All I want for Christmas is a drum set. Well, while I do want a drum set, there is more to it… Looking for insight, we recently met with the CEO of a local mobile game company after connecting through a mutual friend. His company had been through a roller coaster ride reaching the apex with over 50 employees and 10 million in yearly revenues. Eventually revenue plunged, and they were acquired for a fraction of their yearly revenue finding what were in his words “a soft landing” where the remaining employees could keep their jobs and the game would live on under another company.
The talk was insightful, but also a confirmation of what we already knew as best summarized when he said, “The mobile game industry is a blood bath”. Good pep talk. Joking aside, it was nice to talk to someone who understood our struggles and his sincerity was refreshing. We walked away with some fresh market strategies, and confirmation that our low overhead is what might save us. In the days that followed our talk all I could think about was 10 million dollars a year.
If AppA11y made 10 million, Nick and I would fake our deaths and live out our days drunk on a Mexican beach. Probably separate beaches, but we would get together on Sundays to watch football. We have been grinding for awhile and we can’t even say we barely get by. I am in my mid-forties and for the first time in my adult life am not sure how I am going to pay the mortgage each month. 10 million would not only solve some money headaches, but it would be vindication. My wife, most of my friends and family don’t take what I do serious. I am always asked if I am “working now or still doing that game thing?” I would love it if “that game thing” saved me from having to return to my previous soul sucking career as an IT consultant and afforded me the ability to work on what I want when I want. In short…VICTORY!
And while 10 million would be amazing, it wouldn’t make us rapper rich. We would have to forgo buying fire trucks for our daily drivers and funding our little person football league would have to be put on hold, but we would be ok. If we made 10 million or 100 million my wish list would be the same single item if I were to win Lotto. When I do (occasionally) play Lotto, my kids will always ask how I would spend the jackpot. My answer is always the same…I would buy a drum set.
I used to play the snare drum as a kid and always wanted a drum set, but never took it further than grammar school band and have regretted it ever since. And while my parents weren’t big supporters of the drum set idea, I can’t put it on them. I had moved on to other interest like girls. (Irony Alert.) Anyway, when I answer the lotto question with “drum set” my kids they think I am batshit crazy. They start naming off all of the big-ticket items I could buy instead, always ending their argument with, “you know you can buy a drum set now?” What I tell them and what they won’t understand for years to come is the drum set isn’t just for me to live out my rock star fantasies, what it symbolizes is freedom. The freedom to do my best Alex Van Halen and practice “Hot for Teacher” until my hands bleed. The day I don’t have to worry about money is the day I buy a drum set and I won’t buy one until then.
Damnit, where was I going with this? 10-million-dollar company…. Drum set… Hot for Teacher… oh that’s right… what I wanted to also touch on was how companies can go from finding success to wondering what the F happened… hero to zero syndrome. It is easy to play Monday morning quarterback using hindsight to point out their mistakes after the fact. In the case of the company we met with, they became a 10-million-dollar company so fast it was easy for them to assume that they would soon be a 20-million-dollar company resulting in them over expanding operations. They owned a market segment that was soon invaded by bigger competitors and had to share a pie they thought was their own.
Nick and I worked for a San Francisco startup called Cygent years ago in the middle of the dot com boom. It was everything you imagine… insane hours, free dinners, alcohol, parties, and a warehouse office filled with bean bags, scooters, foosball, air hockey, concierges, and hipsters (before there were hipsters). Like the gaming company, Cygent was on the fast track to success. There was a point when a competitor offered to buy Cygent for somewhere in the neighborhood of 200 million. Cygent had taken around 80 million in funding and while 200 wouldn’t have made anyone rapper rich it would be enough to buy drum sets for everyone. I am sure the founders thought that if 200 was on the table after only a couple of years of existence, then 400 or more was just around the corner. What they didn’t foresee was the dot com bubble bursting later that year, wiping out the majority of Cygent’s customers. No customers, no revenue, no Cygent.
Cygent was eventually acquired for 3 million which happened to be the amount of money in its bank account. Looking back, not taking the acquisition deal was obviously a mistake. But a mistake only easily identified with hindsight. Maybe they should have saw the market indicators and anticipated the end, but when you create something successful it is easy to fall in the trap of thinking “That won’t happen to us”. Everyone likes to think they are different.
AppA11y hasn’t found the financial success we had planned on (yet). What we do have going for us though is low overhead. We are lean and mean. (Really, we are more grumpy than mean, but close enough.) If we do turn the corner it is important that we don’t over expand and continue to keep our costs low. This will be challenging since we have a million ideas we would like to implement, but don’t have the resources to do so. We will need to be selective with the projects we take on and not overextend the company financially. Not having instant success will hopefully serve us well.
The truth is, becoming successful then crashing and burning might be a tougher pill to swallow than never reaching the success we intend on achieving at all. We need to keep grinding and hopefully remember that while we are different, we aren’t that different. We will face the same traps as those of our thousands of competitors. Hopefully if we stay the course a we can successfully navigate the pitfalls and a drum set will be in my future.