This is the story of a former Microsoft executive who had an idea for a board game, and how he turned it into one of the most successful game companies ever.
Richard Tait is the co-creator of the game Cranium and he was the Grand Poo Bah of the company that ended up creating 40-plus games, books and toys. It was sold to Hasbro for a reported $70+ million in cash.
Watch the FULL program
About Richard Tait
Richard Tait is the co-creator of the game Cranium and he was the Grand Poo Bah of the company that ended up creating 40-plus games, books and toys.
Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, home of the ambitious upstart and this right here is the story of a tech employee who had an idea for a board game and how he turned that idea in to one of the most successful game companies ever.
Richard Tait is the co-creator of the game, Cranium, and he was the grand poobah of the company that ended up creating 40 plus games, books, and toys before it was sold to Hasbro for a reported $70 million.
I invited him here to tell his story and this whole thing is sponsored by Scott Edward Walker. He is the entrepreneur’s lawyer who you can find at walkercorporatelaw.com. I’ll tell you more about him later. Now I welcome Richard. Thank you for doing this interview.
Richard: My pleasure. It’s great to be here.
Andrew: By the way, you have incredible style. I’m just looking at you. I have a question ready to fire off. Were you always a stylish person?
Richard: I do my best. You’ve got to play the cards you’re dealt.
Andrew: Just, you ran a little bit late so I said, “How do I spend on … I’m not sure how many minutes I’ve got.” Then I said, “A friend of mine introduced me to a stylist. I should look better on camera.” I said, “I looked at Richard. I’m going to spend some time looking for a stylist.” I fired off an email to her. Were you always like this or did this just devolve over time?
Richard: I really appreciate fashion and style since I was a young child who had been taught to turn up being presentable wherever you can. It’s part of, I think —
Andrew: It’s more than presentable in a sense.
Richard: — sense of an individual look.
Andrew: Yeah and it’s an elegant look that doesn’t make me feel like you’re stuffy but also feels like you’re, better than business attire. Anyway, I’ve got to get back in to the actual business conversation.
Here’s the thing, the idea for this game came to you when you were playing a game and you ran in to a problem. What happened?
Richard: It was one of those classic rainy Sunday afternoons when you’re with another couple and you flipped through a book and read a newspaper and you’re wondering what you’re going to do next. This other couple, Dan and Maggie, challenged us to a game of Pictionary. We’ve never been beaten at Pictionary. You could draw a straight line and I’ll be, “[Not much more]“.
We crushed them at Pictionary and during the high five and the victory dance. They immediately wanted to challenge us to a game of Scrabble. I suck at Scrabble, but Dan and Maggie are amazing Scrabble players. They keep their scores on the fridge. Sure enough, they crushed us at Scrabble.
My little antenna went off because I felt like an idiot in front of my friends and family. I thought, why isn’t there a game that has something in it for everyone, that gives everyone the chance to shine. From that simple moment and from that little antenna going off, I started to sketch on a napkin as to what that game would be like.
It would have artistic challenges. It would have word puzzles. It would have trivia but all of it all mixed together. That was the original concept for Cranium. For two guys, my buddy’s name was Wit, who had never been in the games industry before, we decided that we were going to create a new type of games company that was based on a simple philosophy which was to give everyone the chance to shine.
Andrew: Your friend, Whit Alexander, why did you go to him and ask him to partner up? Why couldn’t you say, “Hey, I’ve got the problem, I’m sketching a solution. I’ll just go do it.”
Richard: My leadership style is one where I always find complimentary skills. I’m very conscientious of what I’m really good at but also conscientious of where my weaknesses are. Whit and I had worked together at Microsoft. He phenomenal at building products, very schedule oriented, very good at prioritization and identifying for consumers what their greatest needs are.
So together we worked on the atlas products at Microsoft where we would build the world’s greatest and most detailed atlas [anyone was] thinking about. He left Microsoft too so it was kind of that perfect match of two guys who had some time on their hands and got complimentary skill sets. I had a lot of respect for Wit. I knew that together we could try to create history.
Andrew: What was your skillset?
Andrew: What did you feel you were especially good at as a leader?
Richard: I’m very, very good at identifying the essence of a brand, connecting, making the emotional connection, building that fun and passion and leading a team. I’m very good at painting the picture of where the team has to get to, at building. I played center, mid field in soccer so I know exactly where I need people on the field to be. Then I’m good at marching towards that goal and making it a compelling mission for people to pursue their lives.
Andrew: That helps me understand what’s going to come up later in the interview. I’ve got a list here of projects that you’re working on now. Golazo —
Background Speaker: Go Golazo!
Andrew: … who’s seated behind you. I see Simple and Crisp. I see Moment Lenses. I see Maker Wear. I don’t know how one person could actually run all of these which is why tech, I checked it out with you to make sure, “Is this really all you?” Now that I understand a little bit of your leadership style, I get why you can manage so many different things.
To get to that though, to get to him, did you start doing that research project that I heard where you went to the library and you started looking up other games?
Richard: That was actually Whit that did that.
Andrew: He did that.
Richard: Once I painted the vision for this is what I want the game to be like, Wit, in his classic style, said, “Okay, we have to identify games or game dynamics that will be popular for humans over time. So he went and researched over a hundred years of game activities where we found precedents for things like Pictionary, wherein the olden days people would actually paint on a canvas, and during breaks in a dinner, they would migrate through to that room and try to identify what the artist was painting.
So once we saw those precedents, we said, “Okay, let’s make sure we’ve got some of those fundamental game dynamics in there,” and then added some new twists like sculpting a clay jar with your eyes closed. Those hadn’t been done before, and those were novel twists that we’ve brought to Cranium. And I’ve always said to young entrepreneurs there’s nothing wrong with looking at people who have gone before you, and copying a good idea.
