Overtime’s Zach Weiner on The Changing Space of Sports Media for Gen Z
Speaking at Jefferies’ 2023 Private Internet Conference, Zach Weiner, Co-founder and President of Overtime, emphasized the need for entertainment companies to be agile, responsive, and in tune with the evolving habits of modern consumers.
For decades, large incumbents dominated the sports and media landscape, commanding consumer attention with traditional content and outreach strategies. As Millennial and Generation Z audiences came of age, legacy media struggled to keep pace. Their tried-and-true tactics failed to engage younger audiences, whose tastes were short-form and colloquial.
“When we started Overtime, this new 13- to 35-year-old demographic was our focus,” Weiner said. “By adopting the right voice and leveraging the right platforms, we could create content that really resonates with this next-generation audience.”
Weiner stressed that prosperity lies in understanding the digital space, adapting to audiences’ evolving interests, and constantly innovating to engage viewers. This audience-first strategy was instrumental to Overtime’s early success, and it continues to power the company’s growth today, with more than 80 million fans across platforms.
When it comes to engaging target audiences, Weiner cautioned against trying to cater to everyone. Success means finding consumers whose specific needs and interests you can meet. It is challenging to deliver compelling content and compete with major incumbents as a generalist.
“Do I want the 55-year-old sports fan to watch our basketball league? Sure – I’m not against it,” Weiner said. “But at the end of the day, by focusing more narrowly on Gen Z and Millennials, we can deliver content that really interests them.”
Weiner also spoke about the challenging environment for consumer internet businesses, and how those challenges informed his approach to monetization and business development as a young entrepreneur.
“Among founders, I’ve noticed two extremes: those focused on running the business their way, and those focused solely on revenue,” Weiner shared. “Like most things in life, you want to land somewhere in between. Do what you think is right for the business but remember the importance of revenue generation and cost conservation, too.”
With Overtime, Weiner is always exploring avenues for revenue diversification. The company’s path to profitability began with advertising and e-commerce through their media business. Once Overtime’s audience was well established, Weiner pursued new and larger opportunities for profit: live rights. Capitalizing on the media company’s intellectual property, Weiner launched Overtime Elite and OT7, two new professional sports leagues for the next generation of athletes.
“We realized that if we can make young people care about something, let’s make them care about leagues,” Weiner said. “The media company provides this base to launch the IP, which in turn creates much more economic value.”
Overtime Elite (OTE) achieved a significant breakthrough in the 2023 NBA Draft. Two Overtime Elite stars, twins Ausar and Amen Thompson, were considered among the draft’s best prospects, both taken in the top five picks. Two other OTE prospects received two-way contracts, with the New York Knicks and Milwaukee Bucks, respectively.
The launch of these spin-off leagues expanded opportunities for monetization, including a media rights deal with Amazon Prime, enhanced brand partnerships with companies such as State Farm and Gatorade, and an increase in merchandising opportunities. This balanced strategy — prioritizing the audience and core competencies while pursuing profitability — became the catalyst for Overtime’s growth.
Pacaso’s Spencer Rascoff on the Revitalized Experience Economy and More Pandemic Shifts
At Jefferies’ 2023 Private Internet Conference, serial entrepreneur Spencer Rascoff joined Cameron Lester, Global Co-Head of Technology, Media, and Telecom Investment Banking at Jefferies, to discuss shifts in the consumer landscape.
Rascoff – co-founder of Zillow, Hotwire, and most recently, Pacaso – shared insight into the booming Los Angeles startup scene, post-COVID transformations in consumer behavior, and the thriving market for second homes.
Rascoff expressed enthusiasm for LA’s surging startup ecosystem, where his latest digital real estate venture, Pacaso, is based. He highlighted the city’s unique convergence of media, entertainment, technology, and digital creators – all fueling a swell of local entrepreneurship.
“Post-COVID, we have a lot more latitude in where we live,” Rascoff said. “People are untethered from their homes in San Francisco, Seattle, or New York – places they had to live before the pandemic. Now, many of them are choosing LA, and the city is booming.”
Testra, in its second annual ‘Tech’s Great Migration’ report, found that Los Angeles now hosts more than 3,800 venture-backed companies, surpassed only by the Bay Area and New York. Since the pandemic, LA’s startup scene has emerged as one of the nation’s fastest growing.
The pandemic’s impact extends beyond lifestyle choices. COVID also triggered profound shifts in consumer behavior. Rascoff cited the revitalization of the ‘experience economy’ as among the most impactful and enduring changes. Drawing analogies to other global incidents of historic scale, he noted how such events tend to cultivate a ‘live for the moment’ mentality among consumers.
