The a16z Show - a16z Podcast: We Gotta Talk Pokémon Go

Starting point is 00:00:00 The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, everyone. Welcome to the A6NZ podcast. I'm Sonal. And guess what? Today we're talking about Pokemon Go. It's actually a broader conversation about AR, augmented reality, about apps and. games and just more broadly, you know, how to tell the difference between a fad and something that's real and here to stay. And joining us to have that conversation are A6 and Z deal partners, Kyle Russell and Anu Hurry Huron. And we also have the CEO and founder of Product Hunt, Ryan Hoover. Welcome, guys. Hi. Great to be here. I want to quickly give some context. So I think we should first share what Pokemon Go is for those that don't know or if you're one of our international listeners and

Starting point is 00:00:57 hasn't had a chance to experience it yet. So do you guys want to just quickly like say what it Sure. So Pokemon Go is an adaptation of the Pokemon franchise of role-playing games by Nintendo for mobile devices. So in the world of Pokemon, kind of classic gameplay that's been around for 20 years now, you walk around this big environment generally based on areas in Japan, and you randomly encounter Pokemon, which are pocket monsters, which are essentially weird versions of real animals. So it's a bird that has. electricity coming out of it or a turtle that can spray jets of water. So in the games, you randomly encounter them and you can either battle them or catch them. So basically to bring the world Pokemon to mobile, Neantic and Nintendo. Neantic being the company that was previously owned by Google and Nintendo. Correct. Spunow raised from both Google and Nintendo and the Pokemon company, which is a separate entity owned by Nintendo. And so to bring it to mobile, what they did was the world that you explore to find Pokemon is now the real world.

Starting point is 00:01:58 And the maps that you walk around and navigate through are actual maps from Google Maps. And when you find Pokemon, it's typically near what are called Pokeostops, which are augmented versions of real landmarks, where it highlights it on the map and you go there and you can get free items and Pokemon are more common. And then there's another real world location that's highlighted. And these are typically like somewhat bigger landmarks. And then these are called Pokemon gyms. And this is where the competitive aspect of the gameplay comes in, where people go to a gym and defeat the Pokemon. that are already there, and then leave one of their Pokemon there as essentially a representative of them and their play style.

Starting point is 00:02:35 This is very similar to racing video games where there's kind of this ghost mode where you race against other players' previous records, and you can actually see their car on the track next to you. It's very similar to that, where it's asynchronous. You're technically battling another player, but it's not happening at the same time. They're not actively battling with you every single time someone comes to a gym. Why is it so popular? Because I have to tell you, some of the most amazing stories I've heard are stories about people walking two miles without knowing it, people getting out of their houses and exercising, strangers meeting each other in neighborhoods. And of course, there's the inevitable get off my lawn and then get on my lawn competition going on.

Starting point is 00:03:12 There's also this amazing story that's been making the rounds about this autistic mother saying her child actually connecting socially with other children and people saying thank you and getting help because he's so engaged in the game. And even this lovely moving story about an animal shelter being out of dogs because people were using them to walk. They don't look like idiots playing the game. So they had an excuse to walk their dog and actually catch Pokemon. It's just amazing. And what's happened now to make this happen? Like what went into this? I think what's super interesting is that Ingris launched several years ago by the same team.

Starting point is 00:03:45 And it was relatively successful compared to most apps and services, but not nearly successful as Pokemon. And part of that is just the branding itself. And Pokemon has been around for a few decades. It has this nostalgic factor that I grew up with. And so many people around my age grew up with. And it's also something that's extremely accessible. You know, you see kids playing it to even, you know, adults. And you'll see these people running around on the streets now,

Starting point is 00:04:12 holding their phone in awkward ways. And you could tell they're playing Pokemon. And so it's had this interesting nostalgic factor and just accessibility that's reached such a wide audience. Whereas with most big social platforms, let's take Snapchat as an example, they started off really focused on a younger teenage audience. And while they're growing over time to a wider audience, initially, like my parents would never use Snapchat on day one. Now they are, but it took several years to get there. So I think that's super interesting mechanic of Pokemon Go.

