← Determined Society with Shawn French | Adversity & Mindset
Determined Society with Shawn French | Adversity & Mindset
Why Yat Siu Believes Digital Ownership Will Change the World
01:00:06
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- [00:00]
A
Instagram is free, like Facebook's free. All these different platforms, these social platforms are free. And I'm like, how in the hell are these people making money, man?
- [00:08]
B
Nothing is ever truly free in that sense. Facebook grew with our content. You ought to pay us some royalty because it's driving traffic to Facebook. Or Australia had fought Facebook over it. And here's the crazy thing. Facebook deplatformed the news agencies. Australian news agencies suddenly couldn't be discovered because they said, well, we disagree with this and we're just not going to make it available. We are talking about free countries being censored by a platform.
- [00:42]
C
This one luck. I let the pain inspire me. I put my all in. Everything I'm doing up until it's done, I mean for the entirety, I put in no baton. I'll be working. Just know I'mma go for mine cause I earned it. They watch and I know it's time I confirmed it. A whole society society determined determines.
- [01:00]
A
What'S up everybody? Welcome back. We got another episode here. I have a really cool individual that created Animoca brands and within, I mean, very short amount of time was a multi billion dollar company and they're doing some amazing three with property rights through NFTs, Web3 development, gaming. And so today I have with me one of the founders, you Yat Sue. Welcome to the show.
- [01:28]
B
Thank you for having me. It's a great pleasure to be here.
- [01:31]
A
Yeah, man, it's so good to see your face and have this conversation with you this morning and really looking forward to really learning about your company a bit more and so my audience can learn what's out there. But, but more than anything, man, just you're going to be kind of teaching me a little bit, right? Because you're, you know, it's not one of those, one of those types of companies for at least me that I can wrap my mind around easily. Right. So for the audience and for myself. Why don't you give a little background on the origin story and what it is that you guys actually do?
- [02:02]
B
Well, maybe I'll start off a little bit in terms of what it is that we do in Web three. And web three is so important and then I can talk a little about the origin story. And the background really is that when we talk about where we are in the web today, actually we live in an environment where we don't own anything digitally. Now I know that sounds a little bit strange for people who are like, well, how can I own something virtual? Or how do I like what does it all really mean. But, you know, when you think about, you know, all the people who have an account on Instagram, as an example, or on TikTok, actually, you're renting their platform, and every time you do stuff, you generate data and you generate value and you bring in all your friends and you create all this attention, and they make money from you in the form of advertising, and then actually, what do you get paid for? And almost nothing, in many cases, zero. So you get this thing that appears to be enjoyment and entertainment and having fun, but on the back of it, they make all this money and all this sort of, sort of wealth from you. These companies are worth trillions of dollars with a T, right? They are the most powerful companies in the world, and they do it because we give them our data, our time and our networks, and we help them bring and develop these incredible network effects, and essentially they're robbing us of it, right? That's the issue that we have in what we call Web2. And this happens in Facebook and Apple and Google and, you know, TikTok and all those companies, right? They've built this business model where they're really farming our attention. And the form of revenue that that attention generates is typically in the form of advertising and platform fees, which is again, in the trillions of dollars. But the top 10 companies in the world are actually these companies or companies in service of them, right? So now what does web3 really do? So this is a sort of technological blockchain, which I know a lot of people associate with Bitcoin, because that obviously uses that technology as well. But what it really sort of enables for the very first time is the ability to actually own a digital asset. Now, this seems again strange when you don't understand how it works on the back end, but really, blockchain technology is a distributed database. They call it a distributed ledger. But really what it means is it's basically data that is distributed across the community who essentially, in a way, safeguarded by running their own data structures, right? So it's like a decentralized database. Now, what that means is that nobody really owns or controls it, which means that when I have something in such a network, it is truly mine and cannot be taken away. Now, for instance, when I'm writing data on something like Facebook's Instagram, actually that data belongs to them. It sits on their private servers, and they can turn it off at any time and, and change and alter it. So, for instance, imagine you have a million followers on Instagram and you've got a nice little present presence and, you know, you're getting some fame and you're building something. Well, if Instagram doesn't like you, they can take that away. And that happens every day. It happens on X, it happens on other platforms. They simply deplatform you. I mean, I think the most famous example of that is, you know, even when, you know, in the last presidency, basically at the one prior where Trump was president the first time around, you know, he was, for instance, deplatformed from, From. From. From. What was Twitter at the time, because.
- [05:12]
A
You know, I guess they had some.
