Hi, Miko, can you hear me? Yes, sir. Can you hear me? Yeah, yeah, right on. Thanks for joining. I'm sorry for the confusion. I think Miko thought we were having the broadcast over Zoom, but I'm glad we were able to connect on Zoom and welcome to the aquarium. Before we
you're going to be working on.
But the very short version of it is that I've been here in Silicon Valley about maybe 30 years or so. Originally got started here working on the Java programming language team early on and been working in open source software ever since then.
So I think the big change to open source software came obviously with the introduction of the Bitcoin white paper when open source projects started printing their own money, which was quite a startling for me. This eventually culminated in me joining the VC side.
with Gumi Crypto's capital fund 1 and we deployed $21 million into the crypto winter of 2018-2019, came out with 8 or 9 unicorns out of that and then we basically raised the fund to recently of 110 million
million. So obviously invested in the very early stages, third external investor in YGG yield guild, first external into CREATONnetworks. Let's see, we led the strategic
seed round into open sea. So, you know, we definitely jumped in really, really early on some pretty sizable projects. So, you know, I think we raised much larger, 5X larger, fun too on the back of that. So that's a little bit of the quick version, but you know, feel free to dig around.
All my socials are linked on my web page so you can DMs are open. Obviously you can follow me on Twitter too, which is visible here. Thanks so much. >> Yeah, first and foremost, audience members. Bro, Miko, some love. Shoot him a follow. Miko,
I would say that you guys made out like bandits investing 20 million into the crypto winner of 2018 2019 and those are some big names open C1 inch yield guild thing a star as well. I see on your profile. Yeah, what did you guys see at the time that a lot?
a lot of other VCs and investors did not. The crypto winter of 2018 was, I got in to the market in 2017, early 2018 was when I started really, really trying to build businesses and trying to get involved in the industry, but there was a lot of negative sentiment, especially through the end of 2018, early 2019.
What did you guys see that others did not? Yeah, to me, my particular lens around this has been sort of the eventual victory of open-source software. So having been in-opensored software for some decades, the thing that I think people haven't
really, you know, sort of glombed onto is that opens our software pretty much always wins and it always wins by producing better software. Right? So like, you know, if you look at things like, you know, if you go back into the history books, you know, we Java, compete
against Microsoft. If you watch the history of open source at Microsoft, Microsoft eventually bought, they used to resist and fight Java to return. Eventually with Succ-in-A-Delah, they purchased Minecraft, which is the world's largest and most successful Java desktop
application, and we actually saw that Azure Cloud was originally running on Windows NT. Of course, now it's running almost entirely on Linux. You have an operating system company, Microsoft, that's running Linux as part of their cloud
So, you know, really open source software just makes better software. It's better, it's cheaper. You know, there's more contributors, it's more secure. It's just an inherently better way to make software. And if you're going to do a open heart surgery on the world financial level,
system opens our software is the correct approach to doing so. So, you know, I think that's broadly our idea. And I think, you know, open heart surgery is dramatic. And, you know, I think there's a lot of spectators seeing a lot of blood and they're saying, "Oh, you're getting hacked, right?"
You know, just to be clear, of course we're being hacked, right? We are co-evolving with the adversary. If you think about the speed at which AI Generative Adversarial Networks advance, they advance because they're working directly with adversary.
So, you know, co-evolution with the adversary is the fastest way to advance and evolve, as long as your system is able to absorb learnings. So that's probably the key is, is come back smarter. So that's, that's kind of what we're all doing and, you know,
I think it's a mindset issue, which is that we just think it's going to happen. Open source is basically purely driven by consent. If you deliver better software, you win consent of users and developers.
you know, everyone, everyone enjoys your software because it's better software. So, you know, I think make better software is the thing that has been sort of the watchward, you know, that's the thing that we have cared about the most, right? So if you think about the venture timescales, like it's easy to lose money on crypto kind of flipping coin
back and forth because there's just the overwhelming amount of speculation. So if you jump into things and jump out and jump into things and jump out, then you can definitely get pumped and dumped on. Whereas if you're trying to just, if your goal is to convert investment into software,
software and wait to see if users want to use the software because it's better software than you'll probably do better. That's our kind of investment theory in a nutshell. Right, so buy and hodl for the crypto boys and girls. Yeah, more long-term.
You said that open source software always wins because it produces the best software and you highlighted that it's better, cheaper, and there are more participants. Is that the key caveat? Is that the fact that there are more participants that makes open source software better?
