What if the way we experience gaming could be transformed by hyper-personalization through AI? Join us as we sit down with Brian Cho, co-founder and general partner at Patron, to discuss the future of the gaming industry. Brian's journey from internet cafés in Korea to influential roles at Riot Games and Andreessen Horowitz provides a fascinating backdrop as we tackle the gaming world's evolution. He shares insights into how early broadband experiences and cultural phenomena like StarCraft and Lineage shaped his perspective on gaming's potential, as well as his love for indie games and the unique dynamics of gaming cultures.
Brian recounts his pivotal investment experiences with Oculus and Riot Games, offering a glimpse into his transition from game development to venture capitalism. Our conversation shifts to the strategic approach of Patron, a firm focused on high-conviction investments, supporting innovation across various sectors through the lens of gaming. As we discuss the cultural and economic impact of platforms like Roblox, Brian emphasizes the importance of diverse team dynamics and finding niche opportunities, citing the success stories of companies like Riot Games and the growing influence of gaming culture.
As we explore the landscape of AI-driven interactions and changing monetization models, Brian offers valuable advice for aspiring founders in the gaming sector. The discussion covers the potential backlash against microtransactions, the importance of understanding player pain points, and the need for captivating products in a competitive industry. Brian's reflections on the broadening gaming demographic underscore the significance of innovative thinking and strategic team-building. Tune in for an engaging exploration of gaming's future, packed with insights from one of the industry's most forward-thinking investors.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I also think just like probably what's going to
happen to movies and TV likegames are going to be becoming
more hyper-personalized.
So I think, like there's goingto be elements of games that
just again like plugging backinto, like what AI does best is
more about personalization,understanding what you like.
I think you'll probably seegames that have more, even
(00:21):
deeper personalization, and Ithink that's what kind of made
League of Legends business modelinteresting.
Right Was, skins was less aboutbuying digital goods.
It was more aboutself-expression.
Speaker 2 (00:34):
Welcome to Zeeb Exit.
As always, I'm your host, RhysKeck, and today we're diving
into the fascinating world ofgaming.
My guest today is Brian Cho,co-founder and general partner
at Patron.
Patron is a leading early-stageventure capital firm that
recently raised a $100 millionfund to invest in the future of
gaming.
Prior to co-founding Patron,Brian was a founding member of
Andreessen Horowitz's investmentteam in the gaming sector,
(00:57):
playing a pivotal role in dealslike Oculus, and spent nearly a
decade at Riot Games, where hebuilt their corporate and
business development departments.
In this episode, we explore hisunique insights into how games
are shaping our culture andeconomy and how Patreon is
championing the next wave ofinnovation in the space.
I hope you enjoy thisconversation as much as I did.
Thanks for listening.
Speaker 3 (01:19):
You're listening to the Seed to Exit podcast with
your host, rhys Keck.
Here you'll learn from startupexecutives, founders, investors
and industry experts.
You'll learn from the bestabout building amazing products,
scaling companies, raisingcapital, hiring the right people
and more.
Subscribe and listen in for newepisodes and enjoy the show.
Speaker 2 (01:42):
Well, brian, thanks for coming on, excited to talk
to you.
Speaker 1 (01:45):
Yeah, thanks for having me.
I just appreciate you having meon your show and happy to chat
Absolutely Well.
Speaker 2 (01:51):
I'm really excited for this one, not only because
of the recent raise that youguys just completed, but I'm
also a gamer.
I've been gaming since I was akid, and so I'm excited to nerd
out with you a little bit here.
Speaker 1 (02:03):
Awesome, yeah, no same for me.
I definitely grew up aroundcomputer games, online games, so
it's how I got introduced tothe internet and technology and
also it's just, it's been like alifelong hobby of mine, yeah,
even to this day.
Speaker 2 (02:17):
What's your favorite game from the earlier years and
currently Just curious.
Speaker 1 (02:22):
Yeah, earlier years I spent a lot of time.
So I actually was born andraised in korea, so, um, this is
back in like the late 90s.
So, like you know, theinteresting story about korea
was it was the one of the firstcountries in the world to get
broadband speed internet.
Just like, and you know, it wasseoul.
Like, um, something like 20 to30 percent of the population
lives there.
(02:42):
So is it was like thisinteresting, like petri dish of,
like, what happens if you getbroadband, uh, t1 speed internet
early to to population andcivilization and um, so, uh,
long story short, yeah, like, Ithink, uh, I'm sure you're
familiar with the internet cafeculture there.
Basically, it's where people goto play multiplayer games,
online games.
So, um, I think the two gamesthat you know obviously spent a
(03:04):
lot of time with is starcraft,so that's something I grew up
with.
It became like our nationalsport when I was growing up, and
then, um, and then the othergame was a game called lineage,
which is like uh, online, it'skind of like in the spirit of
diablo, but it's more of a um,mmo game.
That was uh, that came even.
It preceded, like even uh,everquest and world.
So it was, uh, one of thosegames that got me into the got
(03:26):
me into the online gaming.
Speaker 2 (03:28):
Very cool.
Never played lineage.
I played a little bit ofStarcraft and it's funny you say
that Cause the joke was likewhen the Korean kids log on like
you're done for um, what about?
What about nowadays?
Speaker 1 (03:45):
Uh, you know, I spent and then.
But you know, I mean I'll playa lot of single-player games
these days and I actually reallycome to enjoy indie games.
So balatro, which is like acard roguelike game, I've been
playing a lot of that.
It just came on on ios.
I certainly recommend it.
Um, I just have a lot ofbacklog of stuff.
Like I recently I justyesterday downloaded the new
dragon ball game and that's beenfun to play.
Yeah, nice, okay, like, uh,it's like a, uh, like a fan
(04:07):
service love letter game to alot of kids that grow up playing
those uh, tenkaichi games.
And then, um, yeah, like silenthill 2, there's like a.
There's another rpg game,called like a metaphor, that
came out recently.
So, anyways, I just playeverything, just, uh, nice,
geeking out.
Speaker 2 (04:23):
I, I'm a pretty hardcore gamer so, um, obviously
we're going to talk quite a bitabout you know, patreon and
your current investment thesisand what you're looking to
invest in.
But before we get there, I dowant to rewind a little bit
because you have, from when Iwas doing research, probably one
of the most unusual paths intoventure that I've seen.
So you went from gamedevelopment at Ubisoft and
(04:45):
Booyah to Andreessen and being apartner.
How did that happen?
Speaker 1 (04:50):
Yeah, I think a lot of it honestly was right place,
right time.
So I joined Ubisoft as theywere transitioning from physical
to digital.
So this is, you know, 2008 ish,when iPhone had just launched.
Facebook games are just gettingcreated and you know it wash
when iPhone had just launched.
Uh, facebook games are justgetting created and you know it
was clear that, like the gamesbusiness was going to shift from
(05:10):
the box goods model which youknow, historically it was kind
of like the Hollywood style.
You would spend a lot of moneyupfront to build a game like
call of duty.
This would be like a 60 hourgame, maybe it was a multiplier
component, but and then youwould basically sell it, then
market it like you would marketlike a cereal box or like a
hollywood movie right, tons ofmarketing, sell for 60.
(05:31):
You'd been retailers like thatwas like the old school games
industry.
And then you're beginning tosee like there was this new uh
thing that was emerging which islike again going back to korea,
like the business model aroundvirtual items, games as a
service, online games primarily,which are free to play but they
actually don't have a $60 gatefor you to start playing.
(05:52):
And, most importantly, isactually building the
relationship with users and thegame developer.
So you're basically bypassingthis old school game publishing
model, which is akin to a bookor music publishing model, right
?
Yep, long story short.
At Ubisoft, I was one.
Or music publishing model,right?
Yep, long story short.
So at Ubisoft, I was one of thefirst producers on their mobile
games and this is like thefirst iPhone game.
This is like even before we hadin-app purchasing or the app
(06:14):
store.
So it was like we're sellingour Nintendo DS games and
porting it to iOS and selling itfor like 40, 50 bucks, which
was a terrible idea.
But I happened to be theproducer on those games, which
got me early into mobile.
And then, because I was in sanfrancisco, like a lot of mobile
gaming companies were gettingfunded and just by kind of, you
(06:34):
know, share luck.
But also I just was reallyinterested in iphone and ios.
And you know, back then startups, by the way, were like
counterculture.
There was this is like pre thesocial network movie, so a lot
of people did not want to, so ina startup they wanted to go to
Google or Microsoft or something.
Back in the day there was amobile gaming company that got
(06:55):
funded.
It was called Booyah.
It was backed by the sameinvestor that backed Facebook,
jim Breyer at Excel.
They raised a lot of moneythrough Kleiner, which at the
time they were one of the top VCfirms.
So, yeah, I basically joinedand started working more on the
business side of things becausethey basically had mostly
engineers and learned a lot.
So the one way to think aboutthat company it was a competitor
to Niantic.
It came probably way too earlybut they were trying to build
(07:17):
real-world games, basicallygames that use mobile GPS, and
we made a competitor toFoursquare, which was a game
called my Town.
It's got a lot of users and allthat.
But you know, unfortunately wedid like a acquihire to Zynga.
That was like the outcome ofthe company.
But that's the company that gotme kind of my chops around like
(07:37):
mobile and social.
Uh, before it became a thing.
Um, got to meet a lot of, likeyou know, founders, engineers,
just like the early, I would saylike Web2 companies back in the
day.
And then one thing led toanother and then that got me an
interview at Andreessen.
So I met Ben and Mark, met therest of the investment team.
Originally they thought theywere going to hire me to be more
(07:58):
of the business developmentpartnerships type of thing.
But once I kind of pitched themon the stuff that I knew and
what I was interested in, theybasically said I should just
join the investment team instead.
So that was the second non-GPhire that they made on the
consumer team.
So this is back then.
They had like it's a lot biggerfirm now, but they've only had
six GPs.
Three of them were focused onconsumer.
(08:20):
The person I spent the mosttime with was with Chris Dixon,
so helping find, you know, dealslike Oculus and looking at
crypto and looking at drones.
That's where I spent most of mytime.
Speaker 2 (08:32):
What was that transition like?
Going from development andproduct to an investment role?
Speaker 1 (08:37):
It's different.
You know, I think the thingabout being a VC is you have to
go pretty broad.
So when you work for a startupor even like a, let's say, like
a specific industry, you tend togo very deep into like an idea
and you get to understand likeall the nuances of like how that
business is run.
I think what was generallyapplicable was, like how do you
(08:59):
go from like an early stagestartup to like a series B
startup, like what kind offounders you know are good, what
are, like the attributes thatmakes these things successful?
I think some of that is ispretty applicable broadly, but
generally, I think with VC, youhave to have more of an open
mind and be able to absorb justa lot of information that goes
(09:20):
just across different, all typesof categories, right, so I went
from mostly focused on gamingto looking at things like
education and marketplaces,consumer finance and on the
things especially a lot of themost interesting startups.
