COVER STORY

The Fighter: Inc. Southeast Asia’s Magazine Cover for May

Lessons on how to triumph over struggle and strife from the founder of ONE Championship from the launch issue of Inc. Southeast Asia Magazine

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BY Tanya Angerer - 17 May 2017

PHOTO CREDIT: Carli Teteris

A dorm room in Morris Hall on the western bank of the Charles River is a plausible enough birthplace for great dreams. This was Harvard Business School, after all. But for Chatri Sityodtong in 1997, survival was the first worry: Getting by on an average of $4.30 a day, or whatever was left over from the Muay Thai lessons he taught to fellow MBA students. Life for Chatri’s family was tough, so much so he had to share his dorm room with his mother, then in her 50s. The once wealthy Japanese matriarch had no other place to live. Her apartment in Bangkok’s upscale Soi Ruamrudee neighbourhood was repossessed by the banks. The 1997-98 Asian Financial Crisis had wiped the Sityodtongs out. Along the way it destroyed Chatri’s parents’ marriage too.

There are few successful entrepreneurs in Southeast Asia, or anywhere, who have not struggled. Struggle is too often seen as a difficult yet temporary phase, a dark night of the soul that yields to morning. That diminishes its importance. Every entrepreneurial struggle shapes a founder’s instincts, vision and goals. This was especially true of Chatri, now 45. “When I was really poor in my 20s – I always told myself, if I could make a $100,000 a year I’ll be set because I was so poor eating one meal a day along with my mum and brother,’’ says Chatri.

Such day-to-day struggle for food is certainly over for Chatri. The six-year-old mixed martial arts promotion company, ONE Championship, he co-founded and leads as chairman expects to be worth $1 billion by 2018. Yet a deeper struggle continues – which still shapes Chatri and ONE Championship to this day. The degree to which struggle and success are entangled for Chatri offers a lesson for entrepreneurs across Southeast Asia.

Social Media Master

Inspired by Chatri’s childhood immersion in Muay Thai, from where his “warrior spirit” emerged, ONE Championship’s vision is compelling: Give mixed martial arts a branding twist, by infusing it with the values and culture of the ancient martial arts of Asia, and then bring it to billions of Asian consumers via broadcast TV and live events.

“Asia’s been the home of martial arts for 5,000 years,” says half-Japanese and half-Thai Chatri. “Be it karate in Japan, taekwondo in Korea, kung fu in China, Muay Thai in Thailand or silat in Indonesia. And what we wanted to do at ONE is bring it on a world platform.’’ 

ONE co-founder and CEO Victor Cui, 45, correctly sees a gap in the Asian sports market. There is currently no purely Asian sports company delivering world class sports content to all of Asia, with largely English or European football popular in select pockets of Southeast Asia and the obsession with cricket largely restricted to the Indian subcontinent. 

“A lot of these sports have financial barriers to entry,’’ says Cui, who was born in Canada of Filipino-Chinese descent and who was a senior executive at ESPN Star Sports in Asia. “Whereas in martial arts, you can be an orphan, you can come from nothing and become a world champion.’’

Fight night broadcasts to potentially 1 billion people worldwide. PHOTO CREDIT: Stev Bonhage

Make no mistake: ONE Championship is on a roll. It has amassed a following with the potential to reach 1 billion viewers partly by using social media masterfully. The company’s Facebook page has over 3 million followers. No less than three dedicated social media staffers sit next to the cage throughout every fight chopping and pasting photos and captions. ONE even tested live streaming of full fights on Facebook back in 2015, a smart move in an age where sport on TV doesn’t hold the same allure over younger fans. According to a survey by Ampere Analysis, viewers between 18-24 prefer to get their sports fix more sporadically than their parents through their smartphones.

