KB Partners

Steve Ahern — KB Partners

Wednesday, September 28, 2022
How are sports evolving to match the changing tastes of fans?  What can traditional sports learn from esports?  How is sports betting rolling out across the country?
We discuss all this and more with Steve Ahern, partner at KB Partners.

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Steve Ahern is a partner at Chicago based KB Partners but he just moved to LA a couple of months ago. KB is an early stage fund investing $1- $3 million at the intersection of sports and technology Prior to joining KB four years ago, Steve was an investment banker in Chicago and he went to USC.

Great. Well let’s start with the overview of KB and some of the themes that you guys are investing into.

Absolutely. So I joined KB partners about four years ago, as we were starting to ramp up our first fund as a group.  We actually have a long history in venture capital. Our managing partner, Keith, , had been in the business for about 25 years, had two early stage funds but only more recently it started to focus on this intersection of sports and technology that we now focus on.

For us it’s a pretty broad umbrella underneath this, sports tech thesis. It’s anything from human performance. uh next gen media, as it relates to sports. So OTT and streaming technology, We’ll look at stuff in around the live experience.

It’s a little bit of a catchall category for us, but anything from ticketing, crowd analytics, venue optimization, And then.

we have a couple

Bigger buckets that encompass things like e-sports and gaming and sports betting and fantasy.

 and it’s a lot to cover. Let’s start with next gen media and streaming. Where are we today in live streaming sports

Think we’re moving from just taking the traditional TV experience

putting it online.

Uh We’re

starting to move away from that.

I think

Like some of the early platform that that’s all they did. But I think people are looking for a much deeper level of engagement, much deeper level of interactivity that they’re getting from other parts of their life. think like Reed Hastings at one point said, , that, biggest competition to Netflix.

was fortnight. Right. And

Oh I thought it was sleep That’s funny I was going with you Okay Okay

well it’s, it’s not other content platforms. It’s not, you know, other streaming services. It’s like gaming,


getting a a much more social experience out of that. You’re getting a much more engaging experience. So how do you bring some of that to sports?

And I think there are a lot of different ways.


Media companies and new entrance to the market are trying to do that.

Yeah So I’m interested in that How do you see getting that more interactive experience What are the big pushes



know, people want to watch sports when they’re betting on sports.

And are more likely to play more bats when they’re watching

The live game in front of them,

the sports betting

I mean, I think there was lot of control and certain parts of the U S that was lobbying against,


but is it like a moral argument is like we can’t tax it or

I mean, I think it was trying to figure out a regulatory framework that, I mean, all controlled state by state. And so how do you,



Regulatory framework at the federal level that then can filter down properly to let the states do what they want to do? mean, there are some states that just won’t do it because of It’s moral status in their eyes , and others where it’s like, why wouldn’t we do this? This is, the perfect way to generate more revenue and people are doing it anyway. but like on bedding can you do that with live sports now Like what is the status of actually things being live enough That if I place a bet like I’m not three seconds


and so that’s a, that’s a lot of the things that we’re starting to dive into and some places that we’ve made investments thus far.

And so. For long period of time, like way that you would bet is, either prior to a game or are there like futures, bets where, , I say that, , the Rams are gonna win the super bowl.

at the beginning of the season,

and But, uh right now with Some better technology in place. You’re starting to get closer to like real time in game bedding you can do that with, platforms, that, don’t interact directly with the video stream itself. Like, , you can just go online and

There’s game betting platforms.

But in order to make it a more streamlined experience and to bring bedding experience, together the Video. We actually,

Prior to our first fund, one of our managing partners, Keith, as


angel investment in a company called, Phoenix,

 Takes latency down to half a second and video streaming And one of the biggest applications,

Is this end game

betting opportunity.

So right now if I’m streaming a live sporting event there probably will still be some latency

Yup that technology is still being rolled out. I think like we’re starting to get to the point where,, these media companies are starting to see a need for that to bring audiences.

To their live stream,

And also just that start to get new revenue streams for,

These rights they’ve paid billions and billions of dollars for

betting a big market Like is there a lot of money in sports betting

Yeah, I mean, it started out, , only


and a half years ago.

