I get asked a lot how did I get started in the fantasy sports industry, especially considering my background as an aerospace engineer. Well, I started by putting up a website and writing about the industry. Ultimately, I sold that company, and found myself starting a new fantasy sports company, again. These are the main steps I took in launching and growing Fantasy Ethos. By the way, the title of this post very well could say fantasy baseball, fantasy sports, fantasy hockey, fantasy ________, but I just choose football since its the most popular fantasy sport.

Find a niche First, you have to figure out what you are going to do in the industry. Maybe it is a piece of software that you programmed for yourself that you would like to take public, which is what Mock Draft Central and Draft Analyzer did. Perhaps, you have an interesting way of giving fantasy advice, which is how Matthew Berry got started with the Talented Mr. Roto, which he later sold to ESPN. Whatever you want your niche to be, make sure it is unique. If you are going to do something similar to other businesses, make sure you know everything about that niche, included failed attempts to penetrate that niche.

Make sure you size up your niche. For example, I will consider Fantasy Ethos wildly successful when it gets over 1,000 users a day every day. Fantasy ethos appeals to a very small fraction of fantasy players and to members of the fantasy industry. That’s it. If you think you site can succeed on that small of a market, then go for it. Make sure you understand what the minimal number of customers is.

One more thing, you should prepare to change your niche. Rarely do you ever end up where you set out to go. I only started writing about the fantasy industry because I was trying to look for a niche. Turns out that was my niche. ProTrade started with an exchange-based fantasy sports game and morphed itself into Citizen Sports to focus on the growing Facebook and social media market.

Build a Website Once you figure out what you want to do, figure out what to call your business, buy a domain name, and then launch your website. If your site is mostly going to be content, you can be running in an afternoon with the installation of a WordPress blog. (Aside: I recommend not using a “wordpress.com” free account because if/when your business grows, you will want your own domain name and a little more control over the site.)

If you already know what you want, use our GoDaddy link to purchase the domain name and hosting, as it helps me pay our bills.

Once you have your site launched, get to work. The easiest way to get into the fantasy sports industry is by being active in the fantasy sports community. Get out there as soon as you can.

Be Patient Most small successful small business in the fantasy industry took at least three years before they started generating any significant income, and about five years before the owners felt like the company was really rolling. Part of the growth problem in the industry is that fantasy players are creatures of habit, and keep doing the same things year after year. The other, and probably bigger issue is that fantasy players are secretive. It is not like finding a good restaurant that you will tell everyone about. If fantasy players find the next great thing, they will not tell anyone about it. They use it to only help themselves. These habits make new customer acquisition a struggle. Which brings me to my next point.

Bootstrap Spend as little as money as possible. With the time line to develop a successful fantasy sports business three to five year, it will take a while for investors to get a good return on their money. Consequently, build with as few dollars as you can. To be clear, I am not saying invest in lower quality products and cut corners. Spend when you need to spend to make a high-quality product or service. Spend $250 to get a clean, fresh design for your website from an online designer, but do not spend $10K to have an advertising agency develop concepts for you. Spend money to make sure your website has plenty of bandwidth. Spend on customer service. Always.

This also means that you need to take as little outside funding as possible. I can count on one or two hands the number of fantasy companies that are netting over $1M per year. If you take in $500K in funding, you are increasing the odds against yourself in succeeding and making money on your fantasy business. There is no easy solution to this problem, but the best solution is to figure out how to do more for less.

Market To be successful, you will need to market your business. You should/will spend at least as much time marketing your site as your improving your business. Luckily, there has never been a time that you could market a product as easily as you can now without spending money, which is even truer for fantasy companies, since they are mostly internet-based. Between engaging customers on blogs, twitter, facebook, social media, etc and search engine optimization, there are plenty of ways to drive traffic without spending much money. Find where your customers are and engage them there.

This is enough to get you started. As I think of new points, and learn new lessons, I will continue to write about them, which means you should keep checking here for new content.

If you would like to add to this discussion, please comment on the article, tweet the article, or email me at derrick@fantasyethos.com.

That headline is what I imagine the conversation must have gone like right before one guy shot his friend while checking fantasy football scores on Sunday. Now, I am praying that this argument had nothing to do with fantasy football, and it was purely coincidental that they were checking fantasy football scores at the time. Maybe they were playing Russian roulette over who would get to claim Shonn Greene off the waiver wire, and this was just their creative away of doing it.

Why should this not have happened? It is just fantasy sports! The name of the industry should give it away, it is about “fantasy” or in other words “pretend” sports. I love working in this industry, but taking the games too seriously is a problem. They are supposed to be fun, remember?

(Twenty minutes later, but a very important rant later) Turns out a second article had additional information, and alcohol and stupidity were involved in the fantasy football shooting. This is not surprising, and gets into a whole new argument about gun safety, for which this is not the place.

Seriously, I have known friendships that have ended over fantasy sports and that is just silly. This is supposed to be fun, do not take it too seriously, okay?

