Exclusive | We’ve run our business with the idea that it should always be profitable: Dream11’s Bhavit Sheth

July 15, 2022

Dream11 co-founder Bhavit Sheth is a busy man.

Sheth, who runs the online fantasy sports platform with co-founder Harsh Jain, recently wrapped up a successful Indian Premier League (IPL) season and is now gearing up for the T20 World Cup.

In an interview with Moneycontrol, Sheth said these marquee tournaments are crucial for Dream11, one of the country’s most valuable startups, as they help in significant user acquisitions to grow its base.

During the recently concluded IPL cricket tournament, the startup clocked one of the largest contests it has run till date, registering close to 10 million spots in a single contest.

“It’s almost like running a flash sale every day for 60-65 days of IPL” Sheth says.

Sheth also talked about how Dream11 plans to build for the growing scale of each tournament, the groundwork that goes into preparing for them, diversification strategy and the hiring sentiment in the current environment. Edited Excerpts:

Is IPL the peak season for Dream11?

Absolutely, it is the peak season because it’s got the most traction and the most eyeballs. The way we look at IPL is that we get a lot of user acquisitions with these marquee tournaments. And then once we acquire these users, then we engage them throughout the year through other tournaments.

Six months later, the T20 World Cup will come, which will be another big acquisition tournament for us.

Can you talk about the key takeaways for Dream11 from the recently concluded IPL season? What was the growth like?

We grew our user base to more than 135 million-odd users. This IPL season, we added around 12-13 million users on the platform. From a tech scale perspective, the largest contest we ran had close to 10 millions spots in a single contest, which is the largest we have run till date.

This brings in a lot of challenges to be able to run contests of those sizes. Because apart from having the ability to fill those contests, when people join the contest, and they come back to check their scores and the leader boards, we have to ensure that the competition is fast enough, so that people see their scores update in real time.

We had around 170 million-odd requests per minute that we handled during IPL with more than 7 million concurrent users. From a scale perspective, I think IPL breaks the record every year and it was the same this year.

Can you elaborate on the user patterns you see on the platform during a tournament?

We see a spike in users coming onto our platform in the last half-an-hour. Suppose the match starts at 7.30pm, we see a spike between 7pm and 7.30pm because people want to ensure that players in their team are there in the actual lineup or they want to tweak their teams.

It’s almost like running a flash sale every day for 60-65 days of IPL and we have to ensure that we are ready for the traffic scale that comes again and again. This is true even from a payments perspective since a lot of people are trying to pay at the same time so that they can join a contest.

So we ensure that we partner with banks and everyone’s aware of the kind of scale that’s coming out to their systems as well because that’s one place where we have third party dependence, whether it be Visa, MasterCard, RuPay for cards, or UPI. So everyone scales their systems because they know that this is the time that there’s going to be a lot of traffic.

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What sort of groundwork goes into preparing for marquee events such as IPL?

We actually start preparing for the next one as soon as one season gets over…There’s a bunch of features that we want to build, which if we start now, then we get to a stage where we are able to test and scale up before the (next) IPL itself.

There’s also a bunch of (technical) debt that we accumulate just before IPL and during IPL. (Technical debt is a programming concept wherein developers choose an easy-to-implement stopgap solution for faster short-term results but will likely need to be reworked in the future)

A lot of hacky solutions that we put in just to ensure that everything’s running smoothly. So we want to make sure that we at least iron all those items that we accumulated over this period and build proper solutions for them.

Immediately after the IPL, the team actually goes into a debt period – anywhere from 15 to 30 days depending on different teams – where they just clear out all the debt that they’ve accumulated, and then start building for the next IPL.

This is also because if we have to test out scale, we also need to have a high-scale tournament available to test out. So usually, there are some India tournaments during January, February and up to mid-March, which become very critical for us as testing grounds for the IPL. Around one to two weeks before IPL, we go into dev freeze mode where we don’t add anything else onto the platform since we will not have the ability to test it out on the live systems.

We have also realized that how much ever you load test your system, live traffic is a different beast altogether and you can’t really mimic that behaviour.

This year, we also have a World Cup in the middle. So, we have two key milestones, one is we build for the World Cup and then IPL.

