By Andrew Patterson
Imagine allowing the power of creativity that young children so readily possess to be harnessed in a way that allows them to collaborate to make movies and music in a safe supportive platform.
Essentially, that’s the thinking behind Drumleaf / Star86 an innovative kiwi games start-up that focuses on a niche that is much less crowded than those chasing older teen / adult subscribers.
Originally starting out as Big Little Bang, the name was changed to Drumleaf to avoid confusion with a similarly named game called Little Big Planet that emerged after being acquired by Sony.
Founded by entrepreneur Chris White, the first New Zealander to be working with US accelerator, YetiZen, the premier game studio incubator, the business has so far attracted more than half a million users globally to its fledgling platform.
White is your typical restless creative.
Training first as an architect, he went on to start a medical degree but ended up completing his studies in psychology though admits he has always had a fascination for games design.
These days he divides his time between Auckland and San Francisco but says that travel comes with the territory.
He says Drumleaf is focused on delivering games to kids that create value, on top of entertainment, with Star86 being its flagship game.
“It’s a multi-player game, in a browser on a PC, where songs materialise as planets. We give kids a spaceship and they can fly planet to planet and the bits of every song are there to find. The kids can explore the place, find instruments and begin collaborating and composing with other kids in real time.”
He credits his university studies with giving him the idea to start the business.
“Initially, it was entered into the Spark Entrepreneurship Challenge at the University of Auckland. At the time, I was just completing a Creative Arts postgraduate degree, so Spark was the impetus to see if I could turn some of these ideas into businesses.
“The initial idea was based on the fact that I liked being creative with music and I saw that the Internet enabled you to do that with other people. I tried to make a product that I wanted to use and then, very early they got us to validate our business ideas.
“I wrote down what it was alongside some competitive products that were also available. Then I asked people if they would use our idea, without telling them which one it was, and from that very quickly realised that it wasn't people my age that wanted to use it. The younger I went in age, the greater the level of interest, so I discovered I was working on a product for kids rather than adults. That changed our whole direction.”
White says it was an important lesson in the value of market validation.
“Initially I was thinking 18 to 35 year olds would love this kind of engagement but the validation process revealed it was actually the kids who want to be social but don't yet have permission to leave home, stray too far or drive to see a friend but still need to learn their social skills and where they fit.”
Providing a secure environment is a major consideration for a business such as Drumleaf and ultimately key to its success given obvious parental concerns when it comes to kids and the internet.
“Obviously we don't have the ability to stop them from going elsewhere on the Internet. But when they're on our site we make sure that they're safe, that there's live people that are looking into the context of what they're doing and that they're not able to share private information like phone numbers or their address. Also, that they're getting the kind of feedback that supports their creativity as opposed to just being told that they're no good.”
While providing a learning and experiential platform for kids has a high “feel good” factor the reality is you’re dealing with a consumer segment that has almost zero discretionary spending power.
White says it’s an approach he would be reluctant to follow second time round.
“It’s a big challenge that I would probably not take on in my next business. The purchaser is different to the customer and they have different needs. The parent, obviously, wants their kid to be happy but also, spending their time doing something that's enriching and safe from predatory behaviour or the other types of things you find online. The child, on the other hand, is really just looking for the most fun experience possible. We certainly had to add features to the game that we wouldn't have otherwise considered to deliver the experience they’re wanting.
“The whole safety and security issue is a big part of it. That's a staffing cost we have to absorb but also, a technical infrastructure cost. However, in terms of the end user experience, it's pretty similar to what we would have been building for adults anyway.
“While kids don't always know what they want, we do know that primarily they're looking for a fun, interesting way to engage with other kids. What we know they like is real time feedback and opportunities to use their imagination.”
Increasingly, the number of online product offerings for kids is on the rise.
“Minecraft is the most well-known of the kid’s games right now. That came from an employee of King who created Candy Crush Saga. Back in 2009, one of the original King staff had an art project on the side and got some traction with that, so he pulled away to create Minecraft. And that's blown into a massive success where, last year, they turned over $290 million in revenue with a team of less than 30 people. On a per employee basis they're actually doing better than Google! Some other success stories would include Monkey Quest, which is a Nickelodeon product along with Club Penguin and Moshi Monsters which are also reasonably well known.
Going up against competitors with big marketing budgets is a challenge that Drumleaf doesn’t shy away from but White says being based in NZ does have its advantages.
