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This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb.
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Your home might be worth more than you think. Find out how much at Airbnb.ca. You know, not only do you have to build an incredibly fun game, which is really hard, by the way. There's a lot of really difficult problems to solve it, where it has to work, and it has to scale, and it has to update, and the balance of the game from a math perspective needs to be incredibly precise.
You need the content to be compelling, where people fall in love with the characters, and the way that somebody would for Batman or any of their favorite superheroes. And so there's so many things that you have to get right. Again, it's like Granite's sort of joke that knowing what we know now, we wouldn't have invested in ourselves back then. From NPR, it's how I built this, a show about innovators, entrepreneurs, and idealists, and stories behind the movements.
There you go. I'm Guy Rosin on the show today, how two avid gamers fended off for reluctant investors, naysaying experts, and their own self-doubt to build Riot games, in one of the most successful video games ever created, League of Legends. In 2006, a video game company called Bethesda Software X tried out an experiment. At the time, Bethesda had a popular video game called Oblivion.
In that year, it decided to offer its users an extra feature, horse armor, not real armor, virtual armor, that you could use in the game, and Bethesda offered it up for $2.50. It was an incredibly controversial decision, and most players reacted badly, they didn't like it. But enough gamers decided to try it out and bought the armor, and it proved a theory that company had, that you could create an entire revenue stream through what became known as microtransactions. Still, almost no game developers chose to pursue this business model.
But that same year, two friends, Brandon Beck and Mark Merrill, pitched an idea to investors. They wanted to build free video games, but offer up things like in-game currency, and weapons, and characters, and skill points, for a small price. Brandon and Mark believed that if the game was good enough, players would happily spend a few dollars each week to buy virtual products that might enhance the gaming experience. Not surprisingly, most investors turned them down, and thought it was a crazy idea.
The question Mark and Brandon kept getting was, who's going to spend money on virtual things, on things that have no value in the real world, and these were fair questions. And it's why it was so hard for Mark and Brandon to get Riot games up and running. But the game they eventually built, League of Legends, became one of the most popular video games of all time, and a game that helped to pioneer the business model, now known as the free-to-play model. This year, the global video game industry will hit more than $160 billion in revenue.
That makes it four times bigger than the global film and TV industry, and three times bigger than all the music sold around the world in 2020. According to Forbes, video games will earn more than $300 billion by 2025, and a growing percentage of that revenue comes from gamers who spend small amounts of money buying skins or costumes for their virtual characters, or buying access to locked rooms and imaginary worlds. Huge gaming tournaments attract millions of viewers, with players earning millions of dollars a year. It's a massive business, and a big part of it has to do with the model that Brandon and Mark's company Riot Games helped pioneer.
Mark and Brandon both grew up in Southern California. They met as teenagers at a summer leadership camp shortly before college. Here's how Mark remembers it. I remember meeting Brandon, and I'm like, oh, you're from Los Angeles, awesome.
Oh my god, like video games, what's up? And so we just kind of instantly hit it off. And then as I got to know him, I also just really thought he had an infectious personality. I did a really interesting way of looking at the world.
It was just sort of complementary from the values perspective to mine. And he had just this incredibly entrepreneurial and kind of business-oriented mind that kind of inspired me. I'm like, wow, I've never encountered a person that's also younger than me that felt so vibrant and dynamic in this interesting way. And so because of the shared level of games, we could hop on a modem to play StarCraft, Warcraft II, or Diablo, or Duke Nukem 3E.
I mean, I could go on another title, so we all knew and connected it up. So you meet this leadership program, and then you both go back to LA and you stay in touch, or did you kind of lose touch? Yeah, I mean, we stayed in touch and we'd call each other every once in a while. We'd play some games.
I remember one of those phone calls. Mark told me I really had to see the Matrix. So what is that? He's like, you'll see.
Ended up blowing my mind and being my favorite movie of all time. And Mark, you headed to USC to start college. And Brandon, did that. I know eventually you would also go to USC.
Was the fact that Mark was there? Did that influence your decision to go there? Was it just to happen to be the place where he decided to go? It was a total coincidence, but it certainly made me more excited about it.
I even visited Mark when he was at school and hung out with him in the dorms where he had a bunch of gaming buddies and they'd play games together. And I wasn't a very good student. I had ADHD and a variety of learning differences and was in a pretty tough competitive school environment. And I was not the kind of student I was supposed to be.
But in the meantime, I'm living in this world online. I want to spend every minute. In this spare time, I would build scripts that would play my character for me while I had to be at school. So I would continue to make progress.
Well, that's pretty impressive. But you did, despite your struggles, you did end up getting into USC. And Mark is already there. And presumably you guys start to hang out.
And I guess you already have a friend at college and you get there. Yeah, Mark would take me under his wing a bit and introduce me to his friends and show me around. So yeah, it was really great showing up and knowing Mark. Mark, when you guys were in college, did you think, you know what?
Was the business with this guy one day? Or was it just like fun conversations you would have about, hey, maybe one day we should do this or that? Yeah, no, we did. But it was sort of accidental in some ways.
You know, we're Brandon and I because of our shared passion in games and then also our mutual interest in business. We would strategize or brainstorm or think about opportunities. And this is one of the reasons I was attracted to Brandon is because he was sort of the most entrepreneurial and sort of business-minded friend that I had. Like, Brandon ran a music station at a scene.
He'd be thinking about events or stuff like that. And so we were playing games and we both loved online games. And so we loved to watch replays of really competitive players playing online and should help inform how we could get better. And that started us thinking about, well, maybe we could help create or run some gaming tournaments.
Maybe we could do some stuff like that just around campus. And actually, maybe there's this opportunity, maybe we should create a league that we were going to call the UGL, the ultimate gaming league. And so Brandon and I went down to the basement of the league library like one night and started working on this rough business plan. Neither of us really knew how to build a business plan.
We're trying to figure out what that looked like and what the bottom paper and all this. And we kind of never really went anywhere with that business. But nonetheless, I just remember being really energized about the possibilities of the future. And again, that's just something that I think Brandon really helped awaken in me.
Was this ability to look at not the way the world is currently, but the way that it could be and how we could potentially go help change it. So I guess after college, both of you kind of went into like quote unquote safe jobs, right? Like Mark, you went to work for a bank and Brandon, you went to work in consulting initially. But you guys were roommates, right?
You became roommates after college and lived together in an apartment. Yeah, that's right. So this is like 2002, 2003-ish. Were you guys constantly playing games in your apartment together?
Yeah, that's when I was done with thinking and I went to work for a company called Advanced Reconcations and Brandon worked at Bain and company as a strategy consultant. And our lives at the time really consisted of going to work or coming home and playing games. We had back-to-back gaming rigs. And any time we had free time, that's all we wanted to do.
