Neil Young cofounded Ngmoco in 2008, alongside Bob Stevenson, Alan Yu, and Joe Keene, to pursue a burgeoning opportunity in mobile games. Within two years, Ngmoco was acquired by DeNA for US$400 million.

Prior to Ngmoco, Young started his career as a programmer in 1988, but by the early 1990s, Young had established himself as a producer at Probe Software, where alongside David Perry, he shipped The Terminator, among other games. In the four years he spent at Virgin Interactive, Young became vice president of product development before leaving for Electronic Arts (EA) in 1997.

At EA, Young was appointed the general manager at Origin Systems, where he oversaw the Ultima, Wing Commander, and Jane’s businesses, as well as the company’s relationship with Firaxis Games. In 1999, he left Origin and moved to EA’s Redwood City Headquarters, where he would create Majestic, the pioneering ARG and then serve as the executive in charge of production for The Lord of the Rings series of games. After four years, EA made Young the general manager of both the Maxis and EA Los Angeles studios, and eventually the group general manager at EA Blueprint, where he was responsible for Maxis, Will Wright’s Spore, and a partnership with Steven Spielberg.

After discovering the Apple iPhone, Young was inspired to build a mobile game business outside of the EA ecosystem. With the support of Kleiner Perkins’ Bing Gordon, who had then recently been chief creative officer at EA, Young and his team raised more than $40 million in venture capital. Ngmoco went on to publish several bestselling games for the iPhone platform, such as We Rule, Eliminate, GodFinger & Rolando. In 2010, Ngmoco joined the DeNA family of companies, where the company remains today under the new name DeNA San Francisco.

Ramsay: You’re known as a publishing executive, general manager, and entrepreneur, but you were a programmer once, weren’t you?

Young: Yeah. I grew up in the United Kingdom and started as a programmer. I taught myself to code when I was about 12. When I was about 14, I started working on my first game for English Software, a game called Seven Treasures for the 8-bit Atari. I eventually graduated from 6502 8-bit machines to STs.

When I finished sixth form, instead of going on to university, I decided to work for a development company. I was first a programmer at Imagitec Design in 1988. The first game I worked on there was a port of Ferrari Formula I for Electronic Arts. Despite my efforts, I very quickly realized there were much more gifted engineers, and I found myself moving into producing. And that’s what I’ve done since I was 18.

Ramsay: Can you tell me about the UK video game industry at that time?

Young: Oh, amazing! There are a lot of people in the games industry that come from the UK. I think it’s because the weather is so bad that you don’t have a lot to do, so you either go into a band or teach yourself to program.

Ramsay: How many companies were there? Were there a lot at the time?

Young: Yeah, there were, but the most successful company was probably a company called Ultimate, which went on to become Rare and which has since been acquired by Microsoft. There was Ocean, Gremlin, and others with vibrant, rich and thriving businesses. You could make good money as a young person. It was very exciting, very entrepreneurial, and also very creative. Building games, expressing yourself through computers, was really rewarding. And the fact that you could do it and make money was just wonderful.

Ramsay: How did you wind up at Virgin?

Young: I was at Imagitec for two years and left to join Probe Software, which was the largest independent developer in Europe. Our model was kind of like a management production company, so we had just producers on staff and we would work with independent developers—you know, a programmer in Oxford, and then an artist in Edinburgh, and a musician in Brighton.

We would organize and manage the creation of games for client companies, which were companies like EA, Sega, and Virgin, who were one of my clients there, and I worked on a range of games with them: a lot arcade machines and conversions, like Golden Axe to the Commodore 64 and the ST. Virgin was expanding their operation in the UK and they approached me to see if I would be interested in joining them.

Ramsay: Were you interested?

Young: I had really no interest in working for Virgin in the UK, and turned them down. In 1992 at the Summer CES in Chicago, I was hanging out with them and chatting, and they made the pitch again, but this time from their US office. It turns out they had just started the unit and a guy from the US team said, “If you’re not interested in joining us in London, would you be interested in coming out to the US?”

I had been the producer for David Perry who’s obviously pretty well-known in the business now, and I worked really closely with Dave. Dave had just made the transition to go move out to the US and work for Virgin in their internal studio, so I already felt like I knew people who were working there. They were having a great time, so I said, “Yeah, I’d be interested.” The next week, I flew to California and met with people there for a few days, and two weeks after that, I got my visa and moved out to the US to work for Virgin.

Ramsay: You worked with David Perry?

Young: I was Dave’s producer at Probe. Dave was one of those independent developers who Probe would finance, manage and organize. When we came over to the US, he was working on a game called Global Gladiators, and I wasn’t on that title. I worked on the publishing side of Virgin’s business, managing third-party development—essentially, the things we were doing outside of our studio.

But when we got the Aladdin project, I was made executive producer of that game for Virgin, and Dave was the lead. We worked together for a while before he left and started Shiny Entertainment.

Ramsay: I know your cofounder Bob Stevenson worked with David at Shiny Entertainment. Did you know Bob then?

Young: Yes. Yes, actually, Bob was an independent artist and he lived in Edinburgh. And we worked together on an arcade conversion together at Probe. Dave was the programmer, Bob was the artist, and I was the producer. When I came out to the US, Virgin needed an art director for one of the titles we were working on, and I called up Bob because he’s a wonderful artist. He came out, loved it, and that’s when we really got to know each other really well.

Ramsay: When did you transition to management?

Young: Well, I’m really a producer, and producing is managing and leading teams. The producer term has different meanings and different contexts in different companies, but to me, the producer is the one who either has the vision or can hold a vision for a game, from the very first word that’s ever written about it until the last time it’s put away by someone. That encapsulates everything from the game: the design, the vision, assembling the team, public relations, the marketing plan, and the marketing program.

My view has always been that, in order to be a successful producer, you have to be involved in all of those things, so then by default, you end up being in management. But just being in management and being disconnected from the things you’re making is not something I’m capable of doing, or particularly enjoy doing, or, for that matter, think leads to success. Managers disconnected from products tend to be just dead weight, in my opinion.

I never thought I was transitioning to management. I just thought I was producing bigger and bigger things, and maybe producing more and more things. Even as a general manager at EA, I was really focused on the products.

I learned pretty early on that there are lots of things you need to do to get games and the businesses around them working and I’m not good at many of those things, so I need to hire people who really are. They need to be good at managing schedules and production details, so I can focus on the things that I think, at the end of the day, make the products what they are. I try to find great people to work on them and who can work together. I also try to be really clear about the two to three things that will end up defining whether the game is successful, commercially and critically. If we can do achieve both of those things at the same time, then we’re good.

Ramsay: You were the general manager at EA, but you were also the general manager at Origin.

Young: Yes. That was when it was most clear to me that I love making things and being close to the process. When I left Virgin to join EA, the role I took at EA was to be the general manager of Origin. It was a pretty interesting time. From the perspective of EA management, Origin was moving sideways, so they wanted to put new leadership in place. So, Chris Yates, who was my technical operating partner at Virgin, and I moved out to Austin, Texas. I became the general manager and Chris became the chief technology officer.

We focused first on Ultima Online, which felt less like something that had tremendous opportunity and was really not well-understood inside EA. At that time, Origin had four units: the first was the Ultima Online unit team; the second was the Wing Commander team, which included Privateer and everything to do with Wing Commander; the third was the Jane’s Combat Simulations group run by Andy Hollis; and the fourth group was a joint venture out in Baltimore with Firaxis. That was Sid Meier and Brian Reynolds’ company; they were working on Gettysburg and Alpha Centauri.

The Jane’s business just ran itself. Andy was just such a tremendous producer; he was just on top of everything. His products always shipped on time. The attention to detail was spectacular. They always beat their numbers. You just didn’t want to mess with it.

Wing Commander without Chris Roberts was always challenged, and Chris’ brother Erin did Privateer and the year before I joined, those guys had left to form Digital Anvil, and so Wing Commander was a little lost as a product.

Richard Garriott, Starr Long, and Raph Koster were focused on Ultima Online. Ultima Online was being beta tested across about 30 PCs to build an infrastructure we could scale, so delivering was quite an undertaking. So, Chris Yates and I focused on that. Chris became sort of the engineering leader and the infrastructure leader for the product. And then we focused on getting that out, and, you know, it surpassed everybody’s expectations.

We learned a lot. We had tons of challenges. EA’s sales force had predicted that the total sales for Ultima Online would be 38,000 units and we sold 38,000 units on the first day. We ran out of inventory, and that actually turned out to be a blessing. We needed those couple of weeks just to get the infrastructure to function again because it was getting crushed under the load. But Ultima Online went on to be a pretty amazing business and pretty much the first of its kind.

That was an amazing time! I had thought that success was about climbing the corporate ladder, but I reached a point when Origin was doing really well, and I was farther away from product than I had ever been before. It was like climbing a mountain, getting to the top, standing up and looking around, and realizing you’ve climbed the wrong mountain. The mountain you actually wanted to climb is over there, closer to making things and having an impact.

Ramsay: What were your actual responsibilities? What was your day like?

Young: I was responsible for the business unit. At that time at EA, the general manager was not a driver or a leader of products; the general manager was a driver and leader of the business and the manager of a team. The general manager was not someone who would make creative or product market decisions around titles, but I had full responsibility for the business unit.

My day was like a day in the life of any business. You sit down, you meet with people on the teams, and you try to understand what the challenges are and try to help people solve them. I would get into the office at 8:00 AM, and from 8:00 AM to 9:30 AM, I would catch up on things that had happened overnight.

And then I would pretty much have back-to-back meetings with the executive producers, the producers, and the people running different aspects of the business. Some of those were standing regular meetings where we would talk about milestones, production plans, and product statuses in general. Others would be unscheduled meetings, or phone calls. And then the day would end at 8:00 PM or 9:00 PM, and I’d go home, rinse, and repeat.

Ramsay: Can you give me an inside look at one of these meetings?

Young: My time spent with Chris Yates is a good example. When we got to Origin, Chris was immediately deployed onto Ultima Online. We said, “Go get this product shipped.” Chris spent much of his focus on just trying to make that happen. That meant trading off features with technology choices and decisions every minute of the day. Chris and I would spend a lot of time talking about how we would scale for infrastructure to bring a product to market. What features would or would not be shipped with the software?

I think the role of a general manager at EA at that time was probably wrong. Although the general manager had ultimate responsibility for the business, they did not have ultimate responsibility for the products. It was difficult to run a product-centric business when you weren’t responsible for everything.

