From Silicon Valley to all around the world, I meet with startup founders to hear their powerful stories of failure, obstacles, and success. I'm your host, Bluebeard, and this is the Cult of Startup Podcast. This episode is brought to you by Audible. I recently enjoyed a book called Ready Player One.
It's set in a dystopian future where people's main escape from the bleak world is allowed into a virtual reality world called The Oasis. This world was created by the richest man on Earth. However, before he died, Hidden Easter Egg in The Oasis and whoever found it was promised his entire fortune. But before that, he warned to be successful, you need to know a lot about video games and 80s pop culture.
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I'm your host, Luke Baird. In this episode, I sit down with Seth Hyatt, serial board game entrepreneur and founder of Mayday Games, originally Seth Randy's successful online business selling through eBay. However, that all suddenly changed from eBay shipped away from having a single listening fee to taking a percentage of every single sale. Overnight, Seth had to make a choice between going back to his previous career as an accountant or to rework his current business model.
Follow us through our conversation as we discuss his journey and discover tangible takeaways you can directly apply to your startup. I hope you all enjoy this episode as much as I did, and as always, thank you for listening. Alright, everybody, welcome to another episode of the Cult of Startup Podcast. Today's guest is Seth Hyatt.
He is the founder of Mayday Games. How's it going today, Seth? Just great. Thanks for having me on Luke.
Awesome. I am super excited in this interview and to discuss your journey that you've taken for entrepreneurship and a lot about Kickstarter and outsourcing labor and the value of accounting. There are so many great subjects we're going to touch in this interview. First and foremost, let's hear a little bit about your background.
Well, I started just as most people do in the US. I went to high school, then I went to college, got a four-year degree from Brigham University in accounting. You mentioned accounting a little bit. In the middle of that, during those years, I took two years off of college to go to a full-time mission for my church in Brazil and I enjoyed that and then got married, and then I worked for KPMG on accounting firm for about three years and several different places, San Francisco, San Paulo, Brazil, for a year, and then Salt Lake City.
Then I worked in industry and accounting for another three or four years, and then I said, this is not for me. I'm going to do my own thing and I put my accounting job and started my own company, and I've been basically an entrepreneur ever since. So, it's kind of my background. That's awesome.
So, you left corporate. What was it like in the last few days before you left corporate? Had you already established your company or were you like, I'm going to leave and then do this? This is back in the, like, right around 2000, 2001 when I really quit my job, and I had already, it was back in the heyday of eBay where there were lots of people trying to get market share selling all kinds of things online.
Amazon hadn't turned a profit yet. There's lots of stuff happening, and I had started a little eBay business selling other people's products on eBay as a part-time side thing, and it kind of got to the point where I was making as much on that as my full-time job, and my full-time job made me an offer to relocate somewhere and to kind of about the company, and so I looked at the guy who was in the position I was looking at taking, and he looked like he had been worn out by this company working 50 hours a week for 40 years, and it just didn't look like something I wanted to do. I think I'm more of a salesman at heart rather than an accountant, so I just decided to quit and do my own thing at that point. That's really interesting that you sort of said, well, here's my future self kind of in the mirror, and I don't want to be that weathered from my life.
Exactly. It's exactly how it felt, and so I said, I want to do something else, and I have always enjoyed it. I think I enjoy the idea of being compensated for my efforts more perfectly, I guess, because if I went through and found a $200,000 savings for my company going into an internal auditor of financial analysis, I get a pat on the back and maybe a $40 gift card to go out back or something. Now I'm 100% commission.
If I make money, I make money, and if I don't, then I don't. So I feel like I'm rewarded perfectly for my efforts, for better for worse. I think that's a great way to look at that. If you're in your job, it's sort of like you're treated for your time, and your time has an associated value per hour, where the other way your time value per hours could be higher, it could be lower.
Yeah, and you're only really kept in the company, and they're good graces. If you are more valuable to them, then what they pay you for. You know that you're being underpaid. You have to be by default.
They wouldn't hire you. So my company, I get whatever's left at the end of the day, and maybe scraps and I'm starving, or maybe really good, if I'm smart enough to figure out how to do that. Yeah, for sure, for sure. And I think that's the basic principle most people need to understand in business that you hop into it, and if you're working with other people, and you're the boss, you're often the last person to get paid.
Yeah. And if your company doesn't badly go into the company, you want to say, you know what, we didn't make as much money as we thought we were going to afford employee. Give me back like 30% of your salary from last year. That only happens to the owners.
Yeah, only happens to the owners. High risk and high reward, I suppose. Exactly. Yeah, for sure.
Awesome. Okay, and this journey, I didn't realize the eBay thing was also in this as well. So you did the eBay thing for a long period of time. Eventually, you were making more income than you were at your regular job as an accountant.
So you're probably doing pretty well with the accountant. It's going to make good money. What happened next? And what did that lead you to after that?
Well, I started doing basically an eBay sales resale business for time from 2001 to 2008. 2008, we were doing really well, had a lot of employees into growing great. And I don't remember if you look back at eBay stock in 2008, when my woman, when she left the company, there were some changes made there. Pretty significant.
They used to have like basically dollar listing fee and two to three percent commission. And then all of a sudden overnight they went to like free listing fees and like 10 to 12 to 15% commissions. Well, my margin was about 10% on all these other people's products. I was a licensed distributor for time life books and master replicas, Star Wars, memorabilia, all kinds of different companies.
