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Vegas esports squad goes from startup to champion in a matter of months

On the mantle rests one of those giant commemorative checks.

It’s for 18 grand, the spoils that the Rogue “CS: GO” squad earned from winning the Mountain Dew Video Game League championships last year.

At the dining room table a few steps to the right sits Derek Nelson, the CEO and co-founder of the little-esports-squad-that could, one that’s not so little any more: Vegas-based Rogue.

Even as he fields questions during a 2½-hour interview session, Nelson pecks away at his laptop, finalizing a 12-page contract for a new player.

Every deal is unique, contingent upon the popularity of the game a player specializes in, as well as his or her skill level.

“Depending on how big the game is, we’ll put different things in it, like health insurance or the percentage of the prize money changes,” says Nelson, a lawyer by trade, explaining how he works out a prospective player’s deal while writing one.

Across from him sits a white board outlining the Rogue organizational structure, a sort of esports genome map that underscores just how much Rogue has grown in a little over a year.

Starting with but one team in May 2016, Rogue now fields six squads in as many games.

It has players from all over the world, culled from esports strongholds such as Sweden, France and Denmark, a number of whom have relocated to Las Vegas, where they live in various two-person apartments across town.

Foreign travel, frenetic lifestyle

Their teams are constantly traveling around the globe.

“The sun never sets on the Rogue empire,” Nelson says, more sleep-deprived than hubristic. “Between here, Europe and Asia, there’s always something going on.”

This is a far-flung organization: Their “Call of Duty” squad is currently in Orlando, Florida. They have a player en route to a tournament in the U.K. The previous week, Rogue hit Vienna. Shortly before that, it was off to Ireland.

“Our cards get cut off for fraud, literally, almost every day. It’s crazy,” Nelson says of the perils of using company credit cards during incessant foreign travel. “And then at the beginning of the month when we do wire transfers, half of them are international.”

With players routinely scattered around the world in different time zones, running Rogue is pretty much a 24/7 endeavor.

“It’s just constant,” Rogue President and co-founder Franklin Villareal says.

This is why much of the Rogue support staff, which numbers nearly a dozen people now, lives in this spacious, two-story home nestled in a gated community on the city’s southwest side.

Under one roof, they can get together any time of day — last week, they had a meeting that lasted until 4:30 a.m. — and better cater to the needs of their players, who similarly log long hours.

“It’ll be 3 in the morning and we’ll be looking for an open pharmacy for eye drops,” Nelson says of a must-have for any serious gamer.

It’s a frenetic lifestyle, but their efforts are being rewarded.

The members of Rogue’s “Overwatch” team, in particular, have become stars in the past year.

“When they go to China, they have screaming fans with Rogue jerseys and signs,” Nelson says, detailing the spoils of their many victories, which now include gratis travel accommodations. “Most of our big tournaments, they pay hotel, they’ll pay appearance fees, they’ll pay prize winnings.”

Success may beget success, but it also begets more zeros on the payroll.

“No matter how you cut it, to be considered a top-tier esports organization, you need a lot of money,” says Rogue co-founder Carson Knuth. “You need a bankroll of seven figures, minimum.”

And the more popular the game, the higher costs.

“You’re looking at about 175-grand a month for a top “CS: GO” team right now, sometimes more,” Nelson says.

That Rogue has been able to prosper in this environment is as unlikely as the thought of pursuing gaming as a career option would have been a decade ago.

Their story is one of deep ingenuity and shallow pockets.

Before it was acquired by ReKTGlobal, Inc. last week, it was a hand-to-mouth enterprise, largely financed by Nelson.

Villareal slept on Knuth’s couch.

Any month could have been their last.

“We just kept paying the team as if we were going to be able to afford it, even though, every single month, three or four days before the month ended, we did not have money to continue the team, ” Nelson says. “Somehow, we were able to pull out just enough money to keep the team going. They were the best players in the world, so we had to pay them at the top of the industry standard. We were just betting that it would all work out.”

A game-changing game

Franklin Villareal’s comparing himself to a fictional bald eunuch.

“Do you watch ‘Game of Thrones’?” he asks. “The analogy I use a lot is that I’m kind of like Varys: I have little birds everywhere.”

Their chirping has paid serious dividends.

Villareal’s contacts within esports’ deepest recesses is one of Rogue’s most valuable assets.

He’s an insider in an industry being swarmed by outsiders — and there are plenty in the esports world who are resisting what they see as the corporatization of their scene.

The Mark Cubans, Shaquille O’Neals and Robert Krafts of the world may have mounds of cash to invest in esports, but they don’t have any kind of street cred or track record in what remains a fairly insular community, despite its swelling popularity.

Villareal has both.

As more and more money pours into the industry, this is something that can’t be bought, the behind-the-scenes networking that comes from being an esports lifer dating back to when gaming was a passion, not a profession.

It’s what enabled Rogue to get its first — and biggest — breakthrough, its championship “Overwatch” team.

Using his industry sources, Villareal got wind of the game early, spending four months researching it and scouting potential players with attributes suited for the game before it was even released. He was especially drawn to “Overwatch” because it was one of the first titles specifically developed as an esports game.

Getting in on games before they become popular is crucial for an organization such as Rogue. Once a game becomes a hit, the costs of buying into leagues and fielding teams with quality players becomes exponentially more expensive.