In the following years, that definition changed inside EA. When I went on to GM at Maxis and at EA Los Angeles, I had full responsibility for everything. When you have full responsibility for everything, you make a lot of tradeoffs, but you can make the decisions you need to make.

Steve Jobs was an exceptional leader because he knew what the inflections were in his business, no matter how big or how small. Jobs could say, “Look, we’re going to do one thing really well, and in the process we’re going to kill a whole bunch of product lines.” That’s a very broad, sweeping decision that affects a lot of jobs, the whole makeup of the business, the sales team, and everything else. But he could also obsess about how many pixels to shave off the edge of an icon because he knew that that was important to the product. And so great leaders of companies that create things, I think, have to be capable of touching everything everywhere along that continuum.

Ramsay: Was Ultima Online the first time you were exposed to the challenges of connected games?

Young: No, Chris and I made a massively multiplayer space game at Virgin with Rod Humble, who later became CEO at Linden Labs. At that time, companies like Catapult had been telling us that without their modem, we wouldn’t be able make successful games on the Internet. We just didn’t buy it; specifically, Chris didn’t buy it. Rod had this idea for a game called SubSpace and so we decided to prove that we could do it without their hardware.

SubSpace was a low-latency space shooter, and it worked really well. After we launched the game, we had about 100,000 users. That was the first time I had ever built anything connected. Ultima Online was the second, Majestic was the third, and now everything’s connected.

Ramsay: Do you remember how many concurrent players there were?

Young: You know what? I don’t even know. I don’t remember. I think there were between 8,000 and 12,000. Something like that. This was in 1996.

Ramsay: When you were at Origin, did you get to know Garriott and Koster?

Young: Oh, really well. They’re really super great guys. Richard was very welcoming, incredibly talented, and wonderfully creative. He was always committed and passionate about the thing he was making, although he didn’t have to be. He was wonderfully wealthy and had a great lifestyle, but he would be in early in the morning, leave late at night, and work on the weekends when everyone else was working on the weekends. He had a tremendous work ethic and was very passionate and very committed.

Raph was prolific. He wrote a lot, which—if you’re impatient like I am, and I especially was then—sometimes made it difficult to actually understand what he was saying. You were required to read everything he had written. But he was prolific in terms of his output, too.

And then probably the least known member of that team who had the biggest impact was Starr Long; he was the producer on the title. Ultima Online would not have been made if not for Starr. He understood Ultima inside and out. He was a great team leader and a wonderful guy.

Ramsay: Raph’s a friend. What can you tell me about young Raph?

Young: He wrote a lot! He would be on the message boards where he’d get into debates with the players. He would spend a lot of time doing that. If the customer had a point of view that was different than his, they’d feel the wrath of Raph; he would write a huge diatribe on the forum. He was invariably right. He’s great.

Ramsay: And now he’s an expert on community relations!

Young: Exactly. Oh, the irony.

Ramsay: After Origin, you went on to work on The Lord of the Rings series.

Young: Well, when I reached the realization that I was managing this company and not really that happy doing it, I needed to get closer to the products. I called up my boss, Don Mattrick, who was the president of worldwide studios at EA. He was a really amazing producer.

And I said, “Hey, I don’t know how to tell you this, but I’m really not happy. I really want to get back to making games. I’ve been thinking about building a product for the Internet. Instead of just using the Internet as a communication protocol, I want to use the Internet as a canvas to paint a picture on.”

That product ended up being a game called Majestic. I moved from Austin in Texas to Redwood City, assembled a team and built Majestic, and worked on that from 1999 to 2001. I worked on that for 18 to 24 months. Majestic was one of the industry’s first alternate reality games, and was certainly critically acclaimed, but not commercially successful.

When I was done with that, I was looking around for things to do at EA and I sat down with Larry Probst, who was CEO then. I said, “What do you think I should do?” He said, “Well, I’m going on these analyst tours and meetings,” he said, “And, you know, no one’s asking me about game A we’re making or game B we’re making. Everyone’s asking me about two things.” He said, “One is Harry Potter, and the Harry Potter license we’ve got; and the other is the license we’ve got to The Lord of the Rings.” He said, “No one inside the company ever talks to me about The Lord of the Rings though, which makes me think it might be messed up. Could you take a look at The Lord of the Rings and see if there’s anything that can be done there?” That’s how I was introduced to running The Lord of the Rings.

So, first, some background: when EA acquired a license at that time, they’d take the license around to the internal studios, try to find someone to do it, and if no one wanted it, they’ll give the license to a part of EA called EA Distribution, or EAD. That group ran external development, so they would find an external producer, get it made, and bring it to market. The Lord of the Rings had gone there because the internal studios had turned it down.

And so my development director, Arcadia Kim, and I went to Stormfront Studios, which was the developer working on The Lord of the Rings title. The movie, The Fellowship of the Ring, had just come out, and it was clear that they were going to miss releasing the title with the first movie.

What we found was a game that had an okay core mechanic, but which was sort of all over the place. And so we set about turning the game around and trying to focus on building something that would come out in time or ahead of the second movie, so that we could ride that wave of marketing.

The Fellowship of the Ring movie turned out to be a huge hit, and so there was a lot of pressure on us to deliver The Two Towers game for it to be successful. We did that, it did very well, and then we went on to make The Return of the King, which did tremendously well, too. We were also overseeing a lot of other things inside The Lord of the Rings universe.

Ramsay: Did that licensing relationship start with the movies?

Young: Yes. It began with the movies. We unified the rights sets after Vivendi basically totally screwed up the book rights, so EA had the rights to the movies because the Tolkien estate had licensed the books to Sierra, which became Vivendi. And so Vivendi was producing basically a competitive product and trying to release products at the same time in the same window against the movie, but backed with the fiction.

Our games were initially limited to using only the things that were in the movies, but obviously had the benefit of leveraging the imagery and official assets from the movie. And so because we essentially sort of won that battle, Vivendi stopped making those games, and we took the opportunity to unify the rights.

Ramsay: Sierra was developing a MMO around The Lord of the Rings. Was there any discussion at EA about building an MMO with the license, too?

Young: No, because while we were making The Lord of the Rings, EA.com was not doing well, and it got radically rescaled. The company—to the great detriment of EA, by the way—started to have an allergic reaction to MMOs. EA had invested a lot of money, but hadn’t yet been successful with anything other than Ultima Online, so the company stopped investing in MMOs.

And the problem there was that a lot of the talent EA had acquired and maintained in Origin, Redwood City, and Canada left the company. They ended up at our competitors and helped bring out some very successful games.

Ramsay: I understand that the margins are exceedingly high for MMOs.

Young: Well, they can be. It all depends on how much it costs to make and operate. Some designs cost a lot to build, and some cost a lot to operate. The great MMO companies really understand how to build software that doesn’t require an infrastructure that costs 30% of your revenue.

Ramsay: You spent a while at EA managing studios. What led to Ngmoco?

Young: After The Lord of the Rings, I actually thought about leaving EA. I actually resigned, but Larry Probst called me up again and he said, “Don’t resign. Why don’t you GM Maxis?” And I said, “I don’t like being a GM. I was a GM at Origin, and I just didn’t like it.” And he said, “You can be whatever type of GM you want. Just hire other people to fill in the gaps for you.” And I thought, “That’s a really obvious and good point. Why don’t I do that?” So, I GM’d Maxis and got The Sims 2 launched and got that business sort of in order.

We’re skipping over a lot here, but after we shipped The Sims 2, I was one of two general managers at EA in Redwood Shores, including Nick Earl, who is now the studio head at Kabam. Our boss at the time, Bruce McMillan, sat down with us and said, “Hey, our LA studio needs help. I would like one of you guys to give the other one your current business, and the other one will go down to Los Angeles and take it over.” Nick Earl couldn’t do that for family reasons, but my now ex-wife, who was from southern California, wanted to be back there, and I liked turnaround challenges, so I decided to take that job.

I went down to LA, and we eventually turned the studio around; we had a good run. We re-launched the Command & Conquer franchise, and we got the Middle-earth games, two new Medal of Honors, and some other shooters out. We also had a partnership with Steven Spielberg, so things were going pretty well there.

Ramsay: Why did they need you to take over the LA studio?

Young: Basically, we had three teams inside that studio. We had the DreamWorks team, the Virgin team—we had acquired Westwood and Virgin in Irvine—and a new LA team. There were a lot of transplants, new hires, and movie people. There hadn’t been a really good integration done, expectations were high, and getting that studio to a place where it could be really successful had taken longer than people had hoped.

A lot of the products were faltering, both creatively and from a delivery date standpoint, and there were some real cultural problems, from the merger of Westwood Studios and EA Pacific. There were no common goals and no common vision, so it was initially quite a divisive culture. If you can’t build a really good culture, it’s really difficult to build really good products. Culture eats strategy for lunch. So, we had to rescale the organization, focus on trying to rebuild the purpose of the company and the culture, and get the organization into shape. A lot of amazing people helped with that, like Mike Verdu.

Ramsay: You had tried to leave EA, but when did you get the idea to get out and start a new company of your own?

Young: After two years of being down in LA, I was going through a divorce. It turned out that my wife didn’t actually come back down to Orange County, or to LA. My children were living in San Francisco, and I was commuting between San Francisco and LA at least once a week and sometimes multiple times a week. I decided I was going to come back to the Bay Area, and I would run the LA studio remotely and take on some other responsibilities.

And I did that, but while I was in LA on one of my trips down there to manage the studio, my trip coincided with the launch of the Apple iPhone. I found myself waiting in line in Santa Monica for an iPhone, and I eventually got it and I took it home. Within a couple of hours, I realized that the iPhone was changing my behavior. It had this unique blend of usability and capability, which drove me to use it much more than any other phone I’d ever had and in different ways. It struck me that that change in behavior could have a huge impact on mobile games if you could target the iPhone.

Games are entertainment and entertainment is a trade for the time. Anything that comes out that changes how much time you spend with a device is an opportunity to change entertainment. But the device couldn’t be targeted yet. The mobile ecosystem was shitty. It was really hard to make money because the carriers controlled the deck, and even though you were paying for the development of the game, you were getting a small license fee. It just wasn’t a very exciting industry.

