Jack Etienne: "We've been a part of CS essentially since the beginning of Cloud9 and we care a lot about it; we're going to put our money where our mouth is" (Part 2)
In the second and last part of our interview with Cloud9 founder and CEO Jack Etienne, we delve into the organization's new direction in CS:GO and explore the concept of releasing contract details to the public.
In part one, the Cloud9 CEO walked us through the organization's difficult years following their win at the ELEAGUE Major in 2018 and explained a large portion of the plethora of changes his CS:GO division underwent until the summer of 2020.
In the second part, we pick up where we left off as Jack Etienne explains what made the signing of Henry "HenryG" Greer as Cloud9's new general manager attractive to him and the organization, and shares his thoughts on the Brit's atypical approach to the job. Also read below to find out all about the CEO's decision to move away from the South African-American lineup, as well his thoughts on HenryG's hype-driven views, and to take a peek behind the scenes as Etienne shares the response he received from some fellow CEOs following the general manager's groundbreaking move to share his players' contract details.
Continuation from Part 1:
I wasn't expecting the [current team's] results to drastically improve through COVID, but Henry came to me and that was totally unexpected, sort of like when flusha showed up, it was like, 'Whoa, we've got to pay attention to someone like this.' And Henry had an idea of what he wanted to do. I was already thinking that through this COVID period there was no way for me to improve our team, and they also don't get very much European team exposure in scrims and on stage, and my team is basically going to be stuck here in NA through COVID. They probably won't improve so much, but that's okay. We were just going to get through COVID and look to see what we could do when the world opens up again.
But Henry had a plan to build a team in Europe, and every player that would be joining would be understanding that in a non-COVID world, when it's safe to go to LA, everyone would want to be a part of a team that moves to LA. He already had some pieces in mind that wanted to join us and he has a depth of knowledge about the game that very much appealed to me. Additionally, as Cloud9 has grown, my ability to spend a lot of time with each one of these teams, to really watch these teams and make sure they're growing the way they should, gets harder and harder. The ability to bring on someone like Henry, who brings all of this experience, can really ease that pressure from me, and I can put that trust in someone who has good experience. Henry is very driven to make a high-performing team and there is a lot of risk for his reputation for him to go out there and say that he's going to build a great team, so I know he's going to work extremely hard to protect that (laughs). It's a good motivation for him to make sure that he delivers.
So far, it's been really fun to talk about what we're going to build, what we're looking to do, why the players should sign with us. I usually handle all of that, but it's been really nice to have him come in. He's done an incredible job on these negotiations, exciting these agents and the players on the system that we're building. So I know that this team, which is super important to Cloud9's incredible legacy, is in great hands. I am still involved, I am still observing pretty much every single trade, I'm very involved with Henry, talking multiple times throughout the day on what we're building and how it's going to work, but I trust that he's going to build the next chapter of Cloud9 in a good way.
What do you have to say with regards to how this move reflects on your current roster?
These guys are putting in a ton of work. I think they're some of the smartest players in the server. They're extremely young, really talented, and I think that, with the proper amount of time, they are going to continue to improve themselves. But for Cloud9, we need to see faster results, we need to have a team in Europe that can interact against the best pros, and so it's just not the right fit for us right now. I wish them the best. I love how great they've been through this process. They haven't been salty, they've continued to work hard, and so I'm excited to see where their careers take them. They've been totally professional through this whole situation, so I'm really proud of them.
Can you speak to what the situation is looking like with them right now? You're looking for a home for them, obviously, but has there been any indication that you're going to be able to do that in the near future?
Yeah, people recognize the talent and we've got several teams that are very interested in them. When you're an esports brand, on the sponsorship side it's much more attractive to have a North American team because a lot of the companies that have money to spend, they're more interested in the North American audience. That's just the reality of it. It's really a budgeting problem, you spend X number of dollars on marketing in different regions. America is very concentrated, one big budget for a really big area. In Europe it's very fragmented, so companies will have a little bit of money set aside for France, for Germany, and on and on and on. To actually get a cohesive sponsorship package for Europe is actually quite difficult because all the regions want a say where the money is going. So if you're a European esports brand, when you're out there trying to do sponsorships just for Europe, it's a really difficult task to get those dollars in. But if you have a team that is mostly North Americans and located in North America, it's suddenly a much easier conversation to extract budget out of sponsors, so I think there are a lot of teams out there that are like, 'Hey, this is actually a great way for us to widen our demographic of what we cover and the region that is the easiest to get sponsorship dollars for.' We're seeing a lot of teams coming to us to say that this is what they were looking for. It's like plug and play, the players are super young, they're going to be playing for a long time, they love each other, they play well together, they're easy to work with. To be honest, I have to delay the transaction until my new team is built. So a lot of it is like, 'Yeah, cool, let's talk,' but I don't have an exact firm date yet on when my new team will be done, so this transaction can't happen faster than that, or if the transaction happens I need to hold on to this player until this happens, so it's more me slowing down the process than the actual prospective buyer.
