Ep 11: Breaking New Grounds In the Esports Gaming Market With David Chen
Join one of the Partners of the Esports team FaZe Clan, David Chen
Everyone of all ages plays video games, whether it's a mobile game,computer game, or a console game. Which is why the Esports market is constantlyon the rise. Esports has already toppled football in terms of viewership, andit will continue to grow as games get more advanced. Step inside the digitalworld with your host, Scott Harkey, and his guest, David Chen, as they discuss the Esports industry. David is the Advisory BoardMember and Partner of one of the biggest Esports teams, FaZe Clan. Learn why competitive gaming rose to prominence and how this isbreaking new ground for a lot of marketers. Listen in to find out how muchvideo games have evolved today!
We got a fun guest in this episode in a world that's going nuts, my buddy, David Chen, “Panda” as we call him, from the eSports world. He's one of the partners of one of the biggest eSports teams out there called FaZe Clan. He is also doing something in the collegiate world that he's going to talk to us about. I'm super pumped to have him. I want to dive into eSports and your background of being a former partner at Deloitte. You have such an interesting background. For our people reading, try to help them as they go through their career. What insights have delivered you to be on top of the world in an industry that is exploding? Let's give our readers a little background on you.
I came to the country when I was about two. I’m from Taiwan originally. We’re homeless. Our family was super broke and in a really bad circumstance that we came in. I had to eat bugs.
Are you serious?
Yeah, as long as we could survive.
Where did you move to from Taiwan?
To Colorado. Our first kitchen table was a cardboard box with a drape over it. It was a simple part of life. We're grateful for life. It's a beautiful country despite what everyone's trying to tell you and it was the American dream. That's where the value that’s coming in. It was one of those times where you can't speak the language. I was a small Asian kid at the time and it was difficult to understand how to assimilate into the culture and be part of the culture while also maintaining your own and trying to do what's right for your family. I didn't even have my first bedroom until I was fifteen. I didn't even know that there were box springs until I was fifteen. I thought it was just a mattress on the floor. That was part of the way my life was and how I grew up which turned me around.
At 18, 19 at a roll of luck, I went to the University of Arizona but I was a six-year senior. For most Asian kids, it should have a PhD, and the only thing I have was a dummy degree. I was a junior and the hard part was I couldn't even work a day a week at a restaurant in everything else because I almost forgot where I came from because life was so easy. It was just fun and a party. For me, it wasn't the focus of work. It was almost like you forgot everything that you went through. All those hard times when you were homeless and where we couldn't have clothes. I still have some books that I never take out to the garbage can. It still sits in my office to this day to remind me where we came from.
Was your dad or mom hardasses? How did you get that work ethic that you have now?
We had to survive. It was either that or we're going to die, or weren't going to eat that day.
Did you have brothers and sisters?
I have a baby sister. It was interesting because our lives change. When you talk about the circumstances, they sucked. I didn’t have a great relationship with my dad growing up. I can't speak the language. I'm getting bullied because of my race. I'm homeless. I’m broke. It’s very difficult for a kid but the one thing I got was unconditional love from my mother. She basically said that I could believe in myself. Everyone has the greatest mom in the world. My mother, to me, is the greatest mom in the world. She helped me with the impact of influence in saying that I could do it.
There were two crazy events that happened in my life. I was in about third grade. I don't remember the story but my mom will tell you this. I made the honor roll and gave it to my mother. They can't read it because there's no Google at the time. They don't know what it means. She says that the next day she found this paper crumpled up in the garbage can. From there, I never did well in school because it somehow had affected me down the road.
The other part was at twelve years old, our life changed. We rented a restaurant out in Aspen, Colorado. We moved there. My parents were dishwashers and waiters, living themselves up. We're very proud of what they did. We were renting a restaurant out. Ironically, one of the families, the Zaragozas from Mexico, came down and wanted us to partner with them. Thank God there was no Google at the time for teriyaki chicken recipes. They like my parents’ work. The next thing you know, we're flying to El Paso and that's how we got there. It was an opportunity. A lot of people fear opportunities and change.
