the s- uh, the bike-

    12. MRMichael Rubin54:28

        On the wheels

    13. DSDavid Senra54:28

        ... the, yeah.

    14. MRMichael Rubin54:28

        Yeah.

    15. DSDavid Senra54:28

        And they make the sound on your bicycle and shit when we were kids. And I'm like, wait, isn't this just like the fucking art market? When you just said, uh, uh, something that popped to my mind-

    16. MRMichael Rubin54:37

        It is

    17. DSDavid Senra54:37

        ... like, these-

    18. MRMichael Rubin54:37

        All, it, it's art for sports fans.

    19. DSDavid Senra54:39

        Think about how big-

    20. MRMichael Rubin54:40

        It's art, it's, it's art, it's art for sports fans.

    21. DSDavid Senra54:41

        Art for sports fans is a great tagline.

    22. MRMichael Rubin54:42

        Or art for entertainment fans.

    23. DSDavid Senra54:43

        Think about how big the secondary art market is in, like, let's say you have-

    24. MRMichael Rubin54:47

        Tr- trillions.

    25. DSDavid Senra54:48

        Yes. Like I, I've done a couple episodes on, like, Larry Gagosian, and then he actually read, I have a funny Larry Gagosian story. Think about, like, essentially his, his idea was like, "I'm not, I can't succeed in the primary market." And he's like, "I'm gonna identify where I can succeed." He ma- made a map of the secondary market and then just connected, you know, buyer to seller.

    26. MRMichael Rubin55:03

        Yeah.

    27. DSDavid Senra55:03

        Right? He learned some of that from this guy named Joseph Duveen. Joseph Duveen was- Essentially, the art dealer to the robber barons in, like, the late 1800s, early 1900s. His, his... He built a fucking one of the most, uh, valuable businesses in the world with, like, eight to 12 customers. They just happened to be eight to 12 of the richest people in the world, on a simple i- i- uh, uh, insight. Europe has all the art. America has all the money. I'm gonna take the European art, put it on a boat, and bring it to America and sell to these robber barons, [laughs] and he made a crazy amount of money. You know, half a century later, Gagosian's reading about Dufy, and he's like, "I'm gonna figure out a way to build, you know, this, this, this giant art empire." And so I'm like, wait, collectibles turned into fucking-

    28. MRMichael Rubin55:40

        It's, it's-

    29. DSDavid Senra55:40

        Baseball cards turned into-

    30. MRMichael Rubin55:41

        It, it, it's-
17. 59:37 – 1:06:19

    Winning the partnership, not the deal

    1. MRMichael Rubin59:37

       I think school of hard knocks is an incredible school. You just study people around you from, like, crazy. I mean, uh, one of the things that's, I think, unique about me is my friend group is probably the most wide-ranging group of people, and I think we all learn from each other, and I love that. So there's not a day that goes by that I'm not studying people around me, learning from people around me, and I could learn from my four-year-old that's talking to me about our Disney products and what she likes and what she doesn't like, and there's this new hot thing we need to go get or not get. And, uh, by the way, my kids, my four- and six-year-olds come and say, "Daddy, why don't you make cards for this?" I'm like, I'm hitting people up. "Why aren't we making cards for this?"

    2. DSDavid Senra1:00:19

       [laughs]

    3. MRMichael Rubin1:00:20

       Okay? And my 20-year-old who hazes me now that I'm not cool anymore, and, you know, from the most important people to the, you know, the, anybody in the world. I mean, I'm always learning from people around me.

    4. DSDavid Senra1:00:29

       But the financial aspect of this, did you learn that from anybody?

    5. MRMichael Rubin1:00:33

       I, I, I, I think I learned it from everybody, not anybody. I think I'm always studying. By the way, I also learned it from screwing shit up. Like, I fucked so many things up along the way. I've got so many deals wrong. There's so many things that you just, like-

    6. DSDavid Senra1:00:42

       Tell me the worst deal you ever did, or the one that fucking gives you the most pain.

