Zen and the Entrepreneur: The Startup Files

I just celebrated my birthday last weekend and as always, I found it a good time to reflect on the past year and the upcoming year. (Perhaps this is a good idea for all of us, since December 17 was also the day the war in Iraq was finally, finally over, and also the same day that Kim Jong Il, the leader of North Korea, keeled over).

A birthday seems to me like a more natural time to make resolutions for the next year, so that's what I did. One of mine was to write more. Which brings me here.

When I started this blog years ago, my plan was to write mostly about startups, along with some occasional tidbits about zen, meditation, science fiction, or anything else which popped into my head since the last entry, as long as I could somehow relate it back to the experience of starting and growing a company.

Like most things in life, it’s pretty easy to get dragged off track!

Two obvious examples: when I spent at year at Stanford Business School, this blog became about what life was like at the GSB (which led my classmates to have a running joke - whenever anyone said anything really funny or controversial, they’d to turn to me and blurt out: “Don’t put that in the blog!!”).

And, just last week, when I’d restarted the blog after a 1.5 year hiatus, I felt compelled to write about the Daily Show’s (wildly inaccurate) portrayal of my interview with them (See The Top 10 Things that the Daily Show with John Stewart Got Wrong About Tap Fish).

Of course, I'm sure there will be plenty of controversial and off-topic posts in the year to come (I promise!), but for now I want to shift the blog back to where I started. In this spirit, I thought I’d re-link to some of my favorite posts about… you guessed it… entrepreneurship (this is, after all, called the Zen Entrepreneur blog).

I’d like to dedicate these posts to those fearless individuals who, in the past year or in the upcoming year, despite the terrible economy, are willing to leave their well paying jobs, work long hard hours for little (if any) immediate reward, to take a risk and start a new company. In the process you will literally be creating something out of nothing, hopefully creating lots of jobs in the process.

I won't deny it can be stressful (if you've never had employees depending on you for their paychecks, month after month, or a mortgage of your own to pay without any paycheck coming in, or had investors and/or customers literally yelling at you ... well, welcome to the everyday world of a startup founder). But it can also be very rewarding on the days when things go right. And there are definitely some of those days too!

Here's to you:

• The Curious Case of Steve Jobs: Intuition and the Entrepreneur

  one-liner: “Don't let the noise of others' opinions drown out your own inner voice. ”

• Social Entrepreneur: From a Wacky Idea to the Nobel Prize

  one-liner : “Even the wackiest idea can make a huge difference. This happened when most of us had no idea what micro-loans were.”

• The Bootstrapper’s Dilemma

  One-liner: “When you got no cash, the real question is: To Focus or Not To Focus??"

• Build it Fast, But Make it Last

  0ne-liner: “Is your Agile really better than his Waterfall for a new software product? Is there really any good methodology for building software in a startup?”

• Poetry for Entrepreneurs: Love My Startup More Than You.

  one-liner: "Silly poem I wrote to the tune of an old jimmy when I was kicking around unemployed in Silicon Valley."

Here's to an interesting year ahead for all of you who are already on, or about to jump onto, your own entrepreneurial journey!

Top 10 Things the Daily Show with Jon Stewart Got Wrong about Tap Fish!

Some of you may have seen the segment last night on the Jon Stewart show called “Video Game Dealers” where correspondent Aasif Mandvi interviewed me and a family/parent in New England whose kids had used their parents iTunes account to spend more on our game, Tap Fish, than they should have or were authorized to by their parents (NOTE: the parent got a refund from Apple long before this interview, and had given the kids his iTunes password, things that would have been obvious if they had shown the whole or even parts of conversation; more on what they DIDN'T show you below).

Now I enjoy Jon Stewart’s comedy as much as the next guy, and generally find it funny and outrageous, which was the reason I decided to do the interview in the first place (more on that later too!).

I think most people who watch it realize that the Daily Show is a “fake news show” and will take this all in good humor – CEO gets ripped by Fake News show which edited the footage to make him look bad.

But for the few who think this was a “serious journalistic piece” (and you’d be surprised at how many people are tweeting or blogging that this was a serious expose – probably people that don’t watch the Daily Show much) rather than a "fake news" piece that was staged to leave viewers with a certain impression.

So, taking a cue from two other late night comedy shows (David Letterman’s Top 10 Lists, and Saturday Night Live’s Seth Meyers Really!?! segment), I’d like to present my own top 10 list of things that the Daily show segment “conveniently” forgot to mention or edited out or otherwise just got wrong from my interview with them. Trust me, I was there and saw the whole thing, unlike the few minutes shown on TV.