Starting point is 00:04:40 Yeah, I think in addition to the, you know, we can't underestimate the Pokemon IP, right, the 20 years of nostalgia that's held true in it. But for someone like me who I did not grow up with Pokemon in India, right? I grew up with Pokemon at all, I think what got me to the app was I just saw a lot of people walking on the road doing some funky thing with the phone. And I think what got my attention was really the light air aspect of this app, which is, you know, showing the fictional creatures in real local landmarks. I mean, I think that was pretty fascinating for me to get started on the app. And I think that got me to start the app and, you know, start playing it. And I could also play as an individual, so I start getting more excited doing it. And I think there are a lot of elements of the gaming mechanics that gets you hooked to the app.

Starting point is 00:05:28 You look at the Pokemon IP and how powerful it is. They could have slapped it on almost any gameplay concept, say like an endless runner along the lines of what's the one that we all or everyone played Temple Run. You can imagine like in the same way that there's like a Spider-Man game that's based on that that's done pretty well. That Pokemon could have just been slapped onto that. And it would have taken off on the app store for, you know, a couple of days. It would have been featured. It would have been blown up. Then it likely would have just faded away as kind of another one of these endless runners.

Starting point is 00:05:58 Where I think Pokemon Go really like kind of clinches it is the fact that the IP applies so well to this gameplay concept in that as a kid playing Pokemon, you wanted to go out there and catch Pokemon with your friends just like they did on the TV show. And this enables exactly that in that you want to go out with friends because it's kind of, you know, a little lonely to walk for miles at a time on your own catching Pokemon. So you go out with your friends and you're in real world places. You end up encountering other people. So it feels like it's less dorky than it is. And then there's this, again, as Anu mentioned, a light AR mode where when you do encounter a Pokemon randomly, you can then hold your phone up and look through the phone's camera and actually see the Pokemon on top of the real world. And so just as a brief aside on what AR is, this is augmented reality.

Starting point is 00:06:47 So what's the difference again between AR and VR? Could you define it for the audience? Virtual reality is what we're seeing coming out of Oculus, which was required by Facebook, Valve with the HTC V. So it's this idea of headsets that you wear on top of your, on your face, where it blocks out the real world and puts you inside in a highly immersive virtual world. So it looks like a game in that it's rendered content running on your graphics card. and you're kind of in that experience, and they try to play up the immersion with, you know, positional audio. So sound comes from different parts of the environment around you just as it does in the real world. And you usually have, like, hand tracking.

Starting point is 00:07:24 So you can interact directly with things in this virtual space. Augmented reality is very similar in that, you know, what we get excited about when we think of AR are these headsets where, you know, like Microsoft HoloLens, where you still see the world around you, but it layers on bits in addition to the atoms that you're seeing. So, you know, HoloLens, they call the things that you see HoloLens. grams. That's not technically accurate, but it's close enough for what people's conceptualization of the concept or of the idea. So basically it's you go around and you're seeing Pokemon on your phone screen. And when you encounter it, you lift your phone up and see a Pokemon through the screen projected on top of the street that you're walking around on. Right. So just to really quickly simply just simply distill it. VR is an immersive self-contained environment and AR is really about layering that virtualness over the real world. Right. Yeah, so light AR, you know, again, what we get excited about here in Silicon Valley is, are these headsets where, you know, in five years, there'll be glasses and you'll just always have these virtual things floating around you as you're going through through your day. Yeah. Very excited by all that.

Starting point is 00:08:27 Oh, well, you know, again, I'm the weirdo. That's an important point because I think, you know, Chris Dixon here always says that every new thing starts looking out like a toy and Pokemon goes surely a game. I think this was the first, I would say, like a massive game that showed light AR, meaning you could get some experience of rudimentary augmented reality without an additional hardware. I would say it's the first game and the second app. Yeah. What do you guys mean by that, the first game and the second app? I say it's the second app because we've already seen a very popular AR implementation on mobile and that's Snapchat. Oh, of course.

Starting point is 00:09:03 So Snapchat filters. It scans your face using the front facing camera, detects the geometry of, Oh, that's your nose. That's your cheek. So it's mapping your face. And it applies 3D models and textures. And this is how you get, you know, these faces where there's a cat on top of your head and its paws are dangling in front of your eyes. You can take a selfie or you see people point their phone at the TV when Donald Trump is giving a speech.

