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September 23, 2017
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A playbook for cutting the corporate purse strings

by Ethan Levy on 09/30/14 01:46:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Two and a half years ago, I left the security of a stable job at Electronic Arts to cofound a now failed start up with a longtime colleague. Based on our time making free-to-play games at EA, we saw an opportunity to build the business backend as a service for game developers. We were both burnt out from a challenging year at EA after our GM left to cofound a well-funded, all-star game studio. We both had enough savings to cover a year of independence on a tight budget. We both wanted the freedom to pursue side projects and agreed on a Google style 20% personal time plan.

I intended to check two items off my life goals list. I wanted to found a startup and I wanted to make some small, independent games. I had a partner I trusted and a shared vision. He found a technical cofounder from his network to join our team. We hired a lawyer. We incorporated. We pursued advisors, crafted a pitch deck, built a technical foundation and started hunting for investment. We went full Silicon Valley.

As my ultimate role was imagined as developer relations and evangelism, I started attending conferences and giving lectures on free-to-play game design. A strange thing happened. People started asking if I would consult on their games. Keenly aware of my bank balance, I started accepting jobs. I hired a personal lawyer and accountant. I set up a monetization design consultancy. Fearful of going broke and excited by the opportunities presented to me, the dream of making small games faded into the background.

12 months ago on the Jewish New Year, I wrote about our hours old decision to shutter the startup. Now I am celebrating the New Year again. It is a time for personal reflection and new beginnings. As I survived another year on my own, it feels like the perfect time to look back and detail the many lessons I have learned since cutting the corporate purse strings in favor of independence.

Since leaving EA, I cofounded a bankrupt startup with a failed Kickstarter. I discovered a niche, built a successful consultancy and worked with more than 35 clients worldwide. I have been called a cancer on the game industry and told to burn in hell. I have given lectures at GDC and PAX. I have been derided publicly by a journalist whose work I admire, accused of being punished for the crimes committed in a past life. I have released a tiny art game. I have learned the importance of following Reddiquette.

I experienced extreme elation and deep despair. I got married. I negotiated contracts. I worried about not being able to make rent or pay my credit card. And I learned invaluable lessons the only way they’ll stick, through failure after failure.

I wanted to take this time of reflection to share some of my critical lessons. What follows is a playbook: not for the entrepreneur I am today after two and half years of ups and downs, but for the entrepreneur I still aspire to be. This is what I wish I knew not the day after I left EA, but months before I ever gave notice.

Cutting the corporate purse strings

Whether you are pursuing the Silicon Valley dream for the first time or striking out on your own to become an independent developer, there are a few critical lessons to learn if you are accustomed to having a steady income stream and a team of people whose mere presence holds you accountable.

Slash your spending

If there is one change I wish I had made as soon as I left salaried life, it is to set and stick to a strict budget.

Habit change is hard. Grabbing a morning coffee or ordering takeout when I don’t feel like preparing dinner is all too easy. Changing the contents of a supermarket shopping cart, the brand of toothpaste or the number of drinks during happy hour does not come naturally. It takes work.

Outside of gaming, my primary hobby is food and drink. I love to cook. I love the taste of small batch bourbon. I love the smell of fresh ground, ethically sourced, single varietal coffee. Yes, I am a food snob. And just like being the top guild in a weekly event leaderboard, my hobby comes with a steep price.

But just as a player can choose not to care about leaderboard position, I can choose to enjoy my hobby differently. I quit my bourbon club and switched to store brand coffee beans. Frozen seafood replaced fresh, chuck replaced strip and whole bird replaced prepared cuts. I became acquainted with all sorts of unfamiliar beans, grains and vegetables. I learned what you can do with bulgur wheat.

I still enjoy my hobby. I still cook delicious food. But it took too long to discover that I could not keep acting as though checks were guaranteed every two weeks. It took too long to examine my behaviors and change the default.

This section was not intended to make you salivate, but illustrate an example of you need to cut discretionary spending when living off savings. Slash expenses. Set a budget. Review your finances regularly. The worst thing you can do after leaving corporate life to go independent is keep acting as though you have a steady income.