Board games was another one of them. We were a distributor for Alliance games, a big game distributor. So there's lots of different things we were doing, but our margins were pretty low because, you know, it's the internet. And anyone can beat was a computer credit card.
So in 2008, our margins went from 10 to 12% to zero overnight. And I said, well, if I'm either going to return to work in accounting or I'm going to go start another business. And that's how many games was born. It was in like 2008 when my eBay business died overnight.
Wow. What were the feelings that you had that evening? Was it like, hey, you got an email and, hey, guys, we're changing our commission rate to 10 to 12% that we're taking off the top. What was going on at that time?
Well, I was pretty bitter. I was like, well, how is this going to work? I thought, well, surely, if this is going to happen, then all these other eBay sellers are going to adjust their prices as I'll have to. It's going to make 10%.
We'll just pass that cost on to the buyers. Well, it didn't work that way. Just people just went out of eBay business. You can go look at eBay live from 2008 and you have lots of angry eBay business people who built these little cottage businesses.
But it ended up being the best thing I could ever do because they'll never make as much money selling other people's products as inventing and selling your own, at least from my experience. It's been that way. So it forced me to make a really hard decision. I probably would have had to make eventually, but hadn't had to face.
I just accelerated my need to pivot and change my business. So you saw that as, okay, well, this is an opportunity for me to maybe move into a different space. You didn't go, well, I'm down to my life. This is horrible.
Into the world. I need to go back and be an accountant or anything like that. I considered accounting again. I looked at what my family needed to survive and what that would do and the idea of working for someone else, even 40 hours a week, where I was probably working 60 for myself.
I enjoyed the type work I was doing, the entrepreneurial aspect and the risk and the strategy and all that much more. And I just decided that I wanted to continue to try to do that. And I think it's good for every entrepreneur to have a couple of failures in their businesses to learn from them and to maybe be a little bit humble. Yeah, I would agree that that sort of conditioning is a big benefit in the end.
Yeah, I definitely learned a lot from it. And so that's how many games was born was I was already selling other people's games and I had been playing some board games. I like board games, but I started to make it with a very clear idea that, you know, there's a lot of these game companies out there that are gamers first and businessmen second. And I was always, that's cart before the horse to me.
You've got to be a business that can make profit before you can enjoy this hobby that may or may not be fun. It doesn't matter how fun it is, if it's not profitable. So that's kind of my, that's the way I went into it. And I think that was a little different than some other people started their companies.
So that seems to have worked out so far. So that's good. It's worked out just fine. You guys have a lot of games.
Walk me through. Let's say like the first game that you ever came out with. It was interesting because we started, we actually did accessories. We started with this Catan board.
I don't know if you've heard of sellers or Catan. It's a very popular game. Yeah, but we had this board that you basically put the little tiles in to hold the game in place and make it easier to transport, easier to set up. But it was, it couldn't be licensed by Catan.
We weren't big enough that they would even care. So we called it the UCAN Adventure Board and we didn't use any other intellectual property or anything like that. And we started as an accessory company. Well, the idea behind it was that we would start to be giving board games, accessories that weren't already there in the marketplace.
So we started doing accessories back in 2008. And really we had a couple of, we'd have people email us almost every day saying, Hey, why don't you make this or that thing? And we'd analyze that and decide if we should do it or not. And then produce those products.
So we were using our market research with our customers that said, Hey, no one else is making this. We'd love to see this thing. Why don't you make it? So that's kind of how we started.
And then eventually we started getting people saying, Hey, there's this game that I think I'll be made. No one's made it. Why don't you look at doing it? And that's how we got into games.
Eventually we're going to be an accessory and token kind of business. But the games really started picking up 2009 and 2010. We did a couple of games that were frankly not very good. We don't make them any more.
So I guess I can say that. We're getting into games more seriously. And we, I got into to made it more seriously. I said, what do we need to do to make this thing a grow and become a long term success and to succeed like we want to do.
We need to do that and really make those decisions. Yeah. And I want to talk maybe a little bit more about this initial Catan board that you created. I have a close friend here in a San Luis Obispo who did a Kickstarter campaign actually on Catan boards.
His name is Bill Trembl. Sounds like he might have been well ahead of that period of time as well. What was that product as a whole? Was Bill, is he the one that was licensed from Catan that did like $300,000 or something?
Yeah. Yeah. Yeah. I know.
I know when you're talking about it. I knew there was one like that. So we had this idea for a board. It was a cardboard board with two layers so you could put the tiles in them.
And we were going to retell it for 20 bucks and it's cardboard. And it sold really well. We produced about, I think it made 5,000 of them. And we can talk all day about how we got into distribution with this one product when it wasn't really even a company yet.
And I did over produce for sure based on what I didn't know. But we ended up getting out with distributors. And then about a week after we got out with distributors about maybe two weeks before we were going to release the product, the distributors came to us and said, we don't have intellectual property rights from Mayfair Games, this big giant of a company in this industry to make this game. And they've told us various things, which means we can't stock your product.
And they sent me one of those evil cease and desist letters. Not just to me, but to my home and to my family and my wife right before I did. So of course that was always, you can imagine how that's received any wife when it says, we're going to take your home and all your assets unless you burn all the copies, tell us how much money you made and all this stuff. So it was a really stressful time.
