Tune in as Daniel Taren — the cofounder of Scrimmage — joins the show to talk about how they are integrating sports betting with Web3, through rewards!
RYAN KNUPPEL
What’s going on everybody? Ryan Knuppel here, Episode 185 of the Knup Sports Show, really excited that you’re here listening, taking a few minutes out of your day, really appreciate it. Thank you for all the support and enjoying this show. I haven’t brought you as many as I typically do, but, hey, the holidays are here, I have excuses all over the place to take a little bit of a break. But today we have an awesome show, and awesome guest, as always, that I’m excited to hear from. Excited to hear what’s going on there as well. Um, hopefully everything’s good in your world. As we do hit 2023, I urge you guys in this business world, this crazy sports betting business world, to get your planning going. You know, start strategizing, getting ready, and you’ll feel better as January hits in 2023. Alright, without further ado, we’re gonna jump right in to the interview today. Today we have Daniel Taren, the cofounder at Scrimmage. I’m going to bring Daniel on here. Hey Daniel, what’s going on man? How are you?
DANIEL TAREN
Hey, Ryan. What’s up? Appreciate you having me on.
RYAN KNUPPEL
Yeah, really excited to jump in here, excited you’re taking some time to chat with me, so thank you.
DANIEL TAREN
Always fun to talk about sports and sports betting.
RYAN KNUPPEL
Aw, man. We work in an amazing industry, don’t we?
DANIEL TAREN
Yep. Always an excuse to talk more about it.
RYAN KNUPPEL
Awesome. Cool. Well, let’s dive in. I want to hear about you, I want to hear about your journey. Tell me a little bit about yourself, where you came from, what got you to where you are today before we jump into Scrimmage.
DANIEL TAREN
Yeah, yeah. So, born in PA, went to Penn State, uh, so finance guy by trade. I worked in NYC in investment baking at Bank of America for a while. My partner Matt did the same thing. So, I was at Bank of America, he was at Citi Group, both doing kinda boring finance jobs and really we came up for an idea to start a sports betting hedge fund. So, kinda combined our finance passion, we like sports, we thought we could generate some alpha there. So we quit our jobs and that’s kinda our first entrance into sports betting. We set up a private fund in Gibraltar, of all places. Never been there, but set up a fund there and we did exactly that. We’re taking vest for capital and we’re betting it overseas, and dividending it back as profit. As you can imagine, um, United States, banks, etc. are not huge fans of the idea of taking US investor money, gambling it overseas, and then bringing it back, so we thought we were pretty above water, yeah, the lawyer expenses just kind of added up. What we realized was, with the AUM that we had, even though we were pretty profitable at the time, you know, it wasn’t something that we were going to be able to scale with this regulatory environment, so…We were betting maybe 130 times a day on average. We thought, “Okay, let’s pivot this technology to help sports bettor and more of a B to C product”, and that’s how Scrimmage, the 1st iteration, was born. And to be honest, the 1st iteration of Scrimmage, pretty much everyone’s already seen before. It was Betstamp, it was Action Network, it was Sharp App. Of the million sports betting companion tools, we hit the same angle, which is “Make it a financial decision”. Um, and we got into the Techstars Sports Accelerator, which is a great program, and going through that, talking to some venture capital firms and other people in the industry, we realized we had a ton of competition, and the affiliate business is a really tough one to be venture-backable. So what we did was, we were like, “Okay, well we have this cool technology view”. I’m sure you’ve heard of Sharp Sports and the team there, being able to sync people’s sportsbook accounts, we had some manual syncing as well. And we thought, “Okay, well what is a way that we could provide an edge to sports bettors that isn’t this traditional [inaudible] analysis that sports bettors typically don’t want to spend the time to do?”. And web3 is a growing place, so happy to talk about some of the bad parts of the web3 industry, but for us, we thought “Okay, there’s some cool utility here where we can build, essentially, what is the first rewards program for sports bettors”. Um, so think of it as frequent flyer miles, except you’re not beholden to one airline. So pretty simply, the way it works from a sports bettors perspective is you come on to Scrimmage, you pick an NFT that fits your betting parameters, so think of it as “I like to bet a little, I like to bet average, I like to bet a lot”, then you sync all of your sportsbook accounts with us, so whether it’s the major US regulated sportsbooks, DFS providers, and we have a couple of our own partnerships that we’re syncing with directly, and then you earn the internal $SCRIM token based on the betting that you’re already doing in those platforms. And that token pretty much acts as a rewards program for sports bettors where we accrue value to the token, so real USD value, happy to dive in to how, and then you can either use that token to upgrade your NFT further, so you earn more $SCRIM, or you can exchange it for USD. So it’s a brand new product, I would say, in the space, trying to directly combat what is, I think, at the core of every issue of the sports bettor, which is the cost per trade is incredibly high and that makes it incredibly hard to be profitable. And we knew from the beginning we wanted to help sports bettors gain an edge, but this is a new way in the industry we think to do it.
