Yat Siu: The Future of Blockchain Technology & Gaming

In this episode, Tristian interviews Co-Founder of Animoca Brands, Yat Siu. They talk about Yat’s journey in to blockchain technology, NFTs, games, and more.

*Compared to major competitors. Terms and conditions apply. This is not investment advice or an investment recommendation. NFTs are shown for illustrative purposes and the types of NFTs available may vary. Cryptocurrencies, including NFTs are highly volatile, subject to significant price risk, and may not be suitable for you.


This episode of the FTX podcast takes you on a deep dive into the world of mobile and crypto gaming. Yat Sui is a veteran in the tech space, with a career spanning over 20 years, and is most recently involved with Animoca Brands.  

Read on to discover the hidden connection between music and NFTs, how Yat Sui survived a major hurdle to reach the top of the NFT gaming space, and what’s next for this household name. 

Yat Siu Interview

Tristan Yver: 

Hello, everyone. Welcome to The FTX Podcast. I'm your host Tristan Yver. And today I have the pleasure of having here with me, Yat Siu, the founder and chairman of Animoca Brands. Welcome, man. 

Yat Siu: 

Pleasure to be here. Thanks for having me. 

Tristan Yver:

Yeah, absolutely. I know we've been trying to coordinate this for a little bit, so really glad that it worked out now. I think a lot of people in the industry know you and know Animoca, but for those that may not have as much knowledge, would you mind giving a brief introduction of yourself? 

Yat Siu: 

Yeah, sure. So as mentioned I'm Yat, chairman and co-founder of Animoca Brands and I, myself actually have been in the technology space broadly since the '80s. So I'm probably older than certainly yourself and perhaps most people who are probably even listening perhaps. And my first computer was the Texas Instruments TI-99, which is really a glorified computer, 16 kilobytes of RAM, right? And my first work experience was really around... On the Atari ST which was a computer that had a MIDI plug. And I studied music originally. I won't go into the reasons why. It wasn't quite my choice, but either way, I grew up in Vienna, so the center of classical music. 

Yat Siu: 

And I used the Atari computer to do composition software frankly as a way to get ahead of my fellow colleagues who were just much better than me. It didn't really help me much in terms of class because many people thought of it as cheating, but actually for myself, it propelled me basically into the technology space because I uploaded the software onto a pre-internet service called CompuServe and on that pre-internet service people basically discovered the software and said, "Hey, we like that." And actually ended up sending me money. And I was a kid. I didn't even have a bank account yet. And that was the beginning of, "Oh, this is interesting. Maybe I should be pursuing that." 

Yat Siu: 

And since then, I sort of been in that space. I've basically been growing tech companies in Hong Kong. I moved to Hong Kong in the early '90s and built one of the very first internet service providers called Hong Kong Online. Afterwards, I started a company called Outblaze that was later sold to IBM, which was one of the largest email service providers, really an early form of cloud computing. But that was in 1998, right? So it's a long time ago. And of course, fast forward a little bit, we went into mobile games. In 2010, 2011, we were one of the largest mobile game companies. And then basically got into NFTs quite early back in really 2017, 2018 at the birth of CryptoKitties. CryptoKitties was born really in November 2017, right? And we became their publishers in January 2018. So that's super-fast in that space when we saw the opportunity. 

Yat Siu: 

And today Animoca Brands is I think one of the leaders in the space in helping build and construct what we consider the open metaverse through non-fungible tokens, delivering true digital property rights. We have always said and believed that we think gamers and gaming are going to drive this industry forward faster than perhaps other industries, precisely because people understand virtual property better in the online gaming world. Games is already like a metaverse 0.5. It's not a true metaverse per se we think, because you don't own your assets, you don't have real ownership, you don't have full control of your digital lives, but it is the training ground, right? So the games have trained us to this moment where we are today. So I think all of that combined has created this great moment where we're privileged to be in right now, which is to develop true digital property rights in the open metaverse. 

Tristan Yver: 

Yeah. I mean, you guys are super prescient and it seems you have been a few times before. So there's a lot to unpack here and I'd want to go back in time if that's okay and then we can move forward, but actually going back to the start, so you said you were trained as a classical musician. What instrument were you? Were you specified to one or? 

Yat Siu: 

Piano, flute and cello. 

Tristan Yver: 

Oh, wow. Okay. 

Yat Siu: 

So both of my parents were musicians and I'm an... So there was another thing of course. So I was born and actually I grew up in Vienna in Austria and both my parents were studying music there. And certainly in the '60s there weren't that many Chinese or even Asian people, right? So probably wasn't easy to discover each other and then they just hooked up and had me, right? And as an only child, I would say for those of you who understand a little bit of Asian parenting styles, I didn't really have a choice at least in the beginning part of my life as to what it is that I was studying and doing. I was going to be studying music and so I did. And that was the background there, but it was interesting for me because I didn't have the same musical genes as my mother. She had perfect pitch which was brilliant. 

Yat Siu: 

I just had to work really hard. So people often say, "Oh, you're creative because you studied music." It's like, "No, I don't think music did that to me." It taught me hard, hard discipline, right? Practice, practice, practice, practice. I mean, that's what I remember about music. Maybe the creative aspect comes later in life, but at least my exposure was just hard work because many of my fellow colleagues, they just... Music's one of those things where talent just really stands out. And so they could just get there so much faster and I just had to work so much harder to get there. 

