We ran a story earlier this week on Eric Schiermeyer, the co-founder of Zynga and the analytics expert behind its success, and his new game studio called Luminary. But I had a nice walk with Schiermeyer on the coastal cliffs at Half Moon Bay where our conversation drifted across many other subjects.

Schiermeyer talked about how to build a creative game that also pays homage to the discipline of analytics. He also had some passionate ideas about the right way to build a game company in the wake of his experience at Zynga, which grew to more than 3,500 people at its peak. Now he wants to find a new way to motivate employees and spread the rewards around in a very un-Silicon Valley way. At the same time, he’s making an effort to be creative with a strategic endless runner game dubbed Greedy Goblins.

I felt our conversation was more interesting because we were looking at the beautiful coastline and huffing and puffing on our walk amid the sound of the waves and the wind. Our conversation was different because it wasn’t in the middle of the bustle downtown San Francisco or Silicon Valley. Here’s an edited transcript of our conversation.

GamesBeat: Tell me about your business.
Eric Schiermeyer:
I started it up in August of last year, 2013.

zynga tankGamesBeat: Was that after a long break, then?

Schiermeyer: Yeah, a two-year break. In those two years I did a lot of traveling, a lot of remodeling. I feel like I’m an expert at remodeling.

GamesBeat: Did you explore any other company ideas?

Schiermeyer: Not really? I was paying attention to what was going on, but I was embracing the idea of taking two years off. That’s been my pattern with startups. I’ll work really hard for about four years, and then I’ll need a long break to recharge. Things worked out that I was able to very consciously take two years.

GamesBeat: Who are the rest of the folks you’re working with now?

Schiermeyer: There’s David Glenn. He left Zynga a while ago. He was only there for a year, or maybe less. He worked at Blizzard before that on Diablo II. Since Zynga he started his own mobile thing, and then ended up at Kixeye.

Another guy, Amir Ebrahimi, he used to work at Unity. I met him through Dave. He’s a Unity expert. He’s really good at it. He gets called in by companies like Microsoft to do specific things. It’s fun watching him.

Then there’s Marco Risso. He’s Italian. He used to work in the financial industry. He decided to apply the analytic or technical training and expertise he found there to gaming. He’s fun to talk to as well. We’ve been having a lot of discussions about analytics and stuff like that.

The way we’ve structured it, we’re not focusing on stock options and things like that. The basic premise of this is that so many of us have ridden the roller coaster of stock options and all the implicit or outright stated fantasies about the value of those options. Meanwhile, we’ve all experienced, or most of us, witnessing the value that’s actually being created in these apps and these hits. We’ve also seen small teams do exceptionally well, especially against larger teams. It seems perfectly aligned to change the compensation structure. There’s fewer people taking bites out of the pie, and the pie can be quite large. The idea is to immediately pay people out, not wait four years for them to vest.

I feel like the whole compensation structure is misaligned to create value for the employees. So often that’s our pitch to new employees – they’re going to get rich doing this. But when you have the competing interests of investors and public markets and sometimes upper management, a lot of times employees get the shaft. We’re trying to solve that one. And I didn’t want to have a very large team.

Half Moon Bay

Above: Half Moon Bay

Image Credit: Dean Takahashi

GamesBeat: Is it going to stay that way as you hire more people? Is this basically a profit-sharing company?

Schiermeyer: Yeah. What’s cool about it, it’s very open information. Everyone knows what the structure is. They know what the payouts are. They’re already conscious of the fact that if we add another person right now, that person has to be a step function improvement for everyone else for it to be worth it.

GamesBeat: Or their paycheck goes down?

Schiermeyer: Exactly. It’s funny. I was having a conversation the other day about whether we needed another engineer. So often, the way those conversations used to go is, “Yes, we need more! Five more! I don’t care! Get the bodies in the seats!” Instead, the conversation I’m having is, “Let me tell you all the ways we don’t need anyone else. We have enough manpower to accomplish the goal without hiring anyone else.” I love that reversal of the conversation.

GamesBeat: Was that almost the exact opposite of Zynga?

