Our latest Small Business Spotlight guest is Mike Chaves, known in the esports world as FlamesworD. Mike recently came out of retirement and is once again a professional Halo player.
Andrew Gordon of Gordon Law Group talks to Mike about the tax challenges of working as an independent contractor and the path to success in this fast-changing industry.
Navigate the Video
- 01:03: What are esports, anyway?
- 02:27: From basement gaming to the big time
- 04:11: Coming out of retirement as a pro player
- 04:43: The importance of building your personal brand in esports
- 06:44: Advice for up-and-comers: Don’t put all your eggs in one basket
- 09:01: The esports industry’s increasing focus on health
- 11:54: Financial challenges in esports
- 14:49: Rapidly expanding career options in the multi-billion-dollar esports industry
- 17:18: Business & tax challenges of working as an independent contractor
- 19:08: Using the Payroll Protection Program as an independent contractor
Full Video Transcript
Andrew Gordon: Hi, everyone. This is Andrew Gordon and welcome to a very exciting new business spotlight. Today, we have Mike “Flamesword” Chaves, who was a former competitive esports player and has now moved into the entrepreneurial world.
Mike has a lot of different things to talk about, so we’re very excited to have him today. Hey, Mike!
Mike “Flamesword” Chaves: How’s it going, Andrew, man, thank you for having me on the show. And just a little correction: I am back in the competing scene. I have regained a pro seed, a pro rank with my team in the past month, which has been some exciting news.
I mean, I’m 30 years old. I’ve been gaming, I want to say, since I was 15. I picked up Halo 1, Halo 2, in 2007, just fell in love with it and learned early on that there was a competitive pro scene. People my age with a million-dollar contract.
But now moving forward here, 30 years old, I went to a recent tournament. We are now officially pro once again, my team being Status Quo.
Andrew Gordon: Cool. So, if you don’t mind, let’s actually take a step back for those of you watching that maybe aren’t as clear on the esports industry. It’s competitive video game play. Would you say that’s a pretty accurate definition overall?
Mike “Flamesword” Chaves: I would say so. Certain video games that have a following that people gravitate towards. When I started around 15, it was just known as professional video game playing, pro gaming, competitive gaming.
Andrew Gordon: And now it’s this huge esports multibillion-dollar industry, but it sounds like back then, you were just playing video games and got fortunate enough to rise through the ranks and start getting paid for it.
Things have changed a lot since then, right? Can you explain a little bit how that works?
Mike “Flamesword” Chaves: In esports, you could have a brand and organization and then they could have multiple teams, maybe [different teams] for first person shooter and RTS, real-time strategy. So the top 8 teams are the ones where there’s prize money and [they’re] looked at as the pro teams.
I used to be part of OpTic Gaming before all of us original OpTic Gaming members went our separate ways after being bought out and expanding further. It was just guys in a basement, renting a house, whatever it may be, and just collectively bringing more exposure to one another.
Andrew Gordon: So, what was that like? When you began by just having a house with some guys, building a brand, to then competing where there’s thousands or tens of thousands of people in attendance. What was that like, that transition from [playing] in your home to having all those people watching you?
Mike “Flamesword” Chaves: Absolutely insane, man. Like, I can’t even say it. I wanted to start competing when I was 15 years old; I wanted to start going to live competitions. At that time, my parents—I’m a European, Portuguese descent, so parents are very, very on top of their kids. And for me specifically, when I wanted to start going at 15, my parents were afraid of the child molesters or anything that was possibly out there in the world. It was always kind of a fight.
My parents saw, once I was 20, 21, 22, they’re like, “We could’ve let you done it a lot earlier.” No regrets at all. I’m happy with what they did. I was able to learn more things and understand perspective from all angles.
I understood the live viewer at an early age. I knew people would watch us, but I never would have thought that when I got to the live competition team, people would come up to us acting like we’re LeBron James. They go, “Oh my God, that’s Flamesword. Oh my God, that’s Walshy. Oh my God, that’s Ogre 2.”
It was like, “Wow, we’re not only playing for ourselves at this point. We are literally motivating other people to do the same thing we are doing.”
For me, at first, [it was] 100% breathtaking. Couldn’t believe it. First time I was on that main stage and there was a live audience where I physically see people looking back at me, I definitely had the butterflies, definitely had all that, but I think you need that as a competitor.
