Hi everyone 👋 I took an unexpected week off from publishing while in SF, but for good reason.

Thanks to everyone who attended our event with AngelList last week! There were 169 RSVPs and we had to turn it off a few days beforehand; apparently we should do more of these. I also hung out with two of my heroes, ex-Twitter employee Daniel Johnson (I missed Rahul by an hour) and Dr. Parik Patel, CFA.

Fanatics recently announced its pushing into live streaming, which is fascinating to me. I'll also touch on three new product launches, including Google and Bing's conversional AI products launching just as ChatGPT passes 100 million users. Last, I'm dropping $100 in free Safara credits for the first 100 people who claim them.

Finally, some house keeping: I'm planning on only publishing The Split once per week for awhile. There may be some one-off weeks with multiple sends, but overall expect slightly less frequent emails from me.

🏈 Fanatics Gets Into Live Streaming

Fanatics, one of the largest sports-related businesses in the world, is getting into live streaming. And they just hired Nick Bell who, before a stint leading Search Experience at Google, built Snap's content business from $0 to nearly $2 billion in revenue.

You might be familiar with Fanatics as the licensed sports merchandise retailer. If you've ever bought any sports merchandise online - from the Warriors (NBA), the Chiefs (NFL), the Yankees (MLB), to the Sharks (NHL), or the Alabama Crimson Tide (NCAA) - you've interacted with Fanatics in some way.

I doubt think this graphic I spun up is all-inclusive, but the majority of sports-related merchandise runs through Fanatics. So much of it that it just raised $700 million at a $31 billion valuation in late 2022.

I'm admittedly not intimately familiar with Fanatics. But this job posting to run engineering on its live streaming team mentions operating over 900 sports-related properties, having 10,000 employees, and a database of 90 million customers.

You might compare to Fanatics to companies like Nike, Adidas, or New Era, but all of those operate more as consumer facing brands. Fanatics core business is handling everything from the design, manufacturing, and entire supply chain journey of millions (?) of various individual sports-related SKU's. Basically, everything that Nike and Adidas don't do.

This except from an interview with a former Fanatics employee via Tegus has more context around what makes it unique:

As of today, Fanatics essentially controls the end-to-end distribution of products to nearly 100 million sports fans. A jump into live streaming makes logical sense to me, but will undoubtedly be a massive undertaking. Live online shopping is an entirely unique format that doesn't quite exist yet at scale outside Asia, but it matches exactly how sports are experienced. Live sports are so powerful that they've kept the legacy cable bundle intact 30 years into the existence of the internet.

Fanatics already controls the online shop for every major sports team in the US, not to mention their stadiums and in-person retailers. It will probably use this distribution to push demand into a live stream destination, or maybe its just building the infrastructure to support live shopping across every other online sports property. My understanding is it generally negotiates exclusive rights with its league and team partners, so you could argue Fanatics is uniquely positioned to build this.

Fanatics plans to launch its live stream service in second half of 2023. Press coverage mentions its starting with collectibles, and it acquired Topps Trading Cards in 2022. I'd guess it expands into other categories soon after.

Fanatics is also gearing up to launch a sports betting product, led by FanDuel's former CEO, Matt King. It just opened the first Sportsbook inside the Washington Commander's FedEx Stadium, making it the first retail sportsbook inside an NFL stadium. Fanatics is already operating inside every major stadium across the US, and is quickly expanding across Asia and Europe. How many more of these are coming?

I'd assume "place bet, track in-app" is a pretty efficient customer acquisition channel when layered on top of an already profitable in-stadium retailer. Especially compared to other sports betting platforms paying to hit them with thousands of repetitive ads across Instagram and Twitter over the past two years. Fanatics could always pay to acquire new customers there too, with being able to monetize them across both licensed merch and betting as its competitive advantage.

If we want to get real galaxy brain: does Fanatics offering eventually become one comprehensive product? It could acquire a (free?) customer buying a jersey from an NFL team's website, who then downloads the Fanatics app to track the order. Later that week, the fan watches an NBA game where they place a Fanatics bet on their favorite, and then buy his jersey in-app and tickets to the next game after he hits a buzzer beater in triple overtime.