As you mentioned, this time you put your trust into one person to lead the entire division. I'm curious about how you would compare the approaches that you went through before with this. Before that, you seemingly put your trust more in the players when it came to making lineup choices, like in the daps case, but this time it will be more of a higher-management person in charge in Henry in collaboration with kassad.
Generally, I take a pretty holistic view. I'll work with the coaches, I'll work with our data team, the players, and I'll get a lot of input on all those guys to pick my decisions. With this specific setup, Henry is the guy bringing players to me. If I see an opportunity, I'll make him aware of it, but I'm letting him run the show and make the decisions. I do set up things like, 'Hey, this is the amount I'm willing to spend on a buyout, work within this budget.' So he knows the limitations, but, by they way, our access to funds is pretty... we're in a good spot. He's not tied by any sort of financial limitations, it's just more whether the deal actually makes sense. If it's insane, we're not going to do it. But, in general, he's able to get the players that are available, he can convince the teams to let go of them and the players to want to be a part of us.
It also sounds like people are coming to you on their own already.
Well, I think what's really been cool about the way Henry has been rolling it out is that he's snowballing the hype. As we lock in each piece, people that we didn't even think were going to be available are coming to us, saying, 'Hey, we want to be a part of it.' So it's been really cool to see. We made our announcement that Henry is running this thing and some of the people that had already kind of committed to us were really excited to finally do their announcement. Once we announced ALEX, a bunch of people came knocking on the door in the 24 hours after we announced him. A bunch of players we didn't even consider. That's been really exciting to see. And with this Major being canceled, there is suddenly a flood of players who were probably just waiting to get through this Major that now are going to consider working with us.
These are interesting times. We're in a COVID time, sponsorship is a little more difficult to get than it's been historically, getting financial backing or raising is much more difficult. The climate just isn't good for that. So there are a lot of teams right now that were just kind of holding on until the Major, and then were going to figure out what to do after that. Now that the Major is gone, I think there are a lot of teams that are like, 'Hey, I need to cut budget because we don't have the sponsorship or we don't have investment, we don't have an event that we're actually looking forward to anymore, so let's look to sell these players now that we can because we're in a bad position.' Thankfully, Cloud9, we closed our last round at a good time, when we were able to get good value and then the market fell down around us, so it's leaving us in a good position.
Yes, and just a few days into his signing, Henry already made it pretty clear that he's bound to ruffle some feathers in the industry because of his rather unusual approach. How do you see his views on publicizing contract details, which is far from standard practice in CS:GO?
We're in a place where we need to shake up the industry to get talented players to come try Flashpoint out. We're in a great place, where we've got a really good thing going here at Cloud9 in terms of infrastructure, but we need to shake the current norms for players to feel comfortable to try something new. I think doing something like this only plays into our favor. I'll tell you right now: Within minutes of ALEX's contract details coming out, I had CEOs going: 'What the fuck, dude? How much are you actually paying him? Oh, that's even worse than I thought. Wait, that not in dollars, that's in euros? What the fuck.' (laughs) I shit you not. And they're like: 'Well, you just made my negotiations a lot more expensive, what the hell.' And I think I needed that. I need players to realize that they're going to come to Cloud9 and they're going to be really well-compensated, really well taken care of, and other teams can't offer that, so come to us. It falls into our favor to be this transparent. We would actually be completely transparent if we could, but in a lot of these buyouts you're not allowed to actually reveal those details, so we're being as transparent as we can and sharing all the numbers that we can. Some questions have come up recently, like 'We don't know how much of that package is inclusive of bonuses that are really hard to reach.' And the numbers that we listed, they don't include any of the bonuses, they don't include any of the prizing, that's just salary and buyout.
Not even a signing bonus? Or is that included, if there is one?
Actually, we did not include the signing bonus, and now I'm thinking, 'Shit, we should've!' We didn't. That's just straight salary, man, and the buyout. But the buyout wasn't actually that significant.
Can you try to explain why it has been a big deal to organizations to keep these kinds of details private?
