Casual word games is a tough, tough category to compete in on mobile. Not only is it a very crowded red ocean, but casual games are notoriously hard to monetize effectively through IAPs, making user acquisition even more difficult than it already is in the post-IDFA world. That said, Funcraft is making it work in their favor, building a thriving, growing business with an expanding portfolio of games and with the ability to spend profitably, at scale, on user acquisition. With a small team of experienced industry veterans, investments in systems, processes, and analytics, as well as a second-to-none ad mediation stack, Funcraft is a great case study in how it is still possible to compete with the big guys — and win. 

To learn more about how Funcraft is making it work, your host Niko Vuori talks with Michael Martinez, Founder & CEO of Funcraft. 

Funcraft: https://www.funcraft.com/. You can find Michael Martinez on LinkedIn.

This episode is brought to you by CleverTap Gaming, the all-in-one platform for creating personalized player experiences. Visit https://clevertap.com/gaming/ for more details.

This transcript is machine-generated, and we apologize for any errors.

Niko: Hello and welcome to the Naavik gaming podcast.

I'm your host, Niko Vuori. Today, we have a great episode for you. We are talking about casual word games and how to succeed in what is of course a very crowded, very red ocean category that is hard to monetize and therefore is even harder to do UA for. Especially in the post IDFA apocalyptic hellscape we now live in.

And if, of course, if you're the New York Times, it's all very well and good. You've got Wordle, you've got Connections, you've got Strands, you've got the ability to deliver instantaneous and massive cross promo on an industrial scale. And of course, if you want to hear how the Times is growing their business their games business, check out the episode I did with Jonathan Knight very recently, the head of New York Times Games.

That was just a couple of weeks ago. Really great conversation. Check it out. Link in the show notes. But what if you're not the New York Times? What if you are a mere mortal game developer with normal resources and the same handicaps that every other mere mortal game developer faces in the app stores?

How do you build, monetize, and scale casual word and puzzle games in a very competitive environment? To find out, I'm very excited to welcome to the pod, Michael Martinez, another former Zynga colleague and the founder and CEO of FunCraft, which is a developer of casual word and puzzle games. Funcraft has seen a lot of success with our growing portfolio of games and to learn how you can still, to this day, build a real business in this category, in the app stores.

I'm really looking forward to this conversation. So Michael, without further ado, welcome to the pod.

Michael: Thanks so much for having me, Niko. Nice to see you.

Niko: Awesome. Awesome. Yeah. Great to see you as well. With that out of the way, let's get right into the episode. So Michael, I would like to start with a background on our guests, especially folks like yourself, who's been around the block a few times, both, in the industry at big companies like EA and Zynga, and of course as a founder and entrepreneur several times over.

So why don't you tell us a little bit about your background and your journey?

Michael: Absolutely. So I've been in the gaming industry for over 15 years now. Started at Zynga as a product manager back in 2000. That's what days that yes, very early days met Jason McGurk there, who is my this is the second company that we've started together and best engineer I've ever worked with.

So we worked together there, did three years there. Company grew from 150 people. To I think 4, 000 ITO three and a half, I think three and a half thousand a peak.

Niko: Yeah I know this very well because I was there as well at the same time.

Michael: It was crazy. It was totally crazy. Then we left to start juice box games, did that for three and a half years, making mobile mid core games, venture backed and then in 2016 we shut down juice box.

I went to electronic arts. I was the general manager of a studio there launched man, conquer rivals with a great and quite large 80 person team. And then I left in 2019, Jason and I had been talking for a while, and we decided that we were crazy enough to do it again and to try, so we've been doing fun crafts now for almost five years, which is my longest stint at a gaming company.

Which is pretty, pretty wild.

Niko: Congratulations on that journey. And so very similar journey to mine. And you and I share a lot in common and a lot of folks, including working with Jason McGurk. He was a studio CTO of Frontierville when I first got going at Zynga. And fun fact for those who don't know Jason McGurk, he really is an amazing engineer, truly amazing.

And he's the only person I think I know at Zynga in all of those three and a half thousand people who had a verb named after his last name to Mcgurk something was legendary. It was basically him hot fixing something at midnight, the middle of the night in a way that only he literally only he could do.

So good congratulations for landing him as your co founder CTO. He is a phenomenal asset to any team.

Michael: We're lucky. I'm lucky to work with him for sure.

Niko: Yeah. All right. Let's talk about FunCraft then. We're going to talk about many aspects of what you just talked about there, your journey. But we're going to start with FunCraft, obviously, your current company, five years there.

What do you do? What kinds of games are you putting out?

Michael: So FunCraft, I, so FunCraft, what we do, we make daily ritual word games. We have three games that are working really right now. But it's classic gameplay, really simple gameplay brings players back. We want to make daily rituals for players.

Niko: And what kinds of games do you have? I think you've got three that are doing very well at the moment. I'm presuming you've had a lot more that you've either launched or thought about launching and didn't launch. I know your approach is to take a lot of shots on goal. Talk more about that.

Michael: Totally. So we have three games that are how we think about games. We classify things into businesses that are over 25 K a day. Then we have games that are in soft lunch that we are testing and trying to turn into businesses. And then we have games that we're working out in development. And games that are on the roadmap backlog of games that we want to make in the future.

So the three games that we have right now, one is word grams. That is our first game just turned three years old. It's this unique take on crossword games. It's a turn based crossword game. And then we have dice Yahtzee, which is a unique take. I'm going to say unique aloud. That's a unique take on combining.

Anagrams and Yahtzee style gameplay where you have to fill up slots. Then we have a third game dice words. That is some variations on word Yahtzee.

Niko: Fantastic. And any other games that are in soft launch or that you care to mention here?

Michael: We have so many. So we have our first. Non game, non word game that is showing some signs of life.

This is a game called Dice Yahtzee. That game's doing well. We have two titles right now that are about to begin soft launch. One is a trivia game. Called Trivia Tower, and then we have a yet to be named other word game variants. And I think it's something, for our team, it's so confusing because we have all these names.

Wordgrams, Dicewords, Word Yahtzee, Dice Yahtzee, just this. Nick's just put one of these words wherever you want it, and that'll be the new name of the game.

Niko: At least it keeps it simple in some ways. Some ways, yeah. In some ways, confusing in others. At some point, you're going to have enough games that you're going to run out of combinations of those words, by the way.