Yat Siu: 

But the other thing I guess for me, I think that had maybe perhaps even a bigger impression is the fact that I was very much... Even though I grew up in Austria, German's my mother tongue. I would consider myself Austrian as local, as Austrian perhaps from a culture standpoint, but I was also an outsider because especially in the '70s I was maybe the only Asian person in a 50 square mile radius, right? I didn't experience any hostility. It wasn't that, but it was very clear that I was different, right? And people around me had some struggles around, "Oh, you're different." And so judging you a little bit that way in a sort of an innocent manner, but still in a biased way, right? 

Yat Siu: 

And then coming to Hong Kong actually was interesting because I didn't grow up in Hong Kong. So even though I look Chinese and I am Chinese ethnically, actually I'm an outsider too, because I didn't come here speaking the language. I'm overseas trained and educated and yet everyone thought I was local. And then when they realized I wasn't, then I got a different kind of treatment. So I was always the outsider in a funny way. 

Tristan Yver: 

Has that, do you think, also pushed you to develop the things you have in the sense that maybe because you didn't feel completely included, you felt like you had to build your own community or your own universe? 

Yat Siu: 

Absolutely. And I think when you think about computers as an early form, when I first started with Atari and I wrote software and I put that out on CompuServe, I was actually 13 when people started sending checks in the mail to me, and I was like, "Whoa, that's interesting." And within CompuServe, they had a bulletin board system. So pre-forum, pre-blog type of thing and I was a respected member of that community because I could contribute knowledge and people liked my software. It didn't matter that I was 13. It didn't matter that I was an immigrant, you could say from another place. It didn't matter. None of that mattered. It just mattered that I knew what I was talking about and that I was a voice that offered something of value, which led me to a job at Atari and Atari basically brought me in. And I waltzed in their one-person office in Vienna and they were like, "Wait, how old are you?" That's how it started. 

Tristan Yver: 

How old were you then when that happened? 

Yat Siu: 

Yeah. I was maybe 14, 13. I mean, it was just around that time, right? And I still got the job because just like we see today with blockchain, actually it doesn't matter how old you are. If you know what you're doing, you got the job. You get to do it, right? And the opportunities basically. So I think for me, it just naturally navigated me towards that space where... And I don't know that I was thoughtfully thinking about, "Oh, I feel included or oh, this is community." That thinking process really just came over time. It was just natural for me. I just liked that spot, right? I just felt better there because I was offering something of value and I felt I was able to contribute as well, which is something that some people maybe try to look for all their life and can't find it because maybe they're stuck in something they don't want to do, right? 

Yat Siu: 

So that just led me to stuff. Atari actually sent me to the US to study computer science because I didn't have formal training and Austria didn't have computer science programs in the '80s, right? So I went to the US and halfway through Atari basically the way that at least we knew it, basically went under and we started a startup company, really supporting all the Atari guys who were [inaudible 00:09:36] ho had computers, but no more service, just no more services to support. So six of us started the company. I only ever met one of the co-founders in person. It was entirely virtual at that time, mostly communicating over Genie and some CompuServe because long-distance calls were expensive, right? 

Yat Siu: 

Long-distance was a call from Boston to New Jersey and it was dollars per minute, right? You can't afford that. Travel was inaccessible. So we were basically starting a virtual company. And that business eventually got acquired by SGI and is the reason I came to Hong Kong. So it just serendipitously moved in that way, because we just floated in those environments that was just comfortable for us, but we never thought that this was unusual or maybe we shouldn't do it this way. It was just like, "Oh, this is how it's done, let's just do it," because I'd already communicated with them entirely virtually for years before back when I was in Vienna. So therefore, what was the big difference between remotely working from Boston to California versus Vienna to California. It was all the same. So that was our setup. 

Tristan Yver: 

Man, you're early on all the trends. So this is totally [random], but I'm going to have to send you this episode of a show I watched on Amazon because one of the storylines within this show is this son to two Asian parents, his mother passes away. His father is a brilliant musician and pushes him so hard to play his musical instruments. And they have all these conflicts and the son actually learns how to program and starts doing composition programmatically instead of doing so written. And from there he then progresses to build the largest tech empire in this world. So I'm going to have to send you this episode because there are a lot of parallels .

[crosstalk 00:11:22]. 

Yat Siu: 

Oh, wow. 

Tristan Yver: 

Yeah. Yeah. 

Yat Siu: 

Okay. That's amazing. 

Tristan Yver: 

Yeah, I'll send that to you. Okay. Okay. Sorry, step back. It seems that you were a very early internet citizen and when people are early to things that change the world obviously that comes with a ton of benefits. So you built this first company, you guys sold it, you moved to Hong Kong and that's when you started this next one, right? Was this the first cloud[crosstalk 00:11:49] service or…? 

Yat Siu: 

Yeah. So I started an internet service provider in Hong Kong in '93. The genesis of that was that I came to Hong Kong because of the acquisition from SGI. So just to illustrate business planning in the early ‘90s, oh, I'm the Asian guy on the team. You should go to Asia." Like, "Okay." And I had never lived in this part of the world. So they sent me to Japan. I went to Taiwan, then I came to Hong Kong. And my father is originally from Hong Kong. And so I didn't connect the dots, but when I arrived I received a permanent identity card and at the time I didn't even know what that meant. I was like, "Oh, I get an ID card, that's great." I register and then my fellow coworkers were like, "Wait, you can live and work here forever." I'm like, "Really? I can do that?" 

Yat Siu: 

So that was the first part where I got to recognize because at that point I was maybe 20 or something, right? Anyway, I was actually yeah, 19, 20. And then afterwards what happened was I couldn't get my email, right? And that was the first thing, was like, "What's wrong with this place? Why can't I just get my email?" I couldn't even get a proper CompuServe node. So I said, "Well, I can’t live here. There's no internet access. Maybe I just set up an internet service provider," and I registered the domain and the company registration of Hong Kong online. The fact that I could get that domain name just indicated just how early that was. 

