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Is this Moshi Monster’s moment of maximum peril?

By on April 21, 2011
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Moshi Monsters is on a roll.

38 million registered users. A line of plush toys expected to gross £100 million of revenue in 2011.* Rumours of movie deals or TV spin-offs.

So why am I so worried?

The answer is this:

image

It’s a photograph of Mind Candy’s swanky new offices in Shoreditch, underneath the trendy Shoreditch House (sister of Soho House) and recently refitted.

They fill me with fear.

In January this year, I wrote that social gaming was no bubble. Two months later, I changed my mind.

And when you are in a bubble, hubris is your worst enemy.

The perils of hubris

I don’t bemoan the right of Mind Candy, and its successful, charismatic and charming CEO Michael Acton Smith, to celebrate their success. It’s been a rocky ride over many years, and they have worked incredibly hard to build Moshi.

But the news stories that I see – another party, an expensive new office, jetting to Hollywood – have a decidedly hubristic air.

To be clear, it’s not about the expense of the offices. Shoreditch is not expensive, and making an office look nice need not break the bank. It’s the dangers to a startup of becoming caught up in its own hype cycle that worry me.

Moshi is transitioning from startup to corporate beast. This is a tough change for any business that migrates from discovering the business plan to executing on it.

Hubris makes it even more difficult to recruit the right people to help with this change.

Are people joining Moshi because they have a laser-like focus on making the best possible online experience for kids, or are they joining because it is cool and throws good parties. Will there be a steady stream of bankers, consultants and corporate executives trying to join the company, bringing big corporate baggage and expense?

After hubris, comes nemesis

Hubris is so dangerous because it is so blinding. Mind Candy is, quite rightly, the darling of the British new media and games scene. More open than Jagex. Still independent unlike Playfish. Trendier than Splash Damage or Blitz.

But their position of success is not held by right.

The competition for kids virtual worlds is insanely intense. It’s a highly-profitable, huge market that is endlessly renewed as kids grow into the right age bracket for your product. About two years ago, there were 200 virtual worlds for kids in development. It’s a very competitive space.

Moshi Monsters got to its position by having a brilliant product, a focus on execution, great marketing and a wonderful team.

The risk is that they take their eye off the ball.

Some might say this post is typical British sniping at the successful. I am British, so they may be right. But I lived through the last dot com boom, and I watched good companies die because they became drunk with their own success. (I watched a lot of bad companies die as well – they should never have been funded in the first place).

I don’t want Moshi to be another dot com boom to bust story. I don’t even want it to be a successful £400 million exit.

I’d like Moshi to become a massive domestic British success that will expand and grow globally. Someone to provide part of the new media ecosystem that is so critical to a successful entrepreneurial culture in Britain.

So I hope that the parties, and the jetsetting, and the swanky offices are just a front. And that behind it all, there is still the obsessive, product-focused, company culture that will ensure Mind Candy is a great success for decades to come.

In short, I hope that every morning, despite the hangovers, the hard work of being a leading player in a hypercompetitive space carries on undimmed.

Please.

* Note this is gross revenue, including retail margin, manufacturing, distribution, marketing and so on. Mind Candy, the parent company of Moshi Monsters, will only see a small fraction of this number as its own revenues.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • I don’t see it as a negatively titled article, or even as jealous. “Maximum peril” is intended to be a warning. It is a perilous time for any company.
    £400 million would be a *reasonable* British success story. Like Playfish. But Playfish has been swallowed up by EA, and is no longer British (possibly no longer a success).
    As Nic Brisbourne has argued, for the European startup infrastructure to thrive, we need massive, domestic companies that are acquirors of startups, not for everyone to exit to an American.
    Don’t get me wrong: if Michael and the team engineer a $400 million exit, they would deserve every penny after all the hard work they’ve put in.
    But wouldn’t it be even better if they became a $1 billion company? A $5 billion company?
    And finally, I’m not denying them the right to the parties. Far from it. But, from my experience, I see this as a moment of real danger. So I wanted to make say so.

  • Peter

    I’d have to agree with the above and say you’re off course on this one sailor. Firstly the team at Mind Candy have visited the arena before in the form of Perplex City. They failed fast and learnt quickly. The resulting product in the form of Moshi Monsters is therefore not only years in the making but is allowing Mind Candy to make the right decisions based on this experience. Swanky offices, parties – they’ve every right to them.

    I cannot for the life of me understand why you wouldn’t want or champion a £400 million exit for the company. Surely this would be a huge UK success story? The product would continue, the founders would be recognised for their talent / team and IP and would still be able to create further products in the future.

    If you truly support UK gaming / tech then you wouldn’t have posted such a negative titled article in the first place. Jealous?

  • Peter Thorntain

    To me this smacks of jealousy. Moshi Monsters is a great product, years in the making

  • The Three Rings offices are definitely cool. Expecially the meeting room hidden behind the book case.
    I agree that keeping staff is critical. I’m actually not entirely opposed to the nice kitchen and lots of parties. I’m pointing out this is the moment of maximum danger: the point at which Mind Candy is most likely to lose its way as it starts to move from startup to corporate, with all of the management changes that brings.

  • Facebook User

    I don’t think you are right on this one Nicholas. Talent is hard to find and having cool offices is just one of the many things you want to add to the recipe to increase your chances of getting the right people on board and keeping existing ones. Don’t underestimate the power of those free lunches and laundry at Google. Cool offices are not decisive of course, when I joined lastminute.com, it had horrible offices and I shared a desk, its the sheer amount of enthusiasm and smart young people there that got me in but then when we moved to nice looking offices it helped maintain a certain difference, sense of belonging, pride and fun that is key to build a successful company culture. Just make sure its only one small part of a greater strategy. Btw if you want to see some really cool offices you should check the ones from Three Rings: http://bit.ly/gWa5lu