Caramel Tech Studios is a gaming startup in Lahore, Pakistan, founded by two brothers, Saad and Ammar Zaeem. It has worked on high-profile games for gaming giants in Northern America, such as Fruit Ninja for Halfbrick studios. We had a conversation with Saad about how it all started for Caramel Tech.
In one sentence, what does Caramel Tech do?
Saad: Caramel Tech Studios develops high quality mobile and tablet games.
Tell us about your background before this. You mentioned you had 300-400 people reporting– directly or indirectly – to you when you were handling Diesel’s debut in Pakistan. What skills did you acquire then that were useful when founding Caramel Tech?
Saad: Before founding Caramel Tech, I was working at TinTash, which is a startup in Lahore. They were working on services involved games and a variety of applications, and I learned a ton working as a Producer. Before that, I was leading Diesel’s debut in Pakistan while working for Azgard9 Ltd. It was an unbelievable experience as I was just thrown in the Shark tank. The job description translated to a business unit head in a production unit. I had to multitask across various functions in the company and go from the pre-production (sampling) stage, to client communication, design changes, pushing the product into mass production, manage quality control and speed, and finally ship it out. The experience there in many ways directly helped me with Caramel Tech as we go through similar production cycles here.
Is Caramel Tech your first entrepreneurial experience?
Saad: My first entrepreneurial experience was at the age of 14 with Ammar, who was 12. We started a company called CyberWiz and made an online bidding platform for a supermarket chain, Best Day, in Islamabad. Consumers would come to the website and bid on the products they wanted. The bids would come to us in an email, we would sort through the bids and whoever had the highest bid would get the product. We sold them 2 months of updates, and got a decent amount of money for such young kids. Keep in mind, we were not super programmers or anything – just some kids who had experimented a lot with the tools we had. After that, we started talking to a lawyer who wanted a website using Flash; Flash was getting popular in those days and everybody wanted a website. Ammar and I had a few more clients, but our parents stopped us from continuing this project after a while so that we could concentrate on our studies. I actually joke about my parents being our first acquirers to investors in Silicon Valley, as it is much easier to get funding if you have already sold a company.
Why did you start your company?
Saad: I was working on another game with TinTash before starting this, but my vision differed from theirs. Firstly, I wanted to work at a place that developed only games and those guys were working on games, applications and services. Also, I wanted to create a particular culture and set of values in an office – one which people loved and wanted to give it their all everyday. I wanted a culture in which employees would have the same work ethic and passion as others in Finland or the US or London. Now, TinTash was a great place to work and I learned a lot there that I apply here everyday, but the vision in my mind was unique and had to planted in a completely new company. I have always been passionate about technology, games and development and wanted to take it to the next level. My brother and I work well together and have complementary skills. We decided to incorporate our own company, since he shared the same vision, rent an office space, distribute the key tasks and see where it would take us.
What were the early problems that you faced in the first year or 6 months?
Saad: Almost every startup faces a shortage of cash, but we were lucky because we were able to bring in revenue a few months down the line. Our biggest issue was finding the talent we needed to jumpstart Caramel Tech. You need to start a new company with A players; they cannot be B or C players. New companies are always going to get people from other companies where they have already been trained. That is the case in any country; when Facebook was starting, it pulled people from Google, Yahoo and Apple. We did the same, going to companies and hiring good people. It was actually very difficult. These people were at great companies and earning high salaries; convincing them to join a company that is mere days old is not that easy. Finding and then convincing A players to join us was our biggest challenge in the start.
We have heard startups facing that challenge constantly. What is finding the right people so hard?
Saad: There are two reasons in my opinion – the first being that people do not hold a career in software development in such high regard, and secondly, brain drain.
Let us look at the perception of software development in Pakistan. In ’97, ’98, ‘99, everyone wanted to study Computer Science. The majority of students coming into LUMS studied Computer Science, and right now they are sitting in places like Amazon and Microsoft. Growth in that field was huge and rapid. Then the dotcom bubble burst. For a decade, everyone in Pakistan wanted to do medicine. If not medicine, electrical engineering. If not that, then accounting. What you had was an only small portion of our undergraduates taking up software engineering. There is of course the cultural aspect that drives students towards fields considered to be safe. People are looked on eligible bachelors of bachelorettes constantly in Pakistan, and a lot of how a person is perceived depends on their profession. Doctors are looked on most favorably; a software engineer does not come close. What we have here is a classic case of people being pushed or choosing fields for the wrong reason. Fortunately, that is changing. Unfortunately, that change is slower than tech companies want.