And so time passed, I had moved back to the Bay Area, loved my iPhone still, and then in March 2008, I was watching the live stream of an Apple conference where they would be introducing an app store that would cut out the carrier, allowing people to distribute software directly to customers. I picked up the phone and I called Bob, who had become my closest friend. He’s my daughter’s godfather. I told him, “We really need to do something. This feels like the opportunity to do something together. Have you watched the video stream?” He said, “It’s really, really amazing.”

Both of us had commitments. Bob was the CEO at Planet Moon Studios, and I was a group general manager at EA with four studio groups, but we were so excited about the opportunity. We spoke the next day and agreed, “We should go do something. This is it. We have a tremendous opportunity to build a game company centered on these devices.” On April 20, I told EA that I was going to leave. I told them that I thought it was just such a huge, new opportunity. EA tried to convince me it wasn’t a really good idea.

That weekend, I went away on this annual guys’ trip to Vegas with some of my oldest friends, including Bob. I’m there, and my phone rings. It’s Bing Gordon. He’s calling me, on Saturday night, and he said, “Hey, listen, I just want to let you know that we’ve worked together for a long time, but on Monday, I’m going to announce my retirement from EA. I’m joining Kleiner Perkins as a partner to focus on consumer internet and mobile.”

I said, “Well, that’s really funny. I just resigned. I’m building a consumer Internet mobile company.” That call kick-started the conversation about financing Ngmoco. On June 26, I left EA. On June 27, we announced Ngmoco. On July 31, we closed a round of financing that was led by Kleiner Perkins, and Bing joined the board. On October 18, we released our first two titles.

Ramsay: When you went to EA and told them you were leaving to start this mobile game company, why didn’t they try to convince you to stick around and develop mobile games for them?

Young: That’s what their suggestion was. They said, “Look, we’ve got a mobile division: JAMDAT.” We still called it that, even though it was EA Mobile. “You could do this here; you don’t have to start a company to do it.” And, really, the way that EA was configured, you had some studio groups that had product development, and some that didn’t. I was in the group that was by far the largest in the company, and which did all of the internal, and much of the external, product development. The mobile team was housed inside Kathy Vrabeck’s group. Kathy ran casual, mobile, and web, which was a completely different group, almost like a different company.

Given what I knew about the structure of EA, for me to be able to do that, I would have had to work across boundaries inside the company and it would have slowed me down. The one thing I knew about this opportunity was it had to happen immediately. There was a moment and we had to go really, really fast to capture it. I couldn’t afford to be slowed down by the corporate apparatus. EA’s a wonderful company. I loved and really enjoyed my time at EA, but just like any large company, EA has some great strengths paired with some limitations, and pursuing this opportunity within EA would have had me going headlong into those limitations. That was the primary reason that I didn’t stay.

The secondary reason was just that the internal equity structure of EA meant that if I had created something really valuable—something valued in the millions, hundreds of millions, or billions of dollars—I wouldn’t have had the opportunity to participate in that upside. I didn’t know if we could create a successful company, but I knew it was exactly the right time and that timing was an important factor. If we could create a successful company, we would be able to yield a much better return for ourselves and the other members of the team.

And then, lastly, I just wanted to work with Bob. You know, it’s such an amazing privilege to get to work with someone you really care about, who you understand, and who you have great muscle memory with. At EA, I wouldn’t have been able to do that.

Ramsay: The Pulitzer Prize-winning writer James Michener once said, “Any person who has been divorced is a monument to failure.” And yet while writing the book that won him that prize, he was going through a divorce. During the lead up to Ngmoco, you were going through a divorce. While you attributed your inspiration to the iPhone, would you say that your divorce had any influence on your drive to find success with something new and different?

Young: Yeah, good question. I don’t think so. I think James Michener’s statement is valid for anyone who has gone through the process of divorce because you really do feel like a failure. You’re forced to reflect on a lot about yourself, and why, at the end of the day, people go on journeys with you. If they stopped caring about you or you stopped caring about them, something has changed, and if you once cared about them, it’s difficult to look at yourself as anything other than a failure.

But that motivated me to be a better father, to understand the difference between your life’s work and your purpose, and it was a huge learning experience for me, personally. My divorce didn’t change how or why I felt that Ngmoco was an important thing to do, but I probably wouldn’t have had the appropriate perspective that enabled me to keep the relationships I had stable and in place while I was building the company.

Ramsay: How was Bob doing?

Young: He was doing good. I mean, he went through divorce during the process of us building Ngmoco. I had separated from my wife in 2005 and Bob separated from his wife in 2009. There was a gap there, but I think those things are connected. In order to do anything really well, you have to commit yourself completely. If you’re in a relationship that doesn’t allow you to, it becomes difficult for you to be happy, and that becomes a downward spiral.

Ramsay: Speaking of happiness, you didn’t like being a general manager. Were you that disappointed that you had to be a general manager at EA?

Young: I didn’t have to always be a general manager at EA. You know, I could have always chosen to produce. I feel like I was disappointed in the GM that I chose to be when I was running Origin. When I became the GM at Maxis and then EA LA, it was a lot easier for me to define general manager the way I wanted, instead of some imagined expectation of the company.

I’m always wrestling with the need to be a manager of people and with focusing on what, at the end of the day, I think impacts the product. And I’ve come to understand that the two are inextricably linked, but I still daydream about products more than I daydream about the development of people or the management of people. In that regard, I don’t really like the title “manager” that because implies something other than doer. I love the title “producer” because although that sometimes has a bad reputation, it really says what you do.

Ramsay: You were propelled from a company that held your interest for more than a decade not because of disappointment then, but because you were truly looking for something new?

Young: Yeah, the catalyst to leave EA and start Ngmoco was a desire to do something new and big, coupled with the opportunity that I saw with the iPhone. And when I was at EA, the mobile group and mobile games were not the pinnacle of the business. They were sort of an afterthought or an adjunct that was necessary to keep the company prominent in the eyes of the customer, and helped underwrite the large investments that were going into big games.

You’d make a big product, and it would cost a lot of money on the Xbox, the PlayStation, and the PC. You would then do whatever you could with licensing, secondary formats, or catalog formats for the mobile business to offset the cost of actually building those products in the event that they didn’t perform up to expectations. So, they were more about insurance.

For mobile games—from what you could do on the devices, coupled with the device fragmentation, coupled with the stranglehold that carriers had on distribution—that meant that to build a viable business, you had to build lowest common denominator games for lowest common denominator devices that were ported into every language and onto every handset in the world.

And so you built a business that looked like a factory, providing a low quality widget and just stamping it in different variants in the lowest cost places around the world. That was a necessity because of the way the market was structured. I was never interested in mobile games until the iPhone.

The iPhone struck me as something that would be a very powerful game system—easily as powerful as the Nintendo DS and maybe as powerful as the Sony PlayStation Portable, but it also had all this other stuff, right? It had accelerometers, network connectivity, a camera, location awareness that was always on, and it fit it in your pocket. The iPhone felt like it could be a really good machine for playing games, if you could target it.

I also noticed that—and this is actually maybe even more important—I started using the iPhone differently than a telephone. I was rarely using it to make calls. I was frequently using it to browse the web, or to check stocks, or look at YouTube, or for other utility or functionality, or do e-mail. This device was changing my usage habits; it had this unique blend of usability and capability.

Ramsay: Had you ever thought about starting a company before?

Young: Yes. I dreamed about it a lot. But I know it’s hard and you need to not just do it because you want to start a company; you need to do it because you see an opportunity. I hadn’t seen the opportunity up until that point. I mean, I could have started a game development company, but I just didn’t think that was a really great thing to do. The risk vs. reward wasn’t right. Here, I was like, “Wow, what a great moment, a huge inflection in the business. I can get in early, I can build a company with my best friend who shares the same skills as I do, we can build something no one else is building, and we can move really quickly.”

Ramsay: Did you have any idea about what would be involved?

Young: Not really. I knew we would need to raise money, but I had no idea how much money we would or should raise. I had never raised money before, so I had no idea about what a cap table was or what it should look like or who the investors should be. I just thought the VC community would be willing to invest in this company—not a game or a product, but a company that would try to be the definitive developer and publisher on these new devices.

Ramsay: Was your objective, in seizing that opportunity, to sell the company?

Young: No. We didn’t really think about that when we started. Intellectually, we understood that someone could buy us or we could take the company public, but the focus was on “what does it take to build a great company?” If you start out to build a company to sell, I’m not sure you’d be willing to make the sacrifices necessary to build something anyone would be interested in buying.

Ramsay: Where were your expectations for Ngmoco?

Young: Well, a breakthrough moment for me was when I took over Maxis. I realized that you can look at a business and map it to the thing you know well. I knew how to build games, so I thought, “You know what? It’s a lot like a game, right?” There is a core set of underlying systems or features—the people, the culture, and the organizational structure of the company—and then you’ve got all this content that sits on top or that spins off that. In a game, those would be levels or stages, but in a business, they’re individual lines of business, like The Sims.

And once I had made that cognitive connection, it allowed me to draw on what I knew about making games to actually manage a larger business. It’s like knowing the genre you’re in and the type of game you want to build. In setting out to build a franchise, you know the first things you release have some success associated with them. And I started the company thinking of the business as a game development project, asking myself, “What’s the analog to a game design? Who’s the core team going to be? What are the features that are going to determine whether this is successful?” I actually used that cognitive connection I had learned while managing Maxis to start, run, and build ngmoco.

But I really had no expectations, other than to try to succeed going in to Ngmoco. While I had a dearth of expectations, we did have a myriad of questions that led us to our first learnings about raising money.

“We understand what the opportunity is here, so how much money do we really need to get it going?” We started asking ourselves, “Wow, can we get it going for like $500,000? Could we get some products to the market and start testing them?” We realized that if we do that, we’ve really only got one or two shots.

Through this process, you also realize is it’s actually more difficult to raise a small amount of money than it is to raise a relatively large amount of money. In the venture capital community, people want to put capital to work.

They’re dealing with funds in the hundreds of millions, or even in the billions of dollars. Although somewhat counterintuitive, you want to ask for a larger sum of money than a smaller sum of money. We realized when we started talking to people that not only would raising a small amount be too risky, you actually can’t easily raise small amounts of money from the venture community; to do that, you have to go to the angel community. And when we started going down that path, we found out those investments top out at like $2 million, and what we wanted to accomplish wouldn’t be possible for that amount. We immediately had to cross the chasm to the $5 million side of things, which is what we raised. We raised $5.6 million, predominantly from Kleiner Perkins.

