From Bungie to Bootstrapping

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					From Bungie to Bootstrapping


                               March 25, 2009

bootstrapping [ büt stràpping ] Building a business
out of very little or virtually nothing.
                 My Background

 Mid-90’s – tried to start a game company in college
              Goblin Games (R.I.P.)

 Summer between college semesters
 Me and one of my roommates
 Invested $3,000 of my own savings
 Paid ourselves hourly minimum wage
 Arcade-style space combat game for the Mac
 Lasted just a couple months
 Created the shell interface, one 3D model, and a
  broken audio system
 Decided I had to get a real job
                     My Background

 Mid-90’s – tried to start a game company in college
 Helped Aspyr get started
 Got hired by Bungie
   Hired as Webmaster and Graphic Designer
   Experienced all aspects of marketing and publishing
   Started designing interface for Myth games
   Managed online community
   Acquired by Microsoft
   Founded Bungie’s Community team
   Multiplayer and online lead for Halo 2 and Halo 3

 Founded Certain Affinity
Mission     “Create a hybrid Halo/WoW killer,
Statement   sell it to the mafia, retire to a villa
            in the Swiss Alps.”
Mission     “Become an independent
Statement   developer with a reputation for
            creating high quality games and
            original IP.”
                         Certain Affinity

 2.5 years old
     Founded in October, 2006
     Austin, Texas
 Independently owned
     S Corporation
     $80,000 initial investment
 29 full time employees
     Started with 9 developers
 4 credited releases
     1 multiplayer map pack
     1 downloadable title for XBLA, PSN, and Windows
     Contributed to 2 full retail titles
Certain Affinity’s Game Credits
                    Success Metrics

Accomplished                 Work in Progress

 Independent developer       Financial
 Strong business             independence
 Reputation for quality
  work and delivery
 Intellectual property
Lessons Learned and Unexpected Challenges

 We’ve done a lot of things right, but…
 We have not yet achieved financial
 Work for hire business model makes this difficult
 We’ve learned the most lessons about team building
  and business relationships
 Economy also poses challenges
Business Sense
         Work for Hire Business Model

Profit Potential        Profit Consumption

 Publishers are         Not all staff engaged
 generally happy if      Downtime between
 you’re making 20%        projects
 profit                  Sick leave, vacation
                          and comp time
                         Development of own IP
                          and pitch materials
                  Not Enough Margin

 Breaking even with “20% profit” is doing well!
 Bootstrappers need a lucky break in order to have
 financial reserves
    Long term steady work
    Bonus or royalties
    Outside investment
    Lottery proceeds
 Cost control is absolutely essential
   Keep your overhead low

   Focus on doing what you do best
Certain Affinity 2008 Expense Breakdown

                                            Overhead Expenses


                      Employee Expenses

    Cost control. Just 10% of our total expenses are for operating costs.
Development & Support Staff Over Time








     1   2   3    4   5   6   7   8   9   10 11   12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

                 Keeping it lean. Majority of our employees are development staff.
         Business Support Relationships

Internal Functions         External Functions

 Software development      Publishing
 Dev support and IT        Business development
 Outsourcing               Benefits and HR
    management                 consulting
                              Accounting and payroll
   Recruiting
                              Retirement planning
   Self promotion
                              Insurance agent
   Community management      Attorney
   Vendor management         Real estate agent
                Finding Good Support

 Learn what to do in-house vs. external
   Unless you’re an expert in employment law, income tax, etc.,
    get help from someone who is
 Ask other developers for references
 Business people know business people
Team Building
                   Team Building

Lessons learned               What we’ve done well

 Not everyone is fit for a    Maintain high quality
  startup                       standards
 Don’t take shortcuts in      Hire experienced
  hiring                        developers
 Watch group dynamics         No communication
 Know when to let go           barriers
              Team Building: Lesson #1

 Not everyone is fit for a startup
   Talent doesn’t equal business maturity

   Previous startup experience is a definite plus

   People willing to take personal risk can help you get off to a
    good start
   Look for people that always give 100%
             Team Building: Lesson #2

 Don’t take shortcuts in hiring
   Establish a strong process for screening candidates

