a blog by Brad Hargreaves

You don’t have a company. You have a job.

- Yale prof and Honest Tea founder Barry Nalebuff, to me, September 2006

I was in college at the time, running a small antique furniture reseller called Aloysius Properties on the side. Aloysius was a fun business. We realized that Ivy League schools, especially our own Yale, were selling their turn-of-the-century-era wood furniture at fire sale prices as they renovated libraries and classrooms. Aloysius bought as much as we could get our hands on and sold it online at significant markups — a 20x multiple wasn’t uncommon in addition to a 15% shipping and handling fee. And our customers (almost exclusively wealthy southern women) were thrilled to have these pieces of academic history.

It was very much a lifestyle business in every sense of the term. Specifically, the founders (Matt Brimer and I) wanted a business that threw off a decent amount of cash with minimal hourly involvement — that is, a business to support our lifestyles as college students. And it was a total break from our college lives spent staring at books and screens — buying furniture out of university warehouses, physically moving inventory, talking to customers and coordinating shipping was different and exciting.

But this kind of business went over with the pre-Lehman Yale crowd like selling crack in New Haven grade schools. It was gross, physical labor — a waste of our precious mental resources that would surely be better spent pricing derivatives or being flown around the world by McKinsey. In more precise terms, Aloysius would not get one laid.

The university did have a nascent startup scene. Innovation was encouraged, and traditional jobs in high finance and consulting were held in slightly less regard. But there was a parallel problem in the Yale startup community, one that effectively took the place of the larger university’s fetishization of high finance. There was the palpable sense that unless you raise significant capital, you’re not running a real business.*

This left Aloysius high and dry. Matt and I abandoned the business in early 2007, choosing instead to focus our efforts on raising venture capital for an online gaming startup, GoCrossCampus. Things didn’t turn out badly — my next company, PayoutHub, was acquired earlier this year, albeit not for fuck you money.

Since then, I’ve slowly getting back into “lifestyle-like” cash flow businesses. It’s entirely possible that I’ll see an opportunity in a company to take it to the next level and scale it into a venture-fundable blow-the-doors-off next-coming-of-facebook success. But I don’t have to, and there’s nothing wrong with covering my downside by starting with the goal of building profitable companies and seeing where it goes from there.

As a caveat, scalability of personal involvement is important. This is the difference between a job and a company — and helped spell the doom of Aloysius. Aloysius Properties was not only a personnel-heavy business, but it would’ve been difficult to pass off to an intern with minimal instruction (my litmus test for cash flow businesses). If you can’t pass it on to an intern with fewer than a few hours’ per week involvement, it’s probably a job. As you might imagine — and contrary to our beliefs at Yale — the litmus test has nothing to do with raising venture capital.

* Over the last few years, the Yale Entrepreneurial Institute has done a great job shifting this culture. One of last year’s businesses was a grilled cheese restaurant. Cool.

I write a lot about where the gaming industry is headed — specifically as it relates to building game mechanics into non-game apps. Past posts have talked about serious problems in the current thinking about “gameification” and the next game mechanics to be implemented across the internet.

Next week, some of these thoughts will be brought into event format. The New York Gaming Meetup is partnering with the Y+30 to host a panel event on the Future of Gaming at 92YTribeca in New York City. Specifically, we’ll be looking at what gaming will look like in thirty years. If you’re interested, RSVP here. Panelists include Ben Feder (CEO, Take Two Interactive), Stephen Totilo (Editor, Kotaku), and Eric Zimmerman (CEO, GameLab). I’ll be moderating (read: desperately attempting to keep mental pace with the panelists).

It should be a fascinating event. Sam Lessin’s Y+30 always brings a unique outlook to these things by stretching the scope our projection to thirty years. In the words of Bill Gates:

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.

The Y+30 tends to be conscious of this quirk of the human mind — and accounts for it. It’s hard to project out thirty years without getting into the realms of sociology, psychology and philosophy (often in that order), so you have to be prepared for a wide-ranging discussion.

While I’ll save the best parts for those of you who attend the event, here are some topics I hope we’ll cover:

- The future of the console. Will independent gaming consoles (or their analogue) exist in thirty years? Are full-body inputs the way of the future?

