07 Apr 2015
In and out of the ring with martial arts mogul Chatri Sityodtong (MBA 1999)Re: Soon Loo (MBA 1999); Kathleen Martens (MBA 1999)by Julia HannaTopics:
Photo by C.J. Sameer Wadhwa
On a Friday night in November, a capacity crowd of 12,000 spectators is settling in at Singapore Indoor Stadium, shaking off the rain from an early evening downpour typical for the start of monsoon season. They’re here for ONE Fighting Championship’s “Battle of Lions,” a 10-fight card featuring mixed martial artists from around the world. An enormous screen shows highlights from previous matchups held since ONE FC’s 2011 founding, in locations as diverse as China, Indonesia, the United Arab Emirates, Malaysia, the Philippines, Taiwan, and Cambodia, but the primary focus is the cage where two highly trained athletes will use every martial arts skill at their disposal—karate, jiu-jitsu, Muay Thai, judo, and boxing, among others—to score a win by knockout, submission, or points.
Face lit by the glow of his smartphone, ONE FC founder and chairman Chatri Sityodtong (MBA 1999) stands ringside. “I just asked them to dim the lights a bit more, to put focus on the cage,” he says, eyes restlessly sweeping the venue. “It’s similar to creating the atmosphere of a rock concert.” In just a few minutes, ONE FC will be transmitted live to 1 billion homes in 70 countries by Fox Sports, Mediacorp, Astro Arena, Star Sports, and others.
Dressed in a sharp dark suit and crisp white shirt, the Thai native, 43, looks the part of impresario, although his favored attire is often jeans and a T-shirt or workout gear. Trained in Muay Thai himself, with 30 professional bouts under his belt, Sityodtong still works out with former and current world champions at least five days a week at one of the martial arts academies he owns in Singapore. Sityodtong launched Evolve Mixed Martial Arts (MMA) in 2009 as a response to an unanswered question he saw in his newly adopted home: Where could he continue to train in the sport that had taught him the rewards of continuous physical, mental, and emotional self-improvement? Most of the gyms he toured were “dark and dingy, behind a noodle shop in Chinatown,” mirroring martial arts’ marginalized reputation in a young city-state flourishing on the precepts of technology, order, and modernity, not ancient disciplines involving hand-to-hand combat. At the time, Sityodtong was setting up the Asian office of Izara Capital Management, the $500 million hedge fund he founded in New York; Evolve was an interesting entrepreneurial offshoot based on his greatest passion in life, martial arts.
By his own description, Sityodtong lived a blessed childhood, watching his architect father build a real estate business from humble beginnings. But in the years leading up to the Asian financial crisis, business began to slow dramatically, then completely fell apart as full-blown panic hit in 1997, causing a run on Thailand’s uninsured banks. Overnight, the family lost everything. Sityodtong’s father eventually abandoned his wife and two sons, forcing them to move to a concrete-floor shack found through acquaintances. To save money, they subsisted on one meal a day. At that point, Sityodtong learned he had been accepted to HBS. A 1994 econ grad from Tufts University with experience working as an equity associate at Fidelity, he fit the profile of an MBA student. But making the decision to come to HBS was not easy.
“As the first son in an Asian family, I became responsible for my mother and my younger brother once my dad left,” Sityodtong says. “It was nothing amazing or honorable on my part, it’s just part of Asian culture.” Attending HBS represented foregone income and a substantial financial drain at a time when his mother subsisted on $6 to $8 a week, coupled with the very real risk (in Sityodtong’s mind, at least) that he would fail to successfully complete his MBA. But his mother convinced him to take out loans, and was equally determined that her younger son should continue his undergraduate studies at Cornell University. If the two brothers returned to the United States, she argued, they somehow would find a way to make it work.
Money, by necessity, became an obsession. Throughout his first year at HBS, Sityodtong sent $10 each week to his mother in Thailand, money earned by odd jobs such as teaching GMAT preparation at Kaplan, delivering Chinese food, and teaching Muay Thai classes. He maintained a spreadsheet of daily expenses, trying to beat his usual average of $4 a day with tactics that included avoiding public transportation by running or walking to get from place to place. Between his first and second year, Sityodtong worked as a summer intern at Bain, a position he applied for simply because it paid the most; he used the entire sum to help cover his younger brother’s tuition fees that fall semester at Cornell.
