Invest Like the Best with Patrick O'Shaughnessy - Ilkka Paananen – Superpowering Teams – [Founder’s Field Guide, EP.17]

Starting point is 00:00:00 This episode of Founders Field Guide is sponsored by Clavio. Want to deliver marketing moments that last a lifetime, Clavio is the ultimate marketing platform for e-commerce. With targeted segmentation, email automation, SMS marketing, and more. Clavio helps you create your ideal customer experience. See why more than 50,000 brands, like Living Proof, Solo Stove, and Nomad, trust Clavio to grow their business. Keep your customers coming back.

Starting point is 00:00:23 Get a free trial at clavio.com slash founders. That's K-L-A-V-Y-O.com. slash founders. Stay tuned at the end of the episode where I talked to Clavio customer Nomad on their origin story and how they work with Clavio. This episode is also brought to you by Vanta. Does your startup need a SOC2 report to close big deals? Or do you already have a SOC2 report and want to make it easier to maintain? Vanta has built software that makes it easier to both get and renew your SOC2. With Vantta's continuous monitoring solution, you avoid hosting auditors on site and taking hundreds of screenshots to prove that you are compliant so you can focus on building your business.

Starting point is 00:01:00 Vanta partners with audit firms who file your SOC2 report directly inside of Vanta at a fraction of the normal cost. Hundreds of companies, including more than 100 Y Combinator businesses, are leveraging Vantas today to streamline compliance and focus on building their businesses. Founders Field Guide listeners can redeem a $1,000 off coupon at vanta.com forward slash Patrick. That's vanta.com forward slash Patrick. Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Founders Field Guide.

Starting point is 00:01:27 Founders Field Guide is a series of conversations with founders, CEOs, and operators building great businesses. I believe we are all builders in our own way, and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at Investorfieldguide.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaunacy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Oshonosi asset management may maintain positions and the securities discussed in this podcast. My guest today is Ilka Pananin, founder and CEO of Supercell, one of the most successful mobile game developers in the world based in Finland.

Starting point is 00:02:19 Supercell has built hugely successful games like Clash of Clans and Clash Royale that have each reached over 100 million daily active users. What interests me most about the company is SuperCell. Cell's unique culture built on decentralized autonomous teams with nearly total creative control. Ilka and I talk about how Supercell hires and designs teams, why they incorporate as little process as possible, and the rise of global social games. I hope you enjoyed this great conversation with Ilka Pananin. So Ilka, I've been so excited to do this with you for two reasons. One, I've been spending so much time thinking about and in COVID playing video games with myself and my young son. I think a great way to begin this conversation is with one of my favorite lines of

Starting point is 00:03:03 yours, which is that you once said, I am the least powerful CEO in the world. I love this concept because it'll introduce the idea of culture and teams and people that we're going to spend most of our time talking about, which may sound a little strange for a video game company, but I think it's amazing and critical. So what did you mean by this line? Why did you say that? What does it mean to Supercell's culture? First of all, thanks so much for having me, Patrick. I think to summarize the whole point about that phrase is that I just believe that the more decisions that teams make and the less I make, the better. In an ideal world, like if I made no decisions, then that would make me, I guess, the worst least powerful CEO. The whole idea about supercell and what is at the core of our culture is this idea of this small and independent teams that we call cells.

Starting point is 00:03:52 and these independent game teams sacred inside Supercell. And the way to think about them is think about smaller startups within the greater company. That's how we think about them. I'd love to go back before Supercell because I think your career up until that point helped inform you in how to build Supercell with less focus on command and control and more focus on decentralized trust. And I think our lessons today will be applicable across creative pursuits and industries, not just in gaming.

Starting point is 00:04:21 what were you doing prior to founding Supercell and what were lessons that you learned or were taught by your experience before this business? I guess we would need to go back to the year 2000. So I was still a student at Helsinki University of Technology. I had a business major vote. And I actually like in my early days of my studies, for some reason my dream job was to become either a management consultant or a investment banker, simply because that was what everybody else in my class wanted to do. And so did I. But then at some point in my studies,

Starting point is 00:04:58 I got really interested about entrepreneurship, and I started to think that, wow, this actually would be really cool, you know, trying to build your kind of own thing with a group of great people. And then I just got like super lucky. I happened to bump into this group of people

Starting point is 00:05:12 who wanted to found a company. And it happened to be a games company. and earlier, especially my teenage years, I had been a massive gamer and still played a lot of games. And then these guys, they couldn't afford to pay any salary. And I guess for that reason, there was nobody else who was applying to join them. All they wanted to do was to develop games and they needed somebody else to do everything else. And I was probably the only applicant, as I said, and then I got the job. And I didn't get any pay.

