Interview with Trip Hawkins (Digital Chocolate)

I thought I’d start off 2007 with something fun. That said, check out my recent interview with Trip Hawkins, the Chairman and CEO of Digital Chocolate. Prior to founding Digital Chocolate, Trip also just happened to found Electronic Arts and 3DO. Interest piqued? Let’s get on to the Q&A.  🙂

You’re best-known for your central role in the founding of Electronic Arts. Would you mind sharing a few little-known stories about the birth of EA? How did decisions made in the early days set the stage for what EA would become?

I came up with the idea for EA when I was a teenager and saw my first computer in 1971. I had already started designing simulation games but they were complicated to play. The instant I saw that computer I realized I could put the complicated stuff inside the computer and create “real life in a box.” I then laid the groundwork by studying computer science and other relevant topics in college. It was during a summer computer programming job in 1975 that I thought it out and decided to start my computer game company in 1982. I really did plan it that far in advance. Again, I continued from 1975 to shape my experience to support EA’s eventual birth, including getting an MBA to learn more about business and going to work for Apple to help build the market for computers in the home so that I could then sell games to play on them.

When 1982 rolled around, I went to see Don Valentine in February, and he encouraged me to leave Apple and offered me space in his office to incubate EA. I left Apple in April and incorporated what became Electronic Arts on May 28, 1982. I funded the company myself for more than six months. In August, I began hiring employees, starting with Rich Melmon and a few of my co-workers from Apple, Dave Evans and Pat Marriott. By that time I had been developing the core ideas for the business for a decade and had a pretty clear idea of what I wanted to do. I personally went out and found and signed the first several artists, including Bill Budge.

By 1980, I knew I was going to be starting the company but I felt like I needed “the big idea.” From working with ingenious but egotistical software titans at Apple, I realized that the big idea was to be the first guy to bring Hollywood principals of artist management and promotion to the software industry. So the big idea was to treat software as an art form and to promote developers as artists. Also by 1980 I had participated in a difficult transition for Apple in going from two-step distribution to direct retail relationships. I realized that great Hollywood companies all had strong direct distribution, and after what Apple had gone through, I decided to do it that way from the beginning, even though it had never been done before with computer software. The last key strategic piece was the concept of an “artists workstation.” This began with my idea that I could attract the best developers if we had the equivalent of a Hollywood recording studio. You have to realize that developers in those days had to use consumer products for development. There were no serious tools for game development. We also had numerous platforms and I wanted a technology strategy that would enable us to help developers leverage their work more automatically across multiple platforms. Tim Mott was a key early hire because I needed a strong technologist to put the artist workstation together, and Tim had great experience from Xerox. Finally, after enjoying the ride at Apple I appreciated what a difference it makes when you do things in a first-class way. For that reason, I recruited the smartest venture capitalists in the world, raised plenty of money, got the best outside agencies and advisors, and found strong independent board members.

I ran the business with a pretty iron fist for several years, but rather than just giving orders I would have a lot of discussions with my management team, and we had a lot of famous arguments. But I always made the final decisions and a lot of them were stressful and controversial at the time. Yet that was the crucible in which a great company was built, and you can see in the history of the company how critical these early strategies turned out to be.

It’s been a few years since you first declared your intention to found a mobile game company that would emphasize community and make users feel connected to something “alive.” How’s the plan worked out, thus far?

We really blossomed in 2006, proving the viability of our strategy. When I founded Digital Chocolate, I didn’t think it had to ever be # 1, but we have risen fast through the ranks of more than 500 contenders and are now legitimate leaders in many respects. A big turning point came when the mobile carriers decided to give our product strategy a chance. They had been focused more on games based on licenses of known brands, whereas our goal has been to deliver original games that prove that the mobile phone is a first-rate platform, not just a second-rate game console or TV. Now they realize the benefit in giving featured placement to innovative games like Tower Bloxx, Nightclub Empire, and Rollercoaster Rush. These games create buzz that expands the market, and generate repeat purchase patterns.

Digital Chocolate is somewhat of an outlier in the mobile game industry: a company dedicated to (and lauded for) its creativity, in a market dominated by retro game clones. What do you think needs to happen before innovative new games finally take the lead? When do you think that will finally occur?

