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compLexity founder Jason Lake talks League of Legends franchise value, esports growth and North American CS:GO

Jason Lake compLexity
CompLexity Gaming founder Jason Lake talks about esports growth and North American Counter-Strike

As esports continues to grow and change, fewer people have a more holistic perspective than compLexity Gaming’s Jason Lake.

He’s been the staple of the organization — and esports — since founding compLexity in 2003. CompLexity has teams in Counter-Strike, Dota 2 and Overwatch and had two previous stints in League of Legends.

Lake is active on Twitter in following esports’ growth and all that has come with it. Slingshot’s Vince Nairn had the chance to talk to Lake for an extended two-part interview. In Part 1, Lake talks about the industry’s rise, the League of Legends landscape and what to make of the North American Counter-Strike scene. (The audio of the interview will be released with Part 2 later in the week.)

Vince Nairn: What do you think the general state of the industry is right now? You’ve been in it for longer than most. What’s your take on where esports sort of exists right now?

Jason Lake: In general, I think the industry is really at a very exciting place in its growth cycle. It’s endured a bit of a roller coaster rise, especially around the 2008 recession and the fall of CGS. But in the last couple years with the large influx of capital and interest from sports teams and investment groups seemed to really revitalize the industry. It’s an incredibly compelling time to be a part of esports. For years, we did it because we loved the games, and that’s still the underlying root cause for why we’re here. But now billionaires are paying attention to our game. Sports stars are paying attention to our games and we’re filling stadiums. So it’s really a hell of a time to be somebody who really loves gaming and esports in general.

VN: At compLexity, you guys have had your hands in a bunch of different games, but what’s interesting is that you guys left League of Legends before it really started to take off. How did you guys come to the decision at that point, and likewise, is it something you would ever consider getting back into?

JL: Oh, League of Legends. Talk about the thorn in my side. The game has not been good to us and we have not been successful in League of Legends (laughs). It caused so many other problems because of the success of the game. It’s a great game, and Riot has done such huge things with the game around the world. We’ve obviously been in the game two different times. Both times we were in it with young, scrappy teams, on what I call shoestring budgets, to be honest. And both times we got relegated. First time was just a combination of roster difficulties. The second time, quite frankly, had a lot to do with a girlfriend. I often joke that great teams are one girlfriend away from disaster, and we proved that assertion right with our second team.

I’m not gonna point fingers or name names, but it was incredibly frustrating. And then at about that time when we got out of League of Legends, it was getting so expensive to be competitive in the scene and to even buy your way in the scene. People were already starting to pay mid-six figures for spots at that time, and we just didn’t have the cash flow. Hindsight being 20/20, I would have dropped other divisions and gone really gung-ho on League of Legends because had I known it was going to be as successful as it turned out to be, we would have prioritized it much more than we did. I’m still very interested in the game. I’m interested to see what Riot’s gonna do with franchising. Should a situation arise where we can find the right partner and buy a franchise, or become involved with League of Legends again, we would absolutely jump at that opportunity, and I hope we get the chance.

VN: One thing hastr0 from EnVyUs said, I think he tweeted it, after they survived relegation is that simply holding an LCS spot is more valuable to his organization than if his Counter-Strike team would win three Majors. Is that a big change from when you were in League? And if so, how has the value of a franchise increased as much as it has?

JL: League of Legends, in general, has been a large part of the reason that so much interest and financial investment has poured into the (esports) scene over the last couple years. When we start filling up stadiums, which League of Legends was doing even before Counter-Strike, that garners a lot of attention. And the giant amount of interest around League of Legends has really been a catalyst for the explosion in esports interest recently. Now the value of the slots has actually gone up to a place where some people wonder if we’re in a bubble. If you’re spending $2-2.5 million for a spot and a roster that can be relegated, that’s a hell of a gamble to take. And I think that’s part of what Mike was alluding to.

