The company name Kixeye is probably already familiar to you. Either you're a fan of their Facebook titles like War Commander, Battle Pirates and Backyard Monsters, or you've read about their copycat troubles with rival company Kabam. Maybe you remember when it was originally called The Casual Collective? Whichever, it's a company that is attempting to flip Facebook gaming on its head, by making addictive product for core gamers.
CEO Will Harbin was happy to explain Kixeye's strategy for success in a crowded market, how its recent recruits are settling into its growing team, and what venture capitalists are looking for in the games industry. (Spoiler: if you want money from Silicon Valley you're going to need more than a business plan.) And, says Harbin, don't go judging Zynga's success just yet...
Q: The challenge of creating social games for core gamers seems to be all about trying to connect with a group of people who may not even perceive Facebook as a platform for gaming.
Will Harbin: Well, it's certainly a challenge. I think early in the days of gaming around Facebook a lot of what we could call core gamers tried some games and were frankly turned off by what they saw. So yeah, there absolutely is a limited subset of the gaming population on Facebook that wants to play our kind of games that we're making, but its certainly increasing. And yeah, I think it's just a matter of time. For us, it's kind of... to attract users it either has to happen one of two ways. One, you get them through ads, two, you get them via word of mouth.
We don't see the typical social gaming virality tactics work on these kinds of gamers. They're not inclined to accept a lot of Facebook game requests, so it's really got to come from one of their friends who is really passionate about the game, who is playing it non-stop and says, "Hey guys, you really need to play this game with me." We've seen a lot of that in Battle Pirates. It's a synchronous game so the experience is absolutely enhanced when you're playing with another person or against another person. And we've seen that game spread quite a bit through word of mouth and people's traditional friend networks.
I was pretty vocal about my worries about copycats last summer. We could see some trouble down the road if we don't add more, not just quality titles, but more diversity
Q: So do you work on the assumption that, because you've got 800 million people there, that core gamers are on Facebook just because is everybody is on Facebook?
Will Harbin: Yeah, it's a general slice of the population. There are absolutely gamers out there who just refuse to play games on Facebook, because I think their view has been tainted by either one, personal experience in the early days before there were quality games on the platform, or two, just reading the press that's kind of all about FarmVille, CityVille - obviously games that don't appeal to me, [and] they don't appeal to the traditional gamer.
And yeah, we fully recognise that, we don't plan to move from Facebook or move off of Facebook but we do have our own platform launching , probably by mid-summer, and we'll hopefully capture some of those unconverted. But I still expect the market to grow on Facebook for the traditional gamers, simply just as time goes on and there's more quality content developed.
Q: Do you think that Facebook gamers might be getting a sense of deja-vu, with so many similar games on offer, and are coming to Kixeye for something with more depth?
Will Harbin: I don't think that's been a challenge yet. I was pretty vocal about my worries about copycats last summer but that was more of a... this is kind of a warning that we could see some trouble down the road if we don't add more, not just quality titles, but more diversity. We're kind of shooting ourselves in the foot.
I don't think that's a problem yet. I think really the big problem is we simply just have people who are not converted. I can't speak for other developers, but for our games we certainly haven't seen many people get sick of what we've developed so far. I mean we still have people who've been playing [Backyard Monsters] for well over a year, and people who have been playing since day one of install on Battle Pirates, and War Commander is doing well too even though its very early days - we don't even have the full game launched.
But, yeah, I absolutely worry about that down the road, but I think most people have got the message that people aren't just trying to turn out strategy title after strategy title, but we do have a pretty diverse road map coming out. We're launching an RPG in the summer, which will be our first deviation from strategy since we launched Backyard Monsters, and we've got some other things planned as well. So I do hope that the rest if the industry follows suit, but there will likely be tons of copycats of our new approach, but we can't control that.
But that's why we're hedging our bets a little bit. We're allocating a lot of resources to our own proprietary platform so we don't have to worry about stuff like that. I'm excited, there are some newer entrants coming into the space that have a similar approach to us, just thinking about the player and the gamer and trying to deliver quality game experience and not so much trying to be just the best kind of performance marketer out there.
