As summer ended, I could see that we had an unworkable plan and an internecine war, but the prospect of failure never occurred to me. As colleagues warned that the sky was falling, I quickly reassured them that we would be fine, that I had seen worse, much worse.
In truth, I understood the company's most basic problem and knew what to do about it: In its initial zeal to become a major player, Crystal had tried to instantly become a full-service developer and publisher with its own sales and distribution resources, even before it had produced a reliable pipeline of successful products. A sales force requires a steady flow of marketable titles to sustain itself, and Crystal wasn't capable of delivering them yet. Crystal had tried to do too much too fast.
My instincts, reinforced by my experience at LucasArts, said we should take a step backward and do this right: Cut back the sales side of the business, and retreat to the core of the company—the creative organization. Focus all our resources on developing a small number of high-quality games. Sell these games through outside publishers. Then, when we had a stable of successful titles, rebuild Crystal's own sales organization, and recapture the control and margin given up to the distribution partners. We would likely wind up in the same place sought by the founders, but by a different route and with less risk at each step.
Naturally, the prospect of pulling back from the plan did not excite the board. The success of the road show was still a vivid memory, and hope among many of the board members of achieving the original dream — quickly becoming a dominant, publicly traded, full-service developer and publisher of “Next Generation” games—remained high, despite management's growing doubts.
Instead of pressing for what I believed in the face of their resistance, I offered two alternatives. Scale up by acquiring other companies and creative teams. Or sell out. If Crystal Dynamics could find a company that would value our people, our products, and our early position in the market we could avoid layoffs and still give the investors a good return. Moreover, I would be free of my dilemma.
For the next few months, we considered candidates for purchase and held discussions with a number of them, but we never found an acquisition that made sense. At the same time, through that winter, we looked high and low for another company to acquire us. We held serious discussions with more than one potential buyer, but those came to nothing and only confirmed my worst fears: as the game business consolidated, the buyers preferred companies with far more revenue and better-established products than we had.
The board's reaction to my alternatives also proved to be divided. A majority opposed selling because their hearts remained set on building a successful independent company. There was no consensus either that we should grow by acquisition, even if we could find good candidates, because of the inevitable dilution to the investors. In something of a precursor to the Internet “premature IPO” phenomenon, some board members even suggested going public, but I couldn't see how that would solve our operating problems and refused to support it. We needed to get our house in order first. January and February came and went, and we were still trapped by disagreement and indecision.
So began my sleepless nights. They were not sleepless because of the business problems—serious as those were, I had faced worse in other companies without losing sleep — but because I began to recognize a fundamental flaw in my relationship with the company.
If I understood the problem and the solution, why didn't I act on it? Why didn't I shut down the sales organization? I had stood up to resistant board members on other issues — why not now, on the most important issue of all?
Resolution for me and for the company did not come until May, a year after I joined Crystal. That month the Electronic Entertainment Expo, the industry's annual trade show, known as E3, was held in Los Angeles. Hollywood had become enamored with the game business, and they were going to up the ante with their star power and cachet.
What did not bode well for Crystal was obvious as I surveyed the exhibit halclass="underline" several game publishers—glitzed out with dancing showgirls, pinups signing autographs, and huge screens featuring the latest releases—dwarfed my little company. We had puffed up to look like a substantial player for the show, but we seemed puny by comparison. And we were running out of time.
One evening, I cruised the industry parties with Toni, a friend of mine. A very bright and exotic woman, part French, part American Indian, with a strong aesthetic sense, Toni had cofounded a game company that made cool, avant-garde games for the PC. Her titles weren't best-sellers, but they were beautiful and innovative, and, not surprisingly, she was not a fan of Crystal's shoot-'em-ups and fantasy play.
As we whizzed along the freeway in a limo, each of us half drunk, she turned to me rather suddenly. “What are you doing in the game business?” The way she said it was “the game business.” What are you doing in the game business?
Taking her challenge, I sobered up enough to launch into my grand vision speech: We're at an early stage, but it's the dawn of a new era of entertainment and storytelling…. We're learning to put together the pieces and developing the vocabulary…. Yada, yada, yada.
She listened politely to my entire spiel. But when I finished, she crossed her arms over her chest and maintained matter-of-factly, “You're in the fucking game business.”
Her words jolted me like a hammer to my not-so-sober head.
I hardly played games as a kid. I'd never played a video game all the way through. There always seemed to be something more important to do. I liked sports, because there was beauty in physical prowess. But games to me always seemed a distraction. I was definitely not a gamer.
I sighed, sinking into the plush seats, a weight suddenly off my shoulders. “I'm in the game business,” I confessed—to myself as much as to Toni.
I had joined Crystal with a vision of taking the company to a new level of interactive, cinematic entertainment, but the prospects for achieving that had evaporated months earlier. Cutting back the company would have meant confronting what I already realized but couldn't admit: Crystal was going to be a video game company, plain and simple, nothing more. My drive said, “Stay and make it work,” while my passion prevented me from making the changes needed to do so.
The next Monday, I returned to the office and called in my two lieutenants. I explained what they already knew, that Crystal Dynamics was trying to do too much. Given the size of our competitors, we would bleed to death if we didn't change course. We had to shrink the company, I continued, to its core strengths. Naturally they were uncomfortable with my decision, even though they had long been frustrated with my inaction. I asked them to suggest strategies for carrying out the reorganization, and they went off to ponder the options.
Next I met with two key board members and told them my decision. We had skirted this issue more than once without conclusion, but this time there had to be resolution. So I added something further: I was resigning. I would stay long enough to help the company scale back, but I wouldn't run it any more. What was right for Crystal wasn't right for me.
In the end, my two lieutenants, whose groups had fought so bitterly with each other, resigned as well. One of the board members stepped in to lead a scaled back Crystal focused on producing a few quality games that were distributed by larger players. Crystal was finally sold two years later, a small video game company gobbled up by a larger video game company.