Yat Siu: 

What I didn't recognize though, was that probably globally, most people were on these intranets like AOL and CompuServe. There were only 30,000 or so (maybe fewer people) that actually had a true internet connection. So it was a horrible time to be setting up an ISP actually, because I was walking around Hong Kong telling people why the internet is going to be good for them and everyone looked at me like, "What,” and “Why do I need that?" And as you may recall, kind of similar to early blockchain days, when you go online with a screechy modem and then you go to a website powered by Mosaic, right? You go and say, "Wait, that's a really underwhelming experience. Why am I here again?" 

Yat Siu: 

And that's how that was set up, but for me it was just the way things were going to be because I was already virtually living in that space and the fact that I couldn't have it, was just a, "Well, we all should have it, right? This is good for us. And it was good for me, so it should be good for you. So let me give it to you." And of course that was a bit of a struggle. And I morphed that business over time into a free email-hosting service provider, [inaudible 00:14:34] GeoCities, but an Asian version. And we were the largest one of that. I had amassed at that point 300,000 users, which was a big deal in the mid '90s, right? 

Yat Siu: 

And what was also interesting was that I couldn't afford all the cost to run because I had my own leased line which was 64K. So I was supporting 300,000 users over a 64K leased line. Just imagine, right? I mean, that's not even a fraction of a data line that we have on even a 3G phone, right? And how I came to recognize that this was powerful was it was mostly kids using it, not surprisingly, but they were willing to queue because you had to queue. I basically had a bank of modems that people can call in directly and people were starting to call in long distance to upload their stuff. But I only had a bank of 24. So people were queuing for hours until it was their turn to upload their homepage. 

Yat Siu: 

And so even though I was making no money at all, I just couldn't shut it off because I was providing a community for these hundreds of thousands of people. So I took a job at AT&T which basically paid me a lot because I was one of the few people who knew anything about TCP/IP and internet and infrastructure. And so I supported that way. That then morphed into an acquisition. When the internet craze basically Dotcom Bubble started to really emerge in the US, one thing everyone wanted to buy was eyeballs. And so we didn't have any revenue, but we had eyeballs. And so they acquired us, I guess, relatively cheaply in comparison because it was just some kid in Hong Kong. 

Yat Siu: 

But it was starting capital that basically led me to start this company called Outblaze, which was really going to provide tools and services for companies that wanted to go online because based on that experience I said, "Yeah, I don't think I can be my own provider, but I can certainly help others go online". And we didn't have any VC money because I didn't understand that space. It was just about building stuff. So let's be a picks and shovels type company and that morphed and eventually emerged into a major email company because email was the killer application of the internet. This was in '98. And that business was eventually sold to IBM as part of Lotus Notes to become their answer to Microsoft Office 365 and Google cloud. Yeah. So that was in 2009. Yeah. 

Tristan Yver: 

Nice. And then at what point did blockchain become a part of your life? When were you first aware of it? 

Yat Siu:

So I was first aware of blockchain obviously through connection, people talking about it really around maybe let's call it 2015, right? 2014, 2015, that time. However, I was not super engaged in it per se because currencies, digital value, and so on just wasn't something that personally appealed to me at the time as much. At that point, we were also really building out a mobile gaming business, but it was really with non-fungible tokens, were sort of, let's call it the penny stocks in terms of its potential where what happened was is that we were in the middle of actually an acquisition of a company called Fuel Powered whose co-founder, Mack, ultimately became a co-founder of CryptoKitties and he helped build this little thing called CryptoKitties, which was almost like a science experiment really. And when that took off, Roham basically said, "Hey, you know what? Why don't you come and join what will ultimately become Dapper Labs?" I mean, they shared an office, right? I mean, that was how it was.

Tristan Yver: 

Just like him and Dieter, right? It was like- 

Yat Siu: 

Yeah. So Dieter was the CTO, right? Mack was on the board and heavily involved and Roham obviously was running Axiom Zen where it all hatched. And Mack himself, he was the person with the game chops. So it made sense, right? And they were just working together on this with a bunch of other people and that just morphed into that. And when we saw that, we said, "Wait, actually this could be the answer to a lot of things." And just drawing back on that back backdrop a little bit, in 2000 after the sale to IBM, we had a non-compete for everything enterprise. So we went back into our gaming route, which I had experienced when I was at Atari. And we actually became one of the top mobile game companies. 

Yat Siu: 

At one point we had 12 out of the top 20 apps on the App Store, but we were also very early to mobile apps, right? But we had figured out that if we keep launching an app a week ideally, we would always be at the top of the charts because Apple had a very primitive ranking mechanism. So we had hundreds of apps in the App Store. Apple didn't like that. And in 2012 they completely removed every single app from our App Store. Just removed us, no appeal, no call, nothing, right? And if you Google Animoca App Store, you'll probably see some references, articles like on VentureBeat or whatever saying, "The mystery of why Animoca's apps disappeared," because nobody really knew because it's not public. There's no judiciary. There's nothing, right? 

Yat Siu: 

And it's not like today where someone like Epic is large enough to take someone like Apple to task on these monopolistic practices. But in this case, it was really just some person. I will never know who that person is that sat in Cupertino at the time because they didn't have an office in Asia and they're like, "These bunch of radicals somewhere far away are basically polluting the App Store. We got to deal with it, right?” Instead of giving us a call and saying, "Hey, we don't like your practice, but maybe you're offering value." And we had 160 people working for us. So you put 160 jobs at risk. You put millions of people who were playing on games at risk, who had spent money on these games, right? 