Q: It's reminiscent of what one of the founders of Bossa Studio told me. He'd begun to notice a really strong copycat ethic everywhere he looked, that there was this kind of yawning chasm just waiting to be filled by companies that want to offer something different, and that that difference was its selling point.
Will Harbin: Yeah, I think the reason that we're seeing... The companies that have been able to survive so far, first and foremost, are the ones who are able to publish, and I think in the early days of the platform that takes the front seat to game quality. It doesn't matter how great your game is, if you can't get it in front of people it doesn't matter. Unfortunately for quality game developers, they have to really learn how to do their own publishing, because it's not going to work without that.
Q: This ties somewhat to some recent hires for Kixeye - Neil Shepherd into a newly created role of vice president of customer insights, and Brandon Barber as senior vice president of marketing. Can you give me some details about those roles and their importance to Kixeye?
Will Harbin: So it's all about scale. We found a very successful model. 2011 was kind of about scaling Backyard Monsters and releasing a couple of titles, and we've created a very successful business around those games and we're happy with the quality of it and keeping with the vision. So in hiring Neil and Brandon it's really about scaling the business to much bigger things. We want to do the same thing that we've done with Backyard Monsters, Battle Pirates and War Commander but do more of those on a bigger scale, higher level in quality and reach, and reach more users. So both Neil and Brandon are here to help us reach more users, but from different standpoints.
So Brandon has more experience around building brand and product marketing and things like that. Some of the less analytical approaches around PR, strategically positioning brand, connecting with users on an emotional level. Neil comes from a very analytical background, part on the performance media buying side, and then of course on the more just hardcore analytical side. So Neil has a team of analysts and media buyers, they go super deep into the data. I mean we collect volumes and volumes of data everyday and we really hadn't sifted through that before bringing Neil on board and hiring his team of analysts. They dig in and they find really non-obvious things, they try to identify non-obvious trends within our user-base.
Who likes this game? What kind of micro-cohorts and segments of the population are really resonating with the game? What's not resonating with these users? And, you know, we're finding some non-obvious things about our user-base that helps us inform different game design decisions and how to reach more types of those people. So both hires are simply just about getting bigger and better as a company and a game publisher.
Q: It's that role of data, that role of analysis that puts a lot of core gamers on edge about social gaming. Although those are the tools that are going to be able to identify those people and make games that actually suit their needs, I think it's an element of social gaming that makes them feel uncomfortable.
Will Harbin: Well, I see your point. We take a bit of a different approach. We're not like Zynga where we're A/B testing, multi-variant testing every little thing and allowing data to determine how we design our games. We use data to our best advantage to let it inform certain decisions, but first and foremost we use our own innovation and creativity as gamers and game designers to just... When we brainstorm we sit around the room and I say, "Okay, what kind of game do we want to play? What's missing? What should we be playing? What do we want to play?" And actually we do a lot less of... we don't do focus groups or research studies like, say EA and Activision. I mean, those guys are absolutely using data to determine what kind of game they should launch.
Playdom is essentially just a Zynga rip off. They've tried to do some other things and now Gardens Of Time is relatively successful and Zynga's copied that, but that isn't a super creative approach to gaming
So I would say the classic kind of game developer is using data and users more so in determining what kind of game they should be launching in the future. Data does not inform our road map. I mean, it's only us as gamers that informs our road-map. What we do with data is we try to enhance the gaming experience. So for example when you have a lot of people who, let's say, complain in user forums about a new feature that you've launched, well the data might be saying that these guys are spending hours on this feature and it's causing them to come back to the game at an increased rate. That's a helpful experience that allows you to separate the vocal minority from the overall user base. If you just listen to the basic user feedback you might be making a severe error in game design decision by modifying something just because a few people are being vocal about slaying your decision.