I’m sorry did someone say there was a recession? Judging by the $5.5 Million dollars that Watercooler just raised, you would never know it. Last year, Watercooler’s March Madness game on Facebook had over 1.7 million active users, instantly making it a major player in the world of (social) fantasy sports, and now it has a war chest to take the company to the next level.

If there is an immature market in the fantasy industry, it is within social networks. While fantasy players are well-entrenched in their habits, Facebook holds the potential to be a game changer in the fantasy industry. Over 100 million Facebook users actively socialize online, and it is only natural to transition these users to socializing over fantasy sports within their already existing networks. However, none of the big fantasy sites have made a major shift to making their games fully accessible via Facebook, which creates a big opportunity for new fantasy sites to become major players. Currently, this companies that have entrenched themselves in this niche is Watercooler and Citizen Sports.

One item of concern about this funding arrangement is that the $5.5M funding round was lead by online gambling site Betfair. From a legal perspective, there is a thin line between fantasy sports and gambling. I think it is not worth blurring that line, but that is just personal preference. The two can legally coexist, and Watercooler seems up to the challenge.

Congratulations to Watercooler on its new piggy bank, and I look forward to seeing how it spends its money.

Additional Coverage:

• Watercooler Inc. Announces $5.5 Million Series B Funding Led by Strategic Corporate Investor Betfair (Press Release)
• Watercooler raises $5.5M to expand social fantasy sports game business (VentureBeat)

With today being another lazy Sunday, I thought I would point you to some articles that you could lazily glance over when you are not busy stalking your fantasy football team on the your league’s real-time scoring.

• Ten reasons why … you read fantasy columns (OPEN Sports) – Does it count as reading a fantasy article when you are reading an article about why you read fantasy articles?
• 10 Things To Do During The Bye Week (Predominantly Orange) – Clearly this Broncos fan does not play fantasy football, because the fantasy football fan never has a bye week. The list does contain some valid things that you might want to do in case you do need to take a week away from fantasy.
• The Number, The Feeling, The Line (Hardwood Paroxysm) – DJ Turtleface reflects on how he seems to be able to destroy his fantasy basketball league annually, despite continuous improvement by other league owners. This year he may have to take his riskiest strategy–depending on rookie production. He seems happy with it, but let’s see how he feels about it in three months.
• Draft Day Dilemma (Study of Sports) – A fantasy basketball owner struggles with his first round pick and ends up having his decision made for him through a strange twist of events.
• Fantasy Issues: Time to pick ‘a team’? (Sporting News) – When you have multiple fantasy teams, you tend to pick a favorite one, don’t you? It’s okay to admit it, we all do it.

Enjoy these articles while I continue contemplate why people continue think that Brett Favre has fantasy value.

The easiest way to get people to do something new is to make it free, offer prizes, and make it similar to things that they are used to doing. FanDuel’s Tweetball fantasy football is a simple game that easily meets all of these criteria, while creating a simple and elegant fantasy football game that is played exclusively on Twitter.

FanDuel is hosting this game to drive traffic towards its main suite of pay-to-play fantasy sports games that you can find on its site (See: FanDuel Launches Fast Head-To-Head Fantasy. Aside from finding a simple, low-cost way to market itself, Tweetball may ultimately be a product that FanDuel can build a business around. It is easy and fun to play, does not require fantasy players to change their behavior (as long they tweet), and is easily accessibly by anyone. Plus, add in the potential for the game grow via a viral expansion loop, and FanDuel ultimately may have a success on its hands.

To play Fanduel’s weekly fantasy football twitter game, a player tweets a quarterback, running back, and wide receiver and includes the “#fanduel” tag and a link to the game (as pictured above–pretty simple, eh?). The team with the most points each week wins a Fathead of its choice.

Tweet and win!

Many years ago, people thought that ESPN was crazy for broadcasting the World Series of Poker, and we all know how well that turned out for them. Now, Versus is hoping that same kind of magic will work with the World Championship of Fantasy Football (WCOFF). The WCOFF has been around for many years, and has become the premier high stakes fantasy football league.

The first episode aired on Thursday, October 15, but you can check out the first episode by checking out WCOFF TV. The show is well done, and surprisingly intriguing. For the fantasy industry, this is a breakthrough opportunity to make the game even more popular. Combine this show with FX’s new show The League, which is a sitcom built around a fantasy football league, these are great opportunities of watching fantasy football as entertainment.

Will it take off? Only time will tell. In the mean time, check out the video online, and let me know what you think.

On Sunday morning, two fantasy owners in my league felt inspired to make a last minute move. Both moves ended up being significant moves, yet neither had the impact that they should have.

The first owner Brian decided that Miles Austin was worth a shot in his lineup. His alternative was a forgettable (in fact, I have already forgotten) third-string receiver that probably wouldn’t score much anyway. With his team struggling for points, it could not turn out to be a bad move. 250 yards, two touchdowns, and 37 fantasy points later, Austin proved he was worth that last second audible.

