Farzeen Ghorashy: Strategy in a Sports-Media Company (Full Transcript)
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Ronen Ainbinder
This episode is a very special one. It is a pleasure to introduce and welcome to the Halftime Snacks, a former investment banker from Goldman Sachs, who's now the chief strategy and Financial Officer of Overtime. Overtime is one of the biggest sport media companies in the entire world. And their company has over a billion views each month. I can't wait to learn from him. So without further ado, Farzeen Ghorashy!
Farzeen Ghorashy
Hey, man, good to meet you.
Ronen Ainbinder
Thank you for accepting my invitation. I'm sure the listeners and I will learn a lot about you. I want to start off today's chat with your story. How is the transition from working in one of the world's biggest financial firms as an investment banker to directing the finances of a global sports media company? How would you compare both roles?
Farzeen Ghorashy
Working at Goldman was the first experience out of college. So it was a good place to develop a lot of the professional skills expected of you in a boardroom. I went to undergraduate Business School in Canada, and you get to work on a lot of that stuff, as well. But being in an environment like that straight out of school was certainly helpful. Whether it's how to speak or communicate, the level of rigor they put into the work and making sure you're not making mistakes, they are all kinds of things that helped. And I think that adapting to several different kinds of crazy environments was super helpful. Obviously, our company's just over 100 people, so it's much smaller. Still, I think it's helped and understanding how to deal with very different situations and people. Generally, a lot of the skills you get from more of like a technical, financial background help in this as well, just being able to understand kind of all the different inputs into the business and the levers you have to create value. Being able to just draw on experiences of like working with a lot of different clients and how they thought about their business, and I'm able to apply for this job. Between Goldman and Overtime, I worked at Endeavor. This large global talent agency owns many assets in the sports and entertainment space. Being exposed to a lot of those businesses helped as well, just having the perspective that's a little bit more unique coming into Overtime.
Ronen Ainbinder
Were you always interested in sports and in the industry? Or was it something that came about, and you just jumped into it?
Farzeen Ghorashy
I was always interested. I was more interested in playing sports when I was young, like most kids, and then when I injured my shoulder, and I couldn't play tennis as much anymore. I realized that I wasn't going to be an NBA player. I tried to figure out how to mix my passion for sports with my interest in the business. When I was playing games, I like those games that had some business-like aspect to it. In Canada, we're lucky there's a lot of undergraduate business programs. So I could go to one where you didn't have to pick, finance, marketing, or anything, day one just got exposure to a lot of different things. I didn't really have a sense of what I was going to do coming out of school. And I quickly learned that finance was a lot of highly motivated, smart people were spending their time. I was intrigued by it and thought it was an interesting means of developing skills in a fairly concentrated manner. And then leveraging that, and trying to combine it with sports down the road would be interesting. I went to a sports conference, and I realized that like, every other person, there had the same idea I did, and I wasn't that smart. So I realized that I had to think about getting more professional services experience before working for like the NBA or a company like that. And so I was lucky that a Goldman, there's a group that does kind of sports media advisory work. Through some connections, I was able to meet people who worked in that group. And I got super lucky in that I spent a couple of years there. I got to work with the NBA and many different clients and eventually went to another client, which is WWE at the time. It was a mix of always wanting to do it and learning along the way that there are certain steps I had to take before just being fully immersed in sports on a day to day basis.
Ronen Ainbinder
That's fascinating. I'm sure many of the listeners will identify with your story because it's kind of an example of how it's possible to come into the industry. Considering your wide experience, knowledge of sports and finance, combining it also with the working projects and the numbers you're exposed to consistently. I'm intrigued to ask you how valuable and risky (compared to regular asset classes such as stocks, bonds, real estate) is investing in sports and sports organizations?
Farzeen Ghorashy
I think so one, sports investments aren't really accessible to the everyday investor. I think if you are someone who can go invest in a sports company, whether if they're raising money, or if you're so rich, so you can invest in a team. Some stocks are publicly traded as well. In the sports space, I think that it's just a different risk profile, right? You need to understand that the upside may be higher there, but the risk might be higher. Conversely, the same thing with bonds, right? If you're going to invest in triple-A versus junk bonds, there's a risk-return profile there. And the same thing with sports assets, I think sports is a little bit different in that it's not so much about value as it is the price. If you think of sports teams getting sold, the revenue, or whatever it was sold, it's an indication of value. Still, it's also an indication of price. There's scarcity value in that there are only 30 NBA teams, right? How often is the team going to go on sale? This supply-demand dynamic drives the price up, even though the value may not be there. And I think you need to understand where we're at in that cycle, and where that cycles going to figure out if you know, that's an investment expense.
Ronen Ainbinder
I'll keep that in mind. And that's really interesting how you mentioned it, Farzeen. And I want to switch over now to talk a little bit about Overtime. What is the business model of Overtime? And how well is it working? What are the chances you'll need to execute like a business model pivot within the next three years? What's your take about it?
