Founders - #257 Richard Garriott (Video Games and Space Exploration)

Starting point is 00:00:00 It was almost three o'clock in the morning when the sound of a glass door being smashed woke me up. I was alone in my house. A few seconds later, I heard someone walking on the broken glass. The stranger had come back. Hours earlier, my house had been filled with friends who had come to watch huge fragments of the comet Shoemaker-Levy 9 crashing into Jupiter. The first time in history it was possible to watch an extraterrestrial collision in our solar system. I'd built this house on the highest point in Austin just for nights like this, and its centerpiece is a large telescope. When my friends arrived early in the evening, I had opened the security gates in the front of the house and turned off

Starting point is 00:00:38 the exterior lighting so it would not interfere with our observation. The spectacle lasted only a few hours, and by 10 o'clock, my guests were gone. When the doorbell rang just after midnight, I didn't think too much about it, guessing that someone had just left something behind. I had forgotten to close the front gate. I went to a window. Standing at the front door, shifting nervously from side to side with his hands jammed into the pockets, was a stranger.

Starting point is 00:01:06 He was wearing a baseball hat. The hat was pulled down over his eyes. I didn't answer the door. Instead, I stood there watching him to see what he was going to do. I stood at the window for about a half an hour. Occasionally, he would walk around the side of the house, and I moved from window to window to follow him. He didn't leave. I couldn't figure out what he was doing. Then it occurred to me that he was waiting for me to get home. I began wondering how I could encourage him to leave without letting him know that I was home. The front gate could be opened remotely, so I closed it. And as I'd hoped, he looked around, surprised, watching the gate slowly shut. He must

Starting point is 00:01:46 have realized that he was on the wrong side of the perimeter because he hopped over the fence and disappeared into the darkness. I watched for several more minutes to see if he'd come back. Weird, I thought. But when he didn't return after 30 more minutes, I went back to bed. Three hours later, someone hurled a large rock through my rear glass doors. It was the stranger. I realized that he must have been standing in the darkness for hours, just watching my house and waiting. I rushed to the window and looked down to see him cautiously entering my house. If this was simply a robbery, he probably waited and watched until he was certain that no one was home.

Starting point is 00:02:24 So if I banged on the window above him, I thought, he would realize somebody was in the house and probably take off. I started banging on the window, and I was so agitated that my fist went right through the glass. The window shattered. The intruder stopped and looked up at me. For a few seconds, we stood like that, just glaring at each other. Then I said to him in a clear and loud voice, get the fuck out of my house. He stood perfectly still for a few more seconds, and then he walked into the house. I called 911. The dispatcher told me the officers would be there in 15 minutes. 15 minutes! It would take the intruder only a few minutes to find his way to my bedroom. My gun safe had about a dozen weapons in it, but I had those

Starting point is 00:03:13 guns for the same reason I had crossbows, battle axes, bows and arrows, even a working cannon. They're all part of the pantheon of collectible history for me. Knowing about them is essential for creating games. Until that moment, I had never even considered the possibility that I might actually have to use one of those guns to protect myself. I picked up a newsie. I pulled back the slide and snapped the clip into place. I could hear him moving around downstairs, talking to someone. I hadn't seen another person.

Starting point is 00:03:46 I still had the police dispatcher on the phone. He's talking to someone, I whispered. Then I asked, what do I do in this situation? The dispatcher answered matter-of-factly. Mr. Garriott, if you feel threatened inside your own home by an intruder, you shoot him. It was as if one of my stories was coming to life in my life. A few seconds later, I heard footsteps crunching on the broken glass directly below me. Then the intruder started walking up the stairs. He moved slowly and didn't look up at me for the

Starting point is 00:04:17 first few steps. Finally, he paused, and for the first time, he saw the Uzi pointing at his head. I warned him, stop right there or I'll shoot. He stopped. We stood there, six feet apart, staring at each other. I held the gun steady. At that distance, I would not miss. Then he turned and started walking back down the stairs. I remember thinking, I don't want to kill this person,

Starting point is 00:04:50 but it would be dangerous to let him walk away thinking I wouldn't fire my weapon. That would be an invitation to return. So I aimed the gun just a few inches to the side and fired. He didn't even flinch. He just continued walking his back to me. I lost sight of him, but I could hear him walking around once again talking to someone. I stood there, frozen in place. The police finally arrived.

Starting point is 00:05:12 They found him in a guest bedroom, sitting nearly naked on the edge of a bed. Nothing about the entire incident seemed to affect him. He was alone. The officers began questioning him. It immediately became clear that he was very troubled. His name was Daniel Dukes, and he told them that he had seen a hologram over my house of me beckoning him there to receive the reward he'd earned for completing his quest. The police placed him under arrest.

Starting point is 00:05:38 His parents told law enforcement that he had suffered from a mental disorder for a long time and that they had given up on him. The police detained him as long as legally possible, and then they released him. The police arrested him several more times the following year and let me know every time, but eventually he seemed to have drifted away. Several years later, his obituary appeared in the newspaper. Daniel Dukes had died at SeaWorld. Initially, authorities believed that he had jumped into the killer whale tank and had been bitten, but they found his camera and the undeveloped photographs told a different story. He had been hiding in the bushes for several days before

Starting point is 00:06:16 jumping into the tank, taking photographs of women's backsides. He had died from hypothermia. He had not been bitten. The fact that he was found on the back of the whale led the authorities to speculate that the whale had recognized him as an air breather and might have been trying to save him. And that is how I learned to tell a story. That was an excerpt from the book that I'm going to talk to you about today, which is Explore, Create, My Life in Pursuit of New Frontiers, Hidden Worlds, and the Creative Spark. And it was written by Richard Garriott. So I found this book because I saw somebody post something like, hey, more people should build unique and bizarre and like creative homes. They all of our houses don't have to look the same. And then they link to a video

Starting point is 00:06:57 about this guy, which is Richard Garriott, I found out. And this bizarre house that he built in Austin, Texas. It's on the highest point in Austin, Texas. It's got his own high-powered telescope and observatory. It's got dungeons, secret passageways, a collection of all these medieval weapons and science fiction memorabilia. I've never seen anything like it. And in the first few minutes of the video, he gives an overview of his career. And starting in the 70s, he was one of the first successful computer game designers. And so some of my favorite books that I've read for the podcast are autobiographies or biographies on video game designers. The one that comes to mind or the two that come to mind is episode 195,

Starting point is 00:07:40 Sid Meier, who is also making games around the same time that Richard Garriott was. And then episode number 21, Masters of Doom, which is actually the generation a few years after Sid and Richard. And so as I was watching the video, I was like, OK, this guy thinks very differently than the average person. Let me go see if I can find a biography on him. I found this autobiography and it turns out people like Ernest Cline, which wrote Ready Player One, Elon Musk, Steve Wozniak have actually read this book and they're all they've all blurbed about it in the book. And so I want to jump right into the introduction. As we'll see, he has a mindset that's very that you and I have talked about over and over again on this podcast, that the idea that the world is very malleable and that you can actually change

Starting point is 00:08:16 the world around you. And so he starts off explore and create. Why is the name? Why is the book called that? So creation, you think of all the things that he made. Most of the highlights I'm going to focus on is how he built, like he was at the very beginning of an industry, how he built his company. Half the book is about his exploration, the fact that he went to space, the fact that he's been to the bottom of the ocean. He explored the Titanic. He explored the Amazon River in South America. He's gone hunting for meteorites in Antarctica. And so what was interesting is he starts the book saying these are all it's the same exact that impulse like in the video. He says,

Starting point is 00:08:49 listen, the homes I build, they're very much manifestations of the same creative drive that goes into the games I produce. And it's obvious when you read the book that, oh, the same creative drive that he has to explore the world around him and have all these unusual experiences, he applied to building the video game companies that made him very wealthy. So it says, explore and create. These words are inextricable from each other. They feed each other. We are fortunate to live in such a remarkable era for exploration and creation. I often reflect on my own luck. I was lucky to be born at the dawn of personal computers. I was lucky to be the son of a scientist and an explorer. My father was a NASA astronaut. I was lucky to learn early on that a deep understanding of the world around you makes you its master. There's two quotes that I think about all the time that jumped into my mind when I got to that sentence. And the first is by Marc

Starting point is 00:09:53 Andreessen. He's like, the world is a very malleable place. If you know what you want and you go for it with maximum energy and drive and passion, the world will often reconfigure itself around you much more quickly and easily than you think. I think Richard would agree with that quote. He would also agree with this quote from Steve Jobs. Life can be much broader once you discover one simple fact, and that is everything around you that you call life was made up by people that were no smarter than you. And you can change it. You can influence it. You can build your own things that other people can use. And that is a mindset that

Starting point is 00:10:25 Richard applied not only to the building of his house, the building of his companies, the building of the games, the virtual worlds. In fact, one of the taglines of I think either his first or second company is we create worlds. But also he did all these like extreme in like in-person live interactive events. And some of those are actually in the video. I'll link that video in the show notes in case you want to watch it. It's about 20 minutes long. So let's go back to the book. I do buy into the adage that luck is the intersection of preparation and opportunity. Opportunities parade past us all the time. The key is that you must be paying attention to see them. You must be willing to take risks. You must expose yourself to the possibility of massive

Starting point is 00:11:01 failure, which he does. He puts everything on the line. Wait till we get to that point where his first game company almost fails. And it's directly traced back to a decision he made. And so not only do you have to be willing to take risks, but you have to believe and you must believe in what you're doing so much that you do it anyway. This attitude has helped me create and build two world impacting industries, computer games and commercial spaceflight. And then he continues this line of thought with some ideas that helped him build his career. The first thing is he thinks about building games just as the same thing as creating art. Interactive stories are where creativity and exploration meet.

