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Editor’s Note: In the new podcast Masters of scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business – and on Entrepreneur.com, entrepreneurs respond with their own ideas and experiences on our hub. This week, we’re discussing Hoffman’s Theory: To lead an organization to scale, you need to be as adept at breaking plans as you are crafting them. Listen to this week’s episode here.
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What happens when your best-laid plans turn out to be wrong? This is when you become like every other entrepreneur because even guys like Scott Rudmann can’t plan perfectly. He spent three years with McKinsey and Company, was an investment banker at Deutsche Bank in London, and founded private equity firm Nectar Capital. And when he co-founded GLORY Sports International, a professional kickboxing league, he put all that expertise to good use and developed a plan to achieve a big goal: he wants GLORY to be the best standing fighting league in the world, and eventually to become bigger than the UFC. . “It was always going big or coming home with GLORY,” he says.
And yet, almost immediately after launching in 2012, he found he had to shatter almost every plan he made. Today, following many changes in the way the company operates, GLORY is a global phenomenon: it hosts live events around the world, which are televised in 175 countries and watched by 10 to 12 million people. (In the US, his numbered series is broadcast by ESPN and his SuperFight series is broadcast by UFC Fight Pass.) Here’s how breaking old plans led to better, bigger plans.
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When was the first time you thought, “My original plan needs to be drastically changed? ”
We realized six months into the process that, uh-oh, our initial plans – and indeed the fundamentals, fundamentals pillars of the strategy we were executing – were completely wrong. And not only do we have to make adjustments; we had to rethink completely, and rethink quickly. We had to change management. We had to change our strategy. We had to change the execution tactics. We had to adjust our product. We had to change staff. And we had to do it all really quickly, because when you’re in a live event business, you can’t just take six months off.
That’s a lot to change after six months! What were the signs that all was wrong?
Well, I will tell you a very interesting and very powerful and convincing pilot, namely: Oh shit, we’re burning money a lot faster than we thought and we’re going to run out of it unless we change!
It will be ok.
It will be ok ! There is real art and a lot of science to starting a new business and seeing how it grows, and the dashboard dials show a lot of different things. Among them are strategic and marketing metrics – audience shares, audience figures, event attendance figures, all those kinds of things. And then at the same time you have a finance overlay. So, are you hitting the revenue forecasts you thought you were making? Are you using cash at the same rate as you thought you would, or are you late or early? Are you behind or ahead of your income budget? How are your margins evolving in line with what you had planned?
We had a vision for GLORY, which is to be the world number one in standing combat. So our initial planning was to have some huge, highly produced WWE style events with amazingly well paid athletes and lasers and stage productions, and all that kind of flashy stuff that was very expensive to create in an arena, and to have a huge audience. pay a lot of money for tickets to get in and watch it. And we thought it would be attractive on TV, and people would be so excited about it that we would be able to use our investment capital to grow the brand over time.
Well, in mid-2013, we were at the end of six months: we had run a few events in Europe, we had run a couple of events in the US, and we found out that, wow, breaking into the sports market. is a long term business. It’s a marathon, not a sprint. And it’s not even a question of how much money you spend on it. It’s all about time and educating clients and getting them into the fold and making them understand what your brand values are. We had to answer for the people: What is standing combat? What is GLORY? We recognized fairly quickly that this was not going to happen as quickly as we thought. It was therefore necessary to reformulate the events.
What did you do?
We have simplified the events so as not to have such a flashy production. We cut the costs of screens, computers, smoke, giant ramps, DJs, lights and lasers and all that, recognizing that people came to the shows to see the fight. There’s a certain level of production that you need to make it look good, to make a great TV product and to entertain the customer, but you’re not putting on a circus. So we had to readjust our arena show to cost us a fraction of what it used to cost.
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Second, we had to readjust our marketing spending. You know, the old traditional days – spending millions of dollars on offline advertising to get your brand out to the masses – are long gone. It no longer works that way. We redeployed our marketing budget to viral marketing, social media marketing, activities and marketing efforts that would generate grassroots involvement. And it worked much, much better.
And then we found out that the leadership team we put together to execute Plan A was not the right team to execute Plan B. Managers and senior executives have a certain set of skills and mindset. And some are better at executing one type of plan than they are at executing others.
In other words, weren’t the people who were good at putting on big flashy shows the right people at putting on small, scaled-down shows?
It’s correct. And that’s a mentality, right? Our initial management of the company was made up of executives who are very, very talented, but most of their experience came from big entertainment companies with lavish budgets and lots and lots of staff. They were working in companies that may have been around for 20, 30, 40 years and that had built-in brand equity. So if you wanted to do anything with this business, you already had decades of investment in the fan base. It’s a whole different kind of mentality than, “Wow, the funding for this startup comes from the pockets of a few founders and it’s not a call to the business if you miss the budget; it’s a very personal call to your investors to get things done.
But like you said earlier: you can’t take six months off for a reset. How did you make all these changes while continuing to host all these live events?
The only essential element – and it won’t come as a surprise to you or anyone who might read these words – is your commitment to the cause. If you don’t really, really believe in what you do, if you don’t believe in your heart and soul that you are changing the world a little bit by what you do with your business, then you will likely fail. And you have to be prepared to sacrifice time, and possibly economy, to really bring your vision to life. The other thing, which is a vital part, is that you have to have a great team around you who are equally enthusiastic about the vision. If everyone is dynamically stimulated to achieve the business goal, then people are more flexible. People will work any hour of the day.
So you stepped back in 2013. GLORY has grown a lot since then. Did you add some of the lasers and smoke machines?
We have found a happy medium. But also, we started to think about events differently. The main source of income for GLORY, and for any major promotion, is media rights. So we started producing two TV shows from each event because it costs a lot of money to build the set, stage the event, market the event and promote it.
What does it mean? Like, one audience comes out and you bring in another?
No no. So let’s say you’re going to a GLORY event this weekend. The event starts around 6 p.m. You sit for the first two hours watching the GLORY SuperFight series. Then there is a 30-45 minute break, where people can go to the bathroom, have a drink, eat, eat a burger or whatever. During this time, we are changing the appearance of the ring. We are changing the style of arena lighting. We’re changing the names of sponsors on a variety of assets, and we’re even changing the style and flavor of the music that is played in the background and on TV. And then we film another part of the night, which is the GLORY Numbered Series. And that’s another two hour segment.
If I organized an event like this, I would be afraid the crowd would lose interest by the end of the night.
The way you handle this is to put your biggest fights at the end, so people stick around to see the headliners. But our challenge is not usually to get people to stay until the end; our challenge is usually to get people to come early. People know it starts at 6 a.m. and it ends at 11 a.m. or even 11:30 a.m., so they tend to come later. So no matter what city we are in, we usually have an undercard where we feature local athletes. Local guys can come and fight, and usually a lot of their friends and family come to watch them. This is how we fill it early before our main events are televised.
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In a business like yours, I imagine you always have to think about making and breaking plans because your product is based on fighters – and fighters get hurt.
We take care of it daily, weekly, so you know that. People get hurt. Athletes sometimes find it difficult to enter a country. This stuff happens. You have a backup – Plan B, Plan C – and you need to be ready to run it. For each event, we schedule at least two reserve fights, which are not the fights we announce to the public, but in case someone gets injured the day or the week before or whatever, we can do reserve combat. one of the featured fights. And then once you have that plan and you’re up and running and executed on a monthly basis, it becomes second nature.