Supercell's Secret Sauce

Author: by Mike Rose

Whenever I'm abroad and people ask me where I'm from, I always prepare myself for the same response. "Ah, Manchester!" they say. "Manchester United!" they add. These days Manchester City also features in these responses, but in general you can forget our decades of musical influence and terrible weather -- soccer is what we're really known for around the world.

Finland's Helsinki is currently experiencing a similar connection. I was in a restaurant in the capital when an older gentleman stopped me to ask where I was from. But rather than ask me which team I support, he followed up, "and why are you here in Helsinki?"

"I'm here to see some video games," I replied. His eyes lit up, and he said excitedly, "Ahh! Angry Birds!" before turning to his group and starting a conversation about all the mobile games he had played.

He must have been well into his 60s, and his family and friends were a good spread of ages, all discussing what back in my own hometown would be considered a non-talking point to most. Later on a cab driver strikes up a conversation with me about games, and later still a flight attendant wants to know what I'm playing on my smartphone.

Supercell CEO Ilkka Paananen sees a direct correlation between Manchester and Helsinki's separate booms. "It's the same thing as why do kids start playing football?" he tells me. "It's Cristiano Ronaldo, all these sorts of heroes. And now, why do people start making games? Because we want to be the next Angry Birds."

"The success of Rovio has been a huge source of inspiration for all Finnish gaming companies," he continues. "The biggest favor that those guys have done for the entirety of Finland is that they've raised the bar for everybody. They have shown where you can get to when you have the right level of ambition."

If Rovio has raised the bar, Supercell is doing a damn good job of vaulting over it. Since switching to a "tablet-first" business model earlier this year, the company said recently that it grosses over $500,000 a day from just two mobile releases -- a figure which is now "well above that," according to Paananen.

I visited Supercell with one goal in mind -- to find out the secret to how a company can go from an absolute nobody on mobile, to a huge somebody in the space of around four months. When both Hay Day and Clash of Clans launched this summer, Supercell had never released a mobile game before, and its previous title Gunshine for browser had been a bit of a false start. Now the company own two spots in the top five grossing games charts on iOS, with Clash of Clans in particular regularly parked at number one.

"Me and the other co-founders, we have a relatively long history in creating games," muses Paananen, as I question him on how Supercell began. "For me personally, it's 12 years or so. This time, we really want to do things differently."

Paananen co-founded Sumea back in 2000, which was eventually sold to social game developer Digital Chocolate. After holding his role as president of Digital Chocolate for four years, the serial entrepreneur decided that it was time to start over again.

"It's going to sound really naive and simple, but the single biggest lesson that Mikko [Kodisoja, Supercell co-founder and creative director] and I have learned is that if you really want to build the next generation of games company, it's actually all about the people," he says. "Before now, we usually always had to go with a big international publisher or someone like that, so there was always a middleman between us and the consumer. But then these democratic app stores, like Facebook and iOS, and all of a sudden it was possible to directly access the consumer."

Finland has been waiting for the App Store, it would seem. Removing those extra steps between the development studio and the consumer has helped in spades, while allowing devs truly set their creativity free.

"Now it's a lot more about the product quality and the product itself," Paananen notes. "If we want to create the best products, we need the best people. That was actually how the whole thing started, and where the name Supercell comes from. We're creating these small but ultra-dynamic teams of developers who work relatively independently. And despite the small size of the group, we have big dreams -- hence Supercell."

Supercell isn't kidding around when it comes to making sure the company is stuffed full of talented individuals. Most of its employees have around 10 years of experience in shipping commercial games, on average. "We have already been in a situation where we've needed to recruit one person for a project, and we couldn't find him or her at that point," Kodisoja later tells me. "So we suffered for a bit until we found them."

"Of course, the flipside of the coin is that we'll never be as big as many of our competitors when measured by employee count, and we can't grow as quickly," says Paananen. "But that's a core part of our philosophy and vision for the company."

Supercell's vision wasn't always so crystal clear. When the company launched at the start of 2011, it had a very familiar idea of how to make it big in the games industry.

