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A gamer all his life, Overwolf founder and CEO Uri Marchand is committed to helping creators finds ways to monetize what they build for games. The company, based in Israel, focuses on players who build mods — gaming modifications which can change the way a game operates or looks, from Minecraft to Valheim.
Overwolf links mod builders with an income stream, such as micropayments or a partnership with a brand. They’re also investing in creators themselves, through a $50 million creators fund.
To Marchand, the company is democratizing creativity, he tells Signal360’s co-founder Stan Joosten. And that’s when the magic happens.
“When you give creators something they can be a part of, empathize with and believe in, then the outcome can be simply amazing,” he says.
TRANSCRIPT
Stan Joosten
For this month’s startups spotlight, we’re joined by Uri Marchand, from Overwolf. Overwolf is an Israeli company in the gaming space. So welcome, Uri. And I just want to jump right in. Welcome here. Can you tell us how you started Overwolf? And why you started it, and where did the name come from?
Uri Marchand
Sure. So I’ve been a gamer all my life. I’ve played games since around about the age of six. That continued, as I grew up and tried to figure out what I’m going to do with my life. As I graduated from computer science, together with a few friends, we had a couple ideas that we thought are going to be creating a meaningful company. And this is generally kind of the genesis of how we started. We started as creators ourselves building features for the games that we played. We call the company overwhelmed. Because as gamers, we’re used to getting companion tips from an overlord inside the game. We liked that name, I was playing a lot of Starcraft two back in the day. We felt like Overlord is a good kind of name, but it’s probably too serious. And we wanted to give it a bit of an angle with an animal. We played around with it, came up with Ovewolf, because the domain was open, and we decided to call the company this way. So not too exciting. It’s not too much of a smart story behind it. But this is how it originated.
You’re located in Israel. How many people you have working there now, with offices where?
We’re about 125 in the company. There are about 85 of us in the Israeli office, about 10 in the UK. And then all the rest are in different places around the world, particularly Europe. We have one team member in Korea and one team member in Canada. So we’re quite distributed outside of the HQ, and in the UK office.
When you talk about the company, at least on your website, and all the other things you say the company, it is by creators for creators. Can you tell us a little bit about the role of creators in gaming? Because, you know, I’m used to maybe playing Candy Crush. You know, I’m not familiar with all the terms like modding. Explain a little bit how that world works.
Sure. Modding is basically a third party developer that creates a different experience around an existing game. We have about four decades of game modding. Ever since games existed on the PC, basically, in 1983, mods existed. Actually, the first mod is called Castle Smurfenstein that basically took the good old game, Castle Smurfenstein and turn the German soldiers and Nazis into Smurfs, and through that created a whole different way to play the game. So I think, at the beginning, modders were really like hackers trying to reverse engineer the game and build additional content. And the correlation was because of the fact that a lot of people read computer games back in the day and played games were also engineers. So they kind of had the technical skills and one to make it their own.
But then modding evolved, and we kind of transitioned from the first generation of hackers to the second generation of the more organized creation phenomena, when the game developers started building creation kits, and gave third party creators of creation kit so that they can enhance the game for them. For example, for Warcraft, there was a map editor, and the maps are essentially mods. And then later, companies like Minecraft started and like Roblox, and those companies have already took building tools for creators a level up.
Now it feels like the entire industry is talking about that. And so if I need to recap that real quickly, we have something like four decades of UGC, user generated content and mods around games. The first part of that was reverse engineering and hacking. Second part was kind of the beginning of official endorsement by the game developers. And now the third part where we are today is sort of an inflection point and a deep understanding from a lot of IP owners and game developers, that creators are meaningful for the future of their games.
Now, why is this even important? So essentially, creators were responsible for third party creators were responsible for some of the biggest gaming innovations out there. So for example, League of Legends one of the most popular eSports around the world started as a Warcraft 3 mod called DOTA. Fortnite, that kind of grew to this amazing social network of people who are also playing and interacting and creating actually started as an Arma mod. From Arma there was age H1Z1 after H1Z1, PUBG, and after PUBG, Fortnite. And the reason for that it’s for game developers, sometimes it’s really, really hard to take risks on game design, and playability. And if a third party creator created something really, really nice, they actually validated product market fit for certain game design, for example, Battle Royale, which is the game design for Fortnite. And then it’s easier for game developers to kind of go all in and create a more meaningful experience.