So we definitely do not design our games around data. We try to make improvements around data, and actually I had to give this speech to my team yesterday about being a little bit less reliant of A/B tests and data and trusting our intuition and instinct, since it seems to be more effective at moving the needle at a larger scale than doing a lot of micro data analysis. But it's very helpful when when you come to a decision where you have two or more options, it's good to allow data to influence some decisions. But you can't do game design through data exclusively. It can be an aid, it can be a tool, but if you're not creative, if you're not a thoughtful gamer or you're not super passionate about the space then you're not going to make a good game.
Q: Do you think that that would be consistent with larger players in the social space? PlayFish, Zynga, Playdom, companies like that?
Will Harbin: No, I think those guys rely too much on data and user studies. I think those companies have a great deal of... I think they're lacking in the game design and creativity department to be honest. I think they've... Playdom is essentially just a Zynga rip off. They've tried to do some other things and now Gardens Of Time is relatively successful and Zynga's copied that, but I wouldn't say that's a super creative approach to gaming. The hidden object thing has been around for a while. It's not that interesting to a core gamer. Bottom line, they haven't done anything that I think would appeal to a core gamer, they've obviously found a little bit of success in the social gaming quadrant, but I think they rely much more heavily on data, user studies, etc. I don't think they have a team like ours that really thinks about the users and wants to make a compelling user experience.
Q: Going on to the more business side of the situation, you raised $18 million dollars in funding last year, despite already being profitable. What was the money for?
Will Harbin: Most of it was simply being conservative. We were growing fast. This time last year we were 11 people, now we're about 120. We knew growing at that pace, you want to comfortable with hiring ahead of the curve, making a few investments here and there. We were profitable but at the time we weren't spinning off tens of millions of dollars a month or anything so, you know, we were comfortable from a cash position but it would have been helpful to have more cash in our pockets as a cushion, and also to have some in the bank in case we wanted to make a couple of small acquisitions here and there.
So the majority of the reason was simply as a safety measure. We still haven't touched that cash so all has gone mostly to plan, but it was mostly in case things didn't go according to plan. So simply being prudent as an executive and an operator to make sure that we have the right amount of cash in the bank to support our growth...in case things didn't go so well. Fortunately, everything has gone quite well and we're happy to have the cash in the bank in case we need it.
Q: How do you find that process , growing so rapidly? Your trajectory suggests that you'll be growing over the coming year as well.
Will Harbin: As a repeat entrepreneur this process has been pretty comfortable for me. It's a level of responsibility that I've accepted and I've done a few times before, so this is kind of the way. This is a standard page out of the scaling playbook and as long as you protect the company and act accordingly - out of the company's best interest, and the employee's best interest - you're fine as long as you have a great product that you believe in. And we certainly have products that we really believe in.
But yeah, it's been exciting. It is relatively rare to find the kind of success that we have, although it doesn't seem that rare because you only read about the kind of companies that do really well most of the time. Well either about the companies that do really well or really poorly, but you know there are tonnes of companies out there that have not succeeded and we're really proud that, so far, knock on wood, we're one of the ones that's succeeding.
But the process continues to be challenging... In the beginning we were two, three people, it took us a year to get to ten people. We had plenty of open positions, it's been a very competitive hiring marketing. It's started to get a lot easier as we've established ourselves and once we had, I'd say, 60 people we were a little more established this past early fall. And one of the reasons we raised more money is we wanted people to publicly know that we were relatively stable, that we had some cash in the bank, you weren't coming into a company that was about to go bankrupt...
Q: There was a roadmap there and you wanted to execute on that, basically...
Will Harbin: Exactly. You couldn't just take my word for it. You could at least see that these investors had put their faith in [Kixeye.] So now we still have a lot of money in the bank, we're profitable, we're a hundred people, we're making some good games, we've got users who are not going away, so...a lot of it is proving to potential recruits and candidates that this is a great place to work and you should come and join our team. Our two best kind of recruiting tools are one our games and two our story and business success.
The single greatest challenge is continuing to hire great smart people who are really passionate and dedicated about making games.
Q: The remarkable thing about social games from my point of view is that they've actually taught people the very rudiments of playing an isometric strategy game, which has always been a hardcore genre. There's an enormous amount of opportunity for people to create games for those people.
