EXCLUSIVE: Nicolas Julia (Sorare): "It's in everyone's interest for Sorare to do well".
Financial health, games model... In an interview, Sorare CEO Nicolas Julia discusses all the issues surrounding the French unicorn specialising in fantasy sports.
Sorare has just celebrated its fifth anniversary. A lot has happened since 2018. You've attracted tens of thousands of players, you've raised over $700 million, you've launched in the US... Did you think you'd get to this point at the time?
To be honest, we obviously didn't expect to be here. We've done a lot more than we expected. The funny thing is that the only thing that hasn't really changed is our ambition. It's still intact, if anything it's stronger than ever: we really want to create the global leader in entertainment by enabling every sports fan to own a team and do everything a team owner can do in physical life, which is buy and sell players, develop your club, win trophies and awards.
What's been the hardest thing in five years?
I think that when you take the path of innovation, telling yourself that you're not going to copy, but that you're going to invent everything, you expose yourself to difficulty at every level.
You expose yourself to technological difficulties, product difficulties, partnership difficulties, regulatory difficulties, human resources difficulties, but that's also what's challenging. What's interesting in this context is knowing how to reinvent yourself.
Of course we've made mistakes, and there will be others. The most important thing is to learn from your mistakes and know how to reinvent your job. You have to be curious and humble.
As you point out, entrepreneurship isn't easy, especially in Web3. After 5 years, what's the main lesson you've learned? Wouldn't it be the importance of resilience?
I'd say that resilience is a prerequisite. If you don't have resilience, if you don't have some kind of sacred fire inside you, a passion for your project and for your community, then you'll never make it. If you don't have that, you shouldn't even go. You really have to have convictions, and that's what allows you to be resilient, face obstacles and adapt.
For me, the main lesson is really one of focus. You have to know how to distil the 2 or 3 priorities of the company and the product at all times. I learned a lot about this with Sorare. I think at some point we lost focus a little bit, and that's what we're in the process of correcting.
You launched in 2018, during another Bear Market. How are you doing financially?
We launched Sorare at the end of 2018, i.e. in the middle of one of the worst periods in the young history of cryptos. At the time, not a single fund wanted to hear from us.
I remember contacting 150 of them at the time. I was able to talk to around fifty of them. As far as I can remember, I got 48 no's, and another who was willing, but only if we had a lead investor, so it was very complicated. All that to say that Adrien (Adrien Montfort is the co-founder of Sorare) and I know what it's like to operate in a hostile environment. We've been around long enough to know how to manage things and anticipate down cycles.
There's a lot of talk these days about the financial situation of the Web3 industry, but it's actually complicated for everyone. The entire tech industry is under pressure. It's virtually impossible to raise funds. A lot of companies have had to let go some of their teams. You have to be careful with every last euro, and know how to make good use of your funds to ensure your company grows in the medium to long term.
We raised a lot of money in 2021 ($680 million, editor's note) and that money was used to do several things: sign partnerships with leagues, with ambassadors and recruit top profiles into the company.
The thing that cost you the most were the partnerships with the leagues...
We signed contracts with leagues in 2021-2022, when the markets were at their highest. Since then we have renegotiated most of these contracts to make them financially sustainable.
One of your emblematic contracts is the one with the Premier League (English football). Sky News had mentioned a 4-year contract worth £30 million a year (€35 million). Have you managed to renegotiate this contract?
I can't go into the details of the contracts, but there have been a lot of fanciful figures. The most important thing is that these contracts have been renegotiated and that the leagues are there for the very long term. The Premier League only has 10 partners including Sorare. If you take out Sorare, the youngest partner is "Electronic Arts", which is a company that is around forty years old. We're only 5 years old, so we need to give ourselves time.
The leagues are shareholders in Sorare and with the renegotiation of contracts they've become even more so. We are working hand in hand with them. The leagues have a lot of faith in the project. You have to realise that we have an ultra-powerful portfolio of partners. No other company has as many partners as we do with La Liga, the Bundesliga, the Premier league, the NBA... It's a huge asset.
Which leagues have you had difficulty renegotiating with?
I can't reveal the content of all our exchanges. What I can say is that it's in everyone's interest for Sorare to do well and for us to have the financial resources to develop the game. It's in everyone's interest for there to be a balance between us and the leagues.
When we talk about Sorare's partners, we're talking about the leagues, but there's also, and above all, the community of players. Who are these players today?
Sorare users are still crypto early adopters. Overall, they are educated people with an appetite for sport, mostly European and 80% male. The challenge is how to get out of this circle of early adopters.
Waiting to expand your audience, do you get the feeling that Sorare users are satisfied with the product? We're hearing more and more criticism...
I'm very sensitive to everything the community has to say. For the past few months, I've been much more focused on the product, I've been doing user interviews and I listen a lot to what people are saying. I know that there are things to improve, I'm well aware of that.
What needs to be improved?
Sorare Pro needs to be improved, we need to review the tournament structure, the rewards economy. We've started work on this and there will be some announcements in the coming weeks. The question is how we can bring about positive change for the community without tinkering around the edges. The aim is to do something that will last.
One of the points that comes up most often in criticism is the policy for issuing cards, which in reality are not really in limited supply since you issue new ones every year. Do you hear the criticism, especially from players who have been here for years?
We'll be announcing some changes soon. But I also want to remind you that we have always been transparent about our policy. It's wrong to think that Sorare has its hand on the market and that we can influence the price of cards.
