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How Wizards of the Coast distributed equity as a startup

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Re: How Wizards of the Coast distributed equity as a startup

#51

Post by ObligatoryRef »

JoeAltmaier wrote: post #44
pchristensen wrote: post #41

Earlier quoted context omitted.

They knew that it was unbalanced and that some cards (Moxen, Ancestral Recall, etc) were too powerful, but that was on purpose because they expected scarcity to be a part of the metagame. If you were playing with your own group of friends who owned a few cards, the small total number of overpowered cards would be a fun diversion. They didn't anticipate the huge success and scale the game achieved. With a worldwide me…

There's more to it than that. They've re-released edition after edition to obsolete the previous. Used to be 1 mana got you a 1/0 or 1/1 creature with nothing else. Now you can get cards with 1 or two features, flying etc. Anybody using the old ones is a sucker. Its easy to think its all about the money, you have to buy new cards to keep competitive. In fact this is why our game club designed their own card game (Ori…

WotC, especially Mark Rosewater, has addressed this issue many many times. I would recommend checking out some of his columns and podcasts.

Short answer: the game has evolved quite a bit (I've been playing for 17 years).

Long answer:

> Anybody using the old ones is a sucker.

There are several different Constructed formats, each with its own restrictions on which cards can be played. The three most popular are Legacy, Modern, and Standard. In Modern and Standard, only newer cards are allowed, so there naturally aren't any from older sets. In Legacy, there are plenty of older cards being played. Take a look at the lists from any Legacy tournament, and you'll see a mix of old and new. Now, the power levels of each type of card have changed (in general, creatures have gotten more powerful and non-creature spells less powerful), so you'll often see earlier non-creature spells and more recent creatures, but this isn't set in stone.

There's also the idea of power creep. The natural progression of a game like Magic is to allow more and more powerful effects, since not doing so will dis-incentivize buying new cards. For at least the past 10 years, then, Wizards has made a conscious decision to vary the power level between blocks (cycles of sets). Different types of cards will be more or less powerful at different times (in the last block, enchantments were the focus, now multicolor cards are being emphasized).

It's true that if you want to stay competitive takes a certain amount of money, but this is true in many hobbies. Magic has been constantly getting more popular over the last few years, and it's still around when 99% of its competitors are gone. Let's check back on your game in 20 years and see where it's at.

Re: How Wizards of the Coast distributed equity as a startup

#52

Post by tptacek »

tehwebguy wrote: post #20
metaphorm wrote: post #12

Earlier quoted context omitted.

I think its not directly comparable. Wizards of the Coast was never a "my big idea that will change the world!" type of company. It was a a games publishing company. They didn't even have one particular game in mind when they started up. Magic came later. Initially they were doing pretty much any board game and RPG that wanted to cut a license deal with them. In fact, they still operate this way to a certain extent,…

And there was no vesting

Avoid tech companies that don't have vesting. Vesting is not optional. Everyone vests.

Re: How Wizards of the Coast distributed equity as a startup

#53

Post by ianferrel »

nwhitehead wrote: post #16

It's funny how everyone seems to have a different view of how equity should work. I'm reading Felix Dennis "How to Get Rich" (highly recommended, much better than the title makes it sound). He made his fortune in magazine publishing which is actually somewhat close to Wizards of the Coast in business model. His view is exactly opposite; fight as if your life depended on every share, and pay people bonuses to incentiv…

How does that apply to Wizards? They clearly didn't have any money to pay bonuses.

Re: How Wizards of the Coast distributed equity as a startup

#54

Post by negativeview »

JoeAltmaier wrote: post #44
pchristensen wrote: post #41

Earlier quoted context omitted.

They knew that it was unbalanced and that some cards (Moxen, Ancestral Recall, etc) were too powerful, but that was on purpose because they expected scarcity to be a part of the metagame. If you were playing with your own group of friends who owned a few cards, the small total number of overpowered cards would be a fun diversion. They didn't anticipate the huge success and scale the game achieved. With a worldwide me…

There's more to it than that. They've re-released edition after edition to obsolete the previous. Used to be 1 mana got you a 1/0 or 1/1 creature with nothing else. Now you can get cards with 1 or two features, flying etc. Anybody using the old ones is a sucker. Its easy to think its all about the money, you have to buy new cards to keep competitive. In fact this is why our game club designed their own card game (Ori…

As part of rebalancing they've buffed creatures and nerfed non-creature spells. It's simply not true that all cards have gotten more powerful, it's just that early creatures were garbage and early spells were too good.

Nothing we've gotten in the last few sets compare to the original Dual lands, Channel, the Moxen, Ancestral Recall, Counterspell, or even something as innocuous as Dark Ritual.

Re: How Wizards of the Coast distributed equity as a startup

#55

Post by aetherson »

ryanburk wrote: post #27
georgeecollins wrote: post #19

Earlier quoted context omitted.

The number of shares should be figured into the estimated price. If they figure the company is valued at $100, and a share at $0.50, then they should be issuing 200 shares. You should be completely mistrustful of anyone who offers you shares and doesn't tell you the # of shares outstanding. Alternately, if they tell you the value of a share, they should tell you the estimated value of the company. The alternative is…

> You should be completely mistrustful of anyone who offers you shares and doesn't tell you the # of shares outstanding. this is an amazingly important point that many people I've seen new to the startup world ignore to their peril. it is too easy to get big eyes when you hear you are getting 50,000 options not realizing that it is only 0.000001% of the company since you don't know # of shares outstanding, across all…

It's maddening, too, because nobody ever just tells you the actual shares. EVERYONE says, "You'll get 50,000 options!" My answer is always, "Okay, and what percentage of the company is that?" and the answer is always, "Um... I'd have to go look it up."