1.) The Setup – Saving the Economy. Really?!? They did almost 4 hours of interviewing/filming in our offices. The producer Brennan told me that the story was about how bad the economy is and how this one sector (virtual goods based mobile and social games) were doing well and creating jobs, and being a fan of the show, I was up for some lighthearted comedy. They actually filmed a bunch of stupid stuff (but funny, more on this later) that they didn’t show to convince me this was a light-hearted piece about the virtual economy. Turns out that wasn’t the focus of the story at all – the story was “Silicon Valley Company exploits little kids!” Now why would a reputable journalistic institution like the Daily Show lie to the people they were interviewing? LOL – don’t answer that I think I already know the answer.

2.) Reviving The Dead Fish costs $99. Really?!? The worst part of the clip was that they made it seem that it costs $99 to revive dead fish in Tap Fish! That’s ridiculous. It costs 1 Fishbuck = 4 cents to revive ALL of your dead fish. And you start with some free fishbucks and you also get free fishbucks on certain level ups. You can also have your friends revive your dead fish for you so it doesn’t cost you anything! I’ve actually seen some people, after watching this segment, suggesting online that Tap Fish charges hundreds of dollars when your fish die or for a single fish! Ridiculous! Most virtual items are less than a dollar and most users (millions of them) never pay a dime and play for free!

And how much does it cost to feed your virtual fish with virtual fish food to keep them alive? (hint: it's completely free!). But, you say, that's not what Aasif led us to believe on TV! Really?!?

3.) Was the Game Designed/Targeted Primarily For Young children?. One of the takeaways for most viewers from this clip was that this was a game originally designed for young children who can’t even read! Really??
Totally not true. When we designed the game, we were looking at Facebook where aquarium games were very popular – and the average player, according to various blogs was a 43 year old woman! We figured that many of those people who liked to play these kinds of free to play games online would want to play them on their iPhones too.

Do adults in their 30’s and 40’s play Tap Fish? Yes there are LOTS of them. Do college students play Tap Fish? Yes LOTS of them. How do we know? Many of our users are on the Facebook Tap Fish page and fans of the game, and many more email us every day, and you’re not allowed to have a Facebook account if you’re under 13.
Do children play Tap Fish? Of course they do – and when parents (and even Daily Show personnel) download it, they see a big warning “Tap Fish is a free game but some items can be purchased for real money. If you don’t want this you can turn off in app purchases.”

But why didn’t I make this point to Aasif during the interview that this isn’t only a game for kids? Of course I did repeatedly, but like just about 99% of what I told them about the game it WAS NOT SHOWN!! Why not? I think it’s pretty obvious why not – it didn’t fit the script (more on the script below).

4.) One click to charge $99! Really?? Even worse, they made it seem like the only way to spend money on the game was to click on the $99 option in iTunes (the only price point shown) and poof you get charged! Just like that!

Why did they then skip the part where iTunes pops up a password dialog dialog that comes up every time you want to make a purchase? Also, they didn’t show the part where I said that most purchases were for 99 cents or $1.99 - why would they edit that relevant information out? Again I think I know the answer.

Now, back in 2010 here was an actual issue with Apples’ in app purchasing where iTunes didn’t ask you your password for 15 minutes after you installed the app. Apple fixed it in early 2011, and this got a lot of press in our eco-system and in the mainstream press.

Aasif and Brennan (the producer at the Daily Show) also didn’t mention that unlike other games (Tap Zoo, Smurf Village, etc.), we (Tap Fish) were one of the only games that actually disabled in-app purchases the first time users played the game so that this 15 minute window wouldn’t come into play, back in 2010, when this was a real issue for us and Apple wasn’t asking for passwords all the time.

