Davis

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Founder Interviews: Marty Strenczewilk of Splyce

After years of working in the entertainment industry, Marty decided to venture into the unchartered territory of esports, and has since built one of the most successful teams in the industry.

What’s your background, and what are you working on?

I graduated with a theatre degree and moved to New York City with stars in my eyes. Ten years later I had worked on some of the coolest projects I could have imagined across some of the most storied theatres in the world, but I was flat broke. So I retired from entertainment, moved back home to Rochester, NY with my wife to have kids, and got a “real job” in manufacturing. Worked for 5 years in environmental, health and safety management, working my way up from entry-level to running EHS for 26 facilities (1400 employees) for a billion dollar company. I really truly thought I was done with entertainment, but found myself at night pulled back into video games like I had as a kid. Before I knew it I was writing blogs about my new found love for competitive gaming (no one even said ‘esports’ often back then), helping to put up tournaments online and moderating community forums. A startup out of Texas asked me if I wanted to help them launch a small production studio and I ended up leading one of the most successful esports broadcasts of that year (2014 — not many stadium shows quite yet).

Fast forward to today and I am the co-founder and CEO of Splyce, one of the worlds most prominent multi-game organizations in esports. That means we are like Madison Square Garden for video games in the digital world. We have teams in different games, we make lots of content, we fight for championships, we monetize very similar to traditional sports (tweaked for digital) and we even wear jerseys and play in stadiums. It’s a pretty wild thing when I tell people that ESPN regularly texts me to try and get leaks on our rosters or that our players compete on TBS on Friday nights.

Since our inception in 2014, our company has more than doubled its revenue every year while keeping the burn rate steady throughout. This will lead us to being a very economically stable company in 2019, a very rare thing in the world of esports teams.

What motivated you to get started with your company?

When I moved back to Rochester after a decade in NYC, I was pretty distraught with the idea that my life in entertainment was over. The old mentality was that there is no way to make a living in entertainment if you don’t live in one of the few hubs like NYC, LA or London.

It’s Fall 2014 and I’m working a job I’m not really enjoying, while missing entertainment, having just finished working with the esports startup out of Texas on the side. My younger brother was living far away and felt he couldn’t move back home because job prospects for our interests in Rochester weren’t many. Then it struck me — we live in the digital age. Who says I have to live in the valley or NYC or LA to start a company? I was an absolute nut about esports (I watched every single day for hours) and saw that our industry was desperate for so many pieces of infrastructure that I knew I could bring from both my entertainment background and my time spent in executive leadership of a larger corporation. Plus, I figured if I made a company I could employ my brother and he’d move home which would be awesome.

At the time the game Hearthstone was massive. The problem with it competitively was that a ton of companies were fighting to win the battle for who would host the most prominent tournaments for the game. So the events were all the time — day or night, any day of the week. I found myself constantly turning on Twitch or other streaming sites and the event would be almost over. So I called one of my best friends from college who also loved gaming and pitched him on us making a TV Guide for esports. He loved it, and we started working on yet another fun side project for the two of us.

We start building this on the side — he’s front end design, I’m the industry expert and we hire a back-end developer — but it isn’t yet a business. So in January 2015, I decide to talk to our local incubator from RIT (where we both went to grad school) and see if they can lend some advice. We’re both still working full-time jobs at the time, and I have 3 kids by now. Yes we are a little nuts. The head of the incubator convinces us to enter the local business plan competition and I recruit my wife to work on the business side of things (she’s so smart and has NYC business experience). Then — we freaking WIN the competition and someone hands us a big ass check for 25k!!!

By now you’re thinking “I don’t get it, I thought he had an esports team”. We had no clue that’s where we’d end up, I just thought we were making a website to find when tournaments were on. Here we are mid-2015 with about 17k left of our winnings and we’re debating sponsoring a pro team — getting our logo on their jersey. I’m talking to a colleague who runs a small tournament and he says I should just get a team. At first it sounds crazy, but then I realize he could be on to something. So I call this one Angel investor who had been interested in us after the competition and say “I have this opportunity, but I need 10k. Here is what it is” He is a younger guy, so he watches Twitch every day and he gets it. Says “Give me 24 hours”. The next day he calls and says he’s in, so we go get the team in Counterstrike. It only took us a matter of a few months to realize that we had hopped into something at the absolute perfect time by pure chance. A mere three months later teams are formed by Rick Fox (yes THAT Rick Fox), the owners of the Memphis Grizzlies, the owners of the Sacramento Kings and many other folks with WAY more resources than we had. If we had started a few months later, the barrier would have been massive. Started a few months earlier and we would have run out of runway. So we decide to shut down the website and focus all of our efforts on being a top pro team.

