S1: In this standalone episode, I'm talking to my great friend,
S1: Andrew Ringlein. So Andrew and I have known each other
S1: since junior high, and he is one of the absolute
S1: smartest people I know. But somehow, he's managed to keep
S1: a low profile until now. And I think this conversation
S1: will be the first part of changing that. So Andrew
S1: is working in the crypto space and we go on
S1: regular walks around the local lake and we talk about
S1: work in tech and life and whatever. And we just
S1: had one of these walks last week where I asked
S1: him a simple question What does he see as the
S1: intersection of gaming and crypto? Andrew is a lifelong gamer
S1: and he is active in the crypto space as well.
S1: So the resulting hour long conversation was something I just
S1: knew I had to record, and that is what this
S1: conversation is. So with that, here's Andrew Ringland on crypto
S1: gaming and business. So, Andrew, good to see you. We
S1: had this amazing conversation walking around the lake the whole
S1: time I was walking. My phone was in my pocket
S1: and I was worried that if I tried to record it,
S1: it would just sound like crap. But the whole time
S1: we were talking, I was like, Damn, I really wish
S1: I was recording this because I feel like we're going
S1: to forget everything. And then we basically said, OK, we
S1: just need to do this again on a podcast. So
S1: we're going to do our best to reproduce that, and
S1: it'll probably be a little kludgy, but we'll make an attempt.
S2: So thanks for having me.
S1: Yeah, absolutely. So I'll give a proper intro to you
S1: before this, so we'll just jump right into the conversation.
S1: And I think the question that I asked was basically,
S1: how did you see crypto interacting with gaming? They understand
S1: you have a leader in question as well. I guess
S1: we can do both list of yours first.
S2: Well, mine is very similar to yours. You had said
S2: something like, how do you see this? But but you
S2: also basically said, why? Right? Like, why? Like, why? Why
S2: does it matter? And I don't have it. In my view,
S2: the question which is three years ago, I work in
S2: a company and we launched a rewards currency inside an app,
S2: and a number of salespeople hit the up and said, Hey, listen.
S2: Turn your reward currency to blockchain and cryptocurrency, and I
S2: came to you and I talk to you about it.
S2: And I said, Is there anything here? I'm missing? Is
S2: there any reason this should be decentralized? And I got
S2: on the phone with three different sales reps and had
S2: them describe to me what they would do. They would
S2: they would give us money. They would years. And I
S2: kept asking the question of why, like, why should we
S2: change our reworked currency to crypto? And I did not
S2: get an answer that was anything other than it'll stick
S2: the word blockchain next to your company and you'll be
S2: caught right? There was nothing that some gave and I
S2: talked to three sales reps who were trying to convince
S2: me to use their blockchain. And I said, why? And
S2: I got no answer. And I kind of feel like
S2: the world is asking why. And at the wake, I
S2: think you also kind of said to me, you said, why?
S2: Like why? Why does it matter? And I didn't have
S2: an answer for years ago. No one else had an
S2: answer for years ago. And I think now now the
S2: answers are starting to emerge that the wider story.
S1: OK. And so what is the answer?
S2: Well, so the answer is, is a longer one because
S2: there's actually a bunch of lies. And I'd say that
S2: the first one is kind of the simplest to talk about,
S2: which is the the change to the financial model in
S2: crypto and crypto gaming. If we look back at gaming
S2: and we talk about the evolution from the very early
S2: days of pay to play into free to play, that
S2: was a really big revolution that people were very resistant to.
S2: And people said why? And people said, that's terrible, right?
S2: But then it got proven that it's actually a better model,
S2: and one of the reasons that free to play is
S2: a better model and pay to play is you're only
S2: paying for what you want, right? As a consumer, I
S2: can go and I can play 20 games, not pay
S2: anything fine one game I like and I can spend
S2: all my money on that one game that makes left
S2: the cream right at the top. It means that the
S2: game that is successful can make a lot more money
S2: than the games that are not successful.
S1: So basically, there's more experiments because there are more people
S1: playing more games.
S2: Well, it does allow for more experience because it also
S2: allows free to play, makes it easier to try to
S2: go market something, changes the marketing and changes the monetization.
S2: Because now I can go get a user to try
S2: and be a lot more easily convincing someone to spend
S2: three dollars. It's hard convincing someone to look at a
S2: button is easy. So it's very easy to innovate and
S2: experiment and try to find something that can be good.
S2: And then all the money is being spent on the
S2: ones that are good. And so all of gaming, I mean,
S2: not quite all of it, but the vast majority of
S2: money in gaming has moved to free to play. Can
S2: you go back 10 years? And it's a very toxic idea.
S2: If people didn't like it, it's like, Oh, this is
S2: just a cash grab. Right? But now you look at,
S2: you know, the largest games are already looking at like
S2: Fortnite and look at League of Legends, and they're free
S2: to play
S1: anywhere because everyone's saying that about crypto, that it's a
S1: giant cash grab.
S2: Right? It's the exact same thing. And so the evolution
S2: from pay to play to free to play was an
S2: evolution that that aligned the financial incentives better and play
S2: to earn. And crypto gaming actually does that again. And
S2: it does that probably a little bit more than free
S2: to play it, and it's catching on much, much faster
S2: than free to play there because the difference is greater, right?
S2: Free to play. Let's just say free to play is
S2: twice as good of a model. Well played earns probably
S2: like four times as good of a model so that
S2: the speed of adoption is even faster.
S1: OK, so play to earn you think is the next
S1: iteration past free to play?
S2: Yeah, from a from a financial model standpoint, yeah,
S1: I think so. Finance model. So financial model is one
S1: axis and then you have other things like UGC, how
S1: does that play into this?
S2: Yeah. So so I think there's actually like five different
S2: things that for crypto gaming are kind of multiplying its
S2: speed of adoption and its importance. And if we just
S2: go backwards for one second, just talk about like what's
S2: happened recently. Just so people can understand implications. What's happened
S2: recently is back in July, a single game went and
S2: launched their play to earn component, and this game was
S2: called exclusivity. And this game company is worth about $14
S2: billion today and fourteen billion dollars devoid of caps. It's
S2: not worth that, but that's sort of what's worst blizzard,
S2: which is the preeminent preeminent IP, most significant third third
S2: largest gaming company in the world and the single largest
S2: acquisition ever in U.S. history, which it acquired because of blockchain.
S2: Why did that happen? It happened because of Axiom. Infinity
S2: came out of nowhere and is suddenly on everyone's radar.
S2: And after Axie Infinity sort of showed a superior financial model,
S2: five of our games came along and did the exact
S2: same thing. And so when a when a Yahoo like
S2: me can make a phone call and suddenly talk to
S2: a CEO who has got a billion dollar company because
S2: he did something three months earlier? It's bizarre, it's accelerated
S2: the speed of these game companies growth. So every game
S2: company is now thinking, OK, what do I do that
S2: is this new model? It's much, much faster than the
S2: free to play option. It's what drove the Microsoft user acquisition.
S2: It's also what drove Facebook renaming itself. So the financial
S2: implications of this in the gaming world are being seen
S2: by these other companies. And they're all trying to rapidly
S2: move as fast as they can to adopt it. And
S2: that's just the sort of the proof behind that, that
S2: first change.
S1: So that first change, are we talking strictly about? Quickly
S1: being able to raise money for a new idea.
S2: That that is one of the implications, I think, inside
S2: of that, that model change because basically a new game
S2: has capacity to earn more money more quickly. It's the
S2: same thing as like a free to play acceleration, right?
S2: A free to play game for more users work quickly.
S2: These are not trying to get them to pay money,
S2: for instance, that same type of multiplier.
S1: Well, what one is getting more users quickly. But I
S1: thought we were talking about like launching like an NFT,
S1: for example, to gain a bunch of capital to be
S1: able to hire developers.
S2: It does do that, too. Yes. So it changes the model.
S2: So there's more, more cash upfront earlier on. And it
S2: also changes that same model. When you look at Axie Infinity,
S2: this is a terrible game. It's like a knock off,
S2: very poor, bad experience of Pokemon. It's nothing near as
S2: good as, let's say, Pokemon Go, which Pokemon Go was
S2: a craze out of a kind of a great new
S2: game system, right? That just swept the world. This is
S2: the lamest and dumbest game that has come out in
S2: any major way anytime recently. But if someone were to
S2: ask me, Hey, what's actually in of these prospects, I
S2: would say it's great because they just put all the
S2: money in the world in the bank, and everybody knows
S2: with their IP is they have done the thing you're describing,
S2: which they basically do to fundraise on a kind of
S2: bad game. Now they can iterate on that game and
S2: they can invest a lot of capital in making better
S2: versions of the game. And in one year, they're going
S2: to have games that are better than Pokemon Go because
S2: they have all this money.
