Advanced Entrepreneurship: Avoiding Total Studio Disaster

congratulations for surviving until the last day of Gd seeing this is my 21st consecutive GDC so yeah a great fun week and it seems that every GDC is crazier than the than the next so I'm Jason I'm the the co-founder of the execution labs execution lab is a early stage investor in game studio so we are an equity investor we become partners with the companies we invest in long-term partners and so you know our philosophy is one of long-term growth long-term sustainability or survivability and we talk to a lot of companies we talk to a lot of studios we talk to a lot of developers and the sort of the inspiration of this particular talk on you know entrepreneurship and avoiding studio disasters was kind of inspired by a bunch of the stuff we do with our own studios but also with some of the problems and challenges we see with with Studios more more broadly over

the past few years we've invested in or we've done 25 deals not all of those studios are still alive so out of the 25 20 of them are still alive and so you know from an investment point of view a 80% survival rate is actually not that bad a few studios or project you might have heard of Kitfox with moon hunters was released last year to much fanfare we have one of our original teams double stallion launched a big IP with Cartoon Network called ok kayo Lakewood Plaza turbo on mobile which was an interesting sort of attempt to launch a new IP on games before launching it on television so an interesting experiment one of our teams is outer Minds the crew that does the co-productions with PewDiePie so the actual PD PI branded games very very successful team

another example is delusion underwater sub game that was just released a couple of weeks ago through gamba shis and then earlier this week children of zodiacs produced by a bunch of X Ubisoft called cardboard utopia was just announced published by Square Enix which is interesting for a Japanese RPG I don't think you can find a better publishing partner than Lin Square Enix and a lot of other cool cool developers and and in projects and so you know the past few years I've been talking a lot about entrepreneurship and funding and pitching and so on a few weeks ago I was in Germany at casual connect and I did a presentation on why your studio will not get funded and that kind of got picked up quite a bit in the media not everyone liked it so this was a Facebook post from Jamil for folks who know Jamil he's had a strategy for games at at Google

but I know Jamil a long time and you know the issue he took was primarily because I said the first reason that you're not going to get funding is because you're making crap games and he took offense of that and I think was slightly out of context and in that sense I think it's probably a important time to warn you all that this is a lecture on entrepreneurship in the business track and so commerce and money is an important part of that discussion and while you know I've been in the game industry a long time and believe in the creative and expressive power of games and games as a medium and it's a you know an amazing canvas to create and express ourselves you know if you're talking about the business side then obviously we have to be concerned about the dollar bills and so you know in in sort of the respect to Jamila's concern and criticism I will kind of say that

the tip you know the initial tip the starting tip the the baseline tip is all of this only matters to the extent that you know you're working on great games right no amount of you know entrepreneurial savvy no amount of salesmanship or pitching skills or all that kind of stuff is going to matter if you're not making great games so we're all going to just to take that as a given everyone's game is awesome and and we'll go from from there alright so so when talking about entrepreneurship there's all kinds of stuff sort of more so in the in the sort of non gaming space right and you can find all kinds of memes and tips and stuff that don't sort of necessarily say games but kind of relate relate back to us this is founder of LinkedIn Reed Hoffman you know saying something that we can all relate to in terms of the need to iterate on our ideas or here the infamous dave McClure very very well known early stage investor you know kind of saying how most startups are pretty

clueless right you're either it means that you're he's still not quite sure you're building not quite sure who you're building it for nor do you know how you're gonna make money so that kind of sounds like a lot of game developers although he's not talking about game developers this one I thought was cute you know it's it's it's stressful risky challenging work to be in business to be in the game business to build companies and so on and then if you look at more so the kind of textbook definition of entrepreneurship it usually involves these three core elements which which I think most people should be familiar with right the you know setting up and operating a company you know doing it in the context of risk and uncertainty right we don't know if this is gonna succeed or what's going to happen and then the third one being an intention to make profit and for game developers the first two may be sort of obvious or a

given but oftentimes the third one is is forgotten and so I often talk about the definition my own definition of Indies you know because a lot of confusion over who's an Indian who can call themselves an Indian and it's sort of a loaded term but I always talk about Indies as as people or developers or companies that have creative independence right so they're working on the things they want to work on they're working on their own ideas and other they have legal independence right so that their own that are their own entity no one know necessarily owns them they're not part of a larger company etc so that to me is what an India is right creative freedom legal independence now if we take all of those developers studios that qualify as indie creative freedom legal independence I like to categorize them across two other axes one is the degree of commercial intent and the other is sort of quote unquote vision vision is just my catch-all term

for doing meaningful work doing something creative doing something innovative doing something different you know doing something visionary and so this is where we would put the kind of stereotypical starving artists right there doing visionary work they're doing interesting innovative stuff but they're not really doing it in the context of commercial intent they're not thinking about profit they're not thinking about making money they're just they have something we need to express themselves they're creating so the kind of you know stereotypical starving artist this is where we put the near the sellouts right the then they're intending to make money they want to make money but they're not doing anything particularly visionary so maybe this is where we put all the studios that are making candy crush clones or you know trying to attempt to make a clash Royale or a MOBA or something like that where they see something else that's making money and they're just gonna kind of and they're kind of do the same thing and hope they make tons of money so that's you know not super interesting either this is they're just lost down