Starting point is 00:11:35 It is a new art form. Once I've had the pleasure of helping shape what's fascinating. So this book, I think, came out in 2017. He starts building computer games in the end of the late 1970s. He ends this book saying, hey, we're still in the infancy of creating virtual worlds of the gaming industry at large. And one thing that he repeats over and over again in the book is something that helped him create his games is the fact that he's just spent a lot of time learning broadly. So this is the first time he mentions it. He mentions it over and over again. I created some of the first virtual worlds. I did it with little to go on,

Starting point is 00:12:08 largely through trial and error. Like any good artist in any other medium, I became a polymath. I studied subjects from philosophy and religious history to architecture, languages, physics, and fashion. And then he tells us what he believes. He believes that games are in fact the single most important form of media. Games have become much more than pleasant diversions. They have a huge opportunity to be the media form of the 21st century. And then he ends the introduction with, even the way the book, even the way this book is created is different. You don't have to read it chronologically. I did, of course. But he even says, you can read this book straight through, but if you prefer to jump

Starting point is 00:12:43 around to follow your own passionate interests, I encourage you to do so i hope by exploring the pages that follow and taking on the challenges i offer within them thinking about what you would do in many of these same situations you will feel as though you have embarked on your own adventure and so richard like every person that we study has like this deep base of historical knowledge he's very curious about the achievements of people that live long before he did. And he talks about like, these people are my heroes. He's going to mention somebody that has had a huge influence on my life as well. So he says, my heroes are people who took epic journeys into the unknown,

Starting point is 00:13:16 often at substantial personal risk. I am simply following the path that they carved into history. That's fantastic. And so he's going to mention Shackleton. I fancy myself an admirer of men like polar explorer Ernest Shackleton. So I read the most famous book on Shackleton back on, it was like almost two years ago, it was episode number 144. The book is called Endurance, Shackleton's Incredible Voyage. And I actually have another biography of Shackleton. Check this out. So very soon there'll be two books coming.

Starting point is 00:13:47 This guy named Ranouf, I think it's Ranouf Fines or something like that. Fines. I don't know how to pronounce his name, but he's a explorer. He wrote this autobiography that has maybe the best title for an autobiography that I've ever heard. And he titled it Mad, Bad, and Dangerous to Know. So in addition to being an explorer, he also is like a prolific writer, and he wrote a biography on Shackleton.

Starting point is 00:14:08 And so I have both those books. I'll eventually read them, and then I'll, of course, make podcasts on them. And so I've told you this before, but I see Shackleton's face, like, several times every day because every time I pick up my phone, he's my lock screen. And it's not like you can get some, in fact, I've seen covers of books with, like, Shackleton with like, you know, clean shaven looks, you know, like he's well rested. No, no, this is Shackleton mid expedition beard with ice and snow and crusted in it looks like he's on the borderline of death. And I wanted to put it on the lock screen of my phone because of his family motto by endurance, we conquer. So every time I pick up my phone, I glance, I see Shackleton,

Starting point is 00:14:47 and I'm reminded, don't even think for a second that you're going to give up. Quitting is not an option, and you can just win by just endurance. He says, by endurance we conquer. And I like to repeat that to myself and really think about it. I mean, if you really think about what he's saying, that is an entire story told in four words. So anyway, Shackleton is hugely influential. He pops up in these books over and over again. So if you haven't read the book or haven't listened to that podcast, I highly recommend. I think your life would be better knowing Shackleton and his story than

Starting point is 00:15:17 not knowing it. Let's go to where he's a teenager. He's going to start his first, he's going to sell his first game when he's still a senior in high school. And so the prehistory to him starting his own game is playing other games. And before computer games, he was obsessed with tabletop games. The most important tabletop game that he ever played was Dungeon and Dragons. And he's going to describe like the influence that D&D has on him building his games. But really, I think about like you can think about D&D as a metaphor for building a company. And this idea, if we want to continue this metaphor, it's going to continue over the next two pages and just a few paragraphs for you. Here's an example. D&D is a role playing game, an interactive story that is negotiated between the narrator, the dungeon master and the

Starting point is 00:15:59 participants or players. So remember, we're not we're not reading this to think of like what D&D is or the idea of playing games. We're using this as a metaphor for what it's like to build a company. The dungeon master or founder or game master creates the elaborate fantasy and the people playing with him or her take the roles of specific characters in that story, interacting with the other players to solve problems and to move the adventure forward. And so I got to that paragraph and I reread that last part of the last sentence again. Interacting with the other players to solve problems

Starting point is 00:16:32 and move the adventure forward. And that's exactly, I think that's one of the best metaphors for building a company. Made me think of the way that if you go, like, so if I could bring back one person, one great entrepreneur from history from the dead, and I can only choose one. And I can't, obviously, I think the obvious example is Steve Jobs.

Starting point is 00:16:50 So we're going to say, hey, you can't pick Steve Jobs in that case. My number one pick is Edwin Land. And you probably already picked up on that because I've done, what, four podcasts on him. I've read five books on him. I'm about to reread that book, Insisting on the Impossible, hopefully in the next few weeks and make another podcast on it. But that's the way he talked about in multiple cases where he's like, you know, he ran he built Polaroid. He ran Polaroid for his tenure at the head of his company was longer than almost any other founder, executive in American history. It was like 50 years or like he started when he was, I think, what, 18, 19.

Starting point is 00:17:26 And he got kicked out, unfortunately, when he was like, what, 70, something like that. I don't have the exact numbers in front of me, but it was an extremely decade after decade after decade of building the same company, which is really fascinating. But he would always say he's like, this is like, I feel like I'm leading my like I'm running the company like I'm leading students on this grand scientific experiment. But towards the end of the book, A Triumph of Genius, which I covered all the way back on Founders number 134, Edwin Land gives this acceptance speech. And he uses that opportunity to encourage you to continue the sense of adventure and exploration that your descendants had. And so I want to read this. This is only a few sentences, but this is Land. This is a direct quote from Edwin Land. Land chose to pay tribute to the process of invention by analogy to the basic American sense of adventure and exploration. And now this is where, what this is now land talking. We are becoming a country of

Starting point is 00:18:14 scientists and however much we become a country of scientists, we will always remain first of all that same group of adventurous transcontinental explorers pushing our way from wherever it is comfortable into some more inviting, unknown, and dangerous region. These regions today are not geographic. They are not the gold mines of the West. They are the gold mines of the intellect. And when the great scientists and the innumerable scientists of today respond to that ancient american urge for adventure then the form that adventure takes is the form of invention and obviously inventions are usually built around companies right or companies are really usually built around inventions he invented instant photography

Starting point is 00:19:04 that is what polaroid was built around so let's go back to that so it says uh we respond to the ancient american urge for adventure then the form that adventure takes is the form of invention and when an invention is made by this new tribe of highly literate highly scientific people new things open up and then lands deep historical knowledge. Like to think about the base of, think about the things that were in that man's head. And so to me, when I'm reading this last sentence here, he's drawing on everything, not only everything he experienced, but everything that he studied and he knows about human history. And he wraps it up for us here. Always those scientific adventurers have the characteristic, no matter how much you know, no matter how educated you are in science,

Starting point is 00:19:46 no matter how imaginative you are, of leading you to say, I'll be darned, whoever thought such a domain existed. And so what the hell does that have to do with what you and I are talking about? Because where we are in this book, where we're in the story, there is no such thing as a computer game, right? He's only thinking, I'm i'm obsessed with dnd i'm a teenage dungeon master and you're gonna see as this story continues this like oh wow okay not only can i make my own game right and then he progresses through trial and error and doing that but then uh he's like oh wait i can sell this thing that i was doing for free that i'm completely obsessed with that I love so much and then by doing that I can go on my own adventure I can create my own company that is one of the best feelings in the world so I jumped ahead a little bit but it's just fascinating how all

