The document discusses business values that employees of LILA Games will be expected to agree to before joining the company. It outlines seven key values: 1) maintaining a "wartime orientation" focused on results over stability, especially for new businesses, 2) open and direct internal communication, 3) embracing "radical truth" through open debate, 4) having clear areas of responsibility with single owners, 5) focusing efforts using the "hedgehog concept" and "north star metrics", 6) addressing problems directly, and 7) maintaining a solution-oriented and optimistic approach. The document emphasizes the importance of shared values within a company to avoid future conflicts.

1. A discussion of business values that LILA Games employees will agree to prior to
joining the company.
June 21, 2020
LILA GAMES
Business Values

2. DISCLAIMER: Remarks Before Reading this Presentation
1. Shared Values: We believe a company’s values must be shared by the employees of the
company that they work for or there will eventually be unnecessary and irreconcilable conflict
2. Some Differences Okay: While some differences in values can work and we may need to modify
or adjust to fit different situations and context, major differences will be a problem
3. No Fit, No Job: It would be good to know as early as possible if there is alignment and/or
support for the values we support otherwise it would be better for you to work elsewhere

3. Objective: Determine the level of shared values we have before commiting to a
long-term relationship
“There are all kinds of different people in the world,
many of whom value different things… A lack of
common values will lead to a lot of pain and other
harmful consequences and may ultimately drive you
apart. It might be better to head all that off as soon as
you see it coming.”
- Ray Dalio, Principles

4. Seven key business values and philosophies I strongly believe in shown
below
Overview of Key Values
1. Wartime Orientation vs. Peacetime
2. Open and Direct Communication
3. Radical Truth and Debate
4. 1 Owner, Clear Areas of Responsibility (AoRs)
5. Focus: The Hedgehog Concept & North Star Metrics
6. Problems Need to be Addressed
7. Solution Orientation and Optimism

5. #1. WARTIME ORIENTATION VS. PEACETIME

6. #1: The creation of big new businesses requires a “Wartime” orientation with a
focus on results rather than stability
TOM HAGEN Mike, why am I out?
MICHAEL CORLEONE You're not a wartime consigliere. Things may
get tough with the move we're trying.
—Scene from The Godfather

7. #1: Ben Horowitz describes below how Wartime and Peacetime require
different management styles
From Ben Horowitz
“Peacetime in business means those times when a company has a large advantage vs. the
competition in its core market, and its market is growing. In times of peace, the company
can focus on expanding the market and reinforcing the company's strengths.
In wartime, a company is fending off an imminent existential threat.”
“My greatest management discovery through that transition was that peacetime and
wartime require radically different management styles.”
Source: Andreessen Horowitz website, http://www.bhorowitz.com/peacetime_ceo_wartime_ceo

8. #1: A simple view of this principle views Peacetime as favoring Stability over
Results and Wartime as favoring Results over Stability
Peacetime
Stability > Results
Wartime
Results > Stability
Simplification of Wartime vs. Peacetime Focus

9. #1: Wartime vs. Peacetime characteristics
Ben Horowitz on Peacetime CEO vs. Wartime CEO
● Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.
● Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of
dust on a gnat’s ass if it interferes with the prime directive.
● Peacetime CEO builds scalable, high volume recruiting machines. Wartime CEO does that, but also builds HR organizations that can
execute layoffs.
● Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture.
● Peacetime CEO always has a contingency plan. Wartime CEO knows that sometimes you gotta roll a hard six.
● Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid.
● Peacetime CEO strives not to use profanity. Wartime CEO sometimes uses profanity purposefully.
● Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is
sneaking into her house and trying to kidnap her children.
● Peacetime CEO aims to expand the market. Wartime CEO aims to win the market.
● Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity. Wartime CEO is completely intolerant.
● Peacetime CEO does not raise her voice. Wartime CEO rarely speaks in a normal tone.
● Peacetime CEO works to minimize conflict. Wartime CEO heightens the contradictions.
● Peacetime CEO strives for broad based buy in. Wartime CEO neither indulges consensus-building nor tolerates disagreements.
● Peacetime CEO sets big, hairy audacious goals. Wartime CEO is too busy fighting the enemy to read management books written by
consultants who have never managed a fruit stand.
● Peacetime CEO trains her employees to ensure satisfaction and career development. Wartime CEO trains her employees so they don’t get
their ass shot off in the battle.
● Peacetime CEO has rules like “we’re going to exit all businesses where we’re not number 1 or 2." Wartime CEO often has no businesses
that are number 1 or 2 and therefore does not have the luxury of following that rule.
Source: Andreessen Horowitz website, http://www.bhorowitz.com/peacetime_ceo_wartime_ceo

