Studio Design: Building a Foundation for Success and Avoiding Business Disaster

I've been uh lecturing a bunch around uh funding and pitching. Uh actually last year I did a a session on on uh funding models in particular. Um and uh I've really tried to do a lot around educating developers uh primarily on the the the business side of things. Um we we got some attention a few years ago with execution labs because we were one of the first uh preede sort of early stage investors in game studios. Uh we did 25 investments uh and um it was a tremendous learning opportunity for us uh in terms of understanding the challenges of indies and startups. Uh and a lot of the learnings uh that I tend to talk about come from that uh that experience. uh and and uh these days I spend much more time on mentorship and advisory stuff, consulting work uh with studios but also helping um sort of re regions and and sort of upgrading the business knowledge

and skills uh in in regions around the world. Uh one of the fun things that I'm involved with is uh gameplay space. Gameplay space was founded uh about four years ago uh and it was done as a kind of complimentary entity to execution labs. Execution Labs was a private fund and so we were quite mean in that we told we said no to almost everyone who pitched. Uh and since we were investing others pe other people's monies, we had to be really focused on commercial viability uh and the growth potential of the studios. And yet we constantly got requests for um for mentorship and support and help and connections and we always had to say no because we were focused on the studios in the portfolio. And so we created Gameplay Space, which is a co-working space uh dedicated to game development. It's a 10,000 square foot space with over 100 developers working in the same space. It's a nonprofit uh so a much different kind of mindset. It's a very open uh environment where we say yes to everyone in terms of coming to share and exchange and inspire

each other. Um and it's uh let's see the I mean it's just a a big open space. This was during construction when all the developers weren't there. But we host uh lectures and we often invite publishers or platform holders to come and give give presentations. Uh we run more detailed workshops and host uh um uh networking events and showcase nights and all this kind of stuff. Uh it's a really kind of powerful entity. But most importantly, it is my channel by which I force developers to eat broccoli. Uh, and uh, for those who were paying attention in reading the session description, uh, you may recall that I snuck in there a broccoli lover uh, uh, little quote. And in part, it's because, um, I oftentimes I think of all the business entrepreneurship stuff uh, as the broccoli that we all need to eat. Uh but very few of us actually like broccoli or Brussels sprouts or whatever even though it's nutritious and good for us and makes us healthy and live long is like ah I just want a hamburger and I you know I don't want to deal with those

issues in the same way that many developers just want to code and design and do all the cool fun stuff but really don't want to deal with uh the business stuff or don't understand how critical the broccoli is to their health uh and long-term uh viability and so and so also a lot of the lessons uh that I see not only comes from execution labs as well as sort of you know going around and doing a bunch of consulting work but also in this sort of test environment of gameplay space where I I tried a lot of these uh concepts and and working with the teams and I mean I don't have a sort of a a report to give you but overall the studios that operate from gameplay space uh are are quite successful and and doing I would say uh better than average relative to most startups uh or or indies. Uh so before we get too deep, this is where I warn you that I'm not a lawyer. Uh and uh and so you know uh obviously everyone is in a different uh uh country and has different legal and and corporate law contexts and tax issues and all that kind of stuff. Uh and so I'm not a legal or or or or tax

expert. So uh you know all obviously you have to do some conversion in your own brain in terms of what's relevant uh to your own uh region. Um that's my sort of universal image for lawyers. Um anyways uh all right so if we look at the uh the title uh the title was called studio design uh building a foundation for success and avoiding disaster. Uh we went through various uh more kind of clickbaity uh versions but uh we settled on this sort of mid midpoint uh uh title um and uh let's break it down. So first of all uh studio design and I think what's important here is this notion that a studio is something to design. there is sort of things to do and decisions to make and and it it matters. And this is not generally what we see. Oftentimes you see that it's kind of a mistake or not a mistake but a byproduct. We're working on a game and like oh I guess we need a tax ID to fill out these forms for Steam. Oh well we have to incorporate or get a company to get a tax ID and it's sort of like a byproduct of wanting to to to make a

game. So if I say a show of hands like who who kind of like ended up sort of happening into a game coming like sort of not by mistake but like ah I guess we need this thing. All right everybody else was like super laser focused. All right well you're surprising me. uh because most of the time it's it's it's like this ah we don't even know what's going on and we had to do it and and they don't and and developers don't necessarily realize kind of all the elements and things uh to think about and so you can kind of do I mean a word cloud if you know normally our word cloud is focused on all the design and gameplay issues not necessarily all the questions and things uh around business and and marketing and and all of that stuff and I think what I've certainly seen is that the more successful studios it tends to be intentional. It tends to be deliberate decisions around these elements and questions. Uh they tend to do well. Oftentimes when I say that I sort of get the remark it's like, oh well it's chicken and egg and you know

once you become successful then you can go back and think about a road map and you know treating your employees right and and and strategy and all this kind of stuff. Uh and and people tend to think that the success comes first and then all the sort of more intentional choices come after. Uh and while that may happen, I mean lightning can strike at any point, uh it is much more common when uh you make intentional and deliberate decisions to begin with and that sort of puts you on the path for uh success uh with a higher degree of of probability. Um, so I think I think even just uh accepting that there is intentional and deliberate choices that you have to design the business and design the studio and put the effort uh and resources into that I think is already you know you're way ahead of most uh studios or developers who who kind of it's it's all very tertiary and aren't even thinking about it. Um so that's just sort of the the first part. Uh the next part is this idea of building a foundation for success. And I think success is a very tricky word that