S1: So what is the engine that's driving it? How is it?
S1: How is it surviving for six months or a year?
S1: Like what's keeping it afloat?
S2: Yes, I think that goes to some of the other
S2: other elements that are happening so should move forward to
S2: the first one is like the financial models change. Sure, sure.
S2: So so I think the second one is the change
S2: of people who are involved in something and turning them
S2: into owners of that faith. And I have a funny
S2: story about our background. I use an iPhone where an
S2: iPhone family and I have five kids and a wife
S2: and every one of us has some kind of Apple device.
S2: And the reason we have Apple devices is because of you,
S2: because many years ago you dragged me into a, you know,
S2: an Apple store and you bought me an iPhone because
S2: you're a man who influences people, write you. You basically
S2: have like a an attachment to Apple, and you shared
S2: and dragged me along that attachment spread to other people
S2: in marketing. This is called also being an app, and
S2: it's also being an influencer right near that, whether in
S2: a podcast or in person, you do the same thing
S2: with people all around. Mm-Hmm. Well, when you when you
S2: take something like a game and you actually give people
S2: an ownership stake in it by giving them a thing
S2: that they can then transfer and own and can change
S2: in value, you turn people far more into being mavin
S2: through your product, being influencers, free product, being stakeholders, having
S2: a reason to get other people to do it. So
S2: one of the shocking things is this game that is terrible.
S2: Axie Infinity actually has longer play times, higher growth than
S2: other conventional games because they have turned every single person
S2: who owns any piece of it, who owns an NFT.
S2: Who's playing this game into an advocate for it? And
S2: so they are they're weaponizing their own owners and their
S2: own community members to go and recruit more people because
S2: they all share that benefit together in the same emotional
S2: way that you advocate for for Apple. When you bought
S2: me and I thought you didn't have a stake, that right?
S1: So I don't know much about this game. Can I
S1: offer like a cynical approach to this? Is it just
S1: that it is free to play, to earn? Therefore, it's
S1: an income generation system. Therefore, a lot of people are
S1: making money off of it, so they're excited about it
S1: for that reason.
S2: Here's the really fascinating thing. Yes, yes and no. So
S2: there's another restriction that isn't just to earn. So what
S2: warcraft a game dear to my heart I played for
S2: a very long time has a much better earning engine
S2: than actually infinity. If you were to go and basically
S2: buy a five dollar asset in World of Warcraft and
S2: know how to use that asset correctly, you can make
S2: between one to $200 a day on that asset. And
S2: that's the exchange, the way people think about I own that,
S2: I own the thing I own property, what moneys that
S2: you bring for me. So the money being generated from
S2: a job in World War Craft is like 25 percent
S2: per day of the value that I set. If you
S2: go and buy a team for accidentally, it costs $100
S2: and it generates about $35 dollars a day. So the
S2: people who are working in this, so people in the U.S.
S2: are buying the assets and then they're farming out the
S2: jobs to other countries, like in East Asia. But the
S2: income per job is much, much worse than will work out. Well,
S2: what's the difference then between Acxiom theory and will work
S2: out why is actually infinity engaging people more and being
S2: more viral? And the reason is it's allowed. And apparently,
S2: when you make something of black market item like in
S2: World of Warcraft and you, there's a risk hanging over
S2: your head. People don't build businesses and do jobs out
S2: of that. So what a work. The simple idea that
S2: Blizzard never approved these types of transactions. They're still happening
S2: on a black market, but that disapproval, that complexity made
S2: it so people, not as many people are doing it
S2: as a job, even though it pays better. Whereas once
S2: you approve it and you say, you know what? This
S2: is the difference between like, are you a taxi driver?
S2: But you're looking over your shoulder constantly to see if
S2: cops are going to stop you and take away your taxi? Hmm.
S2: But you can earn a hundred times more if you're
S2: a black market taxi driver or are you a legitimate
S2: taxi driver or legitimate Uber and you're allowed to actually operate?
S2: And so when they made it, you're allowed to operate
S2: in this fashion that that was the change, even though
S2: the mechanisms to make money were already there. One is
S2: legal and one is essentially illegal.
S1: Didn't you have another example of this with a Fortnite
S1: mod or a Minecraft mod?
S2: Yeah, so if we go back to the origin of
S2: battle royales and we go back to the origin of MOBAs,
S2: both of these things were created by communities will get
S2: that probably later in this example as well. But Minecraft
S2: as a game did not allow people to monetize external
S2: from Minecraft itself for a long time until Microsoft bought them.
S2: And one of the things that happened was someone created,
S2: innovated a new type of game that was revolutionary, and
S2: I remember watching some of the very first Hunger Games
S2: and battles they were. They were battle rails. They were
S2: inspired from the movie Hunger Games. Mm-Hmm. You weren't to
S2: modifies them, right? So somebody made this mod and they
S2: gave it away for free. Now, when you're when you're
S2: making something, you're giving away for free and you can't
S2: monetize it. You you're not putting incentives in the right place. Right?
S2: It's like a weed startup companies b start companies. If
S2: they couldn't make any money, would pharmaceutical please make drugs
S2: if they couldn't, you know, benefit them? Afterwards, somebody went.
S2: And with no perceived long term benefit when it created
S2: Hunger Games mod in Minecraft, made no money on it.
S2: And then a bunch of people realized waits is way better,
S2: and then lots of different games started coming out following
S2: that same formula. And that led us up to Fortnite,
S2: which is one of the juggernauts now is literally a
S2: knock off of this mod now who made The Hunger
S2: Games mod? I have no idea. Did they make any money? No.
S2: So they did not drive innovation in the way it
S2: should have. If the incentive had been in a better place.
S1: Hmm, interesting. OK, so that's two. What's number three?
S2: So number three is the difference in the way these
S2: companies are interacting with their communities. So. When you when
S2: you look at a conventional game publisher like EA or
S2: we're at a games. So, you know, I talk a
S2: lot to Epic Games back before they became big with Fortnite,
S2: and they attempted to be very focused on their community
S2: and influencers. Once they got big, they kind of stopped.
S2: They were trying to, but they stopped. You go to
S2: the EEA and you say, Hey, I've got something that
S2: relates to your community. Hey, let's do something great with
S2: your community. They're going to be free to internet of
S2: a conventional game company right now is built on the
S2: idea that I'm going to go market. I'm going to
S2: get users and I try to maximize the value of
S2: most users. And if I can do anything to maximize
S2: my value, I'm going to do that thing. How do
S2: I make the most money from my people and how
S2: do I get more people? And that's where their brains
S2: are at. When you go to all the crypto gaming
S2: companies that exist right now, they're very different. The CMO
S2: for Gallo Games lives inside of their discord and talks
S2: to people all day long. So I went and met
S2: him at Decentral, which was a defy convention in Florida
S2: three months ago. And I said to him, Hey, what's
S2: the most important thing in your company? And his answer
S2: wasn't how good my game is. His answer wasn't how
S2: much money we make per user. His answer wasn't our
S2: user acquisition. His answer was our community. Most important thing
S2: to us is our community. This is a guy who
S2: the CMO of this now 10 plus billion dollar company.
S2: He lives all day long in discord. It's like his
S2: desk is sitting in front of a glass window that
S2: has a test. A testing group going on inside of it,
S2: which is constantly testing everything they're doing. And he is
S2: watching that nonstop. He is completely plugged into the community,
S2: as is everybody in the company. And if I say
S2: to him, Hey, listen, I've got a technique that will
S2: add 30 percent more to your monetization, but you know
S2: your community may not like it. He would laugh in
S2: my face and say, like, Are you kidding me? We
S2: don't do things like, you know, you just like all
S2: these crypto companies because there is a an absence of
S2: ability to market conventionally right now for crypto games. They
S2: have been built from this fundamental idea of We are
S2: games for communities. Our users are our mavens. Therefore, they
S2: must be happy. This is like if Apple said, Hey Dan,
S2: do you want me to charge you? X amount more
S2: for an Apple product? Right? And all they care about
S2: how much money they get from you? Or do you
S2: want Apple to call you and say, Hey, hey, Dan,
S2: what was going to make your experience with the iPhone better? Hmm. Right?
S2: These are companies that are built fundamentally from the idea
S2: of how do we keep our community engaged? How do
S2: we listen to our communities? How do we be responsive?