here because they're not doing innovative work and they're not really trying to make money now I mean I'm joking but let's say this is where students might go they're still trying to find their way maybe really kind of junior people that have just left college and they're trying to figure things out so you know I ideally the ones that are lost sort of find their way into one of the other other quadrants as they as they mature and explore and then over here is where what I would call the independent entrepreneurs so they are Indies meaning they have creative freedom and legal independence and they're doing so in the context of commercial intent right so they're trying to make money that the third bullet on the textbook definition of entrepreneurship and they're doing something visionary they're doing meaningful work innovative pushing the boundary etc and I think some of them sort of past discussions about you know identity around around Indies has really been

this sort of struggle between a binary definition of either you're a starving artist suffering for your craft creating something meaningful or you're a sellout that's making you know nothing the worthwhile but you're trying to make a buck and I think it's important to unpack that and really understand that there are other sort of more nuanced definitions and that this kind of happy medium on that spectrum of being an independent entrepreneur exists so who are some of these independent entrepreneurs some folks may recognize Tanya short she's the head of Kitfox Games one of the studios we invested in historically her background is in design MMO design and writing a narrative but she's very entrepreneurial she leads that the Kitfox team very community and and press influencer minded and you know she also handles all the budgets and that kind of stuff and and although the work they are doing at Kitfox is very

innovative they really are trying to build a studio that that is as profitable maybe someone I think most people know rammie rammie is male 1/2 of Vlambeer you know that that dude is a hustler I mean he is a killer business person and and is an entrepreneur you know really textbook entrepreneur but but no one would sort of question that the work that he does and that Vlambeer does that the games are they do are cool and innovative and and fun and all that good stuff Nathan Bella for those who know him from Toronto co-founder of capi or capybara games you know another studio doing a really innovative compelling work beautiful work but you know nathan is really savvy businessman business person also his co-founder or a partner in indie fund you know Jenova Chen you know Jenova Chen arguably is one of the best designer creative directors on the planet today

a-and you know a journey a masterpiece of course people necessarily recognize that they're really smart at business right they were a student team coming out of USC and had a three contract or a three project contract with Sony and then soon after got several million dollars of funding from from from the valley investors so you know creative genius doing amazing games masterpieces and yet also in the context of commercial intent you know really really savvy business side john blow likewise and of course there's tim schafer you know again an indie doing visionary work meaningful work but doing so in a context of commercial intent so the first sort of real tip is to embrace that identity right recognize that you know you're not a starving artist but that in fact you are an entrepreneur or an independent entrepreneur an indie entrepreneur and to really sort of take

on that identity and own it and and that's that's sort of an important first step and we we don't see a lot of developers doing that they're sort of there's almost embarrassed to be talking about money they're kind of ashamed that they're trying to do something innovative but they need funds and so it's a weird sort of situation so it's Oh embrace that identity this is Richard Atlas an entrepreneur an indie entrepreneur from Montreal we did not invest in them he's the co-founder of a studio called clever endeavor some of you may recognize the game that he and his team worked on called ultimate chicken horse it was released last year they had a successful kickstarter they I think they sold probably about a quarter million units on steam at least according to steam spa so the game is done you know pretty well for a three-person team and they were I don't know if they won who won the design award last night I Jeff was anyone there I don't know who won quick someone

google it so maybe they won the design award last night or on Wednesday night but anyway so so they were nominated for four best in the in the igf which is not bad for a few unknown developers with zero experience starting their first company essentially coming out of school and I kind of shooting myself for not having had invested but so kudos to Richard and the team you know I think I think what's important to recognize is the business side was intentional when Richard was starting the studio he was thinking about starting a studio not just making a cool game but the idea that you know he needed to start a studio interested enough Richard came from an engineering background you know had no expire experience in game like many of us was passionate about games and wanted to move in that space but realized he needed to build a business found some

co-founders was able to get some friends and family funding and and when they were prototyping ultimate chicken horse they did it you know as many people do in a game jam and their game got some attention so they were in Newton they knew they're onto something intentionally they plan to go to pax to get feedback and one of the things early on was visit I mean when they were starting was about two years ago so that was really the start of the shift towards the importance of influencer marketing and streamers and youtubers and so on and sort of Richard latched on to that and say okay we need to design a game that's gonna be fun to watch and that the streamers are gonna want to play and and you know so he would go to shows and hustle like crazy to meet all the youtubers and talk to all the people that were managing the youtubers and everything he did was really intentional about thinking about this game as a product how was he going to enter it into the marketplace how is he gonna get noticed Visa the others how is he gonna optimize the game and the design and the

art style to be viewable and you know so I would say it was intentional another example of intention are the folks from Riot and this were going back a few Brandon's a buddy of mine from from way back and I mean I I knew him when he was out trying to raise funds for for Riot back back and you know he thought or they thought they were on to something right it wasn't just I we want to make this cool game now if you talk to Brandon he will admit readily that of course he did not or could not ever imagine the success that they've had with league but they did intend to build a business and create a game whom they thought there was a market for and if they sort of did the right things they would you know they would be successful and so they made these intentional decisions around that and that brings up the sort of notion of uncertainty versus AD by

