Tuesday I attended a Tell Series event, organised by the London Business School and featuring David Helgason from Unity Technologies.
It was refreshing . David Helgason came across as an extremely personable, genuine, straightforward character with a good dose of humour and self deprecation. And it’s not often we see a CEO with their mother in the audience. And she did provide some great insights on the challenges that David faced on his journey. His talk covered numerous points, I have focused on the one that touched disruption, competition, and his overall journey.
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Textbook disruption out of luck rather than being clever
David started by talking about co-founding Unity circa 2001 -2002 and the fact that for a very long time there was no market for their proposition. At the time, games were AAA, created by big teams in big studios. It was very difficult for them to get anyone interested in investing in their idea. As a matter of fact they failed to raise any VC money for a long time. In David’s words “It was a good thing for us, that happened out of luck rather than out of being clever”
Their breakthrough was the launch of the iphone. They had built unity on Mac, they were big apple fans and they saw the opportunity in being a platform that could enable the creation of games for the iphone. Their genius and luck was to be ready when the need to develop games for iphones emerged. This transformed Unity from a bad idea to a good idea
This was a text book example of disruptive innovation as defined by Clayton Christensen, in his classical “The Innovator’s Dilemma”. It’s a perfect illustration of the challenge around an unexplored/non exisiting market for disruptive proposition. As well as the first mover advantage that disruptive companies can benefit from and that later competitors find hard to overcome.
David recollected how long it took them to become succesful “We spent 8 years in the basement”. After 8 years the team had grown to 30 people and most of that growth happened at the end of this 8 year period.
Sustained by a vision that still hasn’t changed
He was asked what made him keep at it, and kept him believing in Unity during these 8 years without much commercial success. His answer, actually the answer from his mother, was that he had a vision. He strongly believed in his vison and as a matter of fact this is still Unity vision today. They wanted to democratize game development, they wanted everyone to be able to make a game. It’s the belief in this vision that has ultimately helped them keep focused and committed to developing the company.
First a software company then a developer community followed by a platform company, now the new business model
He then talked about how they “moved from a software company to becoming a community for developers”.
One of their smart moves on that path was the creation of the asset store marketplace, “we were planning to make money, but we didn’t really manage to make anything significant”. It was however a key feature that helped create a thriving community of Unity users.
They then became a platform company, they grew from 100 to 400 people.
Finally they reached the “new business model” stage. They were more than 400 employees by then and decided to invest in mobile advertising. They tried to build that in house by hiring smart people. 9 months on they realised that it wasn’t going to work.
They then decided to acquire a mobile ad company instead. It was the right choice. However it was a very painful experience. In David’s words:” I wouldn’t wish it on anyone”. Long negotiations, lots of internal adjustments, lots of things going wrong. But it ultimately worked.
4 types of competitors
During this journey David identified 4 types of competitors and talked about how competitive threats made him almost paranoid.
- The toe to toe competitor: They do the same thing as you. There was a French company that was really good and that got acquired for $10M. That was a good thing as it validated the potential value of Unity. And being acquired seem to have killed them somehow.
- The 70/30: Companies that provide 70 utility (i.e. features) for 30% price- This is very scary as these are the potential disruptors, just like Unity was when they started. And it is very difficult to compete on price only, as cost tend to increase exponentially to the feature set. Hence why the 30% of features probably represent 70% of the cost.
- The open source: That can be terrifying, but luckily for Unity in the space they are playing it is extremely difficult for an open source alternative to emerge.
- The make money somewhere else: These are the scariest competitors. The example there was Intel with project Anarchy, free, largely open source and some amazing features. In the end the product was not up to scratch to truly compete.
It was as I mentioned earlier a very enjoyable and insightful talk. David, whom I hadn’t met before, came across as truly personable, passionate and very human. No hint of arrogance, no narrative built around a superior vision and intellect that led him to success. But rather a journey led by vision and passion. Peppered with luck and failure. Supported by people and good manners. With some stumbling along the way. It felt like a very human journey, not a superhuman one, and that’s what I found very appealing.
I spoke about disruption earlier in this piece. I don’t believe David mentioned this word once. He didn’t talk about how he wanted to disrupt the market or any such thing. However the description of his journey sounded like a text book example of disruption. Creating something truly new, building a proposition for a market that doesn’t exist… yet.
When I reflect upon the retail banking sector, I don’t see much disruption at the moment. Something that truly reinvents banking or serves a need or a customer group that wasn’t served before. There is indeed some UX and technological innovation (for instance blockchain), but in my view nothing at this stage that can really disrupt the current incumbent players to any sizeable extent. At least no one that has articulated a way to disrupt the incumbent player yet, leveraging digital in way that isn’t done today.
I hope to write more on this soon.