Sent on February 19th 2021.
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It’s Joakim here. Greetings from Helsinki!
The quarantine has ended, and we are free again! This week was busy still, as we closed the 2nd investment that my angel syndicate has made. I’m learning a lot about the process, and angel syndicates are the way of investing that feels like the right model for me.
Here’s a few reminders before we get into the news:
- Please send 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 March 3rd at 6 PM CET, I’m doing a webinar with Erik Bryant from Opera Event and Steven Chard 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.
Now, let’s get into the news.
🏡 300 home offices
Lots of outlets covered Supercell’s announcement on their financials for 2020, which were revealed this Tuesday. The five live games brought in 1.3bn euros last year, and several people pointed out that Clash Royale needs to get back on its feet. Additionally, there’s been chatter that the company needs bigger teams and that Supercell’s new titles should meet the market’s changing demands.
I want to focus on the remote culture that Ilkka talked about. I was intrigued by what Supercell’s COO & CFO Janne Snellman had said.”Since we’ve been forced into working remotely, we might as well try to get really good at it.”
When Supercell gets to work on something new in their culture, it’s usually not a half-hearted approach.
There’s not much information on how Supercell has been developing its remote culture during the pandemic, but Ilkka mentions a few items.“Like every other company in our business, when COVID-19 struck, we shifted to remote work. Supercell is known for small independent game teams or “cells” that sit together in their own space working on their own game, so this was a slightly bigger change for us than what it may sound like.”
Supercell has built a new HQ, Wood City, in downtown Helsinki, so it might not be going the way of Spotify, which recently announced its Work From Anywhere policy. Perhaps this could be a “cell” specific preference to work where the “cell” wants. They are autonomous anyway.“Since we rely so much on the creativity of Supercellians and their teams, we’ve had very specific challenges adjusting. For instance, we had a number of new joiners to Supercell who had difficulty getting to know their teammates and learning Supercell’s culture remotely. Brainstorming has become more difficult because it no longer happens organically and it’s harder to have fluid conversation over Zoom. Giving and receiving feedback, which our culture relies on, is not easy over Zoom, and Slack and email are even worse.”
This brought to my mind an article from last year. In an interview from June of 2020, investor Andrew Chen from a16z talked about how they’ve gotten to know game founders: “It’s harder to get to know [founders] via Zoom. But one thing we did was a bunch of folks in our team played Teamfight Tactics with the other team, for hours and hours, as part of the getting-to-know-you process. That was a great way to get to know them. It’s been observed that if you’re calm under pressure while you play TFT or League or StarCraft or whatever, you’re probably pretty good at startups. I would bet that the two correlate.”
Ilkka continues:“To counter these challenges, we leaned on one of our core values: trust. We simply trusted each team to figure out what is the best way for them to work (as is common at Supercell, every team had their own unique approach), and the rest of us just tried to support them in every way possible in their chosen approach.”“Given these exceptional circumstances, we were bound to lose some productivity, but we made sure to tell everyone that losing productivity was not just ok, it was to be expected, and we could worry about productivity after the pandemic. What we couldn’t – and can never – afford to lose is trust because that is the foundation of everything we do.”
When I did my keynote at the IGDA Leadership Day in October of 2020, my number one topic was trust. Where does trust come from? I believe its fundamental component is over-communication, from top to bottom and from bottom to top.
What to communicate and to create trust? The focus needs to be on the people who work at the company—give them context and purpose. And that they are working towards something together.
How can trust fail? Startups can eliminate all the edge they have regarding speed if they don’t build trust. Culture in hard times is even more important because that can erode trust so easily if there’s nothing happening regarding all the things that are going on in the company. So, messaging all of that is key.
I wish the best of luck to Supercell and look forward to reading more about their explorations into a remote culture and 300 home offices.
📨 Investor updates revisited
I wrote about investor updates in December 2019 and wanted now to revisit this topic. I’ve surveyed about twelve gaming startups about their investor updates, but only half of them (six) send regular monthly investor updates.
To the people who aren’t sending updates, I asked why not? The common responses were:
- It’s been to hectic and they’d send updates when they had time.
- They did send them once but stopped after a few were sent out.
- “We frequently talk with our main investors. The rest are informed when something big is happening.”
Lots of people seem to be missing the whole point of monthly investor updates. The update is an opportunity to channel information and requests to a group of individuals, all aligned with their dollars, to see the company succeed.
Some additional benefits of monthly investor updates:
- It’s a time saver for the founder. You get to keep everybody in the loop with one email.
- The update email can create a team-feeling between investors. Don’t BCC the investors, but rather put everyone’s name and email in display. Jens Hilgers from BITKRAFT Ventures wrote about this recently.
- Builds confidence. You are transparent and you involve everyone in the company. Investors will be more likely to back you on the follow-on round.
To make the investor update template more effective, I’ve updated the template with a separate product update area and a KPI area. You can now use the template with or without metrics from your game.
Check out the template by going here.
🎙 Phil Sanderson, Griffin Gaming Partners
In this week’s podcast episode, I’m talking with Phil Sanderson, the Managing Partner at Griffin Gaming Partners, a venture capital firm that focuses on investing across the broad gaming ecosystem. They announced a fund of $235 million that they will invest in game companies and related technologies around the world. I’ve known Phil for years, since he invested in my previous company Next Games. We talk about venture, how gaming has evolved and how Phil sees the recent boom and M&A activities affecting things going forward.
“Companies are trading at pretty high multiples in the public markets, and they’re being able to buy companies at lower multiples. So there’s an immediate value that’s being created because they’re trading at that same EBITDA multiple or revenue multiple. So there’s been a lot of M&A recently. But there’s also been a lot of high valuations look at Unity and Roblox and discord and other companies that are valued at eight to $40 billion and growing. So there’s a lot of stock to be able to purchase companies with.”
Listen to the episode and read the transcript by going here.
📃 Articles worth reading
+ Rethinking the Minimum Viable Product — “The Minimum Viable Product philosophy has become corrupted. We have misunderstood its intent and diluted its core elements over the years. What we are left with is a superficial term, often thrown around in conversations around product building, with little to no understanding of the underlying principles.”
+ Startup = Growth — “When I first meet founders and ask what their growth rate is, sometimes they tell me “we get about a hundred new customers a month.” That’s not a rate. What matters is not the absolute number of new customers, but the ratio of new customers to existing ones. If you’re really getting a constant number of new customers every month, you’re in trouble, because that means your growth rate is decreasing.”
+ The Pirate Problem — “My advice for the little Reddit pirates is this: do not make this a game of “we can last longer than you can, we can be dumber than you can”, and all that. It won’t work. Make this a game of, “You’re more afraid of each other than you are of us. And we know that.”
+ Guide: Building Matchmaking To Engage and Retain — “Ranking and matchmaking systems have arguably existed at least as long as many organised sports. One could even loosely understand the likes of football leagues as perpetual matchmaking systems. But it is the world of chess that has had the most influence on video game matchmaking.”
💬 Quote that I’m thinking about
”The pen is mightier than the sword.” — Edward Bulwer-Lytton
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That’s all for this week. Take care and stay safe!