S2: And because they're built that way? The occurrences I mentioned
S2: earlier League of Legends of being a mobile and battery
S2: owls like Fortnite being a. Being a battle royale, those
S2: things were invented by communities and ignored by game developers
S2: for years. Hmm. It's very slow adoption. The crypto gaming
S2: world does not ignore its community. They are the most
S2: hyper responsive to community companies, their art. It is fundamental
S2: in their DNA, and I do believe that as they're
S2: getting bigger and bigger, they're not going to lose that
S2: in their DNA. And I do believe that that is
S2: a massive competitive advantage because they're actually listening to the
S2: consumer in a deep way that that other people are not.
S1: So is this because in this world, essentially those folks
S1: are not just users, they're also marketers and they're also creators.
S2: That's right. Yeah, which which will lead us to our
S2: first point of the greater part as well. But that
S2: is exactly right because you're you're consumers. Are everything right?
S2: I think one of the ways that ticktalk has managed
S2: to be even more viral than YouTube is not only
S2: is it giving you access to UGC, but it's actually
S2: taking everybody who watches TikTok and makes it really, really
S2: easy to pull you in as a creator yourself, right?
S2: Or try to involve the individual. And when my kids
S2: bring TikTok home and they go, Oh, look at this
S2: new TikTok. What they do, they they go filmed themselves
S2: doing the same thing. They've now flipped it around and
S2: now they're bringing all their friends and they're recruiting and
S2: they're becoming those advocates for that software that has helped
S2: drive TikTok. Well, that's true of all of these CryptoGames
S2: in an even deeper fashion, because not only are you
S2: essentially part of creation, but you're also part of ownership.
S2: And that transformation in the way that people are involved
S2: has made these companies recognize, OK, you know, community is
S2: the most important thing. And now when Blizzard and Facebook
S2: come along and try to play in this in this arena,
S2: they haven't grown up from that DNA, right? They they
S2: have people who are over here thinking about how do
S2: I maximize my user experience? How do I get the
S2: most money from people? How do I make this so
S2: I can have the best marketing campaigns there? Their old
S2: world mindset is not going to change that easily to
S2: thinking instead, Hey, I need to be sitting in a
S2: room with a thousand people who are who are my
S2: advocate and my users right now and all the time.
S2: That is a fundamental different DNA that I do not
S2: see in these major companies that I do see in
S2: all of the crypto companies. And I think it's going
S2: to give them a long term competitive edge. It's temporary
S2: because actually the rest of the world might change that
S2: model to eventually. So this is not an implicit like
S2: inherent persistent advantage, but it's certainly an advantage it's going
S2: to carry forward for a few years.
S1: Interesting. And so number four is creators.
S2: Yeah. So creators, right? We've seen this with YouTube. We've
S2: seen this with tech talk that the ability to have
S2: UGC means that you're not limited by like a company's creativity,
S2: like CBS is limited by your own creativity. Right? Once
S2: you add UGC, you multiply the amount of content you
S2: multiply the variety of that content and people go find
S2: out better and more in his ways of showing and
S2: doing things. So YouTube is just a better model from
S2: the UGC standpoint than, let's say, you know, like television. Mm-Hmm.
S2: As we can see, just like a caucus now when
S2: it comes to game creation. Right? Minecraft had a model
S2: that said for a long time and a model that said, Hey,
S2: you can come and build games out of Minecraft, but
S2: you can't monetize them. So the incentive to do it
S2: was very low. People still did it right. People still created.
S2: What turned into now is Fortnite, but they didn't. They
S2: didn't reaping the benefits. Well, if you look at the sandbox,
S2: which is one of the games right now that exists,
S2: they're mostly a toolkit to help people make their own games.
S2: This is can magnify the capacity for innovation because now
S2: all those people who used to go mod games for
S2: every other game are going to say, Well, do I
S2: want to go make them on my free game where
S2: it's really hard to be a monetized? If I want
S2: to monetize off of Minecraft Mod, it's actually not super easy.
S2: You can do it now. Now they've adjusted so you
S2: can do it, but it's still not very easy. You
S2: want to go and do something out of the sandbox.
S2: You have much more tools available to you to make
S2: something that is unique, and you immediately own the vast
S2: majority of the benefit. Right? How much money does the
S2: sandbox make when I go invent a game that's really
S2: a structured sandbox? It's like five percent. Almost all the
S2: money is going straight to the creators of those games,
S2: and this is the same kind of model that is
S2: happening for all across in piece. The minting platforms and
S2: the infrastructure are taking very little, but they're facilitating and
S2: they're enabling people to actually create UGC and benefit from
S2: it on YouTube. You know, you can benefit from your UGC.
S2: It's actually pretty hard to make a living because YouTube
S2: is still keeping the vast majority of the money right.
S2: Most of the advertising dollars go to YouTube at a
S2: very small amount goes to video creators. In this case
S2: that that model is pushed much more extreme, where ninety
S2: five percent of all the money from anybody who's trading
S2: anything goes straight to the creators, which creates a much
S2: bigger incentive for them to create things. And those things
S2: have a lot more flexibility, maybe just from the past.
S1: So we talked about Ready Player One in the past.
S1: It seems like, I mean, the sandbox, essentially like an
S1: SDK for how to that
S2: system would create the. Yeah, exactly right in the in
S2: the Ready Player One, you don't see the mechanisms behind
S2: the floor with Ready Player One Metaverse is that it
S2: was all owned by one company. And in the reality,
S2: metaverse is emerging what it would be a. Be one
S2: company who created the tools, but each of the world
S2: in Ready Player One would actually be owned by somebody else. Yeah, right.
S2: And that world would be like, Hey, listen, I own
S2: the world of doom, right? Doom was by, I think,
S2: one of the world's. MM-HMM. And I'm getting 95 percent
S2: of the value out of doom or doom was owned
S2: by a lot of people. It's actually spread out in
S2: terms of ownership. And there is there's a company that
S2: has that created infrastructure, but it's decentralized as possible. I
S2: think it's the one piece that was missing from Ready
S2: Player One that if you could go back and say,
S2: how will that actually be in the future? It's actually
S2: going to be okay. All those various worlds are owned
S2: by individuals. And ironically, that if the if that core
S2: infrastructure company, you know, went out of business or started
S2: being exploitative, those worlds would go somewhere else because the
S2: worlds are actually portable.
S1: Uh, yeah, is it is funny. Just kind of reminds
S1: me of some Soviet leader came over, I think, in
S1: the 1980s to tour the US and was walking around,
S1: I think New York City or something and just saw
S1: all these markets outside on the street. And he looked
S1: to his chaperone and said, Tom, show me the planner
S1: who came up with this, this is amazing. And they're like, No, no,
S1: all the different markets, they just put out their stuff
S1: whenever they want. Well, it's like, who decides what to
S1: put out? And they're like, No, it's all up to them.
S2: Yeah, yeah. Right, exactly. Yeah.
S1: Yeah. Very cool.
S2: Yeah, actually, that transitions really well into kind of my
S2: fifth point, which is persistence and decentralization. Right? We're talking
S2: about the Ready Player One model, right? Uh, well, in
S2: in the Web3 world right now, there's a lot of
S2: people who are kind of A. Big Brother A. Facebook
S2: for whatever happens to attract those people. But there is
S2: actually a really super element to crypto gaming that can
S2: make it way more persistent, and I can give a
S2: couple examples of this. But first, we can start with
S2: the Ready Player one example. The Ready Player One example is,
S2: let's just say IOI from the movie takes over and
S2: takes over the entire metaverse. And they say, Hey, guys,
S2: we're gonna put up ads everywhere, right? And all these
S2: are ago. Yeah, we don't want to have that experience. Well,
S2: what happens to the person who's created the doom world
S2: is the doom world is its own body of code.
S2: It doesn't maybe have an interpretation of the K, but
S2: it actually has its own group of users. It has
S2: its own community, and what they can do is say,
S2: You know what? We're going to unplug doom from your work,
S2: your system, because you're showing all these ads and that's shitty,
S2: and we're going to go plug it into the competitor
S2: viewers that just made this just kind of copy too
S2: much of your SDK elements. And if teams are essentially
S2: infinitely transferable, it's not. Doom is going to pick up
S2: its entire entire body and walk over here and plug
S2: into a different system. And that new infrastructure could offer
S2: a competitive edge. And you guys know, ads ad free
S2: and all of those worlds pick up and walk over,
S2: and Iowa is they're going, Wait, hey, guys, wait. But
S2: we're the ones who started all this doesn't matter. Right?
S2: This is a decentralized, persistent ownership that can be transferable.
S2: You can transfer the entirety of the assets. And there's
S2: an interesting example I have of this. There is an
S2: NFT project that one of my colleagues is involved in.
S2: I guess maybe all of singer name because this is
S2: super disparaging, but they basically the guys ran off with
S2: all the the money that was generated insanity project and
S2: they're supposed to be building a game and they have
S2: really engaged community. Well, they raised a bunch of money.
