Robby Yung - Keep The Metaverse Open! How Animoca Brands Will Provide The World Digital Ownership

Full transcript: Robby Yung on London Real

2:59 Brian Rose: This is London Real. I am Brian Rose. My guest today is Robby Yung, the technology entrepreneur, investor and gaming pioneer. You are the CEO of Animoca Brands, the world leading digital entertainment company specializing in blockchain, gamification, artificial intelligence and other technologies. Your mission is to deliver true digital property rights for all.

3:19 In the last year Animoca Brands have seen a remarkable rise to prominence and is now valued at 2.2 billion dollars after your recent 65 million dollar raise. You begin your career in technology, building wireless telecom networks in China and Indonesia, while also found in one of the biggest integrated media companies in the region. You joined the Animoca team in 2012, and his CEO took the company public in 2015. In the last three years, your focus has been on blockchain gaming, where you believe it is crucial we create an open metaverse that is managed and run by the community.

3:50 Robby welcome to London Real.

3:52 Robby Yung: Brian, great to be here. Thank you for having me.

3:55 Brian Rose: Hey, it’s great to have you here, and again a big shout out to your founder Yat Siu, who we spoke to, I think, about three months ago, and you know, really appreciate what you guys are doing at Animoca Brands. Yeah, it really opened my mind and our whole community’s mind to this piece of the puzzle that is the metaverse that plugs into blockchain crypto, DeFi, NFTs, and you know, Robby, I’m learning.

4:18 I think I’ll always be learning, but you know I never really understood how everything is related, and one of the things that Yat really impressed me by saying is he said, “Brian, without DeFi, we might not be in the place we are. We might not have the future we have.” And it was just interesting to see someone from the metaverse just acknowledging other parts of the ecosystem, so it was a powerful conversation. I’m looking forward to today. I want to start off by maybe asking you a basic question, because, sure, everyone I meet, I’m trying to get them into blockchain and crypto, so I get them MetaMask wallets, and I had my 17-year-old daughter in here.

4:54 We had a 90-minute conversation just like this and afterwards she got a MetaMask wallet, she got some Ethereum, she got an NFT, which, quite frankly, Robby made me the coolest dad in London for at least a week, then my mom, she’s 78 years old. She lives in San Diego, California. She owns property. That’s what she does for a living. She runs some property she’s owned for like 30 years now.

5:15 She has a MetaMask wallet. She has Ethereum. She has some stablecoin, and I sent her some Chainlink, you know, because she gave birth to me, so I figured might as well give her some of that, but Robby, when I try to explain the metaverse, it’s hard for my mom to kind of take that next step, and I was wondering how would you explain it to someone like my mom. I think people have seen Ready Player One, maybe they’ve played Minecraft, maybe they’ve been in a messenger chat, but this is something different.

5:45 So how would you explain that to my mom or someone else that’s new to this space?

5:50 Robby Yung: I think the easiest way to explain it is to just think of the metaverse as you know, it’s a bit of an all-encompassing term like internet, but the metaverse is really what we’re now calling Web3. It’s the next version of the internet, and the main difference is that, you know, 10, 20 years on, we have a couple of interesting technologies. Number one, computing technology has gone through the roof.

6:12 So, you know, we have smartphones in our pockets that have processing power we couldn’t have dreamed of 20 years ago, and more importantly, we now have blockchain. And what blockchain does is, blockchain allows us to have a secure economic underpinning to the internet. So basically what we had before was we had the free internet, as in everything is transacted for free. You download, you upload, etc., and it’s all free because there’s no way to securely exchange value and we came up with solutions which were the best that we could manage at the time.

6:44 So we have e-commerce, we have two-factor authentication, we have things like streaming services. So you know, you download things from YouTube and Spotify and Netflix, but we don’t have proper digital rights management, which is why we have streaming services, because these are all sacrifices because the tech wasn’t there. Now we have blockchain, and I say that as if it’s something new. It’s not. Blockchain’s been around for a decade, but what I think the metaverse concept is doing is bringing blockchain to a mass audience, because blockchain began in the fintech community for financial services around Bitcoin originally, as you know, and so I think the idea is that now that we’re sort of bringing it out of what was perceived as a niche application.

7:30 I mean, not that finance is niche obviously we all need money, right? But it was viewed as a niche application, and I think bringing it out into consumer entertainment, for example, which is where we sit, is a way to really bring mass adoption to blockchain, because we see, you know, gaming as being kind of the tip of the spear of that movement, because gaming also over the last 20 years has basically eaten all of the rest of entertainment you know, gaming is by far and away the biggest entertainment medium. It’s bigger than feature film, you know, music, television all combined.

8:04 Brian Rose: Essentially, yeah, I think Yat was dropping some numbers on me, and I was blown away that gaming was bigger than, like you said, music and film, and most people don’t realize it’s that passive of a market.

8:18 Robby Yung: Yes, the only thing bigger than gaming is US television advertising spending. Okay, that’s still the king of all media spending, but you know, gaming is 200 billion dollars a year, all film box office and recorded music, and everything’s barely 50 billion dollars, probably you know, and you can get that out of 10 of the top 10 games in the world, you know so gaming has eaten the rest of entertainment, but also what it means to game has changed.

8:48 So gaming used to be a single-player experience. You know, when you and I were kids, we had consoles, and you had two controllers on your console, and that was the limit of the experience. Today gaming is something completely different, and ask, you know, ask your kids or anybody’s kids who play Roblox and Minecraft and Fortnite and all these massive multiplayer experiences. So I think metaverse also is a term for a shared virtual space, and unlike shared virtual spaces like social media networks or, you know, YouTube, which are shared virtual spaces, metaverse spaces have the ability to now have 3D representations, so we can be represented by avatars in that virtual space communicating with each other.

9:35 It’s not a requirement, but it’s part of the possibilities these days.

9:39 Brian Rose: Okay, I think you just caused me to think of four more questions here. So before I get going, you see the metaverse as not just kind of gaming and VR and AR. You think that even some of the blockchain and the financial aspects and the owning of the information is a metaverse as well?

9:56 Robby Yung: Everything, yes, absolutely, because it’s all connected, and this goes back to your intro about DeFi because if you think about it, you know, the metaverse without DeFi is like saying, well, I’m going to make a Hollywood movie, but I don’t need financing, right?

10:11 It’s absurd. One needs the other. That’s how the, that’s how commerce functions, and so now the underpinning of the metaverse, of course, is DeFi, because all of these blockchain protocols are based on open and freely composable assets, which means that we can make a game, for example, an entertainment experience, and we can plug in DeFi protocols into it, to allow players in those, you know, in those entertainment environments to take their assets and transmit them over to DeFi protocols so they can do fun things there.

10:45 I give you an example. We made a game with Formula One called F1 Delta Time. As you would expect, it’s a racing game. You know, you buy Formula One cars, you race them around the track, you compete for prizes, all the things you would expect from a racing game, but some guys over at a company called NFTfi, which is a DeFi protocol lending protocol. They came up with a solution that, you know, they give DeFi loans to people who are interested in, you know, trading crypto, etc., and they accept F1 Delta Time cars as collateral for DeFi loans and so you can go and collateralize your car, which is not unlike your experience in the physical world.

11:26 You know, you can take a second mortgage on your house, or you can, you know, take a note on your car, but they do it through virtual goods, and the thing that’s cool about that is we actually didn’t have to cooperate with that company for them to do it. They can just choose to accept the asset, just the same way that the, you know, pawn shop down the street can choose to accept my gold watch as collateral if I want to get a loan there without having to ask, you know, Rolex or whoever makes the watch, because these are open, freely composable assets that are owned by the players, and that’s pretty cool, and that really probably exemplifies this concept of the open metaverse versus the closed, because again, people can do this, and you’re not trying to control them from doing it or not doing it or doing it through your platform,

12:11 Brian Rose: and I know you’ve got some really cool examples with Rev and your sports games where your cars are sometimes worth more than an actual, say, Lamborghini, and yet also you get yield on them because you can rent them out and you can get fat financing on them, probably more you can get on your Lambo, and it’s a pretty incredible parallel for some people to really understand maybe what’s going on with this digital space, and that it’s real.

12:34 Robby Yung: It’s in that sense, and the economics are better than owning a massively depreciating Lamborghini in your garage.

12:41 Brian Rose: So that’s very interesting. Just to finish off on the metaverse, so you see Bitcoin is part of the metaverse, and Ethereum is part of the metaverse, because it’s basically an exchange of information and value that’s maybe not in person, but it’s in it’s a digital communication, so it’s just as much the metaverse as a game or a WhatsApp group or a VR.

