Episode 4: Bungie (with Xbox Co-Founder Ed Fries)
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Hey guys, it's been the audio in today show is a little degraded since we recorded from skype, but we're super pumped about the shown number less bear with us and i'll get the kids worked out for future shows.

Easy, you wait, you wait, you who? Easy, you busy, you with you, sit me down, say.

Welcome to episode four of acquired the podcast where we talk about started back positions that actually went well.

I'm been gilbert.

I'm David rose fall and we're here today to talk about the bungee acquisition by microsoft.

And uh, most importantly, we have a very special surprise for everyone. This is our first episode with a special guest, and we have a really incredible one for you guys joining us today is ed freeze, a who was at microsoft during the acquisition and actually was the first thing that microsoft, whose group LED the acquisition of bungy. So were very honored to have ed with us today. He was he was a microsoft from one thousand nine hundred eighty six to two thousand four um let the acquisition of of bungee uh and among many others and today he's a prolific Angel investor and start up adviser and board member uh in the game space and others and technology, which is how we got to know him and we're totally honor to have with us today.

thanks. I I didn't realize I was your first guest.

That's exciting. Yeah, we try to keep that part secret.

Now everybody does that. All prose, I know.

Good dad, do you want to do the the opposition history, in fact? yes.

So um most people are probably familiar with bungee, the creators of the video game principle halo um the company was founded in the early nineties by two undergrads at the university chicago, alex Sophia and Jason Jones um and they are made a few games mostly for mac actually ah during the during the nineties uh including hits such as military, the labyrinth, crete and others and uh then they had their first break out success uh with a game called marathon at the end and one thousand nine ninety four and then had a couple of success ccea ful sequel and other projects that came out of that. Then you have a personal history with yeah yeah actually .

my my dad was a reviewer for the mac users of delivery of a of marathon um can in the real early days before I I came out and then as the trilogy gy unfold and we actually eat some some pictures last night, we actually have the the collector's edition box set of the marathon ancho gy .

for math pretty cool and uh and and so that that was bungee for most of the nineties and then um in the late nineties in one thousand nine hundred and ninety nine, they unveiled to greek fan fare their next project after marathon which was a game that they were calling halo they actually unveiled IT at uh a mac world keino in the summer of ninety nine and was introduced by Steve jobs himself um and they continued working on IT for another year and then in the summer of two thousand there was a twist and ed steps in and and microsoft in june two thousand announced that they were acquiring bungee and halo and um that hailo would become an exclusive launch title for the forthcoming expect console which was gonna unch the next year um uh everything changed at that moment so thanks again for join us tell us take us back to that was fifteen years ago now how how did IT all happen?

How did IT come first? I was also A A bungee game player um even before I started running microsoft game business I played a couple games in their myth series, which was their real time strategy series. And so I was a big fan of these guys that I knew that they did really good word.

We got final approval to to make the x box in a meeting he called a valentine's day massacre that happened in february eighty thousand。 And so starting then, my life was really crazy because I knew that I needed a my portfolio games ready for a launch, and november two thousand, and one which was less than two years away. Normally games take .

and no develops. Even know about the x box at this point right?

Very you know he was he was just an idea before then and so so is desperate for content. And um and what happened was uh one day my phone ring and IT was a guy Peter tempt who did pz up for bungee I had got and to know over previous few years and h he told me that bungee was in bad financial trouble.

Um they were a they were running out of money and they were likely going to be acquired if if nothing else happened that they were going to be acquired by and take two take two already owned a third of a third of bunch from the transaction um and he wanted to see if I was interested. Um by the way, there's some debate about this point because also the john chemic was also involved. So there's uh again, one of our product planner, john chemic.

His his job was to go out and talk to about the game companies. And so he was also talking to them with the same china. So I don't know if I talked him first or john talked on first.

I doesn't matter. I Peter called me to told me this stuff and and I said, yeah very interested. I mean I really respect your work and um and i'd love to i'd love to hear you guys are up to. And that was the start of that wall.

And I mean, I got to imagine they were other maybe fifteen or twenty years long tittles for the x box when I came out. So you you guys uh, did do partnerships and and and with with other game developers out there, you know what there's something special about bungee can or halo in particular or just that you knew these guys were talented and the conversation started and went from there. Did you have other high profile targets .

that you were looking, you know, at that time, if any talented developers walk my door, I was going to try to do because I had I had a big pile of money. That wasn't my problem. I had I had less than two years and I needed to try to keep its possible down. And so um so that was was definitely happy to to talk to them and and try to put them together.

Did you try to do uh, any other acquisitions at this this time? Was were you thinking about doing like an all first party laws if you could could get IT with the pile money?

No, we were always gonna a mix of first and third party. We knew we needed that. And then launched IT was about half of we, uh, you know, we had signed a deal with a long in this group other world inhabitants.

