After defining social networking at MySpace, Chris DeWolfe is refining social gaming at SGN
As an undergrad at the Foster School in the late 1980s, Chris DeWolfe (BA 1988) marveled at the rise of Starbucks and Microsoft, home-grown companies that were beginning to gain traction toward categorical world domination. He’d imagine the original intent of their founders, the opportunity they saw. How far did they think they could go?
“I often wondered what they were thinking, back in the day,” he says.
Fast forward to 2003 and DeWolfe was the one looking forward, from the genesis of MySpace, the online company he was casting headlong into the uncharted seas of social media.
By then he’d honed his entrepreneurial chops at a dot-com rocket, earned his MBA from USC, found a complementary partner in Tom Anderson, and gathered a brilliant team around him.
The opportunity was clear to him: with broadband becoming ubiquitous, the masses were rushing online, and looking for something fun to do when they got there. MySpace would offer them a blank canvas for self-expression—their art, their photos, their videos, their music. And it would provide a means of connecting instantly with anyone and everyone.
What was DeWolfe thinking, back in the day? Big.
“The timing was right, since people were ready to socialize online,” he says. “So we were pretty confident it would grow in a huge way.”
It did. The exponential growth of MySpace was unprecedented in business. At its launch, 300,000 new members joined daily. In two years it surpassed Google as the most visited site on the Internet, and eventually reached 130 million members worldwide.
Just two years from its founding, Rupert Murdoch’s News Corporation bought MySpace to add social—and a measure of cool—to its traditional media empire.
Growth did not slow. DeWolfe steered MySpace into music, launching the careers of hundreds of unknown stars like Lily Allen and Arctic Monkeys, and securing streaming rights from the major record companies to become the largest music site on the web.
And DeWolfe, the man behind the phenomenon, became a certified celebrity CEO.
He twice graced the cover of Fortune, was named one of TIME’s 100 Most Influential People in 2007, and was one of Barbara Walters’ 10 Most Fascinating People that same year. He became a regular at the Fortune Brainstorm and World Economic Forum at Davos, and was sought out by thought leaders far and wide who were trying to wrap their minds around this emerging force of social networking. “One of the most satisfying aspects of those years was getting to meet so many fascinating people,” DeWolfe says. “Experiences I will treasure forever.”
But the party couldn’t last forever. Culture clash was inevitable in this relationship between mature parent company and a tech company that was in growth mode. News Corp answered to Wall Street and its insatiable demand for revenue growth, quarter over quarter.
“Suddenly we were part of this big media company and the market was really excited about us transforming it,” DeWolfe says. “But I think it was too early to start monetizing the service so aggressively.”
As MySpace grew—and grew more corporate—its culture began to erode. And its laser focus on the user experience became diluted by the development of too many features and the race to monetize.
When DeWolfe stepped down in 2009, the company was still near its peak. But as it lost its founding CEO and other key founders, the company was starting to lose its cool. It began surrendering market share to Twitter, YouTube and Facebook.
The cultural impact of MySpace cannot be understated. “It gave a new platform for self-expression, diminished the barriers between people, and connected us to the other side of the world immediately,” DeWolfe says.
Indirectly, it also enabled his next venture.
In his travels to Asia, DeWolfe had previewed the phenomenon of mobile gaming. By 2010, mobile was mainstream in the US as well, opening the gaming world to everyone—not just 17-year-old Call of Duty junkies. Plus, most of the top casual game companies weren’t more than a few years old.
“It was clear that from a disruption and an innovation perspective,” he says, “games were the way to go.”
He gathered a trusted nucleus from MySpace and set out to create SGN, an independent company that would develop and publish casual games for any platform. He started with strategic acquisitions in each: MindJolt for Facebook, SGN for mobile, and Mob Science for its game development expertise.
Cute and smart
Then DeWolfe & Co. worked to make the whole greater than the sum of its parts. The key was developing MasterKey, a killer app that allows SGN to build a game once for play on any device (laptop, tablet, smartphone) or platform (Web, iOS, Android).
Technology drives every aspect of SGN. Each phase of a game’s life-cycle is informed by robust analytics—from concept to app store and beyond. Ideas are exhaustively tested before entering production. And by the time they’re ready for the marketplace, SGN has calculated the lifetime value of each potential user, factoring endless adjustments and updates.
The result is near certainty. So far, SGN has created 12 top-ten titles on the iTunes store and three number-ones on Amazon. With over 130 million monthly active users, more than 500 million SGN games have been installed.
“It all starts with great design and fun game play,” DeWolfe says. “But you’re not going to have hit games unless you have great analytics.”
The University of MySpace
SGN shares the DNA of MySpace, which makes it especially responsive to the inherent social nature of gaming, and aware of the potential for viral growth.
But if it starts with good nature, SGN also benefits from good nurturing. DeWolfe is applying some important lessons from MySpace.
The first is to focus. Create a handful of fun, challenging games with proven appeal to a specific audience, then constantly refine and update them. That’s it.
The second is to solve problems with technology. He prefers to drive revenue with a smart, lean team of employees, currently around 130 at the Los Angeles headquarters and four production studios.
And third is to maintain the company culture at all costs. DeWolfe hires employees who are passionate about gaming and keeps them in the loop with regular all-hands meetings. He embraces risk-taking and engenders ownership through stock options for everyone. “It’s absolutely essential that every single employee know why they are walking in the door every day, how specifically they will contribute to our company,” he says.
Fun and games
DeWolfe, who says he plays games around two hours a day for business and pleasure, has learned to work smarter at SGN. There certainly are fewer distractions, despite continued requests for his expertise by the business media.
If he’s no longer revolutionizing the social dynamic of humankind, he’s building on this new dynamic. The stakes—and the scrutiny—may not be quite so high at SGN. But it’s still a business with massive potential. And SGN, like MySpace, gives DeWolfe a great deal of satisfaction.
“The money is nice,” he admits. “But the most rewarding part of being an entrepreneur is knowing that you and your team have created a product that is influencing culture and giving joy to millions—if not hundreds of millions—of people around the world.”