It’s Joakim here. Greetings from Helsinki!
This week hasn’t been the most productive one for me since we’ve had both our kids in quarantine at home after them being exposed to COVID. The quarantine will be over by Sunday, and we’re all doing fine.
The great thing about the last twelve months has been to spend more time with family. Working from home allows seeing family as much as possible when kids leave for school and come back.
Just a quick update before we get into the news.
- On March 3rd at 6 PM CET, I’m doing a webinar with Erik from Opera Event and Steven Churd from Luna Labs on the topic of “Innovation In Mobile Game Ads” where we talk about how developers can use innovative approaches when they are creating ad creatives. Sign up for this free webinar by going here.
- I’m still collecting questions for my “Ask Me Anything” podcast series. You can send a question by filling out this survey, and I’ll add your question to the list of questions that I will answer. Thanks to everyone who sent in their questions so far—I’m recording the first episode in March.
On to the news.
🐸 We don’t need your greenlight process
The first game project for a new game studio usually starts from an idea that the founders had when they started the company. It was in the pitch deck they showed to investors. It was the game that got people excited to join the company.
Then comes the game that has the right metrics. It could be the one that was on the pitch deck, or it could be another one that the team came up with after the first, second or third game failed. This one is the one that has positive user acquisition metrics and can take the company to profitability.
At this stage of the company’s journey, we are getting to the point where the team is thinking about starting their second project after shipping their first successful game. You have the people for the second project, and you want to kick off the project. How do you decide what to make?
Independent teams making decisions
In a recent podcast, Ilkka Paananen, Supercell CEO, talked about new games coming from people who fly under-the-radar. Ilkka said that:
“The usual story was: we didn’t have anything else for these guys to do. They’re sitting somewhere in the corner of the office, and they’re just doing whatever they wanted to do. They were flying under the radar, so to speak, and then the next thing, you know, this amazing game comes out. And then I start to think that ‘Wow, these amazing games come out, not because of me, or the processes that I put together. They come out, despite all the things that we’ve done here.’”
The Supercell model of independent teams getting formed organically, them coming up with a game, under-the-radar, has many positives.
It’s not a mandate for the rock star producer to create a game. It’s not saying that “We need to make a competitive Match3,” and it’s not taking a top-down approach on game making.
It all sounds great when you have fifty, hundred, two-hundred people in the company and you can organically come together to work on projects. How would a company of ten, fifteen, or twenty people organize and organically cultivate the game?
After talking to half a dozen studios and putting together what I’ve seen work best, a form of pitching contest is a perfect way to get people excited. That’s what you really want.
Some steps in a pitching contest:
1) You announce to the staff that every X months, you’ll have a pitching contest for the next game that the company will make. X could be three to twelve, depending on how quickly you can kick off new projects. Six might be optimal for most.
2) People get to work on a concept before the contest, flying under the radar. It’s possible that some magical pairs are getting to work on their idea.
3) People present their concepts, and everyone in the company votes for the best initiative. Democracy is the best bottoms-up approach to deciding on the next projects to be built.
4) People get to show interest, and groups form around the concepts, later forming teams. These people continue refining the pitch.
Eventually, the people greenlight the concepts.
In this model, there is no top-down management involvement. This model allows the organization to make mistakes. It’s the people who decide on projects getting the green light but also pulling the plug. They learn and grow as teams, from success and failure.
Management and politics can still get in the way of things. If there are critical projects that can’t fail, they can quickly eat up resources. “You can’t have these coders for your new project as they are needed elsewhere.” In an ideal, these critical projects should be allowed to fail so that people learn.
How do you prepare a startup to have this kind of culture? You can achieve this by planning ahead. Raise funding for this model and recruit people for this model. Allow everyone’s ideas to surface and allow everyone to fail and learn.
🛫 One month left of runway
During my startup career of almost 20 years, this is probably the most dreaded and fearful moment that I’ve ever faced: you realize that you have one more month left of runway. The cash in the bank will only cover salaries and expenses for one month.
I’ve been there a few times in my career, and I’ve learned some things from those moments. First, I want to talk about where that fear and dread come from.
