A Crash Course in Business and Leadership for Indie Game CEO's and GM's

I pressed the right button I'm apparently good at people pressing people's buttons I've proven that over many years first of all thank you very much for that for the introduction thank you all for being here on the first day of GDC the whole idea of these 30 minute talks is that we are trying to pack in my case 46 years of wisdom building games into 30 minutes so I'm gonna talk really fast like this new mayor listen very carefully because go really fast like this they'll be all like that no I actually won't do that but it will be a case instead of me blurting 30 things I think are true I'm actually gonna take a few things I think are true and talk about them in detail I'm gonna go PI by this part quickly but as I mention I've been doing this for 46 years basically I am a lucky guy I've been at the right place at the right time since 1971 a number of times the key point for this talk is I've been CEO or GM of studios

for probably a total of thirty years and number of other years advising and coaching CEOs and GM's and that's the part of my background as a part from game design or game production that I'm bringing to this talk in the last few years in particular I've been working both on original designs and working with teams really ranging from very tiny indie teams all the way up to top 20 publishers in the world so now I want to tell you I have a lot of opinions here I think that you should be very very cautious in the modern time about automatically accepting people's opinions people who look like this to me are very suspicious thank you I agree I would not trust this man just from this photograph I fact I think I would want to run from whatever country he's gaining power in so so on that note if I I do not have a

requirement that you agree with me if I if you find yourself in dinner tonight in a discussion or even a disagreement or an argument a friendly argument about things I say I'm happy because if you think about it and you're debating it that's all I think that any speaker can ask so that's my goal here so here's the first point I want to make when I first started running a company when I founded my first company in 1988 an advisor took me aside and he gave me one of many wonderful gifts I've been given by advisers and mentors over the years and he said let me tell you one thing starting out as a company if I give you one thing let me tell you what it is and that is gosh is king not girl not Duke not Prince but King and by saying cash is king I thought okay yeah cash is cat

sounds good okay preserve cash watch I people have told me that watch out for cash I've got that okay I'm gonna be careful with my wallets right here I'm gonna be careful with cash but he didn't stop there he said there's more to it than that the thing about cash is it's different from any other resource you have if you run out of time for something it sucks there's a problem your project its ships lay the project can get cancelled it is not automatically dooming the organization if you run out of resources if you run out of printer paper or ink if you run out of people to do a certain task if you run out of anything it's a problem it could really create a chain reaction but it's not fatal to the organization if you run out of cash and you can't pay people on time in the United States that is almost always fatal because of the way the laws work

requiring how we do these things and by the way I think those are good laws because I like getting paid so if you can't pay for your office's if you have offices and you need them you have a little bit of leeway there but pretty soon the doors are locked and everything you own as a company is inside the office that is now with you locked out and they have changed the locks so the reason why we say cash is king is because it is the single most precious resource you have and if we think of it in game design terms think of this business as being a game that has permadeath and the this is the one resource that can kill you if you think of it in those terms you will protect cash in a different way what we all tend to do starting out and I can still catch myself doing this at the start of projects even after I'm supposedly wise is you're enthusiastic okay we have to

get machines for people okay we need two more people to do this okay we don't have enough chairs you start spending money you're sitting up the team everything is new and it feels great and spending that money you're trying to spend it intelligently but there is a pleasure in spending that money while you set up the company at some point later where you can't go okay we're fighting for this deadline you know money is tight we're we watching it you're watching money in a different way you're being more conservative you're being more cautious with what you do with money as veterans of starting companies and starting teams one of the things you can do is start to look at okay how would I spend money late when it's tight how can I take that same attitude and bring it too early in the process so that I make it less likely that money is tight later and if something goes wrong and it turns out we needed more of something than we have

