Fireside Chat: Stillfront Group- Growing from $20 Million to $2 Billion Market Capitalisation PGCD#2

another fireside chat for you now here you're in the global trends track sponsored by bid stack I'd like to welcome our next fireside chat this is from the still front group who've grown from 20 million dollars to over 2 billion market capitalization in five years mainly through mergers and acquisitions so we've got a couple of speakers here we've got shun sing from Agnes your capital and Alexis sponsor from still group I still front group oh and we're coming in I could see my stage manager James is bringing you guys in Shum welcome Alexis welcome hey how are you Dave yeah I'm all right thank you I'm good stuck at home I feel like I've been sat in this this chair without room for a while now but it's great to see you great to see you on screen hopefully won't be too long until we get a chance to raise a raise a glass in person I

hope I'm gonna let you guys crack on with your fireside chat folks if the people watching if you have questions for our Lex please drop them in the window there there's the Q&A box at the bottom and I'll come in later on and help you folks curate that but up for now I would see you looking forward to it great I do very much great so Alexis welcome always a pleasure to have another fireside chat with you I'm gonna just briefly make a quick introduction on myself in case some folks out there don't know who I am and then Alexis you could do the same and then I think we can just dive into some questions that I've had for you so I'm sure I'm saying the managing director and founder of agency of capital we are an investment bank fully authorised and regulated based in London and in Seattle we are exclusively focused on names industry we've been

around for 16 years we've done lots of transactions in the game space we've sold companies to the like so Ubisoft Nexon game ville and of course on four occasions to still front group one of the transactions that we actually had the pleasure of advising on was a republic Labs which alexis Ponte previously was the CEO and founder of after that we also had the pleasure of a consummating to other transactions but still friend and most recently we advised candy writer on its sale to still from group at the end of April and the deal size was up to 195 million dollars if you include those potential announced over the years so as they've kind of mentioned briefly this talk is really going to focus on still front

groups rapid ascent over the past five years from humble beginnings listing on the Swedish stock exchange and initially receiving a market cap of only twenty million dollars and now exceeds two billion dollars in market cap so one of the fastest-growing and most successful and best performing stocks on the Swedish stock exchange over the past five years so with that I'm going to now pass over to Alexis and please introduce yourself thank you some great thank you for the introduction and thank you for two-bucket gamer for at first for me which is a farce at a completely virtual which is which is really really weird I don't know if Sam's wearing any pants I'm it's really yeah I'm sure this is the joke has been made a hundred times already during during this call bit assist this is really weird but fun is well I hope we can make it entertaining

and interesting for everybody pretty quickly I'm Alexis bond I'm the group chief operating officer of still France previously that as as some say that was the co-founder and CEO of your Republic labs which was one of the pioneers of free to play first on browser with sorry 2007 mobile and and I think you know transitioning to what you said about you know humble beginnings and kind of you know I think humility is definitely one of the core values that we have is still from we really don't see ourselves there's a two billion you know market cap company where if you think about it you know we're over founders that have started from nothing you know republic we started you know with it was myself and five other people in a small in a small office no idea about how to design games most of the guys are no idea about to develop games I think with the Rabanne calm the initial game in six months after he went

live we were act and there was pokemons all over the game like now we really go from that and I think you'll see a lot of the studios over time that they've joined the still Tron family we're now fourteen studios it's all studios that were you know that we're the founders about the similar kind of trajectory you know we've had lots of ups and downs successes and failures and it's people that just know how hard and difficult this business is but also how exciting incredible it is and how we know how how much you can scale once you get things right so I think that's really kind of the DB origins of still front I've been part of still front for at least forty three years so I cannot take any credit for the twenty million to one hundred and ten million dollars market can jump because that was the market cap the joint market cap was still firmly republic when the republic joined you

know joint forces was still from i think we're the fifth studio to join to join Sora and then the past three years I mean really what we've been doing is implementing our strategy which is you know really having this decentralized alliance of Studios that's an entrepreneur platform and just letting entrepreneurs be entrepreneurs letting that really kind of be now run one what they're doing and that's that's really what we've been doing and always keeping that humility and never forgetting as you're saying you know the humble beginnings because that was you know keeps you straight yeah so that's really interesting I mean you kind of mentioned being really you know entrepreneur friendly understanding the perspective of being a established and and and you know sort of battle-tested studio over the years because it seems that those are the kinds of studios that you've been pursuing and and looking to attach to to