1) You have employees and investors, and you don’t want to let them down
2) People, your staff and co-founders, might start leaving and never want to work with you again
3) All your hopes and dreams could come to an end if you’d need to shut the company down
Runway problems are inevitable in startups, but they don’t need to be the end of the company.
How do you prepare for runway problems?
First, react several months in advance to these problems, not at the last moment. Work with a cash flow projection tool to measure how much cash you still have in the bank in one, two, three, or four months. Plan for 12 months ahead and monitor when the money runs out.
Second, as you have the insight into your cash flow, don’t hold it hidden but share it with the entire company. Granted, it is the CEOs’ job to manage the runway in a startup, but weekly all-hands meetings where the CEO shares the current runway can create a sense of openness and transparency.
Third, if you see that cash is running out in six months and there’s no straightforward way of generating enough revenue in that timeframe to break even with the runway, you should start working on a plan to get to break even.
For startups, there are usually a few ways to achieve break-even. Create a plan on how you’ll generate enough revenue from your product. Often, the plan needs to include cost-cutting, including possible layoffs. Then, present your plan to your investors with a request to raise a bridge round.
As you get closer to having less money in the bank, you need to move fast. The quickest way to generate revenues is to look for outsourcing projects. Granted, this will slow your game development efforts down, but it will mean that you’ll have more time to execute your plan and make the company get on track again.
In my first startup, I had to initiate a plan like this on three separate occasions, in 2006, 2008, and 2011. The first two times, we managed to generate enough revenue until we got investors to put more money in the company. The plan didn’t work on the third one, and we needed to shut down the company.
The key here is to plan well ahead of time and monitor your runway constantly. It’s the CEO’s job. No one else will do it for you.
🎙 Workshop: How to create a game studio pitch deck
In January of 2021, I did a workshop on the topic of how to create a game studio pitch deck. In this workshop, I shared all that I know about what pitch decks should communicate.
Listen to the recording and grab the workshop material from here.
📃 Articles worth reading
+ Rise & Fall Guys: How to Save a Hit — “It’s now clear that the game has not been able to maintain and is in decline. This trend might be normal for a paid game like Fall Guys but is not for a title that follows a LiveOps model, like Fall Guys. The spotlight and players are important not just for upfront sales, but the in-game monetization the title offers. What led to this decline and what now can be done about it?”
+ Most common games developer fears about being acquired — “It is important to remember that ultimately, making games is an art. A very messy and expensive art but art nonetheless. Developers understandably feel protective over their creations. Meanwhile, acquirers feel protective over their investments and as such, a natural schism can emerge.”
+ Apple, Its Control Over the iPhone, The Internet, And The Metaverse — “Apple’s control and integration allowed it to offer a best-in-class mobile experience that also helped repel the most pernicious aspects of the online world; onboard and engage less technically-savvy users, and develop a richly monetized app ecosystem. This, in turn, led to unprecedented success.”
+ Three Growth Opportunities Unlocked by IDFA Depreciation — “Is the F2P business model at risk? Not likely, but some implementations of the F2P model – especially those that are only viable because of profile-centric, device-based targeting – may become unworkable.”
💬 Quote I’ve Been Thinking About
“An investment in knowledge pays the best interest.”
— Benjamin Franklin
👀 Something cool
If you feel that you’re ego is taking over, that you’re not being treated fairly by circumstances, or that things aren’t just going your way, this video will hopefully calm you down.
Sponsored by ironSource
We all know that developing a great game is one thing, but developing a great game business can be something else entirely. That’s why some of the top game developers in the industry use ironSource’s game growth platform, which takes care of both sides of the business, helping you monetize to fuel user acquisition, and vice versa.
From their ROAS Optimizer, the only product on the market built to optimize UA campaigns towards ROAS according to both IAP and ad revenue data, to LevelPlay, their in-app bidding solution, they offer everything you need to supercharge your growth. See for yourself at ironsrc.com
Sponsored by Opera Event
Looking for some great new authentic video creative? Try something totally new with Influencer Generated Content (IGC) by Opera Event. Influencers or actors will make specific creative content for your games and Opera Event will deliver you high-quality video ads that highlight the best parts of your game.
Note! You get a free video with the purchase of 4 or more videos. Remember to say that Elite Game Developers sent you!
Go to www.getigc.com to see some examples and get more information.
That’s all for this week. Take care and stay safe!