Under the fresh ‘TNW Profile’ banner, I’m committing myself to regularly shining a light on great European entrepreneurs and startup founders, to learn more about their journey and their business, and what drives them personally.
We’re kicking off our series of Q&A-styled TNW Profile interviews with serial entrepreneur David Helgason, co-founder and CEO of Unity Technologies, the company behind the amazing cross-platform game development platform Unity 3.
“The most awesome stage”
Last year, Facebook's VP of Design thought the TNW Conference main stage was the best she'd ever been on.
Helgason is a programmer turned entrepreneur who leads Unity while serving on the boards of several games and tech startups. He was born in Iceland, spent most of his grown-up life in Denmark and currently resides in San Francisco, California.
TNW: What made the single biggest impression on you at GDC this year?
For the last couple of years we’ve seen massive growth in mobile. This year it seems things are coming full circle with a big emphasis on web-based games as well, which is awesome because that’s right in our wheelhouse. The shift from mobile back to the web was one of the strongest themes at GDC this year.
While mobile is still booming, it’s clear browser-based games (as well as games for the Mac App Store) are getting ample resources and attention from game developers and users alike and very large amounts of value can be created there.
TNW: What are some of the key trends in gaming you took away from the event?
It’s not exactly a new trend, but one that’s still going strong: the resurgence of independent game development. There are a lot of companies out there that are finding new creative freedom for themselves to create wonderful and novel titles and we’re proud to be a major proponent of that trend.
Likewise, the movement of developers within the mobile space and the growing web games space also continues to be huge. Obviously we’re going to see the continuation of console games and high-end PC titles but mobile and web games – partly in thanks to Unity – are seeing a quality that is starting to match current-gen console titles and this is spurring a lot of excitement.
This is one of the reasons we have our own Unity Web Player, already support Native Client, and are rapidly improving our Flash deployment tools currently in open beta. It’ll be exciting to see how this trend continues to take shape.
TNW: Unity’s development platform is primarily used for games – by whom and for what type of games exactly?
Unity Technologies’ simple mission is to democratize game development. We want to provide awesome tools that level the playing field between developers small and large, make them affordable and easy to use, but also very powerful.
In the last year, we’ve spent a lot of energy on power and depth, but without leaving the affordability and simplicity behind. We are a much larger company now than even just last year, and our ability to push things forward is becoming quite incredible.
TNW: Does your solution meets the needs of small and big game studios alike?
When we started out, Unity was used by smaller studios. In the last couple of years, we’ve built trust in the development community and we’re finding that companies are looking at Unity very seriously. Over the years we’ve expanded our scope to meet the needs of a now much broader Unity community without leaving our original audience behind: we simply evolved the already great platform to meet the needs of larger teams.
This growth was primarily driven with the mobile boom and the growth in browser-based MMOs. As individuals and small teams could create games for Android and iOS that competed with larger studios, Unity couldn’t not become a significant player.
The sky is the limit when it comes to what types of games can be made with Unity, and we’ve made the software flexible enough that it can handle any and all genres and a broad range of team sizes. We’ve seen shooters, hack’n’slash, puzzlers, adventures, strategy games (both real-time and turn-based), platformers, and just about any other genres you can think of, in both 3D, 2.5D
and pure 2D, from developers spanning the globe.
Everyone should be able to make games, and we have more aces up our sleeves to make this happen.
TNW: The Unity platform also serves for other uses, such as medical or architectural visualizations, and training simulations. What are some surprising use cases you’ve seen?
An increasing number of developers outside the realm of games are beginning to adopt Unity as the engine and tools of choice for developing their applications. These projects include everything from training simulations to architectural
visualizations and educational tools.
One of the standouts for architectural visualizations is “Virtual History – Rome” created by Mondadori Digital. Demoed by Steve Jobs during his keynote to launch the iPad 2, he described it as one of the ‘just wonderful apps’. It provides an authentic journey back in time to re-discover the capital of the greatest empire of all time, a virtual reconstruction that can be explored in 360° with multimedia content and innovative functions.
One of the more interesting medical uses that we’ve come across recently includes a stunning brain scanning project under construction at Emotiv Lifesciences. They’ve developed a highly portable brain scanner that uses Unity to run the software inside of it. Unity is also being used in the visualization aspect of the device, which can display brain function on mobile devices.
TNW: Let’s talk business. You claim to be profitable, yet your products are free of charge for most developers. Care to explain?
Unity comes in both free and premium versions with the revenue being strong enough to keep Unity Technologies profitable and growing rapidly.
This business model has revolutionized the engine and development tools business. Other revenue-driving products include add-ons that allow deployment to iOS, Android, Xbox 360, PS3, the Wii, very low priced licenses for educational institutions and students, and we also do OEM deals that have brought Unity to everything from embedded systems to slot machines.
The way products are packaged and priced allows developers of all sizes to adopt and stay with Unity.
