Reply With QuoteNice job altering your post. I didn't realize that I'd have to stoop as low as quoting your post right above mine in order to make you accountable for the things you've said, sarcastically or not.
--- Alan
If you're going to go to the trouble of creating a new qt3 account, you probably shouldn't retain the same posting style that made you so distinctive in the first palce
Nice job altering your post. I didn't realize that I'd have to stoop as low as quoting your post right above mine in order to make you accountable for the things you've said, sarcastically or not.
--- Alan
The old "Removed due to legal threats by L** the M**" trick again, eh, Dawn Falcon? You're still the only one I've ever seen pull that particular bullshit maneuver.
Edit: wow, and then you deleted all the posts that you retro-edited to snark at Dunkin? Damn, you're something else. Actually, no, I guess you're the same old thing.
Last edited by RepoMan; 07-25-2012 at 12:54 PM.
Why, it's almost like there's an edit button. I've just changed my argument to the single one which you said I've made. So, there we go.Originally Posted by Alan Dunkin
(AMG *accountable* for posts. Srs bsnz)
Last edited by Starlight; 07-24-2012 at 11:30 PM.
You direct me to read something, but don't bother reading the part of my post where I basically agreed with you about the ultimate fate of the MMO. So be it.
But by hammering home your undisputed point, you avoid mine -- why is someone with a security interest in a company saying things that diminish the value of the thing in which they hold the security interest? Clearly, you think Chafee is 100% free of guilt in the crash of 38, and others characterize him as something of a hero by warning others to stay away.
But it looks to me like yet another grandstanding act by a politician that would get him sued for violating his fiduciary duty if he were a private citizen. He took affirmative action to destroy the value of the Amalur IP when the state of RI had a direct security interest in it. Maybe good politics but bad business.
In general, I think you're right, but with Amalur specifically, I don't think there was any value for Chafee to destroy. The project was dead, and whether he said it then or 2 weeks later when it was officially dead wouldn't have made any practical difference.
Let's take the second half of this first, and knock down a fallacy of assumption (not necessarily yours, but others, and one that seems to have been widely accepted): Lincoln Chafee's comments warded off potential investors to 38 Studios.
What we now know is that this is hugely incorrect. What Lincoln Chafee may have done was scare venture capitalists away from doing the first step of due diligence and taking a meeting, but that's about it.
Once any financier had his accountants take a look at the business and the trajectory, the numbers look like this:
$32m in debts to creditors, some of which are 150 days or more past due.
$50-70m in loan debts and interest service to the state of Rhode Island
$50-60m in additional capital needed to bring product to market
Add those up and the toxicity of 38 Studios is apparent to any investor. Curt Schilling talks a brave game in that Boston Magazine article, but it's more of his overly optimistic delusion. There's the publishing deal with Take 2 (for Reckoning II) that got scotched, in Curt's view (reality is Take 2: "We weren't making any deal with them."). There's Curt saying that some mythical "White Knight" was going to give his company that had missed a payroll and laid off all staff a $15m capital investment (which is so ludicrously silly that I'm stunned there was no fact-check follow-up by Boston Magazine before reprinting Curt's assertion that such an corporate philanthropist existed.)
Nothing that Lincoln Chafee said scared off investors. Any investor who got past a 2-martini lunch and asked to see the books would have told Schilling that his company was dead and uninvestable.
But what of potential IP buyers? Let's say you're one of the Asian companies referenced in the Boston Magazine article. What if you're Nexon, and you've got some interest in the KoA IP and Project Copernicus. Well, here's the thing with that, and it gets complicated and litigious. Let's say Nexon buys Copernicus, for instance, before 38 Studios declares bankruptcy. Doing so exposes Nexon to all sorts of problems. For starters, even though they'd just bought assets and IP, they'd likely be exposed to suits from Bob Salvatore (owed $1.7m) and the employees of 38 Studios (owed $1.5m on that missed payroll) for having created the work. Additionally, if you're Nexon you'd be paying something like fair market value. For a company like that, a much smarter move is waiting until the IP and assets enter into bankruptcy, and then purchasing them at pennies on the dollar, with Salvatore and the employees owed back pay not eligible to sue to collect because those entities are listed as unsecured creditors thanks to the bankruptcy filing. Think of it in baseball terms: why trade for a guy who's going to become a free agent in two weeks?
Which brings us (finally!) back around to your assertion that Lincoln Chafee damaged the value of an asset (38 Studios and Project Copernicus) that was in his trust. I would first ask the question: what value did 38 Studios and Project Copernicus possess on May 1st that it had lost by May 15? By May 1 Nexon and any other Asian companies had already declined to partner with 38 Studios, clearly willing to wait for the company to go bankrupt. There wasn't going to be outside investment. This thing was dead in back in March. Lincoln Chafee saying as much in May didn't make it any deader.
