Mind Candy: Michael Acton Smith

How Moshi Monsters’ creator and Firebox.com co-founder started his technology success story

Children will always be captivated by two things: puzzle games and cuddly toys. Now, Mind Candy, a company founded by entrepreneur Michael Acton Smith in 2004, is earning global success by blending these two timeless attractions.

Mind Candy’s flagship game, Moshimonsters, already boasts 60 million registered users, and the growth curve continues to steepen. However, it took a while for the concept of the children’s pet game to come to fruition.

In June 1998, Michael and his friend Tom Boardman decided to capitalise on the growing popularity of the web by setting up their own e-commerce business, Firebox.com. The site’s aim was to introduce the public to cool, unusual and wacky products.

After a £1m investment by SPARK Ventures into the business, Firebox.com embarked on an aggressive plan of expansion. The business grew rapidly, too rapidly, in fact, and in 2000 the whole thing nearly collapsed. Nevertheless, Firebox survived and reached profitability in 2002 but for Michael, this wasn’t enough.

He recalls: ‘the business was profitable…but, like a lot of entrepreneurs, I started getting itchy feet, and I wanted to do new stuff. And one of my big passions had always been games.’

Stepping into the game

In May 2004 Michael stepped back from the day-to-day running of Firebox, and began ploughing some of the money he had made from the business into a new company – Mind Candy.

Michael’s vision for Mind Candy was centred on an idea he had for an alternative reality game, Perplex City, aimed at 16- to 30-year-olds. The game would weave real-world events into an online fantasy realm, with enough scope and mystery to dominate users’ daily lives.

SPARK Ventures headed up a group of private investors to provide the £700,000 investment Michael needed to get his idea off the ground. He used it to rent offices in Shoreditch and began dreaming up a fictional metropolis. The plot’s crucial event was the theft of a priceless artefact, ‘the Cube’, from Perplex City, and its subsequent burial on earth.

The game begins

After months of development, Perplex City launched in July 2005, with an advert in the Guardian demanding the return of the missing Cube. Mind Candy sold puzzle cards at £10 a pop, and offered £100,000 to anyone who found the Cube – giving this fantasy world a very serious prize.

The game was an instant hit, with 13,000 users signed up by January 2006, and 70,000 by the end of the year. Critical acclaim duly followed; Perplex City was even nominated for a BAFTA in 2006. Back in November 2005 Index Ventures had ploughed £1.5m into Perplex City, the first-ever significant investment by a venture firm in the alternative reality space. In October 2006, Index teamed up with Accel and SPARK Ventures to complete another funding round of £4.5m, aheadof a major expansion in the Perplex City product range.

But that expansion never came. The developers had planned to launch a new season of Perplex City in early 2007, but, on the eve of the launch, they announced the project was being suspended. Many outsiders were astonished. How, they asked, could a game that had been in the running for a BAFTA just months earlier be struggling?

Perplexing problems

But to those on the inside, this news had been coming for months.

Despite Michael’s reluctance, many believed that Perplex City could have done with a harder commercial edge. Without a clear sales plan – or even sales director – in place, retailers seemed baffled by Perplex City.

Perhaps most significantly, the game was far too complicated.

By the time Michael went to his board in early 2007 to notify them of his decision to can Perplex City, almost all the external investment had dried up.

Of the £6.4m raised, all but £600,000 was gone. The choice was stark: wind up the business, or channel the money left over from Perplex City into an alternative business venture.

A monstrous resurrection

For Michael the answer was relatively simple. During the final weeks of Perplex City, he began working on a new concept for Mind Candy – something far simpler, aimed primarily at children. The idea for this game was built upon a pet rock he had lovingly nurtured as a child.

Michael envisioned a game in which users could nurture and interact with their own pet monster, tickling and hugging it and receiving intelligent emotional responses in return.

Like Perplex City, users would be invited to take part in a series of quirky and colourful puzzles, as well as having a social element: you could make friends with other users and their monsters.

Michael successfully presented his idea to the Mind Candy management team, unfurling all manner of sketches and diagrams.

Piecing the puzzle together

Having convinced the management team, Michael launched his new project during the final days of Perplex City, in mid-2007. The venture began under the working title ‘Puzzle Monsters’, but Michael knew this wasn’t memorable enough. So he came up with a catchy, child-friendly title for his new venture: Moshimonsters.

This exclusive extract is taken from the Mind Candy chapter, in How They Started Digital: How 25 Good Ideas Became Spectacular Digital Businesses, published by Crimson Publishing. To read the full chapter and find out more about Michael Acton Smith’s start-up story, as well as the inspirational inside stories of 24 other top digital businesses (including Groupon, Etsy, Match.com, ASOS, TripAdvisor and Wonga), pick up your copy of How They Started Digital, available on Amazon now.

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