Sorare sets out to conquer the United States

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Thursday, May 12, 2022

After conquering football, the French NFT champion is now entering baseball in the United States. Boss Nicolas Julia tells us about Sorare's future.

👉 The news. Sorare launches into new sports.

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👉 Why it matters. The French unicorn is speeding up to open up to other markets and conquer millions of users.

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👉 The context. The NFT market is experiencing a slight slowdown.

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THE BIG WHALE: The markets are going through quite a storm. Because of Terra, they're down more than 20% and bitcoin is hovering around $30,000. Has this had an impact on your business?‍

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NICOLAS JULIA: Market trends have an impact on us when we raise funds. Investors are sensitive to trends, so if the markets fall, they are more cautious. But since Sorare was created, our philosophy has been to avoid having a product that is correlated to the markets. We want to abstract ourselves from the complexity of cryptos. We have no blockchain of our own, no token. We made strong choices at the start of the project to ensure that the technology would only be an asset. Our only technology is NFTs, which bring plenty of advantages: ownership, portability and lots of other features.

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Ether, which is at the heart of your application, has still lost more than 20%...‍

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The funny thing is that many members of our community actually see Sorare as a protection against falling markets.... Our players are more likely to think in euros or dollars, so falling markets have almost no effect on them. At the moment, what does matter is the seasonality of the game. With the end of the football championships, we know very well that the community is less active. That's also one of the reasons why we're diversifying.
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How many players do you have on Sorare today?‍

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We have 1.8 million people registered and 380,000 active players, including 125,000 who buy cards. That's a good figure, but we're aiming for much more, and to get there we have several levers. The first is price. We're looking at ways of lowering the price of the entry ticket. The aim is clearly to enable people to play in pay mode for less money.‍

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Could this involve a new series of less rare and therefore less expensive cards?‍

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Creating cheaper cards is not necessarily the best idea. One idea for us would be to make it possible to play with just one card and not five. This system alone would considerably reduce the cost of entry. We're also thinking about simplifying the game or even a 'free-to-play' system, which is a more fun, more social way of playing, and which would considerably broaden the audience. We're investing heavily in this last point.‍

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What is your biggest market today?‍

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It's Europe and that's normal because we started out in France. What's interesting is that the United States is already number three. And the launches we're going to make will help us even more.‍

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In September 2021, you raised $680 million, a record for French Tech and a deal that values you at over... $4 billion. What impact did the deal have on Sorare? How do you manage such a change in status?

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We have to manage to keep the coherence, the culture and the velocity that we had when we were still a very small company. And the most important thing is to have patience, because when you recover so much money, you might be tempted to think that everything will go even faster. But that's not the case. A company is a collective, it doesn't just change. We've also done a lot of recruiting. And recruiting the calibre of people we want takes time. I like to take the example of Ryan Spoon, who we picked up from ESPN, where he was head of digital and fantasy games for nearly ten years. It's not easy to find someone like him. And then you have to give him time to build his team, so very quickly the whole process takes nine or twelve months. Sometimes this 'slowness' is frustrating, but it's normal. You just have to learn to manage it. Where we really saved time with the fundraising was in signing up new leagues and new sports... That helped me a lot!"‍

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Can we envisage a future Sorare token?‍

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You should never say never, but it's not in our plans at least in the short term. If I had to give my opinion today on the 'in-game' currency, I think that rather than using the ether (Ethereum's token, editor's note), which fluctuates, we would go for something more stable. We mustn't lose sight of the fact that the tens of millions of users we're aiming for are going to come to play and not to speculate.‍

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If you went with something like a stablecoin, when would that be?‍

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Today we have a technology watch on all the protocols. We haven't made any specific decisions, but it's something we're looking at very closely.‍

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Sorare is now used by hundreds of thousands of people, including professional football players. How do you manage conflicts of interest?

