(re: Biggest mistake) what do you think is the biggest mistake you made at Sierra?
I had a major problem dealing with being a public company. As a public company, there are people who track and predict your quarterly revenues. A huge portion of our revenue came from new products. If a product shipped late, this could skew a huge amount of revenue from one quarter to the next one. Missing a quarterly profit goal meant the stock price would slide, demotivating employees.
The right answer is to finish products six months before release, like the film industry does. I never had that luxury. I did try to leave time in the schedule, but products always shipped later than we thought.
Time after time, we would let the street (financial community) know when we thought products would ship, we would spend 100’s of thousands of dollars on marketing, and the product wouldn’t be there.
My biggest mistake was sometimes shipping a product I knew wasn’t ready. There were times I folded to the pressure, and shipped a product that I shouldn’t have.
This happened because of all the pressure from lots of directions.
The street – we had our quarterly revenue goals to hit
Marketing – product slippage sometimes means the marketing runs months before the product is in the stores. With a game called Outpost, we ran several different campaigns, some a year before the game shipped – because we kept thinking the game was months from shipping (for years)
Budget – late products are also over budget products. If the budget for a game is $2 million, and the team is burning $200,000 per month – a six month delay means an additional $1.2 million on the budget. This may exceed the original profit projection for the game.
Add all this together, and you see why I spent 20 years stressed out.
On those occasions where I shipped a product because of all this pressure — I paid for it later.
I used to always talk about customer acquisition costs. It was how I thought of our business. All customers I fit into one of three categories:
people that hadn’t bought from us
people that bought from us, and liked us
people that bought from us, and had a poor experience
For each game, I would think about what it costs, per unit sold, to reach each of these three offices. Reaching a new buyer might cost $4, an existing buyer $2, and bringing someone back into the family who had bought from us, and had a poor experience, $20. In other words, you can’t make money no matter what you do, attempting to sell products to people who don’t like you.
Obviously, we made a lot more people happy than unhappy – but, I can’t say that our record was perfect. If I had it to do over again, I would not have shipped some products until later, and some I would have never shipped.