So I was looking at packaging yesterday, and we were looking at Apple’s packaging, they do such a phenomenal job, and I was like, okay, well let’s just do what they’ve done, we can put a little twist on it, but 80% has already been done, and there’s no reason to try and reinvent that wheel. With Cranium, with 12 activities in the game, we’ll look for which ones had historical precedents that were backed, they were well proven, tested..
Andrew: How can you tell that something is well-proven and tested by doing research in a game?
Richard: Well, Trivial Pursuit sold a lot of copies, so…
Andrew: Oh so that’s what it was. It was which of the popular games based on longevity, they’ve been around back before we had computers and before we even had paper, you’re saying. Where people were just…and which ones sold the most and that’s what told you what type of activities people wanted in their games.
Richard: Absolutely. And you could find historical precedents going back to the turn of the century. And whenever you’ve seen that go through tens, decades, and decades, and decades, then you know that humans enjoy that activity. And we also study people playing those games and seeing, we watch people playing Pictionary, we watch people playing Trivial Pursuit, and found parts of the game dynamic that didn’t work, and we were able to make better in our game.
Andrew: I see now why you would want to bring them in if you had that kind of patience. You were always this kind of entrepreneurial person. In fact, I heard that your parents made you return things that you negotiated friends for. What kind of negotiations did you have that your parents had to unwind them?
Richard: Oh my gosh, so many. I was always the kid who had somebody else’s marbles, or a soccer card, or a match stocks toy car that I negotiated away or traded. I’ve just always enjoyed marketplaces even when my parents would take me traveling to foreign countries, some people would like to go to the beach, where I liked to go was the marketplace, and see people trading and exchanging. I loved that commerce dynamic. I’ve always loved it since I was a little boy.
Andrew: You mean the place where they sell fruit and knock off Ray-ban glasses, and all that stuff, what did you like about it?
Richard: I liked bartering, so those people who were trying to sell you the fake Rolex watch for a certain price, I loved that dynamic of negotiation.
Andrew: Going in and trying to get a lower price and seeing how he comes back at you. Really?
Richard: And I also liked the variety of different commerce in different countries. My parents would take me to France or Spain, then I would get a sense of what were the mercantile, or what were the styles of that particular region through its…really getting to the local culture. And then I also just loved the dynamic of the trade.
Andrew: Wow. I also heard that you sold something pretty unique door to door; I’ve never heard another entrepreneur do this.
Richard: One piece of advice is just don’t do this. I’ve had some good ideas and a bad idea. Once I sold fish door to door.
Richard: There’s a shelf life problem with that particular business that’s quite horrifying. I don’t recommend it.
Andrew: I used to watch Alex P. Keyton on Family Ties and he advocated selling fish because he says, look, the fish are going to die, people are going to need a new one because they already bought the aquarium.
Richard: These fish were already dead.
Andrew: Oh, by the time you sold them? Oh, I see.
Richard: Selling goldfish door to door might have been a better business. Where were you when I needed you?
Andrew: I see, oh you were actually selling fish to eat?
Andrew: Oh, all right, I see. Did you pick up on anything as an entrepreneur as a kid growing up, did this make you a better entrepreneur? Did it equip you for the story that we are about to hear unfold?
Richard: Yeah, I think it taught me a sense of courageousness. It taught me about trusting instincts. With the fish story, it taught me when to give up.
Andrew: I see.
Richard: I think it encouraged something that was inside of me which was this desire to pursue my own businesses and create things. I’m very fond of creating tangible consumer goods. I have some things in my life that have been technology oriented, but I really like creating things that people can hold and experience. Those are things that I get really passionate about.
Andrew: That’s what I was going to ask you then. Ten years at Microsoft as an entrepreneurial kid who develops into an adult. Why work ten years for a great company, but one nonetheless that doesn’t make things that you touch, and one that you’re not the owner of?
Richard: That was a chance for me to do [??] within Microsoft. I mean, during that time there I worked on systems, I worked on CD-ROMs, and then I worked on a distribution channel, and then I started doing online startups, and so I got the chance there to really cut my teeth and learn a lot about business.
Most importantly, it was a great platform for me to be in, an intrepreneur versus an entrepreneur, where I was starting new businesses within a large organization. I benefited from the experience and scale that that brought, but also, through four different chapters technology and was able to show how I could start new things and watch them come to life.
Andrew: What’s the proudest, the one that you feel like, oh maybe I couldn’t have done this, but I sailed far and away?
Richard: Well, I’m car crazy, so Car Point. We started car services; we sold one of the first cars on the internet. It was something that I really enjoyed. But the thing that I think I’m most proud of was the project we started called Sidewalk, which was really ahead of its time.
We launched in 20 cities. It was an entertainment guide for your local city, much like you see now in Yelp and some of those other online services, and we had one that I had thought was phenomenal, but it was just too early in the growth curve for the internet.
Andrew: I remember Sidewalk. Actually, the hairs right in the back of my neck feel strange, stood up as I was thinking about Sidewalk. I remember it in New York City, absolutely.
Richard: Yeah. That’s right. We had a fantastic team in New York and I really felt that we did a good job, you know? I was very proud of the work that we did and we had a phenomenal team. But it’s challenging now to look back and just believe that you were just too early.
Andrew: Yeah. Did you quit your job at Microsoft before or after you found a manufacturer for the game that became Cranium?
Richard: Well, before. Towards the end of my career at Microsoft, I had a shaved head and was super hardcore and the culture started to change the company and I was referred to as old school. But I could feel the culture changing and not feeling that sense of being home as much as I did at the beginning of my career there.
So I think that for both of us I recognized it was time for me to make a change, and when I left Microsoft I was really lost. I didn’t know what I was going to do. I wanted to reinvent myself, and so actually I ended up taking radio D.J. classes at a local community college because I actually wanted to be on the radio.
