Paul Rabil, The Entrepreneur, Discusses His Investment Portfolio
The NCAA lacrosse season ended on Monday, with Yale winning its first-ever National Championship; a 13-11 win over Duke. With the victory, Yale became the first Ivy League program to win the title since Princeton did it in 2001. On Friday, we released Part 1 of a 2 Part Interview with pro lacrosse star Paul Rabil. In Part 2, we discuss Paul’s success as an entrepreneur, the companies in his investment portfolio and the lacrosse equipment space.
JWS: You’re not just a lacrosse player, you’re an accomplished entrepreneur with your investment arm. Tell us about Rabil Ventures?
Paul: Sure - we're an operating, investment and advisory company. On the ops side, we've built a portfolio of fitness companies, we own an event business, called Rabil Events which hosts portfolio businesses like the Rabil Tour, Defensive Academy and Goalie Training; and we have other bespoke overnight training and educational properties. In 2014, we built the Paul Rabil Experience, which is an online video tutorial that we sold to Denver-based, TopYa!. When we (with his brother, Mike) opened a portfolio of fitness companies a decade ago, we learned a lot. We self-funded them, as we couldn’t secure any debt - this was back in 2008-2009 – and as a byproduct of that, we helped start a small business lending company, called Endurance Lending Network. During our Series A, we exited the business to Funding Circle in the U.K., who used that acquisition to launch Funding Circle U.S.A. As such, we consider ourselves operators first.
On the investment and advisory front, we focus on sports, media, fitness and fin-tech. As we don't have the bandwidth to allocate to management of LP funds, we write personal checks ($25K-$50K), placing our bets in either Series Seed or Series A round. We look to work with amazing founders, in areas where we have domain expertise, and ask ourselves, are they (the businesses) solving a problem, and is this a problem we can help them solve? For our check size, it wouldn't make mathematical sense to invest in larger rounds. Inherently there's more risk in the early stage, by that's why we stick to our investment thesis.
JWS: Is there a single company in the portfolio that you are particularly excited about?
Paul: There are several. One is Brandless. They’re an e-commerce company that manufactures and sells food, beauty, personal care products. and household supplies. The e-grocery market is a $100 billion-dollar market. We love co-founder, Tina Sharkey, think their UI/UX is gorgeous, and they have a terrific marketing and customer acquisition strategy. Another portfolio company we like is the Athletic. Because of content ubiquity and a new customer that wants a carefully curated, trusted journalistic source, we've seen subscriber growth with the New York Times and Washington Post. We love The Athletic's subscription model and their geo-centric reporting. Final company we think is interest is Petal. They’re attempting to solve a millennial credit-access and credit card deficiency problem. There are 45 million Americans who don’t have access to credit. They’re using new technology to offer credit at a slightly higher interest rate with no recurring annual fees. From a soft launch campaign, Petal's garnered 80,000 email opt-ins, and plan to issue 5,000 credit cards this coming quarter. We expect to have 25,000 users by the end of 2018.
JWS: Who are the major players in the lacrosse equipment space?
Paul: You have the legacy brands like Warrior, who has the largest market share in the hard goods category, then Brine (subsidiary of Warrior), STX, East Coast Dyes, StringKing, and others. What we’ve seen over the last decade though, are some of the global sporting goods and manufacturing companies enter into our sport. New Balance did through M&A (Warrior), then you have Nike, Under Armour and Adidas all produce hard goods and lacrosse-specific footwear.
Howie Long-Short: Back in 2004, New Balance was seeking a growth opportunity (lacrosse was first gaining popularity amongst high-school kids) and acquired Warrior for an undisclosed amount. At the time, New Balance was competing with Reebok (NOT Adidas, Puma or Under Armour) to become 2nd (behind Nike) in U.S. footwear sales. In 2006, New Balance added Brine to its portfolio. New Balance is a privately held entity, there are no ways to invest in the company; unfortunately, the same goes for STX, East Coast Dyes and StringKing.
Fan Marino: The average sports fan may not be aware, but there are 2 pro lacrosse leagues (MLL, NLL). Can you describe how they differ?
Paul: First we have the outdoor game (MLL), which we’re accustomed to seeing at the youth, high school, college level, pro, and international level. This is 10-on-10, with the field size mirroring that of football and soccer. Then we have the indoor game (NLL), where you’ll see lacrosse in an NBA/NHL arena. It’s 5-on-5 with 4x4 nets and big Michelin-sized goalies. The MLL has 9 teams, and is a single-entity organization, like the MLS. The NLL has 9 teams, and is trade association, like the NBA and NFL. The NLL begins in the winter, and the MLL in the spring. There's a scheduling slight overlap, which has proven to be problematic for the players, brands, and fans.
Fan: Is lacrosse a full-time job for guys in MLL and NLL?
Paul: It can be. By technicality, we’re part-time players. We’re only obligated to two or sometimes three practices per week, and they tend to book-end the weekend; so, you’re allotted time during the week to either work a full-time job elsewhere, or create ancillary income streams. Many of the players who have other full-time jobs will use their vacation days to take off Thursday afternoon and Friday for team practice. Other players take on more of an entrepreneurial spirit, where they either start a camp/clinic business, or build a lacrosse-specific product or company. The top players have sponsors who give them additional access to resources and economics. These are the players who are setting the stage for the future of pro lacrosse, and the younger generation of players that will see a professional league that can support them in a full-time capacity.
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