There isn't actually anestablished market, right, so
you actually have to startlearning about brand new
(09:41):
technologies like things like ARand VR.
And then there's obviouslythings like, you know, crypto,
which back then was basicallyjust Bitcoin.
So I think a lot of it is justthe ability to absorb new
information and then synthesizethat into whether that's going
to be a good investment or notas a as an investor.
Speaker 2 (10:00):
You briefly mentioned Oculus, which you you did
source and you know A16Zinvested in.
Of course that became a hugesuccess.
We actually had Greg Castle onthe show a little while back,
who was also an early investorin Oculus, but you were the one
who sourced it for A16Z.
So I'm just curious could yougive us a little bit of an
inside look into what it waslike to source them, what the
(10:21):
investment process was like andthen the general lifecycle of
that, what it was like to sourcethem, what the investment
process was like and then thegeneral life cycle of that.
Speaker 1 (10:25):
Yeah.
So the way that that deal kindof went through just high level,
was, you know, we saw the deallike super early this is back
when it was like right out ofthe Kickstarter right.
So I kind of like learned aboutOculus because it was a very
successful Kickstarter project.
So I think it was like one ofthe first projects to raise like
$2 million and I just thoughtit was like super cool because I
(10:51):
grew up, uh, playing a lot offps games and the if you
remember the palmer lucky'soriginal um kickstarter video,
he actually it's, it's funny,he's like he's such a great
founder and visionary.
But back then he actually umtalks about doom, doom three as
like the launch title, and thenhe had like gabe from valve like
on the interview and he had allthese like industry plot
leaders like talking about whyoculus is like a really
(11:11):
interesting device.
So, um, for me, that likeimmediately kind of piqued my
interest.
Um just again as like more of aconsumer right, less so as like
a bc.
So I pre-ordered um and then,you know, we met the founders
and got to learn and and I thinkat the time it was a bit early
for us meaning like it was.
It.
Just there was a lot of kind ofissues around latency and
(11:35):
motion sickness and the productwas really raw and so a lot of
open questions and I think it'swe.
There's actually a book thatkind of talks about this
specific deal.
I forget which book, but itdoes mention kind of um, like
how was, how was I, how I wasinvolved and how we looked at
the deal, and all that.
But long story short.
Uh, we saw the deal a littlebit later on.
(11:55):
Again, I was at a.
It was like some game developerconference, um, like some sort
of like a panel where, uh, youknow, the ceo of oculus, uh,
brendan aribe, happened to be ona panel and he actually talked
about he solved a lot of thetechnical challenges and then he
hired john carmack, which youknow john carmack is, um, if you
read, like the master, themasters of, uh, masters of doom,
(12:18):
and like he basically inventedfps, like when back then there
was no 3d engine, which isinsane to think about um, he, he
basically joined on as cto andso, yeah, I mean it really
piqued my interest and, uh, wegot them back into our firm and
that's when we decided to investwas, um, you know, we actually
(12:39):
all flew down to orange countyto to meet them and, uh, tried
on the latest demo and all of uswere kind of blown away.
And it was one of these thingswhere it was like, yeah, like we
kind of have to invest and thisis a really cool, really cool
deal that's awesome.
Speaker 2 (12:54):
So, um, obviously a great run at a16z, and then
eventually you did go back toriot.
I was just curious what.
What made you decide to go backto industry of sorts, albeit in
a very different role from fromwhen you were more in
development?
Speaker 1 (13:07):
so.
So you know, I think, justtransparently, when I left
booyah and ubisoft, I actuallythought I would never go back
into gaming because I was justlike man, this is a one, a
really tough business, um.
Two, it's.
It's incredibly hard tounderstand early what makes a
great gaming company, especiallyfor a startup.
Yep and and three, um, like itjust also wasn't very clear,
(13:29):
like how big gaming was going toget at that time for me.
But I think what opened my eyesabout riot was I met the founder
, um, as he was just like,really as just as league of
legends was taking off, andgoing back to how I grew up in
Korea, I also saw the numbersfor a game that was dethroning
StarCraft in Korea, which isjust an insane thing, right,
(13:51):
it's just like imagine if therewas a new sport that got created
that dethroned the NFL.
That was kind of the analogy.
So I started digging in andlearned that, hey, this was a
super special company, thefounder Brandon Beck, the CEO at
the time, which was a superspecial company.
That the founder brandon beck,um, the ceo at the time, which
is a very special founder, andhe just had this like a singular
vision or star and the northstar for riot was like how do we
(14:14):
be the most player focusedcompany in the world?
Like?
I still remember that that northstar right and that actually
spoke to me a lot as a consumerbecause historically gaming
industry was about valueextraction, like especially game
companies at that time wasabout like how do we milk every
cent and dollar from every oneof our users and basically like
create this, like addictionaround, like getting people to
(14:35):
pay, and I didn't want to haveanything to do with that.
But when it came for riot, itwas more about how do we like do
right by our players.
That's why it's called RiotGames.
The founders imagined gamersrioting against the gaming
corporations that have been veryabusive to gamers in general.
I just voted with my feet.
(14:56):
It was a little bit too latefor us to invest at Andreessen,
but I was able to invest with myfeet, as you would say.
I joined, helped them build outbusiness and corporate
development, became one of theirexecs and just basically helped
build out the business andscale it.
Speaker 2 (15:13):
Love that.
So I'm going to skip a littlebit ahead through that, although
I'm sure there's plenty wecould talk about during that
time.
But I do want to fast forwardnow.
A little bit to Patron.
So if you could give little bitto Patron.
So if you could give anoverview of Patron, a little bit
about what you invest in andthe inspiration for starting it.
Speaker 1 (15:32):
So we're an early stage firm.
We invest primarily at the seedround.
What that means is like two to$4 million checks, and the
strategy is also pretty unique.
We only pick 20 to 21 companies.
So what that means is, like youknow, we only lead deals.
It's very high convictioninvesting.
So we're not doing the sprayand pray where we're just
investing in a lot of companies.
(15:52):
Um, and then, uh yeah, we justspend a lot of time like getting
to understand the business andthe founder and spending a lot
of time with them in terms oflike how we view the world.
So for us, it's less about let'sgo invest in games.
In fact, in Fund 1, we're only20% games in terms of actual
exposure.
The 80% is pretty broad.
(16:13):
It can be in consumerapplications, it could even be
in B2B, deep tech, education,fintech, what have you?
We use gaming as a lens tounderwrite.
For us, everything is a game oreverything is becoming a game,
and what we mean by that is, um,you think about the today, like
the kids that are growing up onRoblox.
I think you know they they putout a stat more recently that
(16:37):
half of us teens are growing upon Roblox today, and that's.
That's pretty insane.
Like they log onto Roblox everyweek like half of America.
Right, that's crazy Teenagers.
And you also look at, like,what are the top 10 brands,
consumer brands for Gen Z?
A lot of them are like gamingbrands like Xbox, playstation,
twitch, discord Discord isanother great example right,
(16:58):
like that's how teenagers spendtheir time.
It's not on Instagram orFacebook.
So I think, similar to like howa lot of great companies of the
last generation were born fromproducts like you know, like
Facebook and Instagram andSnapchat, where, like in the
beginning it looks like a toy,in the beginning it looks like
(17:24):
something that little kids,future versions of companies,
are going to have gamingelements, gaming components,
gaming DNA, gaming segment of abusiness.
And I think, lastly, you canactually look at some of the
most valuable companies todaythat got created in the last 10
years.
Look at companies like NVIDIA,where it started off serving
gamers and GPUs or hardcoregamers and 3D graphics, and now
(17:46):
there's something a lot greater.
Look at Tencent, where that'sthe company that bought Riot.
That certainly started off as amessaging company that had
gaming as the underlyingbusiness model.
Now it's one of the mostvaluable companies in the world.
We think the most interestingcompanies will have some element
of gaming DNA baked into it.
So that's how we underwriteopportunities, and that's been
(18:06):
the inspiration for starting.
Speaker 2 (18:08):
Patreon.
So it's almost like thegamification of society or life
is kind of the underlyinginvestment thesis.
Speaker 1 (18:15):
Yeah, and I think it's like we actually don't even
like the word gamificationbecause it implies like surface
level stuff, like leaderboardsand badges and stuff.
But I think you're right.
Like spiritually it's moreabout you can argue a lot of our
day-to-day.
You're gonna argue like life islike a one kind of giant game.
Right, and a game is kind oflike a loaded term too, because
(18:36):
if you look at the actualmetrics, there's over three
billion gamers now and these areeven like mother-in-law is
playing like Candy Crush andthere's like all the kids today.
So it's more about if youbelieve that games what makes
games interesting is alreadybaked into consumer products.
Like we think it's just goingto evolve more into that
(18:56):
direction where the line betweenwhat is a game and what's a
great consumer product is goingto be blurred in the next 10
years.
Speaker 2 (19:01):
Well, it's interesting that you said that
too.
It's because when I was doingresearch on some of your
portfolio companies, I was like,huh, this isn't.
This isn't really a game, butbut that makes a lot more sense
now.
So, when it comes to trends ingaming that you're most bullish
on, what do you think thedominant type of game is going
to be in the future, whetherthat be mobile, you know, vr,
(19:23):
esports, cloud gaming, et cetera?
Speaker 1 (19:28):
you know, vr, esports , cloud gaming, etc.
Yeah, I think it just goes backto our original thesis, like
we're trying to think more outinto the future, like 10 years
out, and I think one trend thatwe've been fascinated by is how
people interact with agents.
Um, these are like basically aipowered chatbots, um, but I
think you're kind of seeing the,the, the very like underlying
(19:49):
um formation of like thisconsumer behavior.
So character ai, as you know,got bought up by google.
They have a product that isaround role play and a lot of
people spend time talking tothese bots and they're building
relationships and like they'rekind of having fun basically
doing that.
Um discord role play server islike one of the biggest things
and if you look at china, that'sactually like a huge industry
(20:09):
and um, I think this is there'slike games that are flying under
the radar over in china.
I think one is called love anddeep space.
It recently was like the mosttrending game over there in
terms of like gross revenuesgenerated, like it beat out a
lot of the most popular chinesemobile games and um, love and
deep space fundamentally it'snot a ai game, but it's a game
(20:30):
about um interacting with uh aiavatars and npcs, like building
relationships with them and likefalling in love with them,
right, which again sounds prettycrazy today.
But I don't think that futureis that far off where, um, we
already have emotionalattachments with video game
characters and NPCs and lore,even without this element of
(20:52):
like memory state, and you knowcharacter development and all
that.
So that's a trend that I've beenpersonally pretty interested in
is like from this emergent AIagent behavior, what kind of
games can you get?
Can get built?
So we've been spending timelooking into that.
Speaker 3 (21:12):
But that's one example.