5.) The Phone Call with the Parent. Is That What Really Happened?? A big hoopla was made about my hemming and hawing about speaking to a parent whose kids had charged too much on their iTunes account. But they didn’t show the actual phone call! Why not?? Here’s why:

a. During the call, the parent admits that he gave his kids his iTunes password that allowed them to make charges, which he shouldn’t have done.

b. I told the parent we’d be happy to work with him to get his money back from Apple – then the parent admitted that Apple refunded the charges a few days after “the incident” happened so this wasn’t a financial issue.

c.I actually took the time to speak to the parent, address his concerns, and explain to him how in app purchasing works, how to turn it off, and why it was bad for us when this kind of thing happens – where it counts – financially! The parent got his money back, and Apple got their "profit" from us even though this wasn't a real sale for us nor did we make any money from it. I’m not saying this was a good situation but making it seem like we were profiting from the situation was completely ridiculous, since we’re the only ones who lose money in these situations!

d. The parent actually thanked me by the end of the call and thought I was being reasonable.

e. The Daily Show producer, Brennan, told me that they probably wouldn’t show the actual phone conversation because if they did, I would come across as an “honest CEO who cares about his customer” and that we weren’t “outrageous enough”! They actually told me this – but decided to show the setup of the call and then skip the whole call and not show our actual conversation!!

f. At one point, I can’t remember if it was Aasif or Brennan, but they told me I should have called the parent a “f****ing idiot” for giving his kids his iTunes password. Maybe that’s how the TV guys in New York think about these kids and parents, but it’s certainly not how we approach this issue, and not how I dealt with it personally.

g. They edited in lots of “hemming and hawing” when I said that we prefer to deal with customers via email. After 4 hours of sitting in a conference room answering stupid questions from Aasif like “Isn’t playing Tap Fish really like being with a hooker??”, I was pretty exhausted, then they sprung this phone call on me, Jerry Springer style. Yes, like every other mobile game company on the planet, we prefer to deal with customers via email! We have millions of monthly users and there’s no way we could deal with them all on the phone. At least we have people answering email, which is more than I can say for a lot of mobile game companies. Could the Daily Show, which has millions of monthly viewers, take phone calls from viewers? Hell, even I can’t get the CEO of the Daily Show, Jon Stewart, on the phone, and I was actually on the show!

6.) Do you have to pay to play the game? Really? A funny quote was “Unless you spend money, the game sucks”. But, as Aasif mentioned 20 million people have downloaded Tap Fish and many more have downloaded other games. What he didn’t say (and I did say during the interview) was that most users play the game for free!

On any given day, less than 1% of users actually pay, the other 99% play free. This is how the freemium game model works – which companies like Zynga, Pocket Gems, Capcom, and even EA are now adapting. But millions of Tap Fish players have never spent a dime, but played the game for weeks or months! Why would our trustworthy fake news correspondent not mention that? And why would our trustworthy comedy show editors not show me saying that - which I said like 5 or 10 times during the interview! Really?!? (Again, I think you can figure out why).

7.) Are Inapp purchases evil?? Really? If you watch the segment where they’re showing Tap Fish in the app store closely, you’ll see the description starts with: “Please Note: Tap Fish is completely free to play, but it allows purchasing of items with real money using in-app purchases. If you don’t want this, please turn off inapp purchases”. Yeah, if you look closely it's there in the video clip but was cut away from quickly so u couldn't really see it. Of course, In app purchases are new, so people can get confused about how they work or how to turn them off. We do our best to explain this to players, and those who download apps even after reading the warning still download.

Do unauthorized purchases still happen? Yes sometimes they do. But on any given day, only 1% of players actually pay. And only 1% of those (yes that’s .01% have this scale of issue). Saying that inapp purchases are evil are like saying that because credit card numbers can get stolen and lots of unauthorized charges can happen, credit cards are evil!
I actually agree that as an industry we need to make people more aware of how inapp purchases work, because as a game developer unauthorized charges actually cost us money, a point I made several times during the interview but again was ignored because the script said to make it look like we "profited" from unauthorized charges made by kids!

8.) How much money do apps really make? Several people online expressed outrage that Aasif mentioned that we were making “$1 million per month” on this game. What I actually said was that I couldn’t share our current financials (because we're owned by a public company), but the most successful games on the iPhone, including games like Dragonvale, Smurfs Village, Angry Birds, and Tap Zoo were making significantly more than $1 million per month in sales. Those are of course only the top few apps out of over 500,000 apps. Most apps make very little - not even enough to support a single full time employee. We weren't making anywhere near this much on Tap Fish via iTunes at the time of the interview - and Apple just released a list of the top grossing apps this year and we weren't even in the top 25.

Keep in mind, Zynga alone does $1 billion a year (yes with a B) from free games like Farmville and Cityville, where a small percentage of people pay for virtual goods, and they’re going public next week!

I also explained (another clip that wasn't shown!) that to be a real player in the mobile gaming space you must also spend something like $1 million per month - in salaries (yes I know most viewers won’t want to believe we, unlike the media, are actually creating jobs both in the US and abroad), in advertising and marketing expenses - so profit is pretty hard to come by in a cut-throat industry like the iPhone gaming world where we’re all trying to grow a business. Really?!?

