Alternate Title: The Best Terrible Stretch Goal Decision We’ve Ever Made
Background: Fun to 11 launched a Kickstarter for it’s game Epic PvP: Fantasy in early 2015. A few weeks before launching, Alderac Entertainment Group (AEG) got on board (they are handling the retail version). AEG brought a lot of eyeballs and our goal was to convert them to backers.
We had already planned a series of stretch goals that we felt could lead to real excitement if they were hit (creating an “exploding tier”). We felt this strategy could bring in fence sitters early, and we could use that momentum later. The problem was, we didn’t change our stretch goal numbers when AEG got involved. We thought about it, but it felt cheaty to us. Plus, we’re getting sick of fake stretch goals to be honest.
The campaign started very fast (thanks AEG!) and we blew through our stretch goals way too fast. We made some new ones on-the-fly. They were mostly simple things like stickers and random pairing tokens. We did add a few new decks that we felt confident in our ability to develop before we had to go to print. One of the things we added in the middle was a Kickstarter exclusive box. When we added it we were thinking we would do custom art for it like we have done in the past. But as the campaign went on, we started throwing ideas around…
Note 1: Letting Jay and Jordan (two great graphic designers) brainstorm can get expensive
We bought a few high end ($35 MSRP) card carrying boxes from other publishers and ripped into them. Our eyes kept getting wider with what we could do. We started looking at just how cool of a box we could get into an efficient shipping size (Regional A USPS box). Jay did a card prototype and we fell in love with it. At this point, we had done exactly zero costing. I looked at the box and I knew if we did it, it would massively increase our cost of goods – almost double probably. So we had a “lets get real” conversation.
Our mission statement says nothing about making money. It’s about making the best products we can with people we want to work with. We’re not against money – it’s what gives us fuel to make more products – but it’s not our goal.
Note 2: It’s good to have a mission statement as it makes hard decisions easier
There was no going back, this was going to happen. Based on the other boxes we looked at, the box we ended up with (and this is no joke or exaggeration) would normally be priced with an MSRP of at least $34.99 and probably more like $39.99 if it was sold by itself – EMPTY. And we were giving it away as a mid-campaign stretch goal for a game that early backers got for as little as $36!
Note 3: Success = Hitting Your Goal not Making Maximum Money.
Did it cost us way too much money in any logical sense to do this? Sure. Did we loose money on the campaign because of it? Not at all – we still did fine. Will we make any more boxes like this? We might get more boxes of a similar design to sell empty to MtG and other CCG players – it would work great for Commander and Cube MtG in particular.
Were there surprise down-sides? Yup.
We had some logistics issues catch us off guard. When you make such a premium looking box, some backers will see any blemish as a “damaged product.” Normally, when a product is damaged in shipping, it’s the shipper’s responsibility, but that doesn’t work in the real world like it should so we had to eat the cost to send replacements to people who requested them. We had to replace some boxes that had very minor scuffs (as well as some truly mangled ones) – and then ship these large items out to backers, some of them overseas (ouch!). And while this was our highest-grossing Kickstarter to date at ~$160K – it wasn’t one of those Kickstarters that had enough money sloshing around to hire outside folks to handle stuff like that, so handling those replacements fell on us (and by “us” I mean “Jordan”…sorry Jordan).
The big question: Would we do it again on an upcoming Epic PvP Kickstarter or some other Fun to 11 product? No idea. We have more ideas than time, and this box took a lot of time to get right and it introduced complexity post-shipment as well. But we know for sure that we will always be looking at ways to do more than is expected when we can for our Kickstarter backers as they provide us the fuel to make the products we want. That and our mission statement pushes us to make products we are very proud of.
Footnote: Fun to 11’s ability to do things like free $40 boxes is unusual because of who we are (people with day jobs and working spouses who don’t need to take a salary from Fun to 11 to make ends meet). If our goal was to grow Fun to 11 into a powerhouse game company (a fine goal for sure!), we probably would not have gone as overboard on that box as we did. Instead, we would have invested that money in some other way. Maybe some day, we’ll have different plans for Fun to 11, but for now it really is more fun for us to do what we do for love not money.
