So Telltale Games is out of business. Like most of the rest of the industry – including the employees of Telltale – I had no idea this was coming. I looked at the popularity of their breakout hit The Walking Dead and the overall quality of some of their earlier adventure game offerings and just assumed this was a well-run company.

They stuck to a given style of gameplay and didn’t stupidly chase trends like online shooters, Battle Royale games, loot boxes, or any of the other fads that have pulled teams off course with the false promise of easy money. They weren’t wasting money on graphics for the sake of prestige. They weren’t chopping their games up into fragments of DLCI mean aside from selling the games an episode at a time, which is kinda built into the design from the outset. If anything, the episodic thing is better for the consumer in this case. You only need to buy the first chapter for $10 to see if you like it rather than paying full price for the whole thing.. They weren’t making any obvious mistakes, so I assumed everything was fine.

But as it turns out, the rot was there all along. This article on The Verge paints a pretty grim picture. (For the purposes of this article, I’m going to take everything The Verge says at face value.) The article calls the company culture “toxic”. I’m always wary of the word “toxic”. As I understand it, this word is used to describe a group where problems are directly attributable to the personalities of one or more people in leadership positions. It shouldn’t be used for more general sorts of problems stemming from poor decision-making. A company where the president picks dumb products, wastes money, and hires unqualified losers is dysfunctional. A company where the president builds a cult of personality, fires people who criticize him, and hires unqualified friends / relatives is toxic.

After reading The Verge article, it sounds like Telltale suffered from both problems. They were dysfunctional in the traditional sense of making lousy business decisions, but they were also dysfunctional in the more specific sense of being run by one or more jerks.

I guess part of the reason I was blindsided by this is that I just wasn’t paying attention. I loved the first season of The Walking Dead, but I never got around to playing season two. Likewise, I never tried any of their other games. Episodic content doesn’t really fit with my binge-playing style. Maybe if I’d played their more recent games I would have noticed something was off, but probably not. Given how this caught the employees themselves off-guard, I imagine this was a well- kept secret.

I don’t think there’s any reason for me to criticize the toxic behavior. A lot of people are pointing fingers at one guyOne of the company co-founders. with a lot of power and a fragile ego as the source of major problems. There’s no point in criticizing him. Most normal people don’t need to be told not to act like a jackass, and a jackass won’t listen. So let’s ignore the toxic stuff and focus on the bad management. I think it can be useful to criticize the more general mistakes made in the area of running a business. These are lessons that people can learn, and hopefully avoid making them in the future.

Lessons To Learn

1. Stability is more important than growth. The rot began at the very beginning. In 2007, Telltale raised more than $6 million in venture capital funding, but those investments came with strings. They were committed to some level of steady growth. The Verge doesn’t specify how much, but this is a destructive kind of deal. It gives you the unwanted obligations of being a publicly traded company and needing to maintain constant growth rather than reliable profits, but it also puts you under the thumb of a small group of investors. I realize that beggars can’t be choosers and the people putting up the money get to dictate the terms of the deal, but I really wish investors would get it through their thick heads that growth is a dangerous thing in a creative company. If you demand your already-profitable company double in size over X number of years, then you’re very likely going to kill the goose that lays the golden eggs. This is because…

2. Rapid growth harms the culture of creative endeavors. It’s one thing if you make lawn chairs or frozen pizzas. If you’re just churning out identical consumer goods then growth is as easy as opening another factory and hiring people to run the machinery. But if you make movies, television shows, comic books, or videogames, then your “product” is not a physical good. People don’t buy movies because they want a plastic disc. People don’t buy comic books because they need some cheap paper and a couple of staples. Your product is the creative output of your employees. You need to grow slowly so the sensibilities and techniques of your initial successful team can be absorbed by newcomers. If you double or triple the size of your team in the space of a couple of years, then you’re getting bigger at the expense of diluting your talent. This is particularly true in the case of writers because…

3. Writers are not interchangeable. Like I said at the end of my Mass Effect series, writers aren’t interchangeable. The two people who made The Walking Dead Season 1 both left the company when that project was over. They went on to tell other award-winning stories while the next season of The Walking Dead went on to disappoint fans. According to The Verge:

In addition to [lead Writers of The Walking Dead Season 1] Vanaman and Rodkin, who are often cited as two of the biggest creative losses for the studio, the resources at the company were diminished by other high-profile departures, including Adam Hines, Chuck Jordan, Dave Grossman, and Mike Stemmle. Earlier in 2017, veteran employees Dennis Lenart, Pierre Shorette, Nick Herman, and Adam Sarasohn left the studio simultaneously and moved to Ubisoft.