Starting point is 00:05:42 But the funny thing is that these guys thought that, okay, you got to do. do all the sales for us and we need to give you like a proper title so that people would actually like want to see you and I guess they didn't know like what to call me so when they decided to call me the CEO and I think I was 22 years of age and of course had absolutely no idea of what I was doing I had never had a proper job except some summer jobs and and I if you ask my parents they probably still think I never had a proper job because all I've done I've been the CEO from gaming companies. But anyway, that's how we got started and of course had no idea what we were doing,

Starting point is 00:06:20 learned by doing and eventually even managed to graduate somewhere in between. So that's how we got started in the year 2000. So set up a games company and funnily enough, we were actually doing mobile games at that time. If you recall those days, there was this thing called like the feature phones that they're coming to the market, mostly from manufacturers like Nokia, for example, of course based here in Finland. And then, of course, there was no app stores, nothing like that. So you would need to distribute these Java-based games through carriers.

Starting point is 00:06:52 It was a very different world at that time. But that's how it got started. We founded the company almost exactly at the time in the dot-com bubble burst, and there was no financing available. So we basically financed it by just doing work for hire work. And then on the side, we developed our own IP and our own games. I think we got lucky. We were able to cut deals.

Starting point is 00:07:12 with most of the European carriers, even with some of the US-based carriers. And then a massive amount of these Java-based phones came to market, and actually we started to make some money, and the company started to grow. And back in 2004, we sold our company to a company called Digital Chocolate, which was founded by a game industry legend, Trip Hawkins, and funded by Sequoia and Kleiner Perkins, and they joined forces with them. And then over time, that company grew to like 400 people,

Starting point is 00:07:42 so relatively sizable game development company. And I would call that time my kind of MBA, I guess, in entrepreneurship and management and learned lots of lessons. What were the key lessons that you learned positive and negative? I'll combine the time at both Digital Chocolate and your company that was acquired by Digital Chocolate. What were the things that it installed in you that you brought with you into Supercell?

Starting point is 00:08:04 And what were some other things that you reacted to or reacted against when thinking about how SuperCell would run as a company? The thing that they kind of kept and what I learned was that ultimately it's all about the people. And at Digital Chocolate, I was very lucky to work with such amazing people. I kind of thought at those times that we are going to like have the best strategy, the best plans, the best processes in place. And Digital Chocolate, and mostly because of my doings, was actually quite a sort of a structured company. And also when it comes to innovation. So we had a process almost for everything.

Starting point is 00:08:41 If you asked me like, okay, how does digital chocolate think about new games development send you a slide deck of like 50 slides? It explains exactly how things work. And we had all kinds of processes for like how to be greenlight new games. We almost thought that we or myself and my kind of leadership team over there had a kind of crystal ball. But as if we kind of knew the best what the players and the consumers want. and then they put together like all kinds of control mechanisms to make sure that the company actually develops products and games to that direction.

Starting point is 00:09:16 But then over the years I realized that there are a lot of negatives about this type of way of thinking because isn't the great the best creative people in the world? They don't get this feeling of ownership. And oftentimes I mean the reality is that actually the people who know the best, what is best for the game and for the players, those people are actually the people are actually the people who are building the game. It's not the leadership team, like not people like me. And over the years I realized our job as leaders, we should enable these creative people to do their work better, not try to control it. We spent so much time hiring the best people in the

Starting point is 00:09:53 world, also at digital chocolate. And if you do that, why on earth then you try to control them? Why don't you just trust them to do the best thing? One of the things that made me like fully realized this was at some point I started to look back that, okay, let's look at, the hit games that our company has put out. What is sort of a common nominator of these games? One is that they had really amazing people and great teams behind the games. But interestingly, the other thing was that most of these games somehow had nothing to do with all of these fantastic processes that they had designed.

Starting point is 00:10:26 The usual story was that we just didn't have anything else for these guys to do. So they're sitting somewhere in the corner of the office, and they were just doing whatever they wanted to do. And they're sort of flying under the raider, so to speak. And then the next thing you know, this amazing game comes out. And then I start to think that, wow, that these amazing games may come out not because of me or the process that I put together. They come out despite all the things that they've done here.

Starting point is 00:10:58 And that was a like interesting moment and I kind of realized that. And then the other moment that I remember, I remember seeing very first, version of the Netflix culture deck, which I think it probably came out, was it 2008 or 2009, something like that. And there we talked about this culture of freedom and responsibility. But there we talked more about that from individual perspective, like about the employees themselves. Like something really struck me about that. We ever going to found a new company, this must be the idea. But then they kind of took that idea further.