Learn a morning routine

Playing on your phone first thing after you wake up in the morning can be the death of productivity. When you are self-employed it is all too easy to waste the day one distraction at a time. Facebook, Twitter, Reddit, Instagram, LinkedIn, RSS feed, repeat. Before you know it, your spouse is home from work and you are left wondering why you didn’t get anything done.

A morning routine is critical once you remove the social pressure that comes with showing up at an office on time every day. One does not have to bound out of bed and immediately start checking items off the task list. But a regular morning routine will get you started on the right foot and ensure you stay productive.

Learn balance

If you are an entrepreneur it is because you are driven by nature. You love what you do and have dedicated yourself to a vision. While leading a team at EA I was not the best at work/life balance. Late nights and trips to the office on weekends were all too common, especially leading up to launch time.

But when you lose the separation between work and home, lines blur. Scheduling Skype calls at odd hours to talk to international clients is inevitable. But if you are answering work emails while preparing dinner, have you really ended your work day? If you have a deadline looming, should you feel guilty about taking an hour at night to play one of this month’s free PS+ games?

When your home is your office, you perpetually carry the guilt of unfinished work. You need to set a clear boundary between what is working time and what is personal time. Otherwise you will get burnt out just as quickly as during the worst crunch times of corporate life.

Find a support group

One issue I did not anticipate when leaving corporate life was the effect being alone most of the time can have. I work from home, my wife teaches all day. It’s easy to get a little stir crazy after weeks or months of working from the kitchen table. Sometimes I leave the house to get a snack and realize that what I really wanted was just to see another person.

Friends and significant others can help, but at a certain point I’m sure my non-gamer wife bores of hearing about the intricacies of game development. And at a certain point, she can only understand my problems so deeply. I needed other game development entrepreneurs to share with and learn from.

I recently joined a mastermind group with 3 other local developers. When leaving for our bi-weekly meetings I joke that “I’m off to group therapy.” Even though we’ve only been meeting for a few weeks, the effect is profound. Being able to commiserate and problem solve with other people who both share your experience and are removed from your day-to-day problems is invaluable to staying healthy as an entrepreneur.

Founding a startup

When I first dreamed of moving to San Francisco, starting my own company felt inevitable. I cannot pinpoint why, but it is something I wanted deeply. After 10 years working for others, I thought I was ready to finally live the founder dream. In some ways I was right, but in others I was very wrong. Here are the steps I wish I had taken to ensure I was not leaving just to start a company, but that I was leaving to start the right company.

Ship a test project

Before starting the company, one cofounder and I had worked side-by-side at EA for years. We shipped a game with him running the backend team and me running the game team. We had spent a lot of time solving problems together and knew there was work chemistry. He and the third cofounder had known each other for years, and had recently built a website and backend system together. But the three of us had never shipped product together, and especially not while spread out across three different time zones.

We should have taken a weekend to build and launch a project together. It could have been incredibly small and unrelated to our startup vision. So long as it was a project we could reasonably complete in two or three days that required all of our skills to succeed.

There are lessons you can only learn from working with each other. One of our final acts before closing the startup was to postmortem our experience. With a number of entries in the “what went wrong” column, we could have uncovered or acknowledged the problems of group chemistry months early by trying to ship a weekend project. Being able to come together and complete something small and put it in front of players should have been a requirement for ever starting a company together.

Scope your vision

The critical flaw in our startup plan was that by nature it required investment to create anything meaningful. As we did not have the sort of access or star power that makes funding easy, we should have realized early on that our vision was too big.

We were trying to build a series of backend systems that we knew would take a large team of engineers to make meaningful. We had one backend engineer and one front end designer/developer. We would take our pitch deck to meetings, explain our vision and the progress we’d made to date. "Come back when you have hit metric X or Y" potential investors would say.

Funding requires traction. Traction requires a live product. Our vision was too big for the three of us to meaningfully launch at our burn rate and personal investment into the company. Rookie mistake.

