[cojo]

I have to say, the only thing more surprising to me than seeing the board actually hold Riccitiello responsible for this (with consequences) is seeing that their interim replacement / transitional CEO is someone with a pedigree that, on the surface, seems even more management consulting / investor / revenue focused than Riccitiello was himself.

To be clear, I know essentially nothing about James M. Whitehurst other than what is readily publicly available (IBM / Red Hat, advisory roles, etc.).

But my read on a lot of the Unity crisis, as a long-time game industry veteran myself, was that one of the increasingly common "management consulting" / investor- & revenue-focused type of gaming executives (e.g. Riccitiello, Don Mattrick [Zynga replacement CEO when Pincus stepped down], Kotick [Activision-Blizzard]) had finally overstepped their bounds and let revenue goals drive decision-making just a bit too far without customer consideration.

So, I had assumed that if Unity did make a leadership change here, it would be in a direction away from that - i.e. a more industry-seasoned executive with less of a pure revenue / "business" focus.

I think I clearly misjudged the situation here in light the Whitehurst pick; while it's possible that is truly just an interim role and they will still pivot to this in the final hire, or that I simply misjudge "the label on the tin" and Whitehurst is very culture / customer focused, I don't think I would bet on it. This seems like the board actually "doubling down" on driving revenue results - and fast.

[airstrike]

Interim CEOs generally tend to be either a board member or a C-level executive that take on the role just to manage day-to-day CEO duties while the board searches for a more permanent replacement.

In this particular instance, Whitehurst isn't a board member, but per the press release[0] he is a "Special Advisor at Silver Lake". Silver Lake is one of Unity's largest shareholders (~10%) and Egon Durban is on the board.

EDIT: Also worth noting Silver Lake, along with Sequoia, committed an additional $1Bn into Unity at the time of the IronSource acquisition in the form of convertible notes with a conversion price of $48.89 / share[1], which is at a slight premium to the price at which Unity's stock traded then (7/15/2022) and at a meaningful discount to their current share price of $29.70 -- which supports the (admittedly speculative) argument that SLP's voice on that particular board is all the more prevalent today.

——————————

[0]: https://www.businesswire.com/news/home/20231009494331/en/Uni... [1]: https://investors.unity.com/news/news-details/2022/Unity-Ann...

[Spoom]

Ah, Silver Lake, of Skype acquisition and zeroing-out employee equity fame.

https://www.wired.com/2011/06/skype-silver-lake-evil/

[Mengkudulangsat]

Silver Lake being one of Unity's largest shareholders explains their recent behavior perfectly. It's a private equity firm whose sole concern is squeezing blood out of a rock.

[raffraffraff]

Silver Lake (along with Qualtrics founder Ryan Smith) bought Qualtrics after a dizzying sequence of planned IPO, acquisition by SAP, and then IPO. They're busily evicerating it, having just announced their second big round of layoffs, and apparently there gonna be even more job losses next March. Everyone I know there is planning their escape. What's hilarious is that this round of layoffs has impacted their ability to deliver on a major internal project because a key player was canned, so the project is now in hold (again).

I wonder how many of these $$$ people are looking at Musk and saying, 'hold on, we could do that too'. It's amazing how resilient a company can be to code rot and infrastructure stagnation. It takes a long time to kill a company, once it has a customer base and decent revenue streams. You could probably fire everybody outside strictly operational teams and simply coast along on the momentum for a few years, creaming off gigantic profits. And what the hell, jack up your prices too, right?

[cojo]

This is helpful context as well, in addition to doomlaser's explanation of his background re: IBM and Red Hat. Thanks for sharing it.

I wonder to what extent Silver Lake drove this overall decision (vs. others on the board potentially initiating it)

[1-6]

The most famous Interim CEO was Steve Jobs.

[gmerc]

It confirms the concern. The board broad on someone to look after the needs of the largest shareholder

[HillRat]

I'd argue that what Unity needs is someone who's got a background in enterprise software, because selling to game developers is very different than selling games. No one with (successful) executive experience in enterprise software would have signed off on Unity's original revenue plan, simply because the number one rule in enterprise is "don't fuck with the customer's business model," which the "pay per download" model certainly did. Hiring a game industry CEO who pioneered predatory monetization models and was responsible for horrifying managerial practices within and between studios was a terrible choice for Unity, and his evident contempt for developers showed through often.

Whitehurst, on the other hand, has a history of strong execution across multiple industries, and built a reputation as someone who protected Red Hat's culture against attempts from within IBM to "Big Blueify" it (possibly to the detriment of his own role within IBM). Even as an interim, having him onboard is a good sign for how Unity is looking to repair its relationships with developers.

