The Dungeon Master's Guide to Startups

With the advent of digital distribution and the explosion of smartphones and tablets, there's never been a better time to launch a gaming startup. Or at least, there's never been a more popular time. To help those considering launching their own companies, the Toronto chapter of the International Game Developers Association hosted a Taking Care of Business event at the city's Metro Hall Wednesday night with a handful of successful entrepreneurs offering advice with no equity stake required.

The panel included Massive Damage CEO Ken Seto (creator of the location-based zombie iOS game Please Stay Calm), Little Guy Games CEO Tom Frencel (Super Snack Time for iOS), Big Viking Games CEO Albert Lai (HTML5 title Mech Force), and HitGrab COO Bryan Freeman (the Facebook game MouseHunt). For most of the panel, their current outfit is not the first time they've started a company. Seto previously started the app developer EndLoop, Frencel was a founding member of Capybara Games, and Lai has actually started six separate companies, including mobile analytics firm Kontagent.

Much of the advice dealt with the very first decisions an entrepreneur would make, like what the business should actually do. Freeman's approach was perhaps the most straight-forward.

"You know what's fun," Freeman said. "Try and build that. And if you get that right, everything else will fall into place."

That notion wasn't universally shared. Lai acknowledged that his approach could be considered "super anti-indie," driven by concerns for the bottom line. He suggested building a new developer on technology rather than content. Technology creates more terminal enterprise value, he said. It's reusable and more likely to have lasting value in the eyes of any company who might eventually want to acquire a startup. He also added that the scientific research and development tax credits in Ontario are greater than those for artistic works.

"The best place in the world [to start a game company], hands down I think, truly is Toronto. And I could have started this company anywhere. And not Toronto, but anywhere in Ontario, really. Because the tax credits, and the talent pool we have, and the cost of living is just unbeatable."

"While you are using your creative vision to drive momentum and passion forward, somebody at the company has to figure out how to make some kind of money so you can do the next game"

Ken Seto

Seto's approach fell somewhere in between, saying entrepreneurs can strike a balance between business and creative interests. He likened his approach to always playing neutral characters in Dungeons & Dragons, and joked that Lai would be more of a lawful evil entrepreneur, while Frencel and Freeman might be chaotic good and lawful good, respectively.

"While you are using your creative vision to drive momentum and passion forward, somebody at the company has to figure out how to make some kind of money so you can do the next game," Seto said.

Much of the success or failure of a startup comes from those early decisions, like finding good co-founders to work with. Seto said that can be a problem for some people who would, as he put it, "hide what they were doing until it was too late to help them."

"They'd be busy working on something, but they wouldn't show it to anybody, they wouldn't talk to anybody about it," Seto said. "They wouldn't ask for feedback or advice. And I think that's the single worst thing you can do as an individual designer or developer, is to believe that your idea is so singularly awesome that somebody will always try to steal it and copy it from you."

Frencel said it's important to make sure that co-founders share a common vision, and equivalent levels of passion for the project. He suggested doing a test project with a potential co-founder before really committing to starting a new company. Lai said starting a business is an up-and-down roller coaster, and a good co-founder helps pick you up when you're down. Beyond that, he stressed the need for complementary skill-sets and a similar level of commitment; a shared willingness to quit the day job is a good indicator of that.

"This is going to sound awfully anti-indie as well, but you can't pay people with passion"

Albert Lai

Freeman said he was helped immensely early on by a three-month course for small business owners. Seto suggested finding a start-up friendly lawyer early on to help draw up clear and concise paperwork that details what happens in the event everything goes wrong. Lai suggested documents that cover what happens when everything goes right as well, since success brings with it an entirely different set of stresses and tensions.

Once the startup exists, it's time to start worrying about hiring people. Frencel said entrepreneurs should prepare themselves for the process and make sure they have boilerplate contracts ready for employees or freelancers so they can move quickly if they find a good hire. Lai implored the audience to actually pay their employees as soon as possible, because stock and equity won't pay the rent, and startups are competing for the best talent against six-figure salaries from the likes of Google and Facebook.

"This is going to sound awfully anti-indie as well, but you can't pay people with passion," Lai said. "You can keep them around with passion, with money. But you need both."

"I don't think there is [work-life] balance when you're trying hard to succeed."

Bryan Freeman

Lai said the biggest mistakes he's made in setting up his six companies were the times he settled for hiring anyone who wasn't the best. He added the single biggest difference in his startups' ultimate performance has been whether or not he made the right hires.

"When you make a bad hire, acknowledge it, face the reality of it, and let them go early," Lai said. "Don't make excuses for them... Hire very carefully and fire very quickly. If the person isn't working out, they will be a cancer in your team."

The panelists agreed that the effort of getting a new studio off the ground is an all-consuming enterprise sure to lead to sleepless nights. They each had their ways of coping with it, but Freeman dismissed the notion of maintaining a healthy work-life balance.

"I don't think there is balance when you're trying hard to succeed," Freeman said. "When you have cash flow issues and have to lay people off, when you built a product that's incredibly successful and now you have all these people you have to please, or when you built a piece of s*** and spent an absolute fortune on it and now you have to let someone go because of it. It never stops."