I think even to this day, if you’ve been in it for 5, 10 years, whatever it may be, if you’re not getting those butterflies in a sense, that probably means that you’re not as excited to compete as you used to be.
This is the third time I’ve come back. Each of the past 2 times, the butterflies weren’t there for me. Versus now, in these online tournaments—it’s still streaming online, not live audience—but knowing that there are still people watching us, I just feel more of a drive once again. Like, this is what I was missing. Now this is why I’m back.
Andrew Gordon: I’m sure there are a lot of athletes that perhaps retire and then get back into the game and they don’t have the same following. They don’t have the same support. Something that I’ve always thought was very interesting is you’ve had fans, you’ve had the public support regardless of the different endeavors that you go into.
And one of the reasons that I thought that exists is because in esports, the players seem to really connect on a different level than conventional sports. You don’t get to see LeBron James practice every day or stream his launch or so forth. What do you think the role of building your personal brand is in esports and how’s that different than other sports?
Mike “Flamesword” Chaves: Early on in my career, I remember the whole debate, like, “Oh, esports will never go big. You’ll never be mainstream.” And the side I was always on and have been on the entire time was we don’t want to go mainstream. It didn’t matter. We were happy that our home was the internet.
We were happy that the internet allowed us to reach out to other people just like us, who are the exact same, you know what I mean? When I used to have only 100 followers, versus my 200,000+ now, I would reply to the 1 or 2 people that were tweeting at me. And as it kept getting bigger, I was like, “Why am I gonna change because the number changed?” I’m not going to change as a person.
The greatest thing, I think, that came because of gaming was that it was always about personality. It wasn’t about your race, your skin color, what size you are. You would only have voice to voice communication, so you would become attached to someone because of their personality and nothing else. And that allowed us to connect with so many people over the internet over time.
And I think that’s what a lot of people have seen over time. It’s like, “Wow, they’re just replying to everyone because we’re the exact same. We have dreams, we have ambitions.”
Andrew Gordon: Right. Right. And I think, too, different than a lot of other sports, esports is something that almost everyone can get into. You don’t have to be athletic. You don’t have to be tall. You don’t have to have any of these qualities.
So, if you were talking to someone that was just getting into esports now and looked to Flamesword, Mike Chavez, and said, “I want to be just like that guy,” do you have any tips or words of wisdom that you would give someone?
Mike “Flamesword” Chaves: To me, it was always about spreading my eggs in as many baskets as possible. I enjoyed gaming and I knew that there was a scene for it, for me to make what I love a career and enjoy it for my entire life. But that didn’t stop me from doing other things.
I still went to school. I ended up getting an associate’s in information technology. But I made sure that I never allowed [the esports industry] to fully suck me in. I stayed aware of everything around me.
So my advice would be: Make sure you’re doing it because you love it. If you’re looking at it literally just for the money, you’re not going to find that passion that really helps you kick off and get you to where you need to be.
I think one of the biggest things nowadays is we have so many choices—like when you go into a restaurant, right? It used to be 10 items on a menu. You go to Cheesecake Factory now, you have this entire list and you’re there forever. And so my thing is keep your list short. Find the four things you like. Gaming. Is there a subject in school you do like? Go into that; learn about it and learn the different avenues of it. Take care of your body. Man, your body, obviously in this pandemic, how important it is just to take care of it.
And then I think, at the end of the day, family, because I think family always comes out to being that support system. And family ain’t just blood, obviously, right? If you find those individuals that you could literally call family, you want to keep those people in your circle and you just want to stick around with them because they will most likely have the same drive as you in different areas, and you all can figure out a way to help one another.
So, if you’re just jumping in, don’t literally just put all your eggs in that gaming basket. Give it the hard work and the dedication that it needs, but understand that… you don’t want to just be a one trick pony.
Again, I’ve been doing this since I was 15; I’m 30 years old. No complaints. People always ask me like, “Mike, if you could go back in time and change anything, would you?” I literally always reply, “No. If I could go back in time, I would want to go back in time just to relive it a second time and not change anything.”
Andrew Gordon: You brought up something really interesting too, which is taking care of yourself and your health. That’s something that you’ve really been focusing on and spreading the word. And something that I’ve seen in the esports industry is the newer focus on health, where some of the pro sports teams even require their players meet with a personal trainer, go to the gym.
Why do you think that health is so important, yet a lot of people think, “Oh, the standard video gamer is sitting, eating Cheetos all day”?
