Adam Lieb's Blog

This essay is part of a collaborative blogging experiment to answer the following question: What inspired you to found your startup? Read responses from founders who are far better writers than I am on Startup Edition

As a huge Latin nerd, I was probably the only kid in law school who grinned each time a new italicized Latin term appeared in a textbook. Because I love understanding the historical meaning of words and care about etymology, I took Latin all through grade school and college. I especially love understanding common words that are overused or over-hyperbolized.

What is inspiration?

I’ll avoid going super nerd, but *insparare*, the root of the word “inspiration,” is Latin for “blow into, or breath into.” This intuitively makes sense because when we are hit with an inspiration, it is as though something external has “breathed into us.” We feel full - full of ideas, full of creativity, and full of energy. Like many other entrepreneurs I know, I typically come up with a new business idea each week. Most of them make sense to me; they are solutions to problems I see in real life. I write these ideas down so I don’t forget them and have been doing this for probably ten years. When I came across the idea for Duxter, I was inspired. I became filled with energy and life. I couldn’t simply write it down and go on with my life. This is how I distinguish an inspiring idea from simply a good idea.

Pre-Inspiration

For four years I owned and operated a network of sites that catered to hardcore gamers. Gaming Synergies was the parent company of 25 different web properties selling a variety of goods and services. At our peak, we were generating $200K a month in topline revenue with about a 60% margin.

Our business was thriving, but for some reason, we had a hell of a time getting gamers to connect with us through social media. We constantly pushed our Facebook pages and Twitter accounts but could never build up any traction on these platforms. Frustrated, I started reaching out to some of our frequent customers asking them what the holdup was. I would consistently hear a variation of the same answer:

“I don’t want X to know what I am doing over here in my gamer life.”

Fill in X with mom, wife, kids, girlfriend, boss, friends at school, or other people at the law firm. After pushing a bit further, I got to the heart of the issue: “gamerlife” was perceived as unique and separate from “personal life” which is what mainstream social media, such as Facebook or Twitter, is typically used for.

Inspiration

After hearing from a few customers, the proverbial lightbulb went off. Inspiration had hit. Here is how I spent the ensuing three days:

• 12 hours on competitive research to understand the landscape
• 4 phone calls with friends and advisors on “the idea”
• 10 hours in Photoshop trying to mock up my “vision”
• 5 hours in Word writing a quick and dirty 3 page business plan
• 2 hours setting up domains and servers in order to build a working prototype
• 4 hours on various forums trying to convince some other community builders to help me work on the prototype

Post-Inspiration

Since that “lightbulb” moment, I don’t think I’ve spent one day where some aspect of my business wasn’t on my mind. I’ve recruited a badass team to join me in my vision. We’ve received significant funding to help accomplish our dream. We have had the pleasure of creating a community and platform for hundreds of thousands of gamers so far. 

I’ve had a dozen of other business ideas since and write them down in a little notepad so I don’t forget. Even though I know I won’t, I always think that one day I’ll come back and try to execute some of these ideas.

The only ideas I want to work on are the ones that keep me up at night. The ones that prompt me to forget about my responsibilities. I only want to work on ideas that I find inspiring. Inspiration will forever be my personal barometer for good ideas. This could steer me wrong, but so far, it hasn’t. 

I encourage you to hear about inspirations from my fellow founders on Startup Edition.

Creating a game that truly engages gamers is extremely challenging. These days our attention span is shorter and our options are more numerous than ever. Yet “engagement” continues to be one of the chief measures of a successful game. Disruptor Beam, the creator of Game of Thrones Ascent, has found an amazing way to increase key engagement metrics. 

How most games do it

Typically in appointment based games there is an unbreakable bond between premium currency and time. If a gamer doesn’t want to speed up time (typically in order to complete a building/game unit) he must simply use some of his premium currency. Most games are now mixing standard virtual currency with premium currency. Meaning there might be ways to “earn” time, but typically it must be paid. 

For only 446 gems (~$5) I can finish my build. 

How to game the numbers

What GOT Ascent went and did is brilliant. They offer a PERMANENT and FREE 5 minute speedup to ANY building/unit during the last 5 minutes of the build. This creates an incentive to login or stay logged into the game, boosting time and frequency metrics.

