The eSports Startup Path
It’s the same as every other startup.
Electronic Sports (eSports) is all the rage these days. But it’s a big mess. There are a couple of heavy-hitting players essentially driving research and development for the industry—companies like Twitch, Major League Gaming, Dreamhack and Riot Games are driving innovation and growth but there is stagnation in the startup sphere of eSports.
A lot of entrepreneurs I speak to are simply too fearful of the size of their eventual (pre-established) competition. But there are a couple of important aspects being ignored; these behemoths were all startups at one point, and the reason they are where they are today is because they’ve become the de facto experts in their given field.
The four companies I mentioned are all in the last two stages above—they’re all at a stage when they’ve already validated their run of business, have gone to revenue, have proceeded to optimize their run of business, and are now concentrating on dominating their share of the market.
You’ll notice these four companies also cover the current spectrum of services surrounding eSports: streaming tech (Twitch), event organization (MLG/DH) and content/marketing (LCS). Loosely, those are the areas available to an eSports startup seeking to create innovation, but more importantly, each of the above has chosen one aspect of eSports to be better at than anyone else — and their success is directly attributable to their ability to defend this position (through superior execution). The worst strategy is to try to do too much; because then you end up doing many things badly instead of one thing really, really well.
The path of each of those startups was to identify an opportunity and deliver a solution that disrupted what was then available. For example, Twitch.tv was built on the insight that people want to watch other people play games (they must have seen this off YouTube). But it delivered this solution by creating technology of its own, that would help it position Twitch as a category leader. The common theme here is that these companies went through the same steps (read: stages) your startup will need to go through—over a period spanning in years, not days or months.
In the ideation stage, startup founders seek to identify the opportunity but often place the cart ahead of the horse when it comes to executing on the idea.
The problem is, ideas are worth nothing if not executed properly.
The table above clearly establishes the correlational relationship between your startup ideas and your ability to execute on those ideas. Obviously, a bad idea will simply never come to fruition—the same way an amazing idea with no execution will yield (roughly) equally catastrophic results.
Twitch’s streaming technology is a great idea (15). But it is the Twitch team’s great execution ($1M-$5M) that has helped it raise over $35M in Venture Capital (15 x $2M thus far). The better they keep executing, the more easily they can continue to attract the dollars they need to grow their business to the size of the founders’ vision (at the appropriate pace).
A new startup should strive to reach strategic milestones the same way other eSports companies have, with incremental pushes supported by the right amount of capital and a value proposition that actually disrupts the industry and moves it forward.
AirBnB founder Brian Chesky has a great quote that underlines a key component of the above companies’ successes:
3+ years for Twitch
6+ years for MLG
8+ years for Riot Games
AirBnB didn’t start big. They started local, and hustled to reach the milestones they had prepared for their company. It took them more than 3 years (1,000 days) to reach product-market fit (the stage at which what you’re creating is exactly what your customers are looking for).
As a result, new eSports ventures should strive to create evolutionary value for the eSports industry and to keep thinking big, the same our three example companies have in order to secure their market share (or monopoly, in some cases).
Concentrate on adding value, answer a big pain with a really simple, really consistent solution and enunciate plainly why the value you’re creating is worth paying for. Once you’re on your way to doing these things, it should be pretty obvious what the next 1,000 days of your company should be in order to get to a point similar to that of Twitch, MLG or LCS.
If not, then go back to the drawing board.
Special thanks to @Drekkonis, @ES_JohnClark and @CoreyDavin for proof-reading.