accident and so it's one thing to say listen I think there's an opportunity to make a MOBA and there's a competitive market out there you know we're not sure if it's going to succeed but here's our thesis and our assumptions of why we think we're going to be successful you know and these are the steps we're going to do to attempt that is much different than saying I'm just gonna make my cool thing and maybe by accident you know it'll it'll be successful which is also kind of that difference between intentionality or hope right as investors we cannot invest it on hope right we can invest on uncertainty we can invest on your thesis and assumptions we can debate whether or not those assumptions are correct we can sort of work towards trying to resolve some of those assumptions to see if they're right or wrong and you know and that intention or intentionality have to be there we can't just invest against you know maybe by accident we'll be

successful maybe it may hopefully we'll be successful and so that's you know as tip to this kind of catch-all of be intentional but even even this week many of the developers we were talking to you know would say ah well you know we create this cool little game idea at a game jam and we liked it so we're just gonna work on it well have you looked at the market have you seen your competitors do you think there's an audience for it I know and we're just like this little mechanic so we're gonna we're gonna play with it and see what happens so you know if you're an entrepreneur and you're building a business you need to be intentional about building that business and one of the things I will often tell developers is designing your business is as important as designing your your game so in that sense it's from the design point of view makes me think of an old lecture from will write many many GD C's ago we talked about the notion of local maximum

you know which sort of mathematical stuff I'm not smart enough to actually compute local maximum but but he was talking about it in terms of design of game design inserted whether the the the term that he used was the opportunity space of game play and that as developers you don't want to get caught on a on a local maximum which means you know you're at the bottom of one of the hills when you're at the bottom of the hill you don't really know how high the hill is and so you start climbing and if you're climbing the hill on the left and you get to the top of the hill you feel happy that you conquered that hill and there's like oh crap you realize it was a much higher hill that's actually a much better design and I should have been optimizing for the local Maxima of the small hill I should have been on the bigger hill and optimizing for that local Maxima and so I think I think that applies to the business side as well in terms of that are built in that I've

often criticized developers who make couch co-op or local multiplayer games despite the fact that couch co-op games are really fun and they show well at events and show well it packs fundamentally as a product they don't sell well because it implies that I have friends and that I have four controllers and I've got a sofa at my house or my home and so you know you kind of get this false sense of confidence when everyone's cheering out there at the indie mega booth and then you release it on Steam and you sell you know five hundred copies and so you know couch co-op games are the little hill and you have many many developers that are building couch co-op games and they're optimizing for a local Maxima that inherently is not very high and so as an investor anytime someone comes in with a couch co-op it's like sorry you're on the little hill not interested that doesn't mean you shouldn't make it but if you're looking for funding or a publisher you know they're they're mentally placing you on

on a hill now of course lightning can strike at any time and and maybe your local co-op game is so crazy amazing that you're gonna be you know way past the local maximum but as a rule of thumb that this is the kind of thinking that goes into it you know so I don't know what kinds of games are on the the better Hill I mean multiplayer games I don't know MOBAs you know things that inherently could can scale but the problem is of course no one really knows how I'm that's part of the part of the challenge but this also does require that you have some sense of what marketing is and most developers get marketing wrong in because they only think about marketing as advertising and NPR and and that's not marketing marketing that I mean they're famously there's the four PS one of those pieces promotion advertising and PR and so on another P

is price which means what's your business model how are you pricing it you know the so many developers debate about it do I make it $15 on Steam or twenty do I allow sales or not or do I go free-to-play you know that's price this determining the price and the business model is part of marketing another one P is placement in the context of the game industry placement could be well which storefronts you know which which platforms am I on you know thinking about you know where you're gonna deliver distribute the game is part of marketing and critically the fourth P is product so actually thinking about in determining what product mean what game are you making is part of marketing and so when we work with our teams you know we try to instill that thinking into them that marketing is not relegated to I'm going to put some ads but it's really sort of in a much more holistic sense and what does that mean that means you're thinking about who's the audience you know which Hill am i

climbing and optimizing for can I get some sense of how tall that hill might be have I done and I looked at steams ply to see what what my competition looks like and how they're selling have I gone on a panty if I'm mobile have I played the the winners in that category to see what they're doing and try to think about why they've succeeded and did I download a bunch of the losers and and and and games that have failed in that category and understood why did they fail and then you know how where's my game how am i closer to the winners am i closer to the losers you know and often that's that's sort of a fine line many developers don't do that that competitive analysis market analysis audience analysis I mean it's still sort of voodoo magic right it's not like there's a there's a recipe and just follow these 10 steps and you've done your marketing or your your analysis but you know in the mote in most cases it's just completely forgotten about and and ignored and so you know doing that kind of more broad

