129 Han Park: From a $1B Esports Exit to Building Payment Labs

Welcome back to the Sports Business Studies podcast. Today we're joined by Han Park. Thanks for joining the show, Han. - Yeah, thanks for having me again, Justin and Jake. Really enjoy your community and stuff that you guys are putting out in both events and content. Yeah, excited to be here. - Yeah, excited to, I know we've been in touch for what's crazy to believe almost a year at this point. - Yeah. - Through Garnett, Haramon at Adventure Ventures, but for everybody listening, Han Park is the founder and CEO of Payment Labs. Payment Labs is a FinTech company helping sports organizations, leagues, tournaments and brands, automate global payments across more than 180 countries. For Han, before launching Payment Labs, Han spent more than two decades helping build ESL gaming into one of the largest eSports companies in the world, culminating in its $1 billion acquisition by Savvy Games Group. Nowadays, Payment Labs works with organizations, including the X Games, the Snow League, AVP, APP, Microsoft, and more, helping simplify one of the most over-lux challenges in sports business, which is helping athletes, creators, and partners get paid quickly and compliantly. So again, Han, welcome to show. Before getting started with the questions here, I'd love to hear more about your entrepreneurial journey and how you got started with Payment Labs. - Sure. - You know, been a long journey in the sense that I've been a serial entrepreneur and also an active angel investor helping the startup communities, a primary around the world of video games and more specifically around the development of eSports, which is, I would say now, it's almost a subset of sports because it follows a very traditional sports model where you're using video games as the platform and it's the organized competition with massive media reach and fan engagement, viewership, where some of these events, you know, top even global sports events. And so that was my background of helping build that industry in the U.S. I would say if we're almost now 30 years, but a good 20, some plus years was developing, you know, a company called ESL Gaming, where my partners and I, you know, ran the U.S. side of that business where we worked with 60 different developers and publishers to really build up the competitive side of their gaming competitions, their eSports programs. And so throughout that process, it was a long journey because we had our ups and downs and we were probably a little too early before eSports really took off, but you know, we built the foundations of what it meant to build essentially a sport around the world of video games. And then since then, I mean, I left ESL about seven years ago and the current opportunity that I'm looking at and building is payment labs, which came actually from my background in eSports where, you know, eSports is global in nature. There's multitudes of titles that are essentially like a vertical sport with each type of game in genre. And so with the number of these competitions that with top prize money, now exceeding millions of dollars, the biggest challenge that I had in friction was using legacy payment processes and systems to pay out a global base of competitors that are competing and winning in these competitions. And so after I left ESL, I really want to tackle this as a purpose built, you know, holistic solution that makes life easier for both the organizers, the game publishers and, you know, anyone, the brands that are actually sponsoring these events and also making life easier for the gamers that are spending a lot of time and, you know, training and skills to improve their abilities to compete in these, you know, organized events and winning significant prize money. So it creates the gap of like these events are amazing. They're a huge, amazing skill with massive viewership, but then legacy processes are behind what's happening. And so I wanted to build this payment labs as an infrastructure solution that can help scale and power the industry. So yeah, Ben Assollent, printer, like I said, multiple businesses that I've either started or help fund and advise throughout that, throughout my career. - It makes sense that this is the path that you talk, especially after having the experience with 20 years at ESL gaming, creating a solution that helps that community. Just from learning and talking to successful entrepreneurs and founders like yourself, on that the best founders are the ones that personally experience the problem that they're trying to solve. And so you've spent more than 20 years helping scale ESL gaming. So can you maybe talk more about what the specific problem was in sports that you kept seeing around payments and payouts that convinced you that this was a billion dollar opportunity to build a company around it? - Yeah, great question. And why I chose to start a new company and building a solution for the ecosystem was because this became as weak as we scaled and grew and through a lot more events and a lot more prize money and attention was built around building esports. The problem only became bigger because the legacy of way of doing things. So if you really break it down, esports started out as grassroots activities where essentially it was funded by like pool betting people would compete in a tournament with their entry fees and a certain percentage of that money would go to the competitors as prize awards. Well, that since then it's evolved significantly and the way that they handle the disbursement of prize money of either giving out physical cash or checks, it works at a community level. But when you're trying to build large organizations and professionalized competitions, that no longer is acceptable because of both the scale in the number of competitors from all over the world like esports in its nature is global, gaming is global. And so you saw a lot of international participants. So moving money and paying someone, their prize money on a global level becomes a lot challenging if you're only operating in US dollars, right? 