WEBVTT - Trinity's Tai on Pokemon Go: Gameplay Is New Blockbuster(Audio)

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<v Speaker 1>You're listening to taking stock with Pimpbox and Kathleen Hayes

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<v Speaker 1>on Bluebird Radio. Nintendo, Yes, Nintendo, the maker of the

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<v Speaker 1>popular Pokemon Go mobile game. The shares of Nintendo are

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<v Speaker 1>up nearly ninety percent in the eight days since the

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<v Speaker 1>game's launched. Indeed, Pokemon Go has been responsible for, in

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<v Speaker 1>some cases, grown men falling off of cliffs in California

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<v Speaker 1>and angry residents even hurling eggs at crowds of monster

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<v Speaker 1>hunters in Australia. What does this mean that you should

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<v Speaker 1>buy the stock of Nintendo and what's the future of

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<v Speaker 1>video gaming? We've got Gus Tie. He is a general

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<v Speaker 1>partner at Trinity Ventures. To tell us more. It joins

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<v Speaker 1>us from men Low Park, California, and he can be

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<v Speaker 1>followed at Trinity Ventures on Twitter. Gust Tie, thanks for

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<v Speaker 1>being with us as a general partner at Trinity Ventures.

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<v Speaker 1>Do you wish that you invested in the company that

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<v Speaker 1>made Pokemon Go? Him? It's great to reconnect with you. Uh. Indeed,

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<v Speaker 1>I would very much would have loved to have been

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<v Speaker 1>an investor in that company. That company has a spin

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<v Speaker 1>out of out of Google, So I wonder what Google

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<v Speaker 1>is thinking about that spin out. Tell us about Pokemon

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<v Speaker 1>Go and some of the details for people that have

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<v Speaker 1>not attempted to play it. Yes, poke, Pokemon Go is

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<v Speaker 1>a real phenomenon. It's a game that's a mobile game

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<v Speaker 1>that was launched last week and as of today, according

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<v Speaker 1>to serving monkey, there are twenty five million people who

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<v Speaker 1>play this every single day. And that's for context, is

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<v Speaker 1>five million more people than all the people in New

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<v Speaker 1>York State. It's the combined total of population of ten

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<v Speaker 1>largest cities, so it's quite amazing. And the nature of

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<v Speaker 1>the game is that when you open it up and

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<v Speaker 1>you walk around and you use it like a mapping

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<v Speaker 1>software like a Google Maps or Apple Maps or ways,

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<v Speaker 1>these objects will appear and their Pokemon animals. Now, Pokemon

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<v Speaker 1>is a type of card game and video games and

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<v Speaker 1>for those of you don't know it, it's around collecting

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<v Speaker 1>pets that you grow, and it has a really neat

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<v Speaker 1>known I p uh intellectual property around the item and

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<v Speaker 1>uh it harkens back memories of childhoods for people who

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<v Speaker 1>are older and for younger people watch cartoons. They can

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<v Speaker 1>really relate to the characters. Now, the shares of of

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<v Speaker 1>of Nintendo, they really only receive a portion of Pokemon

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<v Speaker 1>Goes total revenues, right, because they've got like a third

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<v Speaker 1>steak in the Pokemon company and then what an estimated

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<v Speaker 1>maybe five to ten percent steak in the actual game

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<v Speaker 1>developer Niantic. Yes, yes, and and so so the the

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<v Speaker 1>there's a good question for how much Nintendo's stock should rise.

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<v Speaker 1>Uh and and if you were to argue it was

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<v Speaker 1>unfairly and lowly priced before, this may be awakening of

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<v Speaker 1>the market if you felt it was properly priced. Adding

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<v Speaker 1>ten billion dollars of value for the cash flow stream

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<v Speaker 1>that they would be receiving from this title might be

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<v Speaker 1>a bit of a stretch. I think the analogy for

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<v Speaker 1>how to think about cash flow would be the company

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<v Speaker 1>called super Cell, which has the top selling game prior

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<v Speaker 1>to Pokemon Go, called Clash of Plans on both the

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<v Speaker 1>Android and on the iOS. That title probably produces over

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<v Speaker 1>a billion dollars of revenue a year and huge amount

