Acquired - Benchmark’s Mitch Lasky and Blake Robbins on The Art of Business in Gaming

0:00I will say, I want to give you guys just a pre-recording compliment. I forget what it's called. There's a name for it, but basically it's where you're reading something in the newspaper about something that you were a part of, right? And you go...

0:13people don't know anything right this is so damn stupid and then you turn the page and there's something about foreign affairs and you're like wow super interesting like the thing you know about you don't apply that same logic to the second thing and I have to see I have so much trust in your podcast because the stuff that you do that I was a part of and there are many things you've done that you don't know that I was a part of that I was a part of oh you guys are so good like it's so accurate it is really remarkable somehow you're able to tell a story that is actually as close to true as true exists. Well the secret is we don't have people on the show so this is not gonna be that.

1:10Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert. David Rosenthal. And we are your hosts. After our deep dives into Nintendo and Sega, we wanted to do something special to cap off our gaming extravaganza. And we wanted that something to be a special with guests who are actually in the belly of the beast of the gaming industry. Fortunately, we knew just the people. So today...

1:38Our conversation is with Mitch Lasky and Blake Robbins. Mitch is perhaps the best games investor of all time, generating literally billions of dollars of returns from early investments in riot games, discord, and that game company not to mention Snapchat. Mitch was also an executive vice president at both EA and Activision and took his own gaming company Jamdat public in 2004.

2:05Mitch, of course, was a partner at Benchmark in the Fab 5 era that we chronicled on our Benchmark episode. Which, actually, we stole that line from Mitch when we were talking to him in the research and that's how he referred to it. So we are joined by Mitch and Blake Robbins, Benchmark's current principal who has also come up on previous episodes.

2:25Blake is one of the best thinkers in the world on the gaming landscape today. And Mitch and Blake just launched an incredible podcast called Gamecraft that chronicles the history of the gaming industry from the business perspective. And one other thing, if you are listening to this on the audio feed, we did a full video on this. It's up on YouTube. You can find it on our website or there. We did it at Benchmarks Woodside Office. At it turns out they have another Triangle table. So we have now recorded acquired episodes at both of the famous benchmark dinner tables. Well listeners, as you know, we have an interview show called ACQ two. We've had back-to-back killer discussions with the CEOs of retool and angelist. Angelist in particular was like very mind-expanding for me on how to leverage AI to get huge, huge leverage in your business.

3:18specifically on the operations side of the house. And I think Avlak is one of the best thinkers about how to apply AI to kind of turn something that looked more like a services business historically into a true tech venture scale opportunity. So you can find ACQ2 in any podcasting app.

3:38Join the Slack. There's an incredible discussion of gaming history going on right there right now, including a bunch of episode followups where Dave and I are learning from you all in real time acquired.fm slash Slack. And without further ado, this show is not investment advice. Dave and I may have positions in the companies we discuss as may our guests and of course their firm benchmark capital today. Yes. And this show is for informational and entertainment purposes only. Well, I think an appropriate place to start.

4:08might be what inspired the two of you to go talk about this and create gamecraft and create this bycast. Well, I think after I retired from benchmark a couple of years ago, retired from active investing, obviously the glide path out of venture is kind of a long glide path. So I'm still involved to this day, but after I retired from frontline investing.

4:30I really started to think about ways that I could be useful and helpful in the video game business and whether that was, you know, doing boards without compensation or whether it was helping young entrepreneurs or mentoring younger venture capitalists. And I thought, you know, maybe I should just write a book. So I was very much inspired by a book that I think you know as well, right? The Genius of the System by Thomas Schaff. And that book is a remarkable book in my opinion because it really takes the business side of the film business back from the 20s to say the 50s and really elevates the business side of the business. And shows how a lot of what we understood to be the creative part of the business really was a collaboration between creative people and business people. And I've always had that same sense of the video game business. And so I thought it might be fun to do something in that vein where we showed what was happening on the business side and how it was informing what was happening on the creative side.

5:28And I think the common narrative is video games are something created by creative geniuses, a Miyamoto type person, and then the business models sort of rearrange around the creative vision having consumers that flock to it. And I think already you're introducing this interesting wedge of actually, there are very clear business models that guide where the water of creativity can flow, and that has been for the last 50 years what has defined the video game industry not the other way around.

5:56Yes, and not to take anything away from people like Mr. Miyamoto, who I have infinite respect for. I mean, he's a legend. He's a god amongst the video game designers. And I've had the great pleasure in my career of working with some incredible designers. And they are the leaders of the industry in many ways, but they are constrained quite a bit by the business models in which they operate. So just to give you an example, in the package goods era, Your goal was to sell a disc and then get somebody to come back a year later and buy another disc and That's a business model choice and therefore what you're gonna put on that disc is going to be informed by that business model It's got to have a degree of planned obsolescence to it because if it doesn't if you just bought one game and played it forever That's the end of the video game business and that's how you get final fantasy

6:50Seven. Fourteen. Fourteen. Yeah, I mean, think about how many FIFA's are called duties there's been at this point and it's still firing and also there's despite sort of the business models which we'll talk about rotating right underneath them and those still thrive even to this day. I think one of the super cool things for me and the reason why GameCraft I think has been listened to by far more people than just in the games industry is that this dynamic applies to a lot of industries like when we did our LVMH episode the whole time I was thinking that like it's the same dynamic in any creative industry like if you want to achieve success either as a creator and have people use and appreciate your work or on the business side like you have to work together you can't be at odds. It's interesting I actually I really admired that LVMH episode and there was a part of it where you were in your Nintendo episode that kind of reminded me of the LVMH episode as well because

7:48Those of us who had worked as competitors to Nintendo in the console business, and I did for a part of my career when I was running the studios at Activision, they had... It's interesting you considered yourself a competitor to Nintendo. Well, we'll come back to that. You know, there's limited shelf space in Best Buy, and so they were very much a competitor for that shelf space. And so on the software side in particular, and they would, for example, if they had a new Metroid skewer or a new Zelda or whatever, they were very clever about only releasing a limited amount of inventory for black Friday and then the parents would go because that was on the kids Christmas list and they would go to buy the the disc and it would and they would be sold out and panic would ensue and then two weeks before Christmas or a week before Christmas they would suddenly flood the shelves with all of the inventory that was available and and so everybody was back to the stores and they and it was just

8:41It was genius, but it's something that only they could do because they had that sort of luxury good kind of vibe. Yep. So to bring it back, you didn't write a book. I wrote about a 200-page manuscript and...

8:54The idea in those of you who haven't listened to Gamecraft who are listening to this podcast, it's basically eight episodes but they're topical episodes and so we basically retell the same story from 1990 roughly until the present but we look at them through eight different lenses.

9:13And I thought that was kind of an interesting and unique approach because all the other histories of the video game business are very chronological and very like and then this happened and then this happened and Wallars does have a bit of that and then this happened and then this happened. Hopefully it's a little bit more interesting than that. So I finished it. I sent it to some friends of mine. They read it. They said this is great, but like nobody reads books. And so I was like, well, that's unfortunate, but I don't really know what to do with it. And I said I could read it. I could do it as an audio book. I could read it as a monologue. I don't know what to do with it.

9:40And then I had a fateful dinner in Boston with Malcolm Gladwell. And Malcolm, I've been an investor in Pushkin, which is his podcasting company with Michael Lewis and Michael and Malcolm are both acquaintances of mine. And Malcolm was like, dude, you really have to do this as a podcast. And he was like, did he try to get you as, do it as part of Pushkin? I did submit it to Pushkin. They rejected me. Whoa. Why? To niche it. To niche. Yeah.

10:10And so, but he kind of got me to rewrite it, essentially, as a dialogue. And at the same time, I got to meet Blake on Twitter, oddly. That's kind of where we met. I was admiring his thinking, and he was tweeting about the games industry, and there's so precious little good public commentary on the games industry. I was kind of attracted to it. And so I kind of asked him, you want to do this with me.

10:36and you want to kind of be my interlocutor on this one and he foolishly agreed. Yeah it's funny because like Mitch and I knew each other. like briefly before I joined here and then I remember I was just down in the office here one day and you know Mitch and I I'd asked Mitch if he was willing to meet because you know before he joined you're like okay is Mitch actually still active is he not you know what is it actually like is he actually retired what is the term for that uncles uncles yeah you're an uncle yeah I mean Mitch never retired and said like he still hangs out here all the time and that convinced him to meet with me and we were just chatting and throughout the course of those conversations it just became clear like we were having so much fun just riffing on all this and I was learning so much like I thought I knew a lot about the games industry and Mitch's vantage point is so unique and rare that the moment that he shared the manuscript with me I was like

11:37Oh my gosh, this is amazing. I was like, the perfect target audience of that. And I think it became really clear over time, like, oh, this would be a really fun podcast to do. And it was really useful as well because there is a kind of generational component to the dialogue, right? Because we really are starting when I started in the business in the 90s. And we're ending when he's running the business basically in the 2020s. And so I thought that there was some nice symmetry to that, actually, to have it be multi-generational.

12:06So, Mitch entered the industry right when I was born. And he's telling these stories of all the games that he's worked on. And those are literally the games that I played and the games that he published and all the stuff. And I'm like, this is insane. Mitch, when you were on the business executive side, did you have a sense of how much you were impacting the work of the industry was impacting this whole generation? You know, it was...

12:35Kind of a boiled frog type situation for me because when I entered the industry, my first gig really was in the formation of Disney Interactive, which was in their very, very early 90s. And I mean, this was right around the time Bobby was taken over Activision when he and Steve Win basically financed by Steve Win. Bobby was buying Activision. I forgot Steve Win financed it.

12:56Yes, Steve. The famous story. I don't know if you guys have done an act of vision episode way back before we were good research because there was a because he basically Bobby crashed the cattleman's ball and without an invite and basically did it so that he could buttonhole Steve win and get him to put the money up for the act to buy Activision out of bankruptcy.

13:18and it was a genius deal because they renegotiated all the debt into equity and the new entity. Bobby was brilliant, brilliant executive even back then. So when I was working at Disney and then subsequently in my startup and at Activision, this was still kind of the geeky era of the serious video game business. Obviously Nintendo had brought the console business back in 85.

13:46But we were really only five, seven years into that, right? It was still a fairly recent phenomenon in other... Anyway, it was a corner of the toys industry, as we've talked about. And dominated by the Japanese, too, in general, right? I mean, there were a few, obviously, electronic arts that got and started and interplay existed, and there were a couple of others, but it was primarily PC publishers. Yeah, right. Primarily PC publishers. So that said, no, I had no real idea of what the impact was, because I thought I was making games for myself.

14:15Right. And other nerds like me. And the notion of casual gaming hadn't really hit its stride yet. So I mean, I think one of my big takeaways from GameCraft is, gaming is not for teenage boys, gaming is a innately human activity that now we see in full bore. I mean, I flew down here this morning from Seattle and like the amount of candy crush going on around me on the plane. Like gaming is a human activity.

14:40during the area you're describing, it really hadn't fully permeated yet, absent maybe snake on some early mobile phones. Not even. I mean, you think about it. It was like probably 96 was Barbie's fashion designer and some Hasbro games like Yotsi and the Game of Life and other things like that that they basically did very lame digital versions of and that was kind of the beginning of the casual game revolution really like And it happened very quickly and those titles did incredibly well, but the mainstream video game industry always viewed them as kind of, and frankly, to this day still views a lot of the cat what's happening in the casual game industry is like not the real games business, right? Right. And yet, you know, as we know, because we now know what the numbers look like, it's like, it's...

15:26most of the video game business, right? It's probably more than 50% of the video game business these days would be considered casual gaming by 1990 standards. It's interesting because those people who are playing Candy Crush still might not even identify as gamers. I'm sure they don't. I'm sure they don't. When we talk about the games industry, it's so all-encompassing at this point that it does include the Candy Crush, but it also includes the consoles and the hardcore PC games. There's a little bit of Like, how do we even frame what is gaming? And I think for us, a lot of the podcasts was walking through how that happened. Yeah, I mean, when I did my second startup jammed at, which ultimately was the successful one, the one that went public, we would be on the road, me and Michael Marquetti, my chief financial officer, and we'd check into a hotel, and they'd ask for a business card, we'd hand them the business card, and they'd go, oh, I'm playing your bowling game, and it was literally like, late night,

16:24people on the desk at a hotel or train operators or people in, you know, we would just meet these randos all over the place. A little girl will sit down on a barge in Hawaii next to me and whipped out a phone and started playing one of my games. And it was like, that was when I really understood kind of the ubiquity of gaming in that human sense that you described. So we're going back and forth before recording here on sort of big takeaways from GameCraft. And this is one of them. This feels like a huge beat to me.

