Supercell CEO Ilkka Paananen has had some spectacular successes in mobile games since starting the Helsinki company in 2010. His team of 240 people has created games such as Hay Day, Clash of Clans, Boom Beach, Clash Royale, and Brawl Stars, the most recent collection to its stable.
A year ago, the company said it had 100 million people play its games in a day. And in 2017, the company generated $810 million in profit on revenues of $2 billion. Creating that kind of value explains why the Chinese social networking and gaming giant Tencent led a consortium in 2016 to acquire the bulk of Supercell at a $10.2 billion valuation.
But Paananen doesn’t view himself as a powerful CEO. He says his job is to make sure that his employees — all veteran game developers, working in small “cells” — have the freedom to make their own decisions, especially about killing games that shouldn’t go forward. Supercell has cut more than a dozen projects in its history, mostly after employees decide that the game wasn’t living up to expectations or resonating during play testing in small markets.
I interviewed Paananen at the recent Game Developers Conference in San Francisco, where he talked about the cell-like management style where employees make the decisions.
Here’s an edited transcript of our interview.
GamesBeat: Was there a twist this time? I’ve heard you talk about this before, so did you do anything different?
Ilkka Paananen: I probably gave a few more detailed examples about what the culture looks like in action, and also talking quite a bit about the challenges we’ve faced. I just tried to put in a bit more detail for people.
GamesBeat: You describe yourself as a “weak CEO.”
Paananen: The least powerful, yeah. What I mean by that, the fewer decisions I make, the better I feel about how our organization works. The whole idea has been that teams would make most of their decisions. Ideally they would make all of the decisions. That’s a phrase I use to describe the idea.
GamesBeat: Thinking about it, this is the kind of thing people would like to put labels on. “This is socialism! This is communism!” Political comparisons that people try to make about how to run a game business.
Paananen: In my opinion, it’s probably the opposite of a communism. We’re trying to give responsibility to the smallest possible unit, the individual teams. As far as I understand communism it’s the opposite of that ideology. I was just talking now about how one of the biggest misconceptions around the Supercell culture is that it’s this small happy family where everyone can do whatever they want and not care about the results. Nothing could be further from the truth.
What keeps it all together is that—of course these teams can be independent, but they have great responsibility. Where that comes into play is we have a very high quality bar. We’ve agreed that our dream is to create games that people play for years and years, if not decades. That’s obviously a very high bar. Whatever doesn’t meet that bar gets killed. From that perspective it’s a high performance environment.
GamesBeat: I do always wonder how you handle surprises, like a game where your team and your people might not be the best judges of whether it’ll be popular or long-lasting. It seems like the only thing that tells you that is the market itself. Other companies take the tack of releasing a lot of games to see which one lasts.
Paananen: Our approach there—how we think about new game launches is that, first of all, at Supercell two entities have power of control over that. In the first phase it’s the team. In the development months when we don’t have hard data, it’s only the team that can decide whether a game will get killed or whether we’ll continue development. But once we get the game to the soft launch and we start to get metrics, then the power shifts from the team to the players.
Before we go to beta, we obviously set goals, mostly retention-related. Not only do we set those goals and agree on them with the team, but we also tell everyone else in the company about those goals. That’s our way of keeping ourselves and the whole company honest about that. We do that before the game goes out. If a game doesn’t reach those goals, then we’ll kill it, and if it does we’ll launch it.
Once we start to get the data, we have so much experience in this market, years of experience and lots of data collected from the four games we put out—games, as a business, is super hard to predict and forecast. But we’re pretty well equipped to do that given our experience and history. But you’re absolutely right that nobody has a crystal ball. Predicting a hit game is basically impossible. The only way to know is to put it out and see what players think.
GamesBeat: From what you’ve heard from Blizzard, is it pretty similar to their approach? Or is there something different? They do kill a lot of games before launch as well.
