Finding Alpha: How to Find Your Company's Secret Advantage!

What if I told you that most companies today are playing the wrong game? Hi, I'm Joseph Kim from GameMakers. And in this talk, Finding Alpha, I'll show you why simply executing harder isn't enough anymore. In an age of uncertainty, AI disruption, and brutal competition for attention, survival, and success come down to one key question. What's your alpha? We'll dig into the macro forces reshaping industries, explore how to identify your company's unique competitive edge, and uncover new sources of advantage from AIdriven product philosophy to rethinking how entire organizations are structured. If you want to understand where the real leverage is in business today and how to win instead of just survive, stick around. Let's get started right now. [Music]

Hi everybody. My name is Joseph Kim and today I'm going to talk about a topic called finding alpha. And the reason why I wanted to talk about this topic today is because I'm coming from the games industry. And the games is the the mobile games industry in particular is going through a very tough time. It's an industry in a market in distress. And I think it's more important than ever, especially when we're living in an era of a lot of uncertainty when you're operating in a very dynamic and changing environment to really consider where do you get your source of competitive advantage. And the thing that I'm seeing in the games industry unfortunately and then you can decide for yourself or whatever industry that you guys are working in whether because a lot of the the answers that I get to this question about alpha are not very satisfying and what I see in in the mobile gaming industry are mistakes

being made over and over again. And I think it's very important to really critically think about the kinds of strategy that what what I'm going to call macro that characterizes your environment. So anyway, I'll go ahead and go into this, but I wanted to start with this quote from Lanc Meonson who was a famous physics school professor in the US in the 1960s and 70s and he speaks on Charles Darwin's book the origin of species and he basically states it is not the most intellectual of the species that survives. It is not the strongest that survives, but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself. Okay, so now just a little bit about me. I'm going to go really quickly here because we don't have a lot of time. And just so you know, um unfortunately when I wrote this presentation last week, um

it turns out it was too long. So I'm going to skip a lot a lot of content. But if anyone's interested, I'd be happy to send you the slides. But really quickly on me, you can kind of simplify and think about my experience and expertise being in three areas. One is in publishing where I led um game publishing at companies like NBC Universal and Sega. In terms of game development, I currently have founded and lead a mobile gaming studio out of Bangalore, India called Leela Games. And prior to that, I worked at a company called uh Fun Plus, working out of Beijing actually, where I led the development of a king game called King of Avalon, which uh actually did pretty well, was a number one top grossing game. On the content side, um I published a newsletter and podcast called Game Makers, and more people in the games industry probably know me for starting this podcast for uh this uh podcast called Deconstructor of Fun. All right. So, just also a caveat about this

discussion today. It is kind of very conceptual and speculative. So, it's going to be different from a lot of the other talks that you you may be going to, which are certainly very valuable, but they're probably more tactical. And what I wanted to do with this talk is to really try to talk more about highle strategies, talk about more conceptual issues because I do believe that we are entering an age of uncertainty. There are a lot of things happening whether it's from AI or globalization or a lot of things that are happening in the world today that make our industries much more complex, much more dynamic. And it's in these times where there are a lot of changes that I think that we need to focus on the macro. And I'll explain this concept of macro versus micro shortly. Okay. So what I'm going to talk about uh in this talk is I'm going to talk about the macro meaning the environment. I'm going to talk about a few concepts related to competitive advantage and how

I believe that companies should think about how to compete in their industry. I do have a section on history, meaning lessons from the past of very of specific companies finding alpha and how they were able to use that alpha to win in the market. We're going to actually skip that part because um we're going to be short on time and with the time left, we'll talk about um this concept of finding alpha. Okay. So, starting with the macro and I'm going to be speaking to the mobile games industry because that's as an example because that's the industry in which I operate. But I think it's very important to characterize the environment in which you compete or any company competes because as as stated in that original quote, it will be um those species that are able to best um adapt and adjust to the changing environment. So in order to adapt and adjust you need to be able to understand the environment in which you compete.

