Y Combinator Startup Podcast - #73 - Patrick Moberg and Holly Liu

Episode Date: April 27, 2018

Patrick Moberg is the cofounder of Playdots, which is a mobile game studio in New York. They make Dots, Two Dots, and Dots and Co.Holly Liu is is a Visiting Partner at YC. Before that she cofounded the gaming company Kabam.The YC podcast is hosted by Craig Cannon.

Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is with Patrick Moberg and Holly Lou. Patrick is the co-founder of PlayDots, which is a mobile game studio in New York. They make dots, play dots, and dots and co. And Holly Lou is a visiting partner at YC. Before that, she co-founded the gaming company, Kabam. All right, here we go. Let's start with an explanation of what Dots is, but the whole entity is, and we'll just go from there. Okay. So Dots started as sort of this little art project that was born at BetoWorks, which is an incubator investor in New York City. And it was sort of my synthesis, final synthesis of art and technology, which I'd been like sort of dancing in between up until then. So games was this really natural progression. So it was sort of my first foray into that. And I think it was like a lot of right place, right time. I think the idea was like simple enough. that would just sort of, I think, as a group,

we're kind of surprised by how well and sort of how far it took off and sort of the fan base that it resonated with. Yeah. And so we've now built a studio around that idea. And had you made a game of any kind before? It's funny. I feel like right when I started learning how to program, I was like messing around with like 2D arrays and grids

and like very similar to what dots sort of became, but that was like 10 years earlier. And then I kind of hit a wall because I was so new to programming. So I moved to like server side stuff and started doing like much different type of work. So it was interesting to like come full circle back to that after like programming for like a long time. But I really didn't in the interim there wasn't a lot of like interest in games. Huh. Yeah.

And why art and technology then? Like what what made you synthesize it to? Around dots. Yeah. Well, because I mean it obviously resembles a Damien Hearst's piece. piece, right? Did you try out other things where you're like, oh, maybe I can match this up? Or was that the first? Yeah. So the big point of inspiration was this artist Yeo Kusama. So the year before, I went on this trip to Japan and sort of went to the city, Matsumoto, where they were in a retrospective of this

artist's work. And it's all like dot-based. It's a little more like off the grid than Damien Hurst. But the whole city was sort of like covered in her work. So the buses were wrapped. The like cook bending machines were wrapped. There's like a couple big museums that were showing just her work. And so it was sort of dots everywhere. And so the way the program at BetoWorks was run was like, it was basically an open prompt to build a prototype of whatever you wanted within three or four months. But there was like you had to launch something at that time. And so I was kind of like looking back on that trip and like I think her work was really formative because it was like beautiful but accessible. So it was like the idea that it could almost be

playful to be to be like interacting with something beautiful. Okay. It was kind of the impetus. And so I like started with screenshots of just like what could a mobile game look like that would be different from what sort of what else is available. Yeah. And the gameplay kind of came from that design. Like it was very much like, okay, here's what it, here's what it could look like. How would this play? And so I started sort of like the rules kind of came from there. And are you prototyping these interactions and then showing them to people? Are you asking? I don't know much about game development.

So like how do you figure out those mechanics? I think it was really cool is that. So Paul Murphy, who would later become my co-founder with Dots, the way he ran this program at BetoWorks was that basically every week we would check in on Thursdays and sort of either talk about what you like sort of did or sort of later in the program, show what you had completed. And so, got it. out in this weekly cadence that I really wanted to show something every Thursday.

And so it kind of drove that prototype really quickly. And it, like, made me want to make things that I was proud to show. And so I found that was a great way to produce that type of game. And so it was, like, every week getting in people's hands and sort of seeing how people reacted to it. Yeah. And is that the same way you develop games now? How many games are you guys making now? So we've put out, so we sort of have three that are live in the store. We've done a few others that didn't make it to full releases.

So we can get into it later, but it's like we'll put stuff in sort of test market and sort of do that on a bigger scale. So I think Dots was really born out of like friends and family testing it. And now we sort of just need to do things at a bigger scale to know sort of how it'll resonate with people beyond our sort of network. Yeah, and so the initial launch, how was it received in the beginning? Again, I think a lot of luck, a lot of right place, right time. I think BetoWorks, it was like a first, their force foray into games. And so I think their network, which is like a very substantial and sort of like influential network. I think it was like cool, it felt cool to them to like be a part of a game launch.

And so they were like great advocates for it. And so like people with tons of Twitter followers, like, talked about it day one. And then we like, I think Paul was like forward thinking. He was like, we got to try Facebook marketing, which at the time, like, no other, I think very few other beta works companies were like doing. But he was just like, this is like a good thing to test that with. So we had like a really small budget.

And I think there was actually a mistake. And it all got like instantly, like instantly bought a ton of players. But it was like $10,000, I think. Like it was still relatively small compared to like other budgets now. Yeah, but you spend it in like one day? Like one hour. Whoa. It was like just a bug.

I think Paula talked about it like he fucked up, but it kind of worked out. So it was kind of like that great word of mouth. There's like this foray into Facebook marketing in like a really early time. I think the aesthetics led to really inexpensive sort of CPI's cost per install. Yeah. Why? I think it's it's. It was just such a clean image of a white screen with dots on it.

But I think that just popped in the sort of Facebook feed. And I think it was like I always felt like the less character a game had, the more like a wider audience could almost project whatever they wanted onto it. So it was like maybe you won't find the most hardcore fan, but it's going to appeal to such a broader sort of audience. Which you've kind of see that go out in things like ketchup or there's like voodoo games which do like these really simple games that are all sort of geometric shape driven.