Will Harbin: Of course, my favourite game of all time is Command & Conquer: Red Alert, and I'm very proud of the fact that I think we're having a major hand in reviving the isometric RTS genre and kind of furthering the genre. Battle Pirates, to my knowledge, is the first true MMO RTS out there in terms of persistence, synchronous [gameplay], etc.
And that again is in keeping with our hiring strategy. The common story I hear when I'm talking to people that are coming from, let's say, Playdom or Zynga, and are coming and thinking about [joining] with us, they're like, "Well, I'd much rather on games that I want to play" and then I think that the differentiator between us and... and we hire a lot of people from Activison and EA as well, and we could launch four games or more in the time that it would take one of those guys to launch one game. I think we hired a guy last week who was working on a title, he'd been working on a title for three years and it's still not even close to being launched, and our company's not even three years old. So it's about shipping product and it's about making games you want to play.
Our philosophy is you don't have to spend to spend $40 million to make a great game. I have criticisms about both the AAA game developer and the mass marketed casual game developer. On one end of the spectrum with the AAA developer they're spending $40 million and I'd say 39 of those $40 million are being spent on things that don't necessarily add to the gamer's delight. I'd definitely apply the 80/20 rule to something like that. And I think you can just be more efficient about delivering a delightful quality experience to the user than what they've done.
Don't get me wrong, I love playing those games, but it's like kind of going to a huge blockbuster movie on the IMAX - to get that experience, to get the core of that experience, you don't necessarily have to go to those lengths.
We resonate with people who have gripes about both ends of the spectrum and we kind of sit right in the middle. We deliver great games and we do it in a good timeline and from a cost effective business model.
Q: Having that agility within the work environment must be a great lure?
Will Harbin: One thing I've noticed is when they're working on these three year dev cycles and and these large teams, you've got these very talented engineers working on a tiny, tiny little piece of the game and they're just so narrowly focused. And with us we work on teams, total games teams, of like five to fifteen people. So if you're an engineer that comes on to one of our game teams you're working on a big piece of the game. I mean, you might be responsible for half the client facing stuff, so that's another big proposition. We like to challenge people.
Q: Is there still a lot social investment out there from venture capitalists? Because obviously your position is one of success, but a disruptive kind of success that VCs really enjoy. Do you get the picture that it's still a healthy market in general?
Will Harbin: There's many parts to this answer. One, there's many tiers of venture capitalists and investors, so first I'll focus on what I'm seeing in Silicon Valley, the top-tier investors. I think it's never changed with the top tier investors, they typically invest in markets and teams. Typically, proven teams in proven markets, that's the winning strategy. I think this is absolutely a proven market, but it's not that much different from any other market in which it's hard to compete. It's crowded, people are kind of chasing the same thing, so I don't think there's anything that magic about this market relative to other markets. You can roughly get kind of the same success rate of companies in this market and others, so I don't think there's anything that special about the online browser gaming market. Other than it's a bit disruptive to the traditional gaming market because this is so accessible. And that's true of most new markets we see, usually the differentiations are in accessibility.
AAA developers are spending $40 million and I'd say 39 of those $40 million are being spent on things that don't necessarily add to the gamer's delight. I'd apply the 80/20 rule to something like that
So that being said, I don't think the top-tier VCs are rushing to seed unproven teams in this space, the only people that we're seeing that are going to get early funding in a big way are people like Greg Richardson from Rumble. Our differentiation was I'd started a few companies before and I was leveraging investors I've used in the past and they already trusted me.
But if you're coming in with just a business plan and you've made a couple of casual games without a lot of success you're not going to get any funding. You really have to prove it. You've got to come in and prove your model and really you're only going to get money to scale your business. You're not going to come and be able to just raise a bunch of money and just start a business from scratch if you haven't done it before and you haven't done it in this space. In that respect it's the same as any other market that venture capitalists are looking at.