'Cause a lot of these recipients, especially from online competitions that you have to pay through digital payments to them can't receive US dollars or you use US dollars. So you have currency and cross-border complexities. And then as you're starting to move money, then you have compliance coming in because moving money across borders is very scrutinized because it's a highly regulated industry when you're doing financial transactions. And so a lot of these larger financial organizations whether it be banks or FX, but traders and stuff like that, they don't understand the world of esports. So you kind of have to educate them that this is a legit financial transaction, it can be compliant and we'll meet your compliance requirements. So compliance comes in on a layer on top of just moving the money. And then there's a subsequent layer on top that makes it even more complex is because these earnings are sometimes taxable in the different jurisdictions that you organize these competitions or where the competitors are playing from. So if you're doing a live event in France, in front of a huge French audience, there's probably tax jurisdiction requirements on the prize money that's being paid to the athletes or gamers that are winning that. And vice versa, online competitions, if it's from a US source paying out to individuals out of the country, there's tax ramifications because it's all taxable income, the way IRS recognizes prize money. And so there's layers of complexity behind the scenes around compliance, tax, and even just onboarding, trying to get them support, the right proper support. So that they can pass anti-money laundering or sanctions list type restrictions to make money move efficiently and completely. And so that's where we saw a lot of the friction when I was building ESL was as we continued to grow and we started doing more events and there were more prize money that was given out globally. The problem just scaled and off the shelf solutions. There's a lot of good solutions that could move money, but they don't handle the holistic challenges of compliance and taxes as part of the payment process. So that's where the idea came from is that I really wanted to solve this problem for an industry that was blowing up that I had familiarity with. The way I tackled it when I was at ESL was using multiple payment providers plus my bank, plus a tax service and plus attorneys that specialized in taxes to figure out all these, the complications behind the scenes to make these payments compliant to everyone that are owed payments. And I said, "This gotta be a better way to do this." So when I left ESL, I wanted to build payment labs to solve an eSports problem. But then the global pandemic and the lockdowns happened where the world froze. The good thing is gaming moved online and so our solution was really designed around eSports and competitive gaming which was what we had for about 18 months, right? And so it really allowed us to hone in on the compliance and our tech stack and integrations with our faculty global financial partners where ultimately coming out of the lockdown and everybody wanted to connect again, right? And sports was the awesome medium where people wanted to play, watch, and socialize around sports again. And that's where we saw that our solutions slid right into what's happening now in alternative and emerging sports scene where everybody's looking to modernize how they do their payments. If you're not a part of the community, you don't really understand and I've not been a part of the gaming industry per se. Just don't really know like you talked about all those layers of complexity which are behind making transactions between borders like the tax ramifications and the legal problems that could arise from that. So just having identified that core problem, I would love to hear more about how you not only communicate the value that payment labs provides to these organizations and teams and leagues, but I'd love to hear also when you're selling to these teams. Do you communicate the problem more as it's helping them increase revenue, save money, reduce risk, save time, all the above? Just would love to hear more there. Yeah. So, you know, the way we show our value and the value proposition that we have as a platform is really about solving any friction that they're ex-- if it's, you know, an existing league or team organization, you know, they're encountering very similar problems, especially if they're a global sport. And they have a lot of international participants. It-- what we saw, what we had built for eSports, solving an eSports problem. And I have to tell you that eSports creates the-- I would say the most extreme edge cases of payments because, you