And it was kind of in that context at which we started to explore different ideas about where the game industry was going. And Brandon, I read that. At some point, you'd cold-called a game company, a game company that got west somewhere because you heard they were developing a cool game that you wanted to work on. And I guess the CEO actually called you back and said, hey, we can use your help.
Yeah, long story short, that CEO gave me a call when I was at Bain in sort of my second year. And he said, I think we can get to sort of a next phase of growth for this company. Are you interested in coming on board and helping me out? And I shared it with Mark who was involved and we both kind of went out there and met with him.
And it just rekindled the, hey, we should be thinking about games. We love games. I think that call really sort of got us working together thinking about possibilities and games. And to me, this was an example of Brandon Magic where he hears about this company.
Cold calls the CEO. The CEO agrees. He's like, yeah, come out. And so Brandon flies out to Arizona, meets the CEO and CEO's like, oh, my God, you're a kid.
You're like, what the hell? But then Brandon convinces him to be like, hey, like, how can I be helpful? Like, how can I be helpful? Like, no downside to like, can I get your materials when it comes back, shares with me.
And then we start brainstorming on just like other ways to plug in around value and sort of just finding ways to get to that advice or things like that or connect them with anybody we know that may be interested in things like that. So, all right. So you guys are sort of consulting with this company. You mean time you're still doing your own jobs and just briefly like, what was the game that they were trying to build?
It was kind of like a next generation MMO, which is massively multiplayer, online game, you know, just a really ambitious vision for one that was like super exciting if they could pull it off. So how did the game do? Ultimately, they ended up failing. And, you know, it's sort of a good lesson I think for us where we learned sort of got to see up close that you can have the right idea and the right thing at the right time, but if you can't execute, well, that doesn't matter.
It crashed, right? It didn't succeed. Yeah. And part of the reason is development is incredibly difficult.
And especially building in MMO at the time because technology, like the ability to build an online game is kind of like building a rocket ship where you have to build a game engine and it's a massive tool pipeline to put assets into the game. You know, you have to build a whole set of server technologies that can scale, support thousands of simultaneous players all running around the world. So just the technology effort is incredibly difficult. And then from a content and gaming perspective, you have to build a world.
You need it to make it feel incredibly good to walk around the world. You have to have a story arc and character classes and races and cities with political history that it all makes sense. And then the game has to be fun. So you have to be able to understand and build systems where it feels good to move.
And the sound effects and visual effects are great. And the combat mechanics, which is the math behind the game all makes sense. And you want to play it for a long time. It's an incredibly complex thing.
And so the company needed to continually raise money and they could never quite get the game design or pitch or like the problems that they were trying to solve. It ended up just not resonating when they ended up shipping the game. It's kind of a watered down version of the original idea. And so the company ended up going out of business.
So just to clarify, this is like 2005, right? At that time, if I understand it correctly, games, right? Video games were essentially produced like as a form of software and then shipped out and a user would pay $60 or $100 for that game. And that was it, basically.
Is that more or less, right? Yes. So the typical game model at the time was games would essentially ship. The big ones typically around, you know, the Black Friday sort of Thanksgiving leading up to Christmas holiday season.
And you spent about $60 and you got a game. Not a CD. Exactly. You bought a box with a CD or DVD or cartridge.
And then I guess around this time, too, you started to get into this game called Defense of the Ancients. I'm going to be just straight up honest with everybody listening to this right now. I am like, this is a new, this is like new territory for me. So I know a lot of people listening are like major gamers and super into this.
And this is going to be a little hard for you to hear because I'm like sort of grinding through this with my really bad, basic understanding of how this works. So bear with me, everybody. But you started to play, like essentially around this time, fans of games like Warcraft were creating their own modifications of those games and making it available to fans of the game to play. Is that basically correct?
Yeah. So Warcraft 3, which was a commercial product from Blizzard Entertainment shipped with what's called a map editor, which is an ability for players of the game to utilize the in-game assets, meaning like the art and design abilities, things like that, to change the rules. And then you could upload these maps that'll have these custom rules sets to anybody else in the world that could then go play them. Wow.
But everybody that was playing had to purchase a commercial copy of Warcraft 3 in order to play. And so this is one of the reasons it's a good business model for Blizzard. And so Brandon, just to get a sense of how revolutionary this was, these mods, like in the context of the gaming world in 2004, 2005, when user modified games started to come out, was it like a total game changer? Yeah.
I mean, it was. It created this possibility space for people with relatively limited knowledge of, you know, all the various disciplines required to build a game could really, you know, make something powerful and special out of a lot of existing assets of the existing game. And so there was a ton of experimentation and, yeah, there was magic in there. And so it enabled an explosion of game concepts and design because it made it much more widely accessible for people to come up with their own ideas and then ship them to a marketplace for free and then see what would stick and what people wanted to play.
Meantime to get these games, right? You had to still spend money and go buy the physical disc, put on your computer, and then the expansion packs and all this stuff. Like, that was something you had to do. But from what I, from what I understand, like, you guys started to see the potential for something completely different through these modified games.
Is that right? Or was that not quite happening? Just, just yet? So, so, yes.
So in particular around Dota, where to fence the entrance? And so this became, this is a game. There were multiple iterations of Dota. There was sort of the original Dota.
And then there was Dota All-Stars. And Dota All-Stars in particular was a really, really fun game that started to go virally because it was, it took the heroes, these characters within Warcraft 3 and just made it incredibly fun to team up with a team of five players and fight against an enemy team of five players and all these characters at different abilities. And there was this community site called DotaAllsters.com. And as we got deeper into this community, we're like, oh my god, this, this type of thing where the developer is connecting directly with the audience and growing it in concert with them over time, this is what the future of the industry is going to look like.
And then we thought, well, maybe, maybe we could make a Dota type game, it actually proves this whole game does a service thing. Maybe we should go explore games as a service. And it was that questioning which then led us to start working on the business plan, which then had us reach out to the creators of Dota, starting like, hey, why don't we go explore building a company to commercialize this game and demonstrate that we could make it so much more than if it just remains a mod as part of this Warcraft 3 ecosystem. And so it was really that which led to the genesis of Riot.
So at this point, I mean, clearly the wheels are turning your head, right? You're now talking about building a company. And are you guys thinking of quitting your job? So what steps did you start to take?
You know, every free minute that we had together, we would be playing these games. And as we played them, we would have thoughts and ideas, and eventually we'd start to explore these ideas and put them down on paper and start to imagine, you know, what if it was essentially like the creation of a business plan, almost like a presentation that we would ultimately refine and share with investors to see, A, what do other, you know, making games as expensive, what are investors going to think? Is this crazy or not? Would they back a couple of young 20-somethings?
