"I guess I like being a contrarian," says Bing Gordon, who was the chief creative officer at Electronic Arts -- having started with the company in 1982 -- but left over a year ago for leading venture capital firm Kleiner, Perkins, Caufield & Byers (KPCB.)
That's the company behind the $100 million iFund, which seeds third-party iPhone development, established last year in partnership with Apple. He's also member of the boards of Zynga and and the iFund-backed ngmoco, two companies that concentrate on the newer outgrowth of the games business, in casual, social networking, and iPhone.
You'll find some of Gordon's contrary ideas below -- suggestions for taking the spiraling costs of game development and wringing consummate profits out of them; concepts for changing the way companies are run, and why every company "needs a Will Wright" on their executive team.
Gordon has stepped aside from the gaming space, to an extent -- as he admits -- but he still has experience and perspectives on the business, business in general, and culture that are relevant to studios creating the games of today, and striving to create the games of tomorrow.
Why did you decide to join a venture capital firm? Is that rewarding for you so far?
Bing Gordon: Yeah, for me, I like mentoring high energy, high potential people, and I like hanging out with smart peers. And I kind of knew of Kleiner Perkins, some of the principals there for 25 years, I've always admired them.
Has it been working out for you?
BG: Yeah, I like it. I like it. Better than I hoped.
Well, that's good.
BG: I like the value systems at this particular firm, and it's kind of interesting, the entrepreneurs who we get to meet. And the conversations about the partners are brilliant. I had this "Aha" a while ago on the Amazon board. You only want be on board, and you only want to work in an organization, where you'd pay to be in the meetings.
BG: Or you'd pay to have dinner or lunch with the people. So, that's working out.
Talking specifically of the game world, what makes sense to invest in now, in your opinion?
BG: Well, let's see. Well, you know, more broadly, I'm a believer in the game-ification of the world. I think video game design is the new MBA. Video game design is valuable in education, in internet portals, in advertising, in product design, in entertainment media design as well. Video games are so compelling that people who grow up playing video games will have their habits and world views shaped forever.
I could see that being true. I think at GDC, you said something about there being more game designers out there than we need for once. And I think you said something like, "We don't need a bailout for the game industry. We need the game industry to bail out the culture." How would you envision that happening?
BG: Let's see. Specifically, in education and entertainment, I think education is in dire straits right now. The whole education business. Educators in public schools find that today's kids are more interested in the real-time self-paced interactive online, where everything is clickable, world of gaming, than they are in the boring ass world of text books and prescribed curriculum with memorization and multiple choice tests.
I actually think that game-like systems with simulations are the new manipulatives for learning by doing. I still think there are a lot of learning habits peer-to-peer, a lot learning habits solo, and self-learning habits of mentors. But great teachers are not very scalable, and I think new media is going to bail out the public education system.
In entertainment, I think every Fortune 500 should have somebody in their exec staff who grew up playing Nintendo. The NES first became popular in 1987. I think anyone that was born after 1971 got their driver's license when Nintendo was popular. Anybody younger than 38 grew up with a Nintendo or video game culture. I think that any company that's trying to sell to people under 38 needs to be video game smart.
Then you look at cool web companies like Facebook or like LinkedIn, even like Etsy, they would all benefit from video game design thinking in their product design or a sense of how scoring and points and lifetime career personalization and customization and community and guilds and parties can increase engagement of consumers under the age 38. Every one of those companies could use a Will Wright or a Will Wright equivalent kind of on their executive team.
What kind of responsibility do you think game developers have to represent various views or social ideas or things like that? And if they have such responsibility, whose responsibility do you think it is? Like a director? Or is it the whole team or what?
BG: I don't think it's up to creators to be even-handed. It'd be like saying, "Hey, Michelangelo. As long as you're making David, can you make Goliath?"
Creation does not understand responsibility, unlike the government-supported media, whose job is supposedly to inform a democracy. The job of art is to inspire, and you want people to go in deep on something. You don't want them to try and present both sides. What you do want to do, honestly...
The Odyssey is a good example of it. There's more violence in The Odyssey than there is in Grand Theft Auto, and it's considered socially redeeming because there's some sense that Odysseus gets his comeuppance.
And it might be a little bit of irony when he wraps the chain around the necks of the town who put up with the enemy soldiers, but the reason that it's is powerful is because you kind of identify with the character and his plight, and you feel the emotion that he felt, and not because the artists adhered to an even-handed history.
