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Check it out here: https://mobilegrowthlab.com/

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KEY HIGHLIGHTS

🤭 Facebook’s game Cupcake Corner

👣 Beginnings at OMGPop

🎒 The reason OMGPop decided to move to mobile games from Facebook

👘 Challenges faced during Facebook’s gold rush

💼 The internal expectation of Draw Something before launch

💂🏻 The moment they knew it was going to be a hit product

💃🏻 How the team improved the virality of the game

🧘🏻‍♀️ How does an acquisition process happen in five to six weeks?

🛌🏼 The repercussions of turbulent times in the industry

🤳🏽 The experience at Picsart

KEY QUOTES

The early version of Draw Something

The story goes that Zuckerberg’s wife was an avid player of Draw Something, our original browser version of the game, which was only on the web at that time, and a few of those games that we had on our website. Zuckerberg in 2010 wanted to figure out how to increase the network effect and increase time spent. He thought that real-time matching would be a real opportunity for Facebook. He gave us an opportunity to achieve that.

Facebook to Mobile

Facebook to mobile happened pretty fast. Between 2010 and 2012, it went from Facebook to mobile really quickly, we had to continuously find ways through the game genres that we were in to create games that people would want to play on the platform that would be potentially viral on those platforms.

Challenges faced in accelerating growth

I think the biggest challenge for everybody including ourselves was re-engagement mechanics, particularly on mobile and market penetration and scale. Most had really sizable budgets so it was hard to really accelerate growth, so retention was critical. Games like ourselves where you were trying to match people and create asynchronous gameplay or synchronous gameplay, it was very hard to get people to show up at the same time, or to maintain a relationship between players. 

We didn’t really crack that, until we delivered on Draw Something itself, which was obviously just a quarter after Puppy World. We tried to work with carriers, the media, the press, editorial companies and those times I would say were more static around marketing execution around accessing users. So you would try to go to Samsung, or if you were trying to find a publishing platform in emerging markets you had to go find distribution. 

Draw Something’s unique gameplay

 The gameplay of Draw Something was less competitive and more asynchronous and we’d like to say, more of an experience of tossing the ball to each other, something that you can enjoy doing, any family members, any friends.

50 million installs in 50 days

I don’t think we had defined expectations other than the fact that we needed something to work. So it’s different than when you’re in multiple cycles of development and you’ve got defined KPIs and you’re running financially viable P&L and have a lot of room in your forecast. The game was going to go live. 

We were all taken aback by the level of success. Nobody predicted that level of success about Fortnite, or League of Legends. When somebody has a month to get a monster hit as a single, you have something special, but you don’t really understand the market conditions, or it could be a billion dollar franchise or 100 million, or 50 million installs in 50 days. It was obvious at the get go that there was something special about it.

Of strong foundations in the formidable years

I think without the foundations and all those years of hard work and fundamentals, when the product became a monster hit, we wouldn’t have been ready. The product never went down. We ended up with $50 million in 50 days. We were doing billions and billions of gameplays a month, 500 million impressions today at our peak, over 20 million in the US, when we’re dealing with media-rich content, we’re dealing with visuals reviews, we’re early days in AWS. To Jason’s credit our CTO that time and our really brilliant engineers, we never went down once. 

The extensive database the team build which contributed to their success

The other part that was really important to how we became successful is that we controlled the keywords. We had built a tremendous database, going back to our engineers, and we were able to learn what works and what was popular and what people were having the most fun drawing and finishing or guessing. There was an algorithm and we did bi-monthly iterations or bi-weekly iterations for infrastructure purposes. There was also a very active awareness that we have something very special, and we pretty much dropped everything else.

A seamless gaming experience for all

That was something that was a new offering as well as I would say in a multiplayer asynchronous environment and nobody had done which was, you can come back and still have your history of all the other gamers you’re playing with. And you can select who you want to play with again, who you can call out to have a match with or not. And so you can have people you knew and people you didn’t know and establish your gaming rapport as well as a personal rapport both of those different user flow user spectrums if you will, versus just this is only a network game, of my social network

5 days at GDC

In those five days, we went from looking at $50 million rounds to being in many conversations with Zynga, EA, and Disney. They all went into a bidding process around acquiring a company, which started somewhere around $120 million and ultimately ended up at 200 million over a period of five days. So it was a very amazing acceleration process where on one side, we’re talking about doing a $50 million round. On the other side, we’re talking about a company that we thought was gonna sell for scraps for $10 – $50 million in a month or two now having conversations that $120 million, and ultimately agreeing to a deal with Zynga for $210 million, which is obviously public.

The push and pull that comes with growth

The velocity drives you up, and also drives you down. If you’re dealing with an asynchronous game, where people’s interest is playing with other people, they care about when people start pulling back from the games, that means you have less game plays, and thus, you have fewer reasons to go back to a game. 

The truth about growth

I think at the end of the day, there’s no right or wrong. But Zynga had its cycle when it went from being the primary provider of gaming from Facebook to trying to move into mobile and struggling to do that. You have product cycles, you have industry cycles and platform cycles. People just forget that that’s how a lot of businesses function. It doesn’t make them bad businesses or ephemeral businesses, it just means that you’re not always going to be at the top of your game and market conditions create cyclical cycles and business growth and tremendous companies like Shazam or even Machine Zone, who created billion dollar P&L, were never able to create Supercell- like organizations and multiple IPs which generated sufficient of cash flow and ongoing growth. 

