How Prophet Co-Founders Built a Peer-to-Peer Sports Betting Marketplace
What happens when two friends who love betting on sports and both have finance backgrounds get together? They create a secondary marketplace for sports betting!
Prophet co-founders, Jake Benzaquen and Dean Sisun, decided there wasn’t enough fair liquidity in the sports betting industry and decided to build a peer-to-peer betting exchange platform that enables users optimally cashout while their bets are fluctuating in value.
Prophet is currently in beta and preparing to launch officially within the next month or so. We chatted with co-founders Jake and Dean to learn more about how the platform works, how they branded their sports betting platform and their advice for fellow entrepreneurs interested in launching a marketplace.
How PROPHET ENABLES SPORTS BETTERS TO CASH OUT AT OPTIMAL TIMES & MAKE MORE MONEY
Prophet is the only secondary marketplace for users to optimally cash-out on their sports bets.
Co-Founder & CEO of Prophet
Jake graduated from Vanderbilt University in 2017. with a B.A. in human organizational development and a minor in corporate strategy. Prior to founding Prophet he was a financial and technology consultant at Capco.
Co-Founder & CFO of Prophet
Dean graduated from Vanderbilt University in 2017. with a B.A. in economics and a minor in financial economics and corporate strategy. Prior to founding Prophet he was an investment banking analyst at Hilliard Lyons.
1. What is Prophet?
Jake: Prophet is a secondary marketplace for sports bets. Sports bets are rapidly fluctuating in value until completion, often every second, yet users have no optimal way to cash out. Thus, we set out to provide market-rate and customized liquidity for users looking to sell, something that current operators do not offer their consumers, as well as the best odds on the market to buyers. This is all on a modern, comprehensive and analytics-focused marketplace that makes current bookmakers platforms look obsolete.
2. How does Prophet work?
Jake: Prophet acts as a peer-to-peer betting exchange, meaning that sellers list their bets on Prophet and buyers browse the comprehensive marketplace until making a selection. When selling, users are asked to enter in their bet’s information. From there, we recommend an optimal price and percentage to list the bet for sale at. This is done by pulling in current market information and analyzing the bet’s current value. Sellers will have the ability to go with our recommendation, or customize to their own risk appetite, all while seeing in real-time how much money he/she would make if the bet were to win or lose. After these selections, the user’s bet will be live and listed on Prophet.
These for-sale bets populate the platform and combine with graphs, statistics, analytics, news and media and more surrounding every bet, giving buyers a comprehensive experience when browsing what to purchase! A buyer then selects which bet he/she wishes to purchase and what percentage of the bet they would like to match. This means that buyers have the ability to buy into a bet at as low as $1, or match the entire thing if they so choose. From there, a contract (bet) is made between the two that settles upon the completion of the event(s).
3. And why can’t sportsbooks just do this themselves?
Jake: This is our favorite question to answer and the one that impresses people the most. Sportsbooks currently offer something called “cashing out”. This means that when your bet rises in value, a sportsbook will buy back your bet from you. This is the same concept as Prophet; however, sportsbooks can’t offer you fair rates. This is because for every dollar they offer you above the price you bought your bet for, they lose money. Thus, they really can’t offer you fair rates for your bets, otherwise they would be heavily eating into their own profits. Also, they can only buy back your WHOLE bet, not percentages of it (people can unload percentages their bets on Prophet). This is why cashout rates are so terrible, and it is exactly why there is a need for an independent, third party platform to come in and provide this opportunity for consumers (and sportsbooks)!
4. Impressive! Can you tell me a little more about your backgrounds?
Jake: I graduated from Vanderbilt with a major in Human and Organizational Development and a minor in Corporate Strategy. Vanderbilt University treats this as their business degree. From there I worked in the financial technology consulting sector for Capco from August 2017 - September 2018, working at both Morgan Stanley and HSBC on artificial intelligence tools and large-scale software implementation, respectively. It was pretty lame. I left Capco in September 2018 to focus exclusively on Prophet. Other than the boring stuff, in my free time I enjoy going out to watch/play/bet on sporting events with friends, or, if there is nothing currently on, throwing on my latest TV show with my two dogs, Charley and Summer.
Dean: I graduated from Vanderbilt University with a major in Economics and minors in Corporate Strategy and Financial Economics. Lacking an undergraduate business school, this is Vanderbilt’s version of concentrating in finance. I was an investment banking analyst at Avondale Partners from July 2017 - September 2018. As an analyst, I constructed valuation analyses and analytical models as well as collaborated with executive management teams to develop confidential information memorandums, investor presentations, and company operational strategies. I left Avondale Partners in September 2018 to focus exclusively on Prophet. Outside of work, like Jake, my favorite things to do are watch, play, bet on sports, and binge watch TV shows. I have a special place in my heart for golf (I’ve been playing since I’m 11) and Peaky Blinders. I love to travel, and I spend any bit of income I made on it, until I realized that was a horrendous idea as starting a startup is not cheap.
