DustinClingman.com

I’m often asked as to why I chose to get into the game business. The primary reason I cite is that I was always interested in telling stories and games/interactive entertainment represent the very best possible way to engage a wide range of people while at the same time giving them some control over the outcome and how the story unfolds. It was on that premise that I began to scheme as to what the next great game idea was going to be and how I was going to use it to conquer the world!

Flash forward 11 years. I’m very proud of the games that I’ve created or been a part of during my career, but at the same time, none of them changed the world…yet

When I talk to up and coming developers and entrepreneurs, I see that they too wish to conquer the world with that next great game idea. Since this blog is about startup game studios and entrepreneurship, I'm going to operate on the ludicrous premise...that you actually DO have a great idea for a game. What do you do next?

This is the first in a series of several articles about getting your original game out to the people. We’ll cover protecting the idea, the role of publishers; marketing and promotion…pretty much everything but the actual development of the project for now.

Before really digging in here, it's important to take a step back for a moment and remind ourselves that most games lose money. In fact, most games lose alot of money! Even when you've got great games released you can endure economic conditions like those in 2009 causing total game sales to be down nearly 20% on the year. In other words, commercial failure is highly likely even for games that make it out the door. With that said:

Protecting the Idea

There are two main groups that your ideas need protecting from. These are Publishers and Yourself. Let’s take those in reverse order.

Protecting the Idea from Yourself

This is always the last person you suspect, but it almost always the individual that hurts you the most. Generally, a poor company structure or development team will cause the most headaches. So how can you protect the Idea from Yourself?

•    Setup a company and get all of the stakeholders to sign the idea over to the company. - Your team can split the ownership of the company with you, but fundamentally, the best way to protect it is to give it away to the company.  Whether you think you game has a big chance or not, there's alot of wisdom in setting up a company. One point to make right now is that when you form a corporation (if you so choose) you need to remember that you become a share holder and not the owner of the content. You own some or all of the business that controls the property, but unless you specifically call it out, your corporation will be the owner of the IP and source
•    Sign contributor agreements with anyone doing work – Make sure that any friends or associates know exactly what they’ll be getting out of doing the work to make the game possible. It’s important that the company has the rights to the work, so give them stock, pay them cash, but most importantly make sure they understand and sign the agreement. It has nothing to do with greed, but with clarity so that everyone understands up front, before they do any work what the deal is going to be.

Protecting the Idea from Publishers

As should be clear by now, the odds of your idea really coming out of the blue are pretty slim. However, it is reasonable to think that you might have some USPs (Unique Selling Points). Often, game publishers are looking for exactly these nifty and novel ideas when trying to find new projects to fund. When it comes down to any kind of danger surrounding the idea, it’s when the USP comes out of the bag that you’ve got a potential problem. Ironically, USP are often obvious combinations that don’t make sense to not already exist and can be easily exploited in a completely different game concept. To protect yourself from publishers, I recommend:

•    Don’t talk too soon – Approaching a publisher is best done when you’ve got a working version of the game that you’re willing to let them see. They prefer this because you’ve shown that you can get things done and it likely means a cheaper investment for them to help you finish the game. Cheaper = Less Risk = More likely to get behind you if you’ve got something novel. Waiting also helps because they will be more incented to work with you rather than to try to beat you to market with a competing game.
•    Sign a Mutual Non-Disclosure Agreement- If you can…but realize this likely means nothing. Lawyers will disagree on that point, but remember this: Contracts are only relevant when you intend to pay to defend yourself against them. Some larger publishers, like Nintendo, may not even be willing to sign anything. Effectively, they deal globally and as such cannot guarantee that they don’t already have an idea like yours in development? Heard of Yoga Wii? I pitched a game almost identical to it to Nintendo, sans Balance Board almost 3 years ago. Am I upset? No way! Yoga Wii Exists and Wii Fit was in development before I had even brought the idea around.
•    Sell them on yourself and your team – Publishers who think they’re dealing with a good team will be more likely to try to engage you rather than screwing you. Be over prepared with Team Bios and your past experience. Make sure they realize you’re for real and not just a group of guys with a dream.

