Dec 14, 2020 · 1h 31m · how-i-built-this
Riot Games: Brandon Beck and Marc Merrill
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
This episode of How I Built This chronicles how Riot Games co-founders Brandon Beck and Marc Merrill defied industry norms to pioneer the free-to-play video game model with League of Legends. Through perseverance amidst technical failures, investor skepticism, and explosive growth, they turned a grassroots venture into a multi-billion-dollar global esports and entertainment powerhouse.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 33.4% of the talking time here. How this is scored →
Guy as informed peer 3.2 Guest teaching 2.3 Guest disagreement 0.5 Guy pushing back 0.9
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:15 Marc defends digital goods against 'buying air' framing
Marc passionately rejects Raz's characterization of virtual skins as buying digital air, arguing that designing deep, scalable, and balanced digital content is as rigorous as inventing chess or soccer.
Hardest push from Guy ▶ 1:22:53 Guy Raz presses on workplace sexism and bro-culture allegationsRaz directly challenges the founders on the 2018 investigative reporting and class action lawsuit detailing misogyny and toxic bro culture inside Riot Games.
Biggest teaching moment ▶ 11:48 Marc educates Raz on the engineering complexity of MMOsMarc breaks down the immense technical hurdles of MMO development, comparing server synchronization, tool pipelines, and mathematical balance to rocket science.
Guy holds their own ▶ 1:18:02 Guy Raz challenges conventional startup equity doctrineRaz leverages his extensive interview background with hundreds of founders to drill Brandon and Marc on why they defied standard founder advice regarding retaining majority equity control.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Rise of Microtransactions and Free-to-Play Gaming | 0 | 0 | 0 | 0 | Introductory solo host monologue setting up the history of Bethesda's Oblivion horse armor and Riot Games pioneering free-to-play microtransactions. As a monologue, all host and guest dynamic scores are zeroed. | |
| Summer Camp Connection and Shared Passion for Games | 3 | 1 | 0 | 0 | Marc and Brandon recount meeting at a summer leadership camp, bonding over gaming, and Marc taking Brandon under his wing at USC. Raz guides the nostalgic conversation with friendly, open-ended prompts. | |
| Corporate Day Jobs and Lessons from an MMO Failure | 3 | 3 | 1 | 0 | The founders describe their early corporate careers and consulting on a failed MMO project in Arizona. Marc breaks down why MMO development is like building a rocket ship, detailing server architecture and mathematical combat design. | |
| Defense of the Ancients and the Games-as-a-Service Vision | 2 | 4 | 0 | 0 | Raz openly admits his lack of gaming background, asking for clarification on user-made mods. Marc and Brandon explain how Warcraft III's map editor birthed Defense of the Ancients and inspired the games-as-a-service model. | |
| Whiteboarding the Riot Business Plan on Weekends | 3 | 1 | 0 | 0 | Brandon and Marc discuss whiteboarding the Riot business plan on weekends in an office to avoid gaming rig distractions. Friends and family reacted with bafflement at the idea of starting a video game company. | |
| Pivoting from Studio Developer to Self-Publisher | 4 | 3 | 1 | 0 | Raz asks whether they initially envisioned being a pure game development studio. Marc confirms and explains how legacy publishers dismissed direct-to-consumer free-to-play models as foolish. | |
| Raising the Angel Round and Underestimating Costs | 3 | 2 | 0 | 1 | The founders describe pitching angel investors in living rooms and raising $1.5 million. Raz questions whether that was enough to make a game, prompting Brandon to confess their model underestimated actual costs tenfold. | |
| Mid-Show Break: Impending Team and Financing Turmoil | 2 | 2 | 0 | 0 | Mid-episode transition followed by the recruitment story of Steve Feek (Guinsoo) working at Best Buy in Wisconsin. Marc describes navigating online impostors to recruit him to Santa Monica. | |
| Prototyping 'Onslaught' and Enduring Publisher Pushback | 3 | 3 | 1 | 1 | Raz asks how they explained 'Onslaught' to non-gamers. Brandon shares the superhero analogy while Marc notes that traditional publishers pushed back heavily against abandoning single-player modes. | |
| Internal Leadership Clashes and Founding Insecurities | 4 | 2 | 1 | 3 | Raz presses into reports of early internal dysfunction and an experienced lead developer secretly pitching projects to Sony and Microsoft. Marc acknowledges the friction and describes feeling bullied due to their youthful insecurity. | |
| The Strategic Mandate to Self-Publish | 4 | 3 | 0 | 2 | Raz probes why Riot needed a publisher at all if their game was purely digital and online. Brandon explains that retail boxed distribution and server infrastructure were intertwined in 2007, forcing their decision to self-publish domestically. | |