If you’re a company like BioWare, Naughty Dog, or Telltale and you’ve made stories a major pillar of your products, then your writing team is your company. This goes double for places like TellTale where the “gameplay” consists mostly of lightweight quicktime events.

And if you want to retain those talented people and protect the quality of their output, then the first thing you need to remember is that…

4. Perma-Crunch is destructive. I already wrote an entire article about this back in 2016. Yes, it’s true that crunch can be useful as a temporary measure to meet a deadline as a project gets close to the finish line, but if you’re in a permanent state of crunch then you’re driving off your most talented people and killing the morale and enthusiasm of everyone else. Yes, even if it’s “optional” crunch. If people start working 10 hours days and you’re not up against a deadline, go in and encourage people to go home. Productivity drops off sharply past the 40-50 hour mark, while morale problems and interpersonal conflict goes up. You’re greatly increasing wear and tear on your team for very little benefit. This effect is even stronger in creative fields, so knock it off.

Also, if you’re trying to achieve steady growth then you need to build a company on a reputation of quality. If you want to maintain quality then you need to retain better-than-average people. If you want good people, then you need to…

5. Pay your people well. You can make excuses all you want, but sooner or later mathematics will have its way with you. If your employees can easily find other jobs with higher pay then they will stop being your employees. People get into arguments about what a “fair” wage is or what you “should” pay people, but it all depends on the local economy, the amount of education and experience you demand for a position, and how challenging the work is. If you’re having trouble figuring out what the right value is, you can always check aggregate sites that show the typical income for a given location + position. If you pay less than the typical wage, then you’ll get lots of kids fresh out of game college, and those kids will leave the moment they’ve clocked enough experience to land a job somewhere better. Essentially, you’re paying to break in all the newbies so they can run off and work for your competitors once they’re competent. That’s fine if you want to crank out shovelware and shitty free-to-play mobile games. But if you’re banking on the prestige of being an auteur studio built on storytelling, then underpaying your talent is basically suicide.

Oh, and it’s a lot harder to pay your people a decent (to them) salary if you decide to put your office in the ultra-overpriced Bay Area market. This is because…

6. Fancy offices in prestigious locations are for rich companies, not startups pretending to be rich companies. Are you Walt Disney? Blizzard Entertainment? Valve Software? No? Then get off that expensive property. You literally can’t afford it. The office is expensive, the taxes are expensive, the salaries are expensive, utilities are expensive, local services are expensive, and supplies are expensive.

Maybe you look and see that 10,000 square feet of office space will cost you $17,400 a month in Atlanta but that same square footage will set you back $54,300 in San Francisco. “No problem,” you stupidly think, “we can afford the extra $36,900 a month.”

I guess you skipped a couple of semesters of business school, because you shouldn’t think of this office as “$36K more”. You should instead think of it as THREE TIMES AS EXPENSIVE. More importantly, you need to realize that the cost of everything else will be similarly inflated.

Frankly, if I was an investor I’d refuse to give my money to any ninny who wanted to set up shop in any of the overcrowded, overpriced tech hubs. I’d use that as my first-pass question for weeding out idiots. “Where do you plan to establish your offices? Silicon valley? Get out of my office.”

You can find lots of talented people in Dallas, Atlanta, and Durham for a fraction of the cost. You have better places to spend your money. Unless the land itself is going to magically improve the quality of your software, then there’s no reason to put yourself in one of the most expensive locations in the western world.

Not to mention that these expensive places tend to have horrific commute times, which burdens your employees and drains away their morale before they even reach the office. Seriously, this is stupid. You should have learned this lesson in the dot-com crash 17 years ago.

Wrapping Up

Just to drive the point home, check out this chart I swiped from Imgur:

Huh. Looking at this chart, it's kinda shocking nobody predicted this.

It’s almost as if quality matters. Telltale started off with a brilliant team and then after those people left the company, management just kept hiring people (for below-industry standard wages) and growing the company despite the complete lack of interest in their products. Telltale didn’t “die”. They committed suicide.

Patient: Telltale Games

Time of Death: September 2018

Cause of Death: Destructive business practices. (Self-inflicted.)

What a stupid waste.