It’s a Tuesday in late January, and a dozen sales guys for the Philadelphia 76ers are on their feet, cheering two boisterous dancers in their midst. To a man, the sales force — an excitable 115-person staff that’s 98 percent millennials — is clad in impeccable tailored suits. Office chairs have been pushed aside, monitors have gone dark. Their pressed sleeves flying left and right, the two men at the center of the circle are dabbing at max speed. The sales guys whoop, cajoling the competitors as they throw their faces into the crooks of their arms, like speed skaters drunk on Red Bull.
Next to the sales guys sits one lone 20-year-old, an entrepreneur named Dylan Elder. Gangling, bright-eyed, and wearing the startup founder’s uniform (so, not a suit), Elder is the founder of Monster Roster, a company with a recommendation tool for fantasy sports players. He belongs in the Sixers Innovation Lab, a startup accelerator that doesn’t quite exist yet.
When the Sixers announced the Innovation Lab last summer, more than 120 startups applied within a month, eager for a spot. Elder became the first to score an invitation, but between four and six companies are expected to join by the end of the year. This gamble on entrepreneurs amounts to no less than the Sixers’ latest bid for redemption.
The Sixers, after all, have been in a multi-year funk. Long the running joke of the National Basketball Association, the team has compiled losing season after losing season amid head-scratching player trades and acquisitions and allegations of tanking to secure top draft picks. Last year the Sixers finished dead last in the NBA, eking out just 10 wins that season. “This is what a truly bad team looks like: a group of guys who are so terrible at basketball that they have no shot of winning even when playing the right way,” wrote Deadspin during the 2014–15 season, when the Sixers (a “godless abomination”) won a whopping 18 games out of 82.
But this season has the markings of a different, more exciting year for the team. Two weeks before the All-Star break, it had already matched its 2014 season win total, in part due to the captivating play of 22-year-old center Joel Embiid. Hope renewed, fans are flocking to home games. “This is the most packed it’s been in three years,” gushed a fan just a few seats over from where I sat during a recent game, a win for the Sixers against the Los Angeles Clippers.
Off-court, the Sixers are hoping to hitch a ride off of Silicon Valley’s rise to prominence by banking on startups. It’s a strategy that a handful of other adventurous teams are pursuing, too. In September, the NFL’s Minnesota Vikings announced that their new practice facility would house a startup accelerator. Pro baseball’s Los Angeles Dodgers launched their own 12-week accelerator in partnership with R/GA Ventures in the summer of 2015. And the Orlando Magic, an elder statesman of this trend, launched its internal innovation lab back in 2012 for employees to test new technology and develop new projects.
These incubators are symptoms of a larger evolution in sports. First, venture capitalists have developed a healthy appetite for sports tech. According to Crunchbase figures, VC firms funded sports-related startups to the tune of $927 million in 2014, an all-time high that’s expected to grow in future years. A second shift is in the profile of a typical team owner. “Sports ownership has changed over the last 20 years or so,” says Seth Berger, managing director of the Sixers Innovation Lab. “Today’s owners are usually folks who have made a lot of money in business, and the team is another asset.”
You might not spot the scion of a distinguished family fanning the flames of entrepreneurship. But you do see Mark Cuban, owner of the Dallas Mavericks, fielding pitches on ABC’s “Shark Tank.” Or, if you’re in Los Angeles, you might see former Microsoft executive-turned-Clippers owner Steve Ballmer losing his shit mid-game while dancing to Fergie.
In other words, teams are not just clusters of athletes. They are now platforms. With an NBA championship ring proving elusive, the Sixers have decided it’s time to diversify their portfolio, and to bet on tech wizardry.
The Sixers’ fling with startups traces back to a conversation about high-IQ office furniture. In 2011, a nine-person group, including several prominent financiers, bought the Sixers for $280 million. The new owners installed Scott O’Neil as the new CEO. He’s the kind of guy who runs an inter-organization pickup league that hoops at 6:30 in the morning. (According to employees, the CEO is lethal from 3-point range.)
O’Neil faced an immediate problem: New deals weren’t rolling in for the victory-challenged Sixers. As O’Neil puts it, “On the court the last three years, we won 45 or some-odd games. Partners weren’t ringing us because of the incredible interest in a winning team.” So to attract new lines of business, he cast a wide net.
In one case, that meant kibitzing with a business partner about making desks and chairs sentient — an off-the-cuff conversation that inadvertently led to the creation of the organization’s Innovation Lab.
Furniture for the Sixers organization comes from an Indiana-based company called Kimball Office. In a chat with Kimball president Mike Wagner, O’Neil steered the conversation to how else the Sixers might help him. “Mike kept talking about the future of the office,” O’Neil recalls.
Wagner sketched out a vision of an office that conforms to its occupant — a desk that raises itself automatically for people who prefer to stand; a chair networked to the thermostat so the room temperature changes when a person sits; a fingerprint scanner that logs who’s using a shared workstation.