[johnnyAghands]

> Whitehurst, on the other hand, has a history of strong execution across multiple industries, and built a reputation as someone who protected Red Hat's culture against attempts from within IBM to "Big Blueify" it (possibly to the detriment of his own role within IBM). Even as an interim, having him onboard is a good sign for how Unity is looking to repair its relationships with developers.

100%

I was at IBM at the time. We really hoped he would eventually take over from Ginni once she left... nope. We really could have used someone who wasn't drinking the blue koolaid. Well.. the rest is history.

All this other crap about Silver Lake being a giant POS is concerning though.

[Talanes]

“When you are six hours into playing Battlefield and you run out of ammo in your clip and we ask you for a dollar to reload, you’re really not that price sensitive at that point in time" - John Riccitiello

Amazing that he could so correctly identify why price-blinding tactics would work on people trying to have fun, but not do the inverse and see why it wouldn't work on people trying to develop a product.

[qwery]

You're right that selling a game engine is more an enterprise software business than game publisher, but Unity isn't trying to be a software company at this point, they're an ads and analytics service company, maybe doing a 'big tech' cosplay.

[doctorpangloss]

> simply because the number one rule in enterprise is "don't fuck with the customer's business model,"

On the other hand, the continued growth of gaming revenues, for both developers and services providers, compared to all other creative industries, is all attributable to innovations in business models. I suppose if people rocked the boat as little as you suggest, the only software being sold to game developers would be Denuvo.

[jzb]

I was at Red Hat while Jim was CEO. He’s very culture focused and is an excellent choice for restoring faith there. He got great results while at Red Hat, but they plucked him out for a non-CEO role at IBM after the acquisition. IMO that has been IBMs greatest sin in its handling of Red Hat.

Jim was active on memo-list and seemed to listen to people. That doesn’t mean he’s perfect, but I’d give him very high marks and I think that he had a lot of goodwill among Red Hatters as CEO.

[reactordev]

If anyone can save the stinking ship that is Unity, it’s Whitehurst.

This is said by someone who wants nothing more than to see Unity die.

Whitehurst was pretty instrumental in getting Red Hat sticky in places where it was just RHEL. Open Shift, Open Stack, etc all drove value-add for the business and for their customers. Cloud is fickle though so selling tools to studios and trying to compete with Unreal in the VFX space is how Unity moves forward. Take your lashings from the game devs. Shore up your presence in VFX, Movies, Film. Evolve.

The tsunami has squarely landed on Godot’s doorstep. It will be up to them on how they manage the swell.

[airstrike]

RedHat customers and Unity customers make for two very different types of beasts...

It will be interesting to see how his Whitehurst's pedigree translates to this smaller-scale, higher-touch sales motion.

Forgoing the core Unity audience of game developers and gunning for studios / VFX when Unity is clearly not the graphically superior engine sounds risky at best, reckless at worst.

[georgeecollins]

I wouldn't call Unity a sinking ship. It's the overwhelming choice of game engines in the mobile market. Raising prices is unpopular and may decrease their share of the market. But there is no way Unity is going away anytime soon.

And I love Godot -- love it-- but it doesn't do all the things Unity does. Even if it did, it would take years to get all the teams to switch. Think how long it took people to move away from Flash!

[doctorpangloss]

While I don’t think you deserve to be downvoted for this, your comment is full of opinions that, as a game developer, sound 200% wrong to me. For the sake of curiosity… what are you talking about?

[raxxorraxor]

I don't think the strategic action of a CEO is too relevant right now. The need to focus on rebuilding trust and I just cannot see how they will do that. They introduced an insecurity for developers, which already operate in an extremely high risk industry.

If there weren't people at Unity that could influence or stop the former CEO, the problem probably also didn't vanish with his termination.

[phpisthebest]

Well if whitehurst follows his normal playbook he will just Aquirehire the godot project leads so then unity does not have to worry about it

[Willish42]

"doubling down" indeed...

One possible interpretation of events is that he was ousted not for the initial proposal and backlash but precisely for how he backtracked after the fact -- perhaps the board gave a clear mandate and Riccitiello was unable to successfully change pricing structure to match financial expectations. That would explain the replacement.

Things aren't looking great for Unity right now...

[strgcmc]

I think that's reading too much into, what is fundamentally a very normal and common way of dealing with CEO turnover -- appoint a safe, business-friendly steward of a CEO, while you stabilize the crisis and decide who the real long-term leader should be.

The word "interim" was clearly used, and there's no hint in the PR statement about this being a permanent appointment. So I don't think it's reasonable to equate this to a clear doubling down of anything.

At the same time, a guy like Whitehurst is a safe, relatively unimpeachable medium term choice, not like someone you'd use for a truly short interim 30-90 days while you execute an executive search quickly. If you need him for 1-2 years of just don't rock the boat leadership, it'll probably work out fine for the company and the board would be satisfied.

