Ahead of the Game

The Unlikely Rise of a Detroit Kid Who Forever Changed the Esports Industry

Kevin J. Ryan

• Publisher: HarperCollins Leadership
• Year: 2022
• eBook ISBN: 9781400224517
• Topic: Business
• Subtopic: Business Biographies
• Index: Business

Prepare to be inspired by the story of Delane Parnell, the unlikeliest of CEOs now leading a gaming empire at the center of the booming, multibillion-dollar esports industry.

Delane Parnell is not your typical tech entrepreneur. He was raised in a gang-riddled neighborhood on Detroit’s west side, bouncing between homes as his mother tried to make ends meet. Many of his closest friends and family members ended up in jail or dead.

This makes it even more incredible that Delane became the 25-year-old founder and CEO of PlayVS, a Los Angeles company that is forever changing the gaming landscape in America. In 2018, esports— team-based competitive video gaming—became an officially sanctioned high school sport, meaning student gamers can now earn varsity letters just like their basketball and volleyball player peers. Delane’s startup is making that happen, providing the infrastructure that hosts the competitions, compiles the statistics, organizes playoff tournaments, and streams state championships for tens of thousands of students across the country.

Ahead of the Game is a deeply reported narrative that tells the story of Delane, the motley group of underdogs and hustlers that helped build his several-hundred-million-dollar startup, and the previously overlooked students now participating in America’s growing esports phenomenon. It’s a tale of perseverance, courage, loyalty, race, family, tragedy, and believing you can overcome the odds—no matter how severely they’re stacked against you. Readers will also:

• Learn how the growing Esports industry is changing the lives of students across the country who were previously not engaged in the high school experience.
• Get a glimpse into a successful entrepreneur path unlike any other by following the story of how Delane Parnell created PlayVs in spite of the greatest of challenges.
• Be inspired that there is hope and opportunity available to people who go against conventional paths to realize their dreams.

With a foreword by Sean "Diddy" Combs

1

PHENOMENON

IF YOU WANTED to find Rick Yang in the late 1990s and early 2000s, the first place to look was the swimming pool. The brainy, athletic teen spent hours after school honing his freestyle in the lanes at J. J. Pearce High in the Dallas suburb of Richardson. The work paid off. His freshman year, Yang won the school’s Outstanding Swimmer of the Year award. He repeated the feat the following year, and the year after that. By his senior year, the honor was a foregone conclusion, so he also added two First Team All-American honors and became Texas’s state champion in the 100-meter freestyle for good measure. Yang’s athletic and academic prowess earned him a spot on Stanford University’s swim team, one of the top programs in the country.

Yang also had a bit of a secret life. Unbeknownst to most of his classmates—and his teammates—he would come home after practice, breeze through his homework, boot up his computer, and play the game World of Warcraft. This activity was not, by any means, considered “cool.” Known for its elves, dragons, and other fantasy imagery, the game once had an entire South Park episode dedicated to mocking the nerdy culture around it. Yang developed a second social circle in addition to his swim circle, one that played games together in each other’s bedrooms or basements. On weekends they’d get together and play WoW, as it was known among gamers, or Ultima Online, another game characterized by healthy doses of magic and dorkiness.

One swim season, Yang’s coach approached him in need of help. The team’s roster was smaller than usual, and he needed more bodies to round it out. Yang dipped into the only other pool he knew: his gaming buddies. He convinced a few to sign up. Most had never played an organized sport in their lives. The first day of practice didn’t exactly go, well, swimmingly.

“Some of the guys couldn’t even finish a lap,” recalled Yang.

After he graduated, Yang continued his dominance of the classroom and the pool lanes at Stanford, helping the men’s swim team finish second at the national championships in three of his four years. After a quick stint as a financial analyst in the mid-aughts, he landed a job at the venture capital firm New Enterprise Associates (NEA), based in Menlo Park, California, the heart of Silicon Valley. During Yang’s tenure, NEA invested in companies like Uber, Snap, BuzzFeed, Groupon, Coursera, 23andMe, Cloudflare, and Robinhood. Its funds under management would balloon to more than $20 billion, making it one of the largest VC firms in the world.

In 2012, Yang helped lead an investment in the payment platform Braintree. PayPal shelled out $800 million to acquire the company the following year, and Yang soon found himself promoted to partner. Through all the success, and long after he put away his swim cap for good, one constant remained: video games. As an adult and father, he reveled in the nights he could get his two kids to bed early and sneak away to play for a few minutes or watch other people compete against each other on the streaming platform Twitch.

