Sent on September 2nd, 2022.
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My interview on Building Better Games
I was recently interviewed on the Building Better Games podcast. Thanks, Benjamin and Aaron, for the invite! It always feels great to answer complex questions about gaming startups. I’ve noticed that going through my thoughts in an interview can surface many insights I hadn’t thought about.
Here are my favorite ones from the podcast, with reflections on what I’m thinking after a two-week pause from saying these words.
Question: How to build a co-founding team?
I see a lot of founders putting together co-founding teams quite quickly. But there’s a benefit of taking your time and figuring out what the team should be. You’re a team, experienced in making games and founding your own studio. It’s good to ask, Hey, can we actually build something big here? Does everyone have a shared ambition level? Or you decide, “We’re not gonna go and raise investor money. We’re just gonna bootstrap. We’re gonna see where it goes.”
That’s totally fine. But I think you want to understand if your ambition is to raise money and start building a big company. Then you want to have people who really can build big companies. I think that’s one of those things, building a big company, that is something that the founders should be questioning themselves. And asking, “Hey, who do we need to add to the team?” to make a big company. They’re not shying away from the fact that we will be a hundred people if everything goes well.
I met many founders who struggled later as they realized how hard it is to raise the next round from VCs. They raised money too early or didn’t understand what is expected from the venture-backed route. Whatever worked for pre-seed won’t work for seed and Series A. And it’s not just better KPIs; it’s a stronger team, an iterated and refined strategy, and a lot of skill with timing the market.
For further reading on startup team building, check out my piece: The B-team: When are you ready for an investment?
Question: You brought up the idea of co-founders sharing too many similar traits and skills. Can you give some examples?
Ten years ago, when free-to-play started booming, we had teams who came over from doing PC and console to free-to-play. They didn’t have the complementary skillset of looking outside their own knowledge space of what worked in PC or console and what you could adapt to mobile. The same is happening now with free-to-play people transitioning to web3.
It’s because you can’t rely on what worked in free-to-play to build a business there. I think that the complementary skillset for the founders should be that there are people who are not just building the game they want, but what makes sense in the current market. And that’s one of the ways to build a complimentary skill set is to have [some] people who aren’t stuck from doing ten years of a certain kind of game.
I’ll add something to this one. The diversity of co-founders in gaming teams is still heavily skewed towards an all-male team. In my investor career, I’ve worked with a few female founders, and I feel that the whole industry is missing out on so many good things by not promoting enough the raise of more female founders.
Female founders don’t only need invested capital, but what they need is help and advice to start building companies.
Question: As an investor, how do you keep an eye out for problems happening in the companies you work with?
I ask how much money there’s left. At a certain point, that is something that needs to be brought to the table. When it’s six months left, I think that’s the cutoff point where you wanna talk about what you’re going to do about this situation.
Each company that I worked with has had problems. And as I’m often hands-on involved, it helps me to develop muscle memory around what happens during the problem-solving phase and the circumstances that lead to the problems developing.
For further reading on problems in startups, check out my piece: Surround yourself with truth-tellers
Question: What’s the secret sauce… the way that great leaders build culture?
You start with the foundation where you have the founders, who then figure out their common values. Those become the company values.
Then the purpose. You ask, “What is the purpose of why we are starting this game studio?”
Later, you can lean back on those values and the purpose. I think many gaming studios struggle with the company’s purpose and mission because it’s like, “we do games because we love games.” That’s most of the time the reason why people are in this industry.
There’s nothing wrong with having a love for the games industry. That’s why I’ve decided to stay in this industry forever. Games are the most magical products, and the industry is just starting. But, I feel that the biggest misconception in gaming is how hard it is to succeed. A great company culture, focused on a strong purpose, is the key to tackle the hard times and find the answers to problems.
Question: Why does culture matter?
When there are hard questions, like, “what do we share with the company, the team, and people? How do we communicate? What is the right thing to do?” When you have a hard decision, I think you can always lean back on the company’s values. What do the values say? It helps you make hard decisions.
Great company culture doesn’t exist if there’s a lack of leadership effort on the culture side. If decisions get made that people feel are against the values, there needs to be clarity from the leadership on why the decision had to be made. Clarity builds trust.
For further reading, check out my piece on the Ideal games company culture
Question: What’s your personal philosophy on learning loops and things like that?
I try to be curious and adapt to change. I think that’s the trait that I’m most interested when I see founders who are extremely curious about learning, and they feel joy from learning and discovering new things.
I’m trying to unlearn, or at least trying not to overemphasize the mobile free-to-play user acquisition models because they’re not working right now. Maybe they’ll come back at one point. That’s how big games companies were built in the last ten years through this user acquisition arbitrage, which doesn’t work right now on the biggest gaming where you have a few billion people ready to play games, but you can’t reach them.
Achieving CAC < LTV is hard for people in mobile right now. Many companies are going through the process of finding better models of distribution. It’s a fantastic chance to see innovation happen in the industry and new models appear. The shakeup of free-to-play mobile is a good thing in so many ways. I’m excited about what the future brings.
You can listen to the full podcast by going here.