My dad always told me I had a good face for radio, so I thought I’d try and discover-I’m very passionate about music-and so I went back to take those radio D.J. classes and that didn’t work out for me. And on my journey it’s often a door that closes that results in another one opens.
Andrew: Why didn’t it work out for you?
Richard: I auditioned at a radio station and the head of the radio station said to me “Did you really think it was going to be this easy? You took some community college classes and show up and you get to be a D.J.?” And I said “Yeah, if you give me a chance,” but it didn’t work out.
And so I crumpled up my little proposal and stuffed it in a trash can and with tears running down my face because that dream had come to an end for me, I knew that I had to find a new path for myself.
Andrew: Literally tears?
Andrew: Literally tears?
Richard: Oh yeah. I was heartbroken. I really…for six months of my life…it was a very fragile moment. When you leave something, when you’re in a company like Microsoft and you’re patterning your business card that said Richard Tait from Microsoft, no one listens to the beginning of that sentence.
All of your corporate credibility comes from the fact that I worked at Microsoft, and so much of your social currency is tied up in where you work. And when I was just Richard, it was a very vulnerable moment for me to be. And so going in with that radio proposal and really taking a risk of trying to reinvent myself and have someone blow out that candle was a very vulnerable moment for me.
Andrew: And I imagine that, as a D.J. as opposed to a software developer/project manager or even a creator of a game, when someone rejects you, they’re rejecting you. It’s not like the game is no good, it’s you’re no good.
Richard: You’re absolutely right. That hurt, so yeah. I was…frankly I was depressed. I didn’t know what I was going to do next and I was looking for some way of establishing a new social currency for myself that was beyond Microsoft, and fortunately for me that turned out to be Cranium.
Andrew: How did you find a manufacturer to create this game?
Richard: That’s a great question, and it’s a question, there’s two questions that I get asked all the time as an entrepreneur. People say, you know how did you get started? Well, how we got started was we started building prototypes at Kinko’s. We were…we printed the cards at home on an inkjet printer. We went in and made the boards at Kinko’s and laminated them at Kinko’s and we were taking them to people’s homes, and that’s how we’d get our focus groups going.
Andrew: What did you learn from taking it into people’s homes that you didn’t know before?
Richard: Oh my gosh. You learn…the first play test we ever did was actually at my house in the dining room of my house. We got Cranium done from idea to shipping in about seven months and that’s incredibly fast in the games industry. And the reason it was so quick was that we got six or eight of the most critical Microsoft program managers we could find and they came into my house and they tore the game to shreds.
And if you’ve ever held up a baby and people have told you that it’s ugly, then that’s exactly what happened to us. But because of their insight, because of their constructive criticism, and because it was so acute and we were able to make changes really, really quickly and we weren’t, we didn’t take it personally when we knew that they were trying to help us make the game better.
And so we just moved really, really fast. So those focus groups told us which content was right, it taught us about a duration of game play, it told us about which activities were fun, and which activities were not. They taught us so much about [??] and the experience at the game.
Andrew: Oh, I’m sorry. Do you remember one specific thing that you thought would be fun and people played and said, “No, Richard, this is ..?
Richard: I’ll tell you the one that I thought wasn’t going to be fun. Whit and I thought about it continuously and he ended up being right.
Richard: When one of the most famous activities in the game is the clay where you sculpt and make clues out of clay. I thought it was very trivial and childish. Whit was a huge advocate for it because he believed it brought out a youthfulness in the game. A lot of people discovered a talent that they really didn’t know that they had.
When this one focus group, I remember it so vividly, where I was hiding behind the couch and watching. There was a guy who was in his ’40s, he reached in to the tub of clay and he took out the clay. In his eyes, was this four year old little boy as he sculpted, I think it was a golf course, he was sculpting a golf course out of clay.
Whit turned to me and I’ll never forget this moment. He turned to me with this huge boyish grin and just nodding. I was like, “Yup. The clay is in.” Everything that he described to me about that rediscovery of your youth, that sense of creativity that comes out in a medium that you’ve got no inhibitions around, he was absolutely right. That was in a focus group that we learned, “Okay, that’s in.”
Andrew: You know what? That was one of the most unusual parts of the game. There isn’t another game for adults that I can think of that has that.
Richard: There’s been subsequent iterations that I think people have tried to replicate it. It was very novel as was drawing with your eyes closed which was another thing that people didn’t think they could do. They would delight themselves and their friends and be applauded and celebrated. That was the moment we crafted our games for.
Andrew: So then you had this idea. You kept experimenting, you kept going back to Kinko’s and adjusting. It’s time to actually have it created.
Richard: So the manufacturer, thank you. There was, we looked in the yellow pages. We looked, which this was before the Internet took off, and to find someone like that was very unusual. We actually found other game manufacturers and we called them up. We said, “Who made your game? What worked well? What didn’t work well?”
We found a gentleman named Neil Chuckerman (SP) in Sturtevant, Wisconsin, the cheese capital of the world. He was a board game manufacturer and that’s where we made the first Cranium games, was actually in Sturtevant, Wisconsin.
Andrew: How’d you know how many to make? I know now you have a Kickstarter you just finished so you’d know. How’d you know with the games?
Richard: We didn’t. Well there’s minimum runs. There’s certain things that define how many you can because they just want, they’ll charge you an arm and a leg or they won’t even take on your project if you don’t agree. We just figured out a number that we could afford that was within the minimums and wasn’t too crazy. We ended up manufacturing like 25 or 29,000 games.
Andrew: Oh, wow.
Richard: Though with nowhere to sell them, that was the big mistake we made because we missed Toy Fair. At Toy Fair all of the decisions for all of the major retailers were made. We didn’t go to Toy Fair so when we approached those major retailers with our game no one wanted to buy it because their shelves were full.