There's been a lot of privacy concerns that they just have been sensitive about trying to release those details. Generally, when a team does a buyout, they don't want the details of that transaction to be released because, frankly, it's going to be perceived badly no matter what the number is because a lot of the fans out there, they don't want to think that a team is profiting on one of their favorite pros going from one team to another. But the reality of the situation is: Let's say that if ALEX was active on the lineup, if I go out there and the player wants to play for me and I go negotiate a buyout, usually the other team needs to turn around and go out and buy another player or actively needs to go buy another player at the same time. And the cost of these players can be anywhere from the cheapest, like $50,000, and I've paid as high as $1.75 million for a player at this point. So the company has to protect itself and make sure that as it goes to go replace that player, it's not in a position where it's suddenly in the hole a huge amount of money just to stay stable. So, the problem is that once fans hear about these numbers, they'll feel like it was unfair, not really recognizing the pain of the company that has to go out and actually replace that player. And the team could take a lot of heat from fans because of that. So usually in these contracts, there's a confidentiality clause that prevents the teams from actually even sharing that data. And you'll even see in our ALEX announcement, it's not specified for that reason.
Additionally, often the players will feel like if there was a large buyout for their contract, that could adversely affect the salary that they get, as well, so the players could be unhappy. So it's a double bad situation for teams for letting those numbers out. And so, historically, it's just never really been talked about. I think that's a big hurdle for us to still get over and figure out how we're going to deal with that and get fans to understand that this part of the business transaction of a buyout is just essentially not really a way to profit, it's just there to protect the company's ability to continue to operate.
And then the other side of this is the salary numbers. Why do we not get into releasing these numbers? There are a lot of reasons why people don't want to share that information. I would say the number one reason is, and the thing that a company always has to be careful about — and Cloud9 will never release these numbers unless the player is okay with it being out —, is that it's a big privacy concern that players may not want other people in the public or their family to know exactly how much money they're making. There have been instances where the family and friends of these players will pressure them to get support because they're making good money. And if it's actually known exactly how much they're making, that puts a lot of pressure on someone who could potentially be very young — I've signed people that are 15, 16 years old — from cousins and aunts and uncles and friends suddenly putting their hand out and asking for dollars. I don't really think a lot of the public's actually aware of how bad that pressure can be. And so it's something we have to be very careful with to make sure that we can really protect the players from that type of pressure.
And there are other reasons why. Then, going down the line, there's teammate pressure. For instance, ALEX, he is an IGL and he's the first player signing on for this project with Cloud9. That is a bit of a leap of faith, right? He was on a bench, it's not like he was on an operating team, so there was less stress from that. But imagine you're a player joining a team, you're super high profile, you're a team captain and you're leaving a team that's doing well where you're a starter. That first player is going to require a lot more incentive to join a team than the last and fifth piece joining the team. It's an old saying: The higher the risk, the higher the reward. The person who's taking the biggest risk to join a team is often going to be financially better compensated than the last piece who's not really taking a risk, which makes sense, right? But the thing is that five months after the team is formed, everybody forgets about who took what risk. And they're going to look at their teammate and say: 'Yo, dude, you're making like 30% more than me, but you're not doing 30% more than me in this game, that's bullshit.' And then there are two things that happen, right? There's an internal team pressure on the players with each other, and then there are relationships damaged because of it, potentially. And then there's pressure on the company to even out the salaries, which also causes additional tension because the guy who took the risk to come is thinking, 'Wait a second, I took the big risks, I should be getting paid more than my teammates.' And then there are the teammates who are being paid less who maybe didn't take any risks to join on, but they're feeling like they're being undervalued. And then the company is taking an internal heat, just dealing with that pressure. So there's a lot of sensitive politics/feelings that you have to deal with when it's out of the bag.
And then the additional pressure is that the entire ecosystem looks at what that pay is and they're going to make a determination of whether it is too high or too small or how it should impact them. There's a ripple effect. So when ALEX's compensation package came out, his salary plus buyout that we released, within hours I had at least two CEOs who are in negotiations or getting towards negotiations call me and just express concern. Like, 'Why did you put that out there? You're having an impact on buying negotiation. Now all players are going to be thinking that's the correct compensation. This is going to make things difficult for me, Jack, why'd you do that?' There's all these things we've got, we've got personal privacy and family issues and teammate issues and all that stuff is wrapped up into this question of why it isn't all public. And we're still grappling with it today and we probably will be for a while.
With that all in mind, would you like to see this become more of a standard and have other organizations follow your lead in this aspect?