16:53What are some of the other big beats for those who haven't listened yet? Just a very quickly review what the eight episodes are. They're free to play, which was one of the real revolutionary business model changes in the industry. It's the equivalent of the film business having television introduced, where you went from a very formal go by a ticket and sit in the theater to come into your home. Or even probably more apt.

17:21professional sports when television was introduced and like it was only the upstart NFL that embraced it instead of fighting it. So I think that it was a revolution of that import and I think we're still feeling the reverberations of it uh to this day the the impact of free to play and how it's changed you know how people consume games how they play games and how games are made because it requires a very different kind of game in order to be susceptible to a free to play mechanic then the old school stuff everything onto a disc and hope that it's worth 60 hours for 60 dollars.

17:50That's one of the episodes we do an episode on the change in publishing from package goods at retail business to an online distribution business really the rise of steam would be kind of indicative of that particular part of it we do an episode on.

18:04game economies, and how they've evolved from their very, very earliest stages to these incredibly sophisticated and now even Web 3 enabled economies of our era. One of my favorite episodes is The Forever Games, which is really around this idea of, you know, with the shift of free to play, can a game actually enter forever? And what does those play patterns look like? And Mitch has these amazing sort of guidelines or just rules that he thinks about it. Going into listening to Gamecraft, I sort of had this high level idea that there's more durability in the video game industry now than there used to be. Like it used to be very hits driven. I think a lot of people still believe or a lot of investors look at the category as very hits driven, but there's two different and very distinct reasons why there's more durability now. One is this concept of forever games. The other is the concept of, Mitch, I think you coined this term of platform-based publishers.

19:02Can you talk a little bit about each of those and how they sort of fuel each other and how they're different, but how they both provide durability in the industry? Sure, I think the forever games...

19:13are part of a continuum. I mean, there was durability in the early video game business. It was just not the games themselves that were durable, right? Either the franchises were durable. I mean, you look at FIFA, and I mean, I started playing FIFA on Trip Hawkins' 3DO back in 1993, and I'd been playing every year continuously for the last 30 years. And so if you really, if you think about it, that's a 30 year persistent play pattern very much.

19:40kind of congruent with what we've described in the Forever Games episode with some of these long-duration play patterns. It's just that they packaged it very differently, like you were playing the same game, but you just had to go buy it again and again and again and again and again and again and you look at the Nintendo portfolio which you guys have done a really good job of exploring and you look at the continuity of their brands where they've been able to bring the same characters and the same kinds of play patterns back again and again as they shift from You know, NES to SNES to Cube to Dreamcast to whatever. And that is a sense that is in a sense durability. To my mind, one of the most genius things about Miyamoto is that he came up with two to three really good stories.

20:22and they tell that story over and over and over. Every Mario game is the same story. Every Zelda game is the same story. Absolutely. And they're fine because as the graphics get better, as their ability to tell that story improves and is richer and deeper, then you can go back and explore that story again. And it has a kind of hero's journey quality to it where you don't feel like you're seeing the same story again. It feels new and old at the same time. Yeah. I think Greta Tottos is probably one of the best examples of it.

20:50I think Grant's a thought of five was probably released eight or nine years ago, and it still is a top game on Steam, and everyone still plays it, which is amazing. But when they do an update, it's to the new generations, and it really blows your mind, but very similar play pattern, very similar story overall. And then to your point about the platform based publishing, I think that's really been more of the way that the online distributors have...

21:17created competitive advantage against their package goods rivals, and how they built very similar businesses to a lot of the kinds of businesses that we've seen emerge and disrupt.

21:28incumbent industries across the internet space. So Uber and the taxi industry or Airbnb and the hotel industry where you aggregate demand on an online platform and then you utilize that demand to leverage the supply side of whatever industry that you're entering. And I think you look at Steam and Steam shares many of those attributes. And I think that move which was essentially perfected by Tencent.

21:53with QQ and and and the things that they did sort of leveraging their messaging platform in the games business that's been sort of the kill shot for for platform based publishing in the industry but that is essentially it's more about how you use the internet in a jujitsu like way to massively disrupt the package goods industry which was up until that point up until maybe two thousand three or four absolutely dominant and in fact I think to your surprise, Blake, when we were discussing some of the games in the early 2000s, you were like, oh my god, that game was actually on a disc. Like it was surprising to him to remember that some of these games that he grew up with as downloads were originated as package goods. The craziest thing is steam was on a disc. Yes. All right, listeners. Now is a great time to talk about a new partner of ours here on acquired, LaGora.

22:48the agentic operating system that is redefining how the world's best legal teams work. Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. LaGora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do, operate with obsessive customer focus.

23:17They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review where you...

23:30drop in a folder of hundreds of contracts, and it pulls every key term into a grid a lawyer can actually work with. Lugar's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work, and this means that the pie can grow even as each individual task takes less time.

23:50And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early LaGora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. LaGora now has over 100,000 lawyers on the platform from 1200 legal teams in 50 countries, and crazily, they went from 1 million to 100 million in ARR in about 18 months. Truly insane numbers. And that is the real test.

24:42Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at logora.com slash acquired and just tell them that Ben and David sent you.

25:03Can you share how steam got started? Sure, so you know the valve team gave Newell in particular and his partner Mike Harrington they envisioned that they needed a an update or essentially for their software because they were releasing these games like Half-Life 2 and CSGO and they wanted to be able to sort of affect the competitive balance after they release them to fix bugs, to validate licenses because piracy in this era was still a real thing. And anytime you're selling box software, it's going to be a big thing. It's absolutely the case. And so they thought, hey, we could build this thing basically that would function as a software updater for our products. We'll put it on the disk and you'll go up, log in, and then it'll download patches and whatever, rebalance.

25:51rebalancing for your game, et cetera, et cetera. And so they went around to the rest of the industry. They went to even their old employers at Microsoft where they were early Microsoft employees. I think among the first 25 or so employees at Microsoft had good connections there and they asked if Microsoft would be willing to build this tool for them and they said no, so they built themselves.

26:10And then very incrementally after they released it originally with Half-Life in the box, as you say. And it just auto-installed when you installed the game. And then very incrementally over the next decade, they just kept adding features, community, an app store, mods, all of these various features.

26:31the game's industry. I mean, now it's an $8 billion in your business, right? I mean, it's just a remarkable, remarkable company. Completely privately held. Yep. And is that steam itself is an $8 billion or a valve all up? I think it's valve overall. When you think about actually the strategy that happened there, which is really the essence, and we talk about this in episode two of GameCraft, where it's actually releasing the game, like we're talking about with Half Life.

26:56And it's like this sneaky route of, oh wait, I don't know how intentional it actually was in hindsight, but they've ended up building this platform and they're like, oh wait, now all these other developers want to use this. And now it's very clearly become, like it is the go-to place. Even a lot of people have followed, right? You have Activision having their own launcher. You have all these EA orgs. Yeah, as their launchers, they all have launchers and they all are still forced.

27:25I'm not forced, but really pushed by the market to launch on Steam. We had breakfast with Phil Spencer, the head of Microsoft Games yesterday, and we were talking about Steam, and Phil was like, I put my games on Steam. And this is Microsoft with the most market power of any company, maybe apart from Nintendo and Sony, to roll their own, that he's putting games on Steam, and so you fish where the fish are. Yeah, I think there's a new iteration of that, or what the latest attempt of...

27:52being a platform based publisher, but it actually probably would be Epic, which Epic has Fortnite. It does incredibly well. They've launched that on their own launcher. And now they've been spending the past couple of years really trying to build out that big game store. And from my vantage point, it hasn't made nearly enough like a dent, like relative to steam. That's one of the things I wanted to ask you guys about, which is where are we in the...

28:19business model journey of the platform-based publisher. It almost feels like the rest of the internet, the platforms are starting to ossify. Is that fair or are there still opportunities? You're saying gaming is not awesome. No, the gaming is. You've got steam, you've got the consoles, you've got Microsoft.

28:41And Epic is trying but like who else could really conceivably and Tencent has done the best but could conceivably break in? Or do we need a new paradigm? Well, I mean, I think the next one to go is going to be Nintendo, right? I think that's, if you're looking for a reason to invest in Nintendo as a company, I think they're about to crack that nut, right? And enter the App Store business in a meaningful way. I mean, they have the lowest...

29:09third-party revenue per active user by like an incredible amount, right? I mean, like hundreds of dollars to like $25, right? Like versus the rest of their console competitors. So they're waiting for that lid to boil off there, I think. So that's on the conventional platform based publishing site. But I want to return to the question, your original question, which I think is very interesting. I agree with you. And I think that Game Pass from Microsoft, is an interesting harbinger of maybe the end of the road for the platform-based publisher, or at least the end of this road for the platform-based publisher, because where they had historically aggregated users in an attempt to collapse the supply side. So aggregate demand to collapse supply. He's now filled with Game Pass aggregating supply again. When you look at the Activision deal, $69 billion acquisition of Activision,

30:03It's basically like Netflix or Apple or one of these other companies buying exclusive content and now I use the term exclusive somewhat guardedly because this is currently in the European Commission as a hot button issue. Clearly this is Microsoft strategy. Absolutely. So they're now back to aggregating supply in order to have enough viable IP in the platform such that you will continue to subscribe. Which is really interesting. I mean, just speaking for me personally, as a gamer that is an incredibly compelling value prop of like, I could, I don't have a gaming PC. I don't really want to go make a gaming PC. I don't really want to go go deep in the Valbiko system. I don't want to go deep in the Epic Games ecosystem. Microsoft is offering this really easy. All you can eat option to me. And streamable in a lot of ways, right? So with the new X Cloud platform and I was a pioneering investor in this with Guy Kai back in the day.

31:01And it wasn't really economically viable, but now with scale and Moore's Law and all these other things we've been with improvements, we can now really do it well. And so with a device like a Steam Deck or something like that, you're able to really avoid going down that path of building your own gaming PC. It is interesting that we're finally in the cloud gaming era.

31:24Like, this has been the dream for so long, and of course there's this TikTok and computing to thin clients, thick clients, thin clients, thick clients, but like the whole thin client thing never really made its way to gaming. I remember I worked at Microsoft in 2012, and I was at our annual meeting in the old key arena, and I watched a demo of...

31:44cloud gaming on a Windows phone with an Xbox controller. And I remember Steve Balmer coming out and being like, next year is the year where ship in this, it's finally happening. And here we are a decade later, and now it's finally happening. Tesla full self driving. This year, it's happening. Yes. My question to both of you on this is business models are inherently intertwined with new technology waves. And how does cloud gaming change the business model of the games industry?

32:12I think there's one thing that's interesting about the Cloud model, and one of my feces on why it didn't work back when I first tried it with GuyKine when on live was out as a competitor and some of these others. And that was early 2010s? Early 2010s.

32:27Was it was a mismatch between the user and the technological opportunity, so you could stream these games without owning a gaming PC but all the games that were really viable to stream were the kinds of games that gamers who already owned a damn PC were wanted to play so you look at Stadia from you know from Google.

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33:09You now have actually the question that David brought up, which is, he doesn't want to own one of these devices, and yet he wants to play those games. And I think that didn't really exist so much as a market back in the early days of streaming. Seeing its demand driven. I do. I do think, however, that the audience has expanded really in the last 12 to 15 years, and that this next generation of kids who've grown up on Fortnite, who've grown up on harder core games, But are still casual in their self-identification who don't think of themselves as being core gamers. I think that's the real opportunity for the cloud gaming. Yeah, I think there's also a part of, you know, you think about all these people that are playing or used to play Fortnite on mobile and it's like...

33:54Oh, that's just what I expect at this point. And there is a natural evolution that maybe will happen with just the number of people that have grown up playing games on mobile and just be like, of course, I want to play Assassin's Creed on mobile, whatever that might be. But I still think it's one of those things, again, that for multiplayer, for those pieces, it might take a little bit more time, but surely for the single-player stuff, it's quite magic right now. I want to bring it back a little bit to your question, David, around like the platform based publisher stuff and and where those might fall because like Mitch was involved with Riot and Riot is another spin of what that looks like today of

34:34In theory, they could become an actual publisher of third-party games at some point, but they, instead, they've decided to aggregate all the demands and really keep... It's sort of a social network and that there's friends and all of that within their own universe, and they're continuing to publish their own games incredibly well. You have team fight tactics through their launcher and you have Valorant through their launcher, and those have worked...

34:55exceptionally well. And it really begs the question, if you're a game today, that is just launching on Steam and your venture bets company, what does that mean? Is that enough to really endure and build a real business? But it's really interesting because, yeah, that's a different approach to the platform based publisher because you're really aggregating that demand.

