SuperCell. Amazing story of a Finnish start-up that makes mobile games. They made Clash of Clans, the highest grossing app on IOS and Android app stores. Boom. Started in 2010, and sold 84% of the company to Tencent in 2016 for $8.6 Billion. I know this sounds crazy, but it’s not. The level of player engagement is crazy (trust me, I have spent (read: wasted) dozens of hours on the game. They make great money. In 2016, it had revenues of 2.1 Billion Euros, and net profits of 917 Million Euros. A 44% operating margin. So Tencent is paying about 11x EBITDA (yes rich), but Activision / Blizzard bought KING (Candy Crush) sold for $5.9B+.
Hay Day, Boom Beach, Clash of Clans, Clash Royale. You’ve played one of these games before, admit it.
Read their story here. On the SuperCell website they tell a compelling story. It’s 3,000+ words long. They know who they are. They are different. They have a strategy. They know what not-to-do.
1. Hire the best people. This is a generic adage. All companies purport to do this. However, SuperCell marries that idea with a more radical notion that management should do less (Sounds like Peter Drucker). Low overhead; in fact, as of Jan 2018, there are only 244 employees.
The sole mission of the founders and management would be to acquire the best talent FOR EVERY SINGLE POSITION, create the best possible environment for them, and then get out of the way. It would be an environment with zero bureaucracy. -SuperCell
We fundamentally believe in the power of “small”. Being small means you need less management and fewer processes, both of which just make it more fun to work. As such, our explicit goal is to keep the company as small as possible – SuperCell
2. Organize into cells. These small teams, called “cells”, have autonomy to fast-collaborate and create prototypes and test them. This reminds me deeply of Founder’s Mentality, and I love this.
We’ve found that the best quality work comes from small teams in which every single member is passionate about what they do. Often times when teams become bigger, processes, bureaucracy and even politics emerge, and the work just isn’t fun anymore. . . Each game comes from a cell, and they all operate extremely independently and have complete control over their own roadmap. Our organizational model is optimized for speed and passion, not for control. – SuperCell
3. Focus. They only have 4 products (games) that generate $2 Billion+ in revenue because. . . of #4
4. Kill products. I big part of their story is the graveyard of games that were created, but shuttered. If you watch the video below, you see they take an upbeat pride in all the products they did not waste your time with. This takes guts. After all, it’s just human nature to overlook sunk costs. After developing a game night/day for 6 months, do you think a developer cell wants to abandon their baby? Hell no. But that’s what they do. Winning.
When you read their story, you see that it is a series of fail-fail-fail-fail-win-fail-fail-win-fail-fail,win.They are repeatedly pouring their hearts into products, and quickly cutting their losses. This should incredible judgment and heart. Judgment = how do you know what’s a winner? Heart = just let your baby float down the river?
We’d like to think that every failure is a unique opportunity to learn, and every lesson will ultimately make us better at what we do. That’s why we have a tradition of celebrating these lessons by drinking champagne every time we screw up. For us, it’s clear that releasing hit games means having to take risks. And by definition, taking risks means that you’ll fail more often than you’ll succeed. So whenever we realize that we haven’t failed in a while, it’s a sign that we haven’t taken enough risks. And that is truly the biggest possible risk for a creative company like ours.
Great case study of how small, passionate, focused teams can do crushingly good work. Also, that Jim Collins did have right. Get the right people on the bus. Okay – Gotta get back to my Clash Royale game. Almost at level 8.