Tim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: he gave it away. That strategy has made him a billionaire.
In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising, but its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people.
That’s powered a revenue surge at Epic Games, the company Mr Sweeney created in his parents’ basement 27 years ago. Fortnite alone is on track to generate $2bn this year, making the North Carolina-based gamemaker worth $5bn to $8bn, according to the Bloomberg Billionaires Index. Mr Sweeney, 47, is the controlling shareholder.
Fortnite is a global phenomenon, played obsessively by children, rappers, professional athletes and middle-age accountants. It’s a cartoonish, last-character-standing, fight-to-the-death battle royale where players thrash one another in a struggle for weapons, resources and survival on a shrinking, storm-ravaged island.
Instead of shelling out upwards of $40 for the game, players buy online V-bucks, a virtual currency they can exchange during play for outfits, called skins, celebratory dances or special missions that can cost as much as $20 each.
“On the revenue side, they’ve done something that’s really unique, which is come up with a perception of exclusivity,” says Michael Pachter, an analyst at Wedbush Securities. Many accessories in the Fortnite shop are available on a limited basis, prompting players to buy before coveted items disappear from virtual shelves. “If you see another player in a leopard skin and go to the store and see it’s no longer available, you think, Shoot, I’ve got to move on it next time.”
All that commerce translates into some of the highest rates of revenue-per-user in the industry and operating margins north of 50 per cent, according to analysts.
“Epic’s valuation has exploded alongside Fortnite’s success,” says Timothy O’Shea, who covers gaming at Jefferies Financial Group.
Based on the trading multiples of peers Electronic Arts and Activision Blizzard, Epic could be worth as much as $14bn, though potential buyers would demand a discount due to questions over whether Fortnite could sustain revenue growth, Mr O’Shea says. Even if sales were to fall to $1bn a year - half of its current estimate - the company could still reasonably command $7.5bn in a sale, Mr Pachter says.
That’s a bonanza for Mr Sweeney and Chinese internet firm Tencent Holdings, which bought 40 per cent of Epic in 2012 at an $825 million valuation.
Raised in suburban Potomac, Maryland, Mr Sweeney showed a knack early on for game design and business. At 11, he taught himself to program using the family’s Apple computer and made a hobby of dissecting electronics. He began designing his own games at age 21, packaging them on floppy disks and sending them through the mail.
Despite captivating millions of gamers, Sweeney is not much of a player himself. He’s an avid conservationist and one of the biggest private landowners in North Carolina. After the financial crisis, he bought thousands of acres, mostly in the mountains, aiming to create nature preserves.
Richard Branson, the billionaire founder of Virgin Group, and former National Football League quarterback Joe Montana are betting that artificial intelligence can make getting a mortgage a better experience.
The two are among the investors in startup LoanSnap, which raised $8 million in a Series A funding round led by True Ventures, according to a statement released earlier this month. The startup, founded by Karl Jacob and Allan Carroll, is trying to make getting a mortgage faster and easier while presenting data gathered in the application process to customers to help them make financial decisions.
A simpler mortgage process would be appreciated by almost anyone in the United States who has applied for one, and LoanSnap is not the first company to view technology as a potential solution. LoanSnap’s software pulls the applicant’s personal and financial information so it doesn’t have to be entered manually, and runs continual compliance checks to avoid application bottlenecks, shaving days off the process. Data gathered is used to give customers advice on things like whether to consolidate credit card debt or consider refinancing their home.
“When consumers are in a position where they don’t have the information that they need, and they’re working with someone who also doesn’t have the information that they need, and the incentives are just to get a sale done, things are going to go wrong,” says Mr Jacob, a serial entrepreneur who has sold previous companies to Microsoft and AT&T.
LoanSnap started in 2017 and began making loans this year, after acquiring DLJ Financial, a Costa Mesa, California-based lender, in February. LoanSnap is making loans in California, with plans to expand to 20 additional states by the end of the year, and has so far raised $12.3m.
“LoanSnap is not a mortgage company, but a product and technology company that is transforming the mortgage experience while making life easier for their customers,” Mr Branson said in an email. It’s not his first foray into consumer finance. Two decades ago, he started Virgin Money Holdings UK, a lender that CYBG last month agreed to acquire for about £1.7 billion ($2.3 billion).