- [05:13]
B
Disagreements about what he was writing. You know, whether the. That's it's sort of true or not is kind of beside the point. He actually was in sort of silence because he didn't have his own property. He didn't have his own voice because he didn't really own it. He was renting that platform. And that's where 99% of the Internet resides today. We exist in what we like to describe sort of a digital feudal society. And the kings of the society is Apple and Facebook and Google, and they rule over us and they decide our fate. And in the past, rules like antitrust and the government was supposed to protect us from this, but they weren't able to because they didn't understand this construct. Now, what does it mean when you have property rights? Well, when you have property rights of any kind, whether it's digital or physical, you have actually the freedom to transact and you have the freedom to do whatever you want with it and, and the freedom to compose and do things with it as you like. So, for instance, if I own my house, I can renovate it, I can design it, I could do whatever I like. I can have the freedom to sell it to someone else. But if I'm renting the house, I don't have that freedom. I don't have that ability now, because we also, and this is perhaps even more key because you have ownership, you can now actually conduct business. Business with other people who actually offer you value and services for that. For instance, the car industry, the ownership of cars obviously generates billions of dollars in income, but the jobs and services and revenue that's generated from the business of servicing people who own cars is even greater, right, when we're talking about Uber or Lyft or gas stations or parking lots or people who do tire companies, that kind of stuff. And you can innovate on top of that. So this idea of having your own property is really, really, really, really important. And maybe before I go into the Origin story. The other thing I would say, typical criticism people have around a digital property, right? It says, well, it's virtual, I can't touch it, I can feel it. How is it really real? Well, the most valuable actually property right today happens to be intellectual property rights. The stuff that comes from our ideas, from our creativity. If we didn't have property rights, intellectual property rights, protecting musicians, artists, creators, filmmakers, we wouldn't have that industry because actually it's because we have these kind of property rights. You know, you can have Michael Jackson and you can have Taylor Swift and you can have the Beatles because there's a catalog that is protected so that you're basically able to sort of pour effort and make development and then from that end up having some sort of benefits of the fruits of that particular labor, which of course maybe in the future might go into public domain. But for that period of time you were incentivized, you had a capitalist incentive to make that happen. And if it wasn't for that, we wouldn't have authors, we wouldn't have that creative industry. And just for reference, the creative industry, the intellectual property rights, intellectual property, trademarks, trade secrets, patents, that type of business actually comprises almost half of the American sort of workforce, as in most American half of close to half of Americans actually are working in companies that really depend entirely on this type of virtual property right, as it were. And the entire sort of virtual property right market is estimated to be about $68 trillion in size today by WIPO, which is roughly depending on which day, somewhere between sort of seven to ten times the value of all gold combined. So just to say this is a very, very important and meaningful asset in the world. And the fact that we have virtual property rights already in the form of IP is already so meaningful when you take it to the digital world. The question we started asking ourselves is, well, where do we spend most of our time online and where do we generate most of our value? Turns out it's online in many countries, we spend most of our waking hours online. Every conversation, everything you do actually creates data which then create network effects and then they create these incredible products, whether it's a Google or an OpenAI. But yet here we are. Our data has enabled the creation of these companies, and yet what do we get for it, right? And so that's actually the vision and mission of Animoca brands, which is a way in which through what we call tokenization, neuroscient blockchain technology, we can actually more fairly distribute the value of the efforts that we have created. And we used to say our own labor was valuable, and it is. But what we've transformed today is that it's no longer just, or maybe even less so, especially with AI and robotics, sort of the labor of our hands, but the labor of our mind that really matters here. Right. So that's kind of, you know, the context of what it is that we're doing. Atimoca Brands and maybe just so to give you some examples, I mean, you know, yes, we are a multi billion dollar enterprise. We have invested in over 573 companies in the space, and I think we're one of the largest companies in this area, starting with gaming and sort of culture and entertainment. But of course, you know, reached out and all these financial services in other areas as well.
- [10:04]
A
I mean, that's. Thank you for that explanation. Because, you know, as a creator, right, I have a lot of intellectual property. Even the things that I put on these other platforms like Megaphone or Instagram, Facebook and X, like, you know, we, we don't really understand. A layperson doesn't understand that, okay, that's not ours. I mean, the, the actual content that we create, yes, it's ours, but once you put it on that platform, it's for somebody else. Like Instagram owns it. And, and until you explained it like that, it didn't really hit for me until then. Because, of course, you know, Donald Trump was deplatformed, you know, Andrew Tate was deplatformed, right, you know, a couple years ago. Now they've been brought back. But, you know, there's multiple things that Instagram can do even into a point where anybody can impersonate you, right? Anybody can, you know, rip your pictures of your family, make a new grid and, and create a new page and go try to sell all your community, your followers, you know, bitcoin, and rip them off and then report you as the owner of the real account as a fake. And they can shut you down quickly. So it's, you know, it's kind of amazing to me to hear from you of, of what is really going on, because I don't think a lot of people truly think about it, man.
- [11:27]
B
I think the reason. Yeah, no, sorry to interrupt, but I think the reason why people don't understand it is because they don't understand sort of how companies make money off the back. So the value isn't your data in and of itself, right? It's a form of value. What actually makes it value is what they derive from your data. So it's a derivative of it. It's a little bit like, you know, you have an intellectual property and someone took your intellectual property and created some value. Well, in the normal construct, you should be entitled to something. Is it a royalty, is it accreditation? That kind of stuff. Right. I mean, notice for instance, when you ask ChatGPT a question, it gives you all sorts of fantastic, amazing answers. But what I typically do is in essay, I always sort of end it off with cite your sources because I want to know where you got your data from. And you know, OpenAI doesn't give that right away. And so as time goes on, the behavior starts to change where you start thinking, oh, OpenAI, you know so much and you have all the answers, when in fact, actually that knowledge is entirely derived from the entire Internet and from everything we've put together. And it's not just about money, because money is, you know, like it's one element. It's actually about accreditation. And from, hey, I got inspired by this content or I went to this Reddit group or I, this is this user. Like that type of stuff is important. You know, we go to school and when we rip other people's content off, we get, you know, it's called plagiarism and you know, we get a fat zero. But when OpenAI gets to do it, it's okay, you know, like, you know, so there are a whole few elements. Yeah, exactly, Right. But it's a whole few elements of things where that really doesn't make sense. But because we don't understand what happens on the back and we've been so disintermediated from the process because we don't understand how value is generated, you know, from, from data and what it can create and the power that comes from it. We freely give it away. Right. And, and that's understandable because we don't understand the mechanics, the machinery, the development and the code on the backend. We just expect it to work. But there's incredible values generated. There is a reason why the biggest companies in the world are in fact these data companies that own our network effects. In fact, the top companies are, you know, and they're worth trillions. Right.
- [13:34]
A
It's so crazy because, you know, when you're talking about the back end on how these big platforms make money, it was funny because I think it was maybe about a year and a half, two years ago, I was thinking all these platforms, like, wow, like how are they making money? You know, X is free unless you do like a bumped up subscription or Instagram is free, like Facebook's free. All these different platforms, these social platforms are free. And I'm like, how in the hell are these people making money, man? Because, you know, again, like, what's that?
- [14:04]
B
Nothing is ever truly free in that sense. Right. There's always a price to something.
- [14:08]
A
Exactly right. So it's just interesting to hear, man, because again, I think most people walk around thinking, man, this is a really cool thing. It's free.
- [14:18]
B
Yes.
- [14:19]
A
And I think what happened, you know.