Mike “Flamesword” Chaves: Literally, my career is testimony to health and wellness. I found out around [age] 20, 21, that I had erosive gastritis and esophagitis… esophagus-itus… I always butcher this medical term, but basically just the worst form of GERD, and it damaged my stomach lining. And at that point I literally flipped the script.
I started eating way healthier, started trying to work out anywhere from 4 to 5 times a week, just understanding what worked best for my body on the healthy side. About 4 or 5 months after that scare and the new season coming out, I won my first tournament with my team.
That helped us lead into a Red Bull sponsorship. From that Red Bull sponsorship, I was able to be placed in a men’s fitness magazine. At the end of the day, my whole philosophy, once I did flip the script and I started jumping into it more, was that if I want to be like a pro athlete and I want to take this as a pro sport, then why wouldn’t I treat my body like the best athletes?
All that stuff’s out there on the internet. Right? A lot of people always try to say, “Dude, I don’t know what to do. I don’t know what to do.” I was one of those people who didn’t know what to do. I didn’t have anyone to tell me anything. And it was just me saying, “My health is super important.” I was told that [my condition] could have led to a stomach tumor down the years of my life. That was eye opening to me.
You only need yourself to educate yourself on anything, at the end of the day. The internet literally gives you those tools. So, for me, it was just trying all the diets and figuring out what worked best for me, so I could bring my best come competition day. And just overall, right? You want to be feeling good every day.
I am part of a group called Fuel Up. We are doing our own giveaway. You can get samples of our product, and we’re also allowing people to enter themselves in for a chance at $500. If you guys want to check it out, fuelup.gg/wake-flame, a popup will come up with a code for a free sample and a chance to enter yourself in for $500.
But even as I say this, my thing is always look at the ingredients, look at what you’re putting into your body. No matter what.
And for me specifically, I would never jump into a brand that I don’t believe in. Even with the Red Bull, there are always strategic ways that you could implement things into your body. At the end of the day, it’s all moderation.
Andrew Gordon: Yeah, it makes sense. So, let’s talk a little bit about one of the aspects that people don’t like to talk about or think about much, which is the financial part of being an esports athlete.
You mentioned early on, don’t do this for the money. If you’re just getting into the esports industry because you want to get rich, it’s not gonna work. But I’ve got to imagine that there’s only a limited number of people that make it to the upper echelons, where they really make a career out of this. What are some of the financial challenges that you or other esports athletes have faced, and do you have any suggestions about that?
Mike “Flamesword” Chaves: My first financial struggle and challenge was when I started my career at 18. I was able to save up $550. When I hit 18, the first tournament I ever went to was in Meadowlands, so it was literally a 15-minute drive away.
I had to split a hotel with 5, 6 other guys. [I played] 2 more tournaments after that, and by the end of that, I was only facing semi-pro. Don’t get paid for that.
Andrew Gordon: So how were you paying for that? You were working…
Mike “Flamesword” Chaves: So I worked, I made that $550. I had that money and I knew I could attend X amount of events. For me, initially, it was like, “Can I go pro in that time?” Not looking for the money whatsoever, but looking for that drive. By the third tournament, I’m out of money, no more money for tournaments.
But the first person I ever made friends with on Xbox Live [had a] very wealthy family from Chicago. Literally took me in as their son. One of their sons was really good at the games, too. He wasn’t getting any recognition. I had a little recognition from being a semi-pro already.
We were able to make a squad and he said, “Mike, I got you covered.” And he was literally the reason that I was able to make this a career financially for myself. He ended up covering hotels and my flights to make sure I could get to events. Then the first event that we actually went to was a Toronto one with his son. We ended up getting an RV and drove from Chicago all the way to Toronto.
From that point on, we started breaking into the pro ranks, started making money. We started getting the pro stipends from the league. Sponsors were starting to recognize us, where money also comes in, and things just kept snowballing.
So literally, as I said, I didn’t come in for the money. I said, “Here’s how much money I have. I’m going to go to as many [events] as I can. If I don’t make it at the end of this, then I’m gonna put it on pause and maybe in the future, I’ll come back to it.”
Once everything started snowballing, me and that teammate split up—still friends. And then at that point, I just continued getting better. I was able to build a better team. That team then ended up coming to a victory. Like I told you earlier, coming from that health scare, winning our first tournament, being sponsored by Red Bull. I was sponsored with them for maybe 4 to 5 years total in my career.