or holistic sense of marketing thinking about the choice of the product that you're making and the audience you're delivering it to you in the price point and just all those things you know in part will help ensure that you don't get stuck on a local maximum so that would be the the next tip is don't by accident get caught on a local Maxima right if you're gonna if you're gonna climb a hill at least do some homework to determine if you're probably climbing a good Hill because remember as an entrepreneur one of the things is the intent to make profit and so don't just end up by accident on a hill that has no real real potential that being said we're gonna make lots of mistakes and there's all kinds of stories of failure throughout our industry this is an article from quite a few years ago you may recognize around egusi and alex regardless cofounders of harmonics out in Boston famously you know they created

a guitar hero and rock band at the time I think this is an Oracle from 2009 so at the time those were you know still billion-dollar franchises but the article here kind of goes on about how they had 10 years of quote unquote horrendous failure and that they struggled and they were exploring the opportunity space they were climbing all the different hills for rhythm-action games and music games and all this kind of stuff until they sort of discovered the tall hill which was you know got good guitar hero and and in rock band and so you know part of that you know marketing process is this notion of discovery you know obviously you know Angry Birds is another one of the the famous stories where Rovio had 51 other games until they you know discovered a little red bird and obviously than that you know blew up but I mean I do I do a whole other lecture just on the value of failure and what many people don't fully respect is that amount of time

that amount of exploration that amount of failure is a necessary ingredient to discover the success right there's no way that if you just sit down and say okay let's make the next you know billion-dollar franchise go like like we just couldn't come up with it so so you know I never thought that's a whole other lecture I won't I won't go further than that but that failure is valuable and so it was funny because just last week before coming to GDC I saw a pitch from some really experienced developers primarily from the triple-a space and they were pitching saying well we're from the triple-a space we're gonna come to mobile and conquer mobile we have all kinds of new ideas of how to you know take over and mobile and no one on the team despite their pedigree at least in the materials that were provided had any experience in mobile no experience in free-to-play had not worked at any companies in the mobile space and and so

I kind of I dismissed it right and I and I wrote the back saying wow you know lots of talent you know interesting idea but you guys have as your experience and he wrote back oh no no no no yeah we worked at game companies but we didn't like them in the mobile space and we were on a few failed projects but we didn't want to put anything that looked bad on our you know on our resumes and the pitch deck and stuff and I'm like dude I almost threw your thing in the garbage because you know you didn't show that you had been in that space and at any experience and so they were trying to shield themselves and not show any of that failure and as an investor I always prefer that someone else has paid for that failure right either either out of your own time were you know working at some other company that is super super valuable that that failure so don't you know don't hide that a very famous book who's read the Lean Startup okay everyone else should read it and I have some other book

recommendations later but this is Eric Eyre briefs the the author of Lean Startup and and unlike most other business books or business book authors Eric actually worked in the game industry for many years I mean more instead of social online virtual world stuff but at least you know we can kind of consider him one of us to a certain extent and but it's not in the game industry anymore the leanest people get Lean Startup wrong right they think of lean as as not paying a lot of money like we're gonna tighten our belts and we get lean because we're eating ramen but that's not what lean is it but that's not what lean is in this context is about it's about reducing waste right it comes much more from the automotive space and all the stuff there but although Eric doesn't talk about Lean Startup in this way I view the methodologies presented in the Lean Startup as a recipe for systemic failure and that's a good thing surprisingly although I say it like that and so one

of the key learnings that Eric talks about as a start-up as a small company is to accelerate the rate of learning and and that and when you're learning you're succeeding you're failing and and that also relates back to the notion of local maxima right you're you have the landscape you don't really know which Hill is what so you have to start climbing the hill and as you climb the hill you're learning is this a good hill to climb and and you want to accelerate the process by which you you can you can learn and who's really good at that supercell right I mean you know a lots been written about supercell but the most important thing is how they fail and how they value failure in the whole process and their culture about you know anyone can kill a project at any time and so you know each of those tombstones was a little hill and they recognized it was gonna be a little hill and I said folks the hills too little kill it

you know let's climb another hill and see where that gets us and be able to accelerate that process by which they learn which hills are the good hills and how many hills as they climb and their whole company is built on that process of learning iteration discovery going up the hills calculating the local Maxima realizing it's not a good Hill bailing on it etc and this also relates back to the notion of sunk costs and so the next tip is don't fall in the sunk cost trap right cost is one of the most dangerous sort of mental traps that we have as humans right that if we spent six months of our time and our savings to work on this cool couch co-op game and then some crazy guy named Jason says you're not gonna make any money with that game why are you making it well you're gonna ignore me because you don't want to lose the time and money you already invested in making that game and so that that there is the sunk cost trap and in

reality what you spend what you've sunk is gone you will never get that back and all your decisions should be made on a go-forward basis so as of right now if we keep spending time and money on this couch co-op game is that a good business decision and a lot of people don't do that because it's a it's a psychological weakness of our blind spot of humans where you don't want to let go of the money you or your the time you already or the emotion you already spent so super self for example they don't care right the Sun cost trap they don't have it but they're one of the few studios that thinks in that way again I mean I think some of my failure lectures up on YouTube's of this notion of the failure piece and sunk cost traps of interest you can google or check me on on YouTube partially this also requires that you have some sense of vision and a lot of developers a lot of entrepreneurs don't