So I think for like that particular title, it was like awesome. And then to see that evolve into our second game, Two Dots, which was directed by David Housin, he took it in this way that I didn't really anticipate, which was more sort of character and sort of like a rich art world

that I think was ultimately the right decision in hindsight. Like it, I think fans from the first game who wanted a deeper, gameplay, they were like hungry for a product like two dots, which had both the deeper gameplay and the sort of deeper aesthetic. And like, it was just like a, the right sort of mixture that I actually didn't know was going to work that well. Like, I kind of had this idea that dots was going to remain the sort of minimalist approach. But what's been cool is like now we've

sort of have this studio that can support different types of perspectives on stuff like that. And is your hypothesis around CBI is true? with so now CPIs are way more competitive because there's games with higher LTVs. Okay. So you need a lifetime value. Well, exactly. You're learning. I know.

It's like really easy to slip and just use them all the time. Yeah. So, I mean, the goal is basically to get a lifetime value that's more than the cost per install. For sure. And then once you sort of dial that in, you can kind of scale it. But then you start competing with other people who most likely have higher LTV games. So because the sort of mobile game industry has evolved so much, there's like people with higher LTVs who are willing to pay much more.

So the competition on Facebook has gotten really steep. But going back to your initial point, is that like the clean style still effective? I think it's like difficult to create high LTV games with that style. Oh. Because I think you do want like passionate niche audiences, which can be large, but they want like to sort of gravitate around a certain,

certain theme or something like that if they're going to sort of like financially invest in something. Right. So now it's about like building more narrative, building bigger characters, getting people really engaged. Yeah. And I think for a lot of people that work at the studio, I think they're excited to do that. Like it's not just an end to the means of like financial growth. It's like people like narrative and I think both working on it and sort of interacting with it. So it's kind of a like two birds with one stone sort of thing. Right, right. So what does that mean on the creative side, right? Like, are you turning these games out in three months now? Or, like, when you storyboard, or do you even storyboard, like, these longer games? Yeah. The big thing

with a game, like, two dots, is that it's, it's basically a game that, and this is kind of disseminating throughout the entire games industry. It's like games have two, like multiple phases. So there's sort of like pre-production where you're prototyping and pitching a game idea. Then you move in production, the sort of like time it takes to get it to a launchable state, and then you launch it. And now things have live ops, which means like you're adding additional content and sort of like doing updates, whether it's to like maintain stability or like sort of performance or to add new levels or other sort of things to a game. So we have like a really sort of iterative or like sort of finely tuned process that makes new levels,

which includes sort of either a new mechanic, always include sort of new art and sort of new gameplay for players every three weeks. So there's sort of new levels added every three weeks. And then on top of that, there's weekly events that are sort of levels you can only play for that week. And if you complete them, you get sort of a medallion or sort of bonus sort of things. Okay. And so, like, this has all sort of been, like, it evolved for... All right.

You have a pause. Hey, what's up? Holly Sierra, everyone. Hi, guys. I'm back. We're all. Just arrived. So Patrick was explaining what it meant to develop dots and then two dots and how it was

different in terms of, like, storyboarding, creating a game from, like, because his first prototype was, like, I don't know, a couple weeks before you had it. Yeah. And like three months to launch. And then because it was sort of more arcadey, the gameplay loop was pretty much like infinite. And so now we're like two dots. It's like in a live ops operation. So like we do releases every three weeks and like weekly events and stuff like that.

Yeah. And so Holly, on your side, what did that mean at Kabam? Like in terms of game design. So early, early on when we were on Facebook, the development cycles were a lot shorter. Okay. Within about three months, we could launch a game. And that was really because I think our game mechanics were simpler even for a mid-quick. core game.

Like even our strategy. What does that mean? Midcore? Yeah. So midcore games tend to be a little bit like they're more engaging. Well, not more engaging, but you have to spend some more time. There's several steps. So like a midcore game is something like, I don't know if anybody's heard of civilization.

But those are kind of like the strategy based games we started on. And strategy based games are kind of like if you have resources, you want to build those resources so that you could build your village. And then ultimately, and most of these things is you build these villages so that you can raise an army and go attack people. It's usually there's some type of battle mechanic and a lot of our initial games. We eventually moved into like racing games or RPG games. Or RPGs is like a lot of role playing where you can build out a character and that you

can do something with that over time. But oftentimes there was some type of attack or battling of some sorts. And so it always kind of led towards some type of something that was quite competitive. So we got a lot of competitive players. But early on like our cycles were, we're a bit shorter. mainly because web was a bit shorter. Also, I guess if technically it wasn't yet, it was three months, but there was a lot of stuff that wasn't built out when we launched.

So I will say that. Like when we first did something like an MVP on Facebook, it was just trying to catch, just kind of move as fast as possible to get an MVP. We were able to build resources to build the buildings. And you could get to an army, but you could not attack. So the main part of the, we're like, it's just going to take so long for them to get to that stage. But as we moved on to mobile, the cycles just got a lot longer to today. I mean, it takes us about probably like 18 to 24.

18 months is on the short side, like 24 months, like two years. Really? And it's partly kind of for us, the mechanics have gotten more involved on mobile game. You couldn't just push a new code every day. Like you had to get submitted. There's just so many things. Also, the quality has gotten a lot higher. we've moved into 3D art, which is very different setup than 2D.

I don't know with thoughts if it's probably still 2D, I'd imagine. We're like dipping our toe in the water of 3D. Oh, we can have a discussion around that. Yeah, yeah, absolutely. It's very, it was very different in terms of that. So it definitely for us pushed a lot. And then also on top of that, we did a lot of IP licensing. So that also adds time, right?