Despite the stressful circumstances, Sityodtong thrived at HBS. “The cases on leadership stick in my head to this day,” he says. “As an entrepreneur, leadership is the most important quality to have—you need it to attract the right people and get the optimum performance beyond any employee numbers or resources you control. And the case study methodology is amazing in terms of how much you retain. You remember stories of leadership, failure, and decision points—facts, figures, and theories, less so.” (Sityodtong now serves as a guest lecturer and entrepreneur-in-residence at INSEAD in Singapore.)
He also met classmates Soon Loo and Kathleen Gasuad (now Martens). The trio wrote a business plan for what would eventually become the online services marketplace NextDoor Networks, a business they launched shortly after graduation. Loo and Sityodtong lived and worked out of a two-bedroom apartment in Silicon Valley along with Loo’s sister (their first employee) and Sityodtong’s mother, who had been against this particular risk—safely through HBS, her son had received lucrative job offers from Wall Street and consulting firms. Six months in, the group had grown to 10, but they were served with an eviction notice when the landlord discovered that the bedrooms were doubling as office space. Fortunately, they had already signed a lease on a larger property—but funds were running short. “Chatri pulled Kathleen and me aside and told us we had about two weeks of cash left,” recalls Loo. “That fired us up. Two weeks later—in large part due to Chatri’s efforts—we raised an additional $10 million of venture capital. Working with him was extraordinary: intense and energetic.”
Over the next couple of years, NextDoor Networks raised nearly $38 million in venture capital investment before the dot-com bust of March 2000; by the time the business was acquired by OnStation Corporation in 2001 the number of employees had grown to 140.
Sityodtong then moved to New York City, where he bought his mother an apartment and launched a career on Wall Street as a hedge fund manager. Having enough money to take care of his family had been a driving motivation for so long that it was hard to let it go and get a broader perspective. Despite his financial success, he felt empty inside. It wasn’t until he came to Singapore that he was able to step back and see what was missing—work with a deeper, more meaningful connection to his spirit.
“What drives me today is very different from what drove me on Wall Street,” Sityodtong says as his driver navigates traffic to a weigh-in event the night before the fights. “On Wall Street I wanted to make millions of dollars, and I did that. Changing the world and making a positive impact on the lives of others is what drives me today—money is a by-product of doing good. I feel far more alive today than I’ve ever been in my whole life.”
Sityodtong (right) in a training session with Evolve instructor and two-time Muay Thai world champion Muangfalek Kiatvichian. “Martial arts is a process of continual self-improvement,” he says. (Photo by Armand Bentigan)
Industrial and sleek, Evolve academies feature plenty of glass and brushed steel. It’s a professional, we-mean-business sort of look that could be intimidating if it weren’t for the front desk staff, who immediately welcome newcomers and offer the opportunity to try out a complimentary class in a clean, brightly lit space. Situated in the heart of Singapore’s Central Business District, Evolve’s Far East Square location is a spacious 12,000 square feet. A Muay Thai class for beginners is starting under the instruction of world champions Orono Wor Petchpun and Saenghirun Lookbanyai. (Classes run every day from 6 a.m. to 10:30 p.m. and also include jiu-jitsu, boxing, wrestling, conditioning, and mixed martial arts, among others.) Evolve’s instructor roster features the highest concentration of world champions, a fact Sityodtong has made one of the gym’s competitive advantages despite the expense involved in recruiting and relocating fighters from as far away as Brazil. (Monthly pay for an Evolve instructor ranges from $5,000 to $15,000; housing costs are covered as well.)
The class, like the atmosphere of the gym itself, is no-nonsense but friendly, beginning with a series of warm-up exercises before moving to instruction in different punching and kicking techniques. In Muay Thai (sometimes called “the art of eight limbs”), fighters can use fists, elbows, knees, and shins. Attempting to do the moves quickly and correctly makes it immediately clear just how much conditioning and practice is required to reach a basic level of fight readiness. For most, of course, the combination of discipline, fitness, and focus that martial arts develops is an end in itself, although Evolve academies are also the training grounds for the Evolve Fight Team, an elite group of nearly three dozen professional fighters. (Alongside ONE FC and Evolve, other ventures include Evolve University, the largest online site for training in martial arts, as well as Evolve Fight Gear, an online retailer for martial arts supplies.)