take the time to have vision for their studio but it's not just like the creative vision of the game I'm building it's the vision of the studio the kind of company the the pillars the roadmap of where we want to go as a business you know and the kinds of games we want to do the kind of culture we want to have etc we we often talk about this in the context of scaffolding right that as you're building a business you need to be thinking about the scaffolding your construct like you're building this amazing skyscraper in order to do that you have to build the supporting structures around it to allow you to go higher and higher so there's what we call scaffolding and if you don't have a vision it's impossible to make decisions that lead you to constructing the scaffolding and so you know for example let's say right now we're working on a couch co-op game and then once that's done we're gonna do a VR racing game once that's done we're gonna do an idler on mobile once that's done we're you know we have an idea for an M and though and like essentially you're restarting from scratch every time because there's

really not much learning and value that comes from doing the VR racing game to go to the MMO to go to the the idler on mobile it's just too random right you don't have intention whereas if we say okay we want to make I don't know competitive games on this particular platform using procedural generation because we have expertise in that and I don't know whatever narrative something right then the first game you make will have some elements of procedural and narrative and you know whatever we said and that may or may not succeed but the tools you've built the technology you've used the design learning you've had the person you hired the coder you hired that has expertise in procedural generation is now part of the team so that when you go into game 2 that I don't it doesn't mean it's a sequel but it's another game that's competitive with narrative and procedural stuff you're going to take all that knowledge and toolset and pipeline and the people you use to build the first one now you build the second one

and it goes much faster Kitfox actually one of our Studios kind of has that sort of vision and they had an idea of what the third and fourth game they really wanted to make was but they knew on day one as a startup they didn't have the resources the the the production capacity the the recognition to get to that third or fourth game so they kind of backtracked and said well what you know what smaller game can we do now that we have the means for that then allows us to build the scaffolding to build the second game and then that one hopefully will build the scaffolding that will allow us to build a third and fourth game that's a very powerful thing but you have to be thinking about that vision you have to have that roadmap so you can make those decisions you know three or four games ahead of time and we and we just don't see that from a lot of developers samantha is co-founder of r5 also one of the studios that we invested in there were hearing that cool sort of surreal very emotional and mature game called Ana morphine they've won a bunch

of Festival Awards I think they just won best narrative at the game connection early this week and it's their first project individually they've worked at other companies the you know from a production point of view their experience but this is their first initiative as entrepreneurs in their own own studio and they're just finishing up on that and morphine and you know they're trying to think ahead to the roadmap they have the second game they want to work on and so so part of our thinking to come to GDC was to get some work for hire because there might be some cashflow gaps in their roadmap it's I and I go to GDC and see if I can pick up a contract or two and I said don't do that that's like that's not part of the vision you know making you know some Mickey Mouse game for Disney how does that serve your vision of building mature surreal you know emotional games you know like what like why are you gonna distract yourselves from that vision I cashflow said no you're building your business with a certain

vision with a certain roadmap you have to stick to that and the advice I gave her in that particular situation was now if you go to GDC and you find someone who has a movie or an author that's running a book or TV show that is mature surreal emotionally-driven and they need a game done okay well now now you're talking right there there there's a potential collaboration a partnership to happen that then serves the vision of your studio and also contributes to the scaffolding of where you want to go and so you know not that inherently doing work for hire as a bad thing and in some cases it's necessary just from a survivability point of view but make sure you're doing it that's still serving the vision and still serving your sort of roadmap for for scaffolding and you know in part you know you need to know that before you go out and hustle right so Samantha would have really wasted her time to try to pitch Disney to do some work for hire contracts or Cartoon Network's or what

or whatever because that's not the DNA of their studio and so you know you need to know what you're selling before you go hustle as another example also before GDC some real veteran developers came to me for some advice and feedback on their pitch and you know they're they're working on this cool project but really they were trying to find investment for the studio they had been working on this vision and thinking about sort of the pillars of the kind of company they wanted to build and so they want to come the GDC to find partners to invest in the company and as developers I mean really you know they're responsible for some of the biggest franchises billions of dollars and you know so from a pedigree point of view it's like yes you want to back them you know really amazing but the deck they had was like 31 slides one slide was the name of the company and the other 30 slides were about gameplay mechanics and the and the creatures and you know all

all the stuff about the game I said well hold on it's you you just said you want to sell the Pettitte like you as an as founders your track record the vision of the studio and you want partners to fund the studio and yet you show me a logo and 30 pages of weapons and mechanics and creature designs and you know someone who's interested in investing the company say well I'm not interested in that to see 30 pages of monsters and and and whatever weapons and stuff so as the next tip you really just know what your vision is before you go out and hustle before you go out and find your partners before before you actually know what it is that's unique and valuable what you're doing to go out there in the in the marketplace all right next up is revenue versus proof when I what I mean by that there's kind of two modes of a business right either from day one we're

