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EGD News #61 — Experiments

EGD News #61 — Experiments
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It’s Joakim here! Holiday greetings from Helsinki!

This is the last EGD News of 2020, and what a year we’ve all had. The COVID pandemic has changed the games industry, and 2021 will show us how permanent these changes are.

Some things are for certain. The industry has grown significantly, and we’ve created more companies and jobs, which leads to more games getting created. There’s more ingenious games that have never been seen before, new genres emerge with stellar engagement metrics, and devs have come up with new ways of marketing these games to the right audiences.

For 2021, I would want to see more innovation in areas where there is an audience need that isn’t being met. More than just building a better mousetrap that drives higher LTVs. I’m looking forward to meeting people who are going after something like this.

On to this week’s news.

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🎮 Treat everything as experiments.

I wrote this on Twitter a while ago.

“The worst enemy for failing and learning is the sunk-cost fallacy. You don’t want to give up since you’ve invested so much. How to avoid: fail fast by treating all your projects as experiments that will either work or not.”

Big projects that are too big or too great to fail are the biggest threat to our progress. I’ve built many big games in my career, where it took years to figure out if there was an audience who wanted the game.

An idea came to me as I was building Gaming Angel Fellowship this fall. I had imagined running the course on Teachable and then setting up the community on Circle. Both are quite elaborate tools that all the great content creators use for their course products, including Pat FlynnTiago Forte, and others.

What I hadn’t realized: I don’t need the most elaborate tools. I need good-enough tools. If I’m preaching a “fail fast” mentality to game developers, I need to treat my products as experiments, where I don’t know if it will work on not until it’s launched.

I finally realized that the tools won’t make a difference. I shouldn’t spend time and effort setting up the most elaborate systems to launch this “experiment”. Gaming Angel Fellowship doesn’t need to be perfect. It needs to be good enough, personal, and it needs to contain the things I wanted to communicate.

Perfection is the enemy

Perfection, out of fear of not being enough, causes lots of harm. My fault has been not treating each initiative as an experiment. I’ve been treating my work as a means to an end instead of a learning journey.

Big projects shouldn’t exist. Rather, they should be broken down into smaller experiments that prove things to allow for progress to happen on a smaller scale.

Using a hypothesis helps. To prove something. If the hypothesis doesn’t work, learn why it failed. Iterate. Come back with a further defined hypothesis.

10,000 failed experiments

The signature strength of Thomas Edison was his ability to keep at an experiment endlessly. His iterative approach of 10,000 failed attempts before the electric bulb worked was just one of the more famous ones.

From Robert Greene’s Mastery, a quote on Edison’s work: “When Edison saw his first demonstration of the electric arc light, he knew then and there that he had found the ultimate challenge and the perfect goal toward which to direct his creative energies. Figuring out how to make electric light not just a gimmick, but something that would eventually replace the gaslight, would require years of intense labor, but it would change the world like nothing else. It was the perfect riddle for him to solve.”

Looking at my role as an investor, I can now see that investing in a company is an experiment. But also, “not” investing is also an experiment. I can follow the company to develop and learn from my hypothesis:

“I shouldn’t invest into this company because Z, X and Y.”


“I should invest into this company because A, B and C.”

What perfection looks like for an angel investor? Being in every hot deal and doing everything I can to get into these deals. That’s not what I want. I want to treat more of my life as an experiment.

🤦‍♂️ When investors aren’t smart enough to ask

I often see founders twisting the reality of their startups in one way or another. In the past two years, I’ve seen a few hundred pitch decks. Here are the three most often used “tricks” that founders use.

Investors should have all the correct information to evaluate a company. Especially in follow-on rounds, if founders aren’t disclosing everything, these things can come back haunting the founders.

Team slide has people who won’t be in the team

Part-time folks are often added to pitch decks so that the team would look stronger to investors. Often, these part-time members will join full time once the investment round is closed.

Recently, I’ve seen people added to the team slide who are working at another company and are tied by non-competes and shareholder’s agreements to the other companies.

I’ve also seen consultants being added to the team slide. These people will never be joining the startup, so they should never be on the team slide.

Founders are a minority on the cap table

A startup that has pivoted a few times and has done several funding rounds might be in a position where the founders are left with a quarter of the company.

To be transparent, founders should disclose the ownership structure: how much is owned by founders, staff and existing investors, so that new investors can understand how much incentive the founders have to work hard on the company.

Not talking about risks and how things can fail.

Missing an analysis of the risks and navigating and managing those risks is the primary reason I say no to a founder. If they start by talking about the game and the market without covering the risks, I can’t read what the founders want to do if the metrics aren’t great.

