It’s hardly news that the economy is a mess at home and abroad.   Almost ironically, the private market in the US and the public market in Europe have turned on their respective champions.  We’re not the first to say big problems require big solutions or to doubt political leaders offering plenty of well branded, though suspiciously too easy, solutions.  However, we do believe that for small, technology driven firms who offer their products online there is a political palatable solution that can drive growth and job creation: freeing the American investor. 

We propose that states, such as our home state of New Jersey, should petition the Federal government for exemption from the regulations that prevent average Americans from directly investing, i.e. buying shares, in small businesses.  This rule is known as the accredited investor rule as part of the 1933 Securities Act.

We believe that doing so on a state by state basis will not only be more political feasible but result in a sounder regulatory structure.  States willing to take the aggressive step can take different approaches, with the market determining the best system for both protecting individual investors and freeing up the investment dollars small businesses need to grow.

This proposal has to the potential to have a particularly strong impact on the video game industry where projects in the early or seed stages are very difficult for a traditional investor to value.  Independent game studios will surely benefit from added competition between investors in a broadened field and a day when large publishers or private investors are no longer the only source of development dollars.  

Our Admittedly Self-Interested Proposal
At first glance one can be forgiven for thinking the video game business is a great one. The recession has hardly held back growth. Expanding internet access in emerging markets and the fact that 9 out of 10 kids born in households with a compueter will be gamers for life foretell of a very rosy future.

Nevertheless, even game studios stocked with experienced veterans face a daunting process when raising funds for development.  This isn’t a story of evil corporations or finicky artists (as it’s often told), just a rough business environment.  From an investor’s standpoint, it’s almost impossible to value a video game asset until it’s been at least partially created. From a developer’s stand point it’s almost impossible to create a marketable video game without investment funds.  This is perhaps why few developers love the deals they get with publishers.  

The rules that prevent independent game developers from raising funds from average Americans were put in place with good intentions. The stock market run up to the Great Depression was rife with fraud and manipulation, indeed supposedly FDR remarked that he choose Jack Kennedy (JFK’s father) as the first head of the SEC because ‘it takes a thief to catch a thief.’ 

As a result if a company wants to raise funds by selling shares they are required to register the shares with the SEC, a very expensive and onerous process few companies can afford.  The only significant exceptions to this rule is if the firm has less than 500 shareholders or only sells shares to so-called accredited investors.  Accredited investors are either established investment firms, experienced investors, large pension funds, large companies or charities, a large trust fund, or individuals that meet certain net worth or income requirements. Loosely speaking one can even consider this the ‘1%’ in today’s parlance.

The rule is intended to protected inexperienced investors from being taken advantage of.   We believe this protection is no longer necessary and people can be made well aware of the significant risks of investing in small seed or early stage firms (if for some reason they aren’t already).

Changing this rule is not a new idea.  Given the pace, breadth and meekness of federal policy making, however, we believe it’s not likely the Federal government will get around to doing anything about it anytime soon.  So we propose for states to apply for waivers for the accredited investor rule to allow for crowd-funding small business and for the Federal government to grant acceptable proposals on a case by case basis.  

Doing so will fundamentally change the relationship between risk and reward for entrepreneurs and investors alike. Perhaps most interesting from a small business owner’s perspective is how the increased competition in the investment market will impact the large multinationals and investment firms when they ‘aren't the only show in town.’  In theory, as the result of the investment market being flooded with new participants these established investors will have to reduce their fees and/or increase their value added services to remain competitive.

As Politically Tenable as Reform Gets
Let’s be honest though: it has to be more than just a good idea.  Politics is the art of the possible, someone clever said once.  There are three political considerations that lead us to believe in the potential for this proposal to be enacted.

First, there is our Federal political system itself which grants states broad powers to create their own laws and policies so different solutions can be tried, tested and evaluated and the natural competitiveness between different state governments.

Second, there is the grass roots popularity to throw out the accredited investor rule and allow for crowded sourced funding in the technology sector, a relatively Democratic cohort.  

Third, reducing financial regulation to make it easier for businesses to grow is a core tenant of conservative and Tea Party politics.  

Of all the potential policy ‘game changers,’ we can’t think of one with a better chance of being implemented.

Next Steps
The next step is for business owners to get involved and work with state government officials to dig deeper and find out what can be done and how.  The solution is certainly far more complex and difficult than summarized here and even considering the proposal will require significant resources.  Hopefully a few bold and brave executive and legislative leaders in state government will consider this proposal though. As small business owners we are certain it would have a dramatic impact on growth and job creation.  

Great, great post in Gamasutra entitled “No one cares about your cool game idea.” I'd like to expand the thesis from just game design ideas to marketing ideas (if not all ideas).

If there is anything I wish had been pounded into my head while I was young, it is that "your idea is worthless."  For whatever reason, so many of us grow up with the concept of success as a ‘killer idea’ that is so powerful and awesome it destroys all the lessor notions in its path.  Then reality smacks you in the face. 

So even though I'm not a designer, I loved the post because after ~8 years of working in sales and marketing it summed up everything I've ever wanted to scream from the rooftops. Indeed I've come to believe that individuals who don't 'get this' can be the most destructive force on your marketing team.*  

In the marketing world, they tend to come in these two forms: 

Engineering Success
I use the term ‘engineering’ metaphorically here to describe a situation when someone fiddles with the details (typically incentives) of a program, usually before the program actually launches. In my experience this manifests in the conception or development phase, when a marketer thinks if they can just hit the right econ harmonics the program will be a rousing success.  A key indicator of someone trying to engineer success is how hard they fight and argue for the specific scheme they have dreamed up long before there is any actual data on how the users are interacting with it.