So you've got to talk to the Fox people about like, hey, does this make sense or the Hunger Games people with the characters. Right. So is that similar to Lego? Like you can have like massive hits if you get rights to that stuff? Oh, I think definitely for sure you, you, how you could get massive hits. So I think I might be jumping in the gun, but somebody did ask about, yeah, no, we should, we should read the question proper. CAC is growing and CPI's are reaching like $3.

How do you fix this? And I mean, Patrick, we're discussing about, you know, there's just two sides to to each side. It's CAQ, which is cost of acquire a customer for those that don't know. And then CPI, which is cost per install, which is part of that. Like it's literally you have to get an install in order for them to convert into customer. So that's on one side. And then the other side is what we call LTV, which is the lifetime value of the customer. And we're constant, which I'm pretty sure you guys are at Dots, trying to sort out, like, what's that LTV?

Because it changes over time and you want to model it correctly because you just don't, the game still live and you're like, oh my goodness, there are people who are playing from inception. And that actually plays into kind of your average LTV. So either way, the whole trick is to get your LTV really high and your cat low. And so what this person was asking is as your cat gets higher and higher, it's very hard to collect that margin. So for us on our end, we saw that, that our cost of customer acquisition was just getting higher and higher.

And I do think it's because we are what we call the mid-core game. so people who maybe identify as gamers. And those people are not necessarily all your friends. It's like watching TV. It's not necessarily they're all into a certain shell. You could have friends that are, you know, just your friends. And not everybody wanted to go, you know, build a farm so they can build a building. Like it's not something my grandma would want to play or my mom, right?

Whereas Dots is probably so much more accessible. So for us, the IP has been very helpful in reducing that. hack because I don't have to explain what Marvel is. Like I could go after the Marvel fans, and it's so much cheaper than just trying to get them to understand what is, you know, Edgeworld or Dragons of Atlantis. But once we acquire that customer, their LTV does tend to be a bit higher than casual.

That's usually what we find. I think one helpful sort of way to describe the different casual midcore and then there's hardcore. It's like casual, you kind of play whenever you have free time. midcore, you'll schedule time to play, and then hardcore you schedule your life around playing. So a hardcore game example is world of Warcraft. Yeah, World Warcraft. Like you have to like set up your headphones.

We've also found in our midcore games, especially when we went to mobile, we had to make the site like what people could input like short enough so when they're standing in live. So for us like to kick off building a building, like it was almost like a setup game in some way. Some pieces were super like set up and then come back and see what was the result. for sure. So we had to like adapt some of those things. But I think the ones they've gotten more adaptive in terms of like what you're saying. You don't build your life around it, but you think you're intentional about it. Especially our Marvel game, you have to, especially when you're

battling, it's quite engaging. Like you're not going to just put it on auto battle or something of that sort. It's like they're trying to make it like street fighter for your Marvel characters. Right. It's really what our Marvel game is. Yeah. But early on we certainly had to reduce it so that it would just be like fill your time while you're waiting in line. And I think we just found that with mobile platform. It was very hard to sit there and not think about interruptions and not think about like I really wish I could capture World of Warcraft type. Even though we're on their phones all the time.

Yeah, I was going to say, is like, has hardcore become a thing on mobile or is that still console PC? I still think it's console PC. Yeah. I think what's interesting in like happening right now is that so two games, Fortnite and PubG are like the number one games and sort of right now. And so both of those just got ported to mobile. So you can basically play against other PC players on your mobile device. They're like first person shooter games. So I think those like lines are going to blur. But right now it's pretty, it's still fairly segmented. It'd be interesting to see like if the porting, because I still feel like your platform does have impact on your game design.

Yeah, of course. I wonder how they kind of adjust it for that because I haven't seen, I'll be honest, I haven't seen total successful first person shooters on mobile. I don't know if you've seen. I mean, I think these are historically no, Fortnite like just came out last week or something. Yeah. And it's like top 10 grossing. On the mobile store?

Yeah. Oh, okay. And there you go. Yeah. It'll spike and then sort of maybe die off. It's true. It's really novel right now to play this on like against other players on your mobile device. Okay.

Okay. Well, maybe that's, yeah. Yeah. Yeah. But who knows? I'm just curious on the business side, like, are people always chasing these kind of, like, new areas where they can make a little bit of money or, like, historically, is like these mid-core games? Like, that's where you have the cash. Like, yeah, what do you guys feel? Well, so for us, we were quite focused around what we were doing. So in the beginning, we didn't know what we didn't know.

so we probably were a bit more open. Like we were doing a casual game on Facebook. And then we were doing, we thought this would be great. We're like, hey, we got this strategy game that worked really well. Let's just put like a theme of science fiction on it, like a Roman theme and, you know, Call of Duty type theme and all of this. But like we realized that that just became very derivative in our world. It just everything was derivative in terms of players and revenue and all of that.

It was just really difficult to, I think. players are really smart. Humans are really smart. They, they, uh, you can't just like clone something and then, that was a separate question I had about all the dots.

