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Small startup hits Google paydirt Add to ...

For the past year, some of the biggest names in technology have waged a bidding war for SocialDeck, a small Canadian game-apps maker whose founders were pretty much broke during the start-up’s three-year lifespan. The company caught the eye of Research In Motion; and Zynga, creator of the massively popular Facebook game FarmVille, made an offer. But this past summer, Google came out on top, buying SocialDeck for between $10-million and $25-million (the exact amount is a closely guarded secret).

Engineers and long-time friends Anish Acharya and Jeson Patel hit the jackpot–and they got jobs with the search-engine giant to boot.

SocialDeck has carved out a niche in mobile social gaming–a field that barely existed a few years ago. But thanks to the explosive growth of the smart phone business, it has suddenly become one of the most important software markets in the world. It’s vital to the corporate futures of everyone from Google to RIM, from Apple to Microsoft.

On the surface, it seems that SocialDeck has lived the dream of every hungry technology start-up. The Google deal was shaped by the networking of various players in the country’s new tech epicentre, Waterloo, Ontario. But the way it went down illustrates not only what’s right with the Canadian technology ecosystem; it also exposes what’s wrong.

When Acharya and Patel launched their company, they looked south, not north–moving to San Francisco in the hopes of tapping in to the rich supply of talent and money that drives Silicon Valley’s innovation engine. “We don’t have a great culture of start-ups in Canada,” Acharya says. “That’s not to say there are no great startups, but they succeed in spite of the culture, not because of it.”

About a year before founding SocialDeck, the young Canadian entrepreneurs were racing through the streets of Boston in a taxi, with Acharya eating sugar packets in the back seat. Their futures depended on Acharya’s blood-sugar level. A meeting with Y Combinator, a big-name technology-start-up funding firm, was less than half an hour away, and their prototype–a diabetes management program that could graph a patient’s blood-sugar readings–had stopped working.

The software had performed just fine back in Seattle, where Acharya and Patel had moved after graduating from the University of Waterloo–Patel worked at Microsoft, Acharya at Amazon. Like countless other projects before this one–a Facebook-based matchmaking program, an iTunes database analyzer, a YouTube for DJ music mixtapes–the diabetes software was something Patel and Acharya had created in their spare time, another shot at their dream of designing something from scratch and building their own company.

But now, with thousands of dollars in funding on the line, their latest creation was crashing. “I’m not diabetic, so usually my blood-sugar level is between 108 and 110,” recalls Acharya. “But we’d taken the red-eye flight to Boston and I hadn’t eaten anything for a long time.”

That’s how the two engineers first discovered their breakthrough product couldn’t handle double-digit blood-sugar readings. With no time to fix the actual code, Acharya started boosting his own readings by gorging on sugar. “So we show up to this meeting and I’m pretty wired,” he says.

They didn’t get the funding from Y Combinator, but the pair left the Boston meeting determined that they wouldn’t try to build the world’s next big app in their spare time. Instead, they would quit their lucrative jobs with two of the biggest tech companies in the world and dedicate themselves to their vision. “My perspective was always to do something disruptive, to do something big,” says Acharya.

Just a few months after their disastrous Boston pitch, Acharya and Patel did just that. In December, 2007, they quit their jobs and began brainstorming ideas. A new game running on the Facebook platform caught their eye. It was called Scrabulous–an obvious rip-off of the original Scrabble board game, but designed for multiple users to play online. Just about everyone on Facebook seemed to be playing the game, which had nothing in the way of fancy graphics or elaborate levels. Indeed, seemed to thrive almost entirely on the strength of its social appeal.

Acharya and Patel decided they would try to capture the same magic, but on a mobile phone. Thus was born SocialDeck, which aimed to create social games for smart phones. The premise was simple: Give users free, turn-based games that let them interact with their friends, and leverage the Facebook platform to access those friends. The concept seems like a no-brainer today, but when SocialDeck was founded–with far fewer smart phones on the market and the global recession just beginning–it was a risky proposition.

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