7 ms·

$750,000 per day with 2 iOS apps

88 points by drewjaja 14y ago

xauronx 14y ago
When does a startup stop being a startup? 60 employees and $750,000 per day seems to me like just a normal successful company.
- ajross 14y ago
  270M per year in revenue on ~12M in expenses (assumes $200k/employee) certainly isn't "normal". That's a huge hit. And of course it won't last for the whole year. These are spikey products, and sampling the biggest hit at any moment tells you very little about the value of the company behind it. You don't have to look any farther than Zynga for proof of that. Whether 60 employees constitutes a "startup" or not I guess is a semantic thing. Back in the 90's, that was routine. Now the YC model has downsized the concept such that you stop being a "startup" (in the hipster sense, anyway) once you land funding for real employees.
  - alanctgardner2 14y ago
    The problem with a 60 person team in a volatile market is that they're going to have a hard time weathering the spikeyness. It's not like two guys in a garage who can leave and come back to it. These people are buying houses on the presumption that they'll be employed in 12 months, when the revenue stream dries up it's going to be trouble. I wonder how these social game companies get so big in the first place. I thought it was all but proven that consistently being successful in this space is almost impossible. If it's VC funding, what's the exit? They all seem to run into the ground. In this case it seems like the founders had enough capital from the last time they shipped this game. Personally, I would seek a more stable space after hitting it big once.
    - JoshTriplett 14y ago
      > These people are buying houses on the presumption that they'll be employed in 12 months If you're really making a quarter-billion a year in profit, with 60 employees, thoe employees shouldn't need a loan to buy a house...
      - alanctgardner2 14y ago
        If they have sense saving money from the few weeks of 6 figure sales to weather the inevitable slump while they iterate or find the next big thing. Giving every employee an equal share of the revenue would be equally short sighted.
- mdonahoe 14y ago
  If it is still growing rapidly, it might be considered a startup. http://paulgraham.com/growth.html http://paulgraham.com/growth.html
benguild 14y ago
That's ridiculous!
torhorway 14y ago
Startup copies another game exactly down to the tutorial and makes money... CONGRATS, YAY, SO IMPRESSIVE Zynga copies another game exactly down to the tutorial and makes money... LAWSUIT OMG HATE HATE HATE You people are such hypocrites
- kenpratt 14y ago
  From the article: "5 out of the 8 founders and executive team are from Digital Chocolate, the makers of Galaxy Life". So it's a pretty large mis-representation to say they copied another game, as they were on the team who built said game (granted, the writer doesn't do a very good job of conveying that). MUCH different than cloning a competitor.
  - qq66 14y ago
    The game they built is the property of Digital Chocolate, so whether they're from that company or not, they're copying another company's game. The ethics of that are of course debatable.
  - deleted 14y ago
    [deleted]
  - treysmith 14y ago
    They copied the gameplay style and tutorial. Again, I mentioned many times it's a smart move. I don't think they copied CODE or did anything shady. But go play galaxy life and then Clash of Clans. It's dead obvious.
- deleted 14y ago
  [deleted]
- true_religion 14y ago
  Yours was only the 2nd comment to this article. The first being "that was ridiculous!". How did you so quickly draw a bead on HN, and manage to decipher what the rest of the audience thought about it? For my part... I think these guys are simply Zynga without the rumours of an oppressive workplace. They have 60 employees, and a business model identical to many others. I'm not sure what if anything makes them into a startup.
swohns 14y ago
We've been seeing articles everywhere about how App economics don't make sense, it looks like games are the exception. I'd love to see the communities thoughts about this!
- mmahemoff 14y ago
  Most of these articles are about the long tail of app developers who didn't make anything. I don't see how gaming is any different to that. On a related note, this shows game developers are making their cash with in-app purchases, much as non-game app developers are increasingly making their money with subscription models.
  - swohns 14y ago
    Thanks!
  - derefr 14y ago
    Is it really a long tail of app developers, or is it a long tail of non-competitive app monetization strategies? That is to say, if you make something just as "evil" as one of these social-pressure addiction machines, but it doesn't break the top ten (because there are already tons of other companies making social-pressure addiction machines), will it still be profitable (because it's a good model) or will it fail utterly (because it's in the long tail)?