if we went around the room and ask people, well, how do you define success? What does the success look like? And we may have all slightly different versions of that success. Maybe we can kind of bucket into certain categories. Uh you know, well, I want to be profitable or I want to make an award-winning game or, you know, I want to pursue my dreams, you know. So maybe we can start bucketing it. But but it's dangerous to kind of talk about success without defining it. And I think there's no right or wrong answer here. I mean, if you look at runners, uh you know, the things that the sprinter does is much different than the things that the marathoner uh might do. Uh you know, they're both athletes, they're both runners, uh but they are uh training and eating and preparing and being coached uh with very specific definitions of success uh in mind. Uh and I think I think many developers it's like ah we think we have to go to the gym and maybe do something and they're not quite sort of um um understanding what direction they're going in or there's conflict there's conflict between uh founders

definitions of success. I mean, we we've seen this firsthand with execution labs, uh, where, you know, we would invest in a team and as as we worked together and went further, we would uncover sort of deep rooted conflicts in terms of what each of the founders was trying to achieve. Uh, and uh, and so that's sort of an interesting process to to get to that. What one of the best examples I've seen of this issue actually comes from uh, Henry Smith who [snorts] famously did a game called Space Team a few years ago. Uh, coincidentally enough, Henry works from from Gameplay Space. Uh, but this was actually before Gameplay Space existed. So, I can't take any kind of uh uh credit for for his achievements there. But, um, so it's a cool, for those who don't know, Space Team, it's a mobile game. Uh, and it's a multiplayer mobile game, uh, kind of local in the sense that we're all holding our phone and it's telling we have to like scream at each other and it's saying, "Okay, push this button and turn this wheel." We're trying to like not have our spaceship crash. Uh, and it's a really kind of wacky, innovative game and he's

won tons of awards and got a lot of attention. Uh, and one of the things people would say to him is like, "Oh, aren't you disappointed uh because your game was a failure?" Uh, Henry had released the game for free uh without any monetization. I mean, there was a little like donate uh somewhere deep in the menu, but essentially uh the game was not set up to make money. And and they would say, "Oh, Henry, we're really sorry. Like, you know, you failed." And and and he's like, "Well, no, I didn't fail. Well, it was a huge success because uh making money was not my priority. I had these specific priorities. So, this was his definition of success. He he had been AAA developer. He worked at Boware and a bunch of other cool studios. And so, he wanted to become an indie. And he had never done that. So, he said, "Well, my my goals are to, you know, learn how to program in iOS and deal with the app store. I wanted to make something small so I can kind of have a better sense of judgment for my future games, get my name out there." Uh and so he went on to say that actually despite the fact that he didn't make money, the game was a huge success because it far out outpaced

what he had set as his own definition of success. Um so that's just sort of a really nice example and if you want to read that case study and see all the numbers, you can just Google space team retrospective. U but in the case of this lecture, we're going to assume that everyone here wants to to make money. Uh this is the the business track after all. Uh, and a lot of the stuff that I do tends to be this kind of uh, intersection of doing cool stuff, making great games, but also being entrepreneurial about it and generating revenue and being successful from a commercial uh, financial point of view. Um, I just gave the Henry example as one of the few cases where a developer has kind of clearly outlined what they were trying to achieve. U, but we're going to focus more so on the the business uh, success type definition. All right. So, um, the last part of the the the title is this idea of avoiding business disaster. That's the more clickbaity piece. Uh, and I can tell you an endless amount of horror stories and disaster stories and all kinds of craziness. Uh, but I'll be more positive

and and sort of turn it into uh, lessons uh, and I guess sort of tips or or or advice. So, we'll frame this as as lessons uh without necessarily getting into all the the the the dirty juicy bits of of of how we learned those uh lessons. But, uh all right. So, so lesson number one is that finding your co-founders is more important than that initial cool concept. So, now we're going back really at the very initial uh phases of of of the startup process. uh and oftent times uh developers are kind of frozen uh in want or in being able to move forward because they feel the burden to come up with the cool awesome idea you know before they have the confidence to go ask people to join in their journey or become part of a studio etc. Uh, and in fact, it should be the the the reverse, right? You should find the people that you want to work with and quote unquote get married to and build something with, and then together you figure out, you know, what that

amazing amazing thing is. Uh, and generally when we were investing, we really saw it as a as a sort of three uh three team uh co-founding team minimum necessary. It was always we wanted to see someone in a creative leadership role, someone in a technical leadership role, and someone in a business leadership role. Uh now the business leadership role tended to be the harder one. And in fact, in in some of the deals we wanted to do, we actually turned back the team and said, "You need to find your tech your um your business co-founder." Uh and they would be all but we're so talented and so skilled and our art is amazing. Yeah, you are, but you need someone at that sort of same same leadership uh level that can fight with you about the business stuff the same way that the creative and technical people can kind of fight with each other and and debate. Um and so and so uh and and then they would go out and come back with their you know business co-founder and then those studios would perform uh phenomenally well. Um and so um I see this also with students right I said as

a student I mean sure you're working on your portfolio and you're you know building interesting projects but really you should be spending that time finding the people uh that you want to collaborate with and build a company with. Uh and so um you know this idea of finding your founders or your partners first before finding that one awesome little cool idea uh is an important uh lesson and I've seen that a lot with uh different studios. All right, lesson number two is to set up the studio right the first time. And this is kind of uh um related to the uh the issue we mentioned before, which is like we're setting companies up as a byproduct of needing a tax ID to fill in our Steam, you know, forms or whatever. Uh and so what tends to happen is that companies are formed in the cheapest, quickest, easiest way possible. Uh now, this is highly dependent on what part of the world you're in. uh and certainly some regions of the world are much more difficult uh and much more expensive to set up companies are much more painful uh but uh you know certainly in Canada