the existing family of studios but I think it would be great for particularly the audience to maybe describe a little bit more in detail how you actually acquire these studios and leverage the centers of excellence that you mentioned or functional areas of expertise within the still family so I think one of the reasons that were one of the reasons we're performing well I think as a stock is because we are really strong believers on some in fundamentals we think fundamentals count and are really important and if you look at it you know we are profitable as a group we're very profitable as a group we have organic growth not just a mini growth we really kind of believe in these sort of things and if you look at all of the studios that join the family they're all profitable studios they're all studios that have been able to find a niche find

something that are able to specialize that and be very good at not all the studios were always profitable in Republic labs that usually was profitable years why it wasn't comfortable but after making many mistakes we know we find our mojo and one of the mistakes that a lot of the studios usually do especially the vc-backed studios the Republic was vc-backed is of course you know VCS will you know really push you to go bigger and bigger and bigger and bigger and get more people and invest more and all that and we had found something they were really good at we were very good at doing strategy games and then because we want to grow faster and bigger we thought ok let's we start going outside of our DNA we started going outside of sort of games that we know how to make and that's when we started failing but when you're a large company a large group you do need to have a portfolio of games the portfolio approach so so what we did is we started working again when we started functioning well when we focused on what

we knew how to do well which was strategy games on mobile 4x games you know one after the other and a lot of the other studios that we've quite have gone through the same thing but there is a moment where you do reach a certain maximum you know but when you're doing kind of the same thing over and over there's a moment where okay you need to get how do I get to the next level and usually that's true talents and the way you do that is there's several ways you can do that you're either to know try and hire that talent and try and do new studios with the new DNA and start from scratch and we've seen that doesn't work that doesn't work very well we've seen many large studios you know try to do that or you became you become part of an alliance like still in France where basically those other studios have some of that knowledge and then to build to go to your point about Centers of Excellence so for example good game studios is a studio that is extremely good at doing user acquisition they're very strong you know they've been investing you know in

their team to do you a for a long long time and some of our smaller studios across different maybe didn't have such a strong user acquisition team so basically what we do is we we encourage collaborations between you know some studios that's still front I didn't have a UI team to work with good games you a team and then basically good games is not obliged to take the games from those students by the way you know that if the KPIs are not sufficient or they're not they don't think they're good enough they won't take it but if they are good enough then if they start working with them and then you see great results and you a is just one of the examples we have other studios that maybe you know are located in areas where it's difficult to have a lot of good graphic designers and do lots of you know video ads or that sort of thing so babble and one of our Studios is able to create a top quality Pixar like and you know add video cartoonish add video in the week for a very small budget so they will provide that service to other studios

and we have right now I think we start since we've begun about 50 collaborations across the different studios and 40 of those collaborations are are still life and that really kind of helps you you know scale to the next level great I want to I want to kind of focus a little bit now more sort of what's been driving a lot of the consolidation and obviously there's a number of factors contributing to that that I'm sure you have a view on but also now that's still front it is a two billion dollar market cap business I mean you're a large you know somewhat of a larger player now do you see competitive forces now when you're evaluating other potential studios to acquire so obviously it probably makes more sense to be acquiring larger studios rather than smaller studios so if you could please comment that on sort

of what's your evaluation criteria yeah so we're always on the lookout for great studios to join the family all the time I think you know Marino's our head of M&A is you know as you know very very active and very strong M&A specialist we have probably a pipeline we've seen through our pipeline on probably close the top 1000 in earn studios out of those we probably know enter into talks with a few hundred studios and then you know we've then we probably would go into deeper talks with maybe a hundred and twenty and we've only acquired but since I'm part since I'm part of the group nine studios so it's a very very selective process the size of the studios and the size of transactions that we've made I have indeed become larger recently but that's not our primary concern we're more interested

about other things we're more interested about culture fit so you talked about the value of humility and the values of entrepreneurship if we feel that you know a studio is not very large but you know it's got an incredible entrepreneurial team maybe there's portfolio of games is you know is is adds up to the portfolio of games that we have and so that's that's an interesting fit you know right now for example were very interested in sports games something that we're looking at very carefully because we don't have that many sports games in our portfolio there's other areas that we're interested in recently you know we didn't have any casual games we expand into casual games in what was a large transaction first we store mate and then another fairly large collection candy writer but so really it's more about team culture fit and if it makes sense in terms of the portfolio fit then that will be with a priority then in terms of size of deals really it

can be it can be it can be any size of course you know if if we ideally you know we do want the studio to be making a few millions euros or dollars of revenues and you know in close to a million dollars in profit minimum because that shows that you've been able to reach a certain level but we don't really have the minimum and the maximum really depends on we've we've we've we've bought larger larger companies than our own group before that's what we did with good games so there's this really the criteria is really about about the quality sure good on then we don't have so much time left so I'm going to ask you a kind of more forward-looking question so obviously still fronts had a pretty phenomenal ride the past five years you know it's it's a darling of the Swedish institutional investor market where do