Finally, Fanatics actually owned the rights to stream that game, so this was all done in-app where it served ads, learned more about the fan in-app, and amortized the media rights acquisition costs across everything above. Even activating 2% of its 90 million customers gets it more subscribers than Fubo, which streamed the Super Bowl two days ago.

If Fanatics pulls this all off, it would probably be the largest and most profitable business across all of sports. And for any of this to be true, you'd have to believe Fanatics core business of exclusive merch licensing trumps everything else.

Fanatics recently raised $700 million at a $31 billion valuation with $8 billion in projected 2023 revenue. If you know me, you know I like my $100 billion valuations. A 4x revenue multiple would mean it needs to clear $25 billion in revenue. Capturing a slice of the entire fan experience across every sport around the world, just might be enough to get there.

A Message from Tegus

This write-up on Fanatics would not have been possible without Tegus. I started using it in 2020, and since then I've watched its Expert Call Transcript product evolve into an end-to-end platform that super charges my research and diligence process. It gets me up to speed on virtually any company and industry almost immediately.

If you want to try it yourself, readers of The Split can sign-up for a 14 day free trial here.

🚀 Product Launches

Liveblocks Launches 1.0: Liveblocks is a fully hosted solution and complete toolkit to modularly embed collaborative experiences into your product remarkably fast. If Fanatics wanted to build an interactive chat or overlay on top of its livestream product, it could use something like Liveblocks.

We invested in Liveblocks Seed round last year, and this 1.0 launch brings their full suite of products together.

Sign-up or watch the launch video here.

Secureframe Launches MSP Program: This new multi-tenant portal was designed from the ground up for service providers, security consultants, and their clients in mind. It's built on top of Secureframe's compliance automation platform and allows both providers and their customers to move faster.

Secureframe's product now covers everything from SOC 2, ISO 27001, GDPR, PCI DSS, and, HIPAA. If you're looking for a compliance partner that helps close enterprise customers faster, schedule a demo today.

Google Launches Bard: In case you missed it, Google launched its own conversational AI service last week.

This happens as a) ChatGPT passes 100 million users, and is reportedly the fastest growing product in history according to UBS and b) announces an integration with Microsoft's Bing.

My current view is the technology eventually gets commoditized, and distribution will be king. Google will be fine eventually (it has its own suite of non-search products), very few people switch to Bing unless there's much more coming, and OpenAI will be smart to continue focusing on growing its distribution.

💸 Free Stuff

8% off Your GEICO Insurance: I just learned that if you own any stock in Berkshire Hathaway, you can get an 8% discount on your car insurance. And apparently, you don't actually have to prove any documentation, just call customer service and tell them you're a shareholder...

$100 in Safara Credits: My friend Michelle just started working at Safara, a Sequoia-backed hotel booking platform that gives 10% back at over 1 million hotels globally. Essentially, instead of pocketing the commission, they give it back to customers. She gave me $100 in credits to give to the first 100 readers of The Split who claim them here. (limited to US-based individuals at the moment and new sign-ups only)

Why Safara? It has:

• 10% back on every booking, with no restrictions, blackout dates, or hidden fees

• Automatic carbon offset for 100% of bookings at no extra cost

• Curated lists of the top 1% of hotels on the platform

• 24/7 in-house customer service

I think the curated list approach might be more approachable to younger consumers, and it seems like a smart way to eventually leverage influencers to drive traffic. It's also pretty contrarian to be making lists as the world obsesses over conversational AI!

I just signed up, and if you want to try Safara for your next trip, grab $100 in credits here.

🔗 Links and Charts

Its crazy just how fast ChatGPT grew in historical context. h/t Kyle Hailey for building this chart with ChatGPT.

A new study from Stanford GSB shows a startups future fundraising success is directly correlated to the size of its Seed round.

Carta's been crushing it with the charts lately, this one shows three years of pre-money startup valuations indexed to Q1 of 2020. We're almost done making the full round trip! h/t Peter Walker at Carta for sharing.

Temu Hits $46 Million in Weekly GMV: This would put it at roughly $2.4 Billion annually less than four months after launching. This comes before its Super Bowl commercial this past weekend, and may partly explain Shein's sales decreasesin six of the last seven months of 2022. 

Amazon's Growing Bite: Amazon now collects $0.52 in revenue for every $1 spent on its platform. 

