In conversation with Eric Jordan: Indie video games, discovery and bringing happiness to gamers
In our final episode of Season 2, we talk with Eric Jordan CEO of Codename Entertainment.
Eric shares with us some business and industry highlights from the past year, emphasizing the significance of “discovery” and internal marketing. He breaks down for the listening audience, some common misconceptions about gamers and the terminology that the industry uses to define them.
During the thought-provoking, 64-minute podcast, Eric shares with us compelling insights of the transition he experienced from selling his previous company, PureEdge Solutions, to IBM and the deeply personal journey that landed him in a position where he gets to bring people happiness everyday in his role at Codename.
Click for the full transcript
Paul: And welcome to Island Thrive. My name is Paul Holmes, your co-host, and with me today is Dave Monahan, the President of Smart Dolphins IT Solutions as usual. Welcome back, Dave Monahan.
Dave: Thanks Paul, thank you.
Paul: And we have a very special guest with us today, somebody who we’ve both known for quite a long time, and if you moved in tech circles in Victoria, of course, you know will know the name as well, and that is of course, Eric Jordan, the CEO of Codename Entertainment, Eric how are you today?
Eric: I am good, thank you for having me on.
Paul: And why don’t we start out with the obvious question, what is Codename Entertainment? What do you do and what should everybody know about it?
Eric: Sure, so we are an independent video game studio based here and in beautiful. Victoria, BC, Canada. We have 31 folks now, we focus on making PC and console games that we provide very active live service, so the games that were supporting tend to get an update a week that goes out in those games. We have three games that were live servicing at this point, the biggest of those is our licensed Dungeons and Dragons game called Idle Champions of the Forgotten Realms that came out in September of 2017 into early access on Steam, and then came out of early access on Steam almost a year ago, just as a pandemic was starting and was later recognized by Valve, a company that makes steam, which is the largest PC gaming platform really on the planet as the best free to play early access graduate in 2020, which was super cool to see.
Paul: I remember that news.
Eric: Yeah the studio here in Victoria, I was just so taken aback, it was such a great thing here. The first game on Steam Crusaders of the Lost Idols that we had done a few years earlier and it’s such a competitive platform. And a lot of people here use it, including all three of my sons, so I was kind of like, “Hey look, we did this thing.”
Paul: Well, I remember playing Crusaders when you came out with that. That was a lot of fun. It was a completely different style of game than what I played previously. I guess the category is idol game is that still a category?
Eric: Our language around it has evolved because we found that using the terminology of idol games service genre made sense to people who understood that genre…A lot of people didn’t understand the genre, and so you have to kind of explain the genre and then explain your game and how it fit within the genre. And so we describe it as a strategy management game, because a big piece of the game play is the strategy of how you recruit a bunch of characters and how you place those characters together and the formation you build is the core kind of puzzle of the game, right. We found that using idol games kind of got in the way of that, but honestly, it was… I think so many things in business, it was just going out and talking to people and just kind of continually refining what you’re saying, “well, that one didn’t work let’s try it again” and doing it over and over again. And our language really evolved over several years, trying different things and just experimenting and seeing that work. Strategy management is the one that we’ve landed on.
Paul: Well, we’ll probably talk about strategy management in a different context today, given that we all do that in our daily lives, but yeah. I think the coolest thing about that style of game was that you could kind of pick it up, you can set it up, you can try some different things and you could leave it, come back to it a week later, and just kind of pick up where you left off. Where a lot of games now, you they’re constantly drawing more and more of your attention, and if you don’t sort of give them your attention then you fall behind and all that to this sort of thing. So I do like, I guess the casual nature of being able to play. Am I on the right track with that? Or…
Eric: Yeah, I think in the industry casual tends to refer…I don’t actually tend to like how the industry uses the terms because from the video game industry perspective, it tends to talk about core games and then casual games and then mid-core games. And the language, to me, it seems like the language that was came up by people who are super into a particular type of game.
Eric: So the kind of people you might think of what you talk about is a real hardcore gamer or something like that, someone who’s playing maybe on their Xbox or PlayStation or got a PC rig set up and they’re doing a bunch of PC games at home. And so they’re kind of like, “well, we’re the core and then those other people well, we don’t know they’re casual.”
Paul: Oh, okay.
Eric: And then while there’s some games that kind of use some of those casual mechanics, and they kind of use some of the core mechanics so “we’ll call them mid-core.” But if you look at the game play for someone who is a quote-on-quote casual but super into core play or something like that, in no way is it a casual experience because they’re playing it a lot and really enjoying it and engaging with their friends and engaging with the community and all this kind of stuff around that game. It’s more that that was like middle-aged and retired women who seem from antithetical to people sitting on a PC playing the new steam release or something like that. And so I think the industry developed a set of terminology that I don’t particularly like.
For us around Idol Champions, a lot of the game is really thinking through the puzzle, the thinking doesn’t need to take place in the game, so it’s kind of more like chest in that sense that you don’t need to be actively looking at the chess board every second, if you’re playing a slower game with a friend or something like that, making moves back and forth, but you can be thinking like while you’re riding your bike, “what am I going to do? Well, I’m going to do this and do this and that will lead to this.”
So we kind of think about it more like that. And that the systems are quite deep and there’s a lot of inner relations to keep in mind, and that’s what the players who really get into our style of games like, that’s what they’re super into. They’re like “Oh my God, there’s so much stuff in here.” That they really enjoy, which is one of the reasons that it gives us…Like when we’re making games, we’re going to live service through years and we need enough design space to keep adding systems and adding structures into that, that we can continue to support for years.