And what I think we’re up to.

 Like 40 or $50 billion in handle that last year. and, uh there’s I think double to triple that, that people still believe is being done outside of the legal environment.



global spaces is growing as well. But I think, the U S is definitely going to be the the largest market going forward.

And there was a federal change Okay Keep me honest is it legal to bet in California



so Not that I would


better anyways but so it was just rolling out state by

Yeah. New York was kind of big latest state. to roll out a New Jersey was the first outside of Nevada. But yeah, there’s


lot of market out there to be a rolled out.

Okay, so sports betting could make streaming more interactive. What are the other big interactive pushes that are excitingdoing.

things like,

you know Social watch parties. what are the cool things in watch parties Is that just we all are at home watching it

Yeah. I mean, I think that’s the experience, now but I thinkthere are some interesting, ways to engage with like celebrity watch parties,

umAnd you know, I think like just making things more social gamifying the

experience like.

how can I

Put a game over the top of a game. Like one of our company’s stream layer does some overlay technology that, connects, with kind of the background stats. And, you know, you can predict very quickly, like who’s going to score the next bucket. It’s more of like a step into the sports betting way, but I think

brings,in people that might not otherwise bat and gives them a kind of a more gamified engaging experience.

And I

think just like these watch parties. Even if they’re just like an audio, like the ability to just chat with people. I think like that’s what a lot of people are doing on games. Like Fortnite is there’s walking around and chatting with other people.

And so how do you bring a younger audience? That just kind of wants to hang out, , but doesn’t want to just sit on a couch and watch a game for four hours.

and what about you referenced these rights holders Like people paid billions of dollars right How is that getting navigated in this news streaming interactive world

I think like people are still paying crazy rights fees, but there are some new entrance to the market that are starting


create new models.

that Can

either carve out rights that are separate from these big live streaming rights. So like a company like buzzer,

as go through a signup process where you say what, you’re a fan of, , what type of content you like to engage with then sends you notifications based on your preferences.

To let you know that, Hey, said that you liked the warriors, like Steph Curry’s having a big game. Would you like to pop inreally quickly to this experience and, see him finish out a 50 point game where, you know, you said, , you really like some NFL team there in the red zone about score a touchdown click

on this, pay a dollar, and you can watch until the end of that drive or they score a touchdown.

So I think like that’s a


way to


people back from.


 following games on social media and bring them back to the live experience. Because right now it’s really easy to follow things on Instagram and just watch highlights of every game that’s going on. Gosh I know so little about sports So is it the leagues who sell these rights And so it’s the leagues that are having to get creative about how they’re carving out something It’s that new streaming AR VR whatever

I think it’s both the leagues and new companies having to get creative because

very tough without raising hundreds of millions of dollars or billions of dollars to say I’m going to focus on top tier sports content.

As a part of my platform

Like Amazon,

Is paid, you know, a hundred billion dollars for NFL content.

It’s hard to compete with that.

as a startup.

So you know, the ability to


out these kind of like last minute rights or just these,


pieces, of the larger streaming puzzle has allowed some of these new companies to pop up.

So you can carve out just like the last few minutes of every


I mean, I think like what, they’re saying is that, , it’s benefiting everyone. It’s like user acquisition for The SPN because , what you’re doing is saying like, Hey, this game is on ESPN. You don’t have a subscription there but you’re going to pay a dollar and then we’re going to push your information


ESPN or someone like that as a funnel for you to then maybe get a full subscription. So the leagues make a ton of money by licensing whatever to Amazon for a hundred billion dollars or something.

but then how much money is made in the live events And does the streaming compete with their live events

I think that they always felt that it competed with live events. Like live events competed with kind of the localsports market. So like sometimes you’d have games that were blacked out if there wasn’t enough attendance or things like that to try to encourage people to come.

to the live event.

So like, you couldn’t even see a bulls game in Chicago if,

people didn’t go to the

Yeah and there’s some some


blackout rights

there Yeah. I think now

they seen like, that,

You know, a lot of people are going to be watching for home.

