20VC Unity Founder David Helgason on The Hypergrowth Early Days of Unity, Why Running A Company Is Like A Liberal Art, The Secret To A Successful CEO Transition and What Makes Roelof Botha Such A Special Board Member

In a revealing conversation on "20 Minutes VC" with host Harry Stebbings, David Helgason, the founder of Unity Technologies, delves into his journey from a passionate programmer to pioneering Unity's game engine. Helgason discusses the challenges of scaling Unity, the decision-making process behind CEO transitions, and the importance of a clear yet flexible founding vision. He reflects on the company's growth, including raising funds during the 2009 financial crisis and the strategic direction towards a broader services ecosystem. Helgason credits Sequoia partner Roelof Botha and angel investor Diane Greene for their significant impact on Unity's success. Furthermore, he shares insights on handling acquisition offers, the relationship with money, and the role of VCs, emphasizing the value of being a "shock absorber" as a board member. As he looks to the future, Helgason expresses a keen interest in climate change solutions and societal issues like democracy erosion.

• Harry Stabbings hosts the 20 Minutes VC podcast, introducing David Helgason, the founder of Unity.
• Unity provides tools for content creators across various industries and raised funds from major investors before its IPO.
• David Helgason is also a partner at Nordic Makers and serves on the boards of Labster, Realm.io, and QuizUp.
• Mentions of support from Ari Helgeson, Paul Hayden, Hilmar at CCP games, and Barry Schuler at DFJ Growth.
• Advertisement for Hello Sign, Draper Esprit, and Secureframe.

"And on Monday we released our episode with Roloff Boatha, partner at Sequoia. And one of his great investments at Sequoia was Unity. And so I thought it'd be awesome to welcome back Unity's founder David Helgeson to the hot seat today."

The quote highlights the connection between Sequoia's investment in Unity and the decision to invite David Helgason back to the podcast.

• David Helgason started programming at age 11 and was part of a generation that learned to program with the dream of making video games.
• He worked in web development before founding Unity and had started several companies that did not succeed.
• Unity was born from the passion for video games and the desire to create a different kind of game engine.

"I was a programmer since I was like eleven. I'm born 77 so basically my entire generation were programmers. I think we learned to program to make video games."

This quote explains David Helgason's early introduction to programming and his generation's common interest in video game development.

• David Helgason describes himself as a "massive quitter" before Unity, having dropped out of university and started multiple unsuccessful projects.
• Unity's inception was a collaboration between David Helgason, Nicholas (an old high school friend), and Joachim Ante, who were all fascinated by video games and saw potential in game engine development.
• The Unity team fell in love with the complexity and challenges of creating a game engine, which led them to focus on developing tools for other game developers.

"So I joined probably in January 2003. And we were just going to make video games. But as we were trying to sort of work on different ideas, we kept working on the engine."

The quote describes the initial goal of making video games and the shift towards developing the Unity game engine.

• David Helgason discusses the importance of a mission statement in guiding decision-making.
• Unity's mission to "democratize game development" was intentionally broad and evolved over time.
• The vision served as a foundation for Unity's growth and was revisited throughout the company's development.

"The value of mission statement can sort of be measured in the quality of decisions it helps you make."

This quote emphasizes the role of a mission statement in shaping a company's strategic choices and long-term direction.## Democratization of Game Development

• The discussion begins with the idea of making game development accessible to a broader audience.
• This includes people who are not currently making games, possibly due to a lack of resources or skills.
• The conversation touches upon the need to consider what game development entails, including creation, launch, and operation of games.
• The concept extends to thinking about how people use game engines and the potential to support a wider range of activities within the industry.

"It's people who are not making games right now. People around the world, it might be underrepresented people. It's just people that don't have access."

This quote emphasizes the focus on including individuals who are currently outside the gaming industry, particularly those who may be underrepresented or lack access to necessary resources.

• The speaker reflects on the early days of the company, starting with three coders and facing challenges as the company grew.
• The founding CEO, despite being a good programmer, found himself less skilled than his co-founders and took on other essential business tasks.
• As the company scaled, the need for a formal CEO became apparent, and the speaker transitioned into that role, learning on the job.
• The move to San Francisco and investment from Sequoia Capital marked a challenging period, with issues in communication and direction as the company grew rapidly.

"When you're sitting next to somebody who's like ten or 100 times better than you at coding, like, why bother? Find something better to do."

This quote reflects the speaker's realization that his strengths lay outside of coding, prompting him to take on other roles within the company that better suited his skills and interests.

• The speaker discusses the difficulties experienced during a period of rapid growth and the confusion over the company's direction.
• Addressing these challenges involved improving communication within the company through regular calls and better coordination with the executive team.
• The implementation of a communications plan and the hiring of an experienced assistant helped to stabilize the company's operations.

