Investing in the games industry @ a16z Games, Program Lead @ SPEEDRUN
A big reason Zynga produced so many strong games founders & execs is bc game teams were trained to act like startups 1. New teams had to raise money VC style 2. Monthly board meetings for accountability 3. Outsized rewards for success Here's what each tactic taught our teams: 1/ New game teams were asked to match their dev milestones to VC-style funding rounds and pitch to senior leaders Concept --> Pre-Production --> Production --> Soft Launch --> Launch --> Live Ops Bootstrap --> Angel/Pre-seed --> Seed --> Series A --> Series B --> Growth To take an example, at concept teams were asked to do paper prototyping and come up with rough plans around audience, game, art style, etc. This didn't require more than 2-3 founders that honed an idea while working their day jobs. So no funding yet. If the concept got "funded" they would get a "pre-seed" level commitment. Enough to fund a small team (up to 5 people) for a short time (around 6 months) to get to a seed pitch to fund production Just like at a startup, early rounds of pitch decks were focused on the team's background and the size of the prize. Later rounds were focused on execution and especially metrics (where available) 2/ Founders coming out of Zynga are well-prepared on how to fund their startups because they've already gotten reps pitching to leaders across the company Founders coming out of Zynga are also well-prepared for board meetings Team leads were asked to prepare monthly board updates to the CEO, President, COO, and CPO and could expect to be held accountable to their prior updates, team health (including hiring), metrics, etc. These updates were lightly templatized as PPP updates - "People, Product, Process", a template commonly (and effectively) used by founders in investor updates 3/ Finally, Zynga did a great job in giving outsized rewards to celebrate power-law outcomes Each quarter the company awarded a single employee a $100K "Spirit Award" for delivering outstanding impact. Spirit Award winners were also given Mark Pincus' Tesla for the quarter. Another example - when Zynga Poker's team hit an important (and very large) revenue milestone the team was loaded up on a charter plane the next morning for a day trip to Vegas for lunch and some celebratory poker Zynga trained its game teams on how to pitch, how to manage investors, and how to aim for outsized returns. Those practices will have a lasting impact on the games industry via Zynga alum well beyond any of its games. #gamedevelopment #startupfunding #founders
Paolo Abela
1y
This is a great example on how companies can benefit from embracing the enterpreneurial mindset of their employees. Zynga did the extra mile by not only embracing it, but also fostering it with incentives based on outcomes. What a win-win strategy! Joshua, being an investor yourself, what do you think Zynga could have done better? If you had been in charge of setting up this pipeline, what would have you done differently?
The Zynga model was/is a nice foundation to have, especially for green lighting projects and getting funding. Zynga has spawned many great founders since. Our process at Kabam in the 2010s was quite similar in nature to Zynga’s with similar people/mindset, and has since also spawned solid founders and execs across gaming and tech. Of course in a hit-driven space like gaming nothing can guarantee success, but it definitely improves the likelihood. I tend to think people & mindset are still the most important success drivers, though process can set the right people up to shine more clearly.
it was best place to learn how to grow products/games once they are working in small setup but not to come up with new games/products necessarily. Many amazing masterclass lessons for blitzscaling consumer/social products!
Game development is slightly more complicated than sturtups. In a startup, you address a problem within the existing world by offering a solution. However, in game development, you must first create a world, create a problem in that world, and provide a solution for the player.
💡 By simulating the experience of starting a venture and pitching for funding, teams at Zynga were able to develop skills that will be valuable not only in the games industry, but also in their future endeavors. The monthly board meetings and outsized rewards for success also help to foster a culture of accountability and drive towards impactful results. Well done to Zynga for implementing these practices! Sergey Osipov, Alex Brodsky - it’s worth reading ;)
Holly Liu
1y
It doesn't hurt that there were 1. Growing platforms to distribute games (e.g. Facebook, mobile phone) etc... 2. New business model for the west - free to play - which enabled people who have web services to succeed more than console game makers (this has changed) 3. That is when VC dollars were interested, but without new platforms it's hard for games to make these returns. And finally, yes if you can have operations on top of that to help align incentives, then yes all of that is capturing the most value. =)
I've used this model at several companies I've worked with, it works well as long as executive leadership is consistant in their messaging and the "founders" (usually GDs or CDs) are mature enough to guide their teams through the process.
Serial Entrepreneur | Fortune 500 | Builder of things
1yVery interesting model. Do you think it still works given that they haven’t really produced many new non-acquired games in recent years? Or did they change the operating model internally?