This multi-part series examines the history of Knockabout Games, a mobile games startup I co-founded in 2002, near the start of the pre-iPhone “first wave of mobile gaming”. The start of the series can be found here, and last week’s post on Knockabout’s business strategy can be found here.
Funding and Equity
Knockabout was mostly owned by myself and Monty Kerr. Monty’s role was largely silent — he had an existing game development business to run still — but he had quite a bit of extra office space, desks and computers for Knockabout to borrow. He also had spare resources (people) for us to use on a part-time basis, to complement the rest of us who weren’t going to draw any salaries for a while. Since game development is primarily a labor intensive activity — almost all the expense is tied up in payroll and the space to house everyone — this took care of the bulk of our costs and allowed us to bootstrap the business (we later leased our own space and in an unusual reversal, sublet to Monty’s company).
We also gave a small amount of equity to three seasoned game industry veterans we thought would be critical to our company: a director level manager to oversee the specific titles, a technology director, and the CTO of Monty’s current business (who was to stay there and migrate to Knockabout later). We wanted these folks to feel and behave like owners, not employees, since they were so important to our success.
And we gave them ownership straight up — no options, no vesting. We did have an option plan drafted, but never actually used it. Our take was that options, in 2002, still had a negative connotation left over from the dotcom bubble. There was no point in handing them out if no one would take them seriously. So for most of the staff we had a simple, and generous, bonus plan: any time profit distributions were made, 50% of it had to go to the staff.
For staff, we only wanted to hire coders and artists with prior game development experience. The platform was going to be a nightmare as it was — I didn’t want people learning how to make games for the first time as well. I just wanted experienced game developers who were good engineers (or artists who had strong illustration, modeling and animation skills) — that was the harder thing to find; any good engineer could learn a new platform easily.
On the flip side, we skimped on management. I wanted producers who were former developers so they could communicate well with the team. That struck me as particularly important since the teams were so small (often one engineer). So we would hire guys who knew how to make games, but were trying to transition from a technical role into a management one. I was to personally train and mentor them in those roles.
That wraps up the planning phase for Knockabout. Next time I’ll talk about what actually happened.