Jul 22, 2016 · 24m · 20vc
20VC: Unity 3D's David Helgason on Building a $bn Business, Getting Funded By Sequoia and Powering The Pokemon Revolution
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, Unity 3D founder David Helgason discusses the journey of building a multi-billion dollar platform by democratizing game development. He shares insights on overcoming 45 initial venture capital rejections, capitalizing on the mobile app revolution, and remaining independent to scale globally.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 29.9% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.6 Guest disagreement 1.3 Harry pushing back 1.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:25 Rejection of console death premise
David immediately and flatly shoots down Harry's question asking if console gaming is dead with a quick 'No, no' before explaining console market adaptations.
Hardest push from Harry ▶ 7:43 Challenging growth without App StoreHarry directly challenges David on whether Unity's scale would have been at all possible without Apple's App Store ecosystem.
Biggest teaching moment ▶ 9:48 The $1k vs $100k software pricing ruleDavid educates Harry on software pricing mechanics citing Joel Spolsky, detailing how keeping prices under $1,000 avoids high-touch enterprise sales cycles.
Harry holds his own ▶ 19:49 Contrasting macro history with standard VC playbooksHarry demonstrates quick startup knowledge by contrasting David's pick of Diamond's macro-history book against Ben Horowitz's standard founder guide.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| David Helgason's Educational Background and Early Career | 1 | 3 | 1 | 0 | Harry asks a standard introductory question about David's non-traditional educational path. David explains his diverse background studying psychology, Arabic, physics, and computer science across multiple university dropouts. | |
| Founding Unity and Democratizing Game Development | 2 | 2 | 0 | 0 | Harry inquires about maintaining motivation during Unity's tough early years. David explains the company's pivot from making games to building user-friendly game engine tools to democratize development. | |
| The Impact of the App Store on Game Distribution | 4 | 4 | 2 | 3 | Harry asks if Unity could have succeeded without the App Store and whether console gaming is dead. David firmly refutes the death of console gaming while acknowledging the App Store acted as a vital gravity lift for Unity. | |
| App Store Monetization and Unity's Early Pricing Model | 3 | 4 | 1 | 1 | Harry brings up Apple's store adjustments and asks how Unity set its early pricing model. David shares how reading Joel Spolsky's blog post informed their $1,000 seat pricing threshold to avoid enterprise sales friction. | |
| Emerging Platforms: Virtual and Augmented Reality | 3 | 5 | 1 | 2 | Harry asks about Unity's strategy on emerging platforms like VR and AR. David explains why VR must be supported early using the lentil S-curve model of developer adoption despite present small market sizes. | |
| Unity's Venture Capital Journey and Sequoia Investment | 4 | 4 | 2 | 3 | Harry presses on fundraising strategies, pitch sequencing, and contrarian VC behaviors. David details receiving 45 rejections before meeting Diane Greene and pitching Sequoia Capital. | |
| Maintaining Independence and Resisting Acquisition | 3 | 3 | 2 | 2 | In the quickfire section, Harry contrasts David's choice of Guns, Germs, and Steel with standard VC literature like The Hard Thing About Hard Things. David elaborates on striving for monopoly and mentoring startups. |
Statements from this episode (16)
Stebbings: Unity raised $181M Series C at $1.5B valuation
“Just last week, Unity raised one hundred and eighty one million dollars in Series C funding, with the company's valuation reported to be 1.5 billion dollars.”
Helgason: User-friendly platforms win through high volume at low price
“If you have a user-friendly platform, and everything else in your industry is really not user-friendly, you could maybe, instead of, You know, selling it a few times for a lot of money. You could sell it for a little bit of money a lot of times.”
Helgason: People naturally create the media they consumed during childhood
“People are attracted to Creating the kind of media that they consumed as children, and we'd all played games, and it seemed logical that there would be some, I don't know, he, well, he felt that there would be kind of a, an explosion of small game developers, …”
Helgason: Unity was the only major game engine on mobile early on
“And for various reasons, nobody else really cared about it for a while. So we were kind of the only player there for quite a while. Of course, you know, because all the money was in console gaming, which is a very different everything actually.”
Helgason: Console gaming is not dying and will remain a healthy market
“No, I mean, like there's sort of, there's been that rumor and expectation, but I mean, the console guys kind of reinvented themselves. They opened their platforms up more. Seems to be no end to that, which, you know, I think is good because frankly you know, f…”
Helgason: Overreliance on microtransactions creates an unhealthy gaming monoculture
“It's really just healthy for the ecosystem to have, like, many different ways of monetizing, and, you know, it's become a bit too much of a monoculture in some ways, like, the people that are making all the money are doing the same thing with microtransactions…”
Helgason: Unity originally copied Macromedia's $1,000 per user software pricing model
“We picked the macromedia business model, which, you know, is sort of, like, morphed into the Adobe business model, which was, you know, professional software, roughly a thousand bucks per user, and then you might sort of upgrade once every few years.”
Helgason: Software pricing tiers are effectively under $1,000 or over $100,000
“There's two prices. There's up to a thousand bucks, and then there's over a 100,000 dollars. If you go past a thousand bucks, then you have to kind of go and do a dog and pony show, and you're just going to support them and hang out with them. And by the time …”
Helgason: VR ecosystem is one-thousandth the size of mobile
“Even if you're really generous with VR, you know, it's something like one, 1000th of the mobile ecosystem, right?”
Helgason: Developer growth peaks early in a platform's lifecycle
“The growth of developers happens early in the platform's life cycle and then slows down before the platform has finished growing.”
Helgason: Augmented reality will be massive and almost entirely business-focused
“It's going to be massive. It's going to be massive in a very different way. Whereas VR, I think, is all entertainment. Business users that are sort of entertainment-like, you know, kind of looking at products and things like that. Whereas AR, AR is going to be…”
Helgason: Unity faced 45 VC rejections before receiving 5 term sheets
“We got 45 rejections or so, and then in the end we had five term sheets.”
Helgason: Premier VCs like Sequoia endure extended underperformance without fundraising issues
“A firm like Sequoia, they will, you know, they have to do pretty badly for pretty long before they have a problem raising a new fund, for instance. So, so they're just, I think they're just less worried about the individual deal.”
Helgason: Unity rejected acquisition offers that misaligned with its core mission
“There was a couple of times when we could have probably made some money, but you know, the acquirer was clearly not aligned with that idea. Not because they're bad people, just because they're completely different interests. And in that case, it was very easy …”
Helgason: Startup founders should strive for a monopoly every day
“You're striving for monopoly you know, and then afterwards you don't have one because, you know, there's rarely any, but, you know, along the way you, you've bumped up, bumped off a few competitors and you have some new ones and, you know, there's some theorie…”
Helgason: I will almost certainly never start another company as founder
“As a founder, almost certainly not. Plus Unity keeps me busy. It's just like, it's sort of a Big B stuff of interesting projects and innovation and teams and brilliant people that it sort of keeps me occupied. No, it's hard. It's hard for me to imagine that I …”