FULL TRANSCRIPT BELOW

Shamanth 

I would love to start with cupcakes and puppies. What better way to start a growth-related podcast than with cupcakes?  

Tell me about Cupcake Corner.

Wilson Kriegel

The history behind Cupcake Corner ultimately was that Charles Forman, the founder of OMGPop, had a very strong affinity to anime and Asian cultures. He had spent time there and when he decided to launch OMGPop, which originally was a matchmaking real-time dating platform, which then pivoted several years later into a casual real-time gaming platform. 

He hired very talented graphic designers and flash designers. He wanted to build the Mario games of real-time matchmaking casual gaming. There was a very strong slant of Japanese and Asian design and behavior around graphics of our flash games. 

Cupcake Corner and Puppies really stemmed from our original founder’s DNA. So we built games in a way that would align themselves with a certain demographic, a certain culture, and a certain behavior or gameplay. We thought games like Cupcake Corner and Puppy World would align with that, especially in a casual environment.

Shamanth Rao 

I associated Cupcake Corner with Americans and American culture. I didn’t quite know there was such a strong affinity to Asian culture. 

To take a step back, Cupcake Corner was OMGPop’s first Facebook game. Tell me more about how you found your way to OMGPop. What appealed to you about them? What was the business like at the time?

Wilson Kriegel

I had founded, co-founded and been hired at four other gaming companies before I joined Dan Porter and Charles Forman as an executive at OMGPop. Between 2002 and all the way through 2010, I participated in building several gaming companies from media-centric business and real-time gameplay. When I was introduced to Dan Porter in 2010, Robin Chen, a prolific angel investor and a friend of mine from the New York Days, said, “Hey, Dan joined OMGPop, six months ago, he was a VC guy, a media and music guy he’s joined as the founder.” 

Dan had joined six months prior. He had just closed his original series A with Spark Capital, and they were looking for someone with expertise and the DNA around virtual currency and freemium games and had extensive experience. 

The company at that time was pretty boring. I remember our first office on Bleecker Street, Soho was literally 10 people. Dan, Charles, and eight designers, graphic designers, and back-end guys. It was a small team, they had already built about 20 games at that time. We ended up jumping directly back into Cupcakes and Puppies and Facebook early on, as we were one of the first to really join that platform. 

The story goes that Zuckerberg’s wife was an avid player of Draw Something, our original browser version of the game, which was only on the web at that time, and a few of those games that we had on our website. Zuckerberg in 2010 wanted to figure out how to increase the network effect and increase time spent. He thought that real-time matching would be a real opportunity for Facebook. He gave us an opportunity to achieve that.

We were early in the real-time matchmaking environment on the game side of people playing against each other. We weren’t a farming company in terms of game mechanics, we were really about people playing with each other. There was an effect there. Introductions happened through Zuckerberg and the gaming platform team. They viewed our games as a potential hook for people to spend more time on the platform through gaming. We saw Facebook’s part to support us in these game types to be tremendous. And so at least a handful of our developers end up really just entirely supporting Facebook and pivoting some games that we already had to the Facebook platform.

Shamanth Rao 

I definitely know from the time that Facebook was very, very actively supporting developers such as you guys. I think it’s so cool that they saw the kind of matchmaking you guys were providing as an enabler of the Facebook platform and the virality on the platform itself. And just to clarify, this was the predecessor of Draw Something on mobile, is that right?

Wilson Kriegel

To be clear, there were two versions of Draw Something before we ultimately had the monster hit, the mobile version of Draw Something which was a slightly different iteration of the product. But it wasn’t the original. The original was on the browser, and then Facebook and then ultimately mobile.

Shamanth Rao

The earlier version of Draw Something inspired you to develop on Facebook, which later led to Cupcake Corner, which was your first Facebook game. From Cupcakes, you guys went to Puppies, which sounds like it was another huge transition for you guys because that was your first game on mobile. 

So what about mobile suggested that that was the next platform for you that you guys would want to build on? Because you had caught the Facebook wave, you’d seen traction there, so what about mobile appealed to you guys?

Wilson Kriegel 

Facebook to mobile happened pretty fast. Between 2010 and 2012, it went from Facebook to mobile really quickly, we had to continuously find ways through the game genres that we were in to create games that people would want to play on the platform that would be potentially viral on those platforms. 

We’ve used that as our cost-efficient way of attacking organic growth and social networking growth. So we actually use our engineers, if you will, as a mechanic and our designers as a packing mechanism to try to grow our company versus purely relying on game mechanics, who then arbitrage a game to generate revenues. With that being said,  we were just gradually entering into a bit of a data phase and Facebook was making more data available. We were also confident that we had very low ARPU, very much of an advertising model and that requires a lot of scale. We needed to continue to find ways for our user base, and the mechanics around virtual currency for real-time matchmaking games, which ultimately then have no leveling curve or don’t have maintenance of the history of your investment, were pretty wack. 