13:02 Robby Yung: Absolutely. Well, because the metaverse itself is we think of the metaverse. The parallel for the metaverses, the metaverse is like the world, and the world is a really big place full of diversity in different communities. So, for example, we have you know, a very well-received game called The Sandbox, which a lot of people call the sandbox and metaverse, because it’s a sort of Minecraft-style UGC environment, user-generated content environment, and you can build stuff and you have virtual land, and it feels like a world unto itself, but that’s actually not the metaverse.

13:37 The way we view it is, that’s like a city. It’s like New York City in the metaverse, right? And there are going to be lots of other cities. There are going to be cities where people speak Japanese and Chinese and Russian and all kinds of other languages, so there are going to be many metaverses that will be within the overall metaverse. If you understand my meaning there.

13:56 And so what Bitcoin and Ethereum and these tokens are essentially just like currencies that we have around the world and you know, Ethereum is more, I would say, like your US dollar. It’s currently the most widely accepted and widely used amongst the many metaverses, and Bitcoin, as you know, people have always said is a lot like gold. So it’s literally the gold standard of the crypto world, and different metaverses also have their own reference currencies.

14:25 So within The Sandbox, you have SAND, and the more utility and the more activity and the more vibrant the GDP of that individual metaverse, the more valuable the currency of that place, just like in the physical world.

14:37 Brian Rose: That’s a fascinating way to describe it, and it really helps, because I think a lot of people do think the metaverse is Sandbox. You know, they think, oh, that’s the metaverse over there where I go in and there’s, it’s this, you know, reality that I create, and Snoop Dogg’s building this mansion over here, and there’s a billboard over here, and everyone’s doing land grabs, and that’s the metaverse, or this is the metaverse and this other stuff isn’t, but that’s not the way you look at it.

15:04 Robby Yung: Any type of that kind of digital interface is the metaverse, and then there’s different versions of course. Okay, yeah. Because for some people, like we’re here in London, and I’m sure there are people in London who’ve never, who’ve grown up here and never left, and for them London is the world, and for other people, it’s just one of many cities. So it depends on your lifestyle, and I think people’s digital lifestyles are exactly the same, right? All right.

15:28 Brian Rose: I want to go deeper on the Sandbox in a bit and find out what’s going on in there and get your take on a few of the other things you guys are doing. Just quickly, back, you know, you mentioned that our first experience of, you know, digital information, maybe our digital identities, was kind of in the Web 2.0 world where, you know, we saw the emerging platforms like Facebook and YouTube, where all of a sudden we could stream. I mean, I started YouTube 10 years ago and putting all my content on, then I’ve got 10,000 videos been watched over a billion times, and it’s been an incredible distribution platform, but it’s also not Web 3.0, because I don’t own its information.

16:03 Last year my channel was almost shut down, and I not only almost lost maybe all my videos, Robby, but I almost felt like I lost part of my identity, because this was my life for 10 years, and then it was gone at one point, and I might have had a hard drive with them here, but I didn’t have the community and the links and the shares and the comments, and so you’re I think you’re trying to really emphasize that this open mess, this Web 3.0, is where not one gatekeeper controls the information, makes the rules, and we’re allowed to go ahead and take our assets here and there, and maybe you can speak on this, because this is an important concept. I think Yat called it digital colonialism, where sometimes yes, we’ve been stripped of our information, and it’s been sold back to us because we grew up in an era where we don’t understand we should own our information.

16:52 So maybe you can speak on that.

16:54 Robby Yung: Yeah, absolutely. Well, because I think the important thing is that, as we’ve seen the internet evolve, particularly over the last 10 years, you know, it’s become because of mobile, the internet has become pervasive, because now, ever, you know, almost everybody in the world has internet access thanks to mobile, and so that digital divide now has been largely conquered, but I think the way that we interact with those devices has still become subject to certain centralized platform rules.

17:23 So if you’re accessing on mobile, typically you know, Google and Apple play a role in all of the content that you see, and that may not involve censorship or screening, but it may involve, you know, the type of economic model. So for example, famously, you know, for developers who put apps in the App Stores, they have to pay a 30 fee to Apple and Google of all the revenue they earn there, and you know, same thing with your YouTube channels, you have to share advertising revenues with YouTube, and in exchange, obviously, they provide you that platform, but the difficulty is that it’s very much, you know, become oligopolistic, because YouTube has incredible reach. There are other streaming platforms available, but there they have less reach, and because of the incredible power of YouTube, you as an influencer there don’t have a whole lot of say in the negotiation over your terms of service with YouTube, you know, amen, which is unfortunate.

18:23 You should be able to establish that, you know, more directly with your customer base, and I think part of the issue there is that there has not, before now, there’s never been a great way for you as an individual or as a small business or even a big business to be able to level that playing field a little bit. You know, there are very few companies in the world who can go to YouTube and say, I’m so important and give you so much business that we can negotiate as equals. You know, maybe Facebook can, for example, maybe Apple can, but not many others, and so what blockchain does is it levels that playing field, because it gives everybody equal access.

19:03 So here’s an interesting concept. If you think about esports, so esports is very important to us in the video game business, and what it means to be an esports athlete, historically, means you’re a professional who makes your living and your income through playing games and being really good at it, but the way you make your income is actually through sponsorship, so you’re really good at playing League of Legends or something, and so sponsors somehow find you, or you find an agent, and you sign a contract and you get sponsored. Now, that infrastructure and that system is something that frankly really works best in developed economies, because they have the infrastructure for those types of industries.

19:45 Now, if you come and play some of our games, what it means to be an esports athlete in F1 Delta Time or Rev Racing is completely different, because you come to the game, you play, if you win you get your prize, right? It goes straight into your wallet, so you don’t need an agent, you don’t need a sponsor, you don’t need anything, you just need that internet connection, which means that we can have professional esports athletes making a living playing our games from anywhere as long as they have an internet connection. So that playing field has been completely leveled, and I think you see that when you look at who are you know, lots of the leading companies in this sector, you know, at this time, so if you look at just over the past year, you know, it’s been an incredible year for fundraising in the, particularly, in the blockchain game industry.

20:34 So you see a lot of companies raising money at, you know, billion-dollar valuations, but if you actually look at all those companies, very few of them are American. You know, unlike the last 20 years in technology, most companies that achieve that kind of financial scale tend to be from Silicon Valley, because there was this relationship between innovation coming out of the greater Stanford Palo Alto ecosystem and Sandhill Road and the venture capital industry, but now if you look at companies like Dapper Labs with NBA Top Shot or Sky Mavis with Axie Infinity or Sorare. You know, for example, there’s three top blockchain game companies, all with valuations north of three billion dollars.

21:17 None of them American, right? One is French, one is Vietnamese, and the other one’s Canadian, and that’s fascinating. It means that you can have that kind of success and innovation literally from anywhere, as long as you have an internet, you know, internet access, and that final fact is ultimately, assign that capital is coming from different places, as in coming from, or capitals being also distributed quickly on a different basis based on blockchain.

21:44 Brian Rose: Is that why?

21:45 Robby Yung: That’s fundamentally, yes, and it’s not, and it’s not there are there, aren’t the traditional gatekeepers of investment banking and venture capital? So it’s not about who you know, it’s about I have this great project. I put it on the internet, everybody finds it, and in the capital comes into the project And actually, you know, in order to have a successful, for example, blockchain game, I don’t need to have, you know, 50 million dollars up front from an investment firm.

22:12 I can actually now create in-game assets as NFTs, and I can just sell them to my customers from day one.

22:18 Brian Rose: Yeah, it’s completely very different model. It’s like democratizing the capital structure, and I am having this conversation with somebody recently, Robby, and they said, you know, the term private equity. You know, if you think about it, you know, it almost says what it is: a private small group of very wealthy people get access to early-stage deal flow, and I always, I have a bunch of my DeFi Academy students on my Zoom call the other night, and I said, raise your hand if you got access to the Series A round of Facebook back in 2007, and like, nobody raises their hand.

22:49 I’m like, yeah, of course you didn’t, because Peter Thiel got the call, and a few others got the call, and they put the money in, and later, when it IPO’d, you might have had some access, but back then, even if you’re in Silicon Valley, you probably wouldn’t have seen the deal. You had to be part of the group that was in the group. Nowadays, though, these tokens are, they’re liquid. There’s over 15,000 tokens on CoinMarketCap, which brings its own issues.

