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Holding Out for a Hero
Exhausted and broke, Otero took a quick weekend trip to Seattle with his wife for their one-year anniversary in September 2008. As a pharmacist, Ku was making more money than Otero, so she paid for the airfare and hotel. On one of their first nights there, the two went out to dinner, and when the waiter brought the check, Ku waited for Otero to pay. “She figured [that since] she paid for the entire trip, that it was only fair I pick up the dinner tab,” he says. But he couldn’t. “I don’t have any money,” he told her. “I’ve got to make payroll.”
In fact, it was much worse than she even knew.
Not only was Otero putting all of Mochii’s profits into KlickNation, he was falling behind on his student loans and taxes, too.
“He was robbing Peter to pay Paul,” says his dad, John. “A lot of times his sister Christina, after she finished her eight hours at [Kaiser] hospital, would go over [to Mochii] to help him out. And he couldn’t always pay her. His concentration wasn’t on the yogurt shop; it was on the games.”
A few months after Seattle, Otero got a small, unexpected windfall. He worked out a deal with a social networking company that was looking to monetize social apps and Otero pocketed between $40,000 and $50,000. He figured this gave him one last shot, but he still didn’t know what he was going to do.
In December, with a little cash in his pocket, Mark and Julie took a trip to Hawaii, their first real vacation in years. And that’s when lightning struck.
“I was inspired by the beautiful landscapes and the Tiki idols—the gods and goddesses of ancient Hawaii,” he recalls. “Then it hit me. What if we made a game based on the supernatural in a cosmopolitan setting? These supernatural heroes will travel the world to foreign and exotic locations. That was it.”
As it happened, only a few weeks before Mochii’s doors opened in the summer of 2007, Facebook released something called the Facebook Platform, which allowed developers to create applications, including games, for the social networking site. Otero had been keeping an eye on it, but his focus had been strictly on apps. So he decided to use his knowledge about apps to create a game on this new platform.
Almost immediately upon his return, and with less than $50,000 left in the bank and with tax debts mounting, Otero
began hiring. In February 2009, KlickNation had four people. By April, it had eight. “If we’re going to go big, then we’re going to go down big, too,” he says of his mindset back then. “This was our Hail Mary.”
The original name for the game was Clash of Heroes. And although it was inspired by his Hawaiian vacation, Otero didn’t have to reach far for the concept. The idea was that users could select their own character and acquire a set of weapons and powers that would help determine their outcome as they did battle with strange and mythical creatures in exotic locations. Its DNA was clearly D&D. And Otero was once again a Dungeon Master.
“That’s when the magic happened,” he says excitedly. “I was alive again.”
With his tiny staff sharing a small room above the yogurt shop, Otero often worked so late that he would spend the night on the office sofa for days at a time. But it didn’t matter. “I was really happy,” he says.
And instead of relying on banner advertising like the failed apps did, the game would be free to play, but hard-core users could use real money to buy virtual cash which would allow them to purchase extra powers or weapons to help them rise in the ranks and advance. But they had to get hooked first, so it had to be good.
“This organism itself is sentient and it determines what it wants to do,” he says, describing [the company] almost like an alien that might appear in one of his games. “But it does good things. The culture is really strong. Everyone is happy, energetic and friendly. But also if you don’t fit the culture, this life form will spit you out. They’ll seek and destroy any type of foreign objects.”
The team was designing and programming as fast as they could, all eight guys sitting together in front of their computers in a 553-square-foot room filled with mountains of Styrofoam yogurt cups. But one of the guys—Otero—still had another business to run. Because he couldn’t afford to pay many people to work at Mochii, he was often the only one in the shop. “In between serving yogurt cups, I went into the back room behind the curtain and I was typing up the specs,” he recalls. “I was having the time of my life.”
One of his early hires, Aaron Nemoyten (now a designer and engineer at BioWare Sacramento) recalls watching Otero juggle his dual role. “While we were working on the game, he would say, ‘OK, guys, it’s 4 o’clock. I’m going to go downstairs and work the counter.’ Because there was no one else to do it.” But there were other times when Otero couldn’t afford to be away from the team that long, so he did the next best thing.
“He’d say, ‘I’ve got to talk to you about something important but I’ve got to work at Mochii. So put this apron on, but look busy so people don’t expect you to help them, and I’ll talk to you about this thing between customers,’ ” remembers Nemoyten. “So I sort of hid in the back room while there were customers and pretended I was busy.”
The two had met at a developer conference in San Francisco. “I remember seeing him at the time and noticing that he was well dressed,” Nemoyten recalls. “In a room full of nerds, you stick out when you’re wearing a blazer.”
When Otero was building his KlickNation team in early ’09, the start-up that Nemoyten had been working for had just gone belly-up. He was living in the Bay Area, but was inspired by Otero’s passion and ideas enough to take a big pay cut and commute nearly every day from Fremont for the first few months.