Dave: Yeah, I think Paul and I are gamers, I think. And so we could probably make this podcast all about the actual game. But there might be some people, there might be some people out there that are also interested, I guess, that’s the product right and so the mechanics of the business underneath, could you share some of that in terms of what makes a successful gaming business?
Paul: What do these 31 people do all day?
Paul: Yeah that… How did you get here?
Eric: Yeah, well, I guess first off, I’d say that the single biggest misconception that people seem to have about video games is that you don’t work in video games…back when you could go to restaurants, all of those things, you know….you might run into someone and you’re like, “Oh, what do you do?” And I’m like, “Oh, I work on video games.” And they’re like, “hey, that seems like so much fun.” That’s almost always a response I would get. And the biggest misconception, I think that underpins that is people who it’s not their business to know about what it’s like to be in video games and that’s all fine, but they kind of tend to think about the experience of playing video games as must be sort of similar to the experience of making the game. Which of course if it was an appropriate point to kind of pause and go, “Hey, what unwritten assumptions do you have in there?” I mean, sure that upon talking about it “Oh no, clearly obviously, these things must be different,” but I do think because video games, this is a product or things that are designed – it’s not the game, that’s really not the product.
The product that I provide is the emotions that the game creates inside of someone, and that’s actually incredibly hard to do, is to make a thing that goes out and then people who you don’t see have emotional responses that they find really engaging and enjoyable, even though you’re not there at all, in doing that at a scale to hundreds or thousands of people like, that’s a super tricky thing to do, and the experience of creating that like on the production side is like it’s a very difficult and extremely different experience of playing the games, playing the game should be fun, that doesn’t mean making the game is fun. When I talk to people who want to get into the gaming industry that’s one of the first points I kind of really try to drill in is like, “if you want to make games, you need to just make them, like you need to do them and realize that the experience are doing them is going to be nothing like the experience of playing…The experience you provide other people will not be the experience you have making the game.
And so then yeah, so for us, very broadly, video games is a business-to-consumer space, and so my previous company, which I believe we may touch on which was a business-to-business space or certainly different in that way. And one of the things that I love about how the video game industry has changed is that it used to be, if you were a small studio, the only way you could access a consumer was to go through a distribution deal was something like EA or something like that and then physical copies had to be made and then they had to show up at EM Games or something like that, and then people would buy them. And it’s very hard for them to give you information back, then this kind of core loop is from a business perspective of getting a product into the hands of the consumer and a consumer providing feedback back on that product is a highly inefficient loop. And there was a lot of steps. Then it was super expensive. I remember I’ve always been a fan of both table top games as well as video games, and thinking about the video game space and looking at that kind of model and just going like, “Oh, I want nothing to do with that” personally, and so it wasn’t really until basically the advent of the internet and the guys, you see now a Facebook gaming, which is where our company started and then mobile gaming, PC gaming, like Steam where you could be in a position as an independent game studio to put a game directly out onto a platform and engage with players. And so I was talking at the beginning, we put out content were three games at real service and they all have content that goes out each week, and so if you think about that kind of iteration from us making a thing, putting it in the hands of players and then asking feedback, that’s like one week to do that cycle for us, whereas if we had to go through publishers and all that stuff, it would be like maybe once a year, if not longer than that. So yeah so for us, we’re very focused on that feedback and getting pieces out to consumers.
Paul: Is there still seasons like Christmas it used to be the mad rush for Christmas, I guess it still is for the new consoles that are coming out, that sort of thing, but of course, everybody remembers the classic case of ET on the Atari Console back in the 80s were they rushed to get it out in time for Christmas and it was virtually unplayable. Is that gone now? Is the business cycle just released weekly and release your new game whenever?
Eric: It’s not gone, certainly large, it’s consumer industry and consumer spending in Q4 time frame is very high, so console launches, large games, all that kind of stuff, so there’s still a bunch of stuff that takes place like that.
No, I think it’s more and more spread out as people try to find windows around that, so you have your triple A games or at a certain point, they’re not trying to compete with each other, some do. And some are like, “oh, I don’t want to compete with Red Dead Redemption 2,” or something like that. And so then that starts pushing out the shoulders and then to the small indies like us are trying to find new pockets amongst all of it to put a game out.
Yeah, I think if you were making games and thinking about a studio, you think about our business is fundamentally this system of interconnecting pieces, and I always kind of think that what you should do when you’re coming into an opportunity, you’re looking at a business is understand that system, identify the part of the system that is hard is to solve, trying to figure out how to solve that, and then everything else will be easier. And certainly the hardest to solve component of the games industry in a world where you can have all this direct distribution that we’re talking about it through Steam, and the web and all that kind of stuff, and mobile. The hardest thing is discovery, having someone find your game like by far, that is the number one issue, and so figuring out how you’re going to solve for discovery, which in that answer varies by game, varies by company, there’s a whole bunch of different permutations, it’s not like… “Oh, here’s the rule book for how you solve for discovery.” It’s a super hard problem to solve, but if you were the CEO of a game studio in 2021, that is the problem that is keeping up at night.
Dave: Do mind sharing how you’re solving it or is that…
Eric: Yeah, no, we had some super hard problems and we tried a bunch of stuff over time. Like so much in business. You try a thing, “Well, didn’t work. And how do I learn from that?” Do another thing. The Dungeon and Dragons game, one of the reasons that we worked with, which is a coach in Seattle, the IP holder, and they’re owned by Hasbro to procure the license and working with them around that license was partially for discovery to bring more visibility to the game by having a Dungeons and Dragons license. Then we as the game, after we launched, one of the things that we really started to embrace was the rich set of content creators, some people might call them “influencers” on saying that I could go on a little rant, I don’t like that term, but for now, just say content creators, but people who are doing live play, Dungeons and Dragons table top stuff streamed on Twitch or YouTube, things like that. Podcasts, a bunch of things in that space. And so what we started doing is we started licensing these third-party characters and bringing them into our game as well, so you could have classic Dungeons and Dragons characters as well as these third party characters created by content creators and you build your dreamteam in terms of how all these people would go together. And then in doing that, that would provide us with additional marketing beads because we’re always putting out this new content that kinds of focus on these different content creators and their audiences, as well as kind of marketing back into all the people playing the game, and so now it’s got this character, now it’s got this character.
