One Way To Divide Your Company Equity At Start Up
Dividing your company equity at start up can be a difficult problem. Here is a method that takes a lot of the emotion out of the process.
Motivation
I stumbled across this YouTube video of Gary Vaynerchuck of Wine Library TV giving a presentation at Web 2.0 Expo. At first I just thought the guy was a dick, and he even calls himself that at one point in the presentation, but it turned out to be a fascinating 15 minutes of video. Gary essentially says what I have been saying, i.e. make sure you love what you do, work hard, and things will work out, but he says it in a much more succinct, hard edged way than I do. Check it out, and I think you will see what I mean:
-Jeff Tunnell, Game Maker
Make It Big In Games
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How Much Work Does It Take To Become A Great Game Developer?
Malcolm Gladwell, the author of best selling books such as Blink and The Tipping Point, recently released a book entitled Outliers. Gladwell’s books sell incredibly well, and I own two of them, but I have found that the premise and promise of his books is always better than the writing and delivery, which I find kind of dry and long winded. My personal opinion aside, a meme that came out of the Outliers book is the proposition that to get truly great at something takes 10,000 hours of hard work and practice, which at the full time rate of 2,080 working hours per year is five years.
I agree with Gladwell’s take on this. What? You mean it is going to take me FIVE YEARS to get good at making games? No, I’m saying it is going to take you five years to get good at what you do, but it may take much longer to really make it.
Of course, you can point to some products like iShoot, where the developer had never made a game before and is now quitting his day job due to his game’s success on the iPhone. Sure, there will be some lucky developers that break out and get a hit before they have put in their time, but those will not be the norm. Seth Godin has a good take on this, and argues that the 10,000 hours can vary depending upon the market, and smaller, newer markets are more likely to have lucky break out hits. He puts it really well with this statement:
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What Is My Game’s Sales Potential?
Make It Big In Games community member, JefferE, posted the following question in the MBG forums:
What I’ve always struggled with that I’d like to hear your slant on is how to judge if a game is worth producing. That is, you’ve got an idea, you think its a good one, but how do you go about judging the sales potential? There are very few resources that I’ve found that publish stats on game sales. For a very simple example, you’ve got a Match 3 or Hidden Object game (ala Big Fish Games style). How do you find out how much potential that has? What’s the ‘average” return on a game like that if it sells bad, good, or is a hit? Is it $1K – obviously no one would produce them, is it $10k, $50K, $100K? Basically, how do you go about figuring out if its worth even starting a project – beyond dreaming, right sizing, and just going for it?
How Much Money Your Successful Game Makes
Grand Theft Share Price, Corporate Doublespeak, pt. 2
As further evidence of my MBG post Why I Don’t Own Stock In Game Publishers, I present Take Two.
Where Your Investment Is Going
After fending off Electronic Arts’ hostile take over bid earlier this year, Take Two just announced a fourth quarter loss of $15MM, and their projected 2009 estimates have gone from a profit of $1.21 per share to $0 per share. Remember, 2008 was a GTA year, and they still lost money. What was Strauss Zelnick’s take?
“The Take-Two Chairman expressed marked concern about the economic climate, but urged investors that the company is well-positioned”
Sound familiar?
As an exercise in futility I did a few calculations to see if Zelnick was right in fending off EA’s hostile bid. Let’s see, EA offered $2 Billion in cash in March of 2008. Take Two’s ($ttwo) stock was roughly $15.85 per share before the bid, and the day of the bid, the stock shot up to $26.89, roughly the value of the offer. Zelnick, in classic Jerry Yang of Yahoo’s amazingly greedy style, said the company was worth much more. After several months of haggling, EA pulled out. Today $ttwos share price was $8.43 for a market cap of $654MM, which, for those without a calculator, is over $1.3 Billion less than the earlier ALL CASH offer.
There is no GTA coming out next year, and probably not the year after. If the $ttwo share price is worth a couple of Starbuck cappuccinos at the end of a GTA year, what will it be worth next year? Not $2BB. Good job, guys.
On the other hand, I bet EA is happy they didn’t shell out the $2BB in cash. They just announced more layoffs of up to 1,000 people and the closure of Black Box studio (plus seven others). They are going to need the money to get things turned around.
-Jeff Tunnell, Game Maker
Make It Big In Games
Photo by Jarlhelm.
Fishing Girl Is Fun
Normally I don’t refer to specific games on this blog, but I can’t help it on this one because it is fun and it is a great example of how to make money on Flash games. A few months ago Dan Cook, of Lost Garden blog fame, created all of the art and a loose design frame work for the game, and is holding a contest to see what the development community can do with the assets and idea.
Well, Andre, from developer Luna Drift, took up Dan’s challenge and made a fun game that I have spent a lot of time on. I first ran into the game on the Flash Game License site (also a 2008 Biggie Award winner for Best New Business Idea), and watched the sponsorship bids go up to $4,000. Between Mochi Ads, site ads, and sponsorships, a real Flash game monetization process is starting to emerge.
Click on the icon below to go to the Jay Is games review and play the game.
Update: I wrote this post on Friday, and now it is early Sunday morning. Dan posted the contest results last night, and Andre won the Gold Medal! Congratulations!
-Jeff Tunnell, Game Maker
Make It Big In Games
Instant Action Reaches 1MM Players
Winner of my 2008 Biggie Award for Best Future Way To Play Games, Instant Action is really starting to take off.
Check out the story here on Techcrunch: Gaming Site InstantAction On A Roll.
“For instance, InstantAction, a gaming site from IAC-owned GarageGames, has managed to cross the 1 million members mark only 9 months after we covered their launch.”
That is great news! Congratulations to the InstantAction team. Of course I have inside information that I can’t disclose, but 2009 will be a big year for this service. IA will increasingly become a great place for Indies to make money.
-Jeff Tunnell, Game Maker
Make It Big In Games
Why I Don’t Own Stock In Game Publishers
We have the biggest, most diverse world wide game market in history, but these companies are not making money. In addition, I think that these game companies are in trouble similar to industries such as music and newspapers.
Make It Big In Games New Design
Welcome to the new digs of Make It Big In Games. MBG is now running a Tim Aste design on our shiny new One Press Community (OPC) theme and WordPress 2.7. OPC is one of the first offerings of our new company, Push Button Labs. While I don’t want to announce all that it will do here, it basically turns WordPress in to a content management system (CMS) and attaches it to the popular Open Source phpBB forum system. Look for more info soon.
For those of you in a RSS reader, here is a pic of the new MBG site:
I am still learning the ins and outs of the new system, and I am sure there will be bugs because the change over was a big project. If you experience any navigation issues or have any suggestions to make the site better, please leave a note in the comments. I am pretty sure I will be changing over from Disqus to the Intense Debate commenting system that Automattic recently acquired. Disqus has made my life a lot easier since I installed it, but feel that ID will have the inside track to working better with WordPress now and in the future.
Early next week, we will be turning on the forums for MBG. My goals are to turn MBG into a destination site for game developers to learn about game development, design, business, and life style issues.
-Jeff Tunnell, Game Maker
Make It Big In Games
The Art of Backing Off
Backing down from your initial expectations for your game can be a good thing.