Category Archives: entrepreneurship

Reaction to CoH (City of Heroes) community, and NCsoft’s response

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(background: after 8 years as one of the world’s mid-tier MMO games, City of Heroes (+ City of Villains) is being shut down. The community banded together to ask if they could take over running the world that meant so much to them; NCsoft (the publisher, and a company I used to work for) said: no)

“No means no”

NCsoft is basically saying: “Please. We love you, but … you just *don’t understand*. It’s more complex than you could possibly imagine!”

That’s not a dialogue; it reads like a “this conversation ends when I stop talking” monologue.

“Why on earth wouldn’t you say yes?”

Lots of people wondering that. Obviously, being a public company, no-one’s going to answer that in public. We can only guess. But hear’s a few (over the top) suggestions…

If the community succeeds … then THE FEAR IS: some Executive(s), somewhere, are going to look like bad (I’m not accusing; I’m just saying that in corporates I’ve worked at, this kind of *fear* is common). A lot of the work they do is guess-work. That’s fine, they’re paid to make the best decision they can, while never truly know if they made the right one.

But if a bunch of inexperienced, eager novices come along and offer to do it for free. And – the worst possible outcome – they succeed … that could make someone look really bad.

Another thing I’ve seen in corporate politics at this level is a lot of “horse-trading”. i.e. sacrificing one project (that someone else resents, or has been snubbed by) in return for that person helping out out with a problem on a separate project, that you’re trying to rescue.

Who (individually or collectively) made the decision, and what did they stand to gain or lose? (they are probably worried about / aiming for / trying to win … something bigger than this single game. c.f. my 2009 post on why NCsoft is so huge a company gains nothing from “profitable” games, they need “mega profitable” games)

“Software is software”

Ha!

Has anyone found out yet what format(s) the data is in? Imagine the most insane, unwieldy, incomprehensible, inconsistent, unusable format that bears no relationship *at all* to the game itself … and you’re probably half way there.

This game was written *8 years ago*.

Read the biographies of the people involved. Were they non-game developers … academics with decades of expertise in distributed systems and real-time transaction messaging? … or … were they a bunch of smart guys trying to catch up with the academic research in the space of months, just enough to build and ship a major new computer game? And … most importantly … to make it “fun” before they ran out of budget.

I’ve not yet found an MMO where the people who made it feel – with hindsight – they had any idea what they were doing at the start. When they started, of course, many of them thought they’d covered all the bases, and were “well prepared”. Everyone tries their best up-front (or fails completely); but everyone finds it much harder than expected.

What should we/they do?

Looking at it analytically and logically, I’d give the community a very high chance of failing dismally if they were given the game. But … the eagerness, the excitement, the sheer determination: I’d give them a small chance of succeeding despite everything. Simply because: when you see this much determination, it often wins out and overcomes the obstacles in its way.

So, I say: Go for it.

They know the game they’re trying to (re-)create. The difficulty is simple: whenever you try to re-create a game, the temptation is always there to “improve” it … and 99 times in 100, you find you slightly misunderstood what you were “improving”.

Google’s Strengths & Weaknesses in 2012

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In the past, I’ve had terrible advice from brilliant people. The best way to avoid that is to be careful to research the brilliant person and tailor your questions to avoid their weaknesses.

Tomorrow I’ll be meeting a bunch of people at Google London’s open day. I started by writing down a list of known strengths/weaknesses based on my knowledge and experience of the company and the people. Earlier this year I had some in depth meetings with Facebook, which gave me a fresh perspective on the similarities and differences. I think the list itself is interesting – modulo: it’s only my personal impressions:

google strengths

[comments in brackets to clarify some non-obvious points for anyone reading this]

  • innovating on the Web
  • bringing native tech to Web and making it as good as native
  • software development
  • worlds biggest/most popular search engine
  • …? focus on curation ?… [Page ranking etc is subtle curation]
  • tech brand associated with “quality”
  • massive scale advertising
  • algorithms for automating heuristic tasks (imperfect, vague domains)
  • enormous scale data manipulation
  • throwing hardware at impossible problems to make them possible [Street View]

google weaknesses

  • community [in general, but also specifically: Google Groups]
  • consumer marketing [many Googlers have said "we don't need to; the brand is enough"]
  • building products that people want, rather than products Google staff enjoy [Wave, Buzz, Google Voice]
  • understanding consumers [Android]

Great explanation of “disruption” – and why investors dislike startups that meet expectations

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“Disruption” used to be mentioned frequently as the thing that every company wanted to be (urged on by investors).

But what is it, really? I’ve met lots of people who believe it’s “a fancy word for ‘innovation’” – but if that’s all, it would be pretty pointless and vapid.

This post from 2011 gives a great explanation based on simple concrete ideas. It explains why disruption is interesting to companies and managers.

What about investors?

It’s a great explanation, although it’s mostly from the perspective of business owners / management. Why do investors – especially startup / VC investors – care about disruption?