And then one of the biggest shifts for us in 2020 was we entered the year with a marketing plan that had a lot of physical events in them, which was…
Dave: How’d that go?
Eric: Yes, we had to pivot and we pivoted to streaming on Twitch, and we entered last year where we had two regular…We just started our second weekly show on Twitch, and we exited last year with 12-13 weekly shows, and so now we find ourselves kind of running the small television channel, if you will, with all these shows and kind of all this content.
And that’s been a big part of how we solved that discovery piece, is doing basically streamed shows kind of both about our game, but also around our game, so some shows are like a strategy shows, some shows are like pancake art where we work with this pancake artist around our characters in the game, and it’s one of the ways that we reveal new characters and stuff like that, coming to the game.
Dave: Well, you talked a little bit here about experimenting and learning from those, and I also saw in your profile, you led the Viatec Roundtable for video gane industry, I assume that’s locally. So curious if that’s fairly robust. I’ve got a lot out of being in a peer group myself in an industry-specific peer group, and so a big proponent generally. Yeah so maybe to speak to where else can you find that it’s sort of learning outside of your own?
Eric: I think that the video game industry group or any of those kind of groups is really useful from the perspective that I think a lot of the tech in Vancouver as well as in Victoria is very B2B-focused, and so stuff around discovery, how you go about doing discovery? Like in my last company, PureEdge, we did this huge for several years of outreach program and working with Gartner and those sorts of groups as part of an education discovery piece, and so B2B versus B2C discovery is quite different. And then again, B2C within video games is different, so having industry people, you can chat with it, that is super helpful, and then. Well, I guess in pre-pandemic days, there’s a fantastic conference called Game Developers Conference in GDC for short, takes place in San Francisco that was one of the first big conferences that was on my radar that suddenly like vanished when covid hit that, but that’s a fantastic opportunity when things restart and you can do those things again.
And then I think, yeah, to say that informal kind of discussion with other CEOs running gaming studios, especially if you’re small, in general, my experience has been that a similar to the broader… My broader tech experience, which is the competitors are usually much larger companies, kind of you’re competing in this international space, so like the idea of sharing a little bit of information and are even sometimes some pretty detailed information with fellow video game CEOs people usually pretty open to that not everyone, but for the most part, people pretty open to that. And then, yeah, in terms of understanding if your experiments are successful… We have a lot of great metrics on the game, and so we can see people, they’re play patterns in the game and obviously spending in the game and all that kind of information, and those metrics, the dashboards that I use or every 10 minutes you can… So it’s a very real-time kind of environment, much more than my experience of enterprise software and B2B, where it was very hard to ultimately know. We would work with CIOss, and then basically the IT group would distribute software out and then getting to an end user and actually understanding what their use case was and how that was going was very difficult process that we moved from kind of the data scarcity environment to an incredibly data-rich environment. So yeah, so that gives us a lot of information to understand about those experiments. The one thing that I’ve found with which I think is actually true is a generalizable point, but I certainly see it in to do. And so what I’ve seen is, if a studio comes together and they make a game and they put the game out and the game isn’t great, and it’s not really a big surprise, probably if it’s a new studio and they’re making their first game making games that we’re talking about is hard. And so the game isn’t great, and then they’re like, “well, we’ll learn from this and this, this and this wasn’t great.” And assuming they have enough money they’ll continue working on it and make another game, and if you ask them like, “Well, your first game wasn’t great, shouldn’t the evidence of that be that you’re not great at making games?” They’ll always say like, “No, no, no, the evidence for this is, we learn this and this and this. Will make another one.” Because the unwritten assumption underneath that is, of course, you will understand how to make things better because I wish to be able to make a game company, so I have to assume I know how to make games. The same thing I’ve found is not true from those exact same people around marketing and that discovery problem I was talking about earlier, where they try it in the marketing and they go “well, that didn’t work, and they’re like, wow, clearly, we don’t do this marketing thing that marketing doesn’t work at all.”
I saw that kind of with Tech entrepreneurs as well. They’re defined by making a widget, so they’re like, “I’m going to make this widget,” and you’re like, “Well, that widget isn’t great.” They’re like, “well, I know I can make a better one.” Because they have an underwritten assumption that clearly they can make this widget, but then if they do some marketing around it and marketing fails, they’re like, “well, we can’t do that, I’m not going to do that anymore.” And it’s like, “well, your business is going to need how to market, and you also, at a certain point, need an unwritten assumption that we will figure this out even if we haven’t figured it out, they better believe we’re going to figure it out because we need to know how to do it.” Maybe it’s not the same individuals, of course, it’s different individuals on that team, but I think an organization needs an internalized understanding, they will figure out marketing because if your organization doesn’t figure out marketing you are dead-ice.
Paul: You mentioned a couple of times that in your industry, you’re not one of the big players, you’re one of the small players, and there are a lot of obviously huge players in that space that has sort of become this entertainment video game universe or who don’t follow it well, video game revenue recently surpassed a couple of years ago surpassed movie revenue, right?