And B, we wanted to simultaneously reach out to experienced game developers and see what they thought. So it was this iterative process of, you know, in terms of like quitting our jobs, we were going to, at least me personally, like I didn't want to quit my job and I didn't want to quit my job until I was really confident that all those other stakeholders, whether it was investors or potential talent, would want to join us would validate that we weren't insane. Yeah. So you were a bane, right?
You were a consultant. Yeah. And so did you, the two of you start working on the business plan, like on at nights and on weekends and for how long? When we get together on nights and weekends, we spent a lot of time, I think, at Mark's office over the weekend where we could just be, like, undistracted, including, like, not distracted by our own gaming rigs, because it was so easy for us to just fall into playing a game.
And we'd spend the whole day there just getting on the whiteboard, thinking about stuff, iterating, you know, building this presentation to sort of simultaneously convince ourselves and then ultimately, you know, convince investors that, like, we would have a serious plan. Like, we'd really be able to execute this. It wasn't crazy and we could make a game. And it was interesting because I started dating my girlfriend at the time, who's my now wife, and then my friends or family to be like, well, I'm going to go over this guy's house and work on a business plan all day.
It became this thing where people were kind of like, oh, interesting. And what's your company working on? I'm like, oh, a video game company. People would be like, huh.
Like, I just remember how people just felt abnormal. And so it was fascinating to just experience the surprise. And I don't know if it was because of me or because of not many other people who wanted to go dedicate so much time to something like that, but I just remember being really shocked by that kind of reaction. So, standing correctly, like, initially, your idea was to be like, almost like a studio, like, right, not to kind of develop games and then to work with bigger companies that would then distribute your games.
So, was that the initial kind of vision for what you wanted to do? Yes. Yeah, that's exactly right. We felt like biting off developing games was a big enough bite to chew that we wanted to try to be as narrowly focused as we possibly could.
So, we were going to partner with other companies to publish the game and do everything else that was required. We were going to leverage every existing technology that we could get access to off the shelf to not have to build things that took us away from developing the core moment-to-moment gameplay experience, which is what we had a really clear vision for, and we're really excited but also totally unprepared to make. Now, neither of you guys are engineers, right? I mean, so when you were sort of coming up with a plan, the business plan, the iterating and using the whiteboard and kind of going back and forth, I'm assuming both of you are like, we need to find engineers to help us build this thing.
That is right. Yeah. Brandon and I were 24 and 25 at the time with no professional software development experience. And so, you know, we, part of the diligence process in terms of building the business plan was really focused on answering three questions.
And it was, you know, one, you know, if we build this game and this experience, we think it would be great. What work would people actually want to play this? You know, two, could we attract capital necessary to fund the development to launch this game? And then three, sort of on a related note, is could we attract developers and the right type of talent to be able to work together with us to build this thing?
And when all signs kind of pointed to yes, you know, we ended up jumping ship from our respective careers in the office in September of 2006. But, you know, again, given the lack of experience, we really underestimated the scope and complexity, not only the ability in the game itself, but then subsequently, when we were talking to publishers about financing the game, we quickly realized that that wasn't going to work because part of the experience that we were thinking about delivering was going to be premised upon having the game be free and needing to go direct a consumer and not having single player potentially exploring alternative business models, like digital goods and things like that. And once we started talking to publishers, you know, whose entire incumbency and massive multi-dollar businesses were built around selling shiny disks at retail, they told us that this was a horrible idea that it would never work, which of course shook our confidence. And we talked to a lot of talented developers, too.
A lot of people were busy, were no names, you know, we didn't have a lot of money, so people didn't want to come join us either. You know, so we had all these different challenges to try to figure out how to move forward. And the scope quickly expanded, and it was hugely intimidating. So where did you guys go to get just the initial money to even just have enough money to turn on the lights in the office?
So when we put together the business plan, it essentially was, you know, like a 15-slide deck, and then we ended up having, like, almost 200 slides of backup, you know, in this really detailed appendix. And we would essentially just tap the network and ask people, like, you know, an example that my then-girlfriend's father, who's a dentist, you know, he was friends because one of his patients was a guy in great-dollar hide, who was the former CEO of Baja Fresh. And so he's like, hey, you guys should go talk to Greg, he's a great businessman. And so, Greg and I grew over to Greg's house in Malibu, and we can give him a pitch and run into the deck, and he's got some good thoughts.
And he brings his 17-year-old son over, and he's like, hey, have you heard about this whole game? What do you think about this whole game? What do you think about the game to the service? And he's like, yeah, that's really cool.
You know, and so then Greg would be like, cool. Yeah, to get other people that would come in, yeah, I'll invest, right? And so then he'd actually introduce us to the people. I mean, that's really how we ended up putting together an angel round of a lot of angels.
And so it ended up being like 25 to 30 individual investors. It's just, you know, you start with friends and family, former bosses or colleagues, and then, you know, they would know somebody in the next thing, you know, you're doing this like, we called it like a living room roadshow. And you guys, I think you raised about a million and a half dollars through this friends or family round. Is that right?
Yep, that's right. And with a million and a half dollars, you can't obviously create a game, right? Or can you? Is that enough?
Or was, like, did you guys think you could actually make something with that money? So I think one of the interesting things looking back is we believe that we could, we had created this really detailed model with all the assumptions from all the conversations and research we did that basically had us convinced that we could build and complete this game for two points. I think it was $2.8 million. So we thought we were halfway there with a little bit of buffer.
And we were entirely wrong. I mean, I think all said and done, it was closer to $20 million. And it highlights how, you know, honestly, our own naivete was in many ways an asset to us. We were so unprepared to do what we were trying to do, and we were so unclear about what we were really up against that we didn't talk ourselves completely out of it.
When we come back, just a moment, how Brendan and Mark built an amazing design team, then lost their amazing design team, and why most investors were not the slightest bit interested in their free-to-play business model. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This from NPR.
I'm Guy Raz. So it's the mid-2000s, and Brendan and Mark have set up an office in an old converted machine shop near the 405 freeway in Santa Monica, and they decide to call their brand new company Riot Games. We liked Riot because it had sort of this double meaning of kind of the fist in the air, you know, on behalf of players and gamers, and then, you know, at the same time, this lightheartedness, double entendre for, you know, it's a riot. It doesn't take itself too seriously, and the cool thing about the name was when we first started going to conferences and meeting people, you know, they say where you're from, you know, we say Riot Games, and be like, oh, yeah, I've heard of you guys.