Luckily, I wasn't easily scared when I have a lawyer friend. But these are pretty standard. They're just trying to scare you. And the end result was that we ended up sending a copy to Katana after I got at least a provisional patent on it.
And they kind of haggled with us for a while, threatened to want to license it from us. And nothing ever really came of that. But they didn't agree that we could put on our board that we'd entered an agreement with them that said, as long as that we would say we're not officially licensed, but that we are produced under an agreement with them and that they are compatible with their products. So that's what we put a little legal notice on the bottom of all of them.
And this is even before Kickstarter existed, this is back in 2008. And we sold several thousand of them, but it was never marketed by them or encouraged by them. It was definitely discouraged. And I do take some solace in knowing that that friend of yours that did do the Catamboard has made several hundred thousand, his Kickstarter, I looked at that and said, my idea had value.
I may not have done it right and they may not have liked it because of the way I did it, but clearly this has value. I don't have sour grapes over. I don't hold an ill-will toward Mayfair or anybody else, but it was definitely growing pains and it was interesting to see how that experience works. So it was kind of fun.
Yeah, I recently interviewed another person where his quote, I asked him for advice on starting a company and marketing and getting it out. He's like, do whatever the hell you want, as long as it's not A, illegal or B, destroys your reputation. Just think of it that way. It gets you a long ways, just because you go, I have this sort of credit.
I'm not going to get in that much trouble. A, cease and desist. All right, well, just change plans. Yeah, well, the cease and desist was just an opening solve.
What are we going to do legally here? And I knew that I hadn't infringed on their copyright or used on either artwork or even use their name. So I wasn't worried about it. And then they didn't have it like to stand on.
And they didn't do that too. They just wanted to see where we said and how serious we were. So the really big lesson for me was, and I see this a lot with other entrepreneurs where you have a product and they want to just make a product. And they do it and they print them even before they have a way to distribute them.
And I did a little bit of that. I produced too many of a product without a very good plan to how I was going to sell them. And I learned a lot from that. But getting into distribution was a really interesting experience because board games are distributed through these four or five main distributors in the US.
And when one of the big partners to these distributors says, don't sell it. How on earth do you get on? And even after I got this kind of released from Mayfair, they said, well, we don't really see the interest. And instead of taking over an answer, I said, well, what do you need to see the interest?
And they said, well, we need our stores, our 2,500 game stores in the US nationwide to email us and tell us that they want this product. I'm like, well, how is that going to happen? Well, instead of saying no, I hired an Indian lady and we're going to talk about outsourcing a little bit here. I went and found an Indian lady for like two, fifteen hour to look on other game companies websites and find their licensed distributors for their game company, their games, and compile all the emails of all these stores nationwide in a few weeks.
And then I emailed all of them a little coupon that said, if you will, if you would like, I'll give you a free copy of this product. It's a $25 value. And all I need from you to do that is a reply from you, which has me CC on it telling your distributor, whoever that is, that you want them to stock the scheme or this product. And so, and it works fairly well, but then I sent out actually a mailer, too.
I sent out a mailer to about a few thousand stores and hand stuffed those. And within a couple weeks of that happening, then I had the distributors calling me back saying, hey, our stores want this. And that's how we got on with our distributors was kind of a push strategy on the demand for the product. Interesting, interesting.
So that's a really cool strategy to use to get your product into someplace. Would you recommend that to people who would like to get in the same market? Yeah, I think it's a solid plan. If you can't get it any other way nowadays, I think it's easier to just launch a Kickstarter, be noticed and maybe have one or two products that do well.
And then I think at least start getting on with some of the smaller distributors. I think that might be an easier way to do it than what I did. Kickstarter didn't exist back then. I was really not even as much internet back in those days.
So it definitely has evolved a lot since then. Definitely. They worked really well for us. For sure.
All right. Since we've mentioned the name a handful of times already Kickstarter, what led you into doing Kickstarter as sort of your launch pad for games? Well, I heard a lot about it. This is back in 2011.
I've been hearing about it and there have been a few companies that have used it and gotten 20 or 30 or $50,000 in a project. It would seem like unreal numbers to me for a game. We would typically put up a board game on our website as a pre-order and sell 50 or 100 copies and generate a few sales. And it was a little bit of hype and it was no big deal.
But the bulk of ourselves were always right to distributors after that. Well, in the fall of 2011, I said, you know what, let's just try it. I put up a really simple Kickstarter for a product. And I actually said, I'm going to do two of these.
If I'm going to do one, I'm able to do two projects. One was for a month and one was for 15 days. The one for 15 days was a game called Get Bit. And we had actually already produced the game, licensed the game.
It was in the water on the way from China. It was coming to us in two weeks, which is why I made it a two week Kickstarter. And we sold about 50 of them on our website in the last four months. I thought, well, this is a good test.
We'll see how they do it. And then in two weeks, for some reason, 1,100 people back to the project. They wouldn't have gone to my website, but because it was on Kickstarter, they did it. It's like, okay, well, there you go, proof of concept.
It's definitely a winner. I'd rather sell a thousand more copies to people at full retail than the not. And then I shipped them out a few weeks after the project ended. So it was a really easy thing.
And the other project was for a little deck building game kind of like Dominion called Eat by Zombies. And it did like $47,000, which was in the top 10 of all time board games funded by Kickstarter at the time. It was this huge success to us. I'm like, wow, $47,000.