Starting point is 00:20:36 these things like I just love the fact how all these people in different domains are right in completely different experiences they just think and they arrive and they're like, oh, this is truly possible to create something new, something that never existed. That is insane to me. So let me go back to the book because I'm getting way ahead of myself and we'll get there in time. This was before the emergence of computer games. So he's talking about, hey, I'm a teenager. I'm an online or excuse me, I'm a teenage dungeon master in D&D. There's going to be a slight digression here, which is why I started the podcast where I did, because a huge theme of the book is the importance of storytelling. Steve Jobs has told you and I over and over again that storytellers are the most powerful people in the world. Richard tells us that, listen, storytelling is extremely powerful, just like

Starting point is 00:21:15 Steve Jobs said, but it also can be learned. You can learn how to do this. I learned that each game was only as good. So again, this other paragraph here too, let me tie back to what I started this on. This is really, to me, a metaphor of building a company. Well, let me just read it to you and then I'll add something onto it. I learned that each game was only as good as the ability of the game master to craft a story and manage the negotiations into a compelling narrative. We also turned to being game master and it was quickly obvious that while some people were very good at it, most were not. That is when I began to really understand the power of storytelling. So let me tie what Richard's saying in this book.

Starting point is 00:21:51 There's with another book I saw an excerpt from, I haven't read it yet. The guy that worked with Steve and helped lead the development of the iPod, Tony Fadell, has this new book. And I saw this quote from it and it was on something that's very unique. And again, it's all going to be tied to the fact that Steve Jobs knew the power of story. And it's on the fact that the story defines the product and it's not the other way around. So I just want to read a few paragraphs from this real quick. Steve was a master at this. Before he told you what a product did, he always took time to explain why you needed it. And he made it all look so natural,

Starting point is 00:22:25 so easy. I'd watch other CEOs give pitches before, and they hardly know what their supposedly revolutionary product was. Sometimes they didn't even know how to hold it right. But customers and the press would always be in awe of Steve's presentations. It's a miracle, they would say. He's so calm, so collected. No prepared speeches, slides with almost no words. He just knows what he's talking about and it all hangs together. It never felt like a speech. It felt like a conversation, like a story. And so when I got to that part, I'm like, okay, those are three short sentences. It never felt like a speech. It felt like a conversation, like a story. And if you think about it, storytelling is as old as language. So let's go back to this. And the reason is simple. Steve didn't just read a script for the presentation. He had been telling a version of that same story every single day for months and months during development to us, to his employees, to his friends, to his family. He was constantly working on it, refining it. Every time he'd get a puzzled look or a request for clarification from his unwitting early audience, he would sand it down, tweak it slightly until it was perfectly polished. And this is the punchline here, and the last I'll read from this. It was the story of the product, and it drove what we built. So let's go back to exactly

Starting point is 00:23:47 what Richard's telling us in the book. We all took turns being game master and it was quickly obvious that while some people were very good at it, most were not. Is that not exactly what Tony Fidel just explained to you and I? Most CEOs didn't know what they were talking about, couldn't even hold their product correctly. Steve not only knew it, but he used that story to drive product development. That's insane. That's an insane thought. That's when I began to really understand the power of storytelling. And so Richard's like, okay, how do I get better at this? I was far from the best storyteller at the D&D gatherings, and my first stories were not good at all. Watching other game masters, I knew their

Starting point is 00:24:25 narratives were better thought through than mine. I became a better storyteller by observing the strengths and weaknesses of other game masters. And so the reason I'm giving this background is because what he says here on the next page, playing D&D was the seed that would eventually grow into my elaborate computer games. He is telling us what I'm learning from this experience, I will use later for creating games, and then I use the creation of games to build the creation of my business empire, my financial empire, the things that open up and unlocks all these other opportunities. You know, he had to pay for a private space flight.

Starting point is 00:24:57 I think it was like $20 million, $15 million. I can't remember exactly. That doesn't happen without all the stuff that's happening now as a teenager. I go back to this. The more people enjoyed listening to my stories, the more I enjoyed telling them. Every storyteller is familiar with the pleasure that comes from sitting with your friends around a fire, pouring a few drinks, and weaving a yarn. This is one of my favorite sentences in the book. This was man's first form of entertainment and when done well is still his best storytelling think about storytelling is as old as language much of my life is about telling stories the real ones i've lived and those that i make up more than anything else that i am or have accomplished i am a storyteller okay so i want to go back in his

Starting point is 00:25:43 life when he's younger and this is when he first sees his first video game. I'm always amazed at how much the work that we can do can influence others. He's about to see the first video game that he ever played was Pong. Pong was developed at Atari. Atari was founded by Nolan Bushnell. Nolan Bushnell winds up hiring a 19-year-old Steve Jobs and mentoring him. And if you ever want to read a book, a really easy to read book that's written by a crazy character, that'd be Nolan Bush. Now,

Starting point is 00:26:10 obviously I did it for a founder's number 36. It's finding the next Steve Jobs, how to find, keep and nurture talent. Nolan's very unique. Not only did he found, think about it, he founded Atari and then he also founded Chuck E. Cheese. And that book starts with Nolan, you know, making his, at the time his companies were making hundreds of millions of dollars a year. And he meets up. He's throwing this huge party in Paris. And like a 25 year old or 26 year old Steve Jobs shows up and they wind up having the next day. They wind up going for a long walk or through Paris and they're talking about company building. And so that that discussion that they're having influenced Nolan to write the book later

Starting point is 00:26:45 on. So it's very interesting. It's very quick to read too. So the very first video game I played was Pong. I was 11 years old when my friends and I wired the game into the back of our TV and began playing. It was magical. This was the simplest computer game imaginable, but being able to play a game on the family TV was astonishing. It was a wholly new form of entertainment. I had no concept whether the technology was simple or complex because it seemed so far beyond my own skills. The idea that I might create my own games had never occurred to me. I had never seen a computer of any kind and personal computers did not even exist. But I was intrigued. And so Richard's entire life changed. Everything begins. His entire life begins, really, with his introduction to the

Starting point is 00:27:33 first computer. And the way he got access to the computer is wild. Just imagine this taking place today. It would never happen. The only place that we knew with computers was NASA. And with my father being an astronaut, we had strong connections there. So we solicited the support of one of the space agency's prime contractors, Lockheed Martin. They allowed us to use their computer room, which is a pretty good indication of how lightly regarded those rudimentary computers were. Think about it. One of our nation's leading defense industry contractors, a key NASA partner, permitted a group of teenagers to play with its computers. And so I have a ton of highlights across these next few pages. Really, the reason I'm bringing this to your attention, because this is what the

Starting point is 00:28:15 beginning of an industry feels like. And since humans will never stop creating new industries, it's important to know what they look like like at the very beginning when calling it an industry would be ridiculous and so on one of these early computers he sees there's this text-based game right there's no graphics at this time it's called adventure so says adventure had no graphics only text and it forced you to make decisions so he gives an example to the north you see lights of a town to the south you see a sign that says to the dungeon to the to the dungeon which way do you go that's to the dungeon. To the dungeon. Which way do you go? That's all the game did. Each location had a text blurb.

Starting point is 00:28:49 You're in front of the house. You see a front door. You also see a mailbox and a doormat. What do you do? By exploring the scene and collecting items, the player was drawn further into the adventure. So these are the exact kind of games, only with visuals, that he's going to wind up creating a few years later. There was absolutely nothing to look at, but I was mesmerized. I could visualize everything in my mind. And so what do you do? Your natural inclination is like, I love this game. How do I get new ones? Remember, this is what the beginning of an industry feels like.

Starting point is 00:29:18 I found other text games by luck. There was no place to buy them. Mostly they were spread virally on the so-called sneaker net, which meant that somebody copied a game from one computer on a disc and loaded it onto another computer. Copies of games were passed hand-to-hand. So these games start traveling by word of mouth. They start building up this strong, passionate user base. And so computer stores are like, hey, we should start selling them. And this is how they sold them.

Starting point is 00:29:47 Computer games began to hang games in plastic Ziploc bags on a pegboard. The creators of the games did not consider it a business. When I began making my own games, there was no economic incentive. It never occurred to me that this could be a career. And this is when all the time and effort he put into learning Dungeons and Dragons and learning storytelling really comes in hands. I learned how to play Dungeons and Dragons, and I began writing small pieces of software. And suddenly it occurred to me that I could combine the two. And so he's astonished.

