Leveling up

Admittedly, I went in cold to Starship Command. Some people are born to it, others find their way more gradually. Most agree that, in any case, it’s inevitable and just a matter of time. All I knew was that Superhero City didn’t seem like a city I’d want to live in, and my timing wasn’t right for the Age of Champions. That sounded like the past, and I wanted a future.

My first command decision was a big one: choosing sides. Was I with the Alliance, defending Earth, or with the Zigonians, reclaiming Earth? Each faction had a representative: a barrel-chested, white-bearded man in vaguely naval garb and futuristic eye patch for the Alliance; a busty, red-fleshed extraterrestrial on behalf of the Zigonians. Care had been taken to suggest that each was quite the badass. Deliberating, I told myself that defending and reclaiming both seemed like reasonable agendas.

Earth needs some kind of help, doesn’t it?

Even after everything we’ve been through, and even in a new frontier of human interconnectedness, civilization, after all, has come to this: an educated and knowingly privileged grown man, with plenty of better things to do, having opted against cape-and-tights-clad megajocks on the one hand, and Minotaurs and elves on the other, in order to spend his afternoon pew-pewing around the cosmos with marauding, if voluptuous, virtual space aliens.

It was with the strangest blend of shame and noblesse oblige that I went with the Alliance.

Mark Otero knew where I was coming from.

He took it into very careful consideration. Otero had a hunch that he could offer an online game that I’d like to play. A hunch that also happened to be a huge investment: He was counting on me, and people like me, to keep playing. It was a risk, but there are some risks that Otero has learned not to be afraid of taking.

In addition to being a quasi-reluctant Midtown frozen-yogurt mogul, Otero, 37, is founder and CEO of KlickNation Corporation, the Sacramento-based developer and publisher of role-playing games Superhero City, Age of Champions and Starship Command. He understands online gaming well enough to have banked on it—and in a span of a few short years has gone from dodging jail time for tax evasion to being a Forbes-quoted Google guest speaker, swiftly building his Midtown-based startup from a backroom pipe dream into a multimillion-dollar online empire.

Yes, Otero had my attention.

And so did Starsha Galaxy of Starship Command.

Pretty, busty, to the point. She informed me that Zigonian ships in attack formation were approaching Earth, and that they were scrambling to find able commanders to handle the situation. Admiral Orion, the bearded guy, said he’d heard I was quite the pilot and wanted me to show him my stuff. Futuristically martial music thrummed.

This being a Facebook game, it promptly informed my entire network of friends—in that chipper, tattletale way—that I had begun playing Starship Command.

Pete gave me the thumb up.

Josh asked, “Oh no, did you lose your job?”

No one else said anything—but that almost seemed worse, like a huge virtual awkward silence. There was probably some elaborate menu, in the labyrinth of the privacy settings, through which I could turn that notification off, but finding it seemed like an even more dubious quest than the one I already was on. Plus, fussing too much over privacy on Facebook has always struck me as onerously self-deluded, like drinking nonalcoholic beer.

Finally and besides, there are only so many hours in a day.

Life on the FarmVille

Otero knows perfectly well how willingly we let ourselves get drawn in to virtual worlds and out of the real one. Not just with Facebook itself, but other virtual worlds therein—the so-called role-playing games, or RPGs, that have proliferated online in recent years, suckling from the mother of all social-networking sites like some weird, insatiable, hive-minded parasite.

“The functional benefit of our games is entertainment,” Otero told me recently. “It’s like going to a movie theater. It’s virtual. The only thing tangible is your ass sitting on a seat, for the most part. You walk away with nothing to show for it, except you can talk about your memories. Our games are the same way.” In other words, worth something to somebody.

“You try to be a pioneer, you’re a fool,” Otero said. “Most pioneers die angry geniuses, because no one really valued what they created. We didn’t create anything new. We combined a lot of existing things, carefully.”

KlickNation’s business model is similar to that of Zynga, the Bay Area-based maker of FarmVille and Mafia Wars, among other popular Facebook games, which posits the social network as virtual cocktail party, with people happily brought together but happier when given something to do. Most users play for free, but a small percentage willingly pays for tools and other valuable add-ons that enhance their gaming experience. With enough dedicated players, even a small percentage can mean big profit.