- [14:21]
B
Yeah. And I think what happens is that when they sort of. When. When they sort of make the appeal of free, the other problem is, is that it actually abstracts away our idea that there is a cost involved and that there's a value received. Right. And so as a result, we also became habituated to this idea that this type of stuff ought to be free. So, for instance, if you recall, you know, there's all these arguments before where media outlets were saying, well, you know what, Facebook grew, or these sort of platforms grew with our content, you ought to pay us some royalty because it's driving traffic to Facebook. You might remember Australia and Canada and other countries had fought Facebook over it. And here's the crazy thing. Facebook deplatformed the news agencies. Right. If you take. If you. I don't know if you remember, but. But, you know, Australian news agencies suddenly couldn't be discovered in certain places because they said, well, we disagree with this and we're just not going to make it available. Right. I mean, you know, and this happened to Canada as well. So you're talking about democratic, free countries essentially being censored by a platform. That's how powerful they've gotten. And again, it's. Because actually they've taken the data, they've created value, and now they've become the platform. And. And we're sort of dependent on them. And they've created this sort of feudal sort of serf type of relationship where we have to somehow serve them to exist. Right. And that's actually the problem here. And that's actually what, frankly, blockchain solves in this sort of whole framework of, you know, digital property rights. And it was first really encapsulated with this idea of owning your own digital money, which is basically Bitcoin. That was the origin story back in the early days when it was really you could almost call an experiment.
- [15:59]
A
Right.
- [15:59]
B
And it was a different type of revolt. It wasn't against the platforms. It was more against central banking, which was a different type of, let's call it violence in terms of, well, you have money in your account, but you Know what? We're going to have to do something, and we're just going to do qe, as in quantitative easing. And they just printed trillions of dollars devaluing the value of your money in your bank account, effectively making everyone's savings account poorer. But most people didn't really understand that, and it wasn't. And it was a realization for a whole host of people who ended up flocking to Bitcoin that, hold on a second, that money isn't really my money. Yes, I kind of own it, but I don't have actual real control over it because someone else can just devalue it and take away value. Essentially, another way to think of it, they just basically taxed you a whole large amount without actually ever asking you for permission or seeing whether it's okay. And so that's for the birth of something like Bitcoin to say, actually, this is a kind of digital property, right? In the form of value that is sovereignly mined with a particular set of rules that cannot change. In this case, maximum of 21 million supply. That's that principle. Again, whether you agree or disagree with the construct, the point is it is sovereignly yours, and no government, no intermediary can take it away. And you have the freedom to do whatever you want with it, which is the basis of general freedom. Overall.
- [17:21]
A
It'S wild, man. It's wild, you know, because like, all of these things, like I said, I always go back to. No one really understands it, right? Because when Bitcoin came out, I mean, I can remember my, my thought process on Bitcoin, I'm like, well, how am I gonna. I can't spend that. Like, what is it, like, real? You know, is it. Is this real money? Like, what is this thing, right? Because it was so new and disruptive, right? Like, your industry is very disruptive because it puts the power back into people's hands and, and, you know, big agencies, big companies, and the government may not want that. Right? So how does. How does Animoca brands help just people in general understand this concept, but also for somebody that's not a, you know, a major brand or, you know, just someone that is a normal citizen walking around, how do they become involved in something like this so they can start, you know, like you said, owning what they really have?
- [18:19]
B
Well, we started off with, you know, Blockchain Gaming, or Web3Gaming, as it's now more commonly known, because we sort of had this theory which, you know, turned out true and especially in Asia, that if you're a gamer, you Know, which, by the way, is most of the world, I think 60 to 70% of the world games or plays video games.
- [18:41]
A
Really?
- [18:42]
B
Roughly, yeah. I mean, that's about 3.4 billion people play games on a regular basis.
- [18:46]
A
Wow.
- [18:47]
B
So that's more. That's from an online population anyway. That's like close to 60%. And it's also the cheapest form of entertainment in terms of sort of, I guess, media cheaper than movies or that kind of stuff also because the hours of entertainment you have in games. But what happens inside those gaming economies is actually already forms of value. So, for instance, if you ask your kids what they want, they probably want a skin in either Fortnite or something in Roblox, for instance, or they want Roblox or V Bucks or that kind of stuff. So they already value virtual items. And the skins and items they purchase are Flex items. Just like, you know, a Gucci bag or having a Porsche or having a Rolex. And I think that's the other thing as well, which is that sort of the difference between physical and digital Flex is actually nothing in the sense that the value is already virtual to begin with. Right. You don't buy a Rolex to tell the time. Right. Nor do you buy a Birkin bag to put stuff in it. Right. What you really do is you buy it because it says something about you and the status of who you are. And it's part of, you know, maybe it's a Flex or maybe it's a community as well. Like. Like if you. I mean, if you have a Rolex watch, then you are a member of that community. And other people who have Rolex watches are like, oh, you've got a Rolex too? Well, here's mine is that. And immediately it creates a kind of bond between that and. We see this in all sorts of things. They don't have to be valuable, but we create affinity and affection to these items because we are ultimately social creatures and we create social value out of that. Now, this comes down to sort of the other point before I go then into sort of, you know, how we get how one can get what we do and how we get people involved, you know, which is that the most valuable thing about our human time and attention is our social graph. I mean, we are social creatures. We make friendships. We are connected this way. You know, we want to be part of a social network, which is why we are members of a country or a club or a community or our family. Right. These are maybe our old subgroups, but they're ultimately still about social connections. And maybe some of us are more social than others, but we're ultimately still social. Like, we don't live entirely individual lives, right? Even the most introverted person still has a circle of friends that maybe is a very close circle, but it's still a social social circle. And there's an energy around that that basically fuels us as humans. That's who we are. And what basically the social media platforms have done is they've harnessed this to their effect and basically really monetized that and in some ways weaponized that, right? So that's kind of the situation. And