tnuc 14y ago
Not loading for me.
- mkuhn 14y ago
  http://webcache.googleusercontent.com/search?hl=en&tbo=d&output=search&sclient=psy-ab&q=cache%3Awww.treysmithblog.com%2F700000-per-day%2F http://webcache.googleusercontent.com/search?hl=en&tbo=d...
- treysmith 14y ago
  Sorry, server got overloaded but they are working on it!
  - treysmith 14y ago
    Fixed :)
indigo_daddy 14y ago
Looks like site is getting killed by all the load... not loading for me
skyebook 14y ago
$750,000 a day and he can't keep his blog up.
- treysmith 14y ago
  Haha, I'm not making $700,000 per day. Which is apparently very evident because I can't even keep my blog up.
dakrisht 14y ago
Insane
gagabity 14y ago
7500,000 before Apples cut, and what about expenses? especially user acquisition.
- treysmith 14y ago
  They are at about $60,000 per day. Not bad considering.
  - mrtron 14y ago
    Not bad? That is ridiculously low.
Geee 14y ago
Have you actually played Clash of Clans or Hay Day? Those things are amazingly well designed for money printing purposes. Everything in the games are designed to be slippery conversion funnels filled with hooks that pull you deeper and deeper. The idea is to monetize addiction with very high conversion rates. Some of the ingredients: free to play, every action prompts a IAP (wait or pay), quick&easy progress in beginning, instantly addictive, competitive (leaderboards&prizes), social pressure (you have to join a clan and fight for it) etc. All of this very well executed in a great game. Edit: So, the author's point that they 'just executed proven idea better and added content' is not the reason why they are so successful. It's the starting point. Real innovation here is that they are probably among the first who really focus on conversion optimization in games.
- ronyeh 14y ago
  All of the top grossing free-to-play games are like that. DragonVale used to occupy the top spot, and is similar. The current #7 top-grossing app is Slotomania. I like to think of all these free-to-play games like Slotomania. They're addictive, have colorful graphics, and either make you wait to earn more coins, or succumb to your addiction and pay up (real $) to get (fake $) coins NOW.
- jcromartie 14y ago
  They are finely-tuned psychological conditioning/manipulation machines. Do not confuse them for games.
  - teej 14y ago
    I'm sorry, but bullshit. Clash of clans is a great game. I have played it nearly every day since I've downloaded it. Am I a zombie, sucked in to the compulsion loop so tightly that I can't escape? No. iOS games are not habit-forming drugs. They're pixels on a screen. I play every day because it's fun as hell. I love searching for opponents, analyzing their bases, discovering their weaknesses, and exploiting them with my troops. I love building my clan and getting higher on the leaderboard. I love discussing the ever-shifting optimal layout metagame with my clanmates. These things are FUN. Yes, games use certain tactics that when examined naively look like manipulation machines. But that's fucking hogwash. Clash of clans is #1 top grossing because it's hands-down the most widely accessible, deep, and fun strategy game for the iPhone. Nothing comes close.
jsolson 14y ago
For what it's worth, the tutorial described there reminds me of at least one RTS I've played, although I can't place which one. Particularly that you start the game under attack. Maybe a C&C game or an Age of Empires game? Not sure.
damian2000 14y ago
I'm interested to find out that this is where my 12 year old son sunk about $25 into in-app purchases ("bag of gems") over 2 days of playing this game (Clash of Clans) on his iPod Touch. He says its an awesome game, but this seems way too overpriced to me. All his friends from school are also playing it, and probably also sinking cash at a high rate into this company (and Apple).
- mdonahoe 14y ago
  I spent lots of money on video games growing up. The only difference I see between my spending on nintendo games and your son is that I used cash instead of an credit card attached to an itunes account. The problem is that it is too easy to forget we are spending real money. Clicking YES on a popup is a lot easier than physically removing a 20 dollar bill from your wallet and handing it over. After a cash transaction, I reflect on my empty wallet. After a credit card purchase, I have to check my balance... if I even remember. I dont blame the game companies for trying to make addicting games any more than I blame restaurants for asking if I want to try the specials or if I have room for dessert. tl;dr, credit cards are dangerous. As they always have been.
  - damian2000 14y ago
    Good points, in my son's case he uses pre-paid iTunes cards - which are widely available these days. Same effect - once the initial purchase is made and the card loaded onto the account, its almost too easy to make in game purchases.
- mst 14y ago
