Lessons from Esports Start-ups: Part 2

During my nine years in esports, I’ve worked for over 13 esports startups across six titles and alongside nine national work cultures. I’ve experienced a lot of personal successes, professional failures and lessons. Although the products and services we have put out had a varied probability of success, I often found that there were lingering issues or concerns that ended up deeply plaguing the company and the members involved.

Within this two-part series, I will draw upon my experiences to highlight common mis-steps startups approach esports, their businesses and some common pitfalls in their operations that ultimately lead to their downfall. This article will be more anecdotal and qualitative than quantitative. It goes without saying that what I may say is true for the businesses I worked with but may not be applicable to all current, past or future businesses. It’s recommended you take the lessons and advice listed here and critically think about how they apply (or not) to your work and experiences.

In Part 1, I drew upon three example companies I’ve worked with to highlight controlling investor expectations, key communication lines with your investor to manage expectations and sensible budgeting to ensure short and long-term viability within this volatile industry.

In part 2, I will talk about internal factors that can hurt a brand more so than how it projects itself, and its successes, to be.

Company Atmosphere & Infrastructure

Beyond the circumstances and communication you have with your investors, some common struggles I’ve experienced with start-ups range from creating a good company atmosphere to an understandable staff infrastructure. From 10 employees to more than 400, it is very common to see company communication lines dissolved or remain poorly enforced over time as leaders get focused too hard on their goals and not so much on maintaining the mood of their offices.

Company atmosphere is important, that goes without saying. In esports where salaries may be lower (depending on your region) and your staffing is much more tight-knit, that company atmosphere can help distinguish your company and compensate the difference in benefits or salary ranges that other companies are offering. However, company atmosphere doesn’t just mean group-activities or pizza lunches every month but rather more towards having leadership with the appropriate experience that managers and coordinators can learn a lot from.

I often ask in my interviews with companies on what a person working with them could learn from working in this company, with their leadership. Their first answer is experience but in reality, that experience is only valued if it has lessons the person can draw from, techniques or systems that can be introduced to the staff or contacts/relationships that a staff member would normally not be able to get. Simply put, your leaders must be able to grow their staff to become specialized individuals. I feel that in esports, people often highlight their experience as justification for their role when, in reality, that experience implies what mentoring, connections and education you can provide to newer members in the field. Leaders with appropriate experience and attitudes heavily affect the type of employees that surround them and ultimately compose your company’s environment. Here are some leader examples I have personally experienced:

  1. Executive staff were often not present in their own company offices. For example, the CEO did not live in the same country as the residing company or staff but was often flown in regularly.
  2. COO fired volunteer staff because some members’ other volunteer projects competed with a potential brand partnership.
  3. Executive leadership was not able to communicate with the majority of their staff due to a language barrier. They relied on translators to speak on their behalf. Connecting with the executive leadership was difficult, leading to many staff members have little faith in his words during harsh times.
  4. Multiple overlapping leaders gave conflicting orders and reasons, leading to staff members feeling deflated and unequipped. This created a frustrated atmosphere that disassembled the brand.
  5. Leader was not permitted a decent budget to hire expert staff members, relying on assistants to help on projects that were beyond their depth and ability. The leader often used a lot of their time to assist these assistant instead of fulfilling his intended hired responsibilities.

For leaders, having a staff team that can provide more than just ‘bodies’ to a task can mean reducing the amount of time for your product/service to come into fruition, ultimately lowering your operations cost and meeting client or internal expectations of delivery.

On the flip-side, having too many leaders with not enough specialized team members can lead to a lot of discussion and little action or little ability to fulfill actions without confrontation between involved leaders. An ideal infrastructure scales in accordance with the brand’s services or platform but also relies on specialized employees to help deliver an end-result.Too little expert infrastructure

For many esports brands that are receiving large rounds of investment and scale without appropriately looking at how to optimize their current staff may often find redundancies in their workmanship that can slow a task rather than hasten its completion.

Awareness versus Actual Success

Something I see a lot with recent brands, especially during the live-streaming competing brands and fantasy betting platforms is the PR cycles with actual very little results to display. You often see these sites tout around their CEOs, making large or redundant opinions without much news cycles regarding the actual success of their brand.