•    NEVER! EVER! Let a Publisher Ruin your Game – It is ALWAYS a preferred outcome that a game sit on the shelf than a publisher come along and ruin it. If you’re of creative mind enough to get to the point where you’re having those discussions and meetings, I’ll assume that you are capable of killing your sacred cows. With that said, Never let them change anything. They take you as you are or not at all. If one publisher will give you money, so will another one. Keep your integrity and don’t let them push you around for a couple of bucks. Once you get on that track, it’s all downhill from there.

Other Risks

Without doubt, there will be others that you need or will want to discuss the idea with. A regular NDA should suffice here with the earlier caveats. However, the best thing that you can do is to get good at vetting people. Instinct is something a new CEO cannot live without. In short, You can’t do good business with bad people. Learning how to spot them quickly is important to your ability to survive.

That’s it for now. Please post any questions you might have in the comments or drop them to me on Twitter as @dclingman!

An old co-worker once opined in reference to a Herculean engineering task: "If you ever knew how hard it was going to be, you would have never started in the first place."

I find this a particularly good subject for my first post on running a start up studio. Running a small business will consume you to the very core and it's critical to have a number of things in order before undertaking what will become the biggest challenge that most people will ever undertake.

Here's an incomplete but focused list of things that you must have in order to start a game studio.

1. Basic Business Knowledge - You'll need to have a basic understanding of the kinds of business entities and how they operate. Detailing these is for a later post but you can generally figure them out or look here. Once you have made the right selection, you can use a number of online services to get them setup such as LegalZoom.

2. Legal Help - Have discussions with a few lawyers whom you might consider engaging to help review or draft any contracts that you'll need along the way. There are several agreements that you should have right from the go including a Mutual NDA and a Contributor agreement for people who are working on your project that are not owners. Be sure to ask any prospective attorney for some client references and be sure to call them to inquire about the quality of service they felt they received. If you have any "weird" feelings about a lawyer, just keep looking.

Do NOT try to draft you own garbage agreements that you've cut and pasted from others on the web. I've done this in the past as a cost savings measure and I paid a price for it. People who are more experienced (aka Publishers) can spot these hand drafted documents very easily and it will impact your negotiations. If you need a cheap(-ish) solution, check out Tom Buscaglia's Game Dev Kit which has several game centered agreements for a few hundred dollars and is well worth it!

3. A Mentor - This is incredibly important. This is someone who's been there and can give you advice. This needs not be someone who's running a studio now, just someone who you can rely on to give you the best guidance early on. As a budding CEO, there's a specially reserved spot of isolation in regards to tough decisions and information about situations that you can't always share with other team members. It always helps to have a friendly ear that you can bounce your ideas off. You can find mentors in your local community in a number of ways. Be on the lookout for opportunities to meet the studio and technical leaders of your local community. Enroll them in your success by letting them know your goals and that you're serious about making things happen. Entrepreneurs are required to help each other, so don't worry about asking. They will be happy to help. At the same time, be respectful of their time and don't wear out your welcome.

4. Good Ideas - Notice that I didn't say Great ideas. You can get a significant amount of mileage on good ideas. But good ideas need to go hand in hand with...

5. Outstanding Execution - This is the defining characteristic of any software company. You want the best people working to create the best products and ideas they can. Give them whatever you can to make this possible while at the same time remembering that you're running a business so watch your money closely. For a good example of this, check out Mike McShaffrey's outstanding presentation "Spare No Expense! Aeron Chairs and Starbucks for Everyone!"

6. Patience - Cliche' I know, but critical. I worked for a long time to land that first client. You'd be surprised how it snowballs when you do right by your customers. You worry about getting the best work out there that you can produce and the money and business will take care of itself.

7. Guts - Seriously.  It takes alot of guts to put your future at risk for a chance on yourself. All CEO's and Founders are scared that they are not good enough at one point in time or another. You will be no different. You need to be playing like you don't need the money all the time and be sure you learn to play poker. It did wonders for my business skills. (also another post...)

And last, but not least...