Yat Siu: 

And did Apple care to think about them, right? Independent of whether we were good or bad actors, are you actually going through a process? What do your users actually want? And anyway, completely de-platformed. And I think this is one of those experiences around when I first started building out in ISPs and everything was built on open source. We built outplays all on Linux, right? And we were one of the largest Linux deployments in '98, '99 because nobody believed in open source. Everyone was like Sun Microsystems and Microsoft, right? Everything was closed source. And so we were all coming from this mindset of everything is open, transparent, and fair and obviously, that changed. 

Yat Siu: 

And this experience of being de-platformed, which I think the world still in digitally is a high-risk proposition. I think perhaps the highest risk that we all live in right now. So that was the other thing when we saw the potential of what blockchain technology could offer with non-fungible tokens as a way in which we could actually truly own our data rights, right? And in terms of the data is what is ours, that we can own. And I actually think is potentially even the solution for what people describe as UBI, right? Which I think is a little bit more of a socialist handout, which I think has its issues. 

Yat Siu: 

But I think with data ownership and the refinement of that, and the fact that we can own that now, I think that could be the answer for many of the global inequities that we see. So obviously that thinking evolved, but as we saw that, intrinsically we felt that that was right, that we should basically own our data and we should own our digital assets, and all the time we spend playing games originally, we should own those assets. And that we as players would always wish to be in a world where our time is respected as opposed to abused, which is what's happening today with all centralized platforms. 

Tristan Yver: 

Wow. So yeah, that was such a salient point about the de-platforming. And that makes so much sense on why you decided to go down the blockchain route. I'm curious how you decided what to build because CryptoKitties was there, but it was just an ERC-721. There wasn't really that much application around it. It wasn't certain that you would be able to have application from it, at least from what Dieter told me at the time, it was so exploratory. So how do you guys look at this and then say, "Hey, actually we could build a whole gaming ecosystem around this"? 

Yat Siu: 

Well, I think for us we had started really from the high level, right? Which was what is the implication of a system which cannot be controlled by anyone and is actually the closest parallel to open source? And so whereas we draw back and think about this, technically we go, "Wait a second, we need to make this work because this is the answer in which we know both players and creators can actually have fair participation." And to us basically, it was around the data ownership and blockchain in that system because it is uncensorable, it is immutable. It is something that you can't manipulate after the fact, right? And is not controlled by any single entity. So that made a lot of sense to us. 

Yat Siu: 

And one of the things we think about the future is around what's the most valuable thing actually? And it is our data, right? And in fact, even when you step out of that plane, you think of this in terms of how we create value in the physical world. It is a form of data too, which is derived from our time, right? We have meetings together. We mix together. We create new forms of data out of the data that we have and we create some kind of value, whether it is a business opportunity, an innovation, an idea, or something like that. And that is the one thing that is actually truly scarce if you think about it. Our time is the most scarce thing ever, right? Raw materials like energy, oil, cotton, whatever you want to call it, that's not scarce. Machines are constantly going to make it less scarce as we have seen over time, right? 

Yat Siu: 

But our own personal time and our own thing that we create in our head, that has a finite life period, because we will all pass, right? And that is perhaps the most precious thing that we have and that refinement of that and that data comes only from us, right? Meaning that we are the creators of our own scarce assets. And so that means we create these materials and we don't dig them from the ground. They come from us. The problem is that that data, that resource that comes from us, isn't owned by us anymore, which is the perverse thing. It is actually going to the platforms who take that, refine it, create a network effect of it, create information and knowledge because we don't know how to do that and they sell it back to us in a complete form of digital colonialism where we pay that every day because we don't think the virtual world is important when, in fact, everything we do is virtual. 

Yat Siu: 

When you buy an Hermes bag, what are you buying? You're not buying the materials. You're buying 99% of virtual value that came from someone's head, from their creativity, from their data. When we saw it this way we said, "This is so important. We have to make this happen," which is why our strategy evolved from not just building ourselves, but from investing. Because you got to remember, in 2018 it was crypto winter. It was a really, really bad time to be going out asking investors, to say, "You should back us to build out this new digital world on the back of blockchain technology," which is well known for crypto. You can just imagine what those conversations were like. It was like, "What? No, no, no, no. That sounds really ridiculous. And why should we back something that obviously was struggling at the time.” 

Yat Siu: 

So that's how we approached it. We said, "Look, we're going to build this. We don't know how it's exactly going to turn out, but we're going to acquire companies if they need our help. We're going to invest in them if they already got something, but they need that." So that's how we invested in Axie Infinity. We invested in OpenSea. We own The Sandbox. We're in Dapper Labs. We're in Polygon. All those groups that were emerging and building at the time, we just basically said, "Here, take a check. Let's just go," right? Because we knew that that wasn't something that we could do ourselves and they were outcasts really if you think about it. It was really hard. We were the lead investor for Axie, which was maybe a little more than $1 million, but at the time was an $800,000 round. 

Tristan Yver: 

Really? 

Yat Siu: 

Yeah. And we led the round and I had to pull in friends as well to... So Hash came in as well to say, "Let's go in and do stuff." And as a result of that obviously we're substantial holders in Axie which we're really grateful for. But three years ago, it wasn't that obvious at all. So it was really more like a vision in terms of where do we think this world should go with this? What do we want to make happen? And the absolute recognition that there is no way we can do this ourselves, right? It's just impossible. So that's when you see it in ecosystem. 