    7. MRMichael Rubin1:00:47

       Such a good question. Worst deal I've ever done. When I started in business, I used to always try to win the deal. As I got older, I didn't care about winning the deal. I wanted to win the partnership. You know, I've become more quick in my negotiating style, and so sometimes you miss things. You know, I'll just give you an example about, you know, two deals we've done in the last Five or six years. One was we bought Lids, and when we bought Lids, the headwear retailer, you know, it had shrunken sales and shrunken sales, and we bought it with this, uh, private equity firm, Ames, Ames Watson, and we put a bunch of our friends in the deal, and it made back forty times the money in a couple years, okay? It was a g- grand slam, like, great. And by the way, the team did a great job. Like, they didn't fall into it. They earned the success. Then we bought a company called Mitchell & Ness that we own today, and we put many of the same friends in it, and it was actually at a, it had a trend going on in the business similar to what people thought was happening in collectibles, where retired players' jerseys were really hot. And we bought it, and a year later, it just, it fell out, okay? And the business went from making a lot of money to losing a lot of money. And you know, our mentality was we put a bunch, we had a bunch of really big name stars in this deal. I'm like, "We care too much about our partners. Just give everyone a twenty percent return and give them their money back," and we just gave them their money back, 'cause we wanted to do the right thing by the partners who invest us, who believed in us so much. Like, it's not so different when we fucked up and got in the NFT business. When we bought Mitchell & Ness and it was a really bad deal, that we said, "Okay, we're gonna make it right for people around us, too." So that's one of the things I think life is long, and you wanna make sure you got a good reputation, and I think us, you know, always trying to treat people really fairly is something very important. I think a lot of the sports properties, a lot of ways, have out-negotiated us in, in deals, and we're okay with that, though, 'cause we're lucky to be in business with them. And even if the NFL does a deal with us and, you know, the deal's, you know, too good for them, you know, we're lucky to be in business with them, and so you want the right long-term partnership. But, you know, these sports properties, man, they are har- any, from Disney, who-- I was just talking to a guy who runs consumer products before I walked into this and, you know, we just went through this really long process to do a new partnership with Disney, and these, these things can go on for six months, a year, a year and a half. You know, we're, you know, both sides are killing each other, but then when you get done, you just, you know, you wanna make sure you, you got the best out of, you know, that, that, like, everyone's kinda gotten a good, you know, good position.

    8. DSDavid Senra1:03:24

       I think if you work backwards, one of the most important things to me to try to understand you is, like, work backwards from the fact that, like, I'm gonna die on the job. Like, I'm not selling this. I'm doing this forever. Like, what else am I gonna do with my life? This is, this is what I wanna do.

    9. MRMichael Rubin1:03:38

       For sure.

    10. DSDavid Senra1:03:38

        Um, Sam Zell, do you, you ever heard that name before?

    11. MRMichael Rubin1:03:41

        I know who it is.

    12. DSDavid Senra1:03:41

        Yeah, so I got to have lunch with him shortly before he died. And one of the-

    13. MRMichael Rubin1:03:45

        How old was he?

    14. DSDavid Senra1:03:45

        He was eighty-two, I think. And he had cancer, but I didn't know at the time. And in fact, I was gonna have another dinner with him, and then it was canceled the day before 'cause they said he was sick. It was, I thought he had COVID. Fucking, he dies three, three weeks later. Unfortunately, I didn't get to see him again. But one thing he told me, he's just like, "Hey, I'm gonna do, do deals until I die." Like, he's just like, "There's nothing else." Like, "This is what I wanna do." And one of my closest friends was mentored by Sam for twenty-five years, and s- he said Sam was all about relationships. Go back to what you said. "Okay, I'm gonna do this till I die." You said relationships when, especially when shit's going bad, they're everything. Sam would optimize for not a transaction, what you just said. Sometimes, like-

    15. MRMichael Rubin1:04:18

        Yeah, but a long-term partnership.

    16. DSDavid Senra1:04:19

        So he would go, obviously, he would have to, he would raise money deal by deal. Sometimes it was equity, sometimes it was debt. And I was told this story by the person that he mentored where he said, uh, this guy goes, "Okay, uh, Sam needed, like, a hundred and fifty million dollars." And I think the interest rate at the time was, like, seven point two five. And Sam goes, "Great, I'm, uh, I'll take the hundred and fifty million at seven point seven five." And the banker's like, "No, no, I, I said seven point two five." He goes, "I know what you said, but I'm gonna pay seven point seven five." And when they left the meeting, my friend, who was mentored by him, said, "Why'd you do that?" He goes, "On a hundred and fifty million," I'm making up the numbers. He's like-

    17. MRMichael Rubin1:04:48

        Yeah, it's not a lot of money

    18. DSDavid Senra1:04:48

        "... it'll cost me extra two million dollars." He goes, "It's immaterial, 'cause I'm gonna be doing deals with this guy today. This is the first deal we do. I wanna do deals with this guy today, a year from now, ten years from now, fifteen years from now. I'm building a relationship with him to show him I'm not, this is not a transaction to me. I wanna build a relationship and do-- I don't wanna make just money out here. I wanna make money forever, for decades." You have a lot of that same, uh-

    19. MRMichael Rubin1:05:08

        Yeah, he, he's right. I mean, look, we work with seven thousand athletes globally today on individual contracts. We work with a thousand sports properties, and I wanna make sure that we keep doing more and more with, you know, all the athletes, all the sports properties. I wanna make sure they feel great, and that's why I said, "Look, shit does go wrong, whether we screw things up, something goes wrong, or whatever. You wanna have a great long-term partnership and people to keep come back and wanna do more with you. I wanna make sure that people want to do more and want us to succeed. I want people to wanna root for us.