S2: They took the money and then they left right called
S2: a rental. It happens a lot in the NFT project, right? Well,
S2: a different group came along and said, Hey, guys, you
S2: know what? We like this community. We like this NFT project.
S2: We know where the money got take out, but whatever
S2: we'll take over the project or we'll clone the project. Hey,
S2: everybody out there who already has this thing on the blockchain?
S2: You know what? We're going to issue a new thing
S2: for you on this other and this other chain we're
S2: going to. We're going to give it to you, and
S2: we're just going to migrate all you guys over here.
S2: And hey, you know what? We're going to take care
S2: of you. We're going to do cool stuff that they're
S2: talking about.
S1: We created a new rug. We're going to put it
S1: under your feet that look just like the old rug
S1: that got stolen.
S2: Right, exactly. And they can do that very easily because
S2: the technology allows that kind of transfer an interesting replication.
S2: And so you can actually, you know, I could go
S2: make a game that is a racing game right now.
S2: And then I could say, Hey, by the way, guys,
S2: gala games has this game called spider tanks where you
S2: go and you fight. And I love the way they've
S2: visualized all of their tanks and it's a super fun game. But,
S2: you know, I really want to race things and they
S2: won't answer the phone. So I went made my own
S2: racing game and everybody who owns a spider tank gallon games,
S2: I've just issued you one of my one of my
S2: race cars and I've inspired it off of the art
S2: from whatever it was you already had. It's portable and
S2: it's persistent. Something can die. Bard's tale can go out
S2: of business. Gallon games can close their spider tanks. I
S2: can put up ads and those assets are portable and transferable,
S2: and it's it allows for a type of persistence that
S2: means that these things won't die. This is why people
S2: are obsessed with this, this real estate and obsessed with
S2: kind of the digital. I can only own a piece
S2: of digital real estate because it'll be persistent. Even the
S2: company issuing a ghost business, that real estate is still
S2: there and someone else will use it in the same way.
S1: This is fascinating. I think we talked about the biology stuff,
S1: the Web3 stuff, the Sam Harris podcast, where biology was
S1: on there and talking about it. This to me, what
S1: you're talking about is very Web3, and he's talking about
S1: in in the context of meat space. And like, you know,
S1: the city of Austin gets a CEO instead of a mayor. Right?
S1: And they say, OK, here's our tax law. Here's our
S1: traffic laws. Here's how you get fines. Here's how you
S1: get stoplight, you know, tickets or whatever. And like, here's
S1: our system and you decide to be part of it
S1: or not. And you have a competing one over here
S1: in Houston. Yep. And the idea is that you, you
S1: vote with your feet or whatever. In this case, more digitally.
S1: But it seems like it's kind of the same thing
S1: you're saying. It's like, I love this damn world, except for,
S1: I hate the rules over here. So someone just forks it.
S1: And now it's it's it's almost the same, but slightly
S1: different because these these different rules are different.
S2: Yeah, this idea of voting with your feet is so powerful,
S2: I think, in all of crypto, right? But beginning, it's
S2: sort of like the front end of the sphere. Here
S2: is the the place that has the most money and
S2: the most users and the most engaged. So it'll be
S2: the particle transformation. But yeah, it's the same thing is
S2: actually voting with your feet is the same thing that
S2: made free to play better than pay to play. Right now,
S2: you can vote more accurate with your feet because you're
S2: actually spending money where you want to, not just to
S2: try a thing, but for thing that is actually proving
S2: more long term value and then play to earn is
S2: allow you to vote your feet in a more long
S2: term way of like, Hey, first, I can try things
S2: for free. Typically, then I can spend money where I
S2: care about it, but then that money where I care
S2: about it could both give back to me and be
S2: persistent and can be transferable. And so there now becomes
S2: like all these different ways to vote with your feet
S2: that we didn't have before, and that magnifies your level
S2: of engagement and magnifies you doing the right thing out
S2: of it. So now the people who are involved here
S2: start getting the things they care about, and we've removed
S2: a big brother who's deciding what you care about. And
S2: now we've turned it into, Hey, what are the actual
S2: people saying they care about?
S1: Yeah, it's really fascinating. I mean, it does start to
S1: get pretty libertarian pretty quickly, because what it's talking about
S1: is competition, right? You have a game. It's like it
S1: makes you mostly happy, but you really hate this one thing.
S1: You're just going to play another version of that game
S1: where that thing's fixed. Yup.
S2: Yeah. Because it's because it is the sort of the decentral.
S2: This is the fifth point. Decentralization and the persistence right enables.
S2: The decentralization allows it to be like no one person
S2: decides it can lock you into an experience, right? Can
S2: lock your assets into one place because there is a
S2: portable and the biggest companies right now in the gaming space.
S2: They know this. So if you go to the sandbox
S2: for Gallo games, these are two of the, let's say,
S2: six biggest companies out there right now that are already
S2: established in the in the crypto gaming world. They play
S2: super nice together. In fact, like they really, really want
S2: to be friends because they recognize that they have to
S2: actually have, like sort of friends and collaboration and communities,
S2: and it's all about playing together. They can't stick out
S2: their territory. Like, does Facebook go and call Microsoft and say, Hey, guys,
S2: we want to figure out how we can play better
S2: and nicer together. We want all of our stuff to crossover.
S2: We should know. They're putting up fences and trying to
S2: stake out their territory, right? Games and sandbox are inspired
S2: by each other. And when a new thing comes out, Hey, hey,
S2: this new thing? Hey, can we do this thing together?
S1: So what do you think games do relative to, you know,
S1: that's different than sandbox is exactly the same? Or is
S1: that a different take?
S2: It's actually a very different take. So Galaga games started
S2: out by they were a bunch of guys who basically
S2: had made Farmville, and they're like, Well, Farmville was a
S2: great free play game. Play to earn is better. Let's
S2: go make Farmville in crypto game and they went and
S2: made Farmville in crypto gaming. So we started out with
S2: a single sort of proven game model. It wasn't ideal
S2: and they started up again and then he realized, OK,
S2: this is actually better, so let's do more games. And
S2: so they started hiring independent game publishers with their money,
S2: and they started building up games. And they basically their
S2: approach was to go and individually themselves or contract to
S2: build different games and then have a bunch of games
S2: all under the banner. So they are much more of
S2: a hey, we have like six games in development, like
S2: three you can play right now. So they went and
S2: built individual sandbox style tools to build games and built
S2: this metaverse component. So they're playing together right now because
S2: gal games like we have all these games, we have
S2: no metaverse and we have tools to make games. Sandbox
S2: is like we have a metaverse and we have tools
S2: to make games. Let's play nice with delegates. And so they're,
S2: you know, sort of being friends trying to connect these
S2: things back and forth of Mexican, so.
S1: So if we oversimplify. A sandbox has the ecosystem and
S1: go games has the initial content
S2: they have, they have some initial content they made themselves,
S2: they didn't do it at UGC. So they have a
S2: number of they had a faster way to go to market.
S2: They did was easier, but it wasn't really as transformative
S2: as Sandbox was doing because they just want made games
S2: in this new model without trying to increase that isa.
S2: So they skipped Item four, which was you. Gotcha. It
S2: did make them go to market faster, but I think
S2: they're aware that they missed that piece. They did this
S2: launch a new thing that is also UGC So they
S2: obviously know they're going to start filling in those gaps.
S1: OK, so what are the five again altogether?
S2: So the five are the change to the model, right?
S2: That illusion from from a free to play and to
S2: play to, erm, the financial model, the the the ability
S2: to sort of bring more money upfront and the change
S2: to the way users are paying and spending and the
S2: change the financial model is the first one. The second
S2: one is the way that you involve your owners and
S2: your players and your margins and your influencers into actual
S2: ownership and you turn them into advocates the way that
S2: you know you're an advocate for Apple. Right? That happens automatically,
S2: much more powerful. You give somebody something. You give them
S2: a stake in something. They are way more likely to
S2: think of it positively and recruit others. Mm-Hmm. The second
S2: one is that the change in the model of ownership
S2: by bringing people into the ownership.
S1: And third one,
S2: the third one is the fact that these companies right
S2: now have a temporary advantage of being fundamental community DNA
S2: companies where they listen to their communities. They're hyper responsive
S2: to feedback because of one and two, right makes number
S2: three make a lot of sense to them. I don't
S2: know how long it will take for the other companies
S2: like Metta and Microsoft to change their entire DNA. To
S2: be like that, it might never happen. So all of
S2: the existing companies that are that have grown up inside
S2: of crypto gaming have this fundamental DNA that is, let's
S2: listen to our community, which is a great practice for
S2: any company and quadrupling a great practice for companies that
S2: are in crypto game.