  Compare to how much people would put into the 'new machine' at the arcade during their first day or two of playing it. Admittedly, I thought they were wasting money at the time, but they didn't seem particularly upset about it either.
- masklinn 14y ago
  > He says its an awesome game As a data point, I think it's a nice game indeed. > but this seems way too overpriced to me. Technically, the price is $0, as far a I've seen gems are solely accelerators. However it takes more effort (and time, but that's mostly time spent not playing the game) to play that way of course.
dirkdk 14y ago
nice article. It would have been more effective for me without the superlatives and just in general shorter.
jacquesm 14y ago
These games take money out of the pockets of kids that can usually ill afford it and are typically not aware of the consequences of their addiction until it is much too late. And that addiction is there by design, not by accident. Chalk it up to bad parenting or whatever you want but in the end this is still a scam delivered in the form of a game, aimed squarely at a vulnerable group, one that by law can not enter into binding contracts. The fact that it brings in an insane amount of money is not an excuse, though I'm sure that there are enough people to who this kind of income is enough to throw away all their ethics and start raking it in. In-app purchases work because they defer the visualization of the amount actually spent until the phone bill comes in. Kids literally have no idea how much they're spending on these things (in fact, most adults don't realize it either). I see enough young kids in my surroundings getting into trouble with parents, debt collectors and all kinds of other nastiness just because games like these cause them to overspend due to the addictive elements embedded purposely in the game. Apple, for all their oversight on the appstore is 100% complicit in this, apps are routinely thrown out for trivial reasons but mixing teenagers (a vulnerable group if there ever was one) and impulse buys at exorbitant prices is A-ok with them. And no, this is not a 'blame the computer games for kids behaviors' argument, it is a blame the makers of addictions for the problems stemming from those addictions. The argument seems to be that if they don't screw them someone else will. But that's nonsense and one of the reasons why marketing stuff directly to kids is illegal in many places.
- kranner 14y ago
  > In-app purchases work because they defer the visualization of the amount actually spent until the phone bill comes in. But let's not gather the posse on all in-app purchases. Non-game iOS apps with no consumable items can't help but go freemium in the absence of a time-trial mode (as in e.g. WP7), and Apple's discouragement of separate lite/pro versions.
  - jacquesm 14y ago
    Yes, you are right. There are many legit uses for in-app purchases. But this crack-cocaine in digital form isn't one of them.
ChuckMcM 14y ago
Interestingly that is nearly 1/4 the revenue of Zynga [1] (3.2M/day if you're wondering) [1] http://www.google.com/finance?q=NASDAQ%3AZNGA&fstype=ii&ei=OGCsUKD9NOapiQKnXw http://www.google.com/finance?q=NASDAQ%3AZNGA&fstype=ii&...
fpgeek 14y ago
Data points like this always make me wonder what the non-game part of Apple's app store (and Google's, Amazon's, GetJar's, ...) looks like. Is there any good data on that?
josteink 14y ago
If you make any sort of money, someone will always be at the other end paying that exact sum of money. If you are a sympathetic person, the higher that sum is, the more you will be focused on ensuring that the money paid is paid by people able to do so responsibly and people knowing what commitments they are getting into. This sounds like quite the opposite.
michaelgrafl 14y ago
When I got my first smartphone (not that long ago) in my naïvety I installed some random free game from the Google Play store to see how obtaining software works. I don't remember which game it was, but I remember being stalled a couple minutes in, being offered some kind of upgrade that I could buy in order to progress in the game. With real money. With. Real. Money. I'm baffled that no one else here (although I'm sure there's plenty of us) seems to be baffled at the mere concept of playing a game and being asked in that game to spend real money in order to make it fun to play. If the commercial success of your "game" depends on it, I will not steep so low as to discuss whether that tactic is legitimate in this particular case or not. In my world, it's not, nor will it ever be. Make a game that's fun to play and then sell it. If you can't do that, bad luck. Or try harder. Or go make something else that has value in and of itself. I feel stupid now for writing this comment. It's an overly dramatic one that probably no one will read, and it's kind of off-topic anyway. But I really feel like pointing out how I can't wrap my head around the concept of in-game-charges, and how such a lame, opportunistic thing could worm its way into mainstream game creation.