Starting point is 00:30:21 He's really enthusiastic. He needs access to a computer, though, more reliable than going to Lockheed Martin. So his high school, there's a computer that pops up at his high school one day and he does something that's really, really smart. I discovered another computer at my high school. They seem to have just appeared one day, but they beckoned to me. I convinced the teaching staff to let me have access to them for one period each day. I would work on my project, which was my games, and they would monitor my progress and give me whatever grade they saw fit. They agreed that we could use this quote unquote class in which I taught myself computer basic to fulfill my foreign language requirement. And so then he goes into how he learned to do this. Before I leave this page though, what popped in my mind

Starting point is 00:31:00 is I'm reading about the very early, there's barely an industry here for computer games. They're selling maybe a few on a pegboard and a plastic bag, right? It made me think of like how crazy it was when I've read, I don't know how many books on Henry Ford. And so what's crazy is when you learn about the arc of Henry Ford's career in life. Ford goes from working on an early internal combustion engine in his kitchen to winding up being the owning the most what might have been at the time the most valuable private company owned by one person when he buys out the Dodge brothers and the rest of his investors I think this is if my memory serves me correct it was around 1919 that he owned a hundred he wound up getting back 100 and owning 100 of the Ford Motor Company.

Starting point is 00:31:45 And I think at that point, in 1919 dollars, his net worth was like $500 million. The company was worth $500 million in 1919 dollars. And the reason that's important to know is because you go back, you know, go back in history 20 years. And he's like, like, you're looking, imagine like you could have like a bird's eye view. You're looking at a young Henry Ford, you know, I think he's in his thirties, maybe like 35, something like that. And he's working on this, this smelly, leaky, like primitive engine. And like, Hey, that guy right there that we're looking at 20 years from now is going to own

Starting point is 00:32:18 maybe the most private, most valuable private company in the world. It's hard not to be awestruck at how much can change in one lifetime. So he goes into, okay, this is what's learning to program. Like imagine trying to learn how to make a computer program, a game in the late 1970s. This is what it was like. I learned through trial and error and mostly error. At the time, there was no computer industry. There was no standards. A few magazines published programs people had written for specific computers they were using. And it'd be like a 20-line program that would add numbers or balance a checkbook. So I knew I could program a computer to do complex equations. The more important question to me was whether I could create entirely new worlds.

Starting point is 00:32:55 My real objective was crafting a role-playing game. I wrote 28 programs on that teletype. I know there were exactly 28 programs because I named them D&D 1, D&D 2, and so on until I reached my 28th attempt. Many of them were never finished. I'd get halfway through a game and would have learned so much about the process that I would decide to start over, this time utilizing my newly obtained skills to create an even better structure. By the time I was making D&D 28, I was working at Computerland. So this is some of the stuff that computers, like some of the computers that were for sale

Starting point is 00:33:31 in 1979, we sold the Commodore 64 and the Apple II and the hand, and he says the seemingly handmade computer called the Sol 20. These machines sold for as much as $3,000. They had considerably less computing power than a drugstore cell phone has today and in limited amount of available software and the limited amount of available software was terrible so he's working at the computer store he's still making games and the fact that they have now he has access to apple too he's like oh up until this point he was the only one playing his games and now other people they wanted being his co-workers and then his boss are going to start paying playing his games. And now other people, they either wanted to be his coworkers and then his boss, are going to start playing his games. The real benefit of working at Computerland

Starting point is 00:34:07 was that I had access to an Apple II and I was able to write my games on it. This meant for the first time that other people could play my games. They enjoyed them. The owner of the store told me one day, Richard, the game that you've created that we're all playing

Starting point is 00:34:19 is obviously a more compelling reason to have one of these machines than anything else that's out there. We really need to be selling this on the store wall. Selling? Wow, that's an interesting idea. The first game I made for Apple II was named Alcabeth. I had borrowed the name from a Tolkien story, which is by far the longest, most complex, and most difficult book I have ever read. I was enraptured. J.R.R. Tolkien had changed my life in that video I referenced earlier.

Starting point is 00:34:53 Not only does he have, like, first editions of a bunch of Tolkien's novels, but he has, like, pre-editions, editions that were sent to his editor. And so once he completes the game, he spends what he thought at the time was an insane amount of money, like making copies and saying, hey, I'm going to try to sell this thing. The game was so personal and our expectations were so small that I included my home address and phone number and asked players to call me when they finished the game. It cost my entire life savings, $200 to produce copies of it. So he buys Ziploc bags to put the game in and his mom is the one that actually draws the cover art for the game.

Starting point is 00:35:28 And this is just an amazing paragraph. I love what he's about to say here. This was a state-of-the-art operation then. We hung them up in the store and in the first week sold about 12 copies at 20 bucks each. I would estimate that at the time there were probably fewer than a couple of dozen

Starting point is 00:35:45 people anywhere in the world creating computer games, and not one of us could have imagined we were creating an industry that in less than three decades would become the largest and most successful entertainment industry in history. That a game would gross more in a few weeks than the most successful movie in history had earned in decades that's an incredible thought an incredible paragraph gets even crazier here this is his first game he's about to make 150 grand as a high school senior in the 70s within weeks the game was being published within weeks of the game being published i got a call from california pacific computer company i knew who they were they had published games by bill Within weeks of the game being published, I got a call from California Pacific Computer Company. I knew who they were.

Starting point is 00:36:27 They had published games by Bill Budge, a gaming pioneer whom I had greatly admired. They told me that they wanted to distribute the game nationally. We need you to come out to California right away. I was flabbergasted. I was 18 years old. When I arrived, I was met at the airport by a guy in a new DeLorean. Rather than driving me to the California Pacific office, we went directly to an apartment near the airport.

Starting point is 00:36:50 Uh-oh. It belonged to a friend of the California Pacific owner. In the living room, there was a chest of drawers. This so-called friend opened up the top drawer, and I was stunned to see it was filled with plastic-wrapped bricks of cocaine. Welcome to the video game industry. And so that's something he talks about quite a bit in the book. The fact that a lot of these people that owned these very primitive game publishing, like some of the first game publishing companies in the world,

Starting point is 00:37:19 a lot of them were doing coke, a lot of them were on all kinds of drugs, they were drinking, and a lot of them just, they're A lot of them were on all kinds of drugs. They were drinking. And a lot of them just, they're like fly-by-night operations. They'd pop up, they'd distribute games, make some money. That would go up their nose, and then they'd disappear. And so he's going to have a bunch of bad experiences with game publishers. That is going to lead him to say, hey, forget it. I'll just do this myself.

Starting point is 00:37:41 But we're not there yet. So this is him making money doing something that he used to do for free. California Pacific's version of the game was priced at $34, of which I received $5. They sold 30,000 copies. I had earned $150,000, more than twice my father's yearly salary as an astronaut. How crazy is that statement? He's 18 selling games. He's making twice what a NASA astronaut makes.

Starting point is 00:38:04 It was a phenomenal amount of money, enough to buy a house. It was so much money that it didn't even really sink in. It all seemed like some kind of fantasy. We all thought it was a fluke. It was great that someone wanted to pay me for doing what I was already doing. So he starts working on his next game. This next game, he doesn't know at this point in his life, he winds up updating the series called Ultima. I think he said for like 25 or 30 years, it's going to make him wealthy. And we see a really important point that pops up over and over again is the fact that you really need to hold on so that future technology can unlock more powerful

Starting point is 00:38:40 capabilities. So I had a weird thought when I got to this point because he's like okay well my game was really basic now we're fast forwarding a few years uh the computer industry is growing it's like the computers get more keep getting more and more capabilities they have more and more storage and so therefore i can actually build more and more complex games i actually thought of uh sam's and murray or more specifically the book the fish ate the whale the one i just reread on for episode 255. Because if you think about that, before the steamship, you could sell a banana, like the market for your bananas was essentially your neighborhood. And after this invention of a new technology, it unlocks. Then you can sell a banana all over North and South America. You can combine the banana, this new technology of steamship,

Starting point is 00:39:23 and then two or three very formidable founders like Andrew Preston and Minor Keith. And the combination of those events wind up creating one of the world's first truly global corporations. And I hear myself saying this, and it sounds fake. It sounds like that can't possibly be true. But it was. And so we see the same, a very similar thing here. He's like, okay, now I can start building way more complex games. I wanted to put more, more meat on my games bones and advances in technology made it possible. Ultima was going to be my first virtual world. It took about nine