Yeah, I mean it's a to me open source software generates a super strong network effect because it sort of is the fossil record of all software that works that has that forms kind of a commons or a base platform so effectively like you know if you look at common
If you look at the software commons, like you look at things like databases, or you look at kind of browser engines, or you look at any kind of major sort of common area and software, and you'll see an open source implementation. So really, open source is really ideal for sort of shared infrastructure. So it really is the platform.
So, you know, like 90% of the code of just about everything that we touch is basically already open source. So, you know, it's the platform for human innovation and software. And, you know, that's really a great, you know, that's the basis to have kind of
long-term confidence. And it becomes really, really hard for, like I know a lot of people are scared about like regulation, but like it's pretty hard for free societies to you know prevent people from downloading software and running it like it's pretty, it's pretty difficult.
I noticed YGG, I'm a big gamer. I'm curious to know what you guys were thinking behind the YGG investment and just generally your thoughts on YGG going forward.
Yeah, so we are thesis on IGG is first, best and last guild and that one of the questions that we ask ourselves when we make an investment like if you look at OpenC it's another kind of pretty common construct I think one inch network is another such construct which is does the market
want there to be a big one of these. And I think the way we reasoned about Gamer Guilds is a Gamer Guild is basically a form of labor union and as a labor union it effectively participates in collective bargaining. And so you know that's a network effect business.
business and it's a business that kind of wants to be, you know, I grew up in Michigan and we had the United Auto Workers, right? So that was it. That's a very large, it's a union of unions, right? So basically parts, the parts union, you know, the factory line union, like all the different
sub-unions within the auto workers, they all aggregated into UAW, the United Auto Workers. The idea that the world wants a really big labor union, it makes sense. Our strategy with YGG was
because we just confirmed that their aspiration was to be the first, the biggest, the best, and the last kind of guild of guilds. That was definitely a clear part of their agenda. It's funny, like the way that Gabby narrates YGG and our investment
was, you know, he basically said, he pitched it and I said, is this like a decentralized IGN, right? And IGN was a really strange gaming company set up by Brock Pierce, you know, eventually run by Steve Bannon, yes, that political Steve Bannon.
that basically farmed world of orcraft gold using a lot of underpaid minions mostly based in China. So I basically said to Gabby, "Is this a decentralized labor centric?"
like, "Dow of IGN." And he was basically like, "Yes, that's exactly what we're doing." So I was like, "Okay, we're in." So there is a precedent for that type of online behavior in gaming that precedes the climate
and goes back to World of Warcraft. So it seems like that was a very contrarian and strange thing to do, but also made a ton of sense. Yeah, not so strange. And I played a lot of "Wow" back in the day, so I loved that you made the reference. And I do remember
multiple cases of like this overlord and underlings farming gold and selling it on the black market, which is where I see a great potential use case for Web 3 gaming, right, capturing that value as opposed to having it slip away on the black market.
But the reason I asked you about YGG was because one inch and OpenC, for example, a found product market fit. And I don't see that yet with gaming guilds, Web through games, it's still not that developed, right? They're not that widely played.
And so I suppose this is the waiting game for For entities like YGG and I don't know if they'd be the first in the last but it's interesting to see it play out I Yeah, it's wanted to know what your thought process was behind that investment, but thank you Yeah, yeah, yeah, no, I mean in terms of like the attitude of YGG, right? They just
announced, raising an additional 14 million from Ed Wrayson-Horowitz and the raising of a $75 million venture fund that Jeff and his team will be deploying into promising games. When you think about the combination of their player base
plus their investment capability, plus their kind of player base capabilities, especially with the kind of integration of all the sub-dows. It means that they will be part of the new distribution model because Arthesis around what three gaming is effectively that
We are that the revolution, I'll be giving a talk in NFT and my C, which will reprise a talk that I gave at ETH in November. And it really kind of call, during GDC, which is that it's called the revolution will not be televised, it'll be gamified, right?
The question about the revolution of what three gaming is, is it's not the biggest mistake people make is that they think it has to be a player led revolution, right? That's what they think. So they think the players have to demand NFTs, and which is never going to happen because it's stupid, right? Like the idea of an NFT game being interesting to players is like the
It's like a TCP/IP game being interesting to players, which is, does TCP/IP make a game more fun? Of course it does. It's a network protocol. If you have TCP/IP or maybe UDP, then you can basically have multiplayer. You can have networks. It's awesome. It's great technology. So is NFT.