The process of raising money was exciting and terrifying at the same time. We basically took our pitch out and we started meeting with people who had been recommended to us. Larry Probst introduced us to Allen Morgan, who worked at Mayfield Fund, and Rusty Rueff, who was the HR leader at EA, introduced us to a VC company called Morgenthaler, and we would just ask those people who they felt they competed with and we’d go meet with them. Eventually, we got a good picture of what the reception to the investment would be.

Ramsay: Was the VC community as receptive as you thought they’d be?

Young: In Silicon Valley, the iPhone was already perceived to be successful, and looked like the next great software platform with the launch of the app store. There was enough noise around the iPhone that everywhere we went, we found people who were receptive to the idea.

Our pitch strategy revolved around three things. Point one: we wanted to feel like a first party for the iPhone. We knew that Nintendo and Sony wouldn’t build products for the iPhone, we knew that Apple wouldn’t, and we knew that Google wouldn’t for its Android system. We thought there was an opportunity to create a company that felt like a first party for these devices but, at the same, would become the voice of the industry—that would really understand how to make them work and what customers want from their experience.

Point two of the strategy was that we wanted to build a network that connected our games together, allowing us to move customers from game one to game two and cross-promote inside the network. I think we said something like we’d be “Xbox Live for the iPhone.”

And then third thing that we wanted to do was we wanted to open that network up and bring in as many other companies. We believed that we could create a network on these devices that would scale and be really valuable to both customers and the business.

That’s the strategy we tried to execute. Now, along the way, there were speed bumps and hurdles, but as we presented that idea to the venture capitalists, I think that what people were seeing was not a pitch to fund this app or fund this game, but to build a business on top of this ecosystem that had within it people who knew how to build this type of business. That felt valuable.

Ultimately, we settled on Kleiner Perkins really because of Bing. Starting a company is like going on an adventure and you want people you can trust. I knew Bing, I had worked with him for 11 years, I understood the value that he brought, and the way that he thought. He understood who I was, and we felt that it would just be more fun to tackle challenges together—to know that the person around the table with us cared about us and cared about us being successful more than they necessarily cared just about the money that they had invested. And that turned out to be true.

Ramsay: Was raising money the first step after deciding to start the company?

Young: Yeah, we basically just tried to raise money pretty quickly. I officially left EA on June 26 and we closed the financing around July 31, which was fast. And then we just hit the ground running. We started building a lot of stuff for it at the same time. We started MazeFinger and Topple, and Alan Yu had found and signed Simon Oliver who was working on this prototype called Rolando. We reached out to people in the community to see if there were partnerships we could do, and we slowly started building products with external partners.

Our view was that we wanted to provide a publishing infrastructure, the technology, and a common code repository, so that if you built products with us, the code from the last and next products would be available. We tried to find as many talented people to collaborate with as we possibly could.

We released our first games, MazeFinger and Topple, on October 18, and we decided on the pricing the day before we released them. We sat down with Bing, and we talked about the pros and cons of different pricing, and decided the most important thing we could do right then was learn about the market. At that time, it wasn’t really about making money; it was really about understanding the ratio between paid and free, and the market size.

And so from the outset, we had this idea that we would measure everything we did, so we would try to get as much data as possible. If we had great game makers and great data, we felt like we would increase the chance at hit products. We decided to release Topple as a $0.99 cent app, and MazeFinger for free, and we would release them at exactly the same time on exactly the same day, so we could get a sense of the differences in the charts.

Ramsay: And did you?

Young: Both games went to the very top of the charts. MazeFinger went to number one in free and Topple went to number two in paid. Along the way, we were capturing data about what people were doing, how they were interacting with the software, how many sessions per day, and how many minutes per session. It was a really, really amazing learning experience. We then followed those up a few weeks later with Dropship and Dr. Awesome. They were both similar, but they were both $0.99 cents when we released them. We felt like we understood the delta between free and paid, and we had no method to monetize free then, so we thought, “Okay, we’ll just release them as paid.” One made the Top 10, and the other was number 15 on the charts.

And then we released Rolando on December 15, and Rolando became the number two highest-grossing game on the app store that holiday season, beaten only by Need for Speed. At that moment we felt, “Okay, we’ve just made more money than we’ve spent so far, we’ve tested the market, and we think that we really now understand the market. It’s now time to go to the next level of the business, to raise more money and start stage two of our plan.” Stage two was to start building more games and a network that would connect these games together, to take advantage of the data and put it to work.

In February, we raised another round of financing, just over $10 million. Stage one of the business had been validating, and we were moving onto stage two. As the financing was closing, we started looking at the market from not just our product’s perspective, but from a perspective where we were intersecting the data about our products and the market as a whole.

We had acquired a small company in Texas, two people who built a web app that would hit the iTunes backend every hour in every territory and scrape it, so we knew what games were being released, when they were being released, how they were moving up the charts, and what the trend lines looked like for them. And because we knew how many downloads you could get and thus how much revenue you could make at each chart position, we began to build the first model of the market we could use for forecasting. And as that data started coming in, it became really, really clear to us that two things were happening: one was the number of apps that were being released each week was accelerating, and two was the average price per app was falling.

Ramsay: That doesn’t sound good. Did you see the problem?

Young: Yeah, if you’re building a business that’s predicated on selling $9.99 games, and if the average price is falling from $7.99 to $6.99 to $4.99 to $2.79, you know that creates drag on the business opportunity for you. We realized then that the app supply exceeded the demand, and so price was falling to the lowest control level. We began to think that the premium game strategy we were implementing would not lead us to build a company of consequence.

In fact, at the time we did the study after the closing the financing, we realized that in order to build a company that generated $10 million a year, you would need at least one game in the Top 5 highest grossing for a whole year, and that basically meant creating super-hit products. To create a company that generated $20 million a year, we’d need three games in the Top 10 for a whole year. That just didn’t feel like a great proposition to us.

Ramsay: What did you do?

Young: At the first board meeting following our Series B investment, we sat down with our investors and we said, “Well, we have two things to talk about: we’ve completed the financing, but we don’t think we can build a company of consequence on the paid app store.” We were half expecting the room to go, “We’re doomed.” To our surprise, our investors, and one in particular, Mike Maples, said, “This is great news. Before anyone else has figured this out, you’ve got this information. What are you going to do? You have an advantage that could be measured certainly in weeks and maybe in months. How are you going to capitalize on that?”

And we said, “We don’t think we can build a company of consequence on the paid app store, but we have data that says our players are using our titles an average of 22 minutes a day. We think there’s a way to monetize usage versus downloads.” When you build a business on paid premium downloads, because of the way the discovery mechanisms worked inside the app store and the charts at that time, you actually only really made money when you were in the Top 25, and then revenue falls off really, really quickly. But people keep playing and enjoying games after that, so we thought there should be a way to monetize that usage. If we made games free, we would get way more users, and thus way more overall usage, and then we could create a more sustainable and scaled model.

Ramsay: What was a more sustainable model? Advertising?

Young: Actually, we knew we couldn’t do it with advertising; the advertising industry hadn’t then—and still, frankly, hasn’t yet—reached a point of maturity in the mobile market. We instead thought we could emulate free-to-play games with virtual currency. There were games in the app store, basically clones of Mafia Wars, trying this already. You would download the free master app, and then there were apps at different price points on the paid app store. When you needed to buy currency, you would be directed to run the paid app, which would deposit currency in your account.

And because that currency was valuable, users could be motivated to do things in return for currency. If you had two versions of your software, you could tell users of version one to download version two, and the act of them downloading version two drove it up the charts, which got other people to see the software, which then brought in more organic users, and the total users in your ecosystem increased. It was a nightmare to manage, but it worked.

Our strategy then was to kill everything in our portfolio except two games, and use some of the capital we’ve raised to acquire one of the companies building these Mafia Wars clones. That company was Miraphonic, which built a game called Epic Pet Wars. We were going to quietly and silently run and operate that and learn everything about it. We were going to look for other products we could build from the ground up as free-to-play games. And we were going to lobby Apple to make in-app purchasing available to free games. The investors and the board thought that was exactly the right strategy, and we did that.

In October 2009, we released Eliminate, which was a first-person shooter, and in November, we released Touch Pets: Dogs, which was the game we had been doing with Andrew Stern. Both games were retooled to be free-to-play, and both went to the top of the charts. Eliminate was number one and Touch Pets was number two on the same day. Eliminate went on to be the number one grossing game on the app store, and the first free game to be the top grossing. We, along with other companies, had lobbied Apple hard enough that they made in-app purchasing available to free apps, and the business took off. Our revenue went from not very much to quite a lot really quickly. At that time, we were doing over $1 million a month in revenue, which was a pretty good start.

Ramsay: When you started raising capital, you were new to the process, but finance can be quite technical. How did you overcome that hurdle?

Young: There were two things we did to shortcut that. First, we invited a friend, Joe Keene, to join us as a cofounder. Originally, we hired him as a consultant, and then eventually, we brought him on as a full-time member after we closed the financing. Joe had gone through the process before. Joe had founded Perpetual Entertainment, a massively multiplayer online game company that was working on Star Trek and Gods & Heroes. They had raised a lot of money, so his insight and expertise were really, really valuable.

And second, we were introduced to Mike Maples, who runs a fund called Floodgate; he’s one of the classic Silicon Valley super-angels who invested in Twitter, Digg, and a whole bunch of other successful companies. Mike talked us through the process and acted as a guide.

Ramsay: Did Joe or Mike help you articulate the plan for the business?

Young: No, that was all Bob and me. I put together the deck. And then Bob, Alan, Joe, and I would sit around my dining room table with a projector on the wall, and we would shoot the shit about the plan and iterate and evolve it, and then we would work through the night—and then take it out to investors.

Ramsay: Did you invest any of your own money?

Young: No, I didn’t. I didn’t have any money. I was going through a divorce.

Ramsay: Some founders believe you should really have skin in the game, and others don’t. Where do you stand?

Young: I don’t think it’s necessary. I don’t think I worked any less hard because I didn’t have my own money tied up. I had my career and my reputation tied up in the company, and that was more important to me than money, frankly.

Ramsay: Did you consider options other than venture capital?

Young: No, not really. An important thing to note here is the dynamics of Bob and I. Bob and I were equal partners in Ngmoco, we’re equal partners in our current company N3TWORK, and so my first loyalty is to Bob. One concern Bob had was whether Ngmoco would feel like EA, “You’ve got Neil and Bing who know each other really well, and they have EA backgrounds. What’s my role?” It took a while for Bob to get comfortable with Bing. There were other super qualified investors who, when we started off the process, Bob felt more comfortable with. Bob had to have breakfast, lunch, and dinner with Bing for three days before he finally said, “I’ve made up my mind. Let’s go with Bing.”