I would say there is a different segment of investors spread across the globe who are looking to follow on other successful investments, and they might have a higher tolerance for risk. I can't really comment because I've never taken money outside of Silicon Valley, but I'm sure it's easier to find money in different places.
But for us and with classic Silicon Valley VC, the criteria for a social gaming company is no different from any other company that they're invested in. They analyse the market, they analyse the team, and if things look good they rate it a scale, they give them money. There's not an influx of early stage money into the gaming market from Silicon Valley.
Q: The press has suggested there's been a bit of a bubble around the social space and it's due to burst sometime in the near future. Kabam, they got $85 million dollars in series D funding, and that struck me as a potential example of that.
Will Harbin: You have to have your ear to the ground to kind of understand what's going on in our neighbourhood. With Kabam, specifically, they've never been profitable and they've done two rounds of lay offs, so I'd say the bubble for them is absolutely going to burst.
But other than that I don't think that there is really a big bubble to burst. There aren't a lot of inflated companies out there. For the most part, most of us are profitable. I mean any company that's driving real dollars to the bottom line and delivering a quality product to the user in a thoughtful manner, there is no bubble to burst. I think there absolutely was a funding bubble, maybe two years ago lots of people were getting funding and failed, and I think the bubble slowly deflated rather than kind of had a big pop.
We have found it a lot easier to hire, I don't know if that's because we're doing a better job or maybe others aren't doing as well, maybe it's a little bit of both. But I don't think we're ever going to see any kind of a pop because it's a successful market. I mean it's got hundreds of millions of users playing, spending money and its just millions of consumers voting with their wallets. This is just an experience that they love, so it's very different from past bubbles before. Bubbles are usually caused by investor hype and industry hype, this is not being caused by any external hype, it's our internal hype. It's all external interest from the consumer and its really hard to say that there's a bubble when it's driven by consumer interest.
Sure, there are lots of companies out there that have spun themselves via PR that leads others to believe that they're more successful than they actually are, and I think the day is coming for those companies just like in any other industry, but for the most part this is simply just a new platform for an existing industry. This is still the games industry; 80 per cent of our employees have been in gaming for a long time, so it's not some brand new industry. It's the same industry, it's just a much more cost effective and accessible platform.
Q: I got the impression over the last few months that this belief in a bubble, or at least that things have been somewhat inflated, has been down to two companies: Playdom and its acquisition by Disney, and Zynga's market performnace since its IPO. Do you see all this as a flash in the pan?
Will Harbin: Yeah, I do. Even though some would consider Zynga's IPO to be lacklustre, I think Zynga's really going to be a happy surprise over the next year in the public market. Personally, I would rate Zynga's stock as a big buy. I think it's a well run company, I think they've got a lot of smart people over there, and they've got a stranglehold on their specific market, which I think is the mass-market casual social game, and they're driving major collars to their bottom line. I mean, that company is enormously profitable.
From a relatively unsophisticated investor's point of view, over the last couple of quarters when you saw their books it looked like they weren't that profitable, but you have to dig through the numbers and realise that they were just making a lot of big investments in themselves. If they wanted to be more profitable they could. And they will be, and I think Zynga's going to surprise a lot of people. It's going to be a huge success.
In terms of Playdom and the acquisition by Disney, I just don't think it was a very smart acquisition on Disney's part. And most people were saying that when Disney acquired Playdom. It just was not a smart acquisition. There's a lot of manufactured success there from what I understand, and I don't think anybody in the industry is surprised that Playdom isn't doing well for Disney.
But I do think it's unfortunate, because it was the first kind of big acquisition for a big public company and a lot of people were watching it and unfortunately it hasn't done that well for Disney, so it has soured people's opinion on the industry. But the good companies are not selling, and that's what I'll say.
Q: So it seems like the near future of the social space is going be the filling out of the niches with a more diverse array of products and experiences. Is that they way you see it?