going to go make revenue as quick as possible gonna bootstrap and and get a product on market as quickly as possible to generate revenue because revenue is king and and revenue allows us to then build the company and so on so very revenue focused some developers are in the camp but it's quite rare because often games take a long time to make and need a lot of resources and it's not an easy path and so most developers are selling proof or often what we refer to as selling the sizzle versus selling the stake and so developers tend to sell the sizzle right the pedigree our track record the you know we went to pax and won an award look how awesome the game is played it's fun you know you're selling the hype the excitement you know a view of the game of the road map etc versus the stake because you don't have the stake yet some investors a lot of you know formal institutional investors

often look past the sizzles I don't care about the sizzle show me the stake they invest based on on revenue and stuff those sort of bankrupt the more the banker style the problem with the sizzle is that no investor wants to invest to make a bridge that ends in the middle of the river right then we might as well have not spent a dollar to go halfway into the river right because that bridge that's been built is useless and so investors tend to want to ensure that you have a plan roadmap vision etc budget and so on that gets you to the other side of the river and developers tend to be very bad at that right you know we often get this sort of pitch where y-you know here's my monthly burn you know so times twelve that's how much money I need so I can like work for another year and like just get stuff done so that that sounds like alright well we're just gonna start building some of the bridge and then 12 months runs out and we're in the middle of the

river and it was a big waste and so so you need to think about budgeting planning operations more like a rally checkpoint to checkpoint right you need to ensure that the budget or the revenue the funding you ask for the deal you get at least gets you to the next checkpoint and that checkpoint should be defined not as three months from now but it should be defined as the things that I need to be to have the proof to convince the next investor to give me gas in the tank to get to the next checkpoint and so this is why and there's a whole other lecture I do on funding models and funding stages life cycle and so on where you approach different investors at different stages right so at the very beginning when you have no proof it's love money friends and family and fools and they're only you know only because they love you they give you the money because you have you have nothing so that's the first sort of bit of gas in the tank and then you use that money to hire a programmer and get an artist and make a prototype and then you go see

some angels and then they give you a there's no that so that's really cool okay I like this sizzle I like where you've progressed let me put some more gas in the tank so you can get to the next checkpoint right in the next checkpoint is I don't give a first playable whatever and then that allows you to do a Kickstarter or scores you a you know a publishing deal but but you I mean if you're starting at zero you can't go to the people that are used to investing at later stages of the you know of the race because you're not ready for them you haven't built up enough proof and so when you're doing your planning budgeting fundraising you always need to budget slash fund to key proof points and it's hard you really have to think about okay if I'm future me and I got to do stuff now and pay people now and you know get like where's like what's the next thing that's going to be good enough to convince someone else to give me a public dealer do a Kickstarter or or get investment as opposed to I'm just gonna keep going for a few more months and see how far I get and and the bridge is

halfway in the river you know on premium let's say for thinking of a steam game oftentimes that could be you know the next checkpoint is hitting early access just as an example and once we're in early access you know then we see how the game performs and that could give us them the confidence to keep going or convince another another investor as a side note one of the problems is if you've only budgeted to get into early access you're in trouble because you need time and resources to iterate and address the feedback you're getting so so it's not like every little penny until we release in an early access it should be you know every little penny to really start early access and have enough time to address the feedback and and improve and iterate if you're on mobile it's more like getting into the soft launch and then seeing what your KPIs look like from soft launch and then having time and soft launch to iterate to build enough proof to then go see a mobile publish or distributor and say look you know I use

my earlier funding to get into soft launch and iterate and now here's my KPIs you know now I want the big bucks or the big deal - then take it to global launch and so on so that's an example of what I mean by checkpoint to checkpoint or proof proof point not just yeah I need some money to pay my bills for for six more months you know that that involves a great degree of trust and oftentimes you know while there is you know data in your hand you know this and we're all here at GDC this is a really community driven close-knit industry what one of the most compelling lectures I ever saw was from Nathan and Chris from Cappy capybara again where they did a lecture called beers with friends and surprisingly that was a business lecture and and the point of Nathan was that you know fundamentally we do business with the people we like you know we I want to see you succeed I think you're

interesting and doing cool stuff and and that matters right and it often is this notion of your building long-term relationships often what we see is a developer wakes up one day is like oh crap I need some money who are the people that have some money okay VC's publishers all right and they like walk out the door that morning and so I'm gonna go get me some money because I need it right now and they knock on everyone's door and you have your first coffee then another meeting that you meet at GDC then you meet at e3 and and it's like a year later and you're still sort of chatting because no one's gonna come and just give you the money because you waked up one morning walked out on the streets that I need me some money and as an entrepreneur if you're not accounting for the time it takes to nurture those relationships you're in trouble and so we always like to see developers that are going really early and in some cases even before you are

working on a game let's say you've done one game and you're thinking about the next game that's a critical time to come to a GDC for example talk to publishers and partners and a great question when you're you know at one of the parties and oh you're a publisher what are you looking for these days so so don't pitch them your thing get them to talk about what they're looking at yeah because you haven't really decided which Hill you're gonna climb next and those are really valuable conversations where's a lot of rubble to say well I got nothing to show or I'm not ready to show so I'm not gonna talk to anyone it's a lost opportunity never mind this on a human level you need that time to build a rapport you need that time to build trust you need that time to build you know kind of business friendships and so on and so you know the next tip is make business human right think about it as relationships think about it as friends I'm not saying you're going to invite every publisher bizdev person to your wedding but just think of them as human