“Online travel companies were left for dead during COVID,” Rascoff observed. “Now, they’re just booming. Travel is going nuts for exactly this reason: people want to live again.”
Tourist arrivals worldwide in 2023 are projected to reach up to 95% of pre-pandemic levels, a significant increase from the 63% in 2022, according to data from the UN’s World Tourism Organization. This resurgence is mirrored in the rallying share prices of travel companies, which struggled during the pandemic.
Rascoff cited his own company, Pacaso, as another example of this shift. The platform facilitates fractional ownership of second homes, allowing buyers to invest in a share ranging from 1/8 to 1/2. In just their third year of operation, Pacaso crossed $1 billion in total revenue, as more people realized their long-held dream of owning a second home.
Turning to the broader housing market, Rascoff acknowledged that the sharp rise in mortgage rates from 2% to 7% has affected real estate transactions, with fewer this year than the last couple of years. However, he expects the second home market, where Pacaso operates, to see less impact.
“Second home markets tend to be more expensive, and buyers use more cash and fewer mortgages. They’re less susceptible to rising interest rates because the rest of their balance sheet is much stronger than your average consumer,” Rascoff explained. He added, “Second home markets appreciate faster than primary markets and are better insulated during downturns due to the low number of distressed sellers.”
Rascoff’s perspectives underscore the boundless potential of the ‘experience economy’ and the opportunities it offers to innovative ventures like Pacaso. As the pandemic continues to reshape lifestyle and consumption choices, businesses and regions that can tap into the consumers’ desire to ‘live in the moment’ are poised for substantial growth.
Prime Services C-Suite Newsletter – July 2023
Focus on Employment Law, DEI and Benefits
Our monthly newsletter for multi-hat-wearing C-suite leaders covers the latest and greatest insights across the hedge fund industry.
Hedge Fund Halftime Report
Coming off a challenging 2022, investors are exploring multiple avenues for success in 2023. Join us for a discussion about the global secondary market landscape with Chris Bonfield from Jefferies Private Capital Advisory, as well as the fundraising and performance outlook for hedge fund managers in the second half of this year.
Investing in Change: Spotlight on Activism in Japan
Investor discussions for Japanese activists have increased, particularly from family offices and fund of funds. Among the reasons for this surge are the Japanese government’s and stock exchange’s policies aimed at enhancing corporate governance, creating a potentially more conducive activist environment in Japan. Some allocators believe that opportunistic managers can leverage these market inefficiencies through shareholder activism and constructive engagement with company management to achieve alpha. Despite the opportunity set in Japan, uncertainties and potential challenges remain.
2023 Tech Sector Outlook: Navigating Disruptions and Opportunities
With Cameron Lester, Global Co-Head of Technology, Media and Telecom Investment Banking
The tech sector stands at a crossroads. For the first time, the industry faces both a significant downturn in capital availability and a historic wave of digital disruptions. This unusual juxtaposition of innovation and fiscal tightening creates challenges and opportunities for entrepreneurs and investors alike.
At Jefferies’ 2023 Private Internet Conference, Cameron Lester, Global Co-Head of Technology, Media, and Telecom Investment Banking, expressed bullishness on the future of the sector, despite recent financial tightening. His optimism stems from areas of continued growth and groundbreaking innovation, including artificial intelligence (AI), e-commerce, and the creator economy.
“This funding environment creates certain advantages for entrepreneurs, as talent and capital converge around the best ideas,” Lester said. “Companies will sustain growth and secure funding if they can position themselves as future leaders with a sustainable business model and innovative mindset.”
Artificial Intelligence: The Next Frontier
Lester considers AI the most impactful tech innovation since search engines, with the potential to eclipse even that. He expects it to revolutionize business and consumer environments for generations to come.
Reflecting on OpenAI’s success, Lester noted, “When ChatGPT was released, it amassed 100 million monthly active users in just two months – outpacing WhatsApp, Instagram, and Facebook. Generative AI, practically unknown to the public just months ago, is now emerging as part of the fastest-growing tech platform in history.”
AI’s growth has attracted robust investment, with venture capital funding increasing 11-fold since 2018. Forecasts suggest the AI market could attract $110 billion by 2030. As industry leaders like Google, Amazon, Meta, and Microsoft invest in AI, the sector offers an excellent opportunity for entrepreneurs and investors.
E-Commerce: The Pandemic’s Legacy
Lester also expressed confidence in the sustained growth of e-commerce, a sector that expanded dramatically during the COVID-19 pandemic and shows no signs of slowing down.