35:15for yourself. Right. It's like an Nintendo version of a platform based publisher. So you've got this audience there that's pre-qualified, where you've got their credit cards, hundreds of millions of users. And so you just use it as a way to lower your customer acquisition cost effectively to zero for the next products that you launch in the pipeline. And it just gives you tremendous competitive advantage. This is the bulk case on the switch that we've been talking about, which is like, At some point Nintendo has to wake up and I assume it will be with the switch line and say, wait a minute, we shouldn't come out with a completely new console and have to re-aggregate our whole fanbase again, we should iterate the switch and make it super backwards compatible and bring that 100 million plus person install base with us across all the hardware we release in the future so that we can make this incredibly

36:05compelling thing to third-party developers, as you're talking about, their sort of app store opportunity, but also preserve this ridiculously durable first-party revenue thing that we've had, you know, especially for the last six years with the Switch, but basically through Nintendo's whole life, once their consoles get to scale. Absolutely. I think we will learn a lot about what their strategy is going to look like for the next decade in the next, like, 90 days, right? Because I think if they do come to market with a non-backwards compatible device, It's back to the Iwata era. We're a hardware company and we have proprietary software which helps us sell hardware and it's back to the toys. If they come out with a fully backward compatible switch and an open app store and they really try and improve that position of third-party revenue on an active user basis.

36:56That's the new Nintendo, right? That's the Nintendo that's going to play the modern Nintendo. That is so compelling. At least for me as a consumer, if they do that. I mean, like a game like Hades, an incredible game, indie game. The Switch is by far the best platform to play that on. And like, I just sat there for years, like staring at my Switch being like Nintendo, why do you not embrace this dynamic? I think it's, you can see publicly in the way that they're going with Microsoft against Sony, that Who knows what this actually looks like in the next 90 days? Both everything we can tell of how they're siding with Microsoft and embracing openness gives a clue of maybe how this works. Yeah, you mentioned that a little bit on the series on the GameCraft series of Nintendo siding with Microsoft. Let's talk a little more about that. Sure, we don't talk about it that much on the series just because I'm avoident of talking about the console business and whatever. And let me just try and explain why, right? Like the console business has been

37:54Essentially the same business since 1985, really since 1975, right? I mean, it's cell-a-box and cell-some physical hardware for that box and... grudgingly allow it to be played online, and grudgingly allow communication between users. I don't find that interesting from a business model perspective. I'm interested in revolutionary business models, and GameCraft is really about that. It's about how these revolutionary business models upended the industry. Frankly, there haven't been a lot of those in the console business. Now, there have been a lot of interesting developments, and you guys explore the story of Nintendo. It's a fascinating story, but it's a human story, and it's

38:34There's a particularly your first episode where you go way back, right? And you just talk about everybody who's everybody else's son-in-law. I mean, it's an intensely human story in that regard. Well, I feel like Nintendo had the, in my mind, they did have one revolutionary idea that they have just run with for the past 40 years, which was make incredible games and get people who are capable of making incredible games.

39:02either in-house or make sure they publish on the platform. I don't think anybody else realized that. No, I think that's right and I think Blake put it really well when he was convincing me to do the episode which was he said, look, the console when it entered the market was a revolutionary business model because at the time the arcade was the dominant way and it was a quarter drop and so in some sense it was almost like the equivalent of free to play because instead of having to Sort of pay every time you wanted to touch the controls. Now you had the thing in your living room and you could play whenever you want. Yeah, it was you talk about the $60 for 60 hours of gameplay.

39:34That's literally the equation you were doing at the arcade, right? You're like, I'm putting 25 cents in for a minute. Well, it was in the arcades. It was six dollars for six minutes of games. Exactly. So, so I accept that. And that's why. And I think the we really ends that episode to bring this full circle around cross platform, which is.

39:56sort of the latest evolution of where the council business has been, where you had Microsoft and actually Nintendo embracing, and Fortnite was really the catalyst of this, to let them be able to play across these different platforms. So up until this point, up to Fortnite, if you had an Xbox, you couldn't play with your friend who had a PlayStation or a Switch, and really Nintendo and Microsoft went to war against Sony. Yeah, I mean, as Phil said in our conversation yesterday, he said, you know, Sony's perspective was if you want to play with your friends, get them to buy a PlayStation. Right. All these different business strategies are about figuring out in what way can you leverage an asset to get people to do something that eventually generates profit for you? And the way Sony was looking at it was, well, you want to play with your friends, so we're going to use that as the carrot stick, whatever you want to call it, to get you to buy our console, which we actually don't make money on, to get you to buy our games, which we do make money on, and God, it's like, hop, hop, hop, hop.

40:55and Nintendo and Microsoft ended up being quite odd bedfellows having completely the opposite strategy. Now you could be cynical about it, and you could say that that is the result of the fact that Sony has dominant market share. And that if you were the dominant market share player, you might not be so embracing of openness either, right? Because you had a competitive advantage. But I think it's going to come back to Biden in the ass over time.

41:19It's interesting, right? At one point I think on the series, you guys say that with your investor hats on, it would be really weird if a entrepreneur approached you today and said, I'm going to build a game for a console. But everything we're talking about, if the era of crossplay really comes to bear, that might change things. Would you agree? If it truly is that you could build a forever game.

41:43with crossplay across console, PC, mobile. I mean, as part of our Nintendo research, we talked to the CEO of a very large venture backed gaming company that is not on the switch right now that is working very hard to come on the switch for this very reason. So I will say yes, it is now viable. I would not cancel any of my portfolio companies to launch on the console because the hoops that you have to jump through uh for approvals for manufacturing etc etc for just in general are dire and they're not the kind of thing that I would I would sort of put in front of an of a company that was struggling to find product market fit that said I have greenlit a switch uh skew at that game company for sky and that has now come to market and it is really meaningful and we have a PlayStation 5 skew as well and so for an established

42:39product where it's already found product market fit on another platform on a more open platform sure finding that adjunct it's like as fortnight disclosed in the apple lawsuit the cross-play players monetized like the new whales I mean they were monetizing it at multiples of what the non cross-play players were playing and why not take advantage of that as a startup yeah it turns out that actually like the cross-play there's different moments in council where council really was the package good and then at some point the package good business for the games and at some points free to play games were able to to thrive and you have the fortnite actually do really well and if free to play games are really driven by social or playing with your friends which fortnite was

43:23It's sort of you need to have it on council. Yeah, and think about it demographically. Like, if you've got a game on the console, for example, we were talking about this with one of our co-workers about FIFA Ultimate Team, which you may be familiar with, which is kind of a playing card add-on to the underlying FIFA skier where you can buy card packs and open them, and then you can play with those players that you get in the card pack in the sim.

43:45And that is a massive business. It is a greater than a billion dollar a year business selling the card packs. It's selling literally bits. It is a 99% gross margin. It's the most astonishing business.

44:00And this person was saying, well, look at the attachments for FIFA Ultimate Team, right? And can't we accomplish those with a free-to-play game? And we were like, whoa, slow down. You understand that you're selling a $20 add-on to somebody who's already paid $60 for the game and $500 for the console, right? The willingness to pay of that...

44:20of that user, it cannot be compared to getting somebody from zero to one on a free-to-play game to put their credit card in for the first time to buy a virtual good on a free-to-play game. And I think that nuance is lost on a lot of people when they look at the industry. Well, that's the great part of gold with the consoles, right? You've got these...

44:38highly committed user bases with all their credit card information stored. You've got easy payment rails, easy distribution. It's like the dynamic of iPhone versus Android, but like a whole nother level. It's, I mean, literally you can look at it in the data with Fortnite. It's like even better than iPhone monetization. It's also exactly what we talked about on the Peloton episode where Peloton despite all the problems has possibly the most incredible consumer subscription business, at least from their first five, eight years of customers.

45:08Because they selected into buying a $2,000 exercise bike. Of course, they're not going to cancel a monthly subscription. I think this is part of why Epic actually felt comfortable going to war with Apple is if you look during those filings so much of their revenues actually coming from PlayStation and console. And that, to me, is just like, okay, the mobile gamers were not the same value as the console and PC players. Yeah. One question before we leave.

45:36platform-based publishers that I've been sort of thinking about, but I don't have a clear answer is when does a company have the right to leverage their relationship with customers into becoming a publisher? And like QQ, it was very, it was a chat app. How the heck did they become successful in being, you know, the 10 cent we know today, the most powerful video game distribution on the planet?

46:03Whereas you look at like Facebook has made 11 different runs at gaming and is not steam, is not 10 cent. Why does some times company have the right to leverage that relationship to be a publisher on other times not? I would rephrase it, right? Which is my opinion is is that why QQ was successful was that they didn't just decide that they're going to be a platform based publisher. They embraced being a platform based publisher. They went out and did deals, they own 49% of epic they owned 51% of riot now 100% of riot they were one of the financiers of resort in the in the games business for triple a titles they aggregated products they did they aggregated third-party product from as a pathway into china because you needed a local partner because of government regulation in order to publish in china and they just ran with that right they just embrace that and instead of

46:58Facebook or some of these other American platforms that have treated games as kind of a bad smell over in the corner that they weren't too crazy about. Like, yeah, the Zingathing they flirted with briefly, but ultimately that didn't go that well and they decided now we're just going to become a customer acquisition vehicle for the games industry. And frankly, it's been a very lucrative piece of their business.

47:21They really embraced it, Tencent, and invested deeply in it. And I think that's the difference, right? It's like they were credible as a platform-based publisher where Facebook never was. Yeah, Tencent in QQ is they had the games. They were committed, and they were so intentional. And when Mitch and I've talked about when we look at investing in a studio, for example, it's actually how intentional are they at the beginning of setting out that you are going to try and become a platform-based publisher, because Even just saying I'm going to launch my game on Steam as a new company, maybe is just showing your ambition of what you want to build. And I think that when you're talking about Facebook, it mentioned I talked about this part a lot of the executives in the valley, they're just not gamers. And they're like, oh, we can maybe...

48:11launch a game thing, but they're sort of dipping their foot in the water versus actually like, we're like, Google and Stadia. You're saying, just because David and I have a bunch of you will listen to the podcast, we can't just decide like, all right, you guys, we're now acquired games now. You're all gonna start playing games and we're turning on the network. Yeah, we'd have to be gamecrafted. You'd have to. Although, you know, even then it's difficult. It's like, we tried this at Discord. Yes. Right? And we tried to start a game store. This was obviously my my failure because I pushed them very hard toward becoming a platform-based publisher because I thought, hey man, this is a great way to leverage this audience and look, we've already self-identified primarily as gamers. This was earlier on before the Discord audience brought into becoming the Bloomberg of crypto and now basically the launch area for pretty much every AI chatbot. But in those days it was very gamer-centric and it seemed very logical to me that you could try and leverage that intentionally into the games business.

49:09and it didn't work. So it doesn't always work. And look, Jason is as deep a gamer as you can get, right? Discord was a failed game company, right? And I invested in that failed game company. I invested in it as a game company. I was trying to blame them, not you. So it doesn't, you know, even with the best of intentions, it can be a difficult proposition. This goes full circle to your earlier question, though, David. I'm just like, are the giants already just set on the platform-based publisher side?

49:35It's really to be determined because you have your discord attempt at it, you have Epic really trying to do it and they're sort of everything brute forcing that they possibly can to make it happen. And it doesn't seem like it's sticking at all. And so there is a little bit of a question of what does it mean to actually try and build one today, and is it even possible? All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture.

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51:43How do you think about one of your other investments that game company? Is that game company a platform based publisher, or is it just like a really really great modern studio, or is it something else? It's a great question. I think that the intention is for it to be a platform based publisher. Game 2 was already in development as is the beginnings of thinking about not only game 3, but a sort of way to stitch the games together in a more persistent and coherent way and with more continuity. So I think Genova, he wouldn't phrase it in that way. He wouldn't call it a platform based publisher. He'd call it a digital theme park, right? But the idea would be- Which is sort of Nintendo- Which is sort of Nintendo like in a way, right? And now Nintendo has a legit physical theme park to go along with their virtual theme park. But I think he, but I do think it is in that same

52:38Vane, I would call it a platform based publisher. Similarly, I think the greatest disagreement I had with the founders at Riot was when they, we sat down and I was like, okay, great, we got a hit. Now we're going to leverage this audience into another hit or into a third party game or into a licensed intellectual property. They were like, not chill, man. We want to be blizzard. We want to make a game every five years.

