Mikhail Yurchenko is the CEO of 4iLab. The studio became famous after the creation of the VR-shooter Drunk or Dead and the first in Europe monument in augmented reality, dedicated to system administrators and IT people. Now Mikhail is trying to attract investors' attention to the VirLeki startup, created for the quick rehabilitation of people with movement disorders.
How to quit the criminal investigation department and enter IT
I graduated from the Academy of the Ministry of Internal Affairs and then entered the criminal investigation department of the Zavodskoy district of Minsk. I liked the work, although it was rather complicated due to the very system of the Ministry of Internal Affairs: it is very clumsy and does not accept new approaches. I didn’t have a plan when I left organs.
I always liked both the hardware and software, so I got a job as a sales manager for computer services, where I met my current partner Nikita Susha. We had the idea to launch a startup to develop mobile games. We thought that there is nothing difficult to develop games. Just take a good idea and hire programmers and artists. We expected that millions would begin to pour on us right after the launch of the first project, but on the first day we saw that there were only two downloads by our friends, on the second day there were ten downloads, on the third — thirty, and then again nothing. We began to wonder what we were doing wrong.
Fuck-ups are also shall be studied. Going on to victory further is possible just after troubles overcome.
The first revelation for us was the WhiteNight gaming conference in St. Petersburg in 2012. There we realized that we don’t know anything about game development. Yes, we had been developing games, but we also need to look at the metrics, try soft launching and prototyping, communicate with publishers and with platforms. It was really a discovery for us!
First remarkable success with Time of Dragons
We continued to make games a year and a half or two. We had an interesting title, which we made based on the experience and information obtained at the conference. We found a publisher and spend a lot of time on this project. All this was possible due to the help of an investor who supported us financially.
But at the time of the release scheduled for us, the publisher announced the termination of its activities due to business restructuring. Rebuild quickly was problematic. We were in a small downturn.
We got out of the crisis thanks to the Unity engine and the skills of our guys. Zhenya Ivanitsky, our 3D lead, suggested making Dragons. They created the prototype, and through Unity, we integrated the game directly into Vkontakte. There is huge traffic that grew virally. We decided that this is our way, and found an investor for this project. As a result, we had more than half a million installations.
We were inspired by the project: in the evenings, we sat down and played with other gamers.
We quickly formed a huge community: after three years of cessation of support for the game in the Time of Dragons fan group, there were still about 50 thousand people.
One day the security system changed, and Unity ceased to be supported in social networks. We decided to move the game to Steam, the largest game distribution platform for indie developers. As a result, in three months we did a tremendous job: we redrawn and reanimated a lot. We understood that this release will be global.
We started very cunningly. We had a free-to-play game without the ability to spend money in the game. On Steam, the rating of a game is very important, and we generally removed payments within the game to make it rated highly.
We had more than half a million downloads. But when a month later we attached the first monetization, the interest of the financial partner in this project had dried up.
We went to Kickstarter to get investments.
At 5 a.m. we finished editing the project page, pushed the button and began to wait.
We expected a cool result but failed. Now I understand that we started making a fuss about the release too late: you need to talk about yourself for at least a week. At the same time, the budget for attracting traffic should be from $ 5,000.
It is still possible to raise money on Kickstarter, but success can be achieved by projects that create new products such as hoverboards or super glasses.
How much money is there in the game development industry
There is a lot of money, and the industry capitalization increases year by year. And here is also a problem. Capitalization is getting bigger, but developers are paying millions a day to buy new traffic to stay on top. As a result, it is very difficult for an indie studio with a very unique project to jump out there without collecting data before.
Now any game involves a thorough collection of data, constant analysis, testing, and so on. Just to make a product that you like and present it to the world without thinking about finances is an idealistic picture. But it is what we did at the beginning.
Now BNTU has a course in game design, and many students have a romantic attitude: I’ll come now and make cool games!
No, there is the economy, there are big business and big money.
You are fighting for a person’s time through the application, through the game, and you want him to pay you for this, come back tomorrow, the day after tomorrow, so that he also brings his friend, and preferably two. This kind of game is considered successful.
Turquoise company organization
My partner Nikita Susha and our 3D-artist Zhenya Ivanitsky have been working in the company since its foundation. We love working with juniors who want to enter the IT and game development industry, want to create something new and interesting — their eyes burn, but they have no experience. Last year we work a lot on outsourcing. We do projects in VR, AR, game dev. On Tuesdays, we have a large meeting on all projects: everyone can express their opinion. It is very important to me that each of the team develops and does not fixate.
When we were engaged in developing of only our projects, there was almost full democracy: everyone has the right to vote, still, the leader had the final say on the issue. During the entire existence of 4iLab, there were no personal conflicts within the team.
3 °F-style investment
There is an opinion that the first investment is 3 °F-style: Friends, Family, and Fools. At first, we raked money out of our families, then we went out to friends. But somehow there were no fools.
One good friend advised us to contact BAVIN, the first community of business angels and venture agents in Belarus. It happened that we attracted attention and passed the selection. It is how we found our first investor. It was in 2013.
The investor has not yet got his money back, but we are sure that we will be able to do it. These guys showed us how this market works in general. Their idea of venture investment has been and is still very progressive for Belarus.
Basically, our local investors believe that giving the money they will command what and how to do, and they will also take a share of more than half.
Ideally, a venture investor should have a small share to increase the company’s value through products and resell it in the next investment rounds.
When the Oculus DK2 helmet first appeared in our office, we tried to transfer the flight of the dragon into virtual reality.
Transferred, and then each of us was vomiting the half of the day.
We did the worst thing that could be done in VR: a fly on a large creature that flaps its wings and shakes its head.