Making successful games is a hits-driven process. I was recently reading Seth Godin’s new book Practice, where he wrote:

“My friend J. runs one of the most successful music labels in the world. He’s had a ton of No. 1 hits. I asked him what the hardest part of creating a hit record was. Without hesitation, he replied, “Finding good songs.” “What,” I asked, “makes a good song?” Straight-faced, he said, “It becomes a hit.””

You want to talk about the risks that you see with game development. How quickly can you get to ROAS positive user acquisition? Have you already started scaling your UA activities? What will you do next if the game fails?

Giving investors a full disclosure on your risk analysis will show how smart you are. It won’t turn anybody away from investing, whereas non-disclosure of these risks will.

📊 Most Downloaded Templates of 2020

Here are the most downloaded templates from Elite Game Developers in 2020, in the order from most downloaded to least downloaded.

  1. Cap table template
  2. Stock options template
  3. Premium PC game sales projections template
  4. Ebook: Advanced Retention Metrics
  5. Cash flow projection template
  6. Ebook: 10 questions that games investors ask
  7. Clash Royale breakdown of core and meta
  8. Investor update template
  9. Investment memo template
  10. Board meeting agenda template
  11. Convertible note
  12. Pre-mortem template
  13. Board meeting minutes template
  14. Reference checks question list

The top 3 templates got the most exposure since I believe that founders didn’t really have these kinds of tools previously, but they were thinking about how to solve these.

Here are some additional thoughts on the top templates of 2020.

I’m most proud of the convertible note template since it can have the most lasting effect on the company landscape, as with a convertible note, the founders can more effectively raise their first rounds. Less paperwork, more work done on games.

The most work went into crafting the advanced retention metrics eBook. I’m planning on more gameplay and player goals related content for 2021, so watch out for that coming soon.

The one that I’d want to see higher in the downloads since I believe it’s so important, is the cash flow projection template. I believe that It’s the most valuable tool for a startup since the startup stays alive according to a well-managed runway.

🎙 Podcast: Uri Marchand, Overwolf

In this new episode, I’m talking with Uri Marchand, the Co-Founder and CEO of Overwolf, from Tel Aviv, Israel. Uri and his team started building tools for creators to build apps around games like League of Legends back in the early 2010s. Through the years, Uri and his team have built a company that truly enables gaming creators to create, grow and monetize their content.

“We want to build a great organisation. And we want to build an organisation that is the best place to come to every morning, and to do your best, and to fulfil your professional destiny. And to make sure you’re not wasting your time. But you’re contributing from yourself to the world, to your community, to the company and yourself.”

Listen to the full episode here.

📃 Articles Worth Reading

Sweden Gaming Stocks Crowned Lockdown Winners, With More to Come — “Still, with growth rates for the industry set to return back to normalized levels later in 2021 and valuations near all-time peaks, “there’s little room for error in terms of execution to meet elevated expectations,” Bloomberg Intelligence’s Kanterman said.”

What Arcades Can Teach Us About Monetizing Engagement — “In content-driven games, everybody can play the game. That’s why mobile games must actively design their monetization around this fragmentation, and provide valuable and rewarding content players can spend to engage with. Because everybody can play for free, to be compelling monetization must be mostly about selling a different form of engagement.”

The Observer Effect – Tobi Lütke — “I started a company because I love learning. I went into programming because I found it fascinating. During meetings, I just love to hear the things that teams have discovered. When you’re discussing an idea or a decision, I want to know what has been considered. To be honest, I find myself more interested in the inputs of an idea than the actual decision. I say this because when I have my own ideas, the first thing I tend to do is just try to falsify them, to figure out why what I’m thinking about is probably incorrect.”

Why Content Is King — “Content can be infinitely copied and distributed for free. There are basically no variable costs — it’s all fixed. This creates a situation where scale economies rule the day. The bigger you get, the more you can invest in creating ever higher-quality content. And the better your content, the more cash it generates, the more you can reinvest to increase the quantity and quality of your output. It’s a positive feedback loop.”

💬 Quote That I’ve Been Thinking About

“It costs nothing to ask a successful person how they succeeded, but it may deliver more value than 1,000 hours of hard work. Others are under no obligation to tell you their secrets, but it is surprising how much you can learn from sincere, direct, and thoughtful questions.”

— James Clear


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.

Note! You get a free video with the purchase of 4 or more videos. Remember to say that Elite Game Developers sent you!

Go to www.getigc.com to see some examples and get more information.

That’s all for this week. Take care and stay safe!