23:12 Okay, but at least you have access to capital, access to investors, and then, like you said, also, you know, tokens for users and a bunch of other things I’m probably not mentioning, and that completely democratizes finance in some way.

23:27 Robby Yung: Yes, and it’s actually so much more powerful, because when you think of the power of all of those people who have been denied that access before. It’s actually much greater than the power of the smaller group. You know, often we talk about how the one percent, you know, this is a popular topic in American politics.

23:47 How the one percent control, I don’t know what the number is 50 of global capital or something like that. However, the other 50 still control a hell of a lot of capital, and I think that’s what we start to see is that, you know, there’s been a lot of gatekeeping. Sometimes, you know, rightly so, there should be, what do you call it, legislation and laws to protect consumers obviously from getting scammed, and things like that. That’s important, but unfortunately, often those laws have had unintended consequences of also denying amateur investors and sort of mom and pop investors from opportunities, because you know, just because you have more money shouldn’t necessarily make you a more sophisticated investor, right?

24:33 It’s about what you know, not what you have

24:35 Brian Rose: Yeah, it’s a powerful, and one of the first times I’m actually seeing it, you know, after working a long time in the markets in Wall Street, just to see that there’s this completely new source of liquidity of value exchange that’s also now peer-to-peer, so you don’t have those traditional tech gatekeepers. Robby, I love your comparison with esports because I feel a bit like an esports athlete. You know, I can play these games, I can use YouTube and these platforms, but I can’t make money off them.

25:03 Actually, strangely enough, YouTube demonetized me last year when they weren’t happy with some of my content so I haven’t made a cent from them in a year, and if I want to make money, I have to find other ways to make money, because the gatekeepers make the rules, and again I might have two million subscribers on YouTube, but like you said, there’s very few people who can negotiate terms not to mention, first of all, maybe just publishing terms, let’s dimension economic terms, you can’t do it, so I have to find other revenue models and go find sponsors and partners and create digital products, which is great, but like you said with the esports people, they have to do the same thing, because again they don’t have access to the capital of the game or the rules.

25:40 Now, with Web 3.0, it makes it different for me, for them, and I guess for everybody in the ecosystem, because they have ownership

25:49 Robby Yung: Yes, yes, which is why you see something like, you know, obviously in our industry Axie Infinity has been the big success of this past year. And it’s, you know, for people not familiar, it’s the most successful blockchain game of the year, and to give you an idea of the scale, you know, they turned over a billion dollars of in-game transactions in the month of August, which basically blew everybody’s mind until September when that number was 2.5 billion dollars. And so the idea that that much economic value is changing hands in a game is stunning, however it’s stunning because we also look at it through the traditional lens of gaming, which is to say we expect that the game publisher would take 70 of that revenue off the table, but that’s actually not what happened.

26:44 You know, Sky Mavis, who’s the producer of the game, they take four and a half percent of all the economic activity in the game, and as you would appreciate, that’s on chain, so you can verify it. And it’s the reason that it generates that economic activity is precisely because it’s peer-to-peer, because it’s more fair and equitable for the players. They’re happy to spend money in the game because they’re getting things in return, and they know that those transactions are for their own benefit.

27:14 It’s not just the line the pockets of the developer, and so we’re seeing entirely new business models being created based upon a much fairer ecosystem of providing platforms where people can, you know, exchange economic activity directly between themselves, so in that case it’s very similar to DeFi. You know, it’s just different types of transactions, in this case centered around entertainment

27:40 Brian Rose: let’s go deep for a few minutes in on Axie Infinity, because I know you guys were early investors. I went on Axie two months ago, Robby, and I look, I’m 50.

27:50 I haven’t gamed in a while. I used to have an Atari console back in the day. It was amazing. I used to have a Nintendo. I used to play games on my Apple II Plus.

27:57 Castle Wolfenstein came up the other day when I was talking to the engine co-founder on Friday, and it brought Mac memories. But I haven’t gamed in a while, but I thought, you know what, I’m in this space, I’m talking about it. I need to find out what’s going on, so I got on. I went and got my ETH wallet fattened up. I went and bought my three Axies.

28:14 I got them in the game, and we, I started playing. I’ll be honest, in the first two minutes one of my Axies died, and I was freaking out. I thought that’s 300 bucks gone, and then he reappeared, and it was all good, but I could start to really understand that. Okay, I had to buy into the game and buy Axies that other people had spent time creating, so I was giving them their capital back, and then I could play these and then get the tokens, and I could start to see how this was very different than any other game I had played.

28:43 Maybe you can talk about Axie and how this became this play-to-earn model that I know employed tens of thousands or more people say during the Philippines during COVID and how it completely changed the game of how we understand blockchain gaming.

29:00 Robby Yung: Sure, absolutely. So Axie Infinity at its heart is, you know, it’s an idol battle game And it’s a relatively simple game from a gameplay standpoint, so don’t expect, you know, Grand Theft Auto or something like that.

29:14 It’s a mobile game. And it’s fun, and it’s got cute characters people like to collect them, and you know, the guys at Sky Mavis have been plugging away at building this title over the last four years. So this is not an overnight success, and I think that’s important to state, because when you see a lot of the success in the blockchain game industry this year, most of those products have been out in the market for a long time, so companies have been really putting in the hours to create these great products.

29:41 What happened at Axie Infinity is they solved the age-old problem of gaming. So the age-old problem of gaming is you typically have two different kinds of players in your game. You have players who have lots of time and very little money, and you have players who have lots of money and very little time, and how do you put those two constituencies together in the same place? You know, the stereotype is, you know, the wealthy corporate executive who plays games on their mobile while they wait for the lift or something like that, and the struggling student who has hours and hours to grind away in a game but doesn’t have any money to spend, and mobile was a perfect environment for this.

30:19 So the free-to-play mobile business model is largely based on the idea that 98 of the players play for free and two percent of the players spend money in the game, and the developer makes the money off of those two percent. But the 98 need to play because there needs to be activity in the game. So without those free players, then the two percent won’t spend the money because the game’s no fun, and so what’s happening actually is that those 98 who aren’t paying are actually being exploited, right?

30:51 I mean, of course they’re having fun playing the game. So the argument is they’re getting fun in return, but they’re not getting anything out of the game. Actually, they’re giving their time free, donating it to the game. So what Axie does is Axie allows those free players to monetize their time, because there isn’t a blockchain infrastructure providing an economic foundation to the game, so the players who are grinding and spending time to generate Axies and compete in the battles and stuff to create those, you know, those NFTs, those Axies in the game, they’re spending their time, but they can then monetize their time by selling the Axies that they’ve created to people like yourself, right?

31:34 Because you don’t have time to spend eight hours a day playing Axie Infinity, but you could afford the cost of entry to buy that Axie. And the exciting thing is, because those Axies, you know, are free and composable assets, you can plug them into DeFi. You can stake them, you can get yield from them, you can do other things with them as well outside of strictly the gameplay, and this creates a lot more value. It means Axies are more valuable because there are more things you can do with them.

32:04 And so, you know, somebody like yourself, who’s a savvy DeFi investor, you come along and you say, well, actually, these Axies are kind of an interesting thing. It’s like buying, you know, a painting or, you know, something else that’s an investment asset that has the benefit of being fun at the same time, and so you can go and play in DeFi with your Axies and not play the game at all, but by doing that and investing in the Axies, you’re supporting the ecosystem and the people, for example in the Philippines, who are spending eight hours a day playing to generate those Axies that you just bought, so you’re actually employing those people, you know, in an indirect way. So that’s the basic play-to-earn model now.

32:48 The next layer on top of that is what we call the guild system. And so the guild system is an invention, essentially, to harness the power of players in order to fuel that whole engine. So what happened was that you know, one of our friends, who’s a fantastic entrepreneur in the Philippines, noticed that, you know, the Philippines had been hit really hard by COVID. There were a lot of people unemployed, and he was thinking, how can I sort of, you know, marry my love of playing this game, Axie Infinity, and do something for my local community where everybody’s out of work, you know, maybe they could start playing Axie Infinity in order to make money in the game, but the problem they had was they couldn’t afford the cost of entry, because buying an Axie is expensive, particularly if you come from a developing country, and so he created software that allowed him to essentially rent his Axies to those players, to allow them to use them to play in the game, and they would use their earnings in the game to pay the rent on those Axies, and this was how the guild system was born.