Brain drain is a huge issue as well. One’s earning potential goes through the roof when one leaves Pakistan to work at companies like Dell or Amazon, or in places like the US or Singapore. When you are being paid aboard, you can buy a car, rent a house, support yourself and even send some money back – all within a few months. If you are able to do that, how can we in Pakistan convince you to work for us? If you are able to do that, how can we say you are wrong to leave? Of course, how much you make is not the only factor. There are more structured processes, more opportunities and more to learn when you work abroad. You are in North America; you know the cultures at startups over there. People are passionate, driven, and willing to put in more effort because they know potential growth and returns can be exponential.
How do you combat these?
Saad: Build a culture that attracts those with a passion in technology. We focus on a better environment, more structured processes, constant challenges, stable jobs and high salaries. We knew that the rest of the market would take similar steps to positively alter the local perception of software development as a profession. It is not only us who face a dearth of quality talent and actually doing something to make this field attractive to graduates. 20 or 30 other companies offering the same package means 20 or 30 more opportunities for fresh graduates rather than just one or two or three. Parents are realizing software is a stable area, and people have chances to do amazing things in it. Look at all the new companies opening in Pakistan and dealing with international clients. The culture is slowly being changed. People both laughed and applauded when I unveiled an “Eligible Bachelor” plan at our annual meeting. We have one every year, where we gather al stakeholders and unveil our vision for the next year. I talked about our conscious efforts to create high salaries, great work environments and even give company cars to change the people’s perception about our field. We have to enable our engineers into people who others consider to have a stable career. It is a cultural thing, and we have to face it.
On the other hand, we cannot possibly stop brain drain, but at least we can make a dent. You cannot stop everyone from leaving, but some only do because of how much more they can make abroad. I met a lot of people who were applying outside Pakistan, and they said it would not make sense for them to leave if they were being paid that much here. They have family here, the cost of living is low and they have lived their entire lives here. Case in point, Caramel Tech today employs two people who had job offers from Microsoft once they graduated, and they chose to come here. They did so because we offered similar compensation, and a job with more challenges and learning opportunities. Over here, we are pushing you into the shark thank; you are in the deep ocean, and you have to swim. These guys were top of their class, hence they loved challenges and what the value they were able to bring here.
Results of similar efforts are surfacing in many other companies. I am happy we are part of those driving this change.
You mentioned that you look for top-notch talent and have a way of filtering out less-desirable applicants. How do you do that?
Saad: We look for IQ and EQ both when hiring. The person needs to be a professional fit but more importantly a cultural fit. After going through the various interviews, our final and most important part of the process is the personality interview. It’s mostly a ‘gut’ call and so far it has had a very high success rate.
What is the biggest challenge when it comes to making games for mobile devices?
Saad: The biggest challenge is fitting in a complete user experience in a small screen. It is always going to be hard to bring in gamers who play mostly on console or PC to play and take our games more seriously, because you really cannot compare the gaming experience on a console to one on mobile devices. It is just another experience completely, because we can only do much using such a form factor. Tablet focused games can be of a bigger scale than those focused on mobile phones. That is a growing market and users are more willing to pay for apps for in-app purchases. That is why Supercell, the maker of Clash of Clans, pitched a tablet-focused approach to inventors and the world. Yet most of their games are generating more revenue from mobile phones, since the mobile gaming market is dominating and growing the fastest right now right now – left, right and center. All these markets and users have to be catered for, with the highest quality of game play and an immersive experience. We at Caramel Tech have to learn from companies like Supercell that are doing an amazing job in this space, blowing users’ minds on a tiny screen and just hooking them.
In the start, how did your client base and get more projects?
Saad: I have been in this space for the last 5+ years, so leads mostly come from personal networking. However, we have never focused on aggressively growing our client base, instead we sign up only on projects from which we can learn and acquire the skills needed to, in time, create our own games. Ammar and I have always wanted to work with very few, as few as possible, companies and focus on high quality games. We have said no to many – small, medium and even large – game companies over the years overall we have only worked with literally a handful of companies. In the beginning, when you look to generate revenue, it is very difficult to say no to projects that could potentially return a lot of cash but would not take us a few more steps down the road we have envisioned for us.