I never need to worry about money again. I'm set. I felt at the time. I was like, that's a lot of money.
It was. But I said, well, everybody has a cost of capital. And if I can get some of that capital up front with less risk in terms of how much product to produce, some good market research, why wouldn't I do it this way? It does take a lot of effort, but we've done 30 plus projects since then.
They've all gone really well and we are grateful for the support and its excellent market research. Okay. I firmly believe that Kickstarter is sort of a validator of products. Yeah.
For sure. It definitely helps us determine how many copies of a game to print. Do I want to make $1,000 or $5,000 or $10,000 or what of a game? And without that research, I wouldn't know that there have been games that I have had to cancel because the demand wasn't there.
And then there have been games that I've tripled or quadrupled the amount of the quantity of prints that I was going to produce because the project did a lot better than I thought it would. So you just never know. That's why we do the Kickstarter. So we can tell how many of the prints and what kind of demand we might have for the game.
Okay. I want to touch on this point because I've heard a lot of entrepreneurs that talk about being urgent in getting things done and getting your product out there. And there's a certain term that they use always is, you never know. What are your thoughts on using that to sort of propel you forward in your startup?
I think it just helps you by leaps and bounds, especially as you start up a company because cost of capital for an improved venture is really steep. Either you're going to get an angel investor or you're going to get a really steep loan with your own personal collateral. There's a serious cost of capital. Or if your money or your uncle's money tied up that you just hope you can pay back.
Yeah. And those kinds of funding all have pros and cons. But when you do Kickstarter, that funding comes to you upfront before you produce anything. You know exactly how many copies you've already sold and what price point.
And if you've done any kind of research on what your inventory is going to cost you, you know that you're going to be profitable at a certain print run. So it's a very easy way to do it. The bulk of ourselves comes to distributors after market after we produce the game at 40% of retail. So a fixed dollar game we sell for $20 for distributors.
Well, if I can sell a thousand of those at close to $50, I'm much better off to sell those copies at that rate. And so it's just a much better way to do it. And I get that money in advance, six to eight months in advance of what I actually produced the game. So it can help us fund the graphic design and layout and art and the factory and the shipping and all the other expenses that we're going to have to eat to be able to bring the product to market.
Okay. All right. So we're touching on some of these points here. And let's see if we can maybe create a timeline out of this of what you do to pre-production, creating the game, the artwork, the designs, getting what looks like to be like a pre-order purchase order from a manufacturer or a distributor to launching the Kickstarter to after that.
So let's even go through a storyline and something like that, possibly from one of your most memorable Kickstarter's. Okay. Well, let's go with, for example, with a, let's just take an old standard game, like let's do Dead Man's Drawers, a game we did last year, maybe late year before. Typically, what we do is we will find a game that we're interested in for whatever reason and we'll license that game from the creator of the game game venture.
I don't invent any of these games. I think I could spot a good game, but I certainly can't design one for myself. I guess it's sort of being an editor versus a writer in the book industry. And so we get the license say we got the license for this game in August of last year.
And then with the license, we would then play test that game in a difficult situation. We would test it internally and with some blind play testing to determine the validity of the game concept. And that would, actually, we probably would do that even before we signed the license. I should price that back and say we do a couple months of that, just testing.
And if we're convinced the game is going to be good, then we will license the game. And then from there, we have a full-time graphic designer. There's also kind of our project manager named Allison, and she would go out and find the artwork that we need to. Okay, we have 10 different unique pieces of artwork, plus the cover of the box, plus the field illustrations for the instruction book, et cetera.
And based on this, we're going to go out and research for various sources, what kind of artists we want. And once we have an artist contracted, and we say we pay them, I don't know, $1,500 for the art, then she would work with them to get the art. And then once she started developing the art, and we are at the same time finalizing the rule book, having an editor look at the rule book to make sure that the rules are succinct and understandable, and that there's illustrations in there that make sense. Then we're pretty close to getting a final product at that point.
Then we will take the specs and send that to one of our factories. We actually sent it to three of our factories in China. And based on what they quote us back as a price for the game, we would then establish a retail price. And then once we have this retail price on our head, then we'll start to develop the Kickstarter.
So say we licensed the game in August, by November, December, we probably got some pretty good artwork, and we've got a price from the factory. And then once we have this price, and most of the artwork, we can then use that to launch a Kickstarter, knowing the price without that. And so we launched Kickstarter, say in January or February, and we would say maybe June fulfillment. And then we run this Kickstarter for 30 days at the end of January.
At the end of February, we get the money in from Kickstarter. Then we'll put the order in with the factory and finalize the files. And then the factory will then put it in their queue. It's about a 30-day wait to get a print and another 30 days to print it.
So we're looking at late March to April. Then they have to ship it on a boat from China to us in the US at another 30 days. So you're looking at May. And then by the time we ship everything out to everybody, it's another couple weeks.
So by mid May, early June, the price has been delivered to Kickstarter backers. And then after that has happened, and maybe two or three weeks after that, we would then launch the product to our distributors and street dates for retail customers. Awesome. Okay, so what are some of the...
Yeah, it sounds like we're really doing lengthy. So you sort of are kind of like the facilitator of all this. And I want you to maybe describe a little bit, what is the licensing model in games? What does that entail?