And of course, they had it, but for some reason, there was like something about it that was familiar to people. Alright, you guys, your first big coup was you guys hired this guy named Steve Feek to be one of the people in your design team, and he was, I guess he was like one of the original designers of Dota All-Stars, and I guess he was kind of a big deal in the gaming community. So what was your pitch to him, and was it like, hey, come work for us, and we're going to build this big thing, and he was like sure. Well, so yeah, so Steve Feek, you know, his online handle was Ginsu, and it was very hard to actually track down the real Ginsu online, because there were a variety of people who went under the Ginsu handle, and so, you know, ended up talking to a guy in Brazil, and he was trying to pretend he was Steve, and things like that.
But ultimately, it took us many months to find Steve Feek. We brought him on to the company, I think, in either December 2006 or January 2007. But he was working at Best Buy in Wisconsin and was in college studying computer science, and he was just this incredibly passionate, smart, thoughtful game designer, but with really, you know, sort of self-taught. And so you reached out to Steve, and you were like, hey, come move to LA, we're going to start this thing, and he's like, I'm working at Best Buy, why not?
Pretty much, yeah, and we ended up talking to his parents also, because they were also like, is this real? And the whole thing? And yeah, we flew Steve out, and, you know, we ended up having sort of these young, inexperienced, very passionate people over interns that went out to hire on Craigslist, but that really understood the content and the vision we were trying to create. When we first opened up the office, we had essentially the four of us.
And over the next several months, we probably grew to about 12, and maybe three of them were interns, with essentially no experience. And what was the initial goal? Like when people joined up, you said, here is our plan that we need to focus on now. I guess it was initially a game called Onslaught that you were working on.
Yeah, we really wanted to essentially get gameplay up and running as soon as possible. So we could start iterating on how do we make the game fun, how do we go about the tools pipeline. And Brandon had to learn all these steps, too, because again, this was our first time developing a game. So we had to, we were going to conferences, we were reading books, we were trying to consume everything we possibly could about learning how to develop a game.
And from, like, if I met you at that time in 2006, and I was like, okay, tell me about this game. And I had no, I knew nothing about video games, which I'm sure a lot of your investors knew nothing about them. And they said, tell me about Onslaught. What's the story?
How would you describe Onslaught to them? So this was, this was always incredibly hard to explain to people because there's layers of it. In a nutshell, you're going to jump in a game, there's going to be five players on your team against five players on another team. Each of you is going to be, you know, championing a superhero of sorts.
And so we'd maybe relate it to Marvel or something. You know, you'll pick a Spider-Man type of hero and you'll have maybe Wolverine on your team and a set of heroes with complementary abilities against another team with a bunch of superheroes with complementary abilities. And you'll essentially, again, this is where you get stuff to explain, but you'll meet on the field of battle and try to destroy the other teams before they destroy yours. There's a heck of a lot more nuance to it in the moment-to-moment experience, but yeah, that's how we would attempt to explain it.
And it was always a challenge, and it still is to this day. Well, what's interesting is we tended to not focus much on the actual details of the game, but much more on the business opportunity and sort of the transition that we saw where the game industry would evolve from a sort of package goods model to a direct consumer model. And that onslaught was going to be the proof point to this broader company thesis around being able to develop a direct-to-player relationship and grow a community and evolve, you know, initially this game onslaught, but then such were the other games, you know, with them, right? And ironically, it's actually a lot of content details that Brandon and I were most focused on and interested in, and that I think especially over time really became the differentiator of the company.
So just to be clear, I mean, you were essentially saying to investors, what we're going to do is different because we're going to offer this game for free. We're going to put it onto the world for free directly to consumers, to gamers. And we're going to make money off of it because they'll be able to make payments to buy things in the game. Was that essentially how you were explaining it to investors?
Yes, and that we believe this would work for a variety of reasons. You know, so one, the free-to-play business model was already having success in Korea in particular, and then starting to have some success in China. And then the type of content or games that could benefit the most from this type of model, you know, we thought we're going to be competitive multiplayer games. And so in onslaught, we sort of premise upon being this highly engaging competitive player game where the depth of engagement was not from adding lots and lots of content, but more from how the game would be dynamic because you're always playing against other players.
But when you started to show this to potential publishers, how did they respond? Were they like, yeah, I think we can work with you? It was sort of mixed. So, you know, we would very enthusiastically show a video of our demo.
Sort of flew around the map and showed some characters and showed them fighting and things like this and had this fast music track playing. And so we tried to hype it up. And part of what we were saying is, you know, there are other key messages, like we did all this in four months and we had proprietary technology, you know, talking about the broad opportunity. And so a bunch of publishers were also, you know, just really not interested in particular because of the business model, how we didn't want to have single-player, because, you know, every game at the time, publishers would tell us most people don't play the online component of games at all.
They should have the only play single-player. And the business model was really, you get the vast majority of revenue in the first month when the game launches. So why, how could you possibly make a game free and expect to make money on overtime? And just to clarify, single-player is you go out and you buy the disc, put in your computer, and then you play it by yourself on your computer.
That was the model that the publishers thought was the most lucrative. Well, basically, the ability to play the game without needing others. And publishers were just like, well, hey, you guys are leaving a ton of money on the table because the vast majority of the audience isn't going to want to play a multiplayer game. And all this feedback, though, also definitely caused us to reflect and reconsider.
And we're like, wow, maybe we're wrong. These guys are experts who are doing this all the time. So, you know, we would, you know, our confidence was shaken. And so then we'd have to go back to the Valley.
But then we'd think about it again from a player perspective. And we're like, no, but we think this is what makes sense to us. And so it was always a confusing time because we were just intimidated to a certain extent by our lack of experience. And I guess in that first year, you had the lead developer for write games, somebody with a lot of experience, but had a really clear idea of what they wanted to do, which was, it doesn't sound like what you guys wanted to do.
And eventually you just like kind of part of ways with this developer. What happened? What? Why?
I mean, why was there so much tension? So the tension really was around a lack of shared vision. So we really believed in the ability to build sort of this online experience. It would grow and evolve with players.
And I think given this individual's tenure in the industry, like his entire frame of reference was built around a very different approach and different model. But because Brandon and I had raised money to go do a particular thing, we were 100% locked in on finding a way to go do what we need to do. And once we sort of ultimately had this kind of Jesus moment, we're essentially confided that we had no interest in building the thing we wanted to build. We then had to, in a part ways, which then meant Brandon and I were alone essentially to go figure out, gosh, how do we actually do all this?
I read that this lead developer had plans to, you thought he had plans to kind of take over the company secretly, and was also pitching his own version of this game to other publishers. When you discovered that, what did you think? What did you say? So that was a really contentious moment in the office where it turned out that we heard the individuals having meetings with Sony and Microsoft to try to build games for the PlayStation network or the burgeoning Xbox marketplace.
