Shownotes
Welcome to the first in a series of interviews with European tech leaders brought to you in association with Boardwave. The Boardwave network is a powerful community of Founders, CEOs, Chairs, Independent NEDs & their Investors from across Europe, representing companies at every stage of development.
This week, we are joined by Boardwave member Stephane Kurgan. A man of many accomplishments in the IT and associated investment industries, Stephane is best known for being the COO of European Category leader, King Digital Entertainment. During Stephane’s tenure, King made social gaming their own, listing on NASDAQ and growing to become a multi-billion dollar turnover organisation before an eventual $5.9 bn exit to Activision Blizzard in 2015.
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Transcripts
This is an AI Transcription. It’s pretty good, but please forgive any errors.
[:Welcome to The Difference Engine and to the first in a series of interviews of European tech leaders brought to you in association with BoardWave. The BoardWave network is a powerful community of founders, CEOs, chairs, independent NEDs, and their investors from across Europe representing companies at every stage of their development.
BoardWave provides easy access to relevant skills, knowledge, experience, mentorship, guidance and advice in the belief that together this powerful group can help each other build stronger businesses and shape the long term future of the sector. This week we are joined by BoardWave member Stefan Kurgan.
[: [: n joined King. And from March:Stefan, this must have been an exponential ride for you. Can you talk us through what happened and how it felt to create such a category leader?
[:If you go back to the early days of gaming on mobile phones, everybody remembers, you know, Angry Birds and, and, and those titles and the, uh, the leaderboards were, were very volatile. It was very dynamic. Every month the top titles in the, in the leaderboards would, would change. And with the introduction first actually of Clash of Clans from Supercell and then later of Candy Crush, that changed in the sense that, you know, these games became huge businesses in the billions of dollars of revenue.
And, uh, the leaderboards became much more dynamic. You would find then, you know, the same titles at the top of the leaderboards for, for a long time. So the trajectory was incredibly exciting and exhilarating. Nobody had anticipated it. And so we had to improvise as we went along. The first phase was actually surprisingly short.
, Facebook prior in November,: [: [:And, you know, obviously, if you want to take a company to the stock market, you need to have a very robust infrastructure. So we. With, uh, with, uh, the support of our investors, uh, APAC and index at the time, we, uh, we raised to, uh, uh, bring on board, you know, the, uh, the talent on the corporate side that would allow us to operate as a public company.
o out. At the end of, uh, uh,: [:You had, you know, enterprise. Clients, enterprise, sales teams. Now you're in a world of, you're selling directly to consumers. B2C, I mean, for you personally, what was the change like, the adaption you had to make with a completely different category? One answer with a, and one caveat.
[:And especially. Um, in the sense that for King and, uh, and the games, you know, the, our marketing was performance marketing and it was highly quantitative. Uh, the, uh, I think the answer would be different if. You know, the, the, uh, the marketing was, was much more brand driven, you know, you have these two major disciplines and the holy grail is, is to combine them, uh, flawlessly, but, uh, in the, uh, with us, the product was the brand, you know, candy had to, to a large extent become, you know, the, the, the, the, the brand.
And so the brand was kind of sort of sorted and we, uh, and, uh, uh, You know, we, we focused most of our efforts at the time on, on performance marketing, where, uh, you know, we scaled to a skill that had not been seen before. Certainly in mobile, we were spending, you know, more than half a billion dollars a year in performance marketing, but that's, and then if you look at, you know, another of the other, you know, critical disciplines, uh, obviously the corporate functions of the say are the same, right.
It's, you know, if you finance. People legal and those are the same, you know, working with, you know, uh, uh, top quality engineers. And we had, you know, many, many hundreds where I think we had 700 engineers at the time. It's the same, uh, work working with, uh, uh, uh, with quads, uh, you know, because King had about 150 mathematicians, statisticians, physicists is the same.