The key here is Des’s paragraph about share price:

“Microsoft’s share price hasn’t moved. This is because they are precisely predictable. Their shareholders have gotten exactly what they paid for, and not a penny more.”

A share price that doesn’t move *still provides profit to shareholders* (in the form of annual dividend). In fact, it often provides rather a nice sum of money – just like the rental income from owning property).

…but: Angel/VC investors make the bulk of their profit from changes in the share-price, not from dividends. Two reasons:

  1. Startups usually choose NOT to pay dividends – the money is reinvested into the company instead, to try and grow even bigger, even faster (pour gasoline on the fire of your success, make it burn faster!)
  2. The returns from dividends are – like rent on property – a small fraction of the investment. The returns from the share-price changing are – like betting on a horse-race – a substantial multiple of the investment

If you run your startup perfectly …

If you do everything you said you would do …

If nothing goes wrong …

… your investors may class you a failure. And they’d be right to do so. They didn’t invest for the dividends, they invested for the “surprise me” factor.

(which should, perhaps, give you pause for thought: if they’re “right” to pan you for achieving your aims … are/were you “right” to take their investment?)

UK companies don’t suck, they just need tax breaks

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According to Sefton Hill:

“You just think about quality developers like Bizarre Creations, Black Rock – people who are making really good games and going out of business. Those guys were so talented so how can that happen?

Well, obviously, it wasn’t anything to do with operational mis-management, poor commercial decisions, gambles that didn’t pay off, bad strategic decisions about partnerships/publishers/companies to sell themselves to, a global recession, failure to keep pace with changing trends in culture and audience, technology falling behind, etc.

No – it was the lack of tax breaks.

Obviously.

New startup, aiming for acquisition by Facebook

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Please email me (adam at red-glasses.com) if you have skills / interest in the following:

  1. Mass market (i.e. everyone + their mom) telling stories
  2. javascript frameworks for complex visual 2D stuff (e.g. iGoogle, Netvibes, etc)
  3. Visual manipulation of large 2D images on mobile (especially iPhone)

NB: we have no funding yet, just an idea. This is a scatter-gun first approach – if things go well, there will be another call for people in 2-4 months time.

The FAILtrepreneur?

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Here’s a new term: The FAILtrepreneur


FAILtrepreneur

def: someone who tries to be an Entrepreneur, and takes advantage of lots of things intended to “help” them be a success, but somehow finds each “help” pushes them further and further into mediocrity and the failure of their business. Then they go work for a management consultancy; they have great stories to tell about their jolly jaunty time playing at being an Entrepreneur

What “business-people”, consultants, politicians etc tend to think Entrepeneurs need

Time and again, these people think they’re “helping”. They never stop to think about what their assumptions say about themselves – and how little they say about Entrepreneurs.

Typically, they believe that startup-founders-to-be need:

  1. An office – “rent is too expensive for poor people!”
  2. Tax breaks – “my biggest financial worry each year is my personal tax bill. And it would be the same if I started a new company. I’d get taxed on my £500k profits straight away, after taking all that risk! That’s why I don’t do it. Other people must feel the same!”
  3. Income guarantees – “startups are risky – you can spend years running a startup, and not be able to contribute to your mortgage and your pension. No-one would dare skimp their Mortgage and Pension!”
  4. Opportunity – “I always feel I could have done more in this world, if only I’d been running my own company. Look at how successful I’ve been, working for others – and imagine what I’d have achieved with my intelligence/contacts/business skills if I’d been running the show!”
  5. Contacts – “I hate it when startups talk to me, they’re useless to my career, and they’re so likely to fail they’ll probably make me look bad when they blow all our money. I would never trust them / sign a deal with them. So it must be really hard for them to talk to / meet other companies, potential partners and investors!”
  6. Confidence – “To be honest, I’m terrified of starting a company – God! it must be so awful! – if it fails, it’ll all be my fault, and everyone will finally realise what a talentless hack I am!”

What DOESN’T an Entrepreneur want?

The last thing that Entrepreneurs need – the very last thing – is to be given handouts or to be patronized.

Being an Entrepreneur is *all about* starting from an inferior position and not just out-doing everyone else, but positively eclipsing them.

The idea that they need “a leg up” or “handouts” is laughable – all it does is re-enforce the qualities and expectations that the Entrepreneur needs to avoid.

What does an Entrepreneur really need?

Resource; specifically: whatever resource they cannot manufacture for themselves, out of thin air.

Ultimately, a great Entrepreneur is someone who sees opportunities, leaps on them, knocks them to the ground, and exploits the heck out of them.

If they can do that, normally they can magic-up whatever else they need. But there’s often a couple of needs that prove slightly too overwhelming:

  1. Time – a lot of the time, an Entrepreneur misjudges an opportunity. Given time, they can usually bend it into a new opportunity – or adjust their own spending to fit the potential profit. Often, they run out of time before they finish that.
  2. Cash – “running out of cash before our profit comes in” is really the only thing that kills startups
  3. Staff – cash often kills startups because the first thing you lose is your staff. Everything else is negotiable (deadlines, suppliers, tax, creditors, etc) – but people need money to live, and you can’t negotiate with “hunger” or “I have to pay my rent”.