Starting point is 00:09:23 And they put a puppy ears, nose and a tongue coming out of his mouth. That's technically augmented reality. My favorite Snapchat thing is when people swap their face with like papers or still objects like statues. Because that is phenomenal. Yeah. So Snapchat, yes, is the first. I don't even know if Pokemon. is the second, right? Because there have ingress itself, you could argue, was pretty much trying

Starting point is 00:09:43 to do the same. They used the geocaching and the mapping element of Pokemon. So really quickly just define why the geo mapping is so important. Yeah, that's actually the second element of the gaming mechanics, which makes the game really interesting, which is, you know, A, you're in the real world. So, you know, they obviously are using Google Maps. And John Hunky, the CEO of the company, has the background from Google Earth as well. But what's, what was very interesting to me is even as you walk around the Andrews and Horowitz office, you know, they know the exact location and the walkways within the campus. That's really important because I remember in the early days of that kind of mapping. We used to always talk about how indoor mapping and geo, that kind of fine grain

Starting point is 00:10:24 detail is so key. I mean, think about the applications to retail. Correct. You can do so many amazing things. Because, so they like, they know the Andrews and Horowitz fountain. They know the fountain behind the Rosewood Hotel. They also know, they take information on climate and weather conditions, you know, for the gaming aspect of it, they decide, you know, if you're close to the ocean, should I put a water Pokemon or should I put a different type of Pokemon? But you can just understand. Yeah, New York City, for example, at subway tracks, you'll see like a bell sprout, which is like a little teeny little planty Pokemon. Yeah. So I just think that the the amount of detail that they've collected with this mapping data and is important to know, even if they're not, you know,

Starting point is 00:11:00 It is helpful in the gaming context. But if you want to draw a broader trend, I think this goes on to say what other applications you can do with this information that you're collecting. Yeah, well, there's actually something also interesting going back to how awkward it is to see some people holding up their phone and talking. And I was actually in an Uber the other day and driving, going across the street. Wait, you took a car just to go across the street? Well, not across the street.

Starting point is 00:11:26 Let's just talk about that for a minute. We were going across the street. We see this guy in the corner and he's holding it. his phone, like looking up in the air, and I'm like, that guy's playing Pokemon. And, you know, these, there's certain apps that have come around that actually make people do awkward, weird things. And those are the things that inspire word and mouth and get people talking. So, like, older examples are like Shazam, for example. Shazam is an app that I think a lot of people know where you, you recognize a song, you hear a song, and you're like, what song is that? What

Starting point is 00:11:51 is that? And people end up holding their phone up in the air. You don't really have to, but people have this gesture of holding their phone up in the air. And so when you do that, you now attract you're like a magnet for conversation. People are like, what are you doing? Or if they know Shazam, they're now reminded by it. I think Urban Dictionary is another one that came out a long time ago, which had this function where you'd shake your phone and it would give you restaurant recommendations.

Starting point is 00:12:13 And of course, that's like an awkward, weird, silly thing to do. But when you do that in front of someone, people are going to be like, what the hell are you doing? And Pokemon is very, very similar in that it's inspiring people to do awkward, strange things that inspire word of mouth and get people talking. And that's kind of an understated thing in the mechanics of the game itself. Does Pokemon Go have a network effect? I mean, it clearly has a viral growth. And by the way, just to quantify that growth, what is it? Like, what they reached? Their stock value has changed like astronomically for Nintendo, but for Nintendo is up 96%. I just said this morning since early July. Which does sound a little crazy to be given, you know, the game. It's an amazing. But it's a mobile game and that too was dealt, you know, they've invested in the company. It was not the game that they developed on their own. But I think, yes, you're right. So on, which is in the sense, it is purely vital growth. It's word of mouth people see.

Starting point is 00:13:01 And it's a very different kind of viral growth, right? Which is usually you see vital growth, you know, like let's take Instagram, for example. People saw photos on Facebook. It was a social media driven viral growth. But here they're seeing people walking on the street and they see, well, what are you doing with the phone? Oh, I'm playing Pokemon. Oh, let's, you know, let me also download the app. The Pokemon IP, I think, cannot be underestimated.