Additionally, we have the Asset Store, a service that allows developers to share and sell asset of all types (art, code, scripts, editor extensions, sound, and full projects) directly into their products with no restrictive royalty fees.
Also, Union, a business division of Unity Technologies, provides an avenue for developers to distribute their products to other platforms such as closed mobile devices, set-top boxes such as the Roku 2, and Smart TVs. Union does the work of porting a game over to these new platforms, and finally shares 80% of the game’s revenues back to the developer.-
TNW: What is driving growth at Unity primarily?
Our growth plan is to support the community with amazing tools and see where that takes us. So far, it’s been great. Our mix of price point with powerful and accessible tools that allow for quick iteration and efficient production has really struck a cord with the development community.
We’re also seeing growth in the global market; most notably in Asian territories but also in Central and South America.
The boom of mobile games development has been great for us as we were among the first engine solutions to really go after that segment. We’re also very well positioned as browser-based games continue to rise in popularity and importance.
TNW: Where are the bulk of your revenues coming from, geographically speaking?
Around 50 percent of revenue comes from outside of the US and, at the last tally, we found 30 percent of the revenue to be non-gaming related.
The largest share of Unity users are currently in North America but the global numbers are growing fast. For example the list of countries where Unity is being used the most (by the way not totally correlated with revenues) is the USA, China, South Korea, Japan, the UK, Canada, Russia, Germany, Brazil and France.
TNW: Why did you raise $12 million in funding in July 2011? And how quickly do you anticipate the need to raise more cash or return some, all of it (and/or then some) to your investors?
We have remained cash-flow positive pretty much consistently since our first capital raise in 2009 and again since our second raise in July 2011, but we basically had to be since we launched Unity 1.0 in 2005 so that wasn’t really anything new.
But it still made sense. You see, unlike consumer services companies, a tools provider has to be very conservative. If a social network goes out of business for millions of users, that’s merely annoying. But even if Unity only had one customer, that customer would still depend on us being there two years later!
So though we were profitable, we decided to give up shares in return for the ability to keep a significant amount of cash around against a rainy day. Being able to look our customers in the eye and tell them that we will still be there years into the future is a key sales tool (and doesn’t hurt recruiting either).
We also are lucky to get to work with some of the top venture capitalists in the US, China, and beyond, not to mention a few very powerful business angels from the games and software industries.
TNW: What’s the biggest obstacle you’re facing as a business right now, and how do you plan to deal with it?
One of the most interesting challenges we’ll always have is to provide the new features and upgrades to Unity that our community desires, without the product getting too complex or hard to manage. Simplicity is hard, but we refuse to give it up and will keep spending the time it takes to achieve it, even where less passionate people might cut corners and move on.
Another is learning to grow a great company. We are now 170 people in offices the US, Canada, UK, Denmark, Sweden, Lithuania, Korea, and Japan, with another 10-15 satellites of 1-2 people each.
We’ve learned to cope quite well, and use it as a strength how well we can connect with both customers and talent across the globe. The solution is overmuch communication and spending the time (and the money on plane tickets) it takes to build enough trust to enable the free flow of awesome.
The final problem is that while there’s ample documentation on how to build software startups (we owe much to bloggers like Joel Spolsky and Paul Graham), the stage from 170 and the next order of magnitude of growth is quite under-documented.
We are fortunate to have some excellent board members and other friends to guide us through this, but finally much of it has to be reinvented on the fly. That’s when having hired a whole bunch of open-minded geniuses (who mostly accept the fact that the ride might be bumpy) comes in handy.
TNW: What are some of the mistakes you’ve made since co-founding the company in 2003, and what’s the single biggest lesson you would want to teach aspiring entrepreneurs?
Too many mistakes (and consequently learnings) to count. But apparently none that inflicted lasting damage, or we wouldn’t be in such a good shape now.
As a first-time CEO I think one of my biggest mistakes in the early was a lack of focus, where I had a hard time navigating opportunities. The temptation is to do everything (always bad), the simple antidote (but often wrong) is to just say no to everything.
What I hadn’t learned is that in order to maintain organizational simplicity, one needs to force opportunities and partnerships into a limited set of patterns. One defines certain ways that the company wants to engage in opportunities, and tries to force deals into these molds.
Of course this again requires one to understand the shape of the partners’ needs and when and how they can be flexible, which again typically requires significant industry experience or (in my case) learning on the job by engaging in a lot of discussions.
So maybe after all it wasn’t a mistake to have many of these… even though it feels like a waste of time in retrospect.
TNW: As a European entrepreneur running a US company, what strikes you about Silicon Valley in general?
We were so lucky to be able to bring on Sequoia Capital as our first investors, which made our entry into the US as good as can be.
As is frequently reported, the level of energy here is amazing. But equally important is the fact that the concentration of technology here makes it easy for a company like Unity, which has to collaborate with all the major chip companies, OS companies, internet companies, and media companies. And all the startups here make it easy to follow trends that are so new that they feel like the future.