Starting point is 00:11:32 And instead of thinking about freedom and responsibility, of individuals, we start to talk about freedom and responsibility of teams. And that led to the idea of Supercell. I absolutely love the idea that the success was in spite of process, a magical thing to have realized. I love how Supercell thinks about the hierarchy of people, teams, and culture. I'd love to spend a bit of time on each of those levels of how Supercell runs. And starting with individual people, I know that obviously, I think early on, you said the best people make the best games, but have changed that to be the best teams make the best games and we'll talk about the difference. But let's start with people. When recruiting early on at Supercell and today, what have you learned, how have you

Starting point is 00:12:13 refined the process of identifying the best people, recruiting them, and sort of understanding what qualities they tend to share regardless of their background? The most important thing is, I think we call it like the passion for excellence. So just meaning that we try to like identify like how high is the bar for this individual. I mean, what is like, does this individual know what great looks like? That is so important that you really understand and you can set the bar as high as possible. And that is sort of basis for everything. Other thing is that we call them proactive doers, meaning that is this individual able to get

Starting point is 00:12:53 to that bar and figure out a way anybody telling that individual how to do so or to do so in the first place? I'd like to think Supercell as a company of 340 like entrepreneurs. At SuperSel, we don't talk about employees and leadership and owners. We're just supercellians. And we have very little control mechanisms or processes at the company. So for you to like do well at Supercell, you have to be very entrepreneurial-minded. And actually like a lot of people who have done very well at Supercell,

Starting point is 00:13:23 they oftentimes have actually, they've had their own companies previously. So they're founders of their own companies. later on they wanted to join us and those type of people tend to do super well at the company. And then the third criteria is that you just have to be like great to work with. It doesn't mean that they have to be friends or anything called sidework. We like people to be humble and of course trust therapy and those type of things. In this flat structure that you've built at Supercell, I remember studying Valve's culture back in the day, which is also very flat and self-organizing into small teams, also a games company, interestingly enough.

Starting point is 00:13:56 It seems like the most important thing then, almost everyone's most important job, is getting more great people into the business. What have you learned about that, I'll call it funnel or process. How has that been refined over the 10 years of Supercell's history? What do that look like to start? And how has that process gotten even better? What lessons have you learned? First of all, and this maybe goes against what I just said about processes. I mean, if there's one process there actually process does make a lot of sense, it's probably a recruitment process.

Starting point is 00:14:25 in that process you want to sort of accumulate all the learnings through the years that you got on because as you say that probably is the most important process in the company actually early on we were six co-founders as you may imagine there wasn't much process we simply asked ourselves a very simple question which was who are the best people that we've ever worked in previously and that got us to like we grew up in the company from maybe but six to maybe 25 or so and it all came crew from our own networks. We just made sure that the people who joined shared the same values that we have. And then that group of 25 people then recruited the next layer of people. At some point, we actually created our own recruitment team. It was one of the best decisions

Starting point is 00:15:09 we've ever made. And that team crafted a process around the recruitment. And these days, I feel that it's actually quite well refined. And the number one lesson that we learned over the years is that Don't try to shortcut the process. Every single time we try to shortcut it in one way or another, it has come back by us. And that's the one process that you really want to follow. And you really shouldn't rush it. Of course, they're like product deadlines over somebody who you instantly want to join the company. But you still should just follow the process and take your time.

Starting point is 00:15:42 Don't rush it. What does the recruitment team look like? How many people around that team? What does their day-to-day look like? It's not that big of a team. We have four offices and have recruitment people in every one of those offices. And we're very close with our teams who need new people. What they do is that they help those teams put together with job descriptions,

Starting point is 00:16:03 like trying to really like challenge these people and teams. Okay, what type of people are you looking for? Let's actually like write it down. And then once they agree on the profile of the people that they're looking for when they can go out and try to look for such people. And oftentimes they are the first ones who make the company. contact and then they basically run the process and our interview process it's I guess it's quite famous it is really lengthy and it takes time and we really appreciate all the candidates

Starting point is 00:16:31 who actually do take the time to go through that process because it does have a lot of interviews like it can be 10 or more I know it goes probably like a counter to any logic but I for example still interview every single person who joins super so no matter which office no matter what position even trainees often time the reason isn't that I I feel that I would be somehow like superior in interviewing people or I would like to make sure that they don't make mistakes. But it's a great way for me to give my finger on the pulse on what type of people are we getting to the company. And one of the best advice that I've ever gotten about recruiting is that if you can try to imagine the imaginary average quality of a person at the company. And then there's a new candidate who is about to come in, ask yourself the question that is this new person, is she or he,

Starting point is 00:17:20 going to raise the average quality of the company. And that's what I also try to look for. And it's been really amazing to see like year after year, how much more like great people be able to get to the company. In your own personal interviewing style, in addition to screening for the passion for excellence, being good to work with having that activation energy or being proactive, is that mostly what you're doing is screening for those concepts? And if not, is there anything else maybe counterintuitive or unusual about how you interview people? Well, the one thing that I always, always do before we interview, I actually, I mean, we have documented our culture in a kind of an old-fashioned culture memo, if you will. And we always send that memo prior to my interview to the candidates.

