Opportunities in web3, blockchain and fintech with Robby Yung, CEO of Animoca Brands
Robby, just to kick it off, can you talk through your journey from back in the day when you were studying at college, all the way through to your role today.
I studied political science and public policy in school. I didn't end up doing anything career wise, that related to what I studied, but I think I studied things that were quite diverse. A lot of different things that I think helped teach me how to think, economics and statistics, classics and history and lots of different things that help give you a well rounded education.
I started out working primarily in what the bankers called TMT, Telecom, Media and Technology. I began in the early days of wireless telecoms, when it was still analogue, before digital. These were the early days of mobile. I then moved into the Internet, it was just starting at the time. And there was a lot of excitement. I tried to figure out a way to jump in. I was fortunate enough to be able to convince my family to lend me a little bit of money to start a business. We started a web development business making websites for companies, about 25 years ago, in 1997. We did that for several years, quite successfully. When the market is rising, people are feverishly enthusiastic about everything, making money is not hard. I mistook success at that time for skill, and learned that lesson, a few years into it when the market crashed.
I then started another business, together with a couple of friends of mine, one of whom was somebody that I had gone to secondary school with. We started a media business in China. We raised venture capital, and we acquired media companies into a holding company with the intent to take the whole thing public. It didn't quite work out that way. The magazine business, we ended up merging with another public magazine company and spinning it off and listing that. We then took the remaining part of the business and planned to do an IPO with it. We got our IPO organised, and prepared our roadshow. We submitted our documents to the SEC in the US to do a US IPO, that was in September of 2008. So for those of you who remember that time, it was arguably the worst possible time to have picked to do that because the entire global financial system collapsed within a couple of weeks of us submitting our prospectus. We had to postpone that IPO and deal with the unexpected, so we had to kind of go back to the drawing board and try again. We tried to do an IPO again a year later. But you know, the financial markets were in no condition to support a riskier company like ours, because it was still a young business and eventually we ended up taking the business public about three years later.
I then joined Animoca brands where I am now. This was a business that I thought was really interesting because it was a mobile game company at that time, this was before blockchain. Mobile games seemed to me to be a bit of everything that I'd ever done before, it was a bit of telecoms, it was a bit of media, it was a bit of Internet, it was a bit of advertising, all in one product.
I didn't know anything about making games, I'd played games as a kid, like many kids. I'm just the right age that I grew up literally at the invention of video games. I started with Pong, that was a formative part of my youth. That didn't make me any better at knowing how to make games, but it intrigued me to be involved in the industry. It's been a fabulous business to be a part of five years into it. We ended up pivoting to focus on blockchain, and decided that that was going to be an avenue of growth. This new technology was going to change the way we make games and change the way that people play games and their relationship to games, particularly, financially, as well as from an experiential point of view, and we've been working on that for the last five years.
That was great. The September 2008 IPO must have been quite a sore point, but interesting. The Bitcoin white paper came out in October 2008, and there's no surprise, really, that it came out so swiftly after the GFC. You said that five years ago you pivoted into blockchain with Animoca? What was the thinking behind that?
Like most things that make people look smart, in hindsight, it was luck.
We had a relationship with a startup company in Vancouver and we were in the process of acquiring them and looking for new avenues of growth all the time, the mobile games market was maturing, and growth was slowing industry wide.
We were always looking for something new, something different, different content categories or different gameplay styles. Whilst looking for new avenues of growth, we were acquiring a business in Vancouver that made back-end software for multiplayer games that could make your single player game into a multiplayer game. They had extra office space and they sublet their office space to some people who were doing a hackathon project with us, a bunch of crypto people. It was through that relationship that we got to know those people and ended up offering to help them to publish their first game. That game was CryptoKitties, arguably the first blockchain game, now known as Dapper Labs. They had invented the NFT, about a month before we met them for the purpose of making CryptoKitties. We ended up publishing CryptoKitties in Greater China. That was the main experience for us, personally, I didn't know much about blockchain up until that point.
Many of my colleagues had been following Bitcoin and Ethereum, but more out of curiosity than business. At that point, we started to understand very quickly that this could have a huge impact on the games industry.
Although CryptoKitties was not a game of the type that we were familiar with making, it's a collectibles experience, primarily, what it taught us about the idea of having fungible and non fungible tokens was something that seemed really obvious to us that this was how games in the future should be made.
