Unity IPO: Driving the Next Generation of Content Creation, in Gaming and Beyond
On the first Friday of May in 2009, we met with a Copenhagen-based founder just before he was set to fly home from Silicon Valley. David Helgason and his co-founders, Joachim Ante and Nicholas Francis, had spent five years building Unity into a profitable company with no outside capital. Even more striking than the bootstrapped business was the community surrounding it. Game developers, who build their own products on the platform, were enamored with Unity — and the feeling was mutual. The team, then three-dozen people, cared deeply about serving those creators. By offering tools that had previously been available only to companies large enough to build their own gaming engines, Unity was making game development accessible to small teams and even solo developers.
We were intrigued, too, by Unity’s embrace of mobile gaming — still a nascent idea at the time. The App Store was less than a year old, and smartphones were primitive in terms of everything from screen resolution and graphics to processors and memory. Most companies remained focused on desktop computers, and yet Unity had already rolled out a platform for the relatively small group of creators who were beginning to build for mobile. We asked David to delay his return to Denmark, and became Unity’s first business partner the very next week.
In the months and years to come, that same dedication to its developer community would inform every choice Unity made, keeping the interests of creators at the core of their business. All companies face what we at Sequoia call “crucible moments” — key decision points where the entire business depends on which path you choose. Within six months of our partnership, Unity encountered their first such test: Whether to switch to a freemium model, rather than charging upfront fees for licenses. The freemium approach was gaining traction in tech more broadly, but wasn’t yet common in gaming — and while it would allow Unity to reach millions rather than thousands of developers, it would also require the company to dramatically shrink revenue. We had worked through this very decision point with other founders in the Sequoia community, and connected David, Joachim and Nicholas with those who’d endured the same transition. In the end, they chose to sacrifice short-term financial gain in favor of helping more creators — a decision that would ultimately make Unity a business of consequence and give them a seat at the table with some of the largest companies on the planet.
Over the next decade, more crucible moments would follow. In 2014, Unity worked through a decision to switch from a perpetual license fee to a recurring, subscription-based license model, again making a long-term bet to build a stronger business and ensure Unity could continue offering the best possible service to creators. That same year, David convinced John Riccitiello to take over as CEO — a shift David had been quietly considering since 2013, when he recruited John to join the board. David recognized that John was the right person to help both the team and the community of creators realize their full potential, and that difficult decision helped make Unity the company it is today. Even more critical than David’s selfless commitment to the vision during this crucible moment was his continued dedication as part of the board. His ongoing guidance, along with that of Joachim, who remains a pillar of strength in his role as CTO, has helped Unity stay the course. More crucible moments came in the form of merger and acquisition offers — which themselves came with ever-rising price tags. But each time, the Unity team had the courage and faith to bet on itself, again delaying short-term gratification in favor of what was best for the company’s community of creators.
And that dedication paid off: While the biggest unknown in our minds back in 2009 was how large Unity’s market might grow, it turns out the answer was simply a function of the team’s — and creators’ — imaginations. Today, the platform has found its way into a wide range of industries beyond gaming; last year, nine of the top ten auto companies (by revenue) used Unity for projects such as training self-driving cars, and Unity is used by eight of the top ten architecture, engineering design and design companies (also by revenue). Meanwhile, Unity has stayed true to its loyal creators in gaming, which has become the fastest growing category in media with over 2.5 billion gamers worldwide. Today, Unity boasts 1.5 million monthly active creators that developed more than 8,000 games and applications each month in the first half of 2020 alone.
The Unity team has also stayed true to its mission to ensure the world has more creators in it, and that those creators are successful, by investing aggressively in engineering and R&D; continually building new tools to help customers not only create, but operate and monetize their work; and expanding beyond Mac and mobile to include Windows, tablets, gaming consoles, and AR and VR devices.
As an early believer and through every round since, it’s been an honor to partner with Unity on this journey, and as we celebrate today’s milestone, we’re looking forward to all the crucible moments to come. Congratulations to the entire team at Unity.