Then the scene just continued developing. Even though I said, “If you come here for money, you’re probably going to get burned”—I think that statement is true, but I think what has developed within the gaming scene is that there are more avenues than just the pro gamer now. You can be an entertainer on a streaming platform.
Going back to how you said, what advice would I give an up-and-comer? I’d be like, “What is your main goal? Is it to make money?” Because if it is to make money, then you might want to learn how to become an entertainer. Or you want to learn, maybe, a business aspect of the scene that is missing.
Andrew Gordon: I think that’s a really interesting point, that esports is not just competitive gameplay anymore. Maybe that’s the general definition of it, but it’s become a much larger industry with everything else that it encompasses, things like being an influencer.
Some of the largest names in esports don’t actually play competitively. They’re just pushing out content, merchandising, selling different products, coaching, all different support services that esports needs. Have you gotten into any of those other fields, and what are some of the things that you’ve seen other players who have then retired start to get into?
Mike “Flamesword” Chaves: Since I am competing again, I have a team and I wanted to start merchandise and little things like that. Other things I’ve seen is management groups. A lot of pro players turn into esports managers, where they’re doing the negotiating for the players. Because at the end of the day, even me as a player, I did handle a lot of things on my own, but it was never fun handling that stuff. ’Cause it’s like, you want to have a personal friendship [with your teammates].
Andrew Gordon: Let someone else fight the battles for you.
Mike “Flamesword” Chaves: Exactly, yeah. And you don’t want to be going back and forth and be like, “Ah, now it feels like there’s some bad blood in there, in the ring.”
You have people, again, like me, trying to create a brand now for my Halo team. For example, on OpTic Gaming, Nadeshot was one of the originators of OpTic Gaming. He’s gone out to go do all this stuff. If you guys Google 100 Thieves, Drake is a partner of his company, if I’m not mistaken. And it’s not only an esports brand, but it’s a lifestyle brand as well.
You have health and wellness coaches coming in now. Organizations literally putting these people on payroll to make sure their players are optimized and make sure that they are getting the same treatment that professional athletes are getting.
So, literally so many things have come into the scene, and I can only continue seeing more and more things coming into the scene as the years continue.
Andrew Gordon: Yeah. And one of the things that I always thought was interesting about esports is you’re really running your own business. Sure, at the upper echelons, some players are getting wages. But most, if not all, are independent contractors. They’re running their own business. Many have LLCs or business entities. What are some of the challenges that you’ve seen in handling that side? The business side of esports?
Mike “Flamesword” Chaves: The biggest business challenges? Taxes, to be honest. We get that prize money straight up in one check. When I got my first $15,000 check from second place at a tournament, at first, I spent X amount of it. At the end of the year, it’s like, “Oh, but you owe X amount on that 15,000.” It’s like, “Wait a minute, wait, why?” I thought it was just, I get it.
So I would say little things like that. But then on top of that, not knowing that we could write things off. Like, I’m spending money on all these electronics. I could write this stuff off and appreciate them year to year to year. Understanding just the whole business side of taxes is where I was at a loss. I didn’t know what to do. I ended up getting in contact with you and then everyone at Gordon Law helped me out and whatnot.
You need someone up to date with the times and not just someone who’s used to doing taxes for the basic person who does have an employer and does get all these W-2s or whatever the forms may be. If you are an independent contractor, this is a realm you need to learn about, because if you don’t, you can lose a lot real quickly.
Andrew Gordon: Yeah, definitely. I think that’s great advice for everyone out there. And maybe briefly, if you don’t mind, let’s talk about a little bit of the positive side of being an independent contractor.
Recently, there are a lot of new government programs that came out. If you don’t mind talking about it, did you take advantage of any of the different government options that are out there for small businesses and independent contractors?
Mike “Flamesword” Chaves: For the small business loan, I don’t know if it was the PPP, I have filed my request for it. As an LLC within the scene, we are able to get our cut of it. I don’t think I’ll get the max on either of them just because the businesses have been going well.
Andrew Gordon: I’ve heard a lot of stories from people that I’ve talked to that said, “My business, we’re not bankrupt. I’m not destitute,” but that’s not necessary for these programs. You’re still eligible for these things. It’s just a matter of knowing what’s out there and taking advantage of it. So I think that’s great advice that you gave us.
Mike, it was great having you.
Mike “Flamesword” Chaves: Appreciate it, man. Thanks, Andrew.