As a Teen in Detroit, He Was Just Trying to Stay Alive. Now He’s the CEO of One of the Hottest Companies in the $700 Million eSports Industry
This fall, video games will be an official high school sport. Delane Parnell’s startup is helping make it happen.
Delane Parnell's journey to become a tech founder is different than most. "I didn't grow up on the internet, or coding," the 25-year-old says. "Because I didn't have internet."
Parnell was raised a short walk from Detroit's Seven Mile Road, where gangs ran the streets and the local high school was equipped with metal detectors. His father was murdered a few months before he was born; his brother's father died from sickle-cell anemia. For the first dozen years of his life, Parnell lived with a family friend with a drug habit while his mother struggled to make ends meet.
"Most of the friends I grew up with," he says, "have died or are in jail."
That's why it might be a bit surprising that Parnell's startup, PlayVS, recently signed one of the most important deals in gaming history. This fall, eSports will become a sport officially sanctioned by the National Federation of State High School Associations (NFHS), the organization that writes the rules for high school sports and activities. When it does so, Parnell's PlayVS will be the company providing the online infrastructure--a platform that hosts competitions, compiles statistics, and streams matches for fans.
The startup also says it's on the verge of announcing a record-setting funding round next week. Peter Pham, an investor in PlayVS and co-founder of startup incubator Science, claims that when it does, it will be the largest Series A raised by an African-American founder in consumer internet history, having previously only been bested by two enterprise companies. (According to Crunchbase, real estate companies Compass and Cadre raised A rounds of $25 million and $18.3 million, respectively.)
And it all started with a kid who grew up in the wrong part of town.
Parnell doesn't speak with bitterness about the past. "I didn't grow up in an ideal family environment," he says, severely understating things. One of his few older male family members was his cousin, Juan; he was shot and killed at age 37.
When he was 13, Parnell moved back in with his mom, and she helped get him a job at a MetroPCS cell phone store in Detroit. He started work behind the scenes--mopping floors, counting inventory. Eventually, his boss taught him how to sell phones. "I didn't know it at the time," he says, "but that sales experience became the backbone of my life."
Parnell loved working--so much so that he put in 40-plus hour weeks during the school year, often doing his homework at the store. On weekends and during vacations, he labored constantly. "If I didn't go to work and keep busy after school, the only alternative was to go back in my neighborhood and be in a gang," he says. "I didn't want that life."
Within a few years, he saved up enough money to buy a cell phone store. Soon he bought another and then another, until he owned three shops in the Detroit area by age 17. He used some of those stores' revenues to help a family friend launch a car rental company, which today has 16 locations throughout Michigan.
"That whole time," Parnell says, "I had one goal in mind: How can I get as rich as possible to get my whole family out of this situation?"
After graduating high school in 2011, Parnell enrolled in the University of Michigan. Unable to find a balance between school and work, though, he dropped out after one semester. Around that time, he started reading about a startup with Detroit roots: Groupon, which was based in Chicago but co-founded by two Motor City natives. "I was mad fascinated with their story, and how they were using software to help brick-and-mortar businesses with customer retention," he says. "I fell in love with tech, head over heels." When a friend gave him a ticket to the startup-centric Launch Festival in San Francisco, he was in heaven. "I talked to everybody," he says. "Every person I could possibly find."
He came home and tried to replicate the event in Detroit, inviting people with whom he had networked. He had some success: He set up recurring meet-and-greets and roped in entrepreneurs like Kickstarter founder Charles Adler and Reddit co-founder Alexis Ohanian to speak at them. Over the next few years, he bounced between jobs in the tech space, spending a few months at a venture capital firm and a year at a rapidly growing fiber optics startup. His credibility grew, and so did his connections. He sought mentorship from a number of entrepreneurs, like Amanda Lewan and David Anderson, co-founders of Bamboo, one of Detroit's largest co-working spaces.
Parnell's work with the high-speed internet company led him to learn more about the still-nascent competitive gaming industry known as eSports. In it, he saw an budding industry with a lot of potential to grow. In 2015, he quit his job and built a Call of Duty team, which he sold the following year to one of the leading organizations in eSports; he tried to launch a gaming league but couldn't gain any traction.
On the dance floor at Austin's South by Southwest festival in March 2017, Parnell bumped into a friend, venture capitalist Suzy Ryoo. A few feet away was another friend of hers--Pham, the investor from VC firm Science. Ryoo made an introduction.