Do you talk to your dad now?
Me and my dad are best friends, and that's the hope of life. Me and my dad weren't best friends until later. It took a lot of healing. I talk about my dad in my podcast and books. I hated my dad because I wanted a dad like on Full House and an American dad that would play ball with me. My dad was none of that. He was short-tempered, mean and wasn't faithful to my mother. He and my mother are still together. What I didn't realize was I need to love my dad for him. I couldn't love him for what I want him to be. My great-grandpa was a different way. He came from the war from China and went to Taiwan.
The Civil War that was in China. What’s interesting was I learned a lot from my dad for who he was. I tried everything. I hated him and yelled at him. I didn't want to talk to him. I never loved him for him. When I did, my life changed with him. Now, I asked him for a story. I said, “Why didn't you love me when I was a kid? Is it because you didn’t like me or you didn't know how?” He said, “I didn't know how to do it.” Breaking that cycle of feeling like total crap and that you're not going to be anything in your life is what I've learned in my life and try to change the value because it's so easy to hate, be mad and blame but those aren’t going to matter when you die. You do the best that you can and help as many people as you can. That's how I got there. That's my life story.
You went through that a few years ago.
It totally changed my life. I was a nightclub owner and the youngest Managing Partner at Deloitte.
I want to talk about Deloitte because a lot of people and my friends in the ad agency business consulting companies, Deloitte, PwC, Accenture are buying ad agencies. They're becoming the biggest owners of agencies in the world. Deloitte Digital for example, has 4,000 people. It’s the largest digital agency in the world. You worked and a partner at Deloitte. You were in Mexico and China doing these crazy deals. Tell us some of the stories you were telling me about Deloitte. I pictured Deloitte suited up, worth $1,000 an hour and like, “We're coming and do your consulting.” You gave me a whole new perspective.
How I got into Deloitte was I left college at 22 because my sister had skipped a year. She was a smart kid and I didn't. She went to U of A. The difference was this. My parents have had a heart attack that year and they couldn't afford it. I'm 22 and I was upset but it was my fault. I've been here six years. I left in September. I didn't finish. I'm a college dropout. That's the other crazy part as the story continues. I worked three years at my parents' restaurant to keep our home 168 hours a week back in Mexico. Our restaurant’s in Juarez. I live in El Paso and our restaurant is in Juarez, so I’m crossing the border every day. I was fluent in Spanish.
Juarez was the murder capital of the world.
It was pretty safe at the time. It's a great city. It just unfortunate things have happened, but what's crazy about that story was I worked 3 years at 100 hours a week. I was crying about I couldn't do one hour a week in college. I couldn't do eighteen hours. How ludicrous is that for me to think about that? It was straight-up excuses and laziness. The most amazing part about that story was one day, a guy named Foster Garvin, who was the Founder of Deloitte BPO over there. He had a Japanese and Chinese division because a lot of manufacturing happened over there. I'm 25, no degree, making no money driving my busted Honda and he gave me a shot. I said I could speak Chinese and Spanish. I don’t even know what Deloitte was when I took the job because that's how out of sync I was. I was fluent in five languages. What's crazy is that's 80% of the world's languages. I’m just not speaking of languages, I understand the culture. One is I understand people. That came from the restaurant world when I was sitting there being a waiter for my parents' restaurant. All my friends are getting these great jobs and I'm the only dropout out of my friends.
Did you know you were smart?
No. I still don't think I’m very smart.
I have that problem too. I didn't know I was smart. I'm like, “I am actually smart. This is cool.”
It's interesting because there's a sense of humility that comes in when you don't think you're that smart because there’s an appetite to learn. That comes from our conditions of how we grew up or we didn't finish school. It wasn't a choice. It was a hustle. The story goes like this. I get this job at Deloitte. I worked there for six months and got fired. When a firm like that hires you, they're hiring for expertise. They're not hiring you because trying to teach you.
They’re making money. That's what people don't understand about professionals. If you're working in a law firm, ad agency or a county, they are leveraging you to make money. They are using your expertise, skillset and talents to make a profit. You need to make your clients’ money. It's two-fold. It is the hardest industry in the world. It's not for everybody.
