The Baseball Winter Meetings are about more than just the 30 Major League teams trying to improve their respective rosters with trades and free-agent signings. That’s the main goal of the meetings, but really, it’s an annual reunion of sorts with the entire baseball industry that allows executives, agents, scouts, broadcasters, writers, entrepreneurs, company representatives, and more to interact with each other. Attendees make the most of the meetings by crossing off the tasks on their daily to-do list, but the true fun lies within unexpected interactions, and the latter is what led me to writing this story. In between my busy schedule in Las Vegas in mid-December, I was able to connect with a couple employees from the Palo Alto, California-based startup company, Pando. I found out about the company through Instagram and as a broadcaster and writer, I was interested in doing an interview to tell a story. As a fast-growing startup that’s already been featured in Sports Illustrated and Forbes’ ‘30 Under 30,’ they were interested in spreading the word about their business and getting the name out there. It was a good match, so we made it happen. Pando is new, and the company’s main goal is to educate people on who they are and what they do. I sat down with executive assistant Skye Rankin and financial analyst Harris Stolzenberg for a crash-course on the venture-backed startup that’s looking to change the game financially for athletes, one ‘pando’ at a time. What is Pando? Even the casual baseball fan knows the game’s top stars make a ton of money, have the ability to live a lavish lifestyle, and have few financial worries. The same can be said to an extent for any established Major Leaguer, with the current Major League minimum annual salary at $555,000. But what about the thousands of players grinding in Minor League Baseball every season who haven’t reached the Majors and may never get there? Money is a huge issue for those guys, with many of them collecting barely over $1,000 per month. That’s why Pando exists. At the root of it, Pando is aiming to financially de-risk an athlete’s career (click this link to learn more). “As people can see in the baseball world, there’s so much career volatility and that’s kind of our angle on this. There is such an issue in the professional baseball space where people are making less than minimum wage, and there’s not always the best chance to make the most (money),” Rankin says. “We decided that there is a way that we can pull together players with similar expected value and have them create a safety net for themselves and believe in themselves, the players that they’re with, and building a community around that. “We allow the players to choose when they want to contribute, who is in their ‘pando’, and how much they want to contribute.” The graphic below gives a more in-depth representation of an individual pando's structure. Pando gives athletes the confidence to bet on themselves, knowing there’s a chance they might break the bank some day, while at the same time offering peace of mind in knowing that even if they don’t hit that big payday in the Major Leagues, which is more likely the case, there could still be a significant amount of money to fall back on from their individual ‘pando.’ Players don’t have to commit any of their career earnings before MLB arbitration (see above graphic), so players who never reach that point in their careers are not at risk of losing any money. Historical data has shown that the average player entering a pool has a 95.7 perfect chance of making money or breaking even. Most of Pando’s clients are baseball players, but they’re already expanding into football as well. The Pando team is using data, numbers, and projections to prioritize their athletes’ futures and set them up for long-term financial stability in an industry that offers very little stability of any kind. “I think the data is really what sets us apart,” Stolzenberg says. “You’ve seen these Major League teams in the past maybe five years, they’ve brought on their own data science teams, and I don’t think you’ve seen the rest of the baseball industry catch up to that yet, so what we’re doing is kind of putting data in the players’ hands for the first time. “We have a team of data scientists that basically look at stats historically going back 20 years, and we’re able to predict with a pretty good degree of accuracy what we think a player might earn over the course of their career. When we show this to them, it’s pretty eye opening and they usually respond pretty well to it.” Getting potential clients to trust this new type of financial game plan can be tough, but Pando has gotten encouraging responses so far. “I think at first it was a challenge, because you know with anything new in sports people are skeptical,” Stolzenberg says. “I think athletes gets sold on these ideas every day, and it’s hard to decipher which ones are real and which ones aren’t, and I think as we’ve started to build up our client list, players have given us more credibility and they’ve seen kind of the value we’re able to provide. And as we kind of grow as a company and become more established, it gets easier and easier for players to really buy in to what we’re telling them.” Like any startup, Pando doesn’t have the luxury of a big staff to lean on to get things done. Pando has only eight