Speaker 1 (21:13):
And I think there's a lot of consumer products that's
going to be falling into thatcategory where, like now you
actually have someone that youcan speak to.
It's hyper-personalized.
It's no longer about, like thebusiness model of like let's get
2 billion people to use it andwe'll advertise.
It's like how do we actuallyget you to interact one-on-one
with a consumer product that'sgoing to build way deeper
(21:34):
relationship but also give youcontent that is highly
customized to what you needversus what everyone else on
earth might be interested in?
Speaker 2 (21:43):
And then, how are those models monetized?
Is it a monthly subscription?
Speaker 1 (21:51):
I think subs is more of the natural order of things.
Um, I think that's the beautyof gaming and why we're
interested in games.
Business model, too, is withconsumer sub.
As you know, it tends to capout.
But with gaming, when you havevirtual items and virtual assets
, personalization like that cango a lot higher.
So I think that's why you'reseeing even tiktok, like they
have the ability now to likegift roses and galaxies and do
all these crazy things right,like send items.
(22:12):
Um, I think that's just likewhere business model is going to
be headed.
It's not going to be this likeadvertising, spamming with feeds
, but of course that willcontinue to exist.
But I do think it's going to bemuch more built around like
personalization and havingvirtual items and, yeah, like
more of the gaming type ofbusiness model.
Speaker 2 (22:30):
That gets interesting it made me, um, when you were
talking about your time atubisoft and you referred to it
as the old model of games whichmade me a little sad to say
which is you spend a bunch ofmoney developing something and
then you sell it for 60 bucks orwhat have you?
Those happen to be the types ofgames that I play the most.
Um, do you think that those canwill continue to have a future,
or do you think those are goingto be phased out in terms of
(22:52):
the more modern, you know,monetization structure?
Speaker 1 (22:55):
I think they will always have a future and in fact
, I hope that they stay that way.
I think, for me, the worst typeof games are like games that
should be like 50 or 20 orwhatever, right, but then they
try to force likemicrotransaction and like
advertising and all this likeunnatural business model to it.
So, philosophically, I thinkthe business model needs to
(23:16):
match what that product is andwhat that game is, and my
opinion is like there's alwaysgoing to be.
I mean, just look at likenintendo right, like most of the
games are not these like liveservice stuff and they're
crushing it and I'm assuminglike valve.
And you look at steam.
And then you look at likeplaystation.
A lot of those are singleplayer games too, so they will
persist.
(23:36):
But, um, I do think the appetiteof what gamers look for will
change a lot and you're alreadybeginning to see it.
Or, like diablo 4, when it cameout, a lot of gen z, like they
don't even know what that isright, like for me, I was like
super excited because I played alot of diablo, obviously.
But I think, um and I thinkthat's fine too I think you go,
you go to like a blizzcon andit's mostly like people in their
(23:59):
40s and now probably in their50s, but I think that's fine.
You can age up, up with yourgamers.
That market will continue towant to be part of your business
and be loyal subs, hopefully.
So it's not to say you alwayshave to go younger and look for
the hottest and the nextgreatest thing.
But as venture investors,obviously we're trying to not
(24:20):
short the future and look forinteresting companies.
Speaker 2 (24:23):
Absolutely, and this also is the first time we're
starting to get to an age wherepeople have been growing up and
playing video games their entirelives.
So now there is a market for,you know, the 40s, 50s, 60s
gamers, whereas 30 years ago itjust didn't exist.
I also find it interesting thatyou mentioned the
microtransactions and the otherless than palatable you and the
(24:44):
other less than palatablemethods that sometimes gaming
companies use to monetize things, and I think probably two of
the things that drive me thenuts the most are
microtransactions, and then alsothese day one DLCs where it's,
you know, you bought threequarters of the game, now pay 30
bucks to unlock the rest.
Yeah, that's as the yeah asthings can, and the frustrating
thing is that it works.
(25:05):
I mean, do you think that therewill be a time where the
consumer just says nope, no moreof this and those die out, or
do you think it's here to stay?
Speaker 1 (25:12):
I think gamers are extremely smart and I think
there's a reason why you're alsoseeing, like AA games, do well
right, like Helldivers, palworld, like some of these things that
are not made by triple a gamestudios that are trying to force
like a microtransaction and allthese things into into the
consumer.
So I think also in a world ofai, where we're going to get
(25:34):
like infinite, infinitely largervolume of content, yep, and
people only have finite numberof minutes per day that they can
spend on time, like it's always, it always bubbles up to the
the best type of user experience, the product.
So I have no doubt in my mindthat this is like, uh, it might.
I mean again, it just dependson what it is like.
Of course, if you're buildinglike the next gta, like people
(25:55):
are going to want to spend a lotof time playing that.
But it is a balance and I thinkgame game developers will
probably have to wake up to thefact that, like gamers are
extremely smart and they cankind of smell a lot of this BS
stuff mile away.
Speaker 2 (26:08):
Mention the AI and gaming.
So let's, let's talk about that.
What do you see as the futureinvolvement of AI and gaming?
Do you think that we'll justuse it to speed up development
and we'll have more games?
Will there be entirelydynamically generated AI games?
What are your thoughts?
Speaker 1 (26:24):
Yeah, I think, as it relates, it's kind of two things
.
On the development side I thinkyou're already seeing it
happening which is like theefficiency gains and this is
even not even including gamesLike this is software
development in general, right,you're seeing a lot better
efficiencies with even thingslike Microsoft Copilot and these
productivity things that arecoming online.
I think with games, like one ofthe biggest some cost is around
(26:47):
, like things like animation,art pipelines, like things like
that.
I do think it will help createa lot of efficiencies.
I don't think it takes away thecreative element of the job,
but it will definitely impactmore the day-to-day like how
these things get created.
So it's kind of like a worldwhere, like pre-photoshop and
photoshop and how that kind ofchanged a lot of like that
industry, right, like even thephotography industry um, maybe
(27:08):
that's one way to think about itlike photo editing industry.
So I think, on the like more ofthe enterprise productivity
side, like absolutely that'sgoing to change the industry and
I hate to say it, but itprobably means like even more
cuts and layoffs, right, becausegame studios now don't need as
many people to be able to buildthese games and then you
basically have to fight formargins and like probably big
(27:31):
studios eventually will turn tothat.
I just generally think likethey're going to take a longer
time to do it because theyalready have a great workforce
and ai is not there yet.
It's going to take some time.
Like it's not, like the assetis as good as a hand-drawn thing
right and Sure.
I think it's going to take sometime.
It's getting there fast butit's going to take some time.
So that's on the B2B side, Ithink.
(27:53):
On the player side, that, Ithink is also still pretty early
.
But maybe there is where yousee more things speeding up.
So we most recently put out aterm sheet to a company that is
building, like a, simple gamesthat have kind of a.
It allows, like the basicallythe game engine, using AI and ML
(28:17):
, to create like permutations ofthese games and puzzles that
actually is solvable.
So it doesn't matter if you canactually create, let's say,
like a bunch of puzzles orthings.
Right If it can't be solved,which I think is pre-AI but now
if you can create these thingsthat actually has an endpoint,
maybe you can create betterroguelites.
You can create better types ofgames where it's
(28:38):
hyper-personalized, that hasProc Gen and UGC, where it's a
lot easier to do it.
I also think, just like probablywhat's going to happen to
movies and tv, like games aregoing to be coming more hyper
personalized, so, um, I thinklike there's going to be
elements of games that justagain like plugging back into,
like what ai does best is moreabout personalization,
(29:00):
understanding what you like.
Um, I think you'll probably seegames that have more, even
deeper personalization, and Ithink that's what kind of made
league of legends business modelinteresting.
Right was skins was less aboutbuying digital goods, it was
more about self-expression, likeI want to be this type of
champion in this kind of fantasy, so I'm going to pay for the
skin.
(29:20):
Like, I think you'll see maybemore of that kind of behavior
where people want moreexperiences that are accustomed
to them.
But honestly, I think withthese type of things, like it's
really hard to guess and justlike a lot of the consumer stuff
that usually takes off, I thinkas VCs we can kind of guess
what we want, but we kind ofwant to know what we see like an
(29:42):
immersion behavior and itprobably will look nothing like
what's worked in the lastgeneration of games.
So I suspect the games that dowell, this generation that have
some AI component are going tolook very different than like a
League of Legends or, you know,like a $60 AAA game.
It's probably going to lookcloser to like a character AI,
if I had to guess.
Speaker 2 (30:02):
Do you think there is a world where, like, let's say,
I create an RPG and instead ofthe NPCs just having dialogue
trees, they're dynamicallygenerated using LLMs?
Do you think that's possible,or would that just create too
many openings for stories andthings that just wouldn't make
sense?
Speaker 1 (30:16):
I think it's possible , you're kind of seeing that
with even sim games Like again,they don't have it in there, but
imagine things like I don'tknow like Stardew Valley or like
RimWorld right, where youactually have these AI bots
already running around NPCs andthey have personalities and they
say stuff.
But I think where it getsinteresting is if those things
(30:40):
just feel more alive and theycan make their own decisions.
It's kind of like, I thinkmaybe like one AAA version of
this is like Baldur's Gate 3.
I don't know if you played that,but it has like infinite amount
of dialogue trees, where it'sjust insane, right, it's
incredible, yeah, yeah, it'slike the most insane thing that
they built.
I love it because you know youcan play that game forever, but
(31:03):
I just think that's like maybe aglimpse of what these ai
powered games can feel like,which is just like you have
infinite variability, and it'snot like it's not just like this
one thing that you play and Ithink that's a nice thing.
I think again, like people kindof bash on ai talking about how
it's bad for creatives anddevelopers, I actually think
it's great for indie game devsbecause now you can actually
build these like maybe now youcan actually.
(31:24):
The reason why a lot of indiegames are 2d, by the way, is
people can't do like 3danimation and rigging and can't
pay for like 3d assets.
But maybe that gets equalizedright.
So maybe you're going to havelike a billion dollar game
studio that is like 20 people inthe future.
Like someone talked about abillion dollar, one person
company.
Like yeah, that's not, that'snot out of scope.
Speaker 2 (31:44):
So yeah, yeah, I think that's what it's going to.
A lot of is going to be, isgoing to be the the
democratization of being able tocreate media, yeah, whether
that be gaming or movies, tvshows, etc.
Yeah, um, so, to switch gearsfrom, you know, talking about
the the future of things totalking a little bit more about
things on the investment side,um, how are you assessing
(32:06):
product market fit for earlystage gaming companies and what
metrics do you track?
Because I personally know a lotmore about SaaS and I obviously
know a lot about games as aconsumer, much less so as an
investor.
So what are you looking at?
Speaker 1 (32:18):
Yeah.
So, again, we generally don'tlike investing into pure games
because it is extremely hard toguess as investors and again, I
think most gaming content stuffshould be backed by game
publishers, not by vcs, just bythe nature of that business.
