A Story Of GameLayers, Inc.

In 2007 Justin Hall co-founded GameLayers with an ambitious plan to bring an MMO to the Firefox toolbar, before ultimately shutting down in 2009. Gamasutra presents an exhaustive look back at the entire ride.

[In 2007 Justin Hall co-founded GameLayers, a company with an ambitious plan to transform web surfing into a massively-multiplayer online game, using a Firefox toolbar.  GameLayers took on $2 million in funding and developed this toolbar game PMOG / The Nethernet, as well as two social RPG games for Facebook before ultimately shutting down in 2009.  The following article, taken from Hall's website, takes a sustained look back at the entire ride, and includes links to supporting business documentation, design documents and data.]

Between 2007 and 2009 GameLayers made a multiplayer game across all the content of the internet. I was the CEO of GameLayers and one of the co-founders.

Here I'll share stories and data from this online social game startup. This story covers prototyping, fund raising, company building, strategic shifting, winding down and moving on.

2006 Grad School Project

In 2006, I was an MFA graduate student at the University of Southern California Film School Interactive Media Division. I was living with M (name and likeness redacted by request), a creative writing major at USC.

A reformed journalist, I attended grad school to learn to make the kinds of software I'd only written about before. I was watching people play World of Warcraft and I wanted to have those kinds of immersive persistent social travels through dataspace. WoW looked like fun!

But I couldn't focus on one MMO -- too much time investment required. How about an MMO (massively-multiplayer online game) for life on the web? M and I teased out ideas for a role playing game mapped to web surfing, so you can earn points for doing what you're already doing!

First Draft of PMOG - D&D attributes for surfing the web

Mentored by a number of agreeable engineers, I rigged up a single player prototype, using a Firefox extension that saved my web history to a file, then parsed that web traffic with PHP to give myself Dungeons & Dragons-style attributes. Surfing a lot of Flickr gave me high dexterity but lowered my constitution. Surfing the Wall Street Journal raised by intelligence but lowered my wisdom: hand-coded game values for a few sites. M made art for each of the attributes; with some art from M it was enough to present at a conference Aula summer 2006 in Helsinki, Finland.

Game maven Alice Taylor was in the audience. She and Matt Locke at the BBC had a mandate to sponsor innovative educational interactive media projects. The BBC gave us a $20k grant to build a game to teach people web literacy, on the condition we hire a British programmer.

PMOG: The Passively Multiplayer Online Game

Late 2006 iFrame version of PMOG built with BBC funding

So now this became PMOG: The Passively Multiplayer Online Game. From fall 2006 to spring 2007 we worked: myself Justin Hall as producer/web monkey, game designer/writer M, and a UK game engineer Duncan Gough whom we found through our friend Matt Webb.

Mid-2007 Firefox sidebar version of PMOG (zoom out)

The BBC grant and the confines of Scott Fisher's Interactive Media Division (IMD) at USC provided a fine place to incubate our idea. We were supported and stimulated and challenged by smart folks with a good deadline and feedback mechanisms driving us towards a playable experience. IMD Professor Tracy Fullerton helped us run PMOG paper prototype tests; between the IMD and Alice Taylor we had good oversight to keep us focused on building a coherent experience in a finite amount of time.

Giant poster used to promote PMOG during a poster session in the lobby of the March 2007 Game Developers Conference in San Francisco. Illustrations by the most excellent Colin Adams.

My last year there I was able to take a class "Business of Interactive Media" with a long-time game industry idol of mine, Jordan Weisman. He has started multiple successful game production companies based on new media and new markets. He shared data from his work with the class, giving me the spreadsheet tools to model the cost of running a business and launching projects. Now I could begin to imagine how to sustain and grow a new game idea.

We showed PMOG in the IMD May 2007 and we had 1,500 players! Duncan built a basic Firefox sidebar to host a working web annotation game with character records and user generated play objects across web sites, much of the functionality that we'd initially envisioned for the game. It felt like a game, or at least a fun web toy, with a chat room filling up with return players.

Here's some pictures and research documents from that early PMOG era.

As we shared our work online, people suggested we could raise some investment. We had a new type of game experience, a creative use of the Firefox platform. Maybe we were building some valuable part of the online entertainment landscape. Maybe we could be an internet startup! I had worked for some internet startups in the 1990s (HotWired, electric minds,, but I didn't really have a sense of how an idea turned into a business. Turns out you can raise money on an idea, and a prototype is even better!