Schiermeyer: Yeah. This is my answer to what I was experiencing over there. I’d have daily conversations with multiple people about why they needed more resources and why they couldn’t afford to lend one person from their 75-person team to some other team. It’s my answer to that particular problem.

It’s really complex. There’s a lot of different aspects to the problem. But we can solve a number of them with this particular structure.

Half Moon Bay near Ritz Carlton

Above: Half Moon Bay near Ritz Carlton

Image Credit: Dean Takahashi

GamesBeat: You mentioned the analytics issue. That was always what you brought to Zynga. I overheard some of those stories in the early days – how easily accepted was that, or how controversial was that, when you first proposed it at Zynga?

Schiermeyer: It was quite controversial to get it going. I don’t think Mike Luxton will mind if I tell this story. He and I had a shouting match over that, back when he was CTO. He was my friend that I knew from high school. When we started the company, I brought him in right away.

Mike and I were talking about poker. We were getting it ready to launch on Facebook, and we started arguing about what should and shouldn’t be tracked. Mike wanted to get the game out there. He wanted to focus on other aspects of the app and make them work. For example, two pair would beat a straight about 75 percent of the time when we first launched it. I was like, “We’re flying blind. We don’t know what’s going on. We have no idea what people like about this game. Let’s put some metrics in there.”

But that wasn’t the only time we had arguments. We launched another game, a simple car racing game. I remember having a huge argument with the guy who was responsible for it. We weren’t even tracking unique user IDs. We had no idea who was playing. Luckily, Mark didn’t have any objections to it. He came out of the finance industry. He was already sensitized to the importance of data. He had some sensitivity to understanding what users were doing. But it was really me who was forcing it to happen.

GamesBeat: It seems like it just continued to be controversial the whole time, with more and more game designers weighing in. They’re either jealous or appalled that the intuition of the game designer is less of a priority than the analytics.

Schiermeyer: That’s been an interesting debate that I’ve been a part of for the last seven or eight years. When I started pushing this forward and establishing it as an actual discipline at Zynga, I think I pissed off a lot of people. Back then, the very beginning of this, people would not think in terms of what they were trying to accomplish. You had this game. It was live. It was in existence. People would just come up with random ideas because they thought it was cool. There was no basis for even why they thought it was cool. It was the game developer’s intuition. I remember Bing had a term for it. He used to call it “the golden gut.”

What happened was, I was fighting that tooth and nail for quite a number of years. One of my biggest regrets, when I was leaving Zynga, was that I wasn’t finished with creating the product management discipline in the way that I saw it needed to be created. The main thing that was missing was the game designer’s intuition. It turned into this thing that fed itself. People began to worship analytics in the same irrational way that game designers were worshipping their navels.

It got to this point—It was so incredibly incremental. People would sit down and have entire two-hour meetings about how to move daily active users by 10,000. They’d give this big presentation, explain it all in great detail, all their justifications for doing that or this. Just so they could change it by 0.1 percent. I’m not kidding. This actually happened, more than once. Meanwhile, the debate around game design intuition was going on. Game designers were feeling left out of the equation. Product managers were running rampant with their Powerpoints.

Greedy Goblins gives you a reason to run.

Above: Greedy Goblins gives you a reason to run.

Image Credit: Luminary

GamesBeat: I remember they were saying that there were 150 people with the title of game designer. At the time it was around 3,000-ish in the traditional game industry. I don’t know if they had the chance to be really creative.

Schiermeyer: That was a problem. The traditional game industry did not know how to run a game as a service. When you’re in a two- or four-year development cycle, making a console or PC game, there’s no other choice but to trust somebody’s intuition. Somebody has to bet on what the future’s going to hold. You can’t do that when you can actually know what’s occurring. You can make a change and then see what the result is.

What I was trying to make happen was to combine the intuitive minds of the game developers and the analytic minds of the product managers into one discipline. The guys who really got it, who were nailing it, who were the most successful ones at the company. Mark Skaggs [the project lead on the Ville titles] was one of the first guys who worked with me. He took everything I had to share with him about the analytic side and mixed it with his own product sense.