We were both subjected to our own learnings through data, understanding of our financials with KPIs or products as well as the emergence of the new platform and trying to solve for our own opportunity. It was a bit of a defensive move, it was a bit of an offensive move, a bit of a reaction to our ability to monetize our product.

Shamanth Rao 

Those were days that have been described as the wild west of Facebook. Puppy World really took off. You guys had a million downloads in the first month. And yet not all companies from the time were successful even in an era that’s been described as a gold rush, what would you say were some of the biggest challenges that people faced, even though it was considered a gold rush era?

Wilson Kriegel 

I think the biggest challenge for everybody including ourselves was re-engagement mechanics, particularly on mobile and market penetration and scale. Most had really sizable budgets so it was hard to really accelerate growth, so retention was critical. Games like ourselves where you were trying to match people and create asynchronous gameplay or synchronous gameplay, it was very hard to get people to show up at the same time, or to maintain a relationship between players. We didn’t really crack that, until we delivered on Draw Something itself, which was obviously just a quarter after Puppy World. We tried to work with carriers, the media, the press, editorial companies and those times I would say were more static around marketing execution around accessing users. So you would try to go to Samsung, or if you were trying to find a publishing platform in emerging markets you had to go find distribution. 

The consumers weren’t as readily available or accessible through virality, it was just the first days of Instagram. There wasn’t this kind of proliferation and you weren’t using the same platforms. We tried to use platforms such as Reddit & Twitter to try to proliferate gaming, which actually was a big piece of OMGPop and Draw Something’s success and discovery. It was a more conventional way of trying to drive growth by working with established platform owners and players in monopolistic environments and doing more static awareness, and then relying on the viability of the game itself.

Shamanth Rao

That seems like a different world from where we are now. Because right now, I think consumers are so readily accessible via Facebook’s very powerful targeting tools and ad tech tools. And to think that you have to do a deal with Samsung to reach their users, seems like a completely different era. 

So you guys had seen the performance and metrics from the two predecessors of  Draw Something before you launched the game on mobile. And you guys had a million installs in a month from Puppy World. So what was the internal expectation about Draw Something before you guys launched it on mobile?

Wilson Kriegel

There’s a true story behind how we ended up at Draw Something. The reality of many startups like ours at that time was that we were a quarter away from running out of cash. Our CEO, Charles Forman was no longer at the company, so Dan and I ran the company at that time. We found ourselves in fairly dire moments where we first had to let go of some people who were hired before. But we had basically a quarter left, so we had a few cycles left of development and resources to try to pull something off. 

Dan was working on what was a rapper-gangster Facebook game which then had really good relationships in the music industry. And so we had a lot of rappers involved in the game and we were running through dealing and all sorts of core RPG like mechanics. And he thought that there was a media angle and then a celebrity angle to that and that there was going to be an opportunity. 

Ultimately, we needed to find a way to create cash flow so we needed to have an RPG-like game. Meanwhile, we had seen some level of growth, with Puppy and Cupcake. 

The gameplay of Draw Something was less competitive and more asynchronous and we’d like to say, more of an experience of tossing the ball to each other, something that you can enjoy doing, any family members, any friends.

There’s some level of competitiveness. 

Dan went on to directly help with design and simplifying Draw Something. The original Draw Something games had boards. It was very much more competitive and acquired leveling. When he redesigned it, it was really about a much more simplistic fun design. And one of the brilliant things that we did there was obviously showcasing the process of people drawing as well as guessing. It created a much more immersive and interactive experience, even though it wasn’t real-time. It felt very real-time. It created an environment of going back and forth in the sequence aspect of it allowing for people to have engagement, even if they came back five hours later, or seven hours later, because it was their turn to gameplay. 

They would re-experience the guessing or the drawing at that moment. And so it felt interactive, it felt live. It was fun and entertaining and it was much bigger, and much more viral, because you wanted to invite people to do this because it was actually fun to do with people that you knew. And so those were defining moments. 

But, the reality was that we were a quarter away from running out of cash. And we were on our last two products that made a small number of layoffs right before that. And then that was the best that we could do to salvage our last opportunity in the company. Dan went about adjusting the gameplay design and mechanics to Draw Something for the mobile experience in a way that ultimately made it a monster hit.

Shamanth Rao 

That is quite a fairytale story. By no means do I want to romanticize being a quarter away from running out of cash. I’m sure that would not have been a fun place to be. And to get your guys’ credit, you guys built something amazing and lasting. So you guys hit 30,000 installs on the first day, and you had a million installs on Puppy World. So did you guys think this would go past Puppy World, this would be just about as big, this would be way bigger. What was the internal expectation at the time?

Wilson Kriegel

I don’t think we had defined expectations other than the fact that we needed something to work. So it’s different than when you’re in multiple cycles of development and you’ve got defined KPIs and you’re running financially viable P&L and have a lot of room in your forecast. The game was going to go live. 

We were all taken aback by the level of success. Nobody predicted that level of success about Fortnite, or League of Legends. When somebody has a month to get a monster hit as a single, you have something special, but you don’t really understand the market conditions, or it could be a billion dollar franchise or 100 million, or 50 million installs in 50 days. It was obvious at the get go that there was something special about it. 