know, anyone from anywhere in the world regardless of age, whether they're banked or unbanked, somehow figure out how to compete in these competitions. So, we had to work through, I don't know, scenarios that most, you know, traditional payment companies or global financial institutions don't deal with, you know, paying a 14-year-old winner, you know, out of, you know, in the poll, right, where their infrastructure and banking solutions aren't up to speed as Western, you know, Westernized countries. So, you know, you have to get them traditionally, mail them and, you know, buy, you know, either pigeons or donkeys up the mountain to, you know, a physical check, right? That now they have to figure out how do I cash this check to be able to use it in Nepal-- a Nepalese currency, right? And so, those are the type of edge cases that we had to build our solution to be robust and handle. And so, where we're starting to see, you know, where our value proposition is when we go to now in the world of sports, and we were very fortunate, like I said, after the lockdown, a lot of these, especially the new emerging and alternative leagues, they wanted to modernize their infrastructure from the beginning as they launch, right? But the legacy ones are now pushed through what's happened, you know, happened after the lockdown. No one does cash and checks anymore. It's all about digital payments, right? And with digital payments, like I mentioned before, the complexities related to moving money, you know, related to compliance and taxes, that they have to kind of figure out and they recognize that they need to modernize their infrastructure. And with that infrastructure, what I mean by modernizing infrastructure means is it needs to be tech-based, it needs to be fast, it has to do digital payments, but then it has to add a holistic aspect of the compliance and tax, you know, tax jurisdiction requirements. So now digital payments become very significant of building the right infrastructure. So when we talk to these sports organizations and teams, you know, we go to them and say, how are you doing your legacy process now? Are you seeing friction? Are you spending, you know, a ton of time, you know, reconciling spreadsheets before you can send it to your bank or you to your payment provider? How many payment providers are you using to tackle the global coverage that you need to send out all these payments? And what we learned was that oftentimes these organizations use three to four different payment providers and service providers that actually facilitate their overall payment operations. And then we asked them the following question of like how many people do you have just dealing with support entries and then making decisions on the payments and cash flow and account management of these accounts. And we found that a lot of sports organizations, organizations, has payment operations as a big component of their overall entity because payments are so critical, both on revenue collection and paying out, right? And a lot of these organizations, it's all about the flow of money within the organization of what they collect on the revenue side and pay out, especially to their athletes and their teams and event staff that actually produce the content that the sponsors and the brands and the media get involved with. And so, you know, we just address, are you seeing friction? We built this because we saw similar friction, you know, in the world of gaming. It now applies to the world of, you know, competitive sports, traditional sports, alternative and emerging sports, but also even the trade economy where they're working on a global nature where they're working with a lot of content creators from all over the world that have the same similar friction that we saw in the in gaming, you know, 15 years ago. And so, it slides right in, our value prop is this, if you're seeing friction in any of your payment operations and if you've got more than like, you know, two or three providers dealing with all your payment operations and has a have a big internal staff, let us help you be more efficient, be more productive, and also as you continue to scale and grow, the cost savings is very significant because it's tech based and it's a tech layer that automates a lot of it. The streamlines automates and does a lot of things that often require people to manually do behind the scenes. Thank you for this, hon. And like you talked about reducing the risk and and at the end of the day, like you said, you you can save money by not having to deal through multiple vendors or different platforms to complete your payouts to the athletes or to the creators. And this actually is a great segue into the last question. Within sports business leaders, a lot of companies are selling to teams that might already have an existing vendor or an existing solution to a problem that they're trying to solve. So you've definitely answered this, but I'd love to go into more detail just about how in addition to this core value that you bring, how do you think about overcoming the switching costs with teams using existing legacy software? Yeah. So a change management is one of the biggest hurdles and you nailed it, which is, you know, sports have been around for a long time, right? And especially the more traditional leagues, especially in the upper tier, they, you know, payments are so critical to their operations