As part of our Founders + Funders SF 2019 summit, held in partnership with Seneca VC, we brought together an exciting group of startup founders and investors for a day of learning, networking and growth.
We were joined by Amy Jo Kim, a game designer, startup coach and author, to talk about applying the theories of Game Thinking to effect portfolio decisions as an investor. Amy’s written two books – one almost two decades ago on community building and, most recently, Game Thinking: Innovate Smarter & Drive Deep Engagement With Design Techniques From Hit Games.
Have you ever struggled because you received contradictory advice?
Have you ever been unduly swayed by really polished, beautiful visuals?
Have you ever struggled to figure out what’s the right MVP to build?
If you’re a serial entrepreneur, you’ve probably struggled with all of these issues, and I want to tell you how you can solve all of them. Let’s start with a story.
Back in 2007 when the world was young and innocent and the Facebook platform was brand new, my co-founder and I raised venture money and created a next-generation brain game startup called Photograph. We had innovative award-winning design. We won “Best of” awards. We were so proud of it. We really sweat bullets over it. We got about 2,000 players and about 1,000 true fans that were just rabidly excited about what we were doing. Sound familiar?
Then it was growth time. After all, we had taken venture money. So we tried to cross the chasm to mainstream success. We started getting contradictory advice from our stakeholders, “Build a platform for Brain Games. No, wait. Hidden object games are hot. It looks like it could be that. Develop an engine. Double down on Facebook. Go viral. Dump the co-founder and take a high-paid job.” That last one’s a real option that came up!
At this point, I’d already worked on some big hits like The Sims, and I felt like I knew what I was doing, but I was paralyzed. I got so much different advice, I didn’t know what to do. It was one of the hardest things I had to process. We ended up selling to a competitor, I kept the co-founder, who is also my husband – he wasn’t going anywhere.
We got an exit, but it wasn’t the outcome that either we or our investors were looking for. We didn’t make it into mainstream success. We failed. Period.
What did I do differently on this project than the hits I worked on?
Previously I’d been able to work with Will Wright on a number of things, including Sim City and The Sims, and was on the original design team for The Sims. I noticed that a lot of what we did at first was run several tiny, low-fidelity experiments – what we called “finding the fun” in game design – to really develop our core market. We didn’t start with Sims as you know it. Not even close.
Once we ran these little experiments, we went forward with one idea. I hadn’t looked at all the different ways of approaching a problem, which was an area of improvement for me.
Stewart Butterfield, who built Slack and Flickr, learned from failure that the best place to start is to solve a very real problem for a small, high-need group of people. Slack started as an internal hacked-together team productivity tool built on top of IRC. They dumped the game that didn’t work out, called Glitch, and turned around and made this tool they’d been developing internally for three years into the Slack that we know and love today.
So there’s three powerful lessons I want to share with you.
Find and leverage your superfans.
Superfan is shorthand for your hot, core high-need customers, the first 25 or 50 people who are going to absolutely go nuts for what you’re doing. Not the big market, but the first slice.
Paul Buchheit, recently-departed Partner at Y Combinator and a brilliant guy, likes to say, “Build something just a few people want, even if most people don’t get it right away.” This is a huge deal if you’re innovating.
For instance, in Rock Band, when we were bringing the game to life, we didn’t use our target customers. We used a very early-adopter slice of rhythm game nerds, meaning they’d already played rhythm games, and they were comfortable with Office software, low-fidelity software. That’s who helped us turn Rock Band into the amazing worldwide hit it became.
During the early days of the Sims, we weren’t using or getting feedback from our eventual target audience. We were using a very narrow slice of simulation enthusiasts who really love to make things. There were many people on the team who were frustrated and didn’t understand why we were doing it. But it’s hard to argue with success. With Happify, a breakthrough mental health app, it was a long, slow road to success, and our very first customers weren’t who we thought they were going to be. Turned out they were stay-at-home parents who were super Type A and had recently left the workforce, and really wanted to win at parenting in the way they had won at their jobs.Slack started as a tool for a game development team that was working at different locations. Their early customers were themselves, who were working on what would ultimately be a failed game.
Finding and narrowly focusing on these people at the beginning of our product development is a huge leverage point, and it goes against a lot of the common advice you see.
Additionally, don’t fall for Total Addressable Market (TAM). Every pitch deck probably has a TAM slide, right? Mine did, and that’s part of how I got funding. Don’t confuse your total addressable market with the slice of your market you need to focus on to reach product market fit. Those are two different things.
If you want to cross that chasm to mainstream success, start by focusing on absolutely capturing and delighting your early adopters. If you want to go after a large market, you’ve got to first win their hearts and minds. It might seem counterintuitive.