That was how, yeah first big deal we did and that was kind of a big deal because we pull them away from SONY who would publish their previous game. So I think there's a funny a penny arcade ic from the time where um we're learn lanta talking about how greater is to work with microsoft ten and how he is really, really wants to work with us. And then in the last panel he says, plus they gave me this hat made of money, these wearing this. yes.

What are some of the kind of selling points for, for bringing those guys in house? And you would you you've got a lot of different tools that you're disposal for um coming in and joining in working directly with you know with for the company is developing the platform.

What were your hooks for that? So um you know we had done multiple acquisitions before we started the x box when I was running PC business. Um probably the biggest one is um a company pasa that did neck wry and shatter of us um but but we never went out with a goal of acquiring ing a company. Our goal was to find the best game of Opera in the world and support them with whatever way was best for now OK. I mean, in the .

whether I was publishing or or or accusing, exactly.

And so in this case, the developer was calling and saying we're running out of honey bunny at that time was the developers lash publisher, they did bow and that was IT was more common than but pretty much all the little developers, publishers were going out of business because doing distribution back then was becoming harder and harder for a little company to do. I mean, to try to now on the door with wall mart and that china .

probably especially as the world .

was shifting the council yeah exactly so um so in their case, they were both developed ana publisher and we're finding that that just wasn't gonna out anymore. Um and so I started the conversation then I got a chance to see hello basically to see that trailer that they showed IT at mac world. Um and um I knew that this is something I really hope, hope, hope I could get for us. You know it's part of our lina.

did you did you or anybody else that microsoft have have any comments about acquiring a company that was a mostly a mac developer at that point? Or was IT just all about the content? No.

I didn't care about the mac thing at all. Ha, sleep. I mean, they have done mth versions of their games. I'm sorry how they do PC versions, their games like A P C versions of myth for example. Um so I knew that they can do PC versions. And the x box, especially in the early days, x box was thought of basically as A P C disguise in um I I wasn't worried about them having the technical authority to do IT.

They are always working on on halo for mac before. Did you have to like turn IT all down rearchitects ture for P C, and then do A P C porto ac later? Or how did them how much of halo was already .

done when you required none basically which is funny because .

if you watch the mac world trailer, you know the um I think IT was Jason who who presented IT on stage today. He makes a big deal about this is all running native on mac and being rented real .

time yeah it's got these wild animals .

running around and it's yeah and what I loved is is they don't actually show a master chief, anyone else killing any cover inet because I guess but probably I could imagine apple didn't want any any deaths on stage at yeah well.

I mean, so so we can we can talk about the development of that. Let me talk a little more about the deal first if you that's okay. So um the the thing was I wanted to halo right and and I wanted the development team that was working on hell.

I want basically I wanted all the all the developers and the company um and so I but take two are the own part of the company. So I had to call up the head of take two, which is getting ryan brand. And we can have to work out between the two of us how to split the company into two pieces. And so um bunge was developing two titles at that time.

There were a only right yeah .

only was the other game very good. So bungie had two teams, one in chicago and one down in california. The california team was doing only, and the chicago team was doing doing hello. And so basically the deal I start with ryan was that he would get ownership of all the back catalogue.

So all the all the intellectual property for all the bunch titles that had been published so far um plus we would finish only for them and ship oh um and then the only developers once IT was done with move to red man and become part of our team and the chicago guys would come as well. So basically all I got was the halo IP plus developers, and he ga only in the back cat. Og, and that was.

And then between the two of us, we acquire the company basically. And some some people think I got the Better part of that deal. I don't know honestly at the .

time that you know you make the best decisions that that um you feel like your lying with each of your incentives and um you do the .

most with what you away with yeah and and a ryan was great to work with and idea deals after that. I don't think there were any hard feelings and any other parties involved in the deal. So cool.

You know one thing that that I I just totally look up when I was reading about this last night, you you got a couple of pretty interesting phone calls after after the deal .

was next yeah well uh you know when I when I did the deal, I didn't even think about IT but um yeah apparently jobs was if jobs is not happy so um I didn't know few weeks later once once a deal was announce I got male from Steve bomber or got call from bomber or something and you just said the jobs is mad about that. You require bungee uh column and try to call me down or like this phone number h my god just so that .

sounds like he here's a new school hang yourself like.

uh okay, I can do this um so uh you know so I know how long .

did they take you to work up the nerve to .

dial very I had an idea which was good, which I explained in a minute so so I didn't just call with no idea. I called you with an idea and and here's the thing you know the irony. The whole thing was um the whole deal started when Peter tempt the best def guy from bungee called me.

But when we acquired the company, we had room for everybody at him. We we didn't have a job for him. And so I felt really bad that you know who like one guy out of the acquisition, he went a job.

But he had told me that he was he wanted to start a mac boring company and and anyway so I had so that was in my head and and so when I got this male you know was to call jobs I kind of put you into together and so so I call Steve and um and I say, you know hey, sorry I am the guy SHE but um but we want to do that version halo. And um actually I want to do a lot of other mac um games. You know I don't have a thing against the mac.

