It is commonly claimed that new companies go bust within the first three years. After the journey I have taken, it’s easy to see why. Remode, the studio I started, has now been in business for five years.
It’s only at the end of the five years that we have gone profitable with a 12.5 per cent net margin and a team of 18. We are able to capitalise on the momentum in online and mobile games. While some might say that this is lucky, the reality is that it has involved a hell of a lot of blood, sweat and tears.
This very personal, as well as a business victory is also a reminder of the fact that we are not a start-up anymore, and that has given me a chance to reflect on those critical first three years.
Starting a company and keeping it going onwards and upwards is hard. Really, really, hard. I’m a big believer in the fact that it’s easy to sit there and talk about the way things should be, but actually getting out there and proving it is a million times more difficult.
This general mantra is nothing new. The question remain; why is setting up your own studio so tough? I’ve been working up a theory as to why all this is so difficult. I think a large facet of it is that it’s full of contradictions that defy natural human bias towards black and white thinking.
For most start-ups – the phenomenal unpredicted successes like Mojang and Minecraft withstanding – it is difficult to weather the range of problems and setbacks that come with any growing business. For four of the five years my head has been spinning, but now I feel stronger for it.
These contradictions are like rocks just under or above the ocean surface, and the start-up as a ship on a stormy sea. If you navigate around them you survive, but it is very easy to be wrecked by obstacles you don’t realise were there until it is too late.
CONTRADICTION 1: YOU CAN’T DO THE WORK, BUT YOU MUST DO THE WORK
One of the first things I was told in business is that you must have at least one person looking outwards at all times, forging networks, assessing what is going on in the market, building awareness and signing deals. This is extremely difficult when there are only a few of you and there are jobs to be done and products to be made.
What that means is that one person can often be covering both roles, which can add lots of hours, stress and unknowns.
The problems can get worse when this splits full time. If developers begin to disrespect sales as ‘schmoozing’ and ‘not real work’, and sales end up resenting developers as ‘introverts who don’t understand the world’. It sounds stupid, and truthfully it is, but this is the sort of thinking that a pressure cooker start-up environment – in which tangiable results are not yet evident – can create.
Whatever you do, don’t simply sit there and make a game. Whatever you do, don’t try and ride the tech gravy train if you don’t truly understand it. It’s a difficult balance.
CONTRADICTION 2: YOU NEED A FOCUSED OFFERING, BUT YOU MUST CAST A WIDE NET
I’ve read business textbooks and spoken to many people who all say the same thing: be specific or you won’t send out the right message to the market.
In reality it is very difficult to know where to draw the line, and everyone would draw it in a slightly different place. What I found is that in the beginning you are best off doing whatever it takes to bring in revenues, and then move towards your goal.
Pivot, and the market should be the one sending you the message.
In the early years I worried about this balance constantly, and about whether or not we would be seen in the right light. In 2007 and 2008 it felt like journalists were on a constant mission to homogenise the industry.
Experience now tells me that the start-up period is actually about figuring this out. From what I have seen, unless you experience an extraordinary take-off – which is not common – then, more often than not, history will forget the start-up phase. However this also means that if you are more than three years old and are still the same jack-of-all-trades you were in the beginning, then you probably have a problem.
CONTRADICTION 3: YOU MUST BE OBJECTIVE, BUT YOU MUST HAVE COMPLETE EMPATHY
It goes without saying that to endure life as head of a business you need to think as rationally as possible. That does not mean you are not human and you won’t get frustrated like everyone else.
What it does mean is that you need to be able to draw conclusions based on supporting evidence, rather than forming an opinion and then looking for any evidence you can to support it; that’s the way of dramatic soap opera-thinking.
It’s a fine line and the better you are at it, the more emotionally disengaged you can appear. However, the irony is that you need to be more empathetic and in tune with your emotions than ever.
This is because a company is built on people and those at the coalface need to know you understand their challenges in order to improve process and management. This doesn’t mean you cross certain lines, but it does mean that you need to be logical without being a robot. It’s much harder than it sounds.
CONTRADICTION 4: IT IS NOT ABOUT THE PRODUCT, BUT IT IS ABOUT THE PRODUCT
Games businesses have a consistent problem created by the ‘hit-driven’ nature of entertainment. The company rarely takes off and makes huge profits until a hit has been created, but VCs and other equity investors are not interested in the product.
They see it as a given that you can make a good product and want to understand why the market needs this company, and how it can become a key player within it.
It can be a very difficult problem to overcome, leading to either a disagreement if negotiations go badly or a big elephant in the room if negotiations go OK.
There is no right or wrong answer here, as every company is different, but I would say that thinking about how you are diversifying risk is a key point.
Tadhg Kelly has written more about this at whatgamesare.com.
A SERIOUS BUSINESS
If you are serious about growing a start-up, then try to find a balance between these variables. Expect to have to become who you need to be to deal with it. If you get past the start-up phase, then the real work begins.
This feature was published in Develop #136, March 2013