So it's a licensing model for us, and I think it varies from company to company. But overall, it's five to seven percent of our gross sales of the game. So if the game's in retail for 50 and we sell most of them at 20 to our distributors, they would get 5% of that $20 or about a dollar a copy. Okay.
And then the license agreement is about a four or five-page agreement saying, here's things we can't do to include digital rights, what's our territory, what are the length of the term of the agreement and spelling out those kind of things. But for us, it's usually we do like 5% for the first 25,000 copies, then it goes to six and seven percent over the... As we have more sales, they get a bigger percentage. It's really easy to have the reprint button once you've made the game.
And we want them to also share that bad wealth as we hopefully get the cost of the game down and some more copies. Interesting, interesting. I love that. And I think that's a model that some people sort of ignore, that there is other opportunities where you can sort of be this facilitator of things.
You don't have to be the inventor of all of it and do all this stuff. Just do one thing well. Yeah. If you're inventing a game, you need to decide if you want to become your own game company to deal with purchase orders and sales and invoicing and accounting.
Or if you want to be an inventor and just invent more games or even invent expansions to the thing you've already invented. And most inventors are left brain great at inventing. And I'm not. I'm the first to tell you I'm more of the accounting guy.
I'm the sales guy. And maybe it doesn't bring any of the inventive creative process to the table. We bring the distribution network and the manufacturing know-how and the marketing experience and Kickstarter know-how. So that's kind of the...
That's where the delineation goes. And again, the designer doesn't really share it. They share in some of the reward and it's a low percentage. But they don't share any of the risk either.
There's not really much risk there other than maybe the opportunity cost to get a license to someone else or done something on their own. Yeah. That's really, really interesting. And I'm intrigued by this model and I wish more people would understand that they could investigate these kind of pathways.
Let's talk a little bit about what are some of the key ingredients that go into a successful Kickstarter campaign? Okay. I think the biggest thing that people tend to message Kickstarter is there's got to be a carrot. A reason why you want to pledge now is either got to be limited edition or limited in offering or a significant discount off of the retail price or a real feeling of grassroots.
I want to help this guy out. I think we've done enough that we're going to pass that last one. People don't really want to help us out much on the face of it. But we try really hard to get those other things where we say we'll do a special limited edition box for all the Kickstarter backers.
We'll include this extra promotional item that maybe isn't available for retail or we'll give you a bigger discount. We try to incentivize those people that are looking at the product trying to decide if they want to back or not. Because most people when they look at a product, I might back that, I'll come back later to decide. You need to get them a reason.
There's got to be, there's a pitch there. That's where the Kickstarter page is a pitch. And I try to capture that in our Kickstarter. You've got to have a reason to back.
So that's really what the whole page does. But another key success factors have to be you've got to have a decent looking prototype. You need some artwork. And the video has to capture the imagination.
Most of our videos are not, they're not the same as a demonstration of what the product is or does. It's not the rehash of the rules how to play. It's trying to create a vibe to the experience that you'll get when you play it. A good example of that is the coolest cooler.
If you watch the video, we can talk about how they've fulfilled all day long. But if you watch the video and what's great about that one is he did two different projects. This first one failed and the second one did. The bones of the project were very similar.
The biggest thing he changed were a little bit of the presentation. We've answered the product look. But by and large, the video was a significant step up in terms of the pitch that it was to people. It looked intuitive.
It felt happy. There was a lot of open air shots and clever videography there. It was just a much better look. I think that's something we could all emulate.
And remember, there's a big product that we should probably figure out. Try to understand why our competition is able to do that and we have it. Yeah. Well, I feel like that storytelling matters so much for the product in the end.
Especially for board games where what we're doing isn't selling. I'm not selling a game. I'm selling an experience with your family or friends. That's what I'm trying to convey.
Because people don't buy a game because they like the rules of risk. They like to beat their brother down. Or they like the feeling of the Jenga Tower collapsing. The gotcha moment.
Or whatever it is. There's something about each game that makes it successful. And it's not the gameplay. It's the experience that they take away from the game.
Yeah. This reminds me of something I've said in previous interviews and I'll say it again. Whenever I think of GoPro, I think of outdoors, adventure, having a good time being with friends. I don't think of dinky HD camera made in China.
Exactly. That's what it is. That's what they're selling. But I don't think of it like that.
They're selling adventure. Mm-hmm. Yeah. It's exactly it.
The other thing you're selling is confidence that you can deliver. It started out kind of campy saying, hey, put your video, put yourself in it. Give a plea as to why you need the money. But I think it's evolved past that now.
I think you want to be portrayed as a little bit professional. Having some experience knowing that you can deliver because so many of these bigger projects that look much more professional have faltered. So I think they all need a little bit of that professionalism. You can launch a game today on board game and expect success without some decent-looking finished art.
If the art looks campy or handwritten or you've got it on the back of an app game, it may be great for an angel investor to just going on a gut. But for a game that you're selling to an end user, it needs to look a little more polished than that. And it's competing really with those games that are proven successes in the store already. Yeah.
You know, why is your game better than that game? And it's clearly a proven game. So it's definitely a harder market to crack up. Oh, certainly.
Certainly. I think presentation is probably nine-tenths of the game. Yeah. A few other things that we always seek to have is some independent reviews of the game and instruction about this complete and downloadable that people can check out.