7. A Determination to be Rich or to be King. - This is a well known founder's dilemma that you should contemplate right from the beginning. Whether you're making a game that's going to change the world or just want to cash in on a fad, you need to have clear understanding of what your goals for the business are before you have any chance of accomplishing them. More importantly, If you want to be a creative talent, then let someone else you can trust run your company! There are many people who enjoy the business side of things and its not a requisite that you handle bookeeping and business development yourself. In fact, it may be *better* to let someone else do it. Noam Wasserman cited the Rich vs King options and can be viewed in more detail here. For now I'll briefly discuss each of these in turn. 

Being King - As a regal ambassador and controller of your own destiny, being King sounds pretty cool. Most entrepreneurs who want to be King desire to keep control of the company for it's lifetime. Those who are looking to be King often are wanting to brand the company alongside their own personal identity. The company becomes a sort of lifestyle and extension of your person. Being King is cool, but it also puts some very interesting limits on you. For example, to keep the crown, you'll probably give up less of the equity in the company. This in turn will cost you more in up front money paid to employees that you might have offset with stock options. More importantly, if you're sitting on a great idea and a market space that's moving quickly you may very well sacrifice whatever opportunity to create a more valuable company. Timing is everything, but when you're King even of a little rock, at least you're in charge of your destiny right?

 Being Rich - This is the path of the sell out right? The guy who is ruining the game business with more copycat, unimaginative crap right? Well, let's not be so hasty. Fundamentally, the decision to be rich is structured with the mindset that we give away large chunks of the company in exchange for being able to bring in the most amazing team to build out a fantastic, competitive organization that creates great products in the shortest period of time. Have you ever wondered why there's a company right on the edge of every fad in the game business? People who are seemingly right at the beginning of an opportunity and are making alot of money on iPhone and Facebook. Part of the reason these companies spring into action is because they have a strong precept that they can take to get funding and immediately take a large chunk of the market right from the go. Companies like Zynga, PlayFish and Ngmoco all had investment rounds that fueled the strong push and great games out in front of an audience that quickly became addicted to their efforts. The goal of these groups is to be acquired by a larger company like EA. You need to be big, well positioned and ready to sell what's hot if you're evaluating the Rich option. 

There's no right or wrong answer here, but founders of companies who are generally successful have made this decision at the beginning and so long as they stay consistent as they made decisions for the company, they are fine according to Wasserman. In my experience, most game developers that I've met want to be King. That's largely because they want to create meaning through their games, but also because believe that being Rich goes right along with being King. This is rarely the case because they are almost mutually exclusive. The actions taken to be King will thwart the same decisions to be Rich. Your decision on how to operate the company and execute your plans will be driven from this one decision.

Consider, Steve Jobs was King, then became Rich, then had to fight to stay King, then became ousted and then became King again, etc. What does that mean? It means that Steve Jobs is focused on a broader allegiance to changing people's lives through computing and technology and not to a single title. He's also a bit of a serial entrepreneur. He had to do something with all that Apple money right?

 Just to mix it up, here's a short list of things that people think you have to have, but are not a necessity:

1. An MBA - Simply put, very useful but not required. I've considered going to business school, but never had the time. The education will save you time and perhaps some expensive mistakes, but it's not a requirement.

2. An Office - While you'll need a place to work, you don't have to have a physical space. There are a number of outstanding options to renting an office. In Orlando we have the C0-Lab which is shared work space that's complete with a conference room. While it may have changed, Kyle Gabler and Ron Carmel cited that their offices for 2D Boy were in whatever San Fran coffee house they wandered into. Don't let this get too far into your head. It's not critical right away and probably won't be a for a bit.

3. A Publishing Deal - If you're an indie, you don't need to have a publisher yet. Get your game into shape and then you can worry about deals. Give them something that has them wanting more and the deals will come.

4. Money - If you have a computer, time, talent and motivation, you don't need cash. There are several places online where you can give your game an audience. Don't let the lack of funding scare you. All three of my start-ups were funded by VLC (Very Little Capital) that I bootstrapped off funds that I had on hand. There's a price to be paid for this approach and it's largely in time and opportunity, but at least you don't have to sweat personally being tied to a big debt. If you're doing good work and can communicate that to people, they will want to get involved somehow.

Good Luck and Get Back to Work!