Michael: At some point, yeah. But the beauty of the app store is you can just keep appending names. So it could be dice words, word games, word grabs, fun, word puzzle.

Niko: Daily ritual, daily ritual. There you go. Yeah. Love it. Okay. So joking aside. This is a real business, right? You've been in this business for five years now.

And I want to start word grams, cause that's your kind of breakthrough game Happy birthday. By the way, three years old. It sounds like right recently. I know it's doing real numbers, but it took you a while to get there. So tell us a little bit about the kind of the word cam story and how you went from starting the company five years ago, launching the game sounds like two years after that.

That's a long time between founding a company and actually getting a real product out there, so to speak, and then to where you are now, all the lessons that you've learned along the way.

Michael: So I think it starts with why we started the company and our approach to game making, what we wanted to do with FunCraft.

We knew when we started, so the reason we started it is. Being at these larger companies, we just continue to think there is opportunity. There's so much opportunity in the game space. There was then, there continues to be now. The most important thing is for a studio to move very fast to, and for an effective senior studio to do great work, just unleash that great team and that great work.

So that's what we believed in. We think that we can do it growing, working very quickly and shipping a lot. We also thought and think that. There is a necessity to grow a game, and I know it's obvious you grow a game from zero to 10K, then 20K, et cetera, et cetera, et cetera. But you don't start with a hundred million dollar a day game or a hundred million a year game.

It takes you a long time to get there. So we knew that we were going to grow these games gradually and they were going to continue to steamroll and stack. So when we started the company, we wanted to make smaller games and innovate on or bring in. More social, more live ops. And we were really inspired by two games, word scapes and tune blast.

Those were two games that they're incredibly simple. But we're able to break through in these crowded markets and build really outstanding businesses and sustain.

Niko: I think, if I may. Because word scapes to this day is one of the top word games. My kids play it, I play it. I've been playing it for years now.

So you know, my kids, friends play it. So it's just, it's a great example of something that's incredibly simple, deceptively simple, and yet able to sustain incredibly well over a very long period of time. So that's an interesting great inspiration, and I'm looking forward to digging into that.

Michael: It's like a, one of the best games and has some of the longest slags. Really well run team, run game. That's an inspiration to us for sure. And that's what we see as in the word space. There is, we know we can get bigger because we have several examples of massive businesses that yes, we're big and we continue to grow, but we know that we can keep getting better and bigger which is exciting for us.

So when we started out, we actually. We're more focused on the smaller games and one of the things that we wanted to do is have many games out to find that one game that would turn into a business. So absolutely, the more shots on goals. I really think that a game either works or it doesn't. And you need to find that game and get it out into the marketplace.

To find out with real players as soon as possible. So we put many games, we explored different development models. We did raise money from play ventures a seed round that allowed us to go after this. We worked with some outsource partners to develop different titles. And we had this game word grams that we had made.

And at the beginning, all these games are pretty small. It's like when you're spending 500 a day on marketing, that feels like a big deal that ends up for a month. And we went on to another game. We got some featuring from Google. We made this merge tower defense style game that actually had great metrics.

With the help of featuring from Google. So we put our attention on that and then once the free installs went away and we tried to do you a on it, we realized that it wasn't that great of a business. And then we looked back at word grams and it was just steadily trucking along with. Great retention.

So the DAU was growing, we were able to spend more. And that's when we thought, Hey, let's put more attention here.

Niko: And now that obviously there's a lesson there. And there's probably several lessons there. And I think that brings me onto my next question, which is something I really appreciate by you, by the way, Michael, is that you're very transparent and very open on LinkedIn in particular, if you're not following Michael on LinkedIn, you really should he writes great stuff.

Not too much, not too long, but right to the point. Very metrics driven, a lot of data, a lot of transparency around the business, which I really appreciate. And we're going to talk a lot more about numbers later on this episode. But one post that I saw recently, and part of the reason why I wanted to reach out to you and have you on this on the show is that you said it took you over two years.

To get word grams to 30, 000 a day. And by the way, I really love the fact that you measure revenue on a per day basis. Not like the big studios that do quarterly. Yeah, I'm exactly the same. Like you're only as good as your last revenue day, right? You're only as good as yesterday and who knows what's going to happen today.

So 30, 000 a day. Great. Fantastic. That you've gotten there. But then what you said is you've got your other two games that you've mentioned, word Yahtzee and dice words, they hit 30, 000 a day in 95 days and 30 days respectively. So that's. Huge. That's amazing. Honestly, tell me more about how you were able to do that.

And what did you learn from WordGram? What, in some ways, rude question here, but yeah, what took you so long?

Michael: Yeah, it was hard. It was a hard, long slog to get WordGrams to where it was. So I think there's a few different ways to answer that one is it took us a while to build the amazing team that we have that can support word grams and multiple games.

So 1 is team and I can go into that a little bit more depth and then the 2nd is building out a lot of our processes. How we approach growing a game, testing a game, knowing what good looks like and having that historical information. And then the third is just how FunCraft, we, us figuring out how we operate the company.

That we have Different engines that are powering the growth of our game. So there's the game creation itself. There's all the experimentation with features. There's all the A B testing. And we're very, Jason and I felt very good and comfortable with that from Zynga and from our prior experience.

We can do that. We know all the systems. That's pretty straightforward. The two new pieces that we really had to learn at FunCraft are ad monetization and user acquisition to become really excellent at those. So on the ad monetization side, we had never made a game that is ad monetized before. Our games now are 80 percent ad monetization.

And 15 percent IP 5 percent subscription, but it took us a while to get good at that and understand how to think about it and improve our numbers. And then the 3rd is user acquisition, which is this. Whole other beast, like you said at the beginning about what New York Times is able to do a huge admirer of them, of course, but we are in a totally different boat.

We have to pay for almost every single install. If we get an organic install, we're thrilled about it. So we have to make our business work, grind it out and make sure that we are able to grow it in that way. And we've been able to prove that and continue to able to do that. So I think. That's a, that's a bit of the set of a long answer, but putting all of those pieces together, once we had those in place with word grams, and we actually spent at one point, we spent over a year.