What went into building the initial product?

So I’ll skip the website portion of things, since we shifted pretty quickly to what we are now. Building an esports team is still today something that there is no right way to do. Unlike two MLB teams, who at the end of the day both play baseball, we are multi-game teams made up of various teams from different games and no two of us are alike. So strategies will vary widely.

We went for the approach at first of trying to be really competitively successful. We started winning lots of trophies in games, which helped us get sponsors to want us to use their products (and they were willing to pay us to do that!) The problem was that our popularity wasn’t growing the way it needed to be to keep up. Right now there is a massive opportunity in esports where most of the world has no clue it exists. So you have all these people who are like 4-year-olds finding out about basketball for the first time — you can get them to pick you as their favorite team. But in a couple of years, this opportunity will be gone. So we knew we had to shift.

This lead to a heavy focus on content. We went out and hired a great guy from traditional content (MTV, Olympics) to come help us build a digital content division. Turns out that esports is still figuring out how to do content too, and as easy as we thought it would be to port the model from the Olympics or music or traditional sports, we were way wrong. So many things got in the way. We’re about 16 months in and still trying to figure out the right fit for content, though we’re more and more confident every day that it’s an incredibly important piece.

During all of this, we had a few challenges — I left my job to work fulltime on the business (with a mortgage and 3 kids) but my wife had to balance raising the kids and working on the business and our other co-founder kept working full time (he is just finally leaving that job this month after balancing the two for years). Add to that we were in Western, NY where it’s much harder to raise money and add to that esports teams being a SUPER weird investment to VC’s. We found very quickly that lots of people loved us, loved the company, loved what we were doing, but could not for anything figure out how to make sense out of investing in what was essentially a sports team. So money troubles were a regular part of the business early on, as we tried to build out a team of great folks to grow the organization.

One of the hardest decisions we struggled with was scope. We wanted to do EVERYTHING. But you have to pick your battles when it comes to not just where you spend your money, but where you spend your focus as the leaders of the company. Definitely made the ‘spread to thin’ mistake a few times and every single time quality suffered because of it.

How have you attracted users and grown your company?

So in the early days, I read and watched EVERYTHING out of the valley. And I truly took to heart doing things that don’t scale. For example, for a while during the early website days I would literally spend two hours every night doing advanced Twitter searches for likely esports fans and tweeting each one to tell them about our product. I got blocked a whole bunch. But I also made a bunch of fans who were gracious.

Since then we have focused on really doing things better than our competitors to grow our company. We run team operations to the highest level of professionalism, so our players tell other players how awesome it is to play for us. We respond to every single fan message on any medium (it’s freaking HARD but worth it). We ask our fans what they want, and use it to iterate on things to make their experience better. We gave our business partners such incredible experience of professionalism that they came back for more and told their colleagues at other sponsors vouching for us.

The best thing I’ve learned along the way — and it’s been said 1000000 times but you’ll still probably ignore this — is freaking MEASURE STUFF and actually ACT ON IT. We talked about measuring — and sometimes we did measure — but rarely did we measure consistently, or really act on the data we had. We definitely used up way more resources on things we could have moved on from or iterated on by not using data well for a long time. We are working hard to fix that now.

What’s your business model, and how have you grown your revenue?

We make money like a sports team:

  • League revenue sharing, which we’ve played a leadership role in helping to grow by negotiating with the leagues
  • Sponsorships from brands to use/promote their products
  • Merchandise sales of stuff like t-shirts, hats, water bottles, etc.
  • % of revenue off in-game items that have our IP on them
  • Licensing content or selling to brands to have their brands featured in content
  • Prize money from tournaments
  • More new ways we’re still developing today — our industry is so new that we’re figuring out how it monetizes

So early on it became apparent that we were going to need to work our way up to getting paid. We’d take on a sponsor, do incredible work for them in exchange for product only in order to get to paid work on the next contract. We’d enter a league and help grow it, negotiating revenue later on as things would grow. It’s a bit different than a traditional tech startup in that way.

