The Strategies Behind a Successful Second Act

Selling your business is not the end of your entrepreneurial career, but the start of something new. Five things to keep in mind

Written by Murad Hemmadi

Justin Shulman was just 28 when he sold the family business. The Orthotic Group, Shulman’s firm, was the biggest custom orthotic lab in Canada, with 180 employees. In 2008, the healthcare manufacturing sector was going through a consolidation phase, and Orthotic (a former PROFIT 100 firm) was acquired by the equity arm of PNC Bank. Shulman signed a five-year non-compete clause.

“I really was starting completely fresh,” he remembers. “I couldn’t really utilize all my experience and contacts to that point, because of this noncompete.” Casting around for something new to try, he was introduced to the daily fantasy sports website FanDuel by a friend.

Fantasy sports players choose teams of professional athletes and win points based on the performance of those athletes over the course of a sporting season; daily fantasy compresses the action into a single day. Shulman immediately recognized the appeal. “I was the target market,” he says. In April 2012, he launched Fantasy Feud, a daily fantasy platform.

Pivoting from healthcare manufacturing to online fantasy sports is no small shift, and Shulman says he had plenty to learn. “Gaming’s a whole different ball game,” he says, pun possibly intended. “[In manufacturing] you buy a product for X and you sell it for Y. [In daily fantasy], you’re just offering a service—you’re hosting contests, and people come and play.”

Shulman clearly learned quickly: Fantasy Feud was recently amalgamated into Gaming Nation Inc., which was listed on the TSX Venture Exchange (TSXV: FAN) on June 15. Here are some of the tactics and strategies he used to make his second act a success.

Recognize when to get out

You can’t start your second act until you’ve finished your first. The sale of Orthotic actually began with an acquisition opportunity—Shulman’s family business had experienced 21 years of consecutive growth, and a competitor was for sale. But Shulman wasn’t convinced. “It doesn’t make sense to go buy a company that’s bleeding when nobody here has really put companies together and found those synergies,” he remembers telling Orthotic’s president. Instead, Orthotic opted to be part of the consolidation.

Don’t worry about what you don’t know

Shulman started Fantasy Feud with Jamie Chadwick, the friend who introduced him to daily fantasy, and Michael Kimel, another acquaintance; both are now managing directors at the company. “We jumped into the gaming world knowing really nothing about gaming, and with none of us other than Mike having run a tech company before,” Shulman remembers.

The lack of knowledge actually helped. “Looking back, had I known then what I know now I’m not sure I would have done it,” admits Shulman. “There are so many moving parts and complexities. We were just naive—we were in love with the idea and we just decided to go for it.”

Transfer your learnings

FanDuels and its chief rival DraftKings control 96% of the daily fantasy market, thanks in part to huge marketing budgets. But Shulman has never been interested in glitzy ad spots or showy promotional campaigns. “We tried to follow the mantra that we sort of did in my previous business, in that I didn’t want to be the company that was spending hundreds of millions of dollars to educate everyone that this existed,” he explains.

Hire experienced talent

Shulman isn’t a coder, so he hired a development shop who’s logo he came across on a competitor’s website. “I called the guy—I wanted to find out how much it would cost to build a website similar to this [competitor’s],” he remembers. The next day, he returned to the website to find the developer’s logo gone. It turned out that the competitor had taken website coding in-house, leaving the developer free to work with Fantasy Feud in return for some equity.

“What I quickly realized was that the developer’s main guy, who built their site A to Z, was the valuable asset,” says Shulman. “My partner just employed this guy.” Fearing that this wonder-coder might leave, Shulman was trying to figure out how to hire him away when he caught a lucky break—the development shop-owner asked to be bought out of Fantasy Feud. “We brought the guys working on the site in-house, and that was sort of the start of Fantasy Feud really getting going,” says Shulman. “Now we had a development team that belonged to the company instead of outsourcing.”

Synergize when necessary

The Gaming Nation roll up also included deals for electronic raffle operator 5050 Central, fantasy information site, and handicapping site Pick Nation; all three will be used to cross-market the company’s daily fantasy games. And though Fantasy Feud is now owned by Gaming Nation, Shulman isn’t going anywhere. “We knew when we started this that it was going to become big—it just happened way faster than we were ready for,” he says. “We needed a partner who could take us to the next level and had that financial capability.”

Shulman sees the sale of his company as an opportunity to achieve his objectives, not an exit strategy. “I started this on day one having to buy the domain name €˜’ from a guy who ran a motorcross website,” he remembers. “We’re now going to have the ability to do much bigger-scale projects, and contests, we’ll have the kind of marketing budget that I always dreamed of.”

There will no doubt be challenges associated with working for someone else after going solo for so long. “I think this is just another challenge for me,” Shulman says. “It’s learning to work with a public board, a different type of executive team, and to build my leadership style at the same time.”


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