When you think about tokenizing a game, you're telling people to buy a fungible token, like Ethereum, a virtual currency to buy virtual items as NFTs. And that's exactly what people playing games have been doing for 15 years. You don't have to teach them how to do anything new to bring blockchain into their lives. But what it does do is, it gives them true digital ownership over their stuff, the stuff that they only rent. We thought, well, this just makes sense. If you have the choice of having a game, where you pay virtual currency for virtual stuff, and you own it, versus one where you do the same thing, but you don't own it, why would you pick the latter? It was like a light bulb moment. We decided from that point on, that we were going to stop making traditional games and just make blockchain games.
Robby, you just touched on this a little, talking about blockchain games. Let's go back to the basics. How would you describe a blockchain game to someone new and how it upgrades the existing model?
First of all, talking about blockchain games is kind of a funny thing, because it's not any specific kind of a game. We use the term blockchain games now only because most games don't use blockchain.The same way that a decade ago, we might have talked about online games, because most games were not online games. But I think it's one of those things that over time, we're gonna stop talking about blockchain, because it will just be part of the infrastructure of games.
What differentiates a blockchain game is that, as I was mentioning, the in-game currency, the soft current currency in the game, and also the assets in the game that you buy, the race cars, the swords, whatever those items are in the game, are tokenized as NFTs. What that means is that you can own those item, and the ownership of those items is really important, because we haven't really had true digital ownership before, which means that you have agency, as the customer, the owner over those items, you can buy them, you can sell them, you can trade them, you can gift them to your friend, you can take them out of the game experience to a third party marketplace, or to another game. That's where the excitement happens, because historically, games have always been siloed experiences, and they never mix with each other. The point is to keep all your users in this walled garden, and extract as much revenue from those users as you can. In the web3 context, a blockchain game allows you to create a game that is one part of a bigger puzzle, which is, now what we are calling the metaverse, which is lots of different game experiences where that stuff that you pay for in the game can be brought to other places.
The definition of a blockchain game is this tokenization, and this interoperability that gives you the ability to really own stuff in games, that's yours that you can treat, like your physical stuff.
You mentioned the metaverse, how do you see this evolving and how important is web3 and NFTs to this?
The metaverse as a concept is inextricably linked to the idea of web3, thanks to blockchain. Blockchain provides this secure transactional layer on top of the Internet that we didn't have in web2, this ability to exchange value between each other, I can send you a token, and you can receive it and we can exchange that value over the Internet. I think that is fundamental to the metaverse because the metaverse to me is actually not all that different than what we already have today. We've got great experiences, we have Minecraft and Fortnite and Roblox, and social network sites. We have all these great experiences, but they are siloed. The metaverse is really just our ability to bring all of those together so that they talk to each other. If you bring all of those things together, then I think it's very important that you have to have portability and interoperability.
I own something in Fortnite, why can't I bring it to Roblox?
Why can't I bring it to Minecraft?
Why can't I bring it to Facebook?
Interoperability is key. Once we use blockchain and we tokenize these things, then we can not only facilitate that interoperability, but because it's the metaverse, it's this digital space. The important thing about this space, also is that people are able to own it, not just people, businesses, companies, you know, entertainers etc, everybody can have their piece of the virtual world, just the way they have their piece of the physical world. They can then use that, as a business or as personal space. That's what I think the metaverse is. It's not necessarily this Ready Player One. virtual reality. That's part of a metaverse experience. But I think it's more like just the coming together and interoperability of all experiences generally.
The most exciting thing about web3 is that it's essentially an OpenSource movement. I think the thing that amazes me is the innovation that we see from people who are, you know, building on top of other people's assets and achievements, you know, just like your Weird Whales, right? I think the coolest thing about the Weird Whales is not necessarily that you made it, no offence, but that somebody else can make something really cool with them. That's the best part. That's the innovation. That's what we get in web3, this collaboration, where we have a way to all work together, and layer our achievements, stand on each other's shoulders, but at the same time, we have digital rights management and IP protection built into the system, everybody benefit, if I use your Weird Whales to make something really cool, you will still benefit from that, because it's IP that you created, and you as the creator deserve to be recognised for that. That's really important. We've never had that way before on the Internet, to really honour that. And that's why we ended up with streaming platforms, which I think is unfortunate. I mean, they're amazing from a user experience standpoint, but they're not terribly great for creators.
Moving over to what you're doing with Animoca brands, on the investment front, you've made some 340 investments. How do you look at different projects and companies and what's driving that strategy?