RYAN KNUPPEL
Wow. That’s a lot to unpack there, Daniel. But thank you for that very detailed description of what’s going on, and, you know, I have a lot of comments, but I’ll save a few of them for later because I’m really intrigued, I want you to keep going on what Scrimmage is. I love that you guys pivoted, right? Cause I think that’s, I think us, sometimes as entrepreneurs and as business owners, we get super stubborn and connected and attached to our idea, right? And what we have, and we’re almost blinded by the reality of the situation, right? And I give you guys a lot of credit for being able to kinda step back from that, take a deep breath, and pivot to another angle. I’m sure, tell us a little bit, you know before we get into more about Scrimmage, tell us a little bit about that decision and how that was for you guys.
DANIEL TAREN
So I think the biggest mistake with our first product is that we were building something for ourselves and not for sports bettors. You know, this idea that you want to create a betting product that’s around financial analysis, to people that are really into sports betting, that niche group, it makes a ton of sense, right? Like, you want to find alpha, you want to find an edge, you want to be Plus EV, you know? There’s a lot of buzzwords that go around bout it, and it’s true if you want to take it really seriously, but the vast majority of at least US sports bettor, they say they may want to do that, but they’re not actually gonna spend 45 mins to an hour and a half, you know, blind shopping the way that you’re supposed to, or finding edges that you’re supposed to. It’s just not reasonable, so we struck a chord with a niche group of bettors, but we knew pretty early that it wasn’t venture-backable, and I think, deep-down, there’s a ton of people in the space that, you know, are really smart men and women, and they agree, deep-down they agree. And after talking to enough of them, I kind of, bouncing off the idea of what we were doing, people have seen it before and it’s just not something that we thought or they thought, and kind of collectively thought, that could be large enough business. Um, so that’s why we made the pivot, it was still tough, I mean it’s always tough to admit that you’ve probably failed at something, and try to still strip out part of it, which was the core mission, which was to help sports bettors, strip out that part, and continue with a product that gets to that goal in a different way.
RYAN KNUPPEL
Oh, I love that word “fail”, because, you know what? Every failure leads into something bigger and it takes a lot of those failures to get, it took me a lot of failures to get me to where I am and our business and what we have going on today, and I feel like I fail everyday still, right?
DANIEL TAREN
[Laughs]. Same.
RYAN KNUPPEL
You know, people may look down on it, but no, that’s a good word in my book. You know, you gotta fail, you gotta fail a little. So I pulled up Scrimmage here, Scrimmage.co. Um, you know, very clear: “Get rewards for the bets you already make. Connect sports, place bets, earn crypto”. I think that’s, you know, you touched on this, you guys are. in the web3 space, you know, that number 3 right there, I think, people are gonna be like “Woah, what what? I don’t just earn cash? I don’t just earn money?”. Expand a little bit more on the crypto side, the web3 side, and how you’re going down that path.