“My value proposition is this: Not only are you going to learn from a world champion, you’re going to do so in facilities that are safe, clean, and fun,” says Sityodtong. “This is more like an academy than a fight gym, which is why our students range from a 4-year-old girl up to a 74-year-old doctor.” Sityodtong himself started in Muay Thai when he was in his early teens, training under Kru Yodtong Senanan of Sityodtong Camp in Pattaya. (High-ranking fighters are given the training camp’s name as their own by its grandmaster. Chatri’s birth name is Chatri Trisiripisal; coincidentally, Chatri means “warrior” in the Thai language.)
Franchise requests for Evolve have come in from across Asia and around the world, but Sityodtong has chosen a slower, more controlled path to growth. “If we’re committed to changing people’s lives through martial arts—to empowering them physically, emotionally, mentally, and spiritually—I have to go step by step,” he says. “There are more than 4.2 billion people across Asia. We’re at the very, very beginning of this story, but I believe the concept has great potential. Starbucks revolutionized the coffee experience by creating world-class products and an environment where customers can connect with the brand. Evolve operates on the same concept. The focus just happens to be martial arts.”
Like Starbucks, Evolve charges a premium for that experience, with monthly fees averaging $350. But the chain of academies also offers free instruction to qualified students from Boys’ Town Home, a nonprofit organization serving orphans and disadvantaged youth in Singapore. “A lot of the world champions at Evolve began under the exact same circumstances of extreme poverty,” says Sityodtong, noting that professional Muay Thai fighters can earn as much as $4,000 a night—an astronomical sum in Thailand, for instance, where the average annual income is just over $5,000, and much, much lower in rural areas. “For most of these people, martial arts offered a way out. It’s a way of life that teaches patience, humility, and continual self-improvement, not violence.”
Back at Singapore Indoor Stadium, the evening is well under way, with the crowd enjoying a mix of boxing, flying kicks, and jiu-jitsu in a lightweight matchup between Filipino Rocky “The Outlaw” Batolbatol and Australian Martin “The Situ-Asian” Nguyen. Two minutes into the second of three five-minute rounds, Batolbatol lands a left hook on the chin of Nguyen, knocking him flat. Then he’s up, overpowering his opponent with a double leg takedown. After 45 more seconds of grappling, Nguyen gets Batolbatol into a rear naked chokehold and wins the fight by submission when the referee stops the action after just a few seconds. While it’s true that outright violence isn’t in evidence, there is no mistaking that this is a combat sport. The unpredictable, live nature of it is a big draw, to say nothing of watching athletes in peak condition use every skill they can summon up to score a win. “There’s purity and honesty in what is being expressed,” says Sityodtong. “Fighters can spend 15 or 20 years perfecting their craft. It’s no different from a concert pianist. It’s their chance to demonstrate an art form and provide for their family.”
ONE FC’s growth has more than doubled each year since its first event took place in September 2011; last year saw 11 events in eight countries, including a foray into mainland China (Beijing). In 2015, the target is 24 events, with 10 in China, according to ONE FC CEO and cofounder Victor Cui, the ultimate goal being 52 events a year or a Friday night fight every week of the year. The challenges posed by that sort of expansion are not lost on Cui, a Canadian native and former ESPN executive whose successes include selling the X Games to Chinese officials who had never seen a skateboard.
“What really excites me about ONE FC as a business opportunity is that martial arts is the only sport in Asia with broad appeal and local relevance,” says Cui, noting that the Asian world as a whole (with the possible exceptions of Japan and South Korea) generally lacks the 24/7 sports culture found in North America. “Asia has been the home of martial arts for the last 5,000 years, and MMA is a sport that is intuitively grasped, like hockey is for Canadians. But until now, no one here has tried to commercialize martial arts for the masses.”