Right. I don't necessarily mean to indicate that game developers should feel as though they have to represent all views, but I guess it seems a shame that structures don't exist to support certain types of things. It's amazing that a game like Flower or something like that exists, but there aren't many vehicles for that within traditional games. There's more of that on the web or whatever. I guess it feels like not enough people are pushing for it.
BG: In the world of movies, there is a place for art films. You can make them for more money, you make them weird and unusual, and they have a following. I don't think there's kind of...
You could have a value judgment that everybody should watch them. You could have a value judgment that everybody should eat foie gras, but it's kind of similar. It's a narrow taste and kind of expensive to do.
I'm coming from the perspective of perhaps games' perception outside of the industry.
BG: But there's a reason why Shakespeare that has Falstaff and sword fighting and murder is more popular than his sonnets. So, he did multiple things, and they stood the test of time. I think that's the same with all creations. You can do something for a narrow specialty audience, or you can do something more broadly that works on multiple levels.
Well, I think there's a different obviously between broad and bland, and I think unfortunately a lot of games tend toward the bland view of getting a wide audience versus trying to take something and twist it, you know?
BG: That's been a critical complaint about creations forever.
BG: What architects say is that, to some degree, the caliber of their work depends on the caliber of the planet. Here's what I think about it. There are an awful lot of people in the world, where if they got asked, "If I gave you 50 million dollars, would you give me 90 minutes of filmed entertainment," who would say yes.
And it isn't if their fault if what they turn out isn't always good. So, you know, the hard job there is funded. There are more people who can make stuff than there are people who can get the 50 to 90 million bucks. So, shame on bad clients.
Well, with you being in venture capital here, do you see this as a time for safety or more risk for companies? Obviously, there's always a balance, but in what direction or another, what do you think?
BG: Let's see. I think most people misperceive risk. On paper, Nintendo's current success is from the Blue Ocean strategy with trying to go someplace where no one else would consider going. Electronics Arts' launch on the Sega Genesis when they had less than 5% market share was seen as ridiculously stupid at the time, so sometimes going where no one else goes creates big payoffs. But, you know, you tend to not hear about the explorers who died along the way.
You see this with customers: do you want to buy a sequel when you're pretty sure it's going to be a good value, and you kind of know what you're going to get? Or do you want to go out and try something totally new? I was one of those with The Sims, John Madden Football, World of Warcraft, and Diablo. When the next version came out, I was dying to go and play it again. So, I didn't want to take a risk with my own money and my next hours of play.
I like a metaphor about risk from ice hockey. The thought is, in sports in general, the teams that always make the playoffs never get a chance to totally rebuild. So the powerhouse in the NFL, the 49ers in the '80s and the Cowboys in the '90s, and then the Patriots more recently, had huge success after a decade of spectacular failure.
So, the 49ers were kind of in last place for a decade, and so they got to draft and rebuild and take a risk on a coach no one believed in, Bill Walsh. And the Cowboys suffered and got to put together a couple good drafts. The same with the Colorado Avalanche in the NHL.
They made one draft that basically stood them in good stead for 15 years. And like a comparison to the Boston Bruins, who went to the playoffs something like 21 or 22 years in a row -- which is a record -- and they never won the Stanley Cup. In that case, the good was the enemy of the great.
I think it's the same with risk-taking. Great success often comes from amazing risk, but most people would be more comfortable with a good outcome rather than a lot of failures for a chance of a great outcome.
I think psychologists would say that the emotion of failure -- a failure of one has double the emotion of the success of one, so people don't tend to realize human emotions [keep] us from maximizing expected outcomes.
So if we maximize our hormonal outcomes, we tend to go for small success rather than a chance for a big success or a small failure. And that's people. Unfortunately, all these creations are done by people.
It seems like it's very difficult for people to measure failure in that way sometimes because they have a lot of people, stockholders, to explain things to.
BG: But if you think about your articles. So, you could go out and spend two weeks to do an article that the magazine's never had before and that the editors don't think they want, and you can say, "Yeah, but if this works, I'm going to get promoted, and it's going to be a cover story." And they say, "Yeah, but if it doesn't work, you're fired."
Most people would say, "What I'm going to do instead is call up some dude I saw at some conference and try to get him to say a couple new things that maybe nobody else said, but it's not like wildly risky." And that again is more normal. It's like stabilized success as opposed to continuous risk.
Again, it's not just video games. It's hard to balance incentives so we will take a chance of failure for an outside chance of success unless you don't have any other alternative.
So, it's kind of interesting about bloggers, they can say, "I'm going to try to create a story that's faster or different than anybody else because if I write something that everybody else has, it won't get linked to." But once you get a salary at a magazine, there is a lot of pressure to do what the editors want.