I worked on mac excel, I worked on mac word. Um you know uh we have uh age vamp fires and all the other intellectual perty uh from our P C. Gaming business, and we would love to bring that to the market as well. And I know just the guy to do IT. There's this guy of Peter, empty extension guy.

He wants to start a company to take a bunch PC games to the back and touch um and and Steve ABS very friendly on the phone that sounds great here give you a guy, my team uh and he assigned me to somebody on team to work out the deal and I was very short conversation and and a finally one so so as good so obvious. I had um you know had this deal for Peter tempi apple grade to fund the creation of his new company, which was really cool. So he had someone to fun his new company and um and we were gonna to pour adventure of our games to that.

Maybe we'd makes some money on that. Um so he felt like a roll or roll win. There was this one um there was just one requirement from apple and that was that alex ero, ian and I uh show up to the next mac world and beyond stage with Steve jobs to announce this new hardware ship so so I I mean I I was a little nervous about being a microsoft guy going on uh on stage in front of ten thousand mac people. Well, bill gates.

that before so very much fast.

So but I am like.

yeah you know if that's where IT takes to get the deal here there so we agree and you know a few months go by and then it's time for mac world and and so alex and I get on the plane and we fly in new york and driving in from the airport in a cab, and I remember the phone rings is we're going in. We just land and we were supposed to rehearse that afternoon and then the event was the next morning and flowerings and it's one of Steve jobs handlers and they say, uh, rehearsals really not going well Steve really upset with how how everything is uh, we're really don't want you guys to come in, uh, go check your hotel and and we'll call you we'll ll call you after dinner OK so ox and I go with check in or waiting the foner ings you know maybe seven I say um it's still really going badly jobs is really mad um when you guys just come in in the morning and and i'm like well the event is in the morning and I say yeah yeah just show up you know and um and we'll just believe you right before you wants IT OK going to people and we're going to say something for for a minute or so okay so so we show up the next morning and and just before I start Steve job comes over shakes our hand that's hey, i'm going to i'm going to say this at some point during my talk and then you guys just walk on stage, do a thing, talk for thirty seconds. Talk per minute and then i'll shake your hands and then you your off the stage games like, okay, we got this.

that's what we did see you guys basically got to win IT .

when I I, I, I, I haven't seen the videos. So but I tell you, I mean, so so those are my only encounters ever. My life would steep jobs. So I mean, he was always, he was always very friendly to me. Times I talk him on the first in person and and he didn't amazing job, I mean, sitting in the front row of air watching him, you know, just take the audience and just hold their attention. You know, what was incredible to say that was was really fun to be .

part of which is a good, uh, it's a good segway when at that moment, you know, IT sort of feels like everybody, you know Steve jobs is happy. Mac uses a happy halo, still come into the mac take two gets only you get a great launch title for the x box coming out the next year and uh and then halo science and um well we we you we will dive in the so many questions about that.

But for the probably two or three of our listeners out there who don't know what happened next, you know halo goes on to the first halo a has, I believe, a fifty percent attached to all x boxes. So within the first year of launch, sells a million units and six months, six and a half million units over the lifetime of halo, which would be estate there. No, no hard numbers out there, but kind of two hundred and three hundred million dollars in revenue just from the first tao.

But then IT goes on and becomes this huge uh cultural phenomenon 的 franchise。 You I remember in two thousand four when halo two launched is a freshman in college and like people were organizing organizing trips to the local you know game stop to go by hello in hello two in midnight. That is incredible.

Yeah, yeah. I think I was up for twenty four hours. I mean.

just this share out of mountain and he does. And and so hello two ends up when IT wus in two thousand and four, doing one hundred and twenty five million dollars in sales on the first day um and becomes the fastest selling media product in U S. History um bigger than any movie any album um really is a an incredible moment for video games and in and technology in general and and the kind of the rest of well I would say the rest of the story is history would love to bring him back in and you know the bungee story takes a few interesting turns along the way but but first I when you were you were desperately you need a content for the launch. Could you ever, you knew here I was good, but you think IT was gonna be like this?

I hope IT IT would be. I mean, I have to tell you that, you know, I wish the ride on the inside was a smooth as the one you pay on.

IT was a straight line.

right I mean I mean that the bunny guys were always incredible to work with super hotel that was IT was clear from as soon as we got them in that that this was an amazing group of people um but a little quirky too. I mean you know like microsoft um just corky from a microsoft point of view, like like microsoft, everybody has you know private offices with the door that can shut.

And just like a selling point of going to microsoft, at least that was back in the day you get your own private office. And so I proudly tour the bunch guys around this new wing that we had just built out for them. And one of the buildings and IT was all in a brand new private offices from one to the other.

And they looked at me and they said, we hate this. What mean like, we want all these walls turn out? We just want a big open day.