Despite numerous press releases and appearances by the CEO of Azubu. The actual performance, revenue generated or value of the live-streaming platform and brand was declining quickly. This is not a unique situation that many company will encounter.

Gathering a lot of awareness for a brand to compensate for its actual successes often has a reverse effect within some gossiping business circles. They can often perceive the projection you’re setting and if not, your staff members may undermine you by speaking honestly (yet with frustration) to colleagues within the industry about the decline of their brand.

Seeking PR Exposure for your brand without being able to actually deliver a desirable product is something so basic and yet so many brands try to continue marching on in their business cycles without actually executing their main goals and services.Critical of the current competitors to dismiss their success before you’ve even launched

Lastly, before launch of your company or brand, it’s heavily recommended not to talk down about the current company. Nor is it wise to use the failings of another company as a justification to start a competitor, especially if you are unable to match or mirror the qualities and value that the leading competitor has. I often found myself among circles of people criticizing other established brands before they, themselves, have launched. Be wary of the tone you are setting up internally and the perspective you are spreading within your team, you will find yourself often obsessive about how much better you are than another company, when in reality, they have achieved so much more than you can in the first few years after launch.

Dota 2 Hero Builds Project ends after six years, 364 Million subscriptions

Summary

After six years, the Dota 2 Hero Builds Project is ending. The reason is that I have achieved everything I wanted with the guides and I no longer feel motivated continuing this free project.

The choice was to either start asking for financial support to continue my responsibilities or to move onto new ideas I want to do. I’ve chosen the latter.

Volunteering My Life

I’ve been volunteering my time for the past 10 years simultaneously with my education and career:

1. Before esports, I volunteered at a Jewish retirement center between my classes
2. I rewrote TeamLiquid.net’s original FAQ
3. I created StarCraft/esports university clubs around my city (Montreal): UQAM, Concordia, McGill
4. I hosted local community viewing events called Barcrafts Montreal (4x)
5. I worked on StarCraft events for our local LAN: LAN ETS, NASL Toronto Finals and Blizzard’s WCS Canada.
6. I acted as a player-manager for teams: Root Gaming, Infinity Seven, Team Dynamic, VT Gaming, Quantic Gaming
7. I wrote for many esports websites: Team Liquid, D-Esports, ESFI World
8. I published in-game Dota Hero Builds

Had a lot of fun creating many BarCraft Montreal events during StarCraft II and MLG’s heyday.

For the guides, I’ve learned everything there is to learn and the project itself was no longer being done for my enjoyment. I’ll only volunteer to do something if I can learn from the experience or I genuinely enjoy the work. Simply put, I just want to do things and it stems from a personal insecurity to prove myself:

In my PCGamesN interview, the writer only published a portion of my answers, here is the full quote. I’ve mentioned similar aspects about me on other podcasts and interviews as well.

Overall, I’m a pretty unremarkable person. I’m not inherently personable, talented in games, in general knowledge or any actual abilities. All I got going for me is my desire to be proactive and contribute and I feel its important to pursue that sole quality that distinguishes myself.

Negativity

The project has hit a ceiling of success and the amount of discrediting (‘you’ve had X item on this hero for six years’), misinformation (‘he’s only 3k MMR’) and personal attacks (‘he’s just trying to be famous’) are stronger than the appreciation I receive nowadays. Since I am not enjoying this negative tone on something I want to do, I will just go do something else. There is a lot to say about handling criticism and negativity and I am not sure I want to dedicate a whole block to this subject but I do know I am sensitive to it but not obliged to accept it. This is contrary to YouTubers, Streamers and casters who have to tolerate a lot of mean stuff from their communities because it’s part of their work and life. That said, It does especially hurt when people who are acquainted with me publicly tell me my guides suck but never reached out to help me improve them. Even pro-players have given me more feedback over the years than the critics who watch or cast their play.

Next Steps

In terms of next steps, I will be trying out new ideas and seeing how I feel about them. Most of the things I’ve done no one has really heard of, even less for my actual jobs. But for me, they have all been enjoyable and hard-working experiences that made me a better person.

For instance, now I want to work on being a more outward person and comfortable on camera. I’ve only had four camera appearances in my life and I have never watched them because I get horrible anxiety/discomfort. To rectify this, I’ve been live-streaming or appearing on people’s live-streams to be more comfortable in front of or talking to an audience.