you see still front in the next five years at its ten minutes in your anniversary so I think one of the things that we're gonna do is we're really building if you look at so from today it's about 850 people across 14 studios and we're only 14 people centrally so 14 people at the central Google still unable to operate that and the reason we're able to do that is because with a very decentralized approach that is really you know based on trust of course there's confidence and we and we check everything and all that it's kind of really based on trust trust in entrepreneurs and really allowing the entrepreneurs to run their Studios just as before except with more means access to more information so and the reason we've built it this way is actually both organisms CEO and myself we had experiences before still France where we try to build large companies and I was one of the founders of last min calm he

was a founder of another public company as well that we're a lot more centralized and we realized that when you're building a company that's very centralized with a big you know kind of middle team it works the beginning that then everything slows down and then as you're growing it just becomes more difficult or more complicated I think that we do decentralize approach that way I was still front we could very easily have tomorrow 18 19 20 25 30 35 40 studios there's really no limited number of studios that could be part of the family with this kind of decentralized approach of course we use technological tools to make sure that this glue works and and all that so quite honestly if I if I look now you know five years down the line I think we're continuing to execute on this on the strategy we're growing quite a lot we're probably also doing a few things is leveraging some of our studios with the ability to acquire assets rather than just companies so if there's companies out there that have you know existing games that maybe they do you

know they want they want to pass on they want to move on to something else so they don't have the live operation seem to do it that we could this will also acquire assets but just you know continuing to grow and continue to have fun in this in this wonderful industry that's we're very lucky all of us to be working in great then I think we have literally a few minutes left just one one quick one because obviously you mentioned that a lot of you know you've been pretty aggressively acquiring studios and at a pretty rapid pace do you guys ever fear that there's not going to be and you mentioned you know you're pretty lean and mean central management team of only 14 people how do you handle post-merger integration and can that actually become a more you know difficult or just a more interesting issue to worry about because you mentioned you know in the next five years you could be at you know 25 30 40 studios and how do you manage from just

as such a small central team all of these years let's the beauty we don't integrate mm-hmm we don't integrate of course now we we we do have the you know the kind of you know the checks and balance in terms of finances and all that and we do all that sort of work and all that but there's no forced integration there's no need to go into a common common technical platform there's none of that I mean the integrations that we have really are you know centralized data analytics so basically each to you can keep its own data analytic system but then we make that connect to a central data analytical so that we can have benchmarks and compare alerts or stuff and all that but then you know we don't we don't integrate we let studios run themselves we the way it works is we have you know I have business reviews within all of the studios you know once per month and quite honestly the process is lighter than the sort of reporting I had to do with my VC investors why because I'm an

entrepreneur I know what an entrepreneur needs and I know what an entrepreneur doesn't want and he one is and that's somebody in his back all the time telling him what to do what not to do what he wants for me or from your grandfather people is just to get rid of obstacles in front of them and that's what we focus on right so yeah I think we have some questions here so I'll wait until Dave reappears on her screen there he is hello there that was great guys fantastic thank you yeah we've got a handful of questions here which I can just grab from that Q&A window there and put to you that that was great and very interesting and obviously you've Sparks and some imagination there if the the people listening because someone's immediately the top question is a can we be your studio 15 it's probably a good

idea to hire some to advise you because they'll be quite good at that and he knows exactly when we're ready to accept and what we're not ready to accept for companies to self run and you'll be studio 15 but that's a really good good point Ashley and you you've raised something there which is how people that are looking for an opportunity like this looking to be acquired by still weren't they're gonna become part of your family what is there a what's the perfect way to approach you and what are you looking for right now if you had to kind of nail down what people have to do in order to be ready for you yeah so I think I think a lot of studios underestimate what is necessary when you're going through through a sell process they understand underestimate the amount of juju is necessary the you know what they need to do in in terms of you know what we call the the data room that you need to have prepared we know with all your KPIs game by game and all that sort of information all that so my my recommendation is if you're serious

about selling you need to know as an entrepreneur that's going to be your main focus probably for the next six to nine months if you don't have a very strong financial function definitely go for for the help of the banker to help you advise you you know how to how to structure things how to present your business in a way that you know that sellers are used to seeing that information so that the thing goes a lot faster and quite honestly so that sellers take you more seriously that they know that you're serious about selling very often you know I get because you know I have a lot of friends in the industry a lot of entrepreneurs are friends of mine they're kind of like they want to talk to us and to try it out the thing is there's a lot of other people that actually really want to sell their studio so if you just want to talk to us to see if you're interesting and all that you're probably going to waste your time and our time but if you're serious about it then you know reach out to us we'll give you feedback about what we need and probably now run a competitive process to you know to find a banker that works for you probably trying to identify who you think the