    20. DSDavid Senra1:05:41

        So I know you said you're learning from every interaction you have from all the people around you, but is there anybody where you're like, man, like, I just learned-- So, like, uh, Ari Emanuel was just on the show. I just read his, his book. In the book, you know, he went from agent to deal maker, and he said the person that he learned the most about deal making was Egon Durban from Silver Lake, right?

    21. MRMichael Rubin1:05:58

        Yeah. Beast.

    22. DSDavid Senra1:05:59

        Everybody, like my friend Greg Glemkal, Michael Dell talks-

    23. MRMichael Rubin1:06:02

        He's a beast

    24. DSDavid Senra1:06:02

        ... like, everybody was just like-

    25. MRMichael Rubin1:06:03

        Three beasts.

    26. DSDavid Senra1:06:04

        Yeah, this is the guy. They actually put me in a group chat with him recently.

    27. MRMichael Rubin1:06:07

        So they're my biggest outside investor.

    28. DSDavid Senra1:06:09

        I, I knew Silver Lake, but I didn't know if it was-

    29. MRMichael Rubin1:06:10

        Yeah

    30. DSDavid Senra1:06:10

        Okay.
18. 1:06:19 – 1:08:19

    "You saved me from something really dumb"

    1. MRMichael Rubin1:06:19

       matter of fact, I called Greg. You'll love this. I called Greg, um, this past Sunday night, and it's not my personality. It's like, "I just wanted to say thank you." He said, "What did I do?"

    2. DSDavid Senra1:06:29

       [chuckles]

    3. MRMichael Rubin1:06:29

       I said, "You saved me from something really dumb I was gonna do," and, and I had something that I was fixated on doing that was a big deal, and he came to me and said, like, "This makes no sense. You shouldn't do this now." And he kinda had, like, a mini intervention with me. He's like, "Look, Michael, it's your company. You own thirty-one percent of the company. You have super majority. Do whatever the fuck you want, but I think you're really fucking this up." He was dead right, and I just called him to say, like, I was reflecting on it, and man, he saved my ass.

    4. DSDavid Senra1:06:56

       That's incredible.

    5. MRMichael Rubin1:06:57

       This is recent, by the way.

    6. DSDavid Senra1:06:58

       Yeah.

    7. MRMichael Rubin1:06:58

       Billions.

    8. DSDavid Senra1:06:59

       Billions.

    9. MRMichael Rubin1:07:00

       Billions.

    10. DSDavid Senra1:07:01

        Can you say more about this or no?

    11. MRMichael Rubin1:07:02

        No.

    12. DSDavid Senra1:07:02

        [laughs] Okay, so-

    13. MRMichael Rubin1:07:04

        Too easy to figure out.

    14. DSDavid Senra1:07:05

        All right, so Silver Lake's one of your biggest partners. Like, is there anybody else who you're just like, "These guys are just very sharp"?

    15. MRMichael Rubin1:07:10

        Look, I'm lucky. I have a lotta, I think, really smart people around me. I've got great investors. You know, people talk about, like, oh, they had this problem with this, but I've never had an issue with an investor in my entire life. I've always had great investors in the business. Like, I'm a good listener. I think one of the things when you barely make it out of high school, you don't go to college, you have a self-deprecating personality, I have good listening skills. I g- got a lot of other things I suck at, but I'm a good listener, and so that's really made me, I think, appreciate the input that I get from people around me, or in this situation, Greg, when he, you know, came to tell me, like, "Don't do what you wanna do."

    16. DSDavid Senra1:07:43

        Yeah, one of my favorite, uh, quotes from Michael Jordan, which I think some people would find surprising given how dominant his personality was, he says that successful people listen. Those that don't listen don't last long.

    17. MRMichael Rubin1:07:51

        I think that's a hundred percent right.

    18. DSDavid Senra1:07:53

        Michael, this was awesome. Thanks for, like, welcoming me to your house and doing this.

    19. MRMichael Rubin1:07:55

        Absolutely.

    20. DSDavid Senra1:07:55

        Appreciate it, man. That was awesome. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over four hundred biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. [outro music]

Episode duration: 1:08:19