Ola Holmdahl was the co-founder and CEO of Junebud AB, a Swedish game development company founded in 2008. Junebud grew from six people to about twenty in 2012. During this time, they released two games: the browser 3D MMOG MilMo, which was operated for two and half years, and Tuff Tanks, an artillery shooter MOG for the iPad. Both were free-to-play games.
As an entrepreneur, you constantly motivate yourself and others. You get up and tell the world you can do something no one else can. You convince people with skills, money, and ambition to work with you and take risks. Terminating your company is a powerful experience. Years of hard work, the hardest you’ve worked in your life, are reduced to ashes. Every single action you take during the process will have significant consequences.
Since the bankruptcy, I have been asked a lot of questions. Worried managers of other game companies ask: what went wrong? I tell them that business development efforts failed, and that it was my fault, which is true. But there’s more to it. This article describes what happened before, during, and after the bankruptcy of Junebud.
Battening the Hatches
In the winter of 2011, it became increasingly obvious that Junebud was headed for a rough patch. Contract work on Tuff Tanks, a new iPad artillery shooter, was paying the bills, but that contract expired in early 2012. While talks were under way, a replacement project was not in place. The publisher eventually decided against an immediate follow-up project, and wanted to release the game and assess its performance before deciding on new projects. By February 2012, it was obvious that we had to find a new partner for our next project in order to avoid financial disaster.
This posed a significant challenge for the management team and the board of directors. Wrapping up a game is always resource intensive. Meanwhile, signing a new contract takes an average of six months. The studio already operated MilMo, a browser 3D MMORPG that required a live team for maintenance and new features. MilMo was not generating any real profit, but paid for its live team and helped put the studio on the map.
A small prototype team was assembled, to find new applications for existing technology and to create new game prototypes. As 2012 progressed, several concept teams were assembled ad hoc, in order to produce new pitches and presentation materials.
Clear Division of Responsibility
The management layer of Junebud began looking at plans for handling probable scenarios as efficiently as possible. Analysis established that a division of labor was the way forward. The CEO (me) was to look only at success scenarios and work toward them. Simultaneously, the most economically adept director of the board was assigned the role of “devil’s advocate.” He was tasked with looking exclusively at worst-case scenarios and preparing for them. This was a successful decision, as it reduced a lot of stress. I had not fully appreciated before just how mentally taxing it was to prepare for both success and failure and performing at my max.
Focus is key, and focus requires limited scope.
Our next step was to identify important stakeholders and to have a plan for managing them at all times. For us, they were: employees, customers (publisher, players), shareholders, the bank, the stock exchange where our shares were traded, our landlord, and business partners. While in the process of trying to save the business, the biggest need for all our stakeholders was information. As a CEO, I was responsible for most of our information distribution. Having a clear plan and well-defined priorities was a great help in e-mailing, holding meetings, and issuing press releases.
Finally, the board of directors established a time frame, success criteria and termination conditions for the company. That is, what needed to happen by when for it to be reasonable to continue operations.
Keeping Everyone Informed
Moving into spring of 2012, our efforts generated several promising business leads. This met with our success criteria and prompted a lot of work across the company. Meanwhile, our devil’s advocate held meetings with a bankruptcy estate manger, in order to have a turn-key solution ready if the situation deteriorated.
Out of roughly a dozen pitches, we ended up with three fruitful tracks. Due to different circumstances, one of them failed and two were unable to progress to signing within the time frame our board had defined. In the summer of 2012, this met with our termination conditions. The probability of saving the company was now so low that we considered it irresponsible to our stakeholders to continue operations.
My focus, according to our fall-back plan, switched to damage control and a graceful shut-down of operations. My short-term goal was to manage the formal requirements of liquidation: turn in the correct paperwork, issue press releases, and inform staff and partners. Medium and long term, my goal was to extract maximum value for the stakeholders.
For our investors, that meant liquidating all assets before the company ran up too much debt. For our employees, it meant writing recommendations as well as informing other game developers about the skilled people about to enter the market. For our partners, it meant making sure they had updated versions of all deliverables and the documentation they needed to use them. For the estate manager, it meant providing access to clear financial and legal records.
The Emotional X Factor
Consider the following list of responsibilities:
- Financial
- Legal
- Moral
- Emotional
The first two are clearly defined, and a matter of compliance. Moral responsibility is quite easy to grasp, as they reflect the mores of society. The emotional responsibility is individual, and thus subjective. Game development is technical, but as people we operate on an emotional level. As an entrepreneur, you motivate others, and to do that you must yourself stay motivated.
For me, it’s rewarding to know that over a dozen people got their start in the industry with Junebud, and have since brought their experiences to other great development companies.
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