beings not those things that will dispense cash when I need it when I wake up one morning another great entrepreneur is Eric Zimmerman here in the picture with his wife Natalie an architect Erik is more well known for design right he wrote rules of play he keeps his design at NYU you know speaks every year at GDC does the game design challenge Erik and I used to run the session you know so Erik really is sort of known from a design point of view but Erik is also a great entrepreneur and sorted by my definition and independent entrepreneur although now he's somewhat more focused on the teaching side of things but Erica ran a games studio called game land in New York City for many years and was making indie games before we even we're calling them indie games was making casual games before we even had a label for them you know casual games and was very very very successful one of the things that that Eric really imparted on me was you know

being open to other ideas and other knowledge and Erik's well known for being really rigorous about how he talks about design right he's not he's not like an feels fun so that's what I'm gonna do you know he's in this sort of same school with mark LeBlanc Doug Church and Warren Spector who Robin Hood Ikki who really think about design a systemic way and you know build models of thinking about how to converse and share and so on and so I think as a community we're pretty good about that when it comes to the creative elements even Judy sees an example of that let's get together talk about design talk about level building talk about you know programming whatever but we're not particularly good at that when it comes to business you know inherently because if you're a designer you wanna talk about design not budgets or whatever but notoriously a lot of people don't read and go to other sources of knowledge so I mean I mentioned I mentioned the Lean Startup as an example everybody should read that and there's a bunch of other by there's so many books of course startup CEOs a good one

innovators dilemma is really interesting to sort of understand the kind of broader macroeconomic shifts in in technology industries art of the start is a good one if you're just starting out as an entrepreneur thinking about how do i how do i pitch my business how do i think about how i articulate what i do another one business model generator our generation is a good one venture deals if you are talking to VCS if you're talking to angel investors and looking at doing a formal investment into the company this will be the best fifty dollars you will ever spend venture deals it really gives you the full inside scoop you know you'll still need a lawyer but you'll at least know what they're you know they're talking about the one I'm reading today is called the the art of strategy you know and really there's so so many books out there now in isolation you know just reading books will not teach you to be an entrepreneur right you you you have to be feet on the

ground in the juice you know climbing those mountains failing iterating learning but if you're doing that day to day you know grabbing a book and saying you know there's this whole whirlwind of stuff in my head and challenges that I have and then you read a boy like oh crap I've never thought of it that way the author is taking the time to sort of give a model to it and sort of help me see things that I didn't normally see him what I'm doing and so the tip here is do not rely on first principles right don't rely what comes naturally out of your gut or your head because there is so much knowledge with regards to entrepreneurship business in so many elements and aspects now some of those books and some of those like will not ever say the word game so there is a bit of translation like well how does that apply to game industry you know so there's a bit of work there to do there's so much knowledge so much knowledge out there and I think if you thought about all of the other elements of what we do in the game industry if we all just relied on

our gut that would be crazy to think that we would only rely on first principles and then the last sort a little bit fellow Canadians ray and Greg cofounders of Bioware you know worked on many awesome games of course which most folks know Mass Effect and Baldur's Gate and all that good stuff any maybe it's because they're Canadian but they were always so humble despite their success despite the millions and billions of dollars they sell the company twice over and a bit like the sort of don't rely on first principles I mean rain in particular was always like this notion of having humility that that you know things are changing all the time despite whatever success you've had today doesn't guarantee success you're having tomorrow you have to be humble and have humility you have some pride but also understand that you always need to be learning and then actually Branden from from riot use this this term hum Bish's which he said it's kind of the you know the entrepreneurial crazy spirit of like

against all odds I have this crazy ambitious and confidence I'm going to go in conquer the world but I'm also gonna do so at the same time to be humble about it and realize I don't have all the answers that I need to get help and ask for sisters and and and sort of you know treat business as a human thing as I go up there and explore the opportunity space of what's possible and so my my last tip today is you know despite you know going out there and wanting to conquer the world and build you know successful businesses you know do so in a in a in a mindset of ambitious nests and hopefully with that you can all go up there and build amazingly successful studios thank you very much [Applause] all right I think we have a few minutes for questions I'm happy to address stuff that was specifically mentioned or if you have sort of other questions I'm happy to dig in as well yeah go ahead well thank you first of all for the talk I wanted to come here to shamelessly ask

if you if I could pitch to you something are you making a couch co-op game no no we can talk after yes um thank you I love couch co-op games they're super fun but I just not investable awesome yeah oh yeah go ahead hi where will you recommend we can find or look for investment ah yeah so so I would recommend again looking at my GC Europe talk on funding models and and funding stages the answer is it depends and it depends on it it depends on are you looking for funding for the company or funding for the project the company yeah so so all of the sort of publishers kickstart all the stuff you know we think of as project finances out the window so then you're thinking about the company then the next question is what stage is the company at am I just starting and do I have a product on my pre or post revenue am i in growth stage and then and then each of those sort of life stages of the studio well then some will determine okay which are a city messer in your

