Innovation doesn’t always happen with major leaps forward. Instead, it often comes in incremental steps. Understanding that has been key to the success of Boom Entertainment, a company founded in 2015 that now has 5 million users of its games. “We follow a simple mantra when we think about product development,” says Stephen Murphy, the co-founder and CEO of Boom. “We aim to deliver product concepts that are proven, better, and new.”

It is a lesson Stephen learned as a student at the Stanford Graduate School of Business in a class taught by Mark Pincus, the founder of the mobile social gaming company Zynga. “To create hit games,” Stephen emphasizes, “you often must start with proven elements that are working in the industry. You then add features that are better, ideally substantially so, and then sprinkle in more new things to make the game feel fresh and innovative.”

It’s a formula that has worked for Boom. Scott Frederick, a managing partner at Sands Capital Ventures, which was the lead investor in Boom’s Series A round of financing, emphasizes, “Boom is in an enviable position as one of the premier providers of technology and games in an industry that is both rapidly expanding and increasingly in need of product differentiation.” He adds, “Boom offers the entire continuum, from mass-casual, free-to-play gaming products to online casino and sports-betting games. They are a go-to partner for any company looking to maximize their opportunity with technology and gaming.”

As this market continues to mature and gain acceptance, we expect even more companies will want to participate in these entertainment opportunities. “Ultimately, we believe the participants will include traditional brands, media companies, and even the professional sports teams and their leagues,” says Scott. “Boom already has some customers within each of these categories.”

Bringing Fresh Ideas to All Types of Gaming

Scott notes that the team at Boom has a strong track record, having built innovative and successful products in just about every type of online gaming, including free-to-play games, real-money fantasy sports, and online casino games.

Free-to-play Games

Boom partnered with NBC Sports to make predicting the outcome of daily sporting events easy and fun. With NBC Sports Predictor, you don’t have to do any research on the talent levels of teams’ rosters or the implications of recent injuries to gauge what teams might win or beat a point spread. “We took some lessons from what we saw with popular games in Europe and made predicting the outcomes more accessible for casual fans of North American sports,” says Stephen.

If someone picks a Sunday night football game, for example, they might have to answer several questions. One might be to guess how many yards a quarterback will throw, with users having to select from multiple choices that offer ranges—like 0 to 224, 225 to 249, 250 to 269, and so on. A similar multiple-choice question might ask players to guess how many points both teams will score in the second quarter. Yet another question might ask what athlete on either team will gain the most yards in the third quarter.

“Most of the time, players don’t win, but there is a chance to win a jackpot prize for amounts like $25,000 or $50,000,” says Stephen. “This style of gameplay has been imitated by others now, but we were the first to bring it to the North American market, and it quickly caught on and gained millions of players.”

Real-money Fantasy Sports

When the playing of fantasy sports online became wildly popular a decade ago, companies like DraftKings adopted a salary-cap model. Players have to build teams with a limited amount to spend on athletes who come with different price tags. Each fantasy team owner has a limited budget of virtual currency, such as $50,000, that they spend to build their entire team. A great quarterback might cost $10,000, while a quarterback with a less impressive track record might cost $4,000.

Like the general managers of real sports teams, fantasy owners must decide how to spend their limited resources to establish a balanced team. “That is a complicated mode of play, and it is difficult to win,” says Stephen. “Some professional fantasy players have done well with this style of play, but most casual fans don’t.”

Boom decided to abandon the salary-cap model and instead offer a “pick-’em” style of play. Again, users only have to answer a few simple questions. In a basketball game with the Los Angeles Lakers playing the Golden State Warriors, for example, players will answer questions like “Who will score more points: LeBron James or Steph Curry?” People can play against their peers or wager real money to win small amounts if they guess right. They can also opt to compete for a large jackpot. “Boom was the first to offer this type of gameplay with fantasy sports,” says Stephen. “It has become a major segment of the fantasy sports business and now generates more than $300 million in revenue for the entire industry.”

Online Casino Games

Slot machines are a popular form of gaming, but Boom has brought a new twist to the standard slot machine design of watching three or five reels spin and hoping to see matching items appear. They developed a game that employs the same underlying math models, but instead of watching spinning reels, players shake the image of a “money tree,” and coins fall out of it. Each shake of the tree is the same as the spin of a traditional slot machine.

This may seem like a trivial design change, but, as Scott explains, “It is a great example of Boom being able to improve upon a proven game mechanic to make a new category of games that are both more accessible and more entertaining.” This fresh design has enabled Boom’s partner for this project, Rush Street Interactive, to have a game that ranks in the top 10 out of the 700 online casino games now available in Michigan.