Oh, really? Dude, there's, I was looking at it before. It's insane. But anyway, but I think like,

yeah, even all the dots, like, I think there has to be something new outside of just theme. And there were, don't get me wrong. There were new things for us. But we also learned that,

uh, maybe we didn't copy the right things. Right? Totally. Like it was something. And that was us doing it to our, ourselves in some ways, right? And trying to open, I mean, we definitely did open up more audience. But as time went on and the production costs of our games went higher, we had to be super thoughtful

about thinking about even genres that we're going to go into. Do we even have the talent? Like, is there a place in the market right now that mobile really needed to be in and they just wasn't there right now? So a great example of this would have been racing. So we looked at racing as a category, it came up and down on racing. And we had realized that there were some early ones that were swimming in some traction. We're like, this is great. But at the same time, we didn't have internal talent. So that's where we found our Vancouver studio. And at the same time, we had the IP, but we're like, hey, we need the right team. So we're really focused on, like, the right genre with the right team, everything matching together. Because it would have been

disaster if our King of the Camelot team would have built a racing game because you have to the drifting right, you have to get like the starting right and getting it mobile. That kind of game design, I think, is fundamentally really different than from RPG or to what we call like strategy-based games and building that. So that certainly for us changed quite drastically over time, along with the business environment. I'm pretty sure you're probably seeing a lot of consolidation in the marketplace. And as the person asked about CAQ getting higher, we just realized every single shot on goal had to be really, really good. And we were pouring more money.

And at some point, we tell some game designers, this was like a year or two ago, so it might have been higher, is if you're going to spend money on customer acquisition, reserve at least $5 million. That was like a year or two ago. You guys can't see, but Craig's eyes are really good. Yeah. Ziz are like, woo. No, that's a big money.

I've heard double that. Oh, okay. See, that was two years ago. So today it might be double that. because it's gotten to this person's question, it's gotten so expensive. Wow. So double that to what, reach profitability on a game that took 24 months to develop? Is that what, that's what you're saying?

Yeah, yeah. Like, just for it to get a good shot to know that you have enough customers to see if retention is good, all of that kind of stuff, in terms of getting it to get higher. You wouldn't spend that much in beta. So I'm not recommending you definitely for, if anybody's like a game developer out there and you're starting a new game. Certainly launch it in beta. You could do it in beta countries first.

That's what a lot of people do. And get at least enough, like a couple thousand, just by a little bit so you can fix some of these bugs. And then when you're ready, that's like turning on the holes is the $10 million. That's so big. I mean, when you think about it, like, the LTV is almost like just a little bit higher than CPI.

So, like, you're not making that much money on each acquisition. So, like, that's why you sort of need that big scale to, like, sort of profit from that launch. Right. So what is it for you guys? You've talked about games that you guys prototyped internally and then never released. I assume you didn't spend two years building those games, right? Yeah, I think for ours, it's like three to six months.

Okay. So like dots took three months, but it was very simple. Two dots actually took about six months. Some of our other prototypes that we did put like, what's called soft launching. So you put it in like the Philippines or the Netherlands and sort of like. Through the app store? Yeah. Okay.

So those would take three months to sort of get to that sort of minimal viable product and sort of like you look at the KPI's key performance indicators of sort of what how long people play if they're sort of enjoying it. Those sort of things. And then yeah, you decide if it like has the legs, like are there things you can tweak to change those or is it sort of just on the next one? Right. And so were you launching in the same way, Holly? Or were you just, yeah. Yeah. Yeah, so we were very similar, except for us, like, prototyping the game took a bit longer,

and then we would beta it. So it's, I think for a mid-core studio, it's very hard to kill your baby. Yeah. Because, like, we've had ones where, you know, there was one that we had to kill, and it had taken at least, like, 12 months. And then we found, like, day 90 retention was horrible. And it was so funny because the studio lead, the studio president, he's like, one of the things I learned is I wish we would have released that earlier,

then we would have known that just the engine was broken. They thought the engine would be really good. And then if you just like a day 90, the retention was so bad. He was like, well, if I released that 30 months or like three months earlier, I could have taken that learning to the next game that we were building. So yeah, Patrick mentioned Minecraft, like basically being released before it was done. Did you guys enter that territory as well? Like our mobile game developers doing this kind of thing?

So for us, like definitely early on on the web, like our first game, we launched it before it was done. We all cannot probably get away with something that's quote unquote not done. But we certainly can what we call it an elder game, like maybe not release that portion of it until later because we know it takes some time. But the cycles, I will say that I think you guys probably see this as well is on mobile, what we call consumer. content happens so much faster. So that means like when you release a game, don't have just like 10 levels. Like you need like an order of magnitude larger than that.

Because you'll be surprised how much people just eat up while they're waiting. Like it's just surprised. I don't know how many levels you're like, you have to launch with this many. I don't remember with us. Yeah. I mean, I think we learned it the hard,

the really hard way. Like we launched two dots with 85, which is like, seems like an okay amount. But we had such good, like such a good sort of organic launch, like people telling their friends that we were sort of scrambling to add more levels because people are going through that so quickly.

That's insane to me. In a week, they were going through it. Yeah. That's probably. I wouldn't be surprised because dots is like you just keep playing. Because you don't want to make it exponentially more difficult. Otherwise they bounce. What do you mean?