Andrew: So if you don’t get in to Toy Fair, you just can’t get in to all these new stores?
Richard: It’s a lot harder because a lot of the larger format stores have already made there buying decisions. At that moment we were working with local specialty game stores. In a moment of desperation, Whit and I were in a Starbucks store lamenting about what idiots we were, we had 29,000 games, we had nowhere to put them.
I looked up and standing in line at Starbucks were our target demographics. We called them dating yupsters. I turned to Whit and I said to him in this mode of clarity, “Let’s take our games to where our customers are rather than where games are sold.” That simple sentence transformed the games industry where I said to them, I said to Wit, “You know, let’s go. Let’s target Starbucks. Let’s target Amazon.com. Let’s target Barnes and Noble because those are places where the dating yupsters are going.”
They never sold games before. When none of them had sold games before, but that’s where our customers were. That transformed the industry for us.
Andrew: I’m assuming yupster means a yuppy, hipster type of person.
Andrew: Dating meaning when they’re dating. How did you know that this was the right person to take your game to?
Richard: Those were the people that were fighting us for the prototypes in our focus groups.
Andrew: I see.
Richard: As a generation they were going through this moment where they were all spending so much time on their computers, they were looking for some levity and some time to spend with friends and have a human connection in the evenings or family time.
Andrew: I see.
Richard: So, that was our target demographic.
Andrew: I still think that’s a huge leap but most people would have said, “Great. Now how do I get Starbucks to take my game?” How did you get Starbucks to take the game in?
Richard: Yeah, that’s a great question. All three of those retailers were incredibly busy. Amazon, we’d call up Amazon, we’d click, click, click and then we came up with the idea of actually hosting focus groups with the friends of Amazon buyers.
So that when they went in to Amazon the next day, they were talking about what a fantastic time we’d have with–
Andrew: How did you find friends of Amazon buyers?
Richard: We’re in Seattle, so it was easy for us. We knew some people who worked at Amazon. And we just asked some folks and figured it out. And then we organized those play tests. And with Starbucks we have two things that we did there.
First of all, we found a gentleman called David Brewster who was well known within the organization as the guy who had fostered and developed a couple new projects within Starbucks. For example, he was involved in the early days of Hear the Music. And so I knew that there was a guy there who had a reputation inside the organization for nurturing and developing new products. So he was my guy to get in and we managed to reach out to him.
Richard: We knew who he was. You just called in or you find out who knew him. We got an introduction and, fortunately, for us, he had a young family and they loved playing games. And then we were also very fortunate in that we got an introduction to Howard Schultz through a guy called Dan Livington [SP] who runs an investment company here in a town called Marion.
And that was a way for me to just get in front of Howard and show him Cranium and get his feedback on it. But most importantly, it was building it from the bottom up. That’s really important in those organizations. Coming from the top down can actually be a bad thing. You want to build it up with a lot of eternal support and that’s where we put a lot of our energy.
Andrew: Maveron, was co-founded by Howard Shultz, right?
Richard: Correct. Yes.
Andrew: And they are investing in you along with Texas Pacific Group. At what point did you get investment?
Richard: It was a long time ago. It was year four or year five for us.
Andrew: So after sales had already taken off?
Richard: Yeah. We sold our first million games with no advertising. So we’d already got some traction and it was easier for us and say, Yeah, this is really working.
Andrew: Do you remember how many board games you sold at Starbucks or Amazon or any in the early days? Do you remember those early numbers?
Richard: I don’t remember all the [??] numbers. But I do remember that being there caused us to get a lot visibility. It’s a very unique thing. We were the first non-coffee product in Starbucks store. So when they had millions of people every week going into that store, we were very visible in the store. And we brought a sense of fun and personality into the Starbucks experience. And so it’s a very complimentary and the barristers loved us which was really fun.
Andrew: I’m guessing that you sold the 29,000 games that you had stock piled because of that Starbucks deal, that was the first one.
Richard: Actually Amazon might have been the first one but they all came very quickly. But, yeah, we managed to make our [??] the first 29,000.
Andrew: And isn’t it interesting, by the way, that you remember the name of the manufacturer. I’ve seen you do this at least once or twice more in the interview. But the numbers, you’re not as obsessed with as you are with making sure that we had the right name for the manufacturer. Is that a personal trait?
Richard: No. It’s an acute observation. I just can’t remember how many games we sold in the specific store in a year.
Andrew: All right. I don’t want to start drawing big conclusions. As a result of that, it means you must love your father but not your mother because you had a [??]. No.
Richard: It was 12-13 years ago. So it’s a long time.
Andrew: Do you remember when you made the first million dollars with Cranium?
Richard: Yeah. That was in year two.
Andrew: Year two because of those deals that we talked about.
Richard: Yeah. And also just the traction. We were very fortunate. On the Oprah Winfrey show, there was a moment where she had Julia Roberts as a guess on the Oprah Winfrey and she noticed that Julia Roberts likes to play games. So Oprah asked her, “Is there something that you’re doing for fun these days?” And Julia Roberts declared that she’d discovered a new game and that game was Cranium and she couldn’t stop playing it.
We had a friend that was in the taping of that show who called us right after and said, “You won’t believe what I just saw.” And I said, “What is it?” He said, “Watch this.” And so they pointed us to something where we could see the show and that smile that only Julia Roberts can smile and for her to declare that she couldn’t stop play Cranium. And that was something that took us hard [??] to the left.
Andrew: I’m going to do a quick spot for my sponsor but instead of me doing the commercial for Scott Edward Walker and telling people again as they probably know by now. He’s the entrepreneur’s lawyer. Why don’t I ask you, Richard? You’re an entrepreneur who’s been in the game now for a while. Do you have any advice for entrepreneurs in the audience about what to look for, a lawyer or how to set up things early on so that they don’t have any problems in the future?