Eric: Yeah, a while ago well. Yeah, video games and also being in a pandemic, we were just really just finding it lucky to be in the industry that during a pandemic could get this being uplift and so even revenue is like 120 billion, 130 billion.
Paul: There’s a lot of money and there’s a lot of big players. And so I wonder if you had any general experience for maybe some other business leaders that are listening that might be in a similar scenario where they have maybe a small-ish business and they’re competing in the industry that maybe has a lot of dominant larger players, do you have any sort of general advice for an entrepreneur in that scenario?
Eric: Pick your battles. We as a studio are not going to make the next Assassin’s Creed game period full stop. Just the amount of money and the scope of the studio to make something like Assassin’s Creed – it came out of Montreal, go Canada so that’s all great, but we’re not going to make one of those period full stop. And so really understanding what we can do and being super good at what you’re doing and picking battles in a way that you’re like, I’m not going to try to do certain things and I think understanding, I think it’s human tendency to really focus on the downsides of certain situations and not see the upsides to that and not recognize the downsides on the other situation. Like if you’re making Assassin’s Creed, there are a lot of downsides and having to pit the kind of revenue targets that again, like that has to hit in the budget and the scope, and so there’s a lot of pieces that are going to kind of work against you in terms of like, “wow, we really want to de-risk this, this and this way and and we can’t the chips in these ways…” All that kind of flexibility. Way less flexibility, they have far larger budgets, of course, for us, we have way more flexibility, we have much smaller budgets, and so we kind of go after different niches where we can really find success, and I think it’s a studio knowing where as a company… Knowing what you’re really good at…
Eric: …is a super important thing, and understanding what are skill sets that are of course skill sets you have to have, like my opinion, marketing, however you figure out how to market is a skill set. Every business needs to have that internal. You can’t outsource marketing. I don’t think obviously, product, you need to know how to make your products if you’re defined by making up a product like a game studio is, we need to know how to make games, we need to know how to market those games. Those are sort of core skill sets, and I think that understanding where you can partner and where you really need to know that, especially the point that you don’t know that, especially early on can be really tough. I remember discussions about that when I was on the board at VIATEC and really like what were things that VIATEC really needed and it was like “No, we don’t partner organization on this, because this is the core of what VIATEC does, and understanding that are things that VIATEC shouldn’t do, it’s not our business to do that. And keeping that focus, I think, is especially important.
Paul: Do you feel that that marketing message is universal then, because I think that there’s a certain amount…I think the key thing for business and correct me if you think I’m wrong the key thing for businesses understanding your product and its potential buyers well enough to know how to discover and put those two things together, but do you think that the other core skills around marketing should also be internal then, or is that a universal truth? Or do you think it’s more just the knowledge around what works, I guess, to reach people?
Eric: I mean, I guess abstractly, I would say that you need to understand your market well enough, as you say your product fit between what you’ve got and how that product fits into that market, in the side of the market where the buyers are and stuff like that, and then, whether you’re selling it directly or someone else is selling on your behalf, you need to understand that stuff inside, especially if you run your business right.
Paul: The difference between understanding and doing though, right? There’s a lot of key functions you can understand in your business that you need to understand, but you don’t necessarily need to internalize that, maybe I’m missing…
Eric: Yeah, I guess really the only jobs I’ve ever done is running businesses and really entrepreneurial businesses. I tree-planted in University, graduated with an art degree and started my first company at 24 and now that my eldest son is 21, I really recognized how young I was. What was I thinking? And you know as soon as you start getting employees, the number, it’s easy to spend money, it’s hard to bring money in, and your top focus is figuring out how you’re going to bring money in. And like my first company was ventured back, and so investment was a big thing that we focused on and so I learned a lot very quickly about raising money and doing all that, and then after that, learning a lot about sales and how sales would work, because if there was risk in the business, I needed to understand where that risk really was because that risk sat on that revenue line and basically the overall P and L. And so I think I remember that I really didn’t want to learn sales really. I certainly had no interest in learning that.
Paul: Who does?
Eric: I remember someone saying that the CEO of the business should it’s a number one salesperson. I go, If you don’t understand how to do that, then your business is at, I think a significant disadvantage. Everything else, like I say, all to spending money, pieces of the business, those are ultimately easy in comparison, like you hire someone maybe they don’t do a good job and you do a good job or something like that, but it’s all easier and more predictive than in predictable, I should say, than the revenue line and having no having confidence in that revenue line, being able to have confidence is one of the most important pieces to having a really solid business. I’s one of the reasons that we have a live service model for our games is compared to a premium model for our games, a premium model more like a Hollywood box office opening where like, you make no money, no money, and then suddenly you have an opening weekend, and then every weekend after that is less money that you’re making on this product, and you really don’t match your revenue expenses very well. For us, we’re working on a game and not making money, but once the game is out, then we’re making money, and then assuming the game is doing well, we can continue to invest in that game and continue to make money in that game, it gives us an incredibly predictive revenue model where you can kind of see like, “wow, we do these things and these activities will do this much money for us, and then here’s kind how the next 12 months will look…” Of course, the Covid hits and “oh shit” but more in a normal time… You got time. Yeah, well.
Eric: And it’s funny, in your industry, for those who haven’t followed gaming, everybody’s heard of Candy Crush and Farmville and all that sort of thing, and the video game model used to be used to be like the movie model, you deliver the product, you would hope a whole bunch of people would buy it, and that was the end of its lifecycle, right. And then you’d release another version a couple of years later and hope for the same thing, and of course, now there’s in-game purchases that happen, and that’s how a company like yours makes the bulk of its revenue right with… you have a free version maybe of some programs, maybe a small fee for some other ones, but the in-game purchases is kind of the lifeblood of the revenue, if I understand it correctly.