Before we ever started the company, we needed to know that our vision was something we could create a meaningful first version of without a single outside dollar. You cannot count on money magically falling from the heavens. Potential investors wanted to see more than a deck and a vision. They wanted something tangible. A product they could touch. Metrics that proved market demand.

By committing to a vision that required additional money and people to fulfill, we had delivered the death blow to our company before the first line of code was even written.

Set reflection points

My big regret is not that the startup failed, but that we did not recognize it was failing faster. We should have either changed our course or called it quits much sooner than we did.

From the outset, we should have had solid reflection points baked into our development plan. “On day X we will take stock. If we have not hit goal Y, we will make a change or fold the company.”

What’s funny is that during this time I was also consulting for a number of early stage gaming startups. The problems I was blind to in my own company were easy to spot in someone else’s. Lacking that outside perspective, it was easy to let our shortcomings slide. “We’re just having a bad day/week/month. We’ll get back on track soon.”

Although we made a habit of weekly sprint postmortems, we did not schedule time to take a step back from the day to day issues and evaluate our startup as a whole. Before starting we needed to set clear milestones with clear goals to force us to acknowledge our progress or lack thereof.

Set tangible expectations

Although we founded while all living in San Francisco, two out of three quickly moved to different time zones. We had set our vision, agreed on equity split and founders loans, and had a vaguely defined side-project plan. What we did not have was a clear set of expectations for what each team member was responsible for delivering, hours worked per week, availability across time zones or consequences if one failed to live up to expectations.

When I look back at the company, I feel like my involvement was superfluous. I was responsible for developer outreach, evangelism and business development. I did provide value in the form of finding advisors and working my network to set up investor meetings and other business development tasks, all of which were ultimately fruitless. I secured speaking positions at conferences and wrote articles mentioning the company. I grew our Twitter followers and email list. But our product was not far enough along to need evangelism. In the end I did more for my accidental career in consulting than for my startup.

Despite being a founder, I was not essential. The company would have been far better suited with another backend engineer (or three) than with a world-traveling conference speaker. I was someone who should have been brought on once the product was already up and running and of proven appeal.

Had we set clear expectations and reflection points, I think this could have been acknowledged and dealt with. This may have meant my exit from the company, which would have been the right thing. Maybe I was not the right person for the job or maybe the job did not need doing. Either way, it is only in the setting of concrete expectations one can realize that they are falling short of them.

Running a startup

In addition to all the adjustments I wish I had made before starting the company, there are a few lessons learned along the way that are critical for new entrepreneurs.

Stick with process

Consisting of two former producers, our team was very process oriented. As we were a three person team spread across three time zones, we knew that process was going to be essential to driving our product development forward.

But when things went wrong, we were quicker to blame the process than to blame ourselves. We switched from one productivity tool to another or changed the way we ran sprints and accounted for point tracking. We process waffled all over the place.

In hindsight, I feel that there were very few problems with the processes we had implemented. Small changes here and there did make a difference. But the larger problem was that we were blaming our tools instead of acknowledging our shortcomings.

If you find yourself and your team constantly wanting to change how you are working, take a close look and make sure you aren’t scapegoating tools for human failings. Had we picked a “good enough” process and stuck with it, we would have discovered the true problems sooner.

Hold yourself accountable

I feel this topic may be redundant, but it bears repeating. Your founding team needs to regularly evaluate your progress, goals and momentum, both short and long term.

We did a good job of holding ourselves accountable in the short term. In our weekly sprint reviews, we did not pull punches. When someone failed to deliver, they were always the one to own up to it.

But we did not pull back from the day to day regularly to evaluate our business as a whole. We soldiered on, delivering on sprint goals week over week and feeling like we were making progress. But we were not creating true value. We were not moving closer to our goal of acquiring funding. Had we recognized that earlier, we would have changed our focus with more time and money left to pursue a new strategy.

When we changed course from a service company trying to raise money from investors to a game developer trying to raise money through Kickstarter, it was from holding ourselves accountable. As a three person team, we were never going to make enough progress on our vision to be attractive. So we used our existing technology as a base to build a game on top of.