GamesBeat: I talked to him a lot in those days. He said that he had made artsy games in the past and nobody played them. He was tired of that. And then he made the Ville series. Was that some of what put an end to the debate within Zynga, the success of games like that? Did it validate the use of analytics?

Schiermeyer: There was no question that the use of analytics was an immensely powerful tool. But by the time I left, the organization had become pretty divided along analytics versus creative. It was frustrating for me, because it was obvious that it needed to be the same discipline. One or the other wasn’t enough to be successful.

GamesBeat: It sounds like most of you in the new company are more technical. Is there some design talent there as well?

Schiermeyer: Dave Glenn, yeah. He’s more of a game designer and artist. My background is in technology, but I at least respect the need for creativity.

GamesBeat: And mobile, is that the target? That’s the one that makes sense?

Schiermeyer: Yeah. It’s the one that makes sense. We’ve found something that nobody’s done yet. I can show you a bit of it, actually. What you’re going to see here is part of the single-player experience. This is the basic track editor interface. It’ll be a lot prettier in a couple of days. You’re picking from track sections here. These right now are 100 meters long — mechanical, magical, wooden, stone.

Each of these guys here has a different capability. This guy can defeat mechanical. This guy can defeat magical. This guy can bust through things like stone. Right here, you see there’s some glue on the track. The idea is, let’s say this is your castle. I’m trying to get to your vault. This is your gold. I’m trying to steal all your gold. I have only a certain amount of bag space left. But if I die, all my stuff is left there. The gold goes back into the vault, but all the items that I picked up—This stuff that I left here, you can use to get more troops.

GamesBeat: An endless runner, then?

Schiermeyer: No, it’s a finite runner. We’re calling it a strategic runner. What we’re building now is the strategy aspect – your base management and a simplified take on the stuff that you’d see in something like Clash of Clans. You’re building a base and getting resources and going out to attack other people.

GamesBeat: Do you see this as a series, or just this one game here at this point?

Schiermeyer: I can see it as a series. I can see different genres we can take this to. It’s a popular mechanic. We’re calling it Greedy Goblins. We’re trying to come up with a funny story about that.

GamesBeat: So did you conceive of the company on this trail here?

Schiermeyer: That’s a good question. It was probably down in Encinitas, where I thought of it. I spend a good chunk of the summer down there. It’s so cloudy up in San Francisco.

GamesBeat: It’s an interesting idea. I don’t think anyone has come near doing it before.

Schiermeyer: Not that I’ve seen.

GamesBeat: Why is the idea of ending it important, too? As opposed to making it endless.

Schiermeyer: I’ve played most of the runners that are out right now. Part of my process is that I’ll play anything. Anything that’s growing or anything that’s successful. I’ll deconstruct it. I looked at the different runners out there, and I just get bored. Every single one, no matter what the graphics were or what the fantasy was, I’d always get bored, every time.

My analysis of my own internal feelings—I’ve played games my entire life. The idea for Zynga was because of World of Warcraft. When Mark and I got together, he was talking about Tribe and how he wanted to buy C|Net. I was telling him, “You have to realize, World of Warcraft is the most profitable social network on the planet right now.”

One of the things that I’ve noticed about runners in particular is that I get bored. It’s meaningless. I don’t care if I get 100 meters more or 1,000 meters more than I did last time. I don’t give a shit if my friends do. It’s meaningless to me. It becomes, at best, an addictive experience that I could waste some time doing. I’ve never spent money on it, not once.

I really pay attention to that. If I don’t spend money on a game, I always try to figure out why. I’ll spend money on Candy Crush. I’ve spent money on Clash of Clans and Fire Age. All the top games, I’ll spend money on.

temple run 2GamesBeat: Is the category mostly ad-driven? I don’t even know how Temple Run makes its money.

Schiermeyer: They’ve since tried to include a microtransaction model, in-game purchases. But nobody cares, mechanically. Can you imagine enough people caring to break in to the top 10 grossing on iOS? I can’t imagine that, with the way they’re currently structured.