Eric: Yeah, no, I think that’s very true. The video game industry has shifted from blockbuster movie release type stuff, more like shows showing up on Netflix or something like that, or even more like a soap opera. Like Netflix will have a limited run of the The Witcher or whatever, and then it’s over whereas like soap operas they just put out a new episode every week. I guess I’ve never actually watched a soap opera so maybe that metaphor is wrong.
Dave: Sounds right.
Eric: And so I think from our perspective, the kind of games that we make or games we were always putting out new content, part of it is free and part of its people that people can pay for those pieces of it, and so that’s a whole separate discussion on how you monetize all that content, but putting out that content and making sure you’re monetizing it and allows you to have a much more solid revenue stream then this kind of feast and famine revenue stream that is traditionally in games, and that combined with the idea as we were saying that when you’re making this kind of blockbuster thing, you put a thing out there and then it’s really a couple of years before you put another thing out there, and so any feedback that you get back from your players, it’s years before they see any kind of response to that. And from my previous life, I had this moment…so previously I had this company, and I can touch on it.
Paul: PureEdge Solutions. And you started that when you were 24?
Eric: 24 right out of university.
Paul: With your fine arts degree, specializing in music.
Eric: Visual Arts actually, not even music.
Paul: Oh, visual arts okay, well, seems somewhat connected to what you’re doing now.
Eric: Not really but yeah. And the guy I co-founded it with Dave Manning, he had a half completed Philosophy degree and one year of computer science from UVIC engineering. And so based on that, we were like, “oh yeah, let’s start a company,” not necessarily the smartest choices, but we built this company up, and I guess yes, so briefly what it was, it was an enterprise software company where we did transactional software, particularly electronic forms software, and we found that in 93, and we ended up with large customers doing really complicated transactions, so the Security Exchange Commission. The Security Exchange Commission used our software for all public filings, there was 397 different types of filing forms at the time through the SEC and to any company that was listed on the Security Exchange Commission, any of the public markets in US, we have to file those filings using our software for example. Yeah, so we started this kind of company, built it up, venture backed and all that kind of stuff. And I remember hearing about the dot com crash, and I was actually recently thinking about it is because in 2001, 2000 it all started happening and in 2001, it really hit the B2B sites, initially B2C, and I kept hoping like, “okay, hopefully, hopefully it won’t hit us…” I was trying to put together a fundraising round during that period of time, and then in this wave, just kind of hit us. And we entered 2001 with 101 employees, and we exited with 36 employees. And it was just certainly one of, I think the hardest professional year I’ve had in my life, we did that in two large layoffs during that period of time. And I remember I was just working night and day, we recently bout a house too, which I was convinced I was going to lose during that period of time anyway, and just had a first child. But I was working insane and I remember I got one week off and we went up to Tofino and I was with my now 21-year-old, and he was still a babe, and I was doing a bunch of art and actually to kind of process everything that was going on, and my painting at the time was very processed on all that kind of stuff, and I remember drawing in the sand, and my wife was back at the hotel having nap, and I remember drawing this sort of circle in the sand where I drew the company on one side and the customers on the other, and I drew this kind of feedback loop between those two. And that was a real kind of effect for me of like, that is the core of your value in the business, is it’s the relationship between a company and its customers. There are all sorts of other loops, like for me dealing with investors and all this other stuff, but at the end of the day, all of that exists to support this core feedback loop between a company and its customers in that relationship. And our company just rolled out and it’s really contractual and this kind of nonsense. And so as a result of that, we did two releases a year, we did one small release and one big release. And so one iteration of that circle took us about six months, and was super tough to do, it was really hard to ever talk to a user as I was mentioning earlier, it was very hard to get feedback back, we had to kind of guess and put all that stuff together, and then we could do another loop in six months, and it was trendy painful, and I remember drawing that and realizing like value didn’t come from me raising money or any of those kinds of things. It was very useful to help build those relationships in and of themselves, they did nothing, it was that relationship that was important and having this frictionless circle back and forth around that core, became kind of like my, “oh my God, this is what I must do now.” So that was 2001, there was many steps between there and here and that business we wrapped up. We ended up selling it to IBM. It was a great sale in 2005. Oh, I shouldn’t say after, 2001 was terrible, 2002 ended up being fantastic for us. We got our first really huge deal with the standard RCMP, and then we became the standard for the US AirForce later that year, which was huge. And then I closed a 50 million round of financing later that year, and I stepped down as CEO and became Chief Strategy Officer. The next year was great, actually after that really incredibly difficult year, next healed up being fantastic, and then years later we would sell IBM, which was great, so that model, that realization, that feedback loop really became a template for how I would look at any other kind of opportunities, and one of the reasons why I ended up joining Codename because it really fit. I could see how it fit that realization I’ve had at this point 20 years ago.
Paul: What was the in-between time for you? I remember when that happened, I remember when you sold, I’m pretty sure we chatted at the time, and I was like, “hey, what’s next?” And you’re like, “I don’t know. Just going to go spend some time with the family. And think about it, right?” And not everybody gets that opportunity in the middle of their career, but I wonder if you could tell us a little bit about what that was like.