S1: OK, so finance mavens community and was four and five.
S2: Fourth is UGC. Right. And not only just the ability
S2: to create UGC, but the ability to incentivize that. UGC
S2: And most of the money goes to the UGC creators.
S2: That's the creators of the world do make 95 percent
S2: of the money, right? This is an improvement over the
S2: other models for UGC. They're out there that you know
S2: you can make YouTube videos. What only one thing you
S2: can do on YouTube. You can record yourself and you make,
S2: you know, 25 percent of what what is coming in
S2: from advertising for this gaming is actually got more money
S2: behind it, more user behind it. Ninety five percent goes
S2: to the U.S. creators, and the amount of flexibility that
S2: UGC is much, much greater. OK. And then the fifth
S2: one is that decentralization and persistence, the fact that you
S2: can port something from here to here, I can leverage
S2: spider tanks, oh, I can't kind of come in to
S2: control the whole thing. So your actual ownership of is
S2: more true because because it is decentralized.
S1: So would you say that's the closest to what three
S1: is number five?
S2: With. Yeah, I think the persistence and decentralization ownership, that's
S2: one of the key elements of, you know, cryptocurrency as well,
S2: no one can take down my currency that you know,
S2: that I earn on on bitcoin. So I think that's
S2: the most conventional sort of web theory of blockchain.
S1: Interesting. So question for you about examples. I love your example.
S1: I know you're a huge Disney fan. Can you talk
S1: through like what Disney should have done or what they
S1: still can do with, like issuing some sort of NFT
S1: with like special powers and like how it feeds into
S1: all five of your models?
S2: Yeah, so well, with with this, let's talk about Disney Plus.
S2: So now these five things these five things or these
S2: are what existing crypto gaming. And so when we jump
S2: over to Disney Plus, we're going be talking about just
S2: entertainment rights and all of that exactly the same. But
S2: but if you love this example, so Disney Plus, I'm
S2: a huge fan of Disney Disney. You know, I love
S2: Star Wars. I love Marvel movies. My kids all love
S2: all princess movies. I love Pixar movies. This is like
S2: four of the best types of content there is. So
S2: when they announced Disney Plus, I'm like, OK, I'm in.
S2: I am going to own Disney Plus for my entire life.
S2: There is no chance that I won't. I know that
S2: the second it gets announced that no matter almost no
S2: matter how much they even charge, they charge four dollars
S2: a month. I would still own Disney Plus. If they
S2: charge one hundred, I would probably still own Disney Plus.
S2: It relates to all five of my kids, myself, my wife.
S2: It is of great importance and I believe it is
S2: going to do very, very well. I'm like Disney Plus
S2: is these are the kings of content. Remember, we called it. Yeah,
S2: I said, this is going to do extremely well. There's
S2: no prediction. It's going to be on the nose for
S2: a while is going to do it's going to get
S2: better and better over time. And they will win if
S2: they're going to be three winners. It's one of they
S2: will be one of those winners. So I would be
S2: willing to invest in Disney Plus if it was a
S2: carve out from Disney. Now, I don't know how successful
S2: Disney would be. And, you know, coronavirus can by kick
S2: the ass of their parks. But I knew and I
S2: was sure Disney Plus was going to be successful if
S2: Disney Plus had been modeled using this new blockchain. And
S2: they had said, Hey guys, we're going to take a
S2: page from the books of these other hyper growth, successful
S2: financial models. And we're going to we're going to launch
S2: a piece of Disney Plus. We're going to get an
S2: NFT and this NFT is going to be a VIP pass.
S2: And there's a lot of privileges we can add. And
S2: this is where Disney let's just keep it simple. First
S2: things first, this VIP pass is going to give you
S2: a lifetime subscription to Disney Plus, and you're going to
S2: own it and it's fully transferable. So this thing is
S2: going to cost a thousand dollars. Now, Disney Plus cost,
S2: is it six dollars an hour? I don't know, but
S2: that's a hundred months of Disney Plus. Mm hmm. Hey,
S2: we're going to sell four thousand dollars. We're going to
S2: do 100000 of these VIP passes for Disney Plus. Well,
S2: what would happen on day one? Prior to day one,
S2: I would have gone out about three. Right? Because I
S2: would have immediately invested in that micro opportunity because I
S2: was such a big believer in it. I would have
S2: bought 30 and I said, Hey, Dan, I'm going to
S2: sell these for a long time because I think the
S2: is going to go up. But if you want to
S2: watch Disney Plus having a loan, you one of mine.
S2: So here's one of my What am I going to
S2: VIP badges? So you can also watch Disney Plus. I'm
S2: going to let all my friends use my my things.
S2: I get to be cool for a while, but I
S2: also I believe that the value think significantly. So now
S2: there are there are 100000 of these things, right? They
S2: will sell out on day one, for sure. I bought
S2: 30 myself. People like I get to own a VIP
S2: lifetime pasta, always on Disney Plus. How many people are
S2: there who bought just like me? Quite a few. Which
S2: is why their numbers have blown up. They would have
S2: earned more money on day one than they have earned
S2: up to date so far. That's on day one. And
S2: it would not cannibalize their audience is actually a small
S2: percentage of their audience where they're charging a thousand dollars.
S2: Now what happens on day to on day two? You
S2: say to me, Hey, Andrew, did you notice that these
S2: things sold out instantly and their value was now doubled?
S2: I can't buy them anymore on the open market. They
S2: now cost two thousand. Will you sell me one of
S2: yours for fifteen hundred? And I go, Okay, sure, you're
S2: my friend. No problem. I will sell you one of
S2: my Disney VIP passes for fifteen hundred. I now make $500.
S2: Five percent. That transaction goes back to Disney. Wait. Disney
S2: just covered their monthly subscription fees for all my 30s
S2: and 40s that I have off of off of Vine.
S2: So they still are making their money. Now you also
S2: own something that is part of this future right now.
S2: Assuming they do this correctly and they don't go just
S2: print way more of these, their value goes up and up.
S2: And three months later, there are more and more people saying, Well,
S2: I want to have a lifetime pass for Disney Plus.
S2: And actually, if I'd been smart and I bought one,
S2: the value of that pass without before. The more people
S2: who do that, the more that the value was driven.
S2: And now I have I have twenty eight sell well
S2: passes that are all worth four thousand dollars. I go,
S2: You know what? I give some of my kids to college,
S2: so I'm going to go and liquidate 20 of these
S2: and I'm going to make 80 grand. I have now
S2: pocketed 50 grand. I've benefited personally off of the success
S2: of Disney Plus because I called it as an investor.
S2: I didn't it to be a Qualifié investor. There wasn't paperwork.
S2: There's not particularly like any complexity with doing that. So
S2: I've now made way more money than I invested in
S2: this thing. That was pretty reliable, and this would have
S2: would multiplied almost for sure. And I still have my life.
S2: A VIP for Disney Plus now, has Disney Plus lost anything? No,
S2: they're way ahead financially. They're getting residual income off of
S2: the secondary market sales, which is more than they would
S2: get off of subscriptions. I'm able to be able to
S2: signal that I'm a cook because I own a Disney
S2: VIP pass. I don't have to worry about paying that
S2: bill anymore because honestly, I was going to pay that
S2: bill for the rest of my life anyway. It's not
S2: going to happen. I still wanted to do this same thing.
S2: The MCU like, Hey, you know what? I buy a
S2: a one time ticket to go to a movie theater like,
S2: you know, and I can just go every single week.
S2: They keep trying to do this with subscription fees, but
S2: like they could do with an NFT and they could
S2: raise theatres, could do the same thing with a smaller
S2: people and actually raise a lot of money in the
S2: short run, puts money in their pockets and then they're
S2: still going make their money off a residual. Now, I
S2: don't know how long will be until a company like
S2: Disney can adapt to a new kind of model. But
S2: this model's been proven in the nifty world by people
S2: who aren't significant brands. And so my expectation is within
S2: two to five years, this will sweep through everything, right?
S2: And it's going to be now a hand in hand. OK,
S2: I'm watching Disney Plus. OK, what's the part that we're
S2: going to do that is persistent and decentralized and gives
S2: ownership out because I want to create all those advocates.
S2: I want to have more money upfront. You know, I
S2: want to be seen to be give back to my community. OK,
S2: that's half of it. And then what's the other half? Yeah.
