With his "Gaming Startups: Bridging the Gap Between the Code Hero and the Entrepreneur" talk at the Toronto Independent Game Conference, Greg Brill gave an animated lecture in front of a lively audience that covered "how not to get screwed" by the normal dynamics of an independent game developer, and the current thinking of - and how to interest - venture capitalists.
Beginning with a (intentionally) comically stilted introduction, Brill, the CEO of Infusion Development and a major partner of Infusion Angels, quickly segued into the main content of his talk. His opening salvo, "A lot of you guys are getting together and you're starting games. You've got friends and colleagues and you're all working together, and you're thinking 'Yeah, we're going to be like a crew, we're going to be really good friends and we're going to go through this together and it's going to be wonderful'. Well, about half of you are losers, of the half that aren't losers probably 80% are liars, and the remaining 20% are honest," set up the quick fire wit and brutal honesty that would characterize his talk.
Protect Your Interests
"Often what fails with videogames companies is not the idea, it's the partners tearing each other apart," Brill established, "you'll have a lot more stress once you have that first inkling of success. You'll fall apart so quickly you won't f---ing believe it."
Brill's advice? "First of all, stop using the word partner. Don't think of each other as partners, you are creating a corporation that has shares that are distributed according to investments made either by cash or through work. Creativity counts for shit." Adding, "Sorry, but that's the way it is."
"When you form a group, one person must be CEO and one person must make the final decision. No democracy, no voting, no exceptions to the rule, because as soon as the money hits the table you're going to fly apart." Brill argued, "This doesn't mean that you don't protect your own interests, but you cannot allow a situation where any one member of the team can arrest the development."
Part of this protection of interests, Brill continued, is to ensure that your company has a share structure with a clear shareholder's agreement, which ensures that shares are not saleable outside of the company. "The minute someone wants out or they want to buy a house, you'll think 'oh, that's alright, they're only a minority shareholder,' and then you get what's called a capital call." A capital call, Brill explained, is when a new shareholder infuses a large amount of money into a company to force the other shareholders to add the same amount of money to hold onto their existing shares or face dilution; the shares could be devalued to the point where the new shareholder holds the majority, and the original shareholders lose control of the entire company.
"The biggest danger is other people. Your friends will very quickly become your enemies if you don't protect yourself this way," Brill warned before continuing, "On your team you'll often also end up with a 'Pluto,' some sort of outlying planet that you think you need for some reason. Please cut the Plutos loose; demote them from planet status as soon as you can." Brill argued that such a ruthless approach was critical even when dealing with talented but difficult individuals. "I'd rather create a B game made with A people than almost have an A game with B people", he concluded.
You Have to Be Prepared to Pitch Your Ideas
For people with truly inventive, credible investments, approaching venture capitalists and similar routes of funding isn't as hard as the impression people have of it, Brill contended, "If you are credible and have done the required thinking, pretty much anyone will talk to you."
At this point members of the audience became vocal about fears of their IP being stolen during pitches. "Pretty much no-one is going to steal your IP," Brill countered, offering, "Everyone already has their own billion dollar idea, and nine times out of ten it's likely it's already in development five different places, or it was already done in Japan about 5 years ago. If you're too close to the vest, there are so many ideas out there, it'll be hard to get an audience interested. It's very hard to get anyone to sign an NDA just to hear your idea." Though members of the audience still argued the need for an NDA, Brill returned, "You have to be able to at least pitch something where you don't reveal much but you still get them excited. It's perfectly okay to pitch generally, and then do a second detailed pitch that requires an NDA."
Think Like A Venture Capitalist
Finishing up by discussing the current thinking in the venture capitalist market with the help of research from Fidelity Ventures, Brill informed that currently the Studio/Publisher model is very much a turn off for venture capitalists, but they find the current MMOG boom is incredibly exciting. Brill revealed that he himself is investigating a fashion branded MMOG for the tween market.
Brill's lecture, though told in good humor and with a sharp wit, was heavy with mistrust for human behavior, particularly where money and power is involved, but these lessons were eagerly accepted by the prospective independent start-ups in the audience.
[This write-up concludes Gamasutra's exclusive TIGC coverage, which also includes a Tommy Tallarico keynote and an indie survival plan.]