Eric: Yeah, so obviously, selling a business or anyone who’s gone through it will know, and anyone hasn’t gone through it has yet to experience…It’s just like an incredibly stressful and intense experience, especially selling to IBM. The company when we sold, we had 70 people, and IBM on the due diligence team had 35 people, just investigating us. The list, the list that they gave us of materials, we had to produce was something like 20 pages long of single line item things and a line item could be like every contract you ever signed kind of thing, and then we had 12 days, including like a weekend to prepare all that stuff. It was just kind of non-stop. And we had recently had our third child at this point and I was getting very little sleep and super focused on getting through all this, and then I had had other offers, but… and what we had learned to do, particularly my wife and I, because an offer can be life-changing certainly, and so what we had decided to do is we will just assume it won’t happen, we’ll just kind of keep focusing on just doing our normal thing all that kind of stuff. We’ll just assume it’s not really a thing, which was a good kind of because there’s certainly other ones that didn’t happen, and so that had worked out until the one time I was wrong, and that’s a happy place to find yourself. So I hadn’t really thought a lot about what I was going to do. I knew that I was super proud of the company grown into. And I was really proud of the fit with IBM, I felt it was a really fantastic fit. That kind of transaction needs to be good for the shareholders, it needs to be good for your employees, and it needs to be good for your shareholders, your employees and your customers, and I had to tick all those boxes and I felt IBM did a fantastic job in that. So I was super happy about that, but I also knew that I did not want to be in the enterprise software space anymore, or particularly even B2B, anymore so I feel super done with this and I just need a break. And so as part of that, I had to stay with IBM for six months. We sold in the summer, I exited at the end of that year, and so that was kind of…I knew that I was under no scenario staying there for the long-term, I’m not an IBM person long-term, not that they’re not great, it’s just… It’s not a fit for who I wish to become…
Paul: Did you have to wear a tie?
Eric: We were on dev side, so if you were going out to a client meeting or something like that, that’d be different, especially because I knew I was leaving.
Paul: What are they going to do fire you for not wearing a tie?
Eric: Yes, exactly. Business casual, shirt no tie they were pretty big into that. No tie and a suit. Yeah, I knew that I wasn’t going to say, and so people kept asking me, “what are you going to do, what you do what you do?” And so I didn’t know, I don’t know, I wasn’t really prepared for this eventuality of selling. Anyway, so I hadn’t really thought about it so much. I’m like, “I don’t know, I don’t know.” So I got a call from Greg Case, who I assume everyone here knows, entrepreneur, who had sold a business before that is done subsequent things, including some government stuff, and now basically retired, happily retired. Am I allowed to swear on this podcast? Dave is knodding.
Dave: Okay, go ahead, give them hell.
Eric: So Greg called me and said, “Hey, congratulations. What are you going to do?” And I was like, “Oh, I don’t know, maybe take a month off. Maybe start something new I’ve learned all this stuff, I’ve got some money.” That’s sort of the story I’ve been telling, and I’ll never forget Greg was like, “If you do that, you’re a fuckin idiot.”
Dave: What does he really think?
Eric: And the thing, if you do have a good fortune to go through an exit like that, especially with IBM. People are really nice to you in general, lots of people get super nice to you in their tone. Bankers are really nice to you, lawyers are really nice to you even if they don’t know much about this, not necessarily your banker, your lawyers… People are nice to do, but even if they don’t know about the transactions, “Oh, this is the thing, I better be nice.” So all these people are being quite nice to me and Greg comes in swearing at me, I’m like, “Oh, okay.” And he gave me some of the best advice I’ve had in my life, which is, it’s like, “you need to take some serious time off because the focus that it takes to get a business to where you have gone and going through is so encompassing that you really…You have such blinders on, you’re so used to seeing the world through the binders that you have no idea what it’s like to not have those blinders on, you can’t even use them right now.” And I’m like, “Oh.” I remember thinking like, “Oh, people aren’t talking to you like this. I respect Greg a lot.” I tell other people to listen to advice from experienced people, maybe I should listen to this guy like, “Oh, okay.”
Greg was like, yeah “take six months off and go away.” And so I was super nervous about doing it, and so I started mentioning it to people like, “hey, I think I’m going to take six months off and go travel.”
Paul: I’m pretty sure I said, “yeah, that’s probably not going to happen.”
Eric: I wasn’t convinced, but I would see in their eyes, “well, that seems like a great idea.” And that actually is what convinced me was actually kind of bouncing it off other people. The first time I told my wife and she’s like, “oh my God, that would be fantastic. Please do that.” And then I kind of talked to people about it and kind of got this bits of feedback of like, “Oh yeah, that as a good idea.” And Greg’s point had been that if you travel for six months, you’ll come back and your network of people will pretty much still all be there, whereas if you travel for two years or something like that, that network would change dramatically, but traveling for six months, you can come back and you kind of just lock into the network you still have, which of course is a super important thing to have if you’re going to start another business and all those things. So yeah, so we decided to do it and we went, my wife and I have three young children and our youngest Karen, who turned one in Singapore at the beginning of our trip, our middle son, Sasha, he turned four in Hanoi in Vietnam, and our old son was six at the time and his birthday didn’t happen until when we got back. So for six months, we brought a nanny that was working with us here with us, and so there was at least three adults to three very young children, and we went all over Southeast Asia for six months.
So I had gotten a piece of advice from Terry Clark, and Terry had told me…Mitra and I had done some stuff with Terry and his wife, and he’s like, “You seem to really love Mitra.” “Yes, I do, I love Mitra very much.” And he’s like, “If you want to stay married to Mitra, you need better invest in her getting a life outside of just supporting and raising them. Because if you don’t, when you are my age and your kids are becoming adults, she will leave you, because that’s generally what happens if you don’t support your wife, getting a life outside of the home.” Now, it doesn’t have to be work, it could be volunteering, it could be lots of different things, but something more than just that. And I remember Terry saying that to me, just as I was kind of very early in these years of being a parent, and those ideas were really rolling through my head a lot when we were traveling. And I really realized then that if I came back from that six months away and started a business, my wife would be like “There’s way I’m fuckin supporting you….I supported you through that whole other thing.” And that what she’s been saying to me though, I honestly, I think… I don’t know, I just was just so defined by work and all those things I really struggled to hear what she was saying, “I want to be a counselor, I want to go back and do my master’s. And you need to stay home and look after the kids.” And that just, it was such a shift to who I am, to not be an entrepreneur or not be flying here and doing whatever, blah, blah, blah, blah, that to kind of just create a space to see that and hear it, it literally took months of that travel that was a big processing and then coming back and being like, I see now of course from her perspective she’s like, “well, I’ve been telling you for a months.” So how could you just see now, but I’m like, “I see now that you need to go to your master’s degree and I need to be a primary parent to stay home.”
