The Philadelphia 76ers are one of the NBA’s oldest and most tradition-bound franchises. But with an aggressive ownership group and boundary pushing CEO, the Sixers are getting into the VC game and changing what it means to be a sports team.

Dylan Elder has the look of a prototypical millennial tech founderexcitable and energetic, with a cherubic face that makes him look even younger than 20. With only one year at Georgetown on his resume, he took a sabbatical to develop his brainchild, an idea that won’t change the world but may put some change in your pocket.

His product, Monster Roster, aims to help daily fantasy players win money at Fanduel and DraftKings. The pitch is simple: Sign up, pay up, and receive lineup tips that will give you a leg up on your competitors. Using a proprietary algorithm Elder developed with three high school friends, Monster Roster claims its lineups perform 40 percent better than that of the average user.

Monster Roster, in other words, is a tool for daily fantasy’s minnows to compete against the small group of sharks who win most of the money. Elder was once one of those chewed up by the food chain. He lost about $100 the first time he played daily fantasy and then kept losing more. So he and his friends came up with an algorithm to predict fantasy points. It worked. The algorithm grew into a business model, which grew into a website, which grew into Monster Roster.

When Elder left college, he had a decision to make. The obvious path would have been for the native San Franciscan to find a home for his company in Silicon Valley. Instead, he is sitting in an empty conference room in an office park in Philadelphia on this frosty February afternoon. The lifelong Boston sports fan is now a dutiful 76ers fan, which is of no small detail.

Elder is the first CEO to enter into the Philadelphia 76ers’ Innovation Labthe first startup incubator financed and operated by an NBA team. A second company, Live Life Nice, has since come aboard, and the Lab is expected to reach deals with two more companies soon.

The Sixers see themselves as a new kind of pro sports franchise, one that is not content to be a one-dimensional organization. The Los Angeles Dodgers launched the Dodgers Accelerator in late 2015, and the Golden State Warriors started an investment arm, GSW Sports Ventures, the following year. While those two are so far contained to companies that could create synergy with their parent teams, the Sixers want to play in a bigger arena.

The Sixers are not afraid to take risks. The organization is driven by a simple mottotrust the process—that values long-term glory over short-term pain. The pain, for the basketball team, has been immense—a mountain of losses over several years. General manager Sam Hinkie lost his job in 2016, but his devotion to ignoring the normal constraints of how a sports organization operates still seems to define the 76ers.

As the Sixers and other teams become dynamic entities trying to grow beyond their core product, a critical question remains. What is a basketball team doing starting an incubator?

“We’re definitely going to stay in our lane; our lane is just a little wider than others’,” said Scott O’Neil, CEO of the Sixers, Devils and Prudential Centerall owned by Josh Harris and David Blitzer. “When we talk about the core values of who we are as an organization, innovation is always at the forefront. We like to do things differently. We get up every day and convince ourselves we have a lot to learn.”

Starting Up

The Lab was a savvy solution to a seemingly simple problem. In 2016, the Sixers realized they had extra retail space in the new headquarters they were building in Camden, N.J. O’Neil first contacted Mike Wagner, president of Kimball Office, a smart office company, with the thought of buying furniture. But their discussion eventually turned to the possibility of hosting an innovation lab. The idea metastasized from there. O’Neil pitched it to Harris and Blitzer and asked for money that wasn’t in the original budget.

Harris countered: If the 76ers were to do this, they should do it right.

The Sixers needed someone to lead the Lab and the first person that crossed O’Neil’s mind was Seth Berger. The two met at a trade show in Atlanta in 1994. Berger was running And1, then an upstart athletic apparel company. O’Neil was selling sponsorships for the New Jersey Nets. They were the picture of oppositesBerger in shorts and a t-shirt, O’Neil in a suitand they quickly formed a friendship.