10. #1: Some bigger peacetime companies try to maintain a Wartime/Results
orientation despite their status as really a peacetime company
"As most companies grow,
they slow down too much
because they’re more afraid
of making mistakes than
they are of losing
opportunities by moving too
slowly," Mark Zuckerberg

11. #1. New businesses should be in Wartime, however, as businesses mature they
should eventually shift from a Wartime to Peacetime orientation

12. #2. OPEN AND DIRECT COMMUNICATION

13. #2: There should be complete and open communication within the entire
company
Elon Musk’s View on Open Communication

14. #2: …however, we do not apply this policy to external companies/groups
outside of our company
Preferred Communication Flow Policy
By default, anyone should be able to talk to anyone in any group without the permission
of any group lead (however, +cc to group leads may be appreciated)
Our Company External Company / Department

15. #2: In general, corporate information hoarders add little value beyond acting
as information gateways and killing efficiency
Information Hoarders Kill Efficiency
The majority of large companies have information hoarders who specialize in talking a
lot and holding meetings all day long - we will not do this

16. #2: Further, we should eliminate “pre-meetings” to coordinate opinions and
conclusions ahead of meeting with other people or groups
The Problems with Pre-meetings
● Pre-meetings are inherently political: a select group of people want to try to
agree on their agenda and then meet with others and gang-up on those others
with a “unified front” to influence them
● The objective of meetings should be to have open and honest debate
considering all points of view even contrarian views - pre-meetings violate the
very nature of objective discussion
● Pre-meetings are by nature inefficient. Meeting twice on the same issue
presumably the first time to agree on what the pre-meeters want to push as
their agenda and then secondly to influence others is not a good use of time

17. #3. RADICAL TRUTH AND DEBATE

18. 3: What does Radical Truth mean?
Ray Dalio’s Definition of Radical Truth
“By radical truth, I mean not filtering one’s thoughts
and one’s questions, especially the critical ones. If we
don’t talk openly about our issues and have paths for
working through them, we won’t have partners who
collectively own our outcomes.”
- Ray Dalio, Principles

19. 3: If you complain about a fault in someone you work with but don’t talk
honestly about it with them, you share equally in that fault
From the Bible*
1. Leviticus 19:17 “Rebuke your neighbor frankly so you will not share in
their guilt.”
2. Proverbs 27:6 “Better are the wounds of a friend, then the deceitful
kisses of an enemy.”
* Just to be clear, I’m not Christian and don’t mean to push any religious agenda

20. 3: Debate with conflict and discussing opposing perspectives with an
open mind creates knowledge expansion
Conflict + Synthesis = Knowledge Expansion
Source: Ikujiro Nonaka, A Knowledge Based Theory of the Firm

21. #4. ONE OWNER, CLEAR AREAS OF
RESPONSIBILITY

22. 4: Why do we need ownership? It’s the difference between commitment
and involvement...
Question
● What’s the difference between a chicken and a pig in a ham and eggs
breakfast?

23. 4: Ownership drives accountability and without accountability there’s no “skin
in the game”
In a ham and eggs breakfast, the pig is committed,
but the chicken, merely involved.

24. 4: Be careful, accountability without responsibility doesn’t make any sense,
approaches such as Areas of Responsibility decentralizes authority
Overview of Areas of Responsibility
Topic For More Information
Asana on Areas of Responsibility https://wavelength.asana.com/workstyle-aors/
Why 1 Owner? Ben Horowitz on the
“Two in a Box Problem”
https://a16z.com/2012/01/19/management-debt/

25. 4: In general, there are four primary decision making (aka responsibility)
approaches in organizations: it should be 100% clear which model we follow
Too difficult to
implement*
Not Effective
Viable Approaches
* In businesses with few transactions and in which outcomes aren’t binary, scoring is very difficult

26. #5. FOCUS: THE HEDGEHOG CONCEPT AND
NORTH STAR METRICS

27. 5: In his famous essay "The Hedgehog and the Fox," Isaiah Berlin divided the
world into hedgehogs and foxes, based upon an ancient Greek parable
Hedgehogs vs. Foxes
If you could be a fox or a
hedgehog which would you
rather be?

28. 5: The Hedgehog concept argues for doing one thing really well
“The fox knows many things, but the hedgehog
knows one big thing.”
Jim Collins in “From Good to Great” argues the value of doing one
thing and doing it well using this concept.

