2014 Government Regulations & Business Summit
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By Jonathan Mahler
NEW YORK - The New York Times published an excellent account of how Curt Schilling bilked the taxpayers of Rhode Island out of millions of dollars to subsidize his now-defunct company, 38 Studios LLC. Unfortunately, there was something missing from the story: Schilling himself, who declined to speak to the reporter.
The good news is that before the company fell apart, Schilling and some of his employees spoke extensively to a few researchers from Harvard Business School. Their case study, published in 2009, is available for only $6.95. It’s worth every penny, particularly if you are a fan of Kingsley Amis-style satire.
Schilling got the idea for 38 Studios while playing for the Arizona Diamondbacks in the early 2000s. By then he was well into his pitching career, and starting to wonder what he might do next. An aspiring businessman and budding philanthropist, Schilling thought of himself as a kind of -- well, let’s allow him to make the comparison: “I wanted to make a difference in the world and take one shot at getting Bill-Gates-rich,” he told the study’s authors.
When Schilling informed his financial adviser of his ambitions, his adviser responded, with Tony Robbins savvy, that he just needed to find something that he was passionate about and the money would flow. Schilling’s thoughts turned, inevitably, to video games.
He was soon networking with game-development executives and devouring books about leadership. “The thing that jumped out at me was, there’s a broad swath of parallels between winning a world championship and creating a company that’s best of breed,” Schilling said. In other words: He could do this!
Schilling didn’t just want to develop a video game, let alone a sports-based one. He wanted to develop the most complex kind of video game possible -- a “massively multiplayer online role-playing game,” in which thousands of users interact inside an elaborately conceived and designed fantasy world. He wasn’t going to skimp on the back story, either (even though most people who play these games tend to click quickly through the text to get to the action). There would be 10,000 years’ worth of it, all dreamed up by a best-selling fantasy author, R.A. Salvatore, and a well-known comic book writer, Todd McFarlane. They would be co-founders of the company -- though Schilling preferred the title “co-visionaries.”
Schilling had no idea how much time and money it took to build the software required for such a game. And he didn’t exactly help matters by weighing in with suggestions of his own. There was, for example, that instance when he mentioned in an e- mail that it might be cool to have mounted combat on flying pigs. The design team worked on nothing else for a week.
Indeed, Schilling didn’t know the first thing about the world outside baseball. That’s not hyperbole: He once asked the president of 38 Studios if employees got weekends off. Another time he suggested that they work 14 days straight so as not to lose their momentum. (No need for travel days when you’re playing only home games!) Schilling was so clueless that he had to be told by his wife’s uncle, a retired corporate executive, not to personally guarantee the company’s lease.
Schilling filled his board with family members and, to the dismay of his president, promised employees half of 38 Studios’ (notional) profits. He also insisted on retaining majority control of the company -- which became something of a problem when he started his search for outside investors.