The founder of Unity recounts the platform shifts their video game engine survived & even thrived on, from PC to Consoles, Flash games, Mobile and now VR. Wise words for any entrepreneur who has to deal with the rise of fall of platforms in their industry.
Tim Anglade, Executive in Residence at Scale Venture Partners: So, okay, Unity, right? How do people know Unity?
David Helgason, Founder at Unity: So it’s a game engine. It’s a tool that people use to make video games. It’s currently used by something like 1.6 million people on a monthly basis.
Tim: That’s crazy
David: The Monthly Active Developer, the MAD metric, and then they make apps that, in total, have over two billion downloads per month.
Tim: And tons of stuff that people have probably like played on their phone and everything, right?
David: I think last week we had like 1,300 games have their first hundred downloads, which isn’t much, but it’s a metric of saying like, it’s an actual release.
Tim: It’s not just like you doing something for fun, yeah.
David: So, yeah, it’s a lot of stuff. Wonderful games, too.
Tim: So obviously you’re really big on mobile, and I know you’re doing more and more stuff on VR, and the company’s been around for a really long time.
David: 14 years or so.
Tim: Yeah, you’re getting up there and to be clear, you were there. You’re one of the founders, you’re the CEO for a very, very long time with the company, and one thing I remember we talked about a long time ago was how many times can Unity can add to or ride the platform shift and kind of figure that out because you started out like 14 years ago, mobile wasn’t really your thing.
David: Platform shifts have been decisive and dramatic, and really scary sometimes.
Tim: So what were some of the big ones if you take us chronologically? Do you remember what you started on?
David: I mean, the first one is kind of embarrassing. We started as a Mac-based game engine, which is not the thing. I mean now it is, kind of, but we have to remember that 14 years ago was like the lowest point of Apple, roughly. They were just about to recover.
Tim: It was PowerPC, and nobody wanted to develop for that architecture.
David: And we were there for historical reasons. We were sort of Mac guys and whatever, so the first platform shift was to get to PC, which was critical, and we did that. Then we had web, as a plugin, like a Flash plugin.
Tim: You were like, oh, the audience, the game audience is gonna move away from consoles into the web a little bit.
David: The theory was web would be a big gaming platform. It never quite delivered, but we had half a billion downloads off the browser plugin, and now it’s coming to an end because the browsers are shutting down their plugin APIs, as they should because, ya know, it’s not really safe. But we did that, then we went to the Wii, the old Wii. We went to iPhone shortly afterwards. That was the big break for us. And then Android, and then like everything, including all the consoles, and now all the VR, all the AR stuff.
Tim: So now today if you download Unity Studio, and you want to build a game, you can target like Oculus and all the VR platforms.
David: Basically everything.
Tim: You can target almost all the game consoles you can think of, PC, mobile, everything.
David: Which is over 20 platforms, by the way, including Tizen and Windows Mobile, crazy stuff.
Tim: Anything you can think of, and that’s part of the magic, but to be clear, it’s not like you guys just added platforms. Actually, there’s a couple of tricks to what you did like when you had a platform, what do you put your actual energy on versus what you kind of just don’t do or do as a hobby. And also some of those shifts didn’t end up working, right? There’s tons of platforms, you mentioned web very quickly that isn’t part of your lineup nowadays, right?
David: Well it is through WebGL, right, but you know, we’ve had multiple false starts including Flash, which for a moment seemed like, 3D in Flash seemed.
Tim: I was a Flash developer for a while, so yeah, I remember.
David: So for a moment that seemed like it would be a thing, and we were really scared of it actually because we saw a future for 3D on the web without Unity, which is very scary for us. We went totally crazy. We took some of our best guys, and they started working on kind of cramming Unity into the Flash player, which is almost not a thing, but they pulled it off, and it was pretty dire. But then Flash became irrelevant way faster than we thought. The product was cancelled. It was a total write off, actually, but it was kind of healthy. I remember looking at us and thinking okay, we’re going to survive any platform shift. Because if we can do this, and we’re decisive enough to do it, then that’s a good thing to be.
Tim: So you were aware of the technology, but I’m sure there’s some kind advantage that drew you
Tim: That makes sense, so what would you say the trick is to knowing what to ride and what not to ride? I’m sure some of it must be obvious like when you started with Mac because the numbers weren’t coming in, so you were like, well, we gotta broaden our audience, but some of those like mobile, I think it caught a lot of people by surprise, like you were just saying now because of how big it is.
David: Now it’s obvious but back in ‘08 when we started working on iPhone, like the iPhone was a year old, less than a year old, actually, ween we started that work, and it was a tiny device. Not powerful at all, and, of course, nobody owned it. There was like a couple million, right. So there was an intuition there that it was going to be important. We didn’t predict how big it would be, and we didn’t predict this kind of complete shift to smartphone as the primary computing device.
Tim: So I’m really interested in this one. I think a lot of people they retroactively talk themselves into thinking like, oh we were always the right fit for it, and some people talk themselves into retroactively thinking oh, that was the only thing that we could do, that we had to do this shift. So how do you look at Unity, what it was, and the iPhone and then Android coming out, and you guys deciding to go really big on that, and really owning that space.
David: Yeah, we’re very strong there. Yeah, like, it was a decisive moment. We saw something coming. We didn’t know how big it would be. By the way, ya know, we had very little historical context. Everything was new, and we were a small company, but we hired one guy, and he hired another guy, two brilliant guys, and they basically took the code and sort of ran off and actually branched it completely for a while. It was later brought back because we had to live in one code base, but for a couple of years actually, it was branched, and we rushed to it, and what we intuitively got back then, and now it’s more formally understood I think, internally. As the platform starts growing, it’s kind of small numbers for a while because you’re at the beginning of the S-curve.