Test and iterate early in rough form.
I love this quote from Frank Lloyd Wright. “You can use an eraser on the drafting table or a sledgehammer on the construction site.” We want to get as much done on the drafting table as possible – we don’t want to build all the code and then find out it was wrong. How do you do that?
First, beware the siren song of seductive mockups. I’ve been fooled by this so many times. I used to work at a media company. If you make your mockups pretty, it’s really easy to fool yourself into thinking you’re closer to product market fit than you are. You need to aggressively discover what’s wrong with your idea as well as what’s right with it, and pretty mockups aren’t gonna get you there.
The stage-gate theory is a particular way of generating startup ideas and validating them along the way. You need to test your high-risk assumptions earlier.
On Happify, when we started that project and raised money, we thought we were going after hard-driving entrepreneurs and founders. When we tested that, it didn’t work out for several reasons. We tested three different markets until we found the eventual market – those stay-at-home parents who recently left the workforce – that really worked for us.
And once we found them, guess what? They hated our UX. We had a very game-like UX stemming from founders who’d come from the gaming industry, like me. The users hated it. They wanted it to look more like Pinterest, because they said, “This looks like too much work.” So we did a big pivot right before the beta of our UX model. We were stressing, “Oh my God. Can we afford the three weeks to do this pivot?”
But if we hadn’t done that, nothing would have worked. We took the feedback, we tested the ideas, and we did the big pivot. Everything was up and to the right from there. Not quite that simple, but it really made a huge difference.
If you’re a funder and you’re talking to teams, look for signs of iterative development with low-fidelity materials. There is nothing smarter. If you see people that have really, really pretty mockups, they’ve got a big art team and they’re pouring in a lot of energy, but if they haven’t validated the core idea or customer journey, then you’ve got a team that’s going to get in trouble.
One of the most important things to do during this is to figure out if you want to build a habit-building product. Figure out how to piggyback on an existing habit that that narrow slice of your market has. On Covet Fashion – a dress-up game with beautiful designer clothes, mostly for girls – we found during our early research that women really liked what we would call two-player, co-op shopping. They would send a picture to a friend, “Which blouse should I buy? Which earrings should I wear with this outfit?”. We then built part of the game on that existing habit. The whole dev team thought what we were building was too simple to work, but it’s still in the game six years later, and the game turned into a huge hit. The feature we built that was based on an existing habit was part of why it turned into a hit.
Build engagement from the inside out.
Kathy Sierra, who is one of my great heroes and an absolutely wonderful resource, says, “Upgrade your user, not your product.” You may have also heard, “People don’t buy your product, they buy a better version of themselves.”
This is where deep engagement comes from. The best way I found to do deep engagement is to engage your customers on a path to mastery.
In a good game, it’s pretty obvious how that happens: new things unlock that are more sophisticated over time when you’re ready for them. That same principle applies to any product, SaaS, marketplace, app – anything where people can get better at something and where the app isn’t just a flat, trivial experience. There are guidelines you can use to bring your product to life from the inside out.
A mastery path is a path from discovery onboarding, through habit-building, and into some kind of mastery of the system. That habit-building stage is the important one.
Build and test your 21-day habit first before you pour additional energy into all the awesome mastery systems that people who aren’t game designers like to play with. The hardest thing to do is build a habit. But if you start on it first, you will be in such a good position, and it will save you months or years of time, and it’s actually really hard to do.
Slack didn’t start with fancy onboarding or deep mastery. Slack started with the daily habit, hacking it together and using it. Part of why Slack is so good is that they iterated for three years before they shipped. For Rock Band, we spent six months working on one song – making it work, getting the feedback loops right. People who play Rock Band wonder, “How the hell did they get that to be so good?” That’s how. All the fancy mastery stuff didn’t come till much later. Sims, same thing. We spent a year, at least, on that first, asking, “What is somebody doing on day 21? What is that core experience?” Same with Covet Fashion. Noticing a pattern here?
There have been many products I’ve worked on that were well-funded, with hot teams, that didn’t come to life because they made the mistake of over-developing one of these too early.
Here’s the punchline: If you want to develop a habit-building product, a deeply engaging product, start with your habit building. Start by saying, “What is it that people are going to do when they’ve learned the ropes and they’re just using it?” Mock that up. Build just enough onboarding to get your superfans into it, as superfans don’t need fancy onboarding. That’s part of why you need them at the beginning of your development journey.
If you want to build a habit, start with a low-fidelity learning loop and iterate the hell out of that with the slice of your market who needs it the most. So those are the lessons as an investor. You can look out for this in the teams you’re working with, and as an entrepreneur, you can use these techniques to build your product faster and smarter and save yourself months and months of time and runway.