Note the Bowl of Brown. It is FREE.

I am sure there are other games employing this same tactic. It is a nice way to prompt more frequent/perpetual logins. Gamers feel they are “missing out” if they don’t take advantage of free speed upgrades. Especially early on in the game when something like 5 minutes makes a material difference. I will be curious to find out how much this tactic boosts engagement KPIs. I will be even more curious to find whether or not this mechanic actually matters. Do games that use this mechanic active at a higher rate? Monetize better? Or have longer lives? 

My brain works in a fairly linear fashion. I pick an end, then work backwards to find the intermediate steps necessary in order to achieve that end. When working on my pitch deck the same logic applies. Often times I start by asking myself the question “Why are we doing this?” This became a challenging question for my pitch deck. The high level answer is obviously “to help tell your business story,” however I always got caught up on the nuance. Specifically:

• Is the purpose of this deck to help folks who have never heard about us, learn about us for the first time? 
• Is this supposed to act as a visual aid while I give a formal presentation?
• Should we have a deck that is purely visual and easy to talk over? or should this contain a good deal of text for people to read through? 

The answer was yes. My deck was used for just about everything I envisioned and didn’t invision. 

Be flexible

One of the lessons I learned early on is that your deck will be used in a variety of different atmospheres.

• At a coffee shop, on a tablet, referencing slides on occasion
• On a projector in front of an audience behind my back
• Emailed to someone before a meeting then expecting to answer questions during a call
• On a computer in an office walking someone through it slide by slide

Choose an order that promotes a consistent story

One of my biggest challenges was figuring out in what order to put my slides. I believe strongly that any good pitch comes off as a story, not just a list of facts about your business. Certainly this isn’t a novel opinion, however it is easy to get caught up in the “checklist” game. Instead of using templates or checklists I focused on two discrete points.

1. How can I make my deck tell a story when I am not there?
2. How can my deck act as a visual aid when I am there to narrate? 

The story ended up being identical in either case. When I was able to talk over the deck I simply used it to prove my verbal points. It was almost as if having it written down proved I didn’t just pull something out of thin air. 

Text/Visuals or both?

There are really two schools of thought here.

1. Text: 30/20/10 rule. 30 point font, 20 minutes, 10 slides. Well done decks end up with powerful headlines and supporting bullets.
2. Pure Visual: Include almost no text and make it extremely visual. A picture is worth 1,000 words philosophy.

I’ve used both before and truthfully never liked either. Anything I put in text I know I should be saying verbally. Pure visual doesn’t really contribute much to a presentation, and is most certainly useless in a “if you’re not there” atmosphere. My most recent decks have all been infographic. My logic was to show images and visuals that I could not easily articulate. The downside is that infographics can be confusing if not understood, they can also be distracting during a presentation. I rely on waving my hands around a lot in presentations, in order to keep the audiences attention. 

Think

If you are creating a new pitch deck start by thinking about the “why.” Why are you building this thing in the first place? My answer certainly isn’t the only one, but it was right for me. Be conscious of how your deck will be used and make sure your execution fits those aims. 

 

One of the things I’ve noticed lately is how much the investment process is about building confidence. More often than not an investor-entrepreneur relationship begins with an introduction from a mutual contact. There is some base level of confidence that the entrepreneur isn’t a bum off the street and the investor is someone that could potentially write a check. How on earth do you get from “Nice to meet you” to “here is a two hundred thousand dollar check, go kick some ass?” Focus on building confidence…

…in the entrepreneur 

Before I dive deep into my pitch I try to convey that I know what the hell I am talking about. There is a delicate balance between humble and confident that an entrepreneur must strike. It is crucial to quickly build credibility. I’ve seen this done really well in a few different ways

• Show you’re in the network. I usually look through an investor’s portfolio, website, blog, Linkedin, and Angel List before the meeting. I see who they he has invested in, who we both know, and what sort of people they gravitate toward. There is an incredible amount of goodwill you instantly receive by running in the same circles with folks an investor respects or has made money from. The same can be gained if you went to the same college or business school
• Talk about where you’ve been before. This only usually works if you’ve been somewhere impressive or have been in the industry awhile. I find this often dove tails into your pitch very nicely. 
• Show thought process. It is really impressive when an entrepreneur can spell out his thought process all the way from idea, to execution, to traction. Start with your hypothesis, talk about how you validated it, then talk about how you’ve seen traction grow. This is a really “smart person” way of saying “I was right.” The difference between starting off with traction and the “I was right” statement is that the investor gets to go along for the ride, even if it only takes 90 seconds