Starting point is 00:13:22 That helped drive viral growth. My personal views, it's too early to say whether they have a network effect. given the gaming elements today, I don't think they have a network effect. Why? Because, you know, if you go back to the definition of network effects, it is, the more users that are on the platform, the more valuable it is to existing users. So the more users, the more gamers playing Pokemon Go, is it more valuable to the existing gamers?

Starting point is 00:13:45 Well, today, the game doesn't work like that. I could get up to level eight or level nine without any other players, right? I'm just going out with, you know, I'm playing with Kyle and Austin because it's fun, right? but not because I'm getting additional value. But I do think that... I want to push back. Okay, so I would say that there are elements of the game where there are at least early hints at network effects,

Starting point is 00:14:07 and I think that by kind of implementing a few more kind of obvious gameplay mechanics, they could push them further. So there's this item that you can use during a gameplay called lures, where you go to a pokey stop when these real-world locations where Pokemon are already more common, you get free items, and you can install a lure at these pokey stops that last about half an hour, and everyone in the vicinity of that pokey stop then has an increased odds of finding Pokemon

Starting point is 00:14:32 and also finding rare Pokemon. And so you could argue that in, especially in dense areas where there's already more people playing, as you crank up the percentage of people in that area playing, the more likely it is that someone will deploy a lure at one of these real world places, and then you want to go there. And so you see this just in my apartment complex,

Starting point is 00:14:50 we have a park right outside of it, where every night I check the app kind of over the course of the several hours after I get home and I go downstairs when there's a Pokemon lure. And there will be people down there also there because of the lure. And so in that way, you know, having a density of players does improve the gameplay. You level up faster, you catch better Pokemon, you get more free items. And there's a couple of obvious mechanics from the Pokemon IP that I think would, when kind of implemented in the game, are going to kind of crank up these effects.

Starting point is 00:15:19 So a big part of Pokemon is catching different kinds and then trading with other players so that you get the ones you want and you know they can have their you know favorite side up right this by the way goes beyond the nostalgia point that ryan brought up earlier this goes so his notion of collectibles because that's another great gaming mechanic we haven't really talked about like this it's almost universal behavior that you have to collect the set right yeah yeah the catchphrase of the series is got to catch them all and so there's 150 Pokemon and you're you find different ones in different areas and so if you know my friend lives in L.A. and I live up in the Bay Area and there's different Pokemon right around where we live.

Starting point is 00:15:55 when we do hang out, we can then theoretically, once they implement this, trade the Pokemon that we each had. So there's some elements of comparative advantage there. Yeah. And in fact, they just announced, I think, I believe they just announced they're going to roll out Pokemon trade. Yeah. Where you could. And I think there I can see elements of network effect, right? Because, you know, for example, if you started late in the game and you're at a lower level today,

Starting point is 00:16:17 you really can't conquer any gym. And it's sort of like, how do you get? And we talked about this. Like the adoption curve is different. where at the early stage, they make it easy for you to get up to level six or level seven, and it's interesting. Then when you're level 20 or 15 or about, the curve is again different and you're excited. But getting through the mid-stage is the heart part where I think the Pokemon trading can really come in.

Starting point is 00:16:40 And that, I can see signs of network effects there because, you know, you find a team or you're working with your friends to trade your Pokemon so that you're helping each other to get the game to the next level, which makes it more exciting. So at that point, the network, it becomes more valuable with more users and therefore at that point it could have a network effect. And so that's an interesting way to look also at network effects. And that's something you talk about a lot of how there are specific mechanisms by which you can kind of build network effects into your product. And so you have to think about how can we make this product more valuable for each individual users by just adding this one thing that lets them kind of bounce off of each other in some way. Yeah. And what's been interesting is since two weeks now, So there have been nearly 100 things posted on product, product on about Pokemon.

Starting point is 00:17:25 Anything from a chat app for Pokemon because you can't chat with your friends directly inside the app today, inside the game, to crowdsource like Wikipedia like map. So you can like see where all the Pokemon are and people are contributing across the nation, across the world. And these are essentially just demonstrations of what the people, the players want within the app itself. It's actually really great. It's like an MVP for Niantic in some ways to understand like how people are building a pond. the platform itself. And a lot of those do demonstrate and incorporate aspects of network effects, like the chat, for example. Ryan, what do you mean more about it? It's like an MVP. And by that, I'm assuming you mean the minimum viable product for Neantech. Like, what do you mean by that?

