Do you get annoyed when kids play games on a computer or a mobile device all the time? Take it easy: they may become millionaires in the future. Pavlo Pikulin, co-founder of WhaleApp gaming holding company and founder of Deus Robots, a robotics business, is a good example. He made his first money at the age of 7 by designing websites and earned a million US dollars when he grew a bit older. Pavlo told his story of success he achieved at a young age and the mistakes he made in his interview to Tochka G.
Where Did It All Begin?
Pavlo’s passion for computers was “inherited” from his father who had assembled them before they became easily accessible in the market. He gave Pavlo a software development book as a birthday present, and the boy immediately understood what career he wanted to pursue.
He was interesting in both consuming and creating computer products.
Pavlo learned how to develop simple games and websites when he was a kid. He says that his father gave him the most valuable thing — an essential tool for development.
He made his first big money from online games. Fight Club, a browser game was popular at that time, and Pavlo played it as well. Later on, users began to ask him to sell game artefacts and other achievement items. Users could earn them by playing, however, lots of gamers were willing to pay. Pavlo learned to get more artefacts faster in two ways:
by managing 50 game characters instead of one; and
by creating structural clans, organizing players and providing paid consultation how to advance faster.
There were players willing to pay 4,000 US dollars for certain artefacts, and Pavlo was happy to sell them. He was only 13 at that time.
You are not taken seriously if you are a small kid.
In order to earn as a boy Pavlo said he was 32, and people were willingly buying game items from him.
He found out about Lineage 2 at the age of 15 and used his savings to buy servers for it. These were some of the most popular gaming servers in Ukraine. He invested the money he had earned from servers (around 100,000 US dollars) to purchase a computer club when he was 18.
First Business Failure
Pavlo had a dream when he was 13: to open a computer club. He even developed a business plan but had no money. He had necessary earnings by the age of 18, and his dream came true. It was a turnkey computer club in Kyiv downtown. Unfortunately, the business did not last long: the owners of the premise made Pavlo leave 4 months later having breached the contract terms (it was a 5-year rent contract). The owners were using unlawful methods such as harassment, too many inspections by compliance monitoring agencies, etc. Finally, Pavlo had to take his computers away and close the club. He lost the larger part of his investments and belief in offline business.
You must always be prepared for the worst case scenario when you can lose everything.
He was depressed for 2 months after the computer club failure. But then Pavlo realized it was better to lose everything when you are 18 rather than 40: you can start all over again as long as you have two arms, two legs and proper experience. Know-how and expertise are the biggest assets which guarantee the person will always be sought-after as a professional.
Failure No. 2: First Mobile Game
Pavlo was the owner of an SEO company for a short time, but he was not interested in website promotion. He decided to create his own mobile game, and he found an investor for the project in 2009. It was a Lineage 2 player who was buying artefacts there and knew perfectly well it could bring good money.
The team was small: Pavlo (software designer), other developer and an artist. Neither Pavlo nor the investor liked the quality of the finished product. They found another investor to improve the graphics, but they ran out of funding, again. They had to give up the game.
Business in VK
The developer who worked with Pavlo on the first mobile game suggested that they design a VK app to add minimal changes to images such as hairstyles, outfits, etc. They did not do it as a team because they were busy designing the game, but that developer created the app in his free time. This is how Pavlo got a business partner: the app was released and became viral immediately.
Quick Facts & Figures:
200,000 downloads a day;
a total of 6 mln downloads, a record high for early 2010;
27,000 US dollars of earnings during the first month;
up to 1 mln daily active users.
Ads were the only monetization option in VK at that time. Pavlo came up with the idea of creating his own banner exchange network, because the entertainment app market was already oversaturated. He met the management of gaming companies and sold all his traffic to them, particularly to Plarium, a global browser and mobile game developer.
The major VK apps created by Pavlo’s team include a Photoshop analogue and greeting cards. There were a total of 21 million users in social media; the team switched to games later on.
Merger and Break-up with Plarium
Plarium bought half of Pavlo’s business.
He with his partner remained the owners of the other half. The merger was useful because Plarium already had successful projects, but most importantly, they had know-how, experience and expertise. Pavlo could not refuse that attractive offer; all money he invested in his business.
One successful project can overrule ten fails. A third part of our games are successful. But they should be profitable, not only cost-effective.
War of the Worlds in VK was the first game designed in this partnership. It was quite popular and top ranking in terms of strategies and the number of downloads. This was a successful project, but we wanted more.
Battle of Zombies was the next game. It was the top game in the United States for about a week, brought us around $5 million and caused us terminate partnership with Plarium. Why did it happen?
Developers created a method to play the game in social media, on Android and iOS. It was a highly successful solution; big investment was made in advertising: the team was expecting great success. But Plarium stopped promotion explaining that marketing expenditure is too high. Pavlo decided to work independently, and he now understands he did the right: had they continued to promote the project, he would have made even more money.
Another partner left Plarium at the same time as Pavlo did, and they created WhaleApp.
Game Holding Company: Team and Structure
WhaleApp combines 5 studios with over 650 staff employed. Pavlo is the director of his studio and vice president of the holding company. His responsibilities include monitoring quality of games, monetization, game design, software development and art. He manages the workflow organization, supervises producers and is in charge of recruiting in his studio. Pavlo is a mentor and consultant in other studios of the holding company. He is highly experienced: he knows how to make a product successful and address technical issue, but the final decision is made by the studio manager.
According to Pavlo, WhaleApp is worth millions of US dollars.
Structurally, WhaleApp is an association of 5 studios, each having its own team and manager. The majority of big market players develop according to this model: they buy and combine small studios into one brand. It is difficult and expensive to creating a whole new company from scratch: the chances of success are very low. It is much more efficient and faster to find the existing business and merge on mutually beneficial terms.
WhaleApp departments common for all studios: Marketing, Testing (a team which tests games after they were tested by the developer studio), Central Accounting (each studio has its own accountant though). Decisions on buying traffic are made by partners. The holding company has a total of 5 offices, including the headquarters in Israel, where accountants and lawyers are based.
Games are localized into many languages; this work was previously done by the in-house team, but now they are collaborating with the company. Purchasing traffic was outsourced, but the company now does it using its own resources, which appears to be more effective.
WhaleApp portfolio includes a total of 15 mobile casual games. The company’s revenues over the past 2 years are worth more than $40 million. Facebook and Google are the key traffic sources. All-game DAU (Daily Active Users) is over one million, and MAU (Monthly Active Users) is approximately 5 million.
Two models are used for monetization: advertising (generally hyper-casual games) and user money (the dominating model).
Game Development: Cycle, Trends, Testing
Each new project includes some stages:
creating an alpha version;
creating a beta version;
launching.
Obviously, these is a simplified description; in fact, there are a lot of more steps in a game development process. It takes about a year. The larger the development company, the longer the cycle. Chinese developers can make a game in 3 months, but the quality level will be lower.
The cycle is extended as more and more high-quality products are introduced on the market.
It makes sense: the higher the level of competition, the better product studios want to make, which requires a lot of time. Users are now more picky: if they don’t like something, they will switch to a different game. To attract the audience you need to offer better quality products, which makes the development cycle longer.
Huge funding is allocated for testing: $300,000–500,000 for testing the hypothesis and $300,000 for advertising. A budget viability test can require at least $700,000. The larger the studio, the higher its fund allocations.
The first results can be noticed in 1–2 months following the traffic purchase. This is when it becomes clear if the game is:
highly successful;
successful;
average; or
a failure.
In case of the last option the studio will give developers additional 1–2 months for improvements. The project is closed if improvements or alterations cannot ensure the required result.
Each gaming company had to close projects — this is part of reality.
Platforms and Their Challenges
Android — 80% of users and lots of organics.
iOS — 20% of users, no organics.
Releasing games on different platforms are associated with certain challenges. Here are two key problems:
iOS — too long moderation. If a new feature should be added to the game or a bug needs fixing, you have to wait 2 weeks for approval. The check process currently takes 24 hours, but planning remains a hard task. The chances to launch a game uploaded on 28 December as a New Year’s event are very limited.
Android — too many devices, including those made in China. This make it impossible to test everything because some devices do not work as expected.
Google Ban
The team launched a game on Google Play from a different account. It was banned for stealing graphics from another game. I had to provide them with evidence to prove our identity.
About Humans and Robots
Logistic robots designed to move cargoes have been long used by global companies such as Amazon doing it since 2012. They have replaced monotonous manual labor and help develop the business more actively. There is also a demand for this equipment in Ukraine, but the factors which prevent its use are:
high prices: even Chinese models are very expensive, so it is cheaper to hire humans;
no service: there are no manufacturers’ representative offices in Ukraine — it makes no sense buying equipment which cannot be properly maintained.
Pavlo accidentally met a potential customer for his robots and founded Deus Robots. He has spent 500 thousand hryvnias over the first two years, a very small amount for this type of project. The engineers and software designers who had previously worked with Pavlo, and cutting costs on lots of resources have helped to reduce the launching price.
The company currently employs 15 people. There are two types of robots available:
robots for sorting goods. Load capacity — up to 30 kg; price — $8,500 per unit if you buy up to 200 robots.
Heavy-duty robots. Higher load capacity; price — $12,500 per unit if you buy up to 100 robots.
For reference: the price of the cheapest Chinese model is $20,000. The most expensive design components are batteries, wheels, a computer, sensors, a lifting mechanism.
Pavlo says they currently have no competitors in Ukrainian market. The pandemic stimulated the demand: robots are not susceptible to diseases and help logistics companies work under any conditions.
Will Robots Ever Take Jobs Away From Humans?
The conflict between humans and machines is a topic particularly loved by science fiction authors and screenwriters. But what is the reality like? Can robots take jobs away? Pavlo says it is already happening. How about automated factory lines? There is no global issue here though, because people can change their specializations or professions. Humans can focus on artificial intelligence or related areas instead of manual labor. Besides, robots are not completely independent mechanisms: people must service, adjust and supervise them.
It will take a very long time before robots need no human supervision.
Robotics helps develop and expand business faster. People get tired and burn out doing monotonous operations over and over again: it’s more efficient to assign them to machines.
Our robots pay off in approximately a year, even in Ukraine.
Major Business Mistakes
It is impossible to build a perfect business at once, without making a single mistake. Pavlo named his major mistakes:
Not understanding the complexity of the task at the beginning. If you have zero experience, you don’t know how many team members you need, the potential pitfalls, etc. Someone else’s advice, instructions or interviews of experienced professionals will be useless, because they are all about a different business. This means each new entrepreneur should walk their path to gain personal experience, the most valuable thing.
Multitasking. If you do 5 projects at a time, none of them will be good. Do one, make it successful, and then launch the next project.
Making mistakes at the beginning of your journey is normal.
We believe this is a very good case study showing how to achieve success by reasonably using resources and staying committed to your goal. And what do you think?