How video games taught me to run a business

Many of you enjoy video games, which are seen by some as a kind of guilty pleasure, good as entertainment, but not worthwhile aside from that. I’m the first to admit that spending hundreds of hours playing games will often get in the way of more productive pursuits. Nevertheless, there can be a positive side to these games, particularly simulation games.

One of my biggest strengths is analyzing numbers. This skill is instrumental in answering the question: Which servers are going to make me the most money? If I couldn’t answer that question, then renting unmanaged dedicated servers would not be the right business for me. As it turns out, what’s involved in producing a strategy for a hosting business is very similar to the skills needed to grow a city, run a fictional airline, or sell lemonade.

Let’s explore Aerobiz for a moment. This is an old Super Nintendo game that pits you against other airlines to produce the most profits and fly the most passengers. But it doesn’t happen on its own, you have to make a lot of decisions. How do you determine a price for airline tickets? Where should you fly your planes? How many planes? What size of planes should be on each route? How many of each type of plane should you buy?

As it turns out, these are not simple questions. You end up dealing with inventory issues, as some planes can be flown some routes and not others, leaving you short of planes you need and long on planes you don’t. Old planes don’t sell for very much, so getting this right is important. Some planes require more fuel, or hold more passengers. Sometimes you want more passengers on each flight, sometimes you want more flights with less passengers each. And new planes are coming out all the time that may make your purchases obsolete. You always want to charge as much as you can get away with, but you also want all of your planes running as full as possible. Naturally, unexpected events (good and bad) can impact demand, and competitors can open up in your route, impacting supply. Meanwhile, you may not be able to get enough “slots” at an airport, impacting your ability to fly into and out of a city. In those cases, you want to fly into or out of that city on your most profitable routes, to make the most out of this capacity.

If that sounds complex, it’s because it is. How does this compare to the hosting industry? Let’s answer that by identifying some of the concerns you have to balance in creating a strategy in unmanaged dedicated servers.

Which servers should I buy? Single processor, dual processor? How much ram (minimum and maximum)? Should I charge low base prices and expensive upgrades, or the other way around? Should I offer as many types of servers and upgrades as possible to expand the breadth of my offerings and hopefully drive sales that way? Or should I offer a very limited selection to make inventory stocking easier, offering more consistent setup times, reducing costs from obsolete hardware, and staying ‘in stock’ on my limited offerings more often? Should I focus on lower cost servers that I might be able to sell more of? Or should I sell fewer more expensive servers that are less popular but require less staff time per dollar of revenue? If the ROI (number of months to pay off an investment in a server) is “better” on a cheap server than on an expensive server, does that automatically make it the better choice? Or are the reduced labor costs of selling fewer servers make the more expensive server more attractive even if the ROI, on paper, is not as good?

The above are a fraction of the considerations that go into deciding what to sell, who to sell it to, how to sell it, and for how much money. It’s a bit more complicated than my sim games, so without the practice on those, the whole process could very well become overwhelming. In this business and my previous one, I had to make these kinds of decisions all the time, and games like Aerobiz, Sim City, Lemonade Tycoon, or really any game where you needed to grow your empire while balancing various constraining factors and risks, have helped prepare me to run IOFlood. Best of all, it was a lot of fun along the way.