Startup Lessons from CCP – EVE Online Style

CCP Offices

About five or six years ago, when I was running PlayMotion, the good folks at IBM hosted a really cool dinner for a handful of gaming-industry CEOs here in Atlanta.  It was a fairly intimate evening, with about 6 or 7 of us.   What wasn’t to like?  A swanky free meal, and a chance to hang out and network with other like-minded gaming execs.

No, this post isn’t about gaming, necessarily.  Rather, it is about the observations that I made of the company (CCP), and their product (EVE Online), in the past few years.  Specifically, I want to share some things that I think are worthy of sharing and exploration by startups and growth-stage companies alike.

Back to the dinner …

Erez Goren, founder of Hi-Rez Studios (makers of Global Agenda and Tribes: Ascend) was there, as was Chris Klaus, representing his new startup (at the time), Kaneva.  Sitting across from me at the table was Mike Tinney, then President of CCP America.  His previous company, White Wolf, had recently been acquired by CCP.  CCP’s claim to fame was a small but growing MMO called EVE Online.   I had heard of EVE, but had not yet had the chance to check it out.  After chatting with Mike for a couple of hours, my curiosity was naturally peaked – and I decided to do so.  Boy, was I glad I did.

I gave the game a whirl, and quickly became hooked.  The futuristic world of EVE Online was like nothing I had ever encountered in my 20+ years of being a video game connoisseur.  It was teeming with activity (internet spaceships!), and was, well, gorgeously rendered.  Yes, it had eye candy.  It also had a never-before-seen angle – the players make the rules – most of them, anyway. But it seemed to have that certain “something”, that “X-Factor” – something in its DNA that just kept you coming back for more.  But I couldn’t quite put my finger on it.  It took me several years as a CCP customer to realize what it was.  It wasn’t just “one thing” – per se.

Now, the internal culture of CCP is precisely what you would expect from a video game company.  Crazy, wild, and relaxed, but focused all the same.  Additionally, CCP was headquartered in Iceland, which added a little something extra to the formula. Plus, they have a huge ship moored behind their office.  How cool – and how many can claim that?  But let’s be honest – there are lots of startups and other companies with a similar internal culture.  Cool – and easy to relate to (at least for me), but there was nothing unique there.

But it wasn’t their internal employee culture that made the entire experience special.  Rather, it was their external culture, specifically as it pertained to product development, customer care, and protecting their business model.  Let’s dig further.

Product Development

Most software companies have rooms full of developers that are busy cranking out code.  The features are fed in from product managers (people who ostensibly know the customer better than anyone), developed, QA’d, then published.  Another room full of marketers create nifty slogans and ad campaigns, market the hell out of it, and accountants (in another room for their own safety) hold their collective breaths and wait for the money to roll in.

CCP is different.

They have perhaps one of the most transparent product development teams that I have ever seen.  Their developers share every nuance of their daily technology challenges with their customers.  Want to know what features are being worked on, what struggles they are facing in developing them, or when to expect new goodies?  Their highly trafficked dev blog tells all. How many SaaS companies (which is really what CCP and other MMO gaming companies are) are hip to share this type of information with you? Or this?  Simply awesome. Especially if you are a geek, like me.

Another great example was the formation of “Team Best Friends Forever” (“BFF” is an inside EVE joke).  This team is a group of CCP developers whose sole mission is not to work on major features and improvements, but rather to fix all those annoying “little things” that bother their customers.  Too many times, product managers and development teams are focused on the big-ticket items – and that’s fine, but TBFF is a great approach that again proves that CCP listens to their customers. Fantastic.

Customer Care

Believe it or not, more than one CEO that I know has uttered the words “I don’t need to meet with the customers, I already know what they want.  I know better than they do.”  Please.

CCP has what is called the CSM, or Council of Stellar Management (don’t laugh).  It’s a group of players (customers) that are (get this) elected by the other players (customers) to represent their views and opinions in periodic meetings with the CCP teams.  Oh my.  Can you imagine how powerful this could be in a typical software company?  It goes well beyond the prototypical “user group” or “customer forum.”

The EVE Online CSM Meets!

CCP, like any company, experiments with new features and changes to their product.  Sometimes, these meet with disapproval by their customers.  In one case, an internal memo was leaked describing a vision for a microtransaction-based model, whereby key items in the game would be available for real-world currency.  Can’t fault CCP for trying to make money – for sure.  However, a great many players (customers) protested this, and followed through by threatening to cancel their accounts.  CCP listened, and made it right.  The result?  The universe of EVE Online is far better off, and stronger, because of it.  More loyalty.

Business Model

One of the biggest problems that MMO providers face are what are known as “gold farmers.”  If you aren’t familiar with this term, allow me to explain.  “Gold farmers” are effectively people who grind away in a game, to make in-game currency, and then turn around and sell that currency for real money to players.  This is also referred to as RMTs, or “Real-Money Transactions.”  It has long been a bane for MMO gaming companies.

CCP, faced with the ever-growing popularity of EVE Online, needed to come up with a way to solve the problem.  Many players are always looking for an edge in the game, so buying in-game currency is very appealing to them.  However, when they buy from a third party who transfers the in-game currency to them online, it effectively devalues the in-game currency. So they innovated and came up with something called PLEXes, or Pilot License Extensions. The way it works is simple.  CCP sells PLEXs to players for the cost of a monthly subscription.  The PLEX appears as an item in your in-game inventory, and can be redeemed for a month of playtime.  Additionally, players can buy and sell these PLEXs on the ever-evolving in-game market.  So players rich with in-game currency can spend it for play time (effectively playing for free), and players with real-world disposable income can buy these PLEXs and sell them for in-game currency. Everything balances, and the money stays in-house. CCP makes more money, and the players are happy. Everyone is a winner, except for those pesky gold farmers.

That is some cool business model innovation right there, folks.

CCP isn’t perfect – no company is.  But hopefully some of these ideas will inspire you to look at your own customers, and teams, in a different way.

Cheers.

 

Scott Burkett - Peace Out!

1 Comment

  1. Great tips Scott. I especially agree with your “Know Your Customers” part. Atlanta IT Company CEO Neil Smith and I work on this continuously. We need to be meeting with the top 10% at least once a month if not more…

    Thanks for your ongoing leadership,

    Richard

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