33:57 And so he actually ended up onboarding literally millions of players into the game as a result of this, because he cut down the barrier to entry from the game, and so that’s how this company called Yield Guild Games, or YGG, was created. But the cool part is that YGG, which is now, you know, a billion-dollar business, and created an industry of guilds, of which, you know, there are dozens and dozens of guilds around the world now playing different kinds of blockchain games. This was created on top of Axie Infinity because Axie Infinity is an open platform.

34:33 Brian Rose: Wow, that’s the cool part.

34:35 Robby Yung: So he, I mean, although he’s friends with all the Axie founders, he didn’t need to cooperate with them at sort of that root level, because it’s an open platform. He can build his system on top.

34:45 Brian Rose: Yeah, it’s so powerful when these open systems, they almost empower innovation, because you’re no longer in these walled gardens. You don’t want to grab these gatekeepers, so you get to see value be created where in the past we would have even never even known it would have existed, because the gatekeeper would have said no a long time ago or tried to claim it.

35:06 But they would have been too big, innovator’s dilemma. They probably would have been focused on the one revenue model, and again a lot of people could have been unemployed or lost value on the back of it. This guild, it’s basically a finance play, really, at the end of the day, right?

35:20 Robby Yung: It is. So what the guild is, essentially, it’s the Uber of Axie Infinity.

35:24 So they’ve created a gig economy model on top, because it’s just like, it’s just like Uber, for example. You know, if you needed the permission of Toyota or Mercedes in order to rent out the cars for a hire car service, it would stop right there, but the cars are owned by the drivers, so therefore they can do what they like with the cars, and they can join Uber, and they can use it to make a living, and the same thing is true with Axies and Axie Infinity, and I think, as you said, if this were the old world, pre-blockchain model, what would have happened was there could have been that negotiation between the game developer and the player who says, I have a great idea, and the game developer would go, yeah, it doesn’t sound very good to me, and they just they would kill it right there.

36:10 Whereas, if you look at a chart of the success of, you know, Axie Infinity, number of players, amount of value traded in the exchanged in the game, etc., you can pinpoint the moment that the guild system got turned on, and it just skyrocketed after that. I mean, it literally, like, nobody, everybody benefited in such an incredible way from this explosion of activity And so I think that’s one thing that we see in open systems, because very often it’s difficult for the people who are in control of a system to see that actually they’re going to be much better off sharing, because often, you know, it’s counter-intuitive. You think, oh, I want to keep the majority of this to myself, because it’s successful, because you just don’t, you know, you may not be able to see yet that actually you know, the best yet is yet to come, and you just haven’t been able to see it yet.

37:01 Brian Rose: Yeah, that’s a fascinating innovation, and I never saw it as almost like a finance play, and I’ve heard a bunch of analogies. Some people have said, like, think about a taxi medallion in New York City. It costs hundreds of thousands of dollars to buy but you need drivers out there who might not have that money, but they can lease it or rent it or borrow it and then go drive a taxi, and they can make money and pay the owner. It’s not the best analogy, because I guess it’s kind of a weird closed system, but that’s maybe one way to maybe people understand.

37:28 Robby Yung: Yeah, if in the case of New York City, if after driving for a certain amount of mileage you get it, you generate a new medallion, right?

37:35 Brian Rose: Yeah, exactly, which they need to get to there. The two other things just came to my mind, you know, when I worked on Wall Street, you know, I worked at Bankers Trust. It was 30,000 people, a big balance sheet, and we do all sorts of trading, but because it was based on dollars, it was somewhat of an open system, and what we saw was all sorts of brokers and other businesses spring up to service the banks, and I used to have brokers call me that would do inter-bank transactions, because they knew that if they were anonymous and they could do some hustle, they could create these assets around us that would just kind of help the bigger machine work, and it ended up being like when you watch the Nature Channel, there’s like the wildebeest, and then there’s the bird on the back you know, it actually, it’s a symbiotic relationship, right?

38:19 Robby Yung: It’s absolutely that, yeah. It’s absolutely that, and I think that’s what we see between, because if you chart the growth of the blockchain industry just over the last five years, you know, we had the ICO summer in 2017, and then we had a bit of a crypto winter, and then NFTs were invented at that time, you know, CryptoKitties, but they had a slow start, because general sentiments around crypto was very low, but then we started to have the DeFi summer back in 2019, and there was this explosion of activity on the Ethereum, and I think that actually formed the foundation for the sort of network effect that we have now in blockchain gaming, because the fact that we have access to DeFi and we have those wonderful things like Uniswap and SushiSwap and all these protocols that allow us more interoperability between tokens is essential, because now what we can do is we can offer that kind of interoperability in our games too, so there’s you know, if people want to have the Rev token to spend on in-game items in our Rev ecosystem, they can just go to Uniswap and get it.

39:28 There’s an easy way for everybody to get it, and because that infrastructure for onboarding users is now there, thanks to DeFi, I think that’s really helped gaming make a lot of progress.

39:38 Brian Rose: Yeah, and again I really appreciate you, and yeah, kind of highlighting that, because you know it’s very easy to get lost in your own you know, slice of the gaming metaverse, and you know, just get all into Sandbox and not have your head up and just say, wow, all of this history, tree and protocols helped to get us where we are today. Real quickly on that.

39:58 I mean, so many of the people I’ve had on the show, including you guys were doing hard work back in 17 and 18, some dark days building the infrastructure that would now pay off today. I mean, Stani Kulechov was building, you know, the previous named version of Aave back then, and Tara and Chitra of Gauntlet and all these people were building in this winter time, where they sometimes left, you know, great jobs at S&P 500 companies to go work on something their friends all thought was still a scam. I mean, it was hard work done during the bear markets, when Google was built, actually during the technology bear markets that set up all these great protocols that everyone’s using today, and it’s definitely an important thing to recognize.

40:38 When I took a look at the financing involved in this market this year, I was completely blown away by what happened in the DeFi summer, and I just knew deep in my gut that this was something special. It actually reminded of me a little bit of what we were doing in the 90s and derivatives in Wall Street, except it wasn’t just 12 global banks with a balance sheet and 25 rocket scientist kids from MIT they hired. This is 20 guys and a dog in Tel Aviv, 15 girls and a cat in Singapore, putting these open protocols out, and then boom, Uniswap has more volume than Coinbase.

41:14 It’s super exciting, to say the least.

41:16 Robby Yung: Yes, well, in particular, particularly for older guys like us, because I find so much of the innovation is happening, you know, we have. I literally have people sending me business plans who are, you know, barely in secondary school.

41:31 Brian Rose: Wow wow, that is exciting, and there’s so much energy here in the space, and I love it. We get to that as well.

41:38 You brought up NFTs, and I wanted to just get your take on the journey of NFTs and then NFTs for gaming. Obviously we’ve been talking about NFTs to a certain extent, because I bought a specific Axie to play Axie Infinity that was probably bred by someone who maybe was in the Philippines or other places, and now I have that item that I can probably use other places and fund, but talk to me about how you explain NFTs to people. Of course, we know the first versions, like you said, the CryptoKitties and the early days and then how they’ve evolved, and then what does that mean for gaming and going forward?

42:12 Again, people like my mom are still kind of wondering what they are.

42:17 Robby Yung: Sure. So I think the important thing about NFTs is NFTs represent true digital ownership of assets, of prop digital property. So pretty much anything that we know of as a digital asset can be an NFT, whether it’s a video clip or it’s text or it’s an image, and the first use case which took off, it has been the most simplistic one, which is art. You know, a simple image and I think that it has, you know, it’s taken off because of the fact that the community is so broad thanks to instantaneous distribution, that all of a sudden, art in this case is no longer confined to, you know, physical gallery spaces or people who can attend a Sotheby’s auction or a Christie’s auction.

43:04 You know, art has been largely democratized thanks to blockchain, because we’re able to transmit the ownership of that asset, not necessarily the copyright, but the ownership of the asset itself, from the seller to the buyer and do so in a very secure, you know, a perfectly secure, pretty much fashion and that is novel, and that’s why I think you’ve seen Christie’s and Sotheby’s, you know, specifically jump in head first, because they understand what this means. They understand that this means that essentially, unless they get on board, they’re going to be out of a job, and so they need to leverage what they’re good at, which is having an incredible brand, having the ability to, you know, to merchandise basically, to be able to spot talent and to spot content, because you know they’ve been doing it for hundreds of years.

43:58 They’re experts at that. Now, they’re not going to control the NFT art market by gatekeeping because, you know, nobody gets access to the pre-sales except for their clients. No, they’re going to do it because they’re going to spot the great artists. So they got a hustle for it, right? To earn their living in this digital world, because now artists, you know, can sell directly to clients, but I think there is a place in this sort of brave new world for companies like Christie’s and Sotheby’s, because they can add value, and what this technology does is just force them to do so, as opposed to gatekeeping distribution.

