The Pomp Podcast - #963 Yat Siu On Why Digital Property Rights Are So Important

Episode Date: May 16, 2022

Yat Siu is the Chairman Of Animoca Brands, one of the largest investors in the Crypto Industry. In this conversation we discuss Animoca Brands' decision to pivot and focus on the Crypto Industry. We also talk about NFTs, Web3, Blockchain games, and how the Metaverse will provide digital property rights to millions of people. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Imagine coinmarketcap - decentralized. 3X in valuation is 15 billion dollars from the current price. Cryptotoday.com starts at zero, at fair launch on 7th of March. No VC. No pre-sale. Team tokens locked.  For the people, by the people. For decentralized crypto. Visit http://cryptotoday.com and read the whitepaper for the details. ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Yacht Sue is the chairman of Animoca Brands. They are one of the largest investors in the crypto industry. In this conversation, we talk about everything from blockchain games, the markets, the NFTs, metaverse, and much, much more. I really enjoyed this conversation with Yacht, and I hope that you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by BlockFi. BlockFi provides financial products for crypto investors. Those products include the BlockFi wallet,

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Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. I'm super excited about our next guest. We've got Yatsu from Animoca Brands. They have become one of the largest investors in all of crypto. And so I think that we're going to have a lot of stuff to talk about. But yeah, how are you doing? Great. Thank you for having me. It's a great pleasure to be here. Absolutely. I am. I'm super, super excited to talk to you. Let's

maybe start with Animoca Brands was not a crypto company to get started. And at some point, you guys decided, hey, maybe we should go kind of into this digital economy. Talk to me a little bit out what you guys were doing before and then why were you so excited about going into the digital world and quickly became one of the larger investors in the industry? So Animoca Brands, really its origin and still to an extent is today is as a gaming company, particularly mobile gaming and video gaming. That was the background. The predecessor of Animoca Brands, which is Animoca itself, started in 2011. So we've been really around the block making basically video games and dealing with some virtual items and so forth. And while I had encountered obviously, you know,

Bitcoin and Ethereum because of the very financial nature of it. And it wasn't something that we found immediately appealing or had great understanding, but we got involved very early with CryptoKitties actually back in 2017 through a studio acquisition, which ultimately led us to have a sort of early shareholding in what would become Dapper Labs and became the publishers of CryptoKitties. And that was sort of one of the earliest beginnings of non-fungible tokens. And that really sort of got us into the space in a big way because it was a way in which people could store their digital identities, we felt, in a permanent manner, something that people in the video game industry often dreamed of to sort of own, really truly own their digital assets

and also a way to store digital culture in a more permanent fashion. So that actually sort of is when we basically swallowed the red pill and went all in. And since then have, you know, back in 2018, if you may recall, you know, obviously crypto wasn't doing so well, but we had just entered the space and we decided that in order to help seed and grow the ecosystem outside of building our own blockchain related games was to sort of, you know, basically invest in the earliest players in all things NFTs. And so we invested early in companies like, you know, sort of Sky Mavis, the creators of Axie Infinity, OpenSea, Wax, Decentraland, you know, brought in what ultimately a company

called pixel that ultimately would become the sandbox into animal brands as well and and many many other companies uh that we have sort of helped grow and of course invest in as well so when you think about um kind of your journey into this obviously having that gaming background and a gaming focus uh there's many people who say hey it's very clear to see that connection between nfts and metaverse and a lot of these digital economies when you look at those two things, where are the overlaps? Is it just their digital worlds? And so that's kind of where you guys already had some muscle memory and interest and experience, or are there other things that you find that are kind of common between what you guys were doing before and what you're doing now?

So there's so many things that are in common, even if it isn't obvious for people in the gaming space. The first one is when it comes to digital ownership, gamers already actually have a sense of ownership in the assets that they, or the goods per se, because they're not technically assets inside normal games, goods that they have, right? So if someone owns a skin or owns a weapon inside their favorite game, they think they own it, right? They don't have a relationship of it as one of rental, which is kind of how it really is actually constructed

from the terms of service. The other thing is that the players within the space also think that they own it and the person who has it, it's their ownership, right? So in some sense, it is almost a natural right in the way that they interact with it. It's an expectation. And the other thing, of course, is the feeling and the emotions people have when they lose their items or when something happens to them inside a game.