Placeholder video to help break up text and reading exhaustion. People still talk to me about this video though

Second, I will be trying my hand at hosting a small online Dota show. I’ve produced a lot of types of content but never hosted. I’m hoping it yields community interest and spur support for other content ideas like event coverage or interviews: Patreon.com/TorteDeLini (campaign is paused until I have something to show). I will make a proper announcement of this next week closer to the intended date but its based around improving my actual ability to play Dota 2 as my fundamentals and understanding of the game are average.

Thirdly, I have started writing some personal opinion pieces about the esports industry as a whole. I enjoy giving my expert thoughts on the industry and having a nice display of my knowledge across articles.

Lastly, I’ve just finished my previous esports start-up and considering new projects/options. You can review my career background on LinkedIn: LinkedIn.com/in/MichaelCohenP

Conclusion

After six years, the hero builds project is coming to an end. The achievements of this project are far more reaching than anything said on Reddit, stream or to me in-person and I’ve always been surprised that so many people have enjoyed something I was so passionate about. I do not think I will ever succeed in anything as great as this project but I am very excited to explore what else I can do.

My final message, thank you for the kind comments on my profile. I’ve read (and sometime re-read) every single one across these many years.

Thank you for being my friends and giving me a purpose. You’ve made this relatively ordinary person achieve something pretty extraordinary.

PS: You can always talk to me directly on Discord or catch me live-streaming every week on Twitch.tv/TorteDeLini.



FAQ

Why did you wipe the guides? I mentioned my hiatus as far back as December but I was still getting many messages, on a daily basis, either telling me to update the guides or that they suck/are wrong. In the past I highlighted a concern that users were not converting away from outdated guides, this is to ensure that everyone moves on.

Will you ever bring back the guides?
As mentioned, I’ve achieved everything I want with the project. If there is demand and financial support to bring them back, I’d be happy to retake the position. It will never be something I will personally come back to.

How come you didn’t try to make any money from the project?
It was never my motivation. It was purely an alternative for people who did not want to give direct feedback on how to improve the project. I have tested a few sponsors but quickly realized that the engagement rate was small (0.0003%). Additionally, the guides don’t provide any information (location, daily use, etc.) that can entice sponsors. I’m too average of a player to consider alternative work (e.g: ‘coaching’) and it would conflict with my actual work and responsibilities (and it does not interest me). Lastly, I opened a Patreon but the persistent shaming and backlash made me feel incredibly anxious, so I removed all public mention of it (2016-2018).

Did Dota Plus or other guide-makers influence your decision?
No. Regarding Dota Plus, I wrote in my five-year summary that Dota Plus did not affect my MoM subscription growth (~5.5 Million). Additionally, my guide penetration was 83% of all daily matches whereas Dota Plus has a 56% expiry rate. In terms of other guide-makers, I’ve been providing advice, promotion or help so they can grow because I have always been publicly voicing for more ‘competition’.

What is your MMR? I’ve played ranked for three different seasons and have reached 5K mmr, 4.5K mmr, 4K mmr. I play mostly unranked so I can play whatever hero I want without the extra consequences or pressure. My unranked is definitely lower as I had tested a lot of hero builds with heroes I am not comfortable with.

How come you never waited until the meta settles before updating the guides? The meta is constantly changing, it can take weeks for it to have any sort of settled approach (which can change again). Additionally, for everyone who thinks I should wait, there are about 10x people asking me if I am updating the guides, when can I update the guides, demanding it. Lastly, there were guide-makers who were not following the same thought-process, they would update their builds immediately then abandon them, causing subscribers to be misinformed for months.

Do you ever go back and update the builds after initial guide updates?
Yes, in fact, I regularly do revisions, retractions, adjustments and changes. This sometimes ends up being larger than the initial changes made from the start. Towards the end, my schedule was about 100-400 updates every two weeks depending how off my initial applications were.


I’ll update this FAQ with any other community-related questions.

UPDATE – 10:06cest Feb. 8, 2019 — Did you quit because of the community negativity?
To say yes is to give too much credit to the naysayers and not enough value to those who appreciate the project. The main reason I quit is exactly what I am saying: the project hit a success ceiling and did not garner any more personal value to me. I was not comfortable conditioning the continuation of the guides based on financial support after making it clear that I was doing it for free for so long. Once you hit a certain level of success to something, all there is really left to do is to maintain it and permit criticism to fester and grow. I was not happy doing that and decided to be honest with myself and everyone.

