Fireside Chat with Michael Rubin (Fanatics) | Disrupt SF 2018 | Summary and Q&A

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September 7, 2018
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Fireside Chat with Michael Rubin (Fanatics) | Disrupt SF 2018

TL;DR

Fanatics CEO, Michael Rubin, discusses the company's differentiation from Amazon, its growth in the sports market, and its plans for criminal justice reform.

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Questions & Answers

Q: How does Fanatics differentiate itself from Amazon in the e-commerce market?

Fanatics differentiates itself from Amazon by selling exclusive and unique sports merchandise directly to consumers, rather than selling other people's products.

Q: How did Fanatics start and what has contributed to its rapid growth?

Fanatics started as part of GSI commerce in 1999 and was bought back from eBay in 2011. Its rapid growth is attributed to its focus on vertical commerce in the sports market, selling directly to consumers.

Q: How does Fanatics plan to expand beyond the sports merchandise market?

While Fanatics sees huge potential in the sports market, it also believes there is potential to expand to other verticals in the future.

Q: Can Fanatics compete with Amazon and Alibaba in the e-commerce market?

Fanatics believes it can compete with Amazon and Alibaba by offering exclusive and differentiated merchandise that is not commonly available on their platforms.

Summary

In this video, Michael Rubin, the CEO of Fanatics, discusses the growth and differentiation of his company in the face of Amazon's success. He also talks about the origins of Fanatics, the vertical commerce model, and the potential for growth in the sports merchandise market. Rubin also touches on his involvement in criminal justice reform and the initiatives his company is taking to help individuals reenter society after incarceration.

Questions & Answers

Q: How does Amazon's success impact Fanatics?

Rubin believes that Amazon's success is actually a benefit to Fanatics. Fanatics differentiates itself by selling directly to consumers and designing and developing its own products. This model sets them apart from Amazon and allows them to continue to have significant growth.

Q: Can you explain the origin of Fanatics and its growth over the years?

Rubin started a company called GSI commerce in 1999, which provided e-commerce services to retailers and brands. Fanatics was part of GSI commerce and was acquired by eBay in 2011. However, eBay only wanted the services business, so Rubin bought back Fanatics along with other properties in 2011. Since then, Fanatics has grown from a $250 million business to a $2.3 billion business, with a projected growth to $10 billion in the next decade.

Q: How did Softbank's investment in Fanatics impact the company?

Softbank's investment valued Fanatics at $4.5 billion. Rubin sees the potential for growth beyond just sports merchandise and believes that the sports market alone has a clear path to $10 billion. The partnerships with sports leagues and the focus on exclusive merchandise contribute to the company's growth potential.

Q: Can Fanatics expand beyond sports merchandise?

While Fanatics sees significant growth potential within the sports market, there is also potential for expansion into other verticals. Rubin mentions the success they've had in the NFL and the NBA, as well as their recent partnership with Formula One. The focus on exclusive merchandise and a direct-to-consumer model allows them to serve fans better and differentiate themselves.

Q: What is the unique factor of the vertical commerce platform?

Rubin explains that the exclusivity of the merchandise they sell is the key differentiator. If a fan wants to buy a jersey from a specific team, they will go directly to Fanatics if they offer exclusive merchandise for that team. This exclusivity and direct-to-consumer model is what sets them apart from competitors like Amazon.

Q: How did the idea of manufacturing merchandise come about for Fanatics?

Rubin states that the idea of manufacturing their own merchandise was part of the business strategy even before they bought back Fanatics from eBay. The focus was always on differentiation and having exclusive, unique merchandise that was not commonly available through other online marketplaces.

Q: How do partnerships with sports leagues contribute to Fanatics' growth?

Rubin explains that they have significant growth within the sports industry, and their partnerships with leagues like the NFL, Major League Baseball, and the NBA contribute to that growth. They are also expanding globally, with a focus on soccer and other geographies. The fact that their NFL business is up 35 percent year-to-date is evidence of the growth they are experiencing.

Q: Are there any plans to expand partnerships beyond sports leagues?

While there is significant growth potential within the existing partnerships, Rubin also mentions that they are exploring growth opportunities in other areas. They have worked closely with Nike in the NFL and plan to manufacture Nike merchandise in the future. They are open to working with other brands and verticals as well, as long as it aligns with their focus on serving the fan.

Q: How does ShopRunner compare to Amazon Prime?

Rubin explains that ShopRunner is one of the few alternatives to Amazon Prime on the web. It offers unlimited two-day shipping from their merchant partners at no additional cost to the consumer. The key difference is that ShopRunner is focused on driving business to their partner merchants, whereas Amazon primarily sells other people's products. Fanatics and ShopRunner are separate entities within Rubin's company.

Q: How do you maintain a unified vision with multiple companies under your ownership?

Rubin states that each company within his ownership has its own separate CEO and runs independently. This allows them to have a focused and differentiated strategy for each business. However, he also acknowledges a common perspective shared across the companies, which is the recognition and respect for the success of Amazon and Alibaba in the e-commerce space.

Q: How did you get involved in criminal justice reform?

Rubin shares a personal story about his close friend, Meek Mill, who had an experience with the criminal justice system. Witnessing Meek Mill being sentenced to prison despite recommendations for no sentence from the probation officer and district attorney had a profound impact on Rubin. This led him to become dedicated to reforming the broken criminal justice system.

Takeaways

Rubin believes that Fanatics' differentiation from Amazon and its focus on vertical commerce in the sports merchandise market positions them for significant growth. They are expanding their partnerships and product offerings while also exploring opportunities in other verticals. Additionally, Rubin's involvement in criminal justice reform showcases his commitment to making a positive impact and helping individuals reenter society after incarceration. Through initiatives like offering jobs to individuals coming out of prison, Rubin aims to make a difference and reform the criminal justice system.

Summary & Key Takeaways

  • Fanatics differentiates itself from Amazon by focusing on vertical commerce, selling exclusive and unique sports merchandise directly to consumers.

  • The company started as part of GSI commerce in 1999 and was bought back from eBay in 2011.

  • Fanatics has experienced rapid growth, with a current valuation of $4.5 billion and plans to become a $10 billion business in the next decade.

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