Jon Sakoda, another investor at NEA, rose through the ranks on a trajectory parallel with Yang’s. After he cofounded a messaging platform called IMlogic and sold it to Symantec, he joined the venture firm as an early-stage investor and was promoted to general partner in 2014. When he was studying a startup, Sakoda had a set of prerequisites—three boxes he needed to see checked before deciding to invest. The criteria weren’t groundbreaking, but they laid the foundation for a startup to have at least a decent chance of success. They were:

1. A massive potential market
2. A competitive advantage within said market
3. A great founder

Sakoda wasn’t much of a gamer himself, but he could identify a phenomenon-in-the-making when he saw one. Playing video games was no longer about turning on a Nintendo or PlayStation and competing against the computer. More and more games were being created with team play in mind, giving those teams the option to play against one another online. These competitive, team-based matches were known as esports. In their early days as NEA partners, Sakoda and Yang spotted a cultural transition playing out across America. For gamers, the dual life was becoming a thing of the past. High school basketball and soccer stars were picking up controllers and playing video games after school, and they weren’t hiding it.

“For the younger demographics,” said Yang, “video games were becoming a part of mainstream culture.”

Gaming, in other words, wasn’t just for the nerds anymore. For a couple of venture capitalists, this meant there was a lot of money to be made. The data told a similar story. In 2012, worldwide esports revenues—including media rights, advertising, sponsorships, merchandise, tickets, and game publisher fees—totaled $130 million, according to the industry tracker Newzoo. Two years later, that number climbed to a shade under $200 million. During that same span, Twitch’s streaming platform saw its average number of concurrent users climb from 100,000 to 400,000. In August 2014, Amazon sent a jolt through the gaming world—and beyond—by announcing it was buying Twitch for $970 million. In just two years, the company had gone from an upstart unknown outside of the fiercest gaming circles to having a valuation of nearly a billion dollars. The sale was eye-opening for investors and tech firms. If a company like Amazon was taking esports seriously, why shouldn’t they? Venture capitalists, those at NEA very much included, started scouring the market for the next big thing.

“Twitch’s exit led people to believe that there were some more big esports companies to come,” said Sakoda. “We thought it was even bigger than what most people were saying. We had a thesis that esports was going to be explosive.”

This thesis, of course, was correct. Between 2014 and 2017, global esports revenues would grow by more than 250 percent, reaching $655 million. While the industry expanded, Yang and Sakoda searched for the company that could be the next unicorn. They listened to pitches from a handful of game-makers, known in the industry as publishers. The upshot of betting on the right publisher could be huge: Riot Games, for example, grew its game League of Legends from zero to 100 million monthly users in six years; and Epic Games, the company behind Fortnite, gained 200 million registered users in sixteen months and would go on to be valued at $17 billion.

But for every League of Legends or Fortnite, there were many, many flops. Predicting what titles would take off was seemingly impossible. Yang and Sakoda wanted to find a company that was less vulnerable to the capricious nature of consumer tastes. A company that could instead capitalize on the industry’s macro trends. A company that could tap into the market in a new and profound way.

In the spring of 2018, they found it.

• • •

PETER PHAM WAS a difficult man to ignore. Sometimes it was because of the giant cowboy hat he wore to parties and conferences. More often it was because of the dancing. Pham, short and taut with a big white smile and about zero percent body fat, used any excuse to bust out his moves. Sometimes the excuse was the Burning Man festival, where he was known to work himself into a shirtless sweat for hours on end in the hot Nevada desert. Other times it was a beat he liked coming over the PA system of a convention center ballroom. “First on the dance floor,” read the opening sentence of his Twitter bio, below an image of him mid-move in a gold sequin shirt. The man had rhythm—and he knew it.

But Pham was well known in VC and startup circles for more than just his ability to find a beat. Back in the mid-aughts, he was the fifth employee and president of business development at the image hosting company Photobucket. When the firm sold to Fox Interactive Media for $300 million in 2007, he ended up a millionaire. But his full earn-out required him staying on at Fox Interactive for two years. He left after nine months.

“I’m not a corporate person,” he said later. “I have ADHD. I just couldn’t do it.”

A few years later, Pham joined up with several other entrepreneurs to found the location-based photosharing company Color Labs. The Palo Alto startup scored $41 million from investors including Sequoia and Bain Capital while in stealth mode, then emerged to the public in 2011 to much media coverage and fanfare. The hype was short lived. The Color app confused users and failed to gain any significant traction. Pham, seeing where things were heading, bailed. Not long after, the startup’s CEO reportedly stepped away, and the company collapsed nearly as quickly and spectacularly as it had arrived, eventually selling to Apple for pennies on the dollar.

Pham was living in the Bay Area a short time later when he met up with Mike Jones at a conference in Hawaii. The two had known each other since the early Photobucket days, when Jones was cofounder and CEO of the web chat platform Userplane. Back then, they had privately discussed the possibility of launching a startup incubator should they ever get paydays that would make it possible. Pham’s windfall came at Photobucket; Jones would go on to get his when Userplane sold to AOL for a reported $40 million. Now, on an island in the middle of the Pacific together, Pham and Jones were both unemployed. It was the moment they’d been waiting for. “He turned to me,” Pham recalled, “and said ‘Hey, remember that incubator idea? Do you want to do it?’ I said ‘Yes, let’s go,’ and decided to move back to Los Angeles, where he lived. It was a one-minute conversation.”