…in the team

No matter how well thought out your plan is, how huge of a market you are tackling, or how charismatic you are, teams are what make businesses successful. Smart investors know this. In order to convey that you and your business are going to be successful you must build confidence in your teams ability to execute. There is a nuance here. Building confidence in your team isn’t just about stacking up resumes and expecting all the puzzle pieces will fit together. The confidence comes when the investor says “this team can work well together and execute.” A few things I’ve learned, mostly through A/B testing my pitch.

• Just giving resumes of your team isn’t enough, in fact it will hurt you. There is something dehumanizing about showing a bunch of headshots with where everyone went to college and what they majored in
• Talk about the team in a more conversational sense. Talk about how you met them, how you recruited them, and why they are in love with your business
• Try tossing in a claim to fame or one impressive accomplishment. “This guy might have the highest IQ on the team, he only missed one question on the SAT” or “this guy hacked together the worlds only Nintendo Wii API” (Disclosure, these are both things I’ve said in my pitch)
• I find recruitment stories are very powerful. It shows how you sold your vision to someone else (just like you are trying to do with the investor), it shows the team is bought in, and it humanizes the company

…in the market

I find markets to often be limiting factors. Folks will take risks on unproven founders and disjunctive teams. Experienced investors will not take bets in markets that cannot (under any circumstance) pay off. It is often said that a B team in an A market is better than the inverse. When I see a pitch where the entrepreneur defines his market (and it is too small) the Blackberry’s and iPhones start coming out. Don’t make this mistake. Build confidence in your market.

• Top down market analysis. Explain your total addressable serviceable addressable markets (TAM/SAM). Only use numbers you are comfortable with explaining. You can usually find an IBUS report on your market to get a sense for the total pie. Then slicing it down into what is actually addressable for your business becomes crucial. 
• Bottom up market analysis. The most successful way to do this is with your own data. Surveys you’ve actually conducted to prove that the market you are claiming exists, actually does exist. This should also serve to show the investor that there is demand. Saying you make a puzzle game and 30% of the folks you surveyed on Facebook who play Facebook games enjoy puzzle games, quickly helps you extrapolate UP your addressable market (Facebook gamers[a well reported number]*.30).
• Understanding of the market. Not only should there be a qualitative understanding of the market (both top down and bottom up) but there must also be a substantial qualitative understanding of your market. This can come from domain expertise (weakest), team backgrounds (stronger), or diligent market research/customer feedback (strongest). 

Ultimately closing investment dollars is about building confidence. Build confidence that you know what you are doing, you’ve assembled a team perfectly suited to join you on your quest, and that the market you are going after is both large and well understood by you and your team. 

I spent a great deal of time and deep thought on how to properly order a pitch deck. I’ve read a variety of books like The Art of the Start. I’ve read dozens of blog posts from experienced and thoughtful entrepreneurs and VCs. I’ve looked up a dozen of Angel Group and VC’s “pitch guides” they proudly display on their website. The conclusion I have come to is there is no such thing as the perfect pitch deck order. To make matters worse, there isn’t even such a thing as the perfect pitch deck content. Through all of this research and subsequent experience pitching a handful of businesses over the last several years I have come to the point where I feel I can confidently talk about what I have seen work and what I’ve learned. 

No perfect order

Just accept the fact that there is no perfect order. Some folks think the team should go first. The logic goes

How do I know I can believe you if I don’t know who you are and where you come from?

Other folks think the problem should be pounded on up front.

Show the pain. If you explain the pain, your business will be the logical conclusion. Start with the pain. 

Other folks think it is important to set the context and the landscape.

Paint a picture of the landscape. What does the market look like? What is the world without your solution? 

There are a ton of different philosophies all of which have merit. The truth is your audience may very well have a preference, but you’ll rarely know this. Operating in a world with imperfect information is challenging, but ultimately we can hedge against it. 

