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EGD News #136 — Freshman teams and senior teams

EGD News #136 — Freshman teams and senior teams

Sent on May 27th, 2022.

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Miska from Deconstructor of Fun recently did an interview with Jon Lai, General Partner at VC firm a16z. They’ve just announced a new $600 million gaming fund, to invest in gaming studios, player communities and infrastructure.

In the interview, Miska asked Jon about how they evaluate teams at a16z.

How do you really evaluate the founding team? This is something that rarely funds talk about. They just say we invest in great founders. What makes a great founder?

I’ve been talking about founding teams previously on the newsletter, on how a B-team can raise funding and having the “right people on the bus.”

In the following piece, I’ll go through what Jon said and share my thoughts on founders in gaming. Jon says that they use a framework where they place founding teams in camps of “freshman teams” and “senior teams”. Both can be successful at raising funding, but there’s certain characteristics that help a16z to evaluate the teams.

This is what Jon said:

What we look for in freshman teams, highlighting two things:

First, super high hustle and velocity. They will make mistakes because it’s their first startup, it’s their first game, but we’re counting on their ability to learn quickly and unblock themselves. Can they stretch a single round of funding? Having multiple prototypes and “swings at bat,” before they get it right. We’re looking for a team that has been scrappy, being able to hack together something and to be able to move quickly.

Since I started investing, I’ve observed that the most crucial aspect for any founder is being a learning machine. They should be treating everything they do as experiments and being willing to be proved wrong.

A lot of what goes into startups is preparation and understanding the market. You start with an idea for a game, but that game can never become a success without understanding everything that contributes to the success or failure of games in that particular genre. What does the audience want, and how do you find them, etc. Then you work on proving that you’ve identified the actual audience and that the audience wants what you are building.

It’s a lot of hypotheses that need to be proven, so you might as well treat them as experiments where you need to confirm those hypotheses.

Jon continues on freshmen:

Second, their ability to recruit. Recruiting has traditionally been the biggest challenge for first-time founders. You have to convince people who are way more qualified than you to come work for you. So the question that I always ask myself as I’m meeting a freshmen team for the first time is could this founder convince a Sheryl Sandberg caliber executive to come work for them down to road? And at the answer thought it’s no, what do they need to do in order to get there? And then do I believe that can happen?

Hiring is hard, and I haven’t seen many freshmen teams being the best at hiring. But hiring is the most critical work for the founding team. Founders need to staff up to make great things. You can do a lot with ten people, but you can’t do much with only two or three.

I’ve seen several founders escape the hiring problems by giving away equity for the first employees. It makes sense to know that the employees are actually incentivized by equity in those cases. You might as well ask if they have always wanted to become a co-founder and evaluate if you’d like to bring on co-founders who have small equity stakes.

I’ve seen several teams in gaming who bring on seven or eight co-founders, and they give 6% to 4% to the last two or three co-founders. Titles are cheap, and in the early days, equity is also cheap—as long as the incentives are the right ones.

Jon continued on senior teams:

What we look for in a senior team, here I’m highlighting two of them:

First, are they open to learning new things? Are they stuck running the same playbook? If you previously built a AAA console game, are you opened the building for mobile? And how current are you in you’re thinking? Have you played all of the modern games, i.e. what the kids today are playing? Have you played Among Us, Fall Guys Gentian Impact, etc.?

The problem extends beyond the games you know. The issue could be that you’ve been working on the same gaming platform for your whole career. For example, mobile games have been a “red ocean” for quite some time. Now that we are experiencing the aftermath of IDFA deprecation through increasing UA problems, that should make you think.

Not only should you consider your options but to consider what you’ve learned. Are there things that you could use to go after new opportunities on new platforms?

What Jon is saying reminded me of something that VC Keith Rabois said a while ago on a podcast:

I almost never, both as an angel investor for 13 years and now as a VC investor for seven, have I funded somebody with domain expertise. I believe people with domain expertise basically have learned “what you can’t do”, not “what you could do.”

Gaming is ever-changing. Facebook social games emerged in 2007 and peaked with Zynga’s CityVille having 100 million monthly actives in early 2011. The platform went away gradually in 2012 and 2013, as people started moving their consumption to mobile games. Now the question for seniors is, are we seeing another platform shift? Maybe not, but are you open to exploring better opportunities?

Jon continues on senior teams:

Second, can you adapt the constraints in a startup? Many of these folks come from companies with unlimited resources. Can you go from that to being scrappy, where you have to watch each check that you’re writing, where you have to take a huge pay cut? And then how long is the timeline? Like how quickly can they build? Do you have a plan to acquire your first one million users? You no longer work at a company where you have built-in distribution—you’ve launched a thing and immediately a million people show up.

It’s not only financial but mental constraints. For example, when you are running low on capital with the combination of caring for people—many people will get crushed by the brutal situation of money running out.

I’ve gone through this situation in 2011: I had the option of laying off most of the people and keeping just a few people in the company. That would have extended the runway to 12 months, and then being able to try another idea still to make it work and then find an investment. But I couldn’t do it. I was so crushed mentally.

That’s one of the reasons why I created Elite Game Developers so that founders wouldn’t need to learn everything the hard way as I did.


The interview has more interesting stuff covered. You can go and listen to it on Spotify or on other podcast services. Also, I’ve previously written about a16z and their gaming efforts, which you can read here.

Get my book, “Long Term Game: How to build a video games company” from Amazon. Available on Kindle, audiobook and paperback. Check it out!

Derek Lau — Building Guild of Guardians

In the latest podcast episode, I have Derek Lau (LinkedInTwitter) from Immutable, talking about his journey into web3 gaming and how they are building the blockchain game Guild of Guardians at his company Immutable.

Guild of Guardians is a mobile RPG where players can turn their gaming passion into assets. Once launched, the game is a multiplayer fantasy action RPG game, where players build their dream team of ‘Guardians’ and compete in a guild to earn rewards.

In this discussion, we talk about Derek’s beliefs in crypto, why blockchain makes sense for the future of gaming, and what game developers could do to attract the masses into web3 gaming.

Listen to the full episode by going here.

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The future of game design: In-game Personalization — “The people who pay even a little bit are the ones who understand your game and really appreciate it. They will stay and play over time, for sure. It’s brilliant to imagine a future with games that are able to adapt to the type of audience.”

Addicted to Speed — “We used to call this FOMO, but the new popular lens for these addictions is that our dopamine system is overtaxed. We get a little hit of dopamine whenever we open Twitter or Instagram because we don’t know what exciting new things we’ll discover, and as the rat at the cocaine pellet dispenser, we keep going back for more.”

Quote that I’ve been thinking about

“We divide business plans into three categories: candy, vitamins, and painkillers. We throw away the candy. We look at vitamins. We really like painkillers. We especially like addictive painkillers!”

— Kevin Fong, Mayfield VC

Sponsored by Audiomob

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I hope you have a great weekend!