So how do we optimize that experience and how do we bring like some of the things that people will from,

you know, the in-person experience to home. And I think that , there’s a certain number of people that are always going to want to be like more social and want to see something, live and in person,

With some of these new stadiums, like Sophie stadium or some of these newer NBA stadiums, like it’s a little bit of, a

, mall experience, a little bit of, a top golf experience where like you can,

 Watch the game or you can do a lot of other cool things inside the stadium.

And so, I think again, like, you know even I sometimes we’ll, go to a game.

and it’s like, Okay,

 this this is a boring part of the game. Like


else can I go do? And I think like being able to keep people in the stadium, I mean, , that’s why they’re creating like sports betting bars in the stadium And those open up a couple hours before the game. They stay open a few hours after the game and, , you’re able to keep people in the stadium,

And do leagues like sports betting I thought it was like the leagues like it posed it

there are some leagues that are more quickly, adapting to it than others, , mean, I think there was always this question of can our


Be safe from outside forces If sports betting is involved.

Can you trust that this experience isn’t influenced by someone taking something on the side? I think

people have realized that one these days, most of the top tier professional athletes get paid enough that hopefully a few thousand dollars on the side isn’t going to Influenced them

One way or the other but also that, , again, , sports betting is one of the best ways to get people, to actually watch live content, and to engage around live content.

Who really has influenced in the sports world Like do teams get to influence what the leagues do or do the leads make all the decisions around rights around betting all that stuff

probably varies amongst leagues I think like in someother leagues there’s probably more influential owners and teams that are trying to become more tech forward that are pushing


 If you look at someone like the NBA, they’ve

tried to be pretty tech forward.

so think a lot of their stuff probably comes from the top down,

the biggest leagues

I mean, I think that the NFL has become biggest show in town.

It continues to grow, I think on the flip side, major league baseball has struggled a bit kind of maintaining their audience you know, there was a stat at some point a couple of years ago that like over the past five years or something that.


age of their audience had gotten a year.



that Yeah And it was starting at like 55 and

now it’s yeah it’s just not a great place to be.

I have a little bit of a love for baseball is it an inferior sport or is it something that like the league or the teams are doing Like why is it a sort of aging sport

I think.

some have Some leagues have been a little.

More quickly to adapt to technology to rules, changes that make the game a little bit more exciting. I think major league baseball has been a little bit slower to that. feel

like with sports betting and some of the other things, I mean their, game really is optimized for sports betting.

I mean, there’s



right? Yeah,

exactly. Like a clear, beginning to a play And end of a play and time between pitches and where you could literally bet on every single part of the game, whereas like football, it’s a little tougher or basketball,

 Soccer, and a lot of these other things that are a little bit more dynamic.

 but I mean, there’s also a lot of upstart leagues these days, too,

That are,

taking advantage of, No increased popularity.

Whether it’s, things like the PLL, and the lacrosse side of things, or actually invested most recently in a league that’s going to launch, this summer, it’s a three on three ice hockey league

That takes what many people believe is the best part of hockey, which is overtime hockey and puts that, as the center of the game.

And so it’ll be an experience that’s optimized for more engagement and interactivity.

That’s a cool thing to invest in

Yeah Yeah. So, I mean, I would say it’s like probably typically outside our wheelhouse, but, know, it’s one where we’ve looked at probably 50 plus leagues along the way. And this was one that,


just a bunch of.

castoffs , from other leagues.

These are people that, you know, are skilled specifically for this type of league, they’ll be

physical and more about stick handling and speed. And you know, just the way that

founders of this league were thinking about things was again, starting from like, how do we engage a younger audience?

How do we

make this a more interactive experience.

along the way?

It’s interesting You’ve looked at 50 leaks Like I don’t think of a sports league like venture backed businesses but why not

Yeah. think like when it comes to rights holder side of things, like the, maybe not the quickest

and easiest , way to control rights is to create your own


and so there are leagues like fan controlled football league.

It’s gotten some good venture investment more recently. There’s, a group of leagues around women’s sports called, athletes unlimited,

And what about e-sports? Is there money to be made there We’re like what’s interesting in e-sports

I mean, there’s already a deeper level of engagement and interactivity just by the very nature of gamingAnd it’s already like a much more digital forward, kind of digitally native.