"Our first thought was, 'Hey, we're going to create these cross-platform games that you can access both from a web browser and from mobile devices,'" says Paananen. Was Gunshine a false start, then? "Yeah, I guess you could say that," he admits. "We thought web was a huge platform, so why don't we start with that? But when we started to dig into the tablet and smartphone versions of Gunshine, we started to confound ourselves. We realized, 'Hey, we want to make the best possible games we can for this platform. So we started to experiment with all kinds of things on this platform, and I guess we kind of found ourselves, and we tightened our focus, which I think is the best decision we've ever made."

It was around a year ago that Supercell came upon its "tablet-first" strategy -- a sharpening initiative that has no doubt played a huge part in the company's raging 2012 success.

"We think that tablet is the ultimate game platform," says the CEO. "It combines the best of all the possible worlds. It has a console-like performance; With Retina display, the screen is really as good as it gets; It's the first device that three to four year old kids can use and get started on -- that wouldn't be possible with PCs or laptops, or even gaming consoles."

What Paananen and his team realized ever so quickly was that if you don't build your games from the ground-up for a specific platform, you're not going to build the best games.

"I know from experience, because that's what we tried!" he laughs. "We started from this online web product, and how we actually discovered tablet was when we started to create a version of the game for the tablet, and we realized, 'Hey, it's not going to be a good game!' Unless we actually start from the tablet, we've never going to create the best games for this platform."

Focusing on a single platform seems to go against the grain of what works in our industry -- it especially seems absurd given that there are far more iPhones out there than iPads. Yet Paananen notes of Supercell's tablet-focused development, "I think it results in better games and, ironically, results in better games for the iPhone. When you design for a highly fidelity platform and a bigger screen and so on, you need to put even more emphasis on the quality. And honestly, we think that the tablet is the ultimate game platform. We think that in three to five years ahead, it's going to be the device that most people consume entertainment from."

In fact, the company's iPad revenue already equals its iPhone revenue -- proof, if any was needed, that Supercell's approach is definitely working.

So is this tablet-orientated development the sole ingredient in Supercell's secret sauce? It would appear not. In fact, it's far from this simple, as I slowly but surely gathered that the company's success is part experience, part focus, part culture, and a splash of happy accident.

"We think that the biggest advantage we have in this company is culture," offers the industry veteran. "We want to build a very different type of company. At the center of it is this idea of small -- if you think around the console industry, or even if you look at newer platforms like Facebook, what happens is that somebody comes in, and they have this small and very passionate team, and they make a great game, and consumers pick it up."

He continues, "That company then becomes financially very successful, and investors come onboard, and there are growth targets you need to hit. What happens is you end up growing really, really quickly with employees, and you start to build these bigger and more expensive products and so on, and at some point the company grows to hundreds of people in size, and the products become more and more expensive. And then you don't want to take risks anymore -- you can see that evidence by all the sequels that are being built. Nobody wants to take any risks anymore."

"Quite frankly, it's not fun to work in those sorts of companies. They're run by process, and top-down management," he says. Paananen is keen to avoid such a situation this time around, promising himself that no matter how success Supercell gets, the idea of keeping small will always be a core part of the company's ideology.

"I have this thing about becoming too big," he notes. "Zynga is an example of that kind of threat. The original FarmVille was built by five or six guys, and 84 million people played it on a monthly basis. Clearly people really loved the game. But since then what has happened is, Mark Pincus was quite proud that their latest product was made in 18 months by 100 people, and they are getting to this triple-A scale, blah blah blah.

"Okay, but what did the users think? Did they love the game? Well, maybe not. It really hasn't done that well. It's unbelievable that time after time after time, this industry falls into this same trap. You get bigger, you get slower, you build more expensive products, but they might not be the best products for the consumers."

Say Paananen, what really clicks with him about Supercell's "small is big" approach is the possibility of building a company he's always dreamed of -- a company built on passion rather than metrics.

"We don't hire people and say 'Okay, your job is to code this part of the game', 'you are responsible for these art assets', etcetera," he adds. "We don't have dedicated game designers as such -- it's the team that is going to build the game, and they are all responsible for the end-user experience."

It's an approach to management that has worked well for Valve, and Supercell is further evidence that it can result in huge success. "People really step up and take more responsibilities," adds Paananen. "It's a lot more motivating to do that, and a lot more passion gets thrown into the product. And the beauty of all of this is this is a model that really makes sense -- you don't need 100 people to build a game for this device, and we're not going to fall into this trap of hiring 100 people to build the best 3D experience, high-fidelity graphics, this massive storyline and loads of content. We just want to build games that are really fun to play, where the focus is on gameplay."

