The Observer Ward http://www.observerward.com personal blog of jens hilgers Wed, 07 Sep 2016 15:58:22 +0000 en-US hourly 1 https://wordpress.org/?v=4.6.6 On loan agreements with fnatic and multiple team ownership http://www.observerward.com/on-loan-agreements-with-fnatic-and-multiple-team-ownership/ Tue, 23 Aug 2016 09:09:41 +0000 http://www.observerward.com/?p=536 TLDR; I issued a personal loan to Sannpa Ltd (the Holding company of Team Fnatic and Fnatic Gear), which was made to support the growth of the Fnatic gear business and their launch of new hardware products. The facility was structured in a way to try to avoid any conflict of interest or violation of…

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TLDR;
  • I issued a personal loan to Sannpa Ltd (the Holding company of Team Fnatic and Fnatic Gear), which was made to support the growth of the Fnatic gear business and their launch of new hardware products.
  • The facility was structured in a way to try to avoid any conflict of interest or violation of League rules and does not grant me any actual influence or control over fnatic that would endanger the integrity of Esports.
  • G2 Esports and Fnatic are competitors, have separate ownership, and operate completely independent of each other.
  • After fact-finding with Fnatic and myself, Riot ruled today that the loan agreement between myself and Fnatic creates a form of indirect financial interest between both parties, violating the LCS Team Participation Agreement, while also clarifying that the loan did not establish any kind of direct ownership or control.
  • I mutually agreed with Riot to unwind the loan between myself and Sannpa Ltd to avoid any potential conflict in the future.
  • Esports only wins if we have a healthy ecosystem, and I continue to support the growth of the Esports industry through investments of time and finances.
  • Last, but not least: I criticize myself for not being very proactive in public communication. I am going to be more transparent about my work. Please feel free to reach out to me at any time.

Loan Background

I have known Fnatic’s founder, Sam Mathews, for over a decade. I have always supported Sam as a mentor and brainstorming partner in all his entrepreneurial endeavours, well beyond his Fnatic activities.

Following his journey with Fnatic, Sam and I discussed Fnatic’s short term need for external financing to build out their Fnatic gear products, and I wanted to be helpful.

We agreed that a short term loan was an instrument that could help finance gear inventory and enable further growth of the Gear business. In an attempt to avoid conflict and preserve integrity, the loan was made from my personal account (not my Holding company which holds the G2 shares) to  Sannpa Ltd (not to the Fnatic team ltd). The loan does not grant any information rights into the books of the company or influence their decision making and was used entirely for the above purpose, as any independent auditor could confirm. As this loan was issued by me personally, there is a security clause attached to it, in the unlikely case that things go totally wrong for Sannpa. This clause establishes a situation where if Sannpa were to become insolvent and consequently unable to pay back the loan, I would have priority over potential other creditors in claiming Fnatic’s equity (and ownership) as a way to recoup the lost money from the loan. Even in the worst case scenario, I would have the option to call for an independent broker to liquidate the shares in order to get my money back without having to own the shares myself at any point.

Riot’s LCS Rules and Enforcing Esports Integrity

Multi-Team ownership, and alongside it, influence over Sports teams is an essential topic in Sports integrity. It has been experienced and debated in traditional Sports for decades.

In order to understand how influence and/or control of Esports teams can manifest itself, see my summary page here for some context.

In European football, entities/individuals are allowed to have interest in several Clubs, yet at a lower threshold, typically between a few percentages of ownership up to 50% ownership, depending on the specific league or governing body. In no way am I stating that traditional Sports have created the perfect structures or systems, but they certainly have experience when it comes to Multi-Team ownership.

As a contrast, franchise-based American Sports look much different and much more restrictive. Entities/individuals are generally not allowed to own several Teams in one Sport, yet they can own Teams in different Sports, at the same time. However, in Esports, where there is no franchise-system today, and where Clubs typically operate across multiple games (have multiple teams) and leagues, it will likely take us all collectively many more years to figure out what works best.  