Tim: So if you look at number of games shipped or number of devices
David: Yeah, the size of the business, whatever that means.
Tim: In a consumer sense, yeah.
David: Yeah, so as the platform starts growing like this, initially it will slow down, hopefully in a big plateau like mobile has done, the developer interest for that platform is almost like the mirror of that lens shape, so you get a lot of growth initially and then actually much less growth later. Yeah, we had this intuition for that, and we could feel like other game developers were asking for it, so we moved there fast and decisively, and nobody else did, so we kind of owned that, I mean still, but for a while we were completely alone there. One iOS was done, Android was hard but not that hard.
Tim: And you say your ability to pick up on those is kind of a big thing that not only are you riding the platform shifts well but that you’re becoming your own platform, right, because you can see on one end, you have this audience to worry about, which is like total devices you can ship on and that might indicate something about your revenue, or how successful you are, but on the other end, if you have the pulse of developers and creators
David: For them, Unity is maybe the most important platform, at least from a developer workflow whatever, so we become like the meta platform.
Tim: You become like this dual-sided market so to speak, right?
David: Which is a very powerful thing to be. It’s been vary hard though, I mean going from one platform to three platforms supported, ya know, Mac, Windows, browser was hard, and you end up with different code paths and the tests would have to be blah blah blah, but the going from five, which is hard, to 10 and then to 25 has required multiple re-toolings of the whole process, and QA becomes like a real competitive advantage and our ability to have it all working in one code base.
Tim: So it gets easier from a technical standpoint, but does it also get easier from an user base standpoint? You feel like all these developers adopted Unity for mobile, and now they’re going into VR with you as you give them the possibility?
David: Yeah, it turns out to be the case. Not all of them, but enough that it matters.
David: It’s fantastic like that and having these kind of multi-platform technology gives them a lot of flexibility because the industry is changing fast, and if we stay on the front end of that, that means that we provide that service to everyone, so they can move where they need to be.
Tim: So what are the next big platform shifts that you guys are already operating on?
David: We hope and expect VR to be big. AR behind that, I mean the various glasses, like transparent glasses.
Tim: You mean VR beyond games, too, right? I know we’ve talked about this.
David: Oh, yeah, a bunch of stuff. Well, the one thing cool. Okay, so, Unity is, I didn’t really mention it, but it’s like a 3D technology at heart. It’s pretty good for 2D games as well, but the biggest value is in 3D. Now on every single platform until like recently, 3D was like an afterthought. It was not the primary use case, maybe for the game consoles, but even there, it’s been a mix of 2D and 3D. With VR and AR, finally, we have platforms that are primarily or only 3D, like there is no 2D anymore. Even flat surfaces have to live in 3D.
Tim: Yeah, you’re not interacting through a 2D screen or a TV screen, right? You’re really just living in it.
David: And actually these platforms, Unity becomes almost like an operating system almost. The operating system metaphor, which we’ve bandied around before becomes really kind of relevant there, and it’s very cool.
Tim: Nah, that’s really really nice. So you have this intersection of you’re the perfect fit for it, you have this 3D engine, but I also feel like in the next years it,
David: It’s a perfect fit. One has to remember, though, we talk a lot about VR, but VR is absolutely tiny. If you’re really generous with all the VR devices in the world including my Cardboard that is kind of wobbly now from overuse that means that between mobile and VR, it’s like one to 1,000 in number of devices, and even worse in usage time, and monetization, and so on. So at best, you’re maybe at a 10th of a 1,000th.
Tim: That’s when you have to invest, right? Because if you were investing later, you’d be behind the curve.
David: Exactly, and there’s a lot of companies that we’ve run into that are like the Unity for VR. I mean we absolutely intend to be Unity for VR.
Tim: No, that makes a lot of sense, so the complexity is tooled to the timing of it, so as you become a bigger company maybe you have, not economies of scale, but you have economies of previous market that you owned
David: And also we’ve really learned the discipline of working with platform holders early and in deep ways. We’ve strong relationships, technical collaboration, marking collaboration, and especially, when it comes to these really new platforms, a sharing of vision and wisdom. You know what works and what is needed and so on.
Tim: That makes sense, and to your point about that mobile shift, immersing yourself in that scene, hiring people that really know it well, prototyping it, finding a way to ride that platform shift in the most idiomatic way that seems like the way to succeed in it as opposed to getting to it late, trying to do it your way, that tends to fail pretty hard.
David: Exactly and then those cases, I mean, we don’t branch off as hard any more as we used to, but in the old days we used to just branch off, and they would sort of do it and then we brought it back. It’s a complicated, there is no, the source base of such a system ends up being pretty complicated.
Tim: I do think it’s something that’s really hard to do but as you start up, look to grow, and become really really big I feel like is one of those things. You’re gonna live through, if you have a life of 10 years before your IPO, which seems to be the average timeline, and sometimes more, right, I kind of feel like you’re gonna be at least through one, maybe two platform shifts like big platform shifts like mobile, like maybe VR, you need to learn how to adapt to it. Otherwise you don’t really quite make it.
David: I mean big, but sort of smaller platform shifts like the browser going from plugins to native, like WebGL.
Tim: Yeah, it always does happen so you gotta be ready for it. But thanks a lot.
David: Yeah, thanks. Cheers.
The Startup Tapes chronicle the highs & lows of building a startup, through candid, immersive interviews with founders, operators & advisors. Tim Anglade, an Executive-in-Residence at Scale Venture Partners and formerly with Realm, Apigee, and Cloudant leads the project with the goal to de-mystify the process through which startups emerge, grow & succeed. His unfiltered interviews transcribe the conversations we often hear in the boardroom, amongst our portfolio community and with entrepreneurs and partners we engage with every day.
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