great technology, what do you get, you get permanent objects. Digitally permanent objects, is that useful? Will people enjoy that? Of course they will. It's wonderful. Trying to sell that to a user under the name of the technology is absurd. The thing that happened is,
I participate in a panel that he then recalled why gamers hate NFTs and the thing that was interesting there is that they don't hate NFTs as much as they hate suits, right? So if you look at the rejection, the full-throated rejection of the Ubisoft Ghost Recon NFT series, you know, they, I think they sold three
NFTs and then there was so much anger and hatred that they had to close the entire program, refund the NFTs and basically back away with their hands in the air saying, "Just kidding, guys." That was full-throated rejection. But if you read between the lines,
they hate is they hate suits and they hate greed. They don't hate NFTs. Basically the gamer reaction to that was the suits are trying to money grab and then obviously there's a taint of scams around crypto too. Not only are the suits trying to rip us off,
but they're perpetrating a crypto scam on us that we're gonna get run pulled by Ubisoft. To be honest, players have been run pulled by Ubisoft pre-NFT and pre-crypto. Why wouldn't Ubisoft use crypto, which is a famous scam tool to go after players?
So they hate suits is the bottom line. The revolution is against Ubisoft and EA, which is that the game distribution is going to be something more like YGG than it will be like EA. We have another portfolio company called Blink Finance.
the largest plan earn platform in the world with 20 million downloads and they figured out distribution. So the new EA is going to be basically word of mouth and it's going to be player incentive and it's going to be playing, playing, and earn and it's not going
be that, you know, if you look at user acquisition and gaming, it's fully collapsed, right? If you look at a brilliant product, like look at Xbox Game Pass. That's a wonderful product. It's a great product, right? But like, it's a reaction to the collapse of user acquisition.
which is what's happening is is that they've given up on the platform acquiring new users and they're really just trying to huddle all together for safety. So games are struggling to acquire new users. So instead they're all just binding together under a single battle pass.
make sense. But I would say that if you look at the speed at which Blink Finance has been able to get 20 million users just by offering them rewards for Bitcoin rewards, it's evident that word of mouth and user incentives, instead of paying
traditional channels, you just pay the user. You pay the user to acquire him or herself. And it turns out to be economically way more efficient to just be like, "Here, have some." And since the things like you can reward them with not just Bitcoin and Ether, but you can reward them with freedom
own NFTs, and you can reward them further with Play to Own, and there's all kinds of mechanics that have upper funnel characteristics that are familiar in the free-to-play model. Anyhow, big, big side rant, but certainly excited about that.
as a huge catalyst for user onboarding. And I think just like we had DeFi Summer, I think we're going to have GameFi Summer and I predict it will be this summer. So I think that will be very exciting. Yeah, I want to dive into that prediction here in a bit because we had a game
just an hour ago, Brian Fakuri, I'm hoping I'm not butchering his name, but he said he said the next two to three years, he's like not too bullish on the entire market, but he's more anticipating localizable runs, right? And then so one of the things that I've been noticing is web
three gaming on their eyes. And I do think that there will be a web three gaming ball run at some point. But really quick, before we get into that, I wanted to ask you a few questions about some of the stuff that you said. To bling, bling financial seems interesting. I've, I'd not heard of it before, but it seems that they're basically saying, hey, complete games, complete these
It looks like mobile games and then you get paid in crypto correct that's correct. Okay, and so I was so this is interesting, but I'm talking will rather I was thinking more long the lines of you. Versailles, yes, you're right. When it comes to language, it's really important with gamers.
I found that in my circles they don't like the term NFT that they're just warming up the Bitcoin and they hate suits right if I can reference where the work craft or the work craft is the greatest MMRPG of all time in my opinion and it has over time lost
a lot of its charm and loss of its player base as a result many might argue of "activisions" greed. And so I can see why a lot of gamers don't like suits. So this is a really interesting point that you highlighted. Now I wanted to basically paint this scenario. This is where I see Web 3 gaming being very lucrative.
You have a game like World of Warcraft for example. There is no NFT pre-sale, there is no utility token pre-sale, there is nothing. There is just a game that is built by these developers that have envisioned, they have a dream. But it is built on blockchain technology. And so when players are in that world, when
they're either farming gold or whether they're raiding and obtaining these legendary items, they're able to trade those instead of selling their accounts on a black market, they're able to trade those on a proprietary NFT marketplace made by Blizzard, where Blizzard takes a cut and this way they
players, they're able to capture some of the black market value, and this way the players that want to exit the game are able to pass off some of the items for monetary value to those that want to buy them. That's my vision of I don't know how much I believe in the plater earn model. I'm basing it off of just like few anecdotal examples that I've seen in the market, but with
up to hear your thoughts on what I just said. Yeah, I mean, I would say the following, right, which is that the sort of play to earn is dead, right? And the reason why I play to earn is dead is that play to earn is just defy, right? Which is, you know, it's a degenerate form of defy where people
exchange their time for some reward. And the reason why it's dead is because that basically creates a scenario of zero loyalty. As with all DeFi projects, if you can earn a higher yield somewhere else, you'll just leave immediately.