There's a certain percentage of cards that we give away as rewards in tournaments, and there's also a percentage of cards that we have to sell because that's, today, our only source of income. We're the market leaders, we're the first to do it, so I know not everything is perfect, I hear that and we're going to improve things.
Historically you've built your business around football, but just over a year ago you launched into other sports in the US such as basketball and baseball. How is this conquest of the West going? Seen from Europe, it looks like it's been more complicated than expected...
I've never before talked about this development in the United States and especially the context in which we set it in motion, but I'm going to do so here. In fact, when we signed in 2022, we were up against a number of entertainment and sports players. I'm talking about physical trading card players. So we were faced with a choice: the first option was to take a long-term view and say to ourselves that we wanted to be the world leader, and to be the world leader you have to have American sports. The second option was to say that it wasn't a priority, and that we should let them pass. The risk with that line of reasoning is that potentially you're never going to see them come through again, so we took the first option!
With hindsight, and when you see what it represented in terms of investment, do you still think it was a good solution?
Was it the right time? Probably not. After all, we have a long-term vision, so I think it was the right decision. If I had to make that choice again, I would.
These American products are new. We're going to improve them. We've fallen a little behind, but we're going to make up for that in 2024.
In a Bear Market environment, the US was a strong choice. Haven't you lost touch a little with Europe and football?
Any strategic choice makes you think. Once again, it's a very good thing that we've positioned ourselves in American sports. We have renegotiated contracts with partners who believe in us. But you know, that's all normal. There's a lot at stake and relationships between leagues and their partners are never easy. You just have to find the right modus operandi.
There was just a time when we let the American product deviate too much from what we were doing before, so now we're in the refocusing phase and I'm dealing with it personally. The American product needs to benefit from what we've done with football in Europe.
How many users do you have in the United States?
Some of our American users are already those who play football in Europe. Our aim is to make that base much bigger, and we're going to achieve that through a redesign of things like rewards and a global mobile app.
This app will be available on iOS and Android in the first quarter of 2024. We need a quality app to achieve our goals. It's essential that everything Sorare, whether it's the marketplace or the lives to follow the matches, are easy to use on mobile.
A few weeks ago, you published a long post on social networks, where you explained, among other things, that you were going to be putting the hammer down on gameplay. We're tempted to say 'finally'! On a more serious note, why didn't you do this before?
I like to remind people that when you're experiencing this kind of growth, it can be tempting to recruit very experienced people who are used to managing this kind of thing, but things are a bit more complicated than that. You also have to be on the ground.
This doesn't mean that you have to micro-manage, but it's important when you're a founder to be on the front line, because you're the one who knows the product very well. You have to make sure that the vision is carried through, and nobody can do that better than you. That's what I wanted to say in my post on the product and gameplay.
I've really been getting back into these issues for the last 3 months, which I'd somewhat neglected. Even when there's someone at my side, I'm going to stay on the product.
Many will tell you that that's not the role of a CEO...
If, in fact, the role of the CEO is to be at the forefront of the product and the user experience. If you want the best product, the CEO has to be involved.
I often say that Sorare is still a labyrinth where it's complicated to find your way around. We haven't built a path through which we take the user by the hand. This is one of our priorities. We've started to work on levels for players, but we need to go even further. Not all players need to be exposed to the depth of the game from the outset. We need to go gradually.
When will these changes be visible?
They will arrive gradually. The first stage concerns the mobile application, which will arrive fairly quickly in 2024. It's a fairly cross-cutting subject.
In terms of the product, there's Rivals, which is a new game mode. It's a Sorare Pro, but for the general public. We're currently testing it in closed mode. The idea is to allow players to quickly take on an opponent and win rewards. This is our second major project.
Of course, we also have Sorare Pro, which is the existing model and which we need to simplify and improve, particularly the rewards system. Here too we need to make major improvements.
By 2024, the aim is to have a mobile product that is engaging for new players and highly qualitative for those who have been playing it for a long time.
How do we reach a new audience?
When the product is more mobile and engaging, we will be able to draw on our ambassadors, Zidane, Mbappé and the others to reach out to a new audience. The product has to make sense to this new audience.
One of Sorare's other major projects is regulation. A few months ago, France became the first country in the world to create the status of monetisable digital object games (JONUM). However, this status is provisional. How do you see things going?
What has happened is rather positive, even if the parliamentary process is still far from over. There's a joint committee coming up, and we also have to wait for the implementing decrees.
More generally, I think this text reflects the government's desire to encourage innovation while obviously putting safeguards in place. We are well aware that, given the novelty of games like Sorare, we are arriving with new risks and that we need to frame these risks while allowing innovation.
Some players like Sorare have reportedly threatened to leave France if JONUM status was not created. Is this true?
Our position has been the same since the beginning. Before we set up Sorare in France, I travelled a lot to meet regulators and explain what we wanted to do and how it would change the lines and models.
Our approach has always been to say that we were innovative and that new rules were needed. We want a framework, but a balanced one. We have never threatened anyone with leaving the territory. We've just put forward our position, which has been the same since day one.
Would you be able to stay in France even without JONUM?
I'm very attached to my country, and I want to show that you can build giants in France. That's what drives me every day.
If you had the chance to project yourself into 2028. Where would you like to see Sorare?
I would love Sorare to be the world leader in sports entertainment. We often talk about tech, but we're not tech vendors. We sell cards with superpowers that get you into competitions and allow you to win rewards.
Our goal is to bring sports fans together around gaming. The aim is to build a team and make it grow by creating a bridge with the physical world, by going to the stadiums and meeting the professionals.