This pivot should have happened much earlier. This sort of pivot can only happen when you regularly take a step back, evaluate your true progress and goals, and hold yourself accountable for your shortcomings.

Ignore sunk costs

If there is one difficult lesson that applies to almost all business endeavors, it is to ignore your sunk costs. There are few mistakes more destructive than throwing good money after bad, continuing to invest your time into a product or vision that is not working out.

This goes hand in hand with the advice above about holding yourself accountable. Obviously, we were invested in our vision. The feeling that we had identified a product that game developers need and that we were uniquely qualified to build was what inspired us to start the company. We would not have founded had we not believed in our idea.

As we talked to game developers, advisors and investors, it should have been clear that we were building the wrong product. It was too big. It was too difficult to communicate. Until we had a proven success built on top of the platform, game developers were never going to sign up to use it.

But we were invested in the idea. We were convinced other developers would want it once it was built. It was that belief that drove us forward, blind to the subtle clues that others were dropping along the way.

At those times when we evaluated our business, we needed to ignore all the time, energy and money we had invested into our idea. We needed to look at our product and progress objectively. Had we done so, it would have been much easier to kill our idea sooner. If we had ignored our sunk costs, we could have truly failed fast instead of limping along for months before giving up on the company and going our separate ways.

Freelancing

When I left EA, I thought I had enough money saved for a year of independence. Thanks to my accidental career as a monetization design consultant, I’ve made it two and a half years paying the bills as a freelancer. Along the way I have learned a number of important lessons about staying independent thanks to contract work.

Set realistic expectations

After we folded the startup, my intention was to continue working as a freelancer while developing my own games. In my fantasy world I intended to launch a small project every few months while supporting myself through consulting. In reality, I’ve shipped two games. In my fantasy world, I would spend exactly half my working hours consulting and half working on independent projects. In reality I may go a few weeks focusing on consulting at the detriment to personal projects, or spend a few weeks finishing a personal project while ignoring business development.

The needs of freelancing and the needs of personal projects are always in conflict. There was a period where I focused almost entirely on finishing a commercial focused game I was building with a partner. I backed off business development activities, offers for new gigs slowed down and I worked through my slate of existing work. We finished the game, I looked at my credit card bills and the expenses from my upcoming wedding and realized I needed to sign new clients.

Thanks to freelancing, I have the ability to work on personal projects and the freedom to release them without an assignment of inventions clause getting in the way. But it is not nearly the idyllic life of independence I daydreamed of after a day of endless meetings at EA. Only by having a realistic expectation for how much work I can actually devote to personal projects can I be fulfilled, not frustrated, with the stilted pace of personal work.

Get comfortable with contracts

Every new client requires a contract. Talking to potential clients often require NDAs. Working with a publisher requires a contract. Every potential gig is also a potential negotiation.

As a freelancer, it is important to get comfortable with contracts and contract negotiation. It becomes a large part of running your own business and a huge demand on your time and energy.

It is helpful if you go into every negotiation knowing what you are comfortable with. Are you willing to bend on payment terms? Are you open to exotic deals involving a mixture of cash and equity for early stage startups? Do you give volume discounts for large jobs? When can you sign a contract without a professional review and when do you need a lawyer to evaluate it for you?

These are all questions you will have to answer for yourself over time. Being comfortable with contracts is a critical first step to running your own business.

Hire professional help

If you are going to be making a full time living as a freelancer, you will need professional help. Contracts and taxes will take up more time than you could possibly imagine. Having a lawyer and an accountant are critical to protecting yourself.

These steps may be unnecessary and costly if you are an indie who is not bringing in revenue. But if you are supporting yourself with freelance work they are key. I found a lawyer through a recommendation from an entrepreneur in my personal network. Depending on your needs, more affordable options such as LegalZoom or UpCounsel may be appropriate. I set up a business entity and opened a separate business bank account. I found an accounting firm to help with my taxes. All of these costs have been a worthwhile investment in running my business.

Taxes especially are a huge time sink. Make sure you are saving for and paying your quarterly estimates. There are few things more painful than being blindside by a large quarterly tax payment that you were not anticipating.