Yat Siu: 

And because there was no VC out there doing anything of that sort, we quasi became that. If we don't have a fund, everything's out of the balance sheet and frankly, we got into trouble for that too because we were a publicly listed company in Australia and they did not like the fact that we made lots of investments in crypto, which led to our ultimate delisting because they basically had many issues with that plus all of the uncertainties around crypto at the time, which is probably another story. So we went through a series of sacrifices you could say to get to this point because we had high conviction that this needs to happen. 

Tristan Yver: 

What was the story behind the Australian listing, why Animoca decided to go public, I guess? 

Yat Siu: 

So my co-founder at the time in 2014, 2015, together with our CEO, have capital markets backgrounds. And at that point, mobile gaming was a fairly mature business. Australia had a very hot tech market, I guess at the time. We had some friends who said, "Hey, you should look at Australia as a market." We weren't frankly big enough to be listed and to be recognized in a place like Hong Kong or US. You would just get lost amongst a flurry of large companies. At that point, we were the only listed game company in Australia. So the idea was, "Okay, it could be a new market, some scarcity involved and it's actually a very liquid market." So it was a way to leverage that. 

Yat Siu: 

And Animoca Brands was really dealing with brands, right? So doing branded mobile games. So it was the first mobile game company to list on the Australian stock exchange. It didn't do very well, but it was a difficult proposition just off the back of a number of things that didn't work out in the market broadly speaking around 2015, 2016. So that in itself was a difficult experience, but that was the background. That was the genesis [crosstalk 00:29:21] of that. 

Tristan Yver: 

Got it. Yeah. Because I was wondering if it had been listed solely being an investor in different cryptocurrency project, [crosstalk 00:29:28] then it makes sense that it was mobile gaming. It was a mobile gaming [crosstalk 00:29:31] side. Yeah. Understood. You've taken the same company across the transition then and into this new space that you're doing now. 

Yat Siu: 

Correct. 

Tristan Yver: 

One thing that you said earlier that really is going to stay with me, I think forever is digital colonialism. That is such a good term. That is such, such, such a good term. So I just want to repeat it a few times, so hopefully we can get it. We can get it out there because it's true. That's what Web3 avoids, right? It lets us have our own independent silos of data that we control and we have authority over and that changes everything. And we don't make all these other companies billions of dollars off of ourselves as a product. So I love that. 

Yat Siu: 

Yeah. And it's abusive, right? It's exploitative. That's the issue. And there's no reason for them necessarily to do that because at the end [of the day] the Queen of England is still pretty wealthy. She doesn't have to own and control everything, but it's when you start building these zero-sum approaches and walled gardens, that's when trouble actually begins and inequity starts to form broadly. And I actually think that outside of course the capital issues around what's happening, that's also a source of inequity. The other one is that the big tech platforms are literally farming us every day and giving nothing back, right? That's the problem, right? And so all that wealth that’s created doesn't go to the people who are contributing to it. 

Yat Siu: 

That's the abuse, right? What is Facebook without its users? It's nothing, right? But yet what does Facebook give back to their users? But they recognize that too and it was just... What is it? Two or three weeks ago, Mark Zuckerberg is like, "We're building the metaverse. We're going to be the next metaverse company." We're like, "Oh, no, let's not have that happen." But how did Facebook grow? This is the perverse thing. They grew because they were open, everyone built on top of them, right? That was the whole thing. It was the open platform where there was a Zynga or these social platforms or whatever, they all built on top and made Facebook big by giving them users. And then once it got big enough, they closed their borders, right? 

Yat Siu: 

And I think this is the thing about blockchain that doesn't make that possible and frankly keeps us honest, right? Which is why we're building on top of that because even if we get to a point where let's say Sandbox or REVV or whatever ends up getting very large, or if I'm not around or whatever it may be, there won't be the temptation or the ability to basically change that perspective because of the fact that it is on blockchain, right? And so, we have to be accountable to [inaudible 00:32:10]. I think that's really important. 

Tristan Yver: 

Yeah. I absolutely agree. And I'd love to hear your insight on how the blockchain gaming and NFT space have transformed since you guys started with this endeavor. I think it's been a busy few years, right? 

Yat Siu: 

Yes. Well, I mean, it's been busy, but the last six months was possibly like 10 years. [inaudible 00:32:35] wow, ultra compression, right? There are a couple narratives that have come to play that when we first thought about blockchain gaming was unexpected I would say or not part of the plan. And the first one is of course that the evolution of DeFi really, really was a supercharger for blockchain gaming. Because really without DeFi I think blockchain gaming would've been more of an asset play individually within the games themselves. But what DeFi basically presented was the banking infrastructure, which at that point was hungry for yield to be generated somehow in a productive manner, and in the beginning it was just inflating tokens because that was just the way they could do it. 

Yat Siu: 

But eventually you needed to create some sort of pool of value and labor. And so games started to become that, right? And you can see that happening for instance with Axie Infinity that combined essentially capital and labor in a way where people could own assets and then either rent them or revenue share them with the people who have time, right? And again, after all, time is a scarce resource, it is an economic substance resource. It's just one that hasn't been fairly valued. Now you can have someone who owns an asset and basically pay someone for their time to basically provide them the yield that's necessary. But without the infrastructure of DeFi as an open banking system, much of this would not have grown the way that it has. So you needed DeFi to really become the force that it was and then had the gaming infrastructure coming first, which is reverse of how traditionally it works. 