| Venture Capital Skepticism and the 'Dress Up Doll' Critique | 3 | 2 | 1 | 0 | Brandon and Marc recount pitching venture capitalists who were terrified of betting on gaming content. Marc recalls one dismissive VC mocking their business model as college kids playing dress-up dolls. | |
| The Psychology and Value of In-Game Cosmetics | 3 | 4 | 2 | 1 | Raz shares an anecdote about his son spending money on mobile games, calling skins 'buying air' and 'ones and zeros.' Marc defends the craft, detailing the massive engineering, balancing, and artistic investment required to make virtual goods meaningful. | |
| Series A Funding and the $1 Million Backend Failure | 3 | 2 | 0 | 1 | Raz and the founders discuss securing their $7 million Series A and the crisis of hiring a recommended third party whose backend platform had to be completely scrapped, burning $1 million. | |
| Mid-Show Promo: Launching Without an Online Store | 3 | 2 | 0 | 1 | Brandon recounts board member Mitch calming investors after the tech failure, followed by Marc explaining their stealth beta test in the Philippines to avoid burning Western brand reputation. | |
| Payment Vendor Collapse and the THQ Retail Box | 3 | 3 | 0 | 1 | The founders detail their payment vendor falling apart weeks before launch and their ill-fated partnership with THQ to sell retail boxes, which earned a review depicting money on fire. | |
| Launching League of Legends Without a Store | 4 | 2 | 0 | 1 | League launched with no functioning store, turning it into a temporary free launch party while Marc got married. Raz highlights the terrifying three-year stretch with zero revenue before the player base began compounding. | |
| Community Building, Bi-Weekly Patches, and Competition | 4 | 3 | 1 | 0 | Marc explains their organic community building via Summoner Showcase and rapid bi-weekly patching. He admits they were terrified of StarCraft II and competitor MOBAs from Valve and Blizzard. | |
| Pioneering the Modern Esports Ecosystem | 3 | 2 | 0 | 0 | Raz and the founders explore the accidental birth of League esports, shifting from a marketing engagement feature to filling physical arenas for Season 2 finals. | |
| Managing In-Game Toxicity and Player Behavior | 4 | 3 | 2 | 3 | Raz directly confronts the reputation of League of Legends having a toxic, abusive user base. Marc and Brandon push back by highlighting positive community art and marriage stories while explaining the psychological pressure cooker of 5v5 competitive play. | |
| The $400 Million Tencent Acquisition and Equity Philosophy | 4 | 2 | 1 | 1 | Raz asks about Tencent's $400 million acquisition in 2011 and challenges typical startup wisdom regarding protecting founder equity. Brandon and Marc explain why they favored having a smaller piece of a well-resourced winning venture. | |
| Stepping Down from Executive Management | 5 | 2 | 1 | 4 | Raz confronts the founders with the 2018 investigative exposé detailing sexism, bro culture, and subsequent lawsuits at Riot. Marc acknowledges the devastating emotional toll and outlines leadership reforms, including hiring a Chief Diversity Officer. | |
| Remote Operations and COVID-19 Pandemic Response | 3 | 1 | 0 | 0 | The episode wraps with remote operations during COVID-19, hitting $20 billion lifetime revenue, and the classic How I Built This question on the balance between luck and skill. |
Statements from this episode (29)
Beck built automated scripts to play video games during school
“I would, you know, build scripts that would play my character for me while I had to be at school. So I would continue to make progress.”
Merrill: Building an online multiplayer game is like building a rocket ship
“The ability to build an online game is, is kind of like building a rocket ship where you have to build a game engine and a massive tool pipeline to put assets into the game. You know, you have to be able to build a whole set of server technologies that can sca…”
Beck: Riot Games originally planned to rely on outside publishers
“So we were going to partner with other companies to publish the game and do everything else that was required. We were going to leverage every existing technology that we could get access to off the shelf to not have to build things that took us away from deve…”
Merrill: Incumbent publishers said Riot's free-to-play model would never work
“And once we started talking to publishers, you know, whose entire incumbency and multi, you know, massive multi-dollar billion dollar businesses were built around selling shiny discs at retail, they Told us that this was a horrible idea, and it would never wor…”
Beck: Riot Games assembled an angel round of 25 to 30 investors
“And so it ended up being like 25 to 30 individual investors.”
League of Legends cost $20 million to build, vastly exceeding early estimates
“I mean, I think all said and done, it was closer to twenty million dollars.”
Beck: Founder naivete is an asset that prevents talking oneself out of ventures
“Our own naivete was in many ways an asset to us. We were so unprepared to do what we were trying to do, and we were so unclear about what we were really up against that we didn't talk ourselves completely out of it.”