Also echoing Valve's methods, Supercell is a very flat organization. No one has an office, and everyone sits together, reveling in zero bureaucracy. Teams operate independently, such that the majority of the power is in the hands of the individuals.

"We like to think of our guys as craftsmen -- we want to hand-craft these games for our users," says the Supercell CEO. "Giving orders like a top-down management just doesn't work at all. I think the information just flows so much better. There's the feeling that we're all in this together. It makes sense in our relatively fast-moving and dynamic environment too. It's just good to have everyone as close by as possible."

"Of course we have some processes," he adds, "but basically everybody hates processes here -- for there to be a process of any kind, there has to be a really good reason."

The next spice thrown into Supercell's sauce is transparency. Every single morning an automatic email is sent out to every single employee -- no matter if they are full-time, part-time, or trainee. Said email displays how many users each product has, how much revenue was generated, and various other key performance indicators like retention rates.

"We don't have any secrets here," explains Paananen. "Even if I wanted to keep something secret I can't, because I force myself to send all the data every single morning, and there's nothing I can do about it! It actually helps the management of the company, because it makes our culture very results-driven, and there's no politics."

This level of openness with its employees even extends to those moments when things go horribly wrong -- in fact, as strange as it may sound, Supercell actually revels in flops and misadventures.

"We have this culture of celebrating failure," explains Paananen. "When a game does well, of course we have a party. But when we really screw up, for example when we need to kill a product -- and that happens often by the way, this year we've launched two products globally, and killed three -- when we really screw up, we celebrate with champagne. We organize events that are sort of postmortems, and we can discuss it very openly with the team, asking what went wrong, what went right. What did we learn, most importantly, and what are we going to do differently next time?"

Paananen goes even further -- he believes that teams learn more from failures than from successes, and that the best companies are built on top of these failures. "That's why we encourage failure," he adds. "When you fail you learn, and that's worth celebrating. This will also encourage risk-taking. If you punish failure, that doesn't encourage you to take risks. You'll end up just doing sequels and playing safe."

The Supercell man acknowledges that certain parts of his business strategy may well clash with how others in the industry approach development and management, and so when it comes to hiring time, applicants are made fully aware of how the company operates.

"We pay very close attention when we hire people that they are okay with this working environment," Paananen says. "It's definitely not for everybody, absolutely not, because you have to be really proactive, very passionate about this stuff, and passionate about games, first and foremost. But it's definitely a very fun environment to work with."

The final addition to Supercell's secret sauce is quite simply Finland itself. In 2011, the Finnish games industry grew by 57 percent, to a value of 165 million euros, according to the International Game Developers Association. Why is Finland booming?

"People ask me 'What's in the water in Finland? Where did all these great mobile games companies come from?'" laughs Paananen. "In Finland, we have this unique combination of creativity and technology talent. We're known for a lot of great engineering talent, but the other side that people constantly miss because we're shy and silent and not very outspoken, is that we actually have this long tradition in storytelling."

And the Supercell CEO has his own theories as to where this tradition came from. "200 years back, it was a very poor country, and people were living in very small houses. During the Fall and Winter time it was cold, it was miserable. There was nothing you could do outside, so what people would do is, they would gather in their houses and tell stories. There were storytellers who were almost like rock stars."

"So there's this really long tradition of storytelling," he continues. "But the other part is that people would just then invent games, kind of like board games, just on their own. And this kind of creativity has been in our culture for a very long time. It's a combination of that, plus the engineering talent, which I think makes the games industry so great here."

It's not like the Finnish games industry has suddenly come out of nowhere, either. Finland has boasted a healthy games industry for two decades now, with names like Max Payne, Alan Wake and Supreme Snowboarding associated with the country. But, as mentioned previously, it is the falling of the publisher barriers that has really helped Finland's games industry to evolve at an alarming rate.

"I think it's interesting that, after the collapse of Nokia, Finland sort of needs to reinvent itself," remarks Paananen. "We truly believe that tablets and mobile are the future of games, and I'd argue that if we can keep our position, we're going to be one of these centers of gravity for the future of gaming."

"It definitely doesn't just apply to Rovio and Supercell either," he adds. "I guarantee you that in the next three or four years, there's going to be a lot of other companies that break through. I can see what's going on here in the game scene, and it's unbelievable how many great small companies are being started almost every month."