The problem with engineering successes is anyone who has actually conceived, developed and released a product knows (or should know) that your initial scheme is really just a ‘best guess’ or more kindly a starting point. It’s all going to (and damn well better) change later when you know more. 


The pros know this.  They do their best before release and quickly move on to more important stuff. You know, like, actually attracting customers.  Once you have a stream of people giving your a look you can rather easily and methodically test your incentives, call to action text, pitch or homepage design to capture ever higher levels of revenue from those eyeballs. 

In some ways a classic ‘cart before the horse’ problem, but I think it warrants deeper mention because of the conviction and veracity of the ‘success engineer’s arguments.  To them, success is something that can be engineered with some create idea.  

These people are a drag on a marketing team. You end up endless debating the best way to present a portion of it to them without much regard for how you're going to get them to give you a chance int he first place. 

Sustainability is for Sissies
Recently one of my favorite blogs, Copyranter- authored by a advertising copywriter ranting about horrible (and sometimes, great) advertising, actually posted something I don’t agree with for a change by saying this ad for an awards show was one of the worth he had ever seen.  

If you didn’t watch it, the spot is for an advertising awards show and features an advertising pitch man droning on about buzzwords and typical marketing bullshit in a pitch to a potential client. The potential client’s team quickly gets tired of it though. So with a nod from the boss, they first shoot him with a handgun, then a shotgun and finally beat him far beyond death with a golf club.

Copyranter hated it, but god I loved it and smiled with glee when I saw the spot.  I think anyone who has sat through more than a couple pitches from advertising agencies probably loved it as well.  For all the true talent out there, it's sometimes shocking how ad agencies are able to collect and collate complete hacks. 

The problem with 'idea's people' is even if their super creative idea is really something that can generate results in terms of pure profit/loss, the results are rarely sustainable.  You can research success stories for nearly every pithy line the ad man throws out in the spot (think ‘viral’), but regardless of the individual success of the campaigns the direct result was never a sustainable business.  At most all you can hope for is a nice bump, Colbert style. 

Sustainable ideas are inherently not very sexy, because something  sexy has an inherent half-life.  The thrill 'goes,' so to speak. 

So while it’s a lot more fun to conceive, develop and green light those exciting creative ideas, few (if any) will be helping you build a sustainable business.  This isn’t to say there isn’t room for fun and exciting campaigns, by all means you have to mix it up sometimes. If someone on your team is only working on those parts of marketing though, perhaps they are better suited  at a [crappy] ad agency. 

  *Please note that while it’s certainly the job of marketing to get this and if you are a marketer who does not get it, I will never hire you, we can’t hold non-markers to the same standard.  If only because we hope they don’t think less of us whenever we say/offer some truly stupid technical or design thoughts.  

TechCrunch brings a much needed new angle to looking at Zynga’s running away success with the Facebook games market, by comparing the company to a similar sized Japanese social games developer GREE.  In short, their Japanese counterpart is turning a bigger profit on slightly less MAU (monthly average users). Why might you ask? Well the post posits it’s because of GREE penetration into the mobile market.

I have to wonder though if that’s all there is to it.

Of course, any attempt to draw parallels between the Facebook games market and the social games market in Japan is going to be fraught with caveats.  Facebook games and social games in general are driven not only by cold hard cash, but the value of acquiring ‘free’ new customers through sharing. One has to wonder academically if and how the two cultures approach that kind of behavior and what the end value difference is, if any. 

Unfortunately I have never played any of GREE’s games (though please if you have, tell us everything), but I wonder if it’s more than position and GREE’s success is also driven by a variety of game types and designs. Perhaps even, in a bit better quality and more, well- fun.  

Closing note: Zynga is not an evil company. They are a successful company and they are very good at what they do.  I pick on them out of admiration, mostly, though of course there are times we have given out some heavy criticism.  Let’s not also forget, as the Russians say: о вкусах не спорят-  or about tastes don’t argue.  This is just one dude’s ‘fun’ meter.

IGN reported recently that in the month of November Mafia Wars 2, the follow up to the Zynga smash hit Mafia Wars that was one of the first games to nearly beat our Facebook wall into submission, lost 900,000 daily active users.  More significantly, only 10% of users are playing the game daily, half of Zynga’s average of 20%.

An incident is not a trend, a very wise boss once told me.  Of course, one can’t help but think (as the IGN article mentions) that perhaps this is either an indication of general market saturation, Zynga’s aggressive release schedule (and seemingly monolithic design palate), or both.  Facebook game haters, no doubt, are rejoicing at the news as an indication that they have been right all along.

Well Zynga is still headed towards an IPO with a $10 billion valuation.  That will not change. Nor will the tendency for plenty of people to throw down serious money for playing their Facebook games. 

Perhaps it is indeed an indication of market saturation, however.  More interesting from our perspective at CLE though, is if the demand is waning- where is it going?

We can’t help but think, hope (and maybe even pray) that much like we all grew tired of the thousands of NES titles that were pumped out, gamers have lost their giddy excitement about the experience and are now hunting for quality. In that case, I think we can see this as another indication that Coray’s design tenants for Facebook games may be an outline for what Facebook gamers are demanding.