Wednesday, November 5, 2014

What happens when you give marketing guys too much money (Part 1)

First, I owe everyone who's a regular reader of this blog a profound apology. I made a commitment a while back that I would post at least once a week, which may not seem like a daunting task. However, each of these posts takes some considerable time to assemble, particularly fact-checking and date-checking. And I try to make each of these a short story in itself, so having read the other forty-odd posts here isn't a prerequisite. This means that each 1,500 words I write ends up taking 4-6 hours of writing (not to mention thinking).

We have been working on a major software upgrade for my consulting client, Barona Freeplay Online Poker, for most of this year. We entered final testing in August, which frankly was problematic and consumed about 50% more of my time (and Sharon's) than expected. Then we launched, and that 50% became - well, a lot more than 50%. It's been a very difficult period, consuming 12, then 14 and eventually 18 hours a day until things finally settled down. We're still not truly settled - we have a lot more work to do - but things have stabilized to the point where I feel like I can take a few hours here and there to do things I enjoy, like writing this blog.

For the foreseeable future, my guarantee of one post a week will be a gentleman's/ladies' agreement. I'll reinstate the $100 punishment for non-compliance once I'm more certain of my schedule.

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When I interviewed with PokerStars (more on this here and here), one of my concerns was that the company was attempting to go up against the well-established 900 pound gorilla (which was Paradise Poker back then in 2002). The big issue with attempting to fight a 900 pound gorilla is that you need to be able to act like a roughly 900 pound gorilla yourself. Popping a few ads into Card Player wasn't going to be sufficient - we were going to need to be very creative, and in this context, there's a pretty simple equation:

creativity = lots of money

One of the tasks I performed for Isai before he hired me was to create a marketing plan - not a full-fledged plan, but he wanted me to sketch out details about how I would go about launching the company. As part of this exercise, I created a marketing budget, which involved spending about $600,000 on marketing in year one. I had no idea what PokerStars' financial backing looked like, nor did I know at the time who the owners/investors were other than Isai. I wasn't thrilled with where I was working, but leaving a reasonably well-paid position with an up-and-coming Internet company for a startup was already going to be a challenge - I needed to know that they had deep enough pockets to have a chance in the market.

At some point in the interview process, Isai asked me if I had any questions. I asked, "You've read my marketing plan. Do you have $600,000 to spend on marketing in year one?" Without skipping a beat, Isai said, "We have the money we need to properly launch this company."

Had this been anyone else, I would have had a lot more questions. But there was something about Isai that I simply trusted implicitly. This may seem naive from a nearly-fifty-year-old (at the time), but I've come to rely on my business sense, and there was no doubt in my mind that PokerStars had the resources to carry out an audacious plan.

I'll start with a modest example. After Chris Moneymaker won the 2003 World Series of Poker, I was constantly looking for ways to capitalize on his extraordinary accomplishment, and to leverage his name (which was, frankly, a dream for a marketing guy). After the first few broadcasts of Chris' final table, he was instantly recognizable, so one thought was to experiment with some pure branding around his name. I had this idea for a billboard that would directly tie Chris' success to his experience on PokerStars. I took one of our standard layouts, played with it a little and came up with this:



I thought the tagline was one of my best - it directly linked Chris with PokerStars, broadly implying that he won the WSOP because of us. I sent the design off to our staff artist and started shopping around for billboard locations around LA, thinking that we would use one of the world's largest poker markets as a test.

Around this same time, we got into some very contentious discussions with the owner of the Bicycle Casino, Haig Kelegian. Kelegian owned the Bike, Oceans' Eleven near San Diego and part (later most) of the Commerce Casino, and was an insufferable jerk of almost unimaginable proportions. The last meeting we had started off with Kelegian, in front of five of his own staff, saying, "Companies like yours are illegal, and I can put you out of business with a few phone calls." This pronouncement, I kid you not, was immediately followed by his request (through Kelley O'Hara, his marketing director) that PokerStars run satellites for the Bike's upcoming tournament series.

If that's not outrageous enough, what followed literally made my jaw drop. I told Kelegian, O'Hara and the rest of his team that we might be willing to run satellites for them, but that we needed to work out how we could mesh the brands together so we could each gain some benefit. Kelegian then told me that we couldn't use the Bicycle Casino's name or logo to advertise satellites. When I asked him why we would send a few hundred thousand dollars of our liquidity to the Bike for essentially no return, he said the following: "Your players will know, and our players will know. You should be happy just to be associated with us."

No shit, he actually said this.

In the car on the way home from this complete waste of time, I got a call from Marc Chessen, who owned a media company we had done some business with. I had asked him to look into the cost of a small number of billboards that we could use as a test. He was calling to give me the estimate, and to tell me that there were two particular billboards we might like - they were on the 710 Freeway, on the approaches to the Bike from both north and south. 

"How far are they from the Bike?" I asked.

"You could throw a rock from either one and hit the Bike," Marc answered.

Life isn't always perfect, but then there are moments like this. 

"I'll take both of them," I said. Marc pointed out to me that he hadn't told me the price. It didn't matter. Three weeks later, Haig Kelegian got to look at this on his way to the office.



This escapade cost PokerStars $30,000 a month, plus the cost of the boards (we did a total of six, including one at the exit from the Commerce). Isai wasn't convinced about doing a branding campaign - he believed that our money was better spent in direct response until we were better-known. But I believed that Moneymaker's brand would help us rise to the top, and was willing to take a chance.