“Before the pandemic, e-commerce accounted for just 15% of total retail in the United States,” Lester shared. “The shift to online shopping during the pandemic was expected, but the persistence of these habits is remarkable.”
In 2022, e-commerce sales hit $1 trillion for the first time. Despite the resumption of in-person shopping, e-commerce has maintained strong growth, now representing more than 20% of total U.S. retail. Even older consumers, historically hesitant to adopt e-commerce, now represent the third-largest e-commerce demographic, with over 35 million online shoppers.
Digital resale is another rising trend, expected to grow 80% over the next five years. The sector is projected to reach $300 billion by 2027, outpacing overall e-commerce growth.
The Creator Economy: A Maturing Market
The creator economy is gaining momentum. The market reached $104 billion in 2020, doubling its value from 2019, and today, there are more than 50 million digital content creators around the world.
“Rather than ten TV shows consumed by billions of people, we now have hundreds of millions of shows catering to billions of people,” Lester shared, quoting Eric Freytag from Stream Labs.
While creative industries were historically dominated by large players, platforms like Patreon, TikTok, and OnlyFans have democratized the sector. These platforms allow individuals to reach large audiences and monetize their talents, without the backing of major tech companies.
Lester also noted the sector’s unique cultural influence, with ‘YouTube star’ among the most sought-after career choices for today’s youth.
Despite capital scarcity, Lester remains optimistic about the tech sector’s future. The industry is on the brink of an exciting new phase, as various sectors attract talented entrepreneurs and enduring investor interest. Lester believes that as long as entrepreneurs and investors seize current opportunities, innovation and growth will persist.
“Yes, capital is scarce, but these land grabs often give rise to an abundance of new opportunities,” Lester said. “When macro headwinds subside, expect plenty of capital to flow toward these emerging sectors.”
The Path Forward: A Healthier Startup Ecosystem Emerges
With Gaurav Kittur, Global Co-Head of Internet Investment Banking
Over the last two years, tech companies, particularly those in the consumer internet sector, have grappled with a range of challenges, from inflated consumer acquisition costs to a scarcity of IPOs. These complexities have forced companies to reevaluate their operational strategies, tighten budgets, and streamline their focus around profitable growth.
In the following discussion, Gaurav Kittur, Global Co-Head of Internet Investment Banking at Jefferies, shares his perspective on this transformative period. Speaking from Jefferies’ Private Internet Conference, Kittur explores the effects of these challenges on the tech ecosystem, the strategic adaptations made by companies, and the emerging opportunities for growth and innovation.
Q: What challenges have tech companies faced over the last two years?
The last 18 to 24 months have been incredibly tough for tech companies, especially those in the consumer internet sector. This period has seen almost no IPOs. On top of that, the cost of acquiring new consumers for these companies has skyrocketed.
As a result, companies with constrained marketing budgets had to pull back spending on user acquisition (UA), which affected their top-line growth and, consequently, their attractiveness to investors. This has led to a real capital crunch for companies in this segment.
Q: How are companies adapting to challenging times?
I think companies have used this time to get really disciplined. As I speak with a lot of CEOs in the space, a lot of them have used the last 18 to 24 months to execute painful but necessary reductions in force (RIF).
These RIFs resulted in a decrease in product development expenses and a shift in focus towards building profitable products. Companies have been launching their products earlier, seeking feedback, and then concentrating their marketing budgets on profitable customers rather than just acquiring all kinds of customers.
Despite the harsh capital environment, I believe the tech ecosystem is in a healthier state overall. Things feel incredibly painful right now, but we may look back at this moment and realize it benefited the tech ecosystem. Many companies may find, two or three years from now, that they have healthier unit economics thanks to this challenging period.
Q: What’s next for the tech ecosystem?
We’re reaching a point where a lot of the hard work is behind us, in terms of stripping costs and refocusing on profitable growth. Now, companies are growth businesses, operating in massive addressable markets.
As a result, you have companies ready to go back out to raise capital, and this capital will drive profitable growth. It may also drive transformative M&A. I think companies won’t just try to grow organically, but also consolidate others around them.
Q: How has companies’ approach to growth and financing evolved?
Over the last 18 months, all we’ve talked about was structured financing rounds. This was primarily because company valuations dropped so quickly that many businesses weren’t ready to face this new reality.
Today, everyone is open to new priced equity rounds, recognizing the realities of today’s valuation environment. Companies are talking about IPOs again. I’ve heard from a number of companies who are ready to go public earlier in their life cycle than they traditionally would have.