Two Ajax Amsterdam players recently sought to profit from a team line-up before it was publicly announced...‍
Yes this is a key issue for us. There's nothing more important than fairness. This month we'll be bringing out new conditions of use, particularly for professional players. They will still be able to play, but we really have to make sure that none of them can take advantage of their status.‍
Speaking of professional players, we've seen that Kylian Mbappé has been promoting his Sorare card. Is there anything between him and Sorare?‍
Many players have invested in the company and bought cards. Players are at the centre of Sorare, so having former players and current players is lucky. Mbappé is a world star, an iconic player, so obviously that would be great. But I don't have anything in particular to announce about him.‍

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Would sponsoring a football team be a way for you to expand your audience?‍

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Everything is on the table. We're going to start marketing and becoming more visible in the coming months. As I keep saying, we'll start sponsoring clubs when the product is perfect or close to perfect. Embarking on this kind of adventure is quite expensive, so you can't afford to miss out. When we're ready, we'll do it. And we will be very soon.‍

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Today, on average, what budget do you need to put together your team and start playing Sorare?‍

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We have two game modes, "underdog" and "specialist"" which allow you to play Sorare for a few euros. But it's still marginal.‍

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Do you have any idea of the average basket of Sorare players?‍

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It's very uneven. You have to look according to the rarity of the cards. For "limited" cards, i.e. the least rare, the average basket represents a few hundred euros per year. And when we're talking about unique cards, i.e. the crème de la crème of the game, it can go up to several tens of thousands of euros, but only a few dozen users are concerned.

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‍What did you think when Erling Haaland's card sold for more than 600,000 euros last January?‍

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At the risk of being a bit provocative, I don't think that's a lot. When I look at the intrinsic value of an NFT card, I find that it offers a lot more than a physical card. When you see that some physical cards go for millions, the value of NFT cards could be much greater. But it's not an end in itself, we've never set out to break records.‍

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How much do clubs earn in royalties on each card sold on the primary market? Last I heard it was between 5 and 15%...‍

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I won't be commenting on that.

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‍Would you ever be able to charge commission on cards traded on the secondary market?‍

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It's something we're exploring, particularly on American sports. On football it's still under consideration, but it's not urgent, there's no short-term plan to do it.

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‍You chose Starkware's layer 2 to avoid Ethereum's very high fees, why this choice rather than another?‍

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When we had to choose in 2021, there were two solutions. On the one hand layers 1 like Solana or Flow, and the other layers 2. We found ourselves in the position of an investor: we analysed the quality of the teams, the technology, the existing customers, etc. We were very rigorous because we had to be very careful. We were very rigorous because we'd been a bit burnt out in the past. We started out on Ethereum, before moving to Layer 2 Loom, and then returning to Ethereum because of differences with the team. All the time we were on Ethereum, we always covered the network costs. Some months it was costing us millions of euros...

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Why did you decide to cover the costs?‍

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It removed complexity from the product. I preferred to reduce our margin to achieve our goal of bringing Sorare to millions of players.

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Do you get the impression that something is happening in France?‍

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Today, I think there's a real dynamic. It's quite impressive. But we still have a long way to go. We're still a small ecosystem. There's still a long way to go, and that involves politics in particular. Emmanuel Macron has spoken about us several times, as he did in the interview published in The Big Whale, and we're very proud. But he could do even more. Our conviction is that Web3 is the future of France and Europe.‍

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What are your priorities in the coming months?‍

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The number one priority is obviously to improve the game of football. It's the number one sport in the world. Priority number 2 is to be good at other sports in the United States. We're going to see how we can attack this market, how we can make the cake bigger for everyone. We're going to make football grow thanks to American sports and vice versa. The third priority is to grow the team. There were 17 of us in Series B, now there are 75 and we'll be 200 by the end of the year, with 100 in Paris and the rest in New York.‍

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What does it bring to your board of directors to have the likes of tennis champion Serena Williams?‍

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From the outset, I said I wanted to work with sportspeople who are fully committed to the project. We don't want athletes who are there for a press release. We could have signed any number of them. And when it's not genuine, it shows. Serena Williams is quite incredible. She brings a lot to the table, firstly in terms of understanding women's sports, which is obviously an area we're going to explore. And then there's her relationship with the players, the players' associations and her whole network. It's pretty huge.‍

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And what about Antoine Griezmann or Gerard Piqué? ‍

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Each brings their own touch. Gerard Piqué is very well connected to the ecosystem, to the clubs. He enables us to navigate the arcana of football with the leagues, federations, clubs... Antoine Griezmann is much more focused on the product, the user experience. He'll be giving advice on the marketplace, because he loves the product. After that, we're not looking to add up all the profiles. We just want the best.

This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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