And so for example in the mobile gaming industry what we have seen is we have seen um I would say five major macro trends which are basically these key secular trends that impact who the winners and losers are in our industry. And let me just kind of describe some of those. The first is the rise of China. And so when I worked in China in 2015 or so, China was not as dominant in gaming as it is today. But through a hardcore work ethic, through lower cost structure, through an industry that focused on aggregating and developing their talent, China has over the last 10 years become very dominant, especially in very specific genres and uh especially in genres like for example forex and RPG and uh and shooters. For example, we also have the rise of the attention economy. Closer. Okay. Sorry. Uh hopefully you guys can hear me better now. Uh the attention economy means that as a mobile game developer, for example,

when you're making a new game, you're not just competing against other companies making new games anymore because what's happened is that there has been a rise of a lot of live operated games. And so if it's games like Fortnite or League of Legends or Supercell games like Brawl Stars or or Clash Clash Royale, you're not only competing against new games, but you're competing against live operated games that are stealing players attention. On top of that, you have video on demand platforms like Netflix and Amazon that are also vying for players attention. And even in addition to that, you have social platforms like Instagram or Tik Tok. And so all of these different kinds of media, all these different forms of entertainment are vying for players time, which then you have to ask as a company making a new game, how do you get a player's attention? The third trend I want to highlight is that is the age of efficiency. And so we went through a period where there was a

tremendous amount of waste and excess. And it was fueled by ZERP, a zero interest rate policy environment in which there was a lot of easy money. And so a lot of the practices that occurred over the last four to five years were not actually good practices. And unfortunately, what I would submit to you today is that a lot of those practices are continuing continuing to be repeated even though it's clear that a lot of those practices don't work anymore. The fourth trend is a resurgence of live ops. And so we've seen for example last year there was a game called Brawl Stars which was a game by Supercell that had been operating for a very long time and it was a game in decline but last year that team that worked on Brawl Stars was able to 6x the revenue of that game achieving all-time highs. And so there used to be this this view of live operated games as games that you want to like manage for decline. But now the

thinking is where do we best deploy our resources? Is it for a new game or is it for an existing game that you can also optimize and help increase in terms of performance and revenue? And finally, there's obviously the AI revolution. I don't need I mean everyone's talking about it. I think you're all aware that AI is probably the most uh foundational and most impactful technology in the history of humankind. And obviously that will have a big impact and maybe towards the end of this presentation we can go into some of that as well. All right. So in the interest of time I'm not going to go into the very specific competitive implications of these trends but I just want to highlight the concept. And the concept is that it's very important to understand your specific industries macro the operating environment in which you're competing. And if you are not adjusting and adapting to your environment, then I think you're going to be in

trouble. And and so it's very again it's it's very important to understand the environment and then to adjust. So now I want to talk about specific concepts and the con I'm going to talk about a few concepts and these are all concepts related to the competitive landscape. The first concept is the concept of alpha or how do you find specific company advantage. The second concept uh I've already alluded to is the notion of micro versus macro. And the third concept is what I just call playing to win. Okay. So many of you who have studied finance are probably already familiar with this concept of alpha. And alpha comes from uh you know a finance equation from the CAPM the capital assets pricing model equation which essentially states that if you're looking at a specific asset like a company stock like Tesla or Nvidia or a

specific company then you would expect that the return of that asset will equal well the risk-free rate which is like um the return that you would expect for taking no risk uh plus this kind of market return factor which is defined by this coefficient called beta. And what beta really defines is what the expected return for a specific industry is. And then finally you have the company specific excess return which is characterized by alpha. And so what I would submit to you is that if you were to kind of simplify and think about this concept that the return or the performance of a specific company could be characterized as what the industry does and then what the specific company does then if you are in a distressed industry like I am where many mobile gaming companies are actually in trouble

where if you're not doing anything differently then you might be just looking at failure. So then it becomes very important to understand what is your company's alpha. How are we differentiated? Because again if we are in this kind of industry and environment that's very difficult and you don't have alpha then you're going to be in trouble. So the question I would um basically emphasize is making sure you understand your company's alpha and we'll talk about how you can potentially find new sources of alpha towards the end of this presentation. Okay, macro versus micro. I know we got a couple of Activision folks here popularized by RTS games which I know are popular in Korea like Starcraft and Warcraft. And this concept is kind of simple, but it's basically in RTS games, you had a macro, meaning you

