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Yat Siu Of Animoca On NFT Gaming, Launchpad Luna, And A Huge REVV Racing NFT Giveaway, Plus: Polygon NFT Gaming Studio, Gary Vee Leads Anheuser-Busch, And More...
The gaming space is growing prolifically and NFT gaming is a top topic to watch within blockchain tech. For today’s episode, join Eathan Janney, Jeff Kelley and Josh Kriger as they chat with Yat Siu, one of the sharpest minds in NFTs and gaming. He’s Chairman of the Board at Animoca Brands, a global developer in gamification, AI, blockchain, and mobile tech, and is the company behind games such as The Sandbox and Crazy Kings, to name a few. He talks about the company’s early beginnings and how they became one of the pioneers in NFT integration into gaming. Yat also shares about new developments and projects to look forward to, as well as an exciting REVV Racing giveaway at the end of the episode. Stay tuned for the hot topics segment to see what’s cooking in the world of NFTs right now.
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Listen to the podcast here
Yat Siu Of Animoca On NFT Gaming, Launchpad Luna, And A Huge REVV Racing NFT Giveaway, Plus: Polygon NFT Gaming Studio, Gary Vee Leads Anheuser-Busch, And More…
This episode is a can’t miss. Find out what the Founder of Animoca Brands, Yat Siu, is going to do with the $138 million his company raised.
Discover what discarded fashion items of his mother’s that Yat tried to sell in his neighborhood when he was a lad.
Last but not least, find out how you can be one of the first to earn 1 of 1,000 exclusive Edge of NFT Genesis REVV racing cars and compete for $150,000 in prizes by reading this show and taking action. All this and more to come on this episode. Make sure to head over to EdgeOfNFT.com to sign up for our newsletter and dive even deeper.
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This episode features guest, Yat Siu, Founder and Chairman of Animoca Brands, a global leader in blockchain, gamification, entertainment and AI. It has been ranked in the 2021 Financial Times list of high-growth Asia Pacific companies. Beyond his groundbreaking work with Animoca, Yat Siu is an advocate for self-paced, self-directed education via his work with the Dalton Foundation. He also works to elevate the voice of underrepresented groups while promoting a healthier public dialogue via his work with Cortico. He has also received a number of impressive accolades such as the World Economic Forum Global Leader of Tomorrow and Young Global Leader of Tomorrow. We feel fortunate to even have him here with us. Yat, welcome to the program. We’re looking forward to talk.
NFT Gaming: The way things have been evolving with technology and the pace of change, the best people and the smartest people are not going to work for you; they’re going to work with you.
Thank you. It’s a great pleasure to be here.
It’s an honor, Yat. Congrats, by the way, on closing $138 million round of funding. My niece wants to be a unicorn and would be jealous. You’ve had such an amazing career that spanned the spectrum of tech gaming, entertainment, and blockchain. How did your experience lead to the formation of Animoca?
If you look at the history, it’s always easy to connect the dots looking backwards and saying, “This is how it all happened.” The birth of Animoca before it became Animoca Brands started after we sold our business, which was a cloud computing business being outplaced to IBM. From that, we had a three-year non-compete on anything related to the enterprise. I myself have a gaming room, having started my earliest career with Atari in the ‘80s. We had lots of exposure to the gaming side and we already had some gaming assets. IBM was like, “We don’t care about the consumer. We can’t have you do anything related to enterprise for three years.” I said, “Fine. Consumer it is.”
IBM was also interesting because from an M&A standpoint, it turns out that they don’t like to bring founders into the business. For them, it’s more like buying the structure, revenues, and organization, but not wanting the founders because they consider founders quite disruptive and perhaps even invested. As one of the managers was saying, “Founders come in and tend to want to change things. We like the way things are organized at IBM. We don’t need people going and try to tell us what to do because we know what to do here.” It was quite compatible for us because I was able to come out and branch out to do something else.
Around that time, the smartphone was coming into being. I had an iPhone already, but the App Store was just emerging. This was 2009. I was like, “What can we do? Perhaps the first thing we can do is take a look at this device that I was using.” The birth of Animoca happened because of my children. At that point, I was a young dad. I don’t know if you remember or if you have children. I was carrying around these Baby Einstein big flashcards and they were way big. You had to put them right in front of the face of your kid and say, “Car, orange, apple.” That was a big sensation back in the day. I used to carry stacks of these. I caught up with my 2 or 3 or 4-year-old. I was like, “This is terrible.” Each stack was only twenty cards and they go over twenty cards fast.