There was one thing between Dan and I. Dan worked on the creative game aspects of our company and I worked on the business aspect of the company.We were always very diligent on how we went about trying to achieve and coordinate that. Until four years prior, we were maximizing ad revenues, we were evaluating new revenue channels, we were doing tracking and KPIs, we were doing data. There were fundamentals that we had been doing for years against these types of products. That’s when the game finally took off and we had relationships with platforms like Facebook, with carriers, with handset makers, we were involved in media and already had some buzz. 

So there was a lot of foundational work that although didn’t yield the same return historically ended up completely amplifying the value in the experience of the product and its success itself.

I think without the foundations and all those years of hard work and fundamentals, when the product became a monster hit, we wouldn’t have been ready. The product never went down. We ended up with $50 million in 50 days. We were doing billions and billions of gameplays a month, 500 million impressions today at our peak, over 20 million in the US, when we’re dealing with media-rich content, we’re dealing with visuals reviews, we’re early days in AWS. To Jason’s credit our CTO that time and our really brilliant engineers, we never went down once. 

And that’s an important lesson that was real at that time. If we hadn’t really diligently run a business both on the financial, technical, and product side for many years before that, we would never have been ready for the onslaught of having that type of product.

Shamanth Rao

You guys focused on the process, even when you weren’t going crazy viral, even when business wasn’t booming, you guys completely focused on the process. So when things started to work out, you guys could magnify and amplify that growth tremendously. 

So the days go by after launch, was there a point when you guys said, “Oh my God, this could be huge! Maybe we are not only not going to run out of money, this could completely turn the company’s fortunes around.”? Was there a specific data point that you guys saw that suggested this could be something very different? 

Wilson Kriegel 

A couple of weeks. That’s all it took. The velocity was such that the gameplay and the retention rate in the first few weeks were drastically different from other products. From what we could gather in the market talking to a few people and competitors about the metrics and KPIs of game player retention, the virality in the App Store itself was clear that there was something very unique and special about what was happening at that moment. 

One of the most unique situations we found ourselves in is that these were the early days of Facebook Connect. A lot of users were not using Facebook Connect, and we weren’t requiring you to have an official profile to play the game. But we did need you registered to have an account so that you can match with people. There was a tremendous amount of users who weren’t using Connect, but wanted to be discovered and wanted to share their game or ID to be matched and to have people find them on the platform the same way you would today with a video messaging app or a network communication app. What people would do is they would play their game and take a few screenshots of the game, and proliferate that on social networks, on their blogs, on their forums. 

What happened was, when celebrities who somehow ended up in the games or heard about the games did that, there was a tremendous conduit from the virality standpoint. So what was originally a friction point, and was really an effort in terms of the process for onboarding, became a huge driver of discovery and virality, because people had to get their gamer tag. You need it to be able to share your gamer ID. Once celebrities started doing that, inviting their fans to play with them, it was still an indirect touchpoint that the celebrity had, it wasn’t personal or intrusive. 

The original ID owner could cancel any game played at any moment. There was no championship in place so nobody could really be trolling each other. There was no negativity on the platform. And so that was a tremendous conduit. Once it accelerated at that rate, it started proliferating on all media platforms, including Twitter, the rest of the world, and people’s forums and blogs. The imaging was fun, accessible, and was a product that people knew and resonated with. It was also one of the first games really to play with other people. In a way, there was mass market access. We had kids playing with their parents abroad, army veterans, we had grandmothers playing with their daughters and grandkids, and we had couples playing at work. There were no boundaries to the ability for people to have different graphics and different age groups on a global scale to be able to engage and find funny characters within the product. 

The other part that was really important to how we became successful is that we controlled the keywords. We had built a tremendous database, going back to our engineers, and we were able to learn what works and what was popular and what people were having the most fun drawing and finishing or guessing. There was an algorithm and we did bi-monthly iterations or bi-weekly iterations for infrastructure purposes. There was also a very active awareness that we have something very special, and we pretty much dropped everything else.

We were just all in on Draw Something.  We knew at that moment in time that that was the only thing that we should be doing. We stopped building the RPG, we stopped building, supporting or releasing on any other platform. 

Once you get the kind of velocities where we’re starting to get a million installs per day, we went from having 10 million ad impressions and making basically what was a $10 million p&l for about three years to having three, four, or 500 million ad impressions per day, you put that in context of 30 days, that’s a tremendous amount of ad volume. We also had done something that was unique at that time, we had advertising, in-app purchases, and a premium product. So we had an effect on the market where advertising wasn’t the original driver of revenue, in-app and premium was. 

The reason was that people didn’t have ads and that in-app was still kind of like you could buy keywords. We bundled these keywords for you to have more packs. And then we created a category of keywords that were really about themes and interests. Our retention was well past 70% for 30 days’.  I think at its peak it was around 50 but settled somewhere over 40%, numbers that have been unheard of. Driving velocity and a discovery-based multiplayer experience is very, very powerful. Plus all the adjustments we’re making to how people could play the game, how they paid for content, how they could select types of content, and who they could play with and the fact that people could come back and play and have a history of gameplay. 