53:01I don't want to, I don't want to fund a studio. I want to fund, now little did I know. Also, Blizzard, as you pointed out on GameCraft, only an independent company that had to figure out its funding for three years. The rest of its history, it's had, you know, Daddy Warbuck somewhere figuring out how to fund it. Absolutely. And I was wrong because they just took their time to become a platform-based publisher. But they waited. For the 10 years, but they did it. I'm not that patient, but there was an opportunity to start doing it after three years and I think they, they're, strategy was like triple down on on League of Legends and let's make sure that we can we could get it to all corners of the globe and that we can really build a billion dollar plus annual revenue base and the esports component in the worlds and all these other things and then we'll go and release Valorant and tactics and some of these other things.

53:48Okay, fine, but ultimately they got to the place I wanted them to go. It just took them seven years longer. I think it'd be interesting if you're willing to share much of just like what Genova actually pitched for that game company back in the day because you know, I've talked to Peter I've talked to other people and they still remember that pitch being just so like Just an amazing amazing pitch because at the time it's still was like for you to invest in a studio, right? Like that would have been a big ask or a big leap of faith. And my understanding is you just crush it on that. But now though, this is great too, because I bet a lot of people listening will be like, what are you guys talking about? What is that game company? Are you referring to a specific thing? No, it's a little confusing as it, it's not my favorite name for a game company, although it's indicative. I want to actually, though, take a pause just because

54:37I don't like funding studios, right? And I wrote about this. I think you reminded me of this because you found it in some internet archive somewhere. Like I blogged about this like 15 years ago. Yeah, I think it was like 2011 or something like that. And it's amazing. It's like the title, I mean, Mitch has probably removed all of his blog posts at this point. I think it was like investing in content. Right. And it's like, I don't invest in content. I don't invest in content. Even though I've done more content deals than anyone else in the valley, right?

55:06And what I meant by that is that I invest in businesses not in studios, right? And those businesses have to have a strategy that transcends... I want to make a game and put it on steam, or I want to make a mobile game and put it in the app store, right? And I'm really interested in that strategy more than I'm interested necessarily. The content is a means to an end, but the end can't be, oh, then we're going to go make another game and put it on steam or put it in the app store. The end has to be something better. It has to be something more durable. It has to be something more value aggregating.

55:41I've had this philosophy since the very beginning, and I've tried to be very disciplined about it. So, Genova approached us, Genova Chen. I had met him in the early 2000s when he was a graduate student at USC, and he was working in, he was making games there, and I was working at Electronic Arts, and I had the license for Spore, which was Will Wright's kind of creature evolution. After Sim City, after Sim City, yep.

56:09I was doing the mobile version of that, right? And so, Genova had made this game called Flow. That was basically this game where little creatures ate bigger creatures and evolved based on what they ate. And it was just this unbelievably cool thing, right? And so I wanted to kind of bring him in and build like this mobile version of Spore with me. And of course, he was way too clever for that and said, no, but I kept up with him and we hung out. And then he went off into the Sony ecosystem and built Journey.

56:39um journey is this amazing kind of meditation on death where you're playing a single player adventure game and you're climbing a mountain and enduring all this hardship and it's got all this crazy multiplayer play where you don't know who you're playing with but you have these deep emotional relationships with the people he's just an unbelievable game maker and the art for that game is just a beautiful screen shot any frame and you can put it up above your firestorms. So he came to me and said, hey, I want to, like, I'm leaving the Sony thing. I want to start over. I want to make a game for the masses. Can you help me? And I was like, yeah, I can, but like, let's pitch the partnership. So he came in and he did this pitch to the partnership where he basically talked the whole time. He didn't talk about the game he wanted to make at all. He just talked about emotions.

57:24And how the video game business was so stunted because it was only serving this incredibly narrow band of the human emotional spectrum of anger, of violence, of envy, of accumulation. And there were all these other emotions that were being explored in music and in art and in poetry and in the movie business.

57:47We should do that in the video game business. And he finished this thing and he walked out and I literally ducked because I thought that the blast radius from my partners like seeing what are you doing bringing this into the partnership. We're a little firm and we're funding happy like yeah. Kevin Harvey turned to me and said chase that guy out in the parking lot and give him a term sheet. He was like we are in business to fund people like that.

58:10And I still get goosebumps saying it now, because that's how I felt. But I was too afraid to say it in the partnership meeting, because I didn't have enough juice to really do it. That must have been relatively early in your career. It was very, because I've been working on that thing forever. But yeah, it was probably within the first couple of years that I had been at Benchmark. Before Snap, before Discord, before Riot. Right around the same time as Snap. Okay.

58:39Right after right. But snap, you know, you didn't know it was going to be snap. Yeah, but still pretty small at that. Yeah. Peter tells exactly the same story, by the way, on our team. And he's like, when he talks about the range of emotions that he was going to cover and how underserved it was, it was just magical, like this moment of, oh my gosh, this person's a genius. And so in a lot of ways, Genoa is just like an exception to the rule. And even still, He is on the path to build this, you know, something much bigger than this account. And look, I'm very, I'm a very small contributor to the success of it, but what I did help him understand was that he can't make journey again, right, that if he's going to make, if he makes journey again, he's going to get the same result that he got from journey, which is he's going to get a console-like indie developer result. And so I really helped him understand how to build a forever game.

59:34and he rose to the occasion and just built an amazing forever game and that thing is now, I mean, it was, you know, in the fall, the number four grossing game in China by Revenue. What's the game called? It's called Sky. Sky. So we're talking about hundreds of millions of dollars in revenue and he does it with a tiny team. So it's ludicrously profitable. I mean, I think it's got greater than 30% net income margins. Wow. And would you fund At this point, the concept of sky, even if there wasn't a broader platform-based publisher strategy around it. Like, is that a good enough investment? Or let me make an even sharper game without it? Yeah, let me make it an even sharper example. If you got the pitch for Riot Games and it was literally just League of Legends and it was going to be a League of Legends-sized impact on the world,

1:00:28Is that interesting as a venture fundable opportunity? So I have the great benefit at the moment of not being a venture capitalist in a firm, but having a lot of dough. So I am in a position where I can make these investments personally. And so the answer is yes. And in fact, Blake and I have made some of these investments in things that maybe would have shaded into the studio realm in my previous life. However, I would not have done the mid benchmark. If I'm hearing you right, it's because it's just difficult to accrue enough power over the ecosystem to have flexibility in your business, to have pricing power, to be able to negotiate effectively with everyone else you need to to reach your customers. Yeah, distribution is king, right? Which is so funny, right? Everybody says content is king. And distribution barriers have been removed and anybody can make a game. But like today, in 2023, distribution is king.

1:01:24And if you don't have distribution leverage of some sort, I'll invest against any credible distribution leverage. But if you don't have that distribution leverage, it's very difficult. It's very difficult to aggregate enough value to justify adventure investment. Yeah, I would say the bar, you should just assume every venture backed studio is an amazing game.

1:01:48It just should be. It just should be one of the best games ever. It's never been a better time to be a gamer. Yeah, it should be an amazing, amazing game. But like we know with apps and software, like having a great app, unless it is truly like top one app in that category, people will never even know it exists. And I think that's a lot of people that are building studios today are much more in the camp of I'm going to build the best game ever and people will come.

1:02:16And I think if we've learned anything over the years, unless it is truly the exception, they won't come. I think part of the pitch that Riot made to me that made me convinced that it had a distribution advantage that made me willing to invest in it was the way they understood the existing audience for defense of the ancients, which was the game that they were essentially modifying in making into a...

1:02:37It was a game that was a mod of Warcraft 3 and they were going to turn it into a standalone product and relaunch it online with its own characters and own IP. And you could see that as a studio bit on a certain level. But they had identified this enormous pool of users who were playing defense of the ancients and there was this crazy pent-up demand for exactly what they were going to do because modding defense of the ancients and running it as an user. I mean, you had to find an out-of-print copy of Warcraft 3 and go through all these national nations to like the right team did some pretty awesome growth hacks in the early days, right? We bought the websites that we bought the defense of the ancients websites and just turned their editorial to all the fans content on the internet.

1:03:27It still sits on Reddit, by the way. If you like search, I forget what the name would be. This is like even better than the Airbnb Craigslist growth hack. Yeah, if you search this company. Now you can call it a growth hack. I call it a customer acquisition advantage. And it gets you out of the kind of junk pile of...

1:03:46throw a game up on steam and pray, right? And that was enough because I knew if I could get, if I could leverage that, right? It would give me enough of a profit advantage that I could reinvest, maintain that customer acquisition advantage and build a platform based publisher out of it. And that's how I roll. Blake, what were you saying about the Reddit thread? I was just saying on the Reddit thread, if you search it, I forget what the name of the website is that they bought.

1:04:13It's all these people who were playing defense of the agents to look. What the hell happened? What happened? What's going on? And it was like the top post. It was the top post of the Dota subreddit at the time. And it's like, what happened? Who are these people? What are they buying? What happened? They killed this. And they all just move over. It's like, I don't know. Dota's still over there. But, you know.

1:04:34The forums are all pointing to the very similar game with different IPs. If you want to discuss something, you better discuss this. I will say it's incredible how there was a thing with clear product market fit that was kind of unloved and un-maintained and hard to discover in our world of podcasting. That was Apple Podcasts and the small team at Apple that was sort of looking after it. They didn't turn it into a real business. There wasn't like prioritization at the company and As a podcaster it was always hard to get in touch with someone or be like, can I get editorial on this thing? I don't even know. It's a weird black box. It's basically just a directory where it's a key value store on the left side. They have a URL on the right side. It just points to my RSS feed and then Spotify comes along and is like, oh, well, we have tons of users. We're just going to expose this right on the main feed.

1:05:27We're going to redirect. So much of our growth in the last year or two years has come from Spotify specifically because more people are listening to podcasts on Spotify. There's some cannibalization, but there's an enormous amount of brand new market because it's easy to find. As a total neophyte to this world, right? We have both been just gobsmacked by what percentage of our users are coming from Spotify. I would never have predicted how big of an audience was on Spotify because It just didn't occur to me, right? That Spotify had done that well in podcasting until we started releasing these episodes and we were like, wow, more than 50% of our audience is coming from Spotify. If you had made GameCraft two years ago, that would not be the case. It's actually really weird. It's wild. Yeah, it's wild. There's this really interesting opportunity in capitalism where sometimes there's clear product market fit, there's clear heat around a use case, and yet,

1:06:22there's still massive economic opportunity for some new company to come in and say, oh, that thing, we're going to be the best. And by the way, it happens again and again in the video game business. I mean, you look at, so for example, the survival genre, right, which started with armor mods like DayZ and H1N1 and sort of like evolved into PUBG and then into Fortnite, right? But these were dead genres, right? These were, these were super geeky hardcore, like, kind of weirdnesses, right? Tarkov, right? Which now is like a dominant play pattern in the kind of MOBA shooter industry. Yeah, it's basically these genres emerge, right? And it gives product market fit. And then they realize, oh, wait, if we just make this maybe more casual or we change the business model, whatever it might be, they expand the overall audience. And one of the most famous examples right now is that Fortnite comes from PUBG and sort of stole that whole reign is actually Fall Guys, which

1:07:19which Fortnite or Epic bought. And Fall Guys was this amazing party game that they couldn't publish on iOS because of the Apple lawsuits. And so they never built a mobile game for it. And then there's these three guys in Finland made basically the same exact game.

1:07:38Pushed it on mobile, it's called Stumble Guys. And then it gets acquired by, I mean, it's like one of the number one apps for the entire year, number one games for the entire year, and gets acquired by Scope Lee. And then, you know, Mitch, Mitch was showing me the other day, the biggest game in China is this game called Aggie Party on mobile. And that is actually literally just a fog-ass clone. It really is, it's just, it is kind of remarkable. I mean, look, you could argue World of Warcraft was this, right? That like...

1:08:05There were, you know, you started with, you know, Ultima Online and EverQuest and these things, but they were all that we made a joke in the video. They weren't ambitious enough. Well, and they never, yeah, they weren't ambitious enough. They weren't, they weren't, they didn't reach out enough. Like, they were very content to serve that core 500,000 users. And the joke at Activision back in the late 90s, early 2000s, when I was working there was, there was a herd of 500,000 users who just migrated from one MMO to another, but the audience never grew and then boom, World of Warcraft basically does this, right? They find the product market fit and just embrace it and blow it out, and it's 17 years later, it's still a number one product. I want to pick up on something Mitchi said a minute ago about how you roll. I think it also might be relevant far beyond games, and this is some of your investing beyond games too. You said you'd look for something that can have a distribution advantage up front, gain differential profits versus to your competitors.