Well, how about this then: setting aside the 38 Studios situation specifically, because I do tend to agree that it was probably way too late for any good outcome for them - is it not possible that future investors may have some hesitation getting involved in a similar business agreement in RI, seeing Governor Chafee as potentially hostile to their efforts?
P.S. I don't know any venture capitalists or I'd ask them.
All a VC wants to do is invest money in something and get a lot more back in hopefully a short or reasonable amount of time. There is some risk involved obviously, and VC funding in the tech industry is inherently fraught with risk.
Approached that way, you could see that Chafee's comments would seem detrimental.
The mitigating factors are:
- A serious VC wouldn't consider funding this project at this stage anyway.
- Even if they did consider it, would a governor's comments really scare them off? They should have done a lot more research about this and would know either way. Or they will. If a VC went in blind, they wouldn't be a very good VC (or last long).
- VC's typically come in at the beginning of a venture or middle rounds of funding, not swoop in at the last minute to save the day (though this does happen).
By many accounts, VCs weren't really interested in the last few months, and Schilling never went back to the VCs that were originally contacted before the company moved to Rhode Island when they were originally desperate for money. I just don't see a VC investing in this company at that juncture with such high risk and low eventual return anyway (as they were in the hole massively), regardless of Chafee's statement.
So this boils down to other companies swooping in to save 38 Studios. Schilling talks of Take 2; Take 2 denies it. Schilling could be telling the truth here, and that Take 2 isn't being entirely honest. Take 2 could have shown some interest but not being serious, or maybe they were serious and did eventually get scared off. Considering Take 2's position in the market these days, they would be very weary of making an extremely bad investment or a publishing deal. Plus they'd probably ask about EA's deal for Reckoning 1, which apparently didn't net anyone any profit. And they don't even want the stigma of 38 Studios' collapse to impact their position, so they'll just deny everything.
As for Nexon, I think triggercut is spot on. Nexon is a smart, well-run and calculating company. What's cheaper, investing a ton of money into an incredible high-risk venture or simply swooping in after bankruptcy to acquire the assets, if they were really interested at all? They're not necessarily huge in the US but it's not like they're shrinking either.
---Alan
I think this gets at the inherent problem in seeking to "prove" that Gov. Chafee's comments didn't hurt 38 Studios. It might seem unthinkable that an investor would throw money at this foolish project without have done their due diligence, but obviously at least one investor did just that: Curt Schilling.
The question of whether or not Governor Chafee bears 2% of the fault or 0% of the fault in 38 Studio's death strikes me as a fundamentally boring debate. But it's a debate some of us are very keen to have! I would suggest that those people are letting their "awesome gamer CEO" fantasies impact their judgment.
We have all dreamed of how great it would be to be super-rich creators of the perfect game, but few of us have ever been in a position to act on those fantasies. Perhaps we should look to this whole sordid affair and conclude that, in this particular instance, we are fortunate enough not to have had the chance to chase our dreams.
It's really the only discussion left to have. The rest is all out as a matter of public record, picking the bones of a failed attempt to make an awesome new MMO and get rich doing it. I have no idea what you mean about an "awesome gamer CEO", it seems clear that Schilling was in way over his head. But I still doubt that he carries 100% of the fault here, even if it's no less than 98%.
The thing I find so fascinating about the whole thing is the amount of hubris it took for Schilling to decide to enter the games industry with a $200 million MMO as the flagship project. Even if I had $50 million to invest in my own gamer dream, I'd never EVER think to take on the AAA MMO market right out of the gate. It just wouldn't happen.
I don't want to sound uncharitable, but the announcement way back when of Amalur the MMO struck me as something that was going to fail right away. Of course, I assumed that 38 would get it done, but I assumed it would join the ranks of MMOs that launched and lost subs until it died. It just didn't seem plausible that this start up would be able to launch a MMO that would compete with the big titles. Advantage of hindsight and all that, but the whole project sounded like it was destined for disappointment.
The buck stops with him. Driving the company straight into the ground instead of giving 60 days warning? 100% on him. Being blindly optimistic about more funding, to the extent of giving massive and expensive perks for years? 100% on him. Being totally unaware of the actual scale of the job, and of how much work actually remained? 100% on him. Hiring family members and other cronies? 100% on him. Hiring experienced MMO developers, and then not listening to them? 100% on him. Starting a new company in one of the toughest businesses in the world, with massive undercapitalization? 100% on him.
Seriously, if the Boston Magazine article is at all correct, I think he pretty much does deserve 100% of the blame.