I really like animated GIFs that preload. It's one thing to get someone to click on your video. But if you scroll down the page and there's a little animated GIF showing how the coolest schooler opens and how the Bluetooth speakers work that loads as you scroll down the page without you having to actively click on it, it just conveys information and it doesn't have more professional demand or so. Yeah.
I love that. So really giving the complete experience of the product on a computer. So you're not really getting to play with it, but it's giving as much of an experience as possible at that time. Yeah, exactly.
That's exactly what we try to do. All right. So we talked about your entire process that you use for creative and getting the licensing agreement, et cetera. What are possibly your most successful Kickstarter and your least successful one attributes that were associated to each of those?
So our most successful had to be the one we did. It's been almost 18 months ago now, about a year and a half ago, December of 2014. We had this game. We licensed from a company called Hobbyworld in Russia.
It's a card game. Well, it's a good support game called Viceroy. And we launched this. I was going on vacation.
I was doing all this myself completely. I make it all. I create the project. I run the updates.
I comment to the customers for the backers. And we launched this thing and I thought, oh, it'll be about $30,000 or $40,000. We'll sell a couple thousand copies. Well, the thing just kind of exploded.
And we ended up with $275,000 on the project and like $7,500 backers. Way, way bigger than that. And the amount of effort it took to keep that thing kind of alive and to add more stretchables and just the updates we had to do was really quite a bit of work. But what really came down to was that there was a lot of hype around this game.
There was a couple of key reviewers who really liked the game and spoke super highly of it. And that hype that just got out there to the public just kind of snowballed and created this following. I think our next biggest project has had like 2,500 backers. So it was almost three times the size of our next closest in terms of number of people that supported them.
So I would attribute it mostly to the hype that the game generated. And also the quality of the artwork was really top notch. It's based on a collectible card game that's out of Russia. They had licensed all the art from them.
So all the art on all the cards was gorgeous and unique. And it was really any experience in the game play is unique. So a lot of things went into why it was good. But frankly for me, if I could figure out exactly how we did it, then I would gladly do it again.
Every project system would have been just a success. That hasn't happened. So I think that was the most successful. And I think to some extent, I think that secret sauce is very dependent on the product itself.
The individual product. That's what we're trying to do. We create a lot of great games that we know will sell a long term. But we'll really wait for that hit.
Something to replace Monopoly would be great. The home run kind of thing. Exactly. We're hoping for it.
Yeah. Whatever big game and certain big game name here. Yeah. We're trying.
Okay. And as far as our least successful. And that's a tie. It's a four way tie for the ones we haven't funded.
There have been very few. But they haven't. But even though I guess I'd say that they were successful because we didn't actually invest money on those projects. And if we had, we would have lost money or would have all of the hard to make it back because they didn't have the support.
And that's what Kickstarter does is gives you free market research on that. And it's great to be able to point to someone that goes, look, we are hoping this will fund. We think it's a great idea. And everyone's like, oh, your games are so successful that every single one will fund.
Well, that's not always the case. And we thought we needed so much money and I didn't do it and we canceled it. And it didn't make the game because it didn't have the backing that we thought of it. So it's, even though it was a failure, the extent of the stages, probably 50 or 60 grand and inventory we made of sat on for several years, it was a success to us.
So. Yeah. So you mentioned this in the super successful one. There are a handful of key reviewers or comments or something like that.
Who are those of you? Yes. So in the board game industry there's several. There's a guy named Tom Bassell who runs a video channel called The Dice Tower.
He actually has a whole-time network and he's full-time doing essentially board game reviews, he goes to all the major conventions and covers the news and he's kind of has the pulse of it. A lot of people argue if he's right-dependent or how well he does. I think he has a great job. There's another guy named Radu, run through with Radu.
He's actually lives in the island of Malta of all places. He's an American with his wife there and he is a really, he somehow he reaches his audience with the way he explains and describes games and his reviews are, they seem very heartfelt and genuine and he really loves this game. This will be the, I would, I forget probably half more success or more to Radu's review. So I guess if you can get, you know, The New York Times to give you a positive rating if you're a book or something like that, then that's gonna help you a lot.
And I think that's the same way with these guys. There's a whole bunch of other ones that do a really good job too and we always reach out to them. But those are probably the two that just stand out in my mind. It's probably the, the two most obvious ones that anybody is launching a game.
It doesn't make sense to launch a game without one of these, at least two or three top guys, having reviewed it. If you haven't had them review it, then I think you're wasting your effort and you could definitely do better. And if they come back and say that it's a dumb game or it's not good, then you gotta revamp it. Yeah.
You have to, you've got to give some green to what they're saying. Yeah. Okay, this is, this is really interesting because this is one element of marketing that I think is going to be huge and continue to grow and grow, which is influencer marketing. So these guys are like YouTube celebrities or they're somehow put on a higher level or something like that?
Yeah. Yeah. I guess you call them celebrities a strong word in this industry because the industry itself is small for the US and Europe, it's a much bigger deal. But board games here are just a small drop in the bucket.
If you compare it to say, video games, it's, you know, five or three or two percent of what they do in sales. It's a small industry. But for the game, for the game, people that like to play board games, they're, I would do their household names, but they're more common than any others. So, yeah, they have, they put out videos, Tom Basel, who's the dice tower when I mentioned, he has a annual Kickstarter himself to help fund his salary and that of pay for some of his equipment and fund some of his employees.