Starting point is 00:18:04 And we actually talk about it and I ask a few questions about it. And also I want to ask these people who join that, I mean, we are dead serious about our culture. And it has its positives and its negatives or challenges. And I want to make sure that the candidate actually wants to join such type of company. And we are not the right company for everybody. Some people, it's important for them to have like safety mechanisms like controls and processes and they look to be managers to give them a lot of guidance. And they don't have too much of that.

Starting point is 00:18:34 So if you're that type of person, then they aren't the right type of company for you. Okay. So we've got this 300 plus person group of quasi entrepreneurs that have been put together to build supercell. Now we have to go to the level of teams. And I understand that for the most part, obviously, the mission of the company is to put out these long-lasting beloved games. It's kind of remarkable, given that it's a hit-driven industry. Oftentimes, there'll be a one-hit wonder studio,

Starting point is 00:19:00 but Supercells consistently put out these incredibly long-lasting, high retention games. What have you learned about teams? How do you put them together? Are they self-organizing? Do you direct it in any way? How do you create enough space around them to do their thing? Can they just work on something as long as they want? I'm just fascinated by once you get the right people in the room, how teams then become the driving force behind the company? Well, this probably is the most difficult part of my and our jobs, putting together a great games team. There's so much that goes into it.

Starting point is 00:19:33 I wish there was a formula and how can you put it together. But I think it's quite a bit of just trial and error. And of course, over the years you get some type of pattern recognition of what might work. It's maybe easier to first begin by saying what does not work. I mean, what doesn't work in our experiences, that if you just put together a random group of absolutely great individuals, that doesn't necessarily, and oftentimes, doesn't make a great team. We've done that a few times as well.

Starting point is 00:20:01 We've also tried putting teams together completely organically. That hasn't worked the best way either. So I think it needs some direction oftentimes a little bit in a way that, like, as a coach or GM in professional sports team, puts together the team. I think there are some similarities in there. The great team is something that the core team members, they can complement each other. I think that is the key part.

Starting point is 00:20:26 So we've kind of identified certain type of roles that there has to be in the team and the core of the team. And if you don't have every single one of those types of roles and personalities, then the team just won't work. As a last thing, once you have found a great team, redistributing that team should be very high. I know it's a cliche that you want to keep a word. winning team, but I do think there's a lot of proof into that. One of the things that you think

Starting point is 00:20:51 about a lot is that, okay, of course, there's also a lot of value in rotating people between teams, because that's how you can maximize the learning in an organization, and especially in an organization like us, where one of the biggest risks that we have as a company is that these teams become really siloed. Because on one hand, we are huge believers in this idea of these independent teams, but the flip side of the coin is that if you have these siloed teams, there's no like shared learnings and no synergies between any of the teams. That isn't great either. And the way to kind of get those learnings going on is actually like rotating some of a team member. So it's always a kind of a. And then of course above teams is the supercell wide

Starting point is 00:21:32 culture. It's a very decentralized place. These smaller teams producing these games fairly independently from what I understand. Talk about the cultivation of trust as supercell wide trust, not just within a team, as sort of the driver of the environment and culture that you create. You started with the negative. Maybe what culture doesn't mean to you? We could start there and then talk about what's important to build the culture. It's one of those things that's easy to talk about trust when things are going well. It's very easy to trust a team that it's doing super well.

Starting point is 00:22:03 I think the true test of the trust is that then things aren't going well. And moreover, like if things aren't going well and then you also happen to disagree with the team is doing. And that is the ultimate test of the... trust. This kind of crossroads many times as a company there. And ironically, it's related to one of our biggest hit games too. If I think about the three most recent games that they've done, Boom Beach, Class Royale and Roll Stars, every one of those free games has actually faced quite a big kind of internal opposition. There's been a lot of people at Supercell who actually thought that they shouldn't either develop those games or we shouldn't continue to develop those games or we shouldn't

