How a 2 Man Team Used Agile to Build a $1.6 Billion Company in 8 Years

Agile is being applied to a wide range of uses now. Top to bottom companies are being built using Agile including our example Riot Games. Created in 2006 by a team of 2 they launched their first game in 2009 called League of Legends. Their massive success has shown what a company is capable of when Agile principles are baked in from day one.

Riot Games Did $1.6 Billion In Revenue In 2015

Rising to the number one online game in revenue they have did an estimated $1.6 billion in revenue in 2015. League of Legends is now played by over 100 million people worldwide. Their 2015 final attracted 36 million viewers worldwide.

Image Credit: SuperDataResearch

League of Legends hasn't slowed down in 2016, posting $582 million in the first four months. They recently won Inc.'s 2016 Company of the Year.

How Do You Build An Agile Company?

It’s easy to look at the massive success Riot Games has accumulated now and write it off as right place right time. If we dig into the core of the company we’ve find a few specific Agile elements such as a Manifesto, leveraging User Stories and Customer Collaboration, the importance of Culture and leveraging Scrum and Standups. Let’s breakdown how Riot Games was started and how they start with Agile principles from day one.

Starting with Frustration 

Founders Brandon Beck and Marc Merrill met at USC and ended up in careers with investment firms and banks. Their mutual bond came from a deep passion of multiplayer-focused games like StarCraft and EverQuest. They affectionately talk about their first apartment that was mainly empty except for two massive gaming desks in the center. Passion turned into frustration when it felt like game developers didn’t listen to fans.

"We were frustrated when developers would stop supporting us and the communities involved with the games we played," Beck says. "They felt pressure to move on to something else. We were like, ‘Yo, we don’t need another SKU. Stay here. There’s some obvious improvements that could really make this ecosystem last for a long time, and we love playing in it.’"

One SKU would define Riot Games who has only released one video game over the past 10 years.

Riot Manifesto

If you know Agile then you know all about the Agile Manifesto. If you’re just learning about Agile then read the origin story of the Agile Manifesto we published here. Riot Games in a very agile-like move created their own manifesto."We aspire to deliver on the obligation we feel to players," says Merrill. "When we let them down, it feels really shitty. That’s one of the things that really drives and motivates all Rioters."

Breaking the Model

In order to fully dedicate themselves to player experience they had to make a few unique decisions.

1. Free to Play

2. A New Model of Publishing

3. Hiring on Culture

Free to Play

Riot Games made a bold move making their game free-to-play. In 2007 the free to play model wasn’t as popular as it’s become now. The game remains free supported by microtransactions for things like new character skins or new champions.

A New Model of Publishing

"Originally, we planned to just be a game developer," Merrill says. "We didn’t plan to build a whole publishing business. As we started to meet with publishers, we realized, ‘Wow, we can’t hand the keys to the kingdom to these guys.’"

A traditional publisher would have wanted a physical retail release and future sequels. This was not the online, multiplayer-focused and free-to-play dream that Merrill and Beck had envisioned.

Hiring on Culture

Merrill and Beck focus on hiring based on passion and culture rather than just experience. They want a company of people who are just as passionate about gaming as they are. Many of their employees take midday breaks to play the very same game they are working on.

Hiring Agile Pros

They’ve also made a point of hiring ‘Agile Pros’. Employees working at Riot have detailed their Scrum Practices using things such as Daily Standups.

Feedback Driven Game Development

Truly taking Scrum to heart, Riot let gamers into the creative process and listened to feedback directly.

"If you go back to some of the threads from year one or year two of League of Legends and all the Riot [online] forums," says Steve Arhancet, a former pro gamer and now co-CEO of LoL team Team Liquid, "you had your developers, your executives, all chiming in to the conversation, listening to the community, making adjustments based on forum threads. The executive team didn't just have a plan and roll it out."

Two Months 100,000 Players

Scale happened fast as League of Legends reached 100,000 people playing the game concurrently within two months of launching.

Building the Plane While Flying

Merrill refers to the years following League of Legends' launch as "the 'building the plane while flying' experience." They built an organic game that would grow and change over time with the players. They didn’t know what their customers would want, they just knew they’d work extremely hard to give it to them.

One Massive Niche of Obsessed Fans 

INC illustrated this beautifully so I’ll just quote them directly.

LoL is not mass market. LoL is one massive niche. And as the world continues to fragment and consumers spend more of their lives online, more gargantuan niches will rise up just like it--with deeply passionate, demanding customers who devote large chunks of their lives to a world apart from everyone else. The next great challenge for business is understanding how to reach them and talk to them, and Riot is out on those frontlines. Its founders have made mistakes. They will make more. But that befits a company that's aggressive, flexible, and never cautious. Merrill and Beck meet their fans on their fans' turf, think constantly about what they want, hate, love--all the time honoring one key promise: They will match their fans' obsessiveness with their own. "It's not just about belonging," says Merrill. "It's our tribe, and it's about love." In fact, that's exactly why they started their company.

"We were those players who were willing to spend a thousand hours playing your game if there was a compelling competitive experience," Beck says. "But we often felt ignored."

Fans took on a new meaning though as Riot launched their own esports division.

LCS and ESports Growth

"Imagine we invented basketball," says Merrill, "but we own every basketball court on earth, we sell you the shoes, and we built the NBA." 

Riot took it a step further by creating their own professional gaming league for League of Legends titled League of Legends Championship Series or LCS. They would soon realize that League of Legends had more fans than just players.

"I remember we had something like 20 folding chairs and, without knowing if anyone would watch, decided to stream the games," Beck says of the Season One Championship. "We ended up getting over 100,000 concurrent viewers, which just blew our minds. It was there we realized this was something League players loved and started to really take it seriously."

While the LCS had strong viewership it didn’t have profitability.

Investing Millions Into Esports Without Profit

A Rift Herald headline summed it up nicely ‘Riot: esports still isn’t profitable, and we don’t care.”

They weren’t alone though. Newly minted pro LoL team owners include Washington Wizards owner Ted Leonsis, Hollywood producer and Los Angeles Dodgers co-owner Peter Guber, AOL co-founder Steve Case, life coach Tony Robbins, and owners of the Philadelphia 76ers. Many of these teams continued to operate at a loss.

“Yes, we’re still investing millions into esports without profit, but our goal with esports has always been to make a great player experience first,” Beck said. Riot reaches 7-year, $300 million League of Legends streaming deal with MLB, Disney

Once again player experience came first and ended up paying off in a big way.

Riot Games reached a groundbreaking $300-million streaming deal through 2023 with BAMTech, the streaming tech company owned by Major League Baseball and Disney, The Wall Street Journal reports.

BAMTech will get exclusive rights to “stream and monetize” Riot’s esport League of Legends, and will reportedly build a new app-based streaming service that will attempt to monetize the game through sponsorship and advertising. BAMTech will also reportedly handle Riot’s current streaming partnerships with Twitch and YouTube.

The Agile Lesson

What happens if you started a company based in Agile? Apparently you can create the number one grossing video game in the world while being one of the top 5 companies to work at.

Riot has taught us that culture is huge to the success of Agile.

Want to implement Agile into your company?  We’re currently accepting a few more companies in 2017 for our Agile Marketing program.

You’ve seen what Agile did for Riot now find out what it can do for your company.

In fact, regardless if we work together or not, we will hand select the most valuable worksheet (a $100 value) for you completely free. These worksheets come from our Agile Marketing Certification Class and are normally only accessible through our online academy.

Click here to implement Agile for yourself.

The proof is in the pudding or millions or billions in this case.