we don't have the freedom, once we're in it, to really leave it, because if we do, we leave everything behind. Like, if you say, you know what, I don't want to use Instagram anymore. Well, everything you built on Instagram, you can't take that with you because it's never yours to begin with, right? It's. It's not your likes, it's not your follows, right? You, you, if you, if you shut it down, you literally have to delete the account, which means you lose everything, right? That's because it was never yours to begin with, right? Whereas, you know, if it was your property, you would have the freedom to take it somewhere else, whether it's your status, whether it's your items, whether it's your followers, right? Now, through things like tokenization. You know, for instance, this thing that a lot of people were sort of thinking was controversial, which is NFTs, because they were going up in value and because they're speculative in nature in some cases, because you can trade them, right? Which, by the way, is also true for Pokemon cards or stamps or even Rolex watches, right? I mean, I can trade them if I wanted to, but the reason, and I think this is often forgotten value aside, the reason why, why I can trade them is because I have the freedom to do so, right? So meaning that you have the freedom to buy it from me, I have the freedom to refuse it, and that's fine, right? And that's the point here, right? It's not necessary to say, oh, look what value it could achieve. I mean, that's part of it. The real fundamental fact is that I have the freedom to sell it to you and I have the freedom to buy it from you or refuse to buy it from you. That's the construct here, right? And once you give freedom to any object, a market will develop, right? And that's basically the whole point about sort of the base theory of, you know, Basically a sort of modern economics and capitalism is that, you know, you want to have a reasonably free market, but so you can have that price discovery of the things that there is true demand and supply for. Because, you know, maybe there's no demand and no supply and that's okay. There's no demand and it doesn't matter how much supply you have, nobody will buy it anyway and it's a failed product and on it goes, right? And I think a lot of people are familiar with this in the physical realm, but they're just not familiar with the virtual, even though they're kind of the same. Now what Animoca does is we started with the gaming side because we wanted to onboard people around it and we discovered a few interesting things that gamers, particularly in Asia, not so much in the west, we can get into that a little bit later, basically started to really like this because they appreciated the idea of owning their digital assets and digital time because they're already spending money on it, so why shouldn't they own it? Right? That's kind of the first part. But then what we also realized, and this is the key of this, is that they started actually learning about money and value because essentially they became more financially literate because now they had something that they could trade and sell if they wanted to. In the physical world we have things like for instance, if you're a kid and you start having a Pokemon card and you're trading the Pokemon card, actually you start to learn something about money and value and that different type of social interaction which is, you know, how to sell or how to buy or how to negotiate. I mean, those are actually aspects that we learn as well in the form of that sort of financial system. And we weren't even able to do that digitally. And the reason why this market took off, the entire sort of sort of digital asset space, as one might sort of call it, is now about 3.4 trillion in size. Now that is major, right? And, and so at a 3.4 trillion market that was basically almost non existent less than, less than 10, 10 years ago. It, it demonstrates actually what happens when you enable markets to be free. Sometime stuff starts to develop and then you know, you, you have, you have, you have a, you have, you have a, you have true price discovery a result of that. And people started to learn about how, how is value created and you know, what is something that sort of is important to me and you know, what's the price. And that type of financial literacy started to expand. And so we actually think part of our mission when we say pushing digital property rights is actually also as a result making the world more financially literate. And our contention is that most of the world is actually not financially literate at all. You might have a bank account and you might actually might have some mutual funds. But generally speaking, most people labor for their work, as in they do the classic work and then they receive a salary and then they might put it in the savings account, which is not the same as investing, and then that's it. And in some definition they say, well, you've got a bank account, you're financially included and therefore you're somewhat financially literate. But actually financially literate person to us is someone who actually has an understanding of risk, does a little bit of investing, you know, has a stock portfolio, that type of stuff. Most, if you, if you forget sort of tokens for a moment just looking at the stock market, I think the global average of people who have a stock portfolio who have the means to is still only about 8%. Right. It's a little higher in the U.S. but it's, it's, it's, it's a very small number, which basically to me is an indication of the gap of the people who are financially literate and the ones who are not. And so the world is getting also more sort of the wealth disparity is getting worse as well. But the difference between the ones who have wealth and the ones who don't are the ones who have wealth actually are true capitalists, as in they understand investing and they do that. Whereas most of the world actually is still sitting in the labor world. And if you look at what happened in the last 20, 30 years, you know, capital has appreciated significantly more in multiples than the value of labor. And that's only going to get worse with things like AI and robotics and.
- [26:37]
A
Automation, you know, here in the U.S. right. I think, and I don't, I mean, it's a sweeping generalization, but I feel that the kids here in America are far behind in financial literacy based on what you're talking to me about. Right. Because know, there's some, I mean, like different pockets. Right. If you have affluent families. Right. I, I hear conversations of, you know, me and my dad are learning how to trade, we take a stock and, and man, some baseball teams that I've coached at a high school here locally, you know, they, they, there was people that were like, hey, you know, they're talking about stocks before practice. And you know, I think that's really cool because it's not happening a lot. And I think that is where it's very dangerous for children as they become, you know, teenagers than young adults. They don't understand, they don't understand financial things. And, and quite honestly, like, I mean, I grew up and that wasn't a thing, you know, it was you, you go to college, you know, and then you go get a job and then you save money. But if that money, you know, is not doing anything for you, that's not true investing.
- [27:46]
B
Yes.
- [27:46]
A
So absolutely, yeah, it's, it's interesting because it's, it's not, it's not something that's widespread, man, and it should be. And I would imagine most countries or some countries are way far ahead of us in those regards, based on what you're saying.