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<v Speaker 1>of profits. Last year. In fact, the company super Sell,

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<v Speaker 1>which only makes three titles, reported two point three billion

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<v Speaker 1>in revenue off of three titles, with nine million dollars

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<v Speaker 1>of profits. If for sure, if Nintendo were able to

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<v Speaker 1>have one or two titles that would have this type

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<v Speaker 1>of retention and have the type of cash flow stream

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<v Speaker 1>flowing to them, it'd be easy to understand that that

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<v Speaker 1>that increase in share price. On the other hand, if

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<v Speaker 1>they're not getting the full cut of prop fits, then

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<v Speaker 1>you may have some questions about the press revenue price

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<v Speaker 1>earning multiples of the stock. Now, August, I know that

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<v Speaker 1>you've been doing this as a venture capitalist for more

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<v Speaker 1>than two decades. I'm not trying to to date you here,

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<v Speaker 1>but uh, is your phone and your email box getting

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<v Speaker 1>clogged with offers for copycat like games? I am getting

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<v Speaker 1>phone calls and has also reached out to developers developed that. Indeed,

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<v Speaker 1>that's the case. The the this is so striking and

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<v Speaker 1>the game is very well designed in many ways that

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<v Speaker 1>this is just a new type of gameplay. This this

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<v Speaker 1>is a new genre that will lead to many, many

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<v Speaker 1>blockbuster titles over the next five years. So anyone who's

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<v Speaker 1>a game developer should be paying attention to this, and

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<v Speaker 1>indeed they are. You describe it as geo cashing. How

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<v Speaker 1>do you describe it in English? Yes? Yes, I uh

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<v Speaker 1>that was the nerd in me. The easy way to

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<v Speaker 1>describe it in English is that the core premise of

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<v Speaker 1>Pokemon Go is to go on a treasure hunt. So

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<v Speaker 1>you you're walking around and you've clue is for where

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<v Speaker 1>to look. In this case, it's a clue of some

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<v Speaker 1>item that appears on your map, and you go there

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<v Speaker 1>and you find it, and then in addition, you collect

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<v Speaker 1>things and then you level things that as you grow items,

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<v Speaker 1>and those are very common game mechanics. Gavenger hunts or

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<v Speaker 1>treasure hunts are very popular, but not very common or

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<v Speaker 1>active because they're too hard to set up. Millions of

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<v Speaker 1>people do play them every year, but not collectively, and

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<v Speaker 1>Pokemon Go unlock that. Do you believe that Pokemon Go

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<v Speaker 1>could increase its revenue by organizing joint ventures with advertising

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<v Speaker 1>and sponsors who are part of the location based game,

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<v Speaker 1>Yeah for sure. So what's fascinating is that the game

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<v Speaker 1>right now is a number one grossing title in iOS

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<v Speaker 1>and I believe in Android, which if it's on par

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<v Speaker 1>with Clash of Plans, it might be doing three to

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<v Speaker 1>four million dollars of revenue a day in a very

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<v Speaker 1>profitable way, and so that creates the incentive for other

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<v Speaker 1>people to try to tap in into those monetary flows,

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<v Speaker 1>so you can have advertisers on hearing of companies of

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<v Speaker 1>of businesses. This is the game and allows a business

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<v Speaker 1>to create, over a period of time a new Pokemon

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<v Speaker 1>that you you can collect and put up a signal

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<v Speaker 1>a flare to go to their business to go collect

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<v Speaker 1>on it. And and so their bustinances are actually using

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<v Speaker 1>this as a business function. And the last note I

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<v Speaker 1>would mention is yelps. I think yesterday released a check

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<v Speaker 1>box to say, is this restaurant near a Pokemon stop.

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<v Speaker 1>Pokemon video games and restaurants all coming together, Thanks very much,

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<v Speaker 1>Gus Tide, General partner, Trinity Ventures in Menlo Park, California.

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<v Speaker 1>This is taking Stock and this is Bloomberg. Coming up

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<v Speaker 1>on taking Stock, will be speaking with the former Undersecretary

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<v Speaker 1>of Commerce for the Clinton administration. Will find out how

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<v Speaker 1>the US presidential election will affect technology policy. That's coming

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<v Speaker 1>up next