Richard: Well there’s different stages you go through with a lawyer. First of all, there’s the carpet structure, the second is the intellectual property that you’re creating. How do you get protection around that intellectual property? And that, subsequently, becomes business deals and making sure that those are structured correctly.
I’d give three pieces of advice. One is find somebody that has worked with someone that you know before and that would give you a really good referral on it. Two, is ask a lawyer for good referrals. And when you’re talking to those people about those people about those referral, talk about where the lawyer has made a big difference.
[??] a lawyer that has worked with us that I can point to specific things and say, That guy saved us or that guy was able to negotiate this particular deal for us. And the third thing, a lot of it is down to personality, you’ve got to get along well. It sounds like a crazy relationship for me to have good harmony with, and you want to have good harmony with a lawyer. So hopefully Mr. Walker has all three of those.
Andrew: All right. That’s a great idea. If you do end up working or considering working with Scott Edward Walker, ask him for some referrals. Ask him for past clients who were similar to you that you can talk to and get some feedback from them. Check him out. He’s at walkercorporatelaw.com. Talk to Scott. Let him know that I sent you.
You seem very passionate about this, by the way. I want to continue with the story up to and including the sale. But, I had a conversation with an author on here on Mixergy who said do not go for your passion. You need to think about what you’re good at, what you can spend a lot of time on. That’s what’s more important. Passion is going to not necessarily lead you to success.
What do you think of that? Why do you say passion, and what do you think about the alternative?
Richard: Well, the alternative is working in something that you’re not passionate about, which [??].
Andrew: Maybe not passionate about, but that passion is not what we should be looking for. We should be looking for where’s the money, where’s the business, maybe more…
Richard: Yeah. For me, the analogy that I would draw there is whether passion can lead to profit. For me, like, sure, I’m 50 years old. I want to work on things that I really care a lot about and can get motivated around.
If those things can lead to a financial outcome for me then I think from a professional perspective that’s the luckiest thing you can have. It’s to work on something that you love to do and that you have a positive outcome with. Working on something that I’m not passionate about, you know, I would find that to be drudgery.
So for me the opportunity to work on things that I’m passionate about is what I’ve sought in my life, and said no to things that I can’t get really engaged in, pour my heart in. I mean everything that I try and do I pour everything I have into it. So, for me being passionate about it is really important.
Andrew: I see. So passion without forgetting that the business still needs to make a profit. How did you know that board games, that any board game today, can still be big enough to be worthy of the tension and time and the risk that you’re putting into it?
Richard: Many of those businesses were huge businesses and continue to be huge businesses. We saw the scale that you could get with Cranium. Once we started to get the margins to be very, very healthy then it could be a very, very positive business.
It’s a challenging business to get into. It’s dominated by a couple of big corporations, Mattel and Hasbro. They make it very, very hard to get distribution. You’ve got to try and figure out unique ways of getting traction.
We were fortunate with the relationships we’ve just discussed, with Starbucks, Amazon, and with Barnes and Noble, that we were able to sidestep them a little bit and get some traction and move forward.
Andrew: Is this is a happy-go-lucky story where the idea came to you and, yes, you couldn’t get into the toy fair, but otherwise everything just worked out beautifully for you? Or, was there any moment of challenge and risk and near destruction the way that there are in other entrepreneurship stories?
Richard: Oh yes.
Andrew: What’s the big one for you?
Richard: Well, there’s a couple. One year… When I tell the story I often talk about being in the avoidance business versus being in the reaction business. You get into the avoidance business by having experience either on the team, or on your board, or in your advisory council where people that can help you understand what some of the pitfalls are you’re going to run into particularly when you’re doing things like I do which is get into new industries that you might not have that experience in.
A very pointed example was one year, it was actually the first year that we were going into Toys “R” Us, we were going into Target, we were going into Walmart, for the first year we were on end cap. There was a threat that there was going to be a port strike.
We gambled that the strike would not happen at Christmas time. Other [??] factories were bringing in inventory and holding it in the summer so that they would have it domestically, that they could fulfill domestically for Christmas. We did not do that.
Unfortunately, the strike came to fruition and we could see the games in the port of Seattle. We could see them on this ship in the containers, and we couldn’t get to them. So, ultimately, we had to fly product in from China to meet the demands of the retailers.
That was incredibly expensive and it was hard for the organization to recover from. But, that was an example of where things didn’t go swimmingly, and if we really known what we were doing or observed what our competitors were doing we would’ve followed their behavior and brought it in and held it domestically and fulfilled domestically. That’s an example of a mistake that we did make.
Andrew: You said there were a couple that came to mind. What’s a second one?
Richard: You know, it costs you more to market than it does to build the game. In the beginning we were very conscious of the cost of actually building the product. Ultimately, what was expensive was building awareness and building that following.
We were fortunate, and we started to have this community that were called Craniacs. They referred us to other families. That’s how our business got built.
But, as the business grew and you had the retailers who were asking you for television advertising or all those other things that come with getting shelf space in a retailer, and that’s another example of where we didn’t fully understand those cost when we were getting into it. And also when you start hiring people into the organization they understood that role better than we did.
Andrew: Why did you raise money when things were going so well? Why raise, I heard it was 35 million dollars?
Richard: There were two waves of investment that we took. The first the games were just going really quickly and as we start to build our inventory, we needed to bring in more capitol to allow us to scale. And the second was we launched a toy business so we had a completely new category of trade that we were going into. And we raised money to enter that new category of trade.
Andrew: Okay, did you take any money off the table of either raise?
Richard: Uh, no, no, I didn’t.
Andrew: Wow, so you were still there collecting a salary. Was there any risk that if someone else comes into market with something similar this whole thing goes away?
