Music to Their Ears: How the Founders of Harmonix Found Their Niche
In last week’s post on Tony Hawk, I mentioned in passing Hawk’s lucrative line of skateboarding video games.
For the next couple posts, I’m going to take a look at some of the ways people are making money off video games.
Video games are more than a way for teenagers to pass the time. Video Games have become an incredibly lucrative industry, taking in about 11.7 billion dollars in 2008. Today’s games have become such highly complex products, with countless people contributing to the end product, that it’s often easy to forget that it still takes just one or two people to actually come up with the idea for a video game.
So here’s a Why Didn’t I Think of That? moment: A video game where players “play” instrument-shaped controllers, pretending to make music from their favorite bands.
This story from CNNMoney.com is a great look at Harmonix, the creators of the wildly successful Rock Band and Guitar Hero franchises. In the interview, co-founders Alex Rigopulos and Eran Egozy discuss–among other things– the many, many failures that it took to get to where they are– the top of the popular gaming world.
“As an entrepreneur you never want to lose site of the mountaintop you’re trying to get to, but you have to remain incredibly flexible about the path that you take to get there, which often needs to change direction,” says Rigopulos. Good advice. And, if you read the interview, you’ll see exactly what he means.
Interestingly enough, the story of Harmonix reminds me a lot of one of our WDITOT stories. Ge Wang, the creator of Smule, a company that manufactures “virtual instrument apps” for the Iphone, was in the academic world, teaching and studying “computer music.” Much like Harmonix’s Eran Egozy, he applied some of the revolutionary technology he was working with, and manufactured a fun, musical product for consumers to entertain themselves with.
Tony Hawk: Pro Skater
Tony Hawk was able to make a fortune–an absolute fortune– by doing something he loved. Granted, he was really really good at it. But at the time, skateboarding was a lot less mainstream than it is today. And while some die-hard skaters might blame Mr. Hawk for “exploiting” the sport, or bringing it into the mainstream, he really was the first person who was able to take the relatively obscure pastime and make a lucrative living off of it.
Today, skateboarding is a 4.8 billion dollar industry. But it wasn’t always that way. Back in Hawk’s high school years, relatively few people knew or cared about the sport. But there was definitely an underground scene, with competitions, and prize money available to those with enough skill. Needless to say, Hawk had enough skill. In fact, he won so many skateboarding competitions that, by the time he was a senior in high school, he bought his own house.
Despite that, the skateboard industry still wasn’t much of an industry at all. When Hawk decided to start his company in 1992, many believed the “fad” was on its way out for good. Hawk didn’t, and neither did his friend and business partner, Per Welinder. Both of them took out second mortgages on their homes, putting up 40,000 dollars each, and started their own skateboard company, Birdhouse.
But, even as a business owner, the astronomical athlete didn’t exactly become a finicky micro-manager. He quickly realized that he could do more good winning competitions like ESPN’s then newly formed “X-Games.” By making a name for himself, he simultaneously increased recognition of his brand, Birdhouse.
If being known as “the greatest skateboarder” wasn’t enough to make him a household name, a series of skateboarding video games with his name on it certainly were. I fondly remember the day Tony Hawk Pro Skater came out for Play Station. I spent over 48 hours, during a three day period, playing the game. And I wasn’t alone. The game and its many sequels have accrued more than 1.6 billion dollars in sales in the last ten years.
How much of that went to Tony Hawk, I couldn’t say. But, Forbes has Hawk pegged as “the world’s highest-paid action sports athlete.” Whatever an “action sports” athlete is.
Last year, he earned about 12 million dollars.
And to think that, when it all started, no one really thought you could make any money from such a goofy little “non-sport.”
If you want to know more, I highly recommend you read Entrepreneur’s recent interview with Mr. Hawk, and their look at his newest– and riskiest– video game yet.
RESOURCES
What’s The Doughboy Afraid Of?
One of the great things about running a successful business is that, as your success and wealth grow, so do your influence and power. Of course, that’s not always good news for other, competing start-ups.
Just look at the chilling tale of Häagen-Dazs vs. Ben & Jerry’s. This story is an oldie, but a goodie.
Reuben Mattus was a Polish immigrant. He was 47 when he decided to start his own ice cream company with his wife, Rose Mattus. They called it Häagen-Dazs, which as you may already know, means absolutely nothing. It’s two made-up words meant to look Scandinavian.