So that's essentially the behavior that you're going to see. And then what happens as a result of that type of behavior is that you start to see degeneracy, which is degeneracy is basically like, well, if I can earn a higher yield over here, I'll do so. And what eventually happens is that you have a cloud of so-called yield farmers.
But they're not really farmers. They're actually kind of a cloud of locusts that like descend on any kind of early liquidity boost, right? And then devour everything that they can see. And then they fly to the next liquidity, you know, incentive program, right? So, so they're, you know, so basically whenever there's kind of any extraordinary initial emissions,
you know this cloud of locust descends eats everything in sight and then flies off to the next destination right so that's basically the final degenerate state of like a purely mercenary economic configuration right which i think the problem with that too is that like when you look at it from a defy perspective the way that you'll
are increasingly generated is that they're generated by producing risk. In a sense, what happens in that configuration is that the degenerate crowd pursues higher and higher and higher amounts of risk because they are kind of aping into higher and higher yield.
purely speculative basis. And then it becomes this kind of extreme game of chicken where the winners are the ones who rug pull ahead of everyone else. So this becomes kind of similar to these early tokens like Yam or Ampleforth, these kind of rebased style tokens which are deliberate
games of chicken, right? So I would say that like, yeah, you know, play to earn, you know, is a strives a purpose onto the player, which is the players playing for the sole purpose of earning, right? So play to earn is dead. Like that's not, that doesn't make sense. Play and earn isn't dead. Like play and earn doesn't ascribe
You may earn special items, you may earn, so the incentive may not be purely monetary or financial. It may be that you're earning something that is fun, or because ultimately what's happening when you are playing is you're effectively proving devotion, especially if you're playing on a grind mechanic.
So if you look at grinding to the level cap and roll the warp craft, that's basically just a grind mechanic. The fact that it's a feature and not a bug, which is grinding is basically a mechanism that allows the
I think there's a couple of hacks that circumvent that, but I don't think any of those are desirable. One of them is so-called power leveling where you hire someone in a low economic cost geography to grind your character to the level cap.
in exchange for money. That becomes a little more pay to win. The designers of modern play and earn games, they just need to understand that time and devotion is a lane, money is a lane, skill is a lane, fame is a lane. These are all different lanes.
and these lanes shouldn't interact toxically. So things like pay to win is a toxic interaction between the skill lane and the money lane. What you want is you want positive interactions between the lanes. For example, even XE had a positive interaction between the money lane and the time lane, which is that the money people buy XE
at the time people play axes. That's a positive interaction. It's not that the time people are angry at the money people for buying axes and then effectively giving them to the players. Obviously, they can see the economic interest of the money actors, but they don't begrudge them.
I wouldn't get to play if it weren't for that person. So like, it's fine. Right. So I think the idea becomes that game designers have to improve with respect to understanding and respecting these fundamental base currencies, right, which is, you know, time, people's time should be respected as time, and it should
You shouldn't be able to buy it so easily. People skill shouldn't be something that in game skill shouldn't be purchasable by some overpowered item. By the way, there's incredible mechanics that you can design. For example, if you look at a positive interaction between skill, money, and
theme. You could actually have a streamer who has a streamer show called Watch Me Kill This Rich Guy. You could actually have that person, you could have a game matching server deliberately matching consensual parties where you could have a high skill player deliberately matching against the high wealth player.
who's better equipped, right? And whose sole point is to create a show where he uses his skill to kill players that have much higher wealth and much better equipment. I'm laughing at this because it's really, I didn't know that this existed, but we used to, me and my friends, I mean I would go around on a broke and a while
And I would be intentionally find players that I knew had bought their items through like they're called gold decay p runs where you basically pay gold for items and I've gained them on video just Yes, it's really interesting. Yes. Yes. Yes. Yes. Yes. Yes. Yes. Yes. So my point is my point is that that's an
non-toxic interaction as a function of consent, right? Which is it's not that some rich guy, like if you look at the kind of peak of like if you go back into like the history of paid a win and you look at machine zone, right? Their whole ethos was, you know, players in first world countries like the United States would
by a patchy attack helicopter and then gun down low user acquisition cost players in the Philippines that are equipped with a club and a tribal outfit. That's toxic. That's a toxic interaction.
to me like consent it fuels non-toxic interactions. So I think to me if you're a rich player like you have a fighting chance right you bought good equipment and you know so as long as there's consent so I think I think the fact that you you know actually participated in such a mechanic indicates to me that you know there are designs
elements, right, that there are ways to design systems where everybody's having a hell of a good time, right? And I think that's the key, right? Because I think if you have toxic interactions between these lanes, then people just get really annoyed at how disrespected they are, right? Which I think is fair. It's an absolutely fair reaction, right?