that money is there that is what he taught me about cash as king and it was a wonderful gift but now there are more kinds of money and I use this as my picture to illustrate this but I'm not really talking about currencies there are actually three kinds of cash and this is a very important thing that I learned by experience so kind of cash number one is if you look in your wallet or your purse right now you will find some cash that is cash you own if you have cash in the bank that no one can take away from you that's cash you won't so that's number type number one of cash type number two of cash is money that somebody can take away from you well what are going to somebody's won't allow if I were robbed in the street that would be somebody taking money away from me I buy that would that would be the cash up that is

not what I'm talking about the money in your bank account is often as a company not all yours for example if you don't pay your payroll taxes there's some other kinds of taxes the government can get an order and they can come and take the money from your bank account without your permission so that is money you don't actually any money you owe in taxes is no longer your money because you will either pay it directly or you will pay it indirectly at your bank account but that is no longer your money it's money that can be taken away from you if you get a credit card from the bank and you don't pay that bill typically you're only going to get a card like that for a small start out business startup business from the same bank you're banking with well if you don't pay the bill the bank will simply pay it for you it's a service that we offer we're very happy to do these things for our customers yes we'll take your money and automatically base something without your permission because it makes everything easier so

that's money you don't really control the credit card company can come and they can take it if you have investors or if you have taken any kind of other deal where somebody has advanced you money for example you've got a publishing deal and you've you've been advance money if something is going wrong typically an investment deals the investors have the right to come and take what's left of the money and say hey this isn't gonna work it's not gonna pan out don't spend any more money we're just gonna end it here so that investment money you raised if you read the fine print normally is not money you actually own and control if you have a deal with a publisher and distributor and they give you refundable advances if you look on the contract they'll say it may say refundable advances you know that well that would only apply of say you engaged in criminal activity or you did something

reprehensible or you simply left the country that's the only case and that does it don't worry about that part of the contract and no keep moving keep moving right along nothing to see right here but in reality a publisher who wants to can almost always introduce and create an excuse to say oh you know this isn't going so well we don't you know you you you you gave us a delivery and you you delivered it and it oh it came in at 2:00 in the morning and there's a penalty you're not supposed to do anything after midnight so you have to give us the money back I'm joking around about it but that stuff does happen so when you get in advance from a publisher a distributor you always want to say a non-refundable advance you would like it to say that explicitly that it is the non-refundable advance so if you ever do ship them something that's due in the morning you will not be facing any consequences final example if you have

your personal bank account and your company bank account in the same Bank and you have some loan or payment that you have taken out from that bank you may have personally guaranteed it in fact if it's a credit card you almost always will find that fine print you have personally guaranteed it what that says is oh the company couldn't pay us what a pity well we'll just take it from you instead so now not only do we have company money that you don't really control in your bank account that's suddenly you've got your personal money that you don't really control so that's why thinking about that second kind of money is so important so to recap we got our first kind of money cash you got in your hand cash that nobody else can take away the second kind is cash that somebody can take away and there are many ways for that to happen the third kind of cash is cash you don't have yet and I have many memories of our don don

it's good to talk how's the wife and kids done oh that's glad yeah the check will be there Tuesday will stand exit out Monday the check yeah check will be there on Tuesday well the Tuesday comes and usually there's a FedEx delivery and there's a check but sometimes there's not and sometimes that check comes Wednesday sometimes it comes to falling Monday and some sometimes it comes a couple of weeks later and there be a few times it never came at all so money you don't have yet is not really cash at all I call it their kind of cash but it is not cash because until you have it it ain't there the place I see this hurt people by accident because in reality almost all of the people I've done business with in this industry over decades have been trying to do the right thing trying to be honest people where I

see the greatest instant incidence of this with teams that I advise is they have a good game they're talking to some publishers there's some interest there there are discussions going on and you feel really encouraged because the business development people are encouraging you they're encouraging you because they like your product you're thinking hey if we could do this this could be cool while they are saying and they mean it when they're encouraging you that is not an int in almost all cases it is not an intentional way to to blow smoke of any kind and while they're saying this to you they're saying to the company hey this could be cool what do you guys think of this and the company is reacting and there's an internal discussion about your all of us have a tendency including me to go home and go back to the him say hey this is looking pretty good they're really interested in it we don't know what's going to happen but they're interested and we start to think about what we would do if we signed a deal and