88 points by drewjaja 14y ago

When does a startup stop being a startup? 60 employees and $750,000 per day seems to me like just a normal successful company.

ajross 14y ago
270M per year in revenue on ~12M in expenses (assumes $200k/employee) certainly isn't "normal". That's a huge hit. And of course it won't last for the whole year. These are spikey products, and sampling the biggest hit at any moment tells you very little about the value of the company behind it. You don't have to look any farther than Zynga for proof of that. Whether 60 employees constitutes a "startup" or not I guess is a semantic thing. Back in the 90's, that was routine. Now the YC model has downsized the concept such that you stop being a "startup" (in the hipster sense, anyway) once you land funding for real employees.
- alanctgardner2 14y ago
  The problem with a 60 person team in a volatile market is that they're going to have a hard time weathering the spikeyness. It's not like two guys in a garage who can leave and come back to it. These people are buying houses on the presumption that they'll be employed in 12 months, when the revenue stream dries up it's going to be trouble. I wonder how these social game companies get so big in the first place. I thought it was all but proven that consistently being successful in this space is almost impossible. If it's VC funding, what's the exit? They all seem to run into the ground. In this case it seems like the founders had enough capital from the last time they shipped this game. Personally, I would seek a more stable space after hitting it big once.
  - JoshTriplett 14y ago
    > These people are buying houses on the presumption that they'll be employed in 12 months If you're really making a quarter-billion a year in profit, with 60 employees, thoe employees shouldn't need a loan to buy a house...
    - alanctgardner2 14y ago
      If they have sense saving money from the few weeks of 6 figure sales to weather the inevitable slump while they iterate or find the next big thing. Giving every employee an equal share of the revenue would be equally short sighted.
mdonahoe 14y ago
If it is still growing rapidly, it might be considered a startup. http://paulgraham.com/growth.html http://paulgraham.com/growth.html

benguild 14y ago

That's ridiculous!

torhorway 14y ago

Startup copies another game exactly down to the tutorial and makes money... CONGRATS, YAY, SO IMPRESSIVE Zynga copies another game exactly down to the tutorial and makes money... LAWSUIT OMG HATE HATE HATE You people are such hypocrites

kenpratt 14y ago
From the article: "5 out of the 8 founders and executive team are from Digital Chocolate, the makers of Galaxy Life". So it's a pretty large mis-representation to say they copied another game, as they were on the team who built said game (granted, the writer doesn't do a very good job of conveying that). MUCH different than cloning a competitor.
- qq66 14y ago
  The game they built is the property of Digital Chocolate, so whether they're from that company or not, they're copying another company's game. The ethics of that are of course debatable.
- deleted 14y ago
  [deleted]
- treysmith 14y ago
  They copied the gameplay style and tutorial. Again, I mentioned many times it's a smart move. I don't think they copied CODE or did anything shady. But go play galaxy life and then Clash of Clans. It's dead obvious.
deleted 14y ago
[deleted]
true_religion 14y ago
Yours was only the 2nd comment to this article. The first being "that was ridiculous!". How did you so quickly draw a bead on HN, and manage to decipher what the rest of the audience thought about it? For my part... I think these guys are simply Zynga without the rumours of an oppressive workplace. They have 60 employees, and a business model identical to many others. I'm not sure what if anything makes them into a startup.

swohns 14y ago

We've been seeing articles everywhere about how App economics don't make sense, it looks like games are the exception. I'd love to see the communities thoughts about this!

mmahemoff 14y ago
Most of these articles are about the long tail of app developers who didn't make anything. I don't see how gaming is any different to that. On a related note, this shows game developers are making their cash with in-app purchases, much as non-game app developers are increasingly making their money with subscription models.
- swohns 14y ago
  Thanks!
- derefr 14y ago
  Is it really a long tail of app developers, or is it a long tail of non-competitive app monetization strategies? That is to say, if you make something just as "evil" as one of these social-pressure addiction machines, but it doesn't break the top ten (because there are already tons of other companies making social-pressure addiction machines), will it still be profitable (because it's a good model) or will it fail utterly (because it's in the long tail)?

tnuc 14y ago

Not loading for me.