But I think like lessquantitative stuff we look for
is is there potential for marketcreation?
(32:40):
Meaning, are you building in aspace that truly is blue ocean,
that like a game publisher orstrategic, or like a ten cent,
that like a game publisher orstrategic or like a 10 cent, or
like a net ease or riot or epics, not going to go after and
build a way better version of itusing their distribution and
resources and dollars?
Right, so that's like onefundamental thing we think about
is like why, in this moment intime, that there's going to be
(33:01):
like a new creation of a newtype of business built around
games, um, the obvious questionwe ask is like are you building
a game?
Are you building a game studio,slash business, or are you
building a game so like I thinkfundamentally, a lot of game
developers are doing the latter,where they just want to build a
great game, um, that could turninto a game, big game business,
(33:22):
game studio, sure, but it'salso like super high risk to
just put everything into oneeggs and again going back to
like most of these things don'tturn out to be a billion dollar
thing, so like that's fine, butthat doesn't meet the venture
criteria, so that's.
Those are kind of two macrostuff that we think about.
Um, more tactical stuff we lookfor early stage, seed stage, is
(33:44):
we definitely focus a lot onthe team, like have they
actually?
They don't have to been.
We actually kind of prefer gamemakers that actually don't come
from games.
I know this sounds kind ofweird, but it's kind of like the
PayPal story, right, like ifthe PayPal founders came from
FinTech, I think it would havenot turned into PayPal.
We kind of like this idea ofyou you come in from like a
(34:04):
different angle and see thingsfrom like first principles and
how, like we imagine, usingeverything that is available
today, what like a new type ofgame or game experience could
look like.
So some of our best foundersactually don't even come from
games, you know, but they'rekind of building around the
gaming space, which isinteresting and, more
importantly, is like can theyrecruit the right talent?
(34:24):
And like going back to the riotstory, which is like 2012, 2008
, 2009 actually that's when thatthing started but, um, brandon
and mark were like one or twoyears out of usc, like well you
know.
Like brandon had like one yearat bain consulting, then mark
was like he worked at somerandom bank, like out of
undergrad um.
But what they did have was theyspent thousands of hours
(34:47):
playing dota and they were verydeep with the dota community,
especially the modders anddevelopers.
So they were actually they wereable to convince those guys to
leave, like kind of drop whatthey were doing and turn that
mod into a business.
And then they started likeusing that hiring people from
blizzard, which again soundsinsane, but like they were able
(35:07):
to do that.
So I think like those are kindof things that we look for at
the c stage is like kind offounder, actually convert talent
, build the right team to beable to execute um.
Then we spend.
Lastly, because, uh, you know,a lot of us both my co-founder
and I like understand what agood product, especially on the
gaming side, looks like.
Um, we spend time a lot withthe product and that's when we
(35:28):
typically invest, is usuallywhen there's like it doesn't
have to have a lot of users ormetrics, but we have to feel
like this is a well-craftedthing, like it's not like uh, it
doesn't have to have all thepolish, but it should feel like
a good product and we're bettingon that, right Along with like,
if they have like a passionateuser base of like 100 people,
(35:49):
like we'd love that too, likewe'd rather have that, versus
like 10,000 people that churnafter one day.
So these are some of theelements that we try to poke out
and understand.
Speaker 2 (35:57):
Yeah, so the Riot founders they had a bit of a
competitive advantage when itcame to attracting talent
because they had investedthousands of hours into the Dota
community.
So that's how they made theirfirst hires.
And oftentimes founders aremaking their first call it five
hires from their network.
But for founders that don'thave that advantage of the
(36:21):
thousands of hours invested,what are some of the best
techniques that you would advise?
Speaker 1 (36:25):
founders to use to attract talent.
I think build a great productthat people talk about, that
they love and have, are gettingtraction right.
I think you need like somethingto show for your lack of like
experience or what have you um,and I think it's incredibly easy
to create, like you know, steamgames now lightweight games,
things like that.
I think that's ultimatelyhelpful um.
(36:46):
But yeah, I don't think therethere's necessarily like.
I don't know if I would giveany kind of blanket advice.
I think it's a lot of.
It is like, if you don't havegame development talent, then
you should be able to bringother elements right.
Maybe you're like really goodaround creating um like npcs or
like ai bonds you understandthat space really well, so it's
(37:07):
less about like from like.
No founder and ceo on day onehas everything figured out.
They're usually like, very goodat something.
So if you're a highly technicalfounder and you know one of our
investments like they're likethe x mit research labs team
where they were trying to buildlike a human brain using
software.
They shut that thing down andstarted a new company, but they
(37:27):
actually hired good games.
Talent like these are thethings that we would probably
recommend is make sure you fillthe gaps and I think that's what
great founders do anyways.
Speaker 2 (37:37):
Um, and then when you said you're looking at a great
product, obviously you know atseed stage you've, you've built
your MVP, you have some decenttraction, you said maybe you
have a user base of 100 engagedusers.
How do you delineate these asgood bones?
But need some polish versus.
This has some fundamental flaw.
That doesn't make sense for us.
Speaker 1 (37:56):
Yeah, I think it's probably.
I think one of the things thatwe've tried to look for is like
is this a product that I'd wantto use every day?
Like, is there some sort ofmagic in it that really like
hooks me?
And it's not just somethingthat's like novel, because
there's plenty of consumerproducts that's like really fun
to play for the first like fewdays, and then you just end up
(38:16):
kind of being like a toy or likea nice to have.
So I think that's kind of thecrux of it.
And then you know, maybe it'smore of like the Riot ethos.
But even when we created in gamedevelopment, you call it
vertical slice, which is like a15 minute representation of a
game.
Some people will create kind oflike really like bare bones,
(38:37):
like wireframe prototypes forthe vertical slice.
But at least at Riot we try tocreate the full game as close as
possible, meaning like therewas music, there was art, there
was like a full experience.
Um, so that's kind of like whatI mean by craft when it comes
to games is like thing about.
Games is like a lot of it isnot science at all.
It's where art meets science,right, and I think you need to
(39:01):
be able to really demonstratethe art side, and that's the
hard part about being a gamingceo is you need to be able to
really demonstrate the art side,and that's the hard part about
being a gaming ceo is you haveto be like as much of a creative
and like a game maker.
It's like you're like a clockmaker, but it has to be not just
working, it has to be beautifuland needs to have like a lot of
these like bells and whistlesthat makes that thing tick, um,
(39:22):
so I think these are the thingsthat we try to dig in for.
And then, more importantly, islike, do you understand your
audience?
And I think that was actuallythe secret sauce that riot had
was they were like one of thefew people in the world that
really understood the playerpain point, like that, like
league of legends was actuallysolving a player point pain
point around dota.
I don't know if you ever playeddota I didn't, so, yeah, please
(39:43):
educate me.
It was like an incredibly fungame if you played with like 10
of your friends, um, butincredibly frustrating if you
just try to play online becausethey didn't have matchmaking.
So like you just sometimes playwith people that are like
infinitely better and you justjust just basically your butt
kicked right.
Um, they had these mechanics inthere, like in legal legends.
(40:05):
It's called laning, where, likethere's a element called last
sitting again, I'm getting likereally technical but there's a
part of a game that is in dotalike uh creep deny, which is
basically an element of likemake like it just basically like
think of we used to call itlike the unfun mechanic, where
that mechanic didn't need to bein there but it just made it
(40:26):
like really frustrating forplayers.
And then and then ride alsoadded like new, new features to
a product called uh bushes,which is like it's literally
like a brush and you can likehide your character in the shrub
.
I did, I, I played a little bitof league when I was here, yeah
you can pop out right and dolike gangsta stuff, but that was
actually a fun element.
so, like, I think the point islike what made ride successful
(40:47):
and league of legends successfuland actually what made valorant
their new game successful isthey took a game that was like
pretty niche, super hardcore,with a lot of things that could
have been addressed, that hadclear pain point around the
players, and then they convertedthat into something that is
mass market and I think the lastnumber that Riot put out was
over like 500 people 500 millionplayers around the world have
(41:11):
interacted with a league IP insome game form, which is insane
to think about.
That's a one in 13 people orsomething, right?
Speaker 2 (41:18):
So yeah, that's incredible.
Yeah.
Last question, just when itcomes to advice that you might
give to founders who are lookingto raise capital from top tier
VCs and people who are lookingfor that very high level of
conviction, what would be thebest advice you can give?
Speaker 1 (41:36):
I think a lot of founders.
I think you have to realize onestartup is something that you
want to do, like it's incrediblyhard.
I think most people shouldprobably be better off working
for a big gaming company or likea big tech company than being a
founder, cause it is veryunnatural thing to go start
something.
(41:56):
You need an insane amount ofcourage because everything's
going to go wrong.
By the way, like in the historyof startups, there's never been
a startup that is like you.
You launch something and it waseasy yeah yeah, I mean it's like
the social network movie, right.
Like you know you're coding oneday and then the next day, like
you're on the beach, likesipping on cocktails, like that
does not happen, like it's um.
(42:17):
It's a very hard journey but Ithink, despite that, if you're
willing to go build something, Ithink then it's about building
just a lot of conviction in theearly product that you have.
And I actually recommend to alot of founders too, if you can
bootstrap it, you should Don'traise a lot of money up front
especially.
That's probably the otheradvice I give.
(42:38):
It's interesting advice comingfrom a VC.
It's interesting advice comingfrom a VC.
No, like, I think it's waybetter when a founder like knows
they need to raise capitalbecause it is kind of working,
or they need to hire and theyneed to like actually need that
capital to go do something,versus like I'm just
automatically going to raise $2million and I don't really know
(42:58):
what I'm going to do with it,type of thing.
Right.
But I think the most actuallyis this even tied to this one is
like don't start a companybecause you want to be a founder
or ceo.
Like there's a lot ofentrepreneurs in the last 10
years.
I think I've done that becausethat is not like you should want
to be a founder to solve aproblem, or because you're
(43:19):
deeply passionate aboutsomething and this thing needs
to exist and this is your lifemission and you're going to be
all in, like I think again, it'snot, it's not to generalize,
but like there's a lot ofbecause startups have become so
mainstream culture.
Like it's almost like hey, likeI, I have this great resume.
I went to great school.
Like I got this great, greatjob at this amazing tech company
(43:45):
or startup.
Now the natural thing for me isto be like a tech founder.
Right, yeah, it's almost like anotch on your resume, or like
it's for ego or for whateverelse yeah, I, I just think, like
that's just the recipe fordisaster and you're better off,
you're gonna save a lot ofpeople, a lot of money and
headache to not do that and, um,counterintuitively, like if you
(44:06):
have that itch to go startsomething and you're really
passionate and like this issomething you are going to do,
whether or not anyone funds you,like this is what you would do
on nights and weekends and andsomething that's like your
passion project that you justlike are obsessing over, like
then you should probably startsomething right and and I think
it just kind of that's ifthere's any advice I would give
(44:28):
any startup people is probablythat is, as a founder especially
, you kind of need that elementbecause it's really hard.