44:34 Brian Rose: Yeah, I just want to give a big shout-out to Christie’s and Sotheby’s, because I never really realized this, Robby, but if you think about it, compared to the banks and the governments and all the old Web 2.0 technologies, for as old as their brands are, they’re probably the most advanced in the space, and we don’t even think twice now when, you know, particle eyes, you know, Banksy goes on Sotheby’s or this, but actually it’s quite remarkable that these companies, hundreds of years old, steeped in tradition of Europe, and you think they’re all wearing three-piece suits there and James Bond is, you know, a part of the auction, but they’re actually been really good about embracing digital art and NFTs.

45:16 Robby Yung: Yes, yes. And so beyond that, now we also have the world of playable NFTs.

45:20 So these are NFTs that we create in our games, and the idea behind that is, you know, NFTs are assets, and the most important thing about them is that they have value, because otherwise who wants to buy it if it doesn’t have value. And so we give it value by giving it utility in our game. So when you buy a car in F1 Delta Time, what’s it worth? Well, you know, the value may fluctuate in terms of the Ethereum price or the Rev price, but it’s worth something to a player who wants to play our game, because you need it to play the game, and so it has value in that you can use it in the game, and that is very important.

45:59 So, you know, the value can be derived from several different aspects. You can use it in the game. It could be a collectible, right? It could be a representation, an authorized license collectible, that’s, you know, Lewis Hamilton’s Mercedes from 2019, for example. So somebody who’s a big F1 fan may want to have that car just because the same reason they want to have a helmet signed by Lewis Hamilton, or some other piece of memorabilia or, you know, somebody who’s very DeFi savvy may want to have that particular car, because you get more yield when you stake it, because we have staking events that we run for people who own our cars, because what we want is we want to be able to provide entertainment and service to any kind of customer.

46:44 Some people who come to the game want nothing but to play in race, some people who, you know, and just for amusement, some people who come to the game want to race to win because they want to win prize money, and they want to compete, and they, you know, it’s about being at the top of the leaderboard and having bragging rights over your friends. Some people may just want to, you know, as I said, collect, and so they buy and hold, and they’re like, oh, I want to buy the, you know, collect the Lewis Hamilton car and the Verstappen car, etc., and then I’m just going to keep them in my garage, because I’m not interested in playing. I’m just a collector.

47:16 So we want to try to provide good experiences for all those different kinds of players, but most importantly, focus on the utility. So as long as those NFTs have lots of utility, they will hold their asset value and by the way, that’s Sir Lewis Hamilton. Our Queen just knighted him, I think recently, correct?

47:35 Brian Rose: But this is maybe the second generation of an NFT. Well, first, okay, it had art and value, but now you’re seeing it as having utility inside an application where it can earn yield, like you said, you can stake it.

47:48 It’s got value because now it’s part of a game. What’s the next version of this NFT, do you think?

47:54 Robby Yung: So I think the next version, there are going to be a couple of different, there are other lots of other features that are now being enabled by different protocols. So there are things like the rental of NFTs, similar to what happens with the guild system in Axie Infinity. So a way for individuals just basically to have contracts with other parties, so that they can allow them to use those assets.

48:20 So as I said, you know, for example, in our games, somebody may want to collect Lewis Hamilton’s car but doesn’t have the time or interest to use it in the game, and from our perspective, that’s a little bit of a shame, because other players love to see the car out on the track, right? And if they kind of get denied the experience of racing against that particularly high-spec car, and so what we’re interested in are protocols for rental, where they can then put it into a rental pool and allow other players to use it, so it gets used out on the track. So I think there are lots of these kinds of services coming out, and of course, interoperability is the big one, so the ability to take those playable in-game assets from one game to another game and use them across multiple games, and I think that’s really kind of the Holy Grail from a gaming perspective, because that’s functionality that is just, you know, not able to occur in traditional games, right?

49:18 And so that’s what we’re gonna see 2022, 2023 is where these assets start moving into all sorts of different virtual spaces and metaverse spaces, and all that’s where it becomes interesting, the interoperability component.

49:32 Brian Rose: Yes, because if you spend a lot of your time and money on customizing your asset, let’s stick with the car analogy, you know, you’ve pimped out your ride, right? You got the best tires on there, custom paint job, when you show up at the track everybody else there knows that’s your ride, because that’s your avatar, that’s you in the metaverse, right?

49:54 Robby Yung: And so whenever we’re racing, everybody sees, oh, you know, that’s Brian, because he’s got the pimped-out, you know, so Formula One car with the pink paint job and the big spoilers and what have you, and so because that’s your identity, you actually don’t just want to bring that identity to F1 Delta Time. You want to bring it to Rev Racing. You want to bring it to the MotoGP track. You want to go everywhere in the metaverse with it, because that’s you, and that’s how the community sees you, and community is at the heart of this, because of course the metaverse is a shared place where we all socialize and work and do many other things together.

50:30 So being able to bring those assets wherever you go is very important, because that’s you. You know, you wouldn’t want to, you in the physical world, you wouldn’t go and buy a car that’s not allowed to drive on certain roads. That’s crazy. It doesn’t make any sense, and that car would be worth less than the car that you can drive everywhere, right?

50:49 Brian Rose: And maybe I can drive that car in the Sandbox as well, and I want to go a little bit deeper on the Sandbox because it’s something we haven’t talked about.

50:58 I alluded earlier when I gave my 17-year-old daughter an NFT I became the coolest dad in the world for at least a week, maybe longer, and I’m telling you, Robby, I could have given her a new Porsche, and I wouldn’t have got as much cred as that NFT, and it reminded me that there’s something special going on here that we don’t really understand, with these digital assets. They bring something about us, and again, they’re all quantifiable on the blockchain, and there’s this ownership in provenance and things that the art world is known about and knew there was value, but maybe was never able to properly quantify or express to the world. And we’re seeing it now with NFTs, and now people are saying NFT is the gateway drug for blockchain.

51:40 It’s what’s actually bringing people their first exposure, whereas before it was Bitcoin, then maybe it was stablecoin now it’s NFTs, and I’m just thinking in my mind, I’m processing, you know, my daughter is playing her own Game of Life as her digital identity, right? And in a way, that NFT that I gave her has value, maybe like a car doesn’t in your game, and I’m just wondering, how am I thinking about this the right way? Do you think the NFTs are going to bring people in?

52:05 Are we learning something about humanity and how we value art, and how we show that to other people?

52:11 Robby Yung: I think in the case of your daughter, perhaps it’s social capital. So what it is, is it’s the same thing as, you know, the Rolex that the first time Wall Street banker buys, you know, as the flex, just to show his friends, or it’s the must-have toy at Christmas time that all the kids want, because they’re going to show all their friends that I’ve got, all, you know, this toy, and so for people on blockchain and in the NFT worlds, it may be a CryptoPunk, or it may be a Bored Ape, for example, which are well-known NFT projects that have cachet, and because owning one of those NFTs, you know, signifies to a wider audience that you’re part of a club that you are in the know, and I think that those are the kind of social, that’s the kind of social capital that has existed across all different kinds of asset classes.

53:03 To use a financing term, finance term for generations, and so this is just the latest incarnation of that.

53:09 Brian Rose: Yeah, and that whole social flexing aspect is fascinating you can go super deep on it. You know, I used to know guys on Wall Street in the city, and you know, the value of their Porsche was actually the key chain that they could, like, let drop on the table, you know, that was sometimes even more important than the car that they maybe drove to work once a week, because it was you know, Lambos are terrible on the road in London.

53:31 And again, it also decays in value over time but you’re saying with these digital assets, also with the Bored Ape Yacht Club, you’re literally part of a club. I hear the parties are off the hook, and you can then socialize with people that are strangely like-minded, like you, because you’re investing in digital art. So yes, it starts to get really interesting. I want to ask you about a couple things first. I want to ask you more about Animoca.

53:52 I want to go deep on the Sandbox, but before we do that, I want to talk about something we briefed briefly spoke about, but I want to talk about it a little deep, because it’s something that Yat mentioned, you know, recently. We saw probably the greatest single free press event for metaverse in the world, which was the renaming of Facebook to Meta right. So if you try to look at it from a positive frame of mind, it introduced much of the world to this concept and term maybe they’d never heard of before.