Here's the other story. I’m 25, a dropout, spent six months in college, the chance of a lifetime going out partying like these young guys do. I screwed it up because I didn't want to learn on my own. I wanted someone to tell me. I didn't know what the magic word of Google is. I take this job. I'm sitting there crying for two months, depressed and nothing's happening. I do the one thing that I did. I swallowed my ego and went in. I said, “If you can give me a chance to come back, I'll take a 60% pay cut. I'll do add value which means I'll make this much money in three months. You pay me $2,000 a month. I will prove to you that I can do this. If I can do this, you're going to sign me on for a year and I'll go from there.”
Seven years later, I become one of the youngest managing partners in the world at the firm. I created our marketing thing. We had 62% of people that were going to websites. At Deloitte, Mexico, they were talking about the company I created. I do the marketing, business and development side. The only difference was I was in Mexico working on the Asia division for Latin America. It then became America’s region. What was interesting about that story was as that was happening, I was developing everything on my own as a college dropout and as the guy who got fired. I made partner in seven years. It takes 25 years for a Master's or a PhD and I did it in less than seven.
Harvard MBAs weren’t doing that.
If I was wanting to get a Harvard, absolutely but it was the hustle. It was understanding your client what they want and that's where my value came in.
You had some crazy stories and I don't even know if we can talk about it. You were working on international money coming in for investment companies.
The ICBC bank. It’s the world's largest bank. I'm helping them with a banking license. Also, Sinopec Oil and Gas, one of the largest oil and gas companies, Lenovo, Foxcom and Hyundai. I brought in the biggest companies you can imagine.
At that level, what do people not know about global companies like that?
They have to like you. It’s the likeability thing.
That's almost everything.
It is because when you look at PwC or Deloitte, the only difference is the rankings. The prices and services are the same. They're better but it's the individual.
I’m not sure of you are $1,000 an hour minimum.
That’s what my rates were, $1,000 hour at least.
$100,000 a month retainer.
It’s easy but depending on what you're trying to do. What we did was we had a niche. It‘s what made me different. I've been very fortunate to do business in all these different countries around the world and speak the language but understand the culture in that matter. Adding value matters and that's what we did. That's the story. You can still be a partner at Deloitte, do great things, even if you don't finish the way you want to finish.
To your point, an insight that maybe we can talk about briefly is I was raised by my dad. I love my mom. Similar to you, I've had to come around. It's almost like everyone has one issue with one parent somewhere or some people don't have parents. It's crazy shit and messes you up. Because my dad traveled so much for work, in a lot of ways, I had to figure shit out on my own. He worked for Intel and is a smart guy. It's given me that hustle and that figuring crap-out-mentality. I almost don't let analytics or education get in the way. It's been the biggest blessing ever.
I didn't graduate college either so I do think the environment that you grow up and if you do have that of figuring stuff out survival mode. That's interesting as I think about companies, what they need and the people they need to. I relate with people like you. I don't think I'm that great at advertising but I've learned to be in a number of situations and be able to fit in whether I've moved in high school or whatever. If you figure that out and it becomes a huge benefit.
Being nice goes a long way. Nobody wants to work with an a-hole.
I refuse. I’m like, “I don't care how much money you have. I'm not going to allow bad energy in my life.” I finally figured it out years ago.
Those are where a lot of people get lost because they work with people that don't make them happy and that's an ego-based driven decision. Everything is ego-based.
Have you ever read Eckhart Tolle? I love that book. It's all talking about how removing ego and understanding where ego helps you. It's a survival mechanism from thousands of years of being species but if you're able to remove ego and see when ego’s at play, sometimes ego can take you down the wrong wormholes.
That's a lot of us, especially as young men and people on social media. To touch on your mom and my dad, to me it was, you have beautiful kids and I don't have the kids yet, but I will. You got to break the cycle. That's what I tell everyone, “It's not for you. It’s not about you. It's about your legacy and you're going to pass it down.” If your dad and grandpa were dicks, don't be a dick to your kid and think about why there were dicks. That's what changed my life and allowed me to have a great relationship with my dad. At the end of the day, all we wanted was our parents to love us and tell us that everything was okay. It's a human need but if you break that cycle and you are better, the people around you will start seeing it and eventually, they'll come around. I'm living proof of that.