Because of the reasons I said, I think it's going to have to be always something that all the parties involved are totally comfortable with. And if everybody is, it's really a useful tool because it's really important that when we say we're rebuilding, it has to be super attractive to other pros out there and make them realize that Cloud9, who has not had the greatest run in the last couple of years, is really taking Counter-Strike seriously. There were a lot of rumors out there like, 'Oh, you know, Jack doesn't care about Counter-Strike. He's not investing in Counter-Strike,' which is insane because, actually, all those roster moves I was doing, there were hefty buyouts. We're talking well over seven figures of buyouts that were put into Counter-Strike over the last couple of years, when we just had some bad luck there.
The announcement signals to the community that we care and it goes to the pros that maybe aren't in a happy situation, wherever they are. It generates a ton of hype, and we need that right now, we need everyone to know that, 'Hey, we're going to build something special here and come take us seriously.' So, for us, it's been valuable. I think a lot of fans have had huge question marks about what the hell Cloud9 is doing. And so this definitely shows that we care and it's important to us. We've been a part of Counter-Strike essentially since the beginning of Cloud9 and we care a lot about it, and we're going to put our money where our mouth is.
As far as I understand, this is a move that initially came from Henry to release these details?
He was definitely pushing for it. And because I put so much money into it, I'm proud of what we're doing and how aggressive we're being. And I don't want that stigma out there that Cloud9 is not paying, which is just actually fucking crazy. I could tell you, when I go buy out a player, all of a sudden the buyouts double. All the owners get like dollar signs in their eyes and start rubbing their hands because they know Jack's coming to pay. For me that does suck a bit because players would go like, 'Yeah, my buyout is probably going to be about like 100k,' and then I come knocking, and it's always like, 'Nothing less than 500k, Jack, this is the cost and this is the price.' And I'm like, 'That's not what I'm hearing. Two or three other teams are getting a bit smaller offers.' — 'Well, that's the Cloud9 price.' I'm like, 'Fuck. Okay.'
Are there any other changes that you expect Henry to bring to Cloud9 or even the scene at large?
I'm thankful that Henry pushed this point and thought it would be really good for the announcement. It is really unusual. We've been really, really grateful. We took a leap of faith with Henry because he's never run a team before. We didn't know. But his plan and his ideas were super exciting and he's so passionate about it. And then just to watch and listen in during his negotiations with agents, it's just been really exciting. Yes, he definitely has his own style and flavor, which I think is really cool and really exciting, and it puts a ton of hype into it and I absolutely love it. And it's not over yet. And this is why I'm paying him super well. I can tell you, he's by far the most expensive manager on my staff by a massive margin and it's because he brings something really special to the table. He's not just a standard general manager. He can actually be a face of Counter-Strike that's consistent, which is really nice. And he's familiar to the fans.
What's really cool about Henry is that you've got a lot of really fantastic partners that want to have a constant touch with our teams. Henry's in a great position where he can give an inside view on what's going on at an event and he can promote it and interact with our fans at that event without any sort of negative impact on our players. We're not the first to do this because we've now seen several casting talent now go into the general manager role with PapaSmithy joining 100Thieves and Jatt and Moses joining Liquid. So there's been a really nice path set already by some of these guys. And I'm hoping that we can do some really new, cool, and interactive content with our teams that gives a nice inside view of what the team is doing without negatively impacting the players. It's so exciting to me to have someone like Henry as part of our staff working on this.
The organization has taken a significant risk by signing Henry because of the allegations that were made against him earlier this year. Is this something that you took into consideration and were at all concerned about?
Absolutely. When I was just on the sidelines, not involved with Henry at all, I saw it and I was saddened by it. And then I saw his response and I was even sadder because I felt like, 'Hey, here's a guy who, thankfully, was able to really, I believe, prove that these things were false'. But his name got dragged through the mud and it must have been an absolutely awful experience for him. Thankfully, he was able to put together evidence to show that things weren't what they seemed. So I was sad to see him go through that. And when he came to join me, I had to reevaluate everything, and I felt like my initial read on his response to the way things went was that people went after him unfairly. I wasn't about to let that affect his ability to get a job with Cloud9. It's something that when you're running a company you have to consider. But I felt like he defended himself well, so I'm not going to stand for that hurting his career.
The cancel culture that's out there is super dangerous. And I see it everywhere, I see it within my own company, people participating in it. It's something where it's really easy to slip and get out of control and it's really important that everybody inside of our organization and yourselves really think, 'Hey, I really actually don't understand what the person's motivations were and I don't understand if things were actually accurate here', so take a moment here to think about your response because there are some wide-ranging impacts that would be really unfair if we don't actually know the full story.