Ramsay: You were also new to startups. Did you ever feel unprepared?

Young: Yes. Yeah, I did, but one of the great things about having a team of people founding a company instead of just one person is if you pick that team right, you get a lot of complementary skills. There was no one better in the industry than Alan Yu to try finding developers. Joe had raised money. Between Bob and I, we could pre-visualize, mock up, describe, pitch, and sell anything. The biggest missing piece for us was we didn’t have a technical cofounder, so getting engineers into the building as quickly as possible to explore these ideas, especially around the network and R&D, was really hard.

Ramsay: You had a technology background though.

Young: I did, but I wasn’t programming. Both Bob and I have a technical background, so we understand our way around pretty much all software, and we know what can be done and what can’t be done. We also have generally pretty good ideas about how to do stuff, but we’re not going to sit down and code. To be a great coder, you have to be focused on it, and it was impossible for us, given all of the other things we were doing.

Ramsay: And did you get a technical cofounder?

Young: We didn’t. We never did. Our first in-house engineer was a guy called Tim Omernick; he called us out of the blue and said, “I think I have skills that you might need. I wrote the Stocks app and the YouTube app. I’ve been at Apple for a while. I really love games. And I think what you’re trying to do is really cool. I would love to come and talk to you.” And so we hired Tim, and he’s just a really talented engineer. Once we had him, we were able to attract a few other people like Dave Grijalva, who went on to cofound a great company called FitStar, and Steve Detwiler, who is now our technical cofounder at N3TWORK, and ultimately ran technology for Ngmoco and DeNA in the West.

Ramsay: You had cofounders other than Bob at Ngmoco, didn’t you?

Young: Yes. Bob and I were the founders, and then we invited Alan Yu to be a cofounder and later invited Joe Keene.

I first met Alan when he was the director of the Game Developers Conference, and quickly became a friend of his. Around the time I was taking over Maxis, I felt like EA needed to change its view of development talent. We needed to build different relationships with the community that were more about collaborating with the best and brightest versus just hiring people internally.

Alan had, by far, the best rolodex in the games business by virtue of his position. He built relationships over a long period of time, and those tend to be the relationships that endure. If you have a relationship with someone who has been there for a long period of time, when something happens in your life that might change the direction of your career, you’re more likely to listen to it. And so I convinced Alan to join me at EA as director of A&R, or artists and repertoire. Alan’s skills were a natural fit for a startup. So, at Ngmoco, he essentially went out and started finding developers we could partner with and started building relationships with developers that could turn into great things.

Then we asked Joe to help us originally as a consultant. I had worked with Joe at EA as well. He had been the chief operating officer of EA.com, and he was the chief operating officer of Maxis right after EA bought Maxis. And then Joe left and cofounded Perpetual Entertainment. We needed as many advisors and guides as we could possibly get in the world of venture funding, and Joe helped with the business planning and managing and overseeing the process of closing fundraising and financing. Bob and I did the fundraising, and Joe would handle the mechanics of it, which was quite a gnarly task.

Ramsay: Had you always conceived of Ngmoco as a publisher?

Young: Yes, from the very outset. The original pitch for Ngmoco was to build a next-generation mobile game company.

If we wanted to make one game, it was conceivable to hire a team of spectacular people to make that one game, we wanted to build a really big business and have lots of games. It’s just not realistic, or credible for that matter, to make ten games and have every single team be world class.

We felt like we could have a few world-class teams internally, but we’d have to partner with developers outside of the company. We’d have to be more of a production, management, financing, and technology framework company, that’s what we thought a next-generation publisher would look like.

Ramsay: When you approached Alan and Joe, did they express any doubts about the venture?

Young: We approached Alan first; he had no doubts at all. We have a very close personal relationship and he was just like, “Yeah, let’s do it.” And as the business became more real, Joe saw a great opportunity in joining us. So, there were never any doubts. Along the way though, we all had plenty of doubts about whether we had made the right choices and were on the right path.

Ramsay: The iPhone was your inspiration, so I know the app store was very important to you. But was Apple the only distributor that interested you?

Young: Yeah, initially. As we discussed, Apple was the venue. When we started the company, one of the people I called to tell them I was leaving EA was David Gardner. David was a very early employee of EA, and he went on to become the managing director of EA in Europe. He’s a really, really, really wonderful guy. I called him up and I said, “Hey, I’m trying to do this,” and he said, “That’s really exciting. Good luck. You should meet my friend Erik Lammerding.”

He said, “Erik is at Apple and has been at Apple for five or six years. He’s really, really close to the inner workings of the company, and he’s the guy that picks software to get up on stage. He’s really integral to the Apple community.” And so he made the introduction, and as we were starting the company, Bob and I went down to Apple and had lunch with Erik. And that’s how our really great relationship with Apple originally began.

Apple were great supporters of ours, I think, because we were one of the few people out there delivering the message that Apple, the app store, and these devices were going to completely disrupt the handheld games market. We were very aggressive with the press we did on that message, and the position that we took. And I would constantly be chided by Nintendo or Sony publicly for those positions and those statements.

Ramsay: Why would a publisher want to start talking to distributors before they have any products to distribute?

Young: Businesses are rarely just about products; they’re more often about people. You want to build relationships that transcend product A or product B, and you want to just really explain your business before you talk about your products.

Ramsay: Did you find any developers through Apple?

Young: No, we didn’t. Our first product was MazeFinger. That was Mike Mika’s idea. Mike was an early producer we hired; he had worked on Xbox Live titles and was a friend of Bob’s. He’s a super arcade and classic games fanatic, so Mike asked us, “Have you seen Flamin’ Finger in the arcade?” We hadn’t, so we went and checked it out in the arcade. It’s this Namco game. He said, “I think the mechanic behind touching the screen and having limited time in a maze could be quite powerful.”

Topple was Bob’s design. He said, “I think a stacking game that fights against the accelerometer would be a really good idea.” Alan found Simon Oliver who had put out little videos for Rolando, so Alan interacted with him.

And I knew Andrew Stern. I had met Andrew a long, long time ago shortly after he had made Dogz: Your Computer Pet. I had stayed in touch with him, so we commissioned Andrew to do Touch Pets.

Dr. Awesome was basically Mike again saying, “Could you do something like Qix?” And then Dropship was a design I came up with. I just loved those old vector games, but I thought you could do something different. We also wanted to begin exploring what dual analog might feel like when you’re touching a screen, and how to pioneer the type of controls you need to do really great FPS games while respecting touch. We did that game internally.

Ramsay: Did you have games developed externally?

Young: Yeah, MazeFinger and Topple were done by third-party external dev shops. MazeFinger was built by Ryan Evans. Mike worked with him in the past. For Topple, we worked with an independent engineer, Chris DeLeon. There are lots of little independent contractors you can hire on a work-for-hire basis.

Ramsay: Just how many games did you have in development?

Young: We had 12 titles going at any point in time. When we started, we had eight games going simultaneously, and then we killed some.

Ramsay: How many people were employed during those eight?

Young: Probably 15. We grew pretty quickly to 15 people, and then the next plateau was 25, and then 55, and then we started getting really big.

Ramsay: What’s involved with managing those teams on the publisher side?

Young: You must have producers and a development framework. We had a wonderful director of operations, Kristine Coco; she worked with Bob and me to build what we called the GDF, the Game Development Framework. That was a term we brought with us from EA. It was a method of having a common vocabulary inside the company to talk about our products, so we could say, “Oh, this product is at this stage,” and everyone knew what that was. We had a review process, too, to move things from stage one to stage two and so on, and we had different points of integration along the way. When you start scaling a business, when you’re a small team, process is the enemy; process slows you down. But when you’re a big company or scaling, and you have lots of things going on, smart process becomes your friend. Smart process allows you to do more than you could do than by just keeping everything in your head.

Ramsay: For your first games, you had data, but were there any other reasons why you chose them as your flagship titles? Your best bets?

Young: We knew Rolando was special. As a basic guideline, we tried to do something that showcased the hardware—something you couldn’t do on other devices. You couldn’t do the controls for MazeFinger or Dropship without touch. I’m not sure we thought they were our best bets, but we thought they were smart bets and would, at the very least, tell us something. And because we had raised the money we had raised, we didn’t feel any particular pressure to make money right away. We really wanted to understand the market.

Ramsay: Seems to me that many companies that raise venture capital don’t have an urgent need to make money. Why do you think that is?

Young: Well, it’s not that you don’t feel the need to do it; it’s just you don’t feel like that necessarily is the most important thing. It’s like why people go to college. Why do you choose college versus going and working in the grocery store? Because in the grocery store, you’re going to make money right away. But if you go to college, maybe you learn something and it gives you the opportunity to ultimately have a much higher earning potential. If done right, venture capital gives you the opportunity to really understand your market, so that you can build a business that’s worth something.

Ramsay: Your investors then weren’t investing in the products or the company; they were investing in a higher earning potential?

Young: Oh, yeah, they were investing in the macro, which is like the market as a whole. If you’re an investor, you go, “Do we believe there’s a big business here?” And the answer is either yes or no. If yes, then, “Do we believe the entrepreneurs we’re investing in are going to be able to find a big business here?” That’s either yes or no. And then then lastly, “Do we believe that there’s some inflection happening or on the horizon that can make their job easier?” The reasons why investors invest is very rarely because of the actual business. I don’t think they even expect that the business model you pitch will be the one that ultimately succeed. It still has to make sense though because whether that model makes sense signals whether the entrepreneurs are any good. At the end of the day, I think they invest much more in the macro.

Ramsay: A little more than a year after starting up, Ngmoco started acquiring companies, like Apptism and Miraphonic. How many companies did you buy?

Young: Apptism was our first, then Miraphonic, Stumptown Game Machine, Freeverse, Rough Cookie, and then we acquired Atakama Labs in Chile while at DeNA. And that was it.

Ramsay: Were these acquisitions what people call “acquihires”?

Young: Acquihires? No, no. Apptism was bought because they had a technology that hit the app store every hour in every territory, and we could combine the data they had with the data we had, and it was a very easy system to maintain.