It's a similar sense of positive and negative emotions. There's outrage when it's stolen, there's disappointment, all these things that you feel in the physical world. The other thing that is also very similar really is community. I mean, it's kind of cliche almost, blockchain, it's all about community, all that stuff. But what were some of the earliest, very interactive communities? They were in the gaming world. And the online games are all about community, people coming together, people banding together, working on things together, solving puzzles together, creating friendships together. and creating, you know, all these things already existed in its earliest forms and perhaps the most intense form, if you will, because of the whole visual experiences as well. So, I would say that, you know, these are just some examples of how, you know, virtual societies

really and virtual communities are formed together to create a value construct and to create a culture inside these games. And then you sort of zoom out a little and say, well, in fact, what are layer one, layer twos? What are sort of, you know, blockchain environments? They are areas where cultures are being developed. They are communities that sort of band together and value is being created as well from these communities. So when you start to think about, let's say some of these things that you've invested in, how much of the investment is based on the idea? How much of it's based on the technology? And then how much of it is still based on kind of the founders or the people? And the reason why I

think that that's interesting is if you were to go talk to kind of traditional early stage venture capitalists, they would say it's people, it's people, it's people. And then it's market. How big is the market? How important is the market? Why now? All that type of stuff. Is it the same evaluation framework kind of in this digital space? Or are there different kind of order of operations or importance and prioritization that you put on the various elements of underwriting a deal? So when we first entered in this space, and just to be really clear, we're not a venture capitalist in a typical sense, right? We don't have a fund. So everything we invest out of is out of our balance sheet. So we don't have sort of the typical sort of VCLP structure. We're an

operating company. And I think this sort of maybe changes the lens of how we look at investing. So I can certainly understand that if you're a VC, you need to look at the outcome. You might have a, I don't know, seven-year horizon. So you need to look at the exit. So timing matters perhaps a lot more for a company like that because a VC has to think about the right timing. If they sort of are a little bit too early, those extra few years in where nothing happens may become quite deadly for the returns of the fund, for instance, right? But for us as an operating company, which I also think is really the model that I think more companies are going to sort of do, not just in our space, but in general, where they have to invest for relationships,

for innovation, and for ideas, which is really sort of where we came from. We wanted to help seed the NFT ecosystem because we wanted to build in that space, but we couldn't do everything ourselves. It was impossible. If you're building in an open ecosystem, then you can't sort of try to control everything. That's not possible. So how do we help make it grow? We have to invest. And so we made these ecosystem checks and invested in companies like OpenSea and WAX and Decentraland. And yes, of course, it was people, but really the people in and of itself comes from their mission and purpose and the belief of what was going to happen. You have to remember that in 2018, generally speaking, most people were running away from fungible tokens already because the market was so poor at the time. Bitcoin was hovering around $3,000.

I think ETH at one point went below 100, really sort of dark, dark days. And then here we are talking about a non-fungible, less tradable, less liquid version of a sort of kind of cryptographic token. And everyone's like, what are you talking to me about? So the investing here had nothing to do about sort of the classic elements of timing, for instance. When do you time it? Is the market right?

You know, one could easily argue that in 2018 and 2019, the market wasn't right. This wasn't about that. This was about making a market. This was about helping create and form a kind of future that we thought could be possible. It was sort of a different lens. And so the founders who were already building in that period of time were similar in their belief, right? It was sort of a band of, you know, really just a few hundred of us, if you think about

it, who sort of had a real strong passion in doing this because it wasn't for the money because there wasn't any money to be made in 2018 and 2019, certainly, in that space. But technology is one where you want to know that they have the capacity to build it. But certainly, with early technologies like this, it's not the be-all, end-all because things will evolve. So I think really it is more in our case where we look at the people, but in this case also at the ethos and the mindset of the people in terms of really trying to create digital property rights as a reality and a belief that open systems like this is the most important thing here that we're trying to build in an open metaverse. And when you start to think about some