I think the reason why like serious gamers are disturbed by crypto is because money has had a generally negative overall influence in gaming and that I think it's really just a bad game design. It's bad designs, right? If money is going to ruin your game then
And you just haven't designed it that well, right? Because if you design it better, then you can have money in your game that actually has a positive sum economic value to all the gamers. Right? So I think that's right. Because really like money is just positive economic
input into the game environment. So if someone is taking their hard-earned money and pumping it into the environment, that economic input should make the game more fun for everyone. And if it doesn't, if it makes the game less fun, it means your designers are just bad. It just means like, why is it that someone's putting their hard-earned money in your game?
it's making it less fun. That's definitely a fail. Designers go back to the drawing board. I think that's what people are afraid of. They're afraid of like, "Oh, more money's gonna come into this game and ruin everything." And it's like, "It could. I definitely could. I totally see how it could, but it doesn't have to."
Yeah, it's ultimately up to designers and the developers, right? Because they have to do a good job. The thing is they haven't really, really grappled with this that hard yet. So that's my, that's, you know, so I think some of the stuff I'm thinking about with these fundamental lanes, I think, is, I think it's relatively new. I haven't heard
too many people thinking and talking this way but I do think that you know that this is going to be part of economic design and I think you know successful successful designs in this area are going to propel what they're gaming into the forefront right because I think the thing that is really insane is that
If you know about how games are made, there's this thing called crunch. And crunch is this based on a philosophy called do or die. Which is, okay, it's crunch time. We need to iron all the bugs out of game. We need to get to go master. We need to ship. And so like everyone works like 24 hours and they just die. They just go into a death march and they try to
like ship the freaking game, right? And the thing that is causing revolutionary fervor in the game industry is not do or die. It's not do or die. What's causing the revolutionary fervor and the anger against the publishers is do and die, right? Which is people do the crunch
They're told that if they do the crunch then, you know, their game will actually see the light of day and then the publisher basically cancels it. So like everyone's fired and everyone goes home, right? So do and die is just pretty unacceptable and so the industry
a sort of deeply soul-searching for better ways to publish games. And I think this kind of idea of a Kickstarter community-funded game model, I don't think is the only model and I think the problem with that model is that community sometimes sort of, there's so much
emotion and heart and devotion in the gamer world and sometimes there's such an excess of wealth in the crypto world that it kind of can you can end up kind of being a bit like like Star Atlas you know where it just sort of lots of money gets inefficiently deployed right whereas like if you look
at professional VCs like I'll stand up and you know be the contrarian and say that the there are I get that there's 10 to 100 X too many VCs in the world but I think we need a few you know that professional full-time investors you know
There should be some of them and they should do things like diligence, which I think obviously 360 distributed open source diligence is great. I'm a fan of things like global coin research. I'm a big fan of the types of things you're doing because you can get this kind of incredible
360 open source diligence on something, but I would say that like it's a yes and with professional diligence, which is professional diligence is it's also a thing and you know things like negotiating theal terms like that's a thing you know and those are centralized things in general, right?
So I would say like, you know, we're gonna see a hybrid model with just sort of VC+ community funding for games, you know. And I think the publishers are gonna get rightfully pushed out because I just feel like they've done a bad job. Everybody hates them.
Well, I'm happy with that. You know, the story Atlas reference made me think of during the bull run where I was in a group chat and some of the guys were crowdsourcing. I think they were crowdsourcing money or they were they were, they were getting their funds to buy this $500,000 spaceship.
and I was just like no. Holy cow. Holy cow. I'm like guys this game hasn't been built it's not even done being made yet and it's being it being an MMR RPG is already so hard so many studios have tried and failed like this is not a good idea I don't know if I talked about it but I think I'm I think
I think I might have. You know, it's great, right? I like, you know, because you're effectively applying principles of professional diligence to that situation, right? Because obviously, like, you know, I mean, the thing that's really interesting is is that like when you do, like the fantasy is based on reality, right? Which is the, you know, CCP.