We acquired Miraphonic because Drew Lustro and Amit Matani were building Mafia Wars meets Pokémon on mobile, and we had made the decision that free-to-play was the path we were going to take the company. We wanted to learn as much as we possibly could, and we loved Drew and Amit—they were just really great guys—and we thought there was a lot to learn there.

Freeverse we acquired because we knew Ian and Colin were just a great team. Skee-Ball was a great franchise, and they were early to the app stores, where we felt like we could combine what we knew about free-to-play games with what they knew about building competent software for the app store.

We bought Stumptown because we loved Andrew Stern and the team of people he had assembled in Oregon. When they completed Touch Pets with us, we wanted to continue that relationship.

Rough Cookie we acquired because we wanted a development beach head in Europe. Super talented guys. We built Star Defense together and then we focused on trying to get them into the free-to-play space.

And we acquired Atakama because they were a development resource we were using to move games and products onto our technology; they were exceptionally competent, too, and it was also the much lower cost of development in Chile. So, they were both very talented and very cost-effective.

Ramsay: If you weren’t VC funded, you probably wouldn’t have bought so many companies. Did having that money influence, or encourage, you to make those acquisitions instead of just doing all those things yourselves?

Young: Absolutely. Part of the reason why we raised money was to acquire companies. Developing on your own takes time, and money can be a shortcut to time. The average time it takes to hire an engineer in the Bay Area is 90 days. If I want to grow a team of ten people from scratch, carefully integrating each person, it’s going to take me years. And if I was able to hire all ten of them simultaneously, it would take me at least 90 days and they’d have to figure out how to work together, if they have the right chemistry.

Ramsay: Were all of these acquisitions the right decisions?

Young: Yeah, we weren’t as successful as we hoped we would be at imparting what we had learned to them. I think we underestimated, across the board, how difficult it would be to transfer our knowledge to teams of wonderfully competent people with great cultures and great operating histories.

Ramsay: What were the difficulties? Can you share?

Young: Well, when you talk to people about free-to-play games, they have to embrace the concept of free-to-play for it to be anything more than feeling like a money-making scheme. You have to get over that first hurdle and they have to realize that this is not about making money; it’s actually a different way of building software. You can’t just tack on free-to-play monetization at the end; you have to design from the very outset to build a game that’s going to be free-to-play. If you do that right, you can build a great business and great user experiences at the same time. Being able to impart that to teams who are not necessarily predisposed to thinking that way is hard to do.

Ramsay: When you were put in charge of EA Los Angeles, you were sent there to fix a problem with integration. A previous merger had gone wrong. Did you have similar problems with the companies you bought?

Young: Los Angeles was different in that those studios had been acquired and were then put in the same building. It wasn’t practical, or possible, for us to relocate all of them to San Francisco. They stayed in New York, or Chile, or Oregon, or wherever they were. And our view was the integration was going to be as minimal as possible. We bought these companies because the people were talented, they had a culture we admired and we didn’t want to mess that up, and we wanted to give them the benefit of all the things we had learned, all our systems, and access to the traffic we had. We were much less focused on merging the companies than on preserving the integrity of their organizations.

Ramsay: Was communicating and working across long distances challenging?

Young: Yeah, there was a lot of travel, a lot of video conferencing, and a lot of telephone calls. The plus side was that those companies tended to be very happy. The downside was the rate at which they were able to adopt the learning systems and technologies we had was slow. There’s a push and a pull when you want to retain the integrity of an organization. We could have been more aggressive about how we managed those groups and they may have been more successful sooner, but we did not feel that would’ve been true to the social contract we had. And, frankly, we were learning as we were going.

Ramsay: You’ve started companies and bought them. You’ve since had experience with raising venture capital and how valuation works. I can’t say I know that area too well, so when I read about venture capitalists, I get the impression that they’re very focused on exit multipliers.

Young: Yeah, I think it’s really easy to think VCs are focused on only money. I actually haven’t found that to be true. What I found to be true about the really good VCs—and maybe there are VCs who are focused on only money—but the really good VCs recognize the path to a great outcome for them has everything to do with the team running the company and the decisions they’re making. So they tend to engage there, and try to give advice or guidance and feedback. Sometimes it’s critical; sometimes it’s complimentary. They give you feedback on the decisions you’re making to try to get the very best outcome possible.

For VCs, they have a very long road, so it’s easy to imagine that a VC, when the company’s very small, would force that company to make decisions that would get that company acquired. But if the company’s worth $10 million and the VC tries to make the company look like it’s worth $20 million, that would be a shortsighted and reputation-endangering strategy for a venture capital company that has $6 billion under management. So what VCs are really looking for are exceptional companies led by exceptional teams who can 10x their investment, but that tends to not happen when you try to manufacture that outcome.

Ramsay: Your VCs really weren’t focused on an exit strategy? Strange.

Young: Not at all. Well, obviously, they were at the point when we were making decisions about whether to sell the company, and who to sell the company to because we had multiple offers. They gave us great advice there.

Ramsay: How do you then maintain a healthy, cooperative relationship with your VCs when they give you advice and you don’t take their advice?

Young: Constant communication and transparency. At the end of the day, we run the company; we’re the professional stewards of their investment and all of our incentives are aligned. We want to create something that’s very, very valuable to our customers, our investors, and our employees; and everyone shares that goal. It’s not as hard as it sounds. There are horror stories, but I’ve just never experienced them personally. I’ve found our investors to be first and foremost supporters of myself and Bob, investing in the belief that we and the market opportunity we’ve articulated will lead to something really valuable.

Ramsay: You mentioned that you received a few offers to acquire Ngmoco. How many did you receive?

Young: We were processing four different opportunities. We were processing the offer to acquire the company from DeNA, the offer to acquire the company from two other groups, and an independent path which had us raising a large round of financing. Up to that point, we had had discussions on and off with companies about merging or being acquired that are probably not difficult to guess, but I’m not able to tell you who they are.

Ramsay: Why didn’t you decide to stay on that independent path?

Young: Two reasons. First, it was important for us to succeed as a company, and if we remained independent, although we certainly could have succeeded, the resources necessary to compete at scale with the companies that were either building up steam like Zynga or intending to deploy themselves in the market, like DeNA, really far outstripped what we could raise. We needed the resources to be able to be successful.

Second, well, the second was more of a calculation around optimal value. So what happens early in a market when things start taking off, it’s difficult to predict the ceiling. Valuations for leading companies tend to be much higher. As the market goes from early stages, there’s a high rate of adoption to slightly more mature later stages of adoption, and then you can start to see the peak of the market. And the market changes and evolves over time in waves.

In terms of smartphone mobile games and social mobile games, we assessed that the valuations were about as high as they were going to get for a while. If we remained independent while we could raise money at pretty high valuation and we could raise quite a lot of money at a higher valuation, the likelihood we would be able to dramatically increase the value of the company in the short term seemed less likely to us.

That was sort of a peak valuation moment, and our sense was we could sell the company at that moment. The next opportunity for us to deliver that type of value to our employees and our shareholders was probably going to be four or five years in the future, and I think that has borne out to be true.

Ramsay: Why were you oriented toward the short term?

Young: Our orientation was actually never to sell the company; the orientation was always to try to build something valuable. If you create something valuable, good things will come. That was always the motivation, but when opportunities present themselves, you have a responsibility to take a look. We never thought it would fail. For Ngmoco, we never approached anyone saying, “We would like to sell our company. Are you interested in buying it?” But we got this a lot: “How much would you be willing to sell the company for?”

Ramsay: Well, why didn’t you stick it out regardless of the value?

Young: We did stick it out. I mean, we didn’t see the sale of the company as an end. I think that was borne out by the fact that we stayed with DeNA for two years after the acquisition. Our intention was not to sell the company and bail; our intention was to join forces and try to get the company to the next level, and to try to build a leading company in the space.

I feel good about that set of choices. We were able to deliver a lot of value to the people who had helped us create the company: the employees and the shareholders. We helped DeNA with its objectives globally. And we were able to learn a lot about not just social mobile games, but the science and psychology behind the next level of engagement.

For us, teaming up with DeNA gave a five-year head start on our competition. What happened in Japan in the mid-2000s were that devices with their own unique blend of capability and usability on top of a pretty good national 3G network and the relatively low cost of fixed price data plans spawned media companies like DeNA. Our sense was that, in 2010, the US was in the same place that Japan had been in. So teaming up with DeNA was such a head start.

Ramsay: At the time that you were getting the offers, how far from your vision for the company were you?

Young: A long way. The original logo for Ngmoco had, underneath, Japanese writing. This was long before any thought of selling the company to DeNA. The Japanese writing translated to “future entertainment company.” That was the underlying secret vision for Ngmoco. Only two years into the company’s life, we had the opportunity to partner with a company that had a similar vision. Since that time, my definition of what media are up for grabs has broadened, but that vision, I think, ultimately only gets accomplished if our new company succeeds.

Ramsay: When you were raising money to buy companies, you were buying companies to save time. Were you trying to save time by selling to DeNA?

Young: Yeah, we were trying to be in a position where we were ahead of the competition and where we could get to a scaled network of value faster than anyone else. At the time, the competition looked pretty dire. We had lots of independent companies that were trying to repeat or replicate what Ngmoco had done. We had larger companies that had been successful in the web space trying to move into mobile, like Zynga, Playdom, and CrowdStar. And then we had overseas companies that had a lot of expertise in building free-to-play games like Nexon from Korea and DeNA from Japan.

In order to beat out that competition, I think it would have been a pretty tough fight. Now, in hindsight, it probably wouldn’t have been as tough as we imagined. A lot of companies folded. There’s a lesson for us in that, but it’s always good to be aware of the competition, respect it, and factor it into your thoughts.

Ramsay: Can you tell me a bit about the actual acquisition process?

Young: We were heading down the path of raising a new round of financing that would put somewhere between $30 and $50 million into the company, and we had secured about $25 million from various people. We were sitting down with investors talking about the potential for our business. We described the opportunity as creating a business that was not dissimilar to DeNA.

One of our investors said, “Look, it’s true that those guys are probably going to find it very difficult to make the culture transition here to the West without a partner. But it’s also true that there’s a really big market in Japan that your products aren’t tackling. Is there an opportunity for a strategic investment from one of those companies, so you can offer developers an outlet into Japan?”

And so I e-mailed Tomoko Namba, the CEO at DeNA, who I had met previously about a year before the sale. We had the Plus+ Network growing in scale and our free-to-play games business was starting to take off, and Tomoko had approached us and was interested in acquiring just the Plus+ Network, or doing a joint venture that involved spinning the Plus+ Network off into a separate entity. At the time, we had no interest in doing that; we saw it as a really important strategic asset that created this defensible position for our business.