"And we decided that we wanted to try, tried to remain founder led. And I basically made a communications plan."

This quote highlights the decision to maintain founder leadership and the strategic move to create a communications plan to improve internal operations and clarity of direction.

• The speaker outlines the company's history from founding in 2003 to the rapid growth phase after the investment round in 2009.
• Concerns about future growth and the need for additional energy and expertise led to the introduction of a new CEO.
• The new CEO brought strategic insight and experience in running large organizations, which was essential as the company approached 500 employees.
• The transition was amicable and strategic, with the founding CEO moving to the board and continuing to work with the new CEO.

"And I was lucky that I ran across Ricitello, who's now CEO. He had recently left Electronic Arts. And of all the sort of. I met a lot of people along the way, but of all the people I had conversations with, he just understood the games industry the best."

This quote explains the process of selecting the new CEO based on his deep understanding of the games industry and alignment with the company's vision for the future.

• The speaker shares a personal reflection on recognizing when it was time to step down from the CEO role.
• The decision was driven by self-awareness and the realization that the company needed different leadership to manage its growth.
• The transition to the board was a natural step for the founding CEO, who continued to contribute to the company's success.

"I don't think I completely run out of kind of Runway. I think I could have done a little longer, but the opportunity came up. He was happy to take the role and I was super happy to give it to him."

This quote conveys the speaker's confidence in the timing and decision of the CEO transition, suggesting that it was a strategic move rather than a necessity.## CEO Transition

• Harry Stabbings mentioned a successful CEO transition, asking about the reflection on the process and advice for founders considering a CEO change.
• Speaker B emphasizes the complexity of CEO transitions, advising caution and not rushing the decision.
• Founders have a unique advantage in being heard and effecting change, which is challenging for an outsider to replicate.
• Leadership and management skills are critical as companies grow, and the right CEO can bring valuable perspectives.

"It's tricky as hell, right? I mean, we had considered it like way earlier, very naively, kind of considered it like we could hire because we were three technical co founders and maybe we should have somebody who had done sales before." "Running companies is like a liberal art, right? It's not an engineering discipline." "Don't just rush into it. Just one impulse."

Speaker B reflects on their initial naivety regarding hiring a CEO and the realization that running a company is more art than science. They advise against rushing the decision to hire a CEO, highlighting the importance of founders in guiding the company through changes.

• Speaker B discusses the experience with Roloff Botha from Sequoia as the first VC on the board during the A round of funding.
• Roloff's calm, rational, and supportive nature is highlighted, along with his hardworking ethic.
• Speaker B shares the importance of having board members who are shock absorbers for the company, guiding leadership thoughtfully.

"So he was the first vc we brought on. We've met other people, but we got an offer from sequoia when we were racing our a round in the spring of 2009." "He's such a calm, such a rational person. He's not going to bring emotions, he's not going to bring kind of irrational or strange things, and you won't be able to ratle him easily."

Speaker B praises Roloff for his calm and rational approach as a board member, implying that these qualities are valuable for board members in supporting and guiding a company.

• Speaker B conveys advice for being an effective board member, including being a shock absorber and getting to know founders and leadership well.
• Different styles of board membership are acknowledged, with no single correct approach.

"A good board member should be a shock absorber for the company, because there will be shocks and people will be ratled and there will be all kinds of crazy things happening and just slowing the process a little bit down and, like, guiding the leadership into kind of a thoughtful process, not necessarily rushing into decisions."

Speaker B shares the metaphor of a board member as a shock absorber, emphasizing the role in stabilizing the company during turbulent times and encouraging thoughtful decision-making.

• Speaker B discusses the potential for bad behavior among VCs due to the pressures of managing money for others.
• The comparison is made to middle management in companies, where stress can lead to destructive behavior.
• Speaker B suggests that VCs are not inherently bad but can be negatively influenced by external pressures.

"I think it often comes down to the fact that vcs are money managers for other people. And it's a bit the same as you get in kind of middle management in companies that you get people that are under pressure from different directions."

Speaker B explains that the root of some negative VC behavior is the pressure of managing other people's money, drawing a parallel to the stress experienced by middle managers in companies.

• Speaker B reflects on handling M&A (mergers and acquisitions) opportunities, advising to take confidence from offers and manage expectations internally.
• It's important not to over-communicate about potential M&A to avoid unnecessary excitement or confusion.
• Speaker B recommends using M&A interest as a learning experience and to foster closer relationships with partner companies.