.gif image in this blog was swiped from the awesome folks at Geekdad. They made it for their review of Epic PvP: Fantasy, which you can find here.
I felt the “Nobody is Getting Rich From Exploding Kittens” by Ben Kuchera article needs a full detailed response.
I don’t want to get into the “does the amount of money they make qualify them as ‘rich’” – that’s a personal definition. Personally, I want these Exploding Kitten guys to get rich as hell from this. The fact that they can make money this way is a great sign for the future of creativity.
I’m also not going to get into “are these guys abusing Kickstarter?” (because that’s a stupid question).
I do however want to get into the math at work here, because frankly either they are getting terrible advice or they are getting ripped off by somebody.
First some bonafides. I have done (directly or with partners) more than 10 kick starters. None were the size of Exploding Kittens, but I get how they work. I’ve also been involved in the tabletop game biz for 20 years, focused mostly on cards. I’ve managed CCG brands that have printed tens of millions of cards a year, and was working at WotC when we were printing 1 Billion Pokemon cards a month, and was the game designer for Bakugan which also printed hundreds of millions of cards. I have seen production and logistics at just about every level when it comes to games – specifically card games. When I made a Facebook comment about how I thought the numbers in the article were wrong, the first response I got was “I agree with Luke” and it was from the guy who was the global Brand Manager for Magic the Gathering for years. Most would agree that this is a topic I can speak on with some authority.
Enough of that, on to some math…
I’m going to make some assumptions here.
- I have quotes in hand for products I’ve worked on where high quality playing cards cost less than $.01 a card. At quantities well below what they are printing. So I’m pegging the cost of a 56 card deck at $.50.
- I am putting the box and rule sheet at $.60 – even with a magnetic closure. This size box is fairly standard as it hold 2 decks of cards.
- The article has $3 for shipping, that’s what I’ll use (although that seems high, more on that later).
- The backers are being charged extra for international shipping, so I’m going to assume that they did their math right on extra fees and it is a wash.
- IMPORTANT: I am NOT calculating any add-ons (which, by the nature of shipping, are actually more profitable). I’m ONLY using Base game and NSFW game backing numbers. So my total KS income number is only $7.4M, not the almost $8.8M they raised. I’ll adjust back up at the end.
- I’m using $1.50 as a fulfillment amount. Shipping 200K packages gives you a lot of pull with fulfillment organizations.
- I put in $100K of freight – This is a spitball number. I think AdMagic prints in the US though, so if most of their backers are in the US, this could be high.
- I’m assuming zero overage (extra copies printed for retail sale). I know this is unrealistic, but I don’t know their plan after launch. Also, the article was about the Kickstarter, not afterwards (that overage would be an asset anyway).
- I’m assuming 3% overage for customer service.
- I have no idea about this mysterious extra gift. I don’t know if $3 is a good price for it or not. So I’m leaving it off to start and I’ll adjust at the end.
- I’m adding in an addition $50K of misc expenses to cover warehousing and other stuff.
Using those assumptions… (and rounding expenses up a bit and revenue down a bit to be conservative)
Topline Revenue – $7.4M
Revenue after KS fees (est. 9%) – $6.75M
Printing – $350K
Frieght – $100K
Shipping – $655K
Fulfilment – $330K
Misc – $50K
Pre-tax revenue $5.26M
Now, what is missing from this number?
The biggest question mark/missing data point is that I only gave them credit for $7.4M in top-line Kickstarter sales. They actually had 18% more than that. Part of that extra was add-ons (extra money!) and part of that was what they charged for shipping outside of the US. I have no idea how much is for each. I”m going to assume an even split, so $5.74M
They have that mysterious “extra thing” and I have no idea how to account for it. The article says it’ll cost 3$-4$ and it ships with every package. It doesn’t look like it will effect shipping based on the image on the site. Let’s assume it cost $3.50 and each backer gets one and it doesn’t effect shipping cost. So -$770K gets us to ~ $5M.
They might also have signed up with one of those backer-kit type organizations without properly negotiating – some of those take a % of the amount you raised on KS as their fee. I hope they didn’t do that! They should do a custom solution – it’ll pay for itself and more with late add-ons and avoided fees.