Just once, I'd like someone to provide that information for me proactively. It would instantly increase my estimate of their integrity by 150%.

Re: How Wizards of the Coast distributed equity as a startup

#56

Post by uiri »

tehwebguy wrote: post #20
metaphorm wrote: post #12

Earlier quoted context omitted.

I think its not directly comparable. Wizards of the Coast was never a "my big idea that will change the world!" type of company. It was a a games publishing company. They didn't even have one particular game in mind when they started up. Magic came later. Initially they were doing pretty much any board game and RPG that wanted to cut a license deal with them. In fact, they still operate this way to a certain extent,…

And there was no vesting

I'm not sure that that's really true. Investors don't vest because they put in capital which is immediately available. Similarly, those contributing capital (either in the form of supplies (e.g. a drafting table) or cash) should get their shares right away. Those who are accepting equity for labour should vest because otherwise they may walk away before all of the promised labour materializes. I think that those who were paid in WOTC stock (in addition to or in lieu of cash) received their stock in paycheque-sized increments. Which is fair because the amount of stock they received is a fair trade for the labour that they put into the company.

Re: How Wizards of the Coast distributed equity as a startup

#57

Post by tanzania »

alexose wrote: post #38

The next generation of startups is going to have to address some employee equity problems, I think. This notion that early hires are going to share a small piece of the 10% employee pool needs to stop. Being employee #1 of a startup can be one of the worst positions a young developer can ask for. Long hours, high stress, low job security, and for what? 0.5% of a company that, if it survives, will most likely dilute i…

Yikes this hits close to home for me.

I am employee #1 for a rapidly growing startup, been here nearly two years. It's my first developer position, I'm definitely underpaid (until our A-round apparently), but I have .5%. I feel like pretty soon it'll be apparent whether this is going to ~really~ take off (I honestly feel it will).

Any advice on what steps I should take to prevent getting shafted?

Re: How Wizards of the Coast distributed equity as a startup

#58

Post by Beltiras »

negativeview wrote: post #54
JoeAltmaier wrote: post #44

Earlier quoted context omitted.

There's more to it than that. They've re-released edition after edition to obsolete the previous. Used to be 1 mana got you a 1/0 or 1/1 creature with nothing else. Now you can get cards with 1 or two features, flying etc. Anybody using the old ones is a sucker. Its easy to think its all about the money, you have to buy new cards to keep competitive. In fact this is why our game club designed their own card game (Ori…

As part of rebalancing they've buffed creatures and nerfed non-creature spells. It's simply not true that all cards have gotten more powerful, it's just that early creatures were garbage and early spells were too good. Nothing we've gotten in the last few sets compare to the original Dual lands, Channel, the Moxen, Ancestral Recall, Counterspell, or even something as innocuous as Dark Ritual.

Hypnotic Spectre, Hymn to Tourach, Sinkhole. I remember the days when you could empty your hand with Suicide Black (Type I) on the first turn. Not fun being on the receiving end of 2*ritual, spectre + hymn, losing 2 random cards and looking your doom in the face and your only action so far was losing a coin toss.

Re: How Wizards of the Coast distributed equity as a startup

#59

Post by dnautics »

teachingaway wrote: post #31
kauffj wrote: post #2

I love the idea of small scale stock offerings, but isn't this illegal? My understanding was that selling stock like this is a private equity offering and that private equity offerings are limited to a small number of people unless the investor is sufficiently rich (the government likes to use the term "accredited investor").

>> the very beginning, I wanted all my friends to be shareholders. If I had a deep, intellectual conversation with someone, I’d give them 10 shares. Yeah, it probably violates some securities laws... but when everyone makes lots of money on the deal, there's rarely an issue. When investors lose money, they're all too happy to bring up securities law violations and fraud claims. Better to do everything by the book and…

I think most of the accredited investor rules deal with solicitation. If someone approaches you and makes an offer and you agree to it it's okay (pitching to friends and family), but I am not a lawyer.

Re: How Wizards of the Coast distributed equity as a startup

#60

Post by calcsam »

tanzania wrote: post #57
alexose wrote: post #38

The next generation of startups is going to have to address some employee equity problems, I think. This notion that early hires are going to share a small piece of the 10% employee pool needs to stop. Being employee #1 of a startup can be one of the worst positions a young developer can ask for. Long hours, high stress, low job security, and for what? 0.5% of a company that, if it survives, will most likely dilute i…

Yikes this hits close to home for me. I am employee #1 for a rapidly growing startup, been here nearly two years. It's my first developer position, I'm definitely underpaid (until our A-round apparently), but I have .5%. I feel like pretty soon it'll be apparent whether this is going to ~really~ take off (I honestly feel it will). Any advice on what steps I should take to prevent getting shafted?

Post your resume on Dice // reach out to recruiters. Get another offer. Wave in front of them as a bargaining tactic.

I'd happily bet you $50 that your next offer will be 25% over your current one. my username at gmail if you'd like to take me up on it.

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