You're part owner of FaZe Clan, which I've been talking to over in trying to understand eSports. It has blown my mind. As someone who's done a lot in sports marketing through years of being in the business, I'm like, “To see my son watching Preston on YouTube playing Minecraft, it is going to be big.” What did you tell me about eSports is evaluated at $200 billion?
Before the pandemic, in 2020 the numbers were $3 billion is estimated to be in the industry. Newzoo put out that it's going to be worth $200 billion.
What's the NFL as an industry?
The NFL industry is a quarter of those numbers. I'll give you an idea of FaZe. I came in as an investor in 2017 at a roughly $120 million valuation. Forbes put us at $305 million valuations in two years. The reason is it's a quarter valuation. It's how many people like in marketing, social media and influencers. We had 10 billion viewers and 315 million subscribers. When you're a brand and you're trying to get this 10 to 35 years old demographic, who do you go for? It works. Ryan's Toy Review, he is seven and made $24 million.
I bring up Ryan's Toy Review all the time.
That’s eSports, but bigger level because now I'm playing with athletes. I got partners like Rick Barry, Brian Urlacher, Aaron Jones and anyone else in between Flex Lewis to Paige Hathaway. They're all in these different spaces because they recognize it's a new medium. If you have $0 of $200 billion industry, you're like, “It's a fad,” so was the internet and social media.
People are like, “Why do I need to be on Facebook?” Social media is going to change the world.
You talked about the NFL. The other thing about eSports is if I want to play football, I have to ship 52 players, including coaches, let's say to London. Do the flights, rest the week and then play. With eSports, I can play them all, against somebody in China or South America tomorrow. We started to league called the North American Collegiate League. We have the Latin America League. We focus on these leagues where we have colleges from 30 countries, 220 universities playing and we have celebrities that play all the time. They're playing because they want exposure in a global area that you probably won't get unless you're doing a sick highlight on ESPN. That's where the value is and it's an influence like Marvel in the next 40 years. Now, we watch a Marvel movie and it's not dorky. Years ago, it’s dorky. Now you have a customer base that’s worth billions of dollars. That's what eSports is.
When you make money on the entertainment side, you make money on consumer goods products, including video games. You don't make money at the Box Office.
From Twitch, you can get on and get to subscribe. They pay you to subscribe. You're talking for free or on Facebook. In Twitch, you're getting paid to do that with real fans. You interact with the fans live. People want that access. It's the human emotion. The first time you met a celebrity, two things happen. Either they were cool and you loved them forever or you hated them because they were jerks. In eSports, you can talk to these guys all the time but it's global access. Seventy-three percent of the world plays video games. Your mother's playing Candy Crush. Your son's playing Fortnite. Your baby girl is playing Minecraft. If somebody is playing something, there has to be ad space in there.
The international people don't even understand the NFL.
In eSports, everyone understands. These numbers are insane. It's been a blessing for us in the eSports infrastructure. We're lucky to be a small shareholder in FaZe, playing on the NACL what we've done. NACL is a nonprofit collegiate-based eSports company. We are in 220 universities, 30 countries and been around for a few years. We're partners with the Wolverhampton Wanderers in Premier League helping them push out Fortnite kids in what they're doing.
ASU has its eSports team.
They are a top-ranked team. They're one of our closest allies and they're in our league.
There are other collegiate leagues too. How many other collegiate leagues are there?
There are a ton. People are fighting for this because the NCAA is not grasping hold.
Will they pick one?
No, I don't think they will. I'll tell you why. This likeness issue that we've heard for years since NCAA football was sued. You’ve got to pay this guy to have a likeness. You're going to tell some kid who is making $100,000 streaming that for him to play in college, that's the route to go. If you pay this kid $100,000, you’ve got to pay everyone else money.