DANIEL TAREN
Sure. I think that crypto, in some ways, gets a bad rap, and in some ways it deserves a bad rap. It just depends on who is utilizing the technology, but the technology, in general, does open up a lot of different paths that you can take advantage of, and for sports betting, the value accrued to the token is necessary. I mean, through that token, you can create, truly, a loyalty program that is not beholden to one sportsbook and that is not beholden to you betting at one sportsbook and only having to use whatever that they offer. So no matter where you’re betting, you’re basically getting this token, and the way that we accrue value to it is through a lot of ways that people are familiar with, which is the affiliate model. So, anytime we redirect a user to a sportsbook, we get paid that affiliate fee. A portion of that is restaked back into the token to accrue value to it. We’re changing our licenses over to revenue share agreements so that when you lose, we’re going to accrue value back to the token so our user’s actual losses is what’s fueling part of this, and eventually, we want to be able to negotiate these handle share agreements with sportsbooks, where if we’re bringing you so much action, then a portion of it is restaked back to the community. And through doing that, we’re removing some or all of the bake, and that’s not something that’s possible in web2. So, now web3, this is, the buzzword is “utility”, this, I don’t know another way to say it, this is an actual utility for web3, and we’re not doing, you know, a lot of the stuff that traditionally I think people have kind of a bad thought about, which is, we’re not doing an NFT trap, you know, you’re not paying a thousand dollars upfront for a JPEG. The NFT is, think of it as an access to the membership. You need an NFT to start the game, but that’s really it. We’re not doing an NFT drop before, it’s just once you have. an NFT, you start the game, you can trade in and out of the NFTs based on fitting your betting parameters to earn more $SCRIM, and it’s kind of gamified in that sense, but, um, it’s just using the technology that’s now available to us to help sports bettors.
RYAN KNUPPEL
I love it, and I was gonna ask, you know, which operators, which sportsbook are you working with, you clearly list several of them here, there may be more, but quite a nice list here. You know, all the major operators, especially in the United States, some of the more fantasy type styles as well, so a lot of operators here.
DANIEL TAREN
Yeah, and we’re really excited. We’ve already struck a partnership with a peer-to-peer betting type of marketplace, BetOpenly, if you’ve every heard of them.
RYAN KNUPPEL
I have, yeah. I love them.
DANIEL TAREN
Yeah, love those guys, and we’re integrating with them directly, so basically API to API, we get their information, they get ours, and we’ll be able to reward their users in $SCRIM for betting on BetOpenly. And we’re also going to do something down the line where if you own a Scrimmage NFT, you’re gonna get some portion of commission off trading at BetOpenly, so continuing to provide different ways to incentivize people to take advantage of different ways to in the space to gain an edge and effectively lower your cost-per-trade.
RYAN KNUPPEL
Amazing. So tell me where you’re at in the business. Like, this is clearly launched. Um, are you, where are you at in business? I’ll leave it at that.
DANIEL TAREN
Sure. Yeah, so this portion of it is actually just in beta right now. It’s completely done, um, not to get into boring details, but Apple has come out with some new rules surrounding NFT and cryptocurrencies that’s made our approval process there take longer than we want it to, but [inaudible] we’ll go the way of the web app and we’re totally ready to go. We have like 150,000 followers across social media at this point, really excited to get a couple dozen beta testers that are super excited, so from that sense we’re ready to go, just waiting for that final approval from Apple, which, it could happen during this interview, it could happen in an hour, it could happen in a week, we’re a bit beholden to them. But, super excited. We just raised more of a traditional pre-seed ground a month and a half ago now, so we’ve got runway, probably for the next 12 months plus, so pretty excited about that. And um, you know, our development team is doing well, marketing is doing well, business side is doing well. We’re just ready to go at this point.
RYAN KNUPPEL
So explain what a consumer, a customer, a sports bettor, explain, one, how they would get started with you guys when it’s time, and two, what that looks like, I mean, what do they have to do? Do they have to tell the sportsbooks, do they have to sign up under you, how does all that tie together? Explain a little bit about how that works.