- [28:02]
B
I mean, it comes also a little bit with this original promise, which is that money was meant to be a store of value, so medium of exchange. Right. And that was also because when you, you know, it wasn't that long ago, I think maybe 50 or 60 years ago, where America still had the gold standard. And so with the gold standard, it was essentially a mechanism that ensured that money had a sort of balance in terms of, okay, you had X amount of gold. That essentially represented the kind of money that was out there effectively, you know, essentially measuring that reserve. And this is kind of where, you know, the, the role of economics started to shift and change as well. Right. Because of things like economic crisis, like, for instance, like the very first, the Great Depression sort of led people to think about, oh, well, maybe we need different economic policies to deal with the kind of problems, sort of problems we have. And so inflationary politics and inflationary economics started to be introduced, specifically sort of Keynesian economics. And so the idea there basically was that, well, to stimulate the economy we need to basically sort of, you know, put more capital into the market and lo and behold, people start spending. But then you create inflation. Right. And you're supposed to basically sort of draw that back. But of course, you know, from a political standpoint, it's unpopular to do so. So, so this, this idea of, you know, we help the economy by stimulating it, but then we're not actually sort of, you know, you know, once we've stimulated economy, we're not actually sort of going back and being a little bit more austere, but sort of rain it back. And we've had these boom and bust cycles in the economy precisely because of the fact that we just let the economy run rampant with just basically sort of, let's call it more and more money until it just was not sustainable anymore. And then you basically have these, these boom and bust cycles as a result of that. And I think that's, that's the issue is that most people don't understand that and they think, well, I put money in my savings account, right? And I basically just save that. And that's okay. Imagine if you saved a percentage of your salary, which is what typically a lot of people say because of, you know, compound interest and so on, and you put that into your account every month for your, to your kids sort of college savings. Then the problem is, is that that money that you set, set aside, the interest you get is lower than the inflation that is coming. And as a result you're losing money in that account every single day. And so suddenly you felt, oh, okay, well now my kid's ready to go to college. But it turns out that the plan that you set forward, say 20 years ago no longer is enough because actually the amount of money that you saved couldn't sort of keep, keep pace with, with, with the rate of inflation, right? So it would have been better to invest it and essentially create a return from that so that you basically then are, are more sort of hedged against that. Or, you know, that's why a lot of people buy real estate, because it is somewhat of a finite asset in certain area where that's something you can't as easily inflate as you can with money. And when people start, when the government started printing money, particularly when the first big sort of financial crisis happened in recent history with the whole sort of Lehman Brothers collapse and so the whole banking crisis had happened there, actually the money printing aspect, those who the majority of the world didn't really understand, they're like, oh great, some more money. Someone, you know, government just give fiscal stimulus, bailed out the banks, you know, literally, you know, trillions of dollars was, was basically created out of thin air. But what they really did is they devalued the value of our money in real money terms by, you know, basically, you know, so 30, 40, 50% over time. And that's also why if, if you look at the charts that shows the money supply really since that time, it's astronomical, right? It's, it, it's, it's, it's, it's, it's gone up by trillions and trillions of dollars more, which is also another problem because of course it adds to the debt burden as well. And if you have high interest, which is exactly what your current administration is trying to solve, then you're paying Even more interest on, you know, on debt on top of debt. So again, this is the crisis at hand, and that's because people have not been financially sort of and fiscally responsible. But our contention is that if more people in the world are financially responsible, including your citizens at large, then you wouldn't get to that situation because they're going to be more measured and they're going to plan better. And so you can see this in other nations around the world where that's better, most notably places like China or let's say Hong Kong or basically in many parts of Asia. And the reason is partially because the financial literacy rate is much higher, because people talk about money the whole time, but also because over the last 30, 40 years they've developed around a capitalist framework that made life better. And what happened is that if you look at Europe and America, you've basically enjoyed sort of freedoms and the democratic system and that kind of safety and stability for basically all your living memory, for the most part, right? I mean, yes, you've got there was a big war with World War II, but for the most part, you know, you didn't have to worry about, well, you know, a house that you have might be taken away from you. That's not something you ever worry about. And so you tend to take it for granted. But, you know, that was not true in Asia 40, 50 years ago. Right. I mean, most of the countries were sort of run by tyrants and was despotic in nature. Right. You didn't have any control. Right. It was these dictatorships that ran it. So in living memory, like my parents, you know, you know, from being Chinese, actually didn't have security over their property whatsoever. South Korea's GDP was smaller than North Korea 40 years ago, and today it's the 12th and 13th largest sort of economy in the world. It's hard to imagine that. But the point what I'm sharing here is that there's a generation of people who appreciate and acknowledge that actually capitalism works. We need to understand money, we need to have a property. And that's also the reason why these are the markets that are adopting crypto bitcoin digital assets, NFTs much more rapidly because they appreciate what that means. Whereas it's has a sort of significantly lower adoption rate in Europe and somewhat lower in America, but not as much because of their perspectives of money. And you can see this in your politics as well, right? You've got one party that's all about capitalism and entrepreneurship and their construction of growth. And I guess money and Then you have another party that's actually somewhat anti capitalist and very much against people with money and basically has this sort of, is almost vilifying people who have money because if you have money you must be doing something bad. Which was not the America that sort of I knew when I first sort of went, went to the US back. I don't know, this was like in the 90s, right. And of course America was going through a recession then. But you know, capitalism was very much celebrated across the board, which is no longer true, I would say in, in many parts of the States.
- [34:56]
A
Another interesting, a bunch of interesting points. Right. And when you look at, you know, recent memory, like your parents, they didn't have security over the property and, and as you mentioned, in America, if you have that note and you're making the payments like you have the homestead, act like you're good, like you, you're, you're good. Right? Like that's your home. Unless you just lose your job and just say, you know what, I, I can't make the payments anymore, then the bank will take it back. But I think it creates a motivation, right? So like as you mentioned, in Asia there is a massive motivation to understand how, how capitalism works at a very granular level. So that way they can handle their business and be okay and not have things taken from them. Right. So they, there's a completely different, I guess, paradigm. Right. Whereas if someone's grown up in Asia, especially with parents that went through those times to, whereas we're here like hey, you know, you're good, like they can't take this from you. So there's a different level of motivation, determination and discipline in these other countries to understand money a lot better.