This was mid-2007. The web was booming -- new services were being funded and taking off. There was a sense that you could grow an idea into something large, and it would make money from your large audience, or it would be acquired by Yahoo!/Microsoft/Google.

So we began presenting the game idea to venture capitalists in Silicon Valley. It was amazing to understand that this amateur game production could be seen as an economic vehicle.

First Round of Funding

Joi Ito was our first investor, an angel who agreed to come on if we could find other investors. Joi was a high velocity digital citizen and investor in a number of innovative fun projects. I had helped Joi set up his weblog when I lived in Japan in 2002, so we had some history of working online together.

In 2007 Joi was an active World of Warcraft player: he inspired us to make a game that could involve players as much as WoW involved him. Having Joi signed on first set us up to find other folks.

Joi introduced us to Richard Wolpert, another angel investor with a history of work with Disney Online, Apple, Real Networks -- AAA quality companies. He pushed us to make the experience more accessible and appealing to a broader audience.

Bryce Roberts at O'Reilly AlphaTech Ventures was interested. OATV was a relatively new seed-stage fund; they were looking for companies that might be disruptive or challenging to existing markets.

We believed we were opening the conventional massively multiplayer online game experience to broader audiences, and we appreciated OATV's roots in open source and hacker culture. Plus Bryce had great internet literacy and a fun punk-rock attitude.

I remember sitting in his beautiful conference room with a view of the San Francisco Bay, and him asking: "How much do you think GameLayers is worth?" (theoretically, after investment). I had somehow forgotten to plan that answer, so I winged it: "$3 million." Bryce replied, "How about $2 million?" and I said, without much hesitation, "Okay." So there we raised $500k on a post-money valuation of $2 million - $50k from each of the angels and $400k from OATV. OATV pledged millions more in reserve, if we showed promise.

GameLayers investor Bryce Roberts in his 2007 OATV office - photo by Scott Beale / LaughingSquid.

I graduated with my MFA in June 2007 and turned down a well-paying offer from Yahoo! Games to architect a metagame of badges and points across their service. The deal to fund GameLayers, Inc. closed in July 2007. M graduated with her undergraduate english degree in May, and joined J.J. Abrams' production company Bad Robot as a receptionist, training to use the 3D printer. M left that job after a few months to be chief creative officer of GameLayers. Duncan, our play prototyper, became our CTO, I was the producer and CEO -- we were now three co-founders making a new online experience!

M and I were living in Culver City, near Los Angeles California. Mark Jacobsen and Bryce at OATV strongly encouraged us to move the business from Los Angeles to San Francisco, to be near more developer talent and to be near other internet companies for collaboration.

Bryce, M and Richard one month after the money landed, at a party in the OATV office, on the eve of the October 2007 Web 2.0 conference.

The money didn't actually arrive until September; one of the first great lessons: securing funds takes longer than any prediction or arrangement. That month we packed ourselves and our dog Pixley Wigglebottom into a U-Haul and drove north to a large cheap loft in East Oakland, near San Francisco, where so many other internet startups lived.

Now we were charged with building out our company. We spent $5,000 to buy During fundraising I remember hearing that you could estimate the costs of running an internet startup at about $10k per full-time employee per month. That includes everything -- overhead, salary, technology -- and it actually works pretty well as a formula. So we went up to about six people, burning about $60k a month, which meant that we had a little less than eight months to prove PMOG could be a viable business and GameLayers could be a viable company.

Here's how we were spending our first round of money - mostly salaries!

In reality, we spent the money slower than we predicted. It was harder to hire people than we expected. We saved money by working out of our home. We recruited folks we knew; our first employee, web designer Cap Watkins, was M's friend from USC; he slept in our East Oakland loft with us and our dog until he found his own place.

Cap and M work in the GameLayers loft in East Oakland while Carl Dreyer's Passion of Joan of Arc plays on the landlord's plasma TV - photo from December 2007

Duncan remembers "when we secured funding from OATV and had a conference call with [an] extension-building company, where we almost gave up a large chunk of the company in order to have them build our extension." It seemed like a fast way to get our game running, but we realized we wouldn't be able to iterate our own product if someone else built it. So we decided to hire up a team instead. As Duncan put it, that "was a real challenge, and a test of our self-confidence."

