CATAN: Reid Hoffman’s favorite board game for business leaders

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1:27This week on Masters of Scale, I talk with Ben and Guido Teuber. They're brothers who grew up playing the hit board game Catan, because 30 years ago, their father Klaus invented it. Now, the brothers run the business of Catan, with more than 45 million games sold worldwide. We'll talk about why I think this game, where players pretend to develop an island by gathering resources, building roads, and forming trading alliances, is the best board game for entrepreneurs. The publishing company was so overwhelmed because they got all of these orders. They thought it was an April Fool's joke too late in the year when they got these orders.

2:11And then the retailer said, no, no, we mean it. We want that order. What we didn't anticipate was how well it would also take off in other markets, and especially the United States. I did not anticipate that it would be the global success that it is now, 30 years later.

2:50balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it. This is Masters of Scale. I'm Reid Hoffman, your host. Ben and Guido's father, Klaus, invented the board game, originally called Settlers of Catan, when the boys were young. They've spent a lifetime in the family business of scaling the game and its philosophy of succeeding through strategic collaboration. Players compete to cultivate an island, farming, mining, and expanding their territory. But to do so, they need to trade strategically and build alliances. I think we could all use more practice with that in our lives and businesses.

3:37Ben Guido, welcome to Masters of Scale. I've been looking forward to this for a number of years. As you both know, I'm a huge fan of Settlers, probably first coming to your attention with the Wall Street Journal story, front page story about how much I like Settlers, which I thought was rather amusing, but I was perfectly happy given how much I like what you guys do. And so why don't we start with what your earliest memories of the game were? Well, first of all, thanks so much for having us here. It's an absolute pleasure. Been looking forward to this for a very long time. My first memory with Catan is, I think one of the first prototypes must have been 93.

4:18And it was handcrafted. You know, the game was released in 95. So it was handcrafted by our dad and he hand-painted it. I do remember wanting to collect these resources, not want to give them away, but they were so nice and very, very vivid memory. There is one picture that we have and it shows me with full hair, long, full hair, unimaginable now. And it's in a ski hut in Austria. And it's Benny, my dad, and we had family around. And the prototype was on the table at a stage where I think it was nearly finished. So one of the things I'm curious about is how did it play a role in your family dynamic?

5:00Because, you know, at least my experience playing Settlers, and I don't know how universal this is, But one of the classic parts of negotiation is like, no, no, no, don't trade with Tom. Tom's closer to winning or Tom betrayed you on the last one or, you know, that kind of thing. And I'm curious, you know, obviously, because it's a family business. How did settlers play a role at the dining table and the evolution of the family dynamic? I was quite young and I wanted to win for sure. You know, it's one of the values that you have when growing up with a board game inventor as a dad that you also start to lose learning very early.

5:35But back then I wanted to win and I was very ambitious. And I do know that it were tough, tough fights. Who will win? And it's a running gag in the family where we have the saying, Benny always wins. And it's nearly true. Benny, you do win a lot. And it was always a fun little rivalry, especially between you and our dad. And I have to say, for me, bringing Catan over to the United States in 97, it was quite a different cultural experience, the way people play Catan in Germany versus the United States. People take the kid gloves off here in the United States more. Can you go into any more depth on what you found in the cultural parallels and dissimilarities between the U.S.

6:21gameplay and the German gameplay? If you ask our dad, he would have answered something like Katana's almost cooperative game. In the end, you'll still have constructed something. And then in the comments, in the US comments, you could read, well, clearly he doesn't know what game he created. He should come to the US and play with us because that's not how we play it here. And that was funny for us too, because we really believe that. And if you go to the world championships, we have the 60 national champions competing. You'll discover a lot of different play styles. I don't know how many people who are listening to this have actually played.

6:55I highly recommend it. It's one of the reasons why I'm here talking to you guys. But a quick prairie of what Settlers of Catan is. You have an island. It's uninhabited. You build settlements. You build cities and roads. And the more you build, the more resources you gather. You trade those resources with your opponents or fellow players, depending on where you come from and what's your cultural experience. And then you'll build with the resources. And the more you build, the more likely you're reaching 10 victory points first and win the game. So the way that I got so hooked was that I thought it was the, and still think it is, the best game that mirrors a bunch of things that are more true about like entrepreneurship.