Like that's the thing aboutstartups it's definitely not
easy and it's not a walk in thepark.
Speaker 2 (44:40):
Well, I think that's a fantastic perspective.
So, brian, this has been superfun.
I really appreciate you comingon.
Speaker 1 (44:47):
Thank you, thanks, reese, this was a lot of fun as
well, and, uh, thanks for havingme on board.
Speaker 3 (44:52):
Thanks for listening to see to exit.
If you enjoyed the episode,don't forget to subscribe and
we'll see you next time.
I also think just like probably what's going to
happen to movies and TV likegames are going to be becoming
more hyper-personalized.
So I think, like there's goingto be elements of games that
just again like plugging backinto, like what AI does best is
more about personalization,understanding what you like.
I think you'll probably seegames that have more, even
(00:21):
deeper personalization, and Ithink that's what kind of made
League of Legends business modelinteresting.
Right Was, skins was less aboutbuying digital goods.
It was more aboutself-expression.
Speaker 2 (00:34):
Welcome to Zeeb Exit.
As always, I'm your host, RhysKeck, and today we're diving
into the fascinating world ofgaming.
My guest today is Brian Cho,co-founder and general partner
at Patron.
Patron is a leading early-stageventure capital firm that
recently raised a $100 millionfund to invest in the future of
gaming.
Prior to co-founding Patron,Brian was a founding member of
Andreessen Horowitz's investmentteam in the gaming sector,
(00:57):
playing a pivotal role in dealslike Oculus, and spent nearly a
decade at Riot Games, where hebuilt their corporate and
business development departments.
In this episode, we explore hisunique insights into how games
are shaping our culture andeconomy and how Patreon is
championing the next wave ofinnovation in the space.
I hope you enjoy thisconversation as much as I did.
Thanks for listening.
Speaker 3 (01:19):
You're listening to the Seed to Exit podcast with
your host, rhys Keck.
Here you'll learn from startupexecutives, founders, investors
and industry experts.
You'll learn from the bestabout building amazing products,
scaling companies, raisingcapital, hiring the right people
and more.
Subscribe and listen in for newepisodes and enjoy the show.
Speaker 2 (01:42):
Well, brian, thanks for coming on, excited to talk
to you.
Speaker 1 (01:45):
Yeah, thanks for having me.
I just appreciate you having meon your show and happy to chat
Absolutely Well.
Speaker 2 (01:51):
I'm really excited for this one, not only because
of the recent raise that youguys just completed, but I'm
also a gamer.
I've been gaming since I was akid, and so I'm excited to nerd
out with you a little bit here.
Speaker 1 (02:03):
Awesome, yeah, no same for me.
I definitely grew up aroundcomputer games, online games, so
it's how I got introduced tothe internet and technology and
also it's just, it's been like alifelong hobby of mine, yeah,
even to this day.
Speaker 2 (02:17):
What's your favorite game from the earlier years and
currently Just curious.
Speaker 1 (02:22):
Yeah, earlier years I spent a lot of time.
So I actually was born andraised in korea, so, um, this is
back in like the late 90s.
So, like you know, theinteresting story about korea
was it was the one of the firstcountries in the world to get
broadband speed internet.
Just like, and you know, it wasseoul.
Like, um, something like 20 to30 percent of the population
lives there.
(02:42):
So is it was like thisinteresting, like petri dish of,
like, what happens if you getbroadband, uh, t1 speed internet
early to to population andcivilization and um, so, uh,
long story short, yeah, like, Ithink, uh, I'm sure you're
familiar with the internet cafeculture there.
Basically, it's where people goto play multiplayer games,
online games.
So, um, I think the two gamesthat you know obviously spent a
(03:04):
lot of time with is starcraft,so that's something I grew up
with.
It became like our nationalsport when I was growing up, and
then, um, and then the othergame was a game called lineage,
which is like uh, online, it'skind of like in the spirit of
diablo, but it's more of a um,mmo game.
That was uh, that came even.
It preceded, like even uh,everquest and world.
So it was, uh, one of thosegames that got me into the got
(03:26):
me into the online gaming.
Speaker 2 (03:28):
Very cool.
Never played lineage.
I played a little bit ofStarcraft and it's funny you say
that Cause the joke was likewhen the Korean kids log on like
you're done for um, what about?
What about nowadays?
Speaker 1 (03:45):
Uh, you know, I spent and then.
But you know, I mean I'll playa lot of single-player games
these days and I actually reallycome to enjoy indie games.
So balatro, which is like acard roguelike game, I've been
playing a lot of that.
It just came on on ios.
I certainly recommend it.
Um, I just have a lot ofbacklog of stuff.
Like I recently I justyesterday downloaded the new
dragon ball game and that's beenfun to play.
Yeah, nice, okay, like, uh,it's like a, uh, like a fan
(04:07):
service love letter game to alot of kids that grow up playing
those uh, tenkaichi games.
And then, um, yeah, like silenthill 2, there's like a.
There's another rpg game,called like a metaphor, that
came out recently.
So, anyways, I just playeverything, just, uh, nice,
geeking out.
Speaker 2 (04:23):
I, I'm a pretty hardcore gamer so, um, obviously
we're going to talk quite a bitabout you know, patreon and
your current investment thesisand what you're looking to
invest in.
But before we get there, I dowant to rewind a little bit
because you have, from when Iwas doing research, probably one
of the most unusual paths intoventure that I've seen.
So you went from gamedevelopment at Ubisoft and
(04:45):
Booyah to Andreessen and being apartner.
How did that happen?
Speaker 1 (04:50):
Yeah, I think a lot of it honestly was right place,
right time.
So I joined Ubisoft as theywere transitioning from physical
to digital.
So this is, you know, 2008 ish,when iPhone had just launched.
Facebook games are just gettingcreated and you know it wash
when iPhone had just launched.
Uh, facebook games are justgetting created and you know it
was clear that, like the gamesbusiness was going to shift from
(05:10):
the box goods model which youknow, historically it was kind
of like the Hollywood style.
You would spend a lot of moneyupfront to build a game like
call of duty.
This would be like a 60 hourgame, maybe it was a multiplier
component, but and then youwould basically sell it, then
market it like you would marketlike a cereal box or like a
hollywood movie right, tons ofmarketing, sell for 60.
(05:31):
You'd been retailers like thatwas like the old school games
industry.
And then you're beginning tosee like there was this new uh
thing that was emerging which islike again going back to korea,
like the business model aroundvirtual items, games as a
service, online games primarily,which are free to play but they
actually don't have a $60 gatefor you to start playing.
(05:52):
And, most importantly, isactually building the
relationship with users and thegame developer.
So you're basically bypassingthis old school game publishing
model, which is akin to a bookor music publishing model, right
?
Yep, long story short.
At Ubisoft, I was one.
Or music publishing model,right?
Yep, long story short.
So at Ubisoft, I was one of thefirst producers on their mobile
games and this is like thefirst iPhone game.
This is like even before we hadin-app purchasing or the app
(06:14):
store.
So it was like we're sellingour Nintendo DS games and
porting it to iOS and selling itfor like 40, 50 bucks, which
was a terrible idea.
But I happened to be theproducer on those games, which
got me early into mobile.
And then, because I was in sanfrancisco, like a lot of mobile
gaming companies were gettingfunded and just by kind of, you
(06:34):
know, share luck.
But also I just was reallyinterested in iphone and ios.
And you know, back then startups, by the way, were like
counterculture.
There was this is like pre thesocial network movie, so a lot
of people did not want to, so ina startup they wanted to go to
Google or Microsoft or something.
Back in the day there was amobile gaming company that got
(06:55):
funded.
It was called Booyah.
It was backed by the sameinvestor that backed Facebook,
jim Breyer at Excel.
They raised a lot of moneythrough Kleiner, which at the
time they were one of the top VCfirms.
So, yeah, I basically joinedand started working more on the
business side of things becausethey basically had mostly
engineers and learned a lot.
So the one way to think aboutthat company it was a competitor
to Niantic.
It came probably way too earlybut they were trying to build
(07:17):
real-world games, basicallygames that use mobile GPS, and
we made a competitor toFoursquare, which was a game
called my Town.
It's got a lot of users and allthat.
But you know, unfortunately wedid like a acquihire to Zynga.
That was like the outcome ofthe company.
But that's the company that gotme kind of my chops around like
(07:37):
mobile and social.
Uh, before it became a thing.
Um, got to meet a lot of, likeyou know, founders, engineers,
just like the early, I would saylike Web2 companies back in the
day.
And then one thing led toanother and then that got me an
interview at Andreessen.
So I met Ben and Mark, met therest of the investment team.
Originally they thought theywere going to hire me to be more
(07:58):
of the business developmentpartnerships type of thing.
But once I kind of pitched themon the stuff that I knew and
what I was interested in, theybasically said I should just
join the investment team instead.
So that was the second non-GPhire that they made on the
consumer team.
So this is back then.
They had like it's a lot biggerfirm now, but they've only had
six GPs.
Three of them were focused onconsumer.
(08:20):
The person I spent the mosttime with was with Chris Dixon,
so helping find, you know, dealslike Oculus and looking at
crypto and looking at drones.
That's where I spent most of mytime.
Speaker 2 (08:32):
What was that transition like?
Going from development andproduct to an investment role?
Speaker 1 (08:37):
It's different.
You know, I think the thingabout being a VC is you have to
go pretty broad.
So when you work for a startupor even like a, let's say, like
a specific industry, you tend togo very deep into like an idea
and you get to understand likeall the nuances of like how that
business is run.
I think what was generallyapplicable was, like how do you
(08:59):
go from like an early stagestartup to like a series B
startup, like what kind offounders you know are good, what
are, like the attributes thatmakes these things successful?
I think some of that is ispretty applicable broadly, but
generally, I think with VC, youhave to have more of an open
mind and be able to absorb justa lot of information that goes
(09:20):
just across different, all typesof categories, right, so I went
from mostly focused on gamingto looking at things like
education and marketplaces,consumer finance and on the
things especially a lot of themost interesting startups.
There isn't actually anestablished market, right, so
you actually have to startlearning about brand new
(09:41):
technologies like things like ARand VR.
And then there's obviouslythings like, you know, crypto,
which back then was basicallyjust Bitcoin.
So I think a lot of it is justthe ability to absorb new
information and then synthesizethat into whether that's going
to be a good investment or notas a as an investor.
Speaker 2 (10:00):
You briefly mentioned Oculus, which you you did
source and you know A16Zinvested in.
Of course that became a hugesuccess.
We actually had Greg Castle onthe show a little while back,
who was also an early investorin Oculus, but you were the one
who sourced it for A16Z.
