“We had an ambition to do something ourselves,” says Ustwo co-founder John Sinclair about the consultancy’s formation. “It was 50/50 whether or not it was going to work but we thought: ‘Well, let’s try this for three months or so and if it doesn’t work we can try to get other jobs.’ We could live off bread and beans for a bit.”
A decade on and Ustwo now employs around 200 people around the world. It has annual revenues of around £20 million and as well as working for blue-chip clients such as Google, Barclays and JP Morgan has also built up a business developing its own products. Mobile game Monument Valley, which Ustwo built in-house, made more than £1.2 million in revenues in its first month, while recently launched joint venture mobile ticketing platform Dice is aiming to take on traditional suppliers such as Ticketmaster.
Like all business successes, Ustwo’s growth owes a certain amount to calculated risk-taking and some slices of luck. But it is also down to its founders’ work ethic and hunger to change, not follow patterns and to try new things.
Sinclair and fellow Ustwo co-founder Matt Miller were in their mid-20s when they founded Ustwo. The pair had been friends since the age of 11 when they met at school (their ubiquitous “Mills” and “Sinx” nicknames presumably date from this period). After completing design degrees they found themselves back together again in London working for small studio Big Animal.
It was this experience – working with Big Animal founder Dom del Torto – that inspired the pair that they could take risks and run things in their own way. Interestingly, aside from Sinclair doing work experience at Fitch, neither has any experience working for a large “traditional” design consultancy.
Miller says: “I think that [joining Big Animal] was our first risk. Four years in that environment where it got no bigger than eight people – it allowed us to graft. And it showed us that you could be yourself and you didn’t have to be like all these other design studios.”
Sinclair adds: “Working [at Big Animal] we had immediate direct relationships with clients. We had a real input. We learned a lot about people and processes – how an invoice works, how to get paid, what happens when you spend four months on a project and it doesn’t come out. We learned lots of stuff and we worked our socks off.”
When Miller and Sinclair left Big Animal to form Ustwo they kept a contact from Sony who later went on to set up Sony Ericksson (“they were our only client for about three years”, says Miller, “anyone with a proper business head would have said this was a bad idea…”).
The Sony Ericsson relationship allowed Ustwo to very quickly grow to 40 people and also gave the consultancy its specialism in mobile. Initially this was a limit, but would become the launchpad for what Ustwo is today.
Miller says: “In the early days we were embarrassed to say we were working on mobile – I’m not sure people really understood what it meant. Then the iPhone came along and suddenly it was like: ‘We understand optimisation, we can build things, we have a development team and we have a user experience team. It took off and it became a rapid and we just rode it.”
But he adds: “We never wanted to be an agency – what we wanted to be was the home of product”. It was a second Apple innovation – the App Store – that allowed Ustwo to become this – giving the studio an outlet to bring its own products to market. Early experiments included Mouthoff – a cartoon mouth that opened as you spoke – and Rando, a photo service that Miller describes as a “non-photo sharing app”.
Ustwo achieved moderate success with the Whale Trail app, which broke even, but its greatest success so far has been Monument Valley, which won an Apple Design Award and had by July 2014 sold a million copies.
Monument Valley was developed by a games team funded by Ustwo and embedded in the studio – but who otherwise operated independently. Miller says: “I said to them: ‘Be a proof point for driven people, managing their own time and making their own decisions.”
Cash from Monument Valley sales contributed about a fifth of Ustwo’s revenues in 2014 and have taken the consultancy part of the way towards its founders’ vision of having a third of revenues coming from client work, a third from its own IP and a third from joint ventures.
Ustwo’s first major joint venture is Dice – a gig-ticketing app that Ustwo co-owns with music industry manager Phil Hutcheon. The Dice team will be employed by Ustwo until the product can stand on its own feet. They will own less equity than if they’d started it themselves, but Sinclair says: “We absorb some of the risk and get to the point where the product has been validated and then move people over. Then instead of having a one in ten chance of succeeding, maybe it has a one in three.”
It’s by launching these joint ventures that Miller and Sinclair see Ustwo attracting the best talent. Sinclair says: “Our main competition for talent is startups – so we want to offer the safety of a platform but still allow people to spin out their own products.” Miller adds: “It’s all about talent – everyone’s fighting for talent. We don’t have any tech IP that we’re selling – our offer is our people. So Ustwo has to be the epicentre of what people want to join.”
Last year saw Ustwo appoint Scott Ewings, formerly UK managing director of Fjord, as its London MD. At the time of his appointment, Ewings said: “Ustwo is growing rapidly, and they wanted to get someone on board who had ridden that growth curve.”
Fjord, of course, was last year sold to Accenture – just one example of how common acquisitions are in the digital sector. Ustwo is one of the few major independents left and as a result Miller and Sinclair have had a number of approaches to sell. But both are adamant that they never would.
Partly this is because selling wouldn’t necessarily make financial sense. Sinclair says: “Yes we could sell now for tens of millions and be OK for the next couple of years – but I still believe that if we do it for ourselves we’ll be better off financially in ten years’ time, and more importantly so will everyone else.”
Miller adds: “There’s no real value to us selling to anyone else, but there is a value to us creating for example a Dice and selling that – that’s where there’s massive money.”
These statements fit in with the do-it-yourself attitude that Miller and Sinclair have shown throughout the development of Ustwo. But it’s equally clear that the pair still see huge and exciting challenges for the consultancy ahead. Whether that’s in finding the new projects to invest in, opening new offices (San Francisco is on the cards) or developing new joint ventures.
With its mixture of client service, IP development and joint ventures it can be tricky to articulate exactly what Ustwo’s core business – not least because this has changed throughout the studio’s ten-year lifetime. Indeed, the one constant throughout Ustwo’s lifetime has been change. As Miller says: “We’ve set the company up in a certain way that if we said: ‘We’re not going to innovate now, we’re just going to hold tight’, we’d be fucked…”