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September 21, 2009 3:00 am
Michael Smith, chief executive of Mind Candy, the online games company, has had a good recession, writes Maija Palmer.
"In a start-up, growth is so fast it doesn't make much difference whether the economy is booming or busting," he said. "Any revenue is positive and we don't have tough comparisons to meet."
The company runs an internet game called Moshi Monsters, aimed at children aged seven to 11, in which players customise and play with customised cartoonish pet "monsters".
Mind Candy launched a subscription-based version in January, costing £4.95 a month and has been profitable since May. The site has about 7m regular users.
Mr Smith, who co-founded online retailer Firebox, said that Mind Candy struggled to raise financing at the end of 2008.
"Investors were nervous, deals that had been on the table were pulled, and we had to get our existing shareholder to put in more money," Mr Smith said. Accel Partners, Index Ventures and Spark Ventures have been the key backers. But now, he added, "investors are getting more comfortable and deals are being done".
The downturn has had some benefits. Television advertising became so cheap that Mr Smith was encouraged to try it for the first time, advertising on Nickelodeon and the Cartoon Network. "I was quite hesitant but we had a huge jump in user numbers."
Hiring became easier. "I can remember times in the past when the best employees had four or five job offers and salaries were crazy," he said. "It's also easier to negotiate with suppliers, who are keen to bend over backwards for you.
“You can renegotiate anything from rents to water rates. It is great for a scrappy little start-up that is trying to save every penny."
He plans to launch French, German and Portuguese versions of Moshi Monsters, and to develop other games. "People have been going out less and compensated by tapping into gaming entertainment at home."
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