The two teamed up with Greg Gilman and Tom Dare, two other endeavoring types who had spent most of their lives in the California tech world. They raised $10 million in additional funds from investors that included Tomorrow Ventures, a firm run by former Google CEO Eric Schmidt, and founded Science later that year. The concept was that Science would provide young startups with space in its Santa Monica office, constant access to its experienced staff, and potentially funding to help them grow into profitable companies. One of its first projects was a charismatic entrepreneur with an idea for a shaving-kit-by-mail subscription service. Science provided Michael Dubin with his first investment and helped him hone his business plan. The company, Dollar Shave Club, grew to 3 million subscribers and $200 million in revenue within five years. In 2016, it sold to Unilever for $1 billion. Science had its first big exit, and Pham had multiplied his net worth yet again.

In the weeks leading up to April 6, 2018, Pham sent dozens of emails to investors across Silicon Valley about a new entrepreneur he was particularly excited about. Science had given the young founder a few hundred thousand in seed money and set up a desk for him in its office. Now it was time for him to try to raise a full-on venture round.

A few minutes before 2 p.m., Pham confidently strolled into NEA’s Menlo Park headquarters. Walking alongside him was the entrepreneur in question. Delane Parnell was twenty-five years old. He had no college degree. He wore not a suit nor a vest over a button-down, but a hoodie. His startup had just two full-time employees. But Pham had vouched for him, going so far as to compare his entrepreneurial chops to Dubin’s. As such, several firms, NEA included, had agreed to meet with him.

Yang and Sakoda escorted Pham and Delane to a large-windowed conference room. The two pairs seated themselves on opposite sides of the table. Sakoda thought about his three requirements. There was no denying that Delane’s startup, PlayVS, existed in a massive market: the company was building software for esports. At that time, a small number of high schools across the country had created esports clubs. Students could show up after school and play against one another or, occasionally, against another school. Most of the clubs were grassroots in nature. What Delane was creating at PlayVS was a platform that could give high school esports some much-needed infrastructure. The company would help the schools that didn’t yet have clubs—the vast majority of America’s 24,000 high schools—form and launch them. Then it would arrange the teams into leagues, schedule matches, host those matches online, compile the relevant statistics and records, organize and stream the postseason, and, ultimately, help crown state champions.

This was where Sakoda’s second requirement—a competitive advantage—came into play. Unbeknownst to the public at the time, PlayVS had recently signed a deal with the National Federation of State High School Associations, or NFHS. The NFHS is to high school sports what the NCAA is to college: a body that writes the rules for athletics, determines student-athlete eligibility, and offers guidance on issues like coaching and athlete safety. For years, the NFHS had been considering making esports an officially sanctioned high school sport. Its agreement with PlayVS meant that when that happened at some time in the near future, the startup’s software was going to be the platform on which all high school esports would operate. The deal contained something critical for PlayVS: an exclusivity clause. This meant that no other esports company could cut a similar deal with the NFHS for the next five years. PlayVS, despite being a three-person startup no one had heard of, had built a tall and sturdy wall of defense against competitors—exactly the kind of edge Sakoda looked for.

The way the company had managed to do that had a lot to do with Sakoda’s third factor: the entrepreneur. Sakoda knew as much from his conversations with Pham. Now he was getting to see it firsthand. Almost as soon as the kid started talking, Sakoda found he couldn’t look away from his smile. It changed Delane’s whole face, puffing up his cheeks and narrowing his eyes into squints. Sakoda liked this smile. A few minutes into the meeting, Delane was off and running, standing near the monitor on the wall and walking the investors through the various features of the software.

“This is where a coach can log in to manage their roster.” A click of a slide. “This is where they can see their team’s stats and upcoming matchups.” A click of a slide. Delane talked about the fact that high school esports would be a no-cut sport, allowing kids of all skill levels to participate and thereby creating a wider user base. He spoke about teams being coed, with competitions taking place in person under the guidance of an adult—as opposed to online and anonymous—which he theorized would neutralize much of the toxicity that plagued the world of gaming. He discussed the platform’s potential, as an after-school program, to keep kids off the streets.

Yang and Sakoda listened intently. “You just don’t hear those types of things in a pitch about a gaming company,” Yang said later.

Pham, normally a bundle of energy in these meetings, knew to take a back seat today. He grabbed some snacks from the spread and brought them back to his seat at the table, munching quietly while the VCs asked questions.

“How do we know PlayVS will actually get schools and students to sign up?”

“We will,” Delane reassured them. “We’re talking about video games. And what schools wouldn’t want to give their students the chance to be involved in something after school?”

An even bigger unknown: not a single game publisher had agreed to...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Foreword by Sean “Diddy” Combs
• Author’s Note
• Prologue
• 1. Phenomenon
• 2. The Forgotten Ones
• 3. “This Is Not a Pity Story”
• 4. The Kid from Detroit
• 5. Fate on the Dance Floor
• 6. High School Legends
• 7. Big Deal
• 8. Liftoff
• 9. The Making of a Hustler
• 10. Next Level
• 11. Guiding Light
• 12. Achievement Unlocked
• Acknowledgments
• Sources
• About the Author