of these products, teams, and opportunities, is there anything related to geography? Is most of this in Asia? Do you see most of it in the Western world? How do you think about geography as part of the investments? One of the fascinating things about this opportunity here is that it's really open up opportunities from an investing in a global perspective it used to be that you know vcs would and we were we we had the same problem when we were looking to raise money in fact any local brands had quite a bit of difficulty raising money from traditional vcs in fact we didn't raise any money from traditional vcs in the earliest formations of our business because you know we were actually based in hong kong and and and uh for the classic rule of thumb was well if i can't

see you or travel to you or, you know, visit you on a regular basis, then, you know, that doesn't make sense for us to invest, right? Which is sort of, you know, the rule of thumb back then. Today, that's, you know, partially because of COVID, that's all thrown out the window. And the opportunity, of course, has been that people are now able to invest regardless of whether you're VC in Europe or in US, in companies that exist in Vietnam or in the Philippines or, you know, in Indonesia, for instance. And these were typically places that would have been ignored in the past, which means that you can now tap into a global talent pool in a much more sort of available manner than before.

So, you know, talent is generally quite global, but, you know, capital itself hasn't been quite as global. In fact, you know, people used to move to Silicon Valley so that they can tap into the Silicon Valley money. That is no longer true, which is, I think, actually for the better, because it also means that it becomes more competitive as well in terms of opportunities and deals. And actually, there's more opportunity for the companies that exist in places like Vietnam, which today has become an incredible sort of crypto hotspot, particularly when it comes to blockchain gaming, or even in the Philippines, which were typically great sort of testbeds for innovation, but very, very rarely would they ever attract international venture capital. When you start to think about kind of the types of companies, there's this huge focus now on metaverse. And obviously, Facebook changed their entire company name to meta. And I've seen people debate, what is the metaverse? How do you describe that? How do you define it? Is it a place? Is it a point in time? Is it a thing? What the hell is the metaverse? So the way that we think of the

metaverse is a place in which we actually own our digital assets, in which we can actually have two digital property rights. Now, let me just sort of go back a little bit here in the sense that I think that in the last 30 to 40 years, we have been prepared for this moment in the sense that we have been trained to be sort of virtual beings, as it were. With the earliest days of pre-internet services like CompuServe, we had these small fledgling communities, which is actually my first online experience was on CompuServe. And then eventually with the beginning of the early forms of internet, and then eventually to Mosaic and then Netscape browsers. And then, of course, you had AOL and all that stuff.

As time went on, we went from sort of small digital virtual sort of existences to where we are today, where there's close to 5 billion people online, for instance, that have really become digital dependents who do everything online right now. I mean, if you think about sort of what is the first thing you do in the morning? What do you do most of the day? How do you end your day? likely you're probably doing something on a digital device, which means that you're already connected in a kind of pre-metaverse experience, right? And so now, however, the problem with what

people are trying to define the metaverse from our perspective is to say, oh, isn't the metaverse just a more immersive version of the way we're already sort of tapping into the digital worlds today? We would generally disagree with that. It's not VR and AR from our perspective or any sort of tools. These are ways in which you can experience the metaverse, but that is not the metaverse itself. The way we define the metaverse is one where there's two digital property rights in which you can have a stake and an ownership in. It matters more when you actually own a piece of that. And, you know, because of blockchain, you can actually now truly own, you know, your virtual estate as it were. And, you know, the metaverse becomes real to us because it has real economic

benefits. It has real sort of real effects in our actual life as opposed to playing a game, which is entertainment. It's fun. So we liken the example of those type of environments where that could be very fun, kind of like going to Disneyland. It's like a tourist experience. It's nice, but we don't own a piece of that. And therefore it has no impact. And that's not the metaverse. But the metaverse is the place where it has an actual meaning to us. And that can only happen when we actually have ownership in it. So when you think about kind of owning those assets, how much of this is like brand new, I'll call crypto native assets, right? Things that never existed before and they're created in the digital world and they stay in the digital world