Everything else is fluff:

  1. Office space – have you ever heard of a startup that failed because “we didn’t have an office”? Of course not – that would be stunningly pathetic – like saying: “we failed because my pen ran out of ink, so I could never sign any more contracts. Ever.”
  2. Tax – to a startup founder, their concept of “success” is making so much money that they’ll be *proudly* paying $1 million / year in tax – and not sweating it. People who fail … never earn enough to pay tax in the first place (something many rich people forget is possible). In the end, it’s only the people in corporate jobs that worry about tax…
  3. Income guarantees – to say to a startup founder that they need something to offset lost income is to say: “I believe you will fail”. If you’re building a multi-million-dollar company of which you own – at minimum – 50% of the company, you really couldnt’ care less about “salary”. You’ll be a multi-millionaire just from your shares (and not a paper one: a real one. Because you’re one of the few people who will be legally able to sell them)
  4. Opportunity – what? Do you even know what “entrepreneur” means?
  5. Contacts – every (legal) business needs to sell something. Selling requires finding people and persuading them to give you money that is MORE than the cost of the thing you’re giving them. If you’re able to do that … how could “contacts” ever be a challenge for you? If you’re NOT able to do that … you are guaranteed to fail anyway
  6. Confidence – an Entrepreneur is confident almost by definition – you don’t become a fledling Entrepreneur until the day you leave behind your un-confidence. If you don’t have a vision, and self-belief, you haven’t even started yet.

Concrete suggestions for helping Entrepreneurs

1. Give salary guarantees to the employees, not the founders

2. Cash (but here be dragons: so many ways to do this badly, so few to do it well!)

(this would need a series of posts just to summarise the successes and failures to date – and I believe the professional investors of this world are doing a pretty good job already via the VC blogs, the Angel blogs, VentureHacks, etc)

3. Give cash to failed startups who can explain how they’re salvaging their failure

Professional investors won’t touch a small failed business with a bargepole (usually).

Not because there’s no profit there – there manifestly IS profit there – but because the potential upside has been given a glass ceiling, and they’re not interested in “small but steady profit”.

Fair enough; but that leaves a gulf where someone else could step in. If the businesses that failed are big enough, then professional investors are happy to be involved – the money becomes enough to excite them. It’s when they’re small that there’s a black hole.

Inside story on raising $24m funding, and working with VC’s

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I believe this is the best post I’ve seen on startup funding since the creation of Venture Hacks:

Raising money for a startup is an inherently risky proposition. You step up to the plate knowing that the odds are slim and that, for every story of success on TechCrunch, there’s two hundred companies pounding the street, getting nowhere. We went the opposite route – letting investors come to us.
…
This is the story of that experience – being “pitched” by investors, the decision-making and negotiation processes and the end results.

Rand writes in detail the complete story of a major funding round for his startup, where other CEO’s are “too busy” or don’t have the balls to share publicly.

He talks about what happens when you “practice” things that leading-lights of the VC and Entrepreneur world have long been “preaching”.

He lays out a strategy popular with armchair entrepreneurs, and relates his experience of how it can go wrong.

This should be required reading for any serious Tech Entrepreneur / Startup team…

Google: “A patent isn’t innovation. It’s the right to block someone else from innovating”

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A delightful quote from Google.

Although equally, Florian Mueller has an interesting analysis on whetherGoogle really wants to kill patents – or just kill “patents which Google doesn’t already own”?

note that Google’s discussion of its intellectual property rights starts with patents. They could have started with copyright, trademarks and trade secrets, putting patents last. No, they put them first.

So are they against patents? It seems they like their own patents very much (including the absurd Google Doodle patent, which they spent ten years fighting for) and are only against other people’s and companies’ patents.

Based on their activity over the past 5 years, I’d say Florian’s view seems closer to the truth: as a corporation, they seem to be well aware of such things as patent law, but uninterested in doing anything about it until it suits them. That’s fine, but it makes people less interested in working with them when they later cry “foul!” … Google seems much like a fairweather friend, in reverse.

Great news: Cambridge (UK) startup sells for £7 billion

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(that’s almost $12 billion)

This is a BIG DEAL, for the UK, and for Cambridge. Rory Cellan-Jones is moaning about how terrible it is (“looks like a sad day for British technology – and for Cambridge in particular”) – and I wanted to put across a very different perspective.

NB: this is just my personal view of how this affects small startups and entrepreneurs. I’m sure there’s much more detailed and smart analysis flying around the financial world, given how big the sums of money are here.

From ZDnet’s report:

“UK employees will get a total of £30m in share options. Founder and chief executive Mike Lynch will continue to lead Autonomy and, as the owner of 8.2 percent of the company’s shares, stands to make more than half a billion pounds off the deal.”