What Chinese Social Media Users are Saying About the 'Spy Balloons': I'm sure you've seen the internet go crazy about the Chinese spy balloons shot down above the US over the past week. But what did people in China think? Some thought it was funny, others accused the US of doing the same to other countries (which is true).

YouTube Shorts Monetization's Slow Start: According to Matt at Unnecessary Inventions, he saw YouTube Shorts revenue share last week at $255 for 6.5 million views, or $0.04 per thousand views. It's low, but it's up from $253 for 102 million views, or $0.01 per thousand views in the entire month of January. Bluedrake42 is also seeing $27 on 572,000 views, or $0.05 per thousand views.

Base10 Partners Research Tool, Base11: The portal, which reflects its internal research tools, features a "Real Economy Opportunity Score", which compares the hiring and funding within a certain trend. The dark blue quadrant in the top right represents the top quartile, which of course includes Generative AI. You probably won't be able to guess which one's the furthest to the top right!

Trends in Decarbonization: A great report from Nat Bullard on the intersection of all things climate, business, and funding. (trust me that there are much more cooler, non-investment related charts like the one below in the rest of the report)

Us Fuel Markets in 2023 & Beyond: Visualization of how the US mix of Wind and Solar power will grow as coal shrinks over the decade.

White House Announces $500 Million for Philadelphia Water Upgrades and Lead Service Removal: If you've been reading The Split for awhile, you probably remember me mentioning this 2016 report estimating the US needs to invest roughly $1.6 trillion in its pipe and water infrastructure over the next 20-25 years. This new 

Hardest Hit in Tech Layoffs: Good visual of the recent tech layoffs in context to % of workforce. 

31 of 40 Indian Unicorns Have Less than 2 Months of Runway: This is pretty wild if true.

Single Women Own More Homes Than Single Men: This is true in all US states except North and South Dakota. Despite the wage gap between men and woman, not all women are low earners. According to this LendingTree report, women often spend less for homes than men, and also make more financial sacrifices to make it happen. Some of these single women are also widows who previously lived with their now-deceased partner.

Wealth distribution across Europe. h/t Sasha Kaletsky for sharing!

60% of Teenage Girls Felt Persistent Sadness in 2021: This is double the rate of boys, and 33% girls seriously considered attempting suicide. The study sampled 17,000 high school students across the US in the fall of 2021. Despite higher depression rates, it also found lower illicit drug use, bully, and less sex with fewer partners than in previous years. 

📚 Long Reads

The Retreat of the Amateur Investors: A WSJ profile on the rise and fall of the pandemic's day trading phenomenon.

What the US Can Learn From India's TikTok Ban: What happened in India after more than 200 Chinese-based apps were banned in 2020? It was a different time, but "I don’t think that anybody has really complained about missing TikTok". The biggest winners were Instagram and YouTube, which I'd assume also benefit most from a US ban. An interesting situation at a time some lawmakers are pushing anti-trust narratives.

The Fintech Formula: A Data-Driven Blueprint for Creating Enduring Value: If you're building in or investing in fintech (and even if you're not), this report from Bain Capital Ventures has a lot good benchmarks. Good to see Banana portfolio company Compound sitting at the top right!

How to Write Investor Updates: Whether you're a founder getting ready to write your first or hundredth investor update, this is a great overview from Daniel Gross.

💼 Career Services

Two Banana portfolio company jobs to highlight:

• Inngest is hiring a Frontend Engineer: Inngest is an open source platform that enables developers to build amazing products by ensuring serverless functions are reliable, schedulable, and event-driven.

• Goals is hiring Game Developers: Hopefully I'll get to write more about Goals soon, but they're hiring devs to build a new football (soccer) game from the ground-up.

We also just did Banana Talent Drop #11! If you're starting to explore a new startup role and want to passively get in front of hiring managers in the Banana Cap portfolio and my broader network, apply to the Banana Talent Collective here.

If you're hiring and want Drop #12 and access to 200+ pre-vetted candidates, apply here (as always, if you're at a Banana portfolio company reach out for free access)

🍌 Monkey Business

🍌 The Split is brought to you by the team at Banana Capital. Read more about what we're up to and the latest on our Fund 2 here.

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