Nick Tommarello, a business student at Babson College, had to write a paper for his "Entrepreneurship & New Ventures" class. He was originally going to interview David Whatley, Simutronics CEO, but David couldn't make it, so I stepped in. Here's the paper that Nick wrote in September 1999 (and yes, it got an A! Congrats, Nick!):
Simutronics Corporation has been in the multi-player online entertainment business since 1987, a pioneer in the industry. Their products include such games as GemStone III and DragonRealms, both fantasy role-playing games with well over a thousand players connected at any one point in time. They have also developed Cyberstrike, winner of the Online Game of the Year award by Computer Gaming World, as well as Modus Operandi and Hercules and Xena. Simutronics is currently developing a graphical multi-player role-playing game by the name of Hero's Journey.
Simutronics' games initially appeared on GEnie, a well known commercial online service at the time. Afterwards, Simutronics expanded to Prodigy, CompuServe, and the rapidly growing America Online, but ultimately left the online services in 1997 in order to make its new home on the World Wide Web. Simutronics employs only 25 to 50 full time workers, but manages roughly 450 part time contractors (also known as GameMasters, GameHosts, and Mentors) who run and expand the various games for a percentage of gross revenue.
I interviewed Elonka Dunin, General Manager of Online Games for Simutronics. She came to the company in 1990, when it was still in its infancy, and initially ran it out of her loft with the present CEO, David Whatley. She has been a major contributor to the company's success over the last decade, and profoundly influences it from the lowest to the highest level. Her primary responsibilities include increasing customer experience and satisfaction, post-launch quality control, and product management for all of Simutronics' various games. During the lean and unprofitable years, she worked for nearly no monetary compensation, and, therefore, has a number of shares and stock options in the company.
Elonka has an extremely interesting personal background, starting with her family history. Her father was born in Warsaw, both of his parents being killed by the Germans as they withdrew during World War II. He was raised by his uncle, a Polish officer placed as commandant of Warsaw by the Russians, and his aunt, a member of the Polish resistance who had been sent to Auschwitz and managed to survive. Elonka's father and great uncle soon came to the United States, where they became successful entrepreneurs in time. As such, Elonka's family has been very influential in her life as an entrepreneur, yet not quite in the way one would expect. Elonka stated, "My great uncle and father tried getting me involved with their businesses, and I resisted wholeheartedly. But when I found something that was just mine, I could throw my heart and soul into it."
Elonka does not have a college degree, but has a wide breadth of practical experience to draw upon. After dropping out of college, she spent six years in the Air Force as an Avionics Instruments System Specialist. However, her job in the Air Force became unexciting because she was not allowed to cross train into different areas. As a result, she left the Air Force and worked at a number of temporary jobs all over the country, usually as a legal secretary or programmer. She then decided to travel, and spent the next several years visiting different parts of the world and observing diverse cultures.
These experiences helped Elonka in her present position in several ways. First, she equated her experience traveling with getting used to change, saying, "The number one hardest thing about traveling is going. Getting up the energy to pack and head out the door. There are always reasons to not travel, or to put it off... Entrepreneurship can be the same way. If everything's right, and the only thing holding you back is fear of change? Do it." Elonka has a very high tolerance for ambiguity, and that is an asset to her.
Elonka also feels her experience with different cultures helps her understand some customers better, and actually helps her with some game design. In addition, her numerous temporary jobs at dozens of various companies across the United States exposed her to a multitude of different sorts of organizational problems, and she draws upon this experience to help in her present position. Finally, the structured design of the Air Force influenced some of the ways Elonka set up the teams of the part time contractors who run the various games.
The process by which Elonka and the other members of the management team built Simutronics was very successful, yet not as prevailing as it could have been had they had the experience they do now. Elonka stated, "Simutronics getting where it is today was a combination of factors… The right people at the right time, a lot of hard work, and an enormous amount of luck. It's like surfing a wave. We were out there on our boards when the Internet wave came along."
Some of the key factors that Elonka feels was done right, enabling Simutronics' success, were the strong management team, the timing, and its capacity for change. First, the management team was composed of very diverse people, which gave them strength due to different ideas being explored. It led to conflict, yet conflict is good to the point where it sparks new ways of looking at things. The management team also had a complimentary skill set, allowing them to draw on each other's expertise. Second, Simutronics always managed to catch the latest wave and stay on its feet before it sputtered. They were on Genie when Genie was big and they expanded to America Online just before its huge growth spurt. They got off AOL, moving to the Web, when AOL reorganized its contracts with game companies and as the Web was taking off as its own medium. Elonka stated, "I think David and I like change. And that's one of the reasons that Simutronics has survived through this very turbulent decade." By having the capacity for change, combined with some strong entreprenurship skills, Simutronics was able to stay in business despite everything that was thrown at it.
Some of the things Elonka wishes were done differently, if they had the experience then that they do now, would be creating a better version of corporate bylaws, issuing stock options with a better knowledge of the tax consequences, and more training for all employees. After hearing about the business process, there is also one thing I would have done differently.
Simutronics was largely funded from within. "Sweat equity" was the term Elonka used. Revenues from Simutronics' various operations funded their expansion, while at times the management has had to take pay cuts in order to get by some rough times. Simutronics has looked for venture capital and other investment deals in the past, yet, although they had plenty of offers, the management team felt none of them were actually worth pursuing. Elonka stated, "We want to maintain control, not sell our soul to the highest bidder."
After critiquing the business process by which Simutronics grew to its present state, I am very impressed with how they did it with the sparse resources they had, as not many can build multi-million dollar businesses with nearly nothing to start off with. However, I believe they should have more aggressively sought new capital from outside investors. They have had the technological and first mover edge for a long time in this industry, but this advantage will only erode as more companies such as Microsoft and Sony enter in the market. These companies have deep pockets and can afford to make the mistakes Simutronics already made long ago, learn from them, and then improve their position.
I believe Simutronics will continue to dominate the text-based online game market, but will miss out on the more mainstream graphics based multi-player role-playing games, unless they inject a substantial amount of outside capital into their operations. Simutronics is currently looking for funding for their graphical based role-playing game in development, Hero's Journey, but there are already several graphically based multi-player games that have been just released by much larger companies. The management wishes to remain in control, and they should look for deals that enable them to do so, yet something must be given up if this company is to remain the dominant figure in the industry.
Elonka also had numerous words of wisdom for a young entrepreneur, which either taught me, or reaffirmed my belief in, a lot of aspects about business. She stated, "The essential thing for an entrepreneur that's the most on the "talent" side is the conviction to succeed. The sheer hard-headed stubborn drive everyone crazy but damnit make it happen stuff... You can't be an entrepreneur and just put an idea out there and hope it sells. You've got to want it, If you're just dabbling, it ain't going to happen." This reaffirms my own beliefs, and what was taught in the classroom about the difference between a cocktail entrepreneur and a real one. It was also interesting to hear her views about the entrepreneurial team. Elonka stated, "I think one of the most important things I could say is: Don't be afraid to surround yourself with people who think differently than you. If all of you are thinking exactly alike, some of you are probably unnecessary. Get other viewpoints." Again, I find it refreshing to see some aspects of what I learned in the classroom being applied in a real company.
However, I think one of the most important pieces of advice that I will take with me is Elonka's opinion of leadership, when she said, "Don't insist on going in and fixing each problem yourself. As your team grows, you'll get more done if you have people to fix problems for you, so you can focus your energies on the bigger picture." I think it would be tempting for an entrepreneur to hang on to the details of the business and attempt to micro manage, yet it is important to see the bigger picture. To be able to look at the forest, instead of the trees.