mkuhn 14y ago
http://webcache.googleusercontent.com/search?hl=en&tbo=d&output=search&sclient=psy-ab&q=cache%3Awww.treysmithblog.com%2F700000-per-day%2F http://webcache.googleusercontent.com/search?hl=en&tbo=d...
treysmith 14y ago
Sorry, server got overloaded but they are working on it!
- treysmith 14y ago
  Fixed :)

indigo_daddy 14y ago

Looks like site is getting killed by all the load... not loading for me

skyebook 14y ago

$750,000 a day and he can't keep his blog up.

treysmith 14y ago
Haha, I'm not making $700,000 per day. Which is apparently very evident because I can't even keep my blog up.

dakrisht 14y ago

Insane

gagabity 14y ago

7500,000 before Apples cut, and what about expenses? especially user acquisition.

treysmith 14y ago
They are at about $60,000 per day. Not bad considering.
- mrtron 14y ago
  Not bad? That is ridiculously low.

Geee 14y ago

Have you actually played Clash of Clans or Hay Day? Those things are amazingly well designed for money printing purposes. Everything in the games are designed to be slippery conversion funnels filled with hooks that pull you deeper and deeper. The idea is to monetize addiction with very high conversion rates. Some of the ingredients: free to play, every action prompts a IAP (wait or pay), quick&easy progress in beginning, instantly addictive, competitive (leaderboards&prizes), social pressure (you have to join a clan and fight for it) etc. All of this very well executed in a great game. Edit: So, the author's point that they 'just executed proven idea better and added content' is not the reason why they are so successful. It's the starting point. Real innovation here is that they are probably among the first who really focus on conversion optimization in games.

ronyeh 14y ago
All of the top grossing free-to-play games are like that. DragonVale used to occupy the top spot, and is similar. The current #7 top-grossing app is Slotomania. I like to think of all these free-to-play games like Slotomania. They're addictive, have colorful graphics, and either make you wait to earn more coins, or succumb to your addiction and pay up (real $) to get (fake $) coins NOW.
jcromartie 14y ago
They are finely-tuned psychological conditioning/manipulation machines. Do not confuse them for games.
- teej 14y ago
  I'm sorry, but bullshit. Clash of clans is a great game. I have played it nearly every day since I've downloaded it. Am I a zombie, sucked in to the compulsion loop so tightly that I can't escape? No. iOS games are not habit-forming drugs. They're pixels on a screen. I play every day because it's fun as hell. I love searching for opponents, analyzing their bases, discovering their weaknesses, and exploiting them with my troops. I love building my clan and getting higher on the leaderboard. I love discussing the ever-shifting optimal layout metagame with my clanmates. These things are FUN. Yes, games use certain tactics that when examined naively look like manipulation machines. But that's fucking hogwash. Clash of clans is #1 top grossing because it's hands-down the most widely accessible, deep, and fun strategy game for the iPhone. Nothing comes close.

jsolson 14y ago

For what it's worth, the tutorial described there reminds me of at least one RTS I've played, although I can't place which one. Particularly that you start the game under attack. Maybe a C&C game or an Age of Empires game? Not sure.

damian2000 14y ago

I'm interested to find out that this is where my 12 year old son sunk about $25 into in-app purchases ("bag of gems") over 2 days of playing this game (Clash of Clans) on his iPod Touch. He says its an awesome game, but this seems way too overpriced to me. All his friends from school are also playing it, and probably also sinking cash at a high rate into this company (and Apple).

mdonahoe 14y ago
I spent lots of money on video games growing up. The only difference I see between my spending on nintendo games and your son is that I used cash instead of an credit card attached to an itunes account. The problem is that it is too easy to forget we are spending real money. Clicking YES on a popup is a lot easier than physically removing a 20 dollar bill from your wallet and handing it over. After a cash transaction, I reflect on my empty wallet. After a credit card purchase, I have to check my balance... if I even remember. I dont blame the game companies for trying to make addicting games any more than I blame restaurants for asking if I want to try the specials or if I have room for dessert. tl;dr, credit cards are dangerous. As they always have been.
- damian2000 14y ago
  Good points, in my son's case he uses pre-paid iTunes cards - which are widely available these days. Same effect - once the initial purchase is made and the card loaded onto the account, its almost too easy to make in game purchases.
mst 14y ago
Compare to how much people would put into the 'new machine' at the arcade during their first day or two of playing it. Admittedly, I thought they were wasting money at the time, but they didn't seem particularly upset about it either.
masklinn 14y ago
> He says its an awesome game As a data point, I think it's a nice game indeed. > but this seems way too overpriced to me. Technically, the price is $0, as far a I've seen gems are solely accelerators. However it takes more effort (and time, but that's mostly time spent not playing the game) to play that way of course.