The second owner was myself. With Kyle Orton, Matt Cassel, and Derek Anderson as my quarterback options, I decided to chance it with my most recent free agent acquisition (Derek Anderson) since he had a good game the week before, and he no longer had Braylon Edwards to drop passes for him. 23 yards, one interception, and -1 fantasy point later, Anderson was a total bust. Had I started no one, I would have been better improved my team, to say nothing to Orton and Cassel’s matching 20-point performances.

Now Brian’s move was a stroke of genius, which he promptly followed with a blunder of epic proportions–he never actually activated Austin. When he made the free agent acquistion, Austin was added to his bench, where he sat all day long. Somehow, he still managed to win his game. Despite my own idiocracy, I also managed to win my game, as Austin Collie and Michael Turner came up big for me, making up for my fumbling the quarterback selection.

The morale of the story is simple, you never know what you are going to get, but make sure to set your lineup!

I just spoke with Jason Pliml of Mock Draft Central, and he told me that Mock Draft Central is officially on the market. Mock Draft Central has carved out a very strong niche for itself as THE place to go to for fantasy football / baseball / basketball / everything mock drafts. The site has a loyal following of dedicated fantasy players in the tens of thousands of users.

For interested buyers, the sale process is simple – Mock Draft Central will be placed up for auction on October 30, 2009 with a starting bid of $195,000. The auction will held on eBay.com with a tentative end date of November 12, 2009.

Mock Draft Central is a profitable company that sustains itself through subscription, licensing, and advertising revenue.

Pliml started Mock Draft Central in 2001 as a means to improve his own fantasy baseball drafting skills. Mock Draft Central has since grown to be the leader in mock drafts and powers a number of other fantasy sites’ drafts.

While Pliml’s role with the company is to be determined, it is more than likely that Manager of Operations Geoff Stein will stay on after Mock Draft Central is purchased.

Mock Draft Central is willing to provide company details, including financial, traffic, advertising metrics, etc to parties with a bona-fide interest, and you can contact MDC at (616) 363-6306.

Jason, Geoff, and Mock Draft Central provide one of the highest-quality services on the web, and whoever acquires them will definitely be picking up a valuable asset.

From the “I couldn’t make this up if I tried” category, you can now get weekly fantasy football sleeper picks from three bikini-clad beauties in a hot tub. Hot Tub Sleeper Picks is a new video series offering fantasy advice.

Hot Tub Sleeper Picks is clearly tailoring to the mostly male fantasy football audience, and some find them offensive and/or chauvinistic. The videos are well produced, and the fantasy advice is backed up with rationale. Again, no one will watch for the fantasy advice alone.

Below is the Week 5 Sleeper Picks video, where the ladies nailed one of their three sleeper picks, after going two for three the week before.

If you were not paying attention, you might not notice that Fanball founder Paul Charchian is quietly and slowly building himself a brand new fantasy sports empire. Charch, as he is affectionatly referred to in the industry, was at the helm of Fanball for 15 years before leaving after it was acquired by CDM Sports.

You will not find a site right now that looks like the second coming of Fanball, but once you take a look at all of the little pieces, a fuller picture begins to emerge.

Charch’s first public venture after leaving Fanball was the launch of LeagueSafe. LeagueSafe is a great niche free site that allows fantasy players to easily manage league finances, collect league fees, and distribute prizes. It is a great and unique tool for fantasy players, but it is just one tool.

Next, Charch built and runs fantasy football game for Best Buy–Best Buy Fantasy–this year. It is a simple player free pick’em game where fantasy players compete against a celebrity of the week (this week it’s the All-American Rejects), and can win some neat prizes. Charch and Best Buy are both Minnesota based, so the two of them working together was just a natural fit. Now, Charch is building a platform for fantasy games. Hmm, this is getting a little more interesting.

Next up, Charch is writing regular weekly fantasy football content, which you can read at Fantasy Victory. Writing weekly fantasy content is probably one of the hardest and most tidiest things to do the industry. As the season progresses, it becomes a challenge to sound fresh and original. Doing this for fun is akin to getting your eyelashes plucked for fun. Maybe he does enjoy eyelash plucking, or maybe he is keeping his writing skills sharp.

When I asked Charch to comment on my hunch, he said, “I’m a long way from an empire at this point, but I think we’re headed in the right direction. Trying to build things that make sense for us.” He is definitely doing lots of little things with a much bigger picture in mind.

To recap, Charch is running fantasy games, is creating backend fantasy software, is producing regular fantasy content, and is developing a tool that gives him access to thousands of the high-end fantasy players (those that need a tool to manage league finances). If all of these items do not evolve into a full-service fantasy sports site, I would be shocked. Moreover, the industry would lose out as there is definitely room for a new independent fantasy site that will provide quality content and games for fantasy players. Charch is one of those guys who knows how to do it.