Round 5 CEO balancing black eyes and head size with company growth
As the president of any large company can certainly attest, the day-to-day operations of an organization can leave a never-ending list of decisions to be made.
The work life of Damon Lau, president of the MMA collectible figuring company Round 5, is no different.
As Lau recently told MMAjunkie.com Radio (
www.mmajunkie.com/radio), important decisions regarding whether or not Rich Franklin's figurines should have a black eye and just how big Tito Ortiz's head should be are all in a day's work.
"[The fighters] get involved in every single thing," Lau said. "We sit down with them and go, 'Hey, guys. You get to create this thing in any image you want. What do you want to do?'"
With Round 5 having already released figurines using the likenesses of Ortiz, Franklin, Matt Hughes, Quinton "Rampage" Jackson, Anderson Silva, Sean Sherk and Wanderlei Silva, Lau has learned to ask the right questions.
"I remember telling Rich Franklin, 'How about we add a black eye, your perma-black eye on your figure?' Lau said. "He goes, 'Uh, I don't know about that.'"
It could have been plastic cauliflower ears
So the Franklin figurine was released without the frequently seen blemish, but that hasn't stopped the first two series of characters from being a success for the Canadian company.
"We've got over 35 fighters on our roster," Lau said. "We're in over 3,500 stores across North America. We have distribution in the U.K., Japan, and we should open up France in Brazil at the end of the year.
"We're gunning for 10,000 (stores by the end of the year). Hopefully everything with the economy, if it turns out well, we'll hit that 10,000 mark. But it's safe to say we'll be in anywhere from 7,500 to 10,000 stores."
It's a huge mark for a product that started on a whim.
"It started in the Spring of 2007," Lau said. "I own a mid-sized advertising agency based in Toronto, Canada. Just through that business we had a lot of opportunities to work with people who are athletes in MMA, one of them being Randy Couture.
"Pretty much what happened was Randy was flying into town for a promotional appearance that he had to do. He goes, 'Damon, do you want to hook up for dinner?' I said, 'Absolutely. Let's sit down and have dinner.'"
That casual appointment turned into the beginning of the Round 5 figurines.
"Over dinner we're just talking about funny business ideas that we thought would be really great for the sport of MMA," Lau said. "The sport was obviously seeing such a big boom at that time, and Randy said to me, 'Wouldn't it be really great if somebody came up with plastic cauliflower ears for fans to wear at fights?'
"I thought that was hilarious, and I said to him, 'Wouldn't it be kind of neat if people came up with action figures for MMA guys?' We both sort of went, 'Hey, that's a good idea.' Randy said to me, 'If you ever decide to do anything like that, just let me know.'
"He was the first license we signed."
Compensation, creative control and the UFC
The company quickly expanded, and a third series of figurines is set to be released in May with current UFC champ Frank Mir, former champs Antonio Rodrigo Nogueira and Andrei Arlovski, and legendary referee "Big" John McCarthy as the subjects. A fourth series will be issued in July with Gina Carano and Fedor Emelianenko.
Lau said getting subjects hasn't been difficult.
"Something that's really unique about the program that we do with the fighters is that we make sure it makes sense for everybody," Lau said. "We pay probably four to five times the normal royalty amounts in the toy industry, which is obviously completely against the grain. But we feel it's great for the fighters and it's great for the fans.
"The fighters are getting compensated for the contracts they're signing. It's not just, 'Sign our contract, sign over your likeness, never see anything ever again.'"
Lau said the benefits go beyond simple compensation.
"We give [the fighters] the ability to approve all the artwork, so they know their likeness isn't being used in a bad way," Lau said. "They actually get actively involved in all of the product development. They get to pick the pose, take a look at their faces, pick the quotes on the packaging, all that sort of stuff.
"Even beyond that, we let the fighters sell sponsorship spots on the shorts of their figurine. I think the program, moving forward, has always made sense from the very, very beginning, which is why we've gone so far in such a quick amount of time. We haven't had any problems, even today, signing licenses."
"Even today" is an important point, as the UFC's merchandising rights rules have become a hot topic in the business side of the industry over the past several months.
"The bottom line is I've never even spoken to the UFC," Lau said. "A lot of people pit [the UFC and Round 5] against each other and say that we're enemies and want to take each other's contracts. Really, I've never even spoken with them.
"I'm a really big fan of the organization, but our business model was always to work with the fighters. That's always been the direction, and thankfully enough we've been doing fantastic. The fighters all signed with us because we offer a great program."
Even as the UFC partnered with Jakks Pacific, Inc., in 2008, Round 5's figurines have continued to thrive in the collectible marketplace. And Lau believes his products will continue to succeed even when Jakks' products are released later this year.
"We know that all of our clientele is the typical person that watches MMA right now," Lau said. "So it's the 16-to-40-year-old, and the people that buy our product are going to be the people who end up putting it in their cubicle, leaving it in their collector's case, sitting it on top of the TV.
"I think Jakks' positioning is really to create a fully articulated toy. Meanwhile for us, I would say, 'They're the toy, we're the collectible.' Do I say that children don't buy our stuff? Absolutely not. They could be buying it. But the purpose of building it was never for kids."
In fact, Lau hinted at the release of a new product that may prove even more collectible.
"Actually, probably closer to the end of this year you're going to see us launching a new product line-up, which is actually going to be a full, super-realistic style," Lau said. "We're sort of leaning more towards the collectible element, and I think JAKKS is doing something completely different."
One decision down
So Round 5 continues to grow despite potentially restrictive contracts and the forthcoming debut of a rival product. Lau attributes the growth to the boom of MMA as well as his company's commitment to a quality product.
"We keep revising and changing the figure until everyone is happy," Lau said. "I think that's the bottom line.
"Nothing comes out perfect the first time. It's a lot of hard work. The process of creating figurines and collectibles, it's crazy. Hundreds and hundreds of people are involved in the process."
And when the process was complete, no, the Ortiz figurine did not have difficulty standing due to its top-heavy nature.
"We didn't have a hard time with that, but one thing's for sure: We actually did make the head bigger," Lau said. "We discussed it, and [Ortiz] said, 'Listen, I'm known for my big head. Make it bigger.'"
