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Selling Your Children: Game Entrepreneurs On Letting Go

Selling Your Children: Game Entrepreneurs On Letting Go

Fri 17 May 2013 12:58pm GMT / 8:58am EDT / 5:58am PDT
Business

Trip Hawkins, Alex Seropian, and Tony Goodman on regrets, emotional trauma, and what drives them to keep starting new companies

"It's very easy to look at the dollars, or even the promise of dollars, and go, 'Oooooh, we should do that.'"

That's Bungie founder Alex Seropian talking about the difficult decision an entrepreneur has to make when his growing business has an acquisition offer on the table. It's a temptation he knows well, though not one he's often succumbed to. He estimates receiving perhaps a dozen acquisition overtures while at Bungie, three of which were serious, and one of which became the sale to Microsoft that locked up Halo as the Xbox's flagship franchise. His next company, the experiment in outsourced development called Wideload Games, also received interest from would-be acquirers before Seropian accepted a deal from Disney. His newest endeavor, Industrial Toys, has yet to even ship its first game, but it has already received three such offers.

1

Alex Seropian

"The motivation behind each of those start-ups was a little different, but none of them were really about trying to build something we could sell," Seropian told GamesIndustry International. "It was always rooted in something that was either very personally fundamental or something I thought could be strategically interesting."

Seropian's story is by no means unique among successful entrepreneurs. Ensemble Studios founder Tony Goodman matched it well, both in his attitude when starting a company, and in his eventually selling it to Microsoft.

"My goal is to start a company I believe in first and is something that I want to do," Goodman said. "Then as far as goals go, we do have in mind the possibility of exiting, or making a hit product that's profitable on its own and not selling. You have the idea of some kind of win, but there's no particular focus on selling out."

Goodman has started four companies--the IT firm Ensemble Corporation, Ensemble Studios, Robot Entertainment, and PeopleFun--but not every departure was an exit. He sold the first two, and left Robot to establish PeopleFun because he wanted to work on mobile games with a smaller team. He says he's less likely to take acquisition offers now because he finds the work of creating unique products more rewarding than padding his bank account.

"A lot of the people for whom it is really about the money tend to make lousy entrepreneurs"

Trip Hawkins

Unlike Seropian and Goodman, Trip Hawkins has never sold a company. But the founder of Electronic Arts, 3DO, Digital Chocolate, and the still-in-stealth If You Can has been a successful entrepreneur by any measure, and similar to Seropian and Goodman, he never started a business with the intent to sell out.

"A lot of the people for whom it is really about the money tend to make lousy entrepreneurs," Hawkins said. "In my view, great entrepreneurs are focused on ideas that the world needs, and then they relentlessly pursue their commitment and their vision about those ideas. As a result, they're really focused on the execution of the idea, and if it ends up making money, it's a byproduct of that process."

Hawkins said the path from starting up to selling out is such a long haul (eight to 10 years on average for venture-backed companies today), a person has to be compelled by more than just money to sustain the necessary drive and make the company succeed.

"For me, it continues to be about whether or not there's a quality idea that feels like it makes so much sense and is so compelling and so timely," Hawkins said. "And you can't schedule that like a train. You have to wait and feel it. It's not something you can plan on."

3

Trip Hawkins

Compulsion is a concept that comes up repeatedly when talking to these entrepreneurs. For Seropian, whose parents and grandparents also started their own businesses, it may as well have been hereditary.

"I didn't go to business school," Seropian said. "I never trained in any sort of accounting or business 101 or anything. I just somehow innately knew in my soul that if you wanted freedom and control, you sort of had to do it yourself."

For Goodman, the compulsion isn't something he can get out of his system, even after going through the grind of launching a company four times over.

"I don't know if I'd want to retire but I do get it into my head that, 'This is a lot of work, I don't want to do this again,'" Goodman said. "But then I always end up going back and doing it."

"People's expectations of you... they don't make you happy. They don't do anything for you"

Tony Goodman

That drive is actually the most important thing Goodman feels he can bring to the table these days.

"That seems to be a rare quality, where people are willing to have that ability to jump off the edge," Goodman said. "I bring other qualities; each person at PeopleFun brings their own unique talent as well. But I think the biggest thing is for some reason people look to me to be the initiator of things."

Despite building a career by repeatedly jumping off edges, Goodman said the accompanying butterflies in the stomach never really go away.

"You would think it would be less scary but it seems to get scarier as I go," Goodman said. "There's a little bit of a trap you get caught in of trying to outdo the success you've had in the past, or the expectation of success that people have of you to be successful again. And sometimes that gets in the way of trying things and being willing to fail. So you try to put them behind you because they're not productive to think about. People's expectations of you... they don't make you happy. They don't do anything for you."

2

Tony Goodman

Not every emotion is heightened by going through the process repeatedly. Seropian said age and experience have helped him keep a rational perspective on potential deals.