Yat Siu: 

Traditionally you have a merchant asset business and then banking infrastructure comes into play. So the timing might have been slightly different here, but the outcome was the same, which is why you needed both in order to create that vibrant economy. So that was one thing that when we first looked at NFTs we didn't think was going to play out quite that way, but great that it did and it totally makes sense. But I think the other evolution here was that a lot of people were thinking around how do we bring people from the non-crypto space into this? And I think this is the big ticket, right? The billions of people. There's 2.7 billion people playing games, right? Each of them should be people in crypto. Each of them should be people that are playing in these metaverses, in the true open metaverses, but it was very hard to convince them. 

Yat Siu: 

And I liken it a little bit like going through medieval Europe and being one of those revolutionaries saying, "Hey, you should own your property and you should care about property rights." And most of them will look at you blankly and say, "I don't need that," and they just go back to their regular jobs. That's where it was with gaming and to a certain extent still is, right? So it was really the crypto natives that were needed to create that liquidity first and that market awareness to make a market. And so you needed the blockchain industry to grow to a certain size so that it was big enough, almost a small nation where it was big enough for others to enter, which is what wasn't the case in 2018. That nation was just way too small, right? It was just emerging and so you weren't able to get that kind of liquidity. 

Yat Siu: 

Once you had it, you became an economy, you became an attractive place for others to look at like the promise of America or the promise of whatever place that was. It's like, "Oh, there's economic opportunity. What does that mean? Let me take a look at that." Right? And so you needed all these factors to come together. And the accelerating point was COVID I think because COVID created, I think two major trends. One of them was people looking generally at collecting online as a different form of activity that they couldn't do anymore, because they also had more time to study about the new things like crypto. That was one thing. 

Yat Siu: 

The other one is just spending more time online generally, which is obviously the big macro COVID effect. And that has culminated I think in this general explosion of a combination of online activity, a combination of more time learning new things, and a combination of collecting an activity, because the first spaces where NFTs took off, wasn't actually in gaming, it was in collectibles, and it was in art. That was more obviously and easily understood, but then afterwards... The gaming is a utility, which I think is a more enduring aspect because there is a very clear purpose for the assets in question, which I think 99% of NFTs will be utility NFTs that may not and should not be necessarily super expensive but have a practical purpose. 

Tristan Yver: 

Yeah, I absolutely agree. I think my thesis right now on NFTs for the longer term, excuse me, outside of certain artistic forms of expression which I think will hold and grow in value over time. I do think that the majority of NFTs that will have value will be ones that you can use in these games, especially because I've been incubating a lot of gaming, blockchain gaming projects on the Solana blockchain. So I've gotten a really good insight into how teams that are full-time thinking about this look at NFTs versus people that aren't thinking about it for the utility aspects. So I think it's going to get really interesting and- 

Yat Siu: 

It's going to get really interesting. Yeah 

Tristan Yver: 

... one more thing too, and I'd love to get your take on this. It's not even I'd say utility within a game necessarily, but when we get to this whole metaverse aspect, which... I guess my question here is – is the metaverse a game to you? How do you think of the metaverse? 

Yat Siu: 

Well, I mean, one way to look at it is, is life a game? 

Tristan Yver: 

Right. Yeah.

[crosstalk 00:37:58]. 

Yat Siu: 

I think in the context of that, I think the metaverse as a whole, although various metaverses will exist in it, is in fact a game of life in and of itself, right? So I think in that context, I don't think it's as different. The one thing that does change though, because of blockchain and because of NFTs, is that the asset themselves combine and they create a network effect, and start to create essentially their own value chains and have a very strong form of gravity. And so what happens then, so this is where we think games will play a role differently is that there will be some games where the NFT have prime utility, but I think there will be a lot more games that will basically exist as containers of value to your NFTs. 

Yat Siu: 

So in other words, you can experience your experiences better based on the assets that you have, which is a reverse way of thinking about it. For traditional game designers, the assets exist to support the game, but we don't think that that's necessarily the best approach. It is a sensible approach maybe as a starting point, but designing your assets in a manner where you know that it can be plugged in across the world, basically be friendly for afree trade and open interoperability is going to give it much more gravity, much more weight and therefore much more meaning and actually will force... And the reason we're pushing that, is it will force the metaverse and the digital asset space to stay open because in order to build a successful game, I want to be compatible with a CryptoPunk or with a [inaudible 00:39:28] or with a Formula 1 asset or whatever it is that you're doing, right? 

Yat Siu: 

You want to be able to say, "I can adopt them and use them because I can bring in their users," at the same time as that asset is used in 10 different metaverses or 20 different places, or you can loan and mortgage them or whatever, then it doesn't make sense for you to build a walled garden, right? In the same way that it doesn't make sense for you to be living in North Korea, because it's better to be part of a global ecosystem that has all this trade activity and more possibilities. And so that's how we think of it. So the games are containers of that value and maybe enhance them, but the assets is the main part here. So building the assets and being thoughtful about that I think is really important. And that's the part where maybe crypto natives are more comfortable with, but maybe non-blockchain gaming guys still struggle with because they build a game and the assets exist to support the game, not the other way around. 

Tristan Yver: 

In my sense the other most important component here are the memetics that then combine all these different containers together in the general consciousness. 

Yat Siu: 

Yes. 

Tristan Yver: 

So one thing, I've been speaking with some of these teams that are building these things around memetics which is super hard because there's no defined methodology on how you make something into a meme or how things permeate outwards, except for tying them I guess to archetypes or things that have representations throughout human history. In my mind, a meme and memes have been... We've had them since the storytelling days of the tribes and their caves and stuff, which was just the meme of The Fox and the Crow and then this later had a visual representation and now it has a digital representation. But I think that the teams that are able to capture it for their games are the ones that are going to take over the world versus ones that try and just stay siloed with what they're building. 

