The Best American Sports Writing 2013 (17 page)

But he also shovels much of the blame onto Rhode Island governor Lincoln Chafee, who he believes had a political agenda when it came to 38 Studios. The day before, Schilling alerted his former employees through a private Facebook message board that he planned to go on WEEI sports radio to talk about Chafee's role and “tell the untold side of this nightmare.”

Many former 38 Studios employees, including the CEO, responded to that Facebook post with fierce attacks against Schilling himself. As the assaults mounted, Schilling's wife, Shonda, rose to her husband's defense. “50 million its [
sic
] not a fucking joke. It's gone,” she wrote, adding that, “You have no idea what that last two weeks were like. Hope and hell. We hung on every telephone call. My husband couldn't function. My kids saw their father cry more in that month then [
sic
] any child should see.”

Schilling's harshest critic in the online exchange was Bill Mrochek, the vice president of online services, whose wife required a bone marrow transplant at the time their health care disappeared. “Are you going to admit that your stupid hubris, pride, and arrogance would not allow you to accept that we failed—and help shut it down with dignity?” he asked Schilling.

Mrochek was talking only about 38 Studios' dramatic final weeks, but as interviews with Schilling, members of his former staff, and others associated with the company show, he might as well have been describing 38 Studios from the moment that Schilling—lacking any business experience, but full of the same confidence, bravado, and determination that made him a baseball legend—decided he could build a billion-dollar video-game company.

 

By 2006, Curt Schilling had earned more than $90 million playing baseball, not including endorsements. But what he really aspired to was being “Bill Gates rich.” He admired the global impact the Microsoft founder had made through his philanthropy, and wanted to do the same. Schilling, who has an autistic son, imagined providing $200 million to open the Shonda Schilling Center for Autism Research.

Creating a video game would be what catapulted him to that wealth. More specifically, he would build a massively multiplayer online game (or, blessedly abbreviated, an MMO)—the type that allows people from across the world to play with and against one another. As a kid, Schilling had been obsessed with computers (his first was an Apple II), and during his baseball career, rather than go out carousing, he spent his time playing MMOs. A favorite of his was the industry leader, “World of Warcraft,” a vast fantasy landscape filled with wizards, elves, and warriors that has more than 10 million paying subscribers.

Successful MMOs are incredibly lucrative, but they're also the hardest type of game to build. You're programming not just a game, explains Dan Scherlis, the first CEO of Turbine, a maker of MMOs, but a complex social system for thousands, if not millions, of users. A normal video game might require a couple of years to develop, but an MMO takes at least twice as long. Because of that, many gaming entrepreneurs start small, working their way up from something simple for a mobile device, or perhaps a single-player game for PlayStation or Xbox. But Schilling had grander ideas. He was going to challenge “World of Warcraft.” His fantasy world would be similar (you want elves and wizards, you've got elves and wizards), but he envisioned deeper plot lines and more-striking visuals. He persuaded R. A. Salvatore, the best-selling novelist from Leominster, to dream up the fictional universe and the famed comic artist Todd McFarlane, a noted baseball fan, to conceive its artistic vision.

Industry experts often compare making video games to filming movies, given their similarly long production cycles and hit-or-miss nature. In movie terms, then, Schilling was attempting to start a studio from scratch, but instead of beginning with a low-budget indie flick, he was going straight for the summer blockbuster. His first time behind the camera, he was going to make
Avatar
.

“If it wasn't an MMO, I wouldn't have done it,” Schilling tells me. “If you look at the game space now, if you want to build something that's a billion-dollar company, the only game to do that with is an MMO.”

Schilling founded his company, originally called Green Monster Games, in August 2006, and set up shop in Maynard. (The name was changed a few months later on account of some other guys already owning the trademark on “Green Monster.”) He code-named his game Project Copernicus, and set out to make it richer, more beautiful, and, in sum, more lovingly created than any before it. Copernicus's world would be deep enough to support a network of related products: toys, books, and other video games and media. Schilling calculated that it would cost $40 to $50 million to produce the MMO, of which he'd front about 10 percent. “I told my wife I was going to take $5 million and try it out,” he says. The rest of the money would come from investors. He projected that Copernicus would debut by 2010, or in four years—an aggressive timeline for even an established video-game studio.

