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Thanks to Terrence for posting this very detailed 36 minute video. It was very fascinating to watch, at least for someone interested in the UP story.
I can confirm that I am NOT Terrence, btw.
I agree with most of what he had to say.
He spent some time complaining about the salary structure of the UP employees, even though he conceded his own salary was probably too high!
Terrence's complaint was that they brought certain talented people on board for relatively low salaries ($28-$40k), with the implied or stated promises that they would move up quickly if they did a good job. Then these people would pour their hearts and souls into the company, do a great job, and when it came time to review their salaries, they would be rewarded with a $5k raise when they were really doing work which justified doubling their salaries. When Terrence questioned upper management about this, they conceded that these people were worth more, but "they'll eventually get there", which obviously never happened.
At the same time, Terrence watched them hire expensive consulting firms, spending obscene sums of money, and getting very little bang for their buck.
Terrence was also annoyed that they did not take his feedback when assigning salaries or raises, even though he was the direct manager of these employees and in fact a junior executive himself at Ultimate Gaming.
I can tell you from my experience in the corporate world that, sadly, there is a general resistance to huge salary increases, even when justified. This is because of an idiotic, old-school, bureaucratic model where a "raise pool" is established, and everyone at the company gets a piece of it. When the pool is out of money, that's it for the raises. Therefore, nobody gets staggering raises, even when completely deserved. At the same time, the company has no such budget restrictions on hiring expensive consultants, wild marketing expenditures, useless new hires (which oddly can make more money than people already at the company at the same position), etc. I will go as far to say that not consulting the direct manager for salary input is NOT standard, even at large corporations. Unbelievable that they operated that way at Ultimate Gaming.
But I'm not defending Ultimate's practice here. Ultimate Gaming, while operating under the umbrella of Station Casinos, was supposed to be acting as a startup. A startup should be small, nimble, and flexible, and not subject to old-school, bureaucratic HR practices that large corporations are known for. That's why a percentage of startups become so huge so quickly. They aren't hindered by the red tape of large corporations.
Sadly, Ultimate Gaming embodied the worst of both a startup (instability) and large corporation (inflexibility). A well-run startup will compensate people what they're worth, and not worry about what percentage of a raise it is from their existing salary. A well-run startup will not take the lazy way out and hire expensive consulting firms, but rather will pick out the right men for the job and get it done better and far cheaper. Ultimate Gaming did none of these things. Ultimate Gaming spent way too much in some places (and got little return), and way too little in others.
A word about Chris Danek. He's Terrence Chan's friend, but he's not my friend. I barely know the guy. However, I have to echo Terrence's sentiments that he was dedicated to UP and seemed to know what he was doing. My first impression of Danek wasn't good. It was on this forum, and I didn't appreciate his initially flippant attitude regarding UP's usage of Greg Pierson's company to do identity verification (remember that?)
However, as I got to talk to Danek, I was pleasantly surprised that he was very aware and knowledgeable about UP's existing problems, and had a lot of good ideas on how to fix them. It was actually a shock talking to him, because I was pretty sure I would be speaking to a clueless idiot making excuses, but instead reached someone who pretty much already knew all the problems. I asked Danek when these things were going to be implemented, and he told me it would happen on the next release, but that releases take a long time due to regulatory matters. Then most of these things didn't happen, and I wondered how someone so in touch with UP's issues could have again screwed up so badly.
It turned out he didn't. Upper management stood in the way, which is why things didn't happen. People like Danek wanted to improve things and knew what they had to do to improve them, but weren't allowed to get the job done. You will see Terrence echoing this in his video, where he states that "deadlines were more important than quality control" and how "new features were prioritized over keeping existing players".
You might have gathered by now that I didn't work at UP, and you're correct. You might also have some guesses as to who I am. My identity isn't important here, but I can tell you that my information came firsthand from various sources, which I pieced together to make my posts on the subject. Guys like Terrence obviously have more information than me, so it's always nice to hear from them.
The takeaway here is that a poker site cannot succeed in the US legalized market if not run by poker people. This isn't like the unregulated market where there is enough of a player pool where slick marketing brings in the fish, the grinders will tolerate pretty much any kind of abuse as long as the games are good, and those companies often succeed to some degree in spite of themselves. The US legalized market is much tougher and there's much less room for error. If it's not run intelligently and efficiently, it will fail.
"But wait, WSOP.com has all kinds of problems, and they are still around," you might say.
Yes, but WSOP.com is still losing money. They're just not losing as much as UP, and they also benefit from the wise decision to partner with an existing mature product, so there is less potential for fail. There's lots that WSOP.com could be doing better, but that's another discussion for another time.
So the basic story of UP was "good team, bad market, terrible upper management."
Live and learn.