or or US uh you know oftentimes you see people setting up uh you know just sort of a sole proprietorship type structure or an LLC uh and then that structure doesn't serve them well as they move forward uh and so you do have to think about what are you trying to achieve or what that success path looks like and for example if you think you're going to go out at a future date and start raising funds uh through venture capitalists or angels generally they will only invest in a corp in a CC corp uh just because it's easier from a tax point of view uh and the issuance of shares is much easier uh and so if you're not a CC corp in that particular case uh then it becomes a burden or a hurdle uh for them to do the deal and then they'll force you to convert your LLC into a CC corp uh which is easier to do in certain cases or others. Um and so you know having uh uh made deliberate decisions and not sort of doing it as a oh by accident uh you can think ahead in terms of what you're

actually trying to achieve uh and and setting up uh the right corporate forms. Of course this is where our lawyer friends come in again. Uh and this is also um kind of you know a sublessson of always use professionals right unless unless your mom or dad are are accountants and and lawyers uh or or that you were one in a past life um I cannot overstate the the benefit of actually working with proper professionals to set your companies up straight and and the you know the the shareholder agreements and co-founder agreements and contracts and all that kind of stuff. Uh, I mean, we can spend a whole day talking about um, you know, setting things up uh, properly. And for those who watched uh, Indiegame the movie a few years back and all the drama with Phil Fish and Fez and all that kind of stuff, uh, that whole movie wouldn't exist if Phil had used a lawyer is basically the sort of the the key the key lesson lesson there because they didn't set things up right and they didn't have contracts and IP assignment and all that kind of stuff. So, um, so

I'll stop there because it's a fairly deep topic, but but setting things up right is, uh, critical, and I see it all the time where it doesn't happen. All right, next one is, um, lesson three is pursue projects designed for success from the start. Now, of course, this has that that loaded term success. Uh, so that means we actually had a discussion amongst ourselves as a team, as co-founders. What is the success we're trying to achieve? uh and then we're designing a project uh or roadmap of projects uh to achieve that kind of success. Um and so what gen generally happens is we sit around and we think about okay what games do we want to make? So I like ninjas and robots let's make that. Um you know and what games can we make? So what skills do we have? What resources are available? Uh and we stop there. And it tends to be that the games that we want to make and can make generally are a commercial disaster. That that the chances that those ones actually have uh commercial potential and a chance to succeed uh is is is well

I won't say nil but but very difficult. And so many many developers don't continue to say what game should we make uh and and trying to and this is where you're sort of matching the question relative to your definition of success. Uh and of course that's a much harder bullseye to hit is the intersection of the things that we want to make that we can make and that we should make and here should being you know that allow us to achieve our definition uh of success. I will often see this particularly with uh younger teams uh uh coming out of school. So oftent times uh schools that have uh game programs, they might have like a senior project or a group project and you have a bunch of the students working together on a cool game uh and then they're having so much fun or the or the game is getting a lot of praise and they're like, "Oh, let's go be a startup and and and live the indie life and work on this game and and ship the game." Uh and then I'll go in and look at the game and say, "Well, listen, that is a fantastic student project." Like,

you know, great. Like, yeah, we got A+ and it was amazing. I said that game will sell zero copies because it was not designed, it was not set up to be a commercial success. It was designed for the parameters of the course. It was designed to get an A+, you know, from the teacher. Uh, and so that's what I mean that you have to think about the projects you're working on. Uh, and and they have to be sort of designed to achieve the success you want from the beginning. It's a similar story with game jam games, right? you'll do a game jam and you'll have a you know this burst of creativity over over the weekend and you'll make a super cool prototype and you may maybe win the game jam or you get a lot of praise but it's very difficult then to take the game jam game and turn that into something that's commercially viable. It has happened. Uh, but I mean I haven't looked at the numbers, but there are literally tens of thousands of games now that have been made through the game jam over, you know, the span of whatever it is, 10 years. But I I mean, I can probably only count a handful that I've actually have gone on to um being commercial release. So the so the percentage is extremely

extremely small. But it's excusable because you're not sort of doing the game jam to make something that's the nugget for a commercially viable, sustainable, businessoriented game. you're there to innovate and be creative and have fun with your friends, right? So the context of a game jam is just a different context. So that's again the sort of the point of uh thinking about what you're creating and does that actually link to what your definition of success is and and many studios don't uh don't do that. All right, next lesson is and related to this previous point is do your competitive and market analysis and and do it often. Um, you know, this comes up as part of the pitching process. Uh, when you're pitching publishers, when you're pitching investors, uh, they tend to want to have a sense of where you position yourself relative to the competition. Uh, if you're going into the marketplace, who's already there? What are what are gamers playing, uh, etc. because they're trying to gauge what your chances of success are? And, uh, and o also the whole genre or category. Is that a generally

successful category? Is it a less successful uh, category? Um, and and many developers won't do that until like I force them to eat the broccoli and like, "Oh, I guess I have to have that slide." And they'll go off and sort of do some some analysis on App Annie if they're mobile or Steam Spy and and and so on. Um, one of the best examples of this was uh Ryan Clark uh down in the corner there. He he ran uh um his uh a Twitch and YouTube show called The Clark Tank. um and he was sort of broadcasting his competitive analysis. So he had had great success with Crypt of the Necrodancer uh which sold a ton of copies and so he was uh you know an indie success and uh and then he realized well gez you know I I'm going to spend another two three years of my life and a bunch of my resources and money like I better not screw this up and I need to think about what kind of game is selling what's not you know what genres are going up which ones are going down. Um, and so he embarked on this

process of competitive and landscape analysis. And he sort of did this weekly show where he would go through the Steam sort of uh bestsellers list and look look at the ones that were going up and the ones going down and kind of think through why was that and, you know, what trends were going on. Uh, and and thankfully he, you know, shared that process uh, with with his viewers. Um, and he he paused a bit uh, when I think he he went deep on um, his new game uh, uh, Industries of Titan. uh but Industries of Titan is a direct result of that process. Now I really hope the game is a massive success and then I'll sort of use that as a continuation of of the value uh of doing that. Um uh but but he's sort of the been the most uh visible example of this competitive uh analysis process. Uh last year at GDC in the Indie Game Summit, there was another lecture I thought was really good called Know Your Market uh making indie games that sell was an indie developer named Eric Johnson from Infinite Monkey. uh it's available on the vault. I think it's one of the free ones. Um and he did