Starting point is 00:18:05 Yeah, it's, I mean, these, these are people who love Pokemon and love building products. And they're building these things that they wish existed already inside the game. And by doing so, they're giving Niantic just an opportunity to see, okay, how do people receive this? How, what, what direction did they take in this new crowdsource map or this chat app, etc. And, you know, this is how a lot of platforms actually start as they get really hot, and then people start building on top of it and hacking around it. Snapchat's seen that, Facebook's seen it. If you look at the top of the Apple App Store right now, in the top five,

Starting point is 00:18:34 there's an app where people playing the game can say, oh, I spotted this particular Pokemon at this spot so that other players can know where they want to go where they should go if they want to go. Like, oh, I'm missing an onyx. where in Oakland could I go to find one? And that's, again, something that should be in the application, frankly, to introduce, again, more virality, more benefits of playing with other, you know, the rest of your friends who live in slightly different areas. So you're not walking around directly with them, but you still benefit from their, you know, kind of mutual engagement. Yeah.

Starting point is 00:19:04 The other point I would add is I think this is very distinct about Pokemon Go. And for, you know, for the first time, it's a new way of monetizing using a game. game, which will actually probably help sustain or develop these network effects more easily or sustain it longer. So the lure that you talked about, the rare Pokemon's that Ryan pointed out, I think retailers, restaurants and bars now have a new way to attract people to their locations using these various elements of the app. We already know that they announced a partnership with McDonald's.

Starting point is 00:19:42 Museums are doing really interesting things to get more people into their doors. using Pokemon. Yeah, and this weekend I went to see Ghostbusters in Oakland, and every single bar and restaurant in the area had to lure out. Every single one. Yeah, but you can imagine taking that out to the next level, like, hey, I have a vapor. You know, I sponsored a Vaporium in my store. You can just imagine the amount of traffic it's going to drive.

Starting point is 00:20:03 And also, you know, it's almost like the amount they can monetize based on each of these elements will be different, and it'll drive different traffic to those respective locations, which irrespect of whether Pokemon Go is going to exist or not, I think is a big phenomenon. Something I think is interesting is all the comparisons we're making are to apps, not to other games, to all these different apps that have some gamification hooks. You know, with Snapchat, there's this idea of your streak, how long you've messaged back and forth with another player and you want to get that score up. And, you know, on 4Square, they were really early on with gamification with the idea of mayors,

Starting point is 00:20:40 people who would go to different real-world locations, typically restaurants, check in. And then if you checked in enough times, you would beat everyone in the area and become the mayor of Starbucks or Peets. And that's actually very similar to claiming a Pokemon Gym. And I think it's interesting to see how, you know, whereas those were gamified apps, Pokemon Go is an appified game in that it's the main way you're engaging with it as a form of, you know, game-ish content. But the value derived from it is, oh, I ended up deciding where to go tonight. based on where lures were out. And this ecosystem of apps that you guys are describing

Starting point is 00:21:17 that's growing up around all these context awareness, light AR, all these things that are happening location, what's the difference between a gamified app versus an appified game? So I would say that it has to do with kind of just what is your typical mode of engagement? With the app, like 4Square, you're primarily there to figure out

Starting point is 00:21:37 where we're going to dinner tonight or where right near me should I get the best coffee. And then the gamification is kind of, a way to make you keep engaging with it. Once you're using that utility sometimes, hey, here's a reason to keep coming back to this app, even when you don't necessarily, like, you knew you wanted to go to that particular Pets,

Starting point is 00:21:55 but hey, here's another reason to open the app. Now, where Pokemon Go is an appified game is that the primary way you're engaging with it is to play a game. It's to go out there and catch some Pokemon and be there out there with your friends with this center around the gameplay mechanics. Where the app part comes in is,

Starting point is 00:22:13 you end up finding people to chat and hang out with, find places to go get a drink or go get food through the gameplay mechanisms. And so it accomplishes the goal of the utility app by being a game interface. And I think that if you look at just app stores in general, game content is almost always at the top of paid, free, and top grossing charts. So you look at these top charts and games are so dominant that I think what we're going to see is more games that end up accomplishing the goals of utility applications by keeping you hooked on the gameplay mechanisms. And that is key because if you look at the historical trends, how did games monetize?