Let’s go back five years from that, to 1978 in Burlington, Vermont. Ben Cohen and Jerry Greenfield, “a couple of hippies,” as they have described themselves, took a twelve thousand dollar investment– four thousand of it borrowed– and opened an ice cream scoop shop in a renovated gas station. They called it Ben & Jerry’s, and within a few short years, it became a staple of Burlington, Vermont. They opened their first franchise in 1981, and in 1983, the same year Pillsbury bought up Häagen-Dazs for eight figures, Ben & Jerry’s opened their first out-of-state franchise. Within a year, the two companies would be, more or less, at each others throats.I probably don’t need to tell you that Häagen-Dazs was a huge success. In 1983, Häagen-Dazs was sold to the Pillsbury company for 70 million dollars.
See, while the Ben & Jerry’s ice cream scoop stores were nice, the real business was in the cartons of ice cream they sold in grocery stores.
When Ben & Jerry’s began moving into Boston, the “Doughboy” tried to throw his weight around. Häagen-Dazs threatened to pull their product from grocery stores and other distributors unless those distributors signed an agreement that would basically make them the exclusive premium ice cream brand in all of Boston.
It might sound a little outrageous now, but it makes sense. Pillsbury had just paid 70 million for this name brand. Of course they were going to try and protect it. Besides- Häagen-Dazs was a huge seller, one distributors couldn’t afford to lose. Ben & Jerry’s were certainly doing well for themselves– the company brought in about 4 million dollars that year– but they simply couldn’t compete with Häagen-Dazs on that level.
As for ice cream in Boston, it seemed Ben & Jerry’s was out of the game before it even began.
But the folks at Ben & Jerry’s weren’t going to go down without a fight.
In his book, Ben & Jerry’s: The Inside Scoop, former Ben & Jerry’s CEO Fred Lager writes:
We decided up front to cast ourselves in a fight against Pillsbury, not Häagen-Dazs. Häagen-Dazs versus Ben & Jerry’s was one ice cream company against another. Pillsbury versus Ben & Jerry’s was the Fortune 500 against two hippies.
Tactically, it was a brilliant move. After all, Häagen-Dazs was more than just “another ice cream company,” It was a truly inspiring entrepreneurial achievement, an embodiment of the American Dream. Pillsbury on the other hand? Well, it was a bit easier to pass them off as a faceless corporation.
And it was that thinking which begat their now infamous slogan, “What’s the doughboy afraid of?”
They plastered Boston with the slogan. They took out ads on buses. They handed out flyers. They made T-shirts. They took out an ad in Rolling Stone magazine.They set up a toll-free number that people could call to learn more about the situation, and they printed that number on every single pint of Ben & Jerry’s ice cream they sold.
“Do you think the Doughboy is afraid of two guys working with 23 people in 4,000 square feet of rented space?” one of their flyers read. “Do you think the Doughboy is afraid he’s only going to make $185.3 million in profits this year instead of $185.4 million? Do you think the Doughboy is afraid of the American Dream?”
A little verbose, maybe. Hyperbolic even. But it worked. Ben and Jerry were able to successfully cast themselves as the underdog victims of a cruel, faceless corporation. And the media was starting to take notice.
As the deadline Pillsbury had set for distributors to stop carrying other brands of premium ice cream neared, publications like the New York Times, the Wall Street Journal, and the Boston Globe started running pieces on this “David vs. Goliath” battle.
Finally, Pillsbury gave up. After months and months of back-and-forths, an agreement was reached: Pillsbury would not punish distributors for carrying Ben & Jerry’s ice cream, and Ben & Jerry’s would take the 1-800 number off of their ice cream pints.
For Ben and Jerry the battle was worth the time and effort. After all, they got more publicity in that short time than years and years of advertising would have gotten them. As for Pillsbury? Well, let’s just say they’re doing alright. But it just goes to show you- never underestimate your rivals, no matter how big or small. A little bit of marketing savvy and willpower can go a long way, as the Doughboy found out.
Resources
http://www.rezoom.com/money/from-the-vault/read/5679/
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Batter Blaster
If you haven’t heard this story yet, you’re in for a treat.
When Bob handed me an aerosol can of pre-made pancake batter, I’ll admit, I was dubious. Then I noticed something strange about the can. A little USDA-Certified Organic label.
Organic Pancake Batter in an aerosol can? Yep.
Sean O’Connor came up with the idea for Batter Blaster during the early 2000′s, during his time as co-owner of Thee Parkside Cafe in San Francisco.
But for O’Connor, the hardest part wasn’t coming up with the idea, it was getting others to believe in his idea.
“Try telling someone, ‘I have this idea. We’re going to put pancakes in a can,’ and not have them laugh you out of the room,” O’Connor said.
In fact, so few people believed in his idea that he ended up buying some equipment, finding a company which could mass produce his batter, and setting up the business with his buddy Nate Steck, a veteran of the food development/manufacturing business.
Batter Blaster is currently stocked at most grocery stores in the dairy section. (Oh, and in case you were wondering- the aerosol can Batter Blaster comes in uses CO2, a more environmentally friendly alternative to the nitrous oxide used in most whipped cream aerosol cans.)