Starting point is 00:22:44 release those games. And in those cases, the way we thought about them is that, okay, like, sometimes even the majority of people are against releasing this game, but then the team behind the game actually really wants to release the game, and they truly believe in it. How we thought about it is that, okay, now we have like two choices. The first choice is that let's do what the majority wants to do, which would be not to release it or kill this game, but that would go against what the team wants to do. The chances are that this might be the right business call for the short term

Starting point is 00:23:16 because I mean they have lots of great experienced people here in the room and they all think this game won't do well. So why would we release it? It might be the right business call. But then on the other hand, we can do that when we can't talk about the independent teams anymore

Starting point is 00:23:32 because then they aren't independent. And if we do that, even if it would be the right business call, it would destroy our culture. How we thought about it is that the culture, the culture is the most important thing in the company. It's far more important than this short-term business goal. So then we've always taken the other path, which is to trust the team.

Starting point is 00:23:51 Let's have them release the game and let's see what happens. As I said, sometimes that has been actually, ironically, also be a great business call as well if you think about the last three games you've done. I really have to say that I really admire these teams. It cannot be easy to work on a game there, people outside the team think, actually I don't believe in your game. How do you make sure, given that that that amount of crazy trust, even with most people saying we shouldn't release this, you still do.

Starting point is 00:24:19 How do you make sure that the teams kill games themselves when they aren't good enough? Well, it's funny what happens when you trust people and you trust the teams, because then they get this enormous sense of responsibility. They really think that, okay, this is my game. It's my responsibility. And how we think about responsibility is that it's not that these people would need to feel sense of responsibility, for example, towards me as the CEO. They feel a sense of responsibility towards everybody at SuperSelf.

Starting point is 00:24:52 Then it seems to come quite naturally. It truly is their call to either kill the game or release the game. That actually makes them care so much. And this huge feeling of responsibility comes in. I think that probably is a secret. If it would be like my call, for example, to either release or kill the game, then the responsibility would shift from a team to me. And then they probably wouldn't care as much. But because it's complete their responsibility, they really, really care.

Starting point is 00:25:20 It's a fascinating idea. And obviously it pairs perfectly with incredible people. How often does a game that gets worked on make it out? What is the ratio of games that maybe get started is the wrong metric because it might get started and get killed very quickly? but let's say get started and last for some period of time and then get killed. What is the ratio of success to failure? I've tried to like calculate it quite a few times. As you very correctly pointed out, what makes it difficult is that how do you define what

Starting point is 00:25:49 is actually a game? So if a group of four people brainstorm a game for a week or two with a whiteboard, is that a game and then it gets killed, do you have like an early prototype or do you actually have kind of an official production going on with a full team? I would say that depending how you look at it, I would say that the ratio is probably like one out of 10 or so. So for the 9 out of 10 that don't ultimately make it, what happens when it gets shut down? Do you try to get together and share lessons? How do you use the 9 out of 10 that don't work out to make the teams, the people and the culture better?

Starting point is 00:26:24 Actually, there's a funny story about this. So we actually do celebrate in this moment toast champagne, actually. And how we can get started was that this must be in early 2011. there was the first game that caught killed. I was having a lunch with a lead of that team, and he told me, we killed this game, and now we're going to have this post-mortem session. So I just want to tell the company,

Starting point is 00:26:44 and the company was 30 people at that time. I want to tell the company what happened and what we learned. And I thought that, oh, this sounds like a pretty, like, sad meeting, and what could I do to cheer it up? And then I just had this thought, oh, I'm going to actually go and buy a few bottles of champagne. I'm going to hand them over to that team. Because, I mean, it's nice that they're going to share the learnings,

Starting point is 00:27:02 and that's how we're going to get better. as a company. Then it somehow became this joke. The point is not that we are trying to pretend that failing is fun. It's anything but fun. You can imagine that a group of people, passionate people, have worked for a game for months, sometimes for years. It really has become their baby. So it's an extremely sad moment to realize that, oh, it's not going to work out. There just aren't enough players who would love this game. We don't believe in it ourselves. It's very, very sad. What we do think is definitely worth celebrating are all those learnings that come from that failure. And we want to really encourage this risk-taking culture. We want to make the

Starting point is 00:27:42 failing completely safe. I believe that if you don't take really big risks, never going to grow as a company. Building new great games from scratch, by definition, it's hard because you're trying to create something new, something that doesn't exist yet. If you don't take risks, then that will never happen. The result is just increasing. innovation, which we don't want. So that's why we felt that it's really important to kind of promote this kind of a culture of risk-taking. And that's why we also quote, celebrate the failures, celebrate the learnings coming from those failures. For the one in ten games that does make it out, one of the things when you study Supercell that you find that's sort of mind-blowing is the

Starting point is 00:28:21 incredible long-term, I'm talking three, five, 10-year retention numbers of the games, meaning if you take something like Clash of Clans, probably the game that most people will be familiar with, many, many years after its release, people are still playing that game. I'd love to just hear all things retention from you. Why is retention so important? How do you think about it when you're working with the teams and thinking about releasing a game? How is the idea of that this game may be played five or ten years from now baked into the design and the thinking?