Paananen: I can’t say I’m very familiar with their approach. The way we think about killing games—killing games and failing, so to speak, it’s an essential and inevitable part of our creative process. If you kill a lot of games, it just tells that the quality bar is high. That’s a good thing. Of course, nobody enjoys killing games. It’s always a very sad moment. But as I said, it’s a necessary, inevitable part of the process.
GamesBeat: You guys still do that little celebration?
Paananen: Yeah, we’ve tried to—the whole thing has been blown a bit out of proportion from a PR point of view. But we do a toast. Not to the failure itself, but the learnings we gain through that failure. We try to do everything we possibly can where people will take big risks and nobody is afraid to fail. That’s one way to do that. It’s a very small part of it, but that’s what we do.
GamesBeat: Sometimes some of the big companies run into a problem of the bar going to high. Electronic Arts could kill every game that doesn’t beat Madden.
Paananen: That’s the other risk. We’ve talked about that quite a bit. How we see it, ideally our threshold for releasing anything to beta should be low, but our bar for releasing anything globally should be high. But one way to fail as a company would be you paralyze yourself. Nothing is ever good enough and you don’t put anything out. One thing we fundamentally believe in is that how we ultimately achieve the best quality is we learn as quickly as possible. If you never ship anything to real players, you never learn, and you never achieve ultimate quality.
GamesBeat: You do show a lot of flexibility with these investments. You’re more free to experiment outside your company with the investments into small startups.
Paananen: Another thing I like about the culture at Supercell, we very much enjoy experimentation and risk-taking. I believe that companies do not fail because they take risks. They fail because they stop taking risks. We try to apply that philosophy at Supercell, but we also definitely encourage our investments to do the same thing. We try to take all the short-term pressure away and encourage these guys to think big, to innovate, to create something that doesn’t exist yet, to think about the long term. Ultimately what’s best for the market is if people try to do stuff that hasn’t been done yet.
GamesBeat: You didn’t do this for a long time until recently. Was there a bandwidth question, as to whether you could handle it?
Paananen: Yeah, and maybe a focus question as well. It felt like there was so much to do in our own company. But now we’re relatively happy with the size of the studio in Helsinki. We’ve obviously been very lucky in our lives and the games we have out now. So how can we make an even bigger impact without growing the size of Supercell? We came up with this idea. It wasn’t a decision we made overnight. We thought about it for years before we made the first investment.
GamesBeat: For something like that, do you still do it on your own, or do you talk to Tencent and get feedback from them?
Paananen: We do it pretty much on our own. We work very independently. What makes our investment process special is that ultimately the investment decisions are made by our own game developers. We don’t have bankers making those decisions. We trust the game developers’ instincts, because ultimately we’re investing in teams and people. We don’t invest in products.
GamesBeat: Does this reduce any pressure to expand Supercell itself?
Paananen: Yeah, yeah, in terms of headcount.
GamesBeat: Is it hard to resist that?
Paananen: It’s one of the specific topics that I talked about. The interesting thing about our culture and everything I talk about, it gets harder to maintain the more successful you become. I use an analogy about how all of this traditional approach, by which I mean top-down management and rules and processes, it’s almost this gravity. You get pulled toward it all the time. You need to fight back every day so that doesn’t happen.
GamesBeat: Just one more artist, that’s all we need.
Paananen: One more this, one more that, and before you know it you’re a huge corporation with hundreds if not thousands of people. It isn’t the same place anymore. Again, the more successful you become, the harder it is to sustain that.
The other thing I talked about regarding culture and the independence of teams, it’s easy to talk like that when things are going super well. But when things aren’t going as well it gets harder. Then you have this temptation to start to control things. Maybe you have some really opinionated people in the organization who want to have more control, people who have been super successful. But then you have the question of what’s more important.
Let’s assume that the team wants to do something that isn’t the right decision. Do we step in and correct the team? A force outside the team comes and changes their mind? That might be the right business decision in the short term, but if we do that, the price we pay is destroying the culture. Our culture wouldn’t be about independent teams anymore. The other option is we let the team make that decision, and the worst thing that happens is they’re wrong. But then, if we take that path, we still sustain the culture.