Anyway, with Bob’s urging and a hankering to spray myself a cake, I tried it myself. I’ll admit that I’m not much of a chef, and it took me a couple of attempts to get a perfect hotcake. But I did. And sure enough, it tasted… good. Real good. The amount of batter in each can isn’t much. You won’t be able to make much more than ten decent-sized pancakes with a single can, if that. (The can claims you can make up to 28 pancakes, four inches in diameter. Other reviewers seem to have had more luck than I did, quantity-wise.) But at less than four dollars a can (you can get a three pack for 10 dollars at Costco), this product is certainly worth the money, not to mention the luxury of being able to make only one or two pancakes at a time.
Is it the be-all end-all pancake mix? No. And it certainly won’t replace mom’s hotcakes. But hey, mom’s not here. For my money, the amount of time and energy that Batter Blaster saved me was invaluable.
So really, there’s only one question that remains unanswered:
What’s for lunch?
Resources
http://www.smartmoney.com/smartmoneytv/?vid=29413207001
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/31/MN1PUKCD1.DTL
http://www.theimpulsivebuy.com/wordpress/2008/08/04/organic-batter-blaster/
Daredevil Strategies
After Bob and Greg showed me this story, I just had to write about it.
Alison Levine was born with a life-threatening heart condition called Wolff-Parkinson-White syndrome. As a teenager, her health was so unstable, that she couldn’t do many of the things that her peers took for granted. Simple things, like driving a car and climbing stairs.
But Alison eventually underwent two heart surgeries. Within 18 months of her second heart surgery, Alison made up for all those lost years of climbing stairs, and she did it all at once; she climbed a mountain.
In fact, she climbed a lot of mountains. In 2002, about five years after her surgeries, Alison was the team captain of the first American Women’s Everest Expedition. In 2008, she became the first American to reach the South Pole on skis, taking an obscure, 600 mile route across west Antarctica.
Oh, did I mention that she also suffers from a disease which affects blood flow to her extremities, leaving her highly susceptible to frostbite?
It’s pretty amazing stuff, no doubt about it. But what’s equally impressive, in my humble opinion, is the business she’s built for herself.
See, long before she ever climbed a mountain, Alison was a veteran in the business world. She had years of experience, working for companies like Goldman-Sachs. But, to put it simply, she wasn’t fulfilled.
“After serving as team captain for the first American Women’s Everest Expedition,” Alison says on her company’s website, daredevilstrategies.com, “I realized that many of the strategies employed in the business world are the same strategies used when climbing the world’s highest and most challenging peaks. Foresight, focus, and flawless execution are equally important in the jet stream as in corporate America.”
That’s why she founded Daredevil Strategies. Using the skills she’s amassed during her 20 years in business, as well as her numerous adventures in the wilderness, Alison speaks to corporations and companies about focus, teamwork, and more. And, given her pedigree, one is tempted to listen to what she has to say.
Alison gets 15,000 dollars for every hour she speaks. (That’s pretty close to my hourly rate, give or take a few zeros). But how did she get to where she is?
The story of Alison’s first “paid gig” is outlined pretty thoroughly in this great profile of Alison in the San Francisco Chronicle. But, briefly, here it is:
When Alison had the idea to become a speaker, she auditioned with Virginia’s Keppler, a bureau of motivational and celebrity speakers. The audition went fine, but she didn’t hear anything back for six months. And then, out of the blue, she got a call.
A celebrity speaker scheduled to speak at a convention in Las Vegas had come down with the flu and dropped out at the last minute. Jeff Hurt, the event’s planner, scrambled to find a replacement through Keppler Speakers, and they put him in touch with Alison.
She had less than a day to build a presentation, and deliver it to a crowd of people who were not only clueless as to who Alison was, but were still expecting the celebrity speaker up until the moment Alison walked on stage.
Well, the one thing that separates people like Alison from the rest is the ability to say “Yes,” even under the most strenuous conditions. That’s what Alison did. She stayed up the entire night working on her presentation. She barely had time to “freshen up,” before walking out on stage (still being introduced as the cancelled speaker).
How did she do? She knocked it out of the park, of course. She played the audience’s false expectations for laughs, and then she took charge of the presentation. She succeeded beyond Jeff Hurt’s wildest expectations, and she helped save his event. He didn’t take it lightly. Jeff recommended Alison to anyone who would listen. And that’s how her career started.
In 2007, Alison made over one million dollars from her speaking engagements.
Alison is still climbing mountains, and still booking gigs through her company, Daredevil Strategies.
Oh, and if you’re interested, here’s another great story from the Why Guys about someone who turned Corporate Speaking into a shockingly lucrative venture.