It helps that the Finnish government is rather excited about games at the moment, once again thanks to Rovio and Angry Birds. The country's National Technology Agency hands out subsidies to new video game business that look promising, and according to Paananen, it's pretty easy to get a games business started as a result, at this moment in time.

In conclusion, then, Supercell puts its rapid success down to culture, passion, transparency, working with the best people, and remaining focused at all times. Supercell currently records, on average, 12 sessions per user every day across its two titles, while Clash of Clans sees several million unique battles between users every day.

This is all very well, but with two out of two successes this year, Supercell's next step will be to see whether this formula will carry over to future releases, or whether it was all more happy accident than strategic positioning. Say Paananen, the company is already looking to its second wave of titles, and what he believes will be the next generation of social games -- namely, "those games are going to be truly social."

"People will be playing together, not just spamming each other," he adds. "We actually draw a lot of references from MMOs, especially from countries like China and Korea, but also from old browser classics that were built in Germany -- Travian comes to mind."

"I think this industry took some missteps during the crazy days of Facebook. So all of sudden social started to mean, 'Okay, how many invites per day on average does one user send?' And of course, that was dead wrong. If you were to ask any of these traditional MMO guys, especially from Korea, they say that social does not equal spamming your friends. It's enabling people to create social ties in your game, and make sure these new friendships emerge, and that actually becomes the glue that ties these gamers together."

Other elements that Supercell isn't planning to pile into its games any time soon -- hours and hours of cinema-quality animations; linear gameplay; "click-fests"; menu-based games. This is a company with a clear vision of what works for it and what doesn't, and given the success it has had in prior months, you can expect it won't be hugely shifting gear anytime soon.

"If we're really honest with ourselves, this is a hit-driven business, and it's a form of art, not science," says Paananen. "Whoever says 'I always knew beforehand that this game was going to be a hit' is lying. The key for us is to, not to play it safe, but to trust our instincts and trust all the things that made us successful in the first place. We definitely don't want to play it safe -- we are about innovation and risk-taking."

He adds, "The best thing for us about our recent success is that it enables us to build the company that we always dreamed of. It gives us certain leverage and flexibility -- also the ability to think long-term. We don't feel pressure to think about the next quarter. We can think about the users, think about the quality of the user experience."

Of course, with an ever-changing industry that is constantly in flux, having a single firm target for the next few years simply isn't a good strategy. That's why Supercell stays ever vigilant of other platforms in the mobile space, although it's clear that the company's next batch of games will be focusing on iOS too.

"We are keeping a close eye on all relevant platforms," says Paananen of Android and Windows Phone. "I think the primary driver for us is the quality of the end-user experience. Once we feel that the quality is as high as it is on iOS devices, that's the number one thing. The number two thing is that it has to make business sense. So there has to be enough devices out there, and the users who have these devices have to be the kind of users that play these games, and get engaged."

"We view change as our friend, not as our enemy," he adds. "The way we're set up, having our independent, small, very agile, quickly-moving teams, we can react to the fast-changing environment. So we welcome any change in the market, because we think we are one of the quickest companies to move in the right direction anyway."

And what of the ethics of free-to-play, a hotly-debated topic thanks to the numerous studios that deploy underhand tactics in order to wring as much cash out of "whales" as they can?

"I think free-to-play can overcome these issues, and I think the reason is that these games are so viral, the cream will definitely rise to the top," answers Paananen. "The fact is that people talk about this stuff with each other, and if someone has a great game and they're doing things the right way, people will discover it. A great thing about these kinds of games is that people tend to be really loyal as they find a game that they like, and they'll play it for years."

He notes that Supercell is building games to be their own platforms, rather than just games -- that is, the company's growth is thanks to its loyal users, rather than new user growth. "The focus is to keep the existing users," he adds, "and because these games are so sticky, and the engagement is so high, and the end result is that these games grow."

And when you step back and look at Supercell's business plan as a whole, this desire to keep its current users entertained, rather than pull them in, take their money and then find more prey, is perhaps the strongest element of the secret sauce -- the chilli powder dashed in for good measure. When a game is recording 12 sessions per user every day, there must be a reason why those users are coming back.

Says Paananen, "What I think is our secret sauce -- it's simple, we just build great games."