some really deep crunching on on numbers and was looking at median sales uh relative to certain tags and genres. Uh and I I guess this font is a bit small. Um uh I can barely even see it. Uh so so you know action RPG is the tallest uh bar as one of the examples of a genre that's performing well. Uh I mean this is data from a year ago. So maybe that's sort of higher or lower. I mean, this is why you want to do competitive analysis frequently, RPGs and so on, but like puzzle platformer is this tiny little tiny little slice at the end. And so, this is an example where a lot of developers will say, "Oh, let's make a puzzle platform. It's a a genre that we're fans of. There's so many classic great examples of puzzle platforms we all love. Uh, and it's it's relatively easy to make. All right, let's go make it." And then you don't realize that in fact you know the landscape for puzzle platform is hyper competitive super saturated uh and and from a revenue point of view just does not represent a meaningful uh opportunity to generate sales uh just as an example. Uh and then

he did another one where he was looking at um this is wasn't genres I think it was like specific attributes or or tags. uh and uh you know again here the the really high bar is it's moddable uh or team-based uh online multiplayer etc. But on the far end where there you can barely see like one line of pixels of blue is four player co-op. Uh, and this was um, you know, I wasn't surprised by this because if any of you watch some of my past lectures, I always beat up on four-player co-op. Even though even though it's a fun style of game from a from a commercial perspective, it's a very challenging genre to to be in. Uh, it doesn't lend itself well to um to sales because again, it assumes that I have friends and that I have a sofa and I have four controllers and etc. Uh, but here was some of the data to kind of validate that. So now if we were sitting around saying, "Let's make a party game, a four-player co-op. We love those games. We remember Towerfall from, you know, years ago. Let's go do it." And it all sounds great and fun, but you never

stop to do your analysis. It's like you're going to have a hard time getting investors, getting publishers, getting people to to back the game. Uh, and unless you're independently wealthy and can just do whatever you want, uh, that's going to be a really hard time to sort of build a successful uh, studio behind. Um, anyway, so that's from last year. uh just a great example of doing this kind of deeper uh deeper analysis uh that we rarely see from from developers. All right, lesson number five. Except that you are not in the game making business, you are now in the fan building business. And this is uh a very deep very fundamental philosophical shift uh that I try to uh you know again force the broccoli on. Uh but again, if you've determined or if you set commercial success and building a sustainable, viable studio, generating revenue, uh and making great games, you you're almost not in the game making business, right? You're not just sort of sitting there making a game. You are really making a community. You're making

a fan base. Uh I mean, this year at GDC, it's the first year we have the discoverability series of of of lectures. uh a lot of the stuff that we hear about tends to be about community engagement and and and and using all kinds of tools uh to engage a community, but I think actually it's it goes way deeper than that and it's about thinking about your business primarily as a fan base building business that everything you do really is about uh capturing uh that fan base, delighting the fan base, engaging with that fan base uh and then sort of having them follow you through the journey of the studio. Uh, and a great example of that is a Montrealbased studio, uh, Kitf Fox Games. Uh, actually Tanya, who's the one here in the black cardigan, uh, is giving a couple of lectures at GDC, and so is Victoria, uh, the one doing the sort of dabbish movement. Um, and and, uh, uh, their current game is Boyfriend Dungeon, which has been getting a lot of buzz and hype. They had a massive Kickstarter. Uh, but it didn't happen overnight. Uh they

started I think it was 2013 they did a a barely break even uh mobile game called Shattered Planet. Moon Hunters did moderately better. Uh Shadowed Isle did better still. Now Boyfriend Dungeons their their next game. Uh but importantly um they uh were sort of focusing all of their fans on Kitfox and that Kitfox itself was having this sort of a sense of identity and a brand and a focus. A lot of the games they do or all the games they do are based on procedural uh procedural technology, procedural level generation. Uh Tanya's a former MMO AAA writer and so their games are very writerly and narrative focused. Uh and so even though their games, you know, look different, different style, different genre. uh they were able to sort of go after fans who like those kinds of games uh and sort of funnel them into the Kitfox world such that those fans were ready for the next one and ready for the next one and ready for the next one. So So when they launched the Boyfriend Dungeon Kickstarter, all of their fans just sort

of piled in and you know within I think it was like four hours they had more than uh uh surpassed their their Kickstarter goal. Um, and so this is kind of a part of a long-term uh, planning process. Uh, and and um, last year at DevCom, there was a great quote from uh, Sarin Smith, who's the senior uh, director of global community at Blizzard and she had this great line about, you know, embrace the great fandom frontier and how Blizzard sees or they believe that game building is community building. And so, uh, what we often see, whether you it's community or marketing, it's that thing that you do after you're done with your game making or it's the thing you make a little tweet on Saturday when you're not busy making the game. And so, I think you really have to see it as as as sort of inseparable. It is completely coupled. The process of making the game is the process of making the community and vice versa. Uh and so that means that you need to have the right people, have the right resources, implement the right tools, you know, plan that labor. Uh

it's not the other stuff that you do when you have a spare moment. You know, it is central and core to the to the success of your game, but more importantly to the success uh of the of the studio. So it may seem like a slight sort of h I you know maybe it's a shift in my thinking uh but but understanding that you know building community or building fan base uh is your your business. All right related to that lesson six uh and I've talked about this before build momentum by building scaffolding. Uh and so um the idea of scaffolding is that you are building that kind of momentum. So, Kidf Fox again serves as a great example in that they had a vision, they had a road map, all of the games they were working on were procedural, narrative driven, etc. Uh, they had a target audience in mind and were able to sort of funnel that towards them. Uh, they come to GDC and get invited to other conferences that talk about procedural stuff. Uh, when investors or publishers want to look at