To industry observers, Schilling's quest seemed overwhelmingly difficult. To Schilling, it was just another opportunity to prove the naysayers wrong. “I had to beat the Yankees three times in nine days,” he tells me, referring to when he led Arizona to the 2001 World Series title. “I never doubted I was going to do it. My whole life was spent doing things that people didn't believe were possible, because God blessed me with the ability to throw a baseball. And I carried that same mentality into everything I did here.”

 

Schilling knew he'd been treated well during his baseball career, and wanted his staff at 38 Studios to feel the same. That meant gold-plated health care, for which employees had no paycheck deductions, and top-notch 401(k)s, with the company matching to the legal limit. As 38 Studios grew from 20 employees in 2006 to 42 in 2007 to 65 in 2008, there were plenty of other goodies along the way: free gym memberships, two homes the company rented to temporarily house new out-of-state hires (though that perk was short-lived), and, one year at Christmas, new laptop computers for every employee. Gifts like the computers came out of Schilling's pocket—he says he spent as much as $2.5 million on that sort of largesse over the years.

With midday Ultimate Frisbee games and a staff that got along remarkably well, the Maynard office appeared downright idyllic. Once, after an IT guy's rottweiler died, Schilling presented him with a brand-new pup during an all-staff meeting. There was much applause. Former employees say Schilling was an unparalleled cheerleader. He hadn't originally intended to be in the office full-time, but when he got hurt in 2008 and subsequently retired from baseball, he became a permanent fixture. Jesse Smith, a designer, says that at monthly meetings, Schilling would usually give his thoughts after employees presented their work. “There were a couple times that you could tell he was getting choked up,” Smith says. “This was something that was just an idea and a dream to him, and now it's coming to reality . . . It was just powerful.”

Everything at 38 Studios was not, however, perfect. It quickly became apparent that Schilling was new not just to video-game development, but to the basic concept of working in an office. In December 2009—months before Rhode Island signed on to the $75 million deal—Harvard Business School published a case study about the company titled “Curt Schilling's Next Pitch.”

Brett Close, who joined 38 Studios as president in 2007 and soon after became its first CEO, put Schilling's inexperience into perspective for the study's authors, Noam Wasserman, Jeffrey Bussgang, and Rachel Gordon. “He really needed Company 101,” Close told them. “For example, the whole concept of vacation was foreign to Curt. He actually said, ‘People get weekends off, right?'” Schilling at one point suggested that people work 14 straight days and then take five days off. It jibed with his baseball experience.

That idea was never instituted, but other questionable ones were. Schilling put his wife, Shonda, on the board of directors. Shonda's father received a job in IT (by all accounts, he performed admirably), and her mother was given the title “philanthropy and charity manager.” Meanwhile, Shonda's uncle, William Thomas, became COO. Though a seasoned businessman, Thomas had no experience with video games, much less MMOs. Schilling took to calling him “Uncle Bill” around the office, and even in meetings with outsiders. According to the case study, Thomas told Schilling it was making them look bad and to stop. The nickname caught on with the staff anyway.

Most troublesome of all was the unique profit-sharing plan Schilling devised for his first employees. Wasserman, Bussgang, and Gordon write that, since Schilling was bankrolling the company by himself, he was hesitant to give up equity in it. So instead of luring early prospective hires with stock options, he promised to share all profits 50-50 with them. Upon arriving as CEO, Close recognized that “investors' heads would explode” when they saw the model, since they'd be bearing all the risk but reaping only half the reward. Close eventually convinced Schilling to scrap the policy and replace it with stock options.

The CEO also tried to rein in Schilling's spending, doing away with ideas for company cars and cell phones. But Schilling was adamant about the rest of the perks. According to the case study, between fiscal years 2007 and 2008, the company spent more than $705,000 on “travel and entertainment,” a sum Scherlis, the former Turbine CEO, calls “wildly high.”