Will Harbin: Yeah, I think there's a lot of market opportunity and there's a lot of people like us who are going to take that market opportunity and deliver products. So yeah, I think that's a pretty fair assessment. I don't think... just the way that the core gaming market behaves I don't think we're going to see hundreds of millions of core gamers playing one game online. I think it's going to come from companies who are focused on strategy games and focused on RPG. I think we'll see some interesting first person shooters in the browser this year, just because of new Flash 11 which is a great resource for us. But yeah, generally I think that's a pretty safe assessment, that we will see more players like us that come and fill the niches.
Q: Can you give me more details on the platform that you've got coming?
Will Harbin: Sure. So obviously Facebook has to balance lots of things. They have to make an open platform, that they're not curating, they have to make it accessible to developers and users alike, they have to have an ad platform, they have to promote across from other applications, and they've got to optimise for a bunch of stuff. It's not only optimised for gaming.
So there's two things that I want to accomplish. One, I want to make the absolute best, cleanest experience for playing a game on your browser - so very clean, no ads, no promotions in your face. Our platform is only going to have a few of our games; in the future maybe a handful of third party games that we pick out and we invite to the platform. It's not going to be open, it'll be highly curated by us.
So one, first and foremost again, just the cleanest, best game experience. No noise, nothing in your face beyond the game. Two, it's simply what it's not - it's not Facebook. We'll hopefully appeal to the users who for some reason or other, rational or not, just refuse to play games on Facebook, and there does seem to be a pretty good number of them. So yeah, it's going to accomplish those two goals for keeping it simple.
Q: We've been talking trends, is that something you see trending over the next year or so? Companies actively moving away from Facebook? Because, again, I think when you talk about the social space a lot of people just substitute the term Facebook for that.
Will Harbin: I don't think it's any kind of a trend, I think it's just a natural evolution for a company to move to areas in which they didn't start. So we're seeing games that started on Facebook move off of Facebook. We're seeing game companies that maybe started off of Facebook move into Facebook, so case in point... I mean, I don't think we're being that original about this. Kabam is offering games on their own site, and I think the more established players like us are looking for ways to capture more of the market and its the logical next step.
But also you're seeing companies like Bigpoint starting to experiment on Facebook as well. It's obviously been making games kind of similar to ours for a while off of Facebook, and they're trying to find success on Facebook as well. I think it's just kind of a normalisation of the markets, and again if you've started at A you're going to look to B to extend your market. Also some companies started on B and they're looking to A.
So I don't think anyone's leaving Facebook. Facebook's a great platform, it's a great ad platform, it's a great distribution platform, I have no complaints about Facebook whatsoever. I think they're very fair as a partner and it's a great relationship so I'm always going to make sure that relationship is fostered and we continue to have success from Facebook. This is simply just about expansion.
Q: There's seems to be a lot of opportunity for companies in this general area, to branch out and be present in many more places than just a social network or just a browser window.
Will Harbin: This is really a browser game kind of play. It's not Facebook, it's not our platform, it's just about delivering a quality, hyper accessible experience to the user, and we are super excited at the direction the technology is going towards the browser with the Flash 11 player, and now Unity can export to Flash, and next year we'll see the Unreal Engine supporting Flash - it's great time to be a browser game developer.
But at the same time it's going to be more expensive and it's going to be more effort to develop browser games as technology increases. So I hope it doesn't move too quickly because I do want to still stick to our core values, where we're not spending too much time and energy on extraneous polish and we'll still just focus on the basic game mechanics and just making fun games.
Q: Do you think console manufacturer's are paying attention to this? What Kixeye does can't really exist there because they're closed systems to a great extent. Do you think this sort of thing is on the minds of Microsoft and Sony?
Will Harbin: Actually I haven't thought about it that much. I mostly just think about the publishers versus the platform makers. They'd be stupid if it's not on their minds, and I don't think they're stupid. I certainly think that they're thinking about it, and I'm sure they're making some plays. That's a tough one, I don't know what they're going to do. Obviously EA's been thinking about it, they've been executing it. Activison has been thinking about it a lot and is on the verge of executing, and so if the console guys aren't trying to think about how to capture this market it's their loss, but I'm sure they're thinking about something and we'll see it soon.