Only focused on word gramps. We decided, Hey, these other games have have not borne fruit. Let's see what we can do just by really grinding word gramps. The tricky part is when a game is small and you're making five, 10 K a day. Sometimes it takes a while for experiments to bear fruit because the DAU is relatively smaller.

As we started growing and growing, we were able to accelerate our learnings quite a bit, which has been so helpful for us. And there was a certain point where we realized, Hey, we actually, now that the game is. 30, 000 a day, we can make more improvements by spending 10 percent more on UA or improving our ad modernization.

And our focus shifted as a company from the game metrics focus. We still improve there, but really getting that much better at ad modernization and user acquisition. And that's something it's just we try and focus on the biggest levers for our company. And once you got to this size, we realized that.

Those were the bigger levers. As you're growing the game too, now we have all this historical data with wordgrams. We know what good looks like. We know what our metrics are. We do so much competitive analysis and trying to figure out what different games metrics are and what it takes to succeed. What are the benchmarks you need to have?

But all of those metrics are so tricky because retention is so heavily impacted by the types of user acquisition campaigns you do. If you want 60 percent D1 retention or 40 percent D7, I can give that to you. But I just need to pay a lot more for those users. And maybe it's not profitable, but I can deliver 40 percent D7 retention.

So every number is like you have to take with a grain of salt. Are we talking about US? Are we talking about which users? All these things. And you can really only rely on your own data. Once we had enough with WordGrams, we were able to pattern match and say, Okay, when we launched Word Yahtzee, our playtime is not yet up to snuff.

Microsoft add scene, not yet up to snuff. Retention is better. Okay, cool. We can work with this so we could massage the numbers, do more focused experiments and get those to the place where this game has the the profile of a winner like word grams. Let's invest and we can be more confident in the paybacks that it will invest, or it will pay back in a similar way.

So it's really it's a chase for data, like the more data you have, and the more comfortable you can be making really big, massive decisions in your budgets.

Niko: Yeah, this, as you speak, it's just so reminiscent of the experience that I and my equivalent of Jason McGurk, Corey Johnson is my longtime co founder, CTO, very similar experience with Rocket Games, which are social casino games back in the mid 90s.

We sold that company in 2016, but it was exactly the same experience. If any entrepreneur out there, a gaming entrepreneur out there is listening, like this is real, this is real stuff. You just, you have to rely on your own data. You're building up very slowly. Every day is like a little bit better, hopefully than the previous day.

Every dollar is you're only as good as your yesterday. And then once you see something that's better than what you've had before. And you launch a product that's clearly outperforming the previous ones, you can, with confidence, start to invest in something that is going to bear fruit further down the line.

And my personal experience was exactly the same. It was like, I'd spend 500, like when we finally unlocked paid user acquisition, I spent 500 and I was like, Oh my God, I'm so scared. And then I was like, Oh shit, like I'm returning that money back. And at least according to Facebook at that time, that's where we were spending most of our money.

We're returning that in a day. Like we have really high quality. He's okay, maybe I'll spend a thousand. Maybe I'll spend five thousand before you know it. You're like spending, a couple of million. I think our biggest month was like two and a half million dollars in a month. And you're just like, okay, I guess this is paying back in six to nine months.

But it is really remarkable how you do need to take that. It's not a leap of faith anymore because at that point you've got the data. Totally. And that is exactly what I think any gaming needs to understand is like you have to have the data in order to actually make. Real decisions because you're going to have to take that it's not a leap of faith at that point.

It's a leap of right data. Yeah, we're better. So really interesting that you had a very similar experience to us. And honestly, anybody listening, really, this is real stuff. And this is definitely something that you should actually listen to. And by the way, again, Go follow Michael on LinkedIn.

Like he, he writes exactly in this vein, like it's really data driven stuff. And I really appreciate it. Okay. So we're going to dig into the two pieces that you mentioned, which I think are really interesting and the things that you realize you had to learn to become better at. So ad monetization and then user acquisition and understanding LTVs from the data.

Like we just mentioned, let's go into the ad monetization piece. So post IDFA. It's hard to monetize. It's obviously hard to do you a but it's even harder if you're mostly ad driven, right? And you're saying 80 percent of your revenue is coming from ad revenue. So what are you doing? How did you get so good at ad monetization?

What's your stack? What's your mediation layer? Like the more data, the more information, the better here?

Michael: Yeah, one thing just on the idea of a Yeah. One thing for, it's like the two major changes that have happened in gaming over the last, I don't know, four years are probably pandemic and IDFA and unfortunately for us, or fortunately, I don't know, we were so early, we started in 2019 that we didn't really, we didn't have a before to compare the post pandemic bump to we, because we were so early, we were still growing.

So it was almost our normal and similar with IDFA. We were at the beginning of our journey, so we didn't have too much of a. Of a crippling effect from that it's more of that's just the world that we've operated in for fun craft that it was a challenge that we had to sell out. 1 thing I would say, and I'll say about.

How it affects games, and we feel like we're fortunate about this. My understanding of the IDFA is it is making it very hard to target specific high value users. So if you have a generalist game, or a generalist category, and Word is certainly one of those, these evergreen categories it makes it, A little easier to be able to find users and be able to grow them.

And we've seen that on the ARPDAU side on the ad modernization side for ourselves. We've been steadily growing our ARPDAUs we. In the U. S., we are, it's 50 or 60 cents at Artdaus. Our team is really good. It's really good. It's incredible. We've been growing that over time. We use AppLovin for mediation.

We switched to them in January of 2021. Or excuse me the fall of 2021 and they've been a great partner for us.

Niko: My, my presumption is Michael, that none of that came to happen overnight. This was probably a journey. Certainly that was my experience with rocket games. Like we would start with one ad.

network and then we'd layer on another and then we'd try to do our own mediation and then we'd try some partner and that wouldn't work out and then we'd switch to something else and that wouldn't work out and then you've got your waterfall and then it gets really complicated because then you're not quite sure what's working and what's not as part of that layer.

So tell me a little bit about it. It sounds like you've had something in place now for the better part of three years. How are you, obviously it's working, but how are you confident that is the right stack for you? Given that you haven't sounds like you haven't maybe made huge changes for the last three years, like this stuff is very dynamic, like one network will work and then suddenly it'll stop working right?

And then another one will come online and Oh my God, it's gonna be amazing. And then suddenly you can't scale beyond a certain amount, right? So that's how I'm I'm curious to hear how are you monitoring and measuring and improving the stack with time?