That was something that was a new offering as well as I would say in a multiplayer asynchronous environment and nobody had done which was, you can come back and still have your history of all the other gamers you’re playing with. And you can select who you want to play with again, who you can call out to have a match with or not. And so you can have people you knew and people you didn’t know and establish your gaming rapport as well as a personal rapport both of those different user flow user spectrums if you will, versus just this is only a network game, of my social network.

Now, this became meaningful to people that I know first because it’s fun to play with my friends too. I want to play more than once or twice a day when my friends are available. Now there’s access to millions and millions of people who are also playing the game that I can establish a gaming rapport with, and build us dozens of games that I can play on a daily basis. So you went from having three or four games to 25 gameplay matches that you could access at any given moment of the day. You always have content, always have engagement, and always have gameplay. 

Shamanth Rao

I think that seems deceptively simple from the outside. But what you just said, outlines exactly how many moving parts there were. You guys pulled it off with a very small team doing really fast iterations, even while you guys were on the upswing and growing. You guys iterated and changed tremendously. Given that you are growing that fast, were you able to build out or optimize features that would improve the virality, that would perhaps reduce friction would perhaps improve the user experience so that they would share much more? Were there things you were able to do in that short period of time that would improve the virality in that manner?

Wilson Kriegel  

Interestingly, as time went on, we were able to use network logins to amplify logging in and inviting people faster. So for example, we improve the flow of invitations of our own network, to avoid the friction of having to share it with other people on social networks. But we made a big pivot internally by that point of three years of operating the company, Dan and I are two and a half years, and we had some good foundations around data, at least for that time, around the engineering resources, reallocation, and the understanding of our revenues. So we had a foundation there that once we started seeing things move, we were able to learn fairly quickly and adjust to where we should apply resources and build off of so as soon as we saw a wind, we were able to double down. 

One of the things I’ve mentioned previously is, we are fundamentally stuck on how do we make this more fun? How do we make this more sticky? Not necessarily thinking about UX UI as much as going back to keywords and bundles of words. What would people want to spend more time playing? Or what was it that people were doing that would be more fun to do. How to maintain a very strong focus on gameplay and usability experience around the fundamental thesis, which was, that this should be a lot of fun and entertaining, and asynchronous, where it’s competitive, but ultimately, it’s just about the fun experience in groups. 

So we went about improving the algorithms around keywords. We also were out there selling at that point, within the first 45 days sponsorships, and we were talking about $400,000 per day type of sponsorships, they were humongous. Several months later, after we sold to Zynga, we structured a nearly $1.2 million deal, which was, at that time, the largest mobile advertising deal done with a brand. \So we were able to really start understanding user behavior and experiences around the product and focusing on harnessing that for driving revenues, as well as improving the algorithms of keywords which then were interest-based, which people will spend more time creating or working or going around whether it was sports or movies. 

In a really short timeframe, we were able to understand the key essential drivers of the use cases, and amplify usability around those while solving the engineering back end. 

Shamanth Rao 

That’s amazing. Especially given that you said you guys were one quarter away from running out of money. It’s amazing that you created not just a viral hit, but also a hit that was financially sustainable. Not only that, in such a short time you understood what the drivers of this growth were, and doubled down on the drivers. 

You were at a million downloads in 10 days, and 50 million in 50 days. And within six to eight weeks, you guys were acquired. I think that’s something that I find astonishing, especially given that I’ve been through an acquisition process myself, but our acquisition process took months. So to the extent that you’re able to share, how does an acquisition process happen in five to six weeks?

Wilson Kriegel  

We launched the game in February, and GDC is obviously in mid-March, The Game Developer Conference in San Francisco. Within the first three days, there was a tremendous amount of awareness in the market. We had already hired a banker to actually look at selling the asset because our VCs and ourselves were not sure we were going to survive and so we were trying to recruit capital and do right by our investors and see if we could find a home. The bank was on board and we released Draw Something in February and it immediately skyrocketed. 

It became apparent in particular to companies like Zynga, who were very data driven organizations that there was somebody out there sucking the air out of the market particular to games that they own on the casual gaming side of mobile. They did their diligence and realized it was our game in particular. So you’ve only had so many users at a given moment in the market condition. So eight years ago, obviously a lot fewer gamers, fewer smartphone devices, your game’s out there and a lot more games that were farming games versus casual. 

But Zynga was very aware that we were dipping into and cannibalizing their MAU and DAU on mobile. Pincus reached out to us along with his M&A team. He got on his jet with his team and showed up in our New York offices. Truthfully, the meeting did not go very well. It was a very aggressive approach to why we needed to sell to them and try to override the current stage of our business and the value of our business and muscle us into a deal with them. Our CEO did not fit into that and was not impressed or intimidated and decided that he had no interest. 

Pincus and the team got back on their plane and flew back to San Francisco. Several weeks later, probably two weeks later, GDC was taking place. We were the talk of the town at that point. A month later, we’d seen tremendous growth, we were at the top of the App Store, we were surging, and the algorithms in the App Store matter a great deal to your key factor here – retention factor and to the rate of growth factor. So the number of installs per day, the rate at which your installs are growing, the total number of installs, the retention, the ratings, all those suited the algorithms of the App Store, and we were number one for an extensive period of time in the app store several weeks in a row. We were already up there climbing really quickly. So everybody knew what was happening and that we had a hit. 