But I had met Tomoko then and got to know her a little bit, so I e-mailed her and said, “Hey, we’re going through a fundraising round right now. I would love to see if DeNA is interested in becoming a strategic investor.”

And she said, “Hey, I’m coming out in a week, so maybe we could sit down when I’m out there. In the meantime, if I could send my team who are already based in the US to come out, meet with you ahead of time, and do a little Q&A, that would be great.”

In the week between sending that e-mail and Tomoko coming out, we met with, among others, Dai Watanabe, who was the president of DeNA in the US and an amazing, wonderful guy. One of the questions they asked us was “if you were to sell the company, what valuation would you ascribe to it right now?”

We said, “We’re not interested in selling the company, but if someone was to offer us ten times what we think our revenue run rate at the end of this year will be, we would be interested in looking at that.” That multiple was at the very, very high end of what we thought was the peak of the peak. At the end of December, we had forecast our revenue run rate would be somewhere between $40 and $50 million, so if someone offered us between $400 and $500 million dollars, we would certainly have to consider that offer.

Tomoko came out and sat down with me and Joe Keene, who ran business affairs for us, and we started presenting to Tomoko the vision for the company. We got halfway through the deck when she said, “Your vision and our vision are exactly the same; we share the same vision. You don’t need to continue with the presentation because my people have already gotten the presentation. I think I understand exactly where you guys are coming from.”

“You might not know this, but we’ve tried to be successful in the West two times and failed. And the fact that you don’t know about it is a measure of how unsuccessful we’ve been.” She went on, “But expanding our company beyond the borders of Japan is an absolute strategic imperative to us. So, I understand that you would be willing to sell the company for $400 million.”

We said, “Well, we would certainly consider that.” And she goes, “I would like to offer you $400 million.” So, we said, “What?” And she said, “Yes, I would like you to think about it.” And we went, “Well, yes, we would have to talk to some people and try to figure stuff out.”

She said, “Okay, I’m going to go to Starbucks across the street and I’ll wait there for an hour. When I come back in an hour, you tell me if it’s something that you would like to pursue.” And she went off to Starbucks, I got the rest of the founders together, and called a couple of our investors; there seemed like there was no harm in entertaining a conversation. She came back and I said, “You know, we would be interested in entertaining discussions.”

She said, “Okay, I’m going to be here for a week, so let’s negotiate a term sheet over the course of the week.” And we basically negotiated the term sheet over the course of that week and just a little over a week later, we reached an agreement. And, of course, we were at the same time communicating with the other companies that had made us offers or had expressed interests in the company, as well as talking to potential investors to remain independent, and we had a board meeting and it went on for a very long time. We talked about the pros and the cons of everything, and we had people calling into the board meeting from other companies, basically changing their offers on the fly.

The board finally said, “Look, at the end of the day, Neil, whatever you decide we’re going to support.” And so Bob and I dismissed the board, and Bob and I went into one of the corner offices. We thought about the offers we had on the table, and the choices we had to make; and we made the decision to sell the company. I called Tomoko and I said, “We’re signing the term sheet and we accept the offer. Let’s go the whole way.”

Ramsay: When did you sign the term sheet?

Young: The signing of the term sheet happened in August. The deal didn’t close until November. There were really two things that most notably happened along the way. The first was we worked on the final paperwork. The term sheet just outlined the general terms, but the devil’s really in the details of the contract, so we worked through our attorneys and DeNA’s attorneys, and our banker and their banker. We would negotiate back and forth, we would reach impasses, and then Tomoko and I would try to manage through the impasses.

I got married on September 18, 2010, so that was a Saturday. And just before the rehearsal dinner, which was on Thursday, September 16, we reached what we thought was the final agreement. We hadn’t signed it, but we had negotiated through everything. Everyone felt really good. And I got married.

But because we were in the process of finalizing the sale, I didn’t take a honeymoon. I did a mini-moon with my wife where we got married in southern California, and we would drive up the coast, stop at a few places, and then we came back to San Francisco where I would see my family and so on. That was a three- or four-day trip. On the first day of my honeymoon, Tomoko called me and she said, “You know, I have a really big problem.”

And I said, “Well, what’s the problem?” She said, “I don’t think that we can do the deal at the valuation we agreed.” And I said, “Well, why’s that?” She said, “I’m trying to get support from all of the other people on my side, and the board has asked me to come back and try to renegotiate the valuation.”

That made for a very, very stressful honeymoon, and over the course of the next two to three days, we jiggered the structure of the deal a bit so that Tomoko got agreement from her board and management team. But we still felt like we were getting the value that we wanted.

We signed the final paperwork, but because DeNA is a Japanese company and we were a foreign entity, it had to get approved by a Japanese governing body that has to approve all these types of mergers. We already had approval from the State of California and from the United States for the sale, and now they had to get their approval, which was a month-long process where we knew nothing. The deal could have fallen apart at any point in time. That was probably the most stressful period of my life; there was a lot riding on that deal. But on November 9, we got approval, the deal closed, and it was done!

Ramsay: You said that you signed the term sheet, but the deal didn’t close until later. Tell me about term sheets. What’s the difference?

Young: A term sheet is just a statement of intent. The money doesn’t change hands until the deal closes. So, between the term sheet and closing the deal, there is a full contract that has to be written up, a whole set of things that have to be negotiated through, deals that need to be put in place to retain key people, employment contracts, and then certainly federal or state regulations that require compliance before the sale goes through. And then once the deal closes and everything’s approved, the funds or shares or whatever it is that’s being exchanged are distributed by an escrow company.

Ramsay: Prior to the sale, you were personally insolvent.

Young: Well, yeah, pretty much. I personally had $60,000 dollars in the bank, which might sound like a lot, but I had to pay for my wedding and I just got an American Express bill that came in at $55,000. You know, if you’ve got a company that has value, you always do have options. Someone might want to buy some of your personal shares, so my situation was not quite as dire, although it was very, very stressful because I certainly didn’t want to do that.

Ramsay: When the deal eventually closed, how’d you feel?

Young: I felt good. I felt like a chapter had closed and we were onto the next chapter. I didn’t feel like I wasn’t in control anymore because I was still running that unit. I mean, I definitely wasn’t in control anymore—the company was then owned by someone else—but I didn’t feel remorse. I felt excited about the future. It was life-changing for me and for my family, and life-changing for my partners and for a lot of our employees.

Ramsay: According to the breakdown I saw, the investors took half? Do you think their share was fair compensation for their contributions?

Young: Totally. Absolutely. I think, actually, the investors took about 60% of the proceeds, the employees took 18% or 20%, and the founders took 20%.

Ramsay: Do you think the founding team deserved more?

Young: No, I was really happy with the outcome.

Ramsay: Did everyone on the team feel the same way?

Young: Yeah, I think so. I think it was a very happy day and people had worked really hard. I remember sitting down with people shortly before the deal closed, and I explained to some of the key people in the company one-on-one what we would like to offer them as an incentive to stay with the company, and what they were going to make from the sale of the company. Every single one was just blown away. They had just never thought that they would get that type of money, so that was really exciting.

Ramsay: Key people?

Young: There were about 17 people in the company we considered critical to the business going forward, so before the sale closed, we sat down with each one of them and said, “Okay, here’s what this deal means to you. We want you to commit to the company for a period of time, so here’s what we’d like to put in front of you as well.”

Ramsay: How did the regular employees benefit?

Young: Yeah, the employees’ portion of the deal, excluding the founders, was $65 million over the life of the deal payout. At the time of the sale, we had about 180 people in the company. Some people had been there for a long time and some people had just recently joined, so that money wasn’t evenly distributed, it was paid out over a period of time, and there were performance requirements—some of which were met, some of which were not. But there was a lot of money that was distributed to employees.

Ramsay: What happened after DeNA acquired Ngmoco?

Young: There were three months of just trying to understand how to interact, and then there was a period where we realized the gap in our knowledge of monetization was bigger than we thought. DeNA had said, “You know we think you can 10x the monetization here,” and we were like, “Well, we’re not so sure about that.” We came to the conclusion that we had a lot to learn.

That year, 2011, was a very hard year; it was hard because we had to learn a lot of things and make a lot of mistakes; we tried a whole bunch of different things. Some worked, and some didn’t. We retooled our entire product development line, we retooled the platform, and it was very important for DeNA that we had a strong position on Android, so we switched a lot of development to Android. We tried to get into a position where we launch titles on top of Mobage, which we started doing about 12 months after the acquisition.

And it really wasn’t until April of the following year that we started to see the fruits of that labor. The revenue really started to pick up again, and we started to find ourselves in a place where we had multiple titles in the top grossing charts on Android and then iOS.

Ramsay: After the sale, what was the first thing that you, individually, did?

Young: I was still responsible for the West, seeing as Ngmoco didn’t have much of a business in Japan or China; it was really business as usual for me, other than the fact that we had to map our course to the greater good of the business. I spent a bunch of time in Japan and a lot of time on late night video conferences, trying to understand exactly what needed to happen in order for us to be successful, and then we started trying to execute against that.

Ramsay: Did you end up reporting to anyone?

Young: Initially, I reported to Tomoko, and then Tomoko took a leave of absence because her husband got sick, and she appointed Isao Moriyasu to be the interim CEO and I reported to him.

Ramsay: This all happened in the span of a few years since starting the company, but was going back to reporting to someone a bit of a switch?

Young: Yes, it was. That was, personally, a difficult transition. When you report to a board, the board are a group of advisors, and you make you make the decisions. When you report to an individual, you can make recommendations, but at the end of the day, the individual has the ability to make the call. So, you lose some element of ultimate control.

Ramsay: But you joined the DeNA board of directors, didn’t you?

Young: I did, but I had to be voted in, so it couldn’t happen immediately. It was the next summer that I was nominated to the board of that public company.

Ramsay: The vast majority of people in business, if not the world, has never been involved with corporate governance, especially at the level you were. Was being a member of a board a new experience for you?

Young: It was, and the board was a uniquely Japanese board. The board was a check and balance for the management team, but most of the decisions were made by management and then ratified by the board. As I was on the board and the management team, I got to see both sides.

During that time, DeNA acquired the BayStars, a professional baseball team in Japan. We had a lot of different businesses, including a payments company, travel company, auction company, e-commerce company, storage company, and so on. A lot of different parts of the business were very interesting.