Michael: Early on, what we were really focused on is the basics of it and putting it in place.

So this is just the percent of users viewing each type of ad and then interstitials, art rewarded videos, banners, all of those. And then improving each one. For us in word grams, one of the things we saw early on with that game that the most important metric for us. And we started to focus on that.

It really drove the business was turns play. So if we get players to play longer, play more turns, they will have more opportunities to watch ads. And that really helped us in terms of, okay, they're very highly correlated. And Lots of great metrics. If you improve retention, you're going to have more terms played.

Like all these things are connected, but really just improving terms played allowed us to simplify things and grow the business, like providing some clarity for us on the ad side, our team. There have been changes in the industry as well over the last few years that. Change their ability to have some control.

So there's been a move towards bidding. Things are, things absolutely are always changing. We're on unsteady ground for sure. And I think it's our team's ability to keep adapting and to always be trying things. That's what we, that's how we pride ourselves. Just always trying.

There's always a test running. We have a lot of games that there are ability to test things and then taking the learnings from one game, if it works somewhere else. I'm taking it out to the others as quickly as possible.

Niko: Okay. So that's the ad monetization piece. So 50 to 70 cents, like ARPDA that's crazy high.

That's very impressive. That then obviously allows you to do the UA side of things as well. And so you can start to measure LTV and do your CAC versus LTV calculations. So let's flip to that then now and say, okay, when was the moment when you realized Let's go back in history here that you could actually start spending profitably on UA against an ad based LTV, which is really impressive.

One of the things you mentioned on LinkedIn not that long ago again, was that you're actually spending two million on UA. And I believe that's on a per month basis at the moment. You've unlocked LTV from ad monetization, which is impressive and somewhat unusual. Not. Unheard of, but somewhat unusual to, to be able to do that.

So tell me a little bit about how you've how you've when you when you crack the nut, when did you crack the nut on UA, where you could see, okay, this is going to work, we are going to be able to spend profitably on ads against an ad based LTV.

Michael: I think, we first realized this I guess it's three and a half years ago in the, or three years ago in the early days of word grams. And I just looked back and I saw a January 1st email from 2020. Celebrating. It was like 15 K a day in terms of revenue. And we were so thrilled about that. And I know when I wrote that, I was so excited Oh my gosh, I can't believe we achieved this.

This is great. And now we are just able to we just have continued to grow it. And we've continued to with multiple games, with the improvements of games, getting more and more comfortable and confident, and with all of these improvements, and it just takes time. To be able to increase the scale of our business, and we're seeing this growth accelerate now.

So I think it's something where, just like your example with Rocket, and we're going through that right now, where when we spent 500 a day, that was terrifying, and then we're spending 5, 000, 15, 000. It takes a while to go there. At the same time, you need the game's metrics to support it. So oftentimes there are of course, when you increase your spend, the CPI goes up a bit, and then you need better game performance to be able to merit that higher CPI, to access that higher scale.

And that's what we've been able to achieve with our games. But there are, it feels like there are ceilings that we need to break through. And once we do, we unlock these new periods of growth. And it's just like looking at our, Overall revenue from our, yeah, our daily revenue from 2021 to now, it's this beautiful curve, , it's so nice to look at.

And sometimes as a team, we just check it out that it's there it's going and it's increasing. Like the scale the pace of it growth is continues to, to increase. So that's what's. So comforting to see. And I guess it's just it's like all of that hard, all of that grinding is what put us in this position.

Niko: Yeah. I, it's a wonderful feeling when that, you go from that pretty flat line and you're there, there's something there. There's a little business and then you suddenly start to grow and then you see it accelerates.

Michael: On user acquisition. Sorry. The most important tool and the most important number for us is return on ad spent.

That is what we care about most. Not CPI, not LTV, not retention. It is for a specific campaign. When we spend a dollar today or a hundred thousand dollars, are we, when are we going to get that money back? Are we going to get that money back? So we have this really excellent report that we've put together and it is the lifeblood of our team.

It's the one we're all checking out, ad monetization, product, data analysts. Acquisition team where we are able to predict at three days and then at seven days what the payback is going to look like and we're able to slice it all these different ways. It's a super powerful tool for us. And that is the.

The crystal ball that allows us to make decisions and say, yes, keep going here, slow down on this network there. And so that's been building that tool, continuing to refine that tool. And it takes a lot of work to be able to do that is, is what allows us to make these decisions.

Niko: Yeah, this tool that measures ROAS, again, very reminiscent of the Rocket Days.

I built the first version of that. I'm actually very curious to geek out a little bit on your model. But the one that I built was based on something that Eric Seufert had put together, Mobile Dev Memo. I don't know if you're familiar with his work, but he does a lot of writing on ads and the mobile industry and games.

He had built this really cool spreadsheet, which I copied, borrowed, shall we say. Shout out to Eric if he's listening and modified it to our own use. And it was exactly the same kind of model where it's okay, after three days, this is what it looks like after seven days. This is what it looks like after, 14 days is what it looks like.

And it was pretty, it was very powerful. Once we got it refined to a point where we could be like, we. And we can look at it by different channel. Like we're spending on Facebook. That's, it's got a certain kind of look if we're spending on Google, it's got a certain kind of look, similar, like usually different, scale up or down depending on the quality of the users.

So tell me a little bit more. I would love to geek out a little bit on how you built this tool, how you built this model. What was it based on and what are the core key inputs into this model to allow to make such. Great decisions.

Michael: So there definitely are some, there's machine learning magic involved.

Oh, so we've been doing that for three years. We should probably get a little pitch on that. But it's been a we put in all the metrics that you think would matter, given. Retention, playtime, turns played, ad scene, all of those things and many more. How it actually works. Who knows? The key, though, is just for us to give it more and more data.

Just like AppLovin and all the networks, they always say, Hey, if you just spend a little bit extra, then our algorithm will learn and we can spend it more profitably. We need to get more data into from our games to understand how they're going to perform when we launch a new title. We don't have lengthy predictions for a while specific to that game, but we are able to pattern match against the other games that we already have in our portfolio.

So we're pretty comfortable with what we see early on.