Starting point is 00:28:50 I'm just fascinated by this topic of retention and would love to hear what you've learned. It all started actually like when we founded the company. They were six co-founders. And I think three out of the six people, they're massive fans, almost addicts of this game called World of Warcraft, many would know. And one of the co-founders, Micko, he had played the game for like five years at that point. I think the thing that he had realized was that the single biggest reason why he keeps on coming back to the game day after day, month after month, year after year. It's not even the game itself anymore. It's the other people who he has met through the game.

Starting point is 00:29:27 Because we found it super, so like our dream was to like create games with similar longevity. They just wanted to bring these games to much wider audience than we believe that World of Warcraft was for. That's how it got started. Ultimately, it's almost all about the social value of the game. If the game is more fun than you play with other people, that's a great place to start from. These days, players think these games as almost hobbies or, services and one of the key qualities is that the game needs to be like eventful and there almost every single time you come to the game there has to be like something new available new

Starting point is 00:30:06 content something new to play something fresh in there so they are not just products anymore they're definitely services i think one of those things that we've done is that we have just continued to invest into it not just to the games themselves but also like to the community around the games and the organized events e-sports events and esports for us it's not the kind of revenue driver or it's not a revenue diversification play. We just do it simply because we are players, but there's a group of players who really are passionate about that type of thing and they want to compete against each other. You mentioned this idea of service, so continuing introduction of new content, maybe tweaking,

Starting point is 00:30:45 making sure that the experience stays fresh. Is there anything else that you've learned about, I don't know, intellectual property of the game or just the world that you're building in the game, whether that be the broadest possible reach. How do you make it appealing to many people, the depth of the gameplay? I often read that it's that combination, reach and depth that make your game stand out. What are your thoughts there? One thing that we've learned is that the most important thing is to focus on the players who really, really love the game, absolutely passionate about the game, rather than focusing on the people who don't like the game and why don't they like it. The thing is that if there's a

Starting point is 00:31:22 like a group of people, even though it would be small in the beginning, are passionate enough about a game. Then what will happen is that those people will convert other people around them to love the game too, and then it will start to grow. But certainly has been true about many of our games and even the latest man brawl stars, which as I said, not everybody at Supercell loved internally because it was so different. And many people say that, oh, it doesn't even look like a Supercell game and it's not a mobile game in the first place, just because it was so, so different.

Starting point is 00:31:54 The thing is that these biggest successes, they are not evident from the start. They sort of happen, and oftentimes these big successes, they are so, so different to like what exists in the market today. That means that initially maybe like not everybody will fall in love with them on day one. But the thing is that are a group of people who do fall in love and they are so passionate about them, that over time, as I said, they convert other people to love them. What do you think about the notion of all the teams, I'll call it outside of the core gaming team? So we focus mostly on hire amazing people, let them form small teams, not purely top down,

Starting point is 00:32:34 not purely bottom up, get the teams just right and then really, really trust them to create these great games. Supercell is also famous for the teams and the activity around the games. They're famous for unbelievable performance marketing, for example. I was fascinated to learn about the content that's created around the IP itself, so not the games, but others say YouTube content that gets hundreds of millions of views, I think billions of views in some cases. And these are not core game teams. Talk to me a little bit about how other non-core game teams at Supercell are formed, the role that they play, how they interact with the baseline game teams. What have you learned there? Again, as I said, it all starts from the games and the game teams. That's core of the Supercell. Around the game teams, we have all kinds of different teams, and their mission is to do whatever they can to make these game teams and their games successful. Amazing, amazing creative people, for example, in our marketing teams,

Starting point is 00:33:30 who've done these videos, and we've even released a short film called Lost on Clown on Clash or Clans, and we've done a series of shorts called Clashorama, has probably gotten way more than half a billion views on YouTube, et cetera. Quality is everything to us. I mean, it's absolutely everything. And I think one of the greatest proofs of that is that these videos that you just talked about, the vast majority of those views are organics and they just spread around because they're just great content of our players and also people who aren't yet playing our games.

Starting point is 00:34:02 They just love to watch. For example, this is kind of a weird specific question, but on the content that's created by a team that relates back to IP from a certain game, does the same independence and trust apply to them meaning can they release something, even if the game team for the IP on which the content is based, doesn't approve of it or doesn't like it? Does it work that way? When you have a group of passionate creative people, both in the game team, but then also outside the game team, sometimes there's also a bit of a clash.