As a catchall Cui adds, “Asia” doesn’t really capture the diversity and complexity of markets where differences in government, religion, and culture can vary greatly, despite proximity. “Doing business in Singapore is nothing like doing business in Malaysia, which is a 30-minute car drive from here,” says Cui. “And it’s nothing like doing business in Japan, China, or the Philippines. One thing I’ve learned from running sports properties in multiple countries across Asia is that each has its own challenges and opportunities.” China shuts down for nearly three weeks around Chinese New Year, for example. Ramadan is a factor in predominantly Muslim countries, as are the outfits worn by female fighters and ring girls. (While MMA is primarily a male-dominated sport, women are gaining visibility with the rising popularity of fighters such as Malaysia’s Ann Osman.)
Navigating those complexities could result in a big payoff, of course. “The NBA or NFL sell their media rights to companies for billions of dollars,” says Sityodtong. “The opportunity for ONE FC is equally as large, especially since it has a global media broadcast to over 1 billion homes around the world.”
Based in the United States, Ultimate Fighting Championship is a model for what ONE FC could become. Founded in 1993 and currently the largest MMA organization in the world, it is still privately held, with an estimated valuation ranging from $2 billion to $4 billion, depending on the cited source. While UFC stages events in Asia, ONE FC has the larger market share; Sityodtong sees the potential for a familiar dynamic to play out between the two organizations. “In every industry there’s a dominant Western and Eastern player,” he says, citing Amazon and Alibaba; Apple and Samsung; Twitter and Weibo. “America has just 320 million people. Yes, GDP per capita is higher, but Asia is growing by leaps and bounds. If you localize and execute a proven US concept, the runway is far greater.”
The prospect of that sort of success earned ONE FC the backing of Singapore’s Economic Development Board—one of only two sports to enjoy that status (the other is Formula One racing). Winning over a government initially skeptical about the reputation and potential of MMA required multiple meetings between Sityodtong, Cui, and officials, but the effort paid off. A confidentiality agreement prevents full disclosure of terms, but Sityodtong describes the government’s support as “heavy, heavy tax incentives” with rebates for achieving financial milestones that could result in millions of dollars saved, the hope being that ONE FC events will lure tourists to Singapore’s restaurants, hotels, and casinos.
A primary barrier to ONE FC’s growth, according to Cui, is the difficulty of attracting and recruiting employees with the necessary levels of commitment and expertise. Going to work for a sports business startup isn’t a traditional career path in a culture where becoming a doctor, lawyer, engineer, or banker represents the accepted pathway to success, he explains; but Sityodtong’s track record, passion, and Harvard degree have helped break the ice with more conservative individuals and organizations that never might have considered martial arts as the foundation for a legitimate, even upstanding, business success story.
It’s time for the main event, a middle-weight championship bout between Brazilian Leandro Ataides (a member of the Evolve Fight Team) and Igor Svirid of Kazakhstan. Ataides is favored, but almost immediately Svirid lands a devastating left-handed punch. The Brazilian gets up quickly, but Svirid attacks, knocking him down again and delivering a rain of blows before the fight is stopped after just 17 seconds. It feels like a bit of an anticlimax, but Cui is philosophical about the outcome when asked about it later. “You can’t control what happens in live sports,” he says. “That’s part of what makes it exciting. In his prime, Mike Tyson would finish a fight in one round, but it never stopped people from wanting to watch him in action.”
Sityodtong brings up the fight when asked about the strategy parallels between martial arts and business. “It’s all about calculated risk-taking,” he says. “Ataides overextended himself and got caught. Yes, there is a lot of in-the-moment decision-making. But you’re still implementing a game plan based on your opponent’s strengths and weaknesses. The most important thing in fighting is protecting the downside, just like in business.”
Mental strength and discipline are two other common factors. “In training, you need unbelievable mental and physical endurance to take your body to the limit,” says Sityodtong, whose favored moves include the low roundhouse leg kick, the flying knee, and the uppercut. Wanting to see if he could get back in the ring one last time, Sityodtong went into training and fought in 2008, at the age of 37. He went the distance but lost by decision. “I’ve been practicing Muay Thai for nearly 30 years now, but I can still learn. That’s what I really love about martial arts; it’s a process of continual self-improvement,” he says. “It gives you a warrior spirit to conquer adversity.” The ability to quiet the mind in the face of pure, instinctual fear of the unknown is another valuable skill for combat, adds Sityodtong, whether the battle taking place is in a cage in front of thousands of spectators or in the marketplace.
Class of MBA 1999, Section A