DANIEL TAREN
So, I think this is one of the most important things when it comes to sports bettors, one of the most advertised to groups, maybe in the world at this point, especially in America. You don’t wanna force them to change their betting habits. That’s exactly what we did with our first product, was just totally change your betting process in order to gain an edge. So with this product, it’s super simple. Come on to Scrimmage, you basically go through a tutorial where you pick a few questions on how you like to bet, you receive an NFT, that NFT unlocks you into the game, sync your sportsbook accounts with us one time, and then everytime you place a bet on any of your favorite sportsbooks that synced with us, you go back to the Scrimmage app and that $SCRIM will accrue in your account, and then you could do what you want with that $SCRIM. So like I mentioned, there’s attributes to your NFT that you can upgrade, which, effectively, and I don’t need to get into it, but you can earn more $SCRIM in the future, so there’s a meta to the game in a sense. Uh, you can trade in and out of those NFTs in the in-app marketplace, so if you think someone’s NFTs better and fits your style more, or you think your’s is overvalued and you want to sell it for a profit, you can do that, and then you’ll be able to take your $SCRIM and exchange it for USD. And that’s the only portion of the product where you need to kind of accept web3. What I mean by that is we store everything for you up until that point on our internal block chain, so you don’t have to have a meta mask wall, you don’t have to have anything. It’s kind of like a, I think of it as a more simplified sportsbook process, where it’s super easy to deposit and a little bit harder to withdraw, we’re super easy to deposit, still easy to withdraw, like you just have to acknowledge that you’re in web3. But up until that point, there’s nothing that you need to google or research or be scared about in terms of any cryptocurrency. We do that entirely for you, and then you click a couple buttons and you’ll be able to exchange that for USD.
RYAN KNUPPEL
So what I didn’t hear out of all of that, I didn’t hear a “costs this much to join”, I didn’t hear “you have to sign up here to join”, is that true? It sounds like, is it a free-to-join type?
DANIEL TAREN
Right now it’s completely free. At some point we will switch that initial NFT purchase to probably paid, just on market dynamics. So, if you’re earning X amount of Scrimm and it has this dollar value, we’ll try to equate that back tot he NFT and give you almost like a pay-back period. So, just think of it as, like, market dynamics will control the cost of the NFT and that will be reflected also in the NFT marketplace in-app. So, when people are trading in and out, that’s effectively the market price,a nd entrance will be somewhere around that. But for now, we’re really confident in what we’re doing, completely free, and we feel like that’s going to be a good way to on-board people onto it, realize that, you know, with all the negativity in web3 right now, you’re not getting scammed, nothing weirds going on, and people will understand the value prop of it, which is pretty easy, it’s “I’m already betting, and there’s something out there that’s trying to give me an edge that takes me a couple minutes a day. Why not?”. Like, really, why not?
RYAN KNUPPEL
Yeah. I love that. I love that for sure. And I encourage all you listeners, I mean I know many people, and I talk to a lot of people in this space, are still intimidated by the whole web3 thing, right?
DANIEL TAREN
100%.
RYAN KNUPPEL
And so I encourage you to just jump in at some point, and this sounds like a pretty good entry point, because, like you said, it’s not true web3 right away, but it’s kind of teaching you some of the concepts and how all of it works and how all of it ties together, and gives you a little education there before actually having to dive in and do the whole beta mask wall, all of the above there.
DANIEL TAREN
Yeah, exactly. It gives you the benefit before you actually have to be a web3 native. We do it all for you, and then you’ll understand it. And the venn diagram of sports bettors and web3 enthusiasts, it’s bigger than people think. There’s a study out there that its about, the average sports bettors, about 2x more likely to be somewhat interested in web3 and cryptocurrency. And it makes sense, right? Like, the personality profile fits. It’s a little bit more open to technology and a little bit more open to change and a little bit more risk-on. I mean, it makes sense, and it’s something that could help you, so if it is, I think a good entry point for a lot of sports bettors.