Dan rejected the approach from Zynga, and we decided that we’re gonna go to GDC and see what happens. Maybe we raise capital, maybe we have other M&A talks. Dan Porter and I go to GDC. People are talking about us and there’s been quite a bit of press. Our banker is now in a different process of establishing relationships to evaluate upside strategic opportunities. Obviously I have a very strong network, because I’ve had & sold numerous gaming companies. So I got in touch with Disney and EA. In the meantime, Dan’s working on more strategic funding $50 million round opportunities. So we really looked at a broad scope of opportunities in five days while we were at GDC in San Francisco. 

In those five days, we went from looking at $50 million rounds to being in many conversations with Zynga, EA, and Disney. They all went into a bidding process around acquiring a company, which started somewhere around $120 million and ultimately ended up at 200 million over a period of five days. So it was a very amazing acceleration process where on one side, we’re talking about doing a $50 million round. On the other side, we’re talking about a company that we thought was gonna sell for scraps for $10 – $50 million in a month or two now having conversations that $120 million, and ultimately agreeing to a deal with Zynga for $210 million, which is obviously public. 

Looking back we actually went from an M&A discussion process in the second week of March to closing in April and announcing the deal within 30 or 40 days of the agreed number. That was obviously unheard of. And it’s important to understand that, but that’s what we were three days later, we were already at 20+ million installs, 60 million in 60 days. We were reading 10s of millions of installs and active engaged users with really high retention rates, spending a tremendous amount of time in the game. Those users came from Zynga for a great part. We capitalized on their user base, we’re fully aware of that. 

It was their first quarter as a public company. Q2 was going to be very important. Mobile was a very important part of the strategy to move away from Facebook in terms of the market perception of what was happening to them, their forecasts, and handling the public, being a brand new public company and suddenly having their numbers taken from under them. 

Disney and EA were great suitors for us but they were not as aggressive because they weren’t a social company yet. They just didn’t have the DNA to be that aggressive and understand the metrics and the market conditions because they weren’t sophisticated when it came to data and marketing. So even though they were very interested in a deal, and they hoped that there was an opportunity for franchising and expansion beyond the product, they weren’t able to aggressively bid into the process to the same extent that Zynga wanted to and needed to. Zynga ultimately outbid everybody in a cash deal mostly that our shareholders as well as ourselves were really excited about. 

Culturally, we didn’t think that Zynga was the best fit for us. Obviously, the first experience with them in our offices was not that great. But in looking after our shareholders and our employees, and then how we were operationally going to work with them, we agreed to that deal. In hindsight, it would have been better in terms of brand management and execution moving forward or the IP in the culture to have gone to an EA or to a Disney possibly. It’s always easy to look back. Is it possible that we could have sold for more if we had a better understanding of how impactful we were to all these companies and the scale of our product and the P&L moving forward, possibly? But I think everyone was very pleased. 

At that time, the stock was at $13 ultimately finishing the year at $2.5. So it’s important to put that into the context of when they acquired us and went up to $800 million that week. So the markets reacted very positively, they then raised forecasts in Q2, because they added another 20 or 25 million MAUs. The deal paid for itself. And ultimately, we had strong cash flows and a great product that’s complementary to their other mobile games. 

Dan and I frantically and in a very positive way worked to manage both publishers and fundraisers and our shareholders in five days, and then our employees, and then in a very short timeframe, the entire company. There were at least 15 people involved at Zynga in the diligence process of our company both into metrics and financials and resources during that 30-day period. Many of them had moved into our offices in New York from San Francisco. About four or five of them were there weekly while a dozen resources out of the San Francisco offices for Zynga were a part of the process as well. It was a very intensive 30 days. 

While we needed to continue improving and growing our product and growing our financials, and working towards integration, technology-wise, culturally, and forecasting, it’s fair to say that from that moment on, particularly from Q2 on, the game leveled up and plateaued through Q3 and Q4. The game in the following six months decreased at different levels of velocity downwards. It’s important to understand that velocity.

The velocity drives you up, and also drives you down. If you’re dealing with an asynchronous game, where people’s interest is playing with other people, they care about when people start pulling back from the games, that means you have less game plays, and thus, you have fewer reasons to go back to a game. 

Our biggest challenge from this day on was how do we make this less of an obligation? And how do we maintain this fun? The biggest challenge with the franchise is, over time when you go from 30 Games to ultimately five games how do you maintain the fun component of it? How do you maintain the interest? And how do you maintain this as a non-chore? Because when you’re obligated to continue the exchange with someone because you know them, and then you feel bad about stopping and you’re repeating the same mechanics, it becomes a chore. There’s a lifecycle to any product of what makes the product fun versus a sense of obligation towards the purpose of the product. 

We struggled probably six to eight months into the lifecycle of the product in maintaining or re-engaging the fun factor versus the chore component of the gameplay. That is something that I think ultimately was a challenge for the franchise of Draw Something holistically, which was once you started losing velocity, then there’s a reversed K factor that goes into the acceleration of decreased engagement. The fewer people participate, the less fun the game is, and the fewer reasons you have to come. The K factor goes both ways. One can be a positive K factor, and one can be a negative K factor into the downward velocity pressure of people pulling out of the game and thus increasing the number of people churning. 