So I'm just curious could yougive us a little bit of an
inside look into what it waslike to source them, what the
(10:21):
investment process was like andthen the general lifecycle of
that, what it was like to sourcethem, what the investment
process was like and then thegeneral life cycle of that.
Speaker 1 (10:25):
Yeah.
So the way that that deal kindof went through just high level,
was, you know, we saw the deallike super early this is back
when it was like right out ofthe Kickstarter right.
So I kind of like learned aboutOculus because it was a very
successful Kickstarter project.
So I think it was like one ofthe first projects to raise like
$2 million and I just thoughtit was like super cool because I
(10:51):
grew up, uh, playing a lot offps games and the if you
remember the palmer lucky'soriginal um kickstarter video,
he actually it's, it's funny,he's like he's such a great
founder and visionary.
But back then he actually umtalks about doom, doom three as
like the launch title, and thenhe had like gabe from valve like
on the interview and he had allthese like industry plot
leaders like talking about whyoculus is like a really
(11:11):
interesting device.
So, um, for me, that likeimmediately kind of piqued my
interest.
Um just again as like more of aconsumer right, less so as like
a bc.
So I pre-ordered um and then,you know, we met the founders
and got to learn and and I thinkat the time it was a bit early
for us meaning like it was.
It.
Just there was a lot of kind ofissues around latency and
(11:35):
motion sickness and the productwas really raw and so a lot of
open questions and I think it'swe.
There's actually a book thatkind of talks about this
specific deal.
I forget which book, but itdoes mention kind of um, like
how was, how was I, how I wasinvolved and how we looked at
the deal, and all that.
But long story short.
Uh, we saw the deal a littlebit later on.
(11:55):
Again, I was at a.
It was like some game developerconference, um, like some sort
of like a panel where, uh, youknow, the ceo of oculus, uh,
brendan aribe, happened to be ona panel and he actually talked
about he solved a lot of thetechnical challenges and then he
hired john carmack, which youknow john carmack is, um, if you
read, like the master, themasters of, uh, masters of doom,
(12:18):
and like he basically inventedfps, like when back then there
was no 3d engine, which isinsane to think about um, he, he
basically joined on as cto andso, yeah, I mean it really
piqued my interest and, uh, wegot them back into our firm and
that's when we decided to investwas, um, you know, we actually
(12:39):
all flew down to orange countyto to meet them and, uh, tried
on the latest demo and all of uswere kind of blown away.
And it was one of these thingswhere it was like, yeah, like we
kind of have to invest and thisis a really cool, really cool
deal that's awesome.
Speaker 2 (12:54):
So, um, obviously a great run at a16z, and then
eventually you did go back toriot.
I was just curious what.
What made you decide to go backto industry of sorts, albeit in
a very different role from fromwhen you were more in
development?
Speaker 1 (13:07):
so.
So you know, I think, justtransparently, when I left
booyah and ubisoft, I actuallythought I would never go back
into gaming because I was justlike man, this is a one, a
really tough business, um.
Two, it's.
It's incredibly hard tounderstand early what makes a
great gaming company, especiallyfor a startup.
Yep and and three, um, like itjust also wasn't very clear,
(13:29):
like how big gaming was going toget at that time for me.
But I think what opened my eyesabout riot was I met the founder
, um, as he was just like,really as just as league of
legends was taking off, andgoing back to how I grew up in
Korea, I also saw the numbersfor a game that was dethroning
StarCraft in Korea, which isjust an insane thing, right,
(13:51):
it's just like imagine if therewas a new sport that got created
that dethroned the NFL.
That was kind of the analogy.
So I started digging in andlearned that, hey, this was a
super special company, thefounder Brandon Beck, the CEO at
the time, which was a superspecial company.
That the founder brandon beck,um, the ceo at the time, which
is a very special founder, andhe just had this like a singular
vision or star and the northstar for riot was like how do we
(14:14):
be the most player focusedcompany in the world?
Like?
I still remember that that northstar right and that actually
spoke to me a lot as a consumerbecause historically gaming
industry was about valueextraction, like especially game
companies at that time wasabout like how do we milk every
cent and dollar from every oneof our users and basically like
create this, like addictionaround, like getting people to
(14:35):
pay, and I didn't want to haveanything to do with that.
But when it came for riot, itwas more about how do we like do
right by our players.
That's why it's called RiotGames.
The founders imagined gamersrioting against the gaming
corporations that have been veryabusive to gamers in general.
I just voted with my feet.
(14:56):
It was a little bit too latefor us to invest at Andreessen,
but I was able to invest with myfeet, as you would say.
I joined, helped them build outbusiness and corporate
development, became one of theirexecs and just basically helped
build out the business andscale it.
Speaker 2 (15:13):
Love that.
So I'm going to skip a littlebit ahead through that, although
I'm sure there's plenty wecould talk about during that
time.
But I do want to fast forwardnow.
A little bit to Patron.
So if you could give little bitto Patron.
So if you could give anoverview of Patron, a little bit
about what you invest in andthe inspiration for starting it.
Speaker 1 (15:32):
So we're an early stage firm.
We invest primarily at the seedround.
What that means is like two to$4 million checks, and the
strategy is also pretty unique.
We only pick 20 to 21 companies.
So what that means is, like youknow, we only lead deals.
It's very high convictioninvesting.
So we're not doing the sprayand pray where we're just
investing in a lot of companies.
(15:52):
Um, and then, uh yeah, we justspend a lot of time like getting
to understand the business andthe founder and spending a lot
of time with them in terms oflike how we view the world.
So for us, it's less about let'sgo invest in games.
In fact, in Fund 1, we're only20% games in terms of actual
exposure.
The 80% is pretty broad.
(16:13):
It can be in consumerapplications, it could even be
in B2B, deep tech, education,fintech, what have you?
We use gaming as a lens tounderwrite.
For us, everything is a game oreverything is becoming a game,
and what we mean by that is, um,you think about the today, like
the kids that are growing up onRoblox.
I think you know they they putout a stat more recently that
(16:37):
half of us teens are growing upon Roblox today, and that's.
That's pretty insane.
Like they log onto Roblox everyweek like half of America.
Right, that's crazy Teenagers.
And you also look at, like,what are the top 10 brands,
consumer brands for Gen Z?
A lot of them are like gamingbrands like Xbox, playstation,
twitch, discord Discord isanother great example right,
(16:58):
like that's how teenagers spendtheir time.
It's not on Instagram orFacebook.
So I think, similar to like howa lot of great companies of the
last generation were born fromproducts like you know, like
Facebook and Instagram andSnapchat, where, like in the
beginning it looks like a toy,in the beginning it looks like
(17:24):
something that little kids,future versions of companies,
are going to have gamingelements, gaming components,
gaming DNA, gaming segment of abusiness.
And I think, lastly, you canactually look at some of the
most valuable companies todaythat got created in the last 10
years.
Look at companies like NVIDIA,where it started off serving
gamers and GPUs or hardcoregamers and 3D graphics, and now
(17:46):
there's something a lot greater.
Look at Tencent, where that'sthe company that bought Riot.
That certainly started off as amessaging company that had
gaming as the underlyingbusiness model.
Now it's one of the mostvaluable companies in the world.
We think the most interestingcompanies will have some element
of gaming DNA baked into it.
So that's how we underwriteopportunities, and that's been
(18:06):
the inspiration for starting.
Speaker 2 (18:08):
Patreon.
So it's almost like thegamification of society or life
is kind of the underlyinginvestment thesis.
Speaker 1 (18:15):
Yeah, and I think it's like we actually don't even
like the word gamificationbecause it implies like surface
level stuff, like leaderboardsand badges and stuff.
But I think you're right.
Like spiritually it's moreabout you can argue a lot of our
day-to-day.
You're gonna argue like life islike a one kind of giant game.
Right, and a game is kind oflike a loaded term too, because
(18:36):
if you look at the actualmetrics, there's over three
billion gamers now and these areeven like mother-in-law is
playing like Candy Crush andthere's like all the kids today.
So it's more about if youbelieve that games what makes
games interesting is alreadybaked into consumer products.
Like we think it's just goingto evolve more into that
(18:56):
direction where the line betweenwhat is a game and what's a
great consumer product is goingto be blurred in the next 10
years.
Speaker 2 (19:01):
Well, it's interesting that you said that
too.
It's because when I was doingresearch on some of your
portfolio companies, I was like,huh, this isn't.
This isn't really a game, butbut that makes a lot more sense
now.
So, when it comes to trends ingaming that you're most bullish
on, what do you think thedominant type of game is going
to be in the future, whetherthat be mobile, you know, vr,
(19:23):
esports, cloud gaming, et cetera?
Speaker 1 (19:28):
you know, vr, esports , cloud gaming, etc.
Yeah, I think it just goes backto our original thesis, like
we're trying to think more outinto the future, like 10 years
out, and I think one trend thatwe've been fascinated by is how
people interact with agents.
Um, these are like basically aipowered chatbots, um, but I
think you're kind of seeing the,the, the very like underlying
(19:49):
um formation of like thisconsumer behavior.
So character ai, as you know,got bought up by google.
They have a product that isaround role play and a lot of
people spend time talking tothese bots and they're building
relationships and like they'rekind of having fun basically
doing that.
Um discord role play server islike one of the biggest things
and if you look at china, that'sactually like a huge industry
(20:09):
and um, I think this is there'slike games that are flying under
the radar over in china.
I think one is called love anddeep space.
It recently was like the mosttrending game over there in
terms of like gross revenuesgenerated, like it beat out a
lot of the most popular chinesemobile games and um, love and
deep space fundamentally it'snot a ai game, but it's a game
(20:30):
about um interacting with uh aiavatars and npcs, like building
relationships with them and likefalling in love with them,
right, which again sounds prettycrazy today.
But I don't think that futureis that far off where, um, we
already have emotionalattachments with video game
characters and NPCs and lore,even without this element of
(20:52):
like memory state, and you knowcharacter development and all
that.
So that's a trend that I've beenpersonally pretty interested in
is like from this emergent AIagent behavior, what kind of
games can you get?
Can get built?
So we've been spending timelooking into that.
Speaker 3 (21:12):
But that's one example.
Speaker 1 (21:13):
And I think there's a lot of consumer products that's
going to be falling into thatcategory where, like now you
actually have someone that youcan speak to.
It's hyper-personalized.
It's no longer about, like thebusiness model of like let's get
2 billion people to use it andwe'll advertise.
It's like how do we actuallyget you to interact one-on-one
with a consumer product that'sgoing to build way deeper
(21:34):
relationship but also give youcontent that is highly
customized to what you needversus what everyone else on
earth might be interested in?
Speaker 2 (21:43):
And then, how are those models monetized?
Is it a monthly subscription?
Speaker 1 (21:51):
I think subs is more of the natural order of things.
Um, I think that's the beautyof gaming and why we're
interested in games.