[cojo]

Yeah, I think this could definitely be one explanation.

Other commenters in the thread have also given good thoughts / potential scenarios in similar veins - essentially that this was actually a failure of messaging, sticking to the plan, and / or both, plus some other combination of "no, seriously, we need to make money and become profitable, nothing else matters as long as the boat still floats, make it happen and keep this ship going."

And I do suspect that Whitehurst will likely be a better fit for that. A seasons gaming industry executive (regardless of investor / revenue focus) may actually be a negative if that's the goal right now... I'll be very interested to see how this all turns out.

[phire]

Boards don't micromanage to that level (or more, they shouldn't)

There might have been an explicit mandate that Unity's pricing structure should be changed, but more likely it was just an explicit or implicit mandate that the Unity division should produce more revenue (or profit).

The actual details of how to achieve that mandate would be left up to Riccitiello and his management team.

My interoperation is that while the board probably agrees with the need to change Unity's pricing structure, Riccitiello is being ousted for the poor implementation with a proposal that generated so much backlash and then some pretty poor handling of that backlash.

[joecot]

I think back to Ellen Pao at reddit. Ellen was brought on as CEO, and was the face of a number of very unpopular decisions. All those decisions had one purpose -- jettison the things that made the site rough around the edges, and find ways to monetize, so they could make investors happy and work on going public.

The backlash was staggering, and much of what they tried was rolled back. Ellen Pao took the blame for it, but it wasn't actually her fault. The founders just scapegoated her in order to make changes they needed for investors -- and depending on how cynical you are, they picked an asian woman so that they could channel internet racism and sexism as part of the distraction. Years later, they did the same thing, making multiple unpopular monetization changes, but this time the CEO taking the backlash is Steve Huffman himself, not a scapegoat put in front of him.

CEOs don't make decisions on their own, not really. This pricing change was the direction the company wanted to go in, and they got put on their heels, but only temporarily. They're still going to try to find ways to aggressively monetize.

[mvdtnz]

That is some incredible revisionist history.

[exreddit]

The board at the time was I think Yishan, Alexis, and someone from Advanced. Maybe Sam Altman. Ellen Pao was the natural choice because she had the most business experience of all the staff, but it wasn't the right experience. She was always more of an investor, and she got her job there by investing money in reddit and asking for a job in return. She headed up BD and what turned into reddit labs for a while. She built up a reddit labs team, but they never found the next big thing for the company.

Part of the API drama goes back to her time doing BD, making partnerships with apps, and possibly buying apps.

I doubt there was a master plan to making her CEO, but I believe Alexis's line was "it's her job to lose." At the end of the day, she was bad at making friends, was an awkward fit for the company, and was more experienced in politics and climbing the ladder than running a company.

Good background on her: https://www.vanityfair.com/style/scandal/2013/03/buddy-fletc...

[thrillgore]

Ellen Pao was a glass cliff hire.

[tekla]

> they picked an asian woman so that they could channel internet racism and sexism

Prove it.

[jmull]

I don't think you can really draw conclusions from an interim pick like this one.

It's who they choose after the search that will tell you something.

But things don't look good no matter who they choose. Unity has to become sustainable... that, or go out of business. Their fundamental problem is somehow getting revenue and costs in line with each other.

Here are some general ways that could be done...

* Squeeze a lot more money out of existing customers * Get a lot more paying customers * Cut spending on things that impact revenue a lot less than the cut saves

The first one is what the last CEO tried with that cockamamie licensing scheme. You could go at it in other ways but in the end the impact on customers is the same so I don't think the reaction would be a lot better.

Is there any clear way to accomplish the second, at least without an even larger negative impact on revenue?

For investors, cutting cost is the least desirable -- they want to grow, not shrink. And customers also don't like to get less for the same price. But perhaps there is a way to cut costs that would spare what provides the core value to customers, and perhaps a business guy could get shareholders to accept that it is the only way.

[ChuckMcM]

I concur with this, their interim CEO is the person who can do the needful things with respect to cutting executive pay, laying off people, and outright firing others. Once the organization has been pruned, the "real" new CEO comes on board and is given a shot at rebirth with a new point of view.

[Sakos]

I don't understand how their cash burn rate is so high that a billion in revenue isn't enough to stay in the black. What are they spending so much money on?

[jameshart]

I’d be careful drawing too many parallels between running Unity vs running a game publisher.

Unity is a developer platform/tooling company. They don’t care about hits or franchises - they need service, stability, community, and technology innovation.

Game publishers are creative industry plays, like movie studios. Completely different business.