Uh, and then if you, and if you, you run the business as we were doing by, uh, according to unit economics, unit economics in consumer, uh, or in B2B are largely the same, and I wouldn't say with the exception of enterprise, you still want to look at, you know, unit economics for the enterprise. But the process is, is obviously very, very, and the skill set to succeed in the enterprise space is obviously very, very different.
to:Basically with, uh, digital mapping, uh, and, uh, and so I had done quite a, quite a bit of consumer work.
[:And as you say, the rest of the functions. Quite similar. Interesting.
[:Um, is there anything interesting to say about the way they dealt with you as an investor and help you scale?
[: [: [: [:So they, they actually had some smarts to bring to the party. So if that sends a very good investor, uh, to have as you scaled at that speed. They,
[:You know, if you think about it. I've worked with Apex in their portfolio for almost 20 years. I did three companies with them, and today, you know, I'm working with Index. So I've been working with Index for You know, more than 15 years when you invest in, in an investor relationship, you know, think, think long term.
[: [: o, who founded the company in:And so I happened to, to be part of that team. And then we took the company public, which was. I think a huge achievement and something that, you know, I, I, I highly recommend even though many, many, uh, founders, uh, now tend to keep their, uh, their companies private for much longer for reasons, you know, that I understand about as well, but it's, you know, the, uh, uh, before, or actually after we made the decision and, you know, at the time King was the largest content partner of Facebook, um, so we were, uh, we were generating a huge amount of revenue for them.
Both because we were on the Facebook canvas platform and it's like the app store. We were paying 30 percent of, of, you know, more than a billion dollars of revenue. Um, and also because they were the main distribution channel at the time. So we went to see a Mark Zuckerberg and we sat down after the IPO to basically get his lessons learned.
And, and he had a horrible IPO. I don't know if you recall that the Facebook stock dropped by 50%. And so what he said is it made my company a much better company. And if you look at where they are today, I think he had a point at the time that, you know, it forced him to, uh, make a bunch of decisions and put in place an infrastructure that made a company much more robust and, and, and long lasting.
And I, and I, and I think that's, that's exactly what we did. And we took that lesson. So we build infrastructure, we go public, the roadshow goes very well until the, you know, the, the, the, so that's about 10 days until the weekend, uh, before the, the pricing, where essentially we hear through the other writers that You know, the, uh, there is some negative sentiment, which is developing out there on the day before going out, uh, the decision, uh, there's a discussion and the decision is made, even though there might be a negative sentiment to still go out.
That's the responsibility of the underwriters because that, you know, they, they essentially take that risk when we go out, there is, we can't match a bid and offer. And again, if you recall, that's what happened to Facebook and Facebook, the did not open for about four hours and we open when it opened, it started dropping and then it dropped over the following days by 50%.
So the underwriters decide fine, even if we can't match, let's not have, let's not run the same risk. And after 20 minutes, uh, we, we, we go out and then the price right starts dropping and kept dropping, you know, uh, uh, it. quite low and then recovered. And we ended the day at minus 17 percent on day one, which is the worst large IPO on the New York stock exchange in 20 years.
My CFO and my investor relation team really disliked that statement. You know, I, I think, uh, uh, I think it's. It's, it's, it's fine. It's, it's actually, I think we should take some pride in the fact that we went out and then, you know, and actually we recovered and, uh, and we had a great story and Ricardo, um, was basically, you know, being interviewed by all the big channels on TV and he did a fantastic job, even though behind him, you had, you know, the price basically, uh, going down.
He, he was, he really, he did a fantastic job delivering. The same message because the content and the story is the same, whether the price goes up or goes down. Um, and, um, and, and that's been the case, uh, you know, post IPO.
[: [:And we, it was not a mercenary culture. People were there because they love the product and they loved working there, um, and, uh, and working together. And, you know, they, they like, they watched the price. You know, drop and did the views for 20 minutes or 25 minutes. We had You know, you know, big offices with, you know, big screens and everybody was watching and then they walked back to their desk and they got back to work.
[: [: [: [:You know, there was Ricardo, the, the ceo, Sebastian, the Chief Creative Officer, uh, and, uh, Thomas, the, the chief, the chief, uh, technology officer were still at, at the top table and, and delivering, uh, you know, at, at the very high level. And the, uh, and the, you know, the, what attracted me to the, the company, um, is the fact that they had such strong values of integrity and care.