Data is the most precious thing in this world that we have right now. Click To Tweet
I was telling my team, “I had an iPhone. Why don’t we take these flashcards and put them onto the phone?” At least I could use it, but perhaps other people might like it as well. The general reaction I had from a lot of people was like, “That’s ridiculous. Why would I want to put $1,500 on a device into a toddler?” It was something expensive at the time. They got to chew it, bite it, and do something crazy to it. I said, “It’s okay. It’s my phone. Let’s just start it off.” They put it together and it was fast. In a week or two, they made the app because after all, they were images. There was no voice. It was super primitive.
That was the birth of what was known as Baby Flashcards. It was a free flashcard service on the App Store. I used it and it was great. I didn’t have to carry out my stacks of cards. Shortly after possibly a few months later, the producer of the product came over to me and he said, “Did you know what’s going on with baby flashcards?” I’m like, “I don’t know. I didn’t have access to the console. I was just using the product in the App Store. It’s new.” He says, “We had five million downloads.” I don’t remember the figure, but it was something insane. I was like, “Wait.”
Clearly, a lot of people seem to think it was a good idea, but more importantly, the potential of the scale and growth of what the App Store represented became very aware to us in 2009. We decided, “This is something we should focus on.” Hearing that, I sincerely shifted our entire operations to focus on the stuff related to apps. Originally, it was children’s apps and then I went on to launch one of our first games on the App Store, which was called Pretty Pet Salon. In January of 2011, the launch of that was also one of the first products to use in-app purchases because in-app purchases had just come about in late 2010. The product took off and we became one of the largest mobile game companies in 2011 and very prolific on the App Store. That was the beginning of Animoca itself.
There’s another backstory to this because after we grew the business and getting investment from Intel and IDG-Accel and becoming one of the biggest mobile game companies in 2011. In early 2012, the platform, Apple, removed us from the App Store and completely de-platformed us. To give you context on this, at that point, 12 of the top 20 apps were ours. If you look a little bit at the history, we had figured out that if we end up launching many apps as we did, we’re super prolific. We’re launching an app a week and do it through cross-promotion, we would ensure that we were in the top rankings of the App Store. If you recall back then, the App Store having fairly primitive algorithms of discovery, we ensured therefore that we always had some discovery and dominance.
That irked some people at the App Store or perhaps our competitors. We’ll never truly know because instead of giving us a call, having a chat with us saying, “We don’t quite like the business practice of yours,” or whatever, they removed us as a company that was based in Hong Kong. At that time, the App Store didn’t have a presence in China. They didn’t have an App Store team. We were nameless faces doing something. Someone in Cupertino didn’t like it at the time. That was not our first experience with de-platforming but it was certainly one where we go, “What just happened there?”
I remember I was at the airport in Japan going to some meetings and we had lots of conversations. People wanted to work with us and we’re gone. Just like that, we went from star to pariah, where even the partners that were working with us are like, “It seems like you’re in the bad books of Apple. We’re not sure we can talk to you anymore because it’d be risky. If Apple knows that we’re talking to you, then it’s like talking to the bad guys.” It was a hiring experience. At that point, we’re at 160 staff, but worse even, we had millions of customers using our products and all of them didn’t know what the hell was going on. The birth of Animoca was dramatic, to say the least.
Ultimately, we came back to the App Store two years later and of course, our leadership position was changed. One of the big reasons we got back into the App Store was because Apple at that point had opened up the App Store office in Hong Kong. They started reaching out to developers who had capabilities and China had become important as a market. Commercial is the reason why they started reaching out again. At that point, we’re like, “It’s nice talking to you guys again.” To be clear, we had never spoken to anyone at Apple. That’s the point. They were terms of service type of organization until they came to Hong Kong. We have a great relationship with the team in Hong Kong now. That team had no history or background as to what happened in Cupertino. We may never know. We certainly don’t know exactly what happened.
I also can’t help but wonder what IBM was thinking after letting you guys go into gaming. They’re wondering at some point along the way if they should have adjusted that non-compete and made it a little bit broader.
NFT Gaming: We are actually living in a world not governed by a form of governance. Users in the digital world currently don’t have any kind of rights.
