7 Big Forks in the Road We Faced at Gamelynx
Gamelynx shutdown in 2020, and I wanted to reflect on what some of the biggest decisions we faced were. In risk management games like poker, sometimes going all in is the correct play even if you lose. This is especially true for startups because you only get a few attempts to become huge. So let's not sweat the small stuff. What are the biggest decision points we had that would have really resulted in a drastically different company? Here are several with my thoughts on them in hindsight.
Note: Writing this article cleanly is difficult, so let it be clear: these aren't reasons why we failed, or regrets. They're just big choices we faced and it's not exhaustive.
#1 Choosing to Base Headquarters in USA Instead Canada
This was a huge diverging point we chose immediately after closing our fundraise. Basing in Los Angeles had real advantages with networking, business deals, hiring, but I think being able to stay alive trumped them all. If we had stayed in Canada we would have had access to lower costs of living, favorable government loan programs and tax credits. I believe we'd still be alive today. We chose to go big or go home, but home is pretty nice.
We were extremely cheap (40k/mo burn with 2 founders, 3 engineers, 2 contract artists and an art studio agency with HQ in Los Angeles). People were impressed with that. We did creative things besides low pay such as using a pending demolition building for our office (made the rent cheap and the lease short). Being in Canada would've synergized this to a sizable strength of ours, instead of just a nice quality of capital efficiency.
We also gave up a lot by basing our company in the US as Canadian citizens that we weren't aware of when we did it. Immigration issues aside (which I'll get into in a second), we basically gave up any sort of citizenship-based privileges as we were neither fully in the US or Canada. The uncomfortable personal limitations slowly dawned on us with common things being unavailable to us like tax breaks, government supported savings accounts, flexible work authorization, etc. I'm not saying it's not worth it, it is just better to know what you're giving up beforehand.
#2 Assuming Too Optimistically About US Immigration & Working Remote Without Process
US immigration is tedious to say the least. We were doing all of our visas in 2017 and the Trump administration was just starting their path of constantly shifting things around and changing policies. Carter and Zeke had both gotten their visas, and I got mine denied even though our applications were nearly identical. We optimistically moved the company headquarters to LA and they went without me. I always thought in 1 or 2 month timelines here, assuming that would be the end of the visa applications and the beginning of the fresh start after fundraising.
This thinking that it was temporary and around the corner was very incorrect (both strategically and literally). We didn't adopt good remote working best practices. I didn't pay myself. I ended up couch surfing for 9 months while we sorted it all out. I was distracted by figuring out the legal system, working with lawyers, and figuring out where I should go or live in the meantime. I set the vision and hiring in 1-2 month milestones to keep us on track without plotting out the full prototyping and pre-production course. We lost long-term focus in very important formative months, believing we'd have things resolved quickly and that we still had a lot of time to get going in earnest.
If we had been defensive here and kept the team in Canada until we were all authorized, we would have been way more focused and productive at a very sensitive part of our pre-production cycle. These immigration difficulties were a sincere source of weakness for Gamelynx at the time. We made out fine given the circumstances, but our immigration decisions led to be costly.
#3 We Targeted a Game Beyond Our Initial Funds, Instead of Working Towards It Through Multiple Shippable Projects
We correctly identified a compelling whitespace in the market and had a prototype ahead of it's time. We knew the window was small and there would be many players. We bet on ourselves again and again that we could fight for that big arena even with 2% of the resources. I can't say I regret that. The way we thought was contrarian and that is how big ideas start.
That said, if we had been pragmatic to not bet the studio on the game we may have lived to iterate longer. It's an option. Games are hard: the timelines easily slip, the products are complex, and killing products is common. We knew we were betting the pony on the large game we were passionate about. We could have made 3 great smaller games that each would've had reasonable earnings potential instead of going for a huge live-service multiplayer game from Day 1. Our boldness was part of what made us get funded in the first place, but the tension here is very interesting and different choices would've made a drastically different outcome.