The idea behind the strategic runner is, I want you to care. If you’re playing against your friend or some stranger who’s attacked you, and you have that bag of gold as you run back to your base, you’re going to care if you make it or not. If you’re picking up loot along the way, and the loot actually has value instead of just something you have to have 10,000 of in order to do anything meaningful, you’re going to care. That’s what I want.

And I don’t want you to spend money just because, as you’re playing the game, you inadvertently press some button that costs you gems, like some games that every so often come out.

GamesBeat: I’ve played The Hobbit. It did that. Buy instantly!

Schiermeyer: Yeah. I didn’t want to do that. That just cost me money. If you’re going to spend money, I want it to be because you care that much.

GamesBeat: Is there something useful that analytics have already told you about this? To be honest, it sounds more like a game designer’s idea than an analytics-driven idea. It sounds more creative.

Schiermeyer: That’s good. I’m trying to marry those two disciplines together. Once I’ve got it, if I’ve got it, I’m going to create an organization that has it too.

There’s basically three things you care about in this process. You care about building your game. You care about monetizing your game. And you care about retaining your users. If I’m going to create a structure around what it is that I’m building, I’m going to try my very best to fit the game mechanics into one of those three categories, in a blended way that’s balanced. Hopefully leaving out the fourth pillar, which is ego.

All of this is informed by my experience. I don’t have access to anyone’s metrics, so I couldn’t necessarily tell you that this is going to be better than that based on this number. But I’ve experienced managing games and developing games enough now to know that when I’ve deconstructed something, I’m usually in the ballpark as far as understanding what’s going on.

GamesBeat: One of the things people say about Clash of Clans is that they monetize revenge.That’s why people spend money in it. I think the other part is, when you’re in a clan, you feel an obligation to the clan to keep up with everyone. I’m in last place right now in my clan in The Hobbit. I’m very afraid I’m going to get kicked out.


Schiermeyer: That’s a powerful motivation. I’ve seen Fire Age execute all that flawlessly. They have this one mechanic I’ve witnessed in the game. If you buy anything in the game, everyone in the alliance gets a gift. The alliance chat just erupts with thank-yous and telling people what their gift was. There’s all this social currency being traded between each other. It’s a very emotional moment, especially if you’re the guy who dropped 100 bucks and everyone’s like, “Wow, a gift! You’re awesome!”

What happens, I’ve noticed, is that one person will start it, and then four or five other people will follow within 10 minutes. I’ve seen this happen maybe 10 or 15 times now. A lot of people have some disbelief around paying money in games, a mental barrier. When you see other people break that down, it makes it easier for you to break it down.

GamesBeat: Gifting in dating apps has been very lucrative. Bringing that into games–

Schiermeyer: I used to spend five hours a day farming in World of Warcraft to give away potions on raids. Why did I want to do that? I don’t know if we’re going to put that in the first version of the game, but we have a bunch of follow-up ideas.

Game of War: Fire Age

Above: Game of War: Fire Age

Image Credit: Machine Zone

GamesBeat: You’re talking about a bunch of things that are powerful monetization techniques. I go back and think, why haven’t other people figured it out? There are still so many failures in mobile games. You don’t see anybody crack the top-grossing list so much. I was talking with Gabe Leydon at Machine Zone about this. The top five have all been there for a year or two.

Schiermeyer: I don’t know yet. I’m going to try. That’s my goal. My personal goal is to own all five slots. I don’t know if I can do that, but I like to set big goals for myself.

GamesBeat: I look at EA, with 900 games, and they’re only talking about a couple of them that are proud of, that are monetizing, like The Simpsons: Tapped Out. It still seems very hard to do.

Schiermeyer: I was reading up on Machine Zone, what they were doing. It’s clear to me that Machine Zone’s success is through the alliance system. The game’s a spreadsheet. You’re pretending this spreadsheet you’re looking at is a fun game experience. It’s not actually a game, not in the sense that anyone who grew up playing games would consider.

GamesBeat: It’s a little more real-time than the Kabam games, at least, which are very spreadsheet-like.

