Building and Selling a Tech Company

From: myfirstmillionpod

Dan Porter, described as a “new hero” by the interviewer, has a unique approach to building and selling successful companies that has seen him navigate various industries, from gaming and ticketing to education and sports [00:07:00], [01:09:00], [01:19:00]. His career trajectory highlights a “jack of all trades” mentality, emphasizing experience and observation over specialized expertise [02:00:00].

OMGPOP: The Journey to “Draw Something”

Porter’s company, OMGPOP, started as a Flash-based gaming website founded by Charles Morman, aiming to connect players online [02:24:00]. Despite creating many fun games and accumulating millions of players, OMGPOP found itself in a challenging “middle” ground, being good but not great, especially when compared to giants like Farmville, which had 100 million players [02:52:00]. The shift in the gaming landscape towards Facebook and mobile games left OMGPOP with limited runway – only about four to five months of funding remained [03:12:00], [05:51:00].

Facing potential closure, Porter viewed their situation as a “Hail Mary” moment [09:57:00]. He decided to lead the development of one last game, despite not being a game designer himself, relying on his internalized understanding of the gaming space [04:44:00].

The Genesis of Draw Something

The core idea for “Draw Something” (originally “Draw My Thing”) came from an existing web-based drawing and guessing game that OMGPOP had made [08:21:00], [09:04:00]. Porter’s key insight was recognizing the phone as a communications device, and that popular mobile games were mostly single-player. He aimed to create a social game that connected people, akin to the early Game Boy era but with added connectivity [08:43:00].

His iterative development process involved weekly playtesting on his subway ride home, focusing on simplicity and making the game easier to understand [09:11:00], [23:27:00].

A pivotal founding insight for Draw Something was the concept of “streaks” [17:45:00]. Porter observed that in most games, a winner meant a loser, and losers often didn’t return. By encouraging collaboration and shared goals (like throwing a football 50 times without dropping it), he envisioned a game where “nobody loses,” making it fun for everyone involved [17:11:00]. This idea of collaborative streaks was later adopted by Snap [18:08:00].

Another deliberate design choice was making the game accessible to non-artists, using a finger on an iPhone screen, which lowered expectations for drawing quality and made the process more humorous [22:51:00]. The playback feature, showing the drawing process with mistakes and erasures, fostered connection and vulnerability between players [22:23:00], [24:09:00].

Overcoming Technical Hurdles and Achieving Viral Success

Initially, Draw Something struggled after its release, as a critical backend issue prevented widespread adoption [10:50:00]. Two developers rewrote the entire backend over a weekend. To expedite the App Store approval process, Porter leveraged a favor from a well-known seed investor, securing a review in a day or two instead of weeks [11:11:00].

Once fixed, the game exploded in popularity:

• 1 million downloads in 9 days [12:24:00]
• 50 million downloads in 50 days [12:27:00]
• Became the number one game globally for six months [13:58:00]
• At least 25 million daily active users [14:04:00]
• Ultimately downloaded 250 million times [14:10:00]

The game’s success was largely organic. It gained traction through powerful word-of-mouth in tight-knit communities (like small liberal arts colleges and countries like Sweden) [13:06:00]. Celebrities like Miley Cyrus and Cristiano Ronaldo’s manager discovered it naturally, without paid promotion, because it became a part of popular culture [14:31:00], [15:07:00]. Notably, OMGPOP intentionally didn’t include a sharing feature, which ironically led users to take screenshots and share them manually, further boosting its organic spread, particularly on Instagram [15:46:00].

The Acquisition by Zynga

Just six weeks after Draw Something’s launch, the company was acquired by Zynga for $200 million [25:35:00], [29:29:00]. The acquisition process was exceptionally fast, closing in just nine days, with two law firms working around the clock [25:46:00].

Porter explains that Zynga, along with other major players like EA, was motivated by both offense and defense. Draw Something was so popular it was “sucking the user base out of every single other game on the market,” making it a strategic imperative for companies about to report earnings [26:08:00].

The decision to sell was largely driven by the employees, who had put five years of their lives into the company and saw the acquisition as life-changing [28:10:00], [28:18:00]. Porter also recognized that while OMGPOP was excellent at making games and community management, they weren’t necessarily better at commodity functions like building legal or sales teams that would come with scaling a larger business [28:25:00].

Porter’s negotiation strategy for the sale involved a mix of “delusion and arrogance” but also a deep understanding of the buyers’ strategic needs [30:01:00]. He pushed for a higher price ($250million)despitetheboardbeingecstaticwith$120-150 million, recognizing that the game’s massive user numbers and impact on competitors’ user bases gave him significant leverage [29:37:00], [30:42:00].

Post-Acquisition Philosophy

For Porter, the acquisition wasn’t just about financial gain. He used a discretionary cash component to rehire employees who had been laid off just before the deal, ensuring their options vested, and to provide cash to those who had prioritized cash over stock due to family needs [32:28:00]. He even bought $100,000 worth of iPads from the Apple Store and distributed them to employees, fostering a sense of community and gratitude [33:14:00]. This allowed employees to pay off college loans and other debts [33:03:00].

Porter lives by the principle that “the most powerful people are the people who know how to give up power” [36:13:00], viewing money as a tool to impact lives rather than solely for personal gain [36:51:00].

Lessons on Building and Selling a Tech Company

Porter’s experience offers several key takeaways for building and selling successful businesses, especially in the tech space:

• Simplicity and Accessibility: Making a product incredibly simple and accessible to a broad audience, even grandmas, can lead to explosive growth [12:52:00], [22:20:00], [23:51:00].
• Organic Word-of-Mouth: Cultivate powerful word-of-mouth by creating a product that fosters genuine connection and a shared experience [13:01:00].
• Embrace Paradox: Sometimes, not asking for sharing or celebrity endorsement can lead to more authentic virality [16:03:00].
• Problem-Solving vs. Core Problem: The perceived problem might not be the actual underlying issue. A structural change (like playing only with friends to avoid inappropriate drawings) can be more effective than complex technical solutions (like AI to detect drawings) [19:44:00].
• Read the Environment, Not Just Articles: Porter stresses that much of what is written about why companies succeed or fail is often wrong [31:43:00]. Instead, an entrepreneur should be like a “regular person observing,” looking at what makes people laugh and smile, and understanding cultural nuances [18:24:00], [32:00:00].
• The “Dream of a Clean House”: When selling a product, especially in B2B or “nerdy” sectors, focus on selling the ultimate dream or benefit rather than just features [01:03:19]. Overselling features can lose the audience [01:06:54].
• Strategic Negotiation: Understand the larger game buyers are playing and their strategic imperatives, as this can provide significant leverage [01:07:07].
• Value Relationships: Leaving a little extra on the table in negotiations can foster future business relationships, in contrast to extracting maximum value [01:07:08].
• Community Building: For “cult brands” like Overtime, intentionally create ways for the community to interact and share their identity, using elements like hand signs or common language to build a sense of belonging [00:55:21], [00:56:47].
• Authenticity: Success often comes from being authentic and having a “zest to do something that matters” rather than a studied, grinding approach [00:44:39], [00:42:21].

Porter’s career reflects a belief in gaining diverse experiences and having a relentless curiosity about the world around him, which he argues is more valuable than traditional business education [01:07:55], [01:08:10]. He encourages young people to “say yes” to varied experiences, as they provide context and open doors to unforeseen opportunities [01:09:00]. He also emphasizes finding a work environment that celebrates one’s true self rather than forcing adaptation [01:12:52].