So like you say, all right, so you launch with the 85 levels. But what if at level 50, it becomes so hard that like each level takes progressively longer, right? That's no good? Yeah. So then you'll get people churning. out and just sort of like abandoning the game forever. Really? So we look at like really granular sort of win rates per level and sort of see how, because

you also want, you do want that sort of like nice difficulty curve that does sort of ebb and flow that is just always getting more difficult. So you do want like levels that are challenging, but you do want to sort of make sure that they're not too difficult that just make people sort of quit. Yeah. That's right. I mean, this is very similar except for we don't have a straight level mechanics. them. We have other kind of things that kick off as well. So for us, when we think about

elder game or later game, it's not just level mechanics that make it maybe harder to win a battle, but it might be at that point, what is it that you unlock that's meaningful for, say, like your character or your team. So that's kind of, you do have to think about a bit of the elder game because those guys are your rabid fans, like your rabid customers, your really loyal customers, and you want to keep them around because they actually help bring in others. One of the things that's a bit unique about almost every, I think every one of our games. Yes, every one of our games is we have social features of alliance as well as like chat and those types of customers that are loyal and, you know, play every single day or get to those later levels end up becoming almost like the social,

they recruit people for their alliance. They're usually like the alliance leaders are the ones that are like highly retaining and very valuable to bring on other players. So you do have to take good care and think about that because we are also somewhat managing a community in many ways. Each one of our games has a community. Which is challenging when you're building a portfolio of games, right? Because you're like, oh, man, racing is sexy right now, except this person doing a first person shooter doesn't care about racing. So, like, how do you build your community from that, right? Ours was very bottoms up.

And partly we've had license IPs to help keep the KAC down so we could go after Fast and Furious fans. versus Marvel fans. So, and every, like almost every game had its own community manager as well. Because at that point, we realized,

like what was six, like what that fan cared about was probably different than what a first person shooter a fan cared about. So that was, that's certainly something that where we, we do have,

and because we have less games, like we, we've only ended up launching like two to four a year before we exited, that it's, like, it's very, very, very minimal in that way.

Okay. So that was, that's something, I think as you, if you are a larger portfolio, then you have to think about centralizing and thinking about the community a little bit different. But we certainly would have individual, like every game would have somebody that would help the community. They would either be called a live operations person that would do some community stuff. Yeah.

Feedback what's happening. And they would cross with our customer service department in many ways, which we call player experience. So ours was a little bit. different in that way. But as we got just fewer shots on goal, it was very, very focused. Each one was an independent studio in many ways. Yeah. Big question we're asking with every new sort of pitch that comes now is like, would you be excited to work on this for like five years? Because like you have to sort of think about them now as these sort of projects that are sort of

long term franchises is like what we used to talk about. It's like we're building franchises. And really I think our I don't know if your monetization model is very similar. Ours is what we call free to play. So the user can download it for free. And if there's something like maybe they'll want to buy a sword or they want to do something maybe faster, they will pay money. So our end users are actually our customers. So one of the things we'd always liken ourselves to a lot more is A, games as a service and be very much like TV shows, like movies versus TV. So things didn't have to be like if you think about console games or premium based games, they have to think of the whole thing and then they market it because the way they monetize

as a player you pay them their the money up front and then that's that's about it but um and even for those that don't know this uh but any gamer would know this is like if you buy a disc a like an Xbox disc from the store once you open it you cannot return it right it's just like movies like once you go to the movies and you didn't like that movie too bad like they're not going to give your money back right but with TV it's very different you know you you think about content episodes, you think about earning the, like, you think about audience, you think about it as a service in some ways. And if you, if you actually see kind of the, it was really interesting way to pull some graph from the Simpsons and their viewership. And you just see this

long tail of retention, like, over time. And it's very different than like movies. You see Star Wars and it's a peak and then it goes down and then you have to wait for the next Star Wars movies and it's time over time. But we're thinking about like long term like TV franchises, like keeping our players around, like day after day, week after week is something that we thought about a lot and it had to do a lot how we monetized. Are there different learnings that you guys see indie game developers take? Because all this stuff is just like big, massive scale, you know, $5 million budget minimum. Like that's insane.

Like how do indie developers handle this? Because like that's still a pretty big community, right? Yeah. I think on the like PC console side or more PC Steam. it's like they are starting to develop in the open so something like Minecraft was like in development but people could basically buy it before it was done but they were opting into this sort of tolerance for bugs and like sort of weird behavior in the game I think because they were sort of excited to be sort of along for that ride of the development so you see that a lot with

I think smaller studios like five to ten people sort of pre-selling the game almost before it's ready that helps them sort of like bug test it for like a profit and then just like also building that community that's going to be their sort of champions when they do launch. And you see some actually startups that support like individual game developers. There's this one called Fig, which is like Kickstarter for indie game developers that started by the double fine guys. And usually I find whenever I think such an amazing core to indie is the passion and the craft that they put in there. and that I think that that does not get overlooked when they're building a game. And I think the idea that they can build like a rapid fan base from the get-go from the indie world

is something that's super special. I do because I do think that they leverage kind of their reputation from someplace, like they were worked on this game, and these followers tend to follow them, which is that works very well for premium games, I guess you'd say. Free to play, it's still kind of working as Kings, but like it's starting that culture when you see when you kind of see how the games have developed on mobile like there's just such high quality now like supercell kicked it up a notch all of these things that I think the quality that usually comes out of indie studios can match that in many many ways so I do

want to I do think that there is it's just such a tough environment I will be honest about that it's tough tough business environment out there but I think with places like steam um humble bundle Like there's just still people who are like rabid fans on of that stuff. Right. But so on the acquisition side, they kind of have to employ different tactics because they can't keep up with you. Well, yeah. But I also think like nowadays it's not even smart. Even if you have a big budget, I wouldn't spend it all on customer acquisition.

You're just not going to get like paying for your buck. So you also find folks like us that went after the Marvel fans. So we have to go individual like start focusing on that community and building that community. Places like fig are a great way to like. like start building that. You know, like how Kickstarter does that, right?