Stay on top of invoicing

Once you stop drawing salary on a regular basis, cash flow becomes an issue. You quickly learn that your favorite clients are simply the ones who always pay on time without needing reminders.

In my experience, payments are late more often than not. Few checks arrive on time without a follow up email. My solution has been to set a calendar reminder for myself each time I send an invoice. An outstanding bill is quickly resolved simply by reminding that it has been 30 days and a payment is due.

Market yourself

I attribute the start of my career as a consultant to being in the right place at the right time. I was speaking publicly about in-game monetization at a time when many game developers where first getting into free-to-play game development. Jobs came to me easily. Between conference talks and introductions from former colleagues, I had a steady stream of projects to work on.

After the startup folded and I decided to dedicate myself seriously to my freelance work for the first time, I realized that my flow of new clients had slowed dramatically. I was no longer getting introductions from former colleagues. I was not signing a new client immediately after each public speaking engagement.

I needed to attract clients for the first time and I realized I had no idea how to do so on purpose. I put together a plan, tried a lot of experiments, and ultimately discovered activities that work for me. I spend a lot of time on new business development and as a result have a solid stream of new projects today.

Marketing yourself is critical to surviving as a freelancer. If you are overly dependent on a single client, personal introductions, or a single annual conference, your business prospects can take an unexpected downturn at any moment. In order to make your business fault tolerant, you need to learn how to constantly and confidently market your services.

Find informal partners

Not every potential new gig will be a good fit for your expertise. For instance, I focus on the intersection of game design, metrics and monetization. But in every few inquiries for new work, one will be interested in problems just outside my specialization such as paid user acquisition, launch strategy or other publishing functions. Luckily, instead of just turning these jobs down I am able to introduce them to a former colleague Josh Burns who runs a very complimentary consulting practice to my own. Similarly, I get email introductions from him when he hears of opportunities that are a better fit for my skillset as a monetization design consultant.

This sort of informal partnership has been extremely valuable. Whatever your specialization is as a freelancer, it is likely that potential clients come to you with jobs orthogonal to your skillset. At these times, I believe it is better to introduce them to a better fit for the job than to take on a gig that may be just outside of your capabilities.

Take the long view

Freelancing has not been a linear business. It is a feast and famine cycle. One week you are up to your eyeballs in deliverables, the next you are wondering who will be paying next month’s rent.

Business development is an interesting beast. Sometimes, a client I’ve never met will come in hot and within 48 hours of the initial email contact I have a signed contract and a new build to evaluate. Sometimes, it will be 18 months from when I first meet an interested party over coffee to when they are ready for a project proposal. There have been no clear patterns and no sure things.

It took me a long time to be comfortable taking the long view that freelancing demands. So long as you are not simply waiting around for clients to discover your very existence, you have to have confidence that the next job will come in time.

Live for more than work

This most critical lesson is also the hardest to learn. When striking out on your own it takes extreme diligence to make sure that you are living for more than work.

For instance, I was outlining this article around midnight last Thursday when I got an email. I was trying to set up a Skype call with a Polish developer who had just informed me he wouldn’t be available to talk in 8 hours as I had proposed. Despite my drowsiness, I jumped on Skype and luckily the developer was free. We talked for half an hour, and our call may or may not result in a new consulting gig for me. This late night business development call is a clear sign that I still have a ways to go in finding true work/life balance.

I run a personal scrum, and when assigning points each sprint, I include health and personal tasks alongside consulting and development. I get a point for running 4 times a week, or for beginning each work day with a few minutes of meditation and exercise. If I have a particularly pressing task (like a thorough clean of an overflowing office) I will assign it points as well. It is all too easy to see nothing but the work in front of me as important. Including personal tasks inside of scrum is a system I have adapted to force myself to value other parts of my life than just game development.

The same drive that motivates you to become an entrepreneur is the force that can upset the balance of your life worse than any corporate job ever could. If you want to cut the corporate purse strings to become independent you have to work just as hard on yourself as you do on your business. Living for more than work is the only way to enable you to stay independent over the long term.


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