Gram Games $250M+ Exit to Zynga: How a Scrappy Turkish Startup Built a Mobile Gaming Blockbuster
We are excited to announce today that Zynga has agreed to purchase Gram Games for $250 million in cash, with a substantial upside if certain earn out targets are met. Having only raised $1.6M in funding to date, this is an exceptional outcome for all of Gram’s shareholders.
We co-founded Gram Games at a steakhouse (#saltbae), sitting around a dining table in Istanbul, in late 2012. There was no pitch deck nor any concrete plan. Just three exceptional individuals whom we had brought together as a co-founding team, only a few months before. By the end of the dinner, we committed to invest $100K and thus began our partnership.
Between 2012–2014, when we made our initial investment in Gram, the general consensus among VCs globally was that gaming was a Hollywood-style hit-driven business and that it was near impossible to predict which companies would create the next Blockbuster games. We took a different view, one that was rooted in our experience working with Peak Games, now one of the most successful mobile gaming companies in the world. Peak taught us that it is possible to build an exceptional gaming company from anywhere in the world without raising hundreds of millions or hiring thousands of people. At the time, it was audacious to believe that a European gaming company could reach 100M users within a few years. But we came to understand the scale that is possible with a world class team and a fantastic product. If the team is world-class, has a passion for its product, and is willing to work side by side in the trenches for many years and grit through the inevitable lows then anything is possible.
From humble beginnings, Gram’s achievements today are notable: its initial breakout game, 1010!, has surpassed 100M players globally; Gram helped create a new genre in gaming, hypercasual games, which is distinguished by its minimalistic, addictive, and easy-to-play qualities; their IAP (In-App-Advertising) hit game, Merge Dragons! is currently a Top 50 Grossing Game in the U.S. Apple App Store; and overall their mobile game portfolio today includes nine titles that have been cumulatively downloaded more than 170 million times.
But the journey was not all clean sailing. It took Gram years of experimentation to find product-market fit. There was a tough co-founder break up in the early days. Struggling to attract international talent amidst political headlines in Turkey in 2017, Gram had to establish an additional office in London. Despite more than a few naysayers opining that such a move was a guaranteed failure, Gram successfully transitioned most of the senior team from Turkey to London and went onto hire away some of London’s top gaming talent. Oh, and there was the acquisition offer from a Chinese company that was pulled at the last hour, after all term sheets were signed, due to Chinese regulations. It’s been a wild ride.
At this juncture, we can’t help but reflect on some of the lessons we’ve learned. Every investment teaches you something but given how closely we have worked with the Gram team, the learnings in this case are plentiful and in sharp focus:
1.) Invest in founders with exceptional growth potential. Going through our inbox from 2012, we found an email from Firat to the rest of the Hummingbird team about Mehmet:
“The more time I spend with him, the more I think he is an under-appreciated prodigy. He is very creative, and he is always after the next big thing: He created Sanalika [the largest social gaming company in Turkey with 10M+ players] before Zynga was even big.”
When we first met Mehmet, Sanalika was winding down and Mehmet was struggling to raise a $100K round to pursue his vision of building one of the best mobile gaming companies globally. He was a self-taught coder and musician who had previously worked as a shepherd. He had no schooling and no massive commercial successes under his belt. Nevertheless, we were extremely impressed with his raw intelligence and drive and believed that he was at an inflection point in his journey, poised to build on the learnings from his past failures. As investors, we often try to identify markets with the potential to grow exponentially. But what is more important is the growth potential of the founders we partner with. Though he started out as a talented developer, Mehmet grew into an exceptional leader, attracting some of the top talent in the space, scaling the company from 0 to 77 FTEs across 2 offices with very limited resources. (In the early days, we sat in Gram’s office sourcing and interviewing many of the key first hires.)
We believe that the “under-appreciated prodigies” are and will continue to be one of the best overlooked investment opportunities out there.
2.) Don’t write off your investments too fast. Gram Games had many near-death moments in the past 6 years and the journey felt more like a rollercoaster (with some terrifying drops) than a rocket ship destined for the moon. Though this is rarely discussed in our community, it’s the reality for most exceptional success stories. Following our initial investment in the company, Gram had 2 years of disappointing games while experimenting with different genres and searching tirelessly for product-market fit. Nevertheless, we maintained our conviction in the core team and doubled down on our initial investment. We ended up backing the company with 3 additional rounds of funding in order to provide them with sufficient runway to continue and ultimately succeed. In fact, since Hummingbird’s inception, we have made follow-on investments in ALL of our portfolio companies. We believe that concentrated investments based on conviction, rather than spray and pray, create alpha returns and we will continue with this strategy.
3.) Founder roles may evolve over time. In the early days, the co-founders began as equal co-founders with no clear titles in an effort to have decision making be consensus driven and inclusive, but it became necessary to revisit that dynamic 18 months into the life of the company. After some tense discussions about founder roles, we eventually all agreed that Mehmet should be promoted to CEO. Given Mehmet’s outstanding creative talent and the product DNA of the company, this was the right call for the company at this particular time. There are never any guarantees but flexibility in the early days and a willingness to have tough conversations proved vital.
4.) There are no shortcuts and the culture of a startup is paramount. The Gram team regularly worked until 3am in the morning, and we would find them playing Magic the Gathering together, late at night, when we visited their offices. The founders took minimal salary for the first three years and frequently slept in the office. It was gruelling. Yet, throughout those tough years, the culture at Gram was always unique and was core to their success formula. Every Friday, every team member gathered round to rapidly prototype games that they would then demo to the rest of the team by the end of the day — it was almost a mini demo day every week! Gram embraced the sheer creativity of its employees with a flat organisational structure and gave a level of freedom to all involved that was handsomely rewarded. Comrades in gaming, they also extended their creative camaraderie to music. Mehmet, who somehow learned to play more than ten instruments along with his many other talents, would encourage the team to participate in jam sessions at the office after a hard day’s work. But musical instruments (and ping pong tables for that matter!) are merely a gimmick without the right intent. It’s the energy of a team that defines a culture, not the toys.
Congratulations to the whole Gram Games team, who built a truly remarkable company. It has been a privilege for the Hummingbird team to work with you. Thank you for resoundingly rewarding our belief that exceptional companies can be built from anywhere by exceptional people. We are excited to continue investing in gaming and underinvested geographies. If you believe you are that next special individual, please get in touch.