Do you think that that sort of thing is part of what makes people in this industry, especially executives, so afraid to actually speak their mind and have an opinion? I was thinking about this in relation to you, actually, because you do say your opinions, and this kind of gives you clout. Or perhaps it's because you have clout already, you have the opportunity to speak your mind. What do you think about that?
BG: There's a book about Steve Sample, who's the president of USC. There's a leadership course with Warren Bennis called Contrarian Leadership. So, I think that if you're naturally a contrarian, you might as well try to be a leader. But, you know, you can die along the way as a contrarian.
I guess I like being a contrarian. I would say that my sense is that in organizations, people that talk more tend to rise to higher ranks in organizations. It's kind of like the class you can think of where the teachers want kids to talk, so they waive the grade to some degree based on class participation.
It's hard to move people in organization without talking. So, guess what? The people who aren't afraid to talk tend to do better. And regardless of whether what they say is more cogent than the talk of the people who don't open their mouth, it's hard to move organizations without opening your mouth.
So I don't think execs are afraid to say what they're thinking. I went to Stanford Business School. I think execs tend to say more than they're thinking.
[laughs] Well, I can see that being true in a lot of cases. I do find that in this industry, there is kind of a culture of fear around letting something loose that's going to be misperceived or something like that. But it may be that someone actually meant what they said, and they try to take it back. This happens all the time, that kind of thing.
BG: Yeah, I've always lacked sophistication. But you know, there are fearful people everywhere. You know, fear is a driver. I don't think there's like more fear in the movie business or in the game business than there is in general.
You watch the news? The news is fear-mongering like mad because it's heightened emotion against the tension. So, I think fear is pretty common, and it's a good driver for people. It's easier to get them out of the bed in the morning because they're afraid than because they're happy.
I don't think there's more fear in the game business than any place else I've seen. I would say it differently... Where was I just reading this?
To lead, you have to be an optimist because optimism attracts other people. People want their leaders to be confident and optimistic. It's hard to create and take risk without being optimistic.
Another way to say it is there are fewer leaders than there are people. Everybody has fears and doubts and handicaps, and you can help people mitigate their fears and doubts. You can help them be their better selves and be more productive. That's what we need out of our leaders.
I talked to Nolan Bushnell a while ago, and I think he was quoting someone else, I'm not sure who, but he said that if you want to lead a crowd, the best way is to observe them and figure out where they're going, then walk out in front and say, "Follow me."
BG: Well, Nolan Bushnell famously learned his human nature in carnivals. In carnivals, they famously learned to watch the crowd for tells and figure out how to amaze the crowd and get them to come to their stand. It's better training for entertainment market than door-to-door sales is.
Talking of leaders, what do you think Will Wright leaving Maxis is going to do for that company? Or to that company?
BG: Let's see. I have no idea. There are some really strong people there. So either they're going to step up and be more inventive, and that somewhat happened in Sims 2. Sims 2 was done without much of Will's involvement, and I think it was better than Sims 1.
Sim City 3000 was without much of Will's involvement. I think that was a really good version of Sim City. So, it could be that the team does better. It could be that the team misses his leadership. Clearly, somebody is going to have to step up with vision and leadership. I think Lucy Bradshaw is spectacular talent.
I was even thinking actually about what this will do for games in general. He was, in a way, our intelligent figurehead that we could point to or could go to get quote or interviewed in news stories. We were actually starting to have someone that was cogent that could speak to news organizations and present intelligent perspectives.
BG: There's always been someone like that. He's particularly interesting and charismatic, but there have been spokesmen... He could still be a pretty good spokesman for the video game business. When Electronic Arts started in 1982, it was Bill Budge. Bill Budge was the Will Wright of gaming in '83.
Is venture capital drying up? Or is money still out there for game companies to get?
BG: Let's see. There has been a lot of rain lately. I don't have a strong sense of what's going on at general game companies. I think it's harder to invest in companies that want to compete with Electronic Arts and Microsoft. They have franchises, and they have world-class talent and a bunch of distribution power.
Dean Takahashi covers all the gaming investments. I'm not in touch with all of that. He says that it's the biggest number in 2008 that he's ever seen. Sounds right to me. I think in general, venture investors hate to invest in what they call "hits businesses". The business has to have a breakthrough hit in order to succeed.
The reason is that it's hard for analysts, especially non-gamers, to guess in advance what a hit is or what's going to be a hit. They like to invest in technology systems. There have been a lot of bets in virtual worlds.
I think there will be another round of investments in virtual worlds. You know, the iPhone is kind of new, so the venture guys do like betting on discontinuous events. But I don't know. I'm not paying attention to all the game investments being made.
