A Story Of GameLayers, Inc.
November 10, 2011 Page 4 of 8
Second Round of Funding
Early June 2008, one of the craziest weeks of my life:
- Saturday: Get Married near Yosemite
- Monday: Move from 1400 sq/ft loft to 400 sq/ft apartment
- Tuesday: Sign Second Round Term Sheet for $1.5 million
- Friday: We fire someone for the first time
In June 2008, M and I were married in Central California. Our investors and co-founder from the UK joined our friends and family betrothing the chief creative officer and chief executive officer of GameLayers.
The wedding ceremony was Saturday. Monday, we moved from our large East Oakland loft into a tiny apartment in an awesome part of San Francisco's Mission District. Tuesday, we signed a term sheet with Rob Coneybeer from Shasta Ventures for a total $1.5 million round that we had just raised after a long roadshow together.
Friday, we had to fire someone for the first time. It was extremely intense running a startup, and being married to a co-founder / board member. Nonshop high-pressure togetherness. We put off our honeymoon and kept working.
Fundraising on an offbeat game on an unproven platform was challenging. Fortunately, we found an investment partner who saw the potential in the widespread social experience we were building: Rob Coneybeer from Shasta Ventures. Rob joined the GameLayers board along with M, Bryce, and myself -- leaving an empty fifth seat we didn't worry about filling.
June 2008: Portfolio.com: "Having Fun, Making Money": "a startup turns the entire web into a game, aiming to steer players toward and away from certain sites. Will advertisers play along?"
A timely cash infusion arrives in mid-2008!
We raised another $1.51 million dollars -- $1 million from Shasta, and another $500k from OATV. Our two angel investors Joi and Richard had the option to put in another $50k each, but they chose not to. GameLayers was now valued at just under $5 million!
GameLayers Round 2 Term Sheet with Rob / Shasta -- a triumphant document for us.
We were running on fumes when the second round of money came through. Now, August 2008, the money was in our bank account, and we ramped up plans to expand our operations, reach into new markets, improve our featureset, and draw in a ton more users! Rob showed up with a lot of enthusiasm and ideas for the project, giving us a boost of energy. We looked forward to focusing on our game-making again, after months on the road!
Kicking More Ass, Sooner
Rob Coneybeer from Shasta Ventures, August 2009 photo by Elliot Ng
Our first venture capitalists, OATV, primarily work with nascent startups. Bryce focused on helping us build a team, and helping us get a rhythm building and releasing software. Then Bryce helped us present ourselves as a valuable company for other larger VC investment. Our second VC, Shasta, was accustomed to blowing out a product with promise, making it grow seriously fast. Rob wanted to see progress and drive momentum.
Moving into a new office - photo from 1 September 2008
One year after we started, we finally stopped working from home and moved into an office: 76 2nd Street, the top floor of an old building, for about $3100 a month, space to grow into for 14 people.
Boosting our monthly OpEx spend
One of the biggest challenges for me was learning to prune my stories. I would get a call from Rob at 9.30pm on a Tuesday. "How's it going?" I would immediately start listing the bugs that were on the top of my mind, the problems we were working to solve.
Looking back, I believe Rob wanted to know how we were doing strategically, and maybe a sense of confidence from me that we were kicking butt overall. I've been a journalist for years; in this case, my urge to tell a compelling human drama was not necessarily compatible with "Here's a clear path to acceleration and growth." VCs aren't looking for spin, but I think they want to know that if you're thrashing on bugs, it's part of a coherent larger vision.
Becoming a CEO and raising this money was committing to kicking more ass, sooner -- an exhiliarating proposition. And because I believed in our idea, I wanted to drive it forward as fast as possible. I charged in, learned everything I could from books, advisors, news, and worked to be the best possible CEO Decider Visionary Leader Capitalist.
But occasionally I was too in the weeds -- scavenging on Craiglist for deals on monitors and printers to save $100, when tens of thousands of dollars of employee time was hurtling forwards towards a moving target.
Running a startup is a crazy range of affairs to manage: the unceasing search for engineers, customers having weird issues with common computer setups, investor relations, the mood and productivity of the folks who gave up other opportunities to join our cause, the amount of cash in our bank account, our landlord refusing to install heaters so employees are buying USB-powered heating mittens, state-by-state tax and liability law, we're not paying ourselves much and we're eating out constantly and we're paying rent to live close to the office in one of the world's most expensive cities so personal money is tight, someone else just raised 3x as much money as we did to do the same thing with a larger team. And OMG the entire world economy is cratering!
Justin Hall, Pixley, Terry Thurlow, Alex Friedman, M, Seraphina Brennan, Kristin Nienhuis, Brian Bommarito, Duncan Gough, Joe Wagner, Marc Adams - GameLayers team in November 2008 -- this is as large as we got. Photo by Beth Amann.
In November 2008, the board met for dinner at a SOMA restaurant called Salt House: M, Rob, and Bryce. Rob and Bryce suggested GameLayers needed a new CEO, and my wife M agreed: we needed a firm hand to turn this into a business, someone who could raise confidence with another round from more heavy-duty investors; someone I could learn running a company from. I had gone from game journalist, to game prototyper, to game company pitchman, to game company head, and now I had some reckoning to do. I was not providing leadership for GameLayers that left my board confident in the future.
Time for me to search out a person better suited to my role at GameLayers! That was an intense ego slam. We spent $33k (first installment on a $100k retainer with the Cole Group) and a parade of CEO candidates came through. It was a fascinating experience to meet guys who believed they could make our company evolve and succeed.
After interviews, I didn't think many of them were smarter or better-suited to the role than I was. I appreciated the chance to browse smart potential CEOs, but I also occasionally resented spending upwards of 20 percent of my time trying to replace myself. It seemed like a confidence game. Could I learn enough and re-apply for my own job, owning the confidence of my investors and my co-founder? Or was I better off in another role, leaving the brass tacks of business to someone else so I could focus on building a successful product experience?
The global economy tanked before we could find a replacement CEO; I stayed on by necessity. We were running out of money to pay salary for a big new CEO, and with the stock market plummeting, we couldn't expect to raise another round quickly -- we had to make PMOG succeed with what we had.
Page 4 of 8