(incidentally – both Rory/BBC and ZDnet report that £0.5b is going to Mike, but I’ve heard that it’s shared between him and Richard Gaunt? Not sure which version is true)

Two things I want to point out here:

Cambridge finally sees multi-billion-dollar exit

10 years ago I was in Cambridge and helped start the £30k business competition. At the time, the dot-com boom was still in full swing, and there was a great deal of excitement. We spent a lot of time with investment funds, startups, and angels.

But there was also a sense of “we’ve been here before, will it go wrong again?”, coming from the older generation – the previous generations of entrepreneurs and investors. To be clear: none of them had become California-sized successes, although there were plenty of professional investors making an OK income from their startup investments.

The suggestion was that in the 1980′s/1990′s, Cambridge had got over-excited, convinced “whatever San Francisco / Palo Alto / Stanford can do … we can do too! (and probably do better)”. But the reality had been that Cambridge had a much smaller area, in a less homogeneous market (europe vs USA), with less investment and less tech resource.

A frequent question was: what would it take to achieve “critical mass” in Cambridge? One of the top answers was: “some billion-dollar startups”. Cambridge had plenty of startups that made tens of millions – but none going for 1,000 x millon dollars.

The forerunners were (off the top of my head): ARM, Autonomy, and Zeus. Zeus was the brand new startup out of nowhere – very much hoping for Cambridge to give them a Silicon-Valley style catapulting into the stratosphere. ARM and Autonomy were older, established tech companies that had shown they could reliably make huge sales internationally. Zeus spluttered out when the dot-com crash hit, but the other two have gone from strength to strength (ARM is currently worth £6 billion).

So, finally, we have proof: you can take a startup in Cambridge, and the founder(s) can grow it to a multi-billion success, and then *sell* – while still CEO – for billions of dollars. I’m slightly happier that it’s Autonomy doing this rather than ARM – ARM has been through many management teams over the years, but Mike Lynch has remained at the helm of Autonomy throughout. “Founding CEO still in charge until the big sale” is what new startups want to see when looking for local success stories and role-models.

Mike Lynch has £500 million burning a hole in his pocket

Why does the whole “billion dollar valuation” thing even matter? There were a bunch of reasons given – all based off analysis of “why didn’t Cambridge become a serious rival to Silicon Valley in the 1990′s?”:

  • Venture Capital firms won’t take a region “seriously” until it’s shown it can create companies of the *ideal* size that VC’s want. A VC may be happy with a $50 million exit – but what they really want is another Skype: multi-billion exits.
  • When startups sell for the tens of millions, the founders often don’t make a huge amount on the sale. They end up “rich”, but not rich enough to become “super angels” (bear in mind that an angel needs to write-off their investments – you need a lot of spare cash you’re willing to *burn*).
  • One step down: the early employees get enough money to perhaps pay off their mortgages – but not enough to become “angels”.
  • Arguably, there’s something self-limiting in the region – some blockage – if companies are stuttering before hitting the multi-billion mark. It’s not a problem in itself, but it’s a “warning sign” – and other industries and entrepreneurs will think twice about locating their new startups there.

With this Autonomy sale, we have £30 million spread across employees – should be enough to create a handful of new Angels. I’m assuming at least some of them will stay around in the Cambridge area.

Meanwhile … although I believe Mike’s been an Angel for a while already … he’ll now have more money than many VC funds. Interesting dynamic for any startups looking for the best of both worlds (VC and Angel)…

A startup success story: “what … wouldn’t make us cry anymore?”

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All in the same market/need/desire space:

First product: FAIL.
Second product: FAIL.
Third product: looks set for success

“Our last version was just Tian and I late at 3am practically crying that everything in the food world we were building sucked. So we asked ourselves what could we do well that would be fun and wouldn’t make us cry anymore. And we came up with this. And this version makes us happy.”

Particularly interesting to read how radically different the three *products* were, even though they were fundamentally selling into the same “space”, and there was a lot of crossover in the underlying technology.

This is one of the hardest real, day-to-day (and month-to-month) problems that startups face. Every case is unique, and I’ve seen lots of smart people crumble at that point – or just go round and round in circles till they run out of money, or give up.

“seasoned startup investors absolutely hate patents and the entire patent system. They compare it to a cancer in the economy. “

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Yes! Yes, yes, YES!

Next time anyone in the UK hears an investor ask about patents (hint: they probably are ex-3i staff – and no, that isn’t a good thing), send them this:

10 Myths about patents

“Myth 3: Nobody would invest in startups that don’t have patents.

Fact: The seasoned startup investors absolutely hate patents and the entire patent system. They compare it to a cancer in the economy. ”

Notes of interest from NESTA games-funding event

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This (“NESTA: Investing in Video Games”) was last month, but I’ve been too busy to write it up till now.