Starting point is 00:22:53 Literally two ways, right? Predominantly advertising or in-app purchases. And I think Pokemon Go has actually introduced a third new channel. It's too early to say whether it'll work or not, but it's an interesting trend to observe, which is, you know, it's, yes, they have in-app purchases today. But on top of that, they can get retailers to pay for those in-app purchases versus consumers paying for in-app purchases. I think it's so fascinating that the ad is the in-app purchase is the product for enterprises. It's kind of like a sponsored post on Facebook or Twitter in that.

Starting point is 00:23:29 But more actionable. Right. No. And it's not a, oh, an item of content that's like what you see in the Facebook feed. But, oh, this one's paid for and a little bit more professionally done. And you can kind of tell the difference between, you know, regular content from real people and, you know, professionally made content that ends of being sponsored or, or, like, just put up on a Facebook page. No, the lure that you would deploy is the same that this bar or restaurant would deploy. And this is happening so quickly.

Starting point is 00:23:54 Today they announced, it just got released in Japan, the game for the first time, and McDonald's partnered with them. And they're gyms now at nearly 3,000 stores in Japan. So it's already just weeks after it launched and they've partnered with one of the biggest, you know, food companies in the world. And that's just one of many examples that I'm sure we'll see down the road. Yeah. And the reason this is important is if you look, again, historically, the in-app purchases, it really came from what they call the whale users, which are less than, like, 0.5% of what the app users are.

Starting point is 00:24:25 And now all of a sudden here, you've actually changed who is buying those in-app purchases, which is the retailers in the stores. Just to go back beyond Pokemon Go and some of the bigger picture trends here, first of all, there's this funny thing. You know, we talk about some of these phenomena of this, like this, To me, it's a promise of what Jane McGonicle has long talked about about this massive super gaming, like public gaming, people playing together. And that's only possible now because of every single person has a phone, a computer in their pocket. And that goes to your idea, Kyle, of this light VR and where it fits in this tier of different types of VR. But the question that I have is that we are still not really deploying every aspect of the phone in the U.S., the way, like, for example, WeChat does in China, where they're using like the sensors and every, you know, we talk about it like, you know, killing the buffalo and using all the parts. And so, and one of the complaints I've heard is that. that there's not, you know, people aren't really using sensors for safety. So for example, you know, the New York subway, they issued a tweet saying, we know you got to catch them all,

Starting point is 00:25:17 but stay behind the yellow line. Or I seem like a billboards on highways that say don't Pokemon and drive. What's going to happen as our environment becomes more censorified and sensors are embedded everywhere? And as our phone begins to really, these apps really begin to use more than just the camera, how is it going to change? Like, how do you guys see this sort of spinning it forward? The Panopticon is going to be real. So this idea of a camera where you have a live view at any spot in the real world at any time, that's essentially becoming possible. And we actually saw this recently with the attempted coup in Turkey where if you're on the Facebook website, you can go to Facebook Live and look at a map view of Turkey and instantly see thousands of individuals live broadcasting. Who was parisoping, who was on Facebook live.

Starting point is 00:26:05 And, you know, something that I've tweeted about is. how I kind of wish Google still owned Theantic. Because you look at all the people turning on this white AR mode in Pokemon Go, there's millions upon millions of people snapping photos at every single time of day of densely populated urban areas. So you could theoretically have this amazing data set of live images of basically anywhere that's in a major city in the United States. And now that's rolling out globally around the world, which is just like insane to think about. Pokemon Go hasn't kind of put this out there yet, but something that they could conceivably do is make the location data available via some kind of API or backend system where you could say, like, where is there foot traffic in the real world at any point in time and the day? Do you remember reading this article that was published recently regarding Forsquare's prediction of Chipotle sales?

