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 how Knockabout’s strategy failed can be found here.

In the end, Knockabout got caught in the typical developer trap, going from project to project, always in danger of missing payroll should a milestone slip.   We reached a point where we couldn’t sustain the business and had to shut it down.  Rather than conceal this from our staff and business partners til the last possible moment, we took a gamble on a better (and I would argue more ethical) approach:

• When we first saw things starting to crack, we informed everyone that we were at risk.  We didn’t know if we were going to have to close our doors, but we didn’t want anyone to be caught by surprise.  This was risky– our staff could start jumping ship and our publishers could cancel projects.  But none of them did.  We talked about options and scenarios, but mostly we worked hard to keep revenue flowing.
• A month later we revisited the situation and made the decision to wrap up the business (for reasons I’ll outline shortly).  Again, we told everyone.  Because we had titles under development, we told our publishers we would do our best to complete them, but it would likely cost more than they had budgeted.  All but one decided to continue.  We then asked our staff to stay on until their respective titles were done.  That meant as much as two more months of work.  We also said we’d help them find work if they needed it, and we’d give them severance if they stayed to the end.  All but two stuck it out.  I’d like to think being open and honest with everyone — publishers and our developers — compelled them to stick with us, but I can’t say for sure.

Not everyone understood.  One publisher initially agreed, but was baffled when I asked for more money to complete their project.  He told me I shouldn’t pay my staff unless they meet their milestones.  I explained that every one of my engineers already had jobs lined up with better salaries than what I was paying them.  They were there out of loyalty — he was welcome to not pay, but the project wasn’t going to finish.

Why did we close our doors?  Why not raise money, borrow from the bank, or scale back operations?  That may have been an option.  Indeed, we had deals on the table for another round of products.  But they all looked like the last round of projects, which meant we’d have a hard time surviving unless we were perfect on delivery (and we clearly didn’t have a track record to support achieving that).

We also looked ahead and didn’t see an exit.  Our strategy didn’t produce value in the space the way it had in the pc and console sectors.  And we didn’t have the capital — or the time to raise capital — to change the nature of our business.  So we moved on.

Many of our colleagues faulted the space — it was hard on developers, market conditions were tough, very few survived.  But if you’re running a business you can’t ever point to external factors.  Every problem is ultimately a problem of execution.  If you don’t see the changes happening around you, or you fail to adapt, the only one you can blame is yourself.

Next time:  An epilogue of sorts.