“This is a common problem for a Kiwi company. We're not as well resourced. The good thing is it's a gigantic market; especially when you look at it globally. Actually, Japan's just taken on the number one spot in terms of mobile gaming spend. Then you’ve got Moshi Monsters is in the UK and Club Penguin is in the US. We're looking at the world as a potential market.
“While we're not as well resourced, there's a lot of talent here in New Zealand and you can get a lot done for a lesser cost.”
So how much bigger will the business have to grow?
“I want to plateau our current staff compliment of 10 at about this level because if we go too much bigger, we're going to have to divide into two teams and that has an additional administrative cost associated with it. If we can grow the company to break even with this size team, I'd be quite happy with that.
“Currently the U.S. is our biggest market with 42% of our customer base, followed by the UK at 18% and then we have Canada, Australia, Czech Republic, Israel. Those are really our bigger markets. But New Zealand also punches above its weight.”
Promotion & marketing
Like all start-ups with a tight budget, marketing campaigns are also relatively limited in scale.
“We really have to rely on word of mouth to get the word out. We do a little bit of online advertising but we're still working to refine the products, so we haven't done those big initiatives, like TV advertising, which we hope to do in the future.”
Then there’s the infamous pester power of kids which also has a role to play.
“There is a certain amount of kids nagging their parents involved. On average, it takes about two months before a child manages to get their parent across the line and we expect that the parent initially comes to learn about the game by looking over their shoulder and then gets shown a spaceship that the kids built or a song that they've composed and that gets the parents interested. Obviously they want to feel comfortable about our company before they end up handing over their credit card details.”
The site charges a monthly fee of $7.95 and has different tiers of users plus a discount applies if you pay up front for six months.
“Subscription is the ideal business model. We need to grow to a certain scale before all of the costs of the studio are met. That's what we're aiming towards.”
High profile backers
Successful kiwi tech entrepreneur Claudia Batten, who these days bases herself in Colorado, is also backing the venture and chair’s the company’s board.
White says it’s important to have the right mix of backers.
“We've got some really excellent people that believe in the project. We have a really strong underlying philosophy about what we want to do in kid's entertainment, that I think is the main driver for everyone getting out of bed in the morning and getting excited about what we’re doing.
“Being a start-up isn’t easy and I'm very thankful to have people like Claudia, Andy Hamilton at The ICEHOUSE, Greg Sitters of Sparkbox, Mario Wynands of PikPok, and some other brilliant people coming to join us.”
With capital from a range of mainly local angel investors including K1W1, NZVIF, and Sparkbox, Drumleaf has been able to successfully fund its global ambitions for expansion.
“We're very focused on the US for the next six months and we’re in the process of setting up an office there. We're looking to bring marketing expertise in and we're tuning the game, so we're making that marketing expense go as far as it possibly can.”
With sales and marketing based in the US and R&D in NZ, White says the two weeks here followed by two weeks in the U.S. routine does take its toll.
“I'd be lying if I didn't say it was challenging constantly travelling between time zones and working in two geographies while at the same time trying to keep the culture of the company strong. How we get around that is by frequent communication. We use tools like, Google Hangouts which is very useful, as well as trying to empower everybody in their geography to make decisions, so there are no dependencies that are dislocated.
Recruiting the right staff and ensuring there’s a cultural fit is always one of the biggest challenges for start-ups.
White says it’s one area where you never stop learning.
“You have to really focus on who you bring into the company. Whether it's attitude over expertise and experience it’s about getting the mix right. I’ve definitely learned some valuable lessons along the way.
“Start-ups are very scrappy. The jack of all trades, master of none is really, the right type of person to be working in a company like ours.
“Younger staff have benefits in that they're often more versatile. As you get older you have more capital requirements. Having kids, having a mortgage to pay off, these are things that can funnel you down a certain path which is not necessarily conducive to being part of a start-up, or certainly leading a start-up. Definitely, young is a good place to start but at the same time, we always hire for experience.”
And the big goal for Drumleaf / Star86?
“I'd like to see us become another Jim Henson [creator of the Muppets] or maybe even a Disney. In three or four years’ time I'd certainly like to see us with a couple of hits under our belt.
“Over time, I also think there’s a huge opportunity to add value to the school system. Creating engaging technologies for kids is something schools are not currently able to solve on their own. They need entrepreneurs to come in and generate new models of content that kids find engaging. So there’s plenty of opportunity for us to expand further in the future.”
This column is taking a break for a while.