“Think about how valuable that is for the new WeWorks of the world, or the Cushman & Wakefields of the world,” O’Neil says. “Can you imagine how valuable Kimball becomes to them if they have real data? Well, if we had an innovation lab, you could actually test it out.”
In O’Neil’s retelling, the decision to pair the smart office idea with an in-house tech incubator didn’t meet much resistance. For the next startup with an inventive way to, say, measure the blood oxygen levels of athletes, the Sixers want to be its testing laboratory. Customer zero, if you will.
To run the lab, O’Neil pulled in the 49-year-old Berger as managing director. Berger’s name ought to be familiar to basketball acolytes. In 1993 he founded AND1, and as CEO, Berger crafted what might be considered the first basketball gear company. At its peak, AND1 was a business with $285 million in revenue a year. When Berger was just starting out, O’Neil was selling sponsorships for the New Jersey Nets. The pair met in 1994 at a trade show in Atlanta at the AND1 booth, beneath a 12-foot banner that read, “Your game is as ugly as your girl.”
The two became good friends, at one point launching a venture of their own: HoopsTV.com, a short-lived online channel dedicated to basketball fans. After it shut down, Berger went back to running AND1. O’Neil went to work for the NBA.
When O’Neil called him up to talk about the Sixers, Berger perked up. “I love Scott. If Scott said, ‘What do you think about selling watermelons in Hawaii?’ I would listen,” he says.
With the Innovation Lab, O’Neil and Berger are making two bets: first, that any technology coming out of the lab will be useful for either the team, its business side, or its fans. The second is that any investment the Sixers make into a game-changing startup will lead to big profits.
“What teams are noticing is that this is a heck of an opportunity to almost home-grow new innovation,” says Tim Hayden, managing director of Stadia Ventures, a dual accelerator and academy for sports-technology startups run out of St. Louis. “So they’re leveraging their brand in order to find the next best thing.”
Soon the reinvigorated team and its small crew of startup founders will find themselves united in one facility on the waterfront in Camden, New Jersey. They will share space in the Sixers’ swanky, not-entirely-finished $86 million, 125,000-square-foot training complex. Its buildings are putting an end to the team’s run as the only NBA franchise without its own practice space. As of next week, it will also house the organization’s business operations.
With the accelerator still spinning up, Dylan Elder is off working on Monster Roster solo, having put his undergraduate degree at Georgetown University on hold. Yet he is well taken care of. Even in its embryonic state, the Innovation Lab provides its startups with free food, free legal services, up to $100,000 of marketing services, and free housing in corporate apartments in South Jersey.
For Elder, though, the best perk has been the access he’s gotten to the rest of the Sixers organization. Two weeks into his time with the Sixers, he flew to Boston to meet with Jason Robins, CEO of the (somewhat controversial) fantasy sports company DraftKings—a meeting O’Neil was able to set up because DraftKings is the official fantasy sports partner of the Sixers. It’s something Elder says he would’ve never been able to broker on his own. Since then, Monster Roster, which Elder reports has 3,500 active customers each paying $20 a month, has raised a quarter of a million dollars. “Everyone who’s investing is a connection of Seth [Berger’s] or the Sixers’,” he says.
In exchange for extending an invitation to join the Innovation Lab, the Sixers organization takes an equity stake in each company. In some cases, it plans to invest, and it has a fund of several million dollars to play with (the exact amount, however, is not for public consumption). Beyond that, it’s the wild west. “There’s literally no fixed deal,” Berger says. “Dylan came in August 22, and his term ended December 16, but Dylan’s staying. We’re not charging extra equity. Our model’s going to be very different: Come in, stay as long as you want, as long as we can help you continue to grow and as long as it makes sense for your company to be in the lab.”
Jack Elkins, director of innovation for the Orlando Magic, predicts that more and more sports teams will start running their own startup programs. “If people are getting used to something in the world, they expect it with their professional sports teams as well,” he says. “Teams are not inoculated from what’s happening to all organizations.”
After all, it’s not uncommon for large corporate companies to house small incubators, run internal pitch events, or partner with outside accelerators to try to get ahead of their competition. At this point, though, the startup world is crowded with such programs — even Walgreens and McDonald’s have their own tech incubators. And sometimes the corporate-startup pairing becomes more of a distraction than a boon, as Coca-Cola learned when it closed its three-year-old incubator just before the new year.
Whether this strategy works for the Sixers is a gamble — and diehard fans may find themselves muttering “trust the process” under their breath. Either way, this is one trend the sports organization is squarely ahead of.
Maybe the Sixers would have ended up launching an accelerator no matter what, carried along by the tides of the moment. Maybe it didn’t matter that they were on a multi-year losing streak. But maybe the team was instead pushed to do something much bolder than it would have if it had been racking up championships. Call it the loser’s advantage: just when things look bleakest, you take the bigger gamble — and it pays off. Instead of lagging behind, you find yourself in the lead. For once.