Riot hired DotA designer Steve Feek while he worked at Best Buy
“We brought him on to the company, I think in either December, six or January, seven, but he was working at Best Buy in Wisconsin and was in college studying computer science.”
Merrill: Riot pitched gaming's shift from packaged goods to direct-to-consumer
“We tended to not focus much on the actual details of the game, but much more on the business opportunity and sort of the transition that we saw where the game industry would be, would evolve from a sort of packaged goods model to a direct to consumer model.”
Merrill: Free-to-play was already succeeding in Korea and China by 2006
“The free to play business model was already having success in Korea in particular, and then starting to have some success in China.”
Riot's early lead developer held secret pitch meetings with Sony and Microsoft
“So that was a really contentious moment in, in the office where it turned out that we heard that this individual was having meetings with, you know, Sony and Microsoft to try to go build games for, you know, the PlayStation network or the burgeoning Xbox marke…”
Beck: Riot Decided to Self-Publish in US and Partner Internationally
“So we decided we would publish internationally if we could find a great publisher with a third party, but in the US we'd publish ourselves.”
Beck: League of Legends monetizes through aesthetic customization by a subset of players
“A large subset of our players never will, but a decent percentage of our players do, and they buy aesthetic customization, and there's, you know, there's an ongoing model.”
Riot scrapped $1 million in outsourced backend tech to restart from scratch
“We then had to call our board and tell them, Hey guys, you know, that back in technology we were building and the million dollars we spent on this, we're literally going to have to throw it all away and start over from scratch.”
Merrill: Riot's $7M Series A required 1,000-player beta milestone
“So that's because our venture raise, our first series A financing was actually tranched. So we got three and a half of the seven million dollars. And in order to unlock the second three and a half million, we needed to successfully run a beta test with a thous…”
Riot hired 1,100 Filipino players to secretly beta test League of Legends
“One of the solutions that the team came up with was we ended up hiring 1100 people in the Philippines to go play the game, because we knew that if Western audiences participated in a beta with a game of this quality at this point in time, it could, you know, e…”
Riot sold physical boxes just so gaming media would review their game
“We ended up deciding to sell a box because interestingly, as we got closer and closer to launch, the game's media wasn't going to pay attention to us. In fact, we didn't exist if we did not have a box. If you were a game that didn't have a physical box, you we…”
Merrill: Western Free-To-Play Games Had Heavy Low-Quality Stigma in 2009
“There was A lot of stigma where any free game that existed in the West at the time was generally like a really low production value, sort of like mini game. And so we really thought it was critical to have the main gaming review sites like PC Gamer play the ga…”
Beck: Riot Games raised over $20M total prior to launch
“Yeah, so, so there was even a second round of venture, I think, for eight million, and there was some venture debt, like, on, on top of it for a total, I think, over twenty million.”
Merrill: Riot had highest burn rate among their VCs' portfolio companies
“Our burn rate, which was the highest burn rate of any company in any of our VCs portfolio started to trend down, you know, a little bit just month over month.”
Riot timed League of Legends Season 1 just ahead of StarCraft II
“We were terrified of Starcraft two. And so we actually timed our season one competitive update two weeks before they launched.”
Merrill: Riot originally viewed esports as an engagement feature, not revenue
“Yeah, we didn't look at it as a revenue stream, especially early on. We looked at it as sort of a feature- That would help drive engagement and just be a value added experience for the community for just something cool to watch.”
Beck: Over one million viewers watched League of Legends Season 1 finals
“Millions, over a million people had tuned in.”
Merrill: Riot erred by replacing crowdsourced moderation with top-down policing
“We made a mistake when we were investing in building out our player behavior team to try to nurture, you know, a really positive community, and promote sportsmanship, and train people how to be better online, where we moved from sort of a crowdsource self-poli…”
Merrill: Riot co-founders surrendered majority control before 2011 Tencent acquisition
“Brandon and I didn't control the company at the time. Because we had to raise so much capital prior to launch that we gave up a majority of the equity.”
All growth since Riot's 2011 acquisition has been self-funded and profitable
“In a hundred percent of our growth since that 2011 transaction is organic, right? Like riots never taken on or capitalized the business at all. It's, you know, so like, it's been a sort of, since that period of time, a very profitable. You know, business, but …”
Merrill: Scaling Crises and Governance Exhaustion Led Riot Founders to Step Down
“And like part of the reason Brandon and I stepped down was because we needed to also make it sustainable. Like we were exhausted from running this place for, you know, with so many crises, every step of the way. And when we're, as the company really grew and c…”