And i'm like, I could cubicles, you know, like, that was like the lowest status thing. You could have a microsoft, you know, you know, like you, yeah, we want cubicles really well well, my oh, you're kidding me. I like, I wish I knew this few months ago so their facilities literally had to care and what out .

of this place. So the acquisition prays never before disclosed, but was whatever you paper money plus all the two remodel, you did buildings. I mean, the great thing about.

you know, working at a big company like microsoft when I came to acquisitions, that the corporate of people are so incredible, the H. R. People so incredible.

You know, somebody like me, who and a business could just basically say, make this happen and IT would happen. You know, they will deal with so many details and so many difficult, difficult things and facilities, people as well as like make these walls go away. The walls would go away like magic.

But so that was one thing. So we turned out all the walls and given the space that they wanted, but you know every microsoft team has has a test team that supports them, and it's a really important part of microsoft culture. And and I don't want testing like we don't want we don't need testing. And my you too, you really need you really need a group protesters. This is the way we built software.

Microsoft did all the engineers to test their own code, and they trade testing responsibility .

around or pretty typical in the game business, especially back then. You is like they felt them testers bunch a high school kids, but you know not professional testers like we had a microsoft. And so.

The other thing the bunchy guys wanted was they wanted secure access to their area. They want the only bungey people, and I, and I suppose me and a few other people could get in into their area. So they had these doors that, you know that were needed cartey access to get into.

And so anyway, they didn't want the test team. I'm like, fine, i'm gona give you a test team and i'm going to park them right outside your secure doors. Okay, so they are going to sit right outside outside your doors.

And what happened that time team was run by a guide hero, ryan. And um and the testing really prove themselves to bungee over the period of that first halo. They show them what a group of professional testers can really do.

And like like an example is they built a giant render farm out of A A big pile of x boxes and the render farm brought the time to build to make a new build of halo down from, I don't know, eight hours to a half an hour or something like that. Um so you know so the next between hello one and hello two, they move that wall, that secure wall side of the testers. So but now the testers .

were part of the family. So that and still .

even even with the .

addition of testers, I mean one of the things that I think is so incredible about bungee is later on in bunch's history in in two thousand and seven, and ends up getting respond out from microsoft. And when that happened there, early one hundred and twenty people working there.

I think, including the test right now, hill ryan.

That's also increasing testing.

So anyway um so that's sorry for you. Um when when we have first started showing halo around uh to the game press, uh there was a lot of skeptics. They you know they were worry about microsoft entering the console business to begin with.

They thought we really understand console games, which is true and then we're really excited to show them a first person shooter which is a PC genre you know looks like a PC game and um no like you know this isn't mario, this isn't sonic. You know this is just proof you guys don't get IT. Um so we got a lot to push back from the press actually um e three two thousand and one we only had half speed graphics cards in the in the machines that we had at that time.

And so I didn't show that well show for there was more kind of rumbling in the press. There is there was penny ark comics from that time where the penny and kid guys really down on the game. I know if I can swear in your t podcast, but one of them just says hailo is shit.

And so and so coming in the launch, IT was very unclear whether halo was going to be marheyo. Again, we we, you know we are playing IT, you know, hours and saying, you know, is this game as good as we think this is because this seems amazing. But we're kind of all PC gamer, as you know, maybe are drinking our own cooler here. You maybe console gamers won't want this kind of again.

Did you have the in preparing for the launch, establish what was going to be your flagship game for varying marketing channels? And in the way that you're talking about the platform and what you're showing off or that sort of organically fall out after released?

We did we you know because we had a certain uh, marketing budget, probably the biggest thing we had to decide was which titles we're gonna TV and and the TV budgets. You know we could afford to do TV for just couple titles. And so um odd world and halo ended up getting a basically equal treatment at launch with big T V campaigns from us. And you know our world was kind of our well, this is a developers known the console world. You know I should say the game the is called untie other world, the company but um you know so that and then halo and that's kind of the way we're sort of not sure you know which of these games is.

Yes, so much. In certain that like early launched stage like that, how do you know and how fast do you know which of those two is .

good once things starts to sell and reviewers get their hands on IT, IT becomes becomes clear really quickly, but especially back in in those days, there were there were a lot of things that um had a lot of lag when I came to marketing.

So you know anything that was in print, for example, you know maybe a three months delay, uh if you wanted to be in um in mailers were not not mailers but like uh seem like a Christmas catalog that is inserted and insert into a newspapers and stuff like that uh magazines IT was all like three months, four months uh so we always had to commit to the marketing team three or four month in advance. Win the game was going to ship. And then if we weren't there, if one of these circulars ran but the product wasn't available in store, we could get fine, right?

So that was always that was always built into our development process, but it's not unlike today where information just got bloom out there right away. You can make changes right away. And there was I mean, there was actually stuff printed with you know it's .

sad with yeah I do imagine what curious I really want to ask you, especially because the whole theme of our show is thinking about technology. And while there's certainly a huge element of me about bungee and hello and and our very first episode, we did pixar, of discontent and creativity, there also is a huge almon of technology in halo and and new technology.