The most interesting things that I noticed at the event:

  • Index is interested in spending SEED money on games companies [Ben Holmes]
  • Index can now “write cheques” up to $1m in the UK “in 1.5 weeks”; typically they’re writing them for $200k-$500k – they’ve done 20 of those in past 18 months [Ben Holmes]
  • Tony Pearce won-over Turner as an investor by saying he’d be bringing them detailed analytics on the social gaming industry [Tony Pearce]
  • None of the panel mentioned VentureHacks, even when it was the obvious answer to some of the questions from the audience. I had to grab the microphone and do it myself.

I felt a bit mean, hijacking their Q&A session. But, really … startups *need to know* about VH. It’s wrong for investment/government events to ignore it, or pretend it doesn’t exist; in the long run, everyone benefits from the existence and spread of VentureHacks.

UK games studios and basic business failures

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Recently I had reason to contact a bunch of UK games studios. I thought the hard bit would be to find the names of all those out there. Actually, the hardest part was navigating their websites to do the outrageous thing of daring to send them an email…

Here’s a question for anyone lamenting the unlucky business lives of games companies: If your business cannot be easily contacted, how many opportunities do you miss before you even get a chance at them?

Plenty of failures, but some particularly amusing(ly bad) examples I’ve cherry-picked:

e.g.: http://www.freestylegames.com/contact.php

You can *phone* them on a pay-per-minute number (nice!), but you cannot email them. Brings new meaning to the phrase “(their) time is (your) money”.

e.g. http://firebrandgames.com/contact.htm#

The contact page shows up as the “games” page.

Wow. Great QA on your website there, guys. Did *no-one* check it before going live? Do you visit it yourselves?

(and the only things you’re allowed to talk about are jobs and PR. What does this tell you about their priorities, I wonder?)

e.g. http://www.fireflyworlds.com/index.php?option=com_content&task=view&id=330&Itemid=314

You can download PHOTOS OF THEIR OFFICES 11!!!!!!1111 (featured not just once, but twice, on that page) … but you cannot speak to them.

e.g.: http://darkenergydigital.net/contact.php

Apparently, the only two possible reasons anyone would contact them is because there’s a bug in their games (support@), or they want a job (jobs@). Hmm. Again: does this reflect studio priorities?

e.g. http://www.hanakogames.com/about.shtml

No contact address, link, or form anywhere. Nice!

e.g. http://www.full-fat.com/

When you click the “contact” button, you get this monstrosity:

javascript:location=’mailto:\u0068\u0065\u006c\u006c\u006f\u0040\u0066\u0075\u006c\u006c\u002d\u0066\u0061\u0074\u002e\u0063\u006f\u006d’;void%200

(hackers trying to cross-site-script attack your browser? Or just a deeply incompetent web-designer? I’ll let you decide…)

HINT to Full Fat: webmail. Yeah. Think about it. Over 1 billion people use webmail as their primary mail client these days. Hmm.

e.g. http://www.nitrome.com/contact/

Their email is a Flash app.

A FLASH APP. To display 40 characters of text. Ya, Rlly.

Also: it doesn’t work. When you run it, it displays the text, but won’t allow you to copy it. Huh? I have to manually transcribe the letters. Why? Why, for the love of all that is good?

(and if your spam-protection is really so outdated (and FAIL: you really don’t understand where spam comes from, do you, guys?), then why didn’t you just put a static image in there instead?)

“startup fundraising isn’t about convincing skeptics but rather finding true believers”

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(From an aside by one of LinkedIn’s founding team (interesting blog post on what it was like raising the first Series A funding for LI))

This is one of the hardest things for “old style” European VC firms and Angels to get their heads around, IME. And it’s entirely true, IMHO.

In general, if you find your startup is like swimming uphill against a stream – no matter that you’re succeeding – then it’s either a crummy startup hardly worth doing, or you’re going about it the wrong way. In most startups there are many occasions when it’s difficult or hard work – but in each case, the “working hard” part is optional: you could keep working at a normal pace and still succeed; you just choose to work harder in order to take your “success” and make it “a bigger success”. If you have to work hard just to avoid failure … forget it.

I suspect it’s the infamous protestant work ethic that (perhaps) leads vast swathes of UK and EU people to believe:

“if I work hard, and I suffer, I’m (deserve to) going to succeed; I should expect it to be hard, and cultivate difficulty; easy things are to be suspected and – ultimately – avoided”

IMHO, it’s more likely that a lazy person will find a great product/market/timing and be successful … than that a hard worker will take a weak product/market/timing and force it to succeed by working their ass off. A startup is a company; more than any individual – if the idea is great, other people will join, and tend to pull the work-output closer to the average.

Think on this:

if you’re a lazy founder, every person you hire is bringing the average up. If you’re a workaholic, every person you hire is bringing it down.

(Who am I kidding? If you’re a workaholic, you probably aren’t allowing anyone else in anyway – and don’t have time to interview them. You’re working harder and harder, somehow subconsciously convinced that “hard work” will inevitably create “success”)

Given the chance, would you…

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…trip someone over, or … Help them stand?

Visiting London, this question comes up a lot. Just now, I was on a train where as we pulled into the station the driver announced that the train on the neighbouring platform was the Express train to same final destination; he encouraged passengers to run to the other platform, and promised to wait if the other train left too soon.