“Zynga’s like See’s Candies,” Otero said. “We’d rather be like Godiva—service a very small niche that pays well.”

KlickNation’s three games already have racked up about a million players per month. “It’s a decent amount,” Otero said, evenly. “It’s not great. I’d like for us to be at around 5 or 6 million.” Given his progress so far, that goal doesn’t seem at all unreasonable.

Otero has a kind face, a sturdy build and an aura of stamina. He can speak at length about his own and his company’s history without ever seeming to tire, even as he describes how frantic and exhausting that history has been—and still is.

For instance, as he explains how he needed 31 tries to develop a profitable online application, it becomes clear just how much Otero cares about good games—but also, and maybe more—about good business.

Management style matters to any company, of course, but in KlickNation’s case it is of the essence. “What distinguishes Mark as a manager is that he pays attention to the process of innovation,” said entrepreneurship guru and UC Davis Graduate School of Management professor Andrew Hargadon, one of Otero’s teachers. “That really is at core of any Internet-based gaming company. I think that’s one of the reasons it has succeeded. There are people who’ll read up on creativity and there are the obligatory cafeterias with pinball machines, and those are nice.

“But he recognizes that those are the perks of innovation, not the causes of innovation.”

As KlickNation lead software engineer Aaron Nemoyten put it: “The game isn’t the only product; the company is a product as well.” At age 19, Nemoyten worked for six months at an established video-game company, where everyone did their own thing and embraced routine. “But I really like being a part of something where everything is new to nearly everyone and we’re in an emerging industry,” he said.

Nemoyten, himself a failed-startup veteran, got in on KlickNation early, when, as he put it, the games looked terrible and the money looked invisible. “Somehow, Mark convinced me that it was going to work out, so I went for it,” he said. “Mark is really passionate, and that’s why we’re here. He’s got a very good ability—I don’t know if it’s practiced or if it’s just the way he is—to rope you into his own Steve Jobs-style ‘reality distortion field.’

“That doesn’t mean we don’t argue, because we do, but it means that when we do I’m not worried that I’m going to get fired for it.”

In the business of online gaming, there is no exact universal formula for success, but the inexact universal formula seems to include, paradoxically, a high frequency of and tolerance for previous failures.

My first mission was collecting raw materials to aid the war effort. This consisted of reading instructions and clicking on stuff. Once comprehended, it instantly became boring. But then, just as quickly, it changed. For then Silas Globalcom appeared, with orders to respond to a distress call.

They call it “leveling up”: earning access to new and more complex challenges as reward for managing previous ones. It’s how video games, RPGs or otherwise, always have worked. The first few rounds are supposed to be easy, inviting. You start small, learning the ropes. And for the average idle Facebook scroller, too much complexity too quickly might break the spell of seduction, risking a reactionary closing of browser windows and a rejoining of productive society.

Of course, the game would prefer it if you stay in. It would rather get you so involved that you can’t bear to leave. It will even try to recruit members of your network to encourage you. Having hidden no shortage of FarmVille updates from my news feed, I should have known this. But of course Starship Command is different.

Light-bulb moment

“I was a big geek,” Otero announced not long after we met. “I was a Dungeons & Dragons guy for 12 years.” One reason for that, he explained, was a scarcity of other recreational options during his formative years. “I didn’t have a lot of toys because we didn’t have money. So I had to use my imagination.”

Otero was born in South Korea in 1973. “I grew up in pretty tough conditions,” he said. His family struggled for food and to maintain a roof over their heads. “I think that really made me pretty tough, in the sense that I’m not afraid of taking bold risks. I’m not afraid of being poor. A lot of people don’t know what that’s like, and so they fear it. Me, I fear it, but I’ve been there, and I want a better life for my family, obviously, and for my parents and everyone. It’s really the American Dream, right?

“If you work hard enough and you’re diligent, you will eventually get lucky enough to succeed. You’ll be prepared. I firmly believe that.”

Otero’s family came to Sacramento in 1986. In middle school he got his first computer, a Commodore 64, and taught himself to program it by reading computer magazines. He inclined toward making games, but never suspected a real job might come of that. Even after earning an undergraduate computer-science degree from Sacramento State, and then leveling up to a UC Davis MBA, he didn’t have a clear view of his destiny.