“It never had the culture of a start-up,” says one former employee. “The message was being sent . . . that there was plenty of money.”

 

As Schilling's personal investment shot past $5 million, he knew he would need outside financing. Since the Red Sox hero was able to get meetings with just about anyone within the broadcast range of NESN, he and his executives met with potential investors practically every week for the company's first three or four years.

Todd Dagres, a founder and general partner at Boston's Spark Capital, one of the top tech venture capital firms in the country, trekked out to Maynard for a meeting. He says he was looking to invest in games, but admits that he was also excited to meet the bloody-sock hero.

Schilling gave him an office tour, clicked through PowerPoint slides, and delivered a passionate pitch. But Dagres says Schilling came off as overconfident, as though he didn't understand what a huge bet he'd made with 38 Studios. Project Copernicus was going to require tons of cash, and if the game flopped, the company would go down with it. 38 Studios didn't have “the ‘A' team that I thought you'd want to see developing such a difficult game,” Dagres says. It lacked MMO development experience at the top. “Curt was not the CEO,” Dagres says, “but you could see he was quite involved and had a lot of control. I was a little nervous.” He also took note that the COO was Schilling's relative.

Then there was the issue of equity. Dagres says that Spark Capital likes to get 20 percent of a company it invests in, but that Schilling's offer was far too small. Schilling denies that he hoarded equity, but multiple sources say that, because he was funding the whole enterprise, he guarded it jealously.

“He was very forthcoming to tell you how much of his own money he put in,” Dagres recalls. Schilling tells me that he considered that kind of disclosure a selling point: “I assumed that they would look at it as, ‘If he's this far in, it's not going to fail. He's not going to let this thing fail.'” Instead, Dagres was shocked that Schilling was plunging so much into such a risky venture. The VC left with his checkbook firmly closed.

Time and again, though, Schilling emerged from meetings like this one thinking he'd hit a home run. “There was never a single one that he didn't walk out of saying he absolutely killed it,” says a former employee who attended a number of investor meetings. But over and over, there was no investment. Still, Schilling remained optimistic. “Curt sincerely believed that Copernicus was the best thing since sliced bread,” the former employee says. He “could not imagine a scenario where other people would not see the same potential he did. His attitude is always, This is gonna happen, the deal is going to close.”

“Absolutely,” Schilling tells me when I run that quote by him. “And that's the way I'm built. I think it's one of the reasons I was able to do what I did playing baseball. And it's not fake. I've been around situations where you can make people believe something they don't believe.”

Perhaps, but no investors seemed to be believing—and as they continued to pass, sources say, Schilling and Close, the CEO, began clashing over the equity issue. Meanwhile, Jen MacLean, the VP of business development, was pushing 38 Studios to buy a Maryland video-game outfit called Big Huge Games, which was available for cheap. The deal closed in May 2009, giving 38 Studios 70 new employees. Three months later, Schilling fired Close and appointed MacLean CEO.

Hanging over everything, though, was the fact that there was no new money coming in. As the calendar raced toward 2010—Schilling's original deadline—Project Copernicus remained years away from completion. If Schilling wasn't able to track down money soon, the studio would be doomed. He needed a savior, and was convinced that if he worked hard enough, he'd find one.

 

On March 6, 2010, Schilling hosted a fund-raising event at his Medfield home. Then–Rhode Island governor Donald Carcieri attended, and the two men got to talking business. Schilling needed money. Carcieri was looking to beef up his state's high-tech sector.

The talks continued for months, with the outline of a deal to move 38 Studios to Rhode Island gradually taking shape. At one point, Schilling approached Governor Deval Patrick and asked for tax incentives to keep the company here, but Patrick politely passed. Given the warning signs flashing around 38 Studios, it remains difficult to understand why Rhode Island so freely handed over $75 million. But for Schilling, despite being a longtime proponent of small government, the guaranteed loan was a godsend. He'd get the cash without having to give up even the tiniest slice of ownership. And if everything went bust, it would be Rhode Island that was responsible for the money.