Lessons from Esports Start-ups: Part 1

During my nine years in esports, I’ve worked for over 13 esports startups across six titles and alongside nine national work cultures. I’ve experienced a lot of personal successes, professional failures and lessons. Although the products and services we have put out had a varied probability of success, I often found that there were lingering issues or concerns that ended up deeply plaguing the company and the members involved.

Within this two-part series, I will draw upon my experiences to highlight common mis-steps startups approach esports, their businesses and some common pitfalls in their operations that ultimately lead to their downfall. This article will be more anecdotal and qualitative than quantitative. It goes without saying that what I may say is true for the businesses I worked with but may not be applicable to all current, past or future businesses. It’s recommended you take the lessons and advice listed here and critically think about how they apply (or not) to your work and experiences.

Funding issues is just the consequence

For the majority of the start-ups I’ve been a part of, funding have become the most frequent reasoning for the closing a company. But when I mention ‘funding issues’, that is merely a consequence of a manifested problem within the company and within expectations of all parties involved. Funding slows can occur for a variety of reasons, some at the uneasiness of the investor or because internal issues within the company show signs of weakness that do not spell ‘success’ in the longer run. That ‘longer run’ is what everyone is banking on for esports.

I often found that assessing the right investor for your start-up is as much as a dictation of your success as conveying the right level of expectations to that investor. Ranging from investments as small as X00,000+ to X0+ million, Here are some company issues I’ve encountered over the years:

Though impressively built, the ambitions of this invested esports studio was jumping ahead of its ability to deliver expectations equal to its investments. Its production quality was immense but its audience reach was poor.
  1. Invested at over 8 figures ($X0,000,000), this company (2013-2014) took over a year to establish its basis, set-up initial staffing and launch the company. 3 months later, the company faced funding issues
    • The company had a monthly burn-rate of about 2 million a month
    • The investor agree to future funding (8 figures), but made drip-payments of 2-3 million a month
    • The company closed and failed to pay its remaining employees for 4 consecutive months
  2. Invested at 7 figures ($X,000,000), this Nordic publishing corporation (2015-2016) looked to expand its current magazine business to new audiences (international millenials) and platforms (digital)
    • 9 months to launch, 4 months live before the corporation got scared and abandoned all relevant projects
    • the investor, though a stable corporation, did not anticipate potential costs and issues that come from adjusting a start-up to newly-learned aspects of the market
    • start-up brand made concessions in respect to what the corporation understood as a functioning business, but did not acclimate it to its new audience reach (international) nor current purchasing trends (free, daily, accessible – different from subscription models)
  3. Invested at 6 figures ($X00,000), this medium-sized accelerated start-up (2012-2013) looked to compete with established online league and match-making services like CEVO and ESEA. After several months, it failed to launch a working product that matched what it was heavily advertising and paying influencers to promote
    • after 6 months to prepare, it shuttered after a 1 month launch
    • heavy dependency on business development & marketing to compensate for the lack of product development
    • blew through initial investment without appropriately budgeting what’s most important prior and post-launch

It goes without saying that the issues I’ll be elaborating on aren’t the only problems these start-ups faced. Having said that, they have taught me key things when it comes to navigating this industry, mainly: investor expectations, execution of the product/service and sensible budgeting.

Investor Expectations 

All three example companies have faced a misaligned investor expectation versus actual company results and development. For #1, the investor expected a slower burn-rate, better results for potential ROI in view of the spending. For #2, the investor expected immediate success and revenue but were not ready to pivot their start-up product to further adapt to market trends. Finally for #3, the investor expected a functioning product with their current investment but poor product development halted reaching an adequate launch-time. Regardless of the level of investment, being honest about the challenges of launching an esports product/service before-hand, let alone growing it to potential revenue within a reasonable timeline, plays a heavy factor in not only receiving appropriate funding for your start-up but also justifying further investment and support down the line.

As esports goes through its growing pains, a lot more capital will be pumped in sometimes irresponsibly or, perhaps, to irresponsible ideas.

In addition, by not informing your investor with the proper expectation of ROI you are starting a relationship on miscommunication and misleading information which can hurt your credibility overtime should you fail to immediately succeed (and with most esports start-ups, your ‘success’ is lukewarm at best for the first 2 years).