“The thing about Mark that most people notice right off the bat is that he speaks very passionately,” says Nemoyten. “When he’s passionate about something he gets very serious, and he gets a very specific tone. At first, you don’t know if he’s just being a salesperson, but as you get to know him you find out that it’s completely genuine. He’s such a big nerd—you usually don’t get people who have those sorts of interests and can also talk to you that passionately about products. He had sort of an elder wisdom that you wouldn’t expect from someone in their early 30s.”
Nemoyten says Otero did a good job of sheltering the guys from how desperate his situation was at the time. “But I did get the impression that [this game] was sort of all in. It was this or bust.”
His impression was spot on.
As Otero and the team were feverishly working on the game through the spring, he was running out of what little cash he did have. He had maxed out two credit cards and was now late on making the monthly payments. He was also over a year late on his school loans. “I couldn’t buy anything,” he says. “No clothes. I stopped drinking wine and alcohol because I couldn’t afford it.” To save money on meals, he would often go downstairs and fill a yogurt cup with fruit from the topping counter and bring it back up and eat while he worked. “It was really hard.”
Then it got worse.
He began receiving increasingly threatening letters and calls from the IRS. “I don’t watch much TV,” he says. “But when I did watch TV, they always had commercials asking, ‘Do you owe money to the IRS?’ I swear my blood pressure would increase. I would literally switch channels. I didn’t want to think about it.”
If Clash of Heroes didn’t work out, Otero knew he didn’t have enough money to pay off the debt and that he would likely lose Mochii and possibly his home. “At that point,” he says, “you have to ask yourself, ‘Are you a madman or are you onto something special?’ ”
But the IRS was getting closer.
“Then they found out I owned Mochii,” he says. They threatened to put on lien on both of his personal and business bank accounts. At this point in the conversation, Otero’s voice changes tone and gets considerably quieter. “That’s when it started getting a little scary.”
The game wasn’t finished yet. Without the funds, he couldn’t finish the game. He needed just a little more time, so he hired a lawyer who worked out a deal with the IRS that bought him a few extra months—enough time, he hoped to release the new game.
He knew that everything was riding on this one game. “It’s got to work,” he would tell himself. “Something’s got to work.”
Otero and the team raced to finish the game, and it now had a new name: Superhero City. “It was the very first game on Facebook with animated battle sequences,” he says now. The release date was set for June 16, 2009, but the $50,000 that he started with in January was almost gone. By the time that day arrived, Otero had less than $10,000 left in the bank.
Once it went live on Facebook, all they could do was wait.
For the first few weeks, very small amounts of money were coming in, less than $50 a day. Pocket change. Otero would track it as he tried to keep Mochii going and fend off creditors. At first it was less than what he made on his failed apps. He was sweating bullets.
And then, on July 4, something happened. For the first time, the game’s daily returns passed into triple digits, bringing in $343 on a single day. It may not sound like a lot, but Otero knew it was a good sign. “I called my family,” he says. “And I said, ‘Mark my words, this game is going to make millions.’ ”
“He was like a little kid in a candy store,” his father recalls.
But Otero was far from being out of the woods.
Although the game continued producing revenue—and was growing—he still had to spend thousands of dollars per day marketing the game to Facebook users to attract more players. He also needed to keep paying his team to make adjustments and improve the game on the fly. It was certainly promising, but he still needed to spend a lot of money to make money, so virtually every dollar they were making was going right back into the game. And the IRS was now calling him again. But he wasn’t picking up. He needed more time.
Within months of the games’ debut, he recalls a very difficult moment. He and his wife were driving to a department store one night, and as they were walking through the parking lot, she was opening a letter from the IRS that was addressed to her. “She stopped in her tracks,” Otero remembers. The letter was informing her how much money Otero actually owed. “She crinkled her [brow] and she looked at me. ‘Is this number right?’ ”
The number on the letter: $300,000.
Technically, it was right, Otero said, but it was complicated, and he explained he wouldn’t actually have to pay that much (the amount factored in certain costs associated with their home). Otero says that at that time, he actually owed the IRS around $75,000 in back taxes. Not exactly comforting numbers either. Of course, there were also the school loans and about $20,000 in credit card debt on top of that.
And the IRS didn’t stop with his wife.
One day soon after, an IRS agent knocked on the door of his mother’s house. “We’re looking for your son,” she told his mother. His mom “freaked out,” he says. They also called his brother at his work.
Otero told them all not to worry. And he had reason to be optimistic. The $343 that came in on the Fourth of July had ballooned to nearly $1,000 a day by August. By the end of 2009, the game was generating nearly $5,000 a day.
By early 2010, Otero paid off his IRS debts in full, sold Mochii and was hiring more staff and lining up more games.
“If I was off by several months, it would have been catastrophic,” he says now. “If they would have put a lien on my assets, Superhero City would have never been released.”
After 30 failed products, Otero finally had a hit. He also finally had his own video game company.
He was 35.
The Long Journey Home
Back at 20th and J in December 2011, Otero walks into the offices of what is now BioWare Sacramento on this cold Friday night. The walls are covered with renderings of highly stylized otherworldly creatures from games they’ve released, like Age of Champions and Six Gun Galaxy. And the place is still buzzing with the mostly twenty-something programmers, designers, artists and engineers. There are more of them in just one of their many rooms now than the whole company had in 2009 when it squeezed eight guys into a tiny, 553-square-foot space atop a frozen yogurt shop less than three years ago.