7:42And it's partially because you have partial knowledge of the common set. I mean, maybe you've been tracking exactly what resources are in the hands, but even then that can trade out with a robber. You have collaboration, which is an essential thing in addition to competition. And then there were some really unique elements that I'd never seen before, like the tiles being randomly put out. You never play on the same board twice. We've been very lucky to have had such a great start in Germany. But in the United States, it was really a challenge to explain to people because you have to play. I mean, even if you're super excited about explaining it, you have these resources and you trade them.

8:20And then once you trade it, then you can build stuff. And then a lot of people would have fallen asleep by the time you've gotten to build stuff. But when you play it and you see it in action and immediately see the dopamine hit when people started trading and all of a sudden it's so important to have the ore. And why does no one want your sheep? And so it's just one of those you just have to experience and you can't really explain it. In our family, it was interesting. We have definitely different representation from the planners, the combative ones, the diplomats. Our dad was often in the situation where he played the game, but then also checked out how everyone reacted and what sort of the vibe was.

9:00And he was thinking at the same time while he was moving the pieces, he was thinking about, well, could this be optimized? So there was always like something in the back of his mind where he played the game and then also kind of developed or tweaked it in his mind as we were playing. And sometimes you are different when you play a game versus how you are in life. For instance, I see myself a bit more of someone, a bridge builder, someone who's a diplomat. And yet my mom has commented often that, why are you so ruthless in this game? I don't even recognize who you are. It's like, who are you? She said that in one game.

9:37That's true. Well, and this is actually one of the things that I find kind of amusing because, for example, a common trait in games that I'm playing. So like, for example, of Ben, you and I are playing a lot, the people I play with, they say, oh, Ben wins all the time. Don't trade with him, trade with me. Right, like there's a whole psychological side that goes to it, which is among the many things that I love about where the game has more of an entrepreneurial texture, real world texture, because it plays into all of those dynamics. That's true. I think playing one hour a game, especially something as Catan, where you have the social skills also makes you get to know that person much more than endless hours of just conversing because you can, you know, represent anyone.

10:23But playing actually brings out, Guido, I know this doesn't speak to your earlier example, but it brings out the real nature. Yeah, totally. Yeah. So when did each of you get formally involved in the family business And how did that come about? Ben, we'll start with you. So I studied psychology and then I studied management. I loved both worlds growing up and I never really, really intended to join the family business. It was very open. And since our dad was a little bit forced by his dad into his business, he was like, you guys do whatever you want. And Guido was in the company already by then.

11:03I felt like this would be wonderful to work with a family. Guido and I sometimes compare it to an additional family member because it's now 30 years. I'm 40. So it's such a long time in our lifespan. And at some point it was just like, this is right now because it contains my love for psychology and as well for management to have this company and kind of feels like a startup up still somehow to us because we make so many new things every year and actually haven't required it one day. I love waking up, going to work. Yeah, for me, it was a similar experience in the sense that it had been published in 1996 by Mayfair Games.

11:45And then I emigrated to the United States. First, I was here to study and then I became a permanent resident studying international relations and always wanted to do that something in that arena. diplomacy and I had a chat with my dad and at that time he said hey kind of looks like Catan is here to stay there's different publishers in different countries and they're interested in the license and I really need someone who can coordinate and manage the business part of that so I was still in graduate school but I said like something went off and I was like oh this is actually this is diplomacy this is international relations kind of just with the publishers I I love the game.

12:28And it was a connection to my dad, to the family. So I said, like, why don't we try it out? I would love to do it. So that was really cool. And I always liken Catan as a passport. It was my personal passport at conventions or in board game cafes and so on. It was really cool to connect to people that when you were immediately part of a community. So I also never regretted it. And it fulfills me. Every morning I wake up, I have to pinch myself and say, This is really sort of a continued dream I'm living and we're living. And now Benny and I can stay connected that way. It's so great to have the business that also then keeps us personally super close across the Atlantic Ocean.

13:09When did your dad first realize that this was going to be a success? Sure. Yeah, I remember when just right out of the gate, it was super successful in Germany. And there were several reasons for it. It was almost like a shock because we did not anticipate. We always figured, well, this game would be very successful among game enthusiasts. And then the publishing company was so overwhelmed because they got all of these orders. They thought it was an April Fool's kind of joke too late in the year when they got these orders. And then the retailer said, no, no, we mean it. We want that order. What we didn't anticipate was how well it would also take off in other markets and especially the United States.

