Slaying The Dragon 
Author’s website: Slaying the Dragon — Ben Riggs
Over the weekend I read the book “Slaying the Dragon” by a game designer who spent several years researching the corporate history of TSR, the company that created Dungeons & Dragons.
This book was extremely well written and you can tell that the author has a tremendous amount of passion for role-playing games and especially for Dungeons & Dragons.
But what I loved about the book was the extent which he peered into extremely dumb business practices, such as running the entire business under a single un-tested false presumption.
The book is called the Fish Bait strategy: different bait for different fish, and hence many different products instead of focusing on one really good product. For decades they sold products at a loss with the presumption that these would help bring new people into Dungeons & Dragons and its many settings (think Forgotten Realms, Dragonlance). But what they were actually doing was just competing with themselves and cannabalizing their existing player base.
They also practiced an extremely dumb financial tactic called “Factoring” where they essentially bundled up future sales and sold them to investment banks so they could get the money at the beginning of the year so they could more effectively budget out the year. This cost them a tremendous amount of transaction costs on revenue, but it also locked them into inflexibility throughout the year to the extent that they couldn’t adapt. So for example when magic the gathering came out they couldn’t launch their own competing card game because they didn’t have the resources on hand because they already locked their budget for the entire year way back in January. Another problem with this was they could not discontinue poorly selling products because they had already promised the revenue to the investment banks.
I’d never heard of this before. But it makes me glad freeCodeCamp is a charity with no financial complexity (just a bank account, an endowment account, and zero debt). We spend almost nothing on finance beyond Stripe and Paypal transaction fees. With TSR, the transaction cost of Factoring alone was costing them 18% of their gross revenue!
Finally, TSR had a weird arrangement with one of the New York City book publishers where they could ship product to them and immediately receive payment before the product sold. They’d over-ship product beyond what they expected to sell, which meant that they effectively used the publisher as a bank for getting loans. And they did this until they had millions and millions of dollars in debt, which they ultimately could not service.
Oh and did I mention nobody knew anything about this other than the top executives? The opacity in this organization would make Steve Jobs do a double take.
What transpires from these poor management decisions is essentially them having to cull their staff of incredible creatives, such as book authors, artists, and game mechanics experts.
The final chapter is dedicated to the acquisition by Wizards of the Coast, which created Magic the Gathering. It was an amazing conclusion to the entire debacle. A company that was so heavily inspired by Dungeons & Dragons acquiring Dungeons & Dragons. It was extremely cathartic. For example the founder of Wizards of the Coast came in on his first day and said they should have an all-hands meeting (where the entire staff meets in one room), and his assistant said she didn’t know what that was, because apparently TSR had never held one. Such was the culture of secrecy and the compartmentalization of their staff.
TSR is one of the most egregious examples I’ve ever seen of a company having a strong customer base, having good products, and dominating a market, yet still not being able to make ends meet due to mismanagement. As a fan of role-playing games myself, it was really exciting to read the book but also it was really sad that all the people involved in building all these amazing worlds over the decades were treated so poorly. It really is a “what not to do if you’re running a consumer business” book.
If you’re a D&D fan, an MTG fan, or just interested in business history, I strongly recommend reading this book.