What has been your biggest mistake so far?
Saad: More important than biggest or many big mistakes is how fast you recover from them. I think we are doing pretty okay in this department.
How involved are you in the actual development of the games? How important is it for a founder in this industry to have specialized technical knowledge about game development?
Saad: Various technical skills are required in games from programming, art direction, design, etc. It is very important, especially in the beginning stages for the founder to be fully involved as a producer in a few games.
Are there other companies who follow this business model or are doing something similar? What makes Caramel different from its competitors?
Saad: There are companies around the world working on close if not similar models. The market is huge and there’s plenty of room for more companies to adopt this model and prosper. Our difference would probably be that we are laser focused on AAA quality. We are very comfortable refusing significant revenue now and bearing the costs without compromising quality, and have the holding power to do great work and earn in the future. It may not be feasible for every company to adopt this model.
Was there a time when you thought that this is not working out and you should do something else and you were almost ready to give up on Caramel Tech?
Saad: Not so far. It has only been three years; we are too young right now. Such a time can definitely come in such a short time period, and we are fortunate that it has not yet come to that. After Zynga and the whole IPO bust, game companies have had trouble getting VC funding. Meeting with potential investors and getting positive feedback after pitching to them has become much harder, and there are cash-strapped gaming companies that question themselves everyday. I know we would be if we were going through that route of finding someone to fund us or did not have the partnerships and revenue streams we have today. That would only be natural in that position. Luckily, we have been cash flow positive over these three years.
What have you learned?
Saad: Hire A players, keep them motivated, keep them happy. Pick out good projects, say no to bad ones. These are very cliché things I am telling you but if you apply these with honesty and dedication, they work. This is no secret formula, and not that easy to apply. It is difficult turning down a $300,000 project in favor of one generating a revenue of $30,000, when you know the later will not earn you any profit or meet the costs you incur working on it. But you have to take the $30,000 because you know it will be a huge boost to your portfolio when the product hits the market, while the $300,000 project will be lost in oblivion. Of course, we might go belly-up because of such decisions. Market success is an unpredictable phenomenon, and we have a long way to go, with an infinite number of decisions that could make or break us. Less than 1% of tech companies succeed, and you can never be sure how the market will respond, regardless of your gut feelings, estimates and projections. Look at Candy Crush; King is ruling the charts. They never dreamed this could even happen. However, in terms of the portfolio we have made, quality of work and production values, there are only a few companies that can match us.
You know, you are the first person Caramel Tech has given an interview to. It is not because I am a snob, but because how much do I know anyway? It has been less than three years for me, that is nothing compared to a seasoned entrepreneur sitting in Silicon Valley, such as Jack Dorsey who co-founded Twitter and Square. Right now, we are about to hit the 3-year mark, and we expect to see some changes. People who have been with us from the beginning will want to move on, and we are prepared from that. There will also be other challenges coming our way soon. Once we learn from these opportunities, have a few products in the market, break some charts or win some awards, maybe then I will be the right person to interview, haha!
One of the things I can definitely talk about is getting the right team together and letting them mature together. It is not just about how good the product manager or founder is, it is how the team works. You cannot produce A class material right off the bat, as team performance increases after a while of working together as a unit. People command go, of course, but the core mindset and values of the unit lasts, with the probability of a widely successful product increasing as time passes. Look at Rovio, the company behind Angry Birds. It took them a trajectory of 7-8 years to their first hit.
Success is also a conundrum. Success can mean multiple things – an exit, an IPO, widely adopted software or simply making a reasonable profit. Only the team can define what success they are looking are, and that definition keeps changing as the company evolves. For us currently, it is staying breakeven and building a respectable portfolio for a few years until we are prepared to make a bug jump with a product. You have to stay determined, not throw in the towel and keep jumping. One of those jumps will be at the right time in the right market. That is what it is about. Sometimes you will fall, but you have to get back up.
What advice would you give to an aspiring entrepreneur who wants to get involved in gaming apps?
Saad: Game companies are a tough hit driven business similar to Hollywood. But at the same time it’s creative and a lot of fun. Don’t focus too much on making money, especially in the beginning. Focus on giving a great experience to the user and everything else will follow. And most importantly, do NOT expect your first 3-5 games to do well. It’s a learning process, and if you are focused on the right things, your later games will get a lot of attention.