studios that do that kind of thing, they go see Tanya and the Kitfox team because they've built a reputation for it within the industry. uh you know for for um you know whenever there's uh articles on Kotaku or Polygon that want to talk about pro the trend of procedural games they give Kitfox a call uh you know the tools that they build the technology they work on evolves and grows over time when they hire people they hire people that have that the right mindset or experience to do those kinds of games and so there's all kinds of momentum that's built on many different fronts that that sort of builds um or increases the probability ility of ongoing success for the studio. This is the idea of like you're building the scaffolding uh to support the the foundation of the of the studio. Um and you don't get that if one day we start a company and say, "Oh, I like racing games. Let's make a racing VR game." And ah it doesn't work well because VR is not selling. All right. Well, let's do we hear Pokémon Go is cool. So, let's do a you know a Ninjas Ninja Go. It's Lego, but uh whatever. Ninjas AR. Uh, and and so we abandon all

the racing stuff and all the VR stuff and then we go do, you know, ninjas running around the street and then, well, it doesn't work because we're not Pokémon. So, uh, let's go do a Steam game and and so you're just sort of resetting, restarting different tools, different technology, different talent set, different fan base. You know, you're not really building any any momentum. Um, as a tangible example of that, uh, I think it was last week or the week before, Kitfox announced that they were publishing Dwarf Fortress, the, um, the one with the sort of the graphical tile set. Uh, Dwarf Fortress, for those who don't know, is I think it's like a 15-year-old game. It's like an ASKI based super deep procedural simulationbased game. Uh, it's it's only available through the developers website and and as a Patreon thing. Uh but Tanya met U Tarn who's the creator of the game at some of the GDC panels and they both are working on deep uh procedural simulations and it it was a really natural fit then for Kit Fox to work with uh the studio behind Dwarf

Fortress. Uh and they communicated that wonderfully to to the fan base and everyone's like this is a match made in heaven. This is wonderful you know I will buy it immediately as soon as it's available uh on Steam as opposed to any kind of backlash or what the hell is going on. uh because of that scaffolding, because of that momentum, because of the sort of the the the cohesion of of the vision and roadmap uh lent itself to that, you know, just as an example or manifestation of that. All right, lesson number seven uh is to always pitch opportunities not problems. Uh and this was a a kind of a fundamental point at my lecture uh on my on my funding lecture last year in that so many developers see funding and pitching as a solution to their missing money problem. Right? We're all working hard. We're problem solvers. We're working on our code. And then we wake up one day, oh crap, we missing money. We got to go solve our our our lack of money problem. And they just go out into the world. They come to GDC and they

look for the people with the money and say, hey, I have this problem. I'm missing money. do you want to give me a bag of money? And everyone's like, I don't care about your missing money problem. Uh and so last year, uh if this particular area is of of interest to you, I did this kind of deep deep look of the the forking of of of opportunity relative to investor. And the for first fork is really the split between are we talking about a commercial opportunity or non-commercial? And I gave examples of what a non-commercial, right? You're working on a piece of art or or something to a more serious game or social impact game. Uh and so there's other sources of funding for that. But if you're looking at a commercial uh project or commercial opportunity, then you really have to decide whether this is the projects that the thing that that represents the opportunity or is it the company that represents the opportunity. Uh and the important thing to understand is that that fork uh dramatically shifts how you pitch, who you pitch to, how the deals are structured, terms, sources, all that kind of stuff. Uh and so 99% of the developers who are trying to solve

their missing money problem don't understand that that second fork even exists. Right? To them it's I'm missing money. I go get a bag of cash. And you first have to understand, you know, what's is it is it the project or is it the company? Um my whole lecture from last year is is specifically about that. So I'd encourage you to go see that. But just quick quick quick on the project side, this tends to be games as products. It tends to be things that are premium. it tends to be things that are consumable um often steam or PC and and console um and so sort of represents a linear success curve. You know, I sell units and I sort of succeed in a in a linear manner. Whereas on the company side, this tends to be things that are games as a service that are highly scalable multiplayer kind of uh in theory are endless and infinite in in their consumption. So stuff like Fortnite and League of Legends and Hearstone, etc. Often this means free to play, but it doesn't have to mean freeto

play. Um, and so, so just super quick, unless you are pursuing projects and your vision is to do things that are highly scalable with exponential growth potential, like don't even bother trying to get equity, VC, angel investment in your company. Uh, because they won't even listen to you. Uh if the pro if it's really about the project and it's sort of a product, then you want to look at project sources, which is publishers and Kickstarter and government funds and all all that kind of stuff. But I'll stop there because there's a whole lecture on that from from last year. Uh all right, lesson number eight. Match your business model to the game's needs, not your preference. Uh I'm business model agnostic. Premium is great if they make sense. Free to play is great if it makes sense. Adriven is great if it makes sense. It really is a question of what business model will enable the game to succeed. And more often than not, I see the reverse, which is which B business model does the developer want to implement.