And that's what made the culture of the company. And, and hopefully it's still there today. It really. Um, you know, created something very special.
[: [:And then we went through two other phases. One, which was to launch a number of other titles to sustain the growth. And then, uh, a second one where we realized, uh, that actually there was huge potential with reactivation and stimulation of the engagement of the players. And it's through, uh, those strategies that, you know, King went back to growth and, and the year before, um, it was acquired, uh, by Microsoft, you know, it, it was almost at a 3 billion run rate.
ck probably around, you know,: [: y another player in November,: [: h, invested in the company in:And so, uh, going public, even though, you know, typically when you go public, it's because you want to raise financing to, to, to finance your growth, either organic growth or acquisition. We had a billion dollars of cash on the balance sheet. We, we, we, we didn't need third party financing, but that we thought that was the best way of generating.
A liquid market for the shares of the company and therefore allowing the investors to realize liquidity. Unfortunately, that did not happen because for most of the time during which we were enlisted, the price was below the IPO price.
[:It's a mistake that a lot of Europeans make. They don't get to the exit.
[:the perfect one because it was a very complimentary, um, transaction. You know, they had the world leading IP on, on a console with call of duty. They were world leading IP on a PC with Warcraft and, and the other business IP. And by combining those with, uh, with, uh, with King and the Candy Crush IP, they had leadership in PC, uh, console and mobile, which were the top three platforms.
And also they were adding Um, you know, a new, uh, audience because we had mostly casual players, and then mostly core and me co players. So very complimentary from the standpoint and also from a skill set standpoint, because he was a very data driven, uh, company, uh, which, and we were doing things, you know, in, in, in a different way.
Um, and so there were lots of potential synergies Basically working with, uh, the, uh, the Activision and the Blizzard Studios and combining the skill set of. Of all these leading franchises.
[:So King hadn't sort of left Europe, it combined with another piece of Europe in, in terms of cementing technological leadership there. Yes. And as I understand it, one of the things that Activision Blizzard did very well in the acquisition was essentially to leave King alone. To allow it to, um, continue to do well what it did well.
[:I think it was decently run. They could obviously, you know, the, um, the, we needed to integrate basically into the, uh, I would say the corporate architecture of Activision Blizzard, which we did. Somebody who had led the transaction and became a CFO and was an incredible partner to, uh, to Ricardo, myself, and the rest of the team is Umam Chaknini, who eventually became the president of King.
Um, and, uh, and, and, and run the company and then, and, and then they left us largely running the business for the next two to three years.
[:So, so big that it took 18 months and an enormous amount of trawling through regulatory processes to do it.
[: [: [:Uh, you know, a lot of its resources and focus on the eye.
[: [:Particularly if you're running companies, uh, quite clearly on numbers. Um, IPOs? Um, can be a very Nietzschean experience. Um, uh, very interesting to hear the tale there of Mark Zuckerberg saying that going public made Facebook a much stronger company. And I think that's just because of the, particularly the financial disciplines it puts, uh, upon you.
And also, you know, if you do go public. And frankly, this, this is true of, of any potential crisis situation, such as King experienced in the drop in share price. Um, the need to communicate, you know, clearly and consistently is extremely important.
[:To go back on one of your points about. You know, the why Zuckerberg said it made the company better. Sure. It's, there is something about, you know, the financial robustness, but a lot of it is about forcing you to think ahead and, uh, and, and deploying, um, you know, and there is, because the market will perform.
A much tougher due diligence on you than private rounds here. The capital market, you know, institutional investors, they come from the future, they come from 25 years ahead of, and they have a very different mindset. They don't look at your unique economics. They look at the margin structure 10 or 20 years in the future, and they look at the sustainability of your company.
And so they're going to take a very close look at the leadership and, uh, you know, how. What are the incentive structure, the way the company is structured, how they're thinking about strategy, what are the potential future growth engines, and how that company will keep generating value and compounding value over the very long term, which is often something you don't do as a private company.