employees, including the company’s co-founders, Charlie Olson and Eric Lax, and all eight are exposed to different areas of the business, which Rankin notes is valuable to her. “I’m able to see such growth from some of the first players that we signed on, to where we are now,” Rankin says. “When I started, there were maybe 50-60 baseball players, and now we have over 170 clients, which really drives me in my everyday work.” What is the competition like? With an idea and business model as new as Pando’s there isn’t too much direct competition for the startup to worry about right now, but there is competition, nonetheless. However, Pando is confident in its advantage over potential competitors. “There are a couple companies that kind of play in the (same) space (as Pando). We think we’re very different,” Stolzenberg says. “The two companies that come up a lot are Big League Advance and x10 Capital, and what those companies do is that they offer a lump sum of money up front for a portion of a players’ future earnings. But the problem there is that they’re backed by institutional money, so hundreds of millions of dollars in these funds go to basically buy a percentage of these players’ income, and the issue there is their whole goal is to make money, which is fine, but to do that you have to offer players deals that are sub-optimal. They’re trying to buy a players’ future earnings cheap so that they earn a financial return on that. “The cool thing about Pando is that we offer players their fair value. With Pando, you’re pooling with people who in an ideal world are of the same caliber as you, have the same chances of making it to the Big Leagues as you, so you’re not selling yourself short, whereas in a lot of these other deals with potential competitors you have to sell yourself short.” The graphic below displays an example of how similarly rated players (in this case, top 50-100 MiLB prospects in 2003) can be grouped in a 'pando' and how each member of the group would have made out financially. Pando is all about putting the players first, and Stolzenberg notes that the team “absolutely” breaks down how and why they’re different from competitors when they’re trying to sell themselves to a potential client. Pitching the sames ideas to agents is key for Pando as well. “All in all, we’re very friendly with agents,” Rankin says. “A big piece is just education and kind of just explaining our business model to them, and that’s the best that we (can) do.” Helping players cash in on themselves in ways that didn’t seem possible before is a priority. Any advantage Pando gives its clients to do that in as cutthroat of an industry as professional baseball (and football) is what separates the startup group from its competition. Part of that involves building true relationships with clients. “I think the social component of what we do really sets us apart,” Stolzenberg says. “The fact that in one of those deals, let’s say you go on to make $100 million and you pay 10-million of those dollars to (another company). With us if you go on to make $100 million, that money is getting split up--that $10 million that you put into the pool--between guys who you put blood, sweat, and tears into it with them for your time in the minors. You know them, you’re helping them start their career, start a new life, whereas in these other deals (with competitors) that money goes to guys wearing suits who are just interested in a financial return.” What else does Pando offer? Unless you’re a top draft pick or highly regarded international signee with a substantial signing bonus, for example, a Minor League Baseball salary is not enough to live off of year-round. Minor-league contracts only run through the regular season (between five and six months), which leaves plenty of young pro baseball players looking for work and a way to make money the rest of the year. The Pando team understands that and recently started its own internship program for its clients, which give athletes the opportunity to work for the startup during the baseball offseason. “A couple agents kind of came to us and said, ‘we think what you’re doing is awesome, we’ve got a couple guys who are starting to plan their careers out after baseball,’ because they realize it would be great if they do make it to the Majors, but there’s also a non-zero chance that they’re looking at a job outside of baseball in a couple years. So we were like, yeah, we’d love to have a guy who’s crushing it at Triple-A come in the office and work with us,” Stolzenberg says.
Pando is turning heads in the baseball industry in multiple ways; Not only are they helping financially de-risk a player’s career, but they’re helping players figure out what’s next after baseball. “So right now we’ve got one of those guys and we expose him to the whole business. We show him the financial side of it, we show him the baseball side of it, the football side, the data side, and it’s really great having someone who lives baseball day-to-day and having him in the office to bounce ideas off of,” Stolzenberg says. “I think what we’re providing him is professional experience, so if for some reason baseball doesn’t work out, he’s more prepared to go into the workforce down the road.” Story by Michael Marcantonini
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March 2020
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