Sent on November 11th, 2022.
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I recently read Mindset by Carol Dweck. The book talks about the growth mindset, where individuals thrive on learning. Not only from observations in life, reading books, and studying, but from challenging situations and using failure as the means to develop.
When I started Elite Game Developers in 2019, I felt challenged by many new things—publishing a podcast, writing a newsletter, and sharing my thoughts. But this was just the start.
In 2022, I’ve noticed that sharing feedback and receiving and reacting to feedback have driven my development.
In Bandersnatch, author Diana Pavlac Glyer talks about how J.R.R. Tolkien and C.S. Lewis used their relationship to share feedback on their writing candidly. The praise, encouragement, and criticism led to both authors putting out works with immense appeal worldwide.
Tolkien explains that when he produced text that was not up to par, Lewis would turn to him and say, “You can do better than that. Better, Tolkien, please!” Tolkien writes, “I would try. I’d sit down and write the section over and over.” Lewis admits that his part in Tolkien’s writing process often carried to the point of nagging.— Bandersnatch, by Diana Pavlac Glyer
As an investor, I’m constantly working with several startups. I’m asserting myself as Lewis, them as Tolkien.
I have the benefit of being in startups for twenty years and having seen situations develop, both in my companies and those where I’ve been an investor. Sharing those experiences helps to paint the picture of what might happen if the founders aren’t on top of things.
What is the most common sign of concern? No sense of urgency. As you attempt to grow the company, the startup modus operandi should be a sense of urgency.
Example: I’d give feedback on the latest pitch to raise the next round. I’d observe, then point out the team’s inaction in an uncertain situation, highlighting what might happen to the company if things don’t change.
When it comes to taking action on feedback, many first-time founders struggle, even when they’ve embraced feedback as a great tool, even when they’re framing the feedback through the growth mindset lens.
Why is reacting to feedback so hard?
Marshall Goldsmith, in his latest book, The Earned Life, describes loss aversion as an impulse to avoid risky paths and sticking to things that aren’t working:
Loss aversion—our impulse to avoid a loss is greater than our desire to acquire an equivalent gain. We are willing to pay the price when there’s a high probability that our efforts will succeed but far less eager when the probability is low. We want certainty that our effort and sacrifice will not be in vain.— From The Earned Life
The key here is the need for certainty, which blocks people from taking risks.
Example: You have a game you’ve been developing for three years, but the DAU is stuck. There’s been no growth for months, and decline is more certain than growth. Loss aversion comes from killing your darling, which still is a product that has users. In contrast, the certainty of a new project isn’t there.
When I had my first startup, we had been working on the same game for four years before we pivoted. Why did it take so long?
We had launched early, six months into development, and were doing everything right. But then we got stuck at a few thousand daily actives for three years.
One issue was that no one had shined a light on how things weren’t working and that it would be OK to kill the game.
Four years into the project, we got the feedback we needed. One of our investors said, “It was a good run. Aren’t there better opportunities out there?” Six months later, we had completed the pivot and had a new growing game on a new platform.
Without the feedback, we would not have contemplated a pivot. There was no reward for killing the game. The knowledge of starting from scratch felt painful.
A pivot requires a leap of faith. The feedback encouraged us to take that leap of faith.
Zero-sum world view
The concept of zero-sum means that there’s a winner and a loser or that you can only have one or the other. But not both.
Example: You have a live game that isn’t going well, but you don’t dare to put a few people to ideate something new, something that could lead to new business. You imagine that it’s a zero-sum situation where it’s one or the other.
Do you know how Twitch got started? JustinTV founders decided not to fall into a zero-sum game. They formed several new projects, and one of these became Twitch. They dared to do new things.
From Bessemer’s investment memo on funding Twitch:
[Twitch] was originally founded as Justin.tv in 2006 by Emmett Shear, Justin Kan, Michael Seibel, and Kyle Vogt. Justin.tv allowed consumers to stream live video from their webcams to the Justin.tv destination site. In January 2011, the company started two “skunkworks” projects in an attempt to pivot to a better business. CEO Michael Siebel launched Justin.tv mobile, and CTO Emmett Shear launched Justin.tv gaming.
Surprisingly, both showed early signs of success, and the respective teams wanted to continue pursuing the opportunities they were working on. As a result, the company spun out Justin.tv mobile as Socialcam earlier this year. Justin.tv gaming was renamed Twitch.tv and became the sole focus of the remaining company.— From Bessemer’s investment memo
Without the pivot into these different directions, Twitch would not exist today. The founders knew they’d have to get rid of Justin.tv and throw away five years of work. They made it work because they had several branches, and one paid off immensely.
Stepping out of comfort zone
Thinking about a pivot can be uncomfortable. You’re avoiding confrontation. It’s hard to think about anything new because you’ve pitched something specific to your investors. Can you bring up a pivot three, six, or nine months into the development? “We are going to change course.”
Tied with loss aversion, short-term sacrifice, zero-sum mentality, and opportunity cost problems, you don’t want to talk about these problems with your team, and definitely not with the investors.
The best way to leave all these behind and develop yourself is to ask for feedback. Invite candid, honest feedback from your investors. Ask them to share your shortcomings so that you can evolve as a founder.