In the future, we believe that more and more games are going to be endorsing creators around their games and providing tools for third party creators to play around and kind of use their games as game engines. So just like the revolution that we’ve seen on linear video, or VOD, now, a lot of the VOD content on the web is UGC, right? YouTube, one of the biggest platforms for video is essentially a UGC platform. And we think a similar thing is gonna happen in games. And as a company, we’re committed to seeing the future and making successful for the game developers that we work with, the creators that we work with, and also the brands that we interact with.
Ultimately this is about sustaining creatives, so they don’t do this for free. How do you help creators make money in this environment in this ecosystem?
Basically, it splits into two ways. The first one is advertising and brand partnerships. And we facilitate relationships between brands who want to get visibility with the creations of these creators, and the creators. So it’s very, very difficult if you’re a modder, to, you know, have a relationship with a brand, or do something cool that would make sense for a brand and get paid for it. Because you’re a single person, and maybe all you care about is just creating content, and not necessarily interacting on a business sense with larger companies. So we try to facilitate that for creators. And we’re allowing them to do brand interactions either through traditional ads, like IAB standard ads, or through more advanced and interesting activations.
The other side is simply we’re facilitating payments for them, that could be either subscription to their mods, or micro transaction, or a donation, or something like a Spotify, where you subscribe to a group of mods, and then the revenue is being distributed between the different creators based on their contribution to the engagement. So to sum up, basically two buckets, ads and partnerships, that’s one, and then microtransaction payments, that’s the second one.
You also have a creator fund. You invest in some of the ventures tell us a little bit more about that, and why it is important for this ecosystem.
I think it’s important for the ecosystem, because we’re building it. We’re a company that’s committed to building the creator ecosystem around existing games. And if I’m a creator, and I want to start building something, I may not have the resources or the funds to be able to quit my day job and do this commit to doing it full time and in high quality. And because we want to see this division through and because we want to turn in-game creation, into a true profession, we want to be in a place where we can invest in creators, and facilitate the need for a salary for a certain amount of time, until you can cross a threshold and you know, make a living doing it.
We’ve seen good examples of this with Slack. So I believe they had something like $100 million that they’ve invested in building their ecosyste. We’ve seen it happen with YouTube. And we’re basically, we started doing it a couple of years ago, with a fund that we built together with Intel, we saw that it works and we doubled down and increased the size, the size of the amount of the investment. So right now we operate from a $50 million vehicle.
So it’s a feeder system for the whole ecosystem that you have in mind. That’s great. What trends are you seeing how brand partners are participating in this ecosystem? How can brands be involved? You say you’re a bridge between creators and brands? How does it play out?
I think it really depends on the brand and really depends on the story and really depends on kind of how we want to bring their own values to life within a game environment. But I think it comes down to democratizing creativity. When we’ve done a recent activation for Dawn, we were amazed with the level of creativity that came from the different people that were participated in this activation, we basically challenged them to stays consistent with the brand values around preserving wildlife, and visualizing that inside Minecraft in creative ways. And the outcome is just mind blowing and what they were able to create. Is it a fit for every brand? Probably not.
For each brand, we need to think about what are the brand values. How can we tell the story in a way that is meaningful? How can we touch on what people feel, and not just fun ideas. I think the magic happens when you combine the two and when you give creators something that they can really feel a part of, and really empathize with and believe in, then the outcome could be simply amazing. And apart from that we’re helping with just traditional exposure that you might get with other publishers. But I think the mix of traditional exposure plus leveraging creativity of third party creators in a clear narrative that is defined by the brand values, this is where magic happens.
That’s fantastic. So one last question you’ve now been, you’ve been a co-founder of this company for about 12 years. For any starting entrepreneurs out there, you’ve learned a lot of lessons. What lessons we could teach them about your entrepreneurial journey.
Clearly, a gazillion lessons. If I have to pick one, it’s probably going to be listening to one core customer. Because we get a ton of inputs from many different people, it could be our investors could be our spouse, our friends, our different team members and I found that it’s the most valuable to very accurately define who your core customer is. And just be obsessed with serving that core customer.
I think eventually, if you do this over and over, you’re able to provide a lot of value for these customers. And from there, it’s easier to create value for other people and for other customers and continue to grow the business. But I think sometimes entrepreneurs get confused with, ‘This is a good idea, this is a good idea. This guy said something smart, let’s do it.’ I think that sometimes could also be risky to pick who your customer is and mostly focus on listening to what those guys have to say.
Well, thank you very much for an enlightening conversation. Uri Marchand, CEO and co-founder of Overwolf
Thanks so much
