Congratulating Three Rings (aka OOO) !

Three Rings Designs was acquired by SEGA last week, and we could not be more pleased for the success of the company.   True originally invested in Three Rings in July 2007, after being introduce to Daniel James by our good friend Bob Zipp.  Bob has a knack for getting involved with talented Founders, and, when I first met with Daniel, I knew instantly that he was the type of creative Founder that would build something fantastic.

You know it when you see it, and Daniel was exactly the kind of Founder we strive to work with at True.   When I met Tom, Michael, and the rest of the Three Rings team, it became clear to me that Daniel was a gifted leader who was paying attention to the important things:  creativity, culture, and people.   Daniel had assembled an incredibly talented and creative team and was building a remarkable culture that was distinctly different than others in his market.

And oh what a market!   When we invested in 2007, flash gaming was the present and perceived-to-be future, MMOs and 2.5D worlds were the rage, and we were all looking for the next Second Life platform for rich immersive gaming.  Miniclip was huge, Facebook had just opened up their platform to developers, and the first iPhone had just been released (but the App Store was still more than a year away).

A few short years later and the entire gaming market has been redefined by Facebook and Zynga.  Free to play flash gaming is no longer the front lines of gaming innovation, and the big are getting bigger due to viral restrictions that Facebook enacted in 2009.   The social gaming industry is following the path of other platforms and is increasingly a “big gun” game, in which startups need a $10 million to $20 million war chest just to begin competing with user acquisition.  This means that startups need to compete in extremely creative ways.  At True, we have been fortunate to have significant success in gaming with three acquisitions in the space with Zynga’s acquisition of XPD in May 2010,  Playdom’s (Disney) acquisition of Hive7 in June 2010, and now SEGA’s acquisition of Three Rings last week.

Social gaming has been good for True as a sector, but it is clear to me that this is among the most challenging markets for an entrepreneur to navigate.  This is what makes Daniel’s success even more remarkable.

Daniel and his crew started Three Rings in 2001.  This exit marks ten years in business for the company.  . ..  Ten years.  . . 10(!).

We talk a lot these days in the valley about building companies for the long-term:  Daniel, Tom, Michael, and the entire Three Rings team did it.

Over the past ten years, Three Rings built a culture of excellence around brilliant product creativity, intense loyalty and care for employees, and industry leadership.   I had the privilege of watching Daniel and his team consistently put these values to work over the past several years.  Daniel took huge product risks.  Not all of them worked out, but all were big leaps and none were “safe.”  He avoided the herd and emphasized raw creativity, design, and innovation at every turn.   Even as the market moved towards faster, simpler “copy-cat” mechanics, Daniel pushed the team to come up with truly different types of experiences.  The OOO team measured everything, looked objectively at usage data, and incorporated it seamlessly in a creative endeavor.   Daniel placed enormous responsibility and autonomy on his team and cared deeply for their overall happiness.  At a time when turnover in the social gaming market was enormous, our team at OOO was virtually un-poachable.

It was not always an easy path.  While ups and downs are experienced by any startup, very few Founders have the sheer depth of determination that Daniel and his team demonstrated at every turn of our journey.  The increasing cash requirements and fluctuations of the social gaming markets wiped out many of our competitors.  Many others were “acqu-hired” and their products shelved.

When easier, faster shortcuts were offered to the company over the years, Daniel chose to do the right thing by his employees, his products and customers, and investors.  This made me immensely proud to be a part of the team, for many times doing the right thing meant going down a much harder path.

People love Three Rings because it is authentic and real.  This is a different kind of company, and Daniel truly is a man of integrity and of his word.   We all have much to learn from him and his crew.

This is a brilliant move for SEGA, and I congratulate them on identifying such a gem in this industry.

Three Rings marks True’s seventh exit in 2011, and, once again, I find myself sad that my daily work with Daniel, Tom, Michael, Bob, and the entire Three Rings team now must come to an end.  Three Rings was a career high for me.

On the other hand, we are building True for the long term as well, and great entrepreneurs start many companies in a lifetime.  True is designed to support the entire span of an entrepreneur’s career, so I now find myself mostly excited for my next journey with Daniel and his Crew (whenever that may be).

I can’t wait for us all to set sail again.