that they had to either staff up for it, use multiple providers, like I mentioned, but they get it done, right? It may be highly inefficient and very costly, you know, if you aggregate all the costs, if you look at, you know, that's tied to their payment operations, or it might be even non-compliant now in the post, you know, digital payments age, right? You know, not collecting W9s and W8s as a US based entity and reporting that and all the tax requirements associated with that actually opens risk for you. It's both, you know, you get penalized by the IRS and the interest fees that accrue, it becomes very costly if you're not doing it right currently. The other thing to, you know, look at is also how do you mitigate risk when it comes to digital payments, or if you don't have a sound compliant system or infrastructure built around dealing with this? And I don't know if you guys saw this recently, you know, it's all over social about the Argentine, you know, a national team being reviewed by the FBI for fraud and money laundering and all these things. All of that has to go away because of the legacy way of doing things. So a lot of, you know, a lot of conversations that we have with different sports related organizations or leagues is that they're aware that they need to make change, but oftentimes because they're costly running at 100 miles per hour, right? Just running their business, change management is really difficult because they go, well, we've been doing it this way for the past 20 years. So, you know, it's not even the cost savings or the thing, it's just the changing of their way they work is really hard. So the cell cycles tend to be longer. We have to also educate them on the risks and, you know, especially when it comes to digital payments, right? Security and privacy is a huge thing when you're collecting sensitive information. And how do you pay people without collecting sensitive information? So some of the legacy way of doing things is now outdated. You can't be sending out W9 forms over email that everybody else can see and stuff like that, right? And that was the way it was done. So the push to modernize is one of the drivers that opens the doors. Second is, you know, we have to essentially explain our value prop of, you know, as you continue to grow and scale, you know, you don't want to build a solution that the cost scale and grow as you, you know, you don't want to be punished for your success of growth. What you really want is a solution that enables you to scale efficiently, you know, reduce costs in time, even though you're pushing more payments, more volume. And so for us, it's really about selling the value. What I can probably say is that the sales cycle at the beginning may be long, but we've had almost no turn off the platform once the customers have come on. We've gotten rave reviews, great case studies with customers that have been with us for two or more years about how, you know, how we enable their operations and allows them to also look at how they monetize before they used to look at infrastructure as a cost center. But now that because they're doing, they're able to scale and, you know, efficiently, they're also looking at our platform and ways to, you know, decrease costs on what they traditionally paid for. Let's say, even card processing for entry fees, right? We're able to lower that because it's all a unified platform. And then in terms of, you know, on the pay outside, you know, the things that you don't think about the cost of payment on terms of like legal, CPA, all of that is reduced now. And so the value proposition really is about making their organizations, you know, more efficient, more modern and to be able to scale efficiently and look at looking at the, turning a cost center or the infrastructure into an actual, you know, revenue generator or margin increase. I can see why these organizations and leagues find this to be extraordinarily valuable to broaden the spotlight to the entire sports industry and from your experience both in sports and esports over the past 20 years, knowing what you know now about selling specifically to teams, leagues and organizations. If you could go back 20 years ago and give yourself one piece of advice back then about selling, what do you think that would be? I mean, I would say it's very important to have a good reputation. and network. I think familiarity with people in the industry that you're selling to is a big plus, right? It's like, you know, if I reach out to you or Jake and ask, you know, "Hey, I saw you do somewhat a podcast with, let's say, this, you know, show jumping, right?" And I think we could actually help them with, you know, how they do their payments. Could you make an intro? Being networked and, you know, going out there, putting yourself out there more instead of just, you know, not participating in a community that, potentially, your audience and your buyer personas and the companies that you want to network with, I wish I had done that a lot more when I was younger. I think it adds incredible weight when your name reputation carries you forward so that you can make, you know, get more mentors into this because it kind of expedites the sales process because, you know, you don't have to figure out and navigate, you know, who do I need to talk to at this organization and who do I, you know, after that, who's the internal champion that's