What shape do you think the game industry is going to take in the next few years? There is all this publisher closure and consolidation but also an explosion of indie power on digital distribution platforms and things like that.
BG: Well, I think the internet changes everything. I think in general, the hours of game and internet usage keeps increasing, and that's likely to turn into money. So, the real issue with the console video game business is not usage and popularity but cost. And so our costs need to come down.
I also think the internet is a way to get a better return on the money invested, because the hours of usage of games have risen with budgets. So, the budgets have gone from five million to 25 million, and the hours of usage for PC software has also grown, but the revenue hasn't. The number of units is up maybe 25 percent, and the price has gone up 10 percent, so you have your costs going up by a factor of five and the revenue going up by half.
One way or another, if you get people to pay for the extra hours, everybody's problem would be solved. So, if you had people that play Battlefield -- or let me think of a non EA game -- Half-Life or Counter-Strike, some of the most-played games of all time, and people would pay the same amount if they played it for 20 hours or 400 hours.
The internet gives you a chance to do what Blizzard did with World of Warcraft, charge for the extra hours. And if you can charge for the extra hours, it solves everything.
Yeah, it kind of solves everything except from the perspective of the consumer, unless they don't realize it... I mean, if you're playing Counter-Strike now and suddenly you have to pay, then that looks like a horrible thing for a consumer. If Counter-Strike 3 comes out, and that is free-to-play, pay-for-items or something like that, that doesn't look like a terrible value anymore. I mean, it's gotta be planned from the beginning, obviously.
BG: No. All Counter-Strike would have to say is, "You know, for 50 bucks, you can play for a hundred hours, and after that, you have to watch commercials," you know. That's fair.
[laughs] Yeah, I guess so. It depends on what consumers are willing to stomach.
BG: Yeah. And if they didn't know the difference, they'd think it was fine. Otherwise, you could play Counter-Strike for free with stick figures, or you could buy art. You know, you pay extra for the art. That's another way to do it.
At some point, you look up and like, "Okay, you can't have Counter-Strike anymore because the costs have just gone up by a factor of five, so you have to start paying 250 bucks for Counter-Strike, or what we'll do is charge 30 bucks for it, and then, you know, 25 cents an hour after 80 hours." It's just a pricing model. Either you got to get more revenue for the development dollars or you cut costs.
It seems unfortunate that a lot of people have figured that cutting costs is the way. But cutting costs just sort of gets you less of the game a lot of time.
BG: Yeah, I guess that's the way it is with products. Or you say, video game designers ought to be paid like schoolteachers instead of like computer scientists.
You can do that, too, and start paying them 38 grand a year, and after they put in 10 years, they can get 65 grand a year. That will reduce costs. But the thing it that the Will Wrights of the world are becoming investment bankers.
[laughs] Yeah, I was talking Yuji Naka, the Sonic Team guy, in the past, and he was talking about how in the film industry, the further up you move in the chain, a director is still a director, no matter how acclaimed he is. But in games, if you want to advance your career, you just got to get pushed up into the executive ranks, and you don't actually get to make a product anymore. It seems like a different sort of payment structure would help keep creators creating.
BG: That attitude's wrong.
BG: Let me write out a list here -- 20 favorite designers over the last 20 years, and see what they did in their job after making the game that you like the best. And you're going to find most of them kept designing.
So, you can always do it in an organization. You can say to the quarterback of that team -- he had a great year, let's make him the coach this year. Organizations can do that, but most don't.
Right, but as far as I understand, designers aren't paid necessarily more as their games are more popular at the level of scale that, say, as film directors do. So, if you want to advance your career from a financial standpoint. Like, say you become a creative director. You're not necessarily designing, you're overseeing design. Do you know what I mean?
BG: It's all in organization choices. Again, it's like if you're a football team, if you want, you can call it quarterback. "Congratulations, great year. Next year, you're the coach." But most teams don't do that.
I actually don't know the details, but I think Shigeru Miyamoto at Nintendo probably did not get increasing value as the games he was responsible for got outside success. That may be more Japanese. That's probably an issue for Hollywood movie stars back when they were employed.
Right. In the studio system and all.
BG: Yeah. So, it's not a requirement. It's a structural choice that companies in the industry can make. In all creative businesses, there's kind of a struggle for value, and you can always go into a creative business and see how the business guys are claiming more than their fair share of the value. It's kind of what they're good at.
It's true. That's why they're business guys.
BG: You can go back to Marxism if you want, but history is full of struggles of when value gets creative on trying to decide who gets credit and rewards.