Anybody who has tried to sell video games back to GameStop knows the feeling of disappointment that comes when they find out what the store is willing to pay for a used game. Here is where SwitchGames comes in; co-founded by Kai Bond in 2008, the site is now the largest peer-to-peer marketplace dedicated to videogame trading buying and selling. The site gives members control over the secondary game market, removing middlemen from the process. We spoke with Kai about his experience with entrepreneurship, how his role changed as SwitchGames grew, and a range of other topics.
What exactly is SwitchGames?
SwitchGames is a secondary marketplace and a community where gamers can get fair market value for their games. Users can buy, sell, or trade used games directly with one another. We provide a platform and service that is an alternative to traditional trade in services.
Where did the idea for SwitchGames come from?
I was working at IAC doing mergers and acquisitions – focused primarily in the videogame space. I was lucky enough to meet Jason Crawford, who was consulting for us on a variety of new game IP. He mentioned a service that he had started in 2002 – and wanted to expand that out to a larger audience. I had always been in the product or business development side of the fence and was anxious to get back to a start up environment. So – after a few months, we whipped together a deck, product enhancements, and business model that would work. I came in to the business as COO and was tasked with business, finance, and operational responsibilities. Jason had been creating games for years and is one of the best product people I have ever worked with. We had very complementary skill sets, which was important. I think it was critical for us to each have distinct roles and responsibilities early on – it allowed us to focus on what we were good at. The most important aspect was for me to find a good partner and create the right team.
Are you a big gamer yourself?
I’m not a huge gamer, but I do own a console and play primarily sports games…I am a huge FIFA Soccer Fan, but I have become more addicted to Call of Duty recently…on my iPhone – I just got put on to Tiny Wings and after last nights NY Game Meetup, I am playing Office Riot – try it, its a fun game.
After coming up with your idea, what was the first step in getting it off of the ground?
Raising money. Both Jason and I had relatively stable, good jobs. So it was important for us to know that we had a good amount of runway to execute on the product we wanted to bring to market. We could have done it as a passion project, working on nights and weekends, but we wanted to be able to put serious time into the project. After that, building a team, finding the right engineers, and acquiring the talent was critical.
How has the product changed from how you first envisioned it, what type of reassessments have you been forced to make?
When we launched SwitchGames, it was purely a peer to peer trading community. However, we realized that the most important aspect of any marketplace is liquidity and therefore we built out our buy / sell service. Look at Craigslist – the user experience is not that great, however, people keep using it because its possible to get somebody to come to your home in the next hour and carry out your bug infested bed. We realized that financially, trading was the highest value we could offer. But we had to balance that out with the time it took to negotiate a fair trade. Buy / Sell enabled our users to make transactions with one click – no questions asked.
Is this your first startup experience?
I have always been drawn to startups. I started my career at Microsoft, but once I came back to NYC, I worked at a variety of cool startups – GLG, Rave Wireless, and Oberon were still all fairly small when I joined. I think it was working at these startups that really cemented in my mind that I wanted to work with entrepreneurs. I’m drawn to them because you have to dig into real problems everyday – there are a variety of hats you have to wear, and there is never a dull day…everything is not fun or interesting – paying corporate taxes is not fun -or all good – but I think I learned as much in 1 year as a co-founder of a start up as I did in all the other years of work. So it is rewarding…
Now that the SwitchGames has grown in size a lot how has your job changed?
Well – SwitchGames is still quite small. I think that small teams often times can execute at the same pace as larger teams – sometimes faster. We wanted to build a culture for our company around that idea where everyone’s input was critical. Over time, my role has transitioned from COO to CEO. Early on I was focused on getting the company established – from more internally focused tasks like funding and staffing to managing investor relations, dealing with the board, and managing partnerships. Now it’s a lot more about the metrics, analyzing the clicks, some of the less sexy parts of the business. I spend a lot of time looking at our numbers, thinking about where the market is headed, and what is next.
What do you feel is the best part of running a startup?
When SwitchGames was having a tough time, my friend met with me and told me that “being an entrepreneur is the truest expression of ones self.” I didn’t really think about it much when it happened, but I’ve thought about it since then. If you are really building a company and working on something that you don’t know how it will end, then you are doing it because you love it, and if you don’t love it you wont succeed.
What is the toughest part of being an entrepreneur?
The most challenging part is managing emotions, the highs are very high and the lows are very low. I don’t think it is something that people talk about a lot. When I started out at SwitchGames, everything was a sprint – over time, I was able to think about things more as a marathon. That allowed me to not over think what was happening that particular moment and think about the big picture.
What tips might you give to someone thinking of starting a company?
The first thing I would say is do something you love…you will be doing it all day, everyday for years to come. If you don’t love it – it is not worth your time. The more tactical piece of advice is more straight forward…do not overbuild. Put out a private beta, collect feedback, talk to customers, engage with your audience, and continue to build.