Part of this shift is driven by a desire to instill discipline, as public companies are inherently more disciplined than private ones. The other factor is alignment. By going public early, everyone holds common equity. This means that employees, investors, and all other stakeholders are aligned moving forward.
Finally, I should mention that companies are thinking big. They’re looking at their competitors, looking at adjacencies, and thinking: is there something we can do to fundamentally change the course of our business?
Whether these be cash transactions or stock deals, these inter-company dialogues have been incredibly active. This combination sets us up for significantly more activity over the next 6-12 months.
Navigating the Decarbonization Landscape: A Strategic Guide for Investors
The global transition towards net-zero emissions is gaining momentum, accelerated by policy incentives, the war in Ukraine, and a new wave of digital innovation. Despite geopolitical and macroeconomic headwinds, climate-related capital continues to flow into both public and private markets. Amid this dynamic landscape, investors grapple with a critical question: how to optimally allocate time and capital to emerging clean technologies.
At Jefferies, we aim to provide investors with a strategic framework to navigate this complex landscape. Our approach goes beyond merely identifying winners and losers, focusing on how to select a technology for analysis and how this selection process may evolve over time.
Climate solutions exist across a spectrum, from mature technologies to nascent innovations. Investors face a tough choice in deciding where to focus their attention. To ease this process, we have studied seven analytical frameworks for the investment community. These include (1) the scientific approach, (2) a policy-focused approach, (3) the IEA’s Energy Transitions Pathways Clean Tech Guide, (4) adoption curves and technology penetration rates, (5) the five grand challenges and green premiums, (6) the view from corporates (i.e., industry pain points), and (7) demand-side measures.
The Scientific Approach
The scientific approach is grounded in data and research from the scientific community. It particularly centers on research from the UN’s Intergovernmental Panel on Climate Change (IPCC), which ranks technologies based on their emissions mitigation potential and cost. This approach provides a data-driven frame of analysis for investors, allowing them to prioritize technologies with great emissions potential and cost efficiency.
A Policy-Based Approach
A policy-based approach leverages national roadmaps published by governments, which outline key areas of focus that will receive some form of policy support. These documents can be utilized by investors in deciding which technologies to focus on. For example, the recent UK mandate that 53% of all national emission reductions come from domestic transport is accelerating EV development and commercialization – an attractive, policy-driven opportunity for investors.
Leveraging the UK Carbon Budget
The UK’s Carbon Budget can be used to map out potential expected market sizing. Here, investors used the government’s framework to create a total addressable market for heat pump penetration (2021 – 2035).
Source: UK Carbon Budget Delivery Plan
The IEA’s Energy Transitions Pathways Clean Tech Guide
The IEA’s Energy Transitions Pathways Clean Tech Guide is an interactive framework with information on more than 500 individual technologies across the energy system, all of which would contribute to achieving net-zero. The guide provides information on the level of its maturity alongside development and deployment plans for commercial scale to be achieved. Investors can leverage this framework to gain insight into the main players in a given solution, and their anticipated trajectory of progress over time.
Adoption Curves & Technology Penetration Rates
Understanding where a technology is on its adoption curve and what the adoption rates could be moving forward is a strong basis for an investment strategy. Identifying solutions moving through the early adopters to late majority phase is a proven method for asset managers.
There are a range of factors that impact adoption speed, including the type of innovation, purchase intention data, relative advantage, strength of incumbent technologies, and the complexity of the technology. Investors should use all these indicators in assessing the adoption trajectory of a target innovation.
Technology Types & Market Performance
There are four main categories of innovation, and adoption and penetration rates vary widely between them.
Source: Satell – HBS, Jefferies Research
Five Grand Challenges & The Green Premium
The five grand challenges, popularized by Bill Gates in his work on How to Avoid a Climate Disaster, provide investors with a reference point with which to commit time and capital to. If addressed, these five grand challenges would reduce global GHG emissions by at least 75% through 2030, according to Climate Watch & WRI. Identifying solutions that go towards addressing these challenges is a viable starting point for investors.
The View From Corporates (Industry Pain Points)
The view from corporates, or industry pain points, is another approach for investors interested in decarbonization. Across various industries, companies face myriad challenges in decarbonizing their operations. Surveying companies and executives across sectors to understand the biggest challenges they face in reaching net-zero would lead to a subset of issues to be addressed by sector.
Demand-Side Measures
Demand-side measures, which relate to individual choices, consumer behavior, and lifestyle changes around consumption, offer another avenue for investment. The IPCC’s WG III report made clear that certain demand-focused measures would reduce emissions substantially. In many cases, business solutions can facilitate changes in consumer behavior. These may include product sharing services, alternative proteins, energy efficiency measures, and high-speed railways. Investments in innovations designed to address consumer demand can have the greatest mitigation potential.