“I didn’t know it was going to be games. I knew it would be online. If you had told me it was games I would have laughed in your face. It’s just so hard to break in.”

For a time Otero had what he now calls “a great-paying job in corporate America.” But he quit, cashing out his 401(k), without paying any tax, and began indulging his entrepreneurial urges.

“I started working on some side ventures, which didn’t take off,” he said. “And then I had a little bit of money left over, so I figured I had to open up retail store that had a real business behind it.” Otero opened Mochii Yogurt, at 16th and P streets, in August 2007. “At that point I had $10,000 left in the bank. I barely had enough to cover a month’s worth of expenses. And so if Mochii flopped, I’d be dead.”

But a larval form of KlickNation—comprising himself and a couple of friends—already was underway. A few months later, when Facebook opened its platform to external application developers, Otero pounced.

“It was a struggle,” he recalled. “Over a year and a half to make a living. I stole the profits from Mochii to keep going.” More tax went unpaid.

KlickNation’s early offerings were logical enough, if not exactly inspired. “We had, like, Daily Babe hot-girl photo sharing, Send a Kiss, Spank Your Friends—just really simple applications,” Otero said. He’d only heard rumors of game makers earning a living on Facebook.

Then came the light-bulb moment, a very basic idea: If you build a good reason for people to spend real money, they will come. “So we had to basically abandon all our simple applications and take a leap of faith.”

With capital still dwindling, Otero made a few more hires. He could offer long hours, low pay and lots of potential. In four months, he had a Facebook game that people would pay to play. Superhero City launched in June 2009. It would become the first KlickNation app to make any money. Otero now calls it “the game that changed our lives.” But at the time, it still was anyone’s guess.

Then a $40,000 accounting error in KlickNation’s favor went unnoticed for just about long enough to bring out a second game, Happy Zoo. But that one failed. “It was a horrible game,” Otero recalled. “It just wasn’t interesting.”

He had to ask himself: “So, is this a hobby or is this a business?”

Otero regrouped. Age of Champions followed, and then Starship Command. The company grew, and the money came in. The accounting error had been resolved, but the tax situation had not.

“I almost went to prison for that,” he said. “IRS agents came looking for me. They actually called my brother and sent an agent to my mom’s house. It was last year, after the company took off.” He’s fully paid up now, and relieved.

“Those were scary times, man,” he said. “Talk about not sleeping at night.

“I’m not saying everyone has to go through this, but my God. You’ve got to pull off some extremes to have a success story.”

This distress-call mission wasn’t much to write home about. Educational, perhaps, if only barely. But then here came Globalcom again, telling me, “Everyone’s talking about that rescue. I’m sure that pilot will fight to the death for you.”

I felt like I was in a special-needs class, being patronized. I also felt a frisson of pride, of wanting to prove myself. Just what sort of insidious algorithm was this?

“He’d better,” I replied out loud, to my surprise. “That was no milk run.” (Well, actually it was, but still.) The game was speaking for me.

“I’m Nova Lynn,” said my next visitor, “and I like starship captains.” Luckily for Ms. Lynn, I like prefab simulated banter with busty sci-fi cartoon characters. I had to suppose the laptop computer was invented for occasions like this.

She told me to head for a certain set of coordinates and take what I find there.

I could feel myself leveling up.

“Do well and you’ll see more of me,” she added.

“(Gulp!)” said the game on my behalf.

Quite mysteriously, it seemed to have taken me for granted as some sort of socially awkward dork. Otherwise, though, my command was going fine.

Running for his life

KlickNation has a business development office in San Francisco’s Union Square, but Otero considers Sacramento his home base. “It was actually more expensive for us to do business here than it was in San Francisco,” he said, citing relative costs of office space per square foot. “We’re here to make a statement. We could have easily gone elsewhere. But I decided to put a stake in the ground and say this is where we’re going to be. I’m here to fight for Sacramento.”

“Mark could find more programmers in the Bay Area,” said his former professor Hargadon, “but you’d also lose programmers in the Bay Area. … The best people are not necessarily in Silicon Valley exclusively anymore.”

Or, as Otero himself put it: “The thing about San Francisco, one thing I really don’t like about its culture, is that the workers are very promiscuous. They’ll shift from job to job. They’re much more mobile. Sacramento has a different culture.”

