CEO Jessica Rovello Has Led Arkadium Through Market Shifts, Geopolitical Crisis

Source: SportTechie

Five years and 5,000 miles away, Jessica Rovello lifted her right arm off a conference room table in Arkadium’s New York City office to show the budding hives. Her company’s satellite office since 2004 had resided in Simferopol, a medium-sized Ukrainian city largely unknown beyond Eastern Europe. That was the case until spring 2014, when Russian soldiers invaded Simferopol, the de facto capital of the Crimean peninsula.

“I literally can’t even have the conversation even this many years later without it bringing a physical reaction,” Rovello, Arkadium’s CEO, said recently. “It was that much of a deep-seeded trauma.”

Arkadium has undergone several transformations since its inception in 2001. Its name is a portmanteau of arcade and stadium, owing to the company’s genesis as a host for playing and wagering on skill-based games. When the poker boom hit a few years later, Arkadium made multi-player versions used by a dozen publishers, including ESPN. The company created games for Facebook and Windows, then pivoted to AI-powered media visualizations. Arkadium is now in R&D in preparation for more widespread legalized sports betting.

But no conversion or challenge was more profound than the geopolitical occupation and geographic relocation of its overseas development team to a new city, a new country, a new currency—and a new CEO. Rovello and her husband, Kenny Rosenblatt, had-cofounded Arkadium with Rosenblatt as CEO and Rovello as president. For reasons unrelated to the Crimean crisis, they swapped roles at the same time.

Now, as the spousal executives sorted out new responsibilities and scrambled to maintain development on a multi-million-dollar gaming deal with Microsoft, they were also devising company policies that far outpaced the imagination of a tech-centric gaming company.

“Those contingency plans were pretty hardcore,” Rovello said. “It was like, What do we do if somebody gets shot?”

“There was a tank in front of our office,” Rosenblatt added. “Like, a full-blown tank. Our employees were sending us selfies of them [in front of it] because they never felt really in jeopardy.”

That Arkadium wound up in Crimea in the first place was by chance. Starting an Internet-based business in 2001—right after the Dot-Com bubble burst—limited their opportunities for outside investment, which in turn restricted their payroll. In the early days of outsourcing, they partnered with a company in India, communicating with the developers over AOL Instant Messenger. That arrangement “failed miserably,” Rovello said, attributing the problem to cultural misunderstandings.

To alleviate some of the same issues, Arkadium sought an international company overseen by an American. By chance, the one they found was in Simferopol. Never did they expect—10 years and 100 employees into the relationship—that the host city would be featured on the front page of the New York Times under the headline, “Gunmen Seize Government Buildings in Crimea.”

“What are the chances that we would pick the one place?” Rovello said, adding that the “ratcheting of craziness got higher” after the subsequent referendum.

Crimean residents voted to secede and join Russia. Arkadium now had to convert to a Russian company with Russian banks and rubles while employees had to change citizenship—all working within the inefficiencies of an Eastern European bureaucracy, they noted. Two weeks after the conversion, the U.S. imposed sanctions. If Arkadium sent money or the Crimean developers sent code, they were subject to lengthy prison sentences and massive fines.

Compounding matters is that Arkadium had the biggest contract of its corporate life: a Microsoft deal which included pre-installation of Arkadium games on every Windows 8 operating system.

The Crimean employees brainstormed solutions and ultimately proposed to Arkadium’s leadership that they relocate the office 280 miles east to Russia’s mainland in the city of Krasnodar—“which we had never heard of,” Rosenblatt said. Of the 100 workers, about half moved their families and their lives to Krasnodar. About 35 of those 50 have remained for the long haul while the dozen or so others only went for six months to a year to help with the transition.

Rovello’s first official act as CEO was to visit Krasnodar on Jan. 3, 2015, two days after assuming the new gig. She arrived the same day as two moving trucks carrying the employees’ personal possessions and greeted them in an empty office.

“I give a lot of credit to the crew over there because they were so committed to this company that they found a solution and made it work,” Rosenblatt said, assessing the company thusly: “We were bruised but not broken.”

Arkadium needed a year to recover from the transition, but the company never missed a deadline with Microsoft. Windows 8, however, flopped for other reasons. The market shifted from Facebook games to mobile games where the team didn’t have a hit. Arkadium needed to iterate again and has done so nimbly under Rovello’s leadership, generating 15-to-25 percent year-over-year revenue and profits, according to Fast Company. Arkadium was included among the “Best Workplaces” by Inc. Magazine. The break room has a wall with the hashtag, #LILWINS, to celebrate employees’ small victories.

“It was really because she’s amazing, she’s always been amazing, but when I was the CEO, I was getting a lot of the credit and the speaking opportunities, all of the PR—everyone wanted to talk to me just because of the title even though we were equal partners in the business,” Rosenblatt said, noting the overtones of industry issues affecting women in gaming and the lack of female leaders in tech. “I realized that, if we just swapped titles, I’m comfortable enough in my contributions. She should get some of that spotlight. And we swapped.”

Rovello said there were some “deeper issues” as well. Despite being a co-founding executive, she said she would be ignored or patronized by men at pitch meetings. That was especially the case when meeting firms for a Series A investment in 2013, which explain the timing of the role switch prior to the Ukrainian conflict. (Arkadium would later buy its investors out, with a positive return, to reclaim full control of the company.)

Rovello and Rosenblatt termed Arkadium’s post-Crimea change their “Evolution Day.” The company strengths, they believed, were user engagement and compelling visualizations. Their client base of 500 publishers all said that the gaming section of their sites was the best performing. Arkadium says it reaches 70 million sports fans each month.

Some of the most avid gamers are older women, who play huge amounts of word games, card games, and Mahjongg. Many of them were simply left out of the gaming market that shifted to fast-moving video games with sophisticated controllers. (“You think of the 12-year-old boy in front of his Xbox,” Rovello said, “but he’s got nothing on grandma.”) AARP is one of Arkadium’s biggest clients. Reader’s Digest was the first media publisher to license its games.

Younger readers and especially millennials, Arkadium realized, were increasingly seeking visual stories and engaging content. The company brainstormed ways to present information in a more visual and interactive manner, citing research that graphical elements increase how much readers scroll by as much as 317 percent. That led to its InHabit product and its factives, AI-generated visualizations providing supplementary material to articles. In the sports realm, the Associated Press, Gannett, Tribune Media, CNN, The Washington Post, MSN, the NBA, and SLAM are clients.

“Most companies that [pivot] don’t have the underlying infrastructure and solid product suite that will continue to generate revenue and fund these other initiatives like we do,” Rovello said.

The latest Arkadium foray is a move into the sports betting space. The company recently partnered with Sportradar on a data license. Rovello said she learned to count cards at age 15. Rosenblatt said he was a bookie in college. Their first product revolved around wagering. The common thread among the company evolutions are that its games and businesses enjoy evergreen popularity. The popularity of poker and sports betting, like chess and solitaire, will never fade away. (They even created a successful version of Pac-Man that they dubbed “Mr. Munch” for trademark reasons—the memory of which, two decades later, nearly prompted an iced-tea spit-take from Rovello.)

“It has come full circle,” Rovello said, “and the lessons that we’ve learned are very applicable even though they were 20 years ago.”

Arkadium’s sports betting venture will focus on marketing and user engagement, rather than in accepting bets.

“We will not be a bookmaker, but we fully expect to be a dominant player in the ecosystem,” Rosenblatt said.