The two talked business ideas for 20 minutes or so, with Pham dancing the entire time. The pair learned they shared a mutual interest in eSports, which was projected to be a $696 million industry in 2017. They exchanged contact info, and by the next day, Pham reached out: He wanted Parnell to start a company in Los Angeles, and he wanted to help fund it.
"Sometimes you meet these entrepreneurs, and there's just something special about them," says Pham, whose firm incubated companies like DogVacay and Dollar Shave Club, which sold to Unilever in 2016 for $1 billion. "Delane wants to win so badly, and at the same time he has some humility, coachability. He also understands eSports better than anybody I've ever met."
Over the next few weeks, Parnell spoke with Pham and other potential investors about business ideas in the gaming industry. Eventually, he decided on a concept: an eSports platform for high schoolers. The team at Science loved the idea.
Within three months, Parnell had sold or given away most of his belongings and hopped on a one-way flight to L.A.
A landmark deal
For the 18 months leading up to Parnell's founding PlayVS (pronounced "play versus") last July, the NFHS had been exploring the idea of making eSports an officially sanctioned high school activity. A 2015 study found that 72 percent of American teens play video games, including 84 percent of boys. The organization realized this was an opportunity to convert some of those kids from playing single-player games on their couch to competing with a team in a school setting.
"We were finding through our research that there are more students gaming than there are on our athletic fields," says Mark Koski, now the CEO of the NFHS Network and previously the NFHS's director of sports, events and development. "We felt that eSports was another way for us to grab more students and put them within our education walls after school, to provide them a safe setting where they can learn from a teacher-coach."
Last summer, the NFHS began reviewing proposals from companies that could help it create eSports leagues in schools. Around the same time, Parnell was busy finishing building the company's platform and struggling to get traction with high schools. That's when a friend introduced Parnell to Koski. Parnell and his team flew to Atlanta to make their pitch. Koski told Parnell to expect a decision in about a year. Just two weeks later, though, Parnell received word: The NFHS wanted to sign an exclusive deal with PlayVS.
"They had a great platform already established and their goals matched ours. We liked that 100 percent of their efforts were high school-based," Koski says. "And we loved Delane's passion, his excitement, his drive."
Koski anticipates that between 18 and 20 states will hold an eSports state championship this January, with the other states soon to follow. Koski says the organization conservatively is hoping to see at least 25,000 students nationwide play in the first season. PlayVS will cost each school about $16 per month per student, which would mean the company will likely pull in about $2 million in revenue for the first year. Eventually, Koski thinks eSports will help add about 1 million students to the roughly 12 million who currently participate in high school sports and activities.
PlayVS and the NFHS aren't yet announcing which titles will be available when the first season gets underway in October. The two entities will focus on sports, adventure, fighting, and battle arena games like League of Legends. What they won't include are first-person shooter games.
Anyone who's ever watched a kid stare glassy-eyed at a monitor or TV screen, though, knows that gaming can for some become much more than just a casual activity. The American Psychiatric Association is considering adding "Internet Gaming Disorder"--i.e. video game addiction--to its official manual of mental disorders. According to Psychology Today, studies over the past several years have found that between 0.6 percent and 6 percent of gamers qualify as being addicted.
Koski says that time spent gaming will be time well spent. "The majority of these students are not on the basketball courts or softball fields. They're not playing in the band or part of the debate team," he says. "So this is attractive to us. Any time we can get more students involved in after school programs, it's a positive thing."
'I owe it to them'
When September rolls around, each participating school's teacher-coach will supervise daily practices. Competitions will take place within a school's library or computer lab, and, unlike most other sports, there will be no cuts--anyone who wants to play can play.
As for Parnell, his goals have shifted since his early days hustling in Detroit. He no longer is simply trying to get rich. "I've been around so many smart people, both inside my family and outside of it. People who were brilliant, but because they were in these circumstances, these environments where no one was pushing them to go to school, they didn't have someone in their life to sort of motivate them to do better," he says. Parnell is hoping his company becomes big enough to positively affect the next generation of kids.
From the company's headquarters in Santa Monica, down the block from the Pacific Ocean, Parnell talks about where he started and where he is now. The startup currently has about 15 employees, and he expects that number to grow to 35 by the end of the year. He hopes that someday, he can make enough to provide for his mom, aunts, and cousins. That will require PlayVS to be a success, of course--but Parnell sounds like he won't accept any other outcome.
"This is my first round, and I raised the largest Series A in consumer internet by any African-American. I don't have the audacity to not go out and work hard," he says. "I owe it to my supporters, my investors, my family. I owe it to the millions of other black kids who need to see somebody like me to know that they could also do this."