Until they get to franchising, League of Legends is an expensive gamble, particularly in North America, where you just play not to get relegated. Everyone is in there investing lots of money, and the majority of them are struggling just not to get relegated. You saw what happened with NRG. They invested seven figured and they lost that investment in a very short amount of time. When investors and sports teams and other intelligent people see that loss, it raises major red flags and alarm bells start going off. They don’t like spending a million dollars to have a video game team for less than a year, right? It’s not a great way to build a company and get return on your investment. So when people are spending what the (Milwaukee) Bucks spent — rumored to be over $2 million dollars for a slot — in this environment, that’s getting dangerously close to a bubble.

Now when a franchise (agreement) comes in, you’re buying a tangible asset you actually own and you have a contractual relationship with Riot, versus the incredible lack of leverage teams hold currently. That will be a different story, and I think they’ll be able to justify pretty expensive entry fees. But right now, League of Legends is more exciting than downtown Vegas on a Saturday night to see who’s gonna keep their spot and who’s gonna burn that million dollar investment. And I was really happy Mike kept his spot. He’s a great guy. He’s worked really hard. I was really happy Liquid kept their spot. I know a bunch of people on the Challenger teams that were trying really hard to get in, so it’s where you’re really torn. You hate to see anybody lose.

But just as a businessman, getting that sick feeling in the pit of your stomach when somebody loses that investment in esports of a million dollars or more, like what happened to NRG. It’s big business, it’s going to continue to be big business, and League of Legends will definitely be a force in esports for years to come.

VN: compLexity has been a solid, notable, mid-tier sized organization here in North America, with teams in a handful of games. How do you go about figuring out how to monetize in that position? And what are some of the challenges you face compared to some of the bigger brands in North America? Your Cloud9s, TSMs, OpTics…

JL: To be transparent and just really honest with you, it’s become incredibly difficult if not impossible. One of the things we really pride ourselves on at compLexity is we’re not just old school, we’re a huge part of the old school. We helped develop and build esports in North America, and we’re very proud of that legacy. We’ve survived many iterations of esports. We’ve survived many different games and been successful across many different titles.

But the way of living within your budget and running a bootstraped old fashioned business, on the team side of esports, is going the way of the dinosaur. I like to tell people when I meet with investors and kind of do consulting on the team side, it’s really go big or go home. You’re not competing with businesses that are profitable, for the most part. You’re competing with investor-funded, new organizations that have driven the cost of players through the stratosphere. In Counter-Strike, for example, what’s fairly public knowledge: Counter-Strike salaries went from $2,000-3,000 per month for a player that’s very compelling and winning international events to $25,000 per month for a compelling player who’s winning international events. When you see six, seven, eight, nine-fold increases in your cost of doing business, regardless of what that business is, that is a significant change in the ecosystem. And that’s exactly what we’re seeing.

So as a mid-sized reliable organization that likes to do business with integrity, that likes to try our best and really treat players fairly, and interact with our fan base, it’s a challenging time. I’m out there nearly every week speaking with investors and professional sports teams and high net worth individuals trying to find the right fit for us because it is 100 percent our intention to partner with a group or investor to maintain our competitive standing within the industry. Not only that, but it’s fully our intention to find the right partner and actually become one of the more powerful and most notable esports organizations, not only in North America, but the world.

We’ve kind of sat quietly by, doing the old fashioned business model and watched a whole lot of super talented people slip through our fingers because we didn’t have a big enough checkbook. And it’s my goal to turn that around in that very near future. I’m hoping this year to be able to announce a very compelling partnership that’s gonna see us get back to where we were in, say, 2004 to 2008 as one of the shining stars of North American gaming.

VN: One thing I’ve noticed about you as somebody on Twitter is it seems like you’re someone who consumes a lot of esports news. It’s been fascinating to see on Twitter the rise of these “esports experts” or “consultants.” And it seems so easy for things to be exaggerated or taken out of context because we’re still dealing in this industry without a ton of history. So how do you go about trying to weed out that misinformation, exaggeration, etc and try to give people — whether that’s your Twitter followers or possible investors — the right info to understand?