13:48And that came much later. But even in those days, I did not anticipate that it would be the global success that it is now, 30 years later. 45 million copies, we would never expected anything like this to happen. Reid, we sometimes personally hold you responsible. I don't think there's any interview when they ask us about the success in the US where your name doesn't come up. Because I think you introduced it in meetings and you said, you know, I play it with C-level job interviews because I want to get to know them. and that is just so much the soul of the game. Yeah, that was quite surprising for us how that developed.

14:26Still ahead, more with the Teuber brothers on how Catan scaled into a global gaming phenomenon and what's next for the brand.

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16:20So if you're scaling, make it simple with Deal. Go to deel.com slash mos and get up to three months free. Welcome back to Masters of Scale. You can find this conversation and more on our YouTube channel. So what are some of the biggest challenges that the company has faced in scaling? Licensing, marketing, manufacturing. For me, the most cutting and scary one was piracy. And that was in 2017. So Mayfair Games was a great steward. They brought up the game here. They brought it through the ranks like they were in colleges. Their marketing was basically from going from event to event, Gen Con and other game events, and just demoing one game at a time.

17:09And that strategy went really well. And then in 2017, something strange happened on Amazon, seeing the ratings for Catan plummet, where we usually were sort of miffed if we got a four-star rating. It was like, oh, what did we do wrong? We really have the aspiration to have five-star ratings because we really want to offer a premium game to players. And what's with these one stars? And it turned out that piracy was the culprit. And there was a wave of piracy originating mostly from China and then just coming container loads. And then at some point, every fourth or fifth game was actually a pirated copy from China.

17:49It took us two years to sort it out. And it was really, for me personally, the biggest scare and something that set us back for a little bit. We've recovered from it and it's sort of a forever problem, but it's something that's manageable. Yeah, I think that was one of the biggest threats. One of the biggest challenges was maybe the organic growth. As just mentioned, in 1995, we didn't expect this game to grow as much and Catan grew constantly. It was the first time that we experienced something like that. And more countries came and wanted to publish Catan. And one of the reasons why we took away settlers of Catan is that there are declinations in different languages.

18:36So in some languages, I think in Czech, it needed to be called Catanu. And in French, they added an E so that the pronunciation is Catan. Otherwise, it would have been Catan. But they were like, well, you know, we can do what we want. So like bringing all this back together has been a really big challenge. We have now 44 languages. It's a constant learning curve, but that challenge was really a remarkable one. Well, that reminds me. Congrats on 30th anniversary of the game and the new 6th edition. There's a ton of expansions, right? So there's seafarers, there's cities, knights, there's some branded ones, you know, like Star Trek.

19:19How much of it was a strategy? How much is it with people coming to you? What have been the learnings of the kind of the breadth of how Katana's expanded? I would say just in general, we're very selective and we take great care to vet everything. And so for Katana, just in very general terms, we make sure that when we license something or even approach the idea that it has to be a good fit. So, for example, Game of Thrones and Catan, on the face of it, that is not an obvious fit, right? But we found actually as a team, this small area and the Venn diagram where you had an overlap. And then we looked at that and then it was really intriguing because on the face of it, the IP was really interesting to us.

20:07So there is really great care. And I would say it's always important to offer something, not just a reskin of something with a particular topic, but then to add something that's really unique. And I think that segues well into more the design corner of the company, Benny, which is something that you have taken on. But I think in very general terms, it's really something where we excruciatingly carefully measure and vet and think and ponder whether it would be a right fit. And if it's not, then we've said no to a lot of interested parties. Even on the face of it, if it seemed attractive or it's a great brand or IP, we did say no a lot.

20:54In some cases, it really feels sad, but then you do the right thing because it has to be an organic fit with Catan. Yeah, and I could show you, I'm not sure if it's dozens of boxes, but a lot of boxes of games who have not made it to the shelf. Because for multiple reasons, as Guido just said, maybe the fit for the brand wasn't right. You can't imagine how many expansion suggestions we have received. Why don't we introduce soldiers and tanks? And I was like, no, that's not the philosophy of Catan. So that's one like the brand fit. Which expansion gets most used? And are there any lessons from that?