ideal buyers for you are that you think make most sense for your type of studio and then look at what bankers have done deals with those buyers because that's going to be the fastest way to do it quite honestly because again as I say they know what the buyer is willing to pay um we've got a few more questions here and we'll make time to go through them so Chris asks games M&A seems to as largely survive the covert lockdown this year do you think this can continue for the rest of 2020 as we faced a recession maybe the economic tailwind of the current situation well we go oh yeah I'll make a quick point and then Alexis I'm sure you'll look at something very interesting so and speaking and speaking from you know obviously just completing a transaction with still front just very literally a month ago and actually currently executing other deals I think

that if there was an existing relationship in place prior to kovat then a lot of those deals are just going to continue and and that's just a matter of timing in terms of potential businesses that that haven't met a let's say universe of buyers but as long as they're established and well known I definitely still think that those companies aren't going to get interest maybe they wouldn't get as as the same level of interest from the from the physical contact that they would have had but that doesn't mean that there's gonna be a lack of interest out there just because if you're an established business that is profitable that is growing that has demonstrated certain expertise or a niche market understanding and you will always be attractive irrespective of whether there's a recession or not yeah I think the only thing that very quickly - - what Shaun was saying is I think we were

able to close can the right order encoded because we we knew Kevin and I there for many years we met them at a dinner that actually Shum organised something like 18 months ago we met them again I visited their their their studio in Miami in December so that's where we were able to close the deal you know in COBIT to be fair you know a nice to do that we haven't made met with face to face I we've hired people to still front we're not meeting them face to face music which was weird I think a large M&A deal would be very hard to do without a studio visit because the culture fit is so important that I personally would be uncomfortable in doing an M&A full-on till the close without having met the team gone through the studio Felder falls yeah that makes sense and it also goes to show I think it's someone who organized these conferences the important something else and meet someone in person right and and have those business connections but but in the meantime we get by the another question here is the the M&A market is very competitive at

the moment what do you think still front can offer in particular yeah so I think it's super easy is a few advantages of a were public companies Swedish public company so we're at transparent as you can get like we're very transparent straight shooters what you see is what you get you want to see what it's still from the acquisition deal looks like look at our press releases they're the opposite of American press releases where you don't know how much they bought but for what happened everything's laid out for you to see so I think that's one of the things is a transparency the second thing is the flexibility we're very flexible and very adaptable to what is to your needs and then I think the secret sauce then is real I was saying before the fact that we are truly completely decentralized the owners of still front are the entrepreneurs in the studios many entrepreneurs many many many studio founders right now the joint so front of more shares and I have within New York it has you know the true owners are really the studios and that makes for a

completely different DNA than than than other like large groups of course a lot of the rest is public but the main shareholders individual shows if you look at it really are are the individual studio heads and and so this decentralized approach and thing is really makes it makes it very different or very unique so basically if you're an entrepreneur and you would like to get the you know you'd like to get the exit you'd like to get that money but you want to but games is your life and your company is your life and it's what you like and you want to continue it'll just get to the next level I think your word the best choice out there if you don't reproduce much money as you can short term and you know and go and leave on the boat and ever do games anymore then we're probably the wrong choice that's a good answer it's a very honest answer no actually I have a question for you on that are there advantages of being part of still fun group in terms of kind of knowledge sharing and being members of the although there's a disparate you you say that the decentralized but is there other opportunities in

terms of knowledge sharing between members of the the group is that an advantage of being part of different group yeah it's a huge advantage if you look at all that and you can anyone whose access acid has access to a panic and look at the studio's of Jim you know when they join still front and after they join still from and they all have the same thing in their organic growth it just goes like this and what it is is through no benchmarks and sure of information we all have lots of friends we'll go to your comforters everybody shares information and we learn a lot of things that that's really helpful but how much can you trust the data how much can translate when you're part of the same family and in Walworth working toward the same goal you know when somebody tells me hey you know this is what's working for us in terms of life operations and this event and this piggy bank is working super well show me the data here's the data this is our witted is how it works it's extremely powerful that's wonderful well thank you guys you know we have a couple of questions in the window but we're at we're out of time so what I'm gonna suggest is it that people do have things they'd like

to ask a still from group or a Ganesha capital they should maybe find you in the meeting platform or I'm sure your contact details are out there and I want to thank you very much for taking part this I'm gonna give you a round of applause you're gonna have to imagine that coming from all the other folk around here thank you and hopefully we'll get a chance to see you folks in in person at our next event and and have you part of our about Pocket Gamer connects family again so thank you thanks guys thank you thank you so much you