EGD News #48 — Envy, Circle of Competence and more
It’s Joakim here. Greetings from Helsinki! I’ve spent the week writing material for the blog and for the new gaming angel fellowship.
Here are a few quick updates:
- On October 8th, I’m doing a webinar panel with Anton Gorodetsky and Sergei Evdokimov from InvestGame, Micha Katz from Aream & Co., and Michail Katkoff from Deconstructor of Fun. We’re doing a deep dive into gaming investments and M&A. Register to the webinar by going here.
- I’m doing the keynote at the IGDA Leadership Day. You can register for that event on their website. The date and time are Monday, Sept 28th at 9:00 am CET.
- Next week, I, Abhimanyu Kumar, and Aaron Bush are posting a massive article on Stillfront Group, who’s been the rocket ship of the games industry for a while now. The article will be shared on Elite Game Developers and on Manyu’s and Aaron’s site Master the Meta.
- Related to the Stillfront article, on Monday I’m releasing a podcast where I interview Stillfront Group’s founder and CEO Jörgen Larsson. Watch out for that mega episode when it lands on Monday morning.
On to this week’s news.
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When I was building games companies, I could suffer from envy bolts when seeing someone raise tens of millions in funding or when someone sold their company for hundreds of millions.
At first, it wasn’t a bitter feeling of envy. Instead, it drove me to try harder.
Then, as I’d try hard but not get where I wanted, the emotions of envy got worse. I could think about some funding or exit news from a fellow startup for an entire week until the source of this envy became a part of my reality.
Finally, after years of trying, after putting out my own ”good news” from time to time, I’d been pulled away from the realm of envy. Good fortunes for other game developers didn’t cause me to feel envy anymore, because I knew how hard it was to succeed in gaming.
Now, in 2020, I don’t have an appetite to start another game company. I’ve done it and got the t-shirt. I can genuinely be happy for others and their successes. I can see that failure and success come from skill, timing, and luck. Or from the lack of them. Some fare better than others. There’s not a lot of reason for envy.
One way to work with emotions is to have a side project. Here are 6 reasons why founders should have side projects.
⌾ Circle of Competence
Your circle of competence is the area that matches your skills and expertise.
Berkshire Hathaway Chairman and CEO Warren Buffett explains the importance of knowing your strengths and being successful in knowing your circle of competence.
“Can you tell what’s in the box of [knowable and important] and what isn’t in that box? That’s what I call knowing your circle of competence. And my circle of competence doesn’t include the ability to predict interest rates a day from now or a year from now or five years from now. So I say can I function without knowing that same way as predicting what businesses going to do or the stock market’s going to do? I can’t do any of those things. But that doesn’t mean I can’t do well investing over time.”
In gaming, we have our circle of competence in the games we’ve built and the games we’ve shipped to players. As game developers, in the last ten years, our circle of competence has increased to include live operations, knowing user acquisition, interpreting data analysis on how thousands of players are engaging with our games.
Investors have spent years learning from their portfolio companies what a great company looks like, which increases their odds of succeeding in gaming. As they see, follow, and invest in more companies, they can accumulate knowledge inside their circle of competence.
When you plan to build a new kind of game, in a sub-genre you aren’t totally familiar with, you need to notice that you are stepping outside of your circle of competence. It’s imperative to know where the circle ends and never be afraid to say “I don’t know.”
How does this help with startups? When you are stepping outside of the circle of competence, do it knowingly. Bring in people who can help you make the right decisions, to extend the team’s circle.
If you still aren’t sure, the Buffett way is to fall back to a no.
🏡 Taking over a gaming genre
In the last seven days, two Finnish mobile gaming studios have launched merge games, Merge Mansion from Metacore and Merge Garden from Futureplay Games. Both companies are similar in culture, and they have lots of similarities in the team’s background, from where they’ve worked before.
Both games look gorgeous and they will most likely do well.
That got me thinking about an audience space. What would be the next great game for that audience? What would the Merge players play, and how could a game developer expand the total addressable market for those kinds of games?
An approach for entering into an existing genre and doing well:
Consistency helps. Putting out several games in a genre and building your audience inside a genre is one approach. But you end up with a chicken and an egg problem because you need quality games to actually keep up a brand in the consumer’s mind.
To nurture the brand means that they’re not putting out half-assed games. The only way to build a brand is through quality, but that takes time. Often it takes years to make a cool game. One that works, and that’s been tested well and that is of the highest quality.
And it still might fail, and then you need to start again. If you put out the game every three years, the brand could start deteriorating. And if you want to ship something quickly, it’s not going to be elevating your brand.
Once a company has a foundation with one or two games for a similar audience, they should put out games that expand the audience, bringing in even more people and more gamers who will love those kinds of games.
Expansion doesn’t always work. Space Ape Games wanted to be the dominant games company in the build-and-battle genre, dominated by Clash of Clans. But the switching costs of the core audience of Clash of Clans, to move over to another game which didn’t provide an order of magnitude better experience, were too high. The dynamics are different for i.e. casual match-3, where we’ve seen dozens of games survive in the top 200 lists. A similar dynamic might exist in Merge games.
🎳 The B-team
I believe that startup teams need to assess what stage they are at, in order to know if they are eligible for investment. Here are my thoughts on evaluating a startup team as an angel investor. I think that teams, and how they think and operate, is a bigger indicator of funding readiness in the early stages than any business idea.
— What makes a gaming startup ready for an investment?
🎙 Pitching over video calls
In August of 2020, I did a webinar with the UK’s Department for International Trade as part of a virtual Northern Powerhouse trade mission to Gamescom and Devcom, on the topic of best practices for video pitching.
In this lecture, I talk about how you can get the most out of the pitching video call, what kind of setup you should have and most importantly, how to have an organic discussion with your call participants.
Listen to the full episode here.
🗓 Last week
If you missed out on the EGD news last week, I talked about how you’re never too old to start a games company, and why age actually brings benefits for being an entrepreneur in gaming.
— EGD News #47 — You’re never too old to start a games company
📃 Articles worth reading
+ Mediatonic made 130 games before Fall Guys — “It was easier to pivot and change direction because we weren’t locked into a three or four-year development cycle and we could keep pace with things. But generally speaking, it’s been quite deliberate in terms of the way that we’ve built the company. One of the things that we’ve really, always tried to bear in mind is building the company around sustainability and longevity.”
+ Guide to UA: Modelling Cashflow for Rapid Growth — “Short of having access to a towering personal fortune, you will have to think carefully about how you fund your UA. A large number of mobile companies will use a combination of equity funding and debt funding.”
+ Are Founders Allowed to Lie? — “You probably don’t call it lying, but founders have to will an unlikely future into existence. To build confidence in everyone around you – investors, customers, employees, partners – sometimes you have to paint a picture of how unstoppable you are, or how your duct tape and Mechanical Turk tech stack is scaling beautifully, or tell a few “pre-truths” about your progress.”
💬 Quote that I’m thinking about
“Be more concerned with your character than with your reputation, for your character is what you are, while your reputation is merely what others think you are.” — Dale Carnegie
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.
Go to www.getigc.com to see some examples and get more information.
One quick word before I leave you. The Finnish Games Career Day is happening soon. The job fair for Games industry professionals is now open for applications! If you have been thinking about changing your job or exploring new opportunities then, Finnish Games Career Day is the place to be! It’s an online and interactive event where you can meet some of the leading Finnish games studios, explore multiple open positions, and network with game developers from all over the world! Check it out here.
That’s all for this week. Take care and stay safe!
Previous EGD News
- EGD News #47 — You’re never too old to start a games company
- EGD News #46 — Elevating game developers