There's a nice epilogue to this story. We regularly surveyed our players to find out how they had heard about us and what made them sign up. Within a few days of putting up the billboards, we started to see measurable numbers of players saying that they first learned of PokerStars from the billboards. By the end of the first full month, over 200 players claimed that the billboards brought them to PokerStars. My branding campaign had, inexplicably, become a direct response campaign.

And there's one final, satisfying note. It was a few years before we tried to do anything with the Bike again, and this time it was them approaching us. By 2005, we had three WSOP champions in our stable, were one of the three dominant brands (along with PartyPoker and Full Tilt) and were, in real dollars, larger than the Bike by a substantial margin. Kelley O'Hara asked us to work with them on satellites and other promotional opportunities surrounding their World Poker Tour event, which we did (and used their name). In the last meeting before we launched, we hammered out the final details and I thought we were done. As I was packing up, Rick Cloward (who, I think, was VP Operations) asked if he could speak with me privately. When we reached his office, he closed the door and said just one thing: "Would you please take down those fucking billboards?"


I have written before about the horrific series of events leading up to our first World Poker Tour event, conducted on a cruise ship in January 2004 (see "How I almost went to jail as a terrorist," "Revenge of the Girlfriend" and other related stories). Without rehashing those stories much, I'll mention that I had to fire our travel agent a few weeks before the event, which meant taking on far more work than our microscopic staff was able to handle. We were all working 18 hours a day with no respite in sight until after the cruise.

In the middle of all of this panic, I got an MSN Messenger message from Isai (this was our preferred means of communication for most things). He had heard that Sharon had played quite a bit of poker with Ben Affleck, and asked me if I thought she could get him to come on the cruise. I told Isai that I doubted that Sharon knew him well enough, but I'd ask her opinion.

The next time we went to the Hustler to play, there was Ben. Sharon approached him with the idea, and much to our surprise, he was not only interested, but seemed excited at the prospect. He gave Sharon his agent's contact information and told us to work out the details with him.

I called the agent the following day, and he took my call immediately - Ben had already told him to expect my call. I gave him my pitch, he asked a lot of questions and then said he'd talk to Ben and get back to me.

The next morning, he called. Ben would love to go on the cruise, and he had just enough time in his schedule to do it. And then he dropped a bomb - he wanted a $1 million appearance fee. 

There was no way this was going to happen. $1 million was a very measurable chunk of my marketing budget, and I honestly didn't think there was anywhere near that much value in having him along. But I told the agent we'd talk about it. I hung up and called Isai.

"OK, I talked to Ben Affleck's agent. He wants a $1 million appearance fee." Without missing more than a half-beat, Isai said, "OK, work out the details," and hung up.

So now, in addition to personally making travel plans for the roughly 600 people going on the cruise with us, I now got to negotiate and execute a seven-figure deal with arguably the biggest star in the world. I got to work on the contract with our lawyers, and started working out the logistics. I called the agent after we sent the contract along, and he dropped the next few bombs.

"Ben doesn't travel commercial. You need to fly him from LA on a private jet. I'll send you the specs," he said. They arrived while we were talking - Gulfstream IV or comparable, two wait staff, no one else other than the pilots and whoever Ben brought along.

"OK," I said, having no idea whether or not this was OK. "What else?"

"Ben doesn't want to board with the rest of the passengers on the cruise." I told him that wasn't a problem - we'd board him first, or last, whatever he preferred.

"No, he doesn't want to board at the pier. You need to arrange to fly him to the ship."

By this time, I was in so far over my head that a little more wasn't going to change things much. "OK, what else?"

He sent me a list of relatively minor things - his cabin requirements, getting him from the hotel to the ship, stuff that seemed downright trivial in the face of hiring a helicopter to fly to a moving cruise ship. I told him I'd call him back later in the day.

My first call was to Royal Caribbean. I had no idea if landing a helicopter on a cruise ship was even conceivable. As it turned out, they had done it before, more than once, and yes, it could be done. However, there were two other things that we needed to consider:

(1) They don't allow helicopters to land while the ship is moving except in dire emergencies. So, they would stop the ship for the landing, but it takes an hour to come to a full stop and an hour to get moving again. Cost to us: $200,000.

(2) We needed a permit from Homeland Security, which normally took a minimum of two months. However, my RCCL rep knew someone at DHS and thought she could get it through.

I called Isai again with some revised numbers. Including Ben's appearance fee and all of his demands, the cost of bringing him on the cruise was now just over $1.4 million. 

"OK, do it," he said. Just like that. And my first thought was what's it like to spend $1.4 million by just saying "Do it?"

In the end, we didn't do it. The DHS security certificate was most of the reason - despite my RCCL guy's assurance, there was no guarantee we'd get the permit in time, and we might easily be committed to over a million dollars in expenses and no way to get Ben onto the ship. I breathed a huge sigh of relief - I was never really sold on the idea in the first place, and honestly didn't know if I'd get through the whole experience without having a stroke.

Click here for Part 2.


4 comments:

  1. So great to have you back, Dan! Thanks for sharing these amazing stories!

    ReplyDelete
  2. Dan, thanks for taking time out of your busy schedule to write these stories. I really enjoy reading. -

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  3. Dan, This is pure gold. Thank You!

    ReplyDelete