versus there will be a lot of value created by taking things that already existed in the analog world and bringing them into the digital world. Is it a either or thing? Is it a both? How do you think about crypto native versus maybe like analog driven type assets? So while I think analog type assets are obviously necessary because we are still physical beings, we still have to eat and sleep, you know, and exist in the physical world. I think most of the value, at least in the beginning, is going to come from the sort of what we describe as metaverse first type of IP, right? And part of this has to do with the origin of the sort of the root of the provenance,

sort of the genesis, the birth of that, right? So if I took, for instance, you know, a picture of the Mona Lisa, or I perfectly replicated it through a lithographic copy, it may still have value, but it is still a copy of the original. And everyone knows that. And in fact, that copy may serve to make the original more famous and more valuable, but in and of itself will not replace it because that wasn't its original birth. And we see the same of that in the digital world, right?

If it's something that was born on chain, right? And you know its genesis and its background, you know who created it, then that has more originality and more value in and of itself. The other thing, of course, is that when you start to sort of combine the analog world, You always have the challenge of the oracle because someone has to verify that. And that's kind of where the big challenge is around, well, do we actually know that to be true? For instance, people are looking at, as an example, people have been looking at solving

wine on the blockchain. That's fascinating and interesting, but you still need someone in between to verify that that actual wine is true. And if the oracle is broken, then the entire thing doesn't work, whereas everything on chain functions really well. The other thing I will add is that I would say that today our digital existence is already way more important for many of us, if not for most of us, than the physical one. And by that, I mean that we rely on our digital existence to make friends, to conduct business, to really live our life, right? We might meet them physically, but we connect with them over digitally.

We might sort of create our business opportunities virtually and eventually meet them in real life. But it used to be that, you know, the virtual sort of the digital existence was an add-on to a physical life. I would almost argue that it's now the reverse, right? If you're not digital, right? If you don't have the ability to browse the web, right? If you can't, if you're not on the app store, for instance, then actually, you know, you may be irrelevant in some ways and you have less rights and less abilities.

So being in a virtual world is perhaps more important to you already. And so, in that sense, then what does it mean for the value of analog versus digital sort of assets? Well, if that's true, then digital assets and digital existence and digital property should be more valuable, or at least as valuable, because you're already dependent on them. And now you need to own a piece of that. I mean, imagine if the platforms we're using today in Web2 were actually decentralized and we could actually have a piece of it, wouldn't that be more valuable than actually

sort of perhaps where we are staying physically, which is, of course, a place of comfort and and of value as well, because that's how we sort of might make money. That's how we do perform our jobs. When you start to see some of the young people that are coming into the market, how important are they? Like the young people seem to have a kind of a naivety to them where they don't know what doesn't work. They understand the kind of future is bright. And it seems like when I talk to many of these people, they're excited. They are driving much of the innovation and they have a lot more conviction, obviously, in the digital world, but they also have more courage, it seems like to try just what may seem like insane ideas at first. And so what's your experience with

kind of maybe, you know, tried and true experienced entrepreneurs or operators versus maybe young people who lack the experience, but have plenty of other kind of wild ideas or courage and conviction to make up for it? Well, I don't know that they're necessarily mutually exclusive. I mean, I'm a child of the 70s. So, by that definition, I should be disqualified from being perhaps active in the space that is predominantly driven by young people. I mean, I would say that that is certainly true. But part of the reason why I think it is sort of so true is because the metaverse in particular is, you know, really their playground. It is the field that they know best, right? And in fact, we see this often with new technologies and new approaches. You know, I think my

particular generation might have been described as the mtv generation for instance right like we grew up with mtv i don't know if anyone here knows what that is anymore right and and sort of you know and experiencing that kind of media format before people started going into sort of you know eventually the internet and video games and all that kind of stuff so so i think i think um you know youth has always been an adopter of new technologies because partially it's what they And they're driving it because it's what they want, right? And the businesses then orientate themselves towards solving problems for this new sort of demographic that is emerging, that has new demands, and that is more fluent.