- Relatedly, what platforms will be most important to the gaming industry in thirty years? Will mobile gaming dominate?

- What features will be most important to gamers in thirty years? What trends will we want to read about?

- Games and Society. Will the prevalence of online games for younger and younger children change the way those children interact with games (and the web, and society) as teenagers and adults?

- The expansion of game mechanisms to non-gaming apps. How far is it going? Are we going to live in the world of Jesse Schell’s vision?

- Will people develop an immunity to traditional game mechanics? If so, how will this impact other aspects of life?

I’m sure plenty more will come up. Hope you can join us.

I’ve already had a few things to say on the coming explosion of game mechanisms in non-game apps, but listening to Gabe Zichermann talk at last week’s New York Gaming Meetup raised some new questions.

I agree with Gabe on a lot of things. We’re absolutely seeing a proliferation of game mechanics throughout the internet, and the resulting points or badges are totally divorced from real-world value. But everything I’ve heard on this topic has presumed that most of the innovation in game mechanics has already happened; that the real advances will be in applying points, leaderboards and badges to anything and everything on the internet. In other words, we’ll see a world of thousands of companies replicating a limited pool of “proven” game mechanics to guide user behavior. There have even been entire companies formed to help companies stick points and leaderboards on their apps.

It’s a crock of shit, really. There is a whole world of compelling game mechanics out there, only a small part of which is the Activity > Points > Badges flow that Foursquare nailed. Game mechanics are going to expand throughout the web, but they’re going to diversify and incorporate a wealth of varied engagement strategies as they do. Different tactics work for different people and different sites, and consumers will demand diversity and deeper engagement as they become more hardened to “vanilla” game mechanics.

So what are these next-gen game mechanics, you ask? Here are a few I think we’ll see much more often:

Building and Growing: Most people like to build and grow things. You can chalk the psychology up to our agrarian past, but Ford knew this when they put a virtual tree into the Fusion. Leaderboards feel like a zero-sum game, and many people will respond better to a mechanism that feels more collaborative. Like growing a tree, for instance.

There’s a corollary mechanism to this — building or growing something that can help you play the game better in the future — that could be particularly powerful. This mechanism is analogous to building a strong base in a RTS game. People are doubly motivated to do it since it puts their involvement in the game on an exponential growth trajectory.

PvP Competition: This is a no-brainer. People can be motivated by leaderboards and badges, but it’s nothing compared to the passion you see in player versus player competition. That said, this is somewhat psychographically specific — lots of people have no interest in direct competition with other players, and I imagine that designers will initially approach PvP competition in non-game apps with a lot of caution. But I can’t see it staying on the sidelines forever given its power.

Real World Rivalries: I experimented with this in GoCrossCampus a few years back, and I still think there’s really something here. As I mentioned above, many people love to play games against other live players (whether asynchronously or in real-time), and real-world rivalries only accentuate the power of this mechanic. Your leaderboard isn’t doing enough to engage users? Let players represent major sports teams or their colleges and see which team/college is the best! Use real-world rivalries and your app can piggyback off your users’ natural loyalties and affinities.

Leveling: I’ve seen some non-game apps using this already — such as online forums that reward activity by “leveling up” members based on post count — but it’s still woefully underused. Levels give people goals, the lack of which can be the death of a traditional points-based reward system. If members don’t think they’re working towards anything other than more points or a slightly better place on the leaderboard, they probably won’t hang around too long. Social game developers know this well; it’s worthwhile to study the leveling system that Farmville uses to keep players from leaving in the early stages of gameplay.

Chance: When “gameifying” apps hits the mainstream, incorporating elements of chance into these game structures will be a big deal. People in the tech and media world like the meritocratic, deterministic nature of Foursquare, where points can only be earned, not “won”. But normal folks like to win and will often value a chance to win something valuable over something small and guaranteed. Game designers aren’t blind to this, and the game-based apps of the future will absolutely allow users to wager their virtual currency and tokens.

There are more, but this is enough to argue my point. It’s hard to imagine any of these tools not being used on a large scale over the next five years. Marketers and developers must stop mimicking points and badges and start thinking about how game mechanics integrate with their apps on a fundamental level.