Starting point is 00:27:00 Yes, it was super interesting. Yeah, yeah, the short version is using four square data, they can predict that Chipotle sales are going down just due to the foot traffic alone. And if you imagine a world where some company or someone can measure the foot track of every person that has a phone in their pocket, that's incredibly valuable for a number of reasons. Logistically, for like travel, of course, but also sales. It's very powerful data. Yeah. And this is similar to kind of the case being made for having like low orbit satellites that constantly collect imagery. People have talked about how hedge funds could make bets on different markets by just looking at how many cars are in a Walmart parking lot at any given time. Now you have that not for cars where it's kind of unknown how many people are in it and what they're buying, but explicitly, what are individuals doing and what stores are they willing to and when? Yeah, and I think coming back to the sensor point, you know, you're already seeing applications in retail.

Starting point is 00:27:51 And I can tell you, I just recently moved and I had a hassle doing furniture shopping because you're taking measurements and then you have to figure out whether the color coordinates match. IKEA is rolling out a catalog. They already, I don't know how many of you have seen the YouTube trailer, but if you've seen it, It's very much like the Pokemon Go app. All I need to do is show the IKEA app around the room. And if I choose... With my phone. And if I choose a couch, it can actually place the couch in the room.

Starting point is 00:28:19 So instead of like little pocket monsters, you have like a couch in your apartment or home. And you kind of get a sense for, hey, is this a real good fit within my room or not? So just imagine how much easier they would make the shopping. Now, coming back to the sensor point, I think the key question is how good are the sensors that they can actually determine the size of the room and whether the couch actually fits within the room. You know, those are the things which I'm excited about, but I think the potential is huge here. Well, you have a child, like childproofing. Like, imagine all the different layers of interesting things you can do.

Starting point is 00:28:47 Well, yeah, I mean, for things like childproofing, like it's an arduous task of finding every plug and everything that needs to have a little zip lock on it. Imagine if you could just take a single pass with your camera around the room and it would highlight every single area that could be childproof. Yeah. For me, the most interesting aspect of all of these from Snapchat filters. to the Chubaka Mask phenomenon and Facebook Live to, you know, the fact that this is, as Brian mentioned earlier, not just nostalgia, but there's a certain animated quality to it that we're expressing ourselves through these new types of avatars. And I think it's really amazing because I think it actually allows us to express ourselves in new completely different ways. And so I'm really interested in sort of the psychological components of what happens. The autistic child thing is not just a case.

Starting point is 00:29:29 It's a really interesting example of what happens. I mean, Chubaka Mask later, like there's interesting things that happen. when you're able to detach yourself or attach yourself to these layers and mass and filters. Yeah, and this is where... And Pokemon. No, you look at Snapchat, we use them just for selfies today, but, you know, it's a rumor that Snapchat is looking at, you know, and it's not clearly in what capacity, but looking at the idea of making their own AR glasses. Right. And why would they do that?

Starting point is 00:29:54 Well, we're already expressing ourselves every day, 150 million daily active users expressing ourselves with these filters that apply these 3D models and textures to our faces because we think that that reflects our personality at that point. Well, it just goes to show you, like, selfies are not toys in that context. There's something very meaningful. So imagine, though, if, you know, these glasses took off, I assume that they would make something that's cheap, but like just good enough, where you could say, here's, here's the filter that I wear throughout my day. Today I'm feeling kind of moody. I'm going to wear the one that makes my eyes look pure black and my skin pale white.

Starting point is 00:30:24 Yeah. And to be able to signal that to the world. What's like telling a five-year-old child? Like, you got to tell, use your words. Say, I don't feel good today. Yeah. It's like, you know, I'm feeling rebellious, so I give myself a Mohawk haircut. Well, what if you could just.

Starting point is 00:30:34 just do that temporarily instead of making that to get me. I could dye my hair purple, which I'm dying to do. And then anyone with these glasses would say, oh, that's how this person's feeling today, because they chose that as their avatar for, you know, this however many hours. What's so fascinating about Snapchat is they have such a unique opportunity to actually pull this off, whereas Google Glass was super dorky and nerdy and obviously not built for like a younger audience. Although, people would argue that, and this is not, we haven't talked about this in great detail, and we don't have time to, that Google Glass would probably find its promise in the enterprise, Because I know when we were working on that sort of thing back in the day at Park, one of the theses was that you can actually layer on really deep expertise into people in the field for repairing copy machines or other ideas.