S2: And how many years will be until it happens and
S2: happens everywhere? It's starting to happen, but it'll be slow
S2: because it's hard for people like Disney to go, OK,
S2: here's our conventional projection. We're using Disney Plus as using
S2: a model from tells you to like you to look
S2: at Netflix and see what Netflix do. They're not thinking, OK,
S2: what's this innovative thing that just changed the way money
S2: is flowing, the way users are engaged? That's not where
S2: people are at yet. Not yet, but gaming will lead
S2: the way for everything. And what's gaming does this, which
S2: is sort of starting to, you know, Metta and Microsoft
S2: and Blizzard? And you give us one more year in
S2: gaming and then two more years in gaming. This is
S2: going to sweep through and other gaming companies who don't
S2: adapters can be decimated because it's going to be so
S2: much superior in terms of its adoption. So a couple
S2: of years from now, you know, it's Fortnite will be
S2: doing this just like everybody else. All of gaming will
S2: do it. And then it'll become very easy for companies
S2: like Disney Plus to be like, Oh, wait, you know what?
S2: It works in gaming. Why wouldn't that work over here?
S1: Yeah. And I think you even had an example where
S1: somebody was trying to sell tickets to a club, to
S1: a deejay club or whatever and they like couldn't get
S1: any traction. They were talking to you about an NFT
S1: is and you're like, Why don't you just do this instead?
S2: Yeah. So so I know these guys and they have
S2: an event marketing company in Prague, and what they do
S2: is they go and they give out free tickets and
S2: they give out free tickets to different club events. And
S2: the reason they got free tickets is when you give
S2: out 300 free tickets to a club and a giant
S2: party happening at this club. Well, those three people will
S2: go and bring another 900 people right, and then they
S2: get a very small percentage of the door. So their
S2: job is to go out and get out 300 free tickets. So.
S2: So that's one thing where people show up to this
S2: club and then they get a small percent of the
S2: door and that's their model. And they're like, Yeah, we're
S2: always looking for ways to improve our model. I said, OK, well,
S2: you have a mailing list. You go out and give
S2: out tickets in person. You do these very things that
S2: these tickets out well, why don't you just sell the
S2: interests of these clubs costs $8000. So cost, you know,
S2: let's say it cost $10 to get in one door.
S2: Cost $7. Medicare cost $7 to get in one of
S2: these clubs. Mm hmm. Well, when you give out those
S2: theater tickets, people are happy because reading something free, you're
S2: turning them into your marketing and for free else. Why
S2: don't you take those people that you're regularly emailing? Take
S2: people that you're really going out and trying to get
S2: them to sign up and go to these these parties
S2: for free and actually offer those people hey, instead of
S2: one free tickets, I'm going to give you a free
S2: ticket to every party happening in Prague, in Prague, at
S2: one of these giant clubs, and they actually have one
S2: every night because they've been doing this event thing every night.
S2: So there are seven nights a week and people, you know,
S2: young people in the party love to go to clubs
S2: so you can go and say, Hey, by the way,
S2: it normally costs you seven dollars to get into one
S2: of these clubs doing one of these events because they're
S2: really cool. Hey, if you buy this thing right here,
S2: which costs $50, this is lifetime free lifetime. How many?
S2: How many of these parties do you go to per month?
S2: Is it? How often? How long is it until you
S2: get your money back? Right? And they said these people's
S2: return rate is super high and these people are going
S2: to one or two parties a week. Mm-Hmm. So in
S2: what month they will get their money back? Right? So
S2: you can say to them, Hey, guys, I could give
S2: you a free ticket or I can sell you a
S2: lifetime supply of free tickets. Every one of these parties
S2: you can go into and they can go out and
S2: they could sell a thousand or 2000 or 4000 of these.
S2: And it's the technology makes it very easy for me
S2: to do this, and that gives somebody a VIP pass
S2: to get in all these clubs. First of all, it's
S2: signaling it's cooler. They get to show up and be like,
S1: flash their pass and special line, whatever.
S2: Yeah, special line. I have a thing that, oh yeah,
S2: it's free for me forever. Wait, how do I go
S2: one of those? You can't. They're sold out. You want
S2: to buy mine? It costs you $500 because you can't
S2: even buy it. Sergeant more they go when they sell
S2: the first five hundred now that much money to them.
S2: Five hundred at fifty dollars to them is actually a
S2: giant sum of money compared to what they make as
S2: a percentage so they
S1: could upgrade their club. They could do a whole bunch
S1: of stuff, right?
S2: They do all kinds of things, did it through the
S2: marketing agency, drive people to clubs, but they could basically,
S2: they would not have to go. And market is much
S2: anymore because more people would own these VIP passes and
S2: they would have way more money upfront. Hmm. Now is
S2: there a problem in the long run with having a
S2: bunch of people who show up to these clubs and
S2: get them for free? No, it's their fundamental model anyway.
S2: They already want people show up for free. This goes
S2: back to our point number two of turning like owners
S2: and mavens and try to get people to bring other people.
S2: They're using that same kind of concept. This is magnifies
S2: it and actually lowers their workload. They could do this NFT,
S2: and they could not even do the rest of what
S2: stuff to do. They could literally just sell EMT and
S2: then say, You know what? We're done. The only thing
S2: we do is we get two percent of the door.
S2: You have a right to use our app at your door.
S2: They go to a club and say, Hey, by the way,
S2: we want 30 percent of the gate in exchange for
S2: you using our app, so now let's face gambling.
S1: This is crazy. So if somebody were to respond and
S1: say you're going to lose out because people are just
S1: going to be coming for free. That was the point
S1: in the first place
S2: was to get the. Right? Exactly. Yep, yeah, that's amazing, right?
S2: They were already trying to turn people into recruitment for
S2: other people, right? When I go to a party, I
S2: bring and I go to this club, I bring three friends. Yeah, right?
S2: It's the exact same model. And they just made it now.
S2: So it's easier to implement, right? So they're getting all
S2: kinds of utility here, actually gaining simplicity for business model
S2: like the actual business model that flows without as many humans. Again,
S2: a bunch of cattle up front and they have no problem.
S2: That's what they're doing. Now that simplicity means they can
S2: do this in Prague, and they can pick up their
S2: exact methodology and they can go to Paris and they
S2: can do the exact same thing. And how much effort
S2: is it going to go to this thing in Paris?
S2: They were going to in Prague when it's all based
S2: on selling out these, these adapters that give you VIP entrances.
S2: They walk into the clubs show what happened in Prague.
S2: Now it's really easy to replicate their business. So we
S2: take in business and made it easy to replicate through
S2: this technology innovation, giving them way more money. Now it's
S2: actually like right away, they'll have plenty of money to say,
S2: You know what? We're done here. Prague is running by itself.
S2: We're earning residuals on this. We're earning a percentage of gate.
S2: Let me go to Paris in.
S1: So, so the fundamental concepts of revenue generation initially combined
S1: with turning people into Melvins. These are kind of universal.
S1: I'm calling these like the ring line five or something.
S2: I think there's three that are better universal like for
S2: all crypto, right?
S1: Which is number three, also universal.
S2: It's not universal because it's an advantage that the crypto
S2: gaming companies have. So I don't know that it's universal.
S2: I mean, I don't know that bitcoin isn't over here. Like,
S2: are they being hyper responsive to community? I kind of
S2: doubt it because there is no bitcoin, right? There's so
S2: so I don't know. That number three is, is it
S2: true across all of Web3?
S1: OK, but a number of them are actually just true
S1: of like new ways of doing business, and they're just
S1: being spearheaded by gaming.
S2: Yeah, right. Spearheading has has more powerful like all these
S2: things multiply together, right? You take you take these five things,
S2: you know, they all multiply together. Gaming has these five
S2: powerful things multiplying together. That's why this is like since
S2: July of last year, one game has changed the whole
S2: gaming industry. And you could go and talk to any
S2: any game company and say, Hey, by the way, what
S2: are you doing for crypto? And what you're going to
S2: get is either pain, joy or fear because every single
S2: person is being dragged into conversations about crypto because they
S2: all have realized, Oh, wait a second, that the why
S2: has been proven the what the first y of like
S2: holy shit exchanges. All the money is enough, and now
S2: everyone's going to change. But a bunch of these same
S2: drivers are sure and all of you know, crypto, whether
S2: we talk about Disney Plus or, you know, ticketing or
S2: a lot of things, you're also crypto currency.
S1: Yeah, so that's what I love about this conversation is
S1: that I think what we figured out or I mean,
S1: I think you already knew and I already knew a
S1: little bit, but it became crystal clear in that conversation that.
S1: It's not about the tech, it's not about an NFT,
S1: it's not about a cryptocurrency. This is fundamentally changing how
S1: businesses operate, how they generate money, how they get people excited,
S1: super importantly, how content is created for them. It's really
S1: hard to have a content creation team. You can only
S1: make so much. But if you can get people excited
S1: and have them create their own stuff, which they have
S1: financial incentives to actually creating that sense of that sort
S1: of interlocking incentives work together to create something amazing that
S1: works for gaming. It also works other places. You had
S1: a dirt example do the dirty example.