#4 Tech Was Our Strength But We Maybe Overleveraged It
Technology was our strongest suit as the whole founding team had engineering skills. We tried to get out of our scope issues by diving deeper with creative engineering. Our marketing effort had a website development focus. We built great bots for users to play with because getting enough players regularly online is a difficult task. We had game build infrastructure to hot change game tweaks and automatically crunch out builds for us in the cloud. Web scrapers. Engagement bots. Many more. Most of these investments were favorable and good strategies, but we had too much to build from Day 1 and we added more on top of that. It almost worked, but we should have been more skeptical on our ability to deliver and maintain it all. Sometimes less is more. Technical leverage is amazing as a focused lever but there are limits to feasibility for a small team.
#5 Our Areas of Responsibilities As Founders Weren't Stable
Me and Carter were both generalists, so we mutually decided on a lot of items related to the company. This led to decision making issues especially in the early days. We had many discussions and compromises that wouldn't have had to happen if we had areas of responsibilities and better defined autonomy. The founder flexibility had positive effects, but our team suffered at times for it when they didn't have to.
We had a ride or die team that was ready to adapt and find something that works. I could not be happier with the sacrifice and passion our employees put into Gamelynx. They were incredible, and I wish I could have done them better. Early Pre-PMF teammates are more founder DNA than employee. Most of the leadership and autonomy we are hiring for and hoping from our team is to survive and execute PMF, not any challenges or milestones after that. If we had better founding team structure, we could have enabled more full autonomy to our employees.
This issue challenged us again when we started pivoting in our last year and me and Carter realized that our desired areas of responsibilities for a lot of the projects we were targeting overlapped in a negative way. We amicably decided to part ways at this point, but it would've been better if we could've worked well together! I like that guy.
#6 For Better or For Worse, We Weren't A Team of Industry Veterans
We went lean and mean, hiring entrepreneurial people who were immensely competent but hadn't seen many game production cycles yet. People just like us. We could have hired more traditionally with larger teams, and a bigger focus on years of game industry experience. I decided that other people are more qualified to make that conventional studio, and to focus on being built differently. It's not clear cut better either way, but the resulting company and culture between the two is quite different.
#7 Misjudged Investor Flexibility for Investing past the First Fundraising Round
We delayed our second fundraise in order to demonstrate the viability of our clever user acquisition strategy and test launch our game more. The clever user acquisition worked, and we had a hockey stick growth graph that would serve us well in the long term. We would be able to launch and test multiplayer games for a profit even if the games had no monetization or retention. Who the hell ever says that? We thought we were going to have an easy time selling our studio.
The game on the other hand was incomplete after 2 years. We were making a huge live service multiplayer game with only 4 developers. It performed poorly on a will-it-easily-make-money basis, but had healthy indicators of how we could optimize it and push it forward. It made sense to us, but it was off-putting to investors. They saw too long to market with bad metrics, while we saw we were on the path in a methodical and effective way.
It's understandably difficult to evaluate companies that don't fit in the common investment heuristics. Broadly, investors usually invest in games via vision (which we had, but is discounted past the first seed raise), industry pedigree (which we had little) or better than benchmark metrics (which we had none, save for our user acquisition method).
We thought the rise of many gaming funds would be a great help for us, but these portfolio strategies usually involve investing globally which lends to a location-based valuation arbitrage. If you're making a portfolio of game studios it just makes more sense to have many cheap global studios rather than expensive US companies. As a result our West Coast USA YC company status actually backfired on us a bit even though we had a reasonable valuation within that community.
The biggest problem of course was timing. Our delayed fundraise kicked off in February, and the March COVID economic shutdown sent the private and public markets into disarray. We didn't have enough runway left to wait for people to adapt even though gaming was doing great as a market. We lost team members, which kickstarted a death spiral of changing circumstances. Live and learn!
There are definitely startups that win with advantages or disadvantages related to these points. To that end, these aren't regrets at all, just interesting decision points. There are a lot more than just these 7, but I hope you enjoyed it!
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