54:20 I know in parts of some countries the internet is Facebook, maybe parts of India used to be, and now you’ve got a company basically saying we’re going to rebrand and rename, but it also comes with implications of a potentially closed metaverse in the future of one that’s controlled by a gatekeeper, and we’ve seen what that can do with the simple news feed or a video feed on YouTube, and now we’re potentially talking about entire, all-consuming worlds. What are your thoughts on the pros and cons of this rebrand, rename, etc.?

54:53 Robby Yung: So the pros, as you said, you know, it’s been a great sort of attention grabber.

54:58 You know, I can’t tell you how many journalists called me up and wanted a quote after Facebook did that you know, I guess from the sort of the real metaverse builders, if you will, and I think that’s, it’s kind of a shot across the bow, if you will, to the blockchain industry because Facebook for a while has been kind of flirting with the idea of getting into blockchain, and I think that blockchain, the blockchain community represents the biggest threat to the business model of Facebook, because the business model of Facebook and other large centralized platforms is about gatekeeping access to customer information, and really, that customer information should belong to the customers, and what blockchain, what the blockchain, greater blockchain industry does, is it provides the technological underpinning to allow consumers to monetize their own personal identities, their own personal data, to actually, you know, use that data for their own benefit, not for Facebook’s.

56:03 And so I think that, you know, from Facebook’s vantage point is a scary proposition, because it means that you know, if consumers have that power, then, you know, the simplest way I think of it is that you the king never voted for democracy because it’s not in the king’s interest. And yet democracy has historically allowed economies to thrive, you know, in combination with capitalism, because of the unbridled growth of innovation, because the difficult part is, you know, when you’re building a top-down centralized system, nobody’s smart enough to pick all the winners, you know, and innovation happens at the margins, and that’s what’s great about open systems, because you don’t know where that innovation is going to come from, and the worst thing you can do is inadvertently squash it, because you think that, you know, the board of directors or the smartest people on Earth, and they make all the decisions, for example.

57:00 So I think that’s what’s great about these open systems. As I said, you know, you look at where Axie Infinity is today, and it’s largely the results of lots of smart people continuously innovating in the face of adversity, in the face of, you know, the crypto winter, where they almost, you know, famously, you can, you can talk to Alex, the CEO, who’s gone on the record saying they almost, they almost completely went out of business in 2018, because they ran out of cash. They had only Ethereum, and they had no fiat and, you know, unfortunately, today people still need fiat to eat, so your employees need fiat, and so they were faced with the question of whether to sell Ethereum at, you know, I think it was 75 per ETH, in order to pay staff.

57:49 And yet now, you know, they’re a multi-billion-dollar business but they also wouldn’t have gotten there if it wasn’t for loyal Filipino players who innovated in the face of trying to provide for their community during a pandemic. So it’s all about this innovation, and if anybody had said, oh, you know what the venture capital industry needs is to spend lots of money supporting Vietnamese entrepreneurs who can then empower players in low-wage Philippines, that would be an absurd VC pitch. Nobody would back that, and yet here we are, and that’s the beauty of open systems.

58:25 Brian Rose: Yeah, innovation happens in the margins. I love that. And if look, I look at the thousand guests I’ve had on London Real, it was the ones way on the margins that ended up becoming probably the most famous and the most watched, and I’ll be honest, Robby, I could have never predicted that some of these people became so popular, so famous, so adopted, because they had this unique IP that if it was Channel 4 or you know, in ABC News, they would have said no.

58:53 Even I was like, this person seems a little pretty real wacky here, well, that’s going to give him two hours, and let’s see what happens, and they end up becoming these incredible voices and influenced me a lot, but like you said, if it had been a typical gatekeeper type pitch, it would have been squashed.

59:11 Robby Yung: Yes, I guess that’s, and so I think to go back to your question about Facebook, our job is to keep all of this open, because what will happen is that Facebook will, you know, try their best to come forth with a solution and say, look, we just came up with the Facebook blockchain, and it has everything that you need to come and build on the Facebook blockchain, but we’ve heard that sirens call before. You know, Facebook originally was open, if you’ll recall, and developers came and built games and applications on Facebook, and once the critical mass of users was there, what happened they closed, and everybody got cut off.

59:47 You know, most publicly, Zynga and Facebook then continued to grow on the basis of being a closed ecosystem, because they’d taken what they needed from everybody else and then cut off access, which is, you know, highly exploitative, and I think that our job in the blockchain industry is to continue to innovate quickly, because we’re already getting to the scale where we become too big, basically, to purchase. So, you know, it’s theoretically possible for somebody to buy enough Ethereum or enough Bitcoin to control the network. You know, theoretically possible, but the reality is there’s no company or individual in the world who could afford to do that anymore, because it’s just gotten too big.

1:00:35 So even if Facebook wanted to control Ethereum they don’t have the balance sheet to do so, and so if we can keep innovating in the blockchain industry, we can actually become as a community, much bigger than these behemoth companies and survive the onslaught, if you will.

1:00:51 Brian Rose: Is, you know, Meta formerly Facebook, the single biggest threat to the open universe in the next five years? And how dire is that threat, because when I talked to Yat, he said we need to really pay attention to this, because it’s important

1:01:06 Robby Yung: Yes, no, it is dire.

1:01:07 It is dire, because they have so much influence. I mean, let’s not even get into the discussion of politics. Facebook has incredible influence. They have an incredible amount of resources, and they are, they are a, you know, an authoritarian structure, meaning if the top decides on something, then the rest of the company, board of directors, everybody falls in line, which means that such a large organization can pivot quickly if they are so inclined. So I think companies like Facebook, potentially 10 cents, you know, are the ones who are best positioned to try to take a shot at controlling the metaverse, and I think it’s in the world’s interests to make sure that Web 3 remains open and you know, fulfills the promises of actually what you and I remember as Web 1, because when the internet began to be a mainstream thing back in the 90s, the idea was that it was going to be free and democratic access to information for everybody in the world.

1:02:12 Brian Rose: Yeah, and is this, it’s not obvious if we’re going to win this war to keep it open. It’s like we have all this great innovation, we have all these great ideas, but it’s going to be a knock-down, drag-out fight for the next five to ten years.

1:02:26 Robby Yung: It will be, it will be, because it will be tempting to take the easy choice, and sometimes the easy choice will be the one where you’re spoon-fed into the walled garden, right, and you have these, all these apps and all these social platforms that go right there, and the currency is being given to you, and all of a sudden, you know, you’ve already got the Oculus at home, right?

1:02:48 And so yeah, yes, well, and also the hard part’s been done, so people, you know, they say to me, oh well, opening a MetaMask wallet and onboarding to blockchain is so difficult, and I turn to them and I say, well do you remember the first time you opened an iTunes account or a Google Play account? It was horrible. It took a long time, but the point is you did that years ago, so now they’ve got you. Now everything is easy, because they’ve already took taken all your information.

1:03:13 How many credit cards do you have registered with Google and Apple already, or Amazon, so onboarding for them is simple, because you’re already on board, and that’s the advantage that they have, right?

1:03:26 Brian Rose: And you, and yet, understand that deeply from your experience with mobile gaming, and the fact that I think you’ve said you were like three clicks away from a purchase, and that is like, that is the whole Holy Grail, because those companies had your information. Why have we not seen a move from Amazon, Google and Apple?

1:03:47 Robby Yung: I think only because they haven’t decided what their strategy is going to be, but I suspect you will see it very soon, because it’s logical for them to extend their reach, and also they approach, those are three very different companies that approach things in a very different way, right? Apple is fundamentally a hardware business. Google is fundamentally an advertising business, and Amazon is a, I don’t know, everything else is this he’s an enabler of commerce, I guess, but it makes sense, and I don’t see, you know, like and I don’t see blockchain as an existential threat to those businesses per se, because they add a lot of value in many different ways.

1:04:29 I’d still want to search for things on Google, right? Even if I still see advertisements, because that model works for me as a consumer. But I think that, you know, Apple having devices in everybody’s pocket, it would be logical to me that they should put hardware blockchain wallets into their mobile devices, because why wouldn’t everybody just want to use a blockchain cold storage device on their, you know, on their phone? It’s a simple solution. So I think that would be a logical extension, for example, for Apple, and the same thing goes for Amazon, to enable peer-to-peer transactions, because somebody like Amazon already has the community and the eyeballs they’re already the go-to place for certain kinds of commerce, just like eBay and other large marketplaces, so why wouldn’t you go there to be introduced to somebody and make a peer-to-peer transaction with them?