And again, because the company raised money from investors, we had an obligation to go do what we sold them that we were going to go do. And so it became a situation where it was untenable and we had to move in a different direction. So you part ways, but that, it sounds like that those first two years or a year and a half were just full of these moments where, you know, like, just almost dysfunction. Maybe I'm mischaracterizing it, but it sounds like it was dysfunctional.
Like, I think all of your entire core team members had like left by, you know, within the first 18 months, because it was just, I guess, a different vision. But it must have been kind of scary for the two of you to all of a sudden lose all these people that you worked really hard to recruit that you needed to develop the game, right? I mean, were you? Very much so.
In most other businesses, that would have been the end of the company. 2008, you would have shut down. Yeah, I mean, I would characterize this function as being that we were being bullied essentially because of our own insecurity around our own lack of experience by people who essentially wanted to do something else. And we're telling us we're the experts, and this is how we need to go do it and trust us.
And, you know, but it always just felt wrong and it felt off. And once I think we started to really realize that that was the case, we then realized that we were absolutely going to fail unless we changed the dynamic in the office. And every key inflection point for the organization really was around when we managed to bring in as an experienced quality developer who was culturally aligned who believed in the vision. I guess in sort of developing onslaught, right?
And you hit this roadblock with publishers who kept saying, you know, your concept, your model here is not going to work. This freemium model is multi-player only and direct-to-consumer model is not going to work. But you were not going to make a game that you would buy at Best Buy off the shelf. You were going to always make a game that was only online.
So why did you need a publisher? So the model for publishing online games were still emerging. And we were thinking about our game as a living, breathing service. So the major online games that proceeded as they all still had a publisher because to get the game in the hands of players was still done through shipping a package good.
So if you played a popular, massively multi-player game like a World of Warcraft, you still bought the game at Best Buy. And then somebody had to host the servers and create the infrastructure and manage accepting payments even online and manage all these things that we take for granted today. There were no real off-the-shelf solutions for. But by working with a publisher it meant that they would probably own the IP or have a stake in that, right?
Yeah, the publishing deal generally came with sort of an advance on those future royalties. So it was almost like an investment in the development of the game, which is how a lot of games end up being financed. But yeah, in exchange for that, there were often those kinds of rights were at stake. Also, the most important thing for us was we needed to have a direct relationship with our players.
This was going to be an online experience that people were going to come back to and play over and over again that we'd have to balance and adapt and change and add features to. And we needed to have a relationship and a really deep feedback loop with our audience. And we needed to control the things that they were going to care about or at least have a publisher who we believe would care about those things. Be attuned to those things, relate to those players, and make those decisions for us.
And obviously you were frustrated about that. And I guess that kind of led you to a decision, which was a pretty risky decision, which was to just publish the game yourselves, right? What was the impetus that gave you that idea? I think as we got closer and closer to shipping the game, we would have these meetings with publishers.
And far more often than not, we just sort of felt like the other companies didn't really natively understand what we were trying to accomplish and what our players would care about. And it freaked us out. And enough that we decided, you know what, maybe we should figure out how to publish this thing ourselves, at least in English and in the United States. That felt possible.
International felt just way too daunting. And we had so many other basic execution challenges ahead of us that were daunting. So we decided we would publish internationally if we could find a great publisher with a third party, but in the US we'd publish ourselves. All right, now, but to do that, presumably you needed a lot more money than you had, right?
Right. So presumably you start to hit the road and look for more money. And so when you start to go to VCs and explain all these things that you explained to me, were they super enthusiastic? Were you going to VCs and just like getting term sheets left and right?
No, VCs were not enthusiastic. So we didn't really know how to even engage with VCs. And we ended up getting introduced to somebody who would essentially make the introductions for us, almost as intermediary and tee up meetings. And we'd go to these meetings.
And I think the VCs sensed the passion, but ultimately it came down to betting on content, and most of them felt uncomfortable making a financial bet on a game. They're just like, how do we evaluate if this is going to be fun or not, or it's going to work or not? So the vast majority of VCs turned us down. I think the sort of worst meetings were obviously when we'd be ignored or VCs would essentially say like they really don't believe what we're doing.
And I think there was the most poignant memory I had around that was when I think VC was trying to understand. Okay, so you're going to have a multiplayer online battle in a game where a bunch of college kids are going to be killing each other online, and you're going to make money by selling virtual skins, which kind of translate to them playing dress up tall. And we're like, well, kind of, but not really. And they're like, yeah, good luck with that.
You know, that was a tough road where we weren't sure we were ever going to be able to raise money. That must have been pretty demoralizing. I mean, were there other moments like that where he was like, this sucks? You know, I mean, there were many moments when, you know, I think Brandon and I felt like, oh my God, you know, how are we possibly going to get through this set of challenges, which there were so many that felt overwhelming.
And there were times when we also, Brandon and I would certainly be like, are we pursuing the right model? Should we try to hit it to sell a box? Or maybe we could prefer to play later. You know, I mean, it was, you know, in the fog of war around the ambiguity around what the perfect path was when, you know, nobody had done this successfully in the West at the time, especially at what our, as our first entrepreneurial venture, you know, there was a lot of doubt.
And again, and this is us also now managing a team of, you know, experienced developers that were oftentimes older than us that had shipped big games and whatnot. And we had to be confident, but realistic and explain why this is going to work. Yeah. Brandon, I'm trying to kind of understand the business model.
I think in a sense, what you were doing at the time, what you're doing today is you were essentially saying, look, the developer, we're spending a lot of money on this game, we're going to make it available for free. And in order to get money back, we're going to offer some cool features for people who get a lot of joy and fulfillment out of playing this game by paying a small amount of money. And actually over time, you know, we're going to make more money than these games where you just like pay 60 bucks once a year for. Yeah.
I mean, it was, it was a leap of faith of, you know, even, even for us at the time. And there was a second factor, which is here we are with a game that no one's ever heard of, no name developer as well, in a genre no one's ever heard of. If we put a $60 price tag on a box, that's way too much of a leap. Like, that's just not going to work.
We had to just put something out. And if players, for free with no barriers and if players were enjoying it, they could monetize. And a large set of our players never will, but a decent percentage of our players do, and they buy aesthetic customization. And there's, you know, there's an ongoing model.
And in 2008, when you were pitching this, this was still pre-iPhone, this is still pre-mobile gaming. Like, this was the amazing thing about this is that it required a lot of foresight. And also, let's be honest, some luck to for this vision to be realized. Definitely.
It's just the other day, I was saying to my nine-year-old who loves, he loves a game called Brawl Stars. I'm sorry if it's a competitor, I don't know, but I don't know enough about this world, but loves this game. It's a great game. And he gets $5 a allowance a week if he does his chores, and he spends it all on in-app purchases on Brawl Stars.
