Evan Kaylin, founder of Grilla, discussed the company’s mission and market opportunity. Evan also shared his fund raising journey and his source of inspiration to overcome challenges to scale the company.
[01:07] Evan discussed the inspiration behind Grilla and the company’s mission
[03:15] The revenue model of Grilla was discussed
[04:15] Grilla is competition agnostic. Its tournament formats are conducive across most skill based sports
[05:21] Evan outlined the market segmentation and current focus of Grilla in the average gamers
[06:53] Evan discussed the regulatory landscape of the industry as it operates within the skill based gaming laws
[09:02] Evan took a deeper dive into the revenue model and how the company expands from B2C into B2B so that it can diversify revenue source and ramp up profitability quicker
[12:45] An example of how other business/use cases can benefit from Grilla’s API through gamification
[13:57] Evan shared with the audience his view on the market size
[15:43] Evan went deeper into explaining the regulatory landscape and how Grilla proactively work with the stakeholders so that company operates within the regulatory framework
[18:22] The diversity of regulation across different states was discussed
[20:35] Evan discussed the fundraising journey at Grilla
[23:40] Evan shared with the audience how he works with the fractional controller to setup KPIs
[26:23] Evan discussed motivation examples he used for himself and the Grilla team and some of the challenges he sees as an startup entrepreneur/CEO
Books mentioned in the discussion
The Fixer: My Adventures Saving Startups from Death by Politics by Bradley Tusk
Grilla’s Strategy and Market Opportunity
We ‘ve started to have conversations with companies that we just never thought would be our customer like a lot of gamification companies across different industries. (For example, companies that do fitness gamification.) So you have a company of 500 people, or you have a group of friends, and you want to encourage everybody to lose weight, or build muscle, or become better at what they’re doing. And these companies are helping individuals and groups do so through gamification and having the ability to wager and say let’s put this pot together a thousand dollars, and whoever loses the most weight, you know by the end of the month is able to win the pot. So it [the market] is really much broader than we thought, which is really exciting.
As we look at video games and then expand out. The video game industry is bigger than the movie industry. Now, it’s bigger than most entertainment industries around the world. That’s a great starting point. And like, I said, we’re not focusing on the top level competition. We’re focusing on the everyday competitors. And then if you start to expand out and look at golf and chess, Mahjong, etc. You really could get pretty wide there and then take it even a step back into other gamification through fitness. It (the market) is definitely into the billions. I think the most challenging part for us when we’re out there raising money is trying to really put a dollar value on the TAM.
When we got into the market, what we saw is that a lot of companies were finding roundabout ways to pay winners. So you win a tournament or a head to head match, and you can redeem points for a gift card or maybe they’re doing something where they’re mailing you a check because there’s no paper trail online of those payouts. What we did is we went head on and we tackled the compliance angle and the regulatory angle head on. A quick story is when we launched our MVP. After about a week of operating, we got a cease and desist letter from Stripe, which is our payment gateway. And they said, We don’t allow skill based gaming companies to operate on our platform. We don’t accept their transactions. You have a week to basically take all the funds out of our platform. And from there it sent us on about a one-year journey of figuring out what payment processors we could work with, who thinks that they could get us approved by Visa, Mastercard, and Paypal? What bank could hold our customers funds? How are regulators looking at this space? So we went really deep. And what we found was when we were having these conversations, and when we got approved by certain payment processors and people that had to do with the flow of funds. Therefore we’re self regulated. But once we got through the other side of it, what we’ve done on a regulatory standpoint, and from a compliance standpoint, and be able to stand up this wall and say, we are approved by Visa. We are approved by Mastercard. The funds in our customers are FDIC insured. That’s what really makes us stand out from both B to C standpoint, and what we offer to our B to B partners.
Compliance Through Self Regulation
Regulations across states are not uniform at all. It’s interesting because there’s no federal mandate. So skill based gaming is dictated on a state by state basis. And we did this 50-state analysis. That’s the first step is to hire a gaming attorney. There are 3 different types of tests that these states deploy to figure out if the game is skill based or chance based. But what we found is that there’s case law from 1978, about a baking contest in New Jersey which dictates how skill based games are looked at in that state and in other states. So ultimately it was up to us to say, what’s the level of risk that we want to deploy. It’s so nuanced. But I would say that we’re getting ahead of it and we are in active dialogue with the gaming councils in different states to say this is how we’re operating. This is how we want our partners to operate. Can you tell us if you think that we’re above water, and this is how you’d recommend that we are. And if not, can you give us some guidance? So we’re taking all the measures we can. Our anchor investor, Tusk Venture partners, this is their sweet spot, like they work with companies in highly regulated spaces.
On Source of Motivation during Challenges
There’s no shortage of people out there that have done some really impressive things. So it’s easy to find that motivation. I’Il find that in Bradley Tusk, who sits on my board, who’s just got a million balls in the air and has done such impressive things. He’s written a couple of books. I also look to a lot of sports figures and read a lot of sports biographies. I recently saw biography and Netflix with Arnold Schwarzenegger, which was incredible, just his resilience, and what he’s been able to do. But the truth is, anyone that’s in the arena [of the startup world] because I know how challenging it is. So if you’ve made it to Series A company, if you’ve sold your company or anything in between, it’s just so difficult. So anyone that’s in the arena going through what I’m going through and succeeded in it. It’s just really easy to use that as motivation.
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