What was Governor Carcieri thinking?
That and a lot of head-shaking will likely be most Rhode Islanders’ reactions to “End Game,” Boston magazine’s 5,000-word autopsy of what went wrong at 38 Studios, out this afternoon. Jason Schwartz uses a two-hour interview with Schilling, private Facebook messages and other sources to paint a vivid picture of a company that was never ready for prime time.
Schilling’s overconfidence and lavish spending, combined with dysfunctional management and – crucially – a high-risk business plan, created a situation that’s almost impossible to imagine ending well. The problems were already evident to one venture capitalist who vetted the firm before Carcieri and Schilling started talks in March 2010 and told Schwartz 38 Studios didn’t have “the ‘A’ team that I thought you’d want to see.”
Schilling estimated the game’s development would cost $50 million at most; the company had spent more than $100 million by the time it collapsed, partly because the EDC deal forced it to go on a “hiring binge.” The comments from one of 38 Studios’ potential partners are lukewarm, and Schilling himself declares that the game itself “wasn’t fun” – a worrying review considering the EDC wants to sell it to recoup some of taxpayers’ losses.
These paragraphs sum up the magazine’s findings well:
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. …
Schilling, meanwhile, kept up his free-spending ways. This past Christmas, he personally bought every staffer a computer tote bag with the 38 Studios logo. Add in the company’s high staffing levels, frequent gratis lunches and dinners, and big travel budget, and it was easy to forget the whole thing was a startup. “We never had that sense of urgency or panic,” Schilling tells me. “I think there was a sense of invulnerability — I don’t want to say invulnerability, but I think we were comfortable.”
Read the rest here.