It is also worth noting, that in traditional Sports, we have seen loans issued between competing teams, even to finance player transfers. Here’s an article referencing to a EUR 2M loan the President of Bayern Munich issued to Borussia Dortmund back in 2004.

Riot is taking a very strong and restrictive position on ownership and financial ties, stronger than what is typically seen in traditional Sports and in Esports elsewhere. I respect Riot’s rules, their effort in creating them, and the rationale behind them. While one can see how their rule and sole authority can enforce absolute integrity,  one might also see how these rules could restrict Esports growth, when a simple loan, so far removed from actual league and team play, structured in the way of this Hilgers/Sannpa case leads to conflict.

What is most important though:

1/ That there is clarity of both the rule and interpretation: While Sam, the Fnatic management team and I tried our best to structure this loan in a way to avoid potential conflict or violation of rules, we should have simply approached Riot as an important stakeholder first. It wouldn’t have cost much time. My fault.

2/ That there is a healthy and educated debate on this topic allowing all stakeholders including teams, leagues, players and publishers to evolve and find the right balance on Sports integrity rulings.  

In conclusion, there is no question that I will resolve the loan in mutual agreement with Riot and Fnatic. It was never my intention to violate LCS or any other applicable rules. As a natural optimist, I also view this incident as an opportunity to continue a constructive discourse on Sports integrity rules.

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http://www.observerward.com/532-2/ Tue, 08 Dec 2015 10:43:51 +0000 http://www.observerward.com/?p=532 Why nobody will steal your shitty start-up idea. I remember myself being paranoic about sharing my business plan and presentation with potential investors but finally realized that somebody just taking my idea to start the very same thing is nothing to expect happening. Focus on speed and execution and don’t worry on somebody trying to steal your idea.…

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Why nobody will steal your shitty start-up idea.

I remember myself being paranoic about sharing my business plan and presentation with potential investors but finally realized that somebody just taking my idea to start the very same thing is nothing to expect happening. Focus on speed and execution and don’t worry on somebody trying to steal your idea. The moment you start worrying about that you loose focus and speed which in turn will not make you win and get yourself less protected of potential copycats.

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Designing the first eSports Games Chart http://www.observerward.com/designing-the-first-esports-games-chart/ http://www.observerward.com/designing-the-first-esports-games-chart/#respond Tue, 27 Oct 2015 11:37:09 +0000 http://www.observerward.com/?p=507 All so often i run into discussions of what is an eSports game and what is not, aswell as which games in eSports really matter. Over time i developed my own set of criteria which defined eSports games and there relevance and started using this approach in discussions and presentations. I have now mapped it out…

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All so often i run into discussions of what is an eSports game and what is not, aswell as which games in eSports really matter. Over time i developed my own set of criteria which defined eSports games and there relevance and started using this approach in discussions and presentations. I have now mapped it out in a chart published on my blog. As always: This is certainly not the ultimately best way to look at it, but it certainly feels like a pretty good way to qualify the eSports Games Landscape. Please feel fre to share your critic and feedback!

eSports Games Chart

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http://www.observerward.com/494/ Tue, 21 Jul 2015 09:02:02 +0000 http://www.observerward.com/?p=494 How to pitch? Here's the slides that make up a great story A pitch for your startup is best told as a well defined story starting from slide one to the very last slide. The story should be short, concise and exciting. A story that wants the listener to learn more about the startup. This beautiful article here uses…

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How to pitch? Here's the slides that make up a great story

A pitch for your startup is best told as a well defined story starting from slide one to the very last slide. The story should be short, concise and exciting. A story that wants the listener to learn more about the startup. This beautiful article here uses Elon Musks Tesla Powerwall pitch as a reference to the most important chapters/slides of your story. The way the story is told by Elon Musk it manages to explain the problem and the solution in a very simple and easily understandable way. It manages to emotionalize the audience and makes them want to be part of the solution. The keys to success: Build a journey / tell a story , emphasize problem and solution, simplify to the max.