Yat Siu: 

Yeah. And also I think you need to have that network effect to grow broader, right? If you just silo it, then you're actually limiting it, because you're putting it inside your particular walled garden, and you're not letting it go somewhere else. And I think when you think about the history of memes, really it's a history of culture. We had described NFTs actually as a store of culture, right? And I think this is a good segue into that because the culture may be individual to us, like the number eight. That was a very Chinese symbol that has now basically gone around the world because of the fact that people are collecting and believing in this or whatever it is that that number represents to them. It has now become a global phenomenon. 

Yat Siu: 

And now you have products and assets that are built with specific eight numerology for their symbolism, which has a global audience today, which would be very limited if it was only existing in China and nowhere else, right? So I think you have that possibility that comes from other users around the world combining and mixing and recreating and repurposing. And frankly, I think that's beautiful. And I think that's what makes it so powerful and this is an example of adding more weight to the assets. 

Tristan Yver: 

It's a really good point. There's so much to think about here too. I mean, you have such a fun job, right? Because you have the [crosstalk 00:42:42] object-level stuff with all these teams building all these cool things, but then you also get to think about the meta aspects of how do you interconnect... Okay. I guess, what is the end objective for Animoca Brands? You've incubated all these different blockchain games, they all have their different interactions with their players in their own mini metaverses. Is the goal at some point to have some interconnected Animoca network that is just spread across all these games and things become completely interoperable in some form or another? 

Yat Siu: 

So first of all, I think of the space as being interoperable anyway or at least we want to push that. And I don't know that interoperability necessarily requires a master group that puts that together. In fact, I think you could have a world trade organization type thing that basically binds a lot of them, but you can also allow for direct alliances or direct trade relationships to build if you want, right? So I think that's the beautiful thing about this, you have choice, you decide, right? And you will make sound economic decisions because of the fact that you as a community will benefit, right? When you think of the future, many of these metaverses, including ours are expected to be in DAO structures, which means that the players own them, which means they get to guide and they get to control what goes on. 

Yat Siu: 

And through that messiness, if you will, you also have longevity because you have enough people that care about its survival, which is again, not something that a lot of people that have a top-down hierarchical thinking are going to be comfortable with because they're going to say, "Oh my goodness, this is chaos. I can't control it," which is the point. But I think this is the part where people really struggle. Yeah. But I think to your answer about this, we have taken an approach where half of what we do is investing to build out this space, which is perhaps becoming less important than it was earlier, because there's so many more people willing to put money into the space now. I mean, it's not a problem to raise money if you're doing a blockchain game, relatively speaking to where it was, say three years ago. 

Yat Siu: 

And the other half is building our own, whether it's project like Sandbox or REVV Motorsports or Quidd or Gamey or TOWER or whatever it is that we're building out. And the reason we like this approach, which is unique, is that in so doing we have half of our business in the open metaverse. Means that as we promote that space and ask everyone to be open, they also get interoperability to at least our assets. So we open up our economies to them, right? So that's just one mechanism. 

Yat Siu: 

But the second thing is that should on our side any part of our business really emerge in a very dominant side, because our business is 50% open or actually in this place it's going to be overweight more on the investment side just because of the portfolio returns, then actually it will resist any temptation on our side to create a walled garden because it would be negatively affecting the other part of the business, right? So it's really at this point, I would say intentional in trying to ensure a structure that long term, maybe if I'm not around or if the board changes, we're a public company still, right? 

Yat Siu: 

So even though I'm a large shareholder, I could be voted out. I mean, that's the structure and we as a company are a public company, we [inaudible 00:46:00] within the Corporations Act, right? So I may not be the person that will be here running this in the future, who knows? So how do we establish a structure that ensures that whoever will be running this is not going to be thinking about turning this into another Facebook? And if your leg is big enough in the investment side and in the open space, you'll know that you're hurting yourself if you're going one way or the other. That becomes an insurance policy, which by the way has served us extremely well. But I'm just saying that there is some thought that has gone into that approach. 

Tristan Yver: 

That's fascinating. There's going to be some books written on this. I am sure. I'm absolutely certain that at some point there will be books written about this whole dilemma. It's changing the corporate structure forever for companies…[crosstalk 00:46:44]. Because basically if you're right on your thesis, then you're going to end up in a state where you don't have direct control other than your voting power from your holdings of each one of these ecosystems basically, right? You won't be able to call someone and be like, "Hey, you have to change this or shut this down." That'll be impossible. 

Yat Siu: 

That's right. And you have to hold them accountable for it too, right? And you or yourself, you can't abuse it, right? That's the whole point, that you have other people that you have to at least have a debate or discussion around that may end up becoming quite public, which is the whole point, because you need to be transparent about this stuff. And we think whether it's our metaverses or many other metaverses out there, that there's thousands of them just like we have thousands of cities and many countries. And in fact, we think that's good because we may not want to live in one place or another, right? In fact, we have different skills, different interests, different abilities, different profiles. 

Yat Siu: 

One of the big ills I think of the centralized platforms is the fact that they squeeze you in, in a way that you have to be. It's no longer a case of here's all your choice, actually the choice is being made for you. If you think about your music taste, if you think about what you get to watch, actually how much of it is your choice and how much of it is what they think you should be watching based on some profile that some other person's putting together? And for me, this is quite acute because I grew up with classical music and I have Spotify. Try finding an indexing of classical music on Spotify. It's ridiculous. It's impossible because of the fact that it's not designed this way and Spotify doesn't care because classical music will never have the tens of millions of listeners as other forms and therefore will be relegated, which is awful because there's a lot of people who like that stuff, but don't have a way of being discovered. 