So I think like we would rather learn more from e-sports the Navy push traditional. Sports on them. I mean, I

think just like a lot of this, interactivity that’s trying to


over to traditional sports has been learned from e-sports I mean, you can engage with streamers in a different way.

like much more interaction with the players themselves, like trying to find more

engaging way to, uh connect players more deeply with, the audience that’s watching them.

Yeah I mean talk to me a little bit about traditional athletes and engaging with them which you know they’re the biggest celebrities around

Yeah. I mean, think,


know, if you, look at like them as influencers, , they’re definitely some of the best when they post content versus when their team post content versus brands, they’re supporting like the content they post


highest levels of engagement I think people think, you know, if it’s right for LeBron James it’s right for


Right So exactly exactly and I think it’s like that with any sports star out there?

like It’s probably changing a little bit in this , creator economy where, people grow up with some of these creators and streamers, but I think a lot of people grew up.


Sports stars. and connect on a deeper level with, , athletes from their hometown or athletes that they’ve watched from afar. And so maybe you can’t create in-person or one-to-one contact athletes,

In a scalable way. But, you could,

create,other experiences that allows people that feel a little at least a little bit deeper connection to athletes.

Interesting. But also in e-sports the sport is owned by someone

in those cases, , a lot of the times run by

The game publishers themselves.

And so,


revenue and cashflow flows in a different way than it does.

 And I think that’s where some people have found team ownership hard,

Because some of the sponsorship dollars aren’t flowing to players and teams in the way that you otherwise anticipate with, , like more traditional sports.

it’s some of

it’s flowing back to the game, publishers themselves, and some have found teams tough to sustain because of that.

But I think like the most successful teams have created uh brand that goes beyond just the live events that they participate in. So, feel like at someone like,


thieves you know, they’ve created.

A little bit more of a cultural brand. Like they’ve got, fashion side of

things content,



They do the live events and tournaments and


that’s how, people, know them

on that side of things, but there are people that aren’t even interested in that side that would love to wear you know, a hoodie from a hundred thieves because they’ve seen it.

on , someone else that they respect

Got it

And do you think that people’s taste in sports might actually be changing? as in because of the way we interact that the sport itself might change

I think so. feel like again, you know, just going back to like personalization of everything, I think like technology


enabled, things that might not have otherwise been viable and

There are a bunch of lower tier leagues and lesser known sports where it would have been impossible for you to watch them. And now there are platforms like


sports where some of their most popular content is

wrestling and grappling or karate, or, lower tier soccer leagues how about youth sports Is it changing a lot

Yeah, I mean, there’s tons of money spent in youth sports.

I think youth sports has been one of, kind of the toughest markets.


Build a big venture scale business,

There’ve been a

couple of successes, with

huddle and some of the things that they’ve




is turned into coaching It was originally like, you know, highlights and other things like that. And once you kind of enable that you can add a layer of coaching on top of it.

And it was like, I think originally one of the places.

just to like

Show off your recruiting


and build your recruiting.

profile, like,

Hey, here’s me

you know,

scoring a touchdown. And

last Friday’s

game but it’s also just such a tough market to sell into because there’s certainly like a lot of haves and have nots across the youth sports landscape, And

so, you know, we’ve seen some social platforms that have focused on that. There are a lot of league management platforms. And then there’s a lot of, kind of this democratization of like elite training as well.


how do you use

Computer vision AI since to take coaching that was maybe accessible to


few before. let’s chat briefly about VR So my partner Aidan likes to say that you remember where you were when you first had like an amazing VR experience and I remember I was like what do you call it Courtside ringside at a boxing match in VR And I was like oh my God I’d never been to a boxing match before Do you think sports in VR or maybe AR Have a future together

I think they do. I mean, I think some of the early entrance, the market were just too early.

I think that they were probably too early to find a big enough market in an intersection of people that were interested in VR and people that were interested in sports.

 I think maybe the early

VR adopters.


You know, more into the technology of it, more into the gaming side of things. And maybe you weren’t as interested in watching live sports.