KlickNation finished 2009 with eight employees. By the end of 2010, there were 42. By the end of 2011, it had 70, and now occupies a two-story, 11,000-square-foot building.
And to hear Otero describe it, the company that started out by imagining new life forms has, in many ways, become one itself. Asked about his management style, Otero says he tried to instill a culture of creativity and ideas and over time, it has morphed into something that even he could not have imagined when he created it. He expresses disbelief at what it has become in such a relatively short period of time.
“This organism itself is sentient and it determines what it wants to do,” he says, describing it almost like an alien that might appear in one of his games. “But it does good things. The culture is really strong. Everyone is happy, energetic and friendly. But also if you don’t fit the culture, this life form will spit you out. They’ll seek and destroy any type of foreign objects.”
In one room, a staffer is playing guitar, while another is throwing a Nerf dart at a skylight in a different room. Others are hand drawing mythical creatures on their touch-sensitive screens, while a human skull model and a Homer Simpson doll stand sentry on one of the desktops. It’s now about 7:30 on a Friday night, but they don’t seem to be in a rush to leave. For many of them, this is their home away from home, their family and their passion. In some ways, they’re the only ones of their kind here, far from the game design companies in Silicon Valley and the Bay Area.
And in several significant ways, all of their lives have changed in the last few weeks. Otero says that about 85 percent of the staffers are from this region, with the remainder being imports from the Bay Area and elsewhere. With the reported $35 million acquisition by EA, not only have many of them gained significant financial rewards, but they’re now playing at a level they never dreamed possible before at this stage in their careers, and certainly not here in Sacramento.
“People were cheering, some were crying,” Otero says of when he first delivered the news of the acquisition to the team. “It was very emotional. They wrote me letters saying this is a dream come true. I mean, c’mon, it’s BioWare. It’s epic.”
“It was really exciting,” says Aaron Nemoyten. “I don’t think any of us expected to get into the real part of the industry for a while because we felt like a start-up.”
Now, as BioWare Sacramento, this group joins a list of other BioWare “studios” around the world, including cities like Austin, Los Angeles, Montreal and even Galway, Ireland.
And as the GM of the Sacramento and San Francisco studios, part of Otero’s new job will be to travel to all of the studios, and to host teams from other studios here in Sacramento. “The cross-pollination of people and ideas has already begun,” he says.
That means the Sacramento studio will actually be growing, a fact confirmed by BioWare co-founder Ray Muzyka, the man whose company Otero admits to being nearly obsessed with in college when Baldur’s Gate came out. Muzyka remarks that he was not only impressed by the quality of KlickNation’s work, but also Otero’s passion and eloquence. “I think I have a lot to learn from Mark and his team,” he says.
In fact, EA’s purchase of KlickNation occurred at a time when the social gaming category has been booming with activity. EA, which has had tremendous success with monster console games like SimCity and Madden NFL, has been on a worldwide buying spree in the last few years, snapping up social media game makers in cities like London, Seattle and Melbourne, Australia.
And now Sacramento.
A recent article about the social media game feeding frenzy on the site TechCrunch explained that “EA is also taking a longer-term,
diversification view, showing that there’s demand for richer, more complex [Massive Multiplayer Online] gaming experiences, snatching up KlickNation in December.”
Not a bad endorsement.
But, the gaming industry aside, one of the most striking aspects of Otero’s reaction to his new paradigm is his enthusiasm for the potential impact on his hometown. “We brought one of the world’s largest game makers to Sacramento. If there’s one thing KlickNation will be remembered for, if there’s one little footnote in Wikipedia, it will be that we brought a heavyweight to Sacramento. And we can be very proud of that.”
As one of the chief business boosters for the region, Steven Currall, dean of the UC Davis Graduate School of Management, says the impact goes much deeper than just a handful of new jobs. “It’s so crucially important for young people to see Sacramento as a breeding ground for these kind of exciting start-up companies,” he says. “Mark is so valuable in the current economic circumstances as a role model to others.”
But right now, Otero is focused on returning to a familiar role—being a student. He’s been spending the majority of December and January in Redwood City, absorbing the language and culture of EA. His team is already hard at work on its first official game as BioWare Sacramento. And in his new role, he’ll be learning about and working in many different platforms that he’s never worked in before.
And sitting in the conference room chair in front of the framed Dungeons & Dragons covers, he marvels once again at the full-circle moment. “I feel like a part of my life has become complete,” he says. “Even my worst day is still my best day now. I feel like I’m home.”
Otero says that as he was driving back from Redwood City on this night, something extraordinary happened. With the convertible top down, Otero was listening to a song called “The NeverEnding Story” (from the movie of the same name) on his iPod.
“It was just surreal because that came out back when I used to play Dungeons & Dragons. So I just looked up at the stars and thought, ‘How did these stars align?’ It was an emotional moment for me,” he says. “I just feel like the luckiest guy in the world. And if things go as well as we hope they will go here, I think this is going to be another great story.” S