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http://www.bostonmagazine.com/articles/2012/07/38-studios-end-game/
Only problem is the article is very long, but it is well worth reading if you have a few minutes to spare. Here are some fun quotes though:
Curt Schilling.
Only problem is the article is very long, but it is well worth reading if you have a few minutes to spare. Here are some fun quotes though:
Schilling’s harshest critic in the online exchange was Bill Mrochek, the vice president of online services, whose wife required a bone marrow transplant at the time their healthcare disappeared. “Are you going to admit that your stupid hubris, pride, and arrogance would not allow you to accept that we failed — and help shut it down with dignity?” he asked Schilling.
Once, after an IT guy’s rottweiler died, Schilling presented him with a brand-new pup during an all-staff meeting.
“He really needed Company 101,” Close told them. “For example, the whole concept of vacation was foreign to Curt. He actually said, ‘People get weekends off, right?’” Schilling at one point suggested that people work 14 straight days and then take five days off. It jibed with his baseball experience.
hat idea was never instituted, but other questionable ones were. Schilling put his wife, Shonda, on the board of directors. Shonda’s father received a job in IT (by all accounts, he performed admirably), and her mother was given the title “philanthropy and charity manager.” Meanwhile, Shonda’s uncle, William Thomas, became COO. Though a seasoned businessman, Thomas had no experience with video games, much less MMOs. Schilling took to calling him “Uncle Bill” around the office, and even in meetings with outsiders. According to the case study, Thomas told Schilling it was making them look bad and to stop. The nickname caught on with the staff, anyway.
Most troublesome of all was the unique profit-sharing plan Schilling devised for his first employees. Wasserman, Bussgang, and Gordon write that, since Schilling was bank-rolling the company by himself, he was hesitant to give up equity in it. So instead of luring early prospective hires with stock options, he promised to share all profits 50-50 with them. Upon arriving as CEO, Close recognized that “investors’ heads would explode” when they saw the model, since they’d be bearing all the risk but reaping only half the reward. Close eventually convinced Schilling to scrap the policy and replace it with stock options.
Time and again, though, Schilling emerged from meetings like this one thinking he’d hit a home run. “There was never a single one that he didn’t walk out of saying he absolutely killed it,” says a former employee who attended a number of investor meetings. But over and over, there was no investment.
So as the company moved south in April 2011, it embarked on a hiring binge. In its midst, Schilling seemed to be handing out important titles to anybody who asked nicely for one. “It became a joke,” one employee says. “Oh, you are a VP of lunch? Oh yeah, I’m a VP of doughnuts.” Infighting inevitably resulted, with execs often giving conflicting directives to staffers. “They didn’t work well together,” Schilling says of his bloated management team. “I was amazed at the turf-building and protecting that went on.”
The people working under Schilling had their own complaints about him. One says that he’d undermine managers by randomly dipping in to give direct orders to employees: “His requests added significant work, and were often contrary to the direction given by other people.” Former staff members also charge that Schilling was stubborn and ignored people when he didn’t like what they were saying. For instance, sources say Schilling froze out his vice president of business development by excluding her from meetings. “Once Curt turned on somebody,” a former employee says, “you went from being a superstar to he doesn’t want to talk to you, overnight.”
One former employee says Schilling appreciated that there was a lot he didn’t know about video-game development, and “tried to hire some of the best people in the industry to shore up those gaps. The problem is if you don’t listen to those people.”
Deadlines were frequently missed, something for which staffers say Schilling rarely held anyone accountable. The ex-pitcher had a bigger concern. “The game wasn’t fun,” he says, unprompted, beside the softball field. “It was my biggest gripe for probably the past eight to 12 months.” Visually, Copernicus was stunning, but the actual things you could do in the game weren’t engaging enough. The combat aspects especially lagged. Schilling — who never wavered in his belief that the game would be great — says the MMO was improving, but after six years, it still wasn’t there. When Schilling walked around during lunch hour, he says, nobody was playing Copernicus’s internal demos. They were all on some other game.
Despite the money crunch, however, he brought in two new executives in March, one of whom moved from Texas. That same month, 38 Studios stopped paying vendors like Blue Cross Blue Shield. It had already been ignoring bills from Atlas Van Lines for some time.
Adding to March’s chaos, CEO Jen MacLean, who’d been feuding with Schilling, suddenly went on leave. Her colleagues — and the press — were led to believe it was because of her pregnancy (she was roughly six months in), but according to a company source, MacLean’s departure was not for medical reasons.