One of our first advisors was Ben Cerveny, a well-connected digital nomad who had worked between the web and gaming for years. Ben helped us find a playful contract artist/programmer Mark "heavysixer" Daggett in Kansas, we reworked our basic sidebar version of PMOG to have a more integrated HUD and a gourmet steampunk look. We chose steampunk because we felt like the genre was on the rise, and it was appealing to internet early adopters. We thought steampunk would also help to distinguish us in the broader games marketplace -- stylish, playful nerdery.

Beta Launch and Roadshow

We launched PMOG in closed beta in February 2008 -- people could play, but only with an invitation. This allowed us to gradually grow the game, to be sure our servers held up and we weren't getting overwhelmed with new customers. We had a signup form for people to request access; I would scan the email addresses for the words "venture" or "capital" or "investments" or "partners" or "fund" -- this way I found a number of venture capitalists had signed up for the PMOG beta. I would reach out to each of them to see if we could book a pitch meeting.

Justin, M, Duncan - February 2008 - photo by Bryce

February and March were a big roadshow, talking to the press:

We presented "passively multiplayer online gaming" at conferences: Game Developers Conference in San Francisco (coverage), the Emerging Technology Conference in San Diego, and South by Southwest in Austin.

Presenting "DataPlay: Living Games" at South by Southwest (SXSW), Austin, March 2008 photo by Narisa Spaulding

In our company IRC chat room, with people from the UK, Missouri, Kansas, San Diego, and East Oakland, we worked to evolve our experience, about six of us. Two and a half coders, a front end person, a community support person, a producer, and a game designer/writer. Not enough engineers, but we couldn't hire many -- during a technology boom, engineers are scarce. I pitched in making web views as the producer (the views, and occasionally controllers, part of Ruby on Rails' MVC).

A player profile on circa May 2008

Another major lesson from running a software startup: engineers are the dreammakers, and everyone is in fierce competition for talented programmers.

M envisioned a virtual world on top of the internet: a battle between order and chaos, where we supplied the information weapons. For charitable sorts, there were crates for treasure to be left on web sites. For aggressive provocateurs, there were mines that exploded and shook your browser window when you hit their target URL. Surfing with our toolbar game on at times made the internet feel alive with play in the margins!

Money is running low towards mid-2008

In the spring of 2008, it looked like we had a promising game service that was getting a lot of buzz. We were spending slower than we'd planned, but we were running out of money. So the game designer/writer M, and myself the producer, shifted to fundraising for about 14 weeks of March-June in 2008. This is a huge attention-suck: tracking down introductions and opportunities, developing presentations, taking feedback, corresponding, prioritizing, traveling, pitching.

I started off with a stupidly fat slide deck. I thought it was important to walk through people through the idea, the history of the idea, the market context, the team, the upside, the plans. But a rigid linear presentation was anathema for busy people who have seen a ton of pitches. Each VC had their set of questions and usually couldn't sit through more than three slides.

We learned to show fewer slides, and then just talk with potential investors. Often these were smart folks with experience building companies, so we had a lot to learn. At best, it was a good conversation, when we learned to relax on the formal presentation. We kept a stack of slides in our appendix; if they asked about "competitor products" or "projected burn rate & operating expenses" or "DAU versus MAU over the last three months" we could pull those up.

There were some soul-crushing moments: taking our hard work into a room with five or six hard-driving rich dudes after a red-eye flight, and they want to know why you don't have explosions or blood in your game. Or why you're not a platform for embedding other people's Flash games. Or why you're so deluded about the size of the market.

We were intent on building one game, because the scale of our team didn't suit supporting multiple products, and we didn't want to spread ourselves across multiple products when we hadn't proven the idea and built a successful instance of this new kind of game. We thought we might build a platform someday -- opening up our tech for anyone to upload their games. But we wanted to get the core experience bolted together first before we supported other developers.

Here's a PMOG Experience video we produced as we were going out of closed beta, circa May 2008.

Second Round of Funding

Early June 2008, one of the craziest weeks of my life:

  • Saturday: Get Married near Yosemite
  • Monday: Move from 1400 sq/ft loft to 400 sq/ft apartment
  • Tuesday: Sign Second Round Term Sheet for $1.5 million
  • Friday: We fire someone for the first time

In June 2008, M and I were married in Central California. Our investors and co-founder from the UK joined our friends and family betrothing the chief creative officer and chief executive officer of GameLayers.

The wedding ceremony was Saturday. Monday, we moved from our large East Oakland loft into a tiny apartment in an awesome part of San Francisco's Mission District. Tuesday, we signed a term sheet with Rob Coneybeer from Shasta Ventures for a total $1.5 million round that we had just raised after a long roadshow together.