So many of us, slightly older people or much older people, are effectively digital immigrants, if you will. And some immigrate better than others. But our children, really, and maybe the generation before, are true digital natives. This is absolutely natural to them. They're very comfortable with this. I look at my children, for instance, you know, they don't want something physical for Christmas. They want virtual items in their favorite games.

That's where their value, that's where they see value because that's where their friends are. They play with them over there and they want to show what they're wearing, you know, and what assets they have in the virtual world because the physical world isn't as important to them because, you know, that's not where their friends are. That's not where they're spending time, for instance, right? So, that's one thing. But in terms of the boldness and the courage, there is certainly something around where one could say that, to some degree, or to all degrees, your past experiences certainly shape you. And there's a little bit of the risk aspect. If you're older, you've seen more things, you may be a little bit more jaded. And so I think, broadly speaking, you might take a little bit less risk. Some call this wisdom. But if you take no risks at all, then that might not be wise either.

But I think that's more of a mindset than anything, right? So I don't know that it is as much generational. There's plenty of very, very strong entrepreneurs that are also older who have been very successful because they have a mindset that is willing to sort of learn and is also willing to engage and understand about that space. I don't know that it's necessarily that much more different, right? I agree. And I think that another big piece of this whole thing

is there's a market backdrop that seems to not be so hot right now. Prices are falling left and right. There's carnage everywhere. Everyone is scared. There's fear, uncertainty, chaos, et cetera. One, what are you seeing from kind of your portfolio and the companies and products you guys have invested in

and how are they holding up? And then also two is, are you guys changing anything Or does this kind of evolve your strategy or your thinking as we look over the next three to five years? So from our perspective, when markets are sort of troubled as they are right now, actually, this is an opportunity, you could say, in many other ways. I mean, if you think about where we started as a business, which was really in 2017 or particularly 2018, carnage was everywhere as well. except it was, I would say, sort of even darker, relatively speaking, at least for the crypto industry. Just because of the fact that prices were lower, there was absolutely no capital around that was wanting to sort of go into the space, which is very different today. Even though there

is carnage, there is capital, there is interest to support the right projects. As with everything, there might be sort of a shakeout between companies that maybe ought not to have been supported because maybe they didn't have much sort of substance to it. That always happens in any kind of wave. And these checkouts aren't unnatural. I think right now we have a circumstance of many things happening, including, of course, the stablecoin attacks and other things that are helping to sort of destabilize the markets, as it were. And maybe the impact feels a little larger because the market has grown and therefore more people are involved. And what I would generally also always say is that because it is such a new space, people need to always enter with a certain

degree of caution and a certain degree of awareness about that space. And I think this is one of the things where I think we as a society have really done broadly, this is not crypto related, but just broadly done a disservice, which is that we haven't taught our children, for instance, who then when they grow up, don't have a strong understanding about what is risk management. How do you invest? What is money? What is economics? Because we don't teach that at school. And so many of them actually get taken advantage of because they don't understand any of that. Many of us learn about that when they go to college or later in life, much, much later in life. But if our children have the capacity to learn algebra at primary school, then they

certainly have the capacity to learn about economics and how the real world works. I grew up in Austria, in Vienna, and generally speaking, you know, from a societal standpoint, nobody there really wanted to talk about money because it was kind of a little bit sort of, you know, rude to talk about money. You know, it's not something, you know, we shouldn't be pursuing it for money's sake, you know, but then when you later on grow up, you realize, well, the whole world basically operates on economic principles, and here we know nothing about it, right? So, I think, you know, part of the job here is to get people more ready and aware of that space, which I think crypto plays an important part on such that we are more financially prepared for really anything that

comes our way, crypto included. Yeah. And then when you start to see kind of the market price drawdown, you start to see some of these changes that you're describing. I'm assuming that you all have the ability to access capital, whether it's something on your balance sheet, whether it's from revenue, from various products, et cetera. How do you think about seizing opportunities? So if there's opportunity that is there. Is this something where you kind of have in your head as a team? Okay, when we see this milestone occur, we'll start to deploy capital aggressively. Is it something where it kind of is a day by day, you're just reevaluating the market? Like, talk me through a little bit of the mindset as the prices draw down, like how you guys think

about when to go on offense. So the important thing for us is that we're not a sort of VC sort of, or a hedge fund, right? So we don't seek to enter markets specifically for sort of immediate profit or gain, because that's not the way we operate. We're an operating company, right? So rather we think of, you know, this is an opportunity for us to build positions so that we can invest deeper into it, right? So for instance, if, you know, if, let's say, for instance, if the price of Axie and