The NCAA eSports League won't be condensed to one. There will be multiple leagues which are similar to soccer international. They have seven different deals. Americans don't understand that.
It's interesting because there's enough pie for everyone but the cool thing is access. We have these young guys who are looking for a credit card company, a hotel, an insurance company or the new car that they want to buy after graduating college. Your influence is through gaming and the impact is there but the other thing is we save lives. Many kids have reached out to us saying, “I’m thinking suicide because I felt inclusive when I'm gaming and I'm talking to my friends.” That's what a lot of parents don’t understand.
You don't hear that. You hear the opposite like video games are destroying kids.
They're not because they don't play games. The last couple of years, how did all your kids and their friends talk to each other? If they can’t get out, they have to play video games. That's how they stayed connected. That's the global world now.
They’ve talked about this and we've seen studies. I did a big project for Reebok where we studied Gen Z. It blew my mind. I'm towards the Millennials side but when I was listening to Gen Z and seeing the research, it is insane. They're calling it where they are in a digital world but in a regular world simultaneously almost.
People create avatars. We call it the multi-verse that's out there. You see it with digital currency and with NFTs.
Are you pro NFT?
I am pro NFT if it's done right. It's going to be the same followed as crypto. Everyone is trying to figure out how to do it. They need their taxation, regulations and people need to do it right.
What’s the biggest upside to NFT? Is it a collectible trading card that's one of a kind it's or it's baseball card?
The biggest thing is it means something to you. Why do you care if that person signed your baseball?
Same with video games too. You built up this online city that's worth something to you like my son. He's making these cities and like, “That's freaking cool.” Imagine your Lego piece that's incredible to humans.
One of the craziest stories as we talked to Fredrik Eklund from the Million Dollar Listing. He’s a big gamer. I'll tell you why. I looked at him and I said, “You play Sims.” He looked at me funny and goes, “How did you know?” I said, “You play SimCity because it allows you to figure out how to do development simulation.” He became a NASCAR driver from learning how to race simulations. Fighter pilots did the same thing. The US Military is doing it. When you're doing virtual swings, what are you doing? That's gaming. That's the access of eSports and gaming. It’s such a global capacity and the marketing dollars behind it are huge. We've been very lucky we got in the media space. We are on Rich TV, 124 airports and 3 countries where the CNNs are. Not only do we own the league but now we own the ESPN Pseudo League. We're dishing out information. We're getting 31 million viewers a month audited.
You're figuring shit out. You're like, “The eSports needs a highlight network. I have used my connections in China and I'm going to get distribution. I'm going to be a distributed in the airport. I'm going to create the highlight.” You do it because it needs to be done. We'll call eSports an emerging country and markets as you did Deloitte and be like, “I'm going to figure it out. I'm going to create what the industry needs and what brands, marketers and gamers want.”
We have one of the few leagues that have a show in China and Asia. We're in 34 countries, averaging 40 to 50 million viewers a month. Think about the ad revenue space that's there. The cool part about being beyond the airports is this, when you're doing ads, let's say on Netflix, you can do this and change it.
Netflix doesn't have that space. They will eventually, trust me.
You're trying to watch in the house on TV but when you're at the airports, you're just doing five minutes of CNN, Bloomberg, NACL Knows All or the Sports Center. You're intaking that. That's been the value of what we've done. We get to help the kids. We provide scholarships and hope for these young guys. In this industry, if you're not the best gamer, you can be a publicist, in legal or accounting. Every industry has to have the same people and that's what we've been able to do.
Where is the world going? I don't think there's anybody that has a better global view of where we are. We talked about being a global economy many years ago but now we're in a global economy from crypto, NFTs, to eSports. There's never been a time where globally more connected. Years from now, what's the business and the world look like?
We're going to be in a very digital and global space. When I played basketball and I play with someone who is 7’1, I'm still 6’5 and 270. eSports and gaming for the first time in the world doesn't matter your height, race, if you're handicapped, male or female. Everyone's on an even playing field. There's inclusivity. People can be part of it. If you can bring everyone in, your customer base is bigger. If you can have it as a customer to space, it becomes bigger. There's no barrier to entry is because I'm just playing against someone in China and I don't care about the politics out of there. I'm playing against somebody in South America. Now, I have a lower entry to a barrier. That is what everyone's trying to do nowadays. We've seen it.