While Berger built And1 into a top brand and shoe and apparel company, O’Neil became a successful sports executive, serving as president of Madison Square Garden before taking over the 76ers/Devils/Prudential Center conglomerate as CEO in 2013. By then, Berger was in semi-retirement. He had sold his share of And1 in 2005 and, aside from a few small business ventures, was content to live life as a father and head basketball coach at Westtown (Pa.) High School, a program with a national profile that has produced several top recruits. If anything, he planned on a reverse retirementcoach now, work later.

Then O’Neil came calling with an offer.

“He’s the perfect guy to run this lab,” O’Neil said.

O’Neil and Berger had worked together before. In 2000, they launched—a portal that wanted to be an online cathedral for basketball fans. The site raised more than $20 million but suffered from over-hiring and, on the technical side, under-performance. But it was a learning experience for Berger..

Hs job profile at the Innovation Lab grew quickly. Initially it was thought Berger would work one day a week but he didn’t think that would be enough. He needed to be in the office to sign off on decisions; so he expanded it to two days a week. He started in June 2016 and after a week he realized the lab would fail if he stuck to that schedule. He envisioned his jobrecruiting companies, providing advice while they’re in the incubator and then helping them raise moneyand realized he needed to increase his commitment. What began as a part-time endeavor is now a seven-day-a-week job as the lab’s managing director.

A few weeks Berger started, Rhyan Truett came on as manager of operations. It took some convincing. She had originally turned down the position, believing her future lay as a public relations spokesperson for the 76ers, but came aboard after a weekend of contemplation. She’s now COO; Berger is the de facto CEO.

Leveraging Sports

What makes a sports franchise want to start an incubator? To understand why, you have to stop thinking of the 76ers as just a sports franchise and instead think of them as the basketball division of a large umbrella group.

Harris and Blitzer own two American pro teams, an English Premier League team and the pre-eminent arena in New Jersey. In 2016, the 76ers became the first pro sports organization in North America to buy an eSports team.

“Innovation Lab is just a way of leveraging what we have,” O’Neil said. “There aren’t many organizations that you can say ‘Come on in, we can test in four different leagues.’ It’s a pretty incredible competitive advantage.”

Sports teamsat least the most open-minded and forward-thinking onesare no longer just in the entertainment industry. They are no longer content to put together a team, sell tickets, take TV rights and profit. And it is likely no coincidence that some of the most enlightened organizations are in the NBA. The 76ers bought Team Dignitas after O’Neil heard NBA commissioner Adam Silver talk about the audience driving eSports during a board meeting with the league’s owners. The 76ers’ dive into eSports opened the floodgates for the league.

They’re driven by a new breed of owner. Harris and Blitzer both made their money in private equity. To them, every property has a value and can be a potential engine for growth. “Their team is an asset, as opposed to a play thing,” Berger said. “They’re like ‘Listen, can I find other ways to leverage this team to increase their asset base? Let’s do it.’”

Already, the Innovation Lab has changed its operating procedure. When it launched, the plan was to run it as a standard incubator, with a six-month development period followed by a demo day.

Berger and Truett quickly scuttled those plans. The Innovation Lab is now looser, less an on-schedule incubator and more open to actually incubating CEOs and young companies.

There is no standard model. The Lab will provide free housing and food to its CEOs, along with office space in its Camden headquarters and a slew of other services and connections to partners the 76ers have around Philadelphia.

Stepping away from industry norm was as much to gain a competitive advantage against other incubators as it was to play to Berger’s strengths. He still sees himself as a “street kid”an operator, not an investor. After taking the job, he and O’Neil met with venture capitalists in San Francisco and Berger called his friends in finance. They told him the traditional model didn’t fit him. So he and Truett rearranged the rules.

“If we just said we’re going to be another lab that has a three-month residency, with some capital, and demo day, why come here?” Berger said. “Unless you’re literally in Philadelphia. First you’re going to go to Y Combinator or Techstars. Because they’ve already done it and done it very well. And then secondly, in my opinion we’re going to have to prove out the model before somebody will come to us. This way we get to prove out a completely different model.”

There is no set term for how long companies can stay in the Innovation Lab. The Lab doesn’t take a standard amount of equity from incoming companies either. Everything is variable. If a company needs to raise money or find investors, the 76ers will decide first whether they want in, with the right to invest further.