If you look at Japan and Korea, you can see where the world will go. Several years ago the leading mobile games in Japan were retro titles like Pacman, but since then the market has moved on to more innovative and original mobile applications, and the platform is better established as a social computer. As one example, there is now more email sent in Japan by mobile phones than by PCs. This market transition is underway in the West. What is also exciting for us is that when we show our games in Japan, people tell us they have nothing like them there. We’re ahead of the curve.

Is the wild success of the Nintendo DS (and failure of all hybrid phone-game devices) an indication that perhaps gaming is best suited for dedicated gaming devices?

There are important differences between a good phone and a good game console, even a handheld one. The phone needs to fit in your pocket, be comfortable to hold up to your ear, and cost less than $100. What it can do as a computer on the world’s largest network is today perceived as a bonus, but again the consumer’s bias is on social value, not entertainment fidelity. Since there are more than 2 billion of these devices, we can make a living, and it is a mass market consumer. When you turn to game consoles, the customer wants a high fidelity way to kill time playing a game, often alone. This calls for a larger, heavier, and more costly device that pretty quickly does not make a very good phone. And the program sizes are so huge that it is not practical to transmit them over the cell network. Nintendo did a great job with the DS, using Nintendogs to define it as a first-rate platform. Nintendo grasps many of the requirements of mobile lifestyle without it having anything to do with phones. But these are pretty separate markets today. Some of our products, like AvaPeeps, Tornado Mania, and Brain Juice, approach the tempo and rhythm of mobile life in the same way that Nintendo does with the DS. You get a “taste” of what I mean from our company name and our slogan, “Seize the Minute.”

Do you believe that the technological constraints of phones (i.e. processing power, small displays, etc) foster creativity as much as hamper it?

It’s a craftsmen’s trade. The best mobile developers are passionate and ingenious at working around the constraints and having vision about new user behaviors. Some console developers are so accustomed to the high-powered environment that they cannot adapt to mobile; they need that larger canvas. To each his own.

Why do you think American mobile game developers have failed to make major inroads into many foreign markets? What will it take to change that?

The markets of Japan, Korea, and China are relatively closed. You can only really do business if you are located there, and you also have to be pretty intimate with the cultures. Most mobile companies are not large enough to operate like a Microsoft. As a result, the biggest companies in these Asian markets do not do much in the West, or vice-versa. However, when you look at the rest of the world, there are many countries where you can do business virtually. We have only two main offices but we do business directly in more than 70 countries and in fact a minority of our revenue is in the US.

You’re about to launch a new mobile social networking / avatar system called “AvaPeeps” that will automatically integrate with MySpace, Facebook, etc. What are your goals for this service? How do you hope to make it shine through the ever-increasing clutter of social networking tools and services available to consumers?

For a few years now I’ve been calling mobile phones, “the social computer.” We want to innovate new kinds of mobile social applications and AvaPeeps is a good example. You create an avatar and then send it out on dates with other avatars, and get stories about it’s life. And you can chat with the owners of the other avatars and build up relationships both virtual and real. It’s a blend between an “adult Tamagochi” and a chat/flirting service. We’re breaking new ground in many ways.

Do you believe the mobile carriers will always have such tremendous control over what game content is available to consumers? What factors might change that, and how can mobile developers take advantage of those factors?

The mobile carriers create tremendous value by getting the public to adopt new mobile services and handsets. Distribution models for mobile content will continue to proliferate, especially with growth in WiFi, premium SMS, and HTML browsers. Going forward, the carriers’ biggest contribution is the fact that they now have an automated billing relationship with their customers.

Are you ever tempted to return to AAA console game development and/or publishing?

No. I have great respect and admiration for the purveyors of new inventions ranging from the Wii to Grand Theft Auto, but it is a difficult road to hoe. The 3D arms race has been so punishing that most companies lose money trying to keep up. For this reason, publishers are afraid to experiment and innovate because it is so expensive to do so. I think this means the golden age for console is over. However, it is thriving on the Internet, as evidenced by entrepreneurial companies like NeoPets, Sportsline, and PopCap Games. These guys have been willing to think outside the box.

What is the single greatest surprise you have experienced in your time working on Digital Chocolate?

IGN.com just gave out 17 Game of the Year Awards, and we won 9 of them. I would not have imagined that to be possible. It is very gratifying.

What is the single greatest disappointment?

Mobile is like the Internet was at the 9600 baud dialup stage. In theory it’s all there, but it is a rare day when you can get everything to work the way you would like. But the infrastructure is good enough now and it is steadily improving, and we know what great things we have to look forward to.