21:31I would say the Redbox. So the base game is kind of like the core of it all. I have to say my personal favorite lately is Catan Connect. It's a relaunch of 2015's Catan Big Game. We've been making a world record with most people playing Catan in the same time, the same game. so we have had a thousand people on long benches and there's one dice roll and everybody plays the same turn you have 30 seconds and you're like screaming around like who can trade and it's very hectic you're like screaming at your neighbors friendly screaming and you can be the winner of a game which is as big as a thousand people so this year we'll do another world record in the game fair of Essen in Germany and we want to have 1 ,200 people in a much bigger hall and I've been playing this game in the last weeks and months so much that I have to say it's my absolute favorite at the moment because that mode is so fun.

22:29Yeah I think that is really has the feeling of a party and whether it's in a smaller circle with let's say 12 or 18 people or thousands it's just always like it feels like a mixture of going to a sports event and a concert and playing a board game in that overlap in the Venn diagram. And I have to say, so for me, the most exciting new variant or standalone game is New Energies. Benny, you can claim that. That's your design. That has been great. So I went to the Verge, the environmental conventions. They are very focused on sort of obviously serious and important topics, but sometimes it's nice to have an icebreaker.

23:10And so we had a little room where we basically introduced new energies and policymakers, people from logistics companies, people who were in the environmental field, they were super interested. And it was actually a lot of fun. And also at the same time, educational. We had some guest speakers and it was really awesome to see a bridge of something where games can literally help to break the ice. It was wonderful. We learned a lot from that experience, just about renewable energy. So maybe, Ben, this is the right question for you, because I did mean to ask. I mean, what was the inspiration? What has the response been to the new energy?

23:49The climate, Catan, is obviously very timely in terms of important issues in society. So what was the inspiration and what have been the learnings so far? We had a little scenario called the Oil Springs. It was sent in by a guy called Erik Asadurian, He was part of Worldwatch, like Environmental Society. This is a free little scenario now, which we actually still offer for free download. But we can make a game of this because it's fascinating. And 2015 kind of feels like a different world somehow. But we started and we're not scientists. We know very little about it. And I didn't want to make a game based on assumptions that I got from reading the news and then maybe a little bit of scientific stuff.

24:32So I called up Eric Azadurian again and asked him if he could be my scientific advisor and if that game makes sense. And it slowly became really round. And therefore, I really like that game particularly well, too. I have a copy. I've played it a few times, meaning to play it more. I've been kind of busy starting some AI companies. But what's been the response so far? Yeah, I have to say one of the most beautiful things that I saw was when I scrolled through my LinkedIn page. and then I saw Bill Gates playing it. I was like, well, this is insane. But of course we were thinking about, will there be critical voices as well?

25:10And that was one of the reasons why we did ask Eric to make the scientific check. Like, does this make sense? And then the same time, from a game design perspective, it was really important to our dad and me that we didn't just make a dream world where the only way of winning will be green, but we wanted to depict it very realistic so there is also a way of winning only by fossil power but that only works if you're the only one and the other players all play green and they don't stop you all those dynamics are scenarios of our reality really and i think that it is so realistic and that people are what what game did you create there like i won with 10 points by building all those fossil power plants.

25:59And I was like, yeah, but like, how did the players react? That discussion almost always emerges after the game, right? Like, well, why did you play dirty? Or why did you play focusing only on renewable energies? And then it's, what's really fascinating is speaking with a lot of policymakers at The Verge who were playing, and they were saying, oh, man, this game really shows that often it is sort of in that messy middle, right? Like you want to play a renewable strategy track, but it's so expensive initially. The beautiful thing is I feel that it's educational without the wagging finger and that people volunteer and there's almost an eagerness, a motivation to discuss this topic.

26:39What do you guys see as the road ahead? The journey of where Catan is going, where the company is going i think um a friend of us and and happens to be the head of katan studio in the us always said and keep saying we're just getting started and you know it's been like one of those sayings now which is still said because even after 30 years there are so many new things that we continue doing like like this world record thing like it's a big event uh in end of june we have a different one where the whole world plays Catan in 35 different nations. So it starts, I think, in the US, then we go to Europe, then we go to Asia, and there will be a 24-hour live stream.

27:23So that is something new. And it still feels like very much like a startup. There are so many more ways of telling that story and so many more experiences we can create. Yeah, Benny, beautifully said. I think something that resonated with me that you just said to be like a startup and to have that ethos or that emotion and that feeling. I think that keeps it fresh. And then whether it's among three or four players or an indefinite number of players in Catan Connect, that is something that I am also very excited to continue building. Just anything that Benny, as you said, also, it has to be harvesting, trading, building.