He, Helmarr, just raised 40 million from Andres and Horowitz to do, uh, Eve Online as a blockchain game, right? And like, you know, his, his quote when he launched this was, uh, my job is to make games that are more meaningful than real life, right? And so like, you know,
Will and should people spend $500,000 on a spaceship that only exists in the Metaverse? I think they will and I think they should. I would like them to. That would be hilarious. One of the kind of thought exercises that I went into
into the other day is, you know, I got called a pessimist for this thesis, but I feel like we haven't escaped our evolutionary heritage, right? And so I think people want to form tribes and fight each other. And I think that that tendency is ugly, and I don't approve of it.
that right now there's a war in Ukraine, it's terrible and people are suffering. So the thing that becomes intriguing is the idea of what if the United States and Russia fought a war in the EU online? What if they put 100
billion dollars each in debying spaceships that don't exist and smashing planets and cities that don't exist. So it would scratch the itch of having this kind of combative environment. And I think on top of that, the economic stimulus would be real.
I imagine you could build a pretty good game with $200 billion. I think Helmar would do a good job. I don't think he would squander the money. So it would be a really fun game. And so he would hire a lot of developers. I think the economics stimulus would be real. I mean, it wouldn't go into things like rebuilding
Ukraine and citizens wouldn't die. So like, it's, you know, because in a way, like right now, the world leaders are grasping for ways to stimulate the economy. And like war is a really bad way to do. I mean, if you're just completely cold-hearted spreadsheet,
jockey then war is a good way to do that, right? But like, it's a really fucked up use of the word good, right? Like, it's a terrible way to do that. And like, you know, it's the only thing you care about is pumping a number, you know, an economic number than yes. You know, that's what you're going to want to do, which is, it's dark.
Yeah, I know that like imagining war is happening in EVA Online is kind of a, it's pretty nonsensical. I get that it probably will never happen. But like, I don't know, we just need better. We need, I think we're going to want to fight each other. And so I just think we need better ways to fight each other.
I couldn't agree more. I think that's why people still play these kinds of, I mean, I didn't play Eve Online, but again, wow, is still very popular, even the classic versions of the game are still very popular and people are playing it every day. Communities have been formed. You mentioned something about the view or die. Communities have even
It's formed a hard core version of Wow where you die, you bleed your character. It kind of flushes out all of the pay to play mechanisms and it makes it very primal. Any item matters and every move matters and if you die, you delete your character and you start over and there's a lot of time that goes in like I said
a huge grind. So I would hope that in the future developers take feedback, not just money from the community and from the gamers, but also feedback on how to build the game. There's been a disconnect from developers. I do love what you're saying and I do believe
this which is that if you really look at the game aspect of Star Atlas what they did is actually they created they did create lots of entertainment right and they created a forum of a game where you go to a discord chat and you kind of speculate out loud about what an in-game NFT that you personally
and you kind of go into a sort of an endless loop where you talk about the design of a game that hasn't made yet, right? So that's provably entertaining, right? Like a lot of people went into that and a lot of people did that. Now I think most of the people are disappointed in the kind of a
actual output, right? But like to me what you're describing is that is a form of entertainment, right? And to me like the idea, so I'm against the idea of kind of fully decentralized governance of games, I would say if you look at the world of
kind of fully on-chain gaming, one of the things that makes sense is governance games, right? And the question becomes how much of the game rule engine should be under player governance, right? And I would say that the most extreme case is, is like read the riot forums after League of Legends
patch day. And listen to the whales of outrage of the people who's characters got nerfed in this patch. Just read the kind of wall of hatred and some of the kind of like, you know, growing of delight when they're characters
forgot buffed or whatever, but if you look at that wall of human activity, the idea of turning that into a pay to win game where rich people can come in and vote more and buff their own champs is just a hellscape. There's clearly strong limitations on player governance.
of gaming. And I think the thing that I think where this kind of the end game of this becomes is it kind of becomes mod. It becomes mod driven. Right. So essentially what will happen is is that people will exert governance over game rules, but they'll do so in a mod pack mechanism.
and then the game will actually fragment. So people will play the version of the game that they kind of voted to promote, right, and that that mods will enable the game to flex in that direction. And I think that as kind of AI gets more prevalent in game pipeline, you know, you know,
This type of thing, the ability for communities to generate mods, even in low code and no code, will be pretty dramatic. I don't know if you guys have played with GitHub, Copilot, or I don't know if you've played with the code plugins for ChatGPT, but we're not there yet.
We're not there yet, but we're going in that direction. At the moment, we're not at no code kind of game mod. But I would say that I don't see that as impossible. And to me, I don't even think we need it. There are enough developers sprinkled in among
gamers and vice versa. If you have a group of people who are excited to play a version of a game, the developer that's in that mix will be able to make it happen. We're going to see more experimentation with on-chain governance.
And obviously things like pure on-chain gaming, like Dark Forest, stuff like that. And I think the only sensible application for on-chain games is effectively player governance. And the other extreme end of it is what I call the decentralized producer credit.