Starting point is 00:39:55 months of concerted effort to create. And, uh, and the available memory increased from 48 K of RAM to 64 K. Why is that important? That meant I could add a series of activities that were rich and diverse. And previously, you were incapable of doing so. And so again, I think that's a main theme in the history of entrepreneurship. Hold on so future technology can unlock more powerful capabilities and more opportunities

Starting point is 00:40:21 that you cannot do yet, but will be able to do five years from now, 10 years from now, 20 years in the future. So eventually the company that signed him is going to go under because of all the drug use. And they wind up essentially, instead of reinvesting in the company, they're just taking all that money and doing drugs. So he's going to leave. But really what set Richard apart was everybody else. And I saw this in the Sid Meier game as well. The publishers are really, they were not really interested in being creative. They really just wanted the game creators to, hey, this thing that you made successful,

Starting point is 00:40:50 just make another one. Like, let's not innovate. Let's just keep making sequels and let's just stick with what is working. And Richard did not want to do that. He says, my desire was to make the world of my games as real as possible. Like Tolkien and C.S. Lewis. To do that, I wanted to design the player's experience from his or her first encounter with the game. The moment they looked at the box,

Starting point is 00:41:11 except there was no box. Remember, we're in the malleable early days of an industry. They're selling them in Ziploc bags with like this little paper, black and white paper, with some, you know, basic artwork and the name of the game and who wrote it and his home address and his phone number, right? So he says, in addition to putting the game in the box, I wanted to include a detailed map of the world of this fantasy virtual world that he's making. I wanted instruction manuals that did not give directions like insert the disc into drive one and press the A button, but rather describe the magical history of the world. I had this great dream. Meanwhile, the publishers just wanted to put it in a plastic bag and hang it on a hook. So he goes

Starting point is 00:41:52 to a couple of different publishers and he's like, you know what, forget this. I'm going to do it myself. By then I knew enough about the computer game industry to understand that it wasn't actually an industry. It was an association of companies run by people who had no more experience than I did and who popped up, published a few games and then disappeared. So my brother Robert and I decided to start our own company. We named our company Origin Systems. He's eventually going to sell this company to Electronic Arts. Robert created the tagline by which the company became known.

Starting point is 00:42:20 We create worlds. And the headquarters for Origin Systems is their parents' house. So it says the company was based in my parents' house. Everything about it was informal. One night, for example, we were sitting in our office, which was actually my mother's kitchen table, when a car stopped in front of the house and a strange man got out. He appeared oddly disheveled with long hair and a long beard. My name is Dr. Cat.

Starting point is 00:42:43 I read your ad. I'm here to work. I'm a programmer. That's great, we replied. We need a programmer right now. He was Origin's first outside employee, and he worked for us for 15 years. So now he has to try to make the transition from, I'm just making games to I'm building a company. So he's got to learn how to build a company. And he does that the same way that he learned how to program games through trial and error. Far more quickly than anyone imagined, computer gaming became a huge business. And for me, there was a steep learning curve from creator and designer to businessman. And so his brother has an MBA and he's like, listen,

Starting point is 00:43:18 your work habits suck. And the reason that's important is because they said the leader's habits become everyone's habits. So he's like like can you stick to like some kind of schedule and richard being young and not realizing that like he's like well i don't know why i have to do that uh it seems to be working out so there's just going to be a lot of conflict uh between brothers and it has to happen that way i mean i don't know if a single co-founder relationship that is that is smooth like there's going to be argument like you have a lot of now your time and your energy is invested in your business. Your emotions are invested in your business. Your finances are invested in your business.

Starting point is 00:43:50 It's impossible to think there's going to be no conflict. My brother was always hypercritical of me from being the last person to arrive at the office and often the first to leave. If you asked him to describe my work habits for the first five or ten years that we worked together, he would say something like Richard would roll into the office around noon or sometime between noon and two in the afternoon. He'd play around in his office with his rubber band gun and code and then do coding experiments in his mind that had little to do with actually making game. Richard would might create some code or something else for a few hours, then come dark, he'd leave and we wouldn't see him again until the

Starting point is 00:44:22 next day. And so Richard says, in my defense, I was living an unstructured life that was working very well for me. This was my most productive time creatively and economically, so I didn't understand why I needed to change. He is going to eventually change and have some semblance of a schedule. I felt like I was clearly doing enough to create the next best-selling game because money was rolling in. I might have been sitting in my office discussing philosophy with other developers or reading a book about ancient languages, but I believe those little experiments were essential to my creative process. And so there's a lot of tension, but that tension actually is beneficial for the company. Robert and I are very different people, but there's simply no way that Origin would have gone forward without both our unique contributions. We argued often and we argued passionately.

Starting point is 00:45:03 Both of us were incredibly confident in our beliefs about the right way to proceed to build our company. And they wind up getting into a physical fight over a pencil. Says neither one of us remembers the specific issue that led to this fight, but somehow it came down to the ownership of a number two pencil. I started to leave Robert's office with the pencil. He told me to leave it there because it was his office and therefore his pencil. I insisted on taking,. This sounds so immature looking back. But again, I think it's just, it's obviously there is tension building up. You need some kind of release.

Starting point is 00:45:30 And the pencil is just a way, like the valve that they're going to use here. I insisted on taking it with me because I felt it was my pencil. We started shouting at each other. And the argument quickly escalated into a shoving match. All of our frustration suddenly burst. And the next thing i knew we were literally wrestling in the office and the benefit is this he says we never had a serious fight again so they had to happen and they buried the hatchet this is where richard almost destroys

Starting point is 00:45:55 the entire company and like think about a fast in the early days of a fast-changing industry one decision can one bad decision one catastrophic catastrophic decision can tank the entire company. So at the time, they're just making games for Apple because Apple II is dominating. And he's like, oh, if Apple II is dominating now, it's obviously going to keep dominating and didn't realize how fast IBM is going to take market share. Apple had always been our lead market for sales. So we wrote codes for the Apple. I saw no reason to change strategies for the latest platform that had been introduced, which is the IBM PC. As far as I was concerned, there was no comparison between the Apple II and the IBM PC. I concluded that the IBM PC would never pose a threat to Apple's dominance of the market. I was supremely confident it would

Starting point is 00:46:40 never compete with Apple. So we continued developing our products for the Apple II, knowing that we could translate them later on to the PC. And this is his main lesson that he took away from this, almost destroying his company. It would have been almost impossible for me to be more wrong. That was one of my first big lessons. And it is this, what I think is not necessarily right and perhaps not what everyone else thinks.

Starting point is 00:47:05 So he's saying Apple is going to dominate. Everyone else says, nope, I'm going to choose between Apple and IBM PC. I'm choosing IBM PC. In less than six months, the IBM PC became the dominant machine in the market. Everything else, including the Apple II, was suddenly irrelevant. So due to my mistake, our company was caught developing products for a market that was rapidly disappearing. This means we would have to start from scratch without any employees who knew how to program on the IBM PC.

Starting point is 00:47:32 We would have to retrain our existing staff or hire new people. And so we also say, OK, what do we do here? And he's going to make a decision. He's like, I'm not going to close down the company. I'm going all in. When you make a mistake like this, you can either take your loss or double down. Robert and I discussed closing the company and walking away with the several million dollars that we had in our personal bank accounts. The alternative was to reinvest everything the company had, everything the company was projected to earn, and everything that Robert

Starting point is 00:47:58 and I could borrow personally. The logical decision was to close the company. Robert and I decided to go all in and co-signed million dollar loans. If we failed not only would I lose the house my house but my brother and I would lose the company and be millions of dollars in debt. But we bet on our capabilities. The race was on to get my next Ultima game out with the acceptable quality before we ran out of cash. Okay, so I'm going to pause before I continue the story. Think about what's happening here. He made a catastrophic decision. He had previous, up until this point, had a company.

Starting point is 00:48:37 Everything was going well. His games were successful. He's building out the Ultima series. Him and his brother both are making millions and millions of dollars doing something they love and now suddenly he finds himself in a position where he's staring at the bankruptcy of not only personal bankruptcy but the destruction of his company and everything rests on can we get this game out on time and in the highest possible quality if we do so we have a successful company if we don't we have utter failure and so the note i left myself on this page when i got to this point, it says, Dune,

Starting point is 00:49:06 what is in the box? And so that is from this movie that just came out, Dune. I've seen it three times. Visually, the movie is absolutely spectacular. I actually had to watch it again because I haven't read the books yet. And my friend that has, I had to ask like, hey, can you fill in what is going on here? But there's a scene in the movie that is exactly what is taking place in this book. So the main character of Dune is this young man, young boy. And so I took notes on the movie because it made me think of what's happening in the book. So I want to read that part from Dune first. And I think that adds great context to what Robert and Richard are about to have to endure. So one of the most powerful characters in this world is this old lady.