Focus on the story

Every story is different but they always have a few key components. Beginning, middle, end, characters, controversy, climax, etc… These key themes should be observed in your pitch deck. Avoid a deck full of business facts, which cobbled together make up a very compelling reason to invest. This is a stumbling block for highly analytical people (engineers/lawyers etc..). We think that if we stack up all these facts on one side that we have “proven” our deck is right and somehow that means we win. 

Put your strengths up front

When I talk about strengths I really mean that in the competitive sense. In the investment sense, what does your company have that other companies at your stage don’t? The answer is usually team, market, or traction. Rarely is strategy, business acumen, or graphs your strength (or at least it shouldn’t be).

• If the market you are going after is gigantic put that out front
• If you have the best team assembled to conquer the market, start with that
• If your product is gaining amazing traction, definitely lead with that

Don’t ignore your warts, but focus on why your business is an attractive investment opportunity before getting too deep into the weeds. Within the first 2 minutes you want your audience to think WOW at least once. WOW this the perfect team, WOW this market is huge, or WOW their customers really love this thing. 

Don’t put the team at the end

The most painful place to put the team is at the end. Regardless of how impressive your team is it almost always feels like you are trying to hide something. I find that about 10 minutes into a pitch I start wondering if I should believe the presenter. It takes about 10 minutes to make enough assertions that it feels like something might not be true. Sure references to 3rd party authorities can help, but nothing helps more than credentials. Your team should be a key part of your story. 

Sum it up and ask

End with a summary of why this is a great proposition, basically why someone should invest, then go straight to the actual ask. If you don’t ask you will not receive. It is much harder to say “No” to someone than it is to just smile and nod when they say something squishy like “And we are looking for great people like you to be involved.” Have an ask, be firm, and be confident. 

My current order

I have A/B tested a dozen or so different orders and here is what I currently use.

• High level one sentence description. Clear and concrete. Not abstract. This sets the context for what is to come
• Business genesis. This is a personal story which illuminates the problem. 
• Market breakdown. Who are we for and what do those folks look like. 
• Team
• Solution
• Secret sauce
• Biz model
• Ask

This insanity was created by Sky Kruse (Batmobile) my co founder/CTO and edited by me (ACE) 

 

The party has entered a new area

The party has encountered INVESTOR PROSPECT BOSS FIGHT

ACE tells BATMOBILE: This is my third run at this boss

ACE equips WELL HONED SALES PITCH

BATMOBILE attacks INVESTOR PROSPECT with OLD AMAZON STORIES

ACE performs special maneuver TERMS SHEET

ACE attacks with WELL HONED SALES PITCH

ACE scores a critical hit on INVESTOR PROSPECT!

INVESTOR PROSPECT has 0 gil!

ACE has gained 0 gil!

ACE has been hit STATUS IMPAIRMENT: TOURETTES SYNDROME

BATMOBILE has been hit STATUS IMPAIRMENT: TOURETTES SYNDROME

YOUR PARTY HAS BEEN DEFEATED

I promise this post is not about me reliving my 4th grade frustrations. I am an absolute stickler for precise language  I really hate the term “average” when talking about metrics. Average is really a squishy term that means something is “about in the middle” of something else. When talking about metrics I am usually interested in either the mean, the median or the mode. Often times I am interest in all of them but for different reasons. Making data driven decisions starts with asking the right question. I’ll walk through a story where asking the wrong question lead to some bad decisions and ultimately how we fixed it. 

Scenario: Our CTO (Sky Kruse) and I were analyzing our AARRR! metrics for a recent cohort (the last 100 users to join the site). Sky reported that our Referral (the first R) metric was an average of 6.8. Sky was using mean to mean (see what I did there?) average. This number was awesome so we neglected spending any time thinking about or working on our referral mechanics. Turns out we made a big mistake. 

Here is how different understanding of the word average leads to completely different conclusions (some WRONG) about user behavior:

Mean

This is usually what we are talking about when we say average. The arithmetic mean, add up all the numbers then divide by the number of numbers. While probably the most widely used, I find it to be the least useful “average” when decision making. Mean’s kyrptonite is the almighty outlier. For us, a mean of 6.8 was a really attractive number, however it turns out that it was misleading because of the outlier effect.