1:05:21 Brian Rose: It’s just a more secure version of the same thing, but it’s that classic innovator’s dilemma, right? It’s like even if they know they should go there, even if they know you should move to open, even if you could prove they would get 10x the revenues, the innovator still is, very, it’s very hard for them to do it, because their bread is buttered here, right? So, that’s why we need the disruptors, I guess, people like you. Tell me a little bit about Animoca Brands, and then I’d love to go a little deeper on Sandbox.

1:05:47 Brian Rose: Sure, but you know, you guys are an interesting company. Obviously, you know, an incredible, great success stories. I mean, a fantastic press every four weeks and these amazing valuations, but also you’re quite an interesting brand, because you partner with other brands and kind of bring their IP into the metaverse. Maybe you could talk about what you guys actually do there, and then I’m going to go deeper on a couple protocols.

1:06:11 Robby Yung: We make basically, we have two different parts of the business fundamentally we’re, you know, where we make game and entertainment experiences, so we do that very often partnering with third-party IP, so we’re the biggest licensee of third-party IP in gaming.

1:06:25 You know, historically we made mobile games, and that’s what we were well known for until 2017, when we pivoted to focus on blockchain for all our new games. And so we make games like Formula One Delta Time, MotoGP Ignition, The Sandbox Tower, you know, Crazy Defense Heroes, and so we make lots of different kinds of games, and we have studios all over the world to do that. Also, alongside, we’re active strategic investors in the blockchain game space, so we’ve invested in lots and lots of companies throughout the ecosystem, because we want to support the ecosystem to, you know, we three years ago this initiative began, because we wanted there to be an ecosystem to be a part of, because that was still in question at the time, and so we began investing in these companies, but really it’s because there is a fantastic network effect, because we’re all working on open platforms and in open systems, which means that all of the companies that we make strategic investments in, we can also work together with them, because we’re all tokenized businesses.

1:07:31 We can run staking events with them for our fungible tokens. We can interoperate our, you know, NFTs, playable NFTs, within our games, so that people can bring them from their games to our games and vice versa. So we can find so many ways to work together, and that also extends to non-game blockchain companies, meaning DeFi protocols or layer 1 chains, or, you know, you name it, because there are ways in which we can work together, and that’s the beauty of blockchain.

1:07:58 So we have a quite a large investment portfolio and I think because of that, often people know us more now for our investing activity than for our game-making activity, just because the games take a while to make, whereas investments can be done more rapidly.

1:08:12 Brian Rose: Yeah, and I really appreciate you, you guys, and the investments you made. I mean, you know, when Yat was talking about your Axie investment, he was saying, look, nobody at the time was talking about the play-to-earn, nobody wanted to hear about NFTs and gaming.

1:08:26 It was like, you know, tough moments where you had to really pull the capital out and write the checks that now seem like no-brainers in hindsight, but at the time, yes, I know you guys were putting that out there. You had a real aha moment, I think, during the ICO boom and bust, where I think you saw, you know, tokens out there that then I think might also be used as utility in other aspects, and I think that’s when you saw a lot of this kind of coming, and you thought, well, we can really empower this kind of cross-chain piece. Did I understand that right?

1:08:57 Brian Rose: And maybe you can tell me about some of those things that you observed then.

1:09:01 Robby Yung: Sure, so we ended up coming getting into this business actually through our relationship with the company that’s now called Dapper Labs, and we were the publishers of CryptoKitties in Greater China, and so being involved in what was essentially the first NFT game you know, because Dapper, the guys at Dapper, wrote the NFT standard on Ethereum, and that was our introduction to the potential, and I think when we first got into it, it was after the ICO summer, there were lots and lots of different, you know, companies out there who had raised lots of money from investors who had bought tokens for their ideas, and there were more tokens out there than there were ideas, to be honest, and so I think we saw that as game makers, as an opportunity, because we thought, okay, so, you know, a bunch of people have just bought EOS or they’ve just bought, you know, various other tokens, and what are they going to do with them, right?

1:09:54 Now there aren’t any applications. You know, they put out their ICO white papers, but they haven’t built the product yet, so there are a bunch of people holding tokens, and we thought, if we make games, do you think they’d come and spend their money, their tokens, on our games? Why not? Let’s give it a try. We’re, you know, we make games.

1:10:10 We’re mercenary. We just want users wherever they are come spend money in our games. So we started thinking about making games, and we, that’s where F1 Delta Time, which was our first game, was born on Ethereum. Obviously, you know, in hindsight, Ethereum may not have been the best place to make a game that we wanted to find a mass audience for, because it’s prohibitively expensive now to buy a car in the game, thanks to gas fees, but you know, we can’t complain, it’s due to the incredible success that Ethereum had in the meantime, and so we’re happy to be part of the community, but I think the idea was very simple at the time.

1:10:47 It was let’s look for a new audience and a new market, and we saw this, you know, incredible community of people who had spent hundreds of millions of dollars getting into the crypto space early, but without, you know, without any entertainment opportunities. It was all finance, and we thought, oh, maybe they could use some entertainment.

1:11:07 Brian Rose: Yeah, that’s a great observation. You mentioned gas fees. It’s the single biggest complaint I get from my students in the DeFi Academy is the gas fees, obviously.

1:11:16 For me, I call them tuition fees, because they’re learning so much with the simple protocol exchange when they do a yield swap or a liquidity pool. Yes, I say just pay the damn gas, but it’s something that comes up over and over again, obviously I’ve had, you know, some layer one protocol founders here talking to the AVAX guys and Al gorans, people. I was talking with the engine CTO on Friday, VTEC, who wants to, you know, work with Hank dot to create that kind of engine for NFTs for gaming.

1:11:44 What do you think is the next step in this big problem dilemma of the Ethereum gasseries?

1:11:49 Robby Yung: So, I think really everybody has gravitated towards Ethereum in recent times over the course of this year particularly because Ethereum is where the liquidity is. It’s where the action is. Most of the people, the communities, are around Ethereum and Ethereum side chains, but that’s changing. So now, you know, look at Solana.

1:12:09 Solana had a, was like, had a breakout year.

1:12:12 Brian Rose: You know, if we’re doing the OS, the Oscars of blockchain, there’s Solana with the best newcomer award, right?

1:12:18 Robby Yung: Yeah, because, and I think we’re going to see lots of healthy competition, and this is where we get on our high horse or our soapbox about the open metaverse, because we want for there to be lots of competition, whether it’s layer ones or layer twos, because it’s great for our industry. That’s where the innovation is, because there are going to be solutions that are better for building games on there.

1:12:41 There are going to be solutions that are better for DeFi, and they’re going to be solutions that are better for things that we don’t have a need for yet, but we’ll have a need for later. And the most important thing is that you can have bridges between them, so you can bring your assets from one chain to the other, but that’s it, really. Why not have a world full of lots of innovation with lots of different chains? Because ultimately it’s better for everybody, because at the end of the day it’s not about having the blockchain, and this goes back to the Facebook question, right?

1:13:12 It wouldn’t be any good for all of us, for example, if, let’s just say, we didn’t have the gas fee problem. You know, Ethereum 2.0 is wildly successful, in the world just uses Ethereum not sure that that’s the best either, because too much momentum in one platform also then discourages innovation. What we want is innovation. That’s the reason that we have all the success, you know, what little we’ve had so far. If you look at where the blockchain game industry is now, we’ve got a handful of companies, you know, of market caps north of five billion dollars.

1:13:45 We have probably 30 billion dollars of economic activity this year in blockchain gaming, and yet a lot of people would argue this is year one, and you look at the mobile game industry, which is tremendous at this point in time but mobile games took five, six, seven years to get to that point, with the power of Google and Apple and many big companies behind it, whereas the blockchain game industry has been basically completely grassroots and so I think when you see that much success in that short a period of time, you have to ask yourself why, and the reason is because it’s open, because every you know, everybody who builds a little way up the hill, the next guy starts there, and he builds a little higher up the hill. We don’t have to all start from scratch, trying to knock each other over

1:14:35 Brian Rose: It’s a total shift, in like, almost humanity, what’s happening here.

1:14:39 We’re going to look back on this, and you know, this will be a big pivotal moment here.

1:14:44 Robby Yung: That’s, and the thing is, it’s why when people ask me, so who are your competitors, I actually say, well, there, we don’t have any, and that’s not about, that’s not saying, that’s not bragging, that’s that I actually view everybody in the blockchain industry as my partner, as my collaborator, and I think that comes from this open-source ethos. Right, all our information is on chain.