- [36:04]
B
Yeah. I think also the other thing is that, you know, money is something you can actually teach children at a very young age. And you see that effect, you know, in, in, in, in Asia because for instance in Hong Kong and you know, one might be horrified by this idea that you know, children busy go to horse races and you know, they don't necessarily bet themselves, but they watch their parents bet. And we're talking about clean money here. Like we're not talking about like serious gambling. It's more like hey, you know, have some fun. It's like a social thing. But immediately when you do that, you sort of start to introduce that. And I remember. So I grew up in, I grew up in Europe, right. And, and we're talking about a long time ago now, sort of in the 70s and 80s, and we couldn't talk about Money at all. Money was like, oh, my goodness. Like, you know, my parents were particular money. My mom was, was an artist. So you don't talk about money, right? You just, you just do your craft and you get paid for it. Sure. But to talk about money was kind of rude and you just, it's weird if you do that, right? And as a result, we, we completely take away something that actually is how the world operates. We're actually sort of, it's. To me, it's no different than saying, well, you know, we shouldn't talk about computers. Don't, don't, don't, don't, don't use technology. I mean, sure, but then you are not competitive in the world anymore. Like, you, you completely lack digital literacy. And you can't operate when you don't know how to do that. Right. You can't just say, let's not do that. And that's, that's, that. It's that environment. Then when I came to Hong Kong, you know, later in my sort of beginning of my professional career, I, you know, I was, I was taking the train and I was sort of on, on a race day, saw how sort of a dad was teaching his child how to bet on horses. My first reaction was like, that is insane. Why would you teach your child to gamble? But now I've come to realize that actually he's just giving his insight as to how he's taking, you know, a risk. Right. And yes, it is a gamble, but actually, in life, we gamble all the time. Right. When we start a business, when we, when we, when we. Frankly, in some ways, you know, I'm not talking about just stock investing. I mean, I would argue that, you know, we would gamble with our friendships in terms of, should I spend time with you? Is it someone that, you know, like, like I take you out for dinner, I spend time. I might not be spending money, but I'm spending my time, which is another form of capital to basically invest in you. Like, we're investing type creatures. We're social investing creatures. We, you know, like, you know, if you, if you go on a date or if you want to basically woo someone, actually, that is probably the deepest form of investment you're doing in one format. And that's not necessarily financial, but it's still a big sort of commitment of your emotional capital. And, you know, and, and that, that type of stuff is also a form of investing. And we've, we've started to not appreciate that, I think, in many places. And actually, I think that's also made Us value things less as a result. And I think if we appreciate that there's a value to everything, then I think we actually treasure it a lot more. And I think we see this in the digital space because in many ways, when the platforms say it's free and this game is free and everything is free, actually what we're doing is we're taking away this idea that actually there's value stored in it. We're creating this big lie, and then they extract it from the back because we don't know. And then we suddenly think, well, everything has to be free because the consequences that we're basically giving our value to someone else. Right? It's sort of. It's almost like being a drug addict, but in a different. In a different. In a different context.
- [39:29]
A
No, it's a good point, right? Because you look at, you know, I mean, even in our household, man, just straight up, like, you know, my. My son will come up to me, you know, on. On my phone, like, because they don't have phones yet, right? They're still too young. They're not. I'm not opening them up to that world, right? Because particularly social media, Like, I don't want my children seeing that right now. You know, their brains aren't. They're not formed yet. And there's. I mean, that's dangerous, right? But when they come up and goes, can I get this app? I'm like, how much is it? Oh, it's free. Oh, yeah, go ahead. So what I'm teaching him, if I really break it down, and I'm kind of evaluating this, and I'm listening to what you're saying, it's like, I'm somewhat teaching him that you can't have it unless it's free. So how could he ever have healthy money programs, right? As you said, nothing is actually free. It would be better to say, hey, you know what, son? Okay, we're gonna get this app. You know, it's $5 a month, and this is what this means, right? And really be able to break it down so he can explain to me, why is this worth five bucks a month? Bobby, tell me why you want this. Negotiate with me why I should purchase this for you. And, you know, it's funny because, like, we don't really look at it like that yet. Yeah.
- [40:50]
B
So a perfect example of what happens when you introduce sort of a financial system or essentially capital assets into something virtual. Let's say, like even like a game. During COVID one of our portfolio companies basically had this game called Axie Infinity. And you might have, you might have heard of that game. It was at one point very, very hot. It's still a popular game. But of course, when sort of the hype cycle is not, is not the same as it was. Which one was it? It's called Axie Infinity. Yes. Okay. And some people may have heard of that. Right? But at one point, you know, the reason why Axie Infinity was so popular is because a lot of people in the Philippines played it as a means to make income during the time when in Covid they were locked down. Right. And, and now just again, people go and think that's kind of kooky. How can you make game from money from a free video game? And to understand that is, and this is actually the business part of business that we're in, which is basically blockchain gaming. Is that actually in the world of gaming, in the freemium business model? Remember when you're playing Candy Crush or when you're playing Clash Royale or any of those games, it's free, right. But there's a small percentage of people that pay. And that average industry average is 1.8%. And typically, if you're a good game, you can get 3 to 5% conversion rates. That means 95% or more of the people who play games never pay a dime. And so you kind of wonder, oh my goodness, how do they make money? And that's why it's difficult to understand why a blockchain game can be paying someone. Well, here's the thing. Those 5% or less that pay money actually are paying for the entertainment provided by the 95% who are essentially creating that entertainment. Imagine going into sort of a game of Fortnite with a first person shooter, and you're the only person on the field. Not very fun. Right? It's like going to a. It's like playing a game of chess and there's no opponent, so you wouldn't do anything. Right. But you know what happens is that I'm enjoying my game because I have other people to play with or to shoot or whatever that is. Right. And so, and so really, the people who are playing these games who think they are free, they're actually the entertainment for the people who pay. Right? That's, that's that. So, so. And that industry is a $200 billion industry. And again, off the back of it, you're not thinking that the gaming industry is a $200 billion industry off the basis of, of so called free. Right. But actually that's how they're generating the Revenue. So there's a value. And what a blockchain game can do is it can actually attribute the value and then pay it to you, essentially. Well, you know, there's this person who ended up, you know, paying $100 or $200 to enjoy this game because of the way you interacted with them. Well, let me give you a share of that. Right, that's one way to think of