And i'm curious from your guy's perspective, you to me um the story that I write in my head is the single player experience of halo is is good it's great. I'd buy the game. I play IT. But what made halo is multiplayer and and networked multiplayer .

yeah I remember buying a lot specific actually no, I didn't buy the router I with my dad or and got one, but do in a router and streaming four x boxes together in my friend's place. And yeah, four x box life is the only way to do that.

I think hit in amErica .

at the time that, you know, work, because xbox london come out for a year later, right? And and so people came up with all kinds. I remember you could hope your x box to A P.

C. And then people would do, and then do these PC connections of you. But IT was all like, yeah, hand made. And how much did you .

guys either or both a think about that beforehand in terms of this incredible experience of playing with your friends. But then be how much how much did that shape the eventual launch of xbox live and and halo to you know being to my mind that first real triple a style fully realized experience of what playing with other people and your friends anytime you want IT yes.

So um I mean a few things. It's amazing how much that team accomplished in lesson two years. I mean, that isn't not very much time in the game business.

And you know no did they have a single player, but they had a multiplayer, but they also had the screen and split screen multiplayer. They had network multi player. They also had spit screen cop play, which you don't even have split screen cop play in here of .

five just yeah controversially.

So I mean I was amazing what was in that first game. But yeah um after they shed um halo one then um working working with the x box live team um helping them developed hello or help helping them developed xbox alive and developed how games would work on xbox alive that that was a big thing for the hello team ah they worked really closely with x box live uh tons of halo fans on the x box live side.

So they really wanted to work with the bunchy guys. And you know, IT was a very mutual respect experience there. Know, the place halo wasn't do for, you know, a few more years. Hello, two wasn't too for a few more years. And I can talk a little about that.

嗯， what happened there? So somebody reminded me another day that actually the first x box live title that we launched with our first party group was actually out that that facility that I mention earlier was MC commander was the first one. But anyway, meanwhile, the bungey guys are go off after shipping halo one and and a couple things happen.

Jason Jones, who is, you know just the creative genius behind everything bungee, decides he's gonna leave the the halo team and start a new project. And so he in a small group go go off on the side and they start to work on this new project. Meanwhile, the the halo guys, the main halo team starts working on halo two um and they get a couple years into IT and it's kind of gone off the rails with how Jason running IT.

Um so Jason comes back and he looks at IT and this is about a year before I supposed to ship and he's very unhappy with IT. And um and the team has a lot of problems. They try to do too many things technically. They tried to this new lighting model that really didn't work.

I think I I love you guys tell the story like it's so nice sense for the hello one came and hello to you know me is like this nights is like a little to all crew up, you know and then Jason comes back and like, I can fix this and he go through and just like does a whole big part of hello to um but in order to do IT, he needs a whole another year. So it's going to instead of being out in two thousand and three years can be on to that support and so I have to go to robbie, my boss, and tell him he's not going to have a halo two thousand, two thousand important global 啊。 Anyway, not not my favorite american. Glad, i'm glad you like that came when I came out. So, uh, so yeah, anyway, that was a you know Jason got a back on track and and they were able to think that would really stuck.

It's so, so interesting even I was talking before this about a parallel a previous epsom. Actually our first one is disney part acquiring pixar. And you know so many parallels because it's a um you know a creative hit space business.

Where are you? You're doing the the creative studio work in house and and putting this thing out and hoping you're really resonate with people. And one of the things that makes that process work is the ability to have that honest conversation internally and the mechanisms by which you fixed things when you're off the rails. And there's this incredible parallel here to you know the the story of toy story is that told the rails no toy story um i'm pretty sure yeah I think .

I .

had this too yeah where .

what he was me yeah and they .

were they were screaming the the you know as far as they forgotten and IT wasn't fully render and early realized the story, they'd change the story and rep part of market storyboards and and I think delay a year because IT IT was just like you were watching the movie and IT IT didn't feel nice and I didn't feel right. That wasn't the experience they were trying to create .

and they were getting a bunch of feedback, I think, from cats and bird or something and I was, yeah, all I know, I know you don't really want to see other stuff is made on the inside. That was awesome.

All magic can want the same thing in regularly .

startups to exactly.

I I don't want to do well on this for too long because it's not a super core part of the story. And and you had left microsoft at this point, but I was halo to, despite the the sausage making being A A nightmare for you, goes on to become the the most successful, I think, video game of all time at that point when he was launched and then halo three, when he clicks that and helped launched the box three sixty but then after halo three bungee spins out of microsoft um and and you were gone you may not know but to to the extent you do how how and why did that happen um microsoft ended up retaining a sake and bungee but um and bunge kept working on hello three reaching and O D S T but but how how did that .

happen okay, so I I can tell you what I understand about the story. You know, everything I told now i've talked about stuff I was directly involved. Now it's it's more like things i've heard so apologize and advanced anyone if I get something not quite right here.