Mr Montana, the former San Francisco 49er and four-time Super Bowl champion, invested in LoanSnap through his firm, Liquid 2 Ventures.
Billionaire Tim Draper’s proposition to break California into three states will not be on the ballot in November.
The California Supreme Court said earlier this month the measure, Proposition 9, should not be on the November 6 ballot because the potential harm in permitting it “outweighs the potential harm in delaying” it to a future election.
The justices said “substantial” questions about the proposition’s validity warrant review. The court asked Alex Padilla, California’s secretary of state, and Draper to explain by August 20 why a conservation group’s request to block the measure should not be granted. Draper will have 30 days to respond.
“Apparently, the insiders are in cahoots and the establishment doesn’t want to find out how many people don’t like the way California is being governed,” Mr Draper said in an emailed statement. “Whether you agree or not with this initiative, this is not the way democracies are supposed to work.” Mr Draper, a venture capitalist, sought the initiative because he said the world’s fifth-largest economy is “nearly ungovernable” under the current system.
The Planning and Conservation League, which filed the lawsuit this month, argued that the state constitution requires a two-thirds vote of both legislative chambers before a proposal for a significant change of government can be put to voters.
In a statement after the court’s decision, Howard Penn, executive director of the group, said Proposition 9 is “a costly, flawed scheme” that would “waste billions of California taxpayer dollars, create chaos in public services including safeguarding our environment and literally eliminate the State of California - all to satisfy the whims of one billionaire.”
The measure outlines creating three smaller state governments: Northern California, encompassing San Francisco and 39 other counties; California, covering Los Angeles and five other counties; and Southern California, accounting for areas including Fresno and San Diego.
Elon Musk has reached an agreement with a US potter who accused him of using his farting unicorn design on Tesla products without permission.
Tom Edwards, of Evergreen, Colorado, wrote on his website on Friday that the issue had been resolved "in a way that everyone feels good about!" while Musk tweeted a screenshot of the same statement.
The story began last year after the billionaire founder of the electric car firm and SpaceX tweeted a picture of Edwards' colourful mug, which depicts a crudely drawn unicorn against a rainbow, with smiley-face emojis in the background.
The mythical creature is seen passing wind into a funnel that is connected to a car. "Electric cars are good for the environment because electricity comes from magic," reads the back.
Musk called it "maybe my favourite mug ever" and the publicity led to a slight bump in sales for Mr Edwards, who was happy that the South African-born entrepreneur, often hailed as a leading tech innovator and visionary, was a fan of his work.
But Mr Edwards' admiration turned to disappointment when he found out the image had made its way into Tesla's promotional materials and even its operating system, for which he had not received compensation.
That prompted a bitter exchange on Twitter where Edwards' daughter Lisa Prank wrote that Musk had "ripped off my dad's art! this is a true story! what do you have to say for yourself @elonmusk ??"
Mr Musk initially credited the work to another artist and described the row as "kinda lame," adding that Mr Edwards should be happy it had boosted his mug sales.
Mr Edwards, for his part, was magnanimous in his response.
"It's clear there were some misunderstandings that led to this escalating, but I'm just glad that everything has been cleared up," wrote the 61-year-old, a self-described "ceramics geek" who began working in pottery in the late 1970s after dropping out of graduate school.
Hedge fund manager Leon Cooperman told investors that he plans to convert his Omega Advisors into a family office by the end of the year
"This decision is a very personal one driven not by any health concerns, but solely by how I want to spend my remaining years," Mr Cooperman, 75, said in a letter to clients.
The firm, which oversees $3.8bn, will redeem all outside capital at the end of the year. A little more than half is internal capital, Mr Cooperman said. Omega’s main fund is up 7 per cent this year and "I hope to improve upon that in the second half,” he said.
An outspoken billionaire who worked his way up from the South Bronx, Mr Cooperman founded Omega in 1991 after 25 years at Goldman Sachs Group, according to Omega’s website.
He faced one of the toughest patches of his long career in recent years after the US Securities and Exchange Commission accused both Mr Cooperman and his firm of insider trading in Atlas Pipeline Partners securities in 2010. Omega reached a settlement with US regulators in May 2017, but assets fell from about $9.4bn in 2015.
After the settlement, Cooperman lambasted US regulators as “abusive,” saying he would have won at trial but faced far higher legal costs.