29. 5: Similarly, for optimizing performance, the Silicon Valley concept of a
North Star Metric (NSM) has been used very effectively
Example North Star Metrics
Company North Star Metric
Facebook MAU (Monthly Active Users)
Airbnb Nights Booked
Medium Total Time Reading
Quora Number of Questions Answered
Intercom Number of Customer Interactions

30. 5: At LILA, we will try to focus teams on a single North Star Metric, but these
often start at soft launch and change serially over time
Simplified Example of North Star Metrics in a Mobile Game
Launch

31. #6. PROBLEMS NEED TO BE ADDRESSED

32. 6: “Problems Need to be Addressed.”
This is not obvious.

33. 6: In fact, the majority of organizations do not seriously address major
problems
1. People are afraid of accepting responsibility for mistakes and try to hide the truth
2. People are afraid to call out the person or group at fault
3. People get caught up in day to day work and don’t want to take the time to
breakdown root causes for a problem, assign responsibility, make plans to fix the
problem, and take actions to fix the problem - it’s a lot of work
Top 3 Reasons People Do Not Address Problems
In these organizations (which I believe to be almost all), key problems that
arise inevitably recur and limit the overall effectiveness of the organization

34. 6: How do you foster a Problem Solving organization?
1. You must first start with a culture of forgiveness and openness
2. Avoid the anonymous “we” and “they” and be specific about what happened and
who was responsible
3. Diagnose problems to get at root causes
4. Create a plan to address the problem
5. Execute and monitor the plan for progress
Summary of Approach Recommended by Ray Dalio in Principles
Source: Adapted summary from Ray Dalio’s Principles

35. 6: Backup | Example “5 Whys” Approach to Identify Root Cause
● Problem:
○ The team is continually working late and is on the verge of burning out
● Why?
○ Because we don’t have enough capacity to meet the demand put on the team
● Why?
○ Because we inherited this new responsibility without additional staff
● Why?
○ Because the manager did not understand the volume of work before accepting the responsibility
● Why?
○ Because the manager is bad at anticipating problems and creating plans [Root Cause]
Source: Principles by Ray Dalio
Example Root Cause Analysis

36. #7. SOLUTION ORIENTATION AND OPTIMISM

37. #7: At LILA, we believe there is a power to optimism that trumps skill or
intelligence in determining successful outcomes
From Walden
"I learned this, at least, by my experiment; that if one advances confidently in
the direction of his dreams, and endeavors to live the life which he has
imagined, he will meet with a success unexpected in common hours. He will
put some things behind, will pass an invisible boundary; new, universal, and
more liberal laws will begin to establish themselves around and within him; or
the old laws will be expanded, and interpreted in his favor in a more liberal
sense, and he will live with the license of a higher order of beings."

38. 7: Words of wisdom from a couple of guys I’ve listened to in my life
“Instead of complaining, my process is
this: Assess the problem, find the
solution, and get on the offense. I’m an
offensive player, and I feel like
complaining is the defense.”
Gary Vaynerchuk
“Offense is Defense.”
My Sixth Grade Taekwondo
Instructor*
* Not my actual instructor pictured

39. 7: Teams are generally comprised of three types of team members: Winners,
Warners, and Whiners
Team Member Type Description
Winner Optimists who drive product vision and focus on solutions to
problems
Warner Realists who foresee problems ahead of time and warn the
team about them
Whiner Pessimists who reactively complain about problems and
spend most of their time focused on those problems and
casting blame
Organizational attitudes towards HR policies differ, however, in my
experience eliminating Whiners from teams has improved team
productivity and product outcomes in 100% of cases

40. 7: Be Careful! Important note on Optimism
Be careful, Optimism shouldn’t be confused with Blind
Positivity
“What I cannot create, I do not understand.
The first principle is that you must not fool yourself and you are the easiest person
to fool.
For a successful technology, reality must take precedence over public relations, for
Nature cannot be fooled.”
- Richard Feynman

41. 7: Optimism vs. Blind Positivity | The General Process & Output
Optimism Blind Positivity
Output Output
● Long meetings discussing “What’s
our story?”
● Lots of executive readouts and
Powerpoint slides
● Action Plan
● Lots of task lists and actual work

42. CONCLUSION

43. In conclusion...
Concluding Remarks
1. We have a set of values which we believe will make us dramatically
more effective at the work that we do and will be the source of incredible
competitive advantage
2. These values will not cover every situation and some situations may be
complex in how we should deal with them. For those situations, we’ll
need to think critically and discuss openly.
3. Before you join LILA Games, make sure you know what you’re getting
into and don’t join if you don’t share these values.
○ We may not terminate some employees for performance if there is
skill development and improvement, but we will instantly terminate
employees based on values.