I also think like some of the early, attempts at it were again like taking the


TV experience

putting it around you,

I don’t think it used the full capabilities of what VR is to create a more immersive and engaging experience. It just


of made a nicer screen around

has been VR used on the elite training side of things. So how do you take those types of experiences and bring them to the broader consumer market? You know, one of our companies status pro, starting with,

An elite training product and

Took their learnings from that , a lot of the data that they had access to and realized, Hey, we could create like a much more engaging, and immersive first person football game.

So, now you can be Lamar Jackson and, ,

see, the defense come at you and read the defense and throw the pass and interact in that way. I didn’t actually know that term First person football or first person

maybe uh maybe just came out of my head.

That’s brilliant okay so good Transition to KB are a lot of your companies selling into consumers Are they selling into sports leagues

would say it’s a mix of B2B and, consumer, but if a company is just selling into, 30 NBA teams unless they find something

that’s worth spending millions and millions of dollars.

It’s probably not a big enough business for us.

And also,


know, teams are kind of notoriously cheap.

 You know, it’s there are this big famous brand and you’re a startup. And so it should be our on or tour with them.

what’s like a budget of a team

mean, I think it depends, on the

sport Some of them are much bigger brands. I mean, some of them are


dollar companies and some of them


a little bit smaller scale. Even if their teams might be competitive, like, I mean the Dallas Cowboys and, , some lower tier NFL team are probably on different when it comes to


business side of things

still the Dallas Cowboys might be a multi-billion dollar business

I had not realized what a big business the Dallas Cowboys are. How do you think about the culture of this sports business world, as compared to say the tech world?

I mean, I I think it’s a pretty close knit community, like it seems like everyone knows everyone but think like when you started to add expansion to the tech side of things It’s starting to bring a new younger crowd. I mean, I think like there are a lot of people that have been in sports their whole career and you know maybe are a little bit averse to some of the changes coming but , there’s always people kind of coming in with new great ideas. I think again it’s just like one of these things that people are passionate about And so You know people have Don other interesting things in their careers and they want to do something that they connect with a little bit more on a personal level

but it’s kind of a bit of a legacy industry in a sentence right

Yeah I think especially on the big media side of things, , they’re slow moving behemoths and slow to adapt to New technology But I think they’ll solely be pushed that way.

or be pushed out of the way I think like they’re finding that their share of people’s attention you know is slowly going away if they don’t adapt to the way that people want to interact with


 okay I can’t let you go without asking about the Olympics because we’re taping this a couple of days before the Olympics What are you looking forward to about the Olympics I think the Olympics always does like a great way of telling stories you don’t know about any of these people for four years.

And then all of a sudden, by the end of the Olympics, you’re like, oh my, God I love this person. And it creates this star out of certain people


do interesting things during the Olympics ,

I’m excited about the winter Olympics And then there’s summer Olympics in six years So it seems like a far way off but it’ll be really cool to

Hopefully be in town when uh that’s here I uh grew up in Chicago. I was born in Southern California and Newport beach And uh actually a


story My mom

carried the Olympic torch for the 1984 Olympics Yeah So Some of the Olympics

connections so she Ran track and field and cross country in college And then corporate sports.

In corporate teams were pretty big in

early eighties And uh she ran on the Ford aerospace team won a race there and the men’s winner and the women’s winner of this race got to carry the torch And she was giving her a metal by Rafer Johnson who let the Olympic torch at the end at the LA Coliseum

did you play a sport USC

I did not. know I was not nearly good enough I would say I’m average at a lot of sports and good at none of them So I feel like I can get out on the golf course get out on the tennis courts get out on the basketball court and not look like a fool, but I will not impress anyone

I’ve been asking lots of people what their mental game is what’s your golf mental game

I think it depends on the, day it’s such a mental game.

 I think like there are days when you

don’t have to think about anything. and Like you can go up and hit any shot or like you can be aggressive.

on any

tennis shot and it’s

going in

 someone said like, there are days when, like you play golf shop versus playing golf like where you’re I’m thinking about form. I’m thinking about like, oh, I’ve got to bend my wrist in this way.

like, that’s not really a very fun way to play anything

Great Well Steve wonderful to talk to you You have so many interesting insights Thanks for coming on the


you so much for having me was


an enjoyable time