We look at a lot of projects, we have a great team of people around the world. We also work with a lot of other great investors in the space, we're always happy to share projects and ideas. I think we've got a great network of people that understand our interest in web3, and also how we can help people in the ecosystem, and find ways to work together. We generally have a very broad based approach. We think of web3 culture as our sweet spot. That can embrace many different things. Gaming, obviously, is probably the largest part of it, but it also includes things like art, music and fashion, as well as DeFi, because all of these are aspects of web3 culture.
The beauty of web3 is again, going back to that interoperability drum that I will keep beating throughout this discussion. All of those different aspects of web3 culture have the potential for interoperability. That's why we're active in all of them, because you have the ability to have a metaverse type experience that includes fashion and music and DeFi etc. Our most well known project The Sandbox, for example, includes all of those under one roof.
You've been in various industries over the last 25 odd years. Where do you see the opportunities kind of right now for people?
I see it in two main places.
Fintech is one, obviously, because Fintech is the oldest part of the blockchain related world. I would recommend to anybody who's in finance that they should consider a career in digital assets. I think that even from a conservative standpoint, you can build a solid career in digital assets, its less riskier than a few years ago.
If you can afford to be a little bit more risky, then I would say definitely come to our neck of the woods, which is culture and entertainment, and within that gaming is going to be the lowest hanging fruit. I think eventually, blockchain will make its mark in a big way in industries like music, for example, but that will take more time. I think the best place to get started is honestly just to get involved in it yourself. Buy some NFT's, get involved in some projects, jump in Discord and Twitter and engage yourself in some communities and see if it's for you.
One of the things about working in entertainment is that it is kind of a little bit of a passion based career, meaning that people do it because they get to work with content and in an industry that often overlaps with personal interest. If you're not involved in the culture, it's more difficult, because this is not the kind of industry where you just come and sit at a desk for eight hours a day for a steady paycheck.
Robby, this question can relate to web3 or your personal life? What new skills are you learning right now?
What new skills am I learning?
I've not thought so much about macroeconomics before in my life. Since I studied economics to begin with in school, I don't think I've thought about macroeconomics as much as I have in the last two years.
When I joined the games industry a decade ago, I was new to the industry, and I didn't know much. It was daunting. I would go to conferences, and I would try to learn as much as I could, but I knew I always felt like the stupidest person in the room. I was brand new. Five years into it, I know more about making games, at least from a certain perspective. Now in the world of blockchain games, we're all new to it and we're all learning as we go. I think that, for me, the most rewarding part of it is that ability to learn together with everybody else.
I've spent most of my career working in China. In China, the way people work culturally, it's a very, very competitive environment. What happens is that people are very secretive, because they're very competitive, and so as a result, if you tell other people what you're doing, often they will take your ideas, because they figure that if you've said it, it's fair game, and so everybody's very secretive, you'll go out to a cocktail party, and you'll talk to people, and nobody will actually talk about what they're actually doing, because it's a competitive threat. It's hard to live that way. I now find myself in the completely opposite side of the spectrum, which is in the web3 world where collaboration is built into the system. We all have a way that we can work together, through interoperability, it makes everybody your potential partner as opposed to your competitor. I have to say that from a career standpoint, I've never had so much enjoyment in my career. Now, everybody I meet, it's not about, oh, what can I learn from them, and I can try to out compete them by learning something from them. It's, hey, what can we do together? I'm happy to be an open book about what we do. We're not all fighting for one thing, you know, and it's not a winner take all.
If you were to go back in time to speak to your 18 year old self, what would you tell yourself?
A couple of pieces of advice.
One of the things that I missed out on personally is I didn't really spend much time in my career early on working for other people.
I started my own business when I was 26. In hindsight, this was a little bit young, I should have spent a few more years working for other people because I think sometimes that more conservative path of working for a big company, having a boss or two or three, it's also part of your education. It's not just a job, you can learn valuable skills.
I spent many years trying to find my own way and maybe I could have shortcut some of that if I'd had more mentorship at a younger age.
The second thing I would say is for anybody starting a business, don't start it by yourself.
Start it with partners, find friends, find other professionals.
But don't do it yourself. My first business that I started myself and that was a mistake.
There will be failures along the way, and I've had plenty of failures.
My suggestion is to start it with partners, because the businesses that I have been involved with, partners, when things are tough, there are other people to share the burden who also have that burden of responsibility.
It's nice to be able to share good times when things are going well with your partners. But it's even better to share the lows and the burdens with some other people and have more smart minds around the table to help figure out the problems.
If you're interested in web3, go to Twitter, crypto Twitter is the biggest part of Twitter. I know that from being told by people at Twitter, it's the most active content category on Twitter.
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