that. Right. So it's really just another form of value distribution that exists. And actually when it becomes a capitalist, it has also the ability to depreciate, which means sort of the value goes up. But the point of the story is that after sort of COVID was gone and people were free to do work and do whatever they wanted to and finally travel the world again and do their sort of traditional jobs, a significant portion of people continue to play the game, bring in their communities, and then they started, because, you know, these people in Philippines that were playing axifinity don't even have a bank account because they only make like five or ten dollars a month. So this is not, you know, it's not sustainable in a bank account, but through a wallet, a digital wallet where they can have the digital assets in the crypto, they were essentially now banked, and then they started making some money, and then they had the ability to invest in things like Bitcoin or Ethereum or other tokens that they couldn't do before. And lo and behold, they started to become financially literate and somewhat financially onboarded and they started to learn about that. Right. So. So that's kind of really the story here with, with things like Bitcoin and crypto. What's really happening is it's an entirely new wealth class that's been generated from basically this new asset class that, that brought wealth to new people that would not normally have access to. And these cycles are normal. Right? I mean, for instance, the people who bought real estate in New York or in Miami, for instance, not so long ago would have made wealth. But now for someone else, it's very hard for a young person probably in Miami to afford a home if he had a normal salary job, so what's his opportunity? And that's basically where sort of digital assets and crypto and blockchain comes about, is this new cycle, which is really also for the digitally native, which speaks to the youth, which is also the reason why generally young people are drawn to this, not only because they understand it, but because they need it as well. And I think this is the point here. When you have a need or when you have a desire for something, you're more driven to achieve it. When you're sort of taken care of in a way and very comfortable, actually, you tend to sort of feel like, well, I don't need to do this. I don't need to push myself. And that happens a lot. It's kind of like the whole thing about generational wealth, right? I think it's first generation. The classic trope is, you know, first generation sort of make it, second one preserves it, the third one loses it, right? That's kind of, you know, the, the sort of, the. The typical story because again, once you have grown up with wealth, you actually don't appreciate what it's about and then you actually end up squandering it.
- [46:00]
A
You know, the thing that I enjoyed most about the story about the gaming in the Philippines when Covid hit and they were locked down and they couldn't make money. You know, the theme of the show, man, is about doing things, you know, that you need to do in order to propelled forward. No matter how you feel, you stay determined and you really push forward that goal or to get things done. I mean, you know, you have a. You have to live and you're locked down during co. So to me, there's like two types of people during that era. Ones that shut down and stayed home and drank all day, and there's ones that use that time to. To reset, to get better. I mean, I created the show at that time, right? I was like, I need to be able to create something here. And what you're talking about with the Philippines, they started gaming so they could make money, right? And, and they use that time to become financially literate. Understand, money is that obviously that's what that means, but then to make it as well. So I just find a certain respect for that. I mean, that. That's amazing to me.
- [47:10]
B
I think it also demonstrates the human capacity to actually grow and learn and survive, you know, when we need to. I mean, at the end of the day, we didn't survive as a species because we're sitting back, you know, I mean, if you. If you go back over our history, I mean, there's wars and revolutions and famine and all that type of stuff. And yet here we still are because. Because as humans, we're generally driven towards sort of, you know, maybe survival, but also really achievement. And I think you see this as well that, you know, for people who, once they achieve a certain type of. Let's call it stability, shall we say, actually somehow that doesn't seem enough. And they want to, you know, maybe they want to have legacy or they want to be remembered for something. Right? They're basically constantly pushing themselves to do more. And I think that's why we have progress and why humans are generally so unique. But I think the thing here is that, you know, these people in the Philippines did not have a university education, in many cases not even high school education, and yet here they are still learning about money because they had the ability to have access to a form of money that they wouldn't otherwise had. And if we, you know, if we can teach our children algebra, we certainly can teach them about finances and financing and compound interest and that sort of stuff. And we don't do that at school. And I think the world would be very, very different if we actually had a course around financial literacy and money literally at primary school level. And right now, our kids learn it really from interactions between baseball cards, Pokemon cards and those type of interactions, which has, I think, sort of gone away because in part has gone away because the physicality of the world has changed. So, you know, 30 years ago it was, we always carried stuff and that was our trade and item. And you have a card and you have an item and you engage. So we would be forced to do so because, you know, we would trade something physical. But we're no longer that physical. And it's not going back. We can't say, oh my goodness, let's just go back to, you know, like, you know, like the old days, right? We exist digitally, but what can we trade digitally? That's the thing. We can't trade anything digitally because it's not ours to begin with. And now this is the thing. If I have a token or have an NFT or a digital collectible, I can now trade it with someone. That actually becomes the gateway of understanding money. And I think we're just really, if you think about it at heart, it hasn't really changed our behavior as sort of, you know, transactional sort of creatures, as it were. Right? We're transacting in some form. It doesn't have to be purely about a financial outcome, but we're always transacting in an exchange, in a dialogue, in a conversation. And that transaction was not able to have a form of value in the digital world because it was disallowed or prevented. And again, with blockchain and tokenization, that makes it possible. And our business is really trying to sort of push that and get as many people on boarded in this way because we think that one Value is more distributed fairly. And two, actually, that's what we want. Even if you don't understand money, you do understand ownership. And between the choice of renting or owning your property, almost everyone would prefer to own. Right? And so there's already that. I think as people, we want to own our things and we want to own our identity. They form a part of who we are. And that's. That's important, whether this is physical or virtual.
- [50:30]
A
Yeah. Thank you so much, man. You know, this whole conversation has been enlightening. It's. It's taught me some things, and I hope the audience is really latching on to some of these concepts that we're talking about in the last, you know, three to five minutes or so. Can you explain just kind of the, hey, starting something this big and being successful at it doesn't come easy. I'm sure there were days that, you know, you were down in the dirt, frustrated. Is this going to work? How did you stay determined through those moments and, and come out of them and, and really become as successful as you've been in this industry?