built different buildings that allowed you to develop different kinds of units. You allocated different workers to different resources. You looked at the map and saw what was kind of happening on the map. It was a highlevel strategy. It was resource management. It was map awareness. It was things of this nature. And the micro was the specific unit control. And so in the context of a company, the macro would be the highle strategy would be the philosophy of your company would be the general approach that you're you're taking that may be differentiated from the beta from the rest of the industry. And the micro would be the tactical execution practices and processes, culture, things of that nature. And so what I would want what I would submit to you about this is that if you're operating in a static industry where not much changes micro matters how you execute how you tactically execute your business matters

the most. But when you are operating in a dynamic industry where things are changing, where the environment is changing, then it is very important to also focus on the macro. Are we moving in the right direction? Does your company have the right strategy? And I think more than ever when when I talk to other leaders in the games industry, I feel that everybody is still focused on the micro. And when you ask them about the macro, you get a lot of unsatisfying answers. Okay, the third concept I want to talk about is this concept called playing to win. And it's kind of a simple concept. Uh but let me actually explain it. So um this is a quote from Elon Musk and he basically stated that my philosophy is that if you play, you play to win. You don't play by half measure. And um I have two specific case studies

um related to Elon Musk that shows you how does Elon and I I know Elon to some people may be a controversial figure but I don't think it's controversial to say that he wins a lot. And so when Elon Musk uh last year got involved in the the 2024 United States election, he supported Trump. And one of the things that he did is he decided that for a number of reasons that the election was critical to the fate of Western civilization. And when his team studied the election, they determined that the most critical state, the most critical lynchpin to the election was Pennsylvania. And so what did Elon Musk do? Well, he went and he traveled to Pennsylvania and he stayed there and he funded a, you know, a lot of different events, competitions. He paid for like the Amish to to be able to vote. He did all these

things in Pennsylvania, but basically the key concept is he tried to find what is the greatest point of operational leverage to achieve what he wants to do. And then he sat there and he kept pushing on it until he changed. This is a chart of 2020 versus 2024 for Pennsylvania until he made a big impact on the election. Okay. Another example is in AI and some of you may be familiar with Grock may be familiar with the fact that Elon and X.AI came in late to the AI race even though he was one of the early funders of open AI. But this is a quote from Arvin Shinovas who's the CEO of Perplexity who states AI is a war zone. You only enter to win and die in honor if you die. There's no halfassing, no hedging, no strategic pivots. You have to keep at it, raise the bar consistently and make the product better. users are the spectators. No one is guaranteed to win at this point. The point being is that AI that the the AI

LLM game is a very tough one and it's very difficult to compete. But let's get back to this notion of playing to win. So for those of you who may be familiar with the essay, the bitter lesson, you know that the key levers to driving performance in AI are these three things. Compute, parameters, and data. And if you have listened to some some interviews with Sam Alman, Sam Alman suggests that the future basis of competition on top of those would be distribution and customer habits. So what did Elon do? Well, what he did is he built the world's biggest super computer cluster and he did it in 19 days which many people thought was impossible. And so what was he doing? Well, he was saying what are the biggest points of operational leverage? How do we win? Well, compute and parameters are addressed by the supercluster. And then he thought, well, what else do we need? We need data. And according to Sam Alman, who was asked, what's going

to be more valuable in 5 years? A 1 billion daily active user destination site that um that doesn't have to do customer acquisition or the state-of-the-art model and Sam Alman said the billion user site. So, he's talking about distribution and customer habits. So data distribution customer habits x.ai acquired Twitter or X.com. And so I would submit to you that for a lot of companies it it's like I I asked some people at companies, does your company focus on solving problems? And what most everyone would say is yes, of course. If there's a problem at the company, we solve it. I would say in the majority of cases, there are always major big problems that are not addressed. And they're not addressed because of things like politics. Oh, you know, Fred or Sally's my friend. Don't don't say things like that. Don't bring up these issues. A lot of things, especially at bigger

companies, are hidden and are pushed aside. And I would also submit to you that not all companies play to win. that it does turn into kind of this practice of just turning the crank and trying to do um trying to just operate the business in a way that's not really playing to win. But what I'm suggesting to you is that when it comes to playing to win, this is something that Elon Musk does very well and something that I think we can learn from. Okay, so this is a section I'm going to skip. Unfortunately, I I'm not doing great on time, but let me kind of skip through this. Um and for anyone who wants uh this presentation, happy to send it to you. Okay, so let's get to alpha. All right, so again um this is a very conceptual discussion today and for some of you hopefully you appreciate that. For uh those that don't I I apologize. But now I wanted to get to um the the topic of alpha.