I didn’t put in money for folks they hire to take care of stuff related to the campaign. I think it’s a great idea for them to do so, but I have no visibility into that. This would include experts in games and game production, but also lawyers and accountants.
I also didn’t put any money into this calculation based on any investment they make in the future of the Exploding Kittens/game business.
So with those caveats, how confident am I in this $5M pre-tax number? I’m very confident that it is no more than +/- 10%. That’s if I ran the business (or anyone else who has had similar experience). Now they might have made some choices that are not financial (which is totally fine), like maybe they are determined to use one US printer out of patriotism. That will effect their bottom line a lot – although even doubling the printing cost would only drop them to $5M pre-tax.
Some Suggestions and other bits…
- At printing quantities this high, they should consider printing at more than one location. Print their European product in Europe, their Australian/Japanese/etc… product in China, and their US product in the US. Unit costs do go down when you print a lot, but they don’t go down much once you get to 30-50,000 units. This would save them a bunch on freight and shipping, and would make for easier and faster local fulfillment – a real win/win. This could even turn some of those “extra shipping fees” that they charged into profit.
- They should bid out their fulfillment and shipping. UPS for instance lowers shipping rates based on how many packages you ship. If you are shipping 100K packages in the US from their base in Memphis, you might see tremendous savings on both fulfillment fees and shipping. And if you look above, those are actually your largest expenses.
- When the article says “we’re printing almost a million decks of cards” I’m going to assume they are counting each NSFW product they print as 2 decks. If that is not the case and you are overprinting by 500K sellable units, they should stop now and talk to someone about inventory management. Right away. No reason in the world to have more than 25K units in a warehouse at any time. If they are printing that many because they are pre-sold to retailers already, then good on them!
The main mistake of the previous article, and the big lesson here is that Exploding Kittens is one of those rare and wonderful campaigns that has gotten so big that it has left the realm of Kickstarter best practices for production and logistics and entered the large publishing world. If they operate appropriately, they should be able to deliver a tremendous product experience to their fans and make a crap-ton of money. If they just follow what has been done before than I don’t think they will have fully embraced just how different and wonderful Exploding Kittens really is.
If you have experience with this volume of production, I’d love your opinion on my numbers. I’m happy to adjust to get them more accurate.
Well, it was a fine effort. I got 4 Kickstarters done in 5 months before I hit some serious snags. I was still hopeful that I could get the other 8 done before the end of the year and was on track with some great projects, but then a few things happened that have caused me to wave off the BHAG.
BHAG Killer #1
The Lap Bomb*. I received a call out of the blue about 6 weeks ago. It was from someone I’ve done a lot of work with in the past, asking if I would be available for a new project. In the course of just a couple of days, that call turned into an offer. The project is one of those rare projects that just don’t come around very often and it fits my skill set exactly. It’s also for a client that is important for my long-term career. There is no way for me to turn this project down without feeling incredibly irresponsible and selfish. I pride myself in having a high-level of dedication to clients, it’s what I’ve built my consulting business on. There is just about no way on earth for me to do this project AND 8 more Kickstarters this year.
BHAG Killer #2 (and #3)
Falling in love with 2 of my planned upcoming Kickstarter projects. I knew that doing all of these Kickstarter projects meant I couldn’t give each one 100% attention, and I was good with that. I told myself that the #1 thing I wouldn’t compromise on is product quality. If the marketing suffered, or my social networking, then so be it. Recently, two projects I was working on became much more important to me than I expected. And because of the types of products they are, they would take a lot of time to get right. If I rushed them just to be part of the BHAG, I would have likely regretted it for a long long time.
In addition, both of these projects are also being done with partners who I consider great friends. I just can’t see giving them (the products and my good friends) anything less than my best just so that I can hit my BHAG.
Between the love of these two products and my lap bomb, it was clear that the BHAG had to go.
Project “Lap Bomb” is going to be taking up a lot of my time until the first major chunk of work (then it settles down to a more predictable development-style schedule and perhaps some staff to help me). The two projects that I’m super excited about will take up a bunch of my time as well. I’ve got some other friends who want to work with me on future projects, but I’ll need to be selective on that for awhile. I’m also 100% committed to delivering Kickstarter project 3 and 4 on time (and I’m still on track there thanks to Jay!).