Richard: There’s always that risk.
Andrew: And you were just okay with it?
Richard: You just have to be the best. And another thing that I talk about it, you have to be… I once had this presentation that I gave where I wrote down eight things that I learned at cranium. And number three was meant to be, “know what you’re good at,” but I misspelled good and it said, “know what you’re god at.’ and I think it’s actually more important that you know what your god at.
And what we were good at at Cranium was our core discipline around creating phenomenal games. That’s what we did was create brilliant experiences. So yeah, somebody else could have come in but we just had to be confident that that year we were going to have the best game. And we were one game a year I think five times which has never been done again in history and that was what were would good at was creating those experiences.
Andrew: I see, so it’s not enough to be good at something. You got to be like a Zeus at it. You got to…
Richard: A ninja!
Andrew: …yes, like a god, even more than a ninja.
Andrew: I see. What were you not good at?
Andrew: Was it distribution?
Richard: Yeah, I mean, that was challenging for us because we didn’t, a company like Hasboro has multiple categories of trade with that with that large distributor so they have more negotiation power. They can move things around on the shelf that they want and for us we only had one strip. That was the cranium strip.
And we didn’t have as much bread in the retail environment. And I think that’s quite common among different categories of industry. There’s two or three big players and they dominate the distribution channels, and we have to figure out ways of working around that distribution channel.
Andrew: How did you get into all these different stores, was it just the fair?
Richard: No, what happened once we started getting visibility in places like Starbucks and Amazon of course the bigger retailers are looking for something special and unique. And so, they start coming to us and asking us if we would consider going into larger format stores. And for the first couple years we said no. And because we didn’t feel like we were ready to accommodate their business formats.
Richard: We also wanted to keep it kind of special and unique feeling. So, we had two years there where we were doing that dance of figuring out a specialty business before we engaged the first large format retailer. Toy-r- Us.
Andrew: I remember going into the Starbucks and seeing the baskets that were nicely presented, and I don’t know what they are called, not streamers. But there was something in the basket and then the game. How did you come up with four, I said at the top of the interview, forty other games, books, and toys, how do you come up with that? Is that all epiphany?
Richard: Well it was based, we had this philosophy of creating which was called moment engineering. So, for us we would identify a moment, for example we had a game called Caribou. It was strictly designed for blue collar, rainy day, savings graces where a mom with a young toddler was looking for some activity that would be engaging in bad weather and was also educational.
So with Caribou we created a game that was an early learners’ numbers, shapes, and colors, but was fun for both the mom and kid to play. But it was created around a specific moment. So, for us we would always use something we learned and would look at those moments and engineer an experience around that particular moment. And some of them were driven by demands.
So, for example, at the beginning when we launched Cranium, we had a lot of families who said hey our children are younger than eight. And they need different content, so we created a game called Caribou that was specifically targeted at a different age demographic.
Andrew: I see. That makes sense. What else was I going to say? Oh yeah, Richard Branson, I love this story. Can you tell the story of how you met him and what happened?
Richard: Well, we were looking to try to launch in the U.K. I am Scottish so it is naturally that I would want to go back and try to celebrate the creativity there. But we were looking for the right partner. And Brenton and I, I being a fan of Branson since I was a child, and then one day we decided he was signing a book in a book store called Borders in Seattle.
And one of the guys who works Cranium, a guy called Adam Trapp, and he came to me and said, “you got to go right now. Take this game and go to Borders right now, Richard Branson is there.” So I went and stood in line at Borders with my game under my hand, my arm, and waited for the chance to meet Richard Branson.
When we met, his name was Richard, my name was Richard, and he said to me, “What do you have under your arm?” I said, “That’s my new game, Cranium.” He said, “Do you know I love to play board games?” I’d read his autobiography, so I knew he did. I said, “Yeah! I brought this one for you.” He played that game on the plane home and within a couple of days called us back up and said he’d like to launch the game with us, and with Virgin in the U.K. It was a dream come true for me. It was really fun. Again, it was a disruptive part of distribution, because they were traditionally known for music. To have a game launching with them was quite unique.
Andrew: He actually calls you back himself afterwards?
Richard: I had the chance to meet him. He was the business owner, he was a person who was like, you’ve got to come over and talk to us. This guy called Simon Wright [SP] who I’m still friendly with who now lives in Los Angeles.
Andrew: You said you were Scottish. I read, where was it? I think it was in Seattle Times in 2008. I read an article about the sale. They asked you, what are you looking to do afterwards, and you said, I think I’m going to take my kids to Scotland to see where I come from. I thought, that sounds like he’s never been there or never taken them before. Did you not travel back?
Richard: My kids were super young, so it was the first time that they had traveled.
Andrew: Gotcha. Okay.
Richard: I go to Scotland four times a year. My mom and dad still live in the same house that I grew up in.
Andrew: I see. The reason I ask that is because April told me that you have no sense of work-life balance. I thought, maybe he’s not even taking trips. What is your work-life balance situation?
Richard: I feel like it’s all wound into one. Now with devices you’re constantly connected, and even if it’s just five second or ten seconds, you’re responding or interacting. The other reason I try and focus on things that I’m passionate about is because I do feel… I don’t leave here at 5 o’clock and not think about work anymore. That’s not my personality, and it’s not what I love to do.
For me, with [??], there’s a lot of stuff going on abound football, and I love football. For me, to leave work and to constantly interact with that community and that environment is really important. I’m a dad with three kids and I do find it’s really important to be present with them, particularly as my kids have gotten older. The time and moments with them are more fleeting. Last night I took my girls to see Lorde play. That was just fantastic at that stage in their lives for me to go there with them…
I love music, too, so it was a way for us to have a shared passion and to do something fun together. To be present in that moment and really enjoy it with them… I think that that’s the way that I would define balance: to make sure that you are present with them, and enjoying and interacting with them in the things that they like to do.