Often or historically, this has been sort of the issue of people not being comfortable with freeto play uh or not having the experience for freeto play. Uh but the most u sort of tangible example I see of that now is multiplayeron games that are premium. Right? a multiplayeronly game is screaming to be free. It's screaming to be free to play because as a developer, the most critical thing is getting players into the game. So, your lobbies aren't empty, that there's matches or or whatever the game uh format is. And if you don't get those players in the lobby, then your game is going to take a quick nose dive and it's sort of a spiral of death. Uh and it's the it's the it's the multiplayeron premium pricing spiral of death. Um there's other examples, but that's sort of the most uh obvious one. Uh, and then oftentimes I'll I'll, you know, advise a student. I say, "Hey, like why are you doing that?" Like, "This game really should be free to play." Like, "Ah, well that's tricky and we don't really know how to do it and um, you know, we need to make some money so we're going to put 20 bucks on it." It's like, dude, nobody

cares. Like, that's not how you're supposed to make that decision. You have to make the decision based on the model that will actually enable the game to succeed. Once you figure that out, then you go back and say, "Well, geez, how do we make this work? How do we deliver it? who do we have to hire, what expertise, what do we have to learn? Uh, and then you sort of solve that problem, but the end user, the marketplace doesn't care what your internal challenges are, what you like or don't like, or which, you know, which one you worked on on your last game. Um, and so, and so I see this mistake quite often is that you're making sort of, you're making your business model decisions based on excuses or sort of lack of understanding as opposed to looking at the game and saying, "What do I really need to do uh to make that game game succeed?" All right, lesson number nine. Do not focus on launching. Focus on launching successfully. Right? So, so game developers uh trained as artists and programmers and designers uh are so focused on the product and

sort of delivering or or or developing it and then shipping it and they forget that they have to do the marketing or they don't have the time or resources or understanding how to do the marketing. Uh and and so they're like, well, hey, my job is a game developer and my business is a game making business, so I'm focused on making the game and getting it out the door. Uh, and sometimes they'll rely on publishers to worry about the sort of the marketing piece. Sometimes they'll just sort of pray to the gods of Walmart or or Steam that it all works out. Uh, and and you know, this is the whole sort of sort of joke about uh, you know, if if my game goes out into the world, will anybody even notice it? And that's the whole discoverability uh, challenge. And so the point is, as a studio, since we've already sort of accepted that we're in the fan-based building business, we're not just in the I make games and put them out the door business. Uh you have to be thinking about all these things. You have to be thinking about what do I need to do in order for the launch to be a successful launch. And getting the game out the door,

you know, will not achieve that. Listen, making games is difficult. Uh it's a great accomplishment to get a game released. uh you know, high fives, pop the champagne. I mean, it really is not easy to do that. But again, if you're trying to build a successful business, a successful studio, a viable studio, uh that's not enough, right? You have to be thinking about the successful launch. That also means you need to be thinking about that from a budgeting and scheduling point of view. And so I often talk about this this sort of metaphor of of the b the bridge halfway built. This bridge is completely useless. Right? The goal is to get to the other side of the river. And so we need to plan the timing, the resources, the labor, the, you know, the beams, whatever to get to the other side. And so many studios don't see the other side as the goal. They see the middle, which is finishing the game, and then they're there in the middle of the river, and they're like, "Oh crap, we did not plan for there to

be a soft launch, or we thought early access was only going to be one month, but now it's going to need to last six months, and we have no more cash flow and no more uh, you know, we can't pay our staff, or or whatever the case may be, because they didn't they didn't realize that they're not trying to be in the middle of the river. They're trying to be on the other side of the river. So, so, um, this one, you know, can surprise you at the last minute and everyone's feeling happy that they've made a game and then it goes out there and then you blame the indie apocalypse and all this kind of nonsense. Uh, but the reality is is you build half a bridge and and you can't like like that's not success. And so, you have to be planning, scheduling, budgeting, uh, uh, you know, to get to the fully across to the other side of the river. All right, the 10th lesson, final lesson, uh, is this idea of having a giving or ecosystem mindset. So, I've been in the game industry, uh, well, 23, 24, this is my 23rd GDC. Uh, and I believe deeply in the passion and the drive and the love

of games and the love of game making, uh, that the industry has. I've always been very uh giving and and sort of you know sharing and a lot of the things that I've built like execution labs and gameplay space and previously I was actually the the head of the um the IGDA the international game developers association for for many years. Uh and so I I I sort of have this deep sense of of community and and ecosystem. Uh and in Montreal where where I'm based we have that everyone is so supportive. everyone is helping and and and ready to give advice and and feedback and and and help each other out. Uh and I'm saddened when I do go to other parts of the world where that sort of ethos is not there. Uh and in particular, you see that sometimes where one studio has some success and they go off in the mountains and hide and they want to protect that success from the rest of the the ecosystem. Uh and so I'd encourage you, you know, as you build successful businesses, as you grow and learn, uh to share that with the other developers in the community, whether that's virtual or down the street, uh and and sort of help

the whole the whole thing grow. I mean, systems are such complicated, uh sort of black boxes with so many inputs and outputs, uh and and having this kind of uh giving and ecosystem mindset. Uh well that one while that may sound a bit sort of fluffy and soft I think actually does contribute to the success of a studio uh sort of being a um uh uh you know part of the the fabric of the of the community. Uh and then I'll throw in related to that sort of a bonus lesson. Don't don't be an Uh I mean we we see that uh often these days. I mean there's a lot of sort of uh uh tension around uh um you know labor and crunch and studio shutting down and all that kind of stuff and people making bad decisions or you know surprising hundreds of staff that oops tomorrow we're shutting down this kind of stuff. Uh and so even though this talk has been more of a uh you know has been a businessoriented uh you know commercially oriented talk uh I I think

you know we can all do that in a in a less assholeish uh way. There's a great book, The No Rule, and actually Robert Sutton has written a bunch of books on on this stuff, but I'm going to assume everyone in here is not an and is super super nice. Um, but I guess the sort of the ultimate uh lesson, and so I don't have to end on the uh comment, but really the ultimate thing of course is to make great games. uh that ultimately, you know, even if you make all these deliberate choices and decisions and think about your business, all that kind of stuff, um you know, none of that replaces the need to make great visionary compelling games. It's just what we see today is making the great games isn't enough. You do need to think in this much more holistic uh you know, get to the other side of the river mindset, but fundamentally it starts with making great games. Thank you very much. [applause] All right. So, we do have some time for questions. If you have questions, can