Niko: Nice. Nice. And how big is your UA team? Who's running this? This, in fact, how big is your company? Let's talk a little bit about how you guys are structured,

Michael: right? So we are a lean 14 um, senior folks around the world. We have a two on our user acquisition team, two on our ad modernization team.

Niko: I mean that's spectacular. 14 and you're almost at a 50 million a year revenue run rate. I think you just celebrated a hundred thousand dollar day, not that long ago. So listeners, this is 30, 35 million,

Michael: 35 million run rate. All right. All right. I'm rounding it up a little bit.

Niko: You got to round up. Don't be don't be so coy about this. You'll be there in no time at all. But yeah, listen, it was like, this is. This is why we love gaming, right? This is what's possible. It's still possible with a small 14 person lean senior team to be doing something as spectacular as, 35 short, but let's run it up to the 50 again, million a year revenue run rate.

So yeah it's it is remarkable. And there's still opportunity to this day, despite the fact that everybody says it's really crowded. But I do want to talk a little bit about gear is just a tiny bit. It's related, but it's it's going back in time a little bit. Juice box.

You and Jason McGurk, you founded that company and you very, I think at those days you were going after a single product, right? It was a mid core game. I know you, you tried to pivot out of that at some point once you realized it wasn't working and then you were very public again on LinkedIn writing about what worked, what didn't work.

Didn't the learnings lessons learned from the failure of juice box games. And I've really, again, really appreciate that we don't do that nearly enough as an industry. Most games fail, most game companies fail. We know that it's very hits driven. And so for you to go out there and talk about that was highly appreciated.

And I still remember a lot of the posts you put out there, but it brings me to a question. You were then going after a higher monetizing genre, which is mid core. And then you decided. Presumably you learned some lessons there okay, yes, it does monetize quite well, but it's hard to grow. And then you went after something that monetizes not at all, which is except through ads, which is a, casual puzzle game.

So, make that connection for me. Like, how do you go from that experience with a higher monetizing game and that didn't work out to a lower monetizing game and then succeed? It's remarkable.

Michael: Yeah. Yeah. So I think two big takeaways from us, from, for us from juice box. One was just this idea of betting everything on a single game is not something I want to do.

I did that similarly at electronic arts as well with that studio. That was the mandate for us to make that game. But it is just so challenging because you built this. Great competence as a team. And then if it doesn't work out, what's next? And I, I, I also think just looking back on games that have succeeded, we're always looking at these massive franchises now of what they are.

But if you look at what they started with, they are so different and so much smaller in their early days. So one is we wanted to make sure that we were. Not betting the game, the company on a single game. That's number one. And that kind of led us to, okay, if we're going to do that, we have to make smaller games.

We don't want to be making games that take at least one year to launch. So that leads you to simpler gameplay taking some design risk out of the game and that's been really fruitful for us with FunCraft. The second learning was. Let's not go against these super crowded areas. And I know where games are crowded now, it felt slightly less so then, but if you are going against, like when we made RPGs, that's a, you're playing with the big boys there.

So how are you going to be better than them? What are you better at? Is it production values? Probably not. Is it marketing capabilities? I doubt it. If you're a startup. So I think you need to have some thought about what do you think? Why are you crazy enough to think that you can succeed?

What are you going to be doing better than these folks at? If you, at EA, we made a game that was adjacent to Clash Royale. It's that's tough to beat. You're not going to beat. Clash Royale gameplay. So I think that was really, we wanted to make sure that we were doing something where we felt there was a pocket for us to find some business traction, some revenue traction, and be able to keep growing on top of that.

Niko: Interesting. I think that's a great insight. It's very similar to our rocket approach as well. It was like launch, early launch, often get the learnings, don't dwell too much. If it doesn't work out, it doesn't work out. You still learn something. Don't do that again. Kind of thing. Yeah, absolutely.

Onwards and upwards. And it kind of layers on top. This is not, again, this is not, no offense intended here, but this is stuff that has been known for a really long time. Rovio famously, angry birds was one of the first kind of hit games in the app store. Back in the early day in terms of this terms of use attraction.

And they famously launched like 36 or 37 versions of, birds flinging at pigs kind of gameplay until they finally hit on something that, that worked, with rocket, we had a very similar experience. We launched, I think 20 something, casual slots games until we had, we was lots of Vegas, which was our hit game and, head and shoulders above everything else.

Great insight, but I think still highly relevant to this day. I think a lot of folks do forget that. And they're like, okay, we're going to bet the company. Like we have to be so much better than everyone else. We're going to invest two years in making this game. And that generally tends not to work.

The market moves so, so quickly these days still and two years, if you're waiting a year or two years to launch something no matter how polished it is, like the market will have moved and somebody else will have beaten you to the punch or the taste will have changed. So that, I think there's just a lot of risk.

Michael: And yeah. I think hyper casual as a business model and approach to making games. It's been something that's been, I know they get a bad rap, but I think it's really inspiring what they do and trying to learn what about them has allowed them to be successful. And it's this classic or it's just, people just want gameplay and if you can deliver it to them there, how fast they are is astounding to me and their ability to scale games.

So quickly, I am absolutely impressed by and we try and learn from them. So I think like we, we really value speed. And try and be fast, but we know we can be faster. That's what we tried trying to do.

Niko: Yeah. I think, your note about speed is important. I think that is probably the one thing that a startup does have that is an advantage over anything else.

Anybody else, any incumbent, whether it be in any genre. And I think that brings me to my next question, which is, you've got a fairly lean team. Now you mentioned it very small team, I would say more so even than lean. How fast are you able to launch games, from concept to finish? Let's talk a little bit about your green light process for thinking about what might work, who decides how long does it take?

Like how long does it spend in various phases? Before you actually get it to market and at least. To soft launch, I want to hear all about your process because I think again, that is the one thing that startups have. If you've got a really great process for moving quickly and autonomously and not having a lot of layers of bullshit management my French, you can, you can compete, you can succeed and you can win against the incumbents.

Michael: And I think one of the challenges of it, you were talking earlier about not taking it personally. You need to have really thick skin with these games where. And it's this challenge because you want to, you need the team to care a lot about it, to make the game matter, to have the game be good, and polished, and beautiful, and have it react in a beautiful in a wonderful way.

That matters, absolutely, of course it does. At the same time, you need to do it quickly enough that if it doesn't work, you don't keep going down that path. Knowing when to cut your losses or move on to the next game, and that's okay. Just like most features don't work, most games don't work, everything is a power law distribution.

