How would you feel if you had pioneered a big idea -- but years later someone else turned it into a company worth nearly $4 billion a few weeks after launching the product?

That has never happened to me, but it did happen to an entrepreneur I interviewed in 2011. His Loki Studios built Geomon, a game that combined Pokémon and geo-location.

Loki Studios is no more. But the company's basic idea has had a spectacular July 2016.

After all, a month ago few had heard of Niantic, the startup of which Alphabet owns  6% that launched Pokémon Go on July 6, reached  25 million daily active users on July 14 and started trending downward who during the week ending July 22 spent over $1.6 million a day on digital goods such as Pokeballs.

Niantic is expected to generate $740 million in revenue in 2016 and is valued at $3.7 billion, according to  Citibank.

As I learned in June 2011, Loki Studios was founded by Ivan Lee. He dropped out a few credits short of a Masters' in Computer Science at Stanford after earning an undergraduate degree there to build a game that would combine his love of Pokémon with the then rapidly-emerging world of geolocation and smartphones.

As Lee explained back then, "Geomon is an alternate, parallel world populated by so-called Espers. There are 100 of these creatures and players can collect and document different ones based on where they are on earth when playing the game. For example, people playing next to the ocean can collect sea-dwelling creatures while those living in a snowy climate can get ice-creatures. Collectors compete, as trainers do in Pokemon. And as a player's location changes so do the threats and opportunities."

When Pokémon Go burst on the scene this month, my interview with Lee came to mind so I contacted him via LinkedIn.

On July 24 and July 25, I conducted a Q&A with Lee. He seems to have made peace with the reality that his company was not able to capitalize on his idea as much as Niantic did and admires the hard work that the Niantic team did over a decade to become an overnight success.

Lee also has some very interesting insights into what he thinks is the likely rapid peaking out of the Pokémon Go phenomenon and what Niantic's executives should do to keep the company from being a one-hit wonder.

Loki Studios reached a million users and achieved profitability with its game -- Yahoo acquired it in 2013 and "We ceased operations of our flagship game, Geomon," said Lee.

He had known about Niantic for a long time. As he said, "I heard about them way back when they started making  Ingress [the multi-player, geolocation-based game that Niantic launched in 2013]. They were a high-caliber team working on geo-located games, and I was curious what they would launch."

Lee believes that Niantic made two smart moves that helped it do better than Geomon. "First, they licensed the Pokemon IP :) The hype has only been building since the game's announcement. Second, is that they doubled down on forcing users to get out of their homes to play in the real world. We had concerns users would balk at the concept, and chose instead to find ways to allow users to play while out and about or play from the comfort of their couch," Lee explained.

Lee seems to admire how hard John Hanke and Niantic worked on the project -- persevering over many years.

Lee  also "admires the polish they put into their launch product. They have excellent, lovable graphics -- each Pokemon dances around and jumps at you. Additionally, while I don't believe the virtual reality is a critical or particularly difficult feature, I think it's an excellent touch in driving home that these Pokemon exist around us."

He is also impressed by the amount of work that went into creating the Pokestops. "The communal work they inspired in Ingress went a long way towards making the balance of this world successful -- making this world immediately interesting on launch day," said Lee.

Lee sees revenue potential from in-app purchases and partnerships. As he said, "Imagine if every Starbucks sponsored a mermaid-type Pokemon at their stores. I have no inside knowledge on how the revenue would be split in their business deals, except that Apple and Google will take 30% off in-app purchases ;)."
 
Sadly trees do not grow to the sky and neither will Pokemon Go. As Lee explained, "My current projection is that the game will start falling off in a few months. As users level up, become satisfied with the Pokemon they have collected, and start seeing fewer and fewer new Pokemon, they will move on to the next hit game. How many people are still playing Words with Friends or Fruit Ninja today?"

Niantic is  not resting on its laurels. It plans to let people trade their Pokemons and to create teams of Pokémon hunters with leaders and followers.

Does Lee feel a twinge of regret that Niantic appears to be profiting in an area where Loki Studios previously tread?

Said Lee: "Haha! A twinge? Sure. But as a Pokemon fan, I'm greatly enjoying this Pokemon Go ride. I'm rooting for Niantic to figure this out, because it was my childhood and entrepreneurial dream to play Pokemon in the real world. Niantic was founded in 2010. They have worked on this twice as long as we did, and have earned every bit of the success they've achieved. Now let's please add collaborative battling!"

Published on: Jul 26, 2016