And it’s funny, we started after we were back and the kids started, Deris started at a new school at South Park, and so I was doing the drop off and pick up and meeting parents for playdates, all this stuff. And people would be like, “oh, so what do you do?” And I’m like, “oh, I’m looking after the kids.” And this one person said like, “oh, I guess what do your wife do or something?” I’m like, “God damnit I just sold my company to IBM.” I’m not nothing. It was such a big part of my identity going through that experience, especially it wasn’t all this appropriate to point out that I had done some things. It was definitely a weird way to kind a be treated and to go through that whole thing. So, yeah, so I did that for. I looked after the kids for several years for my wife, she had to finish up her undergrad stuff, and then she did three years as a Master’s program, and now as a counselor and all those things now.
Paul: Yeah, that’s cool. I did the stay-at-home dad thing for about a year and a half as well, and no regrets at all. It was interesting though, when people are like, “hey, what do you do?” “Oh I’m a parent.” Especially when you’re male, because I think there’s so much higher there’s expectations that you’re constantly building your career. For women, I think that there’s a different attitude right there, they’re kind of like, “oh, that’s cool, that’s great.” But I don’t know, maybe attitudes are shifting.
Eric: Me, I’ve never been a woman, so I don’t really know what to say having been a stay-at-home dad for several years was definitely there was an odd… I don’t know, there was like a pause like, “oh, you’re not doing anything like, oh well, what’s your wife do?” Because I think it’s very common certainly, it’d be very common for me if someone asked me, “who are you?” Work would be a big part of how I introduce myself.
Eric: Yeah, a dinner party.
Dave: It’s a social thing. Thank you for the replaying of the days. It’s great. It does make me curious what your vision is for Codename, is there an exit there eventually or where will you be in five years Eric?
Eric: In five years?
Dave: Or a year.
Eric: For me Codename was started by two guys, David Whittaker and Justin Stocks, started the company four years before I met them. So I met them in 2012, who started a company in 2008. They’ve been best friends since they met kindergartens, they’ve been best friends forever and since middle school, wanted to create a video game company and had gone to UVIC and gotten degrees in computer science there. And Facebook gaming opened up, so started the company there. And then the first year was pretty good because discovery, it was a brand new platform discovery is that one thing I was talking about here at the beginning of this was easy. And so they’re able to get discovery, but then it got harder and harder as more companies came in and ran it like a business and to all those kind of things.
So I met Dave and Justin, and one of the first things I asked them was that question like, “what do you want to do, where you want to go with this business?” And they’re like, “well, we really love making video games, and fundamentally, you want to make video games.” And where I was at the time and still am now, is I love being in the games industry, I don’t see myself at this point probably starting another thing, so I don’t really want to sell the business which is actually right now, if you’re following M and A activity at all. The video game industry 2020 was so fantastic for the video game industry and capital being liquid by nature and shifted, there’s a lot of M and A consolidation in the gaming industry right now there is some pretty attractive multiples. But ultimately, I love working in the industry, I love seeing games made. And for me, we’re in this incredibly fortunate position to make hundreds and thousands of people happy, that’s ultimately what games do and that I just feel like it’s really truly my calling in the world, going and making people happy that it’s just…It’s a wonderful feeling. And I has been to this touch point through this difficult year that we’ve all been through so far, I’m like, well, why are we really here? And to me, it’s really it’s about bringing happiness to people. I am not going to get into all the different types of happiness and all that stuff, but at the core, and that’s really what it’s about, and it’s a very meaningful way to be in the world, and so that is what I hope to continue doing for many years…
Paul: I love that.
Dave: What a great answer.
Paul: Yeah, it’s funny because we talked a little bit before recording how people see video games as kind of a frivolous time-wasting activity and obviously, if you’re in the industry you don’t see it that way, and to tie that back to your personal mission to bring happiness, and you had talked earlier about the emotions and the game experience and how important that is. I think that’ll be for some of our listeners, a completely new way of looking at games. And one of the things that’s great about games, I think as well, and this goes to table top games as well as, it brings people together, and that hasn’t always been true with video games, because video games, for people our generation, we might have sat and played by ourselves on our console game with no internet and everything else for hours, and we might have isolated ourselves in doing that, but in many ways, games now play a role in bringing people together… Right.
Eric: I guess I would argue that they always play a wrong reading to people together, like I remember many times we had an Atari 2600 when I was a kid, not everyone had an Atari 2600, and so people could go over to friends houses.
Paul: That’s true.
