Driving the disruption
Talk about a success story. When Facebook launched its public API in 2007, Sebastien and his three partners didn’t hesitate. They quit their jobs immediately, raised $18 million in venture capital and launched Playfish. Just two years later the company is in the driving seat of the social gaming market, claiming 150 million installs of its games and 60 million active users.
Sebastien is a 31-year old Belgian citizen. While many at that age are still trying to figure it all out, Sebastien has already made quite a career for himself. He left Belgium at the age of 16 to spend two years studying in the US. It is there that he first met his friend and current business partner Kristian Segerstråle (CEO of Playfish). Back in Belgium, Sebastien commenced with an engineering degree, but soon went abroad again to complete a Masters degree at Imperial College London. Like many top graduates at the time, Sebastien took on a first job at a major consulting firm, Booz Allen Hamilton in London. There he travelled the world and learned first-hand how companies deal with major transformations. In Asia, for example, he witnessed the impact of the Asian financial crisis and with the dot-com boom he helped media companies attempt to make sense of the disruption in their industry. As Sebastien tells it he’s always been fascinated with the creation of value, whether it’s in engineering terms (transforming raw materials into bridges) or in broader economic terms (disruptive technologies reshaping major markets).
In London in 2001, Sebastien, Kristian and two other friends, Sami Lababidi and Shukri Shammas, launched their first business to develop games for mobile phones. Considered by many as crazy (recall, the iPhone wasn’t around back then), Macrospace nevertheless succeeded and went on to merge with US-based Sorrent Inc to become Glu Mobile, which in turn was taken to IPO in 2007 (NASDAQ: GLUU). Following the IPO, Sebastien left the company to enjoy his newfound fatherhood. But the sabbatical didn’t last long. Nokia came knocking and asked Sebastien to launch a new business unit—Nokia Ad Service—aimed at monetizing mobile traffic across Nokia's millions of mobile devices. Not one to shy away from an adventure, Sebastien and his family packed their bags and moved to Helsinki.
In 2007, not a year after the Glu Mobile IPO, Facebook announced the launch of Facebook Platform, in effect opening up the application to third party developers. The four founders of Macrospace immediately recognised this as the key opportunity to transform the games industry. They all quit their jobs, invested $3 million of their own money (proceeds from the IPO) and raised another $18 million from venture capitalists. Playfish was born. They opened up offices in London, the US, China and Norway and began recruiting developers in rapid tempo. The first game, “Who has the biggest brain”, became an instant hit, without the need for any marketing—the players did it for them, recruiting their friends, and their friends, and their friends...
Three years on, Playfish has 200 employees and has launched 10 games across nine different networks (e.g. Facebook, Google, Yahoo, iPhone, Android). Not only can it claim mindboggling user numbers (150 million installs, 60 million active users), the company is profitable too, earning revenues via micro-transactions (while the games are basically free to play, one can buy virtual items for a small price) and advertising. Sebastien is now based in San Francisco and is, not surprisingly, highly enthusiastic about his business. “It’s been fun and is a great adventure. We have a once in a lifetime chance here to be right in the middle of a major disruption. The gaming industry is being transformed as we speak. Remember, this is a $50 billion industry—bigger than the film industry.”
Lessons for starters
Does Sebastien have lessons or tips for starting entrepreneurs? He gets straight to the point. “Make mistakes! Especially in Belgium we are taught to avoid mistakes. Everywhere we are told not to make mistakes; at home, at school, at work. That’s simply wrong. It’s certainly the biggest lesson I’ve learned. The true mark of innovation is being able to make mistakes. We needed to learn that right at the beginning at Macrospace and continue to apply it at Playfish. For example, to create successful games we rely on the creative spirit of our people. We can’t dictate what games need to be made. That means we have to allow for mistakes, that’s completely acceptable. In a way we’re making bets with our various development projects; some are real long-shots but we’re comfortable making those bets, because some will end up being really disruptive.”
Obviously there’s a warning in there too. “Off course you must see to it that your mistakes don’t kill you. You can’t make mistakes all the time, or make mistakes that are too expensive. If your bets are too big—which is the problem with Hollywood—you end up avoiding risk and killing innovation.”
“In Belgium we’re clearly too risk averse; we don’t want to lose the benefits of a full time job, the car, the phone, the pension. But those risks look ridiculous when you place them against the benefits and joy of being an entrepreneur.”
Sebastien’s second piece of advice, more pragmatic this time, is to keep your costs variable. “There are some real advantages we have today since it is possible to start up a company with very little capital. So many costs you can keep variable. At Playfish we don’t own a single server. We only have laptops and we do all our communication via Skype. Spend as little as possible and get your first shippable product out as quickly as possible! Today you can start a company with several thousand Euros—you don’t need millions. That’s a really optimistic message.”
“Make use of networks like the Betagroup in Brussels. They’re fantastic, helping people to get that first product out and funded, keeping costs low. Also, don’t be secretive about your idea. Ideas need to be free. All ideas will be copied; it’s execution that matters.”
Belgium versus the US
For a Belgian entrepreneur who’s made it in the ‘Anglo Saxon’ world, you might expect some cynicism about Belgium. But Sebastien is reasonably positive. “Sure, there are significant cultural differences. In Belgium we’re more risk averse. But that’s not always a bad thing. The strengths we have in Belgium are our great universities. We have some extremely smart people in medical research, in computer sciences, and that is often underestimated.
“I think the biggest problem in Belgium, from an entrepreneur’s perspective, is the high cost of making a mistake, especially with regard to hiring people. For example, hiring a VP Sales in Belgium is a risky thing to do, especially for a start-up. In the US it is very easy to set up a business and get some good people around you. You can build flexible, fluid teams. That early phase of start-up is lighter in the US. ”
About Sebastien de Halleux
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