I was the first person to reach the other platform; just as I arrived, the other driver started the engines and slowly pulled away.

You might pass this off as coincidence, but I’ve seen it many times first hand from London transport Employees: they delight in fucking over as many people as they can. I’ve even been threatened by London Transport staff, and was too naive to realise their behaviour was illegal.

But on a smaller scale are all the ordinary citizens who passively aggressively respond to perceived slights by barging others as they enter or leave a tube train, or deliberately walk slowly and block the pavements and escalators. When I was one of them … In my mind, I was exacting petty revenge on the woman who barged everyone out of her way when entering the train, or the man who jammed his briefcase in the closing doors so theyd re open and let him in (delaying the train and risking breaking it in the process – I’ve been on London trains that were cancelled because of exactly this).

But some years ago I realised you have a choice at each such moment; two paths lie before you, each goes to the same destination, but the journey is markedly different, and will change you; which path would you prefer to be defined by?

I still resent the petty bastards like tonights train driver who watched people run to his train then pulled away at the last moment – perhaps I even resent them more, as I think about the escalating pyramid of misery and vindictiveness they cause – but it’s also mixed with a small measure of pity, that these sad people will probably never again be truly happy, too wrapped up in their schadenfreude over others.

“if you train your staff, there’s a risk they’ll leave; if you don’t, there’s a risk they’ll stay”

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On twitter the other day (but Twitter’s crashing at the moment, so I can’t find the original author).

Coincidentally, came up in a private games-industry forum today too, where someone was actually trying to argue it’s a *good thing* that their employer pays below-standard wages for all engineering staff. WTF?

Anyway, I think it’s a great quote. Just remember that “train” can be replaced with “pay” and “treat humanely”; a lot of weak company directors (and managers) talk themselves into the idea:

“If I keep my staff downtrodden, lean and mean, and low self-esteem … they’ll be forced to carry on working here, no matter how bad it gets. They won’t have the self-belief needed to leave!”

…but are too scared/panicked/stupid/lazy to think of the obvious immediate side-effect: what kind of product is going to be produced by people in that state of mind? Definitely not “quality”, or anything that will increase the success of the business…

How Valve runs a successful game business, hires people, and more

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Here’s a long (long!) video interview with Gabe Newell, CEO of Valve (one of the biggest / most successful games companies).

(incidentally: this post is shorter than intended. Someone at WordPress considered it acceptable to DELETE your post if your login cookie timesout before you hit the save button. Completely the wrong way to build a blogging platform)

Listening to the long interview, I found him saying some very concise, pithy things about the games industry, and the roles of us working within it. Some of them are clearly at odds with the “corporate” messaging that typically comes out of the larger games companies. Personally, I have often railed against those corporate statements and shouted “don’t believe a word of it! read between the lines – this is a person with their own hidden agenda!”, so I was delighted to hear Gabe providing much more rational and intelligent messages.

I transcribed a few as I listened, as they resonated with a lot of the concepts I’ve tried to hilight on this blog and elsewhere.

Employer responsibility, and a culture of humanism

“You cant ruin people’s home lives to benefit the business
…
we’re not telling them to work on the weekends, but people are working on the weekends
…
those really are the things we worry about”

Contrast this with the issue that made me quit the IGDA:

Mike Capps (CEO of Epic Games) who claimed that: “working 60+ hours was expected at Epic, that they purposefully hired people they anticipated would work those kinds of hours, that this had nothing to do with exploitation of talent by management but was instead a part of “corporate culture,” and implied that the idea that people would work a mere 40 hours was kind of absurd.”

Even when doing a PR-interview to try and un-fuck the issue – supposedly on his best behaviour, trying to sound like a good guy – Mike Capps felt this excused his behaviour:

“My guys ask to crunch. They say, “Hey, we’re not crunching yet. What’s going on? Why isn’t everybody crunching? This is really serious!” That kind of stuff.”

No. Doesn’t stand. You can’t abrogate responsibilty – especially not when you’re an at-will employer in a country with employment law that gives employers many rights, but employees almost no rights at all.

Gabe’s language (whether or not Valve actually does this) is in the opposite, humane direction: at Valve they “worry about” this, and supposedly seek to stop the behaviour, not to work with it.

A real games “business” is self-funding, always

“we fund our own projects so I dont have to worry about how the bank or whoever feels about our business decisions … it makes it a lot simpler to run the business that way”

This is the most common recurring issue I see with good indie games companies that fail – they cannot (or “will not”) grasp the importance of the above statement.

(EDIT’d this section to be clearer; and, of course, this is all IMHO – I have no idea what Gabe/Valve thinks on this)

Read that carefully: it’s “a lot simpler to run the business”. That should be a wakeup call to all the studios that say “I’d love to work that way, but I can’t afford to”; I’d say: you can’t afford *not* to.

It’s generally accepted that *if* you get to that point in your studio lifecycle, you’ve got it “made”. In practice, that should be turned on its head: until you get to that point in your lifecycle, you’re heading towards failure.