So the other day, we're taking a walk and I said to him, you know, I said, you know, at the end of the year, you're going to spend $240 on this one mobile game. You're spending money on air, on ones and zeros, on digital air, and he's like, I don't care, I love it. And it just occurred to me, it's amazing. It's an extraordinary, like, that's like 20, that's like seven subscription services.
You know, the equivalent of, like, doing seven subscription services for one game, buying skins and characters and different items. And it is amazing that you guys were able to see that there was a marketplace for that, because I would have thought, who the hell is going to buy this stuff? But you, like, how did you know back then that there was going to be a market for that? I mean, I think our perspective was really shaped by, you know, the ARP experiences in all these different communities and playing games so deeply, where, you know, we just believed that people would try it because it's free, but they'd stay if it's great.
And so it was incumbent upon us to develop such a compelling experience that once people got into it, unless they fell in love with it, unless they love the content, the characters, and whatnot, then they wouldn't spend money. You know, we really needed to establish trust in our player base that we understand what's important to them, that we care about them, and that we're going to invest and also make the experience better. And I want to be clear about something for anyone listening. I'm not, when I say you're buying air, you're buying ones and zeros.
I'm just kind of, you know, being a little flip here. The amount of time, effort, and money it takes to develop for developers and companies to make those skins and those characters. It's a lot of money. There's an investment in that.
And you are essentially selling content that is valuable to people, that people get joy and pleasure out of, so they are willing to spend $5 or $7 gems or whatever the currency is, you know, on these things that they can then use as part of their character. Like, the point is that there's a lot of work that goes in, like, from your side, that goes into developing that stuff that you sell, right? A ton of work. So not only do you have to build an incredibly fun game, which is really hard, by the way.
It's really about like, how do you go design chess, right? You know, or soccer, you know, or something where people can essentially play it infinitely. There's a lot of really difficult problems to solve that. And then you have to do it from a technology perspective, where it has to work and the system has to scale and update.
And the balance of the game from a math perspective needs to be incredibly precise. You need the content to be compelling, where people fall in love with the characters from a creative standpoint, in the way that somebody would for, you know, Batman or any of their favorite superheroes. And so there's so many things that you have to get right. Again, it's like Brandon and I sort of joked that knowing that we know now, you know, like, we wouldn't have invested in ourselves back then.
But of course, you eventually did manage to get a couple of VCs to agree to put some money. And I think you ended up raising $7 million in 2008. Once you started, once you had some money to tackle this problem, you had to build up the platform from scratch, the platform to build the game on. Is that right?
In 2008? Yes. Everything outside of the moment-to-moment game experience that's required to sort of deliver the game. So things like Friends, a buddy list and the ability to chat with people on your buddy list, whether they're in your game or they're in a different game or they're not in a game yet, or the ability to process payments and have a store, the ability to get match made with other players of appropriate skills.
So you'll hit play and we'll find a team of four other players for you and five opponents who are in the appropriate skill range. So you'll have a great experience. All of that kind of around game stuff is a platform. But also there's a game server and the operational infrastructure, meaning we had to write software to put on the hardware which goes into data centers that we had to administer ourselves, because this is also, we're building this before the cloud existed.
So we had to go put physical hardware in data centers, higher operations people, which we totally underestimated the complexity around this too, which, of course, became a big challenge over time. All right. I guess, Mark, in that year in 2008, you ended up partnering or outsourcing the construction of this infrastructure to a startup that I guess promised that they could build this for you. And you gave them like a million dollars and said, I go for it.
And what happened? Yeah, so we were working with a company that seemed very credible from our perspective where they came recommended by VC. And to make a long story short, once we were able to bring in Scott Gell, who became our VP of technology, who had the expertise around platform, his very first assignment was to go validate where we were with this third-party technology provider and came back after a couple days and was like, this is not going to be at all what we need in order to achieve what we want to achieve. And so that was a really scary moment for the company because this is June 2008.
And we then had to call our board and tell them, hey guys, you know that back in technology we were building and a million dollars just been on this. We're literally going to have to throw it all away and start over from scratch. And that was a horrible moment, Brandon and I were quite terrified that the board would want us to shut down the company. When we come back in just a moment, Heligah Legends finally made it to launch without the feature that was actually going to make them money, their online store.
Stay with us, I'm Guy Raz, and you're listening to How I Built This from NPR. And one more thing, the New York Times best-selling book How I Built This is now available. It's a great read and a great gift for anyone looking for ideas, inspiration, wisdom, and encouragement to have the courage to put out an idea into the world. It's filled with tons of stories you haven't heard about how some of the greatest entrepreneurs you know and respect started out at the very bottom.
Check out How I Built This, the book available wherever you buy your books. Hey, welcome back to How I Built This from NPR, I'm Guy Raz. So it's 2008 and Riot Games is trying to self-publish its first video game, which it's now calling League of Legends. And Brandon and Mark have lost both money and time trying to build out all the back-end infrastructure, an error so costly that it might just convince the VCs to shut everything down.
Here's Brandon. So that conversation with our VCs was, you know, something that we absolutely thought was going to be the end of the company and we would have completely understood. If they said, hey, how can we trust you so bad at forecasting this technology? How can we trust you that the second chance is going to work?
I don't think we'd have a great answer to that. We're just going to be trusting a different set of people. There was one VC in particular named Mitch who stood up and calmed everyone's nerves. He was the VC that had experienced operating games.
He had been publishing executive activism for many, many years. And he said, listen, I've never seen a game ship without a slip. You know, usually a major slip. This was in my model and we all need to take a deep breath here.
We have to validate this plan going forward and I'm going to bring one of my former colleagues to come take an outside look and vet your plan. And if we feel comfortable with that, you know, we're going to keep moving forward. And we do think necessity is a motherful invention and constraints drive a lot of creativity. And because everybody knew we had this fixed amount of runway, it was sort of a do or die moment for the company.
Yeah, and from what I understand, you kind of had to rush it, right? In order to make your deadline to launch this thing in the fall of 2009. And by the way, why the rush? And why did you feel like you had to launch it by the fall of 2009?
I think it was just that's when the plan was forecast and we're going to run out of resources. You're going to run out of money. Okay. So that's because our venture raise, our first series A financing was actually tronched.
So we got three and a half of the seven million dollars. And in order to unlock the second three and a half million, we needed to successfully run a beta test with a thousand concurrent players. Because in the negotiation of VCs, that was the mutually agreed milestone that like, okay, we're on track if we do that. So then we actually had six months of cash left in order to build a platform capable of running a beta test with a thousand simultaneous players.