That's why they took cricket, make it shorter and kill it. Baseball should be 6, 7, 8. The golf should be thirteen holes. They're going to make the hole bigger.
You see the movement because look at what happened to GameStop in Reddit. Who did that? Young gamers. They shifted the Wall Street market. If you don’t want to work with these guys and have them part of your brand, what are you doing? It's going to be a very digital economy and digital space.
Five years from now, people have their little chip in their hand, credit card, got their binoculars of 4D and influencers have these drones up around them. In China and New York, on the side of a building, people are playing Fortnite against each other. It's like the Super Bowl. Is that where it’s going?
It's going to happen because we're going to make that happen. It can absolutely happen as long as people are happy. Ultimately, it comes down to happiness. It does make people happy and make people feel included. The one thing I want to clarify is for me it's not a comparison of the digital world and the current world. I still buy baseball cards, go to a sports game and meet people live. It’s an enhancement. It's more brand community building. That's what the value comes out to.
Have you ever seen Far and Away?
Yeah. I love it.
It's a weird movie. For those of you who haven’t seen Far and Away, it's Tom Cruise and Nicole Kidman. He's this Irishman who comes to America and has to fight to make money. There's a scene where it's the land grab. They’re giving away land. Everyone's on this line and they're all sitting there. There's this old school pistol up in the air and you have stagecoaches, horses, people running and they're all cowards out. The guy that shoots a gun there, they start running to find the best land available. One guy is in this stagecoach and it's falling apart. He's hustling on. This other guy's hustling and everyone's trying to find their plot of land. There are little stakes where you grab it.
For people in business right now, eSports is a great example. It’s one of the biggest things. The same thing with influencers, eSports, NFTs, crypto, the new wave, new trend, we're in a Far and Away situation. Anybody in business, get ready. Go grab your land, do what you want to do, make some mistakes but figure shit out because the world is your oyster. That's what I love about it. We're going to fail and screw stuff up but there's so much opportunity.
In a couple of years, we have had a league that would run to Latin America. We're taking it to Southeast Asia. We have partners in China, English Premier League, NASCAR. We have done clothing with Mark Cuban, the Three Commas brand and Ethereum. In Consensus, we did blockchain development and the first crypto payout system to commute that out was with us. We've been very fortunate in that space. I'm teaching at colleges, SMU and Master’s University. We did the mastermind course, the Special Project at Lambton College in Toronto. We speak at different universities, even working with guys like A. C. Green and his eSports Academy and helping these young kids. I'll tell you what the cool part was. I've been talking to a lot of these basketball guys who were trying to help the youth. The most important thing is you both know you got out of home and played basketball but where do worst things happen? The hours of 9:00 PM to 3:00 AM. That's when you get into trouble when you're doing bad things.
My dad used to always say nothing good happens after midnight, and he’s right.
In gaming, 9:00 to 3:00 is the optimal hours for gamers. You can take your kids off the streets and let them play gaming. Would you have them play GT and gaming or doing that in real life?
I didn't think about something like that. I love having you on. You and I could talk for hours. We're going to talk about some media and do some other stuff. We've got to do some business. It’s a great point. During the pandemic, we’ve gotten introduced to people and we've had a ton of Zoom meetings. We've been trying to set some stuff up.
You give me a handshake and I was like, “This is the first time we met. Give me a hug.”
I do know you. Virtually, this how things happen. It’s insane.
It's an amazing part of the world. We were very fortunate to be around at this time to try to do those types of things.
Thanks for coming to Phoenix, seeing us and hanging out.
I'm very grateful.
If you like this show, please share it. We're trying to reach people who want to do business but do it differently, the new way and connect with great people. Read and recommend it. I can't thank you enough, Panda, for coming on. Check out his group with FaZe Clan and PlayNACL.com. Thanks for reading and we'll see you next time.
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