The team has taken equity from two companies already and plans to do the same with two more, O’Neil said. In November, Berger led a $250,000 round of funding for Monster Roster. But if a company wants to raise more money, Berger is more likely to jump in and see if there’s a way to rearrange or cut back on spending rather than the CEO selling away more equity in his company.

“Our model is ‘Hey, come into the lab. I’m not going to hook you up with a mentorwe are your mentors,’” Berger said. “We are your assistant CEOs, if you will.

“We have seven to eight thousand square feet of office space with space for 150 people. Be here for as long as it works for you because otherwise no one is sitting there. The longer you can be here, the more we can help you and stay close to you and touch you.”

Truett says she can’t see the Lab ever taking in a large classtwo companies coming in one day is farfetched to her, let alone a whole school of them at once. Truett and Berger are too hands-on, too involved in the day-to-day for that, they say.

Monster Roster reflects that paradigm. The 76ers received some 250 applications to enter the incubator, and the daily fantasy sports company was the first. Elder signed on Aug. 22, 2016.

His company quickly underwent a name change. Elder, ironically, had originally named it And 1 Analytics. He had grown up watching And1 mixtape tours and wearing white And1 shoes. But Berger hated the name, despite the callback to his own business. With the help of Maven Creative, a branding and design agency that the Sixers offer access to, And 1 Analytics became Monster Roster.

Three weeks in, Berger and O’Neil ushered Elder into a meeting with DraftKings CEO Jason Robbins for feedback on his product. DraftKings is an official Lab adviser.

Elder texts with Berger into the night and says he won’t go more than six hours without talking to him. Berger helps on big picture ideas, such as how to scale and pricing metrics. Truett assists on day-to-day operations including messaging and creative placement. Monster Roster recently added MLB lineups to its stable of services.

Having a relationship with a sports franchise has its benefits.

“It legitimizes the company, for sure,” Elder said. “People who are in sports and around sports just understand the landscape better than if I had done something in Silicon Valley that is start-up centric.”

The Innovation Lab isn’t necessarily looking for a product that could help one of its own teams. That would be ideal, but difficult to pull off. Berger says it’s like finding “a needle in a haystack.” That doesn’t stop applicants from trying. They’ll pitch an idea they believe can help one of the teams but turns out to be neither unique nor one that Berger things can become a successful business.

A team can still dream, though. “We see applications where there’s really a bullseye with hitting on sports teams,” Truett said. “Sports teams are getting more innovative. I think they’ve gotten a little bit of a pass compared to other businesses in needing to get to 2017, and we’re getting to see a lot of those business that can get them there. So we get to look at and hopefully eventually incubate something that could be the sports teams of the future, that change your game experience, that change the way you interact with your team. That would be the bullseye.”

The focus, for now, is on consumer products. Truett, who finished her MBA and Master of Science at University of South Florida in 2016, believes she has an understanding of how the millennial generation thinks and sees the future. Berger says he has internalized the “average American consumer.”

But it will take years to see if the Sixers’ bet pays off. And the field is getting crowded. The Dallas Cowboys launched Blue Star Accelerator in November. The NFL Players Association launched its own accelerator a month later. As more organizations enter the fray, it puts more emphasis on the Sixers to remain unique.

Berger knows the criticism. A frienda top VC, he saystold him no sports team will succeed at this.

“That it’s just a bunch of really rich guys who are like, ‘Why are we letting all the VCs have all the money? Let’s do it,’” Berger said, recalling his friend.

Even if Berger’s friend is right, O’Neil says the 76ers don’t face much risk. If the incubator fails, the cost might be a hit to the team’s relationship with Kimball Office, its partner and investor. “There’s not much financial risk for us,” he says.

If the incubator succeeds, he says, the 76ers will have further established themselves as more than a basketball team while creating businesses in their community.

Berger thinks it will take five years to find out if this experiment works. The Sixers, already creatures of innovation and patience, now have another process to trust.

Mike Vorkunov is the curator of SportsREDEF.