But um after halo to shipped, there was uh disagreement about a royalties. There was some kind of royalty agreement between the person who followed me and the guys at bungee and um after hilo to ships. Uh the bunchy guys felt like that deal was not followed a the way they thought I should be um and they decided they would be Better off separate uh as a separate company in in part of microsoft.

They went into negotiations uh with microsoft, figure out how they could split out and do that. And my understanding is microsoft agreed to let them go go out and become an independent company under the conditions that they do a certain number of titles and and the and once those titles were made for microsoft, they were free to go um and so they entered to an agreement to do that. And I think that those titles were hell three, halo O D S T and pillow rich. And so after they finished hello reach, they went on to do they are need the destiny, destiny.

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So IT one of the things that we like to talk about a lot are are trying to figure out and pattern match the things from an opposition that made IT successful, that made that um experience where you know the value of the small company, whatever IT was that the big company um brought to the deal. Um the combination of those three things as a dragani multiple of um the two parts and they're separate kind of a one plus one equals three thing yes yeah what characteristics you know what actions and what things transpired that made this so success?

Well, I think, you know, most game that developers pretty much feel the same, which is like, I I just want to make an incredible game. You know, I want have the resources to make the game that I have in my head, you know and and then I want want to see IT have an honest chance to reach its its market right to reach as many people as possible.

So um you know if you think about trying to do that as a little struggling independent company like bunch I was versus trying to do IT under the umbrella of microsoft that's about to launch a brand new council and has a three hundred million dot marketing budget. And it's going to you make a lot of noise about this new platform and think that's um that's a big opportunity for someone to have their their ideas and their you know their creativity right along with that with that big push. Um so that's that I think what's in IT for a game developer to to want to a team up and be part of part of the speaker thing.

Um I think the chAllenge along the way um and you know and this is something we always, yes, I worried a lot about and we we were hard on is how do you and me one of the things that makes these teams special as they have their own unique culture like you know that's what you should hear when i'm when i'm saying plan you want to rip out the wall because they were super collaboration, aborted timely as a team. They wanted the programmer and the artist give IT just shout to each other across this room, you know um and and by the way, if you go to this bunch's office now, it's in this giant. You will used to be a movie theater in some giant that is still completely open because that's part of the culture, know so how do you integrate something creative into a bigger company like a microsoft and still protect IT so that I can have a culture? I think that's really the chAllenge of management that's running something like yeah and .

there's obviously attention you have commanders there between you know efficiencies of the the larger business um and respecting the culture of the smaller did you struggled all .

the decision to move them to? I didn't in retry that I probably have done IT later. Um we went through multiple other acquisitions over time.

And you know I think I think the more you can do to preserve the culture of the companies, the Better because I think that that's really what makes them unique. And that unique is, at least in the entertainment world, is freezing important? Um you know IT expresses itself in the product itself.

So you know what I like to talk about, how, you know, I had these two, two really great teams who work for me. One, as I was called on sample studios, and they did the age of empire series down in texas. And another, you know, the bunchy team.

And if if you looked at the cultures of those two companies, they were almost diametrically opposed like if you wrote their values down, you know there would be like opposite list like one would like bunch would be like we're hard core and um on samba would be where family you know you know I I know stopped like that I would you just be really different and um and that kind of taught me that it's not there isn't like a culture that works, you know. It's it's like having a culture is what matters, is not which culture you have that matters. You know having a strong culture that attracts you, specific people that fit within that culture and really enforcing IT and really making IT, you know that culture is of just expressing itself in the product. I don't know how to say .

it's so cool here. You say that because um that such A A been a core theme of of our whole the .

other yeah we know we .

talked about we talked about pixar. We've done instagram and we've done twitch and all of those are where companies that when they were required had a very, very strong culture that's um so far at least with all of them um been allowed to remain independent and they've all thrived usually and for us, I think a big takeaway has been um the importance of doing that. We know when you have a great culture, that's when great .

things yeah I mean, I think one of the things was we were able to bring um there was two bunchy teams together though you know the chicago team in the cop I team together in once spot and we needed that I think to get the hello work done. So maybe, maybe in that case, I was the right thing to do. But in general, it's not it's not always the right thing to do.

And then the chAllenge you have in a bigger organization is what how do you integrate with the other parts of the company that need to work with you? Um I I had gone through a process of integrating marketing into my game teams when I was doing P C gaming business. And I even though the marketing guys didn't technically report to me, they were integrated and sitting with my teams all through the all through the organization.

And then after x box came along, um there was almost on this kind of bigger x box organization. And in the head of the x box marketing wanted to have all his marketing people under him sitting in his building so they all up hold out and I think there was a really bad decision because you know they they they really got separated from the from the teens and um always said that was sort of in us and then kind of think rather than that, we're all working together. We do different functions, but we're all trying to do the same thing.

And an example that would be the first, the first T V ads came back up from the agency, or halo, and we showed him to the bunchy guys. And I hate them really, really. Here you is a guy I run IT around with the government and he shouts, stop and there, you know and you might think, well, that's what hell s about that, you know, to the bungee guys, that is not what he is about at all that, you know, for them, halo is like the. Quiet before the storm, is that epic long listed that you see and realized you're going to be heading there later?