we start to get to where we think of maybe cash well it's not maybe cashed anymore now it's probably cash that's a psychological difference now we're handling cash differently then maybe we get offered a draft contract you know we're interested in this we'd like to give you a contract and talk about the exact terms where we could do this you're looking at the contract there they're talking about terms in good faith you kick some things around you know there's some things where you disagree but it looks like it's very doable and so you now have hey it looks like we're going to have a deal and there's this moment where you turn to each other and you go we had actually this could work you guys this could really work and you start to think wow this is going pretty well maybe to two weeks we'll have the kickoff check that could be very good to it okay two weeks and now we start to think hey two weeks is cash few years ago I had a

conversation with a number of people who have run teams run companies or advisors yes and we were all talking about how long do you think on anything other than a super simple small project on any deal of any scope from the moment where you start to feel good to the point where you have a signed contract how long do you think that typically takes we were talking about it the consensus we developed was 90 days and you could be sitting there going no yourself handsome yes deck 9990 days I mean if it looks good and you're having deals closed fast with that and they do close faster than that it often does happen they close faster than that they could be a simpler deal or whatever but what happens is once we start to feel good where we have a good link with the producer or whomever we're working with we start to feel that something is imminent and we start working as if the deal were done and it can be weeks months or net

before the deal gets done and that becomes a trap where a lot of cash can escape us very very quickly so remembering to think about those things is key we also come down to the idea of we can have letters of intent the letter of intense a short form agreement that can tide you over while you're negotiating a contract it can also tie you up and take away your negotiating Fremen freedom in the contract even letters of intent can take a while I had a case once where I was doing a deal that we ultimately signed on September 1st the very senior level producer at the at the company said no this feels closed we should be underway shortly I said well when we do a letter of intent just to kind of cover it and make sure we have everything clear so let's see that was September first on December 20th I actually got the draft letter of intent so it's about three months

roughly to get just to get the letter of intent and we signed the deal on February 24th so let's recap let's see September October November December January and most of February yes almost six months from this feels good feels like we're about to do it and them saying hey this is straightforward no problem almost six months and that's a deal we signed I've seen deals like that that never get signed so that third kind of cash it draws us our optimism our hope our love for our game if you're building a game you love your game and when other people love it we that's a great feeling and I will tell you I start to fall into the same thing and I have to keep reminding myself three kinds of cash three kinds of cash third kind of cash done lesson in that but we have to watch that because once you're running a company there isn't somebody else watching it for you once you're leading a team there isn't anybody else watching it for you you have to watch it for yourself I use

this slide of a chess game I just published a book called from dream to delivery which is basically about shipping projects from scratch doing saying you love and I tell a story in there that I call the chess game and it's basically one time when we encountered a company where they very deliberately tried to rip us off very large very well-known media company that deliberately had one executive in the company deliberately tried to steal several with several hundred thousand dollars from us simply by manipulating what they did with the contract as I say in my career most of the people I've ever dealt with have been very reasonable tried to be fair you can argue about business terms but they're fair people like that do exist they are rare and you have to keep it in the back of your mind that's why you want contracts that's why you want letters of intent that's why you check with lawyers about things that's why you're careful is you do find some people out there who

are like that I'm delighted to say what a small minority they are but you have to allow for the possibility in what you do Salvador Dali understood many things he's the gentleman who painted this and many other paintings of this type about a hundred years ago and that is the nature of time when you're an indie team or you're doing a startup so rather than my telling you a lot about about this issue I want to ask you to please do an assignment outside of this session talk to some more than one person who has been part of a startup who has led teams indie teams and asked him the question when you started out you had an idea about how you would be spending your time once you guys got the team going what was the difference between what you expected and how your time really was spent whatever you hear will be wisdom worth worth listening to from any