Frankly speaking, this aspect requires the start-up leader to be accountable and responsible. For many years, it has felt that many start-up ideas in esports have started up because both parties wanted to get in on esports, without being reasonable on their approach or actual possibility of making a return.

Product/Service Execution

In all our examples, the concept behind these start-ups had validity but their execution was another challenge and often times, the ability to pivot makes or break these companies. For start-ups #1 and #2, their initial ideas were bold, albeit flawed, but their inability to pivot heavily determined their downfall.

For example #1, the initial idea had merit: connecting and empowering regional brands into an international cooperation and to signal that cooperation via a media studio megaphone and end-of-year convention with very high prize-pools (7 figures). The concept has a very sound viability but it’s based on initial success rather than its delivery. In other words, all parts of its tentative product needs to work for the rest of its components to succeed. Should the cooperation fail, the studio would be a heavy waste of money.

In example #1, the cooperation did not go as planned and the pivoting towards its studio megaphone execution was now even more important to achieve. The spending for the studio and now its heavy pressure to make a return proved an irreversible mistake that led to the company’s downfall. With it, it brought down two other associated start-ups (agency & live-streaming platform) and highlighted their own individual issues and challenges. With a shaky investor, a myriad of problems and poor pivoting – the companies and its members mostly dissolved.

For example #2, the product was a monthly digital magazine, something the investing corporation was familiar with in their regional market and demographic. In their testing, the concept of a magazine was very interesting for users and good feedback was given. The price-point and approach, however, was not reasonable as the product was seeking subscriptions (like their physical magazines) in a time where media, games and content were all free and accessible. The publishing company had learned what most corporations were learning for the past 20+ years: that digital media was the future and it was free (with advertising). They pivoted but did not have the human nor financial resources to maintain a quality that was set with their monthly digital magazine platform.

Very few esports start-ups brands have pivoted and succeeded. Vulcan has pivoted to their acquired brand: StreamLabs (then TwitchAlerts) and Unikrn is trying to stay in esports fantasy betting using their cryptocurrency: Unikoin Gold. For a lot of current brands, success in your initial idea is key before you can ‘pivot’ (e.g: expanding). Starting with a modest, singular and sound idea before trying to do more or other aspects of your business can mean tempering expectations from your investors, giving a clear vision for your team, brand and audience and ultimately reaching a unified goal rather than reaching minor steps to a larger objective

Vulcun’s acquisition and pivot with TwitchAlerts (now StreamLabs) is one of the few esports start-up companies that initially failed to capture an esports market but transitioned to an essential part of an even larger marketing: gaming livestreams

Sensible Budgeting

In esports, there’s often a misinterpretation that the more money a start-up raises, the more it is a success (or will be). For a lot of businesses receiving new funding, there is a perceived success that will come in the future and that company has a strong footing to be part of that success. That said, I’ve been part of a lot of businesses with many ranges of initial investment (from 8 figures to as low as 5 figures) and their investments have been with two expectations: 1. that the start-up will establish an initial success that will justify further investment to maintain presence and financial stability and 2. that the start-up will sensibly budget their company as a foundation for that ‘over-the-horizon’ success.

In part 2, I will talk about infrastructure, expansion and leadership but the amount of start-ups that overpay their executives, underpay trying to recruit expert staff and over-shoot their goals is very high. The viability of your start-up heavily depends on the timing of your entry into esports, the amount of investment you receive relative to your goals and how you wisely spend that amount. In example #1 (8-figure investment), the amount of investment received was incredibly high but the mis-spending of it was also incredibly high. Similarly, in example #3 (6-figure investment), the amount of staff hired that were not relevant to the product development also highlights poor budgeting (since the product never finished in-time for launch).

In short, be reasonable in your budgeting to ensure the viability of your start-up both for the long-term and in emphasizing your immediate goals towards launch and post-launch depending on your situation.

PS: After reading this article, you may think I’m an idiot or fool-hardy for being involved in so many start-ups that either fail to-go-to-market or faced so many obvious issues that current established companies have never faced (or have easily overcame). In retrospect, I can understand this perspective, however the precautions I personally took then and the contract advantages I negotiated to mitigate personal financial instability helped immensely. I may elaborate on this in future pieces.