Median

The median “average” tells you if the middle value if you lined all values up in order of smallest to largest. If you plotted all values in a range on a bell curve the very center point would be your median. Medians become less than useful when values are clustered. It is most valuable on smooth bell curve type ranges. In our case the median value was one. This told us that there were an equal number of users who referred one or fewer friends as there were who referred one or more. Because of the clustering around one this became a relatively useless number. 

Mode

This is my new favorite type of average. The mode tells you what value occurs most frequently. In our case, what behavior is most frequent. When analyzing our R metric the mode of all user behavior was zero. If we took the second mode (or the second most frequent behavior  it would have been one.This was obviously a drastically different understanding of our average user behavior, in fact it was a really poor metric. 

Range

Mean/median/mode have an important cousin named range. Simply, a range tells you the difference between the largest and smallest values. In our case this ended up being an extremely telling statistic. We had a range of 108.

What we learned?

The median and mode told the same story. Most new users didn’t invite any new members. Those who did invited just one. The range told us that we had a crazy outlier. We went ahead and plotted our referrals on a graph (no we didn’t use our TI-83 calculators). Turns out that we had a handful of outliers on the high end (5 users who referred 25+ people each). 

What decision did it change?

The original decision based on the “mean” was that we were kicking ass with our referral metric and didn’t need to spend any time optimizing it. Turns out our referral system was geared toward high end referrers not average users. We offered some cool incentives and rewards for inviting your friends in chunks (5/10/25/50/100). A handful of new users would sign up and get hooked into this cycle of trying to get to the next plateau. That was the exception, not the rule. The rule was that our referral system was too difficult to use for a less motivated user. 

Only by looking at our three headed average monster (and its evil cousin “the range”) were we able to properly understand how new users dealt with referrals on Duxter. Our decision was initially informed by an imprecise understanding of the term average. I advise anyone making metrics based decisions to stop using the word average and start being precise. I am a champion for the mode, I care about the most frequent behavior. What do you care about? 

What is the challenge?

This challenge will test your startup’s ability to prototype a Windows Store app, quickly iterate to design, and bring your app to life. The Windows Startup Challenge winner will receive a spot to launch their Windows Store app at DEMO Mobile event on April 17, 2013 in front of top press, seed investors and VCs. More information can be found here. This challenge is sponsored by Microsoft, StartupWeekend, and DEMO.

Why did we participate?

Duxter is about giving gamers a home for their gamer life, and Windows by and large is the OS choice of gamers. With the launch the Windows 8 we witnessed huge early adoption by the game community.  It felt natural to bring an integrated and native Duxter experience to the Windows platform.  It quickly became clear to us that Windows 8 offered some innovative new features that could really help our app shine: live tiles, search, share, and snap views.  After hearing about a challenge in our own backyard (Microsoft/StartupWeekend) we decided to build out a prototype and enter the contest. We have been thrilled with experience we’ve been able to build so far, and we think gamers will be as well. Below you will find details about a few of the Windows 8 exclusive features we are planning on incorporated into our app. We’d love to have your vote and support as we bring the Duxter experience to Windows 8. 

Live Tiles

A nifty feature of Windows 8 is the addition of live tiles, which help bring the most recent content updates to the forefront of the Windows experience. This means less time going through your list of favorite websites to find something new, and more time jumping right into the content that matters to you. Duxter was able to leverage this to bring game related updates directly the Windows 8 Start screen.  If, for example, a friend invites you to a game on Windows or any other platform, this would be showed on the Duxter live tile. 

Charms

Charms allow developers to tap into Windows 8’s Charm Bar, which swipes in from the right side of the screen. Rather than each developer having to build their own toolbar, they can tap into this one universal experience. Duxter took advantage of the “Share” charm. Rather than having to create our own share mechanics or force users into a multi step process (like copy/paste) once you’ve installed the Duxter app on Windows 8 users have the ability to share across all apps. How this really shakes out is that users can share web pages, videos, images, or in game content by simply clicking “Share” which is natively built into the Win 8 OS. Duxter becomes one of your share options. This becomes a quick 2-click share option through ANY app which supports the feature. Sharing is easier on Windows 8 than any other platform, even pure web.