ONE’s double punch of social media savvy married to a live event business generating real dollars has caught investors’ attention. In 2016 Chatri received an e-mail from Heliconia Capital. Chatri was unaware of the firm’s link to Singapore state investment vehicle Temasek Holdings, whose net portfolio value is currently $242 billion. After meeting over coffee, one thing led to another and two months later, the buttoned-down Temasek made its first foray into the world of sports, with an eight-figure investment into ONE. Chatri has described it as “the biggest moment in (ONE’s) history.’’

“When Temasek came on board, it was the signal that it’s not about fighting,’’ says Chatri. “It’s about a sports media company trying to become the NFL, NBA or Formula One of martial arts in Asia.’’ 

The company has also managed to attract a dizzying array of sponsors, especially after taking out the word “fighting” from its name in 2015. After the name change, Disney became an official partner of the company, paving the way for partnerships with Facebook, LG Electronics, Yahoo, L’Oreal and Sony. Even Manny Pacquiao, the legendary Filipino professional boxer and politician, holds an undisclosed number of shares in ONE.

No Rolls Royces and Naked Blondes 

“At the end of the day it’s not even about the money,” says Chatri, who put in lucrative stints on Wall Street and Silicon Valley before founding ONE. “I had success in society’s eyes but I felt very empty inside,” he says, which is why, at 37, Chatri decided to retire as a hedge fund manager to start ONE in 2011.

Chatri is confident about ONE crossing the $1 billion valuation mark in a year. Although international sports agency MP & Silva declined to comment on ONE’s current valuation its Asia-Pacific managing director, Wu Swee Sin, expressed confidence in ONE’s growth strategy and its potential to reach a $1 billion valuation in future.

When it comes to valuation, the most common comparison made is between ONE and UFC, its older and cockier MMA cousin from the U.S. 23-year-old UFC, which was bought for $4 billion in 2016, has four main sources of revenue. First is its pay-per-view business. Second is the amount it generates through media broadcast rights. The final revenue components are live events and sponsorship.

Some 39% of UFC’s record $609 million revenue in 2015 was from pay-per-view sales; media rights (in the U.S. and internationally) accounted for about 35%, and live events plus sponsorship filled in a fifth of its revenue, according to sources.

The problem for ONE is that pay-per-view is not currently an option in Asia. MMA in the region has just not reached a level that it can be charged for. Therefore, most of ONE’s revenues come directly from broadcast media rights, through which it claims a potential of 1 billion viewers in 118 countries. Actual viewership is harder to calculate as broadcast rights are mostly sold on a country or regional basis.

In North America, where MMA is almost becoming mainstream, UFC managed to sign a 7-year deal with Fox Sports worth nearly $760 million in 2011. It’s not known how much ONE’s contracts are worth and the company has refused to divulge its revenue or financials. Yet in Asia, where MMA is still in its infancy, it’s hard to see how ONE could bridge the dollar gap between it and UFC through broadcasting rights and sponsorship alone.

What ONE may lack in pay-per-view sales, or even broadcasting dollars, it claims to make up for in scalability.

“UFC is basically popular in North America, which spans over 6 time zones. In Asia, if we look at China, that’s one time zone with 1 billion people. The scale and reach is considerably different, especially when it comes to sponsors,’’ says Cui. While China’s 1 billion strong audience is a mesmerizing prospect for any advertiser it is equally true that audience is significantly more diverse in terms of income and consumption patterns than its Western counterpart. In other words, what will an advertiser sell in a commercial broadcast during a ONE fight in China? Soap? Or luxury cars?

ONE argues that its true potential lies in the future – and that potential is great. “It’s not about where the puck is today,” says Chatri. “It is about where the puck will be in a few years. It is about creating a vision of reality that does not exist today.”

Chatri’s vision of the future rests on three strategies for growth: scaling his audience, deepening his reach, and creating multiple forms of engagement.  Once ONE's content becomes ubiquitous across all platforms, terrestrial broadcasting, cable and digital, and across access devices such as TV, mobile, and computers, then large monetization will come via ONE's own digital platform, media rights, merchandising, and brand licensing. 