Having last year outgrown its birthplace in a makeshift annex behind Mochii, Otero’s frozen-yogurt cafe at 16th and P streets, KlickNation headquarters now resides at 1015 20th Street, formerly the offices of SN&R. It’s another other world—fitting for discussions of alternate realities and the fuzzy frontier between work and play. On a recent visit, it pleased me to find a big pile of Legos in the corner office where I used to work. The main lobby walls, meanwhile, were lined with art from KlickNation’s newest game, Project Lonestar, a science-fiction western.

“Kinda like StarCraft II,” Otero explained, graciously taking no notice of my subsequent blank look.

He is proud to preside over a company that can generate its own decor in-house, as he is proud of the art itself: more busty females and muscular males, with glowing, glowering visages and freely flowing locks. Wherever they come from, they must go to the gym a lot, and less often the hair salon. Project Lonestar, Otero informed me, is the most sophisticated KlickNation game yet. For more details, he said, I’d just have to sign up and start playing it.

A quick tour of KlickNation headquarters allowed glimpses of staffers in their natural habitat—loosely huddled at computer clusters in open rooms, surrounded by inspiration-giving toys, code-scrawled whiteboards and sketches taped to the walls. A select group of intangibly specialized-knowledge workers briskly shoveling ideas into their connected machines, they had the anti-vanity of the dispossessed, and also the focus of the possessed. Amiable, riffing chats bubbled up periodically from the shared silence of their concentration. In some ways it looked like any other tech startup—one that had started up and now was humming along.

“I don’t know everyone in the company intimately like I used to when we were just 10 or 20 people,” Otero said. “That’s something that I’m still not used to.” KlickNation now has 56 employees and counting.

Otero knows people like interactive entertainment. He knows Facebook has the broadest distribution of interactive entertainment. He figures that won’t change for a while, but if it does, he knows he’ll adapt. He knows most players of KlickNation games tend to play for 17 minutes at a time. Of these, the players most likely to spend money tend to be male and in their 30s, working professionals. “Grown men with credit cards are the ones who play our games, and I’m very happy with that demographic,” he said. For now, he’ll gladly let Zynga go after other demographics.

And while Otero has seen some acquisition interest from larger companies, he’s not ready to discuss that publicly. He’s been invited to sit on the board of the Midtown Business Association, and other boards, but he told them he has to think about it.

“You have some success, people assume you’re smart,” he said. “I feel like I get dumber.”

Still, his sensibility seems unclouded. If he’s putting it on, he has a good game face. If the platitudes he invokes sometimes seem like grad-school-learned entrepreneurial concepts, he invokes them with a gaming spirit. And his experience speaks for itself.

“How you spend your time ultimately defines you as a human being,” he said. “Your most valuable commodity is your time. It can be a form of currency. It sits in your vault, but then you exchange it for tasks. Just make sure you’re exchanging it for something you love.”

He used the phrase “running for my life” more than once, implying not just fear but also invigoration.

Now the nebulae were flying by. The training drones, like the anatomies of my Alliance acquaintances, were becoming more formidable. I’d accumulated weapons, skills, musical crescendos. Facebook friends began showing up in my viewfinder, including Mark Otero.

I had begged my editor to extend the deadline for this story. He agreed, but then the first draft was late anyway. I needed more time with Starship Command. For research. However much I had bemoaned the willful commodification of social intercourse, I seemed to be buying into this. Well, not literally. Not yet. So far I’d only made the investment of time, and traded on the capital of persistence. Even in virtual worlds, these things are of real value.

No matter how futuristic or formally elaborate it may seem, KlickNation’s basic merchandise is ancient. It’s the thing that triggers whatever endorphin gets released in us by wondering what happens next. It helps that the games are graphically compelling and interactive, but what seems to matter most is that they’re also narrative.

As Otero understands, no end ever need be in sight, just a more complex series of beginnings. Just an opportunity for the player, the game itself, and the company that made it, to keep leveling up.

“Time to get you into the fight,” Admiral Orion snapped. “Enough of this sitting around.” Apparently I’d been wrong about myself, my destiny. As I found myself telling the admiral: “I was born ready.”