particular team and if you ask a bunch of people that question they may be some of the most valuable speakers you get out of GDC is just talking to them because the issue is inevitably we don't end up spending our time the way we plan to but by talking to other people you'll get a diversity of answers to how that works and what the what the deltas are petri dishes there are many stories you can tell with petri dishes yes some sad some happy but here's the story I want to tell because I I'm a nut about game culture if you are a game designer and then you end up leading a team you discovered that the culture of running a company a team in any area any discipline any technology is in fact a game and it's a game with very real stakes it's a game that people care about and you want to keep your players playing and you want to get great results and you want to win that game

and so I joke about it sometimes but I'm actually dead serious when I say that the most important game design you may ever do is the culture of your company so the way I think about it is if you picture if three of you are starting out on an indie project together and you picture in a room picture three petri dishes that have scattered microbes of whatever sort and you put them on the table in the room and then you bring in seven brand-new petri dishes you take off the top you put them there in the table you turn on a fan and leave the room for two days when you come back what's going to be in the seven new petri dishes it's going to be microbes that are remarkably like those in the first three the first three of you people I've heard people say well there's only three of us I mean culture I mean we sit across the table from each other culture is sitting across the table from each other that's true but then you if you bring in that fourth

that fifth and that sixth person you are transferring to them the good the bad and the ugly of how the three of you work together you get to 10 20 the first 10 then transferred that worldview to the next 10 and to the next 30 in the next 50 and being part of companies that started small and then went up to having hundreds of people if there's something you don't like when your team hits 200 very often you can look back to something in the first 10 people and you can find the roots of where that went so those petri dishes as you keep bringing in new ones into the room they will keep getting most of the same microbes I have one piece of advice for how to deal with this issue and that is to think about it if you sit down by yourself if necessary or just with your core team when you're starting something and this can be done for projects as well as for companies and you say hey

why do we stand for what do we want to stand for what will our team be about if you could write three or four things just about what we stand for as people and as a team and it's like to work with us what would those three or four things be and you can debate them and argue them and then actually write them down what that does it means that to the degree we control ourselves you're deciding what some of those microbes are in that first petri dish and you're deciding what kinds of people in terms of character not just skills you want to bring in to be around you so that's a very valuable and important thing that's how you control how the bacteria grow and spread yes spreading everywhere across the entire world spreading infection of a wonderful or terrible sort it's all up to you but you want to control and you control by planning ahead and thinking about it I love the expression on these women's faces if I were sitting that close to a

flame that big I think my face would look like that too now my point in this slide is to think about when before this restaurant started putting 150 people in a room with six of these things and setting them all on fire at once they probably talked about exactly how to do this and they may have installed some processes and equipment to make sure they did not burn down the building let alone any of their diners when we set up teams very often you're with people you've already worked with you're used to how you do things and you just start working the way you've always worked and that may work out great it may be wonderful but one thing I believe is if you are trying to make a start up a new team an indie project a success it is worth the time at the start to ask yourself a series of questions okay how are we going to organize this project what are our pipelines going to be how

does an art asset go from a concept sketch to being in the game and actually running properly in the game and not creating chain reaction problems when we install it in the game and the same for every other kind of asset how will we know we're on time how will we track our progress okay where we want to use we won't go add shall we want to use hand stuff we want to use fabric we want to use JIRA or whatever you're going to do it actually matters less in my opinion what you choose then it matters that you choose and that you start at the very beginning and you say let's decide what to do having some system it's what's critical the system is what you pick in your control in control of your own faith but I think that not choosing is where I see a lot of problems happen with teams a certain amount of the work I do is I get called in because teams are having problems I would much rather get called in at the start before there