ONE plans to open its online store in the third quarter of 2017, selling a variety of fan merchandise, including t-shirts, hoodies, shorts, rashguards, caps, cups, gym bags and branded gloves, among other items. “If ONE sells only one t-shirt per year at ten dollars per t-shirt to only five percent of Asia’s 4 billion people,” says Chatri, “it is equivalent to two billion in revenues. The potential is massive.” ONE will also launch a mobile app where its content will be accessible on a 24-hour basis.

Although Chatri acknowledges that Asia’s media market, in terms of both advertising dollars and size of broadcasting deals, is currently smaller than the U.S., he cites the higher growth rates in Asia on both counts. The momentum, in short, is in ONE’s favor. “Brands who want to grow in Asia will prefer to spend money on a sports media property that resonates with the Asian audience,” says Chatri, citing ONE’s growing viewership relative to its European and U.S. sports media rivals. “It is only a matter of time before Asia dwarfs the U.S.”

Brand extensions, through licensing deals or direct ownership, also appear to present ONE with a lucrative future. “We have already been approached by multiple parties who want to license our brand for products as diverse as protein shakes to gyms to athletic gear to energy drinks to video games,” says Chatri. “We have turned all of these opportunities down in an effort to stay focused on our core. At the right time, we will aggressively go after these other opportunities.”

Where ONE has already excelled is in branding its product for more mainstream advertisers and sponsors. “Our western counterparts, their heroes happen to be brash – driving Rolls Royces with 5 blondes and pictures of million dollars of cash,’’ says Chatri. “I could do the same thing with naked women running around but I don’t feel that’s right. That’s not my ethos...’’

“It’s a different product,’’ agrees Kunihito Morimura, president and CEO at sports marketing agency Dentsu Sports Asia. “UFC showcases more intensive fights, more entertainment, whereas ONE is more serious and more Asian. ONE is also about intense fighting but there’s more respect for each other.’’

DEFENDING HER TITLE Angela Lee walks through a press throng in Bangkok PHOTO CREDIT: Stev Bonhage

For example, Angela Lee, pretty and disarmingly sweet, is one of ONE’s biggest stars – and the kind of fighting heroine even a conservative advertiser should be comfortable with.

The Vancouver-born, Hawaii-raised Lee “grew up in the gym’’ with both her parents running their own martial arts school before she was born. After high school Angela told her parents that she wanted to do it professionally. Two semesters in at a college in Hawaii and she left to join ONE. By 19 she was a ONE world champion. A diminutive 5 feet 4 inches, inside the ONE fighting cage she’s a beast who remains undefeated.

“I don’t see myself as a barbaric cage fighter,’’ says the 20-year-old Lee. “In boxing you can’t use your legs, in wrestling you can’t strike. So much thought goes into the sport – it comes down to a science and art. It’s a human chess game.’’

Consistent with ONE’s emphasis on Asian values, Lee goes everywhere with her family. When Lee defended her title against Taiwan’s Jenny Huang in Bangkok on March 11, her mother, brother and father walked into the screaming arena alongside her and prepped her before she entered the cage. Every jibe at Angela caused her younger brother Christian to visibly wince. And when Angela’s hand was raised at the end of the fight, her whole family were first to climb onstage.

“It’s a very good positioning statement,’’ says MP Silva’s Wu. “Being an Asian originated product, there is a philosophy of mutual respect, which may not necessarily be the case in the more Americanised version.’’

Dirt Poor and No Education

Chatri’s DNA as a martial artist definitely fuels his vision for ONE. When in Singapore, he tries to train at least 4 or 5 times a week. There is an obvious pride he takes in his fighters, where “99% of his athletes are dirt poor and have no education.”

“You can use martial arts to beat someone up or fight in a ring but the real purpose of martial arts is to unleash human potential,” Chatri says. For many of his fighters, he says, the journey from where they came to being world champions is something he hopes “will inspire millions and billions’’. It’s not hard to see why. Chatri has made this journey himself.