So finding a way to find the things that work, like that's the pursuit. So in terms of how we build games quickly and how that's evolved for us, it starts with Jason. So he's built so many systems so many times. He built example craft for us, and this is something that it has all the great features of our games.

And it's the framework. So whenever we start a new game, we started from example craft. We built one of our engineers, Nate built word Yahtzee in two months. Now I think we're down to four to five weeks for a new title with a single engineer. It feels great. There was one hilarious experience a few months ago where we were having our weekly standup and someone asked about a title and it was like, Oh, that game's done already.

I was like, what? We were, that game's ready to be spotlaunched. And I didn't realize we kicked it off. So our team is quick. They're able to get games out and then it starts the process of, okay, we need to do some marketing on it. Bring users in, make sure it's, Make sure it's okay, tech launch, and then we go from there.

Niko: Yeah. What does LiveOps then look like with relatively small team and now growing portfolio of games that, that matter? Yeah. At least it sounds like you got three that you definitely are going to be investing in given the revenue levels are making. How do you support LiveOps with such a slim team?

Michael: Yep. And this is also similar to what this is, what example craft powers and allows for us with our first game word grams. We were focusing on that game for just 1 year. We launched over 300 experiments on that title. That's the last time we counted. I'm sure it's many more than that now. But so we had these 300 experiments and we have the biggest winners from those.

So now what we're what we did with Word Yahtzee and then DiceWords is we took those. I asked for forming features first and experimented them with Dice Yahtzee or word Yahtzee, excuse me, and it works. Those features works. It was great to see that great to see our experimentation framework work. Now that we know those work, if we have a game that works, we just put them in because we know they are.

We know they're successful. We don't need to spend time experimenting. We know they're good.

Niko: Sorry. Are those the golden mechanics that Mark Pincus used to talk about it? Did you finally figure out how to build the golden mechanic that we searched for so long?

Michael: Many of the golden mechanics that again.

Are no, that's not rocket science to figure this out. Every game has that, but to build them in a way that is templatized and it's really straightforward. Like they, they were we have some challenge features that work really well and they're always effective. They increased turns played, they increased teams played.

And then they are structured, these events in a way that we can schedule them over time of gameplay feel new.

Niko: What about content? Content is always the key. It's all very well and good to launch these features like, challenge features, social features, what have you. Those are, they're not one and done, they're more one and done than content, but content is a treadmill, right?

We know that so well. Every game developer knows that. For word game, the reason word scapes is still. Shrugging along after all these years is because they just have an incredible content cadence and it's quality content. It's not just like they're just not slapping some levels out there.

Like it's good stuff, right? And they feels the balance of the difficulty versus the progression feels really good. You must have some version of that internally as well. How do you keep the content going at the same time as doing all this other stuff?

Michael: So that's part of the game kick-off process.

With word grams, that is a unique, say that word again. That is that. How we assembled those puzzles was a challenge at first, and it was a big investment in building all of that content for ourselves. We continue to add to it, but we feel like we've established the framework for it, and now we can, that's almost on, on rails for us.

And the other games as well, Word Yahtzee, there was a lot of tuning to figure out what is the right letter distribution for proper and satisfying gameplay. Once that's in place. We can go with that. I think for us, we don't play the content game and it's partially because of genre choice. But we don't play the content game in the same way that we did at Zynga with builders and all of these things.

We have different events that theme, they are seasonal. And there's art asset changes that go along with that, but we've, we really try and set things up in a set and forget it way. Okay. That said, certainly if Mood Active started operating our games and put a 150 person team on it. I'm, I wouldn't be surprised if they could drive a lot, drive more to the business with 150 person team, just like they've done with travel town.

So I think it is possible to do that, but we actively choose to not go down that.

Niko: Yeah, Yeah. No, that makes sense. Now, that's obviously a very different approach to, the New York Times, which is obviously we both admire. I'm hooked on their games as I'm sure you are they Jonathan Knight on the pod just a couple of weeks ago, he was talking about, it's very human driven, right?

It's everything is curated by a, almost like a single human being, right? And you know them by name. It's Lena Wu for Connections and Tracy Bennett, yes, is the editor of of Wordle, Lena Wu, Disconnections. And I think the New York Times approach is, per Jonathan Knight is, it's very much A human being does that it's a connection they make on that day through the editor to the player and it's a one day thing only, right?

And you only get that one level again, very different approach to yours. Not a right or wrong approach to just a very different approach. I'm curious to hear. How do you think about that human connection? Is it more about the Connection between players, the social, the competition having a system that's on rails is great in that a human doesn't have to touch it very much or spend a lot of time on it, but you do lose that human connection, at least a part of it.

So curious to hear your thoughts on how you balance those two concepts.

Michael: I think of it more as New York times is its own special, amazing. Beast with this amazing history and pedigree that allows it to be what it is. And how they, and it's unfair and I think it's great for them and how they are managing this.

I am in awe of, I think it's awesome. I love their games. I love everything about what they're doing. I think it's really impressive. I think they are unique in the way that they can approach it that way. If we were to go down that path of investing in. Bespoke, highly curated content by master puzzle makers.

I think we would have been dead three years ago, if not four years ago. Yeah, fair enough. So it's one of necessity. I think you said it better than I could as well. What is different about our games is that they are turn based games. I think what we like about turn based games is there's this feeling of.

Social obligation and need to come back and a connection with the other player. So that is something where we feel like that. Competition and gamesmanship and connection with the other player of being able to have a point of contact is really powerful. That's why we went down that path early on

Niko: That totally makes sense.

And as a startup, you've always got to this is the wrong phrase cut corners, but you gotta be lean. In many places in order to actually survive as a company before you can then have the luxury of potentially doing something like the New York Times is doing, because it is very much a luxury for sure.

I noted with Jonathan Knight on the episode, I like you name me another. Company that is able to bundle a bunch of casual word games that are human curated into a subscription and build that into a huge business. That's almost rivaling the actual news business of the New York Times. Like I struggle to name another company that can do that.

So, okay, let's let's talk a little bit about your remote culture. So you have a fully remote company and you've got your, Yep. Small team, lean team, but you're spread out all over the world. Talk to me a little bit about times like we're remote as well. It's got its pros and its cons.