One of the things that we were definitely eyeing at the time is the business that IBM bought was our messaging email business. At that point, we were one of the largest enterprise email providers out there and perhaps one of the last ones that were truly independent. I remember when we first started in the mid-2000s, something like 15% to 20% of global email was flowing through our spam service. Network Solutions, Juno Online, Register.com, and all of those companies that are big don’t exist anymore but back then were giants in the space using our service.
When we saw what was happening in the messaging space, the first thing we’re thinking was like, “Maybe we should be doing something in messaging,” but we couldn’t because of our non-compete. Certainly, capability-wise, we could have gone and done more messaging quickly because we had all the infrastructure to do that. That space went to the lights of WhatsApp, Messenger and so on. That’s what it was. We certainly had a good exit with IBM at the time, so we weren’t complaining necessarily.
I’m glad we got to hear that from you. I have another podcast, where the goal of the podcast is to help people think about starting businesses, which is affiliated with another podcast called the Indie Hackers Podcasts started by a Y Combinator graduate. It’s to inspire, especially programmers that are starting their business. A lot of people would be inspired by the fact, “You can get started with a flashcard app.” That was a while ago, but something as simple as that can get you started to having a big company like you have now.
The other piece of that we often encounter is not to be dependent on a platform as much as you can own the way that clients interact with you, the better. These platforms like Apple, Amazon, or whatever you’re tied to, have such control and can do things without even letting you know. It’s a great story and lessons learned. I appreciate you sharing that. I have another topic to connect us with this show. When did you first hear about and encounter NFTs? You talked about in-app purchases and things like that. When did you start integrating NFTs into what you’re doing?
The introduction to non-fungible tokens came because of our involvement with CryptoKitties. The backstory to that was at that point, as a business, we were about to acquire a company in Canada called Fuel Powered, which happened to share an office with another company called Axiom Zen. Both of them were involved to construct this little thing called CryptoKitties, almost like a science experiment. When we had acquired Fuel Powered, we didn’t do it because of CryptoKitties because, at that point, CryptoKitties wasn’t even patched.
Mik, who ultimately became a cofounder of Dapper Labs and Roham, who had also been longtime friends from before back to college days acquired them because of the gaming studio that was building network and leaderboard-based games. That was the background of that. When CryptoKitties took off, everyone was like, “Maybe you can come to join as a cofounder.” We’re like, “We had just acquired your business.” The expectation was that Mik was going to join us in a role in North America as the Head of Games. The compromise was like, “You go ahead and join the Dapper Labs.” He remained involved with our business.
As a result, we became the publishers of CryptoKitties one month afterwards in January of 2018, and ultimately, an investor in Dapper Labs because when that took off, certainly for us, it was obvious as to what the potential of that could be. It was early days but we said, “This could potentially revolutionize what we thought, at least the gaming industry needed.” If you think of our history, we tend to identify opportunities early, sometimes, too early. We then get excited about that and then we go all in. We see this on the internet and we see this on mobile. With NFTs, we said, “This is that moment.”
That was our first interaction with NFTs, and then since then, in 2018, while the crypto market was collapsing in probably all possible areas, we doubled and tripled down into the space of NFTs, which of course was challenging in another way because funding wasn’t easy to get. The narrative was also harder to explain because crypto had a negative sentiment and a negative narrative. On top of that, there’s this thing called NFTs that most people haven’t even heard of. I remember the conversations that people had back then that’s like, “The fact that you call it NFT means it’ll never be mainstream.” It’s a technical weird thing.
Blockchain is the one mechanism where we can actually own anything digital. Click To Tweet
They won’t do a skit about it on Saturday Night Live, do you mean?
That’s right. That was 2018. That’s the beginning of that. Those are the things that we enjoy because, in a way, we were almost a lone ranger. Certainly, when it comes to the funding scene, we were alone in the field and we weren’t super well-funded but because we were a public company in Australia at the time, we were listed. Our participation and involvement were very welcomed because we added incredible credibility at the time to a market desperate for credibility because of the fact that it was so destroyed by sentiment. The other one is that we had resources in terms of making games and having talent in that area, which was difficult as well.
Even in the blockchain space, introducing the idea of NFT in gaming was also weird. They were like, “Why would I want to play games?” Because they didn’t play games. The crypto community, because of the nature of the token, started with financial guys in many ways, or at least the biggest players were all finance guys. It took on the flavor of Wall Street. You could argue that crypto now is still much guided by people from Wall Street, people who are into games and culture. The NFT guys were the micro minority. In 2018, we were probably 50,000 people that had NFTs in that space. It was so small.