And the game was behind schedule two. Wow. So you must have been under intense pressure. I mean, were you guys super stressed out for that six month period?
Absolutely. Like the whole team, you know, we were very transparent with the team in terms of how, like, what the situation was, how many resources we had. And one of the solutions that the team came up with was we ended up hiring 1,100 people in the Philippines to go play the game. Because we knew that if Western audiences participated in a beta with a game of this quality at this point in time, even if there was an NBA, it could really risk the brand positioning.
You know, people were like, wow, this game sucks. You know, because it just wasn't good enough. The content, it wasn't mature. It was really buggy.
We didn't have enough of the systems to sort of make it feel sufficiently fun. Right. By doing it in the Philippines, it was sort of a stealth way to test it out, right? Yeah, exactly.
And actually, a lot of Filipino players were familiar with the rough gameplay. And they had a sort of the PC cafe infrastructure, which was sort of a good way to manage the test. And I think when we were able to run a successful beta test, we had less than a month of cash left. And we were doing it like one in the morning, and everybody was in the office, and we were logging on all the PCs.
We had the office also, and we had a video of it. But it was a, it was this incredibly exciting moment once we, you know, the numbers ticked just above 1,000, we all cheered. And, you know, then the VCs were aligned with us. We're, you know, they were hoping that we would achieve that.
Because, you know, they wanted to see if this thing would be able to go. And so that then gave us the next tranche of financing, which led us to continue to move forward. All right. I guess you were planning to officially launch League of Legends on October 27, 2009.
You were going to be the publisher and the developer of the game in North America, and you're going to work with partners in Europe and in Asia. So let's just talk about that launch, because the way we're going to make money, the value proposition your investors was, people would play the game. They'd like it so much, they'd become so into it that they'd want to buy different characters and different features and so on. But you didn't develop the online store, like the way that people could actually send you money.
Once again, you decide to outsource that, which from what I gather was like a total catastrophe. Yeah. That's right. So we were weeks away from launch.
I think it was four or five weeks away from launch when we come to the realization and we were concerned about this for a while. We come to the realization that the partner who we had selected to provide the payment solution, that their tech, which hadn't really been tested in the wild in a big game, might not stand up to the challenge of scale. And it was a bit of deja vu from what we went through on the back end. And sure enough, we just get to a point again where this is not going to be salvageable.
The faster path in fixing this is to literally build something new, bare bones, purpose built from scratch, that will be able to be sort of a minimally functional store that can process payments and transactions. And this is like a few weeks before you launch. I'm just curious, was there like, is there somebody at Riot Games at that point where you're like, hey, can you build a store in two weeks? Did you have that person?
We had much, much better engineers this time around because of the experience with the back end failing previously. And because we had to build a team now and hire a team as fast as possible from scratch that could build the entirety of the back end, we had some really great experience engineers. And they're the ones that sort of diagnosed this problem and had sort of the suspicion that this may not land. It was worse than everyone expected and then they just leapt into action.
And we were just spending almost 100% of our energy trying to solve this wall at the same time, making sure that our game was actually ironing out all the bugs and the last remaining features for a fixed launch date. And we shouldn't have necessarily had a fixed launch date at this point given all the risks. But we sort of naive, so there's another thread here which is we had a box. So we ended up having a box on shelves.
Oh, you could go to a Best Buy, you could go to a store and buy the game? Yeah, so we ended up deciding to sell a box because, interestingly, as we got closer and closer to launch, the game's media wasn't going to pay attention to us. In fact, we didn't exist if we did not have a box. If you were a game that didn't have a physical box, you weren't a game.
And so we partnered with a traditional publisher, THQ, to create a box. What would be in a box? We had to figure out what that would be. It ended up being a bundle of the same digital content that you could theoretically build a buy in the game.
And the irony of it is we did end up getting reviews. And one in particular, we got a 60 out of 100 from a premier game review site, along with the icon of burning money, like literally money on fire, which symbolized awful value. And the reason it was an awful value was why would I buy this box relative to the game being free if I download it? So it wasn't really evaluating the game as a whole, but it was evaluating this box specifically, so it kind of wound up biting us.
Yeah, and it wasn't just awareness. It was also credibility. And that's because there was a lot of stigma where any free game that existed in the west of the time was generally like a really low production value, sort of like mini game. And so we really thought it was critical to have the main gaming review sites like PC Gamer play the game and say, this is a real game in order for players to take us efficiently, seriously, to even be willing to try it.
All right, so you finally hit this date, October 27, 2009. That's the launch date. And how'd it go? Well, I guess it's also worth mentioning, we didn't finish the store in time.
Oh, okay. So we had to figure out what to do at the last minute knowing we would not have a store. And so we arrived on this concept of a launch party. Everything in the game is going to start off just being free.
And there would be no store. And so that was kind of where we landed. And that would be for some period of time until we could actually finish the store. And one thing that was worth mentioning through this period of time, too, is my wedding was scheduled on the first week of November.
That's because originally when we had set the date, like a year and a half, previously, we're like, there's no way we're going to slip the game this far. And so it was just so many things going wrong all at the moment. And, you know, we did this brief destination wedding and, you know, the whole time we're sort of freaking out is where things were. It just, yeah, I remember the game was now live.
Then we had to go to the wedding and we didn't get the store on until, you know, for another three weeks post launch. So here's the amazing thing. It's 2009. You are more than three years into this business.
And you have earned approximately zero dollars at this point. What was any part of you? Because you guys seem like pretty self-aware, guys. Brandon, was any part of you like worried that if this didn't work, you're three years into this now, that all of that would just go down the drain or did you think, okay, we're good.
We're going to launch this thing. It's going to work. Everyone's going to make money out of this. Yeah.
So there was even a second round of venture, I think, for eight million. And there was some venture debt like on top of it for a total, I think, over 20 million. That was an immense responsibility, coupled with just the hopes and dreams of the whole team that have been on this journey with us. So I worried about it every single day and every single night.
And we had to be good at figuring out how to manage our own psychology through the journey. And for me, a lot of that was just was leaning on Mark. There were just tons of times where Mark would just lift me out of a dark place because I'd be staring ahead and it felt like I was staring into an abyss. How do we get to the next milestone?
How is it even possible? And going into launch was no different. There was nothing about our lead-up to launch that should have given us a ton of confidence that we were going to be a success. And we launched the game and we weren't an overnight success.
We had a reasonable amount of players hop into the game. And so the game was working, the technology was working, no transactions were happening, we're running out of money. And the next week, a few more players. And the next week, a few more.
And only when you zoom out over a long period of time does that start to look kind of like the hockey stick that it was. And the reason was because players stayed. And as the word got out, more and more people started to join. Because it was multiplayer, people wanted to go bring their friends to play it with them.