I'm happy to dive into all the cons and the pros as well. How do you make it work? Why did you embrace the remote model? I believe the company started pre pandemic. So you presumably either went remote after the pandemic or you actually started remote before the pandemic,

a lot of the good ideas come from meetings where you're in person and you're bouncing ideas around that really does get lost in a remote kind of structure. So I'm curious to hear how you guys go about that and how do you retain that creative spark through zoom calls?

Michael: So we started right before the pandemic, our first employee hire came into our, we were for one week.

And then we haven't seen him since in person. No, we have seen in person, but not in the office, our office got exploded. And then that put us down the path of remote work starting to hire at the beginning of the pandemic. It is something I never would have conceived of before we started fun craft, but it's been a real strength of ours.

We started our first major hire internationally was our head of product Gonzalo arts, who's based in Buenos Aires and. He is outstanding. He is so great. Once we hired him, he made some recommendations for other great people that he knows and worked with in Buenos Aires. So we have a bit of a pod there.

We have user acquisition people in Spain and in Israel. We have ad monetization in the U S and in Brazil, and we have an engineer in Canada in the U S I think it's something that had happened by necessity. And it's really been able to work because we are senior, like people know what they need to do.

When we're talking about game creation, and I agree that's where it's most important to be able to talk to each other. We have been in the games industry long enough that we have a shared knowledge and language about what we're talking about. So if we're saying, hey, we want to build this feature. We can just say, we want to build this feature, it's like this from this other game, and that's it.

And the game, the feature can begin development. There's, it's very different from the early days in Zynga, I know you experienced this too, where we had to invent new systems. And you needed to spec them out and wireframe them in these huge long processes. I feel like game making is more modular now, that you can say, okay, take this, take that, and we're going to put it together.

And we know that it'll work or not being able to do that allows us to go faster, which again, we've talked about as being so important. We do communicate. We have one standing meeting for the team, everyone together. Monday morning to kick off the week and recap what happened. That's very important for us to get together, talk about goals, talk about where we are.

But that's it. It's a lot of slack work and we make it work foremost because of trust. That's our core value. That is the anchor and the foundation of everything. We know these are great people. We've gotten to know them. They're doing excellent work and we really do trust them. I, that independence and responsibility that we give people that is.

I think appreciated by our people. But it's also, we need that independence and responsibility from them to be able to drive the business to any success that we have. So we always, our people are so good when they find something that is not working, that is not necessarily in their discipline and raise their hand and say, Hey, I think this is an issue.

That's when you know that your company is working and is on the right path. So I think. It's just, it's, this is something that we've built and emphasized over the last five years. But I think it, it probably comes down to what Jason and I value, which is like shipping. If we getting things out the door, that's what matters.

Talking about products, data, that's what matters. So that's where our focus is. And we have selected people. Who like that approach? And that's, it's been this nice wheel for us.

Niko: No, when you find great people that you enjoy working with, that's it's pretty special, right? Like it's, it doesn't feel like work anymore, especially having a great co founder, like you have in Jason, my co founder, Cory is my version of Jason.

When you've worked together for years and you have just enough overlap in what you. Collectively do, but not so much overlap that you're stepping on each other's toes. In this case, it would be like you trying to do some engineering stuff would probably not be a great idea with Jason in charge of that.

And, maybe he shouldn't be doing some of the business related stuff or that stuff. But having just that right amount of overlap where you're speaking the same language, you have that shared DNA in your, in both of our cases actually comes from Zynga, right? Zynga folks.

Michael: Yeah.

Niko: And so having that shared DNA and that's the shared experiences and that. That shared value in shipping early, shipping often, moving fast, not letting perfect be the enemy of the good, all that stuff that I'm pretty sure that you and I probably could geek out over for hours and hours.

It's really special. Now the challenge does sometimes become, how do you translate that to, to, new team members, especially ones that are being on board remotely? Yes. You mentioned that they're senior and that they know what they're doing and that, game development has become more modularized, which I 100 percent agree with, by the way, like you can say, I want a leaderboard feature.

Okay that's where I take the leaderboard feature from. You don't have to design it from scratch. We did in final two or whatever. So how did, how do you do the onboarding piece? Because that's something that I still struggle with a little bit as a remote first company.

How do you bring somebody on board? Yeah. I'll give you an example. We just onboarded three folks. They happened to be out of New York. And so me and Corey like hopped on a plane. We flew out there, we spent two days together. We didn't do any work stuff or like very tiny bit of worky stuff, but mostly it was like our thing was being comfortably uncomfortable.

Which is a startup thing. So that was the theme. So we went up to the very tall tower. I forget the name of that now. And stood on the glass floor and looked down onto the city, a hundred stories below, and we went into the Russian and a bath house, the East village, which is from like the late 19th century, we all had a sauna and freezing cold ice bath together, like things that are like you wouldn't normally do.

We did that, but that doesn't scale very well. I don't know how many times we can do that, like once we're, 10 people or 20 people or whatever. So my long preamble here is how do you make that onboarding piece work for you guys? Once you've got the processes in place, you've got the slack, you've got the Zoom, there's a lot the tools that you can use.

And like you say, yeah your team knows what they're doing, so that's good, you can trust them. But getting that initial, like buy-in, like into the vision of the company, how do you do that onboarding piece?

Michael: I would say. I don't know if we do it well. And this is a pit area where we need to get better at.

I think we Throw people into the deep end of the pool a lot, maybe too much. And this is something I've been thinking about. How do we like? Obviously, we bring someone out. We want to set them up for success. But I think it's important to for us to be honest with the way that we work and we want people who can Who can swim in the deep end of the pool by themselves.

So it's a lit, it's a bit not like it's a challenge for people or we're trying to weed people out. Not at all. Like we want everyone to succeed. But we also need to be a team where people we don't change for a person. A person needs to be a fit for fun craft. Yeah. And we may not be for everyone.

Like we, we don't do. Zoom drinks and stuff. We're not playing games over zoom. That's not what we offer or what we're interested in. Every I've gotten to know everyone on the team. I think they're all, I just visited Argentina. Met with the team last month and met. Five people for the first time after working with them for a year to two years, and it was awesome.