I think you're oversimplifying, Repo. I'm less interested in where the buck stops so much as why the buck stopped now. How many mismanaged companies have we seen limp along for years - hell, how many video game companies? Sure, it's easy in hindsight to say that MMO development is a sucker's game but when he started it looked like a pretty solid bet, and he did manage to talk a lot of people into following his vision. And I'm not sure I buy the "auteur theory" of CEOs - regardless of where blame ultimately rests there were a lot of people invested, monetarily and otherwise, in keeping this enterprise going. Now at the end, we go through the post mortem and call Schilling on his amazingly ill fit for the role, but did it have to end that way?
If they had shipped the game successfully, would you have given him 100% of the credit for it?
I think it's obvious that he made a lot of serious mistakes, but I think it's hyperbolic to attribute absolutely 100% of the failure of a 400+ person corporation to a single person. How does the CEO, CFO and other senior management get a free pass for instance?
I don't even like Schilling from his personality (and teams) from baseball and I find his political views awful and hypocritical. But I think it's hard to discuss the actual situation if you are going to reduce the studio to a single person.
Some extra financial goodness from WPRI yesterday:
--- Alan38 Studios' operating expenses totaled $118 million between its founding in August 2006 and the end of 2011, the documents show. The company earned no revenue during that period; the bills were paid out of Schilling's personal fortune and, starting in November 2010, proceeds from a $75 million taxpayer-backed loan awarded by the R.I. Economic Development Corporation.
During the first three months of this year the company spent another $15.4 million, including $5.4 million in March alone, but also booked its first $27.7 million in revenue, the documents show. Bankruptcy records show a 38 Studios subsidiary received a $28.7 million advance from Electronic Arts in January after it finished its first game, "Kingdoms of Amalur: Reckoning," which EA published in February.
...
The documents obtained by WPRI.com also raise new questions about whether 38 Studios executives were overoptimistic about the company's prospects. Their business plan projected the company would take in $109 million in revenue over the course of this year, including $6.5 million a month from April to June; $476,333 a month from July to September; and $19.9 million a month from October on.
The documents don't offer a rationale for those numbers, but 38 Studios executives told a bankruptcy trustee they'd projected "Reckoning" would sell more than the 2 million copies necessary for them to break even on the EA advance and begin earning royalties. Actual sales totaled around 1.3 million copies.
"I don't think 2 million was an unreasonable estimate - I thought it would do 2 million to 3 million," Michael Pachter, a game-industry analyst at Wedbush Securities, told WPRI.com. "They may have been counting on an extra $30 million to $40 million of revenue from the game."
...
Pachter said 38 Studios' efforts to attract additional financing were likely hurt by the disappointing performance of "Star Wars: The Old Republic," a new MMO backed by EA that was released in December. "Star Wars" cost an estimated $200 million to develop but hasn't been as big a hit with subscribers as expected.
"I honestly think if 38 Studios had moved to get financing months earlier they would have been fine," Pachter said. "Had they been out in the market in December I think they would have been fine, and I think they probably believed they were fine." He also suggested Rhode Island "should have thrown good money after bad" and kept the company afloat for another month while searching for a buyer.
...
Kaplan, author of "The Business Model Innovation Factory," said the newly released documents suggest 38 Studios needed another $60 million or more to finish "Copernicus" and it's unclear whether that much money could have been found. "I can't imagine a scenario where anyone was going to put that capital in," he said.
"That's the chief financial officer's job - to make sure they don't run out of cash," Pachter said. "They should have had enough cash on hand to finish the game a year ago just to be safe. You don't want to keep going back and back and back to raise capital."
I hear what you all are saying, but the fact is that in a startup company, the responsibility flows downhill. Schilling was the only reason, as far as I can see, that the company held together at all. He provided the seed money; he was compulsive about (and incredibly ineffective at) raising capital; he hired the CEO, CFO, and the board; he clearly set the tone and tenor of the management for the place. There was no company before him, and everyone knew he was the big dog on the premises.
If he had hired a much better team, things might have been different. But he didn't, because he didn't really know fuck-all about making a computer game. And that ignorance pervasively crippled the company, leading to ineffective oversight at all levels.
When a company does well, it's everyone's victory. When a company does badly, it's the management's fault. That's just the way it is -- management owns hiring and expectation-setting, the two things that influence company performance most of all. Poor management can singlehandedly ruin a company, and transitively poor management choices from the founder on down can set a pattern that is impossible to fix.
And though I loathe Pachter, he's right about (only) one thing above -- they should have shipped a year sooner and they should have had a financial roadmap that didn't depend on Amalur being an epic hit. They should have been more conservative on all fronts. However, that's obviously not Schilling's all-in personality... and there we come back to Schilling again.
Can the next series of Eastbound please be about this.