And then their friends would help people get over that learning curve. And so once we turned on the store and we started making some transactions, we were like, wow, our burn rate, which was the highest burn rate of any company in any of our VC's portfolio, started to trend down over a month. And then it's like, wow, maybe we'll break even. Maybe we're not going to run out of money.
Maybe this can be something sustainable. And how did you create awareness around the game? Was it by putting those boxes out and then just waiting for magazines and bloggers to review it? Or like with a consumer package, you'd hire a PR firm, right?
And you'd start to take advertisements out. How did you develop awareness? We did do PR because we tried to get as many interviews and game reviews as possible because that's sort of free awareness. But what we really focused on was credibility from a positioning standpoint to our audience and then trying to create incentives for them to help bring in other people.
So we created a friend referral program as an example. And whereas people with their accounts would bring in other people and have a code that would give credit to the person who referred them, they could unlock additional content or get sort of scaling them out of rewards and things like that. And then YouTube was starting to grow at the time, this was 2010. And so we created a YouTube channel.
And we created a show called Summoner Showcase because players of the legends were called Summoners. And then we started getting millions of views of this show because people wanted to get their stuff highlighted. And it just felt like this organic positive community that people wanted to come be part of. And the idea was, unlike most games where you would just buy the next version every year, Madden comes out every year, you get a new version of it, right?
You would constantly be sending out updates called patches, right? That's what you would do. So the existing game, which is constantly improving, get better. That's right.
So one of the focuses of the development effort was to first of all make our characters, which is the thing that the players would play at any given session. They had to be really cool, really great thing and really fun to play. Another key success factor was matchmaking, the ability to align players of relative skill. Because sharks playing against sharks is really fun.
Minos playing against minos is also really fun. Sharks and minos, not so fun, because sharks and minos is not great for anybody. But then another was the ability to update the game rapidly. We would have this feedback loop with the community on message boards about, here's all the change of making the game.
Here's why, and players felt that they were being heard that, hey, this thing's unbalanced, or we don't like this, or we want to see more of this. And they would see rapid progress, which helped build trust that the game's getting better. And now everyone's used to updates. You have an iPhone, your apps are automated.
If you haven't set that way, they're just automatically updated every week or so. I mean, we don't even notice. But in 2010, this was like a really new thing, right? Like, especially because you guys were doing like 20 updates a year, right?
I think this was like kind of unprecedented at the time. Especially at the rate. Yeah. And it was free.
So after, I think, a year, a year after you launched League of Legends, this is incredible. Your revenue was like $17 million. I mean, do you remember getting to the point where the two of you started to feel like, this is going to work? Like, this is actually really going to work.
Definitely not in 2010. Because, you know, we're still, our platform is often unstable. We had bad features. StarCraft II was coming out.
This is going to be the sequel to the best PC game of all time, which is going to have a new map editor that birthed the genre that inspired League of Legends. And they were going to have a mechanism to enable the creators of these mods to actually make money and sell them directly. Wow. We were terrified of StarCraft II.
And so we actually timed our season one competitive update two weeks before they launched, and then subsequently both Valve Entertainment and Blizzard announced MOBAs, you know, direct competitors to come directly after us. And so we did not have a moments rest. And anyway, there was just one thing after another where it wasn't until 2011 where we started to realize, okay, you know what, maybe this is actually going to be a thing. Well, meantime, concurrently, you are also getting into this like nascent at that time, 2010, the nascent world of esports, which is now, of course, a multi-billion dollar industry.
But at the time, it was still really, really new. And you guys are became kind of one of the big giants of esports. Yeah. And just out of curiosity, how do they work?
Like, how does Riot games make money from esports tournaments? Because you give away a lot of money. Yeah, we didn't look at it as a revenue stream, especially early on. We looked at it as sort of a feature that would help drive engagement and just be a value added experience for the community, for just something cool to watch, you know, and pros and teams to aspire for.
And like, this kind of fun path, the pro where it's like, okay, if you're really good at the game, come sign up, so you can win some money and get some fame and just have a blast. So it's at the end of season one when the viewership numbers come back that we realize, hey, this is way bigger, and this appeals to a way bigger part of our audience than we expected. Millions, over a million people had tuned in substantially. And the whole audience had a great experience.
And so for season two, we take a completely different lens. It's what's the next step? What's the dream? We now have a license to sort of fulfill the dream of esports.
And can we be in an arena? Can we fill an arena? Would that make sense? And so season two, like preparing for the finals of season two was all about building the broadcast capabilities and the event capabilities to land that finals in an arena.
And a physical arena, which is where these tournaments are. I mean, could you imagine in 2010 that there would be people who would make entire careers becoming professional esports gamers and become extremely wealthy doing this? There had been some precedent for that. So there was sort of an idea that this was possible, but there wasn't a perfect example for like formal leagues and teams with infrastructure and stability and dedicated places to train and coaches and analysts and sports psychologists and all the infrastructure that now exists behind league.
Right. And so we had to figure out a lot of things from scratch. Essentially to help invent this new thing. Yeah.
And a lot of it was about trying to nurture an ecosystem where the team really came together to try to focus on how do we make it easier to be a fan. That would then create the viewership, which could then create the advertising model or the interest responses, which could then create the incentive for team owners to then take the risk of raising capital or going and buying. Good players, which would then create the incentive for players to be able to tell mom. It's worth me dropping out of college or not taking this job to go be a full-time professional gamer because it's real now.
I mean, there were all these different barriers to overcome and so it had to happen incrementally. I'm curious about an aspect of League of Legends, which is for some reason, and I'm not pulling this out of thin air. You know that this perception exists. There has been a perception in the past that League of Legends had a particularly toxic user base that there was like a particular level of abuse among, let's say, significant cohort of players and that this goes back to the early days of the game.
And obviously you didn't create the game for a bunch of like toxic jerks to behave badly. Anybody who creates something hopes that people will be behaved and positive. But I'm just curious, Mark. Why do you think that League of Legends attracted that kind of player?
Well, I think that while there are some players who get aggressive and are toxic and don't behave, it's a really diverse community. So while there are some notable, say, streamers or situations that have been controversial from a toxicity standpoint, there's also huge amounts of beauty and cosplay and fan art and friendships and marriages. And I think that we made a mistake when we were investing in building out our player behavior team to try to nurture a really positive community and promote sportsmanship and train people how to be better online. Where we moved from sort of a crowdsource self-policing model where the community would agree to sort of a code of conduct to one where Riot was sort of identifying what good or bad was and a lot of ways we then started creating headlines where we pat ourselves on the back for reducing toxicity.