And so that forces you to, you know, do that thinking and put in place, uh, you know, an organization. And bring in people and put in some process, hopefully not too much that will make the company more robust and long lasting, not only financially.
[:Virtually to the next day, nevermind the next, the next quarter, but in the public case, it just gets turbocharged and you really, really have to be on your a game in that situation.
in France. And, uh, in April,:But as we said, you can't keep a good entrepreneur down. And April 20. He founded QDE studio. Um, after that experience with King, you might not be surprised to find out that the Q in QDE stands for Queen. So let's see if we can find out a little bit about, uh, Stefan's new company. Um, and you might want to pay attention to this as, um, if you look for QDD, you will find what we can only described as a bit of a stealth mode website.
So. Stephane, can you explain what you're up to and the opportunity you've spotted?
[:Uh, a year and a half ago, and I think that proved that there is still a lot of life left in mobile gaming, which had become, you know, a bit of a, uh, of a less attractive sector after all the changes that Apple brought to the idea of it. And there was a big question mark from, uh, from venture investors and from the community in terms of case is everything the end of mobile gaming because the leaderboards that are the same, it's always the same top titles and we haven't seen anything new in a long time.
They proved that, you know, you can still get to the top. They did get to the top, uh, over to Candy Crush. And then three weeks later, Monopoly Go came and became, then, you know, the top title. But that only highlighted the potential there was there. And so when I was at King, um, you know, I, uh, I worked very closely with Sebastian Knutson, who was the chief creative officer, who's, you know, the father of Candy Crush.
But also the father of many other IPs, which were, you know, the category leaders in the, in the, in their own. subcategory. You know, he, he, he designed, um, Pet Rescue, which, which was the largest clicker. He designed Bubble Witch, which was the largest bubble shooter. Um, and he designed Candy, but also Candy Crush Soda, which was the sequel, which was a massive title and our Fan Heroes, which was another billion dollar title.
hat period that King. between:And when I decided to step down, he was working on a new title. He wanted to finish it. And so we, after, after three years, he decided to step down and we got together and we thought, you know, That we, we, we still have an appetite to, to build another one that's there's still a massive opportunity and that we want to go back to, um, to, you know, the type of organization where we can bring back that, that creativity we had in the, they were not the early years of King.
They were the early years of, you know, the Facebook and the mobile era. And so we set up a queen. It's a mobile gaming company on mobile gaming studio. We make what we know, which are mobile casual games. Um, and a bit like King and Candy Crush, you know, the brand will be the product. So we are, we're working on, on several titles, uh, which we hope, you know, we will make their mark.
Uh, and then, uh, I think when, when the titles are ready to, uh, Uh, to bring magic and entertainment to millions of players.
[:So given your extensive experience of building and funding tech companies, what are the key lessons that you have learned in your journey to where you are now?
[:And so, and you, you, you want to over communicate. And when I talk about communication, it's both vertical communication, so from leadership down and horizontal communication. So across the various, uh, you know, business functions and corporate functions. And, um, you know, you, you want to be truly systematic there.
I'm not, I'm not the first one or the only one to have raised that. There is a very good blog, I think by Ben Horowitz, who's, who's talking about that, the, you know, the architecture of communication and, you know, how you can think about what you need to communicate and to whom on a daily, weekly, monthly, quarterly basis.
And, and, um, And so we had, um, you know, we build a matrix and I typically, that's something I, I've shared with several of the companies I've worked with. If you start in place saying, okay, you need to know, um, basically. Who you will communicate it to? What will be the content? You know, who's in charge?
What's the frequency, who's in the room at the time? Or obviously if, if it's a staff meeting, you know, is it gonna be a video? Is it gonna be a call? What is it going to be? And, and you combine that with the second, I think, challenge, which is decision making. Who makes decisions and how do you make decisions in the organization?
And then how do you execute them? Which, you know, also is at the source of things not going well, if, for example, you have a lack of alignment between the top of the organization and the rest, um, and, um, uh, and, uh, of frustration where very often, and that's an issue we had at King, and it's an issue that's present in many companies where there is always a layer in the organization that feels they should be Making decisions are more involved in decision making and where you have lower engagement when you run the engagement engagement surveys in organization, you know, what was very striking to us was that where we had the biggest issue was not, you know, basically the, uh, the, the new joiners or, you know, the, uh.