Dream11's growth during IPL 2021

How are you diversifying beyond IPL and engaging your customers?

Across the 11 sports that we host on our platform, we host close to 12,000 matches a year. So we keep engaging our users through different tournaments across different sports throughout the year.

We also keep on adding new features and new products. One big thing that we’ve done over the last two years is we’ve added a social engagement layer on our platform, where people can see which of their friends are playing on the platform, chat with them or challenge their friends.

Fantasy sports in general is a social game, you land up playing with your friends, you want to banter with them or brag when you win. So, we enable people to do that. And we enable people to actually discover their friends on the platform if they already don’t know.

Can you give me a sense of how the activity is when there are no marquee events where you can acquire users?

In those times, we may have fewer new users of the platform. But the users that we’ve already acquired, they continue playing on the platform.

It may not be at the same level as an IPL or World Cup since there’ll be certain people who come to play only India matches in IPL and World Cup, for example. But then, a bunch of people who watch a lot of other sports or watch a lot of other cricket tournaments continue coming back and playing on the platform.

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Does the regulatory uncertainty in the sector affect your product building capabilities or how you approach new products?

There is no impact on our product or tech roadmap. However, as we experiment, we review any proposed changes to the format with multiple stakeholders internally and externally to ensure they maintain the predominance of skill. So it’s more about building different formats, but within the format that we have, it doesn’t really impact product features.

However, as we experiment, we review any proposed enhancements/changes to the format with multiple stakeholders internally and externally to ensure they maintain the predominance of skill.

Last year was also a frenzied year for hiring tech talent. How are you seeing the hiring sentiment now amid the current environment?

This year is definitely more mellow with companies starting to become more cognizant of their spends.

However from a talent perspective, tech is the last one to get hit. A lot of layoffs that you are seeing start with cutting down consultants and contractors, followed by operations and finally the tech team. So it is a little lagging indicator from that perspective.

But I think over the next three months or so, we will see some impact around that. I believe that the industry will get some bit of clarity once the appraisal cycle concludes over the next few months.

Companies with strong fundamentals will be able to attract top talent but there will also be some people who will be a little spooked and will wonder whether they should be joining startups or not.

Are you looking at any measures to cut costs?

We’ve run our business on a very prudent basis and we’ve been running it with the idea that at a unit economics level, we should always be profitable. Now, obviously, we’ve been profitable as a company also for the last 10 years. So for us, we continue with our plans. We have certain plans of hiring and we will continue with that.

Since inception, we’ve gone through three of these cycles – 2008, 2012, 2016. And this is the fourth cycle that we are going through, we kind of know how it is to go through these cycles, and they don’t last forever. But you just have to be sensible in the cycle.

Now that we also have the Dream Capital side of things also, we can actually support good businesses and we can invest in them. Last year, everyone would have had crazy valuations which would have not made sense. Now would be the real price discovery for a lot of product businesses.

I also wanted to touch upon your other businesses. How do you create that flywheel kind of scenario from a Dream11 user to other products?

The way we look at it is similar to someone like an Alphabet. What Alphabet is good at is building a user persona and their preferences based on the data that they have, and then personalizing their products across their suite.

The same thing for us, we have information on user preferences via fantasy sports and how do we personalize the entire journey for the user through different products or services that we are offering.

So for example, if someone comes on to Dream11 and plays all Mumbai Indian matches, so we will know that this person is a cricket fan with a preference for Mumbai Indians, likes watching IPL and then if the person makes Rohit Sharma captain most of the time, then we have a pretty good idea that this person has a bias towards Rohit Sharma as well.

If that’s the case, maybe, when the person goes on to FanCode, the first thing they will see is a Mumbai Indians score. At the right time, we can also push a Rohit Sharma jersey to the person, asking whether they want to buy it.

What are the key focus areas going forward?

From a Dream11 perspective, offer great products to users to keep our users engaged and continue our growth.

From a Dream Sports ecosystem perspective, we already have a bunch of companies that we’ve invested in, how do we help them grow? Where can the team synergize and ensure that the product or the offering is solving a problem for the user. At the end of the day, if we are solving a user problem, users will find out and want to use the product.