How to Do Mistakes as a CEO

Anna Brchisky

Head of Communications & PR, Slush

In a world, where games are played by 2.5 billion people and the market is, to say the least, extremely competitive, a new gaming studio is popping up from a unique place.

Mainframe Industries, an intriguing mix of Icelandic humor and Finnish bluntness, announced their new funding round of €7.6 million, led by none other than Andreessen Horowitz, the US-based distinguished Venture Capital firm with Riot Games, makers of League of Legends the world’s biggest online game, also investing in the round. The Mainframe Industries team had previously announced completing a seed funding round worth €2 million led by Maki.vc, Play Ventures, Crowberry Capital, and Sisu Game Ventures, all of whom also participated in the latest Series A round.

The gaming studio is currently working on an open-world, social sandbox MMO specifically designed for cloud gaming, with cross-platform play across multiple devices. In English, a game that you can play from anywhere, in any way and whenever you please.

To understand the ins and outs of their path from an idea to a whopping 13 people founder team, divided between Helsinki and Reykjavik, and a €7.6 million Series A investment in the pocket by one of the most prestigious investment companies in the world, we sat down for an interview with Thor Gunnarsson, the CEO, and Co-founder of Mainframe Industries.

• How did Mainframe Industries approach their fundraising process?
• What do Iceland and Finland have in common when it comes to culture?
• How does it feel to be the CEO?
• What is the biggest mistake you’ve done as a CEO?
• What are Thor’s top tips for every founder looking to fundraise?

I think games are a social connection unlike anything else and the future of networks. That has resonated with me deeply. Games are not only a place to spend your free time but also a place to meet your friends and new people. They are a way of connecting with others through any device at any point in time.

Unfortunately not much yet, but what I can tell you is that the game we’re building is the one game we’ve all prepared for and wanted to build for our whole lives. Our mission from the beginning was to create a game that everyone, no matter their gender or age, could call their home, where they can spend time with friends.

We’re trying to build a game that attracts people from all walks of life. While the gender balance in the industry is very unbalanced towards men, we don’t see a reason why games should only be built for men. We also think that your chances as a gaming studio of reaching a wider audience are small if you don’t have for example women building the games.

To build the game we wanted to build, we needed to find the right experience and the right “like-minded” developers with a passion similar to ours. We knew that we couldn’t find the talent solely in Iceland and as we already knew people from the Helsinki-ecosystem, the airbridge was natural for us. Our cultures are incredibly similar – we both operate on the Nordic idea where “trust is given until it’s broken”.

On top of the trust by default, the key to making the team work well together was to have several conversations about what we were planning to do and communicate, sometimes even over-communicate. With remote work, it’s very easy to misunderstand others in written format. We also put a lot of effort into spending quality time with the team.

We had high ambitions for investors – after all, when you decide to sign the deal with an investor, you are virtually inviting them to join your team for the next several years. We approached the funding in two stages. When Mainframe was founded, we set out to find interesting local investors like Maki.vc, Play Ventures, and Sisu Game Ventures in Finland and Crowberry Capital out of Iceland, to build strong local pillars. I think it’s vital for any startup to start with strong local support. It helps in the long run and gives you wider networks and validation in your backyard.

I think anyone who follows the scene is familiar with a16z. They were very high on our list from the start, because of their investment thesis on games and massive, 160 strong operational partnership. That operational know-how brings real value for us.

Last fall, we were introduced to Andrew Chen and Jon Lai from the fund, who have an especially deep understanding of the gaming space. Our initial plan was to meet them at Slush, but we found out that they were not able to come to Slush 2019 after all. For us though, the timing of the discussions was critical as we were seeing momentum after fund-raising kick-off coming out of Slush which is one of the most important things to have when fund-raising. We wanted to take advantage of it and so we booked our tickets to California right away.

The magic is in the conversation. You need to take the time to get to know each other. The discussion should not be just a one-way pitch – you’re essentially asking them to join your company for years to come. After we sat down with Jon & Andrew from a16z, we quickly understood through the in-depth discussions how well their investment thesis resonated with what we wanted to achieve at Mainframe Industries.

• Do your homework. Reach out to companies and partners who have worked or invested in your field. Don’t pitch to someone who is just generally interested in or learning the space – that’s wasting both of your time.

• Create a very targeted hit-list of interesting VC’s. Find out what transactions they have done in your space, what’s the history of those transactions, how long they have been in your space, and do they have the staying power to stay in your space with conviction.

• Pitch well but leave time for conversation. Let’s say you have a 40-minute meeting with an investor. You should be relatively quick when pitching, to leave time for the conversation. That’s where you can get to know the actual people and understand if they are a fit with your team and the company.

• Personal connections or warm intros are key when reaching out to an investor you don’t know. In our last round, Harri Manninen at Play Ventures introduced us to Riot while the a16z conversation started through a personal connection between Andrew Chen and my co-founder and Design Director Sulka Haro.

• Finding the right investors and fundraising takes time and patience. No matter how fast you’re trying to pull it off (and the conventional wisdom says 6 months to raise a round), it can easily take double that time. Manage your burn carefully to account for this.

• Turn rejections into a positive. Try to glean insights into why that “no” came back. Use it to hone your strategy and pitch if the critique is on point. The least a serious investor owes you for your time is thoughtful and hopefully helpful feedback. Be sure to solicit it.

As a CEO, what is the biggest challenge in leading a startup?
Definitely maintaining alignment, meaning keeping our creative vision the same and the whole team going in the same direction. It’s a challenge even with people working in the same office, not to even mention when working remotely as we do now. Losing a clear vision stems from human nature – it’s natural for people to get bored with the same vision if they are executing it year after year. We need to keep our vision motivating.

Building a new thing is always scary – what is the scariest thing in being a CEO?
The deep responsibility of standing in front of these people and leading this journey of ours. At the same time, being in this sort of a leading position is an amazing opportunity and I feel very fortunate to represent our team.

What are the three most important tasks for a CEO?

You can boil the work down to three pillars: keep the strategy going in the right direction, attract the best people to your company, and don’t run out of money.

What is the biggest mistake you’ve made as a CEO?

Making mistakes with people is always the hardest part, for example recruiting someone who is not a fit for the team or your company isn’t a fit for that person.

What makes a CEO truly exceptional?

All exceptional CEO that I know are insanely good communicators. They, of course, possess other qualities too, like delegating work and sharing power with their team, but communicating and listening come always first.

Thank you Thor for sitting down with us!