It's that. sic. Yeah.

it's the music is all that. So we have to like way that can try to try to fix this. You know, T, V commercial. But that's the kind of step that happened when you know when there isn't this integrated team working together all the way through sort of the understand the vision for the product .

that is so interesting thinking about just for my time at microsoft, we can have the the one microsoft reward and went went functional from divisions. And where's the appropriate place in the hierarchy to to separate them into divisions for its functions? So with functions being you, all the marketing people together for all the business groups and all the tech people are all all the business groups verses. You know having this sort of family and of these separate divisions where everyone's .

totally integrated .

IT sounds like um you at least in this kind of creative endeavor space, the divisional kind of works Better and and all the different functions need to be super tightness integrated with each other.

I was at microsoft teen times eighteen years. I mean, so I don't know how many times I saw that organza reor happened back one way and then back the other and back one way and back to like the grass is always Greener, you know, it's like one way has a certain set of problems and the other way has a different set of problems. And so this seems like they just hug, go back and forth between the two. I don't really understand IT. Well.

one of things we do on our show that we really enjoy doing is three segments in particularly that we can run through quickly and and we'd love we'd love you to protest pay to um uh the first is benni each assign a category to the acquisition and the kind of five we identify, we can find more that break out of the box but the fight we identify our people, technology, product business line or I just for the fit is is other wild cda but yeah you know for for me uh it's interesting.

I am really pegged um hello and and bungee as a product requisition for microsoft. But it's interesting here and you talk IT, it's really um I think you've given a lot of data to support people as well. Ultimately, I think i'm a mistake with product simply because more than anything, you know, because of the spin up and ended up happening later on. And bunny e going on to um to leave microsoft and that DNA to leave microsoft and halo is ticking behind as as a product for for x box. Or you say .

then I think this 这 样子 一个， like you said， there's there's definitely learning from um the folks at bungee about their culture and about how to produce that sort of game and bring IT to a platform that nobody thought was gonna a first person shooter like the PC and things like that. But um yeah I think my body products.

I am sticking with the people pressure. I mean, I mean, you know it's one thing to create a franchise and it's another to um to continue IT is one thing I say, you know and these are the people like that created halo, you know out of out of nothing and so um you know it's true there's a different team that's moving hello ford now and and and added a lot of interesting new things to the to the franchise.

A bunch created IT yeah and then they created destiny, which I also think he's very good. So I don't know. I I just always fall on the side of the people are like matter in these companies.

Well, one of the one of the pieces of fee back, we've got this. We need more disagreement on this. great. You're welcome back anytime.

If David nike agrees, will just bring in third third .

parties that can gain up on yeah OK second second, last segment um this is my favorite we talk about um because this is about technology acquisition as a host show um we talk about is there an underlying kind of generalizable and broader theme technology um that this acquisition embodies a represents um for me and this is I thought destiny was a great sag um you know for me the bungee acquisition represents the power of whenever there's a platform shift in technology and that happens very discretely in the gaming industry where you know first of us there was early PC gaming and early councils and then councils really became dominant with with the the age of x box and play station to um and and and halo and bungie wrote that success and and then um you know in recent times this has been the age of free to play the two the simultaneous age of free to play in mobile and it's interesting to see you know hello is still a huge part of the cultural landscape but at least in um you know the the media landscape in the U S.

But um the gaming industry you know has been has moved in a lot ways. And what's what's big hour companies enabled by this next way of and that's where bunge is gone with destiny. So for me that this this power of whenever there's a platform shift in gaming or other parts of technology, the ability that not totally wipe away the the companies in the winners from before but create new winners and bigger winners. Um I think K O and bj x represent that really well.

Yeah I I I mean, I see IT maybe a little definitely, but can I think i'll pick the same milestones as you you know for me, IT was the time when you the bunchy acquisition happened at a time when, uh, the publishers were getting bigger and there was consolidation among the publishers. So uh, IT was getting this there was this economy of scale of being big at that time.

You know that activision, ons and electronic arts and take microsoft had an advantage. And the little kind of mom and pop developers publisher, uh, was was going away bunches an example. Another acquisition we did uh was a company called access software that did our golf and tennis and other games.

And um so there is you know these things start small and then you know they get get somewhat bigger. And then at some point, you know economy of scale really matters. Scale really matters.

And then uh, you start to see a lot of acquisitions and and so about about what was happening kind of in them you know um around two thousand when this bunch opposition happened. It's also what's happening now and free to place. So follow on your example. You know I was on the board of z two. He too was really early free to play company um had a bunch of his um trade nations and bao nation no um and um you know at some point um.

You know scale started to really matter and free to play you know you to computer with uh you know a clash of clans uh or Candy crash or something, you know just these massive audiences and you really want to drive traffic to your to your game. That really matters if you have this big audience out there. And so was getting harder and harder proceed to to compete.