Hopeless as things seemed, Schilling remained confident that yet another lifesaving deal was imminent. He still owned 82.9 percent of the company, and says he was willing to part with a healthy chunk of it to save the studio. In April, 38 Studios sent eight employees to China to meet with a potential partner. Then there was a South Korean video-game concern called Nexon, whose executives had recently visited the Providence office and appeared interested in a deal. And finally, Schilling felt that 38 Studios was close to a pact with the company Take-Two Interactive to publish a sequel to Kingdoms of Amalur: Reckoning.
But when May 1 arrived, 38 Studios was unable to make its loan payment. That put it into default and set off a series of private meetings with Governor Lincoln Chafee’s office. Still, most staffers had no idea the company was in trouble until two weeks later, when, on May 14, Chafee told the Rhode Island media that he was working to keep 38 Studios solvent.
Schilling says the deal with Take-Two was ready for “final sign-off” the next day, May 15, but fell apart when the publisher got spooked by Chafee’s comments. Take-Two seems to have had a different impression, however. “I am not aware that there were any negotiations,” spokesman Alan Lewis says. “We do not comment on rumors and speculation.” You’d need a microscope to read between the lines of that statement, but it seems clear that nothing was imminent. Both the Chinese investor and Nexon disappeared, too. (Nexon declined comment.)
Meanwhile, as the media swarmed outside the 38 Studios office, employees inside began to realize that the company could be done for. Wanting the world to see their work, a few grabbed an old Copernicus trailer and began to brush it up. As they worked, colleagues crammed into a small set of cubicles, packing in 50 to 60 deep. When the video was ready, someone hit play and “Project Copernicus” came up in gold lettering on the screen, followed by a shot of a foreign-looking world. With haunting music in the background, the camera zoomed in, whooshing through a series of distinct, beautifully rendered landscapes — a forest of trees decorated with ornate hanging lamps; a castle with a base of finely detailed sculptures; a palace topped with golden griffin statues. When the two-minute trailer ended, people lost it. “We’re all leaning on each other,” says Jesse Smith, the designer. “A lot of us were crying, a lot of us were happy. And after it happened, there was just an uproar of applause.”
The trailer was played several times, with new groups of employees cramming in to watch. It was posted online and then played again for the full staff later in the day on a big projection screen. There was a standing ovation.
On May 24, the entire 38 Studios staff was laid off via e-mail. They hadn’t been paid since the end of the previous month, but their problems were just beginning. In short order, their healthcare disappeared and their 401(k)s were frozen. Then, MoveTrek Mobility — a company 38 Studios hired during the relocation to Providence to buy and resell employees’ Massachusetts homes — notified seven people that, because it had not yet sold their houses, they were potentially responsible for their old mortgages. And Atlas Van Lines alerted some individuals that they were on the hook for bills that management hadn’t paid.
Thom Ang is one of those people suddenly stuck with his old mortgage. With two young kids, no salary, rent due on his Rhode Island home, and now a mortgage in Massachusetts to pay, he’s afraid his credit is about to be ruined. “I wasn’t even aware that this could or would happen,” he says, “and then having it affect where I could possibly live and where I could possibly work?”
One of the company’s final acts — between June 4 and June 6 — was to pay COO William “Uncle Bill” Thomas just over $12,000 for his work shutting down 38 Studios, according to bankruptcy documents.
One former staff member vented his frustrations on Facebook, writing, “I’d like to honestly know why I was hired in the first place on January 16th, 2012…when members of the company knew they were behind on bills and not doing well economically? I moved my pregnant wife, sold my house for a loss of 18k, relocated away from all my family and friends for a company I thought was honest and forthright to their employees. What did I get in return? An unpaid [$10,500] relocation package months after it should have been paid, a pregnant wife who found out our insurance had lapsed from our doctor, a ton of bounced checks and payments to bills when we found out our paychecks had not been paid through the media and a large debt to my unemployed father to help us survive.”
But it was. Schilling acknowledges as much. In the private Facebook postings, executives like MacLean and Mrochek claim they tried to stop Schilling and he wouldn’t listen. MacLean wrote that executives “brought their issues up many times and were largely ignored.”
“You knew we had not been paying all the bills for months,” Mrochek wrote to Schilling. “You bet our lives on the roulette wheel of Rhode Island state politics.”
Back at the softball field in Dracut, Schilling is still having trouble fathoming what happened. “I’ll find myself in the middle of the day, just aching,” he says. He concedes that he’d promised his employees 60 days’ warning if the money ever looked like it was going to run out, but argues that the situation was moving too fast for him to keep sending updates. “It wasn’t that I didn’t want to tell anyone,” he says, “it’s I didn’t know what to say.”
Curt Schilling.