There are two ways to think about it. If you only think in the short term, the right thing to do would be to overrule the team and do what’s right for the short term. But that’s not how we think about it. We think in years and decades. If you take that perspective, it’s clear that it doesn’t matter whether a team makes the right business decisions. What matters is that we sustain the culture.
GamesBeat: If you were to overrule them, then your management style might not be any different from EA’s.
Paananen: We’d become just like every other company. It would be harder for me to explain the difference between Supercell and some other company. What makes is unique is this culture. That’s really worth fighting for.
GamesBeat: If you think about how to prevent an employee from leaving Supercell, what goes into that thought? How do you create a culture to minimize that? I can imagine that’s a reaction from some people when they kill their projects.
Paananen: But that’s the whole point. That wouldn’t happen at Supercell, because the only person who can kill your story is yourself. Nobody from the outside can do that.
GamesBeat: Except the people out there in the market.
Paananen: Again, that’s the whole point. What makes killing these games, I hope, a bit more tolerable for the developers is because it’s their call. Only they can make it. Nobody from the outside will come and do it.
GamesBeat: That empowerment, then, is a good way to retain your people?
Paananen: In short, Supercell has to be the best place for the best teams and the best people to develop the best games. As long as we take care of that, I’m confident that we’ll continue to have the best teams. The culture comes into play again. If we can overrule the team in that example, I don’t think we’re the best place anymore. Then people will leave.
GamesBeat: It seems like you’ve done a good job retaining people.
Paananen: Yeah, we’re very happy about that.
GamesBeat: Do you ever face the opposite problem, where a team makes a big payday and then they think about leaving?
Paananen: What I love about the games industry is that very few people in the games industry do games because—money isn’t the primary driver. Most people are here because they love games, they love creating games. It’s such a great industry to be in. That’s a big advantage, I think, for games.
I would imagine that for most of our people, the reason why they love their work is because of the game they’re working on and the people they create it with. Those are the two most important things. Of course, the possibilities that being part of Supercell offers—I was just talking about this up there. To me this is by far the best time to work at Supercell. We have the biggest opportunities and the biggest resources. It’s amazing compared to six years ago. This is a way better time to join Supercell.
It’s a combination of working on the game that you want to create with the people you want to work with, and really going after that big dream of creating games that people will play for years. To back that up, you have all of these resources and these great people who’ll help you in going towards that goal. I imagine that’s what keeps our people here.
GamesBeat: How do you look at the rest of the game industry? How would you like to see it change for the better?
Paananen: We’re excited, of course. We’re very focused on mobile and the types of things we can do there. But if I look at the mobile landscape, I couldn’t be more excited about the opportunities. It still feels like early days for the mobile games industry. I’d almost compare it to, I don’t know, the early ‘90s on the PC, something like that?
If you look at some of these big eastern markets, like China for example, how quickly they’re growing and the size of the opportunity there, it’s really exciting. If you look at Latin America and India, how the markets are growing, so many people are getting their first quality smartphone. It’s quite easy to reach all those people through the app store model. That’s exciting.
I’m excited about how much better these games can become. It feels to me like we’re still scratching the surface when it comes to stuff like social play. Nobody has developed the truly global mobile hit, a game that’s number one in China, in Japan, in Korea, in the U.S. I totally believe that’s going to be possible.
GamesBeat: What about tech more generally, things like blockchain and augmented reality that are on the horizon?
Paananen: These are all interesting things, but you’d be surprised how little we focus on tech. We focus more on the creative side, on game ideas. Technology always comes second. We don’t spend all that much time thinking about it. We’re not very technology-driven as a company. It starts from an idea, and then we look at the best tech to implement the idea.
Of course, though, the growing speeds of networks and the growing performance of phones will enable us to create better games. What I’m most interested in is everything related to social, the ways people can play together. Everything comes from there.