Is building your fan base? And then getting it into social media. So influencers have been become very powerful. There's been other gaming companies that obviously have dabbled in, you and ourselves commercials, which do help. I wouldn't recommend that for Indy. But you just see,

all I'm saying, Skywriting? Millboards, yeah. I mean, all I'm saying is you just see because of the pressures of just straight acquiring, like paid acquisition. is the pressures are so high on there.

That's when you see things move more towards organic because you're always trying to reduce the cost of customer acquisition. Like either raise your LTV or lower your CAQ. One of the two, those are... And platforms can also be helpful there. Oh, that's right. That's a great point. Apple's like doing a great job now,

sort of like showcasing those indie developers and like both their games, but also their individuals behind them. And so like they're doing profiles of sort of really small developers and sort of like, I think they work that it did well. That's a really good point. Yeah. Apple's done a great job supporting indie developers.

How is Twitch affected game development, or has it affected it at all? Like, are there certain games that are just more fun to watch someone's stream and therefore that's like a growth strategy? Or is it just kind of, you know, it's a popular game. A lot of people stream it. That's whatever. I think games that have like emergent behavior, so like something like Minecraft where it's almost like the random chaos of things happening creates this narrative

that's almost like fun to watch creates like a longer term sales. cycle for a game. So it's a less spiky sort of like the movies. And then it is sort of starting to like almost grow over time. If you do have a game like that, that is really fun to watch. Yeah. So I'll be honest. I don't think I've found a mobile game yet that has been interesting enough to stream.

It's always been reversed. I feel like like things on like Steam or like Activision Blizzard with Overwatch. Like all these other things have all been like downloadable. big MMO massively multiplayer environments. I just haven't seen that. So I've definitely know that people are trying to crack this, like Vanglory. They're trying to basically make a game on mobile that's for esports.

And I think the first hurdle you have to jump, you have to have to jump over is, is it a successful mobile game? And I just haven't seen that yet. There might be some interesting stuff. I think they're streaming more, I don't know, you guys might know more, streaming more stuff about clash, as well as like a battle, like the battle card game that they have.

Harthstone, yeah. Harthstone. So those are probably closer. Actually, hearthstone is probably. But first it was, I feel like first it was a successful mobile game. Yeah. And then it got streamed versus the other way around where it's yet to be seen, but it's not to say that it can't happen. That, hey, it's not that successful on mobile yet, but the streaming has caused it to be successful on.

mobile. This might be happening with PubG. PubG is super successful as a game as well as really friendly to watch. That's an exciting, interesting thing you do want to watch. And if it's TopGo Sam mobile, this might be one of those, a great example where it's because it's a great e-sports game, a good game, great to watch and pushes it over to the side. That might be one. Yeah, I think Supercell is a good example. So they are somebody who does kill a lot of projects, famously.

It's sort of like, and it's because they have these, like, such a high bar to sort of meet. Okay. So it's interesting to see now. I think one of their games that they're sort of in test markets with, it's called Brawl Stars, and you see them trying to make that into this e-sport before it's, like, even readily available everywhere. And I think it's because they are trying to hit this sort of insanely high bar. So they're trying to make sure that that can, like, supersede everything that they've done before. Yeah.

Yeah, that makes sense. So they're trying to employ that. tactic like really early on yeah what other things do you see happening in the future you know like people have talked about like uh collectibles like crypto related stuff like VR like do you in the near term like games in development right now where do you see things getting traction so i i still think esports esports has so many like eyeballs yeah i think more and more are just i think that's just going to be a natural like oh this needs to be like a great game that's viewable not only a great game but also viewable. VR is kind of interesting because it's like I've always felt like it has a lot of

capital, like a lot of like buzz around it, but not enough traction. And there's a little bit around that with like AR with some people that have done the glasses. It's just lots of money, lots of cash, lots of buzz, but not enough like traction. And I kind of, I do feel like for VR for it to hit right now, it's just all that everything's not accessible. Like it still can be more accessible. And I do think that AR will be kind of like this jump into it. Like I think Pokemon Go did a really nice job of introducing AR. I do think that they're, you know, even Apple and all and Google are all like supporting that platform. So I can see it a bit more, especially as you see successful games from a business perspective as well as people loving it, go on there. I can

see that one in the near term. Blockchain games. Like I think that blockchain games are kind of a little bit currently suffering from the VR type world. There's a lot of heat. There's a lot of, you know, excitement around it. And you can make some great cash like CryptoKitties. But I think they only drove like 100,000 downloads, a Metamask. And that's what you need in order to get on the block. Like there's just so many things.

It's almost like back in the day with the internet, you needed your modem. You needed somebody to not be on the phone. Do not call. You needed a special life. Like everything had to get set up just right. However, I do think with crypto, there's so much buzz around it. There's also a lot of capital. I think it might be as short because it's mainly software to make those things accessible

to kind of like get on it. It might actually be a lot easier in my mind. If you're just talking about like the UX and the accessibility and then therefore that encourages more people to be able to play it, more players and more like developers developing on there and playing the game. But like at the end of the day, you still have to make a good game. game, right? Most people don't care about like how the internet ends up on my iPhone, let alone how my iPhone works. But if nobody knows, but if nobody can even get, understand how to play

your game, like get to that point, then like nobody knows. And even I think the ones on there right now are very interesting. They're like the first games, I'll be honest, that we saw on Facebook, like crypto kitties, crypto celebs. I was like, oh yeah, we have that game friends for sale. And now we're just selling like celebrities. And it's just like a very simple mechanic. And you'll probably see that early on. And then I definitely know, I'm sure there's game developers working on something that's much more in-depth than what can the blockchain be used for that technology. I think it's interesting. It's always in my world, gaming definitely pushes those types of technologies forward or at least test those boundaries of like how far can it go. And I'm always encouraging, I think

in the blockchain world and with crypto, like what better people to really explore this than people know how to create virtual worlds. They're okay with virtual economies. I remember at one point, one of my co-founder said this about RCEA because he loves playing games. He was like, yeah, he was spending like real money to buy this fake currency. And I was like, yeah, that's just like crypto. And it's not fake, but it's like virtual currency because you're giving an experience.