1:15:05 You want to see who my customers are, so you can take my customers? Well, it’s all on chain. Go for it, because we have smart contracts that allow us to take a very, very small fee on the future trading activity of our NFTs that we create. That means that there is always a recurring revenue stream for us as the originators of those NFTs, so it’s in my interest that my NFTs go forth and prosper, you know, as far as, as far as they can, because I’m happy that somebody else designs a better game where people can bring my Formula One cars over to that better game because it means the Formula One cars will be more desired if you can use them in more than one game, so it’s actually good for everybody.

1:15:48 Brian Rose: Yeah, and that’s the future, this whole mindset that everyone’s a collaborator, not a competitor. It’s maybe Web 2.0 to 3.0 somehow, and it’s something that took me many years to drum into my head, coming from Wall Street, where everybody was fighting over the same meat, right? We were all trying to get as much as we could out of the customer, and when I moved into New Media, I soon realized that in this space that’s a terrible defeatist mentality that’s gonna, you’re gonna end up with nothing, and what I quickly remember, I remember I was invited on The Joe Rogan Experience, like a year after I started broadcasting, and he was like, inspired the show, and I thought, why would Joe have me on?

1:16:26 Because, you know, I’m doing talking about similar things to a similar audience. Doesn’t he see it as a competitor? And he didn’t. He’s like, wow, the more people watch podcasts, the better, the more ideas, the better, and so he taught me to do the same with all of my competitors, and so I’ve had all of the people on my show that do similar things to me. Sometimes we, you know, speak to the same guests, but the truth is, Robby, we all have such a unique take on everything, that everything is unique, and everything adds to the ecosystem, so there really is no competition if you do you really well right now.

1:17:00 Snoop Dogg was recently on Joe Rogan. He said, we all have one job to do every day, wake up and do you, and it’s maybe is the future, where we’re all collaborating and not competing in this kind of old-school structure. Do you have thoughts on that? Because I know Snoop is a big supporter of the Sandbox.

1:17:20 Robby Yung: Oh yeah, no, I think that’s absolutely true, and frankly, you know, his, the collaboration we’ve had with him in the Sandbox is actually the most ex, the most successful third-party brand collaboration, so with all due respect to Atari and the Smurfs and Adidas, Snoop seems to have resonated with the demographic that’s most excited about the Sandbox.

1:17:43 And I think honestly it’s because he’s done a fantastic job with his own brand, you know, across continually reinventing himself. You know, obviously guys like you and I remember him, because he’s in fact the same age as us. Fun fact. Yeah, we remember him from the early days of his career, but he means new things and different things to the younger generations today, so he’s kept himself relevant, and I think that’s why he resonates with so many audiences.

1:18:11 Brian Rose: Yeah, it’s amazing to watch him grow. I was, my kids were watching the show the other day. It was like a science show, and Snoop was there. I was like, what’s going on here? I mean, we grew up with Snoop in the 90s, where, you know, his song was Murder Was the Case that they gave me, and he just continually innovates.

1:18:27 He’s cooking with Martha Stewart, and it’s a, he’s a great point of reference to anybody who wants to just stay relevant. What’s he done with you in the Sandbox? I know he’s building his mansion in there. Maybe you can talk about what you’re doing with Snoop, and then maybe talk about what the Sandbox actually is.

1:18:44 Robby Yung: Sure so the Sandbox is essentially a user-generated content platform.

1:18:48 So if you’re familiar with Minecraft or Roblox, these are environments where people spend time and have toolsets that allow them to be able to build their own creations, so in the Sandbox we have what we call a voxel editor, which allows you to create this sort of classic arcade 8-bit graphic style. It’s very simple. Think of it like, you know, building with Lego blocks, and the idea behind the art style is that it’s simple enough that it’s accessible to anybody, so that anybody can make cool stuff and what you do is you buy land, and you create things on that land, whatever it is you want to create a cafe, so your friends come over and hang out with you.

1:19:29 You want to create a game. You want to create a little museum to show off your NFT artwork, whatever, it’s totally up to you, so it’s just a virtual representation of physical space, so that people can come together and do cool stuff, and so what we’ve done over the last four years that we’ve been building it is, we seeded a community of creators to have them create really cool content, so because you have to, you know, you need that spark to get it started, and we wanted to create tons of cool content, and then on top of that, when the users come in, they get inspired, they create their own stuff, and it takes off from there, and we’ve seen, you know, with the success of other UGC platforms. What happens when you give tools to players to go and create great stuff, because they’re going to make much more interesting stuff than we could ever think of ourselves.

1:20:21 So Sandbox has become, I think, quite a leading metaverse property based on that idea, because it’s really one of the first UGC platforms with critical mass of players, and so Snoop, you know, we collaborated with him to essentially create a Snoop environment and a club, which, you know, reflects his branding. So, you know, you’ve got his mansion, you’ve got his cars, you’ve got his music and it’s a place where you can go and hang out. You know, hang out with Snoop.

1:20:56 Brian Rose: It’s been amazing. You have so many brands that are jumping in, and so many people that are buying huge pots of land. It’s been a fascinating story, and like, a massive congrats to your success, Robby. I just wanted to finish off and just get your final thoughts on, honestly, China and that entire group of people in this ecosystem, and how it plugs in. You spent so much time there, and you mentioned Tencent earlier.

1:21:17 Maybe just get your perspectives on how to understand that consumer, how to understand the government, that’s not always blockchain friendly, and how do you process that?

1:21:28 Robby Yung: Sure. I think China is going to come to blockchain in its own way. You know, obviously blockchain has been embraced in a certain way. I think very much like the internet, so they understand that this is key to innovation and to staying current and connected to the world, but I think China wants to pave its own path, just like is just like it has with the internet, and so I think what you’ll see is, you’ll see an ecosystem of successful Chinese blockchain companies revolving around blockchain protocols that are domestic, predominantly, just like we’ve seen with streaming platforms and social media platforms, etc.

1:22:07 So they will all be domestic in origin. So they’re going to be, there’s going to be a very successful Chinese blockchain industry, and there’s going to be a global blockchain industry, and they will have, they will connect with each other, but I think through limited channels, just like they do currently with the internet, right? Very much similar, and then who knows in the future. Sure, they might meet and compete and collide. We’ll have to see what’s going to happen.

1:22:30 Brian Rose: Final thoughts. Robby, first of all, by the way, I think you’ve actually made this episode as good as the Yat Siu conversation, which was a big effort,

1:22:39 Robby Yung: so really, if only I could, I could hope to live up to that role model

1:22:43 Brian Rose: No, it was an amazing, great articulation. Just final thoughts, and also next action steps for anybody that wants to contact you I don’t know, brands or send you business plans, or even go get some sand, which I got after the Yat episode by the way.

1:22:57 But just final thoughts.

1:22:58 Robby Yung: No problem. So obviously our website animocabrands.com is the best place to find out anything that’s going on or to access any of our projects or information. It’s all there if you want to reach out to me, the usual LinkedIn, Twitter, you know, obviously crypto Twitter is the most viral and enthusiastic community on Twitter, so that’s a great place to find me as well, and I would encourage people, just you know, try it, you know, get a car.

1:23:25 We can, you can go onto OpenSea and get a car, play to play in Rev Racing, or you can get some land to go and play in Sandbox, but the best way to learn is to just try it out and have fun. We make games. Hopefully you’ll have fun.

1:23:38 Brian Rose: Yeah, and is 2022 going to be absolutely crazy? Are you excited?

1:23:42 You seem quite refreshed. Oh yeah, you seem pretty good.

1:23:46 Robby Yung: Yeah, for sure, for sure. I mean, if 2021 was anything to go by, we’re very excited about the future. Wow, all right.

1:23:53 Brian Rose: I just want to say thank you, Robby. I appreciate what you and Yat are doing at Animoca Brands, like true pioneers in the space, and I appreciate your time for just getting out there and trying to communicate these ideas with people. These are two of my top, top metaverse conversations, and they’re going to change, like millions of people’s lives and perceptions. So thank you so much.

1:24:09 Robby Yung: I agree with you.

1:24:10 Get out there and go get these assets and go play these games, because yeah, just have fun. Yeah, teach you so much, and have fun.

1:24:17 Brian Rose: So, look, thank you so much. Next time, let’s do this in person. Wishing you guys all the best, and thank you.

1:24:23 Robby Yung: Yeah, let’s have a great 2022. Thank you. Great, thanks, Brian. I appreciate that. Thanks everybody.

1:24:27 Brian Rose: We’ll see you next time on London Real Take care, bye.