Of course Epic confuses things by being in both camps but I don’t think Unity is confused that they are competing with Epic in the sense of needing to outmatch Fortnite.

[djmips]

I feel it's unfair to include Mattrick in here - he came up as a gamer, making games as a teen and rolling that into his own company so at least he has roots as a developer and I feel a dev/gamer connection but I respect your opinion.

[cojo]

I think yours is a fair opinion as well, to be clear - I actually debated editing him out for a couple of minutes after I first posted, because I do know that his background was truly heavy on the gamedev side of things early in his career.

I have my reasons for thinking things changed later on, but they are subjective / personal opinion based on personal experience, so I respect anyone who would disagree and exclude him from a list like this.

[hintymad]

> was that one of the increasingly common "management consulting" / investor- & revenue-focused type of gaming executives

My read of this debacle is that the Unity CEO did not pay attention to details. It's as if he had ever thought of how the policy would play out -- a signature move of a corner-office boss who simply delegates everything about product to his lieutenants. Or worse, to the lieutenants of lieutenants.

This is in such contrast with those founder CEOs, who painstakingly think through product and policy changes.

[ajkjk]

It's the standard playbook. By having the CEO leave it gives the impression that it was his decision and so the bad decision-making is gone and now the company can be trusted again. Of course it wasn't his decision; it was the whole board's, but it's convenient for them and their stock price to make it seem like it was his.

No way to know, I suppose, if it was him + the board vs everyone, or him vs the board... but unless somebody leaks the details, I'd assume the board is just as culpable.

[ethbr1]

Right now, I'd imagine Unity is more concerned about placating their investors that the company isn't going to fall off a revenue cliff.

Appointing a "developer-friendly" candidate would have caused more uncertainty.

As a temporary pick, I'd guess Whitehurst is intended to message "We realize we screwed up, but there won't be any sudden changes."

The reaffirmed guidance for current quarter is hilarious though, given any changes would play out in future time (e.g. developer flight for next project).

[cojo]

Agreed - the reaffirmation of guidance almost felt to me like a "seriously guys, why are we down 22% up front, you know this doesn't impact short-term revenue..." which... definitely misses the point.

It's interesting that after-hours / future trading doesn't seem to have responded positively (yet). Maybe that's just another symptom of lost trust as well.

[hn_throwaway_99]

Given the information posted about Whitehurst in another comment, https://news.ycombinator.com/item?id=37825689 , I strongly disagree with your assessment of him.

[cojo]

I agree!

I posted before that comment, which was definitely helpful - that context (and some other helpful replies here and elsewhere in the overall thread) have changed my assessment as well.

[rat9988]

"interim replacement / transitional CEO is someone with a pedigree that, on the surface, seems even more management consulting / investor / revenue focused than Riccitiello was himself. To be clear, I know essentially nothing about James M. Whitehurst other than what is readily publicly available (IBM / Red Hat, advisory roles, etc.)."

To me, it seems he has plenty experience with managing companies.

[cojo]

I agree - this may be unclear phrasing on my part.

What I meant in my original comment was, "wow, this seems like a hire that is only focused on finding someone with lots of experience managing, and not at all on the gaming industry / customer goodwill".

So I think you're right - and I also think this shows how I misjudged how I originally thought a scenario like this would have played out.

[beebmam]

Bring back engineer CEOs. I'm sick of this trash.

[intelVISA]

Don't be silly, we're in the era where engineers are both smart enough to wrangle massive technical goals yet also need many layers of babysitting from their betters.

You may know what a CRDT is, but (apparently) the Trello board is beyond you.

[r00fus]

Unfortunately, in our economic system this is not allowed unless that engineer CEO happens to have incredible clout, financial control or both.

[bdd8f1df777b]

You have a rosery view of the board. I on the hand believe that the it was the intention of the board to sell that ridiculous plan. The CEO was a scapegoat, or rather, he was going to leave anyway, so he took the blame in place of the others.

[SpaceNoodled]

Who do you think made these decisions? The board still wants profits, and they're perfectly happy to let Riccitiello take the fall while they find another tool to take his place.

[koromak]

If none of the board is industry, and none of the major shareholders are industry, why would they hire industry? Finance is becoming the only job that exists.

[mym1990]

It doesn’t seem that wild for a board to be looking to increase revenue results/shareholder value, especially in current economic headwinds.

[Waterluvian]

“with consequences”

Depends how many millions he’s accepting to walk away.

[hackerlight]

> board actually hold Riccitiello responsible

It could also just be a PR move. Riccitiello is disliked among Unity customers, so you get goodwill by firing him.

[rapfaria]

Isn't Riccitiello stepping down a standard operation procedure in a situation like this?

[floor_]

You're acting like the board had no say in the horrible decisions.