1:09:03and then reinvest. Yeah. Once something starts, let's take a game. Once a game starts to work, how do you think about the reinvesting piece? That's the customer acquisition piece, right? What's that calculus for you? I resist as long as possible going paid, although sometimes you're so profitable that you can and not really mess your margins up too much, right? But I think once you start down the paid path for customer acquisition, it's kind of a a slippery slope and it's a very difficult thing to come back from because you become almost like an addict to it and you're so reliant on it and you start to twist your your mental model to believe that like you're in this lifetime value return on investment kind of thing that is unhealthy I think for but what but what I do love is doubling down on the organic stuff right so like in the in the that game company case it's like okay we got we got this thing crushing on mobile

1:10:01Let's look at some other platforms where a similar kind of user could be aggregated, whether it's Switch, whether it's like casual PlayStation, et cetera. Let's go after those, and then Apple wanted us in the arcade. We couldn't do it because we wanted to be cross-platform. They wanted exclusives. It's also what you say no to during that because it would have been easy to say, okay, hey, there's a couple million dollars of of minimum care. But you're not going to expand your audience by doing it. Not going to expand the audience. So it's making those kinds of key choices that continue to reinforce the competitive advantage. I think there's another piece of this, especially for free-to-play games, where live operations, keeping the events fresh, adding new cosmetics in a game like League of Legends, is actually where most of the reinvestment probably goes, versus any of the marketing.

1:10:52Let's keep this game fresh because in a lot of ways when you want a game like League of Legends, that's just a starting line. And they're still on a 10-year journey of keeping this game alive and fresh and that's where a lot of the reinvestment goes in these studios. How does the level of and capital intensity of reinvestment in fresh content for forever games compare to the old world of building new package games for a studio or a publisher? Oh man, it is fast becoming like an annual amount equivalent to what an annual amount during production was. So I don't know if that makes any sense, but let's say that you were spending a hundred million dollars, God forbid. Let's say you're spending fifty million dollars, like I'm breaking out in high as you're saying that number. To build a game. Yeah, let's say it took you three years, right? So you're spending roughly fifteen million dollars a year, right? I think you can expect to spend as much or more on an annual basis than you were spending in development in live-ops.

1:11:50in live-ops, wow. Yeah, and that can cover anything from the support side of this of, you know, when people report toxic users, but really, you see a lot in the events of, oh, I need to make new skin. Concentry for you. Yeah, it's like, or I need a new champion in League of Legends. And when you think about League of Legends, so much of that game is actually around balancing. And so then you have, you're investing all this time in QA testing and balancing and making sure things don't break.

1:12:19and Riot updates League of Legends every two weeks. Yeah. And every two weeks, they're putting out new content, they're balancing everything. And so that's pretty much the entire P&L of that game. At this point is just keeping it fresh. Plus story content, too, right? Like people have realized the IPs for this has become incredibly valuable. Absolutely.

1:12:39Where are we in the esports journey in terms of that being a sort of reinforcing marketing strategy? And I ask Blake, because you, you, uh, though you asked Blake for good reason. You're going to get a very different answer if he asked me. Well, I want both your perspectives, but I actually, I think we'll, well, I think we'll be closer than you think. And then I think it's, I believe you helped start, yes, famous esports team. Yes, yes. So you thought it was a good idea at some point.

1:13:06Yeah, well, I would say like the... Not to leave the witness at all, but that. No, I think, I actually think if you, like for a hundred thieves, you know, which is an eSports organization, that it has three pillars of it, which is, you know, content and a media side, it has an apparel side, which is also a driving business, and then the eSports side. And the view is always, which is probably somewhere in the matches, is that eSports is marketing, right? And the view is how do you start a brand in gaming was...

1:13:34let's try and we'll go and get a spot in League of Legends, which was franchising at the time, that will legitimize the brand. And then we will be able to, well, hopefully that's eventually figures itself out and becomes sustainable. It will be great marketing and distribution for legitimizing a new brand in the gaming space. And I think there's all sorts of nuances around League of Legends esports and Counter-Strike esports and really, When you say the word eSports, and this is probably the real struggle of it, it's quite literally just saying, what do you think of sports and owning a sports team? And it's like every single sport actually has its own pros and cons to it. And there are certain leagues that maybe accrue more values than that. But for the most part, they really are like a marketing engine. And they could be a marketing engine for your organization if you have set it up that way.

1:14:26But for the most part, it's a marketing engine for the game itself and keeping it fresh. That's actually what I'm more curious about. David took it to enterprise value of esports organizations, which I'm less... That's less interesting, because it's an obvious failure. No, it is. But is it a good idea for the game? I think the game. With all due respect, there are some...

1:14:46you know, yours, team liquid, there's a few of them that have kind of transcended and that are now brands in and of themselves of a certain sort and, you know, can sell merch and other stuff like that. And they compete in the League of Legends worlds and get a lot of exposure and sell skins and all that other stuff. There are a million viewers on that. But even those are struggling financially. Those are not still not great businesses, but they're kind of viable businesses, right? But ultimately, like, All of this is accruing benefit to the league of legends right to the overwatches to the to the CS goes of the world because that's really what it's functioning as it's basically like you're getting 30 million people to watch League of Legends You know streams during the worlds and those people are gonna go play more League of Legends and buy skins and whatever and it's like when the Chinese team won worlds

1:15:34The riot guys were like throwing confetti because like when the Chinese win it's like a hundred and fifty million dollar revenue opportunity in terms of increased like you know unexpected sales of skins. When I think about why I was excited or why I actually still am excited about esports is video games especially a free to play game like League of Legends. It feels different than let's say soccer or basketball where in basketball I know at a very young age I I'm not going to go pro. And I also, like, I don't have any real way to even play with people with similar skill level of me, like in my neighborhood. And I think when I play League of Legends, there's clear signs of progression. And I actually just think the average person probably feels like it's more achievable. Like the, it's more if I just play, if I hadn't finished ours, I could go pro in League of Legends, right? That's...

1:16:25The average person might actually say that. So more like golf or tennis maybe? Yeah, like 18 sport. Yeah, I would just say like you think it's so much of the scale just feels more obtainable and because you're seeing another kid in a town over who's like making money you're like, that could be me if my parents just let me play. It's even better. It's way better than golf and tennis because The barriers to entry are so slow. You don't need the money. You can have a lot of money if you're going to pay for it. And you're immediately queuing up against the best in the world, right? But I'm just thinking about it in terms of like participatory with a smooth continuity to pro. One of my favorite examples is you think about there's like a streamer named T-Fu in Fortnite. He got famous because he ended up in the same lobby as Ninja. And he just absolutely styled on Ninja on a stream.

1:17:13And his name was twitch.tv slash DeFu. Truly any given Sunday for everybody. Yeah, it would be like imagine just being able to go and play pickup basketball with LeBron. And LeBron wouldn't do that because he risked her and all this stuff. Whereas Ninjas playing all day. And if you style on them, there's a real chance for you to get famous. And that part, there is just a difference of like the dream is obtainable.

1:17:39That is just so compelling to me. In that way, I think it's very similar to what we saw during the poker boom, right? Where people were playing online, and you could play on into the World Series of Poker, right? Like from those online games, and so there was like, I think that's kind of an interesting analog. Yeah, yeah. And actually, Valorant, for example, just recently released this sort of semi-promote, where it's...

1:18:07to have a team and actually let you run tournaments. And eventually if your team gets high enough up to ladder, they will play in essentially the World Cup. And I think that is just so amazing of selling that dream because it's not even just selling it. It's like sort of real and that there is going to be someone's life who's changed if they get discovered. And that's just... And so back to the earlier conversation about reinvesting in...

1:18:33the game over time, like, what an incredibly leveraged way for successful forever games to, like, the ROI on investing lots of capital in your eSports ecosystem is going to be very high. Very high if it works. Yeah. Yeah. And there's a lot of different approaches for what it's worth. Like, you look at, look at CounterStrike and Valve and they've taken a very, like, they just...

1:18:56don't really care. Yeah, it's more like golf in the city. It's more like the PGA where they sanctioned events as opposed to basically owning the leak. They'll co-sign for tournaments a year. They'll call them majors, but there's hundreds of tournaments that happen outside of that. As a team, you choose which ones you go to. Actually, the real reason why the esports boom happened from an investment standpoint is You finally had the publishers like League of Legends stepping in and saying, no, we're going to try and run this like a sports league where teams are able to buy a franchise spot. They should be like the equivalent of a token somewhere to an MLS team. There's a lot of things, but really it goes into, can this can this improve value? And I think that's really a different dynamic. And I spent five years talking those owners, like the existing sports owners who had terrible FOMO from

1:19:50like dumping money into these things. And some of them took my advice and some of them didn't and ended up in, you know, with some really dead assets. But that's what, that was Bobby's strategy. That was the League of Legends strategy. Bobby got some people so whipped up. Whipped up because he was basically like, look, I'm gonna, this is the next NFL. Get in now where it's still where you can buy in for tens of millions of dollars as opposed to tens of billions. And this is the Overwatch League. Indeed. Yes, yes. And then, by the way, that's...

1:20:16I think even me at that time was what's telling people that's probably not the wisest thing especially when you think about it's not even a forever game. You were working for us. Yeah, yeah, yeah, yeah, yeah. Right and that's a you know, that is a that was a game that's a $60 package good that's trying to be an esport and my my brain just sort of broke at that moment of like okay, at least let's think about the incentives here of like how we're gonna line this it's completely different business model and game overall at least in League of Legends incentive is still to keep this.

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1:22:27So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com slash acquired and tell them that Ben and David sent you. So we were talking a minute ago about in gaming as in many corners of the internet and investing, there are things that have lots of usage but don't have have not attracted a lot of capital or attention or care. Perhaps we could talk about the opposite of that with Web 3 and crypto over the past few years and specifically Web 3 and crypto gaming. You end Gamecraft to my mind kind of on a hopeful note about that. Would you agree? How are you feeling about it? I do and I have been incredibly skeptical, right? And I'm primarily skeptical because it's a character flaw of mine that I am part of the original tribe.

1:23:22Right? I'm part of that OG gaming tribe, right? Like maybe a slightly younger than the real OGs, like being in and trip, but kind of still part of that generation. And so I still am very protective of the video game business because it was this kind of nerd's paradise, like back in that day. And I'm always resistant to tourism, right? I'm always resistant to people kind of coming in from outside and kind of claiming it as their own. And it's of character flaw because I should be Big tent, and I'm just not. At the same time, right, was that right? They'd never made a game before. They never made a game before, but, man, those kids were so down. No, they were, they were super hardcore. I would have adopted them. They deserved to be in the tribe. They embraced the tribe, but a lot of the early Web 3 gaming content.

1:24:18came from crypto people slumming in games, right, who had no idea what they were doing, who made really crappy games that were really just an opportunity to mint and launch NFTs and participate in an NFT marketplace that had some lightweight, you know, game mode that was associated with it. And there's a bunch of those out there, and I don't want to go through them chapter and verse, but they're hideous.

1:24:44This new crop that we're starting to see now and I just actually invested in one oddly enough just recently Supercell the fin finish game company and and I Made a angel and a joint angel investment and in a deal that has a component of this You saw ev online just raised 40 million led by Andreessen Horowitz to make a crypto-enabled diversion of Eve Oh, I didn't realize that and Eve is like a long running. I mean that's a 20 years, 18 years, I think. Icelandic gaming company. Yes, yes. So now you're seeing game people who've had a chance to kind of digest the technology and see if they can find an organic use for it start to bring product to market. And that gives me a bit of hope, right? Because maybe because it aligns with my narrow view of the game's business, but maybe also because we're going to get good games out of it that don't seem like scams.

1:25:40And so for our audience who's not been paying attention to Web 3 gaming, how is it mechanically different than traditional game business models? Or even let's just say that the current most popular free-to-play business model of gaming, what new things does blockchain unlock? The good news is not that much, right? No, I honestly believe this, right? I think the best of them?

1:26:06adhere very closely to the conventional models, and they use the crypto component really almost to maybe improve or enhance an elder game. So for example, if you've been playing for a while and you're kind of bored with just grinding on the underlying free-to-play progression mechanic, There's another sphere where you could play, where you could take your character and mint it as an NFT. It gives you certain benefits in the underlying game, but it kind of gives you status in the status competition that you and the other very advanced players are engaged in because at some point, if you've been playing World of Warcraft for 15 years, you're not running around killing chickens for gold. You're playing a very different kind of game and you're playing kind of a social game.