Starting point is 00:31:15 And so the notion that you can have a centralized expert and then disseminate that knowledge through all the different people in the field and democratize and distribute expertise in the enterprise. In the enterprise is pretty fascinating. And I think we haven't even talked about the enterprise beyond the retail, like going really far into what this all means. For another time. Yeah. So one last question. As investors and, you know, Ryan as someone who curates a very interesting community and who stays on the cutting edge of interesting trends and things that are coming up, how do you tell the difference between a fad and just something that's here to stay?

Starting point is 00:31:47 And how do we know? Yeah. I mean, if I knew the exact answer to that, I should be investing in companies. I think a lot of it is like what is the behavior that people already do or what is the goal that they're trying to achieve? And does this solution, does this solve? this solution in significantly more efficient way. So let's take, you know, Snapchat as one example. Of course, it looked like a toy in the beginning. And it was very simple. It was ephemeral photos and then ephemeral videos. And then quickly it started to become the really the best place to see what your friends are up to and what they're doing. And in many ways, replace some of the behaviors

Starting point is 00:32:20 on Instagram or Facebook. My personal favorite application of Snapchat is actually the media side, which is the Snapchat stories. I used to, I wrote about this like years ago when they first came out because they were doing something really interesting with Devali, and I got to see a whole new view into Davali in India on Snapchat, which I would never have seen. Yeah, and so Snapchat is evolved significantly. And of course, in hindsight, you can see the opportunity and you can see where it's going.

Starting point is 00:32:42 But at the time, it was very difficult to tell that Snapchat would be useful and meaningful. But they really stayed the course and built a place that focused on the camera and made the camera about, the camera is what was, you know, that was the way you communicated. That was the way you shared. That was the way you expressed yourself. It was a very different experience than, you know, Facebook and Instagram. And then if you look at the two experience in terms of creating content,

Starting point is 00:33:04 there's so much more friction involved than creating content on any other mobile platform, primarily, with exception to maybe Twitter, but Twitter is just a very different. It's like a more text-based kind of conversational platform. So for me, a lot of it's like what's the utility that it provides? And is it significantly different? And does it go with the trends of where the consumers are going? So in this case, like mobile, over time, there's going to be AR platforms changing the way that companies and people interact. So utility, the first, the differentiation and is it kind of going it doesn't have sort of a headwind underneath it as well if these are you know many of the elements we've touched upon on our network effects cases as well

Starting point is 00:33:41 I think fundamentally Pokemon Go is a game right I think we need to remember that the IP is strong and there are games that have sustained for many years like the League of Legends is still quite popular yeah so I think the key to longevity for a game like this is the it's a concept from MMOs typically. It's called the end game. Yeah. So it's this idea that and I knew you hinted at this earlier of how there's multiple phases of gameplay. The beginning of Pokemon Go, you're just kind of catching Pokemon

Starting point is 00:34:09 and leveling up and figuring it out. Towards the end of the game, once you're very high level and all of your Pokemon are high level, you're trying to capture these gyms and you're battling people. So in the world of, say, World of Warcraft, which is kind of the definitive MMO. This is massively multiplayer online games. There's an

Starting point is 00:34:25 end game state for that where you've done all of the questing, you know, you're going on adventures with friends, and then you shift to what's called raiding. So you're going into these very high-level difficult dungeons with up to 40 people at the same time, and it's all about getting the very best loot from these super-difficult enemies. And if you look, World of Warcraft has done the best job of periodically adding more and increasingly difficult end-game content for its most hardcore players. And this is what has kept it millions of people paying $15 a month for north of a decade now. Pokemon, right now, right now,

Starting point is 00:34:59 you get to the gyms, and if you're not super competitive, it's actually difficult to battle at the gyms. Which could actually impact engagement. But if they do all the product enhancements that you were talking about, like the Pokemon trading, a good place. Right, they need to add alternatives or different ways to engage with the end game in order to keep people playing. But in either way in a nutshell, I would say, I think instead of just focusing on the game, what's more exciting about this app is all the external trends that tells us about other applications. and I think that's what makes it more exciting. We could keep talking about this and playing.

Starting point is 00:35:32 You guys, thank you for joining the A6 and Z podcast. Thank you for having us. Thanks for having me.

The a16z Show - a16z Podcast: We Gotta Talk Pokémon Go

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