Supercell’s chief wants every game to be as good as Clash of Clans (interview part one)

Above: CEO Ilkka Paananen and creative director Mikko Kodisoja

Image Credit: Supercell

Question: Are you still in the lead?

Paananen: I haven’t seen the updates. I think in September we were number one, at least, but I can update you on those. But I’d assume so, because we’ve made some progress since then in Japan. But this is iOS only.

The other thing we’re quite excited about is the recent Android launch of Clash of Clans. Two things are encouraging for us. One is the reaction from players. We had more than a quarter million reviews, and the average was 4.7 out of five stars. It was a really good reception from the users. We were able to make it to the top 10 in two weeks, both in the U.S. and in Japan. Last I checked we were the number three game in the U.S. and I think number six in Japan on the Android top-grossing chart. Hay Day will follow a little bit later.

I’ll talk about the recent deal we did with Softbank and Gung Ho. Basically, how the deal was structured was that we established what’s known as a special purpose company here in Finland. That company is jointly owned by Softbank, which has 80 percent, and Gung Ho, which has 20 percent. That company owns 51 percent of Supercell’s shares. Both myself and Mikko Kodisoja, one of the founders of Supercell, sit on the board of directors of this company. So it’s not a traditional — I wouldn’t characterize this an acquisition. It’s more of a kind of partner support, a strategic investment. As you know, they’ve paid roughly $1.5 billion for those shares, valuing the company at about $3 billion.

Above: GungHo Entertainment’s Puzzle & Dragons, another huge mobile success story.

Image Credit: GungHo

Question: Why did you do the deal?

Paananen: It boils down to four reasons. Most important, we feel that it’s still very early days for this company. We love what we’re doing and we want to continue to run Supercell as an independent company. This deal, more than anything, guarantees the independence of the company. A very large part of the deal is that the founders of the company still have voting control and decision-making power over the business. We can almost say that after this deal we’re more independent than we were before, because the founders have substantial control over how we want to do things. We’ll continue to operate completely independently. All matters related to strategy, products, road maps, platforms, marketing, and all that are completely in the founders’ control. That was explicitly agreed upon with them.

This brings me to the second point. Before this deal, and before meeting the founders of Softbank — When people in the investment world talk about “long term,” they usually mean a period of five or 10 years. Then you talk to the founder of Softbank, Masayoshi Son. For him, the long-term is a 30-year plan and a 300-year vision. He’s completely different from any other business executive I’ve met, especially here in the west. These guys are all about the long term. If you compare their model to a typical venture capitalist, these guys could hold the stock of Supercell forever if they want to, and that’s exactly what they’re looking for.

Third, I talked about the dream of becoming the first truly global games company. Softbank obviously accelerates our path of progress toward that point. They have a strong presence in Japan, and also strong relationships in China and Korea. They recently bought Sprint in the U.S. and are becoming more active globally. It’s not a short-term thing. In the mid- to long-term, we believe there are benefits to be had from having them as a shareholder.

Fourth, what we share as a philosophy with Mr. Son is that we both think that life, and business life, isn’t a zero-sum game. We’re both about this ideology that we’re all in this together, and so it’s fair that all the economic value created by the company is shared by everybody who’s involved, including all the employees. That’s been proven by Supercell all along. This deal was another example. For us, it’s important that everybody with a share of the company is able to participate on exactly the same terms. Whether you’re a partner or one of the founders or an employee, the terms are the same. Going forward, we’ll pay dividends and so on. Every single employee has stock options, and they’ll be included in dividend payments. That’s a strong part of the culture of Supercell, and it’s great to see that Softbank shares many of the same ideas.

Above: Supercell cups are just the start of branding.

Image Credit: Dean Takahashi

Question: What is the long-term view?

Paananen: We fundamentally believe that we are in a new era in gaming. It has to do with a few things. One is that gaming as a mass market phenomenon is heading to mobile and tablets. There’s going to be a place for the next-generation consoles, and again it’s not a zero-sum game – just because mobile is doing well, that doesn’t mean consoles should be doing badly. But we believe that this device is the superior device for the mass-market consumption of entertainment. We believe that the free-to-play model, when it comes to the mass-market consumer, is the winning model. We believe that these games are becoming services. It’s not just something you launch and then move on to the next thing. You launch and then the real work begins. We believe we can create game services that will last for years, if not decades. And we believe that we can create games that have a truly global appeal.

Those are the fundamental drivers that we believe are changing this industry. On the back of those changes, we believe it’s possible to create a new kind of game company. Our goal is to create a company that is loved by its employees and also by players in the decades to come. What we’d like to create here is something that, say, 20, 40, 50 years go by, and then you can look back and think about Supercell. At that point, Supercell would really mean something. Think about Nintendo. It would be hard to find somebody who wouldn’t love the characters and the brands and the games that they’ve created. I would love to feel the same way about Supercell in 30, 40 years.

We would love to be part of the history of games, to create a company that changes how we think about gaming. But that obviously takes time. You can’t do that in a year or five years or probably even 10 years. That’s the single biggest reason that we wanted to do this deal. We wanted to make sure that we have a partner that shares our vision, but more than anything, has the patience to wait. If you want to try to do something like this, the most important asset you’ll need is time.

Above: Supercell has a board game night every couple of weeks.

Image Credit: Dean Takahashi

Question: I wonder how you feel about all these contradictions here. You raise money, but you don’t need it. You have teams that are structured to be really small and fast, but you make games really slowly. You can share the wealth with all your employees, but then maybe they’re more likely to leave and start their own companies. There are all these very strange things that come from having so much success.

Paananen: It’s part of how we think a little bit differently from many other companies. We get that question a lot. People ask me and the others, “Why do you guys get up in the morning? You don’t really need to work for money anymore.” My answer has always been, and still is, that I’ve never worked for money. None of us have ever worked for money. That’s the strange thing. Since we became successful, all people want to talk about how much revenue we made yesterday. That’s become a topic in itself – what’s the daily revenue at Supercell? It’s awkward for us, because we’ve never made these games to make money. We’re passionate about games overall. We just want to make fun, great games.

So my answer to that would be, since we’ve never made games for money, I don’t see things changing in that way. Along the same lines, we want to make Supercell the best possible environment to make games. This is our number one goal as a company. That’s the idea that the company was founded upon. Why would anybody want to go and set up their own companies? If at some point we’re not the best possible environment to make games, of course they should leave and set up their own companies. But as I say, that’s a very big part of how we think. We want to be the best environment for the best people.

Question: Do you think that Finland is the best place to look for workers?

Paananen: I do. It’s important to us — We explicitly agree about that with Softbank, and with our shareholders as well, that the company will continue to be headquartered in Finland. This is our home. Having said that, we have people who have come from 30 different countries. Roughly half of our employees are Finns and the other half come from somewhere else. It’s a very diverse group.

Having this kind of multicultural environment makes working a lot more fun. But it also has a clear business benefit. If you’re trying to be a truly global games company, it helps that you have your own mini-globe in the office. No matter what market we’re talking about, we have someone who comes from that country who can walk to my desk and have a chat about something.