1:26:51Right? Right. And so I think there's aspects of that that can be enhanced and enabled with the Web3 technologies that actually are additive to the gameplay. And I think that's exciting to me. What's an example? I'm not going to tell you. All right. You can imagine Eve with this. Yeah, Eve is a good example. So they're going to have a token and that token is going to be useful in the game in a way that's not paid a win.

1:27:21Yep. Right? Which is the death of a free-to-play game, right? And Blake is almost a religious fanatic around playing Pay-to-Win. Why do people do Pay-to-Win then? Like, it will kill your game. Because it works. Because it's short. It works in the short term. I was talking about this with someone. It's super so recently. And I think like, Clash Royale, if you play that game, has some real Pay-to-Win mechanics. It's like softer, where you can go from...

1:27:49you probably spend a hundred hours playing that game completely free to play and it's balanced and great but once you hit a certain point it's like oh you hit a wall like it's gonna take a while to grind out here and so either like spend or you're gonna be playing this game like eight times longer than the person you're playing against and I think that's one way that you see you typically see that more on mobile but if competitive integrity isn't the goal of your game, like from a multiplayer standpoint, then it's way easier to do more paid-win stuff. Fair enough. So when social status is a key component of the game, that's when paid-a-win is the worst thing you can do. Yeah, I would say leaderboards, yes. Progressive status, yes. If your rank meant something in League of Legends, which it does,

1:28:40If there was a way for you to buy the highest rank that game would break like it would just simply would break. So wait, let's go back to the token notion. So what is the token and even online? Okay, great. Now there's this like crypto element. What can I do with it? So Hilmar hasn't released the design yet and because he pitched Blake and I am a little uncomfortable discussing it. But let's just say abstractly it.

1:29:03functions in a way like a store value almost like a super currency where you will have it the token as well as an in-game currency and the token isn't necessary and the token can be acquired through play but it has some interesting properties that you are acquired through ownership and you're incentivized to buy it because it provides you with certain benefits in the game that aren't that don't necessarily make it competitively unbalanced, but that open-up areas of gameplay that might be close to you if you didn't own it. Interesting. Very clever, by the way. I mean, Blake and I have looked at a bunch of these things. Most of them are absolute crap. This one is really well thought out. He has one of the best framings that I've ever heard around. This one is, even online, originally he's like, this is Rome.

1:30:00like broken sewage and just like it's it no paved roads all this stuff and he's like Web three and and building with crypto rails actually makes it look closer to like New York City and so he's like We'll still keep realm, and that version of the game will still be here. But now we can build it with the right pipes and do this sort of the right way. And he had this little great line of, and he still have Italians that moved to New York. And he's like, it might take a bit, but they still move over to New York. And I just think that's the right way to think about it is there's...

1:30:35very different cities and people like them for their own reasons, but in a New York example, he just thinks there's a lot more you can do with the game. And Eve is fundamentally an economic simulation, right? Even though it has a veneer of being a kind of space combat kind of thing, fundamentally 80% of the gameplay is economic. Right. Mining, trading, manufacturing, etc. It is the perfect vehicle. Yeah. Like if this game doesn't work, it'll be actually very telling of the current. Because if it works anywhere, it should work here. Exactly. Yeah, like it is a perfect application. There's a real question of, is this game still a viable game that people want to play in 2023? That's maybe a different question. But it is the perfect vehicle for Web 3. I ask these questions because my skepticism has sort of come from, there's all these egalitarian notions of

1:31:27In the web two world it's awful because you have to pay the gaming company for the items but in web three you can actually own your own loot and then you can all trade that around and you don't have to go not everyone has to go back to the store to buy the thing you can buy it peer-to-peer and I might have them always like that sounds nice but why would a gaming company ever enable peer-to-peer sales when their whole business model is having them buy the goods from you because they can hopefully increase the size of the pie, incentivize you to trade at a much greater volume and harvest transaction costs. Look at Roblox. Roblox doesn't have a Web3 component, or at least not yet, but man.

1:32:11It's got a very viable peer-to-peer economy in it, and Roblox is the most highly taxed app store on Earth, right? I mean, because you get paid as a developer in Robux, right? So when you're extracting those, they're taxed. Robux is Web3, but it might as well be the most successful Web3.

1:32:31quote-unquote web three application out there absolutely and so i mean i think the last time i calculated the the total tax the gross tax was somewhere close to sixty percent like fifty-seven percent i was gonna say that the last time i heard is like fifty-five to sixty percent yeah and so it just keeps compounding every time that row bucks moves between parties it just keeps getting and like twitch And like YouTube gaming and other things where there was this incredible feedback loop and we talk about this a bit in our user generated content episode and GameCraft. Minecraft, for example, where they just crossed the one trillion view mark on YouTube, right? Of Minecraft related videos. You know what? The company that made that Mo Young.

1:33:13didn't make any of those videos they were a hundred percent made by the community right and yet that community was highly incentivized because they had an economic incentive because they became famous they became rich by becoming minecraft streamers by becoming minecraft youtubers and the same thing is happening inside of roblox in a certain way and i think the dream of the web three spaces that this can be more broad than even that i would say even you look at a game of Counter-Strike and a lot of people don't look at Steam and view it in like an open-sea or one of these marketplaces but in Team Fortress 2 and in Counter-Strike, they introduce these virtual goods and they're literally just cosmetic but you open a loopbox, you get the skin and those skins have real value because it costs two dollars to open up that crate and you might have just got something that's super rare.

1:34:05And in the public market that is hosted on Steam, where they take, I think it's 10%, they are double dipping and triple dipping on the content that they primary issued, and they're getting all the secondary sale of just recycling through. Oh, you got a knife. I want a knife skin. That's like $400. That is what does go for on that market.

1:34:24Valve is actually like the closest to probably like web 3 being just open where they actually let you take these things off and you can transact for US dollars if you want to they you know they'll eventually shut down that site maybe but it's there like you can people use these accounts people spin up steam accounts as escrow services and like their bots and you know their sites that just literally will transact for US dollars so I think it's There's a lot to study there, and one thing the Mitch and I always talk about is there is a speculator problem in a Web3 example where if you truly were looking at CounterTrack and you wanted to buy in theory, you want to speculate is CounterTrack going to be bigger over time. I should just buy all these skins in the open market and

1:35:08that just raises the price. And it's what we saw in crypto where the people who are owning these NFTs were never even playing the game and you just priced out your average user. That's one sort of unsolved sort of to be determined. I mean, Blake and I talk about this, we call it the...

1:35:25you know the Bitcoin pizza problem right which is you know you have the the person who spent three Bitcoin back in the early days on a pizza and that those three bitcoins are in today's dollars worth 75 grand and so you feel like a fool because you spent that currency and so when you when we're looking at web three related deals like solving that problem like incentivizing you so that you don't feel like an idiot for.

1:35:52utilizing the token is a key factor in these games. And I think it was one of the things that got me over the hump on Hillmars, you know, New Eve game, right, awakening because he actually had a really interesting solution to that problem. And we've seen so precious few good solutions to that problem. And it's a double solve because when something goes up a lot in value, there's a problem because you don't want to spend it.

1:36:17and the goal of creating any economy is dynamism to create a lot of transactions and turnover. Then there's the second problem of speculation. When things go up a lot in value, it encourages a lot of people to speculate, brings in the wrong sort of people, makes the game not fun, messes up the incentives for everyone. So if it doesn't have that problem, then you solve two issues. Yes, it's really tricky and I don't think anyone has solved it yet, but we're certainly finally starting to see Some people have theories around how to solve that. And it will be really interesting to see it play out because if you can solve it, then there's no reason why these things shouldn't exist in games moving forward. Yep. So when we were going back and forth on what's talk about on this episode, Mitch, I think it was you and our shared doc here had quite a few thoughts that you wanted to add on to our Nintendo episode.

1:37:11Specifically, I thought the most interesting was around our assertion that the NES was the first consumer device with a GPU architecture. Right, your PPU discussion. Yeah, yeah. Tell us what we got wrong. I don't think you got it wrong necessarily, but I just wanted to, I'm fascinated by the history of this company, this Utah based company called Evans and Sutherland.

1:37:34And I was really just teasing you guys because this felt like such an acquired, like, mini episode, right? Because these guys were, like, the Fairchild Semi-conductor of computer graphics. So these two professors, they were, you guys talked a little bit about this in the Atari context, right? The view of you, Mafia of computer graphics, Valin K, and...

1:37:56at catmull and Nolan. What you get wrong about that is that Nolan was like 10 years senior to the rest of those guys, right? So Nolan went through as an electrical engineering student. And then Evans and Sutherland came in and formed the computer graphics practice at the University of Utah. And so Nolan was had already graduated. But they got catmull, Alan Kaye.

1:38:18So Katmo, who goes to Pixar, Alan Kaye, who basically goes everywhere. I mean, he's part of the Apple user interface thing. He starts the Atari research groups that basically invent virtual reality. I mean, he's pollinating flowers all over the computer business. He's credited with the best way to predict the future is to invent it. Yes.

1:38:38So incredibly important figure, you have John Warnock, who goes on to found Adobe. One of the most important companies in the computer graphics business. He was the other guy on the Nintendo episode that we were trying to think of. Jim Clark, right, was a student of Evans and Sutherland. So all of these incredible people came through that University of Utah computer graphics program. And so the professors then spun out with a absolute bucket of DARPA money.

1:39:06and started this company that basically started to build in the late 1970s, early 1980s, the first commercial flight simulators. And so, you know, with very high fidelity basic flight simulators, and of course, flight simulators required the kinds of advanced graphics that just weren't available on desktops, even in the workstations of those days. This is pre-silicon graphics. This is, you know, pre-any of that stuff. So, they had developed a bunch of this proprietary silicon during those days and ultimately ended up in the supercomputer business later on in the 1980s and then ultimately in the 1990s were in the console business. They helped develop Ridge Racer for Namco, the very advanced racing sim. You put this in the notes and I was like what? So it comes back full circle to the video game business but I just find that whole episode incredibly fascinating and it's so interesting to think about

1:40:04All of those people kind of coming through that same program and what it must have been like and Evans and Sutherland had a big impact in the games community because former employees of theirs started up a bunch of games companies. And again, like just one of those incredibly seminal in really the true sense of that word technology companies. There was another thing we brought up on the Nintendo episode where I'm curious for both of your fact check on which I was shocked to learn that the gaming industry has always been larger than TV and Hollywood, if you include the total coin drop in arcades. And I always just thought this was this new phenomenon of like, wow, video games have become so much a part of their fabric of our society, but our research was basically like, I think it's always been true. Could be, I don't know much as much about what they count when they count the Hollywood revenues or the music industry revenues, right, whether it's sort of ticket prices or what, but I think

1:41:02regardless, the really interesting fact is how big the arcade business was. Yeah. And if you go back and look, some people, you know, people do these really clever little graphical drawings where they show sort of how we got from early games business to the 180 billion of today. And they show like sectors by market share as they ebbed and flowed. And the thing that always stands out when you look at it is just not only how big the arcade business was, but how long it persisted. Yeah, you think about like Sega and when we were researching for the council castles episode, It was so clear that these council manufacturers really were wrestling with, do we risk it? Do we risk our coin-op business? And a lot of ways is probably why I say it isn't what it was or isn't Nintendo is they were trying to protect what they had. They're literally making billions of dollars in the 70s, like billions of dollars in revenue in the 70s. Of course, you're not going to stop doing that. Yeah. I mean, I grew up in that era, so I was one of those, you know,

1:42:00Rugrats who was like, you know, camped out with a handful of quarters in a video game arcade. And so I remember that. I mean, they were important social loci, right, for kids in those days. Yeah, let's talk about it. I'm curious for both of you. Maybe let's start with Mitch, because you're talking about it. What was your entrance into video games before you got into the business side of things? Yeah, like space wars at a world at a world worth in Fort Lauderdale, Florida.

1:42:30Where I was miserably consigned to grow up. Did you have a PDP one or how did you get access to space? Well, it was the console successor to it, right? It was like they made they made they took that idea and they made a box out of it basically the only a few of them but somehow one of them ended up in In it was not the PDP version that you guys talk about in your episode, but it was a a like cabinet. Yeah, like a cabinet version of it that that that was propagated and somehow this Woolworths in or Walgreens. I can't remember what in Fort Lauderdale in a mall had one of them outside of it and that was literally the first video game I ever played and then it was you know Robatron and those kinds of games were sort of my jam growing up. Would you better have been in the Atari 2600? Yeah, except that we were Apple II family and my dad was one of these guys who loved technology but couldn't.