dirkdk 14y ago

nice article. It would have been more effective for me without the superlatives and just in general shorter.

jacquesm 14y ago

These games take money out of the pockets of kids that can usually ill afford it and are typically not aware of the consequences of their addiction until it is much too late. And that addiction is there by design, not by accident. Chalk it up to bad parenting or whatever you want but in the end this is still a scam delivered in the form of a game, aimed squarely at a vulnerable group, one that by law can not enter into binding contracts. The fact that it brings in an insane amount of money is not an excuse, though I'm sure that there are enough people to who this kind of income is enough to throw away all their ethics and start raking it in. In-app purchases work because they defer the visualization of the amount actually spent until the phone bill comes in. Kids literally have no idea how much they're spending on these things (in fact, most adults don't realize it either). I see enough young kids in my surroundings getting into trouble with parents, debt collectors and all kinds of other nastiness just because games like these cause them to overspend due to the addictive elements embedded purposely in the game. Apple, for all their oversight on the appstore is 100% complicit in this, apps are routinely thrown out for trivial reasons but mixing teenagers (a vulnerable group if there ever was one) and impulse buys at exorbitant prices is A-ok with them. And no, this is not a 'blame the computer games for kids behaviors' argument, it is a blame the makers of addictions for the problems stemming from those addictions. The argument seems to be that if they don't screw them someone else will. But that's nonsense and one of the reasons why marketing stuff directly to kids is illegal in many places.

kranner 14y ago
> In-app purchases work because they defer the visualization of the amount actually spent until the phone bill comes in. But let's not gather the posse on all in-app purchases. Non-game iOS apps with no consumable items can't help but go freemium in the absence of a time-trial mode (as in e.g. WP7), and Apple's discouragement of separate lite/pro versions.
- jacquesm 14y ago
  Yes, you are right. There are many legit uses for in-app purchases. But this crack-cocaine in digital form isn't one of them.

ChuckMcM 14y ago

Interestingly that is nearly 1/4 the revenue of Zynga [1] (3.2M/day if you're wondering) [1] http://www.google.com/finance?q=NASDAQ%3AZNGA&fstype=ii&ei=OGCsUKD9NOapiQKnXw http://www.google.com/finance?q=NASDAQ%3AZNGA&fstype=ii&...

fpgeek 14y ago

Data points like this always make me wonder what the non-game part of Apple's app store (and Google's, Amazon's, GetJar's, ...) looks like. Is there any good data on that?

josteink 14y ago

If you make any sort of money, someone will always be at the other end paying that exact sum of money. If you are a sympathetic person, the higher that sum is, the more you will be focused on ensuring that the money paid is paid by people able to do so responsibly and people knowing what commitments they are getting into. This sounds like quite the opposite.

michaelgrafl 14y ago

When I got my first smartphone (not that long ago) in my naïvety I installed some random free game from the Google Play store to see how obtaining software works. I don't remember which game it was, but I remember being stalled a couple minutes in, being offered some kind of upgrade that I could buy in order to progress in the game. With real money. With. Real. Money. I'm baffled that no one else here (although I'm sure there's plenty of us) seems to be baffled at the mere concept of playing a game and being asked in that game to spend real money in order to make it fun to play. If the commercial success of your "game" depends on it, I will not steep so low as to discuss whether that tactic is legitimate in this particular case or not. In my world, it's not, nor will it ever be. Make a game that's fun to play and then sell it. If you can't do that, bad luck. Or try harder. Or go make something else that has value in and of itself. I feel stupid now for writing this comment. It's an overly dramatic one that probably no one will read, and it's kind of off-topic anyway. But I really feel like pointing out how I can't wrap my head around the concept of in-game-charges, and how such a lame, opportunistic thing could worm its way into mainstream game creation.