Discovering the next Yao Ming or next Uber?Are investors sports agents in chinos?
Last Tuesday, I had the good fortune of hosting a discussion on the Globalization of Sport. During this conversation, we covered what makes a great athlete, where the next super star will come from, how they might be discovered and the challenges with finding great talent. This topic is widely debated from couches to bar stools across the globe.
The difference though, at this event, those answering the questions are the very people making the calls. Hall of famer and 4 x Super Bowl champion, Ronnie Lott, the standard to which all other athletes are compared, NBA super agent, Bill Duffy who discovered and managed Yao Ming and 49ers CSO and Chief Contract Negotiator, Paraag Marathe, who signed Australian Rugby league star Jarryd Hayne, amid a global media storm.
However, it was the final question from a VC that really stuck with me. Allan Chiu, partner at Xseed Capital said, “With reference to picking great athletes, and your expertise, how do we as investors go about picking great entrepreneurs?” Almost in unison, the panel replied, ‘If you work that out, let me know!’.
Having been an agent for 10 years, this is something that has been on my mind for quite some time. As an agent, you have to be able to pick talented clients to invest in, then use your expertise and experience as you join them on their path to become a superstars and hopefully achieve all their wildest dreams! So, are sports agents the VC’s of the sports world? Would a great sports agent be just as successful as an investor? Would a great investor be an equally successful sports agent?
It’s no surprise that many large sports organizations are now looking to establish venture arms — LA Dodgers, Magic Johnson Enterprizes, Fenway Sports Group and the York Family, with both the 49ers and VenueNext.
Lets look at the skill set and core functionality of both the roles.
- Highly adept negotiators
- Ability to manage the ego related swings of success and failure
- Success attributed to high market knowledge and pattern recognition
- A deep understanding of the role played in the talents’ success
- Deal flow — signing new clients/entrepreneurs and securing contracts/ funding, both highly attributed to network and reputation
- 50% coach and counsel, 50% honest, ballbusting truths
- Small by total market size (start up v investors, agents v athletes) but massive market influence
Not only this, it is the similarities in the way both markets operate. As an agent, you try and navigate the annual list of carnivals and tournaments where the next star athlete may be. As an investor you navigate a path of never ending demo days and pitch events, that promise to uncover the next Thumbtack, Uber or Cruise Automation.
This also leads me, having founded Sporple.com, to look at how the negotiations are positioned. As a founder, your company may go through 3 to 5 rounds of funding, directly exposing you to the funding process 3 to 5 times. Similarly, as an athlete, you are likely to negotiate 3 to 5 playing contracts in your career. The reality of this situation is that agents and investors are exposure to the funding and contracting process at an exponentially greater rate than a founder, as it is the core function of their roles. Therefore, their understanding of the process, ability to develop pattern recognition and interact with greater market forces, will always be in the investor or agents favor. This information and expertise is something the founder, athlete must tap into.
Getting the right agents or investors is critical, they are your true inner circle as your company grows. But we, athletes and founders, must not be fooled into believing that everything is complete when the contract of funding is sealed, with an agent or an investor. That’s when more expectations come. No excuses.
The ultimate performance outcome, is solely up to the athlete or the founder.
Embrace it. As Ronnie Lott said, ‘Be the guy with with 1:2!’.
The challenge is what we should live for.