1:43:22Understand how any of it worked so he would buy this stuff and then we would my brother and I would inherit it my brother ends up at the MIT Media Lab and then goes to Hollywood and Inventes video assist essentially in Hollywood so both of us ended up kind of techno geeks What a video assist so in the old days with film cameras the only person who could see what was being shot was the cinematographer who literally looked through the IPs and now if you go on a film set there's a video village where all were the producers god forbid can come and watch what's being shot in real time right and that technology transition basically involved this intermediate step called video assist which was my brother's thesis at the at the my tv lab in the late 80s hey you always see those you know uh George Lucas and Tunisia shooting in the desert in 70 was at 76 when they were shooting uh a new hope like they've got the 10 they've got video monitors everyone's point in their watching daily's i mean it's a it's a

1:44:17It's a camp out. So that was, again, we would inherit these technologies, whether they were like early video cameras or whether they were computers in the case of the Apple IIs, and then we would screw around with them and try and figure out how to make a work. And of course, because we were children most of the time, we'd turn them into games. What was your first dedicated gaming machine? The first dedicated gaming machine that I owned, because I wasn't an early console adopter.

1:44:43So the first dedicated gaming machine I owned wasn't until I was in law school. In 1987, my wife, who is a game designer and worked at Activision for 15 years, but was a lawyer also and we were in law school together. But we just basically played video games all the time. So we bought an Amiga, a Commodore Amiga, which was a very famous device inside the video game business, but largely unknown by most people. But it was...

1:45:10An incredible device and this is after the Commodore 64. Yeah. And so that was my first I would call that my first dedicated gaming device. Blake what was your first gaming experience? My brother is three years old and he was always in the games.

1:45:27he loved Nintendo like more than anyone. And I was always the meme of just being player too. And so like it was so bad growing up of like we would play N64. We had NNES and I think that's the really the first console that we had. And I remember just being stuck playing like the crappy other character. You know, it was bad. Like we would play Sonic and I'd be like Tails. You know, and I just remember hating that experience and it became really clear that my brother just love single player narrative type creative games. And when the Xbox came out, I was like, oh, like I can finally get something that my brother's not going to take all like all the time with. And I got an Xbox and really Halo is the thing that like changed my life. I was like, what is this? This is amazing. And then really the 360 when Xbox 360 came out and Xbox Live just really took off. Xbox Live was such a, you talked about it a little bit in the console castles that will sit.

1:46:24Yeah, only just because of what an incredible business proposition it was because you had a captive audience who really wanted a community who really wanted multiplayer play. Basically, they said, yeah, there's one way to do it. You can pay us $5 a month. Talk about the number of people that actually upgrade. The number of people that wanted to get online services for their game that had to pay Xbox. In addition to their counsel that they're buying, it's just insane. The numbers I forget what it actually ends up being, but it's certainly billions of dollars in revenue, even 10. And it's not like, they weren't your ISP. They weren't giving you the internet. It was just the right to get online with the Xbox. Yeah, yeah, it was just they controlled that hardware. And I just remember playing Call of Duty Online for the first time and being like.

1:47:07Oh my gosh, my life has like changed and my parents wouldn't buy me a gaming PC because I just knew I'd be a total degenerate and they were probably right and I like to like now the gaming PC and I'm a total degenerate so I get it but I I've loved just like Call of Duty and all of the competitive games really But we missed my wife and I the the console are really in a lot of ways because we went from sort of you know PC like, you know, during that entire era basically, I mean, the first consoles really that would have been viable, the 2,600 and stuff, we kind of missed because they came out right as we were graduating from high school, and we were more in the arcades, and then we went straight to the computer. I remember we were playing some of the early EA games like Starflight on a compact portable that had an RCA out that we could plug into a television, and so we were watching, you know, we were playing it. That was our monitor to play, but that's comfortable.

1:48:0330 pound port, you know, sewing machine. I remember those old, um, those old boxes for the mouse. They had like a track ball mouse. Oh, wow. So, and then we, we, we bought our first console actually when she was interviewing for the job at Activision. Um, I was a Disney and she, what she needed to play. So she got into the game's business first. Oh, yeah, yeah. She needed to play mech warrior on a great game 20, 20, 47. I forgot what it was. I played that on the Mac.

1:48:31Yeah, yeah. So, but it was so we had to buy a SNES so she could study the the activation games before she went in for her interview. Wow. And then she got hired and worked there for 15 years. Wow. How did she decide to transition her career from lawyer to game developer? She when we were in law school together we wrote a game together.

1:48:53I programmed and she designed no way it sucked but we were we just sort of knew that was our calling and like we practiced law for a couple of years but neither of us were totally into it. She actually was a district attorney in the hardcore games unit in LA and so she had a much sexier job than me who was just doing Representing you know Atari games against Nintendo Wow, so this is wild like both of you Decided that it was economically better for I don't want to say decided you went to law school rather than go into making games because you thought there was no money in making games It was no you know, it's just one of those things where you don't know that it's possible, right? I mean I I I Think that's it's true. You find this to be the case in Hollywood quite a bit right where kids who've grown up in in Kansas or whatever

1:49:42Um, you know, they'll, they'll say when they're interviewed like, you know, well, why didn't you choose this profession? Why did you go do something else first? And they were like, I didn't know you could do this for a living. And I kind of didn't know you could do this for a living, right? It just seemed so out of touch. But slowly, but surely like, you know, partly it was through the Atari Games Nintendo lawsuit where I had to go around and take depositions of all of these early box console guys who made cabinets. Um, the, uh, the electrical instruments, scientific instruments department at UC Santa Barbara was like where Nolan was hiring all of his top engineers, right? Because those guys knew how to make multiplexers and, you know, these, like, because remember, these box consults, they were making what we would now think of as software in hardware. Yeah, there was no software. There was no software. And so I went around and interviewed these guys and I was like, these people are so cool. Like, what am I doing? Like, there's another world out there.

1:50:41And so I left and went to Disney. Yeah, I think it's funny. You mentioned like the Kid in Kansas has no idea this is even possible. I always joke like I had a double life right I played video games and I still play video games probably way too much and I wasn't even until I entered venture capital that I realized oh you could like invest in games like that's a thing and I learned about Mitch and Bing and all these people I'm like Well, that's like, I didn't even think that's possible and that's even after I ended up in venture capital. I was like, I didn't even realize that was. And that's today, imagine the game's business in the late 80s. This is another great thread. You said, even you said, I play games way too much. There's this stigma around this industry. Still, why is there this stigma? I mean, I definitely just objectively played too many games. But the statement too much.

1:51:33requires... It's a moral judgment. Yes, yes, yes. Requires, yes. I'm standard by which someone has... People that let's remove it from playing games. I think a lot of people in the business world...

1:51:44think of the, you know, video game industry as like, whatever, that's like for kids or that's like not real, that's not real business. Well, and you, I think address this quite well in the first Nintendo episode, when you talk about sort of the roots of this business in the toy business, right? Even Nintendo making the glove for the, of the Magnavox Odyssey, if I remember that correctly. The light gun. Yeah, yeah, the light, I'm sorry, the light gun, yes indeed. And that like, That was real, right? I mean, I mean, it persisted long into the 90s. I mean, that it was still kind of considered kind of part of the toy business, right? Hasbro made a run at Activision, a little known fact, right, in the late 90s when I was running the studios there. And I remember going to Toy Fair in New York, which is a trip, man. It's like, back in those days, like, and we went actually to the Hasbro pre-Toy Fair

1:52:38thing in Boca Raton, Florida, of all places where they were, they'd taken over a hotel and in every ballroom in the hotel, one of the brands was showing their stuff. So like Super Soaker was in one room and you know, whatever, like Nerf was in another room or whatever and you just went from room to room to see all the toys and the deal never ended up getting done. But really in those days, It wasn't that much of a stretch to think of the video game business as basically being really a pertinent to the toy business. And now we don't think of it. Now we think of it more as a pertinent to Hollywood. I mean, you look at the last of us or things like that, where now we're supplying IP to serious drama and whatever. But that wouldn't always the case. I think there's also the subtle shift of games becoming really social. There was maybe hanging out with your friends. They would come over and you'd have a little lamp party or you'd play Mario Party, whatever it was.

1:53:29But obviously games today now, like I play League of Legends with my friends online that I actually probably haven't seen some of those people in person in years. But I still play with them all the time and I know what they're up to. And it's sort of the equivalent of playing golf on some level of like I'm catching up and I'm sure the games itself are a way to facilitate. I'd also see that the content itself and our choices early on in the business was somewhat self-limiting, right? In the sense that I mean, we made a lot of really violent stuff, right? We made a lot of games that, to Genoa's point, perhaps didn't explore all of the spectrum of human emotion. And as a result, I think it was easy for moralists to look at it and say, oh, this is a deviant activity. Much the same way that comic books were viewed maybe in the 1940s, right? Or, you know, certain kinds of independent film or sexually

1:54:26explicit content or whatever has been viewed historically right whereas maybe those things change over time as they get more mainstreamed or whatever but like I think that had something to do with it as well. It is interesting that you say this is how I hang out with my friends plate because you wouldn't say I hang out with my friends way too much but you say I play video games too much and it's it's like there's nothing wrong with being social and there's nothing wrong with having fun and enjoying your life so why is it that there's something wrong with playing video games with your friends.

1:54:55Maybe it's just a game I play that they're really competitive and so they make me very upset and feeling very tilted after I played those games. It's more of that feeling. And it isn't the case in my family. I mean, my wife just played Elden Ring through, finished it. Right now.

1:55:14Those of you who do not know what I'm talking about, Elden Ring to finish Elden Ring is not only do you have to be hardcore, but you have to expend 100 hours or more, right? I finished Elden Ring with a one-year-old. Oh, but I'm still married, so. She finished, she was like, okay, now I got to play it as a different character. Played it again.

1:55:33OK, finished it. We started watching Craig Mason's The Last of Us on HBO. And she was like, oh, I haven't played these games. Sat down and played one and two back to back all the way through, right? So this is this is the family I live in. Wow, where I'm like the non-gamer.

1:55:47So what's your drug of choice here, FIFA? Well, it has historically been FIFA, which then I had a son who grew up to be a very, very accomplished soccer player before becoming a musician. And so he and I played a lot of FIFA together, which was kind of our dad's son bonding stuff, but then he became too good. And then that made your career out of it. It's like the backyard basketball trip. Where your son turns out to be LeBron.

1:56:16And then, but I've always also been a real-time strategy enthusiast and grew up in the era of Command and Conquer and Starcraft and Warcraft and currently, and playing Age of Empires for pretty obsessively. Well, a way that we wanted to kind of bring this episode home is, you guys recorded Gamecraft in full before getting any input from the outside world. Acquired basically only ever has one episode in the can and so, when we release it, we get feedback, we incorporate it into the next episode. I'm sure you've gotten a flood of feedback since releasing the whole series. Is there any sort of mailbag or things people have brought up where you might want to address things from the series? Yeah, I mean, I think broadly, it was a bit scary, right? Because we did release eight episodes pretty much just sort of back to back to back. And as you said, they were all in the can when we recorded basically the first episode.

1:57:11or when we released the first episode. And I've just been incredibly surprised by how universally positive the feedback has been. I think there really wasn't much like it on the market in terms of, like deeply researched, very much, I think, inspired by what you guys have demonstrated is that, you know, there is an audience for this kind of well-prepared, intellectually rigorous kind of exploration of a nichey Industry that most people wouldn't consider interesting, but you can make interesting and I think that was partly our goal when we started and so we did gain to have some inspiration from I mean I think if you guys hadn't existed we probably wouldn't have done it But yeah, we got like Malcolm Gladwell helped a little bit He just told me not to write a book which I think you know, he's been on that that for a while that like that podcast or the future I think he's done a couple episodes with Bill Simmons who you know

1:58:08who calls himself the pod father. And he is. It's true, though. Like, we've thought, we've been asked many times, we've thought about writing a book many times on, it never pencils. Like, it's never a good decision, which is kind of sad, but it's just the reality to the, yeah. Yeah. Yeah. Yeah. It's, I just echo what Mitch has said, which is the feedback has just been amazing. It's the most common feedback or, you know, the mail back stuff is just, you lead us right to the current time. And they're like, what's happening now? What about AI and games? Let's talk about that, right? Because we have gotten that as a question. So this is a brave new world, right? And I think one of the things that's kind of fun about AI and games is that we've had AI and games, right? Like they started in games. Exactly. I remember Danny Berry when she was making Mule back in the old EA days. She was basically like,

1:59:03you know, like, oh, I would make the characters behave randomly because they seemed more intelligent, right? And so every once in a while, I would get my NPCs to make mistakes. And then people were like, oh my god, they're alive because that just seemed so human compared to the computer-like behavior. It started there. I mean, and it's kind of evolved all the way to the very sophisticated kind of computer. I mean, it was at least what a five-year period, I think, where Microsoft's AI was called Cortana. Yeah. After Cortana from Halo.