An Early Interest in Sports and Poker Paved the Way

Stephen didn’t always aspire to become an entrepreneur. His first career goal was to be a sportswriter. When he began looking for jobs, he had natural ties to the New York area, where he’d grown up, and to LA, where he’d earned his bachelor’s degree at Loyola Marymount University. A fellow alumnus from his university advised him that there were already lots of sportswriters in those two major metropolitan areas, so he should apply for jobs at papers across the country. He did just that and found a job in Oklahoma. After a brief stay there, his side interest—as a successful poker player—made him decide to move to Las Vegas.

Someone he met at a poker table in Las Vegas owned the poker magazine Card Player and invited Stephen to write for him. Stephen eventually became the publication’s managing editor. “At the magazine, I could call CEOs in the gaming industry and politicians who were creating the rules to regulate it, and they all took my calls because there weren’t many other trade magazines in the industry at the time,” says Stephen. “Writing for the magazine was a great training ground, and I gained a lot of knowledge about casino gaming and gaming in general.”

Stephen eventually used his media experience to become the public relations and marketing manager for the casino games creator High 5 Games. Before his arrival, the company had been developing land-based games for the major Las Vegas casinos. “At the time, I saw that online games, like Zynga Poker, were beginning to take off,” says Stephen. “I convinced the team at High 5 to put their games on Facebook and create a free-to-play version they could monetize with virtual currency.” That game became one of the 10-highest grossing games in Facebook’s history. High 5 Games quickly went from a company with $4 million to $100 million in annual revenue. Stephen became its head of strategy, but he eventually decided to return to school and obtain his MBA. After graduating from Stanford Business School, he established Boom Entertainment.

Looking for Investment Partners That Add Value

When selecting a firm to lead its Series A round of financing, the team at Boom looked for venture capital firms that could meet three key criteria.

First, they wanted investors who can add value. “We wanted to establish relationships with firms that can provide insights and resources that will help us scale our business,” says Stephen.

Second, they looked for a track record of successful partnerships with other private companies. “We’re a very ambitious company, and we want to do great things for our players and brand partners,” says Stephen.

Finally, the Boom team sought out firms staffed with people they knew they’d enjoy working with for many years. “Building a business is a long-term journey,” says Stephen. “You want to engage with people you can build a good relationship with and trust.”

Sands Capital fit the bill on all counts, Stephen says. “As we were evaluating partners, Sands Capital stood out because they have such a track record for fueling success.” In the two years since Sands Capital made its Series A investment, Stephen’s experience with the Sands Capital team has proven that he made the right decision. “Scott is thoughtful without being overly prescriptive,” he says. “I know I don’t know everything and still have a lot to learn, and Scott and the team at Sands have provided valuable insights about every aspect of our business.”

Stephen emphasizes that it is still important for a founder and CEO to maintain a level of autonomy that will foster the confidence necessary to drive a firm’s success. “In advising us, Scott finds the right balance,” says Stephen. “He lets us know what he thinks, but he doesn’t try to force us into anything. Fortunately, disagreements have never really been an issue because, more often than not, we’re aligned on what’s right for the business.”

Working with Scott has also delivered an unexpected bonus. “Scott is a big sports fan and loves gaming,” says Stephen. “Usually, investors aren’t that helpful on the product development side. Scott has made some wonderful suggestions that we’ve implemented, and his ideas are helping us make better products.”

A Bright Future with Multiple Tailwinds

The trends are all moving in the right direction for Boom Entertainment and the rest of the sports gaming industry.

• More states are legalizing sports betting. Since 2018, more than 20 states have legalized sports betting online and at retail outlets.¹ Two more allow it only online, and a handful of other states only permit it at retail outlets. Several big states—California, Florida, and Texas —could legalize sports betting within the next five years.
  
  
• More localities are legalizing online casinos. In 2013, New Jersey was the first state to legalize online casino gambling. Pennsylvania, Nevada, West Virginia, and the Canadian province of Ontario all followed suit. “The process may take longer because state governments sometimes have more reservations about casino gambling than they do with sports betting,” says Stephen. “Still, more states will continue to legalize online casinos.”
  
  
• Increased mobile adoption. “For many people, the opportunity to play casino games on their phone is a welcome alternative to driving an hour or more to a casino,” says Stephen. “The mobile segment of the casino gaming market will keep getting bigger, and that will benefit the types of games and products we build.”
  
  

Drawing in Casual Fans

The fun and easy-to-play games Boom develops are drawing more casual fans to sports gaming. To understand this customer base, Stephen does not need personas developed by a marketing department. He simply thinks of his mother. “My mom is in her 80s and lives in New Jersey. She loves Notre Dame football and watches every one of their games. She also likes betting and will play the slot machines on her occasional visits to Atlantic City.” Historically, most of the advertising for sports gaming has targeted men and serious bettors. The games Boom develops appeal to a much wider audience—people like Stephen’s mom who simply want to have fun and a chance to win some small, or even jackpot, prizes as they engage with their favorite sports and teams.