Demand-Side Mitigation in Electrification
Demand side changes in electricity and buildings could materially reduce emissions through 2030.
Source: IPCC WGIII
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The decarbonization landscape offers myriad of opportunities for investors, but navigating this landscape requires a nuanced understanding of the various technologies, policies, and market dynamics at play. By leveraging the seven frameworks outlined here, investors can make more informed decisions about where to allocate their time and capital. This will not only help them identify potential winners and losers in the clean technology space but also enable them to contribute to the global transition towards a net-zero future.
Aniket Shah is Managing Director & Global Head of Environmental, Social and Governance (ESG) and Sustainable Finance Strategy at Jefferies Group LLC. In this role, Aniket leads the integration of ESG and sustainability analysis within the global investment research department and engages with clients on this dynamic area of corporate and financial services.
He is an Assistant Adjunct Professor at Columbia University’s School of International and Public Affairs. Aniket is a graduate of Yale College and the University of Oxford, where he completed his PhD on the financing of sustainable development.
Embracing Neurodiversity: An Untapped Source of Innovation & Growth
Neurodiversity – or the natural variances of the human brain leading to distinct ways of thinking, learning, and socializing – is often overlooked in discussions of corporate culture and inclusion. Today, few workplaces embody a culture of neurodiversity, as many HR departments overlook it in their recruitment and hiring. As new data demonstrates the significant benefits of neuro-inclusive workplaces, there is growing pressure on business leaders to enhance neurodiversity at every level of their organization.
Jefferies’ ESG team recently invited Joseph Riddle, Director at Neurodiversity in the Workplace, to share his research into neuro-inclusive HR practices and their impact on the workforce.
Understanding the Gap
Despite rising awareness, neurodivergent representation in the workplace remains inadequate. Today, fewer than one in six autistic adults are employed full-time. Adults with Tourette’s syndrome also experience high unemployment, and adults with ADHD are 60% more likely to lose their jobs.
This isn’t just an employment issue, but a cultural one. Bias often begins in the hiring process, as many interviewers rely on social nuances, natural rapport, and ‘culture fit’. Such practices exclude neurodivergent individuals, many of whom bring unique perspectives and potential to the table.
The Benefits of Neurodiversity
Studies show that workplaces championing neurodiversity often outperform their non-diverse counterparts on profitability and value creation. A recent study by Accenture found that businesses with strong neurodiversity programs outperform competitors on profitability and value creation, with 28% higher revenue, twice the net income, and a 30% higher economic profit margin. On average, neurodiverse companies total shareholder returns outperform industry peers by 53%.
Promoting Flexibility & Accommodations
Creating a neurodiverse-friendly culture requires flexibility. Conventional expectations around personality and work style can pose barriers to neurodivergent individuals. Forward-thinking companies are exploring strategies such as revamping interview practices, providing real-time employee feedback, and creating dedicated employee resource groups to address these challenges.
Practical workplace accommodations are also essential to supporting neurodivergent individuals. These include offering quiet, secluded workspaces and prioritizing clear, concrete communication. The use of assistive technology and neuro-inclusive meeting formats is also beneficial. Events and meetings can be more neuro-inclusive by communicating agendas and formats beforehand, having people choose their own seating and level of participation, and reiterating important action steps and takeaways.
Finally, employers must recognize that atypical social communication does not imply a skills deficit. This recognition, alone, goes a long way toward empowering neurodivergent employees.
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As we move forward, businesses need to question and challenge the norms that limit neurodiversity in the workplace. This starts by scrutinizing existing initiatives for neurodiversity inclusion and ensuring that accommodations are in place for an inclusive work environment.
In a world where 72% of HR departments overlook neurodiversity, businesses are closing the door on the unique talents and perspectives of neurodivergent individuals. It’s time to shift the narrative, invest in accommodations, and unlock the power of neurodiversity for a stronger, more inclusive future.
Aniket Shah is Managing Director & Global Head of Environmental, Social and Governance (ESG) and Sustainable Finance Strategy at Jefferies Group LLC. In this role, Aniket leads the integration of ESG and sustainability analysis within the global investment research department and engages with clients on this dynamic area of corporate and financial services.
He is an Assistant Adjunct Professor at Columbia University’s School of International and Public Affairs. Aniket is a graduate of Yale College and the University of Oxford, where he completed his PhD on the financing of sustainable development.