JL: That’s a great question, and it’s becoming incredibly difficult just to stay on top of this space. I was talking to someone yesterday and used this analogy: It’s like trying to get a sip of water from a firehouse. We live in an age where information is so ubiquitous and so overwhelming at times. If you want to be an “expert” in any field, you need to have a serious amount of dedication. I spend at least two hours a day, seven days a week, ingesting and digesting news and business information, both public information and not public information, just to be competent enough to run my own business and give wise consultation to the people I work with.

I don’t call myself an expert. I believe the term is a bit silly in a space like this. I think I know a good bit about it. I think I’ve got more experience about it than your average bear. And it is kind of comical people that have come in the space pretty recently and all of the sudden they’re advertising themselves as experts as a way to make a buck. It’s very much buyer beware, and if you’re in this space, coming in to invest and build something or do a startup — whatever it might be — you really have to do your homework and make sure you’re working with the right people.

It is a minefield out there. Right now, we’re the hot girl at the prom and everybody wants to dance. Everybody wants esports this and esports that, and I just tell people to make sure you’re dealing with people who have a proven track record and work with integrity. Do your homework. Just because a guy is posting a lot on LinkedIn or Twitter doesn’t mean he’s not just regurgitating information that’s already public and calling himself an expert.

VN: Moving into some more game specific questions now, what do you think of the landscape in North America for Counter-Strike? It seems like it comes up all the time. Cloud9 and OpTic both had great runs last year, but it seems like we’re back to this kind of general malaise about North American Counter-Strike. What do you think about the scene?

JL: Counter-Strike is the game that got me into esports, and it’s always been very near and dear to my heart. So the past couple years have definitely been a bit depressing for me. The generation of Counter-Strike players North America has produced to compete in Counter-Strike: GO has been less than ideal. Obviously, there is talent and there are some really fantastic players that have come out of North America.

But because of the number of teams now, it’s nearly impossible to get them all on the same team at the same time to field an international contender. But with the size of the North American player base, it would be logical to think we could form three or four world class teams, as you’ve seen come out of Europe, at any one time. I have my own theories for why that hasn’t happened. It has to do with attitudes and work ethics. It has to do with an entitlement mentality and an overall lack of maturity, but a lot of these people are very good friends of mine. So I don’t want to cast too many aspersions or throw stones.

We’ve struggled at compLexity, obviously to maintain a roster and level of play that we wanted. We recently just brought on Slemmy (Alec White) because in-game leaders are very hard to come by in North America, so we’re much more optimistic heading into the second half of the year. But it’s been hard, man. To watch North America get shit on over and over and over again and realistically have a hard time even breaking into the top eight teams in the world has been depressing. I wish I had the answer. I wish I had the money to make it happen. We just have to try to stay optimistic. We have to try to continue to develop new talent and support guys who are coming up through the system and hope there’s light at the end of the tunnel.

VN: And the craziest thing was you’re thinking at the end of last year: Cloud9 wins ESL Pro League. OpTic wins ELEAGUE Season 2 and finishes second at ECS the next week. And then all of the sudden it’s right back down.

JL: Yeah I don’t know if you saw Hiko’s vlog, and to be honest, I even mentioned the owner of Boomeo, a good friend of mine, Simon, and said this perfectly demonstrates why North America is not good at Counter-Strike. We have players arguing over where they’re sitting. And I’m not even pointing fingers at that particular team. That is an endemic, cancerous, toxic attitude that pervades almost all of North American Counter-Strike. These guys just can’t get along. Over and over again, we see people fighting and bickering and just a lack of maturity.

If they could go out and be 27, 28, 29 years old and have to go out and get a normal job and have to hustle and grind every day and bust their ass for a shit salary, and then come back to play Counter-Strike, they’d have a better perspective on life. “I’m getting paid thousands of dollars to play Counter-Strike and travel the world! I’m not gonna fight over who I sit by. This is freaking fantastic!” But they’re young, and we were all young, and they make mistakes when you’re young. And you just watch that vlog by Spencer, and everything he said in there to the best of my knowledge is 100 percent true. I’ve seen that and so much more, and that’s why North America is not good at Counter-Strike.