Andrew: If it wasn’t to take your kids to Scotland for the first time the way that I misunderstood, why did you sell the business?
Richard: This was in 2007, 2008. I don’t know if you remember what those years were like, but those were bleak years in…
Andrew: Just as they were going into even bleaker times.
Richard: That’s correct. We started to see that happening. Whit and I were watching the dynamic with the retailer. They were starting to push more and more inventory back on the manufacturer, for them to take the holding risk on the inventory. We went to our board and said, we see an emerging storm that we’re not sure we’ll weather by ourselves, so it’s time to reach out to a larger partner. That was the right time for us to approach Hasbro and Mattel as a possible sale.
Andrew: How much of the company did you own by that point?
Richard: We don’t talk about that.
Andrew: Did you and Whit own less than 50% combined?
Richard: As I just said, we don’t…
Andrew: Oh, you don’t even talk about that. Did you become a… Of course you became a millionaire because of that sale.
Richard: That’s not why I started the company.
Andrew: Why did you start the company then?
Richard: Because at that time, Whit and I wanted to go on another passionate journey. After 10 years at Microsoft, I wanted to craft the next chapter of my life. At that time, the entertainment industry was dominated by negative programming. It was The Weakest Link, it was “You’re fired!”, it was who was going to sleep with whose girlfriend on an island.
I wanted to create an entertainment company that stood for something different, that stood around family values, celebrated what’s inside each of us, and that creativity and that passion. I wanted to create an entertainment company that gave everyone a chance to shine, which was so counterintuitive to everything else that was going on in the business. That was the cross that I wanted to carry, the flag that I wanted to take to the top of the mountain.
Andrew: And you feel like you got it to the top of the mountain?
Richard: Yeah, I do.
Andrew: What felt like the moment of being at that top? What’s the one period where you felt like, “I did it”?
Richard: It still happens to this day. I’ll be in a cab, and someone will ask me what I do, and I say, “I create things.” They’ll say, “What have you created?” I’ll say, “I made a game a while ago called Cranium.” They’ll go [gasp] “Cranium! I love that game!” I was just at a resort with a young person who was serving us and asked what I do.
We were having an engaged conversation around products and they told me about the Christmases that they’d spent with their family with that product. It wasn’t about the magnificent moments, it was about little moments: the fact that you did bring families closer together. Somebody did laugh or they tell a story of their dad impersonating Elvis during a game of Cranium. It’s those types of things that make me realize that we touched millions of people’s lives
Andrew: You know, I should say to the audience that usually on Mixergy I cover entrepreneurs who only do tech. Meaning software frankly, stuff you can’t touch feel and share with your family in the same way that you could with a physical product like a board game. Well I do have a handful of interviews on Mixergy with entrepreneurs who’ve done it. And not just interviews, but also courses with entrepreneurs who’ve built speakers. Who’ve built alarm clocks. All with their own unique edge to it.
Remember the alarm clock clock? You would jump out the bed and you would have to go chase it. The speaker would be one that was beautiful that would sit on the table and look like a well-designed part of your house. And all those types of products have special and unique challenges that are different from the kind of challenges that an entrepreneur who comes on here and says “I had to get into the APP store and then get to the top of the APP store”.
So if you’re building physical products or are curious about it, I urge you to listen to the interviews and the courses that I’ve done on with entrepreneurs who’ve done it so that their stories, their experiences – well, so you can internalize them. And then use them as you guild your own company. That’s all available for you on Mixergy. And, if you want to take it to the next level, and really take those courses that are exclusive to Mixergy premium members go to MixergyPremium.com and sign up. I urge you to sign up. I guarantee you’ll like it.
And I think maybe we should be doing more physical products. I’m thinking of Mike Del Ponte who has the Soma water purifier. That looks to good on the table that, when I have guests over, I put it out. Everyone knows all my – like, I had Mike over with some friends. We all knew what we each did. But Mike didn’t just say what he did. We didn’t just know what he did. We got to drink out of the pitcher that he created, that he in his mind came up with. It’s a unique experience. Go sign up to premium if you guys want to hear some of those courses…
I know what I was going to ask you. I’m trying to be aware of the guests beyond my personal questions. At the top of the interview, Richard, I thought as I was saying, “he sold his company for a reported 70+ million dollars” I thought I saw a twitch. How did you feel as I said that. Did you feel uncomfortable or something?
Richard: No. The only uncomfortable thing for me was I would love to still be running Cranium. I mean I love that job. And I loved what we made and my kids loved that I was making games. It was a fantastic chapter in my life. And I look back on it still fondly and so often when people – I don’t like talking about the money to be perfectly honest.
If there’s any cringe that I have is that I never started that company with that as the raise on Debtta [SP]. It was because we wanted to bring families back together and bring a sense of fun. And so, often times that’s the punctuation point but that’s not really why I’m so proud of what we did.
Andrew: I’ve interviewed entrepreneurs who’ve gotten into a melancholy state after the sale because everyone else is celebrating them thinking “Congratulations! You walked through the finish line” but to them it feels like a loss.
Richard: It was an emotional time in my life for sure and certainly for me, because I’m so passion oriented that I lost my metronome and my compass. And so when we went through the sale I didn’t have anything else to do. I didn’t have anywhere to turn up and do what I did. I’d find myself in my jammies at 3 o’clock in the afternoon and that’s not me. I’m so driven and purpose orientated that I was looking forward to that next pursuit that I would have.
Andrew: I want to ask you about passion. One more question about it, but, first, let’s just see these new products that you’ve got. What is the one over your shoulder, Golazo?
Richard: this is a new beverage company. It is an all-natural sports beverage company. Golazo means “super goal” in Spanish. It’s what you scream when you score a fantastic goal. If you’ve heard on the TV, “Golazo!”, and we wanted to start a sports beverage company that was very, very different. One that was all natural in its ingredients.