Growing our revenue has really been about growing the industry itself. Unlike a tech company, we cannot have winner take all (it’s sports, we need competitors). And we already have hundreds of millions of viewers in our industry. Unfortunately, we monetize them at a very low rate (NFL is $46 per fan per year, we’re at about $3.50). So a lot of us teams at the top have worked together to grow the pie for everyone. If only one of us succeeds, no one succeeds in this business.

One piece of advice I’d give is to really spend time on the materials you sell with. In the beginning we were trying to sell B2B with the same deck everywhere. What a difference it made when we knew our customer and their needs SUPER well and custom tailored a deck and solution just for them. Going that extra mile means a lot and is more likely to land the sale.

What are your goals for the future?

Goals for us as a company is to become the most prolific esports multi-game team in the world — bigger than the Yankees and Lakers combined (because that’s essentially what a multi-game org is).

Goals for the industry is true sustainability for all parties (tournament organizers, teams, players, support infrastructure). We are running at 10x the speed of traditional sports when they started up but the opportunity is massive if we get it right.

What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?

Mistakes I made:

  • Taking too little money. God being broke was the worst. We talk a lot about not taking too much money, but also too little is awful too.
  • Firing too slow. We had some bad hires early on and we let them linger. I felt bad because they worked for peanuts early on, but the truth was that they were causing others in the company to get frustrated by working next to those who didn’t work as hard as they should
  • Taking on revenue streams solely for the sake of the cash in the door. We have a couple deals we did where by the end we knew that it was such a resource drain and outside our core competency.
  • Not trusting people around me. I micromanaged like crazy. Sometimes it was warranted, but I also stunted our growth and our people’s growth by not letting them really lead things and figure it out. I’m still working on that today.

Have you found anything particularly helpful or advantageous?

  • Having an awesome board. They literally support me in so many ways and truly believe in me. It’s crazy how much it means just to have their true belief in you — that alone helps in the darkest hours
  • Finding great advisors but knowing that most times they just let you cry on their shoulders/listen to your excitement at good things. You have to make your own decisions, but they are great to talk things out with.
  • Never being too far in to keep learning. We are in year four and I’m taking Startup School again (listening to it online). I’m even listening to parts of lectures that we are WAY past to see what tidbits I can pull out for us.

What’s your advice for entrepreneurs who are just starting out?

I had to give a speech to the class that graduated after us from the incubator, and I wrote this top 10 things for them — hope it’s helpful for you as well:

1 — Everything takes longer than you think — give yourself more time than you think yo you need

2 — Hard work/passion will beat a ‘good idea’ every time — I’ve seen loads of people with good ideas never do anything because they didn’t do anything with it

3 — You never have enough money — you’ll always raise too little or want more to do more stuff with (accept that fact)

4 — A strong community matters — get people around you who can support you

5 — You have to know why your business exists — if it’s just to ‘make money’ you will fail. Making money is a result, not the reason, for your business

6 — No one can sell your product better than the founders — if you go out and hire a ‘head of sales’ they will never be able to sell your product like you can

7 — The world is truly flat — you can run a business from anywhere and succeed — gone are the days of needing to be in Silicon Valley/NYC/LA to succeed

8 — Trust your gut — sometimes numbers don’t mean shit and you have to know when to go with your own feeling and when not to

9 — Hire amazing people — you should want to spend time with them and they should wow you at how good they are at what they do

10 — Don’t go out to try and make something because you want to be a founder. Become a founder because you have to and nothing else will satisfy you and you have some burning problem to solve

Where can we go to learn more?

I love talking about building our company and having discussions about it on the internet! Please follow me on Twitter @Lazerchickenzzz. I’m quite active there.

Our company is @Splyce on pretty much every social platform.

Please do feel free to ask questions in the comments and spark up a lively debate! Thanks for reading and hopefully my journey can help yours, as so many past founders sharing their stories helped me.

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