What happened is we went through several brackets from 25+ million to 50 million to 10 million to 5 – 6 million and to 1-3 million. But that was during a period of 24 months. And even within the second year, we still had multiple millions of active monthly users, which again at that time was still a meaningful amount of gamers. But it certainly wasn’t the tremendous amount of MAUs and DAUs that we had the first six months. There was a consistency there and an ongoing financial value there and the 10s of millions of dollars, even in the second year, even though it was no longer on the growing scale from the first year. There were plateaus of lowering of that user base that was over an extensive longer period of time, and people understand that to be. 

But what happens is the PR. The press will write you down the moment that you’re not the number one, and thus you think about the app stores and how the app stores work which is engagement, retention, reviews, velocities of installs, velocities of aggregate app installs. You also have the reverse effect there, which is if you surge really high and you can’t maintain that surge, then you will naturally drop. It doesn’t mean you will still see a lot of installs, it just means you can no longer sustain the ranking algorithm. At that time, they were very much driven on velocity more than anything else. And so as our velocity decreased, then we dropped in the App Store for six months. If you’re no longer in the top 25 or top 50, then you’re no longer a discoverable app, and your installs naturally just attrition. 

We’d also seen hundreds and hundreds of installs and there’s only just so much market size for any product as well as at that time. All these variables came into play plus a PR it was about the acquisition, the Zynga stocks were at 250. There’s also a perfect storm around social and gaming in 2013 that was fairly negative across the board, not just for OMGPop, though we bore a lot of that brunt, Zynga was a down stock, the market was slowing down, there wasn’t a lot of innovation going on. So people were down in the sector a lot. That has a chilling effect on gameplay, on usage, on saturation of usage on the mind frame of gamers. But it’s really important to realize that we actually sustained millions of MAUs even in the second year, which was never talked about. 

Shamanth Rao

I think most of the press focused on Draw Something having been a huge viral sensation. But I think what isn’t noticed as often is that it was a financially successful product. It had great product engagement metrics, from what I’ve read, the D7 retention was 50 to 60%, if not higher. So it sounds like it was a very sustainable product. It was a financially healthy product. Except, of course, it was also subject to that same cycle that the upswing was subject to.

Wilson Kriegel 

If you think about Pokemon Go today, it had a tremendous 12-month run. Is there anybody talking about Pokemon Go today? Nobody’s talking about it anymore. Is it not a good game? It’s still a great game, it’s still a market changer. It’s still generating insane amounts of cash now, like a billion dollars, like it was last year, probably not. But does that not make it a success? Absolutely not. There’s a perception of what the press feeds on. 

Again, at that time, we went from being a $200 million exit and being the biggest game in history at that moment to 12 months later, I think it stopped being negative. The industry being really in the low four months later the social farming, gaming base, and mobile space hadn’t really taken off to another stage.  That feeds into the condition or perception that it was just a one hit wonder. We had over 70% retention, it was extremely successful financially, we had millions and millions of MAUs well over the 12 month to 24 month cycle period of time and the return on capital that Zynga got from the acquisition, was a significant success.

Shamanth Rao

I’ve played Draw Something and I play Pictionary offline and I find both of those very enjoyable. I still play Words with Friends, which has been around for eight plus years. All of that drives home your point that what the press highlights isn’t necessarily what is financially sustainable. 

You talked about how the cycles of attrition happened. You talked about the turbulent times in the industry itself, and also for Zynga, which were perhaps driven in part by the transition overall to mobile, in part by the overall adoption of mobile mechanics, gaming mechanics across the board by other companies. And one of the ways all of that played out was that eventually the OMGPop office was closed down less than a year after the exit happened. How did that feel for the team? What was the mood and sentiment like for the team, when that happened?

Wilson Kriegel 

It wasn’t an OMGPop circumstance, it was the cycle within Zynga, where Zynga stock had dropped down to 2.75. I remember 12 months in, having a conversation with their management team about how they were going to restructure. I would say that everybody at a company is in a different emotional and financial situation through any deals as well as their own jobs. Obviously, some of us were slightly more lucky and successful in the transition deal and got something more than others, simply because of where we were, as executives or founders or on the cap table. Some people were very happy to have their jobs at Zynga, and some people were ready to move on.

Some people were sad, because of what we’ve achieved, they had an emotional attachment to the company. Dan did stay a year later than I did.  He stayed through 2013. I only stayed through the end of 2012. He was able to do a good job at protecting the teams and working through some of these transition plans. And by the end of 2013, yes, they moved on from those offices, but it wasn’t just that. It was also the Boston office, the office in DC and Philadelphia. There were some consolidations. They pulled back from other markets like China as well at that time. It was more of a circumstance of the low and the mobile casual as well as Facebook’s timeline of what made Zynga successful versus where the market is moving forward. 