are problems and very often it's good people doing good work but it is the lack of a consistent way to organize and know how they're going to do it that ends up hurting them so so I would just say figure out at the start what is your process and picker or picks you can picture if you're going to start six bonfires in a room with a hundred fifty people there's a certain mount of planning you need to take your planning equally seriously I just like this picture I what I think about with this picture is the you know we've all seen dogs chase cars what is it dog do when they catch a car normally they stand there and they look confused and they have no idea what to do next because they never conceived of catching the car this is an unlikely outcome that we see pictured here of a dog chasing a car but

yet very often we start but knees we start teams because we have a project we love that we believe in and we go out and we build that game and we ship it and down the road we think it's going to make money and then we have the question of oh god what do we do next what so one of the things we have to think about is if you're actually starting a company and not just doing a project is what do you want your company to be what do you want your company to be when it grows up that's a critical question again the only one who will know the answer is you but if you don't ask that question at the very start you'll now be in a position where your finish your project and you don't know where necessarily what to do next and there's another issue that comes when you finish your project and we see the lion family on the savanna feasting on

the night skill they languidly stroll across the beach feeling the feeling of full bellies for the first time in three days now if you're a lion and you kill something big first you eat a lot and then you lie around and eventually you go I got to go hunt and kill something again as game studios would very often happens is we ship a game we finish a project and the next Monday we have to know what we're going to do to pay for the next paychecks for the team and it really isn't fair because in a fair world in my view what would happen would be you'd finish everybody could take some time off the way you can to the big company and then you come back and you figure it out the trouble is the payroll requirement keeps coming up from the bank during that time the last two or

three months of a project are very often crazed and yet you have to be thinking about what are we going to do next where is the next money coming from what sometimes will happen to teams is they may not have thought about the big picture of what they want the full team to be what they want the long term the company to be and they are so busy finishing one game they they can only half-heartedly think about what they do next then they do a great job on a game release if there's no money coming in yet from that game and they don't have another project and they can run out of cash before they find that next project because sometimes it takes a while remembering that fact of we're not like the Lions we have to feed ourselves constantly it is one of the bad parts of what we do that we have to think about money that way but we do so I've talked about all sorts of problems I would like for this slide to come up thank you I've talked about out sorts of problems I want to finish by talking about the other side and why we do this there's an

old board game that actually this this board game was published for like 60 years before it finally was shut down and when I was a kid I grew up in an alcoholic family and about five o'clock at night things would usually start to get red they're loud and unpleasant around our place and I would retire away into a corner in my room and I would play this game and I played this game for years and years and then later turned out I got to design computer games and can be computer baseball games were part of it which was just incredible but I part of what got me through part of my life was this game just plain old board game if you do this for a while you'll have people come up to you and say oh I played one of your games and they won't tell you how great the level design was on level six they won't talk to you about game mechanics they'll tell you where they were when they played who they were with and why they still care enough now one five ten

twenty years later they want to tell you about it that's because you didn't just entertain them for a couple of nights that's because you got to him you create a link between you and them that made their life more fulfilled and they wanted to tell you because they now care about you because through your game you showed that you cared about them so why do we do all this why do we put up with all the crap a lot of which I've talked about in this presentation we do it because this is what we do this is our dream this is what we're made to do I've done this 46 freakin years and I still love to do it I don't want to do something else I can report that you can do this for 46 years and not get bored because that's my experience but we have to keep doing it and to do it we have to be willing to deal with the crap we have to be willing to learn the negative parts of running a business many of which are just

incidental parts of the gameplay because god likes a well-balanced game but we have to be willing to do it because this is an art form and if we're going to prove it to the world and if we're going to impact those lives and give them something to come tell you is a reason you made their lives better and they want to talk to you because you've linked to them and you connected to them with your game we can't be discouraged about all this other stuff we have to believe in ourselves our teams our projects and our games and we have to deal with the crap and go out and build what you were meant to build that's the most important thing I could possibly say to you today and thank you guys very much for being here you