Being very, very focused on providing the best functionality we possibly could, with phenomenal flavor, and create a unique positioning around starting with soccer as our core audience and then progressively moving into other sports and allowing people to be forced to the ball. So we started that company two and a half years ago.
And we launched with a sports energy product that is a caffeinated electrolyte drink and also a coconut water infused hydration product which is so much healthier than either anything in the energy category or in the hydration category. We’re now the number one drink selling at Wholefoods in the Pacific Northwest. We’re now run by 15,000 stores in eight states.
Andrew: I saw for Moment Lenses, that’s a lens that you put on your iPhone right? That it just snaps in place. You can take it off and put it in your pocket. It wasn’t you on Kickstarter representing it. And I was wondering what’s your relationship with the people who are running the company. Are you running it day to day? or is there a CEO who runs it day to day?
Richard: We talked in the beginning about what I’m good at and then finding other people to compliment me which was the case with [??]. He was an entrepreneur whose name was Mark Barrows. [??] no, no. He’s the one that you see predominantly in, I’m in the video but I’m not speaking in the video. He’s the CEO of the company. He has a lot of category expertise. He started a company called Contour which is a head mounted camera before Go Pro.
We’ve met each other and found a real chemistry between the two of us. We said, “Okay, let’s create a new company that Mark was ultimately going to run.” I helped in terms of the original vision and helping them getting up and going. A named [sounds like] moment, we went through that whole beginning of the company together. Now I’m more of an advisor. I work with the team yesterday but Mark is really the person who’s doing that day to day.
That’s true with [Simple] and Chris, with Jane [Newin] who’s the primary CEO in that company. In those instances then I’m trying to help. I’m provide any support I can in terms of my network or through my incubator [??] called Boom Boom. That’s, in those cases I’ve found in order to help them pursue their dream.
Andrew: That’s the idea, to find an entrepreneur who’s passionate already about an idea who can run it but can use some of your network experience and other assets.
Richard: That’s correct.
Andrew: Very similar actually to Richard Branson’s model where there’s someone else running it but he brings the Richard Branson essence in to the business.
Richard: Yeah, maybe. He has the same. I mean, he had 110 companies when I met him. I think I’m a ways behind him yet.
Andrew: How do you find your passion? I see where you have something that you cared so much about that you wanted to keep on doing it and would have been happy doing it for the rest of your life. I know that other people feel that if they found that passion that they could do it with as much energy as they have inside of them but where do they find the passion that allows them to bring out that energy. Do you have any advice?
Richard: With each of the ones that we just talked about, Mark came to me and he said, “I believe the world is a better place with beautiful photography. I want to create the most beautiful photography ever.” I was so struck by that vision I said, “Let’s make history. We can do this.” Since that moment of stepping off that cliff, that opportunity to make history is where you galvanize around that passion.
With each of those businesses then I’ve got an entrepreneur who’s ready to step forward and throw their life at it and trying to make history. You have to look deep inside. I love football. I played football since I was four years old. For me to have a chance to create a business that starts with that as its genesis is something that I’m personally very, very passionate about.
It was combined with an economic opportunity. We saw the growth of the popularity of soccer. We saw the demand for all natural products and we saw the growth and influence of the Latino community.
To be at the apex of those three big trends meant that we would have a better chance of success. The fact that I’m passionate about football is just something that demonstrates that I’m willing to throw my life at it but there was a business reason to step forward and do it. You’ve got beverages, if you have a big in a beverage it can work out really well.
Andrew: First it’s either how do, what do I want to see changed in the world? You gave the example I’d like to see better photography or I’d like to have games that are more family friendly, engaging and are fair to people who have different skills. That’s the first place. The second place is to ask, the second step is to ask is there a business opportunity here so that it’s more than just passion.
Richard: Yeah, with the case of [Moment] Mark held out a cell phone to me and he said, “I want to make this the best camera in the world because this is the camera that you have with you all the time.” When we did that and we looked at what was happening with mobile photography and we saw that, that was the curve that was taking off we said, “Ok, let’s make this the best camera it can be.” That meant we went out to make unprecedented quality in lenses.
Andrew: It blew past its Kickstarter goal. I think it was aiming for, I’m looking it up right now but I don’t know that I’ll find it fast enough. It was aiming for something like $40,000. It did, here we go $50,000, was aiming for. It got $451,000.
Andrew: All right. This is an incredible success story. It’s one of those success stories where you feel like it couldn’t have happened to a nicer guy or frankly a more styled, a better styled guy.
Richard: You’re so kind.
Andrew: Yeah, thank you so much for doing this interview. If there’s a stylist out there who can get me like 10% of the way that Richard looks, you see that, I would like to meet you. Thank you. I really, as a person who, I admire businesses because I love and want to create successful business. I admire style because I have none of it as you’re going to see when this interview is posted on the website. I’m working on getting better at it.
Richard: Good luck. Andrew, my pleasure. It’s really nice to [??].
Andrew: Thank you, thank you. Thank you so much for doing this.
Richard: … amazing work you do for all of the entrepreneurs. It’s very motivating and providing the benefit of the experience. The people that you have on to your show with the tools that you’re providing, it’s really, really important. I applaud it.
Andrew: Thank you so much for doing this and for being such a supporter. Thank you all for being a part of it. Go out there. Build a successful company. If you got anything out of this, find a way to thank Richard and to let me know so that I can know what to keep looking out for, for you guys. Thank you all. Thank you, Richard.
Walker Corporate Law – Scott Edward Walker is the lawyer entrepreneurs turn to when they want to raise money or sell their companies, but if you’re just getting started, his firm will help you launch properly. Watch this video to learn about him.