you just uh line up in the the center? There's a a mic on the floor. Uh I'm happy to address uh any of the points or lessons that I made here. Uh but of course, if you have sort of slightly different uh questions, uh I'm happy to to dig into that uh uh as as well. All right, we have someone uh don't don't be shy. All right, go ahead. Hello. So, um you mentioned about the three co-founders um the technical guy, the artist, tech guy, and the business guy. Uh and like I my studio is exactly like the example you gave lacking the business co-founder. Um, what would the business co-founder do at the first like one year of development of a game? Okay, I may be making a full out of myself by this by this question, but I think that I'm I'm okay with that. like this. Yeah, listen, it's a it's a it's a great

uh it's a great question and um that that business person and often times um the business person may not actually have a business background. It could be uh another designer, programmer, the producer uh is taking on the business responsibility. So I'm not saying you got to go get an MBA student and like okay you're the business person put a suit on and so so I I should have said like someone taking on the role of the business leadership responsibility. I mean ideally they have some uh business uh background or marketing background. Uh and so uh it's a great question because this sort of uh hints to the notion that you are not accepting yet or understanding yet that you are a fanbased building business. Right? So that person not only has to start thinking about uh the branding of the company and the studio already has to be thinking about the audience of the project should already be doing competitive analysis before you even start coding uh and having that sort of debate amongst the teams saying I think

we're going to do a ninja game. All right, have we done a search and looked at ninja games? Let's dig into the numbers and see what what makes what makes sense or not. uh or you do a prototype. And so then they're going to start running, you know, user group or or play test nights to get, you know, user like real user input. And um and then they're going to go to the shows to talk to publishers and investors. So so that that person is uh fundamental to the whole start of the business, the whole start of the company, and the whole start of the project, and needs to be there from the start. It's not someone that you bring in two years later and say, "Okay, make some tweets and go go market this thing." because chances are that you've not made something that's relevant or marketable or doesn't have the right hooks uh to get you there. So, you need that person sort of arguing with you from the from the very beginning. And just to to be sure, you do recommend that person to be not one of the other two like taking on the role. You do that being a separate person. Yeah. Because it's hard to argue with yourself, right? Because if fundamentally you're a

designer and then you're like, I'll I'll put the suit on from time to time. Then you're like, well, we should make it this. we should put free to play, but no, let's make like like like the designer in you will always win that argument. Um, so so there needs to be another person that sort of says, well, I'm going to fight for what's, you know, viable and dig into the numbers and sort of So, so it has to be someone else. Thank you very much. All right. Thank you. Go ahead. Hi, Jason. Mike Lynch from Renelier Polytech. Good to see you. Um, good to see you, too. Um, question for people who would doing teaching. Uh the schools I think are coming up really short on conveying these kinds of lessons to seniors who are about to go out there and maybe start a studio. Uh what can schools be doing more to make that kind of mindset happen among game designers? Yeah, what wonderful wonderful question. So so uh I mean obviously academia is its own kind of complex uh system. Uh, ideally what I'd like to see is that schools that do have a kind of a senior

or final project that the end goal of that project is to ship it. Like I think I think they should actually go through that now. Some schools might do that. I don't think many do. University of Indiana does. I just found out they're trying to put that in place. That's a problem for us because it's infrastructural and resources. There's copyright issues and business and like whatever. But just the process of go a bit like Henry where he said oh my goal was to learn and make estimates and sort of go through the whole cycle and stuff. So I think I think actually having the students ship it uh is an important learning step but it's also the idea of including sessions on marketing community management entrepreneurship and ideally that's for all of the students not just the ones that are taking sort of a marketing minor or something. like everyone in game development, game whatever in the school should all be taking like a fundamentals of of game economics and business and marketing. I think it would be great. Yeah. All right. Next. Hi. Uh thanks for the talk. My name's uh my name is Kyle and I I recently started an LLC by myself. So I know that's one

thing I shouldn't be doing. Um well it depends what your your goals are. Depends on what my goals find success. But um in terms of my own skill set, I am a business person first. I'm probably the person that everyone hates like, "Hey, I got this idea." Um, but I have a little bit of technical expertise and I have a little bit of creative expertise. And it seems like when you were talking about role number one, it seems like everyone has predefined roles. One person does technical, one person does business, one person does creative. Is there an opportunity for blended roles? And if there are blended roles, do you think there's different rules if you're starting a studio which has blended roles rather than defined roles? [clears throat] Yeah, I think I think I think blend blended roles is fine. Uh, and the reality is when you're a threeperson studio just getting started, like everyone's doing some mixture of everything or things that they're not sort of trained to do. Um, the the the main it's more about um call it the arguments or the debates that the leadership has to have. It's less about on the ground who's doing the coding and who's doing the art asset. Like I'm less

concerned about that. It's more about when the the founders are debating with each other what the roadmap should be. You know, who our audiences and what kind of genres or platforms do we go after? Uh you know, when you have those debates, you you need someone sort of taking the perspective from a creative point of view, you know, what's going to be beautiful, what's going to be interesting, what what's going to make a great game. You need someone from the technical point of view says, well, that may be interesting, but there's no way we can build that or Unreal doesn't support that yet, or it's, you know, we need this tool that we can't afford. Like so they have to sort of fight from the technical perspective and then you need the business person to fight say well that sounds crazy but it's going to cost us 20 million it's never going to work like like so that it's more about the sort of the tension uh and debate amongst those people when you're making those kind of highlevel uh uh company level vision level decisions. It's less about we're sitting around doing the the day-to-day work of making a game. I'm less concerned about the the blended blendedness at that level. Okay, thank you.