The gap in between Facebook was Zynga’s primary revenue driver. People moved away from that and between 2012 and 2013, there was the transition into mobile and new developers into a new cycle of gaming which rose into 2014 and 2015. Zynga further restructured a lot of offices and tried to manage our financials as a public company.  It was a symptom of a greater issue and market conditions. I’m always opportunistically excited about participating in building great companies. At that time OMGPop was my fifth startup. I was ready and looking forward to building another business and creating another great product and creating more shareholder value somewhere else.

Shamanth Rao 

It was very much an industry-wide thing that resulted in the OMGPop office closing down. And you could even point out that Zynga went through a very similar ascension and decline in much the same way that OMGPop did and the entire transition broke many hearts, including mine when I saw that happen because I was such a huge fan of Draw Something at the time.

Wilson Kriegel

By the way, if you look at the second cycle, which was the Kabam Machine Zone cycle, which were mobile and RPG, they also went through that cycle. 2014, huge move to mobile, huge move to more RPG-like products, high ARPU, arbitraging, which really was kind of new to mobile. And these guys really pushed the limits of the marketing tremendously to create billion-dollar P&L with primarily single franchises. There again, you have a life cycle, but by the time it was 2017, they were running out of steam, running out of market size, running out of users, and ultimately, churn takes place and products have cycles, and deals are no longer in, no filings of IPOs or clear M&A paths. 

I think at the end of the day, there’s no right or wrong. But Zynga had its cycle when it went from being the primary provider of gaming from Facebook to trying to move into mobile and struggling to do that. You have product cycles, you have industry cycles and platform cycles. People just forget that that’s how a lot of businesses function. It doesn’t make them bad businesses or ephemeral businesses, it just means that you’re not always going to be at the top of your game and market conditions create cyclical cycles and business growth and tremendous companies like Shazam or even Machine Zone, who created billion dollar P&L, were never able to create Supercell- like organizations and multiple IPs which generated sufficient of cash flow and ongoing growth. 

Really, if you look at the companies out there, Supercell is ultimately the greatest success of that era by far. Fortnite is a new generation. Now, I don’t want to account for them in that cycle, but in that 2003 to 2007 timeframe, Supercell is the ultimate success in that industry. Supercell was the Activision of the mobile world. It’s quite an amazing achievement. It’s a lot harder than it seems to just build more than one successful product. Even when you do that, it doesn’t make you not a good company. It just shows how difficult it is to build franchises across multiple IPs and to build multiple billions of dollars of P&L for long periods of time.

Shamanth Rao 

Yes, it’s a natural life cycle. There’s a natural business cycle that the natural life cycle that products experience. Trends emerge and trends die down, which only illustrates how hard it is to build something truly sustainable. We are approaching the end of our time together. But I would definitely want to talk about some of the things you did after OMGPop. This was your fifth startup. You had been in gaming for a while. You’ve continued to work on some amazing apps afterward. Can you tell us about what you did after OMGPop?

Wilson Kriegel  

After 12 years in the gaming industry, and having a huge hit, obviously, I decided I want to explore other areas of verticals of opportunities. I ended up taking on the role of COO and president of a company that was a video group chat platform called Poaltalk. It was a legacy product that had a significant number of daily users around 400,000 who were participating in using video group chat from a server-server perspective. The technology was unique.  

I was working with its founder to pivot that platform, which was PC based to mobile, and we were generating extensive amounts of cash flows. I met Josh Feldman and David Sze at Greylock, well-established product guys for investors, who I had known for a while, mentioned that there was this little app that was growing significantly in the Google Play Store and it could be interesting to me. They had briefly met the founder who was out of Eastern Europe in Armenia, and he was looking to build a global business with very little to start with except for a fast-growing product. 

I went to Armenia and I met with Hovhannes Avoyan, the founder of Picsart. He had the vision to enable 4 billion people to use creative tools for self-expression and creativity on mobile first. For him, the idea was creating and building a community that would enable a billion people to self-expression and creativity. I was really interested in that. The numbers looked really unique at that time. It was a small team of about 15 developers, and him as a co-founder in Armenia that was bootstrapped. There were no investors. It was within the first year of their launch, and so there were very complementary skills and expertise and my background, having to raise capital and build different departments of organizations and skeleton business to his product vision, his experience, and his goals. After three to four months of courting each other and me going back and forth between San Francisco and New York and Armenia, I agreed to join as the first hire to be non-Armenian at the company to help them build the organization.

Shamanth Rao

And today, you have a new venture. You guys are a variable hardware and software company that could very well change the way we communicate and capture moments safely using hands free devices. Your first product is coming out this summer. And I’m excited about that. 

I think this has been a tremendous conversation that I’m very excited to share with the world very soon. This would be a good time for us to start to wrap up. Can you tell our listeners how they can find out more about you?

Wilson Kriegel

I do post a lot on LinkedIn. So you can find me on LinkedIn. I am on Twitter, my Twitter account is WD Kriegel. And those are usually the most prevalent places you can find me but a lot of people follow me on LinkedIn because I post a tremendous amount of information and news updates on a daily basis, everything that’s going on in various verticals and industries.

Shamanth Rao

I will link to all of this in the show notes. When we post this has been amazing. Thank you so much for taking the time to be on how things grow. I hope to see you around soon.

Wilson Kriegel

Thanks for having me.