   Don’t bypass process due to existing relationships

   Don’t lower quality standards due to pressing needs
             Team Building: Lesson #3

 Watch group dynamics
   Smaller the team more critical the dynamics

   Leadership team dynamics are especially important

   Get leads on the same page before communicating with team

   Trusted advisors can convey the feelings of the team
             Team Building: Lesson #4

 Know when to let go
   Recognize when the risks of retaining a problem employee
    outweigh the benefits
   Act quickly and decisively to remedy this situation

   Make sure the company is protected

   Communicate with the team so the lessons aren’t lost and
    you’re not sowing fear
    Team Building: What We’ve Done Well

 Maintain high quality standards
   Set a high bar for candidates from day one

   Communicate quality bar to everyone involved

   Expect high standards regardless of role

   Personally meet and approve all hires

   Trust your gut
    Team Building: What We’ve Done Well

 Hire experienced developers
   Need a good mix of experience and fresh perspective

   Lean towards experience early on

   Fill leadership positions with experienced people

   Experience with failure and success are both valuable
                         CA Developer Experience

                                          All Staff   Leads









                Less than 5 years   5-9 years                 10-14 years   15+ years
                                       Development Experience
    Team Building: What We’ve Done Well

 No communication barriers
   Everyone’s voice matters

   Pay careful attention to who’s sitting where and next to whom

   Open office layout solves problems for you

   Don’t separate yourself from the team
Open Office Layout
Business Relationships
             Business Relationships

Lessons learned           What we’ve done well

 Myth of long term        Follow through on
  relationships             commitments
 The speed of business    Don’t waste other
 Your own best             people’s money
  representative           Don’t put all your eggs
                            in one basket
        Business Relationships: Lesson #1

 Myth of long term relationships
   Hard to get steady work from even the best partners

   Publisher interest waxes and wanes based on their own
    circumstances and priorities
   Factors external to your relationship can stall decision making
    (budget cuts, reorganization, mergers, etc.)
       Business Relationships: Lesson #2

 The speed of business
   Contracts and negotiations take a very long time to complete

   Likely you’ll start working without a full contract in place

   Don’t rely on getting paid on time; have a backup plan
       Business Relationships: Lesson #3

 Your own best representative
   Early on expect to spend half your time running the company

   Expect to spend the other half generating new business

   Avoid being critical path on development

   Know when it’s time to get help

   Hire people that you can delegate to with confidence
 Business Relationships: What We’ve Done Well

 Follow through on commitments
   Don’t commit without consent from your leads

   Diligently work towards meeting deadlines

   Always meet or exceed the expected quality bar

   Communicate frequently and proactively with partners

   Admit when you make mistakes and remedy them, even if it’s
    on your own dime
 Business Relationships: What We’ve Done Well

 Don’t waste other people’s money
   Publishers want to work with stable developers

   Even the most well-off partners respect tight cost control

   Everything makes an impression, from office space to your
    personal automobile
First Office, Exterior
First Office, Server Room/Kitchen
First Office, Security Guard

                           security is
                           sure hard
 Business Relationships: What We’ve Done Well

 Don’t put all your eggs in one basket
   Even the best partners can disappear at crucial times

   Multiple projects can be a lifeline, but are difficult to manage

   Multiple projects require stellar production management and
    enough leads to go around
 The New Economy

        Challenges in The New Economy

 Increased competition
   More developers willing to do work for hire

   Developers willing to work for less

   Startups forming from layed-off employees

   Publishers offloading games and even entire teams
         Challenges in The New Economy

 Everyone is trying to reduce risk
   Budgets are tight

   Most publishers are cutting back external spending

   Publishers more likely to cut losses, cancel projects

   Fewer publishers taking chances on new IP
            Benefits of the New Economy

 Best time to be hiring
   Lots of great talent looking for a home

   Fewer illusions about stability of large corporations
           Benefits of the New Economy

 Natural selection
   Those that survive will be stronger for it

   Better business practices will make the industry stronger
           Benefits of the New Economy

 New IP for the win
   Entertainment can’t be solely sequel-driven

   Strong new IP will be valuable in the future