Farzeen Ghorashy
Our model is primarily advertising based, if you're familiar with Barstool Sports, for example. They are a company that has a large audience, and large brands like Coca-Cola and Pepsi... want to reach their audience. They'll spend money with them to go and reach that audience. And then also, because so many people are hardcore Barstool fans, they'll go and buy their apparel and merchandise. Our business is very similar in many ways. We're the largest sports media company in digital. We just passed the NBA on TikTok, for example. We reach a lot of young people. And it's a very elusive audience. Such brands like Nike and Gatorade want to reach this young audience, and they can't do it on live television because these sports fans are not watching live television anymore. So this is kind of where they go and spend that money. We put on live events before. It's another form of advertising away. But similar to many martial respects, like we have a very engaged loyal brand. When I walk around New York City streets with an Overtime shirt, kids will do that "O" with their hands and be really excited. They want to be able to wear that themselves and represent the brand themselves. I think that differentiates us from many other digital media companies, like no one walks around with a BuzzFeed shirt, or like a Vice Media shirt or anything like that. I think that's the power of our community. Our business model is like primary advertising based, whether it's direct brand deals. Whether it's programmatic revenue, whether it's live events, then general apparel, and creating merchandise from our core IP. In terms of a pivot, I think that we're going to expand into extensions of our business that a company like ours would think about doing because of this audience that we have and the distribution power that we have in the brand. Whether it's like owning leagues, having our own subscription product, having our own app. We just released an app in the App Store, which is basically serving the Gen Z young millennial sports fan, because there's nothing else in the market for that. Really leveraging our core competencies to go and expand our business and the things that really are products that our audience will want to consume.
Ronen Ainbinder
Wow, I find that super intriguing. And that's really worth looking into. When a company is so big with such a massive following like yours, you have 4 million followers on Instagram – you have such a massive following. What's your and your teams' thought process to consistently deliver value to consumers to keep growing? What are the most critical metrics you consider for the financial strategy and the company's growth?
Farzeen Ghorashy
I think three that would pick; one would be the engagement rate. You can post a lot of content, but if people aren't engaging with your content, it's only so valuable, right? So, showing that as a percentage, compared to other people, how much are people liking, commenting, and sharing? That's how you create a community. You don't create community by passively watching videos. You create community by people wanting to interact with your content, share with their friends, comment, tag, things like that. So I think the engagement rate is, like always, the number one thing that we've looked at. We still look at it today and the fact that even after we were small, people were like, Oh, it's easy to have high engagement. But then now we're like, bigger than everyone. And we still have the highest engagement rate. And I think that shows our understanding of our audience and our ability to create engaging content. The second one would be watch time; everyone uses the "billion views per month" thing. I think watch time is a better representation of how much people are consuming your content. Someone could watch our YouTube video or a Snapchat video, but they're watching for one minute, or they're watching for 10 minutes? Our watch time and the percentage that watch-time comes from long-form content are certainly something we take a close look at continually. And the last one, I'd say is, it's more of a financial metric. It's the percentage of our inventory that we're selling to advertisers. That's meaningful in terms of how quickly we can convince brands that this is inventory that's worthwhile their ad spend: an increasing sell-through rate and our ability to sell our higher proportion of the content. We're creating to sponsors and things that are critical as we think about managing growth in a high growth stage company.
Ronen Ainbinder
Well, that's fantastic, Farzeen, I appreciate that answer. Since we're running out of time, I'd love to ask you a more personal question. What is your "Thielean secret"? Meaning, what is one key belief held by you, or by Overtime, that the industry is not widely shared? What has made you believe in it?
Farzeen Ghorashy
I think it's actually like two things. For a long time, people said, you don't have an app, and you're not valuable. I think that we have an app now, but it's not because we need it. It's because it's an interesting extension of our business. But we're always going to be where our audience is, and our audience is spending time on Tick tock, they're spending time on Snapchat. And so our ability to build our brand, on the backs of the social platforms, I think, was really huge. And people think, now that we have an app, we're going to push all of our users there. And that's not the case, like there may be some users that go there. Social media platforms will always be a key component of our distribution strategy because that's where people are spending a lot of their time. And I think that's where many people have disagreed with us in the past and still don't quite understand that's how young people are consuming sports content. The second one would be really understanding what your audience wants and building that for them and not assuming what they want. We do a really good job of surveying our audience, talking to parents of the athletes we work with. We don't launch a business line or a product without really understanding the pain points and creating value for that consumer. One of the things you said was like, how do you go in every day, go create value, every consumer, it's not really a guessing game. We understand what is bothering them, where the gaps are in their day to day consumption habits. How can we serve that purpose as a brand that they love and other parts of their life?
Ronen Ainbinder
I like the way you described it. It lies perfectly in the definition of audience-first-products, which basically value what the audience actually wants, not based on what sells the most. It's based on what brings value to the audience and to the actual consumer. And I love how you said that for you, It's really important how much time they spend on the video, and I love that that's a super smart way of measuring your success.
Farzeen Ghorashy
Yeah, for sure. If we built this company for what I or CEO wanted to consume, we would have built something similar to ESPN or our competitors that none of these young people love. And I think the whole point is that we shouldn't be building what we think should be built. We should be building what our audience wants, and we think we're the best people to build that for them. That's why we go into the analytics, and we'll see like, oh, like, minute four, for some reason people stop watching. Why? I love that! But it doesn't matter. What I want is what our consumer kind of consumption habit is like really understanding that over time, and how you can improve it. Ensure that whatever you're delivering to them, whether it's a T-shirt, whether it's content, whatever it is, what they would expect and want because that's not what other people are doing.
Ronen Ainbinder
Totally. I think that's a great place to wrap this conversation. I'm grateful for having the chance to speak to such an icon of the industry. I'd like to thank you for your time for your insights, and for your kindness. I hope we get the chance to interact in person sometime soon. But for now, thank you for coming to the Halftime Snacks.
Farzeen Ghorashy
Appreciate it. Thank you, man!
Transcribed by Otter.