list stage okay we're good and where are you based here in second city okay well I mean they're standing on every street corner you yeah I mean so so early stage seed investing is a bit more difficult yeah the thing is that as a gaming company I have been here for four five five months and there is not a lot of investors interested in gaming companies yeah that's what I'm asking yeah well well because most game companies are not doing some of the things that we talked about where a game come is don't have a vision they don't have a roadmap they aren't thinking about their company well they're not thinking of their company as an investable thing and you have to sort of I mean you have to be human you have to have empathy of saying well why is this guy over here with money gonna give it to me it can't just be because I need it I have to think about what I'm doing is a legitimate opportunity and how do i frame it in that way and that's not an easy thing for folks that have been so

focused on making games it's like what's the business what what is the actual opportunity what is that vision in roadmap so yeah check out the lecture on funding models and that will give a bit more bit more insight okay hi Jason oh you didn't great talk I am I have like it's kind of specific but you said about the Bishan about how you counseled the this company that not go for Disney and all this kind of stuff or work for hire mmm we are currently meeting with an investor and he's he wants to invest in one of our games which we try to do narrative heavy like your heartwarming kind of narratives but he told me that he's intend is to move forward because he wants a company that helps him create educational games so right now I am a little unsure if I should like proceed

because he wants to invest in one of our projects but I don't know if I should keep like the relationship going because I don't think that our our mission it's the same of what he's looking for right yeah so I'm in a really good situation where it's like they're putting money on the table and you just want to grab it but if you do that it sounds like you're gonna end up in sort of conflict down the road because like okay well you took my money now I want you to make me these boring educational games or it's like what I want to do these heartwarming narratives like well hey I own partly so so that that's a difficult thing to do and a bit like as you say the advice I gave to Samantha was if you understand really what your vision is as a company and what you want to do you should only ever accept partners investors deals that feeding or scaffolding to help you build that vision even though he may be dangling a bag of money it's like I'm hungry I wanted that baguette it's like that's where you have to have that entrepreneurial discipline to say well

this is what I'm trying to build I'm not going to distract myself so that that's the sort of a conversation you have to have their say hey buddy I mean I'm not interested in educational game this is what I'm interested if you want to invest that because that vision is interesting to you what we can keep talking but otherwise it's probably a bad idea to take the money and then later have that conflict or tug-of-war yeah but I mean always nice to have some money in front of you but I do all good so Jason you talked about you know sort of picking the hill you're gonna scale and assessing its size and in general we learn about the height of those hills from the flags that the previous parties of climbers have planted what's your approach is an early stage investor to assessing Hills the climbers haven't gone up yet like whether it's clouds and you don't know if it's this higher that huh yeah yeah yeah well I mean so that that's a bit where the sort of the you know the guesswork comes from right and so early

stage investors essentially that's the risk they're taking right if I'm a growth investor while I'm having a billion dollars over - right because they already placed the flag at the top and it's an unknown thing whereas the earlier I go the more sort of fog of war is around the base of the hill you know so some investors are set up to do that which means inherently they're going to accept more more risk more failures so you need to talk to investors that have comfort around that as opposed to later stage growth investors and then on our side I mean it's part of us trying to be you know I mean have our own little sort of half broken crystal ball and of looking at the trends and hearing what the buzz is and you know do we go VR do we go eSports you know what's gonna happen with social like all these things you're trying to sort of make sense of it and then if you're a developer that comes in and says I got a crazy idea you know I'm seeing these trends and I think I can build a profitable business that sort of weaves its way through some of these trends you

know then it's like oh that's interesting okay we were also seeing things moving in that direction all right let's talk whereas normally we get really bored by people that say well I saw the flag that riot put way up there on top of the mountain and me and my one other buddy we're gonna climb that Matt's like no you're not like don't you know so but but that's because we're built as an early stage investor and so we're looking for those kind of risky and there I mean the valley has those early stage investors as well but you have to talk to those ones not the not the chicken ones yeah not the scaredy-cat one thanks all right I think one last question thank you so you observed correctly I think that many of the business practices and ways of thinking of portable across industries and for example the books that you suggest that there are flickable for any type of startup one practice in other industries is that people who know the business hire external management consultants who know how to build a

business well coming from outside hmm what's your thinking on that for gaming are you an external management consultant nothing digital it's very bad yeah yeah I mean I mean I think it's there's a difference between you know I'm in it every day and I'm struggling and fighting the fight and then I go and grab a book and there's some nice diagrams and some language about how to make sense of my daily struggles I think that's valuable as I mentioned you know hiring an external consultant is another version of that saying I need to help making sense of what my daily struggles here's a guru of some kind so we'll pay him or her to come in and sort of make sense of and there's valuable in that as well though it's usually quite pricey versus buying a a book yeah I mean III I'm someone that likes to get input and knowledge from from everyone and and everywhere so so

just sort of treating is another input pointer or data stream I think is uh is valuable yeah I mean fundamentally you just do not want to rely on your own gut instincts you have to leverage other other resources and knowledge yep all right folks thank you for coming and enjoy what's left of GDC