Often they make excuses to themselves that it’s “not possible” to run this way, and accept it won’t happen, and then blithely go about their business.

Net result: their games get worse and worse, as their competitors pull away from them, and sooner or later they drop below the standard it takes to keep getting new projects, and BANG! studio goes under.

All digital products these days are an order of magnitude easier/cheaper to make than they were 15 years ago, ignoring the staff costs; service prices have plummeted (web hosting costs, software suite costs, etc). They’re at least an order cheaper/easier to launch and sell in the marketplace. If you’re a startup, you should find it trivial to get to self-funded project status – ignoring the staffing costs.

So. Compared to 15 years ago, you have two obvious routes to self-funding: get someone else to pay your staff costs, but move *very* quickly to where you don’t need their money (because otherwise you’ll have a hard time forever), or do what you can with the people you have (you, your co-founders, the goodwill you can get from ex-colleagues, etc). It’s not excusable to say “self-funding our projects is out of our reach” – this is simply not true. It may require some ingenuity – or it may simply prove that your business is non-viable (if your business plan is to out-do Zynga at their own game, for instance, you’ll probably find it’s just not possible. In that case, declaring “we’re starting off non-self-funding, and when we get our first hit game (like Zynga did), it’ll be easy from there” is just papering-over your hopeless business plan).

How to get a *good* job in the games industry

“the main characteristic we look for is the ability

  • to create something

  • develop an audience about it
  • measure the reations to something you’ve created
  • and then change what you’ve built to reflect that
  • and measure again how much of a difference you made

”

Sound familiar?

If you’re serious about startups, it should do – it’s the path that http://venturehacks.com/ et al have been pushing startups along for the past 5 years. The best of the entrepreneurs are expected to live and breath this approach by now.

It’s not even rocket-science – a big part of it is nothing more or less than the Scientific Method, over a century old now, which has driven most of the world’s research. It works. It’s a pity that so many people ignore it.

If you want to be a game maker, then … make games

Partly responding to the oft-quoted fear “but how can I get experience making games, if the pre-requisite to joinging a game team is that I already have experience making games??”:

“iteration cycle with Customer Feedback is the most important characteristic for somebody to be successful right now, and ability to demonstrate that through a portfolio, through a website, through a mod

If you have learnt anything at all, if you have achieved anything, if you have any skill – then you can *always* demonstrate that, somehow. If not, then implicitly your achievement doesn’t exist – if you can’t show it, it’s not there. c.f. the section Marketing is a science, not an art, and read Sergio Zyman’s book if you need inspiration here.

Which matters more: credentials, or mindset?

Atttitude and approach wins, apparently:

“you have to actually act almost like a CEO yourself, in terms of understanding an audience, understanding a market, building a product, taking feedbakc about the product evolving the product communicating about the product
…
more than whether or not you go to an Ivy League school … or take CS classes … or drawing classes … that for us is the key indicator of future success
…
an awareness of what’s actually going on right now tends to trump a lot of previous experiences … I think it’s going to be harder and harder for people to stay current as the pace of things accelerates … get in front of instead of get behind any structural changes of an industry you’re going into
”

Don’t take a job you don’t want, to sneak into the one you were too crap to get

And, so important (and lied about so many times by journalists, HR departments, recruiters, et al): the worst thing to do if you want to get into a game development job is to join QA expecting it to be an “easy route in”:

“each person that we hire has to be able to do that, even if they’re just going to be in marketing … or support … or QA”

i.e. QA is no “easy path” – you’re still held to the same criteria.

But also, as *so few* execs from EA etc are willing to admit (and I pick EA, because I’ve seen their senior people HR blatantly lie (IMHO) about this on multiple occasions, following their own agenda):

“at most companies they put in all these barriers to keep people from moving out of QA or support … in some companies you can actually get fired for trying to get out of support positions into the development organization …[so instead] build a flash game; ship it; make it better … and you’ll get everybody’s attention if you’ve got talent”

Angel investor admits mistake; world doesn’t end

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I don’t normally call-out individual investors, but this tweet from Max Niederhofer underlines something I’ve been thinking about for a while: I’d like to see a culture of equity investors admitting (publically) their missed investments as often as they big-up the ones they made.

Biggest angel investing screwup of mine of the last 18 months: not accepting @begemann’s offer of getting into @wooga. 18M monthly players!

And of course – aside from the investor issue – it’s interesting just how big Wooga is right now.

Anyway, I’d like to celebrate Max (and others) for publically admitting he misjudged that investment. I wish more investors would do this, on a regular basis.

Why should an investor keep quiet?

I make no claim to know the mind of investors. The nearest I can come is that – for a while – I sat on an investment team that made recommendations on investments from $0.5m up to $10m. I loved the experience of being on “the other side” of the table. But I only did it for a year or so – I’m in unfamiliar territory here.