I would not use the same terms to describe Curt Schilling as I would use to describe the folks who control large funds that invest in startups. There's a Texas-sized difference between the two that starts with "Curt Schilling doesn't have a roomful of accountants."
No.
He's not.
He nailed it actually. 100% right at Curt Schilling's feet. Go back and read about "Uncle Bill" and tell me that it should be any other way.
We need a "like" button on this forum.
Fine, dude, I'm out. Curt Schilling was the sole engineer of the downfall of 38 Studios. There was no nuance whatsoever to this story, in fact it's a miracle he managed to get both legs into his pants in the morning before he dodged oncoming traffic on his way to the office that he did eventually manage to utterly destroy. I love a happy ending.
Sorry honestly, didn't mean to be poking at folks. You've pointed out the mistakes that managers under Schilling made, and you're correct about them. I think what RepoMan and I are both saying is that the culture of lack of accountability that allowed so many of those mistakes to exist and continue can be laid at Mr. Schilling's feet.
In the end, I do think Dave47 has the right of it: whether Curt was 98% (or really even 90%) responsible or 100% is kind of a dull argument. My point was that assigning any blame to the coroner who marks the time of death and zips the body bag is probably less-than-accurate, and then I got caught in a fairly meaningless tangent.
Yeah, Pogue, I don't mean to be minimizing the stack of fail that was 38 Studios. Clearly many people failed at many levels. But the buck stops with Schilling, since he hired those people. And moreover, when they fucked up, he didn't fire them -- and, from what I hear, he fired a fair number of the ones who weren't fucking up, but who were telling him truths he didn't want to hear.
It actually is one of the remarkably less nuanced corporate failure stories I've ever heard. Compare this to Enron, where you had Skilling building a house of cards while Lay gadded about the globe, almost totally clueless. If there is a Svengali to Schilling's Trilby, we have yet to hear about that person.
(also: u mad, bro? We still have OGRE to play this fall, maybe your ire will stoke your fire ;-)
And let me make my perspective clear in case I have failed to do so: I am in no way defending Schilling. He could have made the company a success but, to steal a phrase, never missed a chance to miss a chance. However! My question is, was there really no saving 38 Studios? They hammered out Reckoning in relatively short order to keep things going. Maybe they could have scaled back their MMO to something that could be released quicker to at least get a little cash flowing. I don't know.
Last edited by Pogue Mahone; 07-25-2012 at 05:44 PM. Reason: damn iphone
Ha, I'm not really a "get mad" kind of guy, especially over a discussion, but I confess I have very little patience, and I just didn't feel like we were communicating here. Anyway, behind us now.
And I'll hold you to the OGRE games, we need to get a group together.
Note that 38 Studios was a two-headed beast. The Baltimore studio, aka Big Huge Games, was entirely responsible for Reckoning. The Rhode Island studio, working on the MMO, was a completely different team -- and by all accounts, a much less functional and much more wasteful team, with much less to show for five years of work.
An MMO is the largest-scale genre there is. From what we've seen in this thread -- especially Alan's most recent post, above -- they weren't even close to shipping. If Schilling had been more candid with the team all along... if he'd cut perks earlier and told people exactly how much money was left... if he'd put less faith in fundraising and more faith in cold hard milestones... then the whole story would've been different.
But he wanted to make an industry-beating MMO, so scaling back was never in his vocabulary, as far as I can tell. Hubris, hubris, hubris....
The moral is: the skill it takes to throw a ball better than damn near anyone is not the same as the skill (the many skills) it takes to run a multimillion-dollar business employing hundreds of people.
Unfortunately, money and reputation will let you buy your way into just about any business there is. It just won't let you get out with either intact.
Group OGRE session sounds awesome -- hell, you and I will both have copies of the game; we can probably put together like a 36 foot square playing area! I'll brew approximately one gallon of coffee per square foot, so we can stay awake long enough to play a whole scenario :-D
As RepoMan noted, Reckoning was the work of the Baltimore studio. They'd been working on the game that became Reckoning since the last Age Of Empires expansion shipped in 2006.
And to give you an idea about what Repo is saying about how Schilling kept the idiots and fired the smart people, in the summer of 2010 the top five folks at the Baltimore studio were basically fired for questioning the sanity of the business model and the silliness of the sales projections.
Well, the Baltimore studio was in effect also making tons of assets for use in the MMOG, so it's not like they were completely independent of each other except for finances.
--- Alan
I don't know. I think there is an interesting discussion around why there seems to be such a savagery against Schilling, in a way that I don't think would be there if it were any other random executive who had screwed up (beyond typical political reactions along party lines).
I smell some people wanting to knock a rich sports star off his pedestal. Armchair psychologist in me even feels a bit of glee that a sports hero failed when he tried to come into "our world."
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