Super League Gaming (SLGG) CEO Ann Hand joins The Stock Podcast to describe the investment case for her company. Esports is a relatively new commercial market, but it’s growing rapidly and there are numerous ways for companies like SLGG to capitalize on that growth. Tune in to here Ann describe a really interesting investment story.
At the time this interview was recorded, SLGG’s market cap was $23M, cash and equivalents were $13M, and the company had zero debt, which puts the enterprise value at approximately $10M.
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Learn more about Super League Gaming by visiting their investor relations page.
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Interview Transcript
Participants
Ann Hand, CEO of Super League Gaming (SLGG)
Nate Abercrombie, The Stock Podcast
Interview Transcript
Nate: Ann, thank you so very much for coming onto the podcast, it’s going to be great learning about your business.
Ann: Absolutely, happy to be here.
Nate: Happy to have you, and very happy to learn about your business because it’s just a very different business model for me, so interested in that. But before we get there could we just talk about your background a little bit? Where’d you come from?
Ann: Yeah, sure. I grew up in the Midwest of the States, did what most people do out of college back in those days, my goal was to go work for a big company. I first started out with Mobil Oil and then I moved on to McDonald’s, and eventually went to BP. Great training, it made me fit in a lot of different functional types of roles, all in the interesting of grooming me to be a generalist and at some point a large P&L owner. My last couple jobs with BP were in London, I ran a global B2B to C business unit, liquified gas, that was in many countries around the world, about a $3 billion P&L with about 3000 employees. Then my last assignment there I ran all of our global brands. BP owns a lot in their portfolio, ARCO, ampm, and Ralph’s, all kinds of food convenience brands, and of course, business to business brands as well.
Ann: Then along the way, about eight or nine years ago I met some venture capitalists. They were coming and poaching executives from energy companies. They had put a lot of money in clean tech and they were looking for people to run those businesses. I think it just seemed exciting to me after all the time in large cap companies that I would get a chance to in some ways do something that was very similar to what my father did. He was a serial entrepreneur. He was the first franchisee ever of Fuddruckers, the restaurant chain, so I was used to being in a household with somebody who was trying to start new businesses, scale things that were small. I jumped off and ran first to clean tech business in the Bay Area for about fives years. Then I knew some of the early investor board members of Super League, Super League was about six months old, and they were looking for a CEO. At first, to be very candid, I was a little bit nervous about it because while I could see that the e-sports space was blowing up, and timing is everything in early stage companies, and I certainly was a gamer as a kid, but I did at least at first blush I was a little worried that maybe gaming’s changed so much since I was a teenager and that struggle a bit to understand the market space.
Ann: But I will say that I always felt I had really good instincts when it came to creating new brands or transforming them. The lure of the opportunity to not be in a highly relevant rapidly growing space, but to define what a really powerful mainstream brand could look like around that was just something that I couldn’t look away from.
Nate: That’s interesting. I didn’t realize you came from … Well, I take that back, I did realize that you came from energy, but I didn’t realize that you had some clean tech in your background as well. I don’t know if you’re familiar with any of the previous podcast episodes, but I previously covered energy, so-
Ann: Oh.
Nate: … we could probably talk about energy stocks and the energy markets all day long, but-
Ann: Well I will tell you a funny little side quick story on that, Ken Hirsch, who’s a long-time oil and gas guy based out of Dallas, very well known in the energy sector, he has a fund called Hirsch Interactive that is a direct investor in us. They also bought the Dallas Overwatch e-sports professional league and he and I’s joke anytime we see each other is from energy to e-sports, the likely career transition. We know that we are one of a small club, for which we’ll now include you in who likes to talk about the two extremes of those businesses.
Nate: Yeah, yeah. Well tell me about Super League, what is it that Super League does and describe the business model if you wouldn’t mind.
Ann: A little bit first of the arch of the story, again, company is now about five years old. When we started the thinking was that we were seeing all this smart money going into e-sports. We were saying big name traditional sports owners buying professional e-sports teams, and just a lot of excitement about the rapid growth of the gaming sector, the fact that gaming is now bigger than traditional Hollywood, bigger than TV and movies. Again, as I mentioned earlier, that is one of the hard lessons learned if you brought in early stage company as the importance of timely. Because like clean tech, when you have market fundamentals working against you, when the price of crude is low or regulation isn’t within our favor it doesn’t matter how great your product is, the best thing you can do is shutter the business for a while until that market landscape shifts.
Ann: But certainly with e-sports and just the explosion of gaming becoming not just large in numbers, there’s 2.6 billion gamers on the planet, but also just the fact that gaming is now becoming a lifestyle trend, it’s not something you grow out of anymore like previous generations, so the longevity of a gamer’s life cycle is as well an important compelling piece to the story. Super League was looking at that and saying hey, if all this money’s going in but it’s all going in at the tip of the pyramid, the tip of the pyramid is this professional level, which really represents you could argue anywhere from about 10,000 to 20,000 gamers around the world. But what about the rest of the pyramid? What’s the consumer play in this space? We had done some research and realize that of those 2.6 billion gamers on the planet about 50% of them identify as competitive, meaning they’re playing at least 8 hours of game play a week, they’re watching an additional 9 hours of someone else playing games, and that doesn’t mean it’s a pro-game, they’re watching other amateurs in their game play.
Ann: They’ve probably invested in a gaming peripheral like a Turtle Beach headset or a Logitech gaming mouse. We looked at that massive market and we thought there’s just so much unmet demand there, there’s no infrastructure. I often would say to investors early on who were definitely excited by the space, the numbers don’t lie, it’s the size of the audience, that they … because they’re of a different generation like me, they were struggling with why on earth would you want to competitively video game?
Ann: I often would use the analog of look, I took tennis lessons as a kid, at some point I got to go to tennis camp. I can’t imagine if the next step there wouldn’t have been a way for me to join a team. I knew, and my parents certainly knew, that I wasn’t going to be Serena Williams, but that was an important piece of me loving this sport and getting to play it in new and more challenging ways. What we really focused on is how can we really think about what is the field space for the gamer who wants to game in a different way, and who wants to get out of home and game? Gaming is really about just as much about community and the socialness of gaming than it is just the game play. Players are chatting with each other in the gaming, they’re making friends.
Ann: But just like anything that’s done online it does still have an isolating quality to it, so what we started doing early on and it really gets to where our business model is now, is we started early on partnering with movie theaters. Why? Because we said, hey, movie theaters could be a great field for video gaming. You got that big screen, you got that great sound system, and here’s the other thing, movie theaters are empty half the time, so this is a no-brainer. We can be a real way of them to bring new Gen-Z, millennial foot traffic in their location, they’ve got the right field space for these competitive gaming leagues. In the early days we jumped out of the gate, we ran 100s of events in the first year, we now run 1000s of experiences around the world per annum. But we started running those leagues and we learned something else, entry polling pretty consistently the gamers came through the doors and said, “I’m here for the competition.” Exit polling always highest ranking when I made friends tonight and that helps us see that this was less than just a play about capacity utilization for dying brick and mortar and gamers want to game with leagues.
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