And you know, just like microsoft, bob buni made a lot of sense for king to buy Z E to. So I think you know there is kind of cycles to the stuff and we see IT you know over and over again. No, may be.

It's not just one platform shift maybe and you know just a natural evolution of each market, right? As some new market comes. Have a lot of little guys at the beginning, a lot of experimentally and then and then change over time.

And with that, all all kind of take us into a our last section where we render a conclusion grades a through f, you get pluses and minister and ll kick IT off by asking you a question add, do you think that the x box would be the success later day if the bunchy team and and your team didn't pull off the cache size?

I really don't. I think a hello is hugely important to the success of x box. I don't know that would have been an x box three sixty if there was no halo with x box. So I think IT was incredibly important famously .

microsoft criticize for years and years and years of um you know not not make money on next box and being something the company was serious about, and then you know where we see where is gone today and kind of um being part of the same platform as windows and doing so much more than gaming and and the company really taking the the whole thing seriously and and come with the whole lanes and a lot of other .

future bets that are making my crafts future .

episode um really taking the way for the future of the company. So is pretty amazing to hear how important was to Christian platform.

When I went to work on games in nine years, I was leaving a successful career in office, said in there ten years, and I was told a couple things, I was told that I was committing career suicide and I was told, why would you leave office? One of the most important parts of the company to go work on something no one cares about that was, uh, I was a great motivator for me to go go to make games be an important part of of microsoft. And so I think .

you cleared you a lot more of people care about maybe meta, at least as many people who care about office care about games today.

Yes, I think I think it's an important part of the company proud .

that it's fine. This is like the part of the show where I always bring Christians and but like, boy, does that sound like low and disruption even in your career, right? You you're leaving to go and play the thing that nobody can take seriously and it's a total.

And how could I ever get big again? This is the thing that matters and it's the titan that's been trucking along forever. It's a it's just so reminiscent of every start up that comes out of nowhere and then suddenly nobody can understand how everyone once taking this seriously.

And it's such a big market. Well, as you know, I i'll just say it's going to be part of that. You know you .

yeah right well, a plus.

没事儿。 对。

yeah let s go。 Last year.

you know i've been struggling with this one uh and not just for creating disagreement for the sake of the show, but um this acquisition really any perspective you look at IT you know and that that one that that then you and ever just talking about is such a powerful one.

Look at a financially, I mean over the lifetime of the halo franchise and there there is no way anybody could have never seen this at the time, but over five billion dollars in revenue um just from game sales alone. That's before merchants, that's before movies, that before machining ma ah, which was a whole another category that halo really helps the launch, although microsoft didn't monetized by IT. So really any dimension you look at IT, it's an incredible acquisition.

The thing that I I struggle with a little bit, I come back to the spin off and I think about what um what both halo and um x box and bungee, what all three them could have been if um that creative team had really continued being a central part of x box and gaming going forward and and for many years, you know while mobile was was rising and while free to play was rising. Uh hilo wasn't part of IT and I don't know I think about what I could been. So obviously, it's really great acquisition. Um I think I removed the plus because of that.

So it's an a for me. So your argument is that .

I .

argue that there's someone realized potential here.

Nothing that gets do IT. But yeah do you .

think that does this span out? Say, because they lost IT again .

yeah in two thousand seven, which ended up being IT, was the the the very top of the console market ah or at least close to IT before the next way was coming. And right then um microsoft lost banty.

So are you blaming the microsoft mobile?

Windows phone is a director, result the bungy spin out then well.

even even mobile gaming, right, like microsoft never never had a they they have this incredible presence in in council gaming. And like when i'm sitting screen around on my phone playing clash clans or whatever, like it's it's not a microsoft property. Do you think that there is like unrealized potential if that team has stuck there in the day?

I don't know, I don't know. Maybe not. And maybe, maybe, maybe even destiny, never what had happened within microsoft. So I don't know, but I look at hilo today and I think and maybe it's just the natural course of things, but it's not as culturally relevant as if once was and that is relevant video gaming as a whole .

that once was um okay well few thinks microsoft had a right of first refuse on destiny. So they post if they want to do um when they made the right choice a matter or not I guess time i'll tell but just this just one thing I think about um I was probably involved in a dozen or so acquisitions big and small and microsoft and definitely one that when the best was acquiring function. So I am i'm gonna get myself in a place but I myself and I yeah.

you're greeting yourself here.

I go over there because this was the one one that I was sounds .

to me and you know, it's not fine like before these other tree grades around, but it's sort just a framework for us to get in a little bit and thinking about what could have been .

or was rather you. Thank you, and we really appreciate all the time. Uh, super special trip but for us and our glisters and that like I said, you're welcome back anytime .

to disagree with us. Thanks a lot. I was really fun to be part of this.

appreciated. And for listening is is we are acquired FM on twitter. Yeah sorry, this one went so long, but I so many .

great moments.

thanks again is. Easy you, easy you, busy you who got to.

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