Starting point is 00:34:34 But we try to, of course, talk them out. And I don't think they've ever been at a situation where the game team is absolutely opposed to something that, say, people outside the game team are trying to do. And the nice thing about Supercell is that we're still a real thing. relatively small company. It doesn't take much to get people together and talk about things and agree what to do. Going back to where we started, which is you as the least powerful CEO in the world, what does the world's least powerful CEO spend most of his time doing? What does your day-to-day look like? How is your time devoted to make sure Supercell keeps getting better? Well, I spent most of

Starting point is 00:35:07 my time, obviously, with people. I spent my time with leads of the teams, obviously. I spend quite a bit of time with recruitment. As I said, try to keep my finger on the pulse, what's going in the company. I try to look for opportunities to improve a company. One of my favorite questions, if not the favorite one, is when I talk to the leads, is what's slowing your team down? How can I help? How do we make SuperSale better? We talk to people about that and we just want to always constantly get people's ideas. How do we make a company better? How do we make the culture better and we ask people to challenge us, challenge the existing beliefs and nothing is sacred. But of course takes a lot of time and trying to encourage people to speak up.

Starting point is 00:35:48 What are some of the most or the most surprising thing that has happened inside of Supercell in its first decade? Starting from the obvious when they founded the company, could have never, ever imagined what it's become. I remember when they were celebrating when they got, I think, 10,000 daily active users and then it went to like 100,000 and people, like now we've really made it and probably won't grow much more. And then it went to a million and 10 and 100 million and all that.

Starting point is 00:36:16 It still surprised me how lucky we've been as a company as people. And then the other thing is that I'm still like keep on surprised how great people we have, both the people we have and then also these new people come and join us. So lots of people, of course, and all the companies talk about how people and culture are, their number one asset, et cetera, et cetera. but I think it really is true. I have a very simple question, which is really based on the fact that you've created so many games,

Starting point is 00:36:43 most of them haven't made it out the door, and you've had so much success, but also a lot of failures. What makes for a good game? What are the features that are shared in common across, not just your best games, but the best games that you've ever played? It's a rost of list of features. I think game development would be easy. I guess on a very high level, as I said before, I'm just a huge believer in the social value of the games.

Starting point is 00:37:12 I just believe that if the game is more fun when you play with other people, that alone will be magical. Because then you create an incentive for you to invite other people and then the game is kind of larger than just the game. It becomes a social phenomenon. It gives you like other value than not just the fun that comes from playing the game, but it gives you like context. While you're playing the game, you can talk about something else also with the people. And that's what happened. If you look at how, say, kids play Fortnite these days, I mean, Fortnite has become this ultimate place to, like, hang out. Look at kids playing Fortnite. They can talk about homework and all kinds of things besides the game itself. But Fortnite is just

Starting point is 00:37:54 the place there these gamers meet. And the same is true about some of our games as well. A thing I wanted to ask you is about this notion of infinite games. Most games end. A board game we play or a video game we play has some beginning, middle and end. I think you're a believer in this notion of, not just in work, but in life, this notion of infinite games. Can you describe what that means to you and why it's important? I guess that's a dream. Even our company mission is we want to create great games that as many people as possible will play for years and games that would be remembered forever. And of course, it's obviously a very, very bold dream. It's something that It's super important to us.

Starting point is 00:38:32 We just believe that a fantastic feeling when we are old and we kind of look back if people still are playing the games and it would be a great feeling. It would make us feel that we've actually given the world of entertainment, something long-lasting. But I described how I feel about Nintendo. It is a pretty incredible feeling that when I was less than 10 years old, I played some of these games on a fell in love with characters like Super Mario, etc. And then you still have these characters which exist today and people, of them and having fun with them. It would be just a great feeling to be able to invent such type of things. Look, I've so enjoyed reading everything that you and your company have put out, exploring the culture. It is radical in some sense because it's so different than the typical

Starting point is 00:39:14 corporate culture. But in another sense, it's just so obvious that you should find great people and let them do their thing. And I think Supercell, to study as a business, is a great example of the potential of that way of running something. My traditional closing question that I ask everybody is to ask what the kindest thing that anyone's ever done for you is. I think outside looking in might look like an instant successful company and things have always gone so well, but it really isn't true. So I remember the early days, they definitely weren't easy and we had a huge amount of failures until we finally then got lucky with Hayday and got that game out. But even like since then, every once in a while we screw up massively on something. So many people who have,

Starting point is 00:39:58 even in those types of times have supported us. And it's hard to like single out one single thing. That's something that I pay forward. Sometimes I feel that in the world of entrepreneurship, we talk way too much about people who have been successful. I actually admire more of the people who have tried to set up their company and have failed, but despite that failure they are try again. I feel those like unsung heroes are also the people who deserve a lot more respect.

