[MUD-Dev] Evolutionary Design

Derek Licciardi kressilac at insightBB.com
Wed Jun 19 20:21:32 New Zealand Standard Time 2002

From: Jeff Cole
> From: Derek Licciardi
>> From: Ron Gabbard

>>> I would argue that it's [...] not the VCs that need to learn
>>> about ORPGs... it's the game designers that need to learn about
>>> business.  The dot com boom/bust showed that it takes more than
>>> advanced technology and a good idea to make a successful
>>> business.  A compelling business plan is much more important in
>>> getting money than a compelling game design document as the VCs
>>> are investing in a business, not a game.

>> This has not been our experience.  I have a business degree and
>> the team and I have put together a strong argument for the game.
>> The investors realize this most of the time.  We have the team,
>> the product, the focus and the management skills to pull it off.
>> None of the investors we've talked to have argued these points.
>> What they argue is that they don't have the experience in the
>> industry and as my other post points out, choose to invest
>> elsewhere because their risk assessment is easier.  (this lends
>> well to your powergamer theory) In this respect it would seem
>> that it is the VCs that need to get educated about our industry
>> and not the other way around.  As it stands right now, they do
>> not have the ability to "see" the opportunity because the
>> industry is so alien to them.

> I certainly hope your pitches are less seasoned with arrogance and
> condescension.  Do not delude yourself, the VC's do not *need* to
> become educated about the industry; *you* need the VC's to become
> educated.  Don't forget, *somebody* (entity) is going to get the
> capital for which you're pitching.  You have to do more than just
> beat the industry; you need to have the potential to perform so as
> to pay (and then some) for the VC's dogs (much more than a couple
> of bags of Alpo, heh).

At this point, it has been indicated to us by the VC that we pitched
to that our pitch was solid and that they have never dealt with the
games industry.  This is why they have no basis with which to assess
our opportunity. (Their words not mine.)  The original problem Dave
Rickey discussed centers around us being able to tell each other a
great opportunity exists, but not being able to convince the finance
guys.  With VCs telling me that the plan seems sound, I am left with
only their experience in the industry to fall back on when they
don't move on our opportunity.  I will give you this, you are right
that it is "us" that need the VCs to become educated about the
industry.  Unfortunately, education is not something many of them
are willing put up with in this post dot-com era as they rather
focus on what they know.  Everything I mentioned about our
experience was matter-of-fact.  There is no arrogance or
condescension in the statements.  I suspect you mistook my frank
words for something other than what they were meant to be.

> With respect to your team, product, focus and management skills, I
> would imagine that a VC never seriously considers those aspects
> because you(r business plan) never clear(s) the first obstacle
> (the industry--the "venture opportunity").

> This thread begs the question of the existence of a venture
> opportunity.  The opportunity is assumed; and, further, assumed to
> be obvious.  Even as an avid gamer, I don't think the MMO*
> industry, as discussed by anyone on this list, presents a very
> interesting venture opportunity at all.

> As a VC, one of my first questions would be, "What's a homerun for
> us?"

I'd beg to differ, but that's probably why I am working with VCs to
secure funding.  Name me another game that can last 5+ years, earn
monthly revenues during the whole time, and scale the way an MMO
does.  You'll be hard pressed to find any games other than MMOs
capable of making the money a properly implemented MMO can make.
Certainly the $90M Lineage brought in last year is enough to entice
a VC into thinking its worth a further look.  It can be easily shown
that the many recent purchases by NCsoft into the genre means that
there is a significant profit margin.  NCsoft is a public company
after all so all M&A and financials are publicly available.
Besides, there is a huge precedent for MMO companies to be purchased
three years down the road and other than an IPO that is a major exit
strategy for many VCs.  The response to our plan hasn't been
entirely negative.  Like I said, I believe they have a hard time
evaluating these games because most of them have never participated
in the business side of making games and certainly fewer of them
have participated in making an MMO.

I simply can't believe the venture opportunity can't be stated
properly to attract VC funding.


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