If you go on that set with a movie, there's some usually some shlubby dude, it's usually a dude who's kind of you know eating the craft food service like you know and you're just kind of looking at this person you're like this person doesn't seem to be doing any work this person seems to be you know eating the buffet this person
seems to be obnoxiously telling the director things that make no sense. Who is this person? That's the producer. That's what you know, producer is someone who basically bought their way onto the set and is now kind of like rubbing elbows with Gwyneth and all the rest of the cast. So it's sort of like, what the fuck?
So the thing that's known about the producer is that that's what the producer is supposed to do, right? And that's what the producer has earned is they're basically the art patron of the film, right? So if you look at game development, I think that's going to be the new so-called decentralized producer credit, right?
Which means that people who buy run-way to build games are going to have a say. Do producers in the film industry say things to directors that make no sense? Of course they do. They do that all the time. Does the director actually nod their head?
ahead and pretend they're listening, they do, right? And do they like kick the guy off the set for saying something stupid? No, of course they don't, right? Because like that person has effectively bought their way into this conversation, right? Now, is the director obligated to implement this incredibly stupid idea?
I think to revolt, I should do all his stunts like Tom Cruise does. The director is going to be like, that's stupid. Actually, they're not going to do that. They're going to nod their head and be like, that's a cool idea. And then they're going to be basically ignore that person.
It'll be a great idea, right? And the direct will be like, that is a good idea. Let's do that. Right? So that's that's that's what I think will happen in gaming is that people who buy expensive NFTs early on will get effectively a decentralized producer credit and they'll earn the right to
get into a gated discord with the actual game devs and they'll be able to say obnoxious things that make no fucking sense and you know and they'll be heard which I think is good right and and you know some of the things they're saying make a ton of sense and I think you're making that point right you're making that point which is that the game players deserve
to be heard. And my argument is, yes, some of them. Yes, yes, emphasis on some of them. I couldn't agree more. And at the end of the day, like the people are always going to complain, right? You nerf one class and buff another one. People are going to complain if you then re-nerf it and then rebuff the other one.
going to complain, you're not going to make everyone happy. And I know that I know that it's really hard for a developer or a lawmaker or anyone that needs to make a big decision that affects a lot of people, you're never going to have anyone happy. So I, I, I, I sympathize with them. So I wasn't expecting to talk this. But by the way, you made a point about AI and it's something
that I've been reading about more recently as well. It's going to tap into this untapped pool of creativity. People that are creative that have these amazing ideas in their head, but otherwise cannot express themselves whether they're a writer or a filmmaker or in this case a video game developer
And those people are able to express that creativity and what AI is going to allow those people that aren't able to express it and do is therefore be able to express it. And we're going to have a flood of new ideas and I think better ideas than they ever had before. Yes. Yes. So I love that. I love that. So I think it sounds like you're forming a question.
Oh no, yeah, so no I was just gonna I was reiterating your point in my own words because I thought it was a really interesting point that you made that no coin that no code developing and it's still far out but I do I do believe it's gonna happen eventually I wasn't expecting us to talk about gaming this much and so I wanted to bring it up by the way I love talking about gaming probably
I would talk to you about gaming for the next four hours if you wanted to. But I wanted to bring it back to the VC side of things really quick because we're almost at the top of the hour and I wouldn't be respectful of your time. So in the 2018-2019 crypto winner, we were still in a bull market
traditional in the traditional economy. And so I find that the strategies, I would imagine the strategies in deploying 20 mail in the crypto winner of 2018-2019 is much different than this crypto winner. So how have your strategies changed and how are you guys currently investing?
Yeah, I would say the following right which is that we are really interested in kind of what a guy Kawasaki documented in rules for revolutionary he was the Macintosh and Apple Evangelist of his day and you know in his he created this rule called eat like a burger
It's very hard to achieve in gaming. We definitely do see some of that going on. We do think that an ideal pre-product market fit early stage team is
a very, very skilled product person and then ideally that product person is a coder and then we look for that really that person to be paired with another person who may be just a dedicated full-time coder. If it's a product person who doesn't code paired with
engineering person who does code like that's fine also like we're okay with that for sure you know but we're looking for this kind of like idealized templates obviously like you know there's plenty of variation on this you know one of the things that's really complex about early stage investment is that you know entrepreneurs are fundamentally
pattern breaking. And VCs are fundamentally pattern matching. So I think that that tension makes successful VCs more opportunistic. So in a sense, we have a policy to break our own policies as a function of that.