He got a couple of employees, I think, that helped him with the podcast. But he puts out a lot of videos too. He does probably, I don't know, one a day, something like that. He does a lot.
Oh, wow. So yeah. Okay. That's, that's really interesting.
His model. So Kickstarter to pay a salary, but then he does game reviews. Does he do it for free or does he take compensation for those things like that? He doesn't for free.
He doesn't for free. He gets the games for free from, you know, we'll send a copy of everything we produce. But what he does on the Kickstarter, he doesn't even produce anything on the Kickstarter. He says, Hey, we're working at Company X, send me some promo cards for that game you just did.
And if you back this project and I'll give you so many promo cards from all these different games, and the only way to get them or one of the easiest ways to get them is to back my project and give you 20 or 50 or 100 bucks for those products. And he's on paper, those products. He just gets them donated from us. And then we're kind of a sponsor for his show.
So it's an interesting way to do it. And I think it's last, I want to say it is last Kickstarter to $100,000. So he's doing fine on it. It's an interesting model.
Yeah. But he lived as a part-time podcaster, video caster for love of the industry for years before he started doing that full-time. And he's been full-time maybe three years. It's a great story of passion to profits.
And I think his model is very integral that it's, you know, I'm not getting $50,000 from X Company to promote their product on my channel. Here's how I make my money. I'll take everything free. Yeah.
And it keeps him a little bit independent of the actual company. He's not bought and paid by anybody in the industry. If I were given a $10,000, I'd expect good reviews. And I want that.
He doesn't want to give those. I want them to be honest, because that helps me make decisions about how many to produce. Yeah. Yeah.
Interesting, interesting. I'm definitely look that guy up and look at his model because I'm just curious to know because I know most influencers are sort of like, hey, here's X product and such brand is paying me two grand to promote it. Cool. Wow.
Like something like that. I think that that model lends itself to the fact that it could be completely not integral and misleading to the end user. Sure. Yeah.
And he did used to do, but before he was full-time, I think he used to do Kickstarter introductions where he would opine us to the quality of the product. He would just give an explanation to how the game was played and say, if this sounds like an interesting game to you or you like this kind of game, then maybe you should consider backing it on Kickstarter because it was following. And he'd be paying like 500 bucks for that or something like that. It wasn't a huge amount of money, but he was using it to eat.
Yeah. You need to put food on the table, that's for sure. Yeah. All right.
So let's let's touch on maybe the main points that you learned from the failures in Kickstarter. What were the ingredients that were maybe missing, whatever it may be? Well, that's a tough question. Honestly, I say that a lot of the failures came because of my misunderstanding of what I thought the market wanted.
I thought they wanted a foosball-like table that they could play in a certain manner for $200 when they could go buy real foosball table for $100 at that cost. Something like that. It was just my misunderstanding of what I thought that my market wanted. And it also was kind of far afield from what our typical game release is.
Most of our games are small, simple to play. The kind of the mantra I like to say is that it's a game you can explain in five minutes, plan 15, and buy for 20 bucks. Those are my kind of games that I like to sell for mating. And that thing was so far off of that.
It did have an exterior element. It was easy to play and you could learn it. But $200 is a far cry from two to 20. So I think our typical customer base didn't respond very favorably to that.
Okay. So before we jump into our next subject as a whole, which is outsourcing night, this question is coming to my head because you mentioned a handful of times and I imagine listeners would want to know why are games more successful or working for successful in Europe than they are in the US. Well, that's a tough question. The stats I've heard are that in the US, we have about a third as many dollars going to board games per year as a Germany, while Germany has about a third of our population.
So dollars per dollars, the average population in Germany spent in nine times more per year on board games than the US. Some of that, I think there's two reasons for that. One, I think that Germans in general seem to be more family oriented still. Like when I go to conventions in Germany, I see whole families out and I see them dropping real money on these things.
And in the US, you see a lot of individual guys playing the gathering, you see people that are loosely affiliated together. It's definitely not the same family vibe. And so for whatever reason, there's not much money being spent that way. The other piece of it though, I think is the style of games that is known there.
If you go to any little market in Germany, a little convenience store, you'll see board games on the shelf next to the get caps in the bubblegum. There's a little board games there. It's just a more it's more you have to pick with us in the distribution because I think the sales are there. But in the US, the types of games they play in the US, the ones that everyone knows tend to be risk monopoly strategic, which are by and large games that you have a player elimination on, somebody's gonna sit out for an hour or two or three hour brainbusters that just take a long time.
The style when people here board games, they think of these games because it's the ones that you're playing or very infantile games where it's rolling move and it's, you know, sorry, shoots and ladders, those kind of things. Whereas the games that we are producing and that they're producing in Europe are more like ticket to ride or seller's at hand or Euro style games. We even call them as kind of the classification of them in the industry, meaning that they're typically 30 to 45 minutes, maybe an hour. You may all play and maybe one person wins, but everyone feels like they've done well.
There's no player elimination generally. There's a more of a cerebral experience to it. Maybe that reflects something about Europe too, I don't know. But there's definitely difference in the perception of what a board game is here versus there.
I think that speaks volumes to knowing your audience. For sure. Yeah, your customers best as you possibly can. Yeah.