I was looking at the Axie Infinity coin price. While the whole market has struggled, Axie Infinity is going up. That’s a popular game.
What’s interesting is that there was a point where everything correlated to Bitcoin, even Ethereum correlated to Bitcoin. Everything was correlated to the master coin for the longest time and now it started to decouple. To your point, Ethereum is doing much better but still, it’s down from its highs. When it comes to gaming-related NFT projects, in some cases, there is recovery. In the case of Axie, it is much higher than it was. Axie is another interesting example here because we were the lead investor in 2019 and it was such a struggle to raise money for Axie. It wasn’t just a struggle because they didn’t have lots of users at the time, although great potential, but they were based out of Vietnam.
From our perspective, there are a lot of interesting innovations that happen out of Vietnam and some great founders, of course. However, for most of the world, it’s a little bit of a backwater. It’s like, “It’s Vietnam. It’s not quite China. It doesn’t have the potential. It’s far away. I don’t know anyone there.” It was treated like that on top of it and with esoteric technology as well with something like NFT and gaming. It was hard to raise money. They are also all first-time founders, relatively inexperienced and not given the time and respect at a time on what they’re building.
Because they were early users of CryptoKitties, they saw the potential earlier than most and felt that maybe they should iterate on what CryptoKitties did and make it into a game, make it better, and introduce that with elements of collection like Pokémon style as well. They built and built on that until they get to this moment. Axie Infinity took three years to gestate to where it is now. It wasn’t an overnight success just like that. There were many things that had to happen first before this moment and we’re seeing this happening. There will be more moments like this happening, particularly with gaming NFTs, especially in 2021.
It’s so interesting to reflect on how you’ve involved and supported the overall ecosystem and how all these projects have grown up to be their versions of adults and self-expressing gaming culture. If you look at how Facebook integrates companies that they require investing, it’s different than your approach. Can you talk a little bit more about that?
This is an evolution over time, but it’s somewhat generational and it’s where we are now. When you think about historically, because of the concentration of the access and the power and the fact that business models in the past were designed around creating monopolies, you rely on governments to break it up and off the cycle continues. As of 2021, the government hasn’t been so good, not just in the US but all over the world, around dealing with antitrust issues when it comes to technology because they don’t fully understand it.
China is starting to make moves to that area as well, where Tencent’s merger of two of the largest video streaming platforms has been blocked by antitrust regulators within China. That is interesting because, in the past, this type of stuff would not have been blocked. People are cottoning on and catching up to the fact that these things ought to be regulated as well, even though it’s technology as it were. In the US, there were many talks about, “There should be a set of antitrust on Microsoft or possibly Facebook.” All of these are talks, but at the end of the day, none of that is happening.
Brinc** and it’s called the Launchpad Luna.**
Let’s get started.
Did you sell the shoes?
It’s a great way to start the day.
Sure.
Ten times or one time.
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About Yat Siu
Yat Siu moved to Hong Kong in 1996, where he set up Hong Kong Cybercity, the first free web page and email provider in Asia. In 1997 Yat joined AT&T Solutions’ System Integration practice, but left in 1998 to set up Outblaze, which developed innovative web-based multilingual white label communication and collaboration services.
Yat Siu’s steady leadership and vision steered Outblaze through the Dotcom Bubble and several subsequent crises. Outblaze became a world leader in white label-hosted web services, winning numerous awards and accolades. With over 75 million end-users under management, Outblaze secured clients and partners from all over the world and business sectors, including service providers, telecommunications operators, corporations, academia, media and publishing companies.
In April 2009, Outblaze messaging assets were sold to IBM and incorporated in IBM’s LotusLive suite of services. IBM also used the Outblaze assets to open its first cloud computing laboratory in Hong Kong. The transaction established beyond doubt that -like banking and finance services- Hong Kong’s local information technology can compete on a global scale.
Yat Siu was called World Economic Forum Global Leader of Tomorrow and a Young Global Leader of Tomorrow. He has also been awarded for his contributions in business and society: Standard Chartered Platinum Achievers Award, the URENCO Innovation Award, and, for the execution of his vision at Outblaze, the IT Excellence Product Award, Linux Business Adoption Award 2003 and the Asia Pacific Information & Communication Technologies Award 2003. Most recently he won the Young Entrepeneur Award from the Hong Kong Business Awards 2009.