Like this is why gaming's considered entertainment. Yeah. You're paying for entertainment. So those are my long two cents. Let's make that 20 cents. Yeah, I heard another pitch recently about sort of back to like the idea that once you buy a game, you can't really resell it. But like with something like blockchain, maybe there is sort of opportunities to transfer ownership of either goods or like titles. So that there could be interesting applications like that, but I totally agree if like a player has to understand how that system works, it's going to be difficult to sell.

But if it is, if it does become sort of this invisible sort of underlying thing, maybe. Yeah, it's very confusing right now. Very confusing. You need to get out of the blockchain. It's like, what? There's three networks and your public key, private key seat. Oh, yeah. Well, especially with something like MetaMask where you're like, oh, this is great.

If you have someone over your shoulder saying like, okay, no, don't do that. This is how it works. That's what I'm just going to send someone $1,000 right now. Yeah, exactly. I just said something the wrong thing. Let's get some of the Twitter questions out of the way. So David Trudeau had a question for you, Patrick. What kind of role did psychology play in making,

all the dots games so addictive. I think it definitely wasn't a like design to be addictive, but I think the methodology with which it was developed facilitated that. So basically what I would do is like sit down every day and like think about what I wanted to like change or add to the game. And once I found myself more fascinated by like playing it than the like metagame of making games, I knew there was like something working there.

So I like just found myself, oh wow, I just spent 10 minutes playing the prototype. I should be working. But it was like that sign that the thing was working and like maybe you didn't really have to add much more. So then I kind of stripped stuff out and just made it that like core experience shine. And then all the games we've put out so far have been built on that sort of core functionality. So I think that's what's been like, yeah, foundational for the type of games we put out so far. Same for you, Holly. I basically try it until you find a mechanism that's addictive and then you just keep it.

Yeah, well, I think a little bit, it's with casual games, there's a little bit of great time for iteration. So for us, our game loops have to be a little bit more fleshed out. And like I said, we have to stick it out for 90 days at least to see what the day 90 retention is like. Because I feel like dots, what's so great is like you have this core mechanic that you can play over and over again. And then like you might just change a couple of things. But for us, like the core mechanic, it does get like a little bit iterated on. and definitely in beta, we would probably kind of change it. But there's definitely less iteration, like a lot more kind of discussion, discussion,

and then throw it out there. So it's a little bit, I wish there was a way to be able to do it. But there's so many things that happen in a mid-court game that trigger all these other things that's very hard to test just one piece of it without the full context of the game to say, like, okay, is this thing compelling? because it could actually be something else. So in reality, we've actually built like three or four loops of like just that that's, it is. It is what it is.

One of the things we do try to do on de-risking, I will say this, is like we definitely taught, like we had focus groups. We had a whole team called Consumer Insights. And he would inform, well, his team would inform things like not just genres, but even things like some features in the game. So try to collect, trying to collect that kind of stuff early on. But this is where it became, well, we'd like to say, it became much more closer to premium cable television shows, like, Game of Thrones, where it's like just this high production, but on TV. But you have to like think about like, where does the character development go?

You can't just like kind of throw it out or like it can't be like a soap opera. Well, all of a sudden, like the twin is dead, but they actually came back alive. It just can't be that way where, you know, it's, it just has to just have like a lot more. So this is why we started moving a lot of our game designer stuff. Some of them had like 10 years of experience on just racing alone to make our Fast and Furious game. And that's kind of what was needed. It just got much and more specialized. Cool.

So another Twitter question, Hexel asked, how can you predict what will be a successful game? We kind of talked about that. The second part of their question is, how do you come up with game ideas? Yeah. Interesting. I've ever thought of this one. I don't know. I guess there's a bunch of different ways to do it. I think for, so for dots, it was like definitely driven by what I wanted to look like. And the sort of sort of gameplay fell out of that. So it was like, okay, I want this grid to like look this sort of way and just like what naturally did I then want to do. So I think actually to the like former questions, like the psychology of just connecting dots is like something kind of ingrained in us as like kids or humans. I don't know. So just that simple act is like really easy to pick up. And then so like if you. think of it, sort of concentric rings.

If that's the thing you're doing every second, then what do you do in every 10 seconds or minute or week or month? And then sort of like creating features that accommodate for those different sort of time scales. I know the sort of Nintendo preaches sort of like taking hobbies and turning those into games. So like what things that people like naturally want to do and sort of gamifying those. Yeah, I think at dots were like really really.

heavily driven by the aesthetic sort of inspiration that we find. Yeah. Yeah. I think ours was driven a bit more by like consumer insights. Yeah. Yeah. Ours was very like very purposeful and like super like things had to be super strategic. So it was a little bit harder.