Schiermeyer: You see something moving across the screen. There could be a bit of a game to that. You scout me, I scout you back, that kind of thing. But the real magic of it is in the alliance system and the revenge monetization.

GamesBeat: There’s a lot of sophistication to the communication system they have.

Schiermeyer: Definitely. But back to your earlier question, why haven’t more people done it? I feel like a lot of people lack the ability to create a game as a service. People have a lot of ideas. If you can’t iterate on those ideas, or don’t at least start with some level of understanding of what you’re going to have to do to keep people retained, you’re going to have, at best, these games that suddenly explode and fade away. Like Dots or Flappy Bird. There’s more discipline involved.

Greedy Goblins has a twist on the endless runner genre.

Above: Greedy Goblins has a twist on the endless runner genre.

Image Credit: Luminary

GamesBeat: You were saying you’d try to keep the company small. It seems like there’s more pressure to build up a larger and larger company that continues these services and creates new games.

Schiermeyer: Let’s try and dissect that pressure a little bit. Where’s that pressure coming from? Who wants to have a large organization? You need a large organization if you want to have multiple titles. If those multiple titles are services being managed, you’re going to need people to manage them. But why exactly do you want that?

GamesBeat: Better 3D art?

Schiermeyer: You can outsource your 3D art. My belief right now, what I think I’m perceiving, is that if you raise money, or you promise people that your company’s going to be worth something someday in the future, you have to fulfill that promise to your investors and to your employees. Suddenly one game making a million dollars a day isn’t enough. But it sure feels like it’s enough to me. I don’t need more than that. I don’t need a billion dollars.

I would like to make a billion dollars. I’m not going to limit myself as far as how much I can make. But I’m not going to create a convoluted structure that forces me into this position where I have to have 3,500 employees running around with their heads cut off, not aligned, not focused on creating sustainable value, if I don’t have to. I don’t believe I do. I feel it’s both intuitively and rationally obvious that I can do quite well – way better than the average – with a small team. I don’t have to hire a CFO. I don’t have to have a 50-person human resources department.

GamesBeat: There’s probably also enough services around you to handle things if you need advertising or technology–

Schiermeyer: Yeah. You have experts in that field you can outsource to. Even things like your backend. Let them deal with scaling my infrastructure. I don’t want to deal with that. I don’t want to hire a bunch of very expensive employees and promise them that they’re all going to be millionaires. I want a group of ninjas who are going to take down the top grossing. That’s what I want them to focus on. I don’t want someone coming in and talking to me about the intricacies of managing remote QA. I just don’t want to have to care about that stuff.

I had multiple conversations with people at Zynga who were complaining to me about the inordinate expense of the way that we were managing QA. I’m sitting in these meetings and thinking, “Why am I having this conversation at all? What went wrong with our company that this is how I spend my time?”

GamesBeat: That structure you mentioned, are you extremely focused on that structure, or do you have some other things like—If someone really wants stock options, can you give it to them? If someone wants to put money into the company or somesuch?

Schiermeyer: We have a pool for investors. Right now we have three investors – myself, David, and Marco. If someone wants to be in that pool, they have to put up money. But we’ve made that pool very small relative to the number of employees. If you really have to own a piece of Luminary, you can. You just have to pay for it.

GamesBeat: Has anyone else done something like this, that you know of?

Schiermeyer: I remember someone telling me about a game company where—I forget the name. They had a profit-sharing program. The CEO comes in, everyone’s in the conference room, he goes up to the board and starts writing zeroes. He ends up writing like 75,000 and he tells them, “That’s what everyone’s getting.” The room erupts and they’re all freaking out. He does that every quarter or something. That’s cool. I want to add another zero to it.

mark pincus with venturebeatGamesBeat: It sounds like you’re having fun.