"This might be a factor of having gone through the deal-making process many times, and it might just be the fact that I'm older and I've got kids and have just been in more emotional situations, but the emotions of it are easier," Seropian said. "When we were contemplating doing the Microsoft deal, I was much younger, it was the only thing I'd ever done, and the emotional attachment was like a parent to a child. The idea of selling it is emotionally somewhat traumatic."

Though Hawkins never sold his "children," he found the parenting parallel absolutely apt, especially when founders are deeply involved in running all aspects of the business, as he was.

"By the time Electronic Arts was 12-13 years old, it was literally like a teenager, and it had a lot of the characteristics that teenagers are known for. And it was clearly going to make it safely into adulthood, which is something a parent tends to feel about a teenager, that they're no longer fragile little things where you have to hold their hand when you cross the street."

And just like a parent, Hawkins' interest in his offsprings' well-being doesn't end just because they're no longer "under his roof" or following his rules.

"Companies go through different stages, and you do remain emotionally connected to them," Hawkins said. "You have a heart for them. You're proud of them, and you want them to do well. You enjoy their successes and suffer with their failures."

"It felt more like 'selling out to the man' after I'd done it. I had myself convinced I wasn't selling out to the man at the time"

Tony Goodman

Given the emotional investment in these companies, one might expect the founders to second-guess decisions to sell them.

"When I sold the second Ensemble to Microsoft, the downside didn't appear until sometime later when we found it difficult to develop the games we wanted to do because it didn't fit in with the Microsoft portfolio," Goodman said. "And maybe there was some regret years later about how far I could have taken the company if I hadn't sold out."

Goodman said Microsoft talked a good game at the time of the acquisition. Even if the company had a certain reputation for its tactics in pushing Windows, Goodman said Microsoft's operating system division and gaming divisions felt like very different entities at the time.

"It felt more like 'selling out to the man' after I'd done it," Goodman said. "I had myself convinced I wasn't selling out to the man at the time."

Regret isn't limited to those who sell. Hawkins said he has had some misgivings about not selling, particularly when it came to some companies expressing interest in acquiring 3DO and Digital Chocolate.

"Every company has plans," Hawkins explained, "and they're excited about their own plans and committed to their own plans. And if somebody comes along and says, 'Why don't you abandon those plans and accept this offer,' it is often the case that the offer is going to feel underwhelming, and not really capture the perceived value. And then it's hard for people to abandon plans to accept something that feels undervalued. And not all plans work out, so as a result, you're going to have some regret, thinking, 'Yeah, maybe we should have taken door number three.'"

"People call an acquisition an exit, but really it's a beginning"

Alex Seropian

Unlike his fellow entrepreneurs, Seropian seemed completely at peace with how everything turned out for his companies, particularly Bungie.

"We had some offers that seemed to be too good to be true, and in hindsight, they were," Seropian said. "We sort of rode through the big Internet bubble when there was lots of crazy stuff going on that wasn't really based on real value or doing cool things that people liked; they were just based on hype. And we stayed away from all of that, which in hindsight was good."

He described the eventual deal with Microsoft as an ideal situation where the two parties had something unique to offer one another, such that the combination of the two was more than the sum of its parts. Without Bungie, the Xbox wouldn't have been what it was, and without Microsoft's help, Halo wouldn't have been what it was. That deal established a philosophy for acquisitions that Seropian still subscribes to today.

"People call an acquisition an exit, but really it's a beginning," Seropian said. "If you look at it as an exit, then it's just, 'I want to cash out and I don't want to have anything to do with it.' That's not really a healthy philosophy. An acquisition is more about a combination and a beginning of a new way to approach satisfying a goal. For that to work, the parties to that acquisition have to have something to offer each other."

There is wisdom to be gleaned from these entrepreneurs' experiences. But given the qualities seemingly inherent to those who would start their own businesses--relentless drive, willingness to perform without a net, and inclination to lead rather than follow--perhaps they might be better off ignoring it.

"For people starting up companies, they shouldn't waste time following other people's paths," Goodman said. "They should follow their own path. That's the only way they'll achieve success. And if it's not, it's the only way they'll achieve happiness."

5 Comments

James Brightman
Editor in Chief

241 366 1.5
Great article Brendan! Too bad that most of our readers haven't noticed yet...

Posted:A year ago

#1

Brendan Sinclair
Staff Writer

23 34 1.5
Thanks James! This comments section is really starting to heat up now!

Posted:A year ago

#2

Christopher Thigpen
Lead Producer

47 92 2.0
I liked the article. It was thought provoking and has inspired me to one day have my own company.

Posted:A year ago

#3

Christopher Bowen
Editor in Chief

447 692 1.5
But... but... how can we curse out EA in this article? :(

But this is a great read. You always get the impression on the outside that the whole reason most people open startups is to get them big and then either sell them off and get out, or make them go IPO and cash out. You guys picked some STERLING subjects to interview. I mean, Trip Hawkins! It's such a lot more entertaining, and insightful, than another session of "let's beat up Mark Pincus".

Posted:A year ago

#4

Dean Parker

11 7 0.6
Excellent article!

Posted:A year ago

#5

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