The, you know, the, the rank and file and the like, it was actually pretty senior management, not the top leadership team. So not the top 10, but you know, the, uh, the next 40.
[: [: [: [:pushing down decision making to them, um, and also putting in place a compensation system where they felt, you know, they were very aligned with the, with the, with the senior team. And I would say it worked for half of them. So I think all of them will say, I want to make more decisions, but actually when faced with the ability of making the decisions, probably only half actually, um, you know, step in and and take that into their own hands and do so.
And the other one actually are probably more comfortable getting broad direction from from the rest. But a big part, you know, we were talking about leadership journeys. You see, yeah. When it begins, most of the skills you use are hard skills, so it's a very quantitative, very number driven, and at the end it's almost all soft skills.
So, you know, once you're, once basically the core business is in place and it starts to run, it's all about developing the next generation of leadership, it's all about recruitment. It's all about motivation. And in the last two or three years, a huge chunk of time was spent with that top 50 basically to try to prepare them to take over, you know, get up to the, to the top 10 and then over time.
You know, we need the company.
[: [:And you're going to need a number of, um, areas of skills that all perform very strongly. In the case of mobile gaming, we had what we called, uh, you know, creative, which is, you know, one level of Candy Crush. Gameplay, you had the craft. which is the business model. It's the envelope. It's the, uh, it's the, the social, it's the leaderboard.
It's the, the, you know, it's the, the, the monetization, all of that stuff. You have the science, which is to make the game, uh, not too difficult so that you don't lose your players, but not too easy so that they feel challenged. And that's where we had, you know, or as I mentioned, we had 150, uh, uh, quads, mathematicians and like you have then, um, you know, the tech, because at peak we had 540 million players, we had, uh, 1.
5 billion gameplays per day. So that's 50 billion data events. And so you need a very strong tech team to, uh. to build at that scale and to run an environment at that scale, then you need marketing. Because if you want to get these 540 million players, you're going to have to go and get them and then keep them.
Um, and the, the key is to get all of these functions to play nicely with each other and to work towards the same goal. And the way you do that is through an instance system where they fully aligned. And so King, you know, the, the, the, the target was the same for everybody. It was to maximize the revenue of all the games of all the studios.
And everybody was incentivized on the, on, on that one number so that we could make sure, you know, they would all cooperate, but also that the studios would cooperate because there's no, you know, uh, there were many, you know. Features that were pretty similar between the titles, and we wanted the teams to share if they find something that was very insightful.
We wanted them to share with the other studio and share with the other titles, and actually we had a team that was doing just that, a harvesting team. It would identify what was working best, you know, in, in one, and, uh, and actually also come up with, it was called the experimentation team. With, you know, ideas where they might almost break the game, but it's much better to break a 1 million game than a 1 billion game, you would break 1 million game.
And, and sometimes, you know, they came up with incredible ideas where, you know, we had one where basically it was, it increased, I think, revenue by 8%, well, 8 percent of 2 billion is 160 million. Then they brought that to Kandi. And then we, we, we, we, we, we increase the revenue very, very materially. Um, and so going back to how you keep the leadership team, you basically have a very clear set of objectives, have an incentive system where they all rewarded on this basically based on the same target where, you know, it's, it's truly a partnership and also be, you know, very honest and transparent in terms of, you know, what's expected of them and the performance.
Because it's a peer group and you know, I think they, all of us had to, to work pretty hard to, uh, to keep performing at the level that was required. And, and on the transparency, you have to tell the truth. Even if the truth is difficult, the, the team will always be able, they will always be able to take, they will be able to take it, they will be grateful.
And then you have to tell them what we're gonna do about it and, and, uh, and what, uh, and what the, the path forward looks like. But we were always transparent with, you know, the good and the bad. When there were issues, we would put them forward and share them with, with the entire company.
[:
