Most gaming companies start with the app and then leave it to marketers to find fans and audiences. But why not turn it around and encourage users to co-create the gaming app and commit to being loyal players after its release? It’s the brilliant concept at the core of Cerberus Interactive, a company that builds bold new games with a marketing-first design process. Our host Peggy Anne Salz catches up with Sami Khan, Cerberus CEO & Co-Founder, to discuss why it pays to drive user involvement (and commitment) early in the process. They also discuss how app verticals could harness his marketing-first model to deliver apps with the right mix of audience appeal and commercial potential.
And some people are talking about shaping it as you go along, really sort of like that lead user approach where you work together with the community to get the best results. So we’re going to hear about that approach and much, much more, from my guest today – Sami Khan, he is CEO and Co-Founder of Cerberus Interactive. First of all, Sami, great to have you here on Mobile Presence.
Thanks, Peggy, thanks for having me.
And Sami, we go back a way, I mean, full disclosure, I know a lot of people in the industry for a lot of years, so last time we checked in, you were actually here on Mobile Presence, you were at Acorn, an amazing FinTech Nimble start-up cool company and now you’re at a different cool company we can say, but what got you from Acorn to Cerberus?
Yes, so, you know, I was fortunate enough to be part of the Acorn story all the way from, as you know, Peggy, their launch day back in 2014, you know, and helped grow that company quite a bit, was there for nearly four years and you know just really got the entrepreneurial itch to move to the next project. I felt like Acorn was in a great place, they continue to do great things and, yeah, since Acorn, I’ve took some advisory gigs helping different start-ups in the LA area grow, a couple of notable companies that I’ve helped advise for include the browser extension, Honey, also helped another company called Skirt which was a rental car delivery company – they were bought last year I believe by fare.com.
But also, you know, through these advisory experiences, I started really kind of learning more about the rinse and repeat process of digital marketing and what I learned was no matter what you’re selling, whether it’s round-up investment app or a digital browser extension or a rental car delivery service, 85-90% of the work is effectively the same from a mentality standpoint and of course from the physical delivery standpoint, right, and what I mean by deliverables, I mean the ads, the copy, the uploading into the Facebook and the Instagram campaign managers and things like that.
So, I really started seeing the repeatability of it so early 2017, the Head of Operations from Honey whose name is Mike Paley, he came to me over coffee and said, “Hey, we want to take this approach that you built for multiple companies and turn it into an actual growth consulting firm”. So, you know, basically from Acorns, moved into Staircase Digital which is our early stage growth consulting firm where we help seed, mostly seeds, sometimes Series A start-ups, you know, set up their marketing and get going.
And then from them, you know, that company continued to grow, we have over 20 employees in LA now, we’ve helped over 100 different start-ups and my passion has always been gaming and here I see this opportunity, great opportunity – 74% of all app store revenue comes from games and of course over 500 new games hit the app store every day. So, while the opportunity is massive, the competition is massive and that’s where I said, “Okay, if there’s high competition and here I have the skill set of driving a large amount of users to different products, maybe I can make some waves in the gaming space but de-risk it a little bit” and I think that’s what I’d love to talk to you about today.
De-risking, that’s what’s interesting to me because it’s like rather than what used to be the case also in performance marketing for that matter was sort of like, “Yeah, I have a high degree of confidence but I’m not 100% sure” and you sort of do things in a vacuum, you do do your AB testing, you do understand what’s going on in the marketplace but it doesn’t enter early enough in the cycle and I’m looking over the website for your company and it’s just fascinating, the whole idea of shaping it so early on. Maybe you can talk about that process and why that makes sense and then we’ll talk about how you’ve done it with a couple of clients.
Yes, sure. So, effectively, I mean, the way to think about this is the hardest part to figure out of your product is usually not can you build it, right – building something just takes money and takes time. The next part of the question is how do I make money and I think those are things that you can answer but ultimately you can’t make money unless you have users. So, where I see a lot of clients trip up and where I see an opportunity in gaming is we work so hard on the product, we work so hard on how to monetize the people that come in but we don’t think early enough about will people come in?
And I think that’s such a key thing that we’re just – we just assume, you know, we assume virality. We assume that we can get users but the truth of the matter is that’s where most companies early stage die is that they can’t get the users at the cost they thought they could and they put some random number on the proforma because they heard from XYZ forum, right or some Reddit post, this is how much I pay for my app. But that’s not true and it doesn’t always transfer.
So, the notion was for Cerberus Interactive, we call it the marketing-first approach. We will never build a game in a silo, right? So, if we have a game concept in mind, the first thing we do is we put together a trailer that relatively speaking is a lot cheaper than building a game and then we’ll put up some landing pages and run the ads on Facebook and Instagram but we won’t stop there, you know, we’ll ask for the gamer’s name, email and phone number, you know, and you might be saying, “Well, why do you ask for a name and phone number when all you need is an email?” Well, the notion here is we’re not looking just to build a massive wait list for the sake of a wait list. We want proof that the concept we have put forth is good enough that people are willing to jump over hoops so I almost call this deliberate hurdles, right?
If you don’t put these deliberate hurdles and you make your funnel so slick and so easy, those people haven’t really stood the test of time – are they window shoppers or are they serious, and we’re looking for people that are serious. So, for Atlas Empires, our first game at Cerberus Interactive, we put together this concept which was a strategy based, strategy game that meets a location-based game, so kind of like your Clash of Clans meets Pokemon Go-style game. And we left it at that, it was a very high level concept because we just wanted to see would people even resonate with this kind...
Exactly, would it really fly? This is like the reality check before you invest, it’s the smartest thing because then you’re not burning cash, makes perfect sense.
Exactly, and guess what? We didn’t take any investor money, this was strictly from my personal credit card, right, like really just trying to figure this out, you know, you would call this your classic like, you know, boot strapping as much as you can. And so I mention that because not only did we collect their name, email and phone number, once we collected the users’ information of the people that were interested, we redirected them to a second page where we asked if they’d be willing to contribute to be part of a conversation, right? So not just proving the demand, Peggy, but also going, “Okay, you are one of those people that would play this, now would you pay $5 to be part of the conversation with the devs, would you pay $15 dollar to have your name in the credits? Would you pay $60 to have all of the above plus a t-shirt?”
And what was amazing for Atlas Empires, the concept was so good that not only did we add over 75,000 people to our wait list, we actually made over 100% ROI on my marketing dollars on a game that did not exist.
That is fascinating, I am fascinated by this story. I hate to have to go to a break but I’ll everyone on a cliffhanger because I want to come back and find out about that merchandising as well because that is an amazing move. So, I will go to a break, listeners, but as you can hear, this is a new model with a lot of opportunity, a lot of mileage, a lot to hear about it – so don't go away, we will be right back after the break.
Welcome back to Mobile Presence. I’m your host, Peggy Anne Salz with Sami Khan, CEO and Co-Founder of Cerberus Interactive. And right before the break, it was a cliffhanger because I have never heard of that but it is so smart. Don’t just like democratise the creation of the game but like open up the merchandising early on or say, “Hey, I want these names in there, I want this stuff”. I mean, it really is community builds the game for the community. How did it turn out? I’m almost betting you made as much money on merchandising as you have on the game?
Well, that would be true so far because the game is still on beta, our commercial launch is actually going to be closer to February 2020 but, yes, I mean, you’re totally right. So, we’ve actually made over $50,000 from community contributions and that equates to over 3,000 people who are part of a very closed – we have a closed Facebook group, right, so whether you paid $5 or $60, everyone who paid any type of contribution got into this Facebook group where they were able to vote on concept art, so we would do is we would actually come up – I would tell my artist, “Hey, come up with three of these”.
So, for example, the game might have like an axe man character or an archer character, right, and so what we do is we would concept two or three archer characters that we’re all happy with as a team and then we would basically bring that option to our Facebook group and say, “Hey guys and girls, vote on your favorite” and what this allowed it to do was, you know, you give the community the options and the community makes the final choice. As a matter of fact, the Atlas Empires logo was voted by the community.
So, this is like a mash-up between sort of like all of the, you know, all of the kick offs, kick start meets gaming development community building, sort of thing – is that what’s going on here?
Yeah, I mean, look, everyone that we’ve spoken to, very few of them actually do it in the free to play space and I think that’s very – a key differentiator here. We’re not building a PC game, this isn’t a Steam [15:17] release – you could argue that Steam has the ability to do certain items like this, you know, the Steam used to have a green light kind of a program and console games are pretty big on kickstarter but those type of people, they’re used to paying and shelling out $30, $40, $50 for a title when it comes out.
The key differentiator here is these folks that are contributing money know that the game will be free and yet they’re still willing to contribute to have their voice as part of the creation process.
That is wild, that is really something. And you know, you have such a vast background, I mean, starting when I knew you at Acorn, FinTech to games – does this – it’s early, early days but do you see that this has some overlap or some spill over or some creative opportunity overlap with other app categories?
100%, I wish I could talk to you more about the overlap because we are confidentially working on something that is I think going to blow the lid off multiple industries. But, the best I can say, Peggy, is that I’m uniquely suited to sit between gaming and FinTech which is rare air and what I will say is gaming has an addressable market of $2.3 billion and so if you can use gaming as a Trojan Horse for FinTech, it becomes a huge opportunity that I don’t think even FinTech companies of today’s day and age could probably fathom.
And of course I’m watching FinTech all the time, it is personal finance, right, and the emphasis is on personal, I’m seeing so many cool attempts, I mean, even yours – I remember with Acorn, you guys had this cool jingle and everything to talk to the millennial's so it’s not the audience you think it is, it’s an audience where this would resonate, you know? It’s gameification, it’s fun, it’s personalization, it meets and ticks all the boxes, I think.
Yes, and I think one thing I’ve learned from just general marketing, I’m not going to call out just Acorns but I’ve helped over 30-40 different start-ups in the last four years and what I will say is people just want something that adds value to their lives, right, whether it’s value from an entertainment standpoint, value from a convenience standpoint, value from a savings standpoint – I think that my opinion is that we’re getting over-personalized when really there’s a few large pillars that people just want to solve, right, and I think the companies that can solve those large pillars in the most convenient fashion or the most straightforward fashion are going to be the ones that end up really taking charge.
I mean, I don’t have any stock in Robin Hood but I use them as a great example, right? People want to trade stock, that’s a fact, and to offer that ability for free – it just makes sense and you could argue Robin Hood is not hyper-personalized, it’s not going down that road but it’s probably up the FinTech world, the most successful start-ups in the last four or five years, right? So, I think we need more Robin Hoods that are truly like looking after, okay, here’s something everybody wants to do, let’s just offer it at a better value or for us in gaming, it’s people want to play games, what if they want to play a game that they had some say in building, or whatever that may be. I think, you know, we’ll find our path but, you know, I do have my opinions of – I think that just because we have the technology to hyper-personalize doesn’t mean we always should, I guess, because that creates the user experience now that users have to download 50 apps to solve what might be done in two.
Yes, keep it simple, simplify it, streamline it. And to your point, there’s also probably something going on in the mind of – for the same reason I talk to a lot of people, you just don’t give away stuff for free, there has to be an investment and even if it’s like symbolic, even if it’s like here’s $10 or here’s $19 or something, you just don’t give away like free tickets or something...
I think incent traffic is the worst, the worst, because, look – go back to what we just did at Cerberus, right? I go back to the deliberate hurdles. If someone’s not willing to put their name and phone number, are they really going to play your game for a week, right? You know, it shocks me, and this is the biggest takeaway hopefully for your audiences as a veteran marketer in the space is that don’t confuse downloads with users – don’t confuse sign-ups with users.
As a business owner, we have to understand “What is a user?” and every business has a different definition and that’s okay. You know, for a video game like ours, a user – I don’t consider you a user unless you’ve played the game three days in a row, right? And for Acorn, certainly it wasn’t just a download, it was someone who opened an investment account. And paying someone to just download the game or paying someone to open the game the first day, that doesn’t do me any good.
And speaking of that, you know, you’ve got these people signed up and ready to roll, you’ve got them interested in shaping the game – let’s talk about how they become your advocates. Have you had some success in saying, okay, you guys are really into it, now you were talking about your marketing budget but you don’t have to worry about that – is it also the case that they are your advocates, your amplification? Is there a knock-on effect that maybe even you weren’t expecting?
Yes, certainly. I’ll give you – so, yes and no and I’ll say the no first which is because we’re not live yet, I haven’t asked our community to promote us, right? But certainly I feel like when the time comes, we have a very invested group that would but I’ll give you an example and you know, for us in these tech hubs, San Francisco, Austin, LA, New York, I think sometimes – I just assume the majority of your listeners are from the tech communities but I think we just assume that the things we take for granted, everyone would take for granted and I have this one example which is...
At first I felt a little unsure about taking $5 or $10 or $15 from, if you will, everyday Americans to be part of creating this universe, right, because I come from the FinTech world where it’s like we’re just trying to help people save money and save up for their future and then here I am, the next gig I do, you know, taking $10 from someone to listen to their feedback.
But what struck me super interesting was, you know, on Facebook you can see people’s jobs and things like that and I noticed a lot of people that were signing up and paying money were cashiers or everyday kind of like the American jobs that you don’t think about, I guess, and for us, what struck me was I saw somebody’s Facebook profile who was a cashier in Alabama or something and the second role they listed in their Facebook profile was “Beta tester at Atlas Empires”. And it kind of just strikes you how much pride there is for those folks, you know.
Like we in the tech industry might go, “Oh, that’s a customer who paid $5 or $10 or 15 or $30” but for them it’s the opportunity of potentially a lifetime to be part of something that normally they can’t be.
So, it’s definitely a community, it’s definitely paying off – we are going to talk about some of the lessons here and maybe how they can apply to other app verticals or other marketers but first we do have to go to a break, Sami, so hold in there for me and we will be back after this break.
Hey, hello, we are back to Mobile Presence. I’m your host, Peggy Anne Salz and we have Sami Khan, CEO and Co-Founder of Cerberus Interactive. Sami, great show, I wasn’t even expecting it, sometimes I go into these shows thinking, “Okay, just going to do our thing and it’s going to be alright” and then it’s like, “No, this is fascinating”. Because this is taking us past the thinking of the minimum viable product which we thought was the thinking – do your sprint design, do whatever you need to do and get through it. This is very different, this is saying that’s not enough, that’s a great start, I won’t knock it, but you have to do something more. So, let’s talk about the model here, I mean, do you see that, do you see yourself as architecting a model that’s great for games but probably good for everything else that’s going to go into digital?
100%. I mean, I think the argument could be made, you know, where we made 100% ROI, you know, I’m not convinced that every other industry could do that just because there are so many passionate gamers that are already kind of in the mindset of wanting to spend money. But most companies aren’t in a position where they need to make them, you know, $50,000 back, right? I hate saying it that way but I think that anyone can do this to an extent and I believe they should – I don’t believe that anyone, and I’m talking about any industry, if you’re in the digital space, if you’re starting a restaurant, if you’re starting a clothing line company – I mean, why would you torture yourself not knowing what’s going to happen, what’s going to work – I feel like the stress alone would kill you.
So, you know, I think that we live in the day and age where you got to get, you got to look at your advertising channels, you’ve got Reddit, you’ve got YouTube, you’ve got Facebook, you’ve got Instagram – more than ever now, you can reach – you know, I always say this, 89% of all online Americans are on Facebook in a given month. I mean, reaching eyeballs is no longer the issue. So, I would say the only issue is the fear of finding out the truth but quite honestly I feel like you should find out the truth sooner than later, you know. When you’re $5 in versus $50,000 in.
Yes, I fully agree. I mean, we’ll see the proof of concept, as you said, you’re in beta, maybe we’ll have you back at some point, you know, later on, hear about how it turned out, any other cool projects you might have in the works. But that’s just it, we’re seeing that Atlas Empires, you’re in beta, things are moving along – my listeners, they’re probably saying, “Hey, this makes sense, this has legs” but what do they do? I mean, how would they interact with you, what do you offer, how can you bring like the Atlas Empire, you know, algorithm for success to whatever game or idea they might have – is that how it works?
Yeah, I mean, you know, I personally don’t do much advising anymore but what I will say is that at Staircase Digital, my goal was to take my knowledge and put it into a larger team that can support, you know, 30, 40, 50 concurrent start-ups. So I would, you know, I’m not sure if I’m an allowed to give a plug but anyone looking for this type of help, my team in LA is extremely well positioned and the Staircase Digital team, they can talk to you about this stuff and I am an advisor still to that company so a few hours a week, I’ll check in on a couple of different clients and make sure that things are going well and my team will reach out to me if there’s any questions.
So, that’s a good way if you don’t feel like doing it yourself, otherwise, you know, I’m available on LinkedIn, I’m always happy to exchange notes when I can and I sincerely believe this is the future of not marketing, of product and I think product and marketing are so married together that people have to do this and I 100% encourage people to take what we’ve learned at Cerberus with Atlas Empires and put their own spin to it and apply it in whatever industry they’re in today.
So, they could come to you, they could come to your other company, they could also just try this out, you know, it’s really about connecting with your community – what would you say, I mean, just as a final word – what do I do if I’m really going to just try this out, maybe before I come to you, maybe it’s like checking to see if I’ve got something here with commercial potential before I even explore it with one of your companies – what would you say, is it just like, float it in social media...
Make your call to action, sign up, give me some data, show me that you’re committed.
Yes, so, we could have a whole call on this but what I will say is if you have a discovery-based product, not an intent-based product, and I’ll make a quick distinction – intent is like you’re solving a roof leak, right, I need it in a very short window but if it’s a discovery product like Acorn or like Honey or like Atlas Empires where you wake up and you didn’t know about it and you realize you need it, social media is the best place to start. From a tech perspective, I’d say sign up for our company website like Instapage – it allows you to build landing pages really, really easily, I’m not an owner or shareholder of Instapage, I’m just saying it’s what I use to quickly create landing pages. You can get people to sign up, collect info – all that stuff can be done in a day, right?
So, you have an idea, go put a landing page together, collect some basic information, just keep in mind the fact of deliberate hurdles, right, make sure it’s enough information where these people are clearly interested and not window shoppers, and I would say if you can do that, you’re basically halfway there.
I love that, set deliberate hurdles. Absolutely want to have you back, Sami, so make a note, we’re going to do it again, we’ll talk about it post-beta, we can dissect this and we can also maybe give our audience a few more tips about how to do this because democratising this is definitely where it’s going.
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