9). Splicing and Dicing Can Make You Look Bad. Really? With 4 hours of footage, you can splice in any stupid expression or thing from anywhere in the footage to wherever you think it’ll make the person look the worst. There were a number of times when they took a facial expression or answer from a different part of the interview. At the end of the interview Aasif sat there and actually put on a bunch of different “stupid expressions” so they could edit them in – and they certainly took some of what I’d said from the 4 hours of interviews and edited them in at inopportune times! (Notably where they made me look squirmy and uncomfortable for a long time).

10) Funny or Manipulative or True or Scripted? Coming under the guise of “we think it’s funny that you sell virtual fish and that you’re the only part of the economy doing well,” they shot hours of gags about the game itself and how it worked: at one point Aasif even poured actual fishfood on top of an iPhone in an attempt to poke fun at the game (leaving our conference room carpet full of fishfood which we had to call in a cleaning crew to clean up, mind you).

At one point, Aasif put on a hardhat to walk around our office where “virtual goods were being constructed”. Where did these gags end up? Nowhere – they didn’t show up online or in the segment.

Instead, during a break I peaked at Aasif’s notes, which he had been studying religiously when not interviewing me, and they were a collection of: ”Make him say XXXXXX. Here are 5 or 10 different ways to ask questions so that you can get him to say XXXXXX. We really need to get him to say XXXXXX on tape.”.

An interview where the questions and the answers are in a script?? Really?!?

So, there you have it. The Top 10 ways in which the Daily Show Got It Wrong (and that’s only the top 10 - I could go on and on).

Despite being almost entirely inaccurate, editing out the most relevant information about my conversation with the parent (and making me look squirmy when they sprung it on me), believe it or not, there were still a few things about the segment that I found funny, so I guess I have to just laugh at it.

But I didn’t find the implication that we’re consciously out to exploit kids funny at all (nor should Jon Stewart or Aasif Mandvi or the Daily Show Producers), and they could’ve shown this wasn't the case, if they'd wanted to, by simply showing my actual conversation with the parent on the phone! But the parent and I were "too reasonable" and weren’t swearing at each other enough!! To say that is our primary business purpose is insulting to the millions of players who have played for free, it’s insulting to (the very few) entrepreneurs who are building the new economy and creating jobs here in the US.

Why if this wasn’t shown a “fake news show" meant to make people laugh, I might actually think they were being dishonest journalism and be upset with them!

Still, their conclusion about what Tap Fish “teaches” kids – that if something dies you can throw money at it to make it live again. That is pretty silly (and ok, kinda funny).

The real lesson for me from being on the Daily Show? Welcome to show business – where nothing is quite what it seems, and heroes and villans are made in the script and the editing room, and have very little to do with real life.

The Curious Case of Steve Jobs: Intuition and the Entrepreneur

“Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

- Steve Jobs, Stanford Commencement, 2005

Wow it’s been a long time since I’ve written an entry (the last once was written just before I sold my iPhone gaming company, Gameview Studios, to DeNA) in 2010. I’d like to re-start my blog with two topics that are dear and near to my heart: following your intuition and the death of Steve jobs.

Steve’s death on October 5, 2011 caused a literal outflowing of emotion, analysis and opining: hundreds, perhaps thousands of pages have been written in the last month alone since his death. And that’s not counting Walter Isaacson’s 600 plus page biography.

Some of these focused on his achievements at Apple and Pixar, some on his tumultuous personality, some on his “insanely great” products like the Mac and the iPhone, some on how he ran Apple after his comeback, some on the impact he’s had on (count them) at least five different industries, some comparing him to Walt Disney and Henry Ford combined.

So...what’s left to say?

For me one of the most inspiring (and overlooked) aspects of Jobs’ career and philosophy was his reliance on his own intuition even in the face of the “noise of others’ opinions”. I haven’t seen much written on it, so using his own words as much as possible, here goes:

Most writers about successful business persons like to try to reduce what they did to a set of pithy “principles” you can follow to be just “like Mike”. With Jobs, I think that’s pretty much impossible. It’s like asking for the “step-by-step formula” for how to “think different”! If it could be reduced to a formula…well you get the point.

