John Yao on what it takes to run Team Secret successfully

Hi John, thank you for sitting down with us for an interview. Let's get right to the point. How has the overall trajectory of esports been, more than a year after the pandemic hit the globe?

Speaking of which, how has Team Secret handled the financial stress, if any, during the same period?

Financially, Team Secret is doing better than ever. We increased our sponsorship revenue by over 26% year over year even during the pandemic slowdown, when many businesses, unfortunately, struggled during this time. Our audience continues to grow in size and engagement, so our much valued partners doubled down in their commitments to us. We were able to sign some significant new partnerships as well. 

The biggest impact of the slowdown for us has been the lack of international tournaments. Esports is a very global community, international tournaments are the universal translator that brings everyone together in the sport that we love. I’m glad to see their return this year. 

What kind of measures were taken to ensure the well-being of the org and that the financials of the company were protected?

We’ve always been very disciplined in our operations management. In fact, I would not hesitate to say that we are the best run organization in the industry. We’ve been profitable since our inception as a company 4 years ago, every single year, and we continue to increase our annual sponsorship revenues by double digits. There is a sense of “we must grow at all costs” within the industry, but that’s not how we see it. 

Esports is a long game, and we intend to win over the long term. To do this, we need sustainable growth. Iconic brands and iconic teams do not get built overnight. There have been many organizations that have built exciting brands in a few years, only to fizzle out once the realities of running a business set in. Personally, I’ve been running businesses and advising executives of Fortune 100 companies for over 10 years, so everything I’ve learned along the way we are applying to Team Secret.

Not long ago Secret announced their partnership with DMScript, a blockchain-based company. We are seeing a rising trend of such companies entering into the esports landscape, however, it is still unclear as to the additional values such partnerships bring. Could you shed some light on this?

Is esports a bubble?

We’re witnessing automobile companies like Mercedes and BMW entering into the esports space. From a CEO’s perspective, how do these companies benefit by advertising in a niche industry such as ours?

The esports audience in many places around the world actually has a higher family income than audiences of traditional sports. Young people who buy a $3000 gaming PC are exactly where I would advertise if I were running a luxury brand. That’s why you don’t just see car brands, but luxury brands like LV, Gucci, and TUMI enter this space.

From a CEO's outlook, how profitable has Dota been, especially after the changes to the majors in 2017?

Dota has never been profitable in a sustainable way. Sure, if you place Top 3 at TI, your team can be profitable that year, but beyond that, I can tell you the vast majority of teams are not profitable at all. While TI’s prize pool continues to grow, the prize money outside of TI continues to shrink. I think if you look at the competitive scene, excluding TI, for the past 3-4 years, the total financial pie has decreased every year. 

In Dota, TI is everything, financially and competitively. It is near impossible to run a company based on competitive results from a tournament that happens once a year. Before this DPC regional format was enacted to force players to compete, teams would even skip out on the first Major of the season. That should speak volumes about how the rest of the annual competitive scene is viewed. 

I suspect that’s why you see many other popular organizations decline to enter Dota, and why many of the DPC Circuit teams are unsigned. Organizations like Cloud9 would just pick up a team for TI and then dump them after the event. Why carry a team for an entire year when you can soak up the majority of the value by just focusing on the 1 month that matters. That’s not our philosophy, but I can also see the perspective of organizations outside of Dota looking in.

Let's talk a bit about the mobile gaming scene. Secret currently fields a roster in PUBG Mobile in Malaysia. How does Secret intend to capitalize on this investment from a business standpoint?

Is Mobile Gaming the future of esports as compared to traditional PC Gaming?

If you’re comfortable, I’d like to talk about the situation that took place between Midormeepo (Secret) and Ceb (OG) which took a nasty turn. I’d like to hear your thoughts on the situation

Does it bother you to see the trajectory of the Dota team, considering the fact that they start off on a solid note at the beginning of the year, and as the year progresses, the team withers. Is there personnel to help out the team on a psychological level?

I think our team will be fine. They are one of the best in the world, and their skill level and teamwork are unquestionably top tier. Once you qualify for TI, I would say the motivation drops off significantly.  In past seasons, the “schedule meta” would be to skip the first Major, and then qualify to TI through the second and third Majors. In this current regional circuit format, the “schedule meta” is kind of shifting to trying really hard to qualify for TI through the first Major, and then chilling until TI itself. Until the value of TI is balanced out with the rest of the annual competitive circuit, this type of mentality will not really change. 

I’m not saying this is the right way to approach it, or that we prefer this as an organization. But I definitely understand it. TI is worth 90% of Dota on an annual basis, maybe even more, so you cannot be surprised if the level of effort and passion and investment from the teams is also 90% focused on qualifying for TI and TI itself, and not so much on the rest of the year.