Starting point is 00:49:46 So it says the old lady, these are my notes. The old lady makes the young boy put his hand in a box and then says, I hold at your neck a poison needle. Instant death. The test is simple. Remove your hand from the box and you die. The boy asks, what's in the box? Pain.

Starting point is 00:50:10 One of the best maxims you will find in the history of entrepreneurship comes from the founder of Four Seasons when he said, excellence is the capacity to take pain. If Richard and Robert are going to get to the other side of what's happening in their lives right now, they are going to have to endure pain. The test is simple. Remove your hand from the box, meaning quit, and you die. Every month, Robert and I would sit down and look at the numbers compared to our progress. And every month, the situation looked more ominous. In family lore, we refer to this as the year of Richard's fetal position. When we reviewed the financials, I found it so difficult to listen

Starting point is 00:50:49 that I would sit in a chair in a corner in the fetal position with my legs curled up under me. After all the success that we had enjoyed, it was extraordinarily difficult to deal with the possibility of failure, especially given that my mistake had brought it on. I barely slept, and when I did sleep, the nightmarish scenario of what I could have, should have done, played over and over in my mind. Desperation can be an extremely productive motivator. We had only enough money to keep the doors open till the original

Starting point is 00:51:26 ship date. If this game wasn't published on time and with the highest possible quality, we were through. We worked every possible minute for months while at the same time resisting the urge to cut quality just to get it done. As a result, this was our cleanest execution of a game. Somehow, we managed to ship it on time. I managed to un-fetal myself. We had been saved. He kept his hand in the box. So the book goes into a lot of detail about how he makes, like, what all the preparation he does and all the learning he has to do to actually be able to create a world and to make it feel authentic and detail-oriented. And so if you find this podcast interesting, I obviously highly recommend you pick up the book

Starting point is 00:52:18 and read it to get all the detail. But there is just one thing I want to pull out, and it's when Richard's working on this problem of how to create a language from scratch. And I had a bizarre thought when I read this paragraph. I'm going to read the paragraph to you first. Then I'm going to read the note I left myself. And I actually read the note. So obviously, when I go through the book, I make all the notes and highlights.

Starting point is 00:52:37 And then before that, usually the night before I record, I go back through and I reread over all of them and really like try to absorb and make sure I understand it before I sit down and talk to you. And I got to this note. I'm like, oh, this is my favorite note in the entire book. I didn't remember writing it. And so again, I just, when I'm reading, I just go on pure instinct. I'm just like, okay, this is interesting to me. Let me highlight it. And then what is the first thing that pops to mind? Like, don't put too much thought into it. Just like, what is your natural, like, what is your first reaction? And so hopefully this makes sense to you. So this is what Richard wrote. I spent a lot of time working on this problem. So crafting languages, right? Crafting believable languages and scripts is essential to creating any realistic fantasy world since language and writing is the foundation of a society. Tolkien, the greatest reality crafter I have ever discovered, once said that his stories grew out of the languages he created.

Starting point is 00:53:29 So this is what popped to my mind when I got to this section. You can think of the belief system of the founder as the language of the company. That is why it is usually written down and repeated over and over again. The belief system of the founder is the language of the company. So now we fast forward into his career where he's realizing, hey, up until this point, I've been really imitating. And now it's time for me to actually create something unique. This is one of the most important things that I've learned from any book. You know, what are we at? 265, I think something like that. The imitation precedes creation.

Starting point is 00:54:05 I wish, like, that's such a great maxim. I wish I could say I came up with it. It's not. It was written in Stephen King's autobiography, which I covered on Founders 210. Imitation precedes creation. And some people are like, I don't know where to start. It doesn't matter.

Starting point is 00:54:17 No one knows where to start. Do what everybody else does. You imitate, and then you'll imitate long enough and realize, hey, well, I have my own idea. Then you'll start slowly mixing in your own insights into what you're imitating, and then you'll imitate long enough and realize hey well i have my own idea then you'll start slowly mixing in your own insights into what you're imitating and then you'll keep going down this path and eventually that is where your creation will come from something unique imitation precedes creation coming from somebody sold 350 million books that's wild five years into a very successful career i had an important decision to make my other games had borrowed liberally

Starting point is 00:54:41 from existing fantasy stories none of them were particularly original. Think about how crazy this is, right? Up until this point, he's just taking things that he read, games that he played, experiences he had beforehand, applying that to a new art form, new medium, which in his case is the computer programs, right? And even though nothing was original, right? Up until that point, very little original thought there,

Starting point is 00:55:03 he had still made millions and millions and millions of dollars. There's a lesson there. My other games had borrowed liberally from existing fantasy stories. None of them were particularly original other than the fact that they were being told in a computer game format. All these stories had inspired me. So he's talking about Narnia and Time Bandits and Lord of the Rings. I'm skipping over all that. All these stories had inspired me. But if I was ever going to compete with the writers I most respected, I knew I couldn't continue stealing from D&D, The Lord and the Rings, Narnia, Star Wars, and etc. Games, I realized, had the potential to be much more than pleasant diversion. Done well, they could be as much an art form as books and movies.

Starting point is 00:55:42 And so up until this point, computer games are relatively simple. You know, you have an objective. But he's like, well, think about the best novel you've ever read or the best movie you've ever seen. There's like moral choices made by the main characters. Like they have to go through and like there's some kind of trade-off and they have to make like decision, like what path they're going to take in life. He's like, why won't we do this for games? And this is going to lead to his most successful project ever. I thought, how cool would it be to incorporate a player's own value system into a game? If I could do that, instead of a player just mindlessly going around killing monsters, players would be forced to emotionally

Starting point is 00:56:13 invest in the game. Instead of pushing a button, they'd have to sit and make a moral choice. Now, why am I bringing this up to you? Because he has this idea. He loves it. Everybody around him is like, no, no, no, no. Do what's working. Don't do something new. And we saw this with Sid Meier. He was making, I think, what was it, flight simulator games. They were selling them crazy, making a ton of money. But he's like, man, I want to make this big civilization game.

Starting point is 00:56:37 And this epic game, it winds up being called Civilization. And everybody around him is like, no, don't do that. Stick with the very profitable flight simulators. There's no money in that path you're going to take. And that game civilization that Sid makes over the course of that series, they sell like 53 million copies. So it says, when I told my brother and our team,

Starting point is 00:56:58 I wanted to tell a story about the player's spiritual growth through their own actions. His response, the response was pretty much unanimous. Are you nuts? There's no profit in virtue. That's a terrible idea. When I pointed out that no one had done this before, I was reminded of the reason for that, because that's not what people were buying. Throughout the development process, many people in the company continued to think I was nuts. So he's going to go head forward. Like he's the main designer. He's like, I'm going to do this.

Starting point is 00:57:22 So he's going even as he, so before the idea or as he has idea don't do this he's nuts he continues the idea you're still nuts the ultimate formula was proven and profitable and many other people saw no reason to change it and then he gets to his why like why is he taking this big risk why is he doing this it was my attempt to further develop an emerging art form and so he goes into way more detail in the book about all the fights they're having the decisions he's making but this part just made me laugh because his brother's like, no, I don't want to do this. His brother's handling the business aspect of their company. He's obviously developing the games.

Starting point is 00:57:51 And this part just made me laugh. They're fighting about all this. He goes, I had no choice but to stand firm. Forget it, I told my brother. My reaction forced him to take the ultimate extreme position. He told our parents. So I just love this idea. Like, I think they're what they got to be at this point, mid to late twenties. Sorry, we can't resolve this in the

Starting point is 00:58:12 business. I'm telling mom and dad that legitimately made me laugh. But later on, he was right to stick to his guns. And I just love this idea. It's like what Charlie Munger says, like, you got to follow your natural drift. It's a good idea. There's something inside of you that you may not even understand why you're drawn to that. Or another way to think about that is like what Jeff Bezos says.

Starting point is 00:58:31 He's like, listen, we don't choose our passions. They choose us. And there's some weird reason that you think you should be doing these things. And so follow it. So it says, this is the game that they were fighting over when Quest of the Avatar was published in 1985.