Intuition vs. Analysis

Jobs attributed much of his success to his ability to follow his own “inner knowing”, even when analysts and the “experts” disagreed. He was quoted as saying he hated focus groups because consumers “don’t know what they want until we show it to them”. Instead, he insisted on having an “intuitive” feel for when a product was “just right” and when it felt “wrong”.

This is pretty much the opposite of what you will learn from business schools (even more progressive west coast ones like Stanford) about building products and companies. It’s even different from what most venture capitalists and startup gurus here in the valley will tell you - which is to analyze a market, make sure the analysis confirms that the market is “big enough”, then interview the people in that market to find out their needs. It’s kind of ironic that one of the biggest icons of Silicon Valley would disagree with the way business is being done here.

Tim Cook, who replaced Jobs as the CEO at Apple, talks about following his own intuition when he decided to join Apple after meeting with Jobs. “Engineers are taught to make a decision analytically but there are times when relying on gut or intuition are indispensable.”

Where did Jobs get this mindset from? A big part of his reliance on intuition vs. analysis came as a result of his own search for truth. When he was young, he dropped out of Reed College (again the opposite of what logic would tell you to do if you want to be a successful entrepreneur) and followed his own intuition down several notable paths.

The first path, his quest for enlightenment, led him first on a trip to India chasing some guru, and later transformed into his study of Zen meditation here in the Bay area. “The people in the Indian countryside don’t use their intellect like we do, “ said Jobs. “They use their intuition instead, and their intuition is far more developed than in the rest of the world.”

He concluded with: “Intuition is a very powerful thing.” (src: Isaacson's biography).

Continuing his search for enlightenment when he came back to the US in the 1970’s he experimented with Zen meditation (an interest he kept up for the rest of his life) and mind-altering drugs (which as far as I know, he did not keep up for the rest of his life). Now I can’t speak for LSD (since I’ve never taken it), but I can vouch that meditation can be indispensible for learning about different states of mind and teaching you how to follow your own intuition.

Steve Jobs said: “If you just sit and observe, you will see how restless your mind is. If you try to calm it, it only makes it worse, but over time, it does calm, and when it does, there’s room to hear more subtle things- that’s when your intuition starts to blossom and you start to see things more clearly and be in the present more. Your mind just slows down, and you see a tremendous expanse in the moment.”

According to his longtime friend, Daniel Kottke, who’d known him since his college days: “Steve is very much Zen. It was a deep influence. You see it in his whole approach of stark, minimalist aesthetics, intense focus.”

Zen influenced Steve Jobs in other ways too – including his appreciation of a minimalist ethic that rubbed off on his insistence that user interfaces and products be as simple as possible. When creating great products like the Macintosh and the original iPod, Jobs talked about having this intuitive knowing when something had met this ethic of simplicity and when it could be improved. Although he wasn't always right, he was right way more often than he was wrong.

Connecting the Dots: One thing leads to another

Of course, it’s not always easy to follow your intuition when it’s telling you something that’s different from what others tell you should “logically” be done. Jobs own life is a good example – ranging from his decision to drop out of Reed to what looked like a very poor investment decision to fund Pixar, a money-losing operation that he bought from George Lucas for $10 million in the eighties, and then continued to fund for years (to the tune of $50 million of his own personal money), until they came out with Toy Story in the nineties and became the landmark success story we know about today.

I think it only happens if you can have confidence in yourself and your own ability to find what’s right for you. Following your intuition often means follow your own path, even if you can’t see exactly where it’s taking you.

Jobs often gave an example from the time when he dropped out of college. He said that once he’d officially dropped out, he could take the classes that he “wanted to take” rather than the ones that “they were requiring him to take”, showing a streak of his habitual disrespect for authority.

He saw a flyers on campus for a calligraphy class, and decided to follow his intuition and take this class, where he learned about proportional fonts, serif vs. non-serif fonts. Jobs would say about this time: “It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating. None of this had even a hope of any practical application in my life.”

Later, when it came time to design the Mac, he insisted that there be “fonts” of different types, rather than the usual stale green fonts that were popular at the time. Again in his own words:

“And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do.”

This was perhaps the most important example of what Jobs referred to as “connecting the dots” – when something in your life unexpectedly connects to something at a far later date, but you are completely unaware of the influence it’ll have at the time.

I think that most successful entrepreneurs benefit from “connecting the dots” – bringing together seemingly unconnected experiences into a single whole that somehow is more than the sum of the parts. How do you know? You don’t – you have to have the courage though to follow your intuition.

I’ll end, as I began, with Steve Jobs in his own words from the now famous Stanford speech:

“Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”