Fun to 11 will be transitioning into something different at the end of the year as well. Kai and Dave are just too busy with other work entanglements, so I’ll need to manage that shift as well. I am super proud of all the things Fun to 11 has accomplished and I want to keep producing product through the company at a reasonable pace (NOT 12 a year…what was I thinking?). This means figuring out how to handle distribution and shipping, and those plans are coming together nicely.
But What of the Other BHAG Projects?
I’m going to use this space to talk about some of the planned Kickstarters that I’m abandoning. If any of the ideas spark you, feel free to take them and do with the idea what you will. I would love to see some of these things happen and just because I’m not going to have time, it doesn’t mean they don’t deserve to be made!
* – “Lap Bomb” is a term for a bunch of work that gets “dropped on your lap” when you weren’t expecting it. Usually it refers to a boss dropping a bunch of work off to a subordinate at 4:45pm and requesting that it’s done by the next morning (as boss leaves the office)
So a BHAG is supposed to be hard, that’s the idea. And let me tell you, 12 Kickstarters in 12 months is certainly hitting the goal of being Hard.
The last few weeks I’ve spent prepping the Castle Dice Expansion Kickstarter, shipping the Meeple Decks (early! Bam!), and trying to figure out what is going on after the Castle Dice expansion.
If that was all I had to do, it would all be possible to plan it all out and get on a hard schedule. But life has a way of throwing curves…
Shipping the Meeple Decks with Shopstarter has been a learning curve, and honestly, the software is missing some key features. But slow and steady wins the race when it comes to shipping, so I just try to get our 20-30 packages a day while I keep making progress in other areas. A few of the add-ons are slowing a few packages out, and only about 80% of the backers have filled out their surveys, but I’m still way ahead of schedule on these. One of the benefits of being good at production (thanks Jordan!) is that it gives you some breathing room when it comes to shipping. I even had time to send out a set of “test” packages to make sure my shipping choices were going to work before I worked on the bulk of the packages.
Castle Dice Expansion
Been working hard with Jay on getting this expansion ready to launch on Kickstarter. Castle Dice is really dear to me so even more than normal, I’m worried about the campaign before it even launches. Being an expansion is going to make it challenging. I’m hoping to get a lot more people to try the base game through the campaign as it’ll help fund the expansion. Fun to 11 doesn’t have great retail penetration, so hopefully all the good reviews I’m putting gin the campaign will really help expose the game to more players.
I was ready to hit “Launch” on Friday when one of the partners in Fun to 11 (Kai) pretty much told me that was a stupid idea – launching a campaign on Friday is apparently bad. So I decided to hold off until Monday. Of course, Monday I was planning on being in Kansas City starting a drive from there back to central PA with my step mom. Launching a Kickstarter from the road is not something that I think most would recommend. But I’ve got 12 of these things to get done, and delays are not tolerable. So, the plan was “Fly to Kansas on Sunday, launch on Monday.” Then weather happened, and I ended up getting stuck in the Chicago airport overnight. This was my bed last night…
(If my grammar is bad on this post, I blame this)
Right now I’m still in Chicago waiting to get on a plane to Kansas City. I’ll probably launch the Castle Dice campaign from the airport in Kansas City. That will be a new one for me for sure! I’ll monitor the campaign from the road and see what I can do to build momentum.
The Next Campaign
I had another product lined up, but the developer has fallen off the planet as far as I can tell. Pretty frustrating actually as we had already started getting artwork done. If I don’t hear from him this week, I’ll have to move up one of my other ideas, which honestly aren’t’ that flushed out yet (no printer quotes, etc…). So the next few weeks look to be quite busy for me. I also have a wedding to go to in Seattle, which should be a nice break and give me time to get some work done on the long flights. Plus, the guy getting married might be working with me on one of my BHAG campaigns… (always hustling 🙂 )
…Oh look, my next flight was just cancelled… maybe I’ll be launching from Chicago after all…