Yat Siu: 

And actually what it's doing is it's killing that industry, even though it's a very valuable one. So it's just examples. Anyway, I don't think that Spotify or big platforms set out in their mission statement to say, "Oh, let's kill classical music." No, that's not at all what they want to do, but it just doesn't make sense because of the way they're constructed and I think this is why blockchain and Web3 can change all that. 

Tristan Yver: 

Yeah. No, I absolutely agree. And it's really cool to see that you are mission-driven. Yeah. I think from the founders I speak with, the most successful ones all tend to be completely mission-driven with what they're doing and it's the crucial ingredient, right? Because you could go live on an island somewhere, why are you still working? I guess that's another question. What's your drive at this moment in time? 

Yat Siu: 

Well, I think generally when we think about what we do, impact and purpose is super important for us. And I guess I view what we're doing here as truly a purpose much larger than ourselves, which is basically why this is so mission-led. I think this is really important what we're building here and I think our entire teams recognize that as well, which is just what gives us energy. And I think we're privileged to be able to be in that position where we can help shape this industry in the direction that we think is right. In the early days of the internet when we started, we were obviously smaller and less experienced. We knew where the industry was going, but we were participants, right? 

Yat Siu: 

We were swimming in the river as it was flowing along. And we were just growing with that. But with where we are today in the NFT space, I'm extremely mindful based on our own experiences of multiple de-platforming and what that can cause, that we need to prevent that. And what attracted me to the early internet was this open space, which became closed. And we have to fight to prevent that for Web3, because it could happen, right? A nightmare scenario could be that most people prefer because of user-experience issues and so on to basically play and exist in a metaverse that was basically closed and a walled garden, and then all of us would move into that. And so our goal here is to make sure that that doesn't happen. 

Yat Siu: 

And I think of that as really important. We are in a position that we can at least help shape it, right? Which is different from where we were, say 20, 25 years ago. And it's a position that we shouldn't abuse and it's a position that we have the privilege of being in. So let's make it work in the best possible way. So that's how we think of it. I love what we do. I'm super excited. I wake up very motivated. I don't have a lot of sleep, but it doesn't matter because it is a purpose greater than my own. 

Tristan Yver: 

Thank you for sharing. I really appreciate that. And my last question for you, Yat, is what would you give as advice to people that want to enter and perhaps further this mission that you guys have or build their own thing in this space? What would you leave with them? 

Yat Siu: 

Well, I think we're in an incredible time right now because the first thing, the macro picture is, there's what? Maybe less than 100 million people who are in crypto. There's only less than a few million people that have an NFT, that actually have digital property as we think of it. So from an opportunity standpoint, it's great, which means to me that this is a chance where you can really build the world as you really want it to be in the most positive way. It's a rare opportunity to be able to do that. This is something that we've felt 25 years ago or 30 years ago with the internet, right? There was a chance to really rebuild information, knowledge, sharing of information, democratizing knowledge. 

Yat Siu: 

That was the whole thing about Web1, Web2. And with Web3, I think that is that opportunity, in a slightly different construct. Any founders who are looking at this space, I think you are responsible in this where you are actually able to create a much better place and you have that power, which was never before -- I would say in this context -- possible in quite that impact. And so I think founders who are building this space, and of course there's people who will abuse it as is always the case when there's money involved, but for those who are purposeful about this, you have a North Star, right? 

Yat Siu: 

You should follow that and there will be rough roads, but you'll persevere I think because of the fact that you know that what you're doing is better. The other thing is I would also say don't think of it in zero-sum ways, because that's what a lot of traditional businesspeople will tell you, how do you control? How do you monopolize? I think that is wrong, especially with Web3. I think in this case being open actually benefits all which benefits you, which is the whole structure around the network effect around blockchain. If you understand that, I think you'll do really well. If you don't, then maybe you need to rethink your purpose in life. 

Tristan Yver: 

Yeah. And we have our opportunity to change this now. The internet may have gone the wrong way, but maybe we can direct this the right way or at least what we think is right, but- 

Yat Siu: 

Absolutely. I agree with you with that. I think FTX has been incredible as well in terms of how they're moving towards and changing the landscape of finance, right? And I think the other thing of course is that it's not just broadly the opportunity of digital assets. It's also financial education, right? I mean, our children are playing games all the time and this would be perhaps the best construct for them to learn about financial knowledge. And so by the time, if they ever go to college, if they need to, if they want to, they'll have a portfolio, right? They understand. Their first experience with true finance is not going to be debt, which is indentured servitude, right? It's actually going to be a positive experience and one of value and really disrupt that space. So I think this is where the world should be going and we have to do it somewhat in a hurry because there's going to be forces of course that may want to control. 

Tristan Yver: 

Absolutely. Thank you for sharing that. Thank you so much for coming on the podcast, Yat. 

Yat Siu: 

It's a great pleasure. Thank you for having me. 

Wrapping Up with Yat Siu

We hope you enjoyed Yat Sui’s insights and perspective on the latest advancements and trends in the crypto and NFT space. Yat Sui is a true expert on the digital economy since he’s seen technology evolve to this point from day one. He’s also seen this evolution through a global lens which allows him to lend a perspective to the space that’s unlike anyone else’s. 

To hear more from the other brilliant minds and market makers in the space, listen to other available episodes of the FTX podcast. Also, watch for new interviews going live each and every week.

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