Business model, too, is withconsumer sub.
As you know, it tends to capout.
But with gaming, when you havevirtual items and virtual assets
, personalization like that cango a lot higher.
So I think that's why you'reseeing even tiktok, like they
have the ability now to likegift roses and galaxies and do
all these crazy things right,like send items.
(22:12):
Um, I think that's just likewhere business model is going to
be headed.
It's not going to be this likeadvertising, spamming with feeds
, but of course that willcontinue to exist.
But I do think it's going to bemuch more built around like
personalization and havingvirtual items and, yeah, like
more of the gaming type ofbusiness model.
Speaker 2 (22:30):
That gets interesting it made me, um, when you were
talking about your time atubisoft and you referred to it
as the old model of games whichmade me a little sad to say
which is you spend a bunch ofmoney developing something and
then you sell it for 60 bucks orwhat have you?
Those happen to be the types ofgames that I play the most.
Um, do you think that those canwill continue to have a future,
or do you think those are goingto be phased out in terms of
(22:52):
the more modern, you know,monetization structure?
Speaker 1 (22:55):
I think they will always have a future and in fact
, I hope that they stay that way.
I think, for me, the worst typeof games are like games that
should be like 50 or 20 orwhatever, right, but then they
try to force likemicrotransaction and like
advertising and all this likeunnatural business model to it.
So, philosophically, I thinkthe business model needs to
(23:16):
match what that product is andwhat that game is, and my
opinion is like there's alwaysgoing to be.
I mean, just look at likenintendo right, like most of the
games are not these like liveservice stuff and they're
crushing it and I'm assuminglike valve.
And you look at steam.
And then you look at likeplaystation.
A lot of those are singleplayer games too, so they will
persist.
(23:36):
But, um, I do think the appetiteof what gamers look for will
change a lot and you're alreadybeginning to see it.
Or, like diablo 4, when it cameout, a lot of gen z, like they
don't even know what that isright, like for me, I was like
super excited because I played alot of diablo, obviously.
But I think, um and I thinkthat's fine too I think you go,
you go to like a blizzcon andit's mostly like people in their
(23:59):
40s and now probably in their50s, but I think that's fine.
You can age up, up with yourgamers.
That market will continue towant to be part of your business
and be loyal subs, hopefully.
So it's not to say you alwayshave to go younger and look for
the hottest and the nextgreatest thing.
But as venture investors,obviously we're trying to not
(24:20):
short the future and look forinteresting companies.
Speaker 2 (24:23):
Absolutely, and this also is the first time we're
starting to get to an age wherepeople have been growing up and
playing video games their entirelives.
So now there is a market for,you know, the 40s, 50s, 60s
gamers, whereas 30 years ago itjust didn't exist.
I also find it interesting thatyou mentioned the
microtransactions and the otherless than palatable you and the
(24:44):
other less than palatablemethods that sometimes gaming
companies use to monetize things, and I think probably two of
the things that drive me thenuts the most are
microtransactions, and then alsothese day one DLCs where it's,
you know, you bought threequarters of the game, now pay 30
bucks to unlock the rest.
Yeah, that's as the yeah asthings can, and the frustrating
thing is that it works.
(25:05):
I mean, do you think that therewill be a time where the
consumer just says nope, no moreof this and those die out, or
do you think it's here to stay?
Speaker 1 (25:12):
I think gamers are extremely smart and I think
there's a reason why you're alsoseeing, like AA games, do well
right, like Helldivers, palworld, like some of these things that
are not made by triple a gamestudios that are trying to force
like a microtransaction and allthese things into into the
consumer.
So I think also in a world ofai, where we're going to get
(25:34):
like infinite, infinitely largervolume of content, yep, and
people only have finite numberof minutes per day that they can
spend on time, like it's always, it always bubbles up to the
the best type of user experience, the product.
So I have no doubt in my mindthat this is like, uh, it might.
I mean again, it just dependson what it is like.
Of course, if you're buildinglike the next gta, like people
(25:55):
are going to want to spend a lotof time playing that.
But it is a balance and I thinkgame game developers will
probably have to wake up to thefact that, like gamers are
extremely smart and they cankind of smell a lot of this BS
stuff mile away.
Speaker 2 (26:08):
Mention the AI and gaming.
So let's, let's talk about that.
What do you see as the futureinvolvement of AI and gaming?
Do you think that we'll justuse it to speed up development
and we'll have more games?
Will there be entirelydynamically generated AI games?
What are your thoughts?
Speaker 1 (26:24):
Yeah, I think, as it relates, it's kind of two things
.
On the development side I thinkyou're already seeing it
happening which is like theefficiency gains and this is
even not even including gamesLike this is software
development in general, right,you're seeing a lot better
efficiencies with even thingslike Microsoft Copilot and these
productivity things that arecoming online.
I think with games, like one ofthe biggest some cost is around
(26:47):
, like things like animation,art pipelines, like things like
that.
I do think it will help createa lot of efficiencies.
I don't think it takes away thecreative element of the job,
but it will definitely impactmore the day-to-day like how
these things get created.
So it's kind of like a worldwhere, like pre-photoshop and
photoshop and how that kind ofchanged a lot of like that
industry, right, like even thephotography industry um, maybe
(27:08):
that's one way to think about itlike photo editing industry.
So I think, on the like more ofthe enterprise productivity
side, like absolutely that'sgoing to change the industry and
I hate to say it, but itprobably means like even more
cuts and layoffs, right, becausegame studios now don't need as
many people to be able to buildthese games and then you
basically have to fight formargins and like probably big
(27:31):
studios eventually will turn tothat.
I just generally think likethey're going to take a longer
time to do it because theyalready have a great workforce
and ai is not there yet.
It's going to take some time.
Like it's not, like the assetis as good as a hand-drawn thing
right and Sure.
I think it's going to take sometime.
It's getting there fast butit's going to take some time.
So that's on the B2B side, Ithink.
(27:53):
On the player side, that, Ithink is also still pretty early
.
But maybe there is where yousee more things speeding up.
So we most recently put out aterm sheet to a company that is
building, like a, simple gamesthat have kind of a.
It allows, like the basicallythe game engine, using AI and ML
(28:17):
, to create like permutations ofthese games and puzzles that
actually is solvable.
So it doesn't matter if you canactually create, let's say,
like a bunch of puzzles orthings.
Right If it can't be solved,which I think is pre-AI but now
if you can create these thingsthat actually has an endpoint,
maybe you can create betterroguelites.
You can create better types ofgames where it's
(28:38):
hyper-personalized, that hasProc Gen and UGC, where it's a
lot easier to do it.
I also think, just like probablywhat's going to happen to
movies and tv, like games aregoing to be coming more hyper
personalized, so, um, I thinklike there's going to be
elements of games that justagain like plugging back into,
like what ai does best is moreabout personalization,
(29:00):
understanding what you like.
Um, I think you'll probably seegames that have more, even
deeper personalization, and Ithink that's what kind of made
league of legends business modelinteresting.
Right was skins was less aboutbuying digital goods, it was
more about self-expression, likeI want to be this type of
champion in this kind of fantasy, so I'm going to pay for the
skin.
(29:20):
Like, I think you'll see maybemore of that kind of behavior
where people want moreexperiences that are accustomed
to them.
But honestly, I think withthese type of things, like it's
really hard to guess and justlike a lot of the consumer stuff
that usually takes off, I thinkas VCs we can kind of guess
what we want, but we kind ofwant to know what we see like an
(29:42):
immersion behavior and itprobably will look nothing like
what's worked in the lastgeneration of games.
So I suspect the games that dowell, this generation that have
some AI component are going tolook very different than like a
League of Legends or, you know,like a $60 AAA game.
It's probably going to lookcloser to like a character AI,
if I had to guess.
Speaker 2 (30:02):
Do you think there is a world where, like, let's say,
I create an RPG and instead ofthe NPCs just having dialogue
trees, they're dynamicallygenerated using LLMs?
Do you think that's possible,or would that just create too
many openings for stories andthings that just wouldn't make
sense?
Speaker 1 (30:16):
I think it's possible , you're kind of seeing that
with even sim games Like again,they don't have it in there, but
imagine things like I don'tknow like Stardew Valley or like
RimWorld right, where youactually have these AI bots
already running around NPCs andthey have personalities and they
say stuff.
But I think where it getsinteresting is if those things
(30:40):
just feel more alive and theycan make their own decisions.
It's kind of like, I thinkmaybe like one AAA version of
this is like Baldur's Gate 3.
I don't know if you played that,but it has like infinite amount
of dialogue trees, where it'sjust insane, right, it's
incredible, yeah, yeah, it'slike the most insane thing that
they built.
I love it because you know youcan play that game forever, but
(31:03):
I just think that's like maybe aglimpse of what these ai
powered games can feel like,which is just like you have
infinite variability, and it'snot like it's not just like this
one thing that you play and Ithink that's a nice thing.
I think again, like people kindof bash on ai talking about how
it's bad for creatives anddevelopers, I actually think
it's great for indie game devsbecause now you can actually
build these like maybe now youcan actually.
(31:24):
The reason why a lot of indiegames are 2d, by the way, is
people can't do like 3danimation and rigging and can't
pay for like 3d assets.
But maybe that gets equalizedright.
So maybe you're going to havelike a billion dollar game
studio that is like 20 people inthe future.
Like someone talked about abillion dollar, one person
company.
Like yeah, that's not, that'snot out of scope.
Speaker 2 (31:44):
So yeah, yeah, I think that's what it's going to.
A lot of is going to be, isgoing to be the the
democratization of being able tocreate media, yeah, whether
that be gaming or movies, tvshows, etc.
Yeah, um, so, to switch gearsfrom, you know, talking about
the the future of things totalking a little bit more about
things on the investment side,um, how are you assessing
(32:06):
product market fit for earlystage gaming companies and what
metrics do you track?
Because I personally know a lotmore about SaaS and I obviously
know a lot about games as aconsumer, much less so as an
investor.
So what are you looking at?
Speaker 1 (32:18):
Yeah.
So, again, we generally don'tlike investing into pure games
because it is extremely hard toguess as investors and again, I
think most gaming content stuffshould be backed by game
publishers, not by vcs, just bythe nature of that business.
But I think like lessquantitative stuff we look for
is is there potential for marketcreation?
(32:40):
Meaning, are you building in aspace that truly is blue ocean,
that like a game publisher orstrategic, or like a ten cent,
that like a game publisher orstrategic or like a 10 cent, or
like a net ease or riot or epics, not going to go after and
build a way better version of itusing their distribution and
resources and dollars?
Right, so that's like onefundamental thing we think about
is like why, in this moment intime, that there's going to be
(33:01):
like a new creation of a newtype of business built around
games, um, the obvious questionwe ask is like are you building
a game?