Friday, we had to fire someone for the first time. It was extremely intense running a startup, and being married to a co-founder / board member. Nonshop high-pressure togetherness. We put off our honeymoon and kept working.

Fundraising on an offbeat game on an unproven platform was challenging. Fortunately, we found an investment partner who saw the potential in the widespread social experience we were building: Rob Coneybeer from Shasta Ventures. Rob joined the GameLayers board along with M, Bryce, and myself -- leaving an empty fifth seat we didn't worry about filling.

June 2008: "Having Fun, Making Money": "a startup turns the entire web into a game, aiming to steer players toward and away from certain sites. Will advertisers play along?"

A timely cash infusion arrives in mid-2008!

We raised another $1.51 million dollars -- $1 million from Shasta, and another $500k from OATV. Our two angel investors Joi and Richard had the option to put in another $50k each, but they chose not to. GameLayers was now valued at just under $5 million!

GameLayers Round 2 Term Sheet with Rob / Shasta -- a triumphant document for us.

We were running on fumes when the second round of money came through. Now, August 2008, the money was in our bank account, and we ramped up plans to expand our operations, reach into new markets, improve our featureset, and draw in a ton more users! Rob showed up with a lot of enthusiasm and ideas for the project, giving us a boost of energy. We looked forward to focusing on our game-making again, after months on the road!

Kicking More Ass, Sooner

Rob Coneybeer from Shasta Ventures, August 2009 photo by Elliot Ng

Our first venture capitalists, OATV, primarily work with nascent startups. Bryce focused on helping us build a team, and helping us get a rhythm building and releasing software. Then Bryce helped us present ourselves as a valuable company for other larger VC investment. Our second VC, Shasta, was accustomed to blowing out a product with promise, making it grow seriously fast. Rob wanted to see progress and drive momentum.

Moving into a new office - photo from 1 September 2008

One year after we started, we finally stopped working from home and moved into an office: 76 2nd Street, the top floor of an old building, for about $3100 a month, space to grow into for 14 people.

Boosting our monthly OpEx spend

One of the biggest challenges for me was learning to prune my stories. I would get a call from Rob at 9.30pm on a Tuesday. "How's it going?" I would immediately start listing the bugs that were on the top of my mind, the problems we were working to solve.

Looking back, I believe Rob wanted to know how we were doing strategically, and maybe a sense of confidence from me that we were kicking butt overall. I've been a journalist for years; in this case, my urge to tell a compelling human drama was not necessarily compatible with "Here's a clear path to acceleration and growth." VCs aren't looking for spin, but I think they want to know that if you're thrashing on bugs, it's part of a coherent larger vision.

Becoming a CEO and raising this money was committing to kicking more ass, sooner -- an exhiliarating proposition. And because I believed in our idea, I wanted to drive it forward as fast as possible. I charged in, learned everything I could from books, advisors, news, and worked to be the best possible CEO Decider Visionary Leader Capitalist.

But occasionally I was too in the weeds -- scavenging on Craiglist for deals on monitors and printers to save $100, when tens of thousands of dollars of employee time was hurtling forwards towards a moving target.

Running a startup is a crazy range of affairs to manage: the unceasing search for engineers, customers having weird issues with common computer setups, investor relations, the mood and productivity of the folks who gave up other opportunities to join our cause, the amount of cash in our bank account, our landlord refusing to install heaters so employees are buying USB-powered heating mittens, state-by-state tax and liability law, we're not paying ourselves much and we're eating out constantly and we're paying rent to live close to the office in one of the world's most expensive cities so personal money is tight, someone else just raised 3x as much money as we did to do the same thing with a larger team. And OMG the entire world economy is cratering!

Justin Hall, Pixley, Terry Thurlow, Alex Friedman, M, Seraphina Brennan, Kristin Nienhuis, Brian Bommarito, Duncan Gough, Joe Wagner, Marc Adams - GameLayers team in November 2008 -- this is as large as we got. Photo by Beth Amann.

CEO Search

In November 2008, the board met for dinner at a SOMA restaurant called Salt House: M, Rob, and Bryce. Rob and Bryce suggested GameLayers needed a new CEO, and my wife M agreed: we needed a firm hand to turn this into a business, someone who could raise confidence with another round from more heavy-duty investors; someone I could learn

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