We had to ask our like people that were hiring like same thing. You're going to be on this genre. Like it's going to be hard to swap genres like once you're on here. Like you need to really love racing. games. You really need a lot of RPG. Do you love Marvel? As Marvel's like been around for a couple years and even some of our older games, there's still people playing it like today, even the ones on Facebook. Wow. That's like that's just, so when someone's just getting into the gaming industry or if they were to get into it right now, like what do you advise them? Like start your

own company, start your own game and apply it. Okay. No. No, not start your own company. Well, I guess if you have the revenue, like if you have the means, like, because the thing with gaming is it can be lucrative to where you can bootstrap it, right? So anything that can generate revenue pretty quickly, I guess you say, if you have the means, go ahead and bootstrap it. It's probably going to be the best way you're going to learn. Yeah. It's to actually just do it. But I do think if you're like kind of cash constrained, it really depends on like what area you want to get into gaming. Like if you want to be a game designer, I think it's great to go work at a gaming studio. That's always really good. If you are a student and you don't have that means yet and you can't intern

or whatnot, I think it's great to just even try to start designing your own game because you'll learn so much about it. And there's all these like fun things you could do old school, like starting like to paper prototype some things if you even wanted to. But like if you're, I do think going, trying to get into a gaming studio is really good. It's a very, I feel like it's still, very apprenticeship in many ways. It just takes such a long time. Yeah. Yeah, maybe I think if you are sort of, you find yourself sort of in a vacuum, I'm not sure where to start. I think tools like Unity are really accessible to like sort of like the access to a game engine is now like like, like accessible than most people. Yeah. And then I think also modifying games has become like

more of a sort of cultural thing. So like yeah, like I think on Steam there's like a sort of big subgenre of modifications to games. So games that are designed to be modified and sort of like have a game designer just sort of add new rule sets to the games. So that's like a good way. That's like relatively low cost or low buried entry. Paper prototypes for sure. I think having work that you can show at least that you've started and like got

out of the initial hump of just like trying something yourself like goes a long way. Yeah. So that would that in other words differentiate someone because you guys have both interviewed people for these kinds of jobs. Like if they showed that they had made something or like forked something in a cool way. Oh, yeah, for sure. Definitely your engineer or game design of some sorts. Yeah.

Okay. Okay. So let's assume that someone is crazy enough to start their own game. Like their own studio, whatever. What are the biggest mistakes you guys have made that you would advise them to avoid? Raise enough money not just for one game, but two or three. Because you're never like your first one likelihood will not be a hit. What's a ballpark number?

Well, we already know it's like what, well, it depends. Are you on mobile? I guess if you go on PC, it's probably cheaper for customer acquisition costs. I don't know. Something like Roblox has been really interesting in terms of like opening up a development platform for kids. And also being able to like push other users to it. I mean, they've been doing some pretty crazy stuff on that. The like not mistake, but the challenge we're facing now I think is like super common.

I think you've described, like, what we're facing. It's like that we, people want to be working on different stuff. It's like, yeah. It's like the business side is like all about de-riskifying. And I think creativity, I like that word. Creativity inherently is about creating risk. And so it's like the dichotomy of those two things. If it's not balanced, right, just like causes.

At one time, at one time we had a hackathon, but it was like only things that you could do on the game. So it's kind of like Usually a hackathon is like something more open And I'm sure people will crave more Even I would have like I don't know guys I mean they still like hacked And some people wanted to try all these things

Like I've been wanting to fix this thing It's been broken But usually people didn't We've tried to do things like Like open submissions of game ideas But we had The thing is it's like we needed to give people Like a business case

And some people didn't have enough business case. And at the end of the day, we had set up some type of submission. It was only like three people that really did end up submitting, right? So this is like, we're already like a couple hundred people already. And so we're like, hmm, do you really want it? Do they say this? But do they really want it?

And then the other thing, what we could have done, which I think would have been much more streamlined is if like at one point there was someone who really pushed for like a particular theme type game, I should have went through consumer insights because it was super clear that like that type of theme did not work with that type of genre. So that's, yeah, that was something we really cared a lot about, which also for IPA, this might be a side tidbit, but IP, we cared a lot about what fit, like, would it fit one of the genres that we've done? So for example, Star Wars, you know, we had conversations with him early on, but all we had

was like a strategy engine. Like, does it make sense? And later we had. had like a different engine. We're like, okay, this probably makes sense or like the Hobbit or something like that. The Hobbit, like does it make sense? We only have this type of engine. Like, would it make sense to put racing out with Hobbit?

Hobbit racing game? Yeah, maybe not. All right. My last question. What's your favorite game that you have not made? Not made. I love Candy Crush. I really like candy crush.

The classics. I love that one. I was like, this is like brilliant because I love like, I love Beach, dueled, obviously dots. I love dots, too. But, like, I really, like, kidding her, I spend so much, I've spent a lot of time on there. I've spent. The threes, that game? Yeah. I think it's just, like, head to toe, really impressive and, like, an interesting story if you, like, know the ins and outs of their, what happened. They basically got cloned, and 2048 became the sort of ubiquitous version of their game, basically.

Really? Yeah, which is like this really like a tragic story of like a really amazing product that was like cost $3 but the market wasn't willing to pay for that so like the free version just like became this thing that a small studio

sort of like I don't know launched basically with this clone. I forgot to ask you. How do you do with clones? So we have like a lawyer that like Oh. But people still fork it and put dots in the title It's like crazy dots, wacky dots, whatever. They're also like candy dots, 2048,

like the string of these key phrases that are just so transparently like trying to, I don't know. It must be harder. I think in casual world it's much easier to clone. I think also dots like attracts people that are like, that looks so simple I could do that and like to do it. That's true. It's a much harder, you know, underneath. Oh, man.

All right. Well, thanks for coming in, guys. Thank you. Thanks, Greg. All right, thanks for listening. So, as always, you can find the transcript and the video at blog. combinator.com. And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.