We realized that this technology has a huge potential, plus the financial partner liked the idea. We decided to try ourselves out in this direction. The first game was released based on our dragons — "Ahros: Chronicle of a warrior", it is on Steam. We tried different mechanics on it: we have flying on a dragon and shooting from static turrets, and walkers, and quests, and horror, and basketball, and a shooting gallery in one game.
The community, unfortunately, didn’t particularly react to the game. The home VR market is still very small.
Everyone thought that the gaming industry would drive the development of virtual reality technologies, and only then medicine, retail, education would be interested in the technology. But now it’s clear that the share of VR in education or medicine is greater than in game dev. But the gamification of the process is an integral part of the education of the future.
Many experts predict that the era of VR helmets will come in 2025. A person will finally understand why this technology is needed. VR devices will be needed just like smartphones today. Those who possess these technologies will be prettier tech-savvy.
Get drunk and shoot zombies: PR success of Drunk or Dead
The New Year was coming, and we needed to organize some kind of corporate event. But since there was not enough time to participate in the hackathons, we came up with our own, Christmas, right in 4iLab. The idea was to gather in the office, take alcohol, order pizza, snacks and make a hackathon. We sat down, put down boards, chose themes, so that we had fun ourselves, so that we could do it in two days, and that it was in VR. And in the end, the idea of Drunk or Dead was born.
We chose the shooter genre where you need to shoot and you don’t have to go anywhere. But a fan was needed, so we added an alternative movement: turn around to the bar and drink.
Who does not drink, becomes a zombie.
This action shows the capabilities of VR: you turned away, and something happened behind your back. It was out interesting due to the basic mechanics. We had been covering the progress of our development on Reddit all the time, pulling people up. Immediately after developing the game we released it.
The very next day an article appeared. It told that the Russians want to drink the whole world to death in virtual reality.
Like, if you don’t drink, then you will become a zombie. One hooked on another: Lenta.ru, NTV, our newsmakers tightened up. Comments were generally divine. People said something like we transferred their lives to VR, that it is in every entrance, in each queue. In general, everything turned out very viral.
The monetization model of this game is the sale. We looked at the hype in the early days of downloads: on a wave of New Year, the game was received very well. Then we made more locations, came up with a story — we wanted to go to the PlayStation VR, where the largest market is in game dev.
But since there is no home using VR yet, the game is not very popular compared to the hype that happened to it because of the selected setting.
We don’t make money on VR games yet. Now we subsist on outsourcing, and earlier we subsisted on the financial partners' support. A startup was generally unprofitable at the beginning.
Rehabilitation of patients with VR penguins
We did the VirLeki project at the hackathon for Social Weekend together with neurologists. The idea was to provide a simple, cheap, and convenient way to rehabilitate people who had neurological diseases with an impaired balance function. Everything is arranged like this: we build an axis with controllers on a standing person. With his tilts in different directions, the person controls the mark in the game, followed by a penguin character.
A patient, who needs help himself, assists the penguin in fishing or riding on ice. He understands that he is not sick now, it is not he who takes help, he himself is helping.
Like, I don’t need to work out today, but the poor penguin needs help.
Такая фишка получилась у нас интуитивно, потому что мы знаем виртуальную реальность, знаем, как делать, чтобы не укачивало. Это отличает наш контент от многих конкурентов, с проектами которых мы знакомы.
We got such a chip intuitively because we know the virtual reality, we know how to do it and not get sick. This distinguishes our content from many competitors whose projects we are familiar with.
Officially we conducted the test on healthy people and athletes who needed to train their bodies for complex coordination sports like shooting, biathlon, jumping, etc. There were good results. Now in Moscow, we are testing the technology on people who really need help. But we can show its results only in scientific publications and to future partners. Regulatory authorities oblige such startups to conduct tests with a budget of $50 thousand to tens of millions.
As it turned out, medical startups are very difficult, long, and bureaucratic. In fact, we came up with a cool thing that everyone needs, but we need evidence that it works to implement it.
And this base can be collected only for money. So we need to find someone who will invest in it.
My colleagues and I visited the international conference on virtual rehabilitation in Tel Aviv. We looked at competitors and learned that some of them had already raised tens of millions of dollars from investors, but their projects were at about the same stage as ours.
It is a big problem that our method works only with the brain, replacing pharmacological interventions. And corporations that have spent millions of dollars on the release of one tablet cannot be happy about this.
AR-Monument dedicated to system administrators
Volha Kuzeeva at a hackathon, which we mentored, talked about the idea of making an art object — an AR monument to the sysadmin. And we got our hands on it, planning to announce ourselves loudly. The idea was to make a monument up to the system administrator day, such a gift from hoster.by to all IT specialists. When we implemented the project, we changed three different technologies to confidently fix it in place. Fortunately, we had 4 months for work without hard deadlines.
The monument should work right here and right at this moment, look exactly in the direction where we put it, that is, be like an ordinary classic monument, but only in augmented reality. We have small effects there, the eyes sometimes look around. We wanted to animate it more but still made it static.
There are Easter eggs on the monument.
There is the hoster.by logo on the button, and at the bottom of the mouse there is the 4iLab logo.
"Generation play" documentary
Our friends wrote to us about the idea of creating a film about IT. They were not interested in successful outsourcing teams. It was important to show the success story of a small startup.
We agreed and met the director Igor Pischeny. For several months his team was constantly with us, filming the work process. And they also filmed our victory in the competition of entrepreneurial ideas from the IPM business school. We just applied for this contest to come up with how to make a platform from VirLeki, which consisted of a single technique.
Now, this film is shown at festivals, it is unavailable publicly.