"When companies are doing well, and we were for quite a while actually doing quite well at Unity M&A interests come, comes in." "I learned from smart people to kind of basically hold those tight to your west as they're happening. So you engage in conversations, just don't spread it too broadly."

Speaker B shares their approach to M&A interest, which includes keeping discussions close and not over-sharing information. They suggest leveraging these opportunities for learning and building partnerships.## Confidence in Future Value

• When considering offers for acquisition, it's important to weigh current value against potential future value.
• Confidence in the company's direction and the team's capabilities is crucial in deciding to reject offers and continue growing the business.
• It's not always easy to turn down immediate financial gain for long-term prospects.

"see far enough ahead that whatever they're offering you now seems small. And if you have confidence in where you're going, ideally you can see a time, maybe in a couple of years or more, where you will be more valuable than whatever was offered."

This quote emphasizes the importance of long-term vision and confidence in the company's growth trajectory, which may lead to greater value than immediate acquisition offers.

• Personal motivation can significantly influence decisions around company acquisitions.
• Having financial security can reduce pressure and allow leaders to focus on the company's growth and enjoyment rather than monetary gain.
• Reaching a level of financial comfort can change one's perspective towards money and business decisions.

"Money. Never interested in me terribly much. Somebody told me that if you had a few million dollars, you're really set."

The speaker expresses a lack of interest in wealth for its own sake, suggesting that reaching a comfortable level of financial security can allow for a more relaxed and enjoyable approach to business.

• Financial security can impact leadership and decision-making by removing the fear of downside scenarios.
• The ability to take risks without fear of personal financial ruin can potentially lead to better business outcomes.
• Trust in the business and the team is a key factor in deciding whether to sell or continue growing the company.

"Do you think it made you a better leader and decision maker when you had that kind of downside scenario taken off the table, when you knew that at the end of the day you'd be fine, may not be huge, probably."

This quote suggests that financial security can enable leaders to make decisions without the pressure of personal financial consequences, potentially leading to better leadership.

• Trust in the company's potential for growth and the team's ability to scale is crucial.
• The need to evolve or replace team members can be a determining factor in whether to sell a company.
• Management churn is inevitable, but excessive churn can be a red flag.

"Do you have trust, of course, in the business around you? Like, can your company grow? Like another phase might be a couple of years of growth or whatever. And importantly, do you trust that the people around you can kind of go with you?"

This quote highlights the importance of trust in both the business's growth prospects and the team's capability to support that growth as key considerations in strategic decisions.

• The venture capital (VC) model is favored for high-growth tech companies with significant opportunities.
• Despite criticism, the VC model allows companies to fund growth ahead of revenue, which can be advantageous.
• The alignment with investors is never perfect, but the VC model provides valuable resources for scaling.

"Yes, probably. I really like the model. Depends on what I'm doing, but actually do like the VC model."

The speaker expresses a preference for the VC model for funding high-growth companies, indicating its suitability for certain types of businesses.

• Personal reading habits can reflect current interests and priorities.
• Emotional and relational topics are of interest to the speaker, suggesting a focus on personal development.

"I read so little these days. It's super embarrassing. And I'm reading stuff around emotions and love and stuff."

This quote reveals the speaker's current reading focus, indicating an interest in emotional intelligence and relationships.

• The speaker has moved away from Silicon Valley and now resides in Copenhagen.
• There is a perception that Silicon Valley receives a lot of criticism, but the speaker does not see it as particularly problematic.
• Efforts are being made to improve the European tech scene, including more rational investment terms and better investor behavior.

"Today we are changing know as angel and working with a group of angels called Nordic Makers and so on. We are actually trying to evolve it here."

The speaker is actively involved in shaping the European tech scene through angel investing and collaboration with other investors.

• Personal preferences, such as a preference for natural wine, can be indicative of individual identity and lifestyle choices.

"I almost only drink natural wine."

This quote reflects the speaker's personal preference for natural wine, suggesting a choice that aligns with their values or tastes.

• Angel investors can play a significant role in a company's success by providing not only capital but also mentorship and industry connections.
• Diane Green's investment and mentorship were particularly impactful for Unity.

"So that was Diane Green, founder of VMware. So I met her in the spring of 2009, just before I met Sequoia."

The speaker credits Diane Green as an influential angel investor who provided valuable support and connections, highlighting the importance of mentorship in the startup ecosystem.

• The speaker plans to continue angel investing and advising companies.
• There is a strong interest in climate technology and societal issues, such as trust and democracy.
• The search for companies that address these issues is ongoing, with a particular focus on climate change.

"I'm thinking a lot about climate change and climate technology, climate change fighting technology."

This quote indicates the speaker's future focus on investing in and supporting companies that are developing solutions to combat climate change.