- [51:05]
B
So, I mean, generally, first, my perspective on success is that I don't really sort of like that word too much because it's all relative, I suppose. That's not to say that I'm not proud of the sort of the lives we change or the achievements we've had, especially proud of our team and the community. So there's certainly a sense of pride, but I think success sort of denotes a sense of you've reached your goal, and I don't think there is such a thing. I think we will continue to strive and try to achieve more and of course, learn through failure and all that type of stuff. So the mantra that we generally operate under is to live a life with impact and personal purpose. And I think if you find something that is purposeful to you, that has impact to, you know, some people are happy to have an impact to a smaller community, and that's what they want. And some people want to have an impact to a large group of people, which is, I think, sort of where. Where we're leaning to, and they all offer value. But if you can be blessed to live a life with, so where you know that you're living one with impact and purpose, then it doesn't really matter, sort of, you know, what the struggles are, because your North Star is generally there. It doesn't mean that business will work because it may meander or change. Right. So when we started off, sort of the origin story, I mean, I won't go back into my first startups, but the origin story of Animoco Brands is as a video game company. And, you know, we were very successful. Actually. We were one of the largest mobile gaming companies in 2011 up until 2012. And then something happened. You know, we had, I think at one point up to 12 of the top 20 apps on the App Store. And if you remember back in 2011, the way that you scroll through the App Store, you had to sort of go in blocks of 20 because, you know, the phone had sort of limitation and you had the ranking system, which Apple basically really removed. But at the time, that was how you discovered apps. And by having sort of all these top apps, we were getting lots of downloads and making lots of money. And this was great. We're like, oh, wow, this is working really well. And then one fateful day in 2012, Apple deleted all of our apps on the grounds of us violating rules in which they never really told us what it is. So we suspect it, but we don't know what it is. There was no appeals, nothing, because again, we were renting their grounds. And some person at the time in Cupertino was like, we don't like these guys. I don't know who they are. I'm going to hit the delete button. And so this is the thing which is, with these platforms or in general, not just the platforms, when you have that kind of power, inadvertently it does corrupt you because you get drunk on that power and you think you're doing the right thing. I don't think the person who, or the team of people who decided to deplatform us were necessarily thinking that they were like, you know, scheming and evil people. They had justified in their mind that they were doing the right thing. But they never talked to us, they never contacted us. In the meantime, millions of customers suddenly were out of the apps that they loved. And at that point we had like 160 people who basically were fearing for their life in the terms of survival and money and income, who were feeding families who were like, okay, what about them? Like, did anyone come talk to us? Did someone say, knock on the door and say, you know what, we don't like this. Can you explain it if you don't make those changes, you know, whatever, because again, it's on their rules because they're basically acting like kings. And we can see this with Apple today. Unfortunately, it hasn't really changed. Remember, you know, even when the judge ruled that Apple had to open up for Epic, they Just flat out refused, right? Until they basically had to be brought in for contempt of court. I mean, that's how brazen the situation is. Anyway, it's a long form way to say that we realized that we couldn't really depend on these platforms and we had to find another way to do so. And we didn't really, you know, it was a pretty sort of difficult existence during the struggle, but at the end of the day, you know, we still wanted to be in the space and, you know, provide meaningful experiences for users. And then as time went on, that's when we sort of discovered NFTs with CryptoKitties. Our studio was actually involved in building this and that's where we really encountered blockchain technology in 2017 as to what it meant. And very quickly we realized that it wasn't just about sort of, you know, trading digital cats and sort of, you know, basically sort of using that, which is what CryptoKitties was, but it was really about the deeper construct, which was that actually now you had sovereign ownership over your digital assets. And sure, this particular one was very whimsical because it was a digital cat, but it set the foundation for something larger. And we realized that we could really maybe reshape the sort of the next stage of the web into something much better where we actually truly owned our assets, digital assets, which we didn't. And so that was our mission. And so, yeah, there were difficult times. I mean, if you remember what happened, you know, in, you know, with the whole FTX scandal and Terra Luna, I mean, everyone called people in our industry as the scammers and said, oh my goodness, you know, it's, it's, it's a hate pirates and all that kind of stuff. And look, today, right, major institutions like BlackRock and Fidelity are all buying bitcoin. You know, your president right now is probably as pro crypto as it gets, right? You know, the whole world has shifted, right? But you know, we went through many, many years of a dark winter and the people who didn't believe had obviously left the industry and were often encouraged to do so. But you know, we didn't, we weren't in the space for quick buck or even just to make money. We're in the space for creating digital freedom. And so again, that's, that's the purpose and the impact should be momentous. And therefore it doesn't matter when life is tough, as it will invariably be, the sacrifice, as it were, is worth it. Because the mission and the purpose is greater than your own. And I Think we see this in human character as well. If you have a family, for instance, in many cases, the family is your greater purpose. Then you do everything to defend and protect them. And it doesn't matter when there's tough times, you'll still figure it out, right? So I think that's the message for me to any entrepreneur is, you know, find that thing that is sort of your purpose and the impact you want to create. And you may not get there the first goal, but you'll find that way because it's. It's. That much. Is that important for you? Because it's. It's greater than.
- [57:29]
A
You absolutely love it. You heard it, audience. You know what? A lot of times we have to lean in on our purpose and focus on that and the impact that we want to create, because everything that we do in life is much, much bigger than us. Everybody needs to find their purpose and propel forward. Because again, I always say, guys, it doesn't matter how you feel in the moment. Are you moving towards it? So, yeah. Thank you so much for coming on today, man. I really appreciate you taking the time. I know you're on the other side of the world here. Super great to connect with you. And the.
- [58:04]
B
The.
- [58:04]
A
The value you gave the audience today was second to none. And to the audience, guys, really take that in. All right? No matter how you feel today, I need you to go out there and chase your dreams. Provide the impact and the purpose that you have to your family, your friends and the community. And until next time, stay determined.
- [58:26]
B
Sh.
- [58:27]
C
French. What up? This one. Luck. I let the pain inspire me I for my all in everything I'm doing up until it's done. I mean, for the entirety I put it in no baton I'll be working Just know I'm a go for mine. Cause I earned it they watch and I know it's time I confirmed it A whole society determined determined.