Codigames: How to increase your sales fortyfold in one year

After seven years of working silently with a pick and shovel, like a weary little ant, the other day code me with the announcement that in a single year, in the 2019 financial year, it has quadrupled its turnover with 20 million Ebitda from just over 1 million euros to 44 million euros and that for this year 2020 is aiming for double results that reach 80 million euros. And also that he bought back his company from investors. Two milestones that represent the ideal dream for joint entrepreneurs. But how did they achieve it?

Everything started in Valencia in 2013, but in reality it started much earlier in Molina de Segura, Murcia than the parents of Francisco Jose Martinez When he was only 9, they gave him a computer and hired a tutor to teach him how to code. “That’s when I discovered my calling. I worked on projects and computer games in high school, but I knew I wanted to make a commercial video game. I suggested it to my cousin Zacarías, we grew up and played together all our lives. In the early days there were many barriers to entry: you had to publish in physical form, the software was very expensive, it could easily reach a million euros. But in 2010/2011, with the arrival of smartphones, everything became more accessible, the software was democratized and we decided to create the first video game.”

“We presented it in international competitions and we learned. We were soon self-sufficient, but we were ambitious. So we applied to all the entrepreneurship competitions without winning any until it came up Commute. It was the first edition. We had developed our third video game a few months ago and were already billing €20,000. We ended this edition with a €350,000 investment round with the Lanzadera Fund (Angels Capital) and in 2016 we completed a second investment round of one million dollars (about €800,000) again with Angels Capital but also with Faraday Venture Capital and Caixa Capital Risk,” explains Francisco.

Today he is the CEO of the company and Zacarias Gomez, its co-founder, the Product Director. Between 2013 and 2019, they grew at around 100% annually, “except for 2017, where we struggled because we couldn’t launch new video games. But in 2018 we became leaner and faster in execution. And in 2019, we fell off the map thanks to the success of Idle Supermarket Tycoon, which reached the top 1 in the US. Getting a game to #1 and staying there for weeks is a big goal, but being in the top 5 for many years makes more sense. So our goal is to keep working to create that experience, to keep surprising the player and to hold those positions for many years to come.” Those are the steps that got them here.

never settle down. “We always aspired to build a large company that sets national and international standards. We could have settled down when we managed to be self-sufficient or when it worked with 7 or 12 people, but we had a clear philosophy to keep launching projects.” Today they are a company with 42 employees and 70 million new ones Downloads of their games, mostly in United States, Canada, United Kingdom, China, France and Germany.

and keep trying. “When no one believed in the project apart from the two of us, we kept counting on it. I think that’s the key to our success. When we started in 2011 we set a few milestones and thought: if we haven’t achieved what we set out to do by achieving those goals, then let’s not, but we’ve always kept going because we love what we did and we thought we could keep learning and get closer to our dream.”

With a very clear focus. “Michael Bay is the best at making action movies because after he’s done one action movie, he makes another action movie. It’s the same in our business: we always knew we wanted to make video games for mobile platforms. Being such a passionate industry, it’s easy to be tempted to venture into games with other themes. If you keep changing, you end up not reusing your knowledge. If you always keep the same focus, you will be better able to reuse that knowledge to the maximum. In short, being able to say no to many things and yes to a few, and keeping the company’s mission in mind.

work in parallel. “We have always opted for the funnel philosophy: working on several projects at the same time in order to diversify risks and because it allows us to get to know the player better. Casual games involve experimenting and constantly observing people until you find the key that will make them fall in love. For this it is essential to grow horizontally instead of bundling all resources in a single project. In our industry we sometimes think it’s better to make video games more complex and spectacular and we forget what really attracts the user.”

Learn from the player “Like I said, this is a very passionate industry and it’s very easy to get carried away by the temptation to make the game you want to make, the one you’ve dreamed of making since you were a child, rather than the one the players want. That has no return in the end. The key is to listen to your customer and make a game that you enjoy, yes, but the focus is on the player who will enjoy it, meaning your real goal is to create a product that people will love seduced, always learning the player”.

Efficient use of capitall. “We are of the methodology of handling capital carefully. In the end, they are very simple math: the acquisition costs must be lower than the return that the customer generates. When each user gives us more than it costs us to acquire them, the growth is organic. The users must be profitable for themselves. The limit is when that no longer adds up. We stop making marketing investments when they are no longer profitable. With Supermarket, for example, we took the big step of reaching a large audience at a lower cost than the return, and we went for it. If you spend a million on marketing, the return must be at least the same. It’s about developing a product, finding an audience that embraces it and reaching it very cheaply, paying a very low initial cost and having a clear return on investment. That means making the LTV higher than the CAC. This allows you that the necessary capital for marketing comes from the generated capital and not from investment rounds. We did rounds in the beginning because we needed them to create the teams we can work with in parallel on multiple projects, but our DNA is to do as few rounds as possible under the idea that if I have a good business, don’t we don’t need investors”.

A very productive downturn

Codigames growth was steady from 2013 to 2017 when results slowed. “In 2019 we released several hits. Idle Supermarket Tycoon in February, Idle Them Park Tycoon in June, Idle Fitness Gym Tycoon in October and Idle Hotel Empire Tycoon in December. Now the challenge is to consolidate that growth and show that it wasn’t a question of one day.” At the moment they are planning to reach €80m for this year 2020 and to achieve that they want six games on the market, of which they have already released two.