Some guesses / intuitions from that experience (and from conversations I’ve had with investors over the years):

  1. The suspicion that you might scare-off new startups when they hear you rejected other startups that they consider similar to themselves. Fair enough – although I think this does a disservice to entrepreneurs; we’re not stupid – we know that investors make mistakes, and we expect them to learn from them, I think many of us would be more eager rather than less (“they’re probably smarting from that mistake, and more likely to jump on a similar opportunity like US!”)
  2. Funds, especially, sell themselves on their reputation for making “the right” decisions. Every few years, they have to persuade a bunch of very rich individuals to part with tens of millions of dollars, on nothing more than the faith that the fund will invest it more intelligently than the investor would have themself. They don’t want to tarnish their reputation by admitting the profits they “failed” to secure for their own investors.
  3. Angels have a similar reputation issue, but with Funds, rather than with investors. My impression is that this relationship is a lot less fragile / critical – but if an Angel is respected by a Fund as a canny selector of good startups, it could make it much easier for said Angel to cash-out when they need to. Although… that exit may itself make the Angel look bad (why are they getting out? What gives?) so I’m not sure this is so important
  4. Pride. Both personal and professional.
  5. Fear of revealing their personal “investment strategy” to their rival investors. I’ve heard Angels talk about how they have a secret sauce in their choice of investments – one they guard as vigorously as Coca Cola’s – but I’m not sure how important this really is. “Security by obscurity”, and all that…
  6. Um. Others?

Why should an investor confess?

As an entrepreneur, when I’m sifting through potential investors, I’d like to know:

  1. Does this guy track their failures as well as success – do they live by the same rules they expect us to, i.e. “test and prove and IMprove”, or are they stewing in a soup of arrogance and ignorance?
    1. An investor that gets better each year is one I want on my board – chances are, their advice and input will be better year on year. Not stagnant.
  2. Market opinion: what other entrepreneurs came to you with serious investment offers? Social proof works both ways, guys…
    1. Every investor will boast about the good investments they made, but that tends to be a small pot. Sure, they see 20 (or 200) pitches a year – but how many of those pitches are from smart entrepreneurs? Do the smart guys avoid this investor, or do they swarm to them?
  3. Market exposure: what has motivated them in the past to make yes/no decisions? Not theoretical (fakeable) ideals – but actual deals they’ve rejected. (again, finding out the deals they accepted is relatively easy / common)
    1. Does this investor get enough exposure to the “real” spectrum of startup opportunities? Or do they only deal with – say – Financial Services tech startups? Will I end up having to (re-)educate them on the realities of (say) Social Media startups, because although they’ve funded one … that’s the only one they’ve ever seen (and they judge everything else by that one)?
  4. Honesty. With personal recognition of past mistakes, and the dose of humility that required.
    1. Yeah. Most people don’t care about this one. I do. If I’m holding myself and my colleagues to these standards (and I do) … why should investors get a bye?

I’ve got an idea; I’ll give you 25%…

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…if you:

  1. finish it
  2. and design it
  3. and build it
  4. and test it
  5. and refine it
  6. and launch it
  7. and sell it
  8. and market it

…for me.

This was the tempting offer whispered in my ear this evening by a hard-up web-developer at a networking event, once we were alone, and he’d heard I developed iPhone apps.

For the record, this is the worst offer I’ve ever had – even in the days of the iPhone goldrush (2008, mid 2009) the least I was offered was “one third”. Since then, even the unrealistic offers usually start at $2,000 cash up-front.

I smiled, and said nothing.

I carried on the conversation, when he suddenly broke into a long (minutes) tirade of abuse in the middle of the venue, because I’d “blown [him] off” when he’d “offered to share [his] great idea”.

I stood there in silence for another 30 seconds, wondering what to do: should I respond in kind? should I try to help him? should I walk away?

I decided to try and help him. I asked him to think about how his offer sounded to someone who makes apps for clients every day. (he ranted about how I thought I “was the Big Man – BUT YOU’RE NOT!”). I apologized profusely for offending him, and said I’d try to explain (he told me to “scuttle off, little man”). I made one more attempt – I pointed out that after inadvertently offending him, I was at least trying to make amends, and all he seemed to want to do was insult me. He sneered.

So, my public-service act for the day:

How much does it cost to develop an iPhone application? (tl;dr – $250,000 for a good one)

(note: when we talk to clients, I advise them the sane limit is c. $150k for a great one, or $75k for a good one. The $250k figure is accurate if you’re doing own-IP and it HAS to be awesome (like twitterific, quoted) – but you always end up spending more when it’s your own IP – or if you work with extremely expensive digital agencies who don’t have in-house iPhone specialists. Most of the good, solid iPhone dev teams are about half that price)

NB: this problem (“I’ve got an idea, I’ll let you have it in return for a profit share”) is prevalent among people who know nothing about computer games, as much as for people who know nothing about generic iPhone apps (but who read the papers and think they’re sitting on a goldmine. That’s very interesting in and of itself…

At the end of the day, I walked away from Mr. Abusive. Some people just don’t want to be helped, sadly…