And so um what so what have I talked about so far? So just just kind of in in summary I've talked about for example the macro which is discussion of the operating environment in which you or your company may be operating then I talked about specific concepts to win and now I think we should talk about so then where do you find alpha and what I want to do is just share a few different ideas with you in terms of where you could potentially find alpha and I I would say that if you see the full presentation with um with the the the history the specific case studies of different companies this may make a little bit more sense. But one way of thinking about sources of alpha in this this idea is to think about what are the key bases of competition for your industry. And in mobile gaming today it's basically these three areas. Product meaning the quality of the game that you're developing.

growth, meaning your user acquisition strategy strategy and the capabilities that you have in user acquisition, and then live ops, which is your ability to maintain a content cadence and deliver consistent and exciting content to your players. And so, one way of thinking about sources of alpha and one specific case study that I mentioned in the history section is the notion of potentially looking at some of these areas and tying them together. And so there's a company called Century Games and what they have done is they took a game called White Out Survival. There there were like a lot of fake mobile ads that pushed players into different games that had nothing to do with the game itself. And what what um what Sentry did is they took um some of those like mini games and then they integrated that game directly into the game itself turning turning it into a hybrid game. And so I think what you're going to see is that there are kind of two opportunities if you are able to properly identify the

key bases of competition or the specific um pillars of of of success for whatever industry that you're working in is to look at those specific pillars and to try to understand if there's a way in which you can do some form of combination. And again, there's more specific examples in the history section. And the and the other way to look at it is the impact of AI, right? And so today, if you talk to a lot of different mobile gaming companies, um there are a number of companies actively looking at how you can create a new product based upon capabilities that AI provides in growth. There's a lot of um this probably the most active area in terms of the use of AI where you're seeing creatives being created by AI where you're seeing a lot of automation being applied to AI and especially when you have some games like uh white out survival by century games that have 300 people working on creatives that the potential for AI to speed up and to lower cost is very

dramatic on the growth side. And then in terms of live ops, right? And and what we're probably going to be seeing soon is the use of AI to really automate a lot of operations within live ops. And so you can think of something like a battle pass for example. And in a battle pass which is you know very well structured and fairly consistent what you can do is you can try to apply agents that basically try to automate a lot of these specific workflows when it comes to live ops. Okay. The second idea I have um is really around product velocity. And so there there's two aspects of this. And one of the things that I believe is going to happen is that when we look at the impact of AI, what we're seeing is that for very specific kinds of work, there's a massive acceleration. And so for example, six months ago, if I were to write a design spec uh for for a

game, it might take me anywhere from 4 to 12 hours. Now today, if I use with the help of AI, I can write that same spec in about 30 minutes. And so what we're um so one of the things where I think there's going to be a big impact is speed. That we're going to see dramatically faster speed because of AI. And so the company that's able to fully characterize their entire um product iteration cycle like what are all the specific steps that go into the development of your product and then to find the specific areas that can be sped up. Those are the companies that I think are going to to win. Uh there's a lot of people that believe that in the age of AI um the critical factor will either be distribution or this notion of velocity. I think it's going to be velocity because I also think in an age of AI that um advertising becomes less

important. Uh that's a whole another topic we can go into. The the other issue is this notion of speed versus velocity, right? which is to say that you not only need to be moving fast, but you have to be moving in the right direction. And I think that's the one area where today AI can't help, but hopefully if you have the right macro and if you have the right strategy, you can be moving in the right direction. Oops, I've got one minute left. So real quick, um this is a I was hoping to talk about this topic more, but there is a concept that um I believe in called the organizational meta. And what I mean by this is that I believe that all organizations and specifically teams and product and specific roles will change dramatically with AI. And I think a lot of roles are going to compress. I think a lot of teams are going to compress and so um what what I'll do is um I will share a talk where

I actually talk about this topic. I'm sorry I'm running out of time here. I can I can see. But um the the key takeaway I' I'd like you to um come away with is that if if we're correct on what happens with AI, um it will be very very critical for teams to rethink how they structure their teams and how they structure their workflows to create new products. Um, apologies I'm out of time, but um, if uh, if any of you have any questions or want access to the slides, feel free to reach out to me at any time. Thanks.