Are you building a game studio,slash business, or are you
building a game so like I thinkfundamentally, a lot of game
developers are doing the latter,where they just want to build a
great game, um, that could turninto a game, big game business,
(33:22):
game studio, sure, but it'salso like super high risk to
just put everything into oneeggs and again going back to
like most of these things don'tturn out to be a billion dollar
thing, so like that's fine, butthat doesn't meet the venture
criteria, so that's.
Those are kind of two macrostuff that we think about.
Um, more tactical stuff we lookfor early stage, seed stage, is
(33:44):
we definitely focus a lot onthe team, like have they
actually?
They don't have to been.
We actually kind of prefer gamemakers that actually don't come
from games.
I know this sounds kind ofweird, but it's kind of like the
PayPal story, right, like ifthe PayPal founders came from
FinTech, I think it would havenot turned into PayPal.
We kind of like this idea ofyou you come in from like a
(34:04):
different angle and see thingsfrom like first principles and
how, like we imagine, usingeverything that is available
today, what like a new type ofgame or game experience could
look like.
So some of our best foundersactually don't even come from
games, you know, but they'rekind of building around the
gaming space, which isinteresting and, more
importantly, is like can theyrecruit the right talent?
(34:24):
And like going back to the riotstory, which is like 2012, 2008
, 2009 actually that's when thatthing started but, um, brandon
and mark were like one or twoyears out of usc, like well you
know.
Like brandon had like one yearat bain consulting, then mark
was like he worked at somerandom bank, like out of
undergrad um.
But what they did have was theyspent thousands of hours
(34:47):
playing dota and they were verydeep with the dota community,
especially the modders anddevelopers.
So they were actually they wereable to convince those guys to
leave, like kind of drop whatthey were doing and turn that
mod into a business.
And then they started likeusing that hiring people from
blizzard, which again soundsinsane, but like they were able
(35:07):
to do that.
So I think like those are kindof things that we look for at
the c stage is like kind offounder, actually convert talent
, build the right team to beable to execute um.
Then we spend.
Lastly, because, uh, you know,a lot of us both my co-founder
and I like understand what agood product, especially on the
gaming side, looks like.
Um, we spend time a lot withthe product and that's when we
(35:28):
typically invest, is usuallywhen there's like it doesn't
have to have a lot of users ormetrics, but we have to feel
like this is a well-craftedthing, like it's not like uh, it
doesn't have to have all thepolish, but it should feel like
a good product and we're bettingon that, right Along with like,
if they have like a passionateuser base of like 100 people,
(35:49):
like we'd love that too, likewe'd rather have that, versus
like 10,000 people that churnafter one day.
So these are some of theelements that we try to poke out
and understand.
Speaker 2 (35:57):
Yeah, so the Riot founders they had a bit of a
competitive advantage when itcame to attracting talent
because they had investedthousands of hours into the Dota
community.
So that's how they made theirfirst hires.
And oftentimes founders aremaking their first call it five
hires from their network.
But for founders that don'thave that advantage of the
(36:21):
thousands of hours invested,what are some of the best
techniques that you would advise?
Speaker 1 (36:25):
founders to use to attract talent.
I think build a great productthat people talk about, that
they love and have, are gettingtraction right.
I think you need like somethingto show for your lack of like
experience or what have you um,and I think it's incredibly easy
to create, like you know, steamgames now lightweight games,
things like that.
I think that's ultimatelyhelpful um.
(36:46):
But yeah, I don't think therethere's necessarily like.
I don't know if I would giveany kind of blanket advice.
I think it's a lot of.
It is like, if you don't havegame development talent, then
you should be able to bringother elements right.
Maybe you're like really goodaround creating um like npcs or
like ai bonds you understandthat space really well, so it's
(37:07):
less about like from like.
No founder and ceo on day onehas everything figured out.
They're usually like, very goodat something.
So if you're a highly technicalfounder and you know one of our
investments like they're likethe x mit research labs team
where they were trying to buildlike a human brain using
software.
They shut that thing down andstarted a new company, but they
(37:27):
actually hired good games.
Talent like these are thethings that we would probably
recommend is make sure you fillthe gaps and I think that's what
great founders do anyways.
Speaker 2 (37:37):
Um, and then when you said you're looking at a great
product, obviously you know atseed stage you've, you've built
your MVP, you have some decenttraction, you said maybe you
have a user base of 100 engagedusers.
How do you delineate these asgood bones?
But need some polish versus.
This has some fundamental flaw.
That doesn't make sense for us.
Speaker 1 (37:56):
Yeah, I think it's probably.
I think one of the things thatwe've tried to look for is like
is this a product that I'd wantto use every day?
Like, is there some sort ofmagic in it that really like
hooks me?
And it's not just somethingthat's like novel, because
there's plenty of consumerproducts that's like really fun
to play for the first like fewdays, and then you just end up
(38:16):
kind of being like a toy or likea nice to have.
So I think that's kind of thecrux of it.
And then you know, maybe it'smore of like the Riot ethos.
But even when we created in gamedevelopment, you call it
vertical slice, which is like a15 minute representation of a
game.
Some people will create kind oflike really like bare bones,
(38:37):
like wireframe prototypes forthe vertical slice.
But at least at Riot we try tocreate the full game as close as
possible, meaning like therewas music, there was art, there
was like a full experience.
Um, so that's kind of like whatI mean by craft when it comes
to games is like thing about.
Games is like a lot of it isnot science at all.
It's where art meets science,right, and I think you need to
(39:01):
be able to really demonstratethe art side, and that's the
hard part about being a gamingceo is you need to be able to
really demonstrate the art side,and that's the hard part about
being a gaming ceo is you haveto be like as much of a creative
and like a game maker.
It's like you're like a clockmaker, but it has to be not just
working, it has to be beautifuland needs to have like a lot of
these like bells and whistlesthat makes that thing tick, um,
(39:22):
so I think these are the thingsthat we try to dig in for.
And then, more importantly, islike, do you understand your
audience?
And I think that was actuallythe secret sauce that riot had
was they were like one of thefew people in the world that
really understood the playerpain point, like that, like
league of legends was actuallysolving a player point pain
point around dota.
I don't know if you ever playeddota I didn't, so, yeah, please
(39:43):
educate me.
It was like an incredibly fungame if you played with like 10
of your friends, um, butincredibly frustrating if you
just try to play online becausethey didn't have matchmaking.
So like you just sometimes playwith people that are like
infinitely better and you justjust just basically your butt
kicked right.
Um, they had these mechanics inthere, like in legal legends.
(40:05):
It's called laning, where, likethere's a element called last
sitting again, I'm getting likereally technical but there's a
part of a game that is in dotalike uh creep deny, which is
basically an element of likemake like it just basically like
think of we used to call itlike the unfun mechanic, where
that mechanic didn't need to bein there but it just made it
(40:26):
like really frustrating forplayers.
And then and then ride alsoadded like new, new features to
a product called uh bushes,which is like it's literally
like a brush and you can likehide your character in the shrub
.
I did, I, I played a little bitof league when I was here, yeah
you can pop out right and dolike gangsta stuff, but that was
actually a fun element.
so, like, I think the point islike what made ride successful
(40:47):
and league of legends successfuland actually what made valorant
their new game successful isthey took a game that was like
pretty niche, super hardcore,with a lot of things that could
have been addressed, that hadclear pain point around the
players, and then they convertedthat into something that is
mass market and I think the lastnumber that Riot put out was
over like 500 people 500 millionplayers around the world have
(41:11):
interacted with a league IP insome game form, which is insane
to think about.
That's a one in 13 people orsomething, right?
Speaker 2 (41:18):
So yeah, that's incredible.
Yeah.
Last question, just when itcomes to advice that you might
give to founders who are lookingto raise capital from top tier
VCs and people who are lookingfor that very high level of
conviction, what would be thebest advice you can give?
Speaker 1 (41:36):
I think a lot of founders.
I think you have to realize onestartup is something that you
want to do, like it's incrediblyhard.
I think most people shouldprobably be better off working
for a big gaming company or likea big tech company than being a
founder, cause it is veryunnatural thing to go start
something.
(41:56):
You need an insane amount ofcourage because everything's
going to go wrong.
By the way, like in the historyof startups, there's never been
a startup that is like you.
You launch something and it waseasy yeah yeah, I mean it's like
the social network movie, right.
Like you know you're coding oneday and then the next day, like
you're on the beach, likesipping on cocktails, like that
does not happen, like it's um.
(42:17):
It's a very hard journey but Ithink, despite that, if you're
willing to go build something, Ithink then it's about building
just a lot of conviction in theearly product that you have.
And I actually recommend to alot of founders too, if you can
bootstrap it, you should Don'traise a lot of money up front
especially.
That's probably the otheradvice I give.
(42:38):
It's interesting advice comingfrom a VC.
It's interesting advice comingfrom a VC.
No, like, I think it's waybetter when a founder like knows
they need to raise capitalbecause it is kind of working,
or they need to hire and theyneed to like actually need that
capital to go do something,versus like I'm just
automatically going to raise $2million and I don't really know
(42:58):
what I'm going to do with it,type of thing.
Right.
But I think the most actuallyis this even tied to this one is
like don't start a companybecause you want to be a founder
or ceo.
Like there's a lot ofentrepreneurs in the last 10
years.
I think I've done that becausethat is not like you should want
to be a founder to solve aproblem, or because you're
(43:19):
deeply passionate aboutsomething and this thing needs
to exist and this is your lifemission and you're going to be
all in, like I think again, it'snot, it's not to generalize,
but like there's a lot ofbecause startups have become so
mainstream culture.
Like it's almost like hey, likeI, I have this great resume.
I went to great school.
Like I got this great, greatjob at this amazing tech company
(43:45):
or startup.
Now the natural thing for me isto be like a tech founder.
Right, yeah, it's almost like anotch on your resume, or like
it's for ego or for whateverelse yeah, I, I just think, like
that's just the recipe fordisaster and you're better off,
you're gonna save a lot ofpeople, a lot of money and
headache to not do that and, um,counterintuitively, like if you
(44:06):
have that itch to go startsomething and you're really
passionate and like this issomething you are going to do,
whether or not anyone funds you,like this is what you would do
on nights and weekends and andsomething that's like your
passion project that you justlike are obsessing over, like
then you should probably startsomething right and and I think
it just kind of that's ifthere's any advice I would give
(44:28):
any startup people is probablythat is, as a founder especially
, you kind of need that elementbecause it's really hard.
Like that's the thing aboutstartups it's definitely not
easy and it's not a walk in thepark.
Speaker 2 (44:40):
Well, I think that's a fantastic perspective.
So, brian, this has been superfun.
I really appreciate you comingon.
Speaker 1 (44:47):
Thank you, thanks, reese, this was a lot of fun as
well, and, uh, thanks for havingme on board.
Speaker 3 (44:52):
Thanks for listening to see to exit.
If you enjoyed the episode,don't forget to subscribe and
we'll see you next time.
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