Starting point is 00:40:26 And I wish there was entrepreneurship gala for those people. people because they, it's actually pretty easy then it are successful. And I don't think those people really need much of celebration. But I think those people do keep on trying despite the failures. And that's why I've always really respected the people who have supported us also in those difficult moments. Yilka, what a fantastic answer. I would encourage everyone out there to just take this conversation and just dream a little bit what it would look like to adopt some of these principles into what they do because I do think they're so powerful. Thank you so much for your time today and all the lessons that you shared.

Starting point is 00:40:57 Thanks so much, Patrick. Really enjoyed the chat. This episode was brought to you by Clavio. In this four-part miniseries, I sit down with Clavio customer Nomad and discuss their origin story, why they chose Clavio for their business and how your brand can grow online sales with Clavio's e-commerce marketing platform. In this week's episode, Nomad Marketing Director Chuck Melboro and I discuss how Nomad uses Clavio to personalize their e-commerce marketing and grow their online sales. Chuck, maybe you could walk us through the specifics of what Clavio does today, specifically how you use it, not everything I can do, but the ways that you apply it in your business and how you work with it. And just give us some of the nuts and bolts details of how it actually works. Yeah. So for me personally, one of my favorite parts of Clavio is the segmentation tools it offers and the connections it has with other marketing

Starting point is 00:41:46 tools out there. It allows me to build out really personalized segments of customers that I can send emails to, of course, but also sync with my Facebook and run ads to depending upon purchase behavior or viewing behavior. That's kind of number one. It's been a really great tool to have for that. Number two, the flows we can build out. You know, like you have the basics, like a post-purchase flow or a browse abandonment, or a browser abandonment flow.

Starting point is 00:42:07 But some of my favorites are like the predictive analytics flows I'm able to build out with Clavio. They have a pretty cool AI system built in that basically looks at our customer data and can analyze and predict like, hey, these types of customers are probably going to buy within the next 30 days. So I can get out ahead of them and present them with some sort of offer to make sure that that conversion happens rather than maybe going by the wayside or that's not never happening. How does it work literally with the other marketing tools? Like how much of all that happens

Starting point is 00:42:33 just inside a Clavio dashboard or system? The primary thing, like I said, is building out segments. I'm able to build out a segment of customers with all their different logic gates and then sync that with my Facebook or sync that with something else and then run the ads I want to those specific customers. Other cool features it has is like the fact that I'm able to build out my email capture popovers within Clavio has been awesome. In the past, usually I have to use like a third party tool to build out the popover and then hook it into Clavio to send the data back and forth. Just having it all kind of silo to one place has been fantastic for just easy use,

Starting point is 00:43:07 but then also like getting super solid data. There's nothing getting lost in the mix or nothing falling through the cracks. Is there anything that they do to give you some sort of feedback loop in terms like how whatever you set up is working so that you know either it's effective or it's ineffective or you need to iterate it or improve it? Is there a feedback loop? Clavio has some really interesting feedback mechanisms. They do a really good job of tracking all of our user behavior data as far as open rates, click through rates, on sub rates and stuff like that. So I keep a pretty close eye on our flows to see like when our customers are

Starting point is 00:43:39 unsubbing or reporting us a spam or something like that at a higher rate than anticipated. That's usually a pretty good indicator of them clearly doing something wrong as a marketer. So let's start experimenting and figure out what it is and try to put a band-aid on it. The other thing I keep a really close eye on is my open rates. I was on to ensure I have a high open rate because it's going to have like cascading effects. But my personal favorite thing they have going right now is they have a benchmarking tool that's been, I think, worked on for a little while now. And it's been really neat to see. It basically gives me insight into how Nomad is performing with our email marketing versus other brands in the same category or similar category to us.

Starting point is 00:44:16 It lets me know, like, okay, my 35% open rate, is that good or bad? Like, you can read blogs all day long, but that's just emails and people pontificating about what they think's good. Let's look at the actual data and compare it to everybody else in the space. So this benchmarking tool has been great because it's helped me highlight some areas that I'm doing well, but also where I have deficiencies as a marketer in areas to improve upon. To find more episodes or sign up for our weekly summary, visit investorfieldguide.com. Thanks for listening to Founders Field Guide.

Invest Like the Best with Patrick O'Shaughnessy - Ilkka Paananen – Superpowering Teams – [Founder’s Field Guide, EP.17]

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