And it was so nice. It's I know these people. Of course, I know these people. But with newer people, it is a challenge and making sure that I'm the onboarding process. We are really clear about who we are. So there are no surprises. And Making sure that there is feedback on how they're doing and they're providing feedback to us as well.

What I'm going to do after this call is I'm going to reach out to our most recent hire and ask him, like, how is it going? What could we be doing better? Cause I know there's a lot we could be doing better. And I want to hear it from him. So it's a challenge. I think one of the things we emphasize and try to ask for is.

Of course, when you are remote, you need to communicate that much more like always err on the side of communication. So we asked for more, try and push people to, to communicate more. It's hard because you don't, it's not like an office space that you can see a group of three people having a conversation.

I don't know if three different people are having those necessary conversations but they are. And. It's just a it goes down to trust again. And more like really emphasizing communication as much as possible. Yeah, it's tricky.

Niko: It is tricky. And over communication. That's what I say as well.

Like I'm I'm probably over communicate too much. Like I'm a stream of consciousness in some slack channels. But I've told the team, I said, you need to just communicate because that's the only way we're going to stay, you don't have to read everything. You can switch notifications off if you don't want to be pinged all the time, but but yeah, put it out there.

Like we record every zoom call, and then we use like a transcription AI tool that gives you all the points and all that, and everybody gets those and so on and so forth. So even if you're not in a meeting, you still have access to anything that happened. So a hundred percent agree with you.

Last, but one question for you any hiring mistakes along the way? Have you had any kind of regrettable hires that you then had to let go? I'm always, this is more for me and listeners will appreciate too, but I'm always like, it's almost worse to hire the wrong person if you know what I mean, then not hire somebody because you have the wrong person.

It can cause real problems with culture. It can cause real problems with trust because people are like I don't trust these guys to hire. Properly. Like everybody can see there's a problem. Obviously the best thing to do in those situations is to, let them go quickly cause it's not a good fit, but it can still have, especially early on some pretty negative impacts.

So curious to hear, have you had those situations over these last five years? And if so, what did you do and how did you learn from them?

Michael: Just like most games don't work. Well, It's a little different because I don't think most people don't work, but most games don't work. A lot of features don't work. We shouldn't expect that all of the hires will work.

Of course that would be crazy. It's, there's all this research on interviews that there's different ways to research. There's so much bias. It's a crapshoot whether, so I usually work with a company or not. So I don't think it's bad for people to leave a company. That's totally fine.

And that's expected and try to do that as maturely and and painlessly as possible. And to be. Give honest feedback about when it's going. One thing that we've done that has prevented this or lessened it is sometimes when we bring people on and it doesn't work for all situations, but we begin it as A contract basis or a part time basis as a test run.

And that has been really successful for us that we work with someone. We get an mutual to see if it's working both ways and it helps us define what's working or what's not. I think we've worked with a lot of contractors on different parts of our business early on, on product management and user acquisition on the ad modernization, some of those end up working with us on a project basis.

Some have been long term, some it ends up not working or someone thank you for your service. And that's fine. So I think there's, we've been okay with that. We haven't had to have any. Layoffs or firings or anything like that, fortunately. But I don't think that's the worst thing in the world when that happens.

Niko: Okay. No, I think that's a great answer. And yeah, there's no, I don't think there's a right or a wrong answer to that. It just, you just got to move on quickly. And I asked this whenever I talked to somebody else who's running a remote, gaming studio, I was asked this question selfishly because it's something I need to get better at as well.

And we. Collectively, like our company needs to get better at two. So appreciate the answer there.

Michael: I think trust your instincts. And then one other hilarious thing just reminds me of, we had one person interviewing with us one time and we told him that we would want some overlap with our hours.

He was in the UK and then he goes I can't work these certain hours. And I asked, why not? And he goes, because that's when my other full time job is. And I was like, wait a minute, what? You have worked two jobs?

Niko: Okay,

Michael: Yeah. No, I did not hire that person.

Niko: You trusted your instinct. And his name is You trusted your instinct.

Although I think it's pretty easy to trust your instinct on that one.

Michael: Yeah.

Niko: Fair enough. Fair enough. Okay. Final question for all of our guests here which is what three games are you playing at the moment or are you most excited by and you can't name your own.

Michael: Okay. One game that I, I don't know how I found this.

It's called coffee golf. And it's this very simple game golf, and I'm inspired, of course, by golf clash is one of the one of the great games, seeing if we could play around in that area. And coffee golf has a nice little take on that. So that's one. Another is words of wonder guru. From I think that's from play simple and they just added a nice little take on on word games and I appreciate what they're doing in that space.

And then I think that I'm going to say the last 2 combined because I think they're similar. What is squad busters? And 1 is natural motion. Zynga's star wars as it hunters. Squad busters. I think so. Yeah. Team based shooter. I'm excited for both of those games. Squad busters. I'm a little it unfortunately doesn't have the magic for me as a player, similar complaints that everyone has, hard to read, very similar gameplay, lack of understanding the truth difference, all of that.

But the magical on the UI side and the experience of rewards. And then star Wars hunter really surprised me. It's it's a great shooter. I don't know if that's going to be able to be a business for them, but I'm super impressed with the game that they built. Nice. Okay. You can't take four years to make a game like thay

Niko: No, you can't take four. Natural motion is even when, pre Zynga and when acquired by Zynga what was the car racing? Was it CSR racing?

Michael: CSR was the moneymakers and then Dawn of Titans was the It was a beautiful game to look at, but not a business in any way, shape or form.

Niko: Okay. Michael that wraps it up. We're at time here, but thank you so much for coming on the pod. It was really great catching up. Congratulations on all the success. 100, 000 day rounded up to 50 million a year revenue run rate. Super excited for you. And yeah, keep posting on LinkedIn and listeners in all seriousness.

Go follow Michael. He writes some really good stuff. If you're interested in running a gaming studio, being a gaming entrepreneur, he has some absolute amazing words of wisdom and is extremely data informed. Everything is led by data, which should come as no surprise as an ex-Zynga PM. So Michael, thank you again for coming on the pod today.

Michael: Absolutely. Thank you so much.

Niko: Awesome. And of course, as always, a big thank you to all of our listeners. We'll be back next week. With more interviews, more insights, more analysis from the world of gaming.

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Again, that is www.naavik.co. Thanks for listening and we'll catch you in the next episode.