1:59:32So now we obviously, you know, you can't, every rock you turn over in Silicon Valley these days is an AI pitch, right? So yeah, we're at benchmark and I can see like 15 founders. Literally the parking lot was full. We had to drive around to like the town hall though. There's only eight spaces. And we get asked a lot about, you know, where we see the technology being applied. And I think there is a kind of There's a train of thought that has been advanced that, oh wow, this is really going to democratize the game industry in a way where now, kind of like you're seeing with mid-journey, for example, where you can just describe a piece of art and it magically appears that people will be able to describe a game and it'll magically appear. I don't subscribe to that. I think, and again, maybe it's just my narrow-mindedness, but I do believe that making games is really hard, right? And I think making a coherent narratively

2:00:31uh, satisfying, you know, journey in a game context and interactive context is not necessarily going to fall to AI early, right? That may be one of the later things that happens, but in the interim, man, there is going to be some really cool stuff to happen. So I would, I think we, we, we were talking about this with some senior executives in the video game industry recently, and I think we kind of agreed on that there were going to be four really interesting areas of investment early on. Um, I think one is art pipeline.

2:01:00Clearly, right? Because just the amount of money that's spent on art in video games is mind-boggling. It's just staggering because you think about it. It's like you're making an MMO. You got a town, one of many. There are buildings in the town.

2:01:14Every building has a table. Every building has a chair. Every building has a piece of art on the wall. And there is a... Every character has clothing. Has clothing. Every rug has a different pattern, or whatever, or it gets monotonous. Like, you have to change it. Every event themes these things for Halloween and Christmas and New Year's. I mean, hopefully you guys played Breath of the Wild. Absolutely magnificent. I mean, it is a magnificent achievement. But, man, when you're playing it, think about what it took to make it.

2:01:41Right? Every one of those characters, the dialogue, all of that stuff, right? And so, I think, you know, it's not gonna replace the need to design those things, but it may replace the need to hire an artist to go and bang out 30 different variations of a chair, right? For example. So, I think that's the, like, art pipeline feels like a no-brainer. Yeah, that's like the lowest hang fruit. I think that, and, you know, right now we're in the 2D phase of that.

2:02:08Will we have a 3D phase? Yes, for sure you will. Number two, I think is quality assurance and balancing, right? Because we can now train an AI to play these things, and we were talking to a senior executive who has done so, and it reported back that the AI can now describe an activity as fun. Wow.

2:02:32which that has been a hot topic of debate in the video games industry forever to define fun so even AI who can tell us if something is fun or not when like I don't think there is a consensus view on what fun means true I mean I've you know I have my own theory of fun right and which I talk about quite a bit but yeah to have an AI that could describe their experience of playing the game in those terms is extraordinary so I think that's going to be really cool Balancing is really hard because balancing is essentially an arbitrage activity, right? It's like you're trying to find little advantages that the game engine, the spreadsheet, if you will, of the game allows. So for example, I'm playing Age of Empires, right? The Chinese cavalry under certain circumstances has an advantage that I can exploit in an arbitrage-like way, right?

2:03:25finding counters to those or whatever is a really interesting potential use of artificial intelligence that we haven't explored really, very much. And I think that's going to be really cool. It's like to bring in the thing we've all, I think at least three of us have mentioned as a pillar of our life to bring in Halo. I mean, when dual wielding first came out in Halo 2, so overpowered. Yes. And it was one of these things that like...

2:03:47took a whole, you know, new disk shipping to fix the fact that all you should ever do is run around dual wielding fully charged and then running your enemy. And like, if we can do that, of course, through play testing, and it gets fixed quickly now, that's one thing, but AI can catch that way earlier. Absolutely. And find potentially new ones that we hadn't even thought of. And as we move into this era of more and more sophisticated game economies, being able to sort of play out those game theory kind of scenarios where about where, you know, hoarding of various resources and what that does to the economy, et cetera. Yeah, you had to do it a funny one yesterday. Like, you just write the problems of, like, get rich, like, to someone like to, like, to this bot, right? And you're like, what does the bot do? And you're like, that was not at all what we were thinking about. They're going to, like, write the economy. So I think those things are going to be really, really exciting. And then I, the one I'm particularly excited about is live ops, because we're spending

2:04:43both loads of money on live ops it's really hard and and it's a very delicate thing because you've got a game that's already working right and so you don't want to make those kinds of nerfs and buffs that that rip out the competitive balance on the one hand but you want to continue to introduce new content into the game and so I think that's really interesting and also just adding a sense of dynamism to that where let's say if we were all playing together it understands kind of what are capabilities are what are characters are like and it designs quests that are kind of challenging to us but accomplishable or whatever like that you can have a real-time quest system or narrative system that you could build into a live game that would be really exciting and then the last one which is particularly interesting also is an adjunct of that it's sort of an analogous to that which is live DMing for like a

2:05:39you know, Dungeon and Dragons like experience where, you know, if you've ever been a... Like Dungeon Master. Dungeon Master, yeah. That live direct message. Not direct message. Well, I'm pretty sure you open AI does. You're among geeks here today. We have a different kind of acronym. But you know, the Dungeon Master is a role in, you know, if you've ever played Dungeon and Dragons with your friends, right? It's like somebody's got to play that role and it's a very difficult role to play. I mean, you are a storyteller. You have to some, you know, you're one of your players enters a tavern.

2:06:09You've got to figure out a non-player character to interact with the tavern wench or whatever to interact with that character. And that requires storytelling and narrative. And if you could have an AI assistant that could supply you with narrative in the background and sort of help you tell that story, I think that's super exciting. And I think there's going to be a lot of interesting things that are going to happen in that space, particularly now where we're in the middle of a massive Dungeons and Dragons Renaissance.

2:06:38Yeah, I think there's also this inherent tension within the games industry of, if you are maybe an incumbent studio, are you comfortable using AI arts and doing that such generation? And what does that mean? Maybe as an innovator's dilemma type scenario. But then there's also maybe a working theory that I have is the UGC platforms like the Fortnite Creatives or the core or the Roblox's of the world might actually be the ones that accrue the most value in this.

2:07:08AI asset generation time where, you know, if you can't spin up these 3D assets and you're letting the users go and do that, that should be just a really more obvious way that this evolves than having, you know, your artist push back and be like, hey, don't use my hard style and that's going to be a whole other sort of. It certainly seems from the, you know, mostly outside that a problem in the games industry right now is the amount of resources and capital required to make a great game. Would you agree with that? That it stifles innovation. I mean, again, as a former studio boss, I would say...

2:07:48Yes and no, right? In one sense, yes, because it doesn't fully democratize the ability to make games, right? And we're getting there. It's better than it used to be. It used to be, you had to write your own engine in order to make a game work, right? And so you had, so you couldn't make games unless you were John Carmack or unless you were Tim Sweeney. That's no longer the case, right? Now you can go and license Tim Sweeney's engine, the Unreal Engine, and you can build a game on top of that. That's already somewhat democratized it, right? It's like, we didn't, in the old days, we used to create bitmaps by hand to, like,

2:08:18you know, try and wrap around 3D characters. It's like now you got, you know, incredible technology, my advanced Photoshop tools and all of these other things that are just capable of sort of accelerating that process. They're a little bit expensive, but they're accessible to individuals in a way that you used to, when I started in the business, you needed literally a Silicon Graphics workstation. In fact, When I started companies were being valued on the base on the number of silicon graphics for stations that they had available to them. You talked about this in the series. It was crazy. Rocket science games go go go go look them up. It's like they were literally valued in their series A on the basis of the number of. The graphics work stations they have. Definitely like an arbitration. So I think that that democratization on the one hand is fantastic, right? And we've seen with things where that has happened like YouTube. Let's take that as an example.

2:09:08We're all kinds of interesting new content that we never expected before. I mean, if I had told you 15 years ago that unboxing videos were going to be like a billion dollar business on YouTube, you'd be like, get out of here, right? There's not the unboxing videos. Come on, man. But they are, right? And all of the, these are new kinds of narrative experiences that we would never have really found valuable. So I think there's great value in that and I'm a big proponent of that. On the other hand, you know, not everybody is good at this. And that's also something you see on YouTube, right? Which is, you know, there's thousands and thousands of videos, you don't get fed to you in the algorithm, which suck, right? And that's gonna be the same in the video game business. Yeah, I think that's right. I think there is, we still haven't fully reached maybe the iPhone moment for your camera, but we're getting there. And there is this parallel track within games that we know modding is such a key part of innovation and how

2:10:06these games evolve and new genres are created that we're getting so close to those moments of with the UGC getting better and you can have the random kid maybe come up with a new genre or a new game and it looks like a mod or whatever it is but it might just be important and creative or roadblocks. Right. The older Hiroshi Yamaguchi Maxim that you know they're a handful of Shigeru Miyamoto's in the world.

2:10:31that can make games like that and we want them all, you know, making games for Nintendo is probably still true. It's true, absolutely true. Absolutely true. There's absolutely. That's amazing, right? Let's feel or didn't get any worse in, you know, this current time. That's right, right. But the window for that, like, say it's, I don't know, one in a million. The denominator of the number of millions is artificially limited right now. Yes, yes. And you think about, you know, how Carmack and Romero got into the position they got into and all the luck and sort of serendipity that was involved. Same with Miyamoto, right? It's like, what has he's been there since 77? Yeah. And he was hired to design the arcade games. Yeah, exactly. And they plucked about even the guy who trained him that you talked about in that first episode.

2:11:16who himself was kind of plucked off the assembly line. And so I think that's the part where hopefully we can be a little more efficient about how we find those Miyamoto's. Well, on that note, I want to close with a pitch to you guys, which I've texted you about, but I want to now make it live in public, which is I really think you should continue the Gamecraft podcast. Not that you need to, but I do think like Hopefully you've seen this in the reaction to it. Like, I think this can be a really good galvanizing force for people to take this industry more seriously, invest in this industry, most importantly enter it. Like, make games, become entrepreneurs. I agree. I think I'm feeling a bit of that pressure. I mean, people, when I started this, I think the other thing that I learned from Malcolm and from Michael Lewis was they were like, I said, well, should I do it as a weekly? And they said, no, that's a job.

2:12:11Right, but they said you should do it as a as a special project and so I think what we're trying to figure out right now is how we keep it a special project and not turn it into a job But still make it meaningful to the audience and so I think we have some ideas and I think we'll be back later this year with some fresh content Great and look we one of the benefits of being old is I've met everyone in the video game business over the last 30 years right and some of them even like me And so hopefully we can bring, start bringing some guests on who can help us tell some of these stories because I certainly know my path through the video game business and Blake knows his path through the video game business, but there are many paths through the video game business. And I think that's the part that excites me. Well, everyone should definitely check out the GameCraft podcast. Where else can people find you on the internet? I met Mitch Lasky on Twitter. Yeah, Blake, I are on Twitter.

2:13:05and Mitch, you don't tweet that much, but Blake, you're an excellent follow. When Mitch does tweet though, it's good, but it's great. You turn on the notifications for Mitch because it's just once like a week, you'll just get a notification and you just know it's spicy. So I recommend it. Awesome. Thanks so much guys. Thank you. Thank you. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn

2:13:57what changes actually created value for customers, and how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

2:14:16So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. All right, David, that was awesome. Really pumped we get to do that with Mitch and Blake. So great. Love those guys. Listeners, we appreciate you joining us for those on video. Sure, it was kind of fun to feel like you were actually in the room, especially at the wide angle camera this time, capturing what the table actually looked like. We got a lot of feedback on the first benchmark episode that We talked about this cool shape, and you couldn't actually see it, so made sure you had that. Also, huge thank you to Mitch, to Blake, and to Benchmark for hosting us and doing this together. If you want to hang out with us more, come check out ACQ2. It's where all of our interviews are happening with founders, investors, and basically all of our interviews going forward. We're going to be putting over on ACQ2, which is really becoming known as the acquired interview show. Yep.

2:15:12Lastly, if you want to become an LP, you should help us pick future episodes. We'll be doing the next one in a month or two as we kick off the next season. So be sure to go to acquired.fm slash LP if you want to come deeper into the acquired kitchen. All right, that's all we got. Talk about the episode in Slack. If you want acquired.fm slash Slack. And with that listeners, we'll see you next time. We'll see you next time.

2:15:39Is it you? Is it you? Is it you? Who got the truth now?