S2: Yeah, so so after I got him the space, which
S2: you know, early on, you were very helpful with teaching
S2: me like technology and protocols and all that stuff. And
S2: then I went and to conferences. I talked to lots
S2: of people, and for me, I had a revelation when
S2: I was talking to a guy who had a whisky company.
S2: And I'm like, Why? The same thing is like, why? Like,
S2: what is the possible advantage of sticking an NFT barcode
S2: on a casket? Why does that matter? Like, like, I'm
S2: so skeptical of this. And after talking to Guy for
S2: an hour, I walk away going, Holy shit, that actually matters.
S2: This guy is actually able to do a bunch of
S2: things that that actually really do matter because he figured
S2: the model out. And so I started to challenge myself
S2: of saying the why in regards to anything. And like
S2: the why is there a way that you know that
S2: we can leverage blockchain and these crypto concepts on different things?
S2: So I'm at a I'm at Christmas dinner with my
S2: brother in law who always says, Oh yeah, you do
S2: things with computers. Those aren't real. I build houses. That's real. Like,
S2: that's kind of a shtick of the 80s. Feel funny.
S2: And so I say to him, like, Hey, listen, give
S2: me any problem that you have. And there might be,
S2: you know, I'm gonna try to find a way to
S2: solve that problem in the future using using blockchain. And
S2: he goes, My problem is dirt. I say, OK, this
S2: is perfect. This is the forest away from from technology.
S2: You can possibly give me your problem of dirt. And
S2: he's like, I have dirt that I need to get
S2: rid of. It's going to cost me $30000 to go
S2: and dump it into, you know, landfill or appropriate EPA
S2: approved place if I can get a golf course to
S2: take it. I'm calling golf courses every day, trying to
S2: get some golf courses. Take it because occasionally they'll take dirt.
S2: But I am always stuck with this problem of having
S2: to get rid of dirt. And then, you know what,
S2: in a couple of months, I'm actually going to buy
S2: dirt from somebody. It's super annoying that I both need
S2: to sell dirt and I need to buy dirt. And
S2: there are a lot of people at the same problem,
S2: but like, that's a real problem, like dirt under your fingernails.
S2: How are you going to solve that with, you know,
S2: digital ones and zeros? And I go, OK, let's let's
S2: try this out. So how many contractors are there who
S2: deal with dirt, who want to either buy or sell
S2: dirt in the in the Bay Area right now? And
S2: he's like, There's 10000. I'm like, OK, would you spend
S2: $5000 to have a pass that allows you to dispose
S2: of or pick up dirt? He said, For sure, I'm
S2: going to spend thirty right now to dispose of a
S2: bunch of dirt. Why wouldn't I spend $5000? I said, OK, great.
S2: Let's convert those 10000 people, uh, into. I mean, this
S2: is this assuming we can do some you have connections
S2: and that there's some way for us to get this started.
S2: But let's assume that's the case. We go out and
S2: we tell all these guys, Hey, by the way, you
S2: buy a $5000 pass to drop off and pick up dirt. Uh,
S2: it makes sense for all of them. They're all going
S2: to buy into this pass. Right now, you have five
S2: million dollars to create a center and Stanford center that
S2: will pick up, store and then distribute dirt. You've got
S2: plenty of money to actually process this like that's way
S2: more money than you're going to need to actually process
S2: all the dirt and allow people to come in and
S2: take it. And now all of you have this right,
S2: you're the owner. You're also going to be an advocate.
S2: So we only get five thousand people start with every
S2: one of your people who, you know, is like, I'm
S2: dropping off the dirt and my dirt center and they go, Wait,
S2: your dirt center? Yeah, I own part of the dirt
S2: center that I can drop off and pick up whatever.
S2: I want that right? So it will spread right. It
S2: has the capacity to spread from person to person to
S2: go sell out. Right now you've sold out and again
S2: you limited supply. This, uh, so there is 10000 passes.
S2: A new contractor moves in the Bay Area and he goes,
S2: Wait a second, you mean that I can get rid
S2: of and pick up dirt whenever I want. This is fantastic.
S2: How do I get in on that? You can't all
S2: the passes were sold. OK, I really want it on that.
S2: I've got three major projects coming up. Who has a pass?
S2: I can buy some else over here. I'm retiring next
S2: year and I don't think I'm doing any more stellar
S2: dig out. So you know what I will sell. You
S2: might pass for 40 grant. I'm going to be nice
S2: to you because you're a nice guy. Guy buys a
S2: pastor 40 grand, so somebody over here bought a pass
S2: for 5000 brands to pick up and drop off dirt, right?
S2: A couple of days later, someone who showed up needs
S2: a pass. They sold their pass. They pocketed the 35 grand. Right.
S2: So they benefited by the marketing adoption of this center.
S2: The dirt centre gets a five percent cut to maintain
S2: their staff and their infrastructure. That $40000 transaction pays money
S2: back to the drawing center to keep it right. Right?
S2: Who owns the dirt center? All the people who bought
S2: these in a piece, right? He transferred his ownership of
S2: his piece of the drug center to this new guy,
S2: paying money to the senator to keep it running, pocketing
S2: a bunch of money himself. All of those initial people
S2: who created a strip center now that they've actually made
S2: a bunch of money off of this dresser because all
S2: of the things that they possessed, they can let us see.
S2: You know what? I'm selling kid to college. I don't
S2: care about dirt any more. And they can sell their thing,
S2: and it's worth the money because the value has been
S2: proven out. So this allows for upfront fundraising to create
S2: the dirt, so it allows for distributed ownership, the center,
S2: all those people are involved. It allows for those people
S2: to become advocates of the center, allows them to share
S2: in the benefits and the rewards, right. In a way,
S2: this is like UGC for business, right? A guy created
S2: his own custom use case that, you know, is some
S2: investment company going to come and say, or some start company,
S2: I want to sell dirt. They're not going to do
S2: that right? But but we took the financial possibilities and
S2: we made them granular enough and flexible enough that they
S2: could apply to contractors and the infrastructure is easy to
S2: do that. I don't have to go through as many
S2: different legal proceedings to even transfer ownership. Again, all of
S2: this has made a lot easier when you're doing it
S2: on blockchain. And so the ease of simplicity, if we
S2: harken back to one of the really early examples of
S2: World of Warcraft versus Axie Infinity Warcraft, you can make
S2: more money in. But it's illegal. It's hard. Actually, infinity
S2: is it's legal and it's easy to change to making
S2: it easier does actually alter the adoption. So the fact
S2: that the blockchain ownership is shared much more easily and
S2: much more transferred does help enable. This does help make
S2: it possible. And that's a solution for dirt, which is,
S2: you know, like, is that going to happen tomorrow? Probably not.
S2: Is that going to happen three years from now? There's
S2: a good chance.
S1: Yeah, and there's a million problems that are just like problem. Right?
S2: Exactly. Yeah. One of the things that the podcast you
S2: referenced earlier mentioned was regulation and how it's very hard
S2: for the government to regulate things and keep on top
S2: of all of the various entities that are out there.
S2: It's a lot easier for users to self-regulate, and Uber
S2: and Yelp and Rotten Tomatoes are an early example of this.
S2: That isn't the full, fully able form, but they allow
S2: for peer to peer reviewing. If you're a bad driver,
S2: you get put out of business rankings. People give you
S2: bad reviews. If they get you big in your Uber,
S2: it smells and you're mean you can put out of business.
S2: They have decentralized. That relationship to different sides are both
S2: validating one another. Yeah, that kind of model is the
S2: model that we need to regulate all the things in
S2: the future. And that kind of model is made much
S2: easier through blockchain, right? Uber is still an example of
S2: that type of regulation, but it's still owned by Uber.
S2: But that model can be further improved by being blockchain,
S2: and then it can be applied to nearly everything. And
S2: so we'll have way less transactions that are better, not
S2: peer to peer regulated. We're going to get way more
S2: punitive regulation. That's again, the reason why Alleghenies does something
S2: to disrupt the community. Well, they're being regulated by their community.
S2: Their community has a voice, their concerns, boat and a
S2: lot of games and companies that are in the space
S2: are allowing for that kind of regulation. So the sandbox
S2: goes and has people vote on things before they're going
S2: to do a thing that changes the way their currency
S2: is deployed, structured, they go and they hold a vote
S2: and people who hold an ownership vote. And so they're
S2: decentralizing that regulation implicitly inside of their model.
S1: Interesting, so that's a very web Web3 sort of thing
S1: with ownership and voting, yeah, inside of an ecosystem. Awesome. Well,
S1: this is a this is fantastic. I think hopefully we've
S1: stitched together how this is a pretty big idea. I
S1: like I like your five tenants. I think they're really
S1: useful and I do agree with you. I think we
S1: could talk about this in the context of gaming, but
S1: it really is much bigger than that. It's just gaming
S1: is leading it.