Eric: Yeah, you sit on the couch and play together, or you’d be at school and then you’d be talking about it, did you beat asteriod or whatever. And so I do, I think that there is a big disconnect between the cliche idea of a gamer is sort of a loner, all these kind of things, from the reality of games, even table top games. Gaming bring people together. Like sports bring people together. It’s about bringing people together? If people don’t know about that underlying value of games, I would strongly suggest checking out, there’s two TED Talks by Jane McGonigal, talking about the power of video games, and she does a fantastic job in one of them where she talks about a brain injury that she had and devising a game to help her to recover from that brain injury, she picks it off talking about the five regrets of people dying as documented by hospice workers, the top five regrets, and then it touches on how video games help with each of those things, connection to family, like my gaming, personal gaming is dominantly about connecting with my wife and kids, we play a lot of table from D and D at home during the pandemic, and it’s around connecting and creating time, not just in the playing…But when we’re not playing, it’s talking about the game and things that we can do and all those things. In pre-covid times, it was…I ran actually four different table top D and D games, one with my wife and some of our friends, and then one with each of my children on their friends, and I got to connect with my kids and their friends and kind of that soccer dad kind of coach way I’m not a soccer coach kind of person, but what I imagine that to be where I kind of got to know each of the children, and so I got something very revealing about who a person is when they play a game, like that kind of social kind of nice drops by, depending on what they’re looking for, certain young men might be highly competitive – I certainly was when I was there…
Paul: I’m not at all competitive.
Eric: Actually the biggest determinant in kind of what you enjoy games is your age, more so than your gender.
Paul: Oh, interesting.
Eric: Over the course of your life, you will change more about what are the motivations that really drive you around playing games when young men typically are heavily competition-focused, not. but young men tend to be very focused on competition, and then middle-aged men who have families are very focused on connection, to spending time with their family is the big reason that they’re gaining, playing a game of your kids stuff like that.
Paul: So interesting, yeah, I like games where you build things, like I really love Minecraft, and I’d like to build the other games, build the castle and that sort of thing. What does that say about my personality Eric?
Eric: In my opinion, the leading researcher in that area is a guy named Nick Yee, and he’s got a company out of the Bay Area called Quantic Foundry, and you can do a game or motivational model.
Eric:…where he’ll talk about testing a bunch of questions, and then kind of come back “well, here’s kind of games you probably would like, and here’s kind of things that you would like.” His research is all based on Ocean and the Big Five, which is sort of the research first based version of Myers-Briggs, and at this point, I’m just kind of quoting because I’m not a pychologist. Their research-based version of Myers-Briggs and personality test is like a Big Five or Oceans just two names for it, and so Nick built on that with a game motivational model, we’ve done actually a bunch of work with him around stuff, and so we know the kind of games that we make appeal through a particular sets of motivation.
Paul: There’s a whole other podcast all about that and… Yeah, the whole personality thing. So it’s interesting that there’s a gamer version of that, I shouldn’t be surprised whatsoever. But yeah, and our time is running down a little bit, this has been really great. We really appreciate you being with us. I know there’s a whole bunch of more topics we would have loved to have gotten to today, I wonder…One of the things that we’ve kind of talked about on a lot of these, obviously how people have managed through the pandemic, things that have changed, obviously you’ve moved to a work-from-home model, which you talked about a little bit, but I’m wondering if there’s any sort of high level or any sort of wisdom around some of the things that maybe you tried that you wanted to share with our audience before. Don’t feel obligated because we’re kind of crushing it all into the last five minutes here.
Eric: Certainly… At the beginning of the pandemic, these words I started kept echoing through my head was that leaders are defined by how they respond in a crisis. There was a huge amount of uncertainty, and at the point you didn’t quite know which way to go with all that, and so kind of leading into that, and we really like those words kept echoing like, how am I personally going to respond to something of this magnitude, which really…I turned 52 this year, and in my 52 years on planet, and I’ve never seen something kind of like this that happened, so how would I respond as a leader and how would I support everyone in the company? And one of the things that I focused on was really separating what is kind of up in the air from things that we knew weren’t changing. So our marketing plan was completely up in the air…We have no idea what was going to happen there, but we knew that our purpose, which was to make people happy, like that wasn’t changing, every day people are accessing our games, and we were living that purpose. I produced this slide and I shared with everyone when we record our meetings that had a dot for every single person who accessed our game or three games on one day, and then just a few little dots for all of us to be like, these are all people who in one day played one of our games. As I really focusing on that purpose, focusing on that core business loop that we talked about like “this is where value comes from,” that’s not changing. Value comes from that relationship, like I’ve held that belief for two decades, that is not changing, I believe that that’s a core of what our business is about, and our business will always be architected around that idea, and then really rooting all of that and the core values that we have in the business and in particularly one of our values is with great power and great responsibility. How do we support people in the company, how do we support our player community, and then how do we support the broader community?
So we often do fundraisers and stuff in our games in last year, we donated over 100,000 to a whole variety of organizations, sparking some local and some international mixture organizations of really living that value. So I kind of kept that message, these things won’t change and there’s all this other stuff that is going to change, and we would talk about like, “well, we don’t know what happened here, we don’t know it’s appear and all that kind of stuff.” And there has been a lot of change for us, but we could be really rooted in, these things aren’t changed, and you know this isn’t going to change, you may be in the office, you may be at home, that may change, but these three things are not changing.
Paul: Well, this has been great. I really appreciate you taking the time with us today Eric Jordan CEO of Codename Entertainment, and we wish you the very best in your growing business and hopefully will be like 2000, 2001, where things just rapidly recover and increase like they did the last time around.
Eric: For us, like the video games… Honestly, being in the video game industry during a pandemic was a great place to be. There was one kind of futurist person I was looking at the beginning of this year doing planning, and he talked about how one of the things that got accelerated, covid accelerated many things and one of those was really moving video games into being a primary way in which people interact online, like a core activity in which people interact online. So you happen to be into video games, it’s a good place to be… Yeah, so continue building on that to see where we go from there.
Paul: Well, we wish continued success here and all the very best, and hopefully to all of those who are still listening this late in the podcast, we wish you all the very best as well, and thanks on behalf of Dave Monahan and myself Paul Holmes.