Windows Snap

The window snap feature of Win 8 allows a modern app to be “docked” to the left or right of the main viewing area. This allows a level of multitasking previously unavailable to other tablet devices. Immediately we recognized the value in this functionality for the Duxter app. One of the main reasons gamers login to Duxter is to stay up to date with what is going on in their gamer life. They do this primarily through reading and interacting with their newsfeed. By building a snapped window view in our Windows 8 app we allow gamers to stay updated with their gamer life while not taking them out of their game experience. 

Vote for the app

We appreciate all of the support from friends, family, and of course our loyal gamers. We are building this app for gamers to better live their gamer life. If you want to see us succeed in this vision please vote for the app here. If you want to spread the word go ahead and tweet at us @duxterinc with#windowschallenge 

Updates

I will continue to update everyone throughout the competition. The deadline for round 1 is February 4th at midnight. If we make it to the next round I’ll put out another update as our development continues.

I’ve tried a few free to play or free trial games recently. These games have ranged from SWTOR (MMORPG), to Angry Birds, to some Wild Tangent games. I was impressed with some of the mechanics, but I also felt there were some missed opportunities. I will bifurcate this post into what worked/what didn’t. 

I have never created a game which means I’ve never created a F2P game. I have however worked in the industry for 15 years so I’ve seen the evolution of thinking around the F2P model. Free to play isn’t exactly a new concept, especially F2P games with a “premium” or subscription based model. The logic behind creating a F2P game is:

• The game delivers some value, a value people are willing to pay for
• By giving a “sample” of the game to gamers for free, some % of them will be willing to upgrade to a paid account
• More gamers will upgrade to paid accounts if they try the game for free, than if the game were purely paid
• There are appropriate incentives/reasons to upgrade

Upgrade moments

In order to get someone to take out there wallet there need to be built in upgrade moments. Moments where you say:

“shit…because I’m F2P I miss out on this.”

“This is so awesome, I think I want commit to this game and upgrade”

Option 1 tends to be far more powerful. The fear of missing out can be a powerful driver. I often see this go wrong when games make the 

If these moments are compelling enough people will upgrade. If you say to yourself “eh I don’t really care that I am missing out on this” the moments fail. The upgrade screen should be used only when one of these moments hits. Rather than popping the upgrade screen up every hour on the hour, or at every login, save the screen for a true upgrade moment. This is the same logic behind Kiip. 

Earned but unclaimed goods

This is a great mechanic I discovered in SWTOR which will not be applicable to many F2P games. SWTOR has in game currency that you earn by doing all sorts of activities. F2P players are “capped” out at 350K credits. Rather than telling you “any credits you earn over 350K are lost. Upgrade today” all credits over 350K are put “in escrow” and redeemable after you upgrade. I love this mechanic for 2 reasons

1. This mechanic doesn’t punish F2P players and instead lets them build up an ever-increasing incentive to turn into a paid player. 

2. It helps make converting to paid feel like an eventuality rather than an oddity. The game continues to deliver value but meteres that value out to you over time. The logic dictates that after the game has delivered enough value, you will upgrade. 

Incentivize paid players for converting F2P players to paid

I have not seen this mechanic well executed anywhere. If anyone has a great example please let me know in the comment section. 

One of the most powerful tools in a F2P game arsenal is the power of the paid/premium players. Those gamers obviously enjoy the game enough to shell out some cash. On the margin they are more active, more engaged, and more passionate about the game. Give the premium players additional incentive to get F2P players to upgrade. This is similar to how many games do incentivized referrals  but rather than incentivizing players to get folks to sign up, incentivize them to convert F2P to paid. Paid gamers are your best advocates. Building in game mechanics to facilitate this should be even easier than building a solid incentivized referral program. 

Use F2P players to the advantage of paid players

Rather than segregating F2P/paid players for activities why not create special activities that require F2P players to play with paid players? This will help feed into the mechanic I described above. it also keeps the F2P players from being out on an island. If paid players are incentivized (whether directly or indirectly through gameplay) to bring F2P players into the mainstream game activity it is much more likely a F2P gamer will convert to paid. By tweaking the gameplay to allow paid players some advantages, F2P players see the perks of paid first hand. 

I love good game mechanics and I’m infatuated with business models. When the two work together in harmony it creates incredibly powerful effects that can drive games for years (See League of Legends). We will see more F2P games in the coming years, I hope we see evolving mechanics as well.