Ramsay: Was the language barrier a real challenge?

Young: Yeah, I would say there was three challenges: first, the language; second, national cultural differences; and third, company cultural differences. Those three things meant that you would invest a lot of time and effort and energy into just really trying to understand what’s said or intended through translators. I spent a whole lot of time on late night video conferences with translators, just trying to follow quite complex conversations about where the business was going and how and why it was succeeding.

Ramsay: What were your responsibilities?

Young: Well, for Japanese companies, the board has important check-and-balance and fiduciary responsibilities to validate, debate, or discuss the decisions that the management team makes. It’s a little different than the way a board of directors works in the West. It’s a very formal post. Most of the day-to-day management decisions are made by management and the management committee, which I was also on. I was responsible for DeNA’s business outside of Japan and China, and expansion into the US and Europe, predominantly.

Ramsay: What are the differences between a board in the West versus Japan?

Young: For a board in the West, the founder and CEO are typically the only members of the management team who sit on the board. In Japan, it’s much more common for every key leader of the management team to also be a board member. In addition, there are independent directors, auditors, and senior board members, so there’s a lot more crossover between the management and the board in a Japanese setting. That’s one difference.

The second difference is a Western board, or at least in my experience, has a much more collaborative relationship with management. What you’re really trying to do is to solve problems together. In Japan, it’s not adversarial by any means, but the job of the board is to debate and vet management decisions that may have been already made, and then authorize or validate those decisions.

I would say, in a nutshell, a Japanese board is much more formal, and has much less impact over the actual direction of the business, while a Western board is much less formal, and much more collaborative with the executive team.

Ramsay: What do you mean by “validating” decisions?

Young: If the management team is taking a course of action, they would report that course of action to the board, and then if the board had any questions or objections, a discussion would then evolve from there. For really big decisions, like the buyout of the DeNA BayStars, there was a lot of discussion at the board level before that deal consummated.

Ramsay: Did you enjoy that aspect of your role?

Young: It was educational. It was interesting. Each month, it exposed me to a lot of different areas of the business that I might not necessarily have been exposed to. DeNA’s a really interesting company, and I enjoyed personally all of the board members and found everyone to be great.

Ramsay: How well do you think you fit in with the mostly all Japanese board?

Young: Yeah, although that wasn’t a requirement to be on the board, Namba san, Tomoko, thought it was really important that DeNA internationalized. She thought DeNA should figure out how to grow beyond the boundaries of Japan, and knew everyone had to appreciate the markets beyond Japan.

So, I think I fit in fine. DeNA’s quite a unique company with a very unique culture; it’s unlike any other Japanese company that I’ve interacted with. The management team is pretty young, very entrepreneurial, energetic, very open to debate and dialogue, and there’s not a whole bunch of decoding that has to be done to try to understand the specific customs. With the people at DeNA, what you see is what you get; they’re just very forthright and upfront.

Ramsay: What did you learn from the Japanese approach to business?

Young: Well, I don’t know a lot about the Japanese approach, but I learned a lot about DeNA’s approach. They might be the same thing, but it’s very difficult for me to delineate between what was DeNA and what was Japanese.

In terms of general management practice, somebody once said this to me. A team of American managers and a team of Japanese managers are standing at the edge of a field where there was a river. They couldn’t quite see how wide it was or how fast the water was running, but on the other side of the river, there was a castle that had to be taken. The American managers would start running immediately towards the river, thinking that speed was the most important thing. They would trust that when they got to the river, it would be either narrow enough to jump over or the current soft enough that they could swim, or they would be able to jump on a rock in the middle, very quickly build a raft, or do something to get to the other side. Then, many times, the Americans would get to the other side before the Japanese.

The Japanese approach would be to walk to the edge of the river, analyze it, and then nine out of ten times build a bridge and get 100% of their managers across that river. That meant they might not get there first, but it would ensure they got there in force. And so even if the castle had been taken by one American who made it across, the hundred Japanese could take over that castle.

That’s the difference in business ethos between how American companies think and how Japanese companies think. DeNA was at the very entrepreneurial end of that Japanese spectrum, but it was a definitely a company that thought about things, planned, and then acted, and then iterated very quickly.

The other thing I learned was that you build your case differently in Japan than you do in the West. In the West, if you’re presenting, you make a statement about what you want to accomplish, and then you back up that statement with supporting material. So, you basically state a vision, support that vision with a strategy, support that strategy with an execution plan, and then support that execution plan with data.

A Japanese presentation is the complete opposite. You build a case over the course of a presentation to reach a conclusion, and each piece of data supports the conclusion that you’ve reached. And if you don’t know that, presenting can become tricky and difficult in that setting.

Ramsay: You stayed on with DeNA for two years after the acquisition. Was that a requirement stated in the terms of the acquisition?

Young: No, actually. I could have left immediately after, but there were certain incentives that motivated me to stay around, beyond wanting to see the business succeed. But there was no contractual commitment that I had to work with DeNA for a particular period of time.

Ramsay: What did they want you to achieve post-acquisition?

Young: It was really important for DeNA to shift their mix of revenue from 100% Japan to a 50/50 split between Japan and the rest of the world. So, the fundamental belief we had at DeNA was that the growth of social games in Japan, from a monetization standpoint, was not an anomaly.

It was actually just a function of the Japanese market having at least a three or five years head start over the Western market, in terms of knowledge, insight, and understanding with regard to free-to-play social mobile games, and how to generate revenue and income from them. We believed it was just a matter of time before the usability and capability of the devices proliferating in the West would drive the same type of usage patterns that had been seen in Japan. And on the back of those patterns, we could build a really big business.

Ramsay: When you’re an entrepreneur, you tend to be more hands-on with everything. As the CEO at a subsidiary of a large enterprise, did you ever feel that you were becoming disconnected from the day-to-day?

Young: Yeah, I would say so. When you sell a company, that’s a pretty life-changing event, so there are a few months you’re just dealing with what that means. On a purely personal level, it knocks you sideways a little bit. We closed the sale in November, it wasn’t until February that I really felt like my head was back in the game and in the right place.

Ramsay: What does that mean exactly? Was that downtime?

Young: It wasn’t really downtime; it was just having to re-orient to a very different situation. I had gone from not having very much money in the bank, and, essentially, living paycheck to paycheck on my venture-backed yet unprofitable startup to working for a large company after selling the company I started for $400 million. That just changes your outlook a little bit, and it just takes time, I think, for any human to adjust to that.

Ramsay: I think most people would think that coming out as far ahead as you did would think all your problems were solved.

Young: Yeah, well, money doesn’t solve all your problems. That’s for sure, but it can certainly help.

Ramsay: Would you say that your fear of failure was tempered?

Young: I still fear failure. I fear failure at a macro level, but I don’t fear failure at an everyday level. I think it’s essential to fail in order to succeed. I didn’t want this company to fail. I wanted this company to succeed because I really would like to make an impact on the life of the people who both use and make the stuff that we build. I didn’t want to let those people down. So, if I feared anything, it would be just that.

Ramsay: What were the consequences of not having your head in the game?

Young: Oh, I think it slowed our development a little bit. I think we could have been faster by a few months, if I had been as close to the company as I was when it was independent. When we sold the company, we essentially said, “Okay, we’re stopping our current development path, we’re going to roll that back, and we’re going to start deploying Mobage on Android.”

That basically meant the revenue ramp of the company started to slow, and we started to go into essentially deficit spending, investment spending, as we started to build products and learn new skills and turn Ngmoco from a game company with an affiliate network to a platform company that had first-party and third-party products and technologies. That was a huge transition; it took 14 months to get to a place where revenue started to inflect up again, and you could start seeing the trajectory of the company. It was pretty exciting though.

Ramsay: What do you want for Ngmoco’s future under DeNA?

Young: I wanted DeNA to be successful, globally, at building this social mobile game platform company and everything that could become. I think there’s a tremendous opportunity still. The market is still up for grabs. Everyone is one hit away from being able to take the crown. And DeNA had the expertise, network, and the capital to seize on those opportunities and turn them into an accelerant for the company.

Ramsay: When companies are acquired, they often lose their identity, becoming less cohesive, and eventually, just fade away into the larger corporate body. Were you concerned about that happening?

Young: I think that’s necessary and inevitable. Fighting it is stupid; it doesn’t serve any purpose. The right approach is to, as fast and effectively as you can, integrate the companies for a successful outcome. That’s how everyone wins. Creating a moat around the culture, or business, is keeps it from growing in the short term and doesn’t serve anyone’s long-term objectives.

Ramsay: You eventually left Ngmoco. Why did you leave?

Young: It was just time. You know, the company was on a pretty clear path to the type of success we imagined. The revenue ramp up was significant. Whether it ultimately succeeds is out of my hands, but when we were sure we had put it on the right trajectory, it was clear to us that it was time to do something else and go on to the next adventure.

Ramsay: It was just time? The life cycle of Ngmoco was very short as an independent company. Do you wish you had created a company that lasted a bit longer as an independent company?

Young: I think it’s really good to try to build an enduring company, and I definitely wish we could have built Ngmoco into an enduring company that could have been successful and independent at the scale we imagined. But this was the fastest and best way for Ngmoco to achieve the objectives we originally set out for it. It was a really, really great experience. I don’t regret any of the decisions we made over the life of Ngmoco. Starting a new company, I would definitely like to build a great and enduring company that is ultimately very successful. And so that’s certainly a motivation.

Ramsay: Why was it important to get there fast? More than 90% of businesses in the US are small businesses and they’re not really racing.

Young: It’s a race, especially in technology. You want to get to the audience faster than your competitors. There’s a big difference between a lifestyle business and wanting to build an impact consumer business that touches a lot of people and takes advantage of an inflection, a disruption, in technology. I don’t think you can afford to be slow. Speed is a really important weapon. The faster you go, the more iterations you get; the more iterations you get, the more you learn; and the more you learn, the more likely you are to succeed.

Ramsay: Do you think you can replicate the success of Ngmoco again?

Young: I think that we can. It’s not without its challenges. We’re in a different space, although utilizing a lot from our experiences. We’re trying to build something that has the potential to be much bigger than Ngmoco or even DeNA was, so there’s a lot more reward and a lot more risk. The competition is at a different order of magnitude.

Ramsay: Is there a formula?

Young: Work hard, hire great people, and have high personal standards. That’s the formula.