Cool. Thanks. All right, go ahead. Uh, hi, thanks for the talk. Um, I have two questions, but I think we may have time. Um, one, uh, out of curiosity, what do you see as the role of agents in starting up a company? Is that something that you like to see? Something that you don't like to see from an investment point of view? Are you an agent? No. Are there any agents in the room? Um, yeah. I mean I mean there are some agents that are are are great, super super uh uh valuable that have huge networks uh and so on. Uh and then other agents which are maybe less reputable. Um but you know that's fairly common. Um I think ultimately depends what you're trying to achieve. Uh and you know an agent is not really going to help you build community and worry about your fan base and make those hard decisions about what's you know competitive analysis all that kind of stuff. uh and you know if you want the agent to go after a publisher or investor I mean that's always a little bit tricky but in the

right context could help and I think I think the issue is um you know when you're sitting around saying oh we don't know anyone and we don't know how to get a publisher let's go ask an agent to help us I mean the agent vets you first and they're trying to determine whether or not they can sell you and and and sort of find a deal for you and so on. Uh, and unless you know you're some rockstar, have a huge track record or or or the game has progressed far enough that it's something really beautiful or something really interesting or a huge opportunity, then the agent's not going to take you on anyways or or or they shouldn't. I mean, it's like it's that that joke about like I I don't want to be part of a club, any club that would have me as a member. So, it's like a little bit of of that because the point where the agent looks at you and says, "Oh yeah, you've got something amazing. I'll I'll represent you." That should be the very moment where you say, you know what, I think I'll represent myself. Uh, but that's I mean that's just me and sort of having confidence in in in what I do. Um, so so oftentimes uh agents can

be very powerful, but you really have to think about the context you're in and whether or not you need them or whether they'll even take you on. So they're not they're not always the the quick uh quick fix. Uh okay, cool. And then um just a second question. Um I know a couple other people have also asked about it, but is uh when you're looking at investing, is three really the Goldilocks number um in terms of just ownership in the company? Like if there's like five or seven, you're like, "What is this socialist combine?" versus if there's like a sole owner, it's like, "Well, this guy's clearly just going to be a dictator." Um if if there is um a group that has a more diverse um ownership group, but they still have the clear like we have one person leading the business, one person leading the creative, and one person leading the tech. Is that okay? Yeah. I mean, so so um another another great great question. I mean, uh yeah, three is kind of the Goldilocks number. Uh two tends to be too few. Uh and and and then you don't have the sort of this

this tri like this the balance of the triangle and sort of those those those fights. uh one is definitely a red flag uh in that in that many investors will not back a solo uh entrepreneur just because there there's so much burden so much work that's that's just like it's a herculean effort uh alone uh I mean publishers it's a different story because they're not investing in the company they're just like hey can your team deliver the project and so it's a different discussion um I mean if it if it's four founders or five I mean it's fine what tends to happen is the more founders you have the the smaller the slice of ownership of each founder. Uh and so the cap table, the capitalization table gets quite messy. Uh and then if you took some money from your uncle and he's sitting on there and you know whatever, um the main thing the investor wants to see is that the founding team still own a significant portion of the company such that you're motivated to to put in the blood, sweat, and tears to make the company succeed. And if each of you owns, you know, 118th of the company, then really how committed is

each of the founders and so on. So I mean like like that's in a my response there is in a very traditional business sense. Uh, and certainly we're starting to see other implementations like I think there's a lecture I don't know if it was yesterday about like a a collective like a like an an employeeowned collective but that's a completely different structure and that's tuned for their success to have a more sort of democratic you know employeeled uh thing and that's beautiful but also they will never ever get VC money because it's incompatible uh with that structure but my guess is they would never even ask for like they're just on a different path and so that so that different structure was suitable for their definition of success. Whereas, if you do think you want to build a business and take on investors, etc., you know, then you're sort of playing by the more traditional rules, uh, and you don't want to have, you know, 25 co-founders each owning, you know, 125th of the like it it just it it looks weird when I look at that cap table. I want to see that you and the other two co-founders each own, you

know, a significant portion so that you're, you know, you're going to go to hell and back and this is going to succeed and you're committed and you have skin in the game and and so on. Yeah. All right. Thank you. All right. Another question. Thanks for the talk, Jason. Appreciate it. Uh, so traditionally in in that that sort of structure you're talking about where you have three co-founders, but usually there's one that's really strong, like a strong personality, right? Oh, or no, not so much. Maybe. Maybe. So, I guess that's the question is is what has been your findings as far as like like the the balance the balance of personalities, the balance of Yeah. Yeah, I mean now now we're getting into sort of uh you know I I can tell you endless stories about sort of the the interpersonal dynamics of the of the co-founders and where where it's been amazing and where it's been very sort of toxic. Um I mean I think I think the idea is that the co-founders are on relatively equal footing so that when you're having these debates about the future and vision and so on that it's not just one person that says well I'm the star here so you shut up and you

know we're going to do it my way because then now now it's you have that more dictatorship model. Um so so thi this goes back to the notion of finding your co-founders first uh in that you really I mean this is a marriage and and you want to find the people that uh at a personality level you combine with uh at a skills level you're comp you're complimentary uh and that you feel like you can actually rely on each other and trust each other and build a company together and it's not just my my buddy or my brother you know whatever it's it's I'm really being deliberate about finding those people and and it's not easy it's not easy to find those kinds of people that sort of plug plug in nicely to to make that that co-founding team. Uh and and I've seen it where one person is sort of a little more toxic and but they were buddies in high school and so they kind of do it anyways and then you're like five years in and one's trying to buy the other one out and the other one's trying to sue the and it's just it's just a a nightmare. So So that really goes back to like like find the co-founders first uh before that. But uh yeah, I don't know. Go see see a counselor if you're having sort of No, that's great.

Intermarital issues and stuff. So all right. Well, I guess uh we're we're mostly out of time. Thank you everyone. I hope you go out there and eat a lot of broccoli. Enjoy the rest of the show and fill out your surveys, please.