Two companies doing work I admire have announced in the last few weeks that they're closing their doors on projects I love: Fourth Wall Studios, creator of Emmy-winning Dirty Work; and Tiny Speck, creator of quirky Flash MMO Glitch.
In neither case is the company itself shutting down. They're both conducting a pivot, as the Silicon Valley lingo goes. Fourth Wall will focus on developing its technology platform and get out of the business of original content. Tiny Speck will pursue chat technologies it developed... not games.
Neither company is continuing the work the founders meant to do when the company was formed. In both cases, nearly all of the staff have been let go.
I know what these teams are going through. I know exactly what this is like, in fact. Five years ago, my employer Mind Candy did its own pivot, switching from making the edgy, pervasive treasure hunt Perplex City to a children's puzzle game. Mind Candy was the rare pivot that was a runaway success: the project they pivoted toward was called Moshi Monsters, and the company is worth hundreds of millions of dollars now. But that wasn't my doing, and I don't have advice or insight for the people who are staying behind.
I have quite a few things to say, though, to the staff at these companies, about how to get through these coming weeks and months. And for other bystanders like myself, I have a few thoughts about this sad story and why it keeps happening. Because in every case, it's the same story.
Once Upon A Time...
...there lived a team with an amazing idea. They formed a company, then lobbied and received venture capital. O joyous day! Then they went out to build their dream with it: A risky but innovative and beautiful new kind of entertainment. The work attracted a loyal and ardent audience. The project was highly regarded by critics. It was clear the company had made something very special.
But it was also a little inaccessible to newcomers, and that loyal, ardent audience wasn't really big enough to justify all the money from that investment. A wider, more mainstream audience, though long hoped for, never arrived.
After two or three years, the company just couldn't afford to keep things going any longer. And everyone was sad that this beautiful, creative thing would pass from the world.
It's heartbreaking, that's the only word for it. It's heartbreaking as a fan -- I attended Glitch's final shutdown party late last night, and more or less cried myself to sleep after. But as sad as it is for the audience, trust me, it's orders of magnitude sadder for the creators who spent years, literally years of their lives pouring their deepest selves into building a magical thing, only to have it taken away in the end. Not to mention the, you know, sudden need to find a new job.
But wallowing in misery, while it offers its own comforts, doesn't ultimately help anything. So let's move on.
Without a Net
For the former staff of Tiny Speck and Fourth Wall: It's going to be OK, I promise. If you start to freak out about it, you don't have to take my word for it; go look for yourself.
The nice thing about working on a critically acclaimed but commercially unsuccessful project is that you still have all that glory to bank on. And if you weren't, say, the CFO, nobody will hold lack of revenue against you. In fact, you may find your late and lamented job unexpectedly opening doors for you two, three, five years in the future.
In the meanwhile: Give yourself room to grieve. You haven't lost a person, but you've lost a dream, and that can hurt just as much. The first few weeks are the hardest. Be kind to yourself, whatever that means to you: spend more time around people you love and less around people you don't. Eat nice things. Take bubble baths. Hit the whiskey, but not too hard.
If you're like me, it'll be a year or so before you start to remember the joyful parts more. But it will happen.
Don't despair that your best work is behind you, because that's only true if you stop working now. Know that you made one amazing thing, and that means there are inevitably more amazing things in you. Keep going. Fourth Wall: Spread into the studios and networks, and change the face of Hollywood. I know you can. Tiny Speck: Go Glitchify all of the games. They need a good dose of emergent, collaborative whimsy. In being struck down, you have become more powerful than anyone could possibly imagine.
And let me know if you need a shoulder to cry on. I don't even care if we've never met before. It may be hard to find people who understand exactly what you're going through right now. I'm here for you.
And now on to the lessons-learned part of the post.
Once or twice might be a coincidence, but the same story three times is a pattern. And I bet if you looked hard, you could find many, many more examples of this same story playing out. So... why? Why do smart people and good intentions and an amazing product keep flaming out this way?
Putting on my pundit hat, I'd say the answer is this: venture capital is toxic to a creative enterprise.
The reason that people go for venture funding in the first place is to get the money to build a bigger team and a bigger project than they could otherwise afford. Some dreams -- RIDES, for example -- would be harder and slower to build without a big injection of funding. But I'm here to argue that's not necessarily a bad thing. Sometimes a leaner company built on sweat and shoestrings is the better bet for the long haul. I think this is doubly true when the company in question has a creative output.
Investors bring problems. One is the need to answer to a higher authority. A funder will always bring new interests and expectations to the table. But few venture capitalists are going to have the savvy regarding storytelling or experience design, and may not recognize the difference between their own taste and objective truth. (Not to say that's what went down in any of these three cases -- but it's a significant risk to the company's output.)
When the party's over, a venture capitalist is looking to make money. Usually on a particular timeframe; usually in a particular quantity. A VC wants to get in and cash out, and no critical acclaim or special community or innovative experience is going to change that. So accepting venture capital puts a ticking clock on your success.
A massive injection of capital can also provide creators with a false feeling that an immediate revenue stream isn't necessary. Consider the case of Glitch: The only way to give the company money was a subscription, which only came with questionable benefits -- extra teleportation privileges, and credits to spend on in-game clothes and house customizations. Now that there are art books and music for sale, many wallets have been opened anew. Fourth Wall Entertainment never had a visible revenue stream at all! Perplex City had its puzzle cards, the board game, and so on... but abysmal distribution outside of the UK. For people in most of the world, you'd have had to spend as much on shipping as on merchandise, which wasn't exactly an easy sell.
And even Perplex City didn't do a lot of the things I consider no-brainers now for scraping up revenue from a creative venture. If you're making media, you should also make sure you're selling t-shirts, art prints or posters, plushies, hard-bound books, jewelry, music downloads. Embrace the philosophy of the thousand true fans, and continually produce a fresh stream of new reasons for them to give you money.
Look at Penny Arcade or MS Paint Adventures, who have taken this kind of organic growth and ruthless monetization and turned themselves into bona fide cultural phenomena. Don't leave money on the table. Just don't. And consider only building as much as you can stand to build out of your own pocket to begin with. Bootstraps and duct tape. If you only commit your own resources to the project, then the only one who can decide when the show is over is you.
Not All Investment Is Bad
Even if you don't think you can make the project of your dreams without investment, venture funding isn't the only game in town. Consider the case of Zombies, Run!: A successful crowdfunding campaign on Kickstarter, which led to a great product that people will pay money for. That money led to expansion of the company and the Zombies, Run! product line, even more expansion of the fan base, and to all appearances, a stable revenue stream. It's the picture of successful organic growth.
Crowdfunding may not be for everyone, you say. It's hard and scary, and the outcome is uncertain. But consider this: If you can't conduct a successful crowdfunding campaign, there is a strong possibility that you're making something nobody wants. Or something that you can't explain well enough for people to understand why they want it. Or that you can't market well enough for people to hear about it even if they did want it.
And in all three cases, it's better to find out before you've spent months or years of your life building something -- because if any of those things is true, you won't be any more successful with the product launch than with the Kickstarter.
There are a thousand reasons that companies fail. Bad marketing or bad management, bad luck and bad timing. Sometimes it's down to interpersonal conflict, legal drama, sometimes the core vision simply wasn't very good.
But for companies to fail, even after building a thriving community, or winning awards, or getting industry kudos for innovation... a tragedy, yes. But with slower growth and more modest expectations, arguably a preventable one. It's OK to make something that isn't the next Star Wars or World of Warcraft -- and that shouldn't be anyone's benchmark to begin with. Success can come in all sizes... not just the big fish venture capitalists are hungry for.