And a lot of people go and produce a game or launch a game like Xtrogon. It's very clear that they have no understanding of what the current market industry is. It's very obvious talking them for five minutes if they are aware of what kind of competition they have. If you don't know your competition, how can you compete against them?
There's only people who've entered with a product not knowing that. Oh, there's another product like this that came out five years ago. This product was done 20 years ago and it's way past two. No one wants to see this anymore.
Yeah, yeah. I think understanding your market as much as you possibly can. I'll be a don't get caught up in it and miss the urgency card. But knowing your audience and knowing what's going on is key to your strategy.
For sure. Yeah. Definitely just having that figured out holes. All right.
Let's go on and talk a little bit about outsourcing because you mentioned that story about outsourcing to an Indian lady and maybe we can touch a little bit more on that, but I know that you actually moved to another country, took your entire family there and learned pretty much two languages at the same time. Let's figure out a point to start in this. Maybe your first experience with outsourcing and figuring out these manufacturers. I guess it comes out when we started producing board games, we started looking at quotes from board game manufacturers and trying to figure out how to do this on the seat.
There's only two ways to do this. You can either go to a Chinese factory. Well, I should say three ways. You can go to a US factory and pay a lot more.
You can go to a Chinese factory and pay a lot less than either either doing a leap of faith that you're going to get anything at all or the quality or understanding what you're producing. Maybe a little sketchy. That's kind of the perception. Or you go to a third party company that's a middleman that will basically take the factory that maybe the same factory you're getting a quote from and mark out the product.
But then they'll provide you that English language, the customer support, their quality assurance and those guys, you know they earn their money. There's reason they exist. But those are kind of the three rots you can go. Yeah.
Well, for us when I was looking at these quotes, the US option wasn't an option because we would have had a simpler price. There's a reason that the iPhone isn't a $6,000 item made in California. It's a, you know, $600 item made in China because labor rates and production costs are what they are. And the same thing holds true for board games.
Most of them are produced in China, although there are some that are produced in other places too. So for us, I looked at the first option with the US that that's not going to work. The price is way too high. I can't retail this for a price, my customers will pay because everybody else is competing with this producing in China.
Or I could produce it with a third party and I'm looking at about a 25% markup. And I got some quotes for those and that's about what they were just 25%. Or I could try to figure out how to do this in China. And I was like, most Americans, I never spoke in Chinese though.
I think about China. I was scared of stuff. And I, you know, I actually wired Chinese factory the first time and thought, wow, this is scary. What if I don't get anything back?
This guy could be fake, right? You don't know what you're going. So I will say, I'll see if you guys are definitely looking for manufacturing in China. Alibaba at the website, Alibaba.com is great because it's factories, they've already invented it.
They pay a significant fee to be on there. And their whole bread and butter is continuing to do business on Alibaba with international clients. And so anybody on there really, they have paid a significant fee to be there. And I've never seen one that didn't fulfill to a large extent.
Now there's going to be some problems with communication and quality and things, of course, as you could with any transaction. But definitely that was a good spot to start. And I went through several different companies there, a very big quality, a very price. And while I was getting better deals than through a third party, I still didn't feel like I was doing as well as I could have.
And I started looking at things kind of like what you mentioned in an earlier podcast. I listened to the one where you talked about the idea of quartitis burning his boats when he was attacking, when he was colonizing the Americas and how if you burn your bridges, you're going to fight more determinedly. Well, I decided that if we were going to be successful in this industry, that toxic of soul was a key component. And so I sold our house here in the US and my wife and three kids and I moved to China in 2011.
And so we picked up and moved and went over there with the express purpose of me learning Mandarin and dealing with factories and figuring out distribution and manufacturing and shipping, all that good stuff over there. And not to use another third party company to do that for me. So and we did that and it's been a great experience. We have gone through, I'd say eight or 10 different factories over the years and every duration, I think we do a little better.
I feel like what we have now is really good and I really love what they do for us. And the prices are incredible. Quality is really, really good. So I'm super happy and it's like an hour and a half for my house.
I can drive over there whenever I want from my house in China, because the factory talked to the owner and and you know, how to go for better pricing and taste lower and higher quality. So that's why I'm always pushing for it. Okay, I want more of your business. I'll give you more if you give me a super price.
Cut me 3% on this. All right, come on. I want to hear the story of like when you first got there and finding these manufacturers like, did you open a phone book? Did you just Google it?
Are they just all around? What is the setting there? I started with Alibaba here in the US. I started looking at Alibaba looking on this website, Alibaba.com for factories.
And then like out there, I didn't speak any Chinese at all I spoke So for the first year, I wasn't even looking for factories as much as I was trying to immerse myself in the language studying it, talking to everyone I can. I have a friend of mine that said the only way to get fluent in any language is to make a million mistakes in that language and get started now. So I started making lots of areas of Mandarin and I thought I picked it up in a couple of years because I did that with a language previously on my mission to Brazil. I picked up Portuguese pretty quickly.
But it was a much harder process. Even now anybody who claims to be fluent in Chinese, if you want raised speaking Chinese, I'm calling you out Mandarin. There's not that many. I've never met one that speaks fluent.
Yeah, unless you were raised there. So I'd say I'm probably like 60% fluent or maybe less. It's good enough to go to the factory and talk to them and have a conversation and certainly get enough to impress other Americans, but it's not the same as being fluent. Yeah.