5. What was the inspiration behind Prophet?
Jake: Naturally, the inspiration behind Prophet came from betting. We (myself and Dean) were taking futures / outrights on teams to win different championships. Some did better than others, however, the main takeaway was that there is not enough fair nor customized liquidity in the sports betting industry. Fast forward two years later, Dean and I were both behind desks working in the finance industry. I was extremely unhappy with my situation, and started making calls to see how real of an opportunity this could be. One thing led to another and as of September we quit our jobs and are slated to move to London in the next month!
6. How did you decide how to brand Prophet?
Jake: Sportsbooks and other betting exchanges in the industry are known for having terrible user interfaces / experiences. These mainly operations based companies built their platforms on stacks of the early 2000s, with no need to change (due to them making an unbelievable amount of money). To this day, you can see the archaic technology used on Betfair, Ladbrokes, etc. Thus, Dean and I set out to design a modern, sleek betting platform with a clear focus on technology and analytics. “
Since we are providing users with a whole new type of betting experience, we wanted to give them the feel to go along with that. All of this was communicated at the forefront of our conversation with our designer, Alex Griffin. After numerous sessions explaining our vision and desired focus, we had a beautifully laid out platform with bright and inviting colors.
In terms of the logo, we knew we wanted it to be modern and sophisticated, branding ourselves along the lines of other successful financial startups such as Mint and Robinhood. Alex did an unbelievable job creating the P with numerous curved lines running through. The lines give it a stock market, financial feel to it, since users will be looking to capitalize on their bets’ changes in value (similar to day trading or trading options). As for the color scheme, we went with different shades of green (as well as a hint of blue and yellow) because psychologically, the color green makes people feel safe (this is why poker tables are green), and also money is green.
7. What has been the hardest part about building a marketplace?
Dean: Tough question to answer since we have not launched yet. As for the actual build, getting all of the right third-parties in place and being able to explain our vision and the dynamics of the platform to all of those working on it who are not as gambling focused as Jake and I are.
However, I believe if you asked us this a few months after launch, it would be securing seed liquidity and the chicken and the egg theory. Without sellers, you don’t have buyers, and without people buying people’s bets, people will get discouraged and stop trying to sell. What we are doing to combat this is 1) get as many people on the platform upon launch as possible by incentivizing them to signup for our waitlist and 2) buying people’s bets when they put them up for sale, so they don’t get discouraged and never use the platform again.
8. What features do your users enjoy the most?
Dean: From initial feedback, people love the selling calculator as well as our bet-ticker pages the most. The selling calculator displays in real-time your bet’s value and what you are looking to win / lose on the bet based on the price and percentage you are looking to sell. The feedback was so great surrounding this that we built a similar tool for buyers, allowing them to see the amount of money they are saving and the enhanced value that Prophet providers versus a traditional bookmaker or exchange. We have made it extremely easy for our users! The bet-tickers we modeled after financial trading platforms stock pages (for example, when you click on Apple stock on Yahoo! Finance), and people love to feel like traders. In addition, users love to see their bets’ trends over time, stats related to their bets, analytics and news & media all on one page.
9. Have you done any marketing? What has been your most successful growth/awareness campaign?
Dean: Yes, mostly on Twitter via professional bettors in the UK and US promoting us (a mix of paid and them genuinely loving our product / offering). We have also done a little advertising on Facebook and Google; however, it seems that these channels are less effective for user acquisition. In addition, we’ve been in contact with two of the top 5 betting podcasts in the UK, but we have not done anything with them yet (we are set to in 2019, look out for some exciting news surrounding this in early 2019). Twitter has been our most successful platform, as ~50% of our users come from there (it is HUGE for sports betting in the UK). In addition, we saw a significant uptick in traffic when we were featured / interviewed on the two podcasts (Sports Gambling Podcast, US and Kickers Matter, UK).
10. What is one thing you wish you knew before creating Prophet?
Dean: How to code. I can’t stress that enough.
Jake: The level of granularity, focus and time that is needed to build software that can scale globally, especially in the gambling vertical!
11. Any advice for an entrepreneur looking to launch a marketplace?
Dean: Talk to as many people as you possibly can to gauge interest in your product. Market validation is key and something that all investors are looking for. It is not enough to just have a problem and solution, there needs to be validation as well. You can do this on all forms of social media, when you go out, when you’re at school, etc. Then, work to gain these people’s contact info and store it somewhere (we use Google Sheets), as you will never know when they could be of assistance to you. Finally, when you launch your landing page, add all of them to the waitlist, email them, and then incentivize them to invite their friends and others. Liquidity is the biggest factor in a marketplace; without liquidity, it is destined for failure. A great example of this is TickPick, a ticket marketplace with no fees. I always look to them for tickets, but after realizing that they really ever don’t have the tickets I want, I stopped using them.
Jake: Similar to Dean, I recommend talking to as many people as possible and it is never too early to get the word out about your product. Whether you have hand sketches, wireframe to wireframe or interactive demos, feedback from end-users is the most important thing. Take this feedback and tailor your product to the consumer, after all you will need them more than they need you!
Secondary Marketplace Advice
Thanks Jake and Dean for sharing the story behind Prophet! Are you interested in launching a marketplace? Jake and Dean also shared the 8 key steps they took from ideation to launch here!
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