actually going to understand, you know, what the value prop that you're, you know, proposing to the organization and then they're the ones that are going to help you navigate to the decision makers that are actually going to sign off on this. One thing I've learned is that the RFP process in the sports world is very difficult. There's other pay-to-play, you know, pay-to-play components for a lot of service providers, a lot of these sports leagues are sponsorship driven. So oftentimes the VIK and sponsorship discussions come ahead before the service. So there are a lot of things that I've learned, you know, I would say in the past three years selling into the world of sports. A lot of it is from the legacy of way that sports industry works, right? But also now I'm finding, you know, the right ways to position the our business, our service, but also leveraging the network, you know, of both myself, my board and our salespeople that come from the world of sports. And I've seen that the relationships are the most critical, like having the reputation, the right reputation and also having, you know, the network that you can just kind of tap into to get this. And that's why like I love what you guys do at SPL because that's what you guys are building is a network of people that are like-minded within the same vertical. So it's easy to reach, it's easier to reach out as long as you participate, you know? Yeah, I appreciate the shout out and obviously, Han, we feel the same way. And what I found both from my experience selling to teams before sports business leaders and just learning about how others operate in space is just that having that internal champion is one of the most critical components of being successful selling. So I appreciate that on and just wanted to ask if there's any last words that you'd like to share or piece of advice that you'd like to extend to the rest of the audience today. Yeah, you know, one thing that I, you know, I, when we were retooling our sales approach of like, man, we got X games and we got the snow league and we got the, you know, some name, you know, leagues that were in the action sports and we were like, okay, so let's go out and really go after the sports market. Boy, go to market strategy in sports, you really have to have a plan and you have to like look at it vertically. Not everything in within one sports vertical translates well to the next sports vertical, right? Like we have customers in disc golf. Doesn't really necessarily mean the solution that we're providing in the world disc golf works in billiards and pool, right? Because the way they do their events and how they do their payments and payment operations is very different. St, St challenges, but payment flow. So addressing nuances is really key. So you got to know your audience and have really good go to market plans. And that's what we're discovering now is that we're almost treating each sport vertical as almost its own industry and we're doing a land and expand approach of like, okay, we have a case study, I have the use case. Does all the leagues and teams within that sport work the same way? And you'll find that some don't, you know, because they're alternative to the traditional way of that sport has been, you know, organized and played and paid out. And so there's a lot of things that I would say when you're tackling sales in the world of sports is to really understand the vertical sport itself and then the buyer personas and their operations and what their frictions are and then really addressing it. So there's a lot of key learnings that I'd love to like, you know, share at some point, but yeah, it's a very interesting industry as a whole. It's awesome, but it's very hard to sell into it sometimes. Not a great point on it. And I just want to make an analogy. When I grew up, I used to swim and in the pool, the way I think about it, the pool is like the sports industry as a whole. And then the specific lanes are like the different sports. There might be one lane of swimmers that are working on one stroke and then the next other lane. So just thinking about it that way, I think it at least for me makes it make more sense that although it's the same arena sports as a whole is its own industry, but every single vertical like you said is so different. And my final thing is if anybody that's watching this cast is looking for a payment solution or to, you know, modernize their infrastructure, just have a discussion with me. And I would say nine out of 10 times we could probably help you beat me to it. So what is the best way for everybody to learn more about payment labs and get in touch with you? Yeah, I would say initially just go to our website at paymentlabs.io. We have a number of case studies there, reference customers. Everyone from the world of video gaming to traditional sports, now even creators, we're doing a pilot project for Mr. Beast, which I shared with you earlier before we started. So there's a lot of things exciting happening with our company. And so go to the website. There's a good contact form. But also people can just reach out to me on LinkedIn. I think it's forward slash Han Park after the I've been on there for so long. So yeah, well, it's an easy name. So I don't think people will have trouble figuring it out. So thank you again, Han. Best of luck. Congratulations. And thanks again. I appreciate the time again, guys. Cool.