Schiermeyer: Yeah. We’re not going to kill ourselves to accomplish this goal. None of us really want to crunch. It’s been my experience, too, that crunching doesn’t lead to success. I’ve seen so many people come in to a company looking vibrant, healthy, fit, and they gradually become pale, weak, ill all the time. And for what? By the time they’re in that dilapidated state, what are they actually providing? They’re sick half the time. Their work isn’t very good. Eventually they quit, or someone comes up with a brilliant idea to fire them because they’re underperforming. Whose fault is that, really? Is it their fault for agreeing to work 120 hours a week? Or was it our fault for asking them to work 120 hours a week?

GamesBeat: Just setting up the wrong incentive.

Schiermeyer: Exactly. We value face time. Which is just absurd. So none of that. That’s useless. It doesn’t provide value.

GamesBeat: It all sounds a little un-Silicon Valley.

Schiermeyer: Yeah, it is. I mean, my first startup that was really successful was Intermix Media. Remember those guys? MySpace? I started MySpace with a bunch of guys down in L.A. We were very un-Silicon Valley down there. We actually cared about revenue back then, in 2000, when everyone was like, “You don’t need revenue! Revenue is passé!” We did, and we survived, although MySpace could have been better.

Later on, when Zynga started getting bad press, people were coming to me to talk shit about Mark, and I didn’t do it. Not because Mark didn’t have his own self-admitted flaws, as we saw in the last couple of days, but because Mark’s a good guy. He’s a better friend to have than a business partner. But he’s not a bad person at all.

Oculus Rift dev kit 2

Above: Oculus Rift dev kit 2

Image Credit: Oculus VR

GamesBeat: Facebook has Oculus now. They almost seem to be coming to the other side of the pendulum, saying that the hardcore gaming executives are the ones who should run the place. I don’t know if that’s the right answer either.

Schiermeyer: My belief is that you need both. You need to be a balanced human being to succeed in the long run, in any endeavor. One of the things I played around with when I left Zynga, I was talking a lot to the guy who started the Wisdom 2.0 conference. While I was at Zynga, I started up pretty much all the perks – the food, yoga, acupuncture, massage. These were all things I started there. I brought in people to do qigong and meditation. All in the hopes of bringing some balance to the organization. It was kind of out of balance, all these people working so hard.

I think there’s a way for us to generate income and create value, and at the same time create well-being and a healthy life within these organizations. I categorically reject the Silicon Valley belief that you have to work yourself to the bone to be successful. In line with that, 100 percent, I disagree with the belief that you have to have a narcissistic CEO. I can’t tell you how many times somebody’s told me, “He’s not a narcissist. He’s not gonna be a good CEO. They’re not working themselves to the bone. It’s not gonna be successful.” Total bullshit. It’s a complete lie. The only reason someone might believe that is because they haven’t done it themselves, or they’ve only done it once.

I think everyone’s secret fear, when they’ve only been successful once, is that when they try again, they’ll be proven a fraud. Like if my company fails.

GamesBeat: Is there anything in particular that got you off the couch and made you want to do this? To do something better than you’d done before, or something different?

Schiermeyer: When I left Zynga, I ended up leaving because I was too frustrated by internal politics to keep expending my energy and achieving results that didn’t satisfy me. Being accustomed to the organization moving when I wanted it to move—That left me frustrated when it wouldn’t.

There were a lot of unanswered questions for me. One of them was this discipline I started. I watch these conferences now that talk about a lot of these things we got going at Zynga. I feel a bit disappointed in where it is, the level of the discourse.

GamesBeat: There are so many analytics companies, but they’re not–

Schiermeyer: –analyzing anything? I feel like there are so many analytics companies providing you analytics that don’t tell you anything about what’s really going on. I’m saying that flippantly, but I’m talking about things at a higher level. That’s one of the big ones. I believe strongly that we could have done Zynga without so much—What did they used to call it? Zynga speed? Zynga time? Really what that meant was that we worked 12 hours a day.

My big thing – and I was trying to propose this at Zynga – was that if we just had better kung fu, we would be more successful. We wouldn’t have to run around with our heads chopped off, praying that someone in this huge organization would do something right.

We talk about how we think of ourselves kind of like a band. We all have something creative to express right now. I think that’s one of the reasons why I do this. I want to express something creatively.