When Rogue was founded, the organization lacked the finances it takes to compete in the most established titles.

“We didn’t have a million and a half, 2 million dollars to pick up a ‘League of Legends’ team, which was the biggest game at that point,” Nelson says.

And so they had to find a way to do what an outgunned underdog in any sport must do: Be more resourceful than the competition, stay ahead of the curve, maximize efficiency, leave no margin for error.

For Rogue, this meant going all-in on a game that no one could even play yet.

It was a big risk with the potential for even bigger returns.

Get it right, and they’d be poised to dominate a title on the tip of everyone’s tongues.

Get it wrong, and they’d be poised to dominate a title no one cared about.

The former outcome would be a game changer; the latter, a game ender, potentially.

“That was our play,” Nelson says. “We’re going to pick up this ‘Overwatch’ team for cheap, get these awesome players, and then we’re betting on the game becoming huge.”

He smiles.

“That was a good bet.”

A gamble pays off

It’s like trying to play chess while strapped into a tilt-a-whirl; Japanese cyborg ninjas, Australian anarchists and French assassins in place of bishops, pawns and rooks.

To the uninitiated, watching a televised “Overwatch” match can be a seriously disorienting experience, a dizzying blend of strategy and nonstop, whipsawing motion, colors and munitions exploding in unison

“There it is! Graviton surge!” the play-by-play announcer booms, his words coming as fast as all the flying bullets.

It’s Russia versus South Korea in the Overwatch World Cup from Katowice, Poland, the showdown broadcast on Disney XD this past August.

It’s some seriously adrenalized viewing, Red Bull for the eyes.

Even if you can’t keep up with the action — and it’s hard — the rush of it all has proved addictive for millions.

When “Overwatch” was released in May 2016, it became an instant hit, garnering 35 million players in five months and earning $1 billion in revenues during its first year.

Villareal saw it all coming, assembling Rogue’s first “Overwatch” team with three Swedes and three Frenchmen, who swiftly became one of the world’s best squads, buoying the entire organization.

“We had to build it on success. We had to build on winning,’” Nelson says of Rogue’s early days. “It started out really small, five to 10 grand a month, and it just increased 40-50 percent every month since then. The burn rate has gone up a lot, every single month.”

“Overwatch” has gotten so big, the window has slammed shut for upstarts — like Rogue was not too long ago — to be able to seriously compete at the game because of much higher costs.

“Trying to get into that now with the way that we got in, it would be impossible,” Knuth says.

Now, the trick is to keep finding the next big thing before it’s even a thing — Villareal says he’s scouting a pair of future releases for Rogue to potentially pursue.

“We’re constantly expanding,” Villareal says, “because the games that are the most popular now are not going to be the most popular games in five years.”

Rogue’s lean business model earned it more than scads of tourney wins: It also made Rogue attractive to investors, who are now supplying the organization with the financial backing it once lacked, further enhancing its profile.

“We thought that they had a sense of where they wanted to go, to build teams on a cost-effective basis, kind of a ‘Money Ball’ approach,” says Jeff Seltzer of the New York Angels investment group, which has contributed over $100 million to various entrepreneurial ventures, including Rogue.

“They’re scrappy,” adds fellow Angel Scott London. “We were able to relate to them.”

This relatability was also a key draw for another important benefactor: superstar DJ-producer Steve Aoki.

Aoki, a lifelong gamer, spoke with numerous teams about becoming a part owner before backing Rogue.

Ultimately, he was drawn to Rogue’s indie ethos, the same DIY approach he used to build his record label, Dim Mak, which he started on his own in 1996. It’s subsequently helped launch the careers of successful punk and electronic dance music acts such as Bloc Party, The Chainsmokers, Keys N’ Krates and many more.

“It has the same kind of spirit that I can relate to,” he says of Rogue. “That really resonates deeply with me.”

Team ambassador

Aoki’s a key addition to the organization for more than just financial reasons: He serves as a popular, instantly recognizable public face for Rogue — that hair, that goatee — and also brings his own esports pedigree to the table, which is substantial (“I’ve always been a friend of the community, whether it was remixing songs in a game or performing at a game party,” he says. “So I’ve always kind of been in the circle”).

Aoki has embraced the role of Rogue ambassador.

“I want my team to succeed and have a sustainable future, and in order to do that, I gotta shake hands and rub elbows with the leaders of the field,” he says, mentioning that he was on a call with the CEO of Activision games the day before.

With Aoki in place, the Rogue principals have settled into somewhat defined roles, though there’s plenty of overlap: Nelson focuses on business managerial duties and fundraising; Villareal builds and oversees the teams; Knuth serves as a conduit between the business and gaming sides; Aoki presses the flesh and provides additional industry entree.

Aoki knows how to develop musicians into stars.

He’s been doing it for years.

His next challenge: To do the same with a bunch of video game players.

“How I started Dim Mak, we got passionate people together who really cared about music, cared about our lifestyle and our culture, and we put out some artists who took the world by storm,” Aoki says. “I feel like team Rogue is doing that one game at a time.”

Contact Jason Bracelin at jbracelin @reviewjournal.com or 702-383-0476. Follow @JasonBracelin on Twitter.

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