Starting point is 00:58:43 It was very successful with sales surpassing all previous versions of ultimas it also had a lasting impact on the gaming world uh commonly appearing on the list of the 10 most important video and computer games ever published and so i really like that chapter because if you think about where the chapter started to where it ended up it's like imitation precedes creation yes i'm successful imitating and maybe being having influence maybe just taking a story that's appears in a book and adapting it to a new format and then eventually i like i'm learning all these other things that were on their way and i i'm understanding myself he's getting older you know he's not a teenager anymore

Starting point is 00:59:16 and he's like all right i'm just gonna combine all these experiences and then create something new something something something that no one has ever done before and he winds up creating one of the most valuable franchises ever. And so then he's going to build on that success, and he's going to create, he is widely, so it says, I have been credited somewhat inaccurately with inventing the term and category known as, there's an acronym here, I'm just going to tell you what it means, Massively Multiplayer Online Role-Playing Games.

Starting point is 00:59:41 Because the next game, the next thing they're going to work on is this thing called Ultima Online, which is the first to become a major success so this is like the world that we live in now where you're playing the game but you're also playing with millions and millions of people at the exact same time all over the world and so the reason I want to bring this to your attention is because his point is like yeah they they credit with me for inventing the term in the category I didn't invent it I just was it was first, I took an idea that I found in the history of my industry and then I added something new to it and it winds up being the first massive success.

Starting point is 01:00:10 And so because most people didn't take the time to study the history of the industry, they actually didn't know that I wasn't the first one to come up with this. And so what's the main, like, why is that important? Because we've seen this over and over again. Like, I can't think of one founder that you and I have studied

Starting point is 01:00:23 that did not study the hell out of the industry that they're in. And they do that because you just never know when you can profit on that knowledge. So it says, but in fact, long before the existence of the Internet, people were linking computers to communicate with each other. They got together through dial-up services like the original American Online a decade before we produced Ultima Online. We were already dreaming of producing a game that allowed many people to play in the world at the same time and interact with each other. We were not the only people with that dream. Since the availability of computers, some people were producing text-based MUDs. And so MUD, I don't remember hearing about this before, they were called multi-user dungeons.

Starting point is 01:01:02 So text games, right? That are multiplayer text games. These multiplayer games were quite simple. Players could chat, they could write to each other, anything that's on the screen would show on all the screens of all the players at the same time. But these games had user bases in the few hundreds or low thousands and were not competitive with mainstream games. So that is really his innovation. It's like, well, you were doing this for text based. You already have this capability. I'm creating entire new worlds they're they're visual worlds they have this elaborate storytelling like why not just apply that idea to what we're working on and make it so you're not just playing by yourself you're not just playing if you happen to be networked

Starting point is 01:01:37 with a person in the same room as you it's like no you can play all over the world these games never really appealed to me nor did they inspire me beyond seeing the potential he's talking about text-based mods these games never really appealed me, nor did they inspire me beyond seeing the potential. He's talking about text-based mods. These games never really appealed to me, nor did they inspire me beyond seeing the potential they offer for something much more exciting. We watched this segment of the gaming industry very carefully for at least a decade. That's so important. He was studying the history of his industry, collecting information, and it took a decade before he was able to capitalize and profit on that. That's really cool. We'd meet regularly with the companies making the best dial-up games to discuss producing a multiplayer Ultima.

Starting point is 01:02:14 But with the fee structure that existed at the time, we couldn't figure out how to make a business out of it. So, again, this is like the first time I got on the Internet when I was like a young kid. I was probably like 12. I was on an IBM PC, and it was American Online. And you would pay. Like, you know, you called the Internet. I tried to explain to my daughter about this.'s like what are you talking about i was like you had to call the internet and like no one call your house phone when you're on it so it'd bring i think busy at the time make the damn funny noises and stuff but we were paid like you you had to pay by the minute it's insane like think about how how much you're everybody's online now

Starting point is 01:02:42 so it says the why he couldn't do this. He says these games were expensive to play. They required a subscription to a dial-up service, and the game itself generally would charge as much as a few dollars an hour to play. The availability of the internet, which allowed people to be online for extended periods of time without being charged by the minute or hour, completely changed the economic structure. So wait a minute. I didn't even write this note, but that's the same example we just said. Wait, just hold on, and future technology will unlock opportunities that you can't access yet that's exactly what happened here it's like hey i wanted to do this on massive online player multiplayer game couldn't do it when you're being charged a couple dollars an hour just to play the game and

Starting point is 01:03:17 you have to buy the game that doesn't make any sense right but now technology keeps marching on this new thing the internet you can it as much as you want. Now this is possible. And this game, he's going to end up having millions of subscribers on this game. So he says, suddenly a million people could be online at the same time. Not just a million, a hundred million people could be on at the same time. The potential was almost incalculable. So he set out to create a game that would appeal not just to the few who played text-based MUDs,

Starting point is 01:03:44 but the millions of people who were playing any type of computer game. Ultima Online proved that a huge market for multiplayer online games existed. Okay, so I said at the very beginning, or he said at the very beginning, you don't have to read this book in order. It also doesn't go in order. So this is going to be weird because he just said, this is where the idea came from. I'm going to develop it. It's really successful. Then he goes back in time and suddenly you realize, oh, he had sold his company. He's going to develop Ultima Online when after he sold his company to EA, to Electronic Arts, and he has a terrible experience selling to a larger company. And understanding that it's so important, this is going to go on for like 60 pages. The book is 300 pages.

Starting point is 01:04:25 This is a gigantic part of the book. So let's go into what it was like after he sold his company and he's trying to develop this idea. And he's just tenacious as hell. Like that is really a good way to think about Richard and just a great trait to have. The game was so different that initially EA had no interest in developing it. Solo games were selling, meaning games you just played real long, were selling millions of copies,

Starting point is 01:04:46 while rudimentary MUDs were selling a few thousand at most. My team and I explained to EA, for whom we were then working, that this new concept, massively multiplayer online gaming, was the wave of the future, and they needed to be prepared to ride it. It's amazing that he knew that back then, because that's the reality we live in now, right? No interest, they said. They pointed out that there was no data to support the belief that anyone would play an online game. And then he describes the difference between having a small entrepreneurial company.

Starting point is 01:05:12 Now he's got to get used to working with this gigantic bureaucratic company. He doesn't really like that. EA had a very formal process that its developers had to go through before the company would even consider funding a game. To make the case for funding, we had to bring together a huge set of documents that demonstrated why it would be a success. The sales department would then do an analysis based upon the sales of similar games in the past. Now, that's obviously a big problem because there was no. Like the only past historical data is these text-based muds, right? Since no one had ever earned a penny selling the type of internet game we wanted to create the sales projection was zero ea would not budge when i have an idea i believe in i am

Starting point is 01:05:51 tenacious six months later we went back for the second time we were told no six months now i'm telling you all this because think about this is going to be one of the most successful games they ever make and think about like he had to fight just to get them to do this so six months later we went back for the second time we were told no six months after that we went back again i literally would not take no for an answer this time i went into the ceo's office and told him look we spent five million dollars or more on any game that we develop just give me a quarter million dollars to prove to you that this is viable he truly was not interested but i would not leave the office until he agreed finally he agreed to sign a note that this is viable. He truly was not interested, but I would not leave the office until he agreed. Finally, he agreed to sign a note

Starting point is 01:06:27 that I'd already written out that said basically, I hereby grant Richard a budget of 250 grand in pursuit of this Multima thing that he wants to do. EA gave us minimal funding and no other support. To make matters worse, EA wouldn't give us proper office space. The building that we were in were being refurbished, and every other team was given new space as it was completed.

Starting point is 01:06:47 My team was literally put out in the hallway. We were working in the middle of a construction site. So he actually gets it done with this very limited budget, like this prototype. And then check that. This is a very unique marketing ploy that he used to launch Ultima Online. For the $250,000, we managed to build a nice little prototype. We then put up one of EA's first websites to introduce the game. Basically, we introduced ourselves. Hello, we're the Ultima team. We spent $250,000 making a

Starting point is 01:07:16 prototype for a new game, and we need people, a lot of people, to help us test it. We can't download it to you, we wrote, because it's too big. We need to send you the game on a CD, which is going to be expensive for us to manufacture in mail. So if you want to volunteer to be a beta tester and help us develop this game, please send us $5. This was a marketing strategy no one had tried before, asking people to pay for the privilege of volunteering. We didn't know what kind of response to expect. The EA marketing team had projected lifetime sales of Ultima Online at about 30,000 units, which they thought was wildly optimistic. We put it on the internet and we held our breath. Within a week or so, 50,000 people had signed up to pay $5 for the disc. Ultima Online instantly became the most important thing happening

Starting point is 01:08:03 in the EA world. We got all the money and the development people we needed. EA now decided we needed considerably more management oversight. This is also going to be a mistake. Having money made the situation much better. The managers made it much worse. In the past, once we shipped a game, it was done. So he's now talking about, I've skipped ahead a little bit, sorry.

