MIND CANDY | BETA
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o honest is founder Michael Acton Smith about the close shaves his Moshi Monsters empire has had over the years, this article may as well be titled ‘How Mind Candy Won By Failing Over And Over.’ Mind Candy is definitely a winner. The London-based studio, which employs over 100 permanent and part-time developers, has become a hot property in games and the wider online tech world – and for good reason. Its virtual-pet-meets-games-meetssocial-network Moshi Monsters has over 50m users worldwide, with money made from subscriptions and licensing. Merchandise and spin-off products are popping up everywhere – in Sainsbury’s, on the App Store… and hopefully soon on cinema screens. Acton Smith himself is Willy Wonka made flesh – a messy-haired, focused inventor of what amount to ‘virtual sweets’, but with a real youthful, playful personality. No wonder, then, that he’s the first to blurt out that it wasn’t always so good for Mind Candy when Develop catches up with him in London.
THE GOLDEN TICKET As an entrepreneur, Acton Smith cut his teeth with the founding of famed UK gadget estore Firebox, but eventually moved on, hoping to bring together his passion for games, the web and business into a new venture. “My big love has always been gaming. In 2003 I wanted to explore the intersection of gaming and the internet.” And so Mind Candy was born. “And we raised lots of venture capital for Perplex City.” Although dubbed ‘a global treasure hunt’ with multimedia content, physical goods sold at retail (predominantly through Firebox at first), the game was faithful to its name. “Creatively it was amazing, but it was way too complicated – people don’t want to consume their story across all these different mediums. Eventually, I had the worst feeling you can get as an entrepreneur. I felt awful – a real aching in the pit of my stomach. I realised that this was just the wrong thing. “We were burning thousands of dollars in salaries a month. I went to the board and said ‘I know you’ve invested $10m in this, but it’s not working’. We had a choice – burn through the cash until we ran out, or try this little kids game I was thinking about. They were shocked, but to their credit they said to go for it. We spent the remaining $1m on that.” Moshi Monsters was the result, built in 2007. For many success stories, this is the juncture where cash starts pouring in. The day is saved with that last roll of the dice. Not quite. “We sold toys to access it, the only way to get in was have a code from the toys. But it just didn’t work. Retailers wouldn’t stock it, and we were getting around two sign ups a day. It was a very solo experience – you adopted a monster and looked after it. In April ‘08 Mind Candy took a new gamble, making Moshi Monsters free to access. “We had to stop asking kids to pay, make it free, and worry about the commercial stuff later. We went from a handful sign-ups a day, to 5,000 a day. It grew dramatically in 2008.” Still no cause to unpack the bunting just yet – “By the end of 2008, we had no money left,” explains Acton Smith. “In December 2008 I couldn’t pay salaries, I had some offers DEVELOP-ONLINE.NET
from investors that were pulled – it was chaos around that time, horrible. The financial crisis scared away a lot of investment.” “I didn’t know what to do. I still believed in the business, and we had a bit of traction.” A last-minute meeting with an angel investor saved the day. “He didn’t know much about games – but the big driver was that his kids played Moshi Monsters. He put in a bit of money which was enough to keep us going into 2009, when we launched the subscription service.” SETTING UP SHOP That was the real ‘goosebump moment’, says Acton Smith. “We switched subscriptions on, and sat there waiting… and then mums started paying. And we made thousands in the first month, doubled it the next, and so on. That’s when we realised we had something special. We became cash flow positive quite quickly and have been profitable ever since. “It was amazing to see their parents willing to pay for it – but it’s because they could see the kids enjoying it and trusted it, it’s a very safe environment for kids.” It helps too that the property itself is fun and engrossing. Fast forward to luxury London retailer Selfridges in early 2011, and Acton Smith saw that first hand: Moshi toys are on store shelves after a licensing drive kicked off in 2010, and trading card backs are sold at the till. “I always knew that toys would make sense, but didn’t really know if they would sell. But I was in Selfridges and there were two kids and their mum fighting over the trading cards. She gave in and just bought
I always believed in it and knew it’d work given enough time. Yes, it’s taken a long time to get to this point. We’ve had several dead ends along the way. Michael Acton Smith them a handful. Seeing that energy and excitement… it’s clear we can build a global entertainment brand, not just a little website. “I always believed in it and knew it’d work given enough time. Yes, it’s taken a long time to get to this point,” says Acton Smith. “We’ve had several dead ends along the way. “But that’s the beauty of building an online game versus a boxed one. Instead of building what we think someone wants, we can make what they actually want by constantly tweaking the direction we are going with. We take all the data and feedback, and marry that with gut instinct.” Having shot past the 50m user mark, Mind Candy says one user a second signs up to the site. Subscriptions of £5 a month or £30 for the year are the main revenue drivers, propped up by proactive licensing forecast to be bringing in $100m dollars in gross sales from merchandise. JUNE 2011 | 21