(1/2) Bot lane teams from the $30M I've invested in videogame studios, platforms, and tech

The flywheel effect of maturing within top industry ecosystems

So what do the alumni coming out of the top videogame talent pools we referenced in the last post look like? What kinds of founding teams are able to survive, let alone thrive in an industry where the bar keeps getting higher? What are the skillsets that set them apart?

In the last Botlane post we looked at the Riot ecosystem’s ability to foster entrepreneuriship through the lens of my own experience in learning there, which propelled me to starting my own venture-backed company in 2014. Over the past decade, limited partner allocators have recognized the return potential of the gaming category; venture capitalists have successfully raised vehicles from them to invest into it; and entrepreneurs have learned both that capital is available and how the venture model (as opposed to the legacy publishing model) can be used to build gaming companies. Successful exits by venture-backed gaming entrepreneurs (Riot being only one of those examples) has of course fueled this flywheel.

The entrepreneurs coming out of these pools do not all have the skillset to generate a successful venture exit, but honing their craft within them certainly increases the odds for several reasons: the high bar to entering these pools, the mentorship offered within them, the appreciation of the quality level required to gain market traction, and building relationships with those who can later become cofounders, employees, and advisors. We'll return to this below.

At the simplest level, that skillset generally falls across three areas:

1. Creative/design/tech (product)

2. Team/company building

3. Go-to-market/distribution

All three are much harder in gaming. Despite the continued growth of the industry toward that $200B revenue mark, the rate at which new products are released into the vertical outstrips the growth rate of the industry itself- and incumbents themselves are growing as well. Couple that with the fact that consumer attention, taste, and social network effects are critical arbiters of success, and entrepreneurs are left with a near-impossible task that is both art and science. Technology, visuals, and real-time near-zero latency interaction all must work perfectly in concert for a gaming product to have a shot, and even then it can die without proper distribution or the successful leadership of the team behind it. The talent capable of delivering at this level is also difficult to secure and retain.

As a result we filter upfront in our process for entrepreneurs who have either:

1. built a company, sold it, and seek to do it again at greater scale; or

2. have built a massive business within a company, and seek to do so again for themselves rather than an employer.

The entepreneurs who do so often tend to come from one of these talent pools. Though we view that fact in itself as "correlation, not causation" with the DNA that makes for an entrepreneur with the talent and XP to generate a venture return, we do have a deep appreciation of the catalytic effect maturing within a top talent pool can have. As mentioned previously, the upfront talent filter is intentionally brutal, leading to an environment with a high proportion of A players (e.g. my on-site interview day at Riot was a ten-plus hour gauntlet of interviews, all with people who were already industry luminaries) in which osmosis happens constantly across one's discipline and those of others, and "intrapreneurship", which can be highly microcosmic of entrepreneurship's challenges in the field, is encouraged and rewarded.

Among all of the entrepreneurial characteristics required to generate a venture-scale gaming exit, and all of the accelerants that can occur in places like Riot, Blizzard, etc. we would argue that a subtle intersection of the two- the skill and experience of starting, building, and executing in partnership- is one of the most significant elements in the alchemy of building real enterprise value at a venture scale, and of course it's central to the theme of this blog. We detailed the nature of the ideal "bot lane" duo composition in the very first post; at the core it entails a pair of partners executing perfectly in the roles of enabler and executor, akin to a League of Legends support using unique abilities to protect, empower ("buff"), heal, etc. the ADC, so that he/she can secure all the key objectives to victory and get the most "gold". There are a multitude of shapes this relationship can take, several of which we cited in the kickoff post; here we'll focus on examples from the portfolio of them initially forming within work done at various top gaming talent pools, and then translating into new companies.

In our next post we'll do high level resumes on these teams and which exit pools they emerged from; in subsequent posts we'll delve into the detail. We've been fortunate to have both acquisition and publishing offers here, revenue-generating games launched, and new venture financings successfully raised at higher valuations across the board; these companies’ experiences in getting through those critical early steps in the initial few years are helpful lenses into what the first lifecycle of gaming enterprise value development takes.