Starting point is 01:08:27 He's talking about the fact that no one's ever had an experience on working on a game that is never finished. So it says, in the past, once we'd shipped a game, it was done. It was out. It was time to focus on what's next. This was completely different. We were going to be running a live service. There was no one in our group with any level of experience. We didn't even think about this when we were working. We were too busy just

Starting point is 01:08:46 running around. So there's a great line in Mark Hendryson's blog post, blog archive I did back on Founders 50, when he's like, you know you have product market fit because the market will pull the product out of you. And when that happens, it's just this huge rush and there's just, you don't have enough time or resources. You can't keep up with demand. It's very similar to what's happening here. We were wildly more successful than we ever imagined. We had designed servers that would allow for thousands of people to be connected simultaneously. But we were completely unprepared for the game's success. Suddenly, we had millions of subscribers and our servers could not handle it.

Starting point is 01:09:20 Not only could he not predict the level of success that he was going to have, he didn't predict what millions of people interacting with your product was going to be like. And so this is where he actually accidentally creates a real world economy from a virtual world. And this is going to be relevant to the day and age we live in, because this is happening, what, 25 years ago, maybe. One thing's for sure. People are very, very willing to spend real money on all types of virtual items. And he sees that here. No one anticipated that the game might enable students to work their way through college or allow criminals and drug cartels to launder money

Starting point is 01:09:54 or lead to the creation of Chinese gold farming businesses. We had no idea we were creating a real money economy that would generate billions of dollars in revenue and would obscure the lines between virtual world and reality. We just thought we were making a real money economy that would generate billions of dollars in revenue and would obscure the lines between virtual world and reality. We just thought we were making a game. And so I'll give you like a summary of what's happening here. Players could earn virtual gold in a variety of ways and use what they earned to purchase everything from virtual meals to a virtual house.

Starting point is 01:10:19 People began to covet these virtual items like property and magic swords, but were not willing to put in the time to earn the virtual items, like property and magic swords, but were not willing to put in the time to earn the virtual gold needed to buy them. Instead of spending months playing the game to earn the virtual objects they wanted, players began making side deals, often through places like eBay, buying virtual assets for real US dollars. He did not expect this to happen. So those people who were willing or able to put in the time necessary to obtain these items discovered that they could sell them in the real world for real money. I remember the first time I found an object from our game was being sold on eBay. A rare and magical sword was for sale for $100 and we were flabbergasted. The obvious question asks, why would anyone pay real

Starting point is 01:11:01 money for nothing? Remember, these are conversations that are happening in present day. You know, history doesn't repeat human nature does. That's why I'm reading this section to you. But for some people, it actually makes a lot of economic sense. A player could spend two weeks in the game collecting treasure before they had enough gold to purchase a big sword. Or they could pay someone to do it for them. Then he also sees another analogy in the virtual world, very similar to what takes place in the physical world. Real estate starts becoming incredibly valuable. In the real world, you might be able to buy a small

Starting point is 01:11:30 piece of land in a New Mexico hill country for a dollar, but a piece of land that exact same size in New York City would sell for many millions of dollars. The same thing is true in virtual worlds. And so the value of property near the entrance to the cities rapidly escalated. Within months of the game going online, a piece of virtual property sold for more than $10,000. So even though he's having a lot of success with his Ultimate Game series, he hates working at EA, and we're going to see him get kicked out of and fired from his own company. Before I get there, though, this is just a fantastic line. And he says, the art of business, which I had to learn, was how to stay in business long enough to give yourself the best chance to get a big hit. So now he gets into why he sold his company

Starting point is 01:12:16 and what the result was. So again, it's not in chronological order. He says, the experience had come at a substantial personal cost, even while it made me a fortune. Origin had long been among the top publishers in the industry, but as the industry matured, it began consolidating. The biggest players acquired many, many, many smaller companies and then became much, much, much bigger. To survive, we had to make a very tough decision. Even today, people ask me why in the world we did this, and all I can tell them is that in order to compete, we just had to get bigger. We either had to gang up with several other small companies

Starting point is 01:12:50 to become a single larger entity, or we had to sell Origin to someone else. Ultimately, it became obvious that we were not going to be able to engineer a merger of small companies and that EA was the right fit for us. So in 1992, we sold Origin to EA for $25 million. They immediately provided the resources we needed to double in size.

Starting point is 01:13:11 This was a huge strategic mistake. We couldn't manage the type of rapid expansion, and we wasted a lot of their money. The first thing we did was to split our team in half, which meant that some teams had second-tier leadership. So essentially the reason I want to bring this to your attention is because he's talking about all the mistakes he made. And it's very likely if you and I were put in the same position, we are prone. Rich is obviously very smart. These are smart, driven entrepreneurs,

Starting point is 01:13:35 very gifted at what they're doing. And as we've seen time and time again in these books, they make insane mistakes. Smart people make mistakes all the time. And so realizing, hey, if I was in that situation at that time, I might act the same way. And so the really benefit of downloading all these experiences into your brain is realizing it's going to be very difficult. If all these other smart driven people are making the mistake, like what hope do I have? Like it's very likely that if I was exposed to the same decision, like choices, I'd do the same thing. That's why it's so difficult to avoid the mistakes. But if you see this play out over and over again, like, hey, wait a minute, I need to really pause and make sure I'm not going down the same route that I've already seen multiple other smart and

Starting point is 01:14:12 productive people, you know, do and then regret later on. And so part of this is like you go from having one great team to now two okay teams. The first thing we did was split our teams in half, which meant that some teams had second tier leadership. We brought a brand new building that was twice as large as our existing space. Then we doubled the size of our staff. And then they're also working on a bunch of games at once. Two years later, we realized about half of the games that we have in development were not going to be successful. And EA told us to abandon them. For us, this was a new and very different way of doing business. We had never canceled a single game, but now we were playing by EA's rules. And so he goes into the fact that he just hated the way EA was building games and he no longer had control.

Starting point is 01:14:54 At EA, there were large teams assigned to each project. So when a game was canceled, we had to fire people. Once, when we announced that we had to cancel a game in development, the project manager laid down on the floor while another manager outlined his body in masking tape as if it were a crime scene. And this is the punchline, the most important sentence of this entire section. We felt this was symbolic of the death of the entrepreneurial company that we had built. They also make them rush and compromise quality. We released games when we were done with them. That was not the way EA did business.

Starting point is 01:15:26 Richard, they told me, your release of games is incredibly unreliable. They wanted us to change our development process to meet their deadlines. Ultima VIII, EA wanted on the shelves in time for the following Christmas. And they told me, Richard, you need to cut whatever needs to be cut

Starting point is 01:15:42 to get this game done. So I cut it. I cut it, get this game done. So I cut it. I cut it, and I cut it, and I cut it, and as a result, I shipped the most incomplete, dumb, buggy game that I've ever shipped. The creative joy that we had once shared in developing a game had been replaced by the prosaic demands of running a business. It was hard to believe how much had changed. And so you're starting games. You're not finishing a bunch.

Starting point is 01:16:19 You're firing them. There's all these turnovers. You have like this small band of this incredibly gifted team working together. Most of these people are churned out. Then you have all these different people in charge. And so it says EA kept sending a second string replacement managers who would immediately start by undoing all the things that his predecessor, also sent by EA, by the way, had tried to put in a place, replacing them with his own initiatives. The manager then would start their own new projects and fire all the junior people who weren't on their team and then bring in other junior people.

Starting point is 01:16:51 None of them stayed in place long enough to see their new projects through. So every year, the entire culture changed. And because he came up with control, he has no influence. He's trying to convince them, hey, we should go back to the way we were doing them before. And EA said no. None of my suggestions were accepted. Then one afternoon, a general manager of EA called me into his office and said, Richard, we just don't need you anymore. I left the office, drove to a grocery store parking lot, and wept for several hours.

Starting point is 01:17:23 It was the end of my personal Camelot. This was no game. This was my life. It had been painful for me to fire other people, but as I had just learned, that was nothing compared to being fired. I got blindsided by a deep and complex range of feelings. I felt like a failure. I was angry and depressed and confused. It was a hurt that lasted a long time. And frankly, I don't think I ever fully got over it. And that is where I'll leave it for the full story. Get the book. There's a lot more that goes on. He winds up founding two or three more video game companies. He winds up going to space. There's all kinds of exploration of Antarctica, the Amazon, the bottom of the ocean.

Starting point is 01:18:10 This book was really, really wild. And if you buy the book using the link that's in the show notes of your podcast player, you'll be supporting the podcast at the same time. That is 257 books down, 1,000 to go. And I'll talk to you again soon.

Founders - #257 Richard Garriott (Video Games and Space Exploration)

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