RYAN KNUPPEL
So where’s Scrimmage headed? Where are you headed, what’s on the near future, um, you know, what kind of short term plans do you guys have here for growth, and what, secondly to that, what can the audience, what can the listeners help you with? A lot of sports business people, betting leaders, start-ups, are listening to this type of show, what can they help you with with the future plans you guys have?
DANIEL TAREN
Definitely. So first and foremost, it’s the launch. Once we launch, one of the biggest problems, I think also with our first product, is we didn’t listen to user feedback as much as we should have, and we continued to build the product for ourselves. So with this one, we’ve totally been beholden to our beta testers, what they want, we continue to build the futures that they want. One of the easiest things we can do is you kind of touched on it earlier, you saw a lot of US-focused sportsbooks and DFS providers. There’s absolutely no reason that Scrimmage should be beholden to the US, there are sports bettors everywhere. And the more bettors that are on here, the more value that should theoretically accrue to $SCRIM token, which helps everybody. So for us, it’s finding API connections, reputable sportsbooks across the globe. We’ve had, you know, some preliminary talks with some in different countries, and that’s, we’re excited to do that. So, for any listeners that might be, that work at a sportsbook outside of the US, Canada, South America, Europe, for us, we have a really confident dev team that would be excited to onboard some more APIs and give access to Scrimmage to more people. So those are kind of the main plans of the next year, and then continue to build futures that help sports bettors. So, however we can accrue value to the $SCRIM token, and make people enjoy their experience more, we’ll keep taking that user feedback and keep building it.
RYAN KNUPPEL
Amazing. Awesome, well thank you for that. One last question for you, and this is a little more personal businessy type question. So, you made the comment in the beginning, and I found this fascinating, I always find this fascinating, but you made the comment: “Me and my cofounder, we just up and quit our jobs and started this”.
DANIEL TAREN
Yeah.
RYAN KNUPPEL
And I, everytime I hear that, I’m like, “Oh, boy”. That had to have been, um, scary maybe? But you also come across as a very confident individual and confident in what you’re doing and operating and offering, so I want to get a little of your, of what that was like for you, and maybe give a little encouragement to the other potential people out there that just can’t quite make that same jump, because that’s a hard jump to make, right? That they have this idea, they have this business, but they can’t just quit their jobs and do it. What helped you get there and make that happen?
DANIEL TAREN
Sure. I think, transparently, there’s pros and cons to everything. I always think with advice, it’s somewhat useless because advice is kind of like nostalgia, it’s just you thinking back on your past self and just reiterating what worked for you or what didn’t work, so for different people I think it will be different. For me, investment banking is long hours, it does pay well, but the life that I was living during that, I felt was not one that I wanted to forecast out 30 years or so, and I knew that, you know, based on other jobs that I could get, that this is something I was passionate about, and I also thought that there was a market for it. And I was wrong. I mean, transparently, the sports betting hedge fund, it didn’t work, and the first generation fo Scrimmage didn’t work, so maybe overconfidence is actually the truth to it, but, you know, you just keep grinding, and as long as you are adaptable and you, I guess the word is, you never get too high or too low, you’re resilient to those things, because there’s times that are definitely painful, and you’re, like, looking around like “Ah, maybe this was stupid”. But there’s also times that come across where things are awesome, and you’re like, you can’t get too high either, you kind of rest on laurels. So I think, you know, it’s definitely not for everyone. I don’t think being an entrepreneur is something that everything would want to pursue because there’s other things in life that you can enjoy and you don’t have to go through the risk of starting a company. Um, because it is risky and sometimes it can be painful, but it’s also a lot of fun. I have a blast everyday doing this, and I’m pretty confident in the success of it, you know, with or without me doing it. I really think this is something that could help bettors, and I’m glad to help facilitate it.
RYAN KNUPPEL
Very wise advice. You’re very wise beyond your years, Daniel.