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http://www.observerward.com/strategic-thinking-an-essential-skill-ceo/ Thu, 25 Jun 2015 11:24:41 +0000 http://www.observerward.com/?p=483 Strategic thinking - an essential skill of any CEO In order to assess and iterate the company’s strategy going forward it’s of utmost importance to have the fundamental skill of strategical thinking. It is a rare skill though as it comprises of many ingredients and most importantly requires abstract thinking. Here’s a quote i found which…

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Strategic thinking - an essential skill of any CEO

In order to assess and iterate the company’s strategy going forward it’s of utmost importance to have the fundamental skill of strategical thinking. It is a rare skill though as it comprises of many ingredients and most importantly requires abstract thinking. Here’s a quote i found which defines strategic thinking really well:

“The essential part about strategic thinking is not about theoretic tools but about developing one’s thinking, feeling and acting in a rational as well as emotional way; it is about flexibility, professionalism, worldwide openness, clarity, but also calmness, inner strength and firm willingness.”

– Hinterhuber (1990, Author on strategic management)

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http://www.observerward.com/481/ Mon, 22 Jun 2015 21:13:32 +0000 http://www.observerward.com/?p=481 The next sports empire is built on eSports In April 2015 Prashub Menon published this great article on Redef. It contains lots of data points, great references to esports history and a bold prediction of where esports is heading.

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The next sports empire is built on eSports

In April 2015 Prashub Menon published this great article on Redef. It contains lots of data points, great references to esports history and a bold prediction of where esports is heading.

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New tournament platform gets $ 750K funding http://www.observerward.com/new-tournament-platform-gets-750k-funding/ Mon, 22 Jun 2015 16:28:04 +0000 http://www.observerward.com/?p=477 Arena Online is the name of a new eSports Tournament platform that just announced a Seed round of $ 750K which already took place in April this year. Arena Online is focussing on League of Legends first and seems to be going the direction of paid micro tournaments with deep statistics based on the Riot Games API.

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Arena Online is the name of a new eSports Tournament platform that just announced a Seed round of $ 750K which already took place in April this year. Arena Online is focussing on League of Legends first and seems to be going the direction of paid micro tournaments with deep statistics based on the Riot Games API.

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http://www.observerward.com/468/ Mon, 15 Jun 2015 04:33:05 +0000 http://www.observerward.com/?p=468 If you are not embarrassed by the first version of your product, you’ve launched too late. — @reidhoffman

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If you are not embarrassed by the first version of your product, you’ve launched too late.

— @reidhoffman

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http://www.observerward.com/464/ Sun, 14 Jun 2015 23:15:31 +0000 http://www.observerward.com/?p=464 Engaged users monetize better - the case in eSports Great charts by Reasearch company EEDAR demonstrating how the deep level of engagement by eSports players translates in significantly greater spending on their games platform.

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Engaged users monetize better - the case in eSports

Great charts by Reasearch company EEDAR demonstrating how the deep level of engagement by eSports players translates in significantly greater spending on their games platform.

Hardware spending eSports players

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Tech Bubble or not – this graph matters http://www.observerward.com/tech-bubble-or-not-this-graph-matters/ Sun, 14 Jun 2015 22:44:45 +0000 http://www.observerward.com/?p=460 With all the talk on Bubble-or-Not in the Tech industry i found this graph refreshingly insightful. The only aspect to be considered here additionally is that most of the growth on Internet Users now is happening in Emerging or developing markets while the most attractive markets/audience have maxed out.

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Internet Users x Tech fundingWith all the talk on Bubble-or-Not in the Tech industry i found this graph refreshingly insightful. The only aspect to be considered here additionally is that most of the growth on Internet Users now is happening in Emerging or developing markets while the most attractive markets/audience have maxed out.

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