The team hasn't really been in a position where it can contend for big wins since 2018, but judging by the ambitions HenryG broadcasts every step of the way it certainly sounds like you're hoping for that to change. Just how high are your expectations?
It's still really early on. We've only announced one player [Editor's Note: The interview was conducted shortly after the announcement of ALEX's addition]. I want to keep my feet firmly planted on the ground and not set these guys up for too much pressure coming on. But especially in these COVID times — which I don't think we're going to come back to a normal LAN year until 2022 at the earliest, I think 2021 is going to be a lot of online stuff — to be a part of a lot of really good online events, with other really quality teams and to get exposure at all, you have to be in Europe, that is the place to be right now. Right out the gate we're going to have a team that's located in the correct region to play against the best teams, to get them as much exposure as possible so that when we go back into the LAN environment, our team should be in a really good, strong place to be contending for top ten at a minimum. And I think Henry would be disappointed if we didn't see a team that was top five with what we're building. I would be very happy if I saw that with the quality of the teams out there. It's a bit difficult to understand the strength of teams right now in an online environment because it is a very different game once you get back to LANs. We will see how the teams shake out in this online environment in 2020 and 2021, and as we move into 2022, things are going to get really shaken up, but I'm really confident that Henry is going to build something that's going to last through both of these eras.
You've said that once it is possible the team will be based in Los Angeles, even though it will be at least in large part European and staying in Europe during the first stint. This is something that other organizations have attempted in the past, but the vast majority of cases have been unsuccessful over the long term. There are only a few rare exceptions in CeRq in EG, for example, or jkaem and kassad in 100T. How do you plan on making sure that the team is happy and when that time comes, when they move to North America, it works out in the long term?
The first thing that I'm doing is, when we're hiring, we're looking for people that are already inclined to want to go to LA. So just going into this thing, there's an expectation of, when the world's in a better place, we'll be looking for everyone to move to LA. I've been doing this for a while and the reality is that saying you're ready to move halfway across the world and being happy with it and the actual reality of it are two completely different things. It's a different culture and lifestyle in LA, so there's no 100% certainty, right? I've had at this point many, many Europeans, many different teams that I've moved to LA and, in general, we've been able to get people at least satisfied, if not really happy with being out here. So I'm pretty confident that I can provide a good daily lifestyle and experience that they'll be happy with when they get here. But you never know until it actually happens. If it's going to go well or not, we can just kind of put everything together and try to do our best to make sure that they get here and the community is a fun, rich experience for them. But it's happening more and more and I think we're seeing people more and more comfortable with that shift. We will see and we're going to do our best to make sure that people who are signing up are really excited about coming out here and it's something that they want to do. But it's going to be a case-by-case basis on if people actually are happy once they get here.
Do you feel like it is more difficult to make that happen in CS:GO? In League of Legends, it's a very different story, for example. Plenty of Europeans have gone over to NA and stayed there for long periods of time, but it has been far from the same in CS, including in your team.
Not a single one of our players left because they were unhappy here. It was just a team dynamic situation where it just didn't work out. So that does make me feel good that if we've got a team that's functioning well in Europe and we bring them out here, we're not going to have those issues. It'll be other cultural issues or lifestyle issues that are a frustration that we'd have to contend with. I think the biggest problem with it is that, right now, Europe is and may always be the hub of the best Counter-Strike and the best players want to be in that area. But as Counter-Strike is evolving through the years, we're seeing that the players are asking to play in fewer events but have those events be more meaningful. And if Counter-Strike moves to place where North America has more of these really meaningful events and they're not required to fly around to Europe for half or more of their events, it'll make it a much more comfortable situation.
The tournament system for Riot, all of the games are here in LA and so it makes for a very comfortable lifestyle. And the lifestyle of a Counter-Strike player is vastly different than the lifestyle of a League of Legends player in that travel is the key component. Players in the past have said, "I want fewer events and I don't want to travel as much," but every time a tournament came up, they're like, 'Sign me up for that shit, I want to win that money'. But it sounds like I'm hearing more and more that players would like to either pass on events or just have fewer events and be more focused for those events. And I'm all for that. There has been a lot of misperception out there that teams want their players flying to every single event. That's just absolutely not the case. I want my players happy and want them healthy. I want them to be really good at these events. Each one of these events that we send our players to, I can see that it's wearing them out. I see it's wearing out my management. So I would love to see a reduction in the number of events and then just increase in quality. As we evolve towards that, I think it will be less and less unattractive for players to join North American teams.