It's, it's, we, we're just aware that, you know, successful entrepreneurship comes in really odd packages sometimes. But, you know, if I were to think about broadly speaking the pattern, you know, we do continue to be really diversified across the space. I know I spent a lot of time on the game sector, but we do think that's where mass
adoption will come from. So we don't see significant catalyst in the fire financial services, you know, and we definitely don't think that any other mass adoption vertical will precede gaming. So music, sports, like all of these other kind of social media, like all these other verticals will follow gaming and not precede
gaming. So like we that's why so much focus and attention on gaming is that that's where the users will come from. You know, that's where the next billion crypto users will come from. And it'll happen. It'll happen faster than you think. It'll happen. Yeah, it'll happen faster than we think. Well,
You said it, it's probably gonna happen very soon. You said this summer you're expecting a game by, game by summer of 2023. Tell us a bit about, I guess tell us a bit about the research that you've done, what you've seen and probably highlighted a lot of it in this broadcast, but what makes you say that it's gonna be so soon?
Yeah, absolutely. I think that one of the key points is that $7.6 billion of investment has gone into Web 3 gaming in 2022. Right. So that investment has already been made. Obviously that doesn't include any money that's already been deployed this year. And so those are all pipeline.
Those are all game pipelines. So basically the games are under development. Some of the earliest ones are going to hit in the summer. So really what we need are hit games. Obviously it's great to see really classic IP, like even online, things like Nexon has announced MapleStory going
on chain. So we're seeing kind of like classic game IP going, you know, into online. There's over 2000 global brands that have started entering Web 3 in the form of things like loyalty. But I would say that those will ultimately be tied to the presence of users, especially gamers in
in the world, right? Because when you really look at what a brand thinks the Metaverse is, they generally think it's Fortnite plus Roblox. That's what the Metaverse is to most brands, right? And so to me, like, there's no actual hint of what three in it as yet. But I think that's a
That's a, you know, it's going to happen, right? One of the novel definitions of Metaverse that popped into GDC, I think that's another reason why I'm both optimistic and spun up about this is, you know, I just came back from GDC in San Francisco, you know, spent the week up in SF, basically just deep
simply immersing in what's happening and what you're gaming. And while I can confidently say that I saw zero games where I'm like they did it. This is complete. They achieved what I was hoping to see. So there are none of those. But it's a super hot interest.
I definitely got to speak with a really sophisticated OG game dev from Northern Sweden who basically fired me up about F the publishers. He didn't say F.
The battle is on and I think the stakes are pretty high. The industry is undergoing radical reorganization now. As a function of a collapse of the traditional UA channels, everybody knows the channels are dead, everybody knows what to is dead, Zach doesn't want to come
a company called Facebook, he wants to run one called meta, and Dorsey doesn't want to run a company called Twitter, he wants to run one called Block. Even though Web2 leadership knows that Web2 is dead, and we're trying to figure out what Web3 looks like.
Well look, Miko, I want to have you on again maybe talk maybe we can have this in the midst of Game by Summer of 2023. I hope that we see it happen. So I would love to have you on again in the future before you go.
I know we're here at the top of the hour. I want to ask you a question that I've asked all the researchers. I asked students this question. I asked VCs this question. It's very fun. It's a bit speculative. If I was to hand you $100,000 today and for the sake of the argument, let's say you
you just had to deploy it into crypto, anything you want, what would that portfolio look like? I would say the following, which is, if it's a personal investment, then I would probably diversify in a
So I would probably get Bitcoin and Ether and equal weighting with 50% of the portfolio. And then what I'd probably do is chase the extreme tail end. Right? And I would probably go into speculative gaming on the other side. So I'd take 50% into the...
most base assets possible and then I would take 50% of that and throw it into kind of really wild emerging games and I would write really really small checks. And I would try to get as many tickets as possible so that I could be diversified because picking hits and gaming
is just nuts. It's just not, you're not going to be able to do it. It's too hard. So just try to diversify yourself away from that problem and then see what happens. Yeah, I completely agree with the latter, right?
emerging games are wild and unpredictable. So small checks, many tickets, as for the base assets, I don't know how comfortable you are. What do you mean by that, which base assets? I would say out of 100%, I'd say 25% Bitcoin 25%. Either.
Love it. That seems to be the general answer I get. So I'm pretty conservative in bear markets and in general I've just been DCing in the big one and ether for the last five years and I get called the grandpa for it all the time but it seems like my strategy is very aligned.
with a lot of the guests that we've come on and had on speak, had on to speak on our podium. So, Miko, look at what's up? Yeah, I got to run, but thank you so much. Miko, it's been a pleasure having you on. Take care.
We'll coin talk community. Thank you for joining remember that everything you hear on these broadcasts meant for educational purposes only nothing is financial advice. So be safe out there and we'll see you all in about an hour for the next one.