DANIEL TAREN
[Laughs]. Thank you.
RYAN KNUPPEL
Really appreciate that business advice and hopefully everybody watching this show does as well and has taken something out of this episode. I think it’s been an amazing show. I know we gotta get going here, I know you’re a busy guy, but I always leave this open at the end. Any last words, anything we forgot to talk about, anything we wanna touch on before I let you go here, Daniel?
DANIEL TAREN
No, I thought this was awesome. I’m really glad with what we got to cover. I hope sports bettors are open to it and give it a chance because I think it’s something that could really tangibly help them, and there’s so much redundancy in the space of the type of products that come out to help bettors, that it ends up not helping bettors. You just rack up costs of things that are data, or they’re picks, or they’re whatever, and a lot of times, that data or those picks, the sportsbooks are also using to shape their lines. And you just end up paying more money on top of the cost that you’re already sacrificing in trading with a sportsbook, so I think this. something new in the space that it needs. It needs a little bit of disruption, and I think we could really bridge the gap between web2 and 3 and provide people with real tangible value. So, excited for people to do it, and if you don’t believe me, join our Discord, join our Twitter, look around for awhile and hopefully you dive in.
RYAN KNUPPEL
Yeah, I don’t even need to ask for all those links, you don’t need to give all the links, I’ll put them in the show notes, I have them all here. We’ll put them out there for everybody to join. Join the Discord, join the Twitter, get ready for their launch. Uh, Scrimmage is going to be awesome and it sounds like it’s going to be pretty easy to use. So, Daniel, really appreciate you coming on. You know, I’m excited for where you guys are at, but I’m more excited for where you’re headed. I think you guys are heading down a path that’s going to be fun to watch, and I look forward to having you on after that launch has happened a few years down the road, having you back on for an update.
DANIEL TAREN
Absolutely. Hope it’s good news. I really appreciate the time.
RYAN KNUPPEL
Alright, my friend. Talk to you soon. Bye-bye.
DANIEL TAREN
Have a good one. Bye.
RYAN KNUPPEL
Alright. That was Daniel Taren of Scrimmage. Really good guy, as you can tell. Really smart, really doing some cool things that’s tying web3 into sports betting, and if you, anybody knows me, and knows what I’m about, I love both those spaces. I live and breathe sports betting every single day, I have been addicted to the web3 side of things, you know, for several years now, I’m part of many projects, many companies, many NFT projects, crypto projects, things of that nature. Yeah, is that industry down a little right now? Sure, maybe. But, I’m looking long term with the web3 model and that business, and I urge all of you to jump in a little bit into that space as well, and what better way, if you’re a sports betting fan, then look at Scrimmage and see how those tie together. So, we’ll put the links out there in the show notes after this, so make sure you go check all of that. I’m Ryan Knuppel, this was Episode 185. If you want to be on this show or know somebody that could be a good guest on this show, please reach out to me. @Knup, you’ll find me about on any social media channel. Twitter, LinkedIn, anywhere you can find me. I’d love to have good guests, we’re looking to get to 200 shows here very shortly, and hopefully do something special on our 200th show, that’d be quite an honor. So, thank you all for your supports, appreciate everything. Share the links out, put the links out wherever you can. I think this is a good one to share with our industry, so make sure you share, like, thumbs up, all of the social jargon. And if I don’t talk to you before hand, please have a great holiday, have a great Christmas, we’re heading into the New Year, let’s make some big things happen. So, take care, we’ll talk to you soon. Bye-bye.
Relevant Links
- Learn more about Scrimmage.com here
- You can connect with Daniel Taren here.
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- If you are looking for my services you can find more information on the Knup Solutions website.
- Listen to more episodes of the Knup Sports Show.
- Want to be a guest on our show? Setup a time that works here.
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Contact Ryan Knuppel
- LinkedIn: https://www.linkedin.com/in/ryanknuppel
- Email: ryan@knupsolutions.com