S2: Yeah, yeah. And gaming is a will because gaming is
S2: bigger than all other forms of entertainment. It's going to
S2: lead the way and then everyone else will just follow suit.
S1: Now, consider what needs most people need a community, most
S1: people need to make money, and most people need marketing.
S1: But these are things that are just better done in
S1: this model, so yep, like we were saying, these are
S1: incentive models, not really technologies. They're kind of the same.
S2: But yeah, the tech, the technology has only been a
S2: small step forward. Like, that's the thing is, when people
S2: were first talking about, Hey, let's have decentralized trust for
S2: your trust, OK? Technologically, it doesn't matter at all. But actually, psychologically,
S2: it matters when you create that persistence. And so this
S2: this is not a like it's not technically that different
S2: to stick a NFT barcode on a whiskey cake and
S2: was like, What am I like? Listen, this is not
S2: technically that different. You're just changing the way ownership exists. Well,
S2: when you when you do a bunch of these small,
S2: subtle changes and you involve people in the ownership and
S2: you make things easier and you make things easier to
S2: vote and you make them persistent and you start to
S2: do all these little tweaks, suddenly it actually has powerful psychological.
S1: They're feeding off each other. They're having to each other. Yeah, right?
S1: And here's what I think a lot of people don't realize,
S1: just like NFT or whatever, there's lots of rug pulls
S1: like crypto could fill. Bitcoin could fill. Ethereum could fail.
S1: Even blockchain could fail. But these ideas that you've talked about,
S1: which are enabled by those technologies, they will resurface.
S2: Yeah. These ideas are not going.
S1: Yeah. Even if this stuff actually, you know, crashed, it
S1: would rise from the ashes in a different form. Maybe
S1: it would be a different blockchain. Or maybe it would
S1: not even be a blockchain, but it would have the
S1: same features.
S2: Yeah, right, exactly. I mean, there also might be an
S2: evolution on the speed at which technology and ideas are evolving.
S2: It is possible this thing doesn't get to its full
S2: maturity before it gets replaced by something even superior inspired
S2: by it. Yeah, that's possible. I actually think that's almost
S2: the most likely thing to happen. Is this the speed
S2: of innovation at will so quick that if someone were
S2: born and innovate, a couple of things that again are
S2: going to help multiply these advantages?
S1: Yeah, but I think certain certain components are so fundamental
S1: that you can't go too much further. I mean, ultimately,
S1: you have you have companies, you have people, you have marketing,
S1: you have the raising of money and you have profit
S1: and you have ownership. You the certain things are are
S1: kind of static. The question is like, how good is
S1: the technology at magnifying those things?
S2: You know, I have what my colleagues recently calling me like, Hey, listen,
S2: you know that if you give people a piece of
S2: candy before you try to sell them something, they are
S2: four times more likely to buy from. That's that's the
S2: same idea, what you just change a little bit of
S2: the psychology of involvement in some way. It just changes
S2: things materially, so those things won't be different. Those are
S2: human drivers that, you know, we're going to change our
S2: nature overnight. And it's all about, you know, finding the
S2: right ways to leverage that that can help grow the
S2: most correct kind of business, like I actually think that
S2: these businesses are better models for the future. We're not
S2: going to be, you know, people who dislike Facebook being
S2: the man we yeah, it's actually going to be really
S2: hard in this model for there be a Facebook in
S2: the future. Yeah. The Sandbox and Cal games are not
S2: going to that. They're very different. They're giving out most
S2: of the value of the users. It's mostly UGC. They're
S2: super committee directed. It's decentralized. You can pick up and
S2: walk away. So when, when, when this next metaverse and
S2: this next level of all these products is built, it's
S2: not around these sort of giant corporations that have all
S2: the power.
S1: So, I mean, is that a way to summarize, I mean,
S1: this is a sentiment incentives that works more for the
S1: user than for the big corp.
S2: Yeah. That's a really good way to describe it. This, actually,
S2: because this is all these are all benefits for users.
S2: And a lot of people don't realize that there was
S2: a magic influencer who was, you know, playing magic recently
S2: went on a big grant of like, Hey, I want
S2: to oh, my magic cards for my digital game. Like,
S2: why can't I hold my magic but not own a piece?
S2: Because the stigma out of NAFTA made him not want
S2: to be an MP. But what he wanted was he
S2: wanted the old school world of only ration cards. Yes.
S2: Once magic gets off their ass and allows you to
S2: honor magic cards, they basically will be doing crypto gaming
S2: and it is a superior model. That is what made
S2: magic huge to begin with, because that model was more
S2: present in physical, tangible things. Digital is an easier way
S2: to reach more people. But once you combine those two models,
S2: it's going to be way more effective. So the second
S2: magic and another company come out and show how much
S2: better it is. Everyone can follow suit. People are going
S2: to own their own magic cards and the guy over
S2: here saying, why, why? Why are you try to steal
S2: my money by selling NFT? No, no. We're trying to
S2: give back to you, right? We're gonna make it so
S2: you can own this thing. I want to go live
S2: in a regular world. I want to play in a
S2: game where I can earn money, right? I want to.
S2: I want to have the things that I'm doing. Relate
S2: back to my own financial prosperity. Like, that's better.
S1: Yeah. And the companies don't get screwed either, because they
S1: can get all these residual fees when when things are
S1: being transferred around, if they don't remember. Exactly. So the
S1: users get most of it, but they still get rich,
S1: like in a peripheral way. Accidentally, they get rich.
S2: Yeah, I've had someone say to me like, Well, it's
S2: all about how much money there is. There's only so
S2: much money like so that's not really true. When you
S2: when you think about we go back to the first
S2: change from the pay to play to free to play right. OK,
S2: free to play games, make more money. In theory, some
S2: of them do other them make less money. We have
S2: moved the money to be in a more appropriate place. Right.
S2: So the money where it is being changed and that
S2: that is being realized. So there's the same amount of money.
S2: But now the things that are good rise. The top
S2: free to play allows more for the things that are
S2: good to rise to the top. This does that even
S2: more so. So that new good things can come out
S2: and in a blink of an eye, they'll be all
S2: over the place.
S1: Yeah, I mean, that's that's one way to think about
S1: this is it's a giant engine for content creation. Yeah.
S1: I mean. It's only one of your items, but I
S1: feel like a lot of things are feeding into that
S1: because the content creates the communities around it, which creates
S1: the money which creates the hype which creates the Melvins
S1: and the more and more content you have. It's just
S1: the whole ecosystem gets super rich. People are excited. They
S1: want to play different universes. And to your point, that's
S1: not zero sum money that is more and more money
S1: around more and more content. So the better you incentivize
S1: the content, the more money there is.
S2: Yeah, if we talk about, like, really far future and
S2: in my case, I'm talking about super, far future, let's say,
S2: five years, right? I don't know that we're going to
S2: see the same kind of thing like a tick tock
S2: or a YouTube or Facebook come and take over full
S2: segments that and these companies being sort of like owned
S2: and backed by major corporate powers. Instead, what's going to
S2: happen is The Hunger Games not right? The Hunger Games
S2: board was a better version of a type of battle
S2: inside of Minecraft. That kind of thing is more innovative.
S2: And so we're going to have more things that come
S2: from just random communities because the past is to being
S2: successful in bigger way, more so now we're we're allowing
S2: that spark of innovation, the idea that innovation is kind
S2: of like you need the right level of opportunities and
S2: the right combination of ideas and then something something.
S1: It's an evolution play
S2: and evolution play. Now we're we're multiplying the speed of evolution.
S2: And so but it's not a small world where we're
S2: talking about we're doubling the speed of evolution we're talking about.
S2: We're going 100 x the speed of evolution. And that
S2: speed evolution means that some big person who comes by
S2: and said, Hey, by the way, I want to make
S2: a tick. I want to recreate YouTube. I want to
S2: I want compete with Facebook for, you know, social media
S2: platform like that. Large lumbering play isn't going to be
S2: the point at which it's going to be three guys
S2: who got together, who were drunk while playing some music,
S2: and they figured out a thing that was kind of funny.
S2: That was more interesting. They deployed it. They suddenly got
S2: a bunch of money on it. It suddenly works way better.
S2: Nobody loves this thing. Now, this thing is a new
S2: super hot thing, and it came from nowhere.
S1: All right. Well, this is a this has been fantastic,
S1: let's continue doing these conversations, maybe the other one's going
S1: to be shorter, but I really enjoyed having you and
S1: talk to you again soon. Hey, my pleasure.