SLP, you know, basically drops substantially, then we would think of it as an opportunity to maybe accumulate more positions, although we have already pretty big positions in that, to sort of then support guilds to basically breed more axes, for instance, right? We think of it in terms of, we think of tokens in a sort of productivity framework rather than in a sort of trading framework, right?

If we're looking to invest very heavily into a new L1 or L2, and we might want to build up a position there, just because we think we're going to build in it, then that's an opportunity for us to sort of accumulate in those positions as well, right? You know, whether, you know, whether this is something like Matic or Flow, for instance, you know, and again, we have pretty decent positions in them, but it makes sense for us because as the business grows, we may have more need for the token long-term, for instance, right? So that's how we look at that.

Now, the evaluation is very much sort of reactive in terms of day by day for the time being, because that's, I think, what the market demands. This is not a, oh, let's, you know, we're not automated, right? It's not like, oh, well, if this trigger happens and do this, there's many factors that you have to put together that at this moment, I think no algorithm can truly compute because frankly, there's a lot of sort of assumptions that have to come into play as well. I mean, if you think about what happened basically with Terra, this was somewhat unexpected and the market sort of went from sort of already some weakness to sort of basically a level of panic, right?

And if we had basically just gone through a sort of formulaic approach, we wouldn't be able to sort of analyze and take stock as to some of the new circumstances and also take a look at things like what does that mean for other stable coins, for instance? How do we sort of hedge ourselves here in terms of risks as well if we had more exposure, for instance, in maybe certain tokens that perhaps we shouldn't have, right? So this has to be a constant sort of feedback loop that's required. I don't know that there's really a smart way to do that in a circumstance as we are in right now. And for the various portfolios that are out there, our role is to support them, right? Because if we invested in them, then we have high hopes in them. And so often, although I'm glad to say that we haven't yet come to a situation where people

are like, oh my goodness, we're running out of cash and we can't raise any money. That hasn't been the case so far yet, right? But we do come to assist companies, you know, when we think, you know, both either for signaling or basically just for plate support. I think the most recent example, although it was unrelated to market circumstances, is what happened with, you know, Axie Infinity and the Ronin hack, right? I mean, you know, we basically were one of the main contributors together with Binance and many others to basically support them, even though they probably had the balance sheet and had the capital capacity to actually solve it. But it was just one, a signaling, and two, just a bolstering of their balance sheet so that it could weather the storm, you know, better. And that's sort of, you know, how we see ourselves playing an important role because we're here really to play the long, long game, right? I see this very much as like the internet sort of, you know, 30 years ago.

So it doesn't make sense for us sort of to trade our way out of any of this, right? We wouldn't know what to do with, you know, like an excess of fiat per se. But we have sufficient, of course, to sort of, you know, invest in support over our companies. When you think about that long-term, walk me through what that vision is. Like, what are we building? What does the finish line, if you will, or the 10-year vision, what does that look like? The North Star for Animoca Brands is to deliver true digital property rights. And what that really means is, you know, both in a legal and in a practical sense,

the recognition that data is a property that is generated from us as people. It also means that from a sort of, you know, we think of data almost as a human right and one that ought to be protected in that manner. Right now, the legal construct of data is actually a contractual one. It is not a sort of natural one per se, right? So it doesn't enjoy the same rights, which is the reason why when we as sort of users spend time on platforms like Facebook, for instance, you know, can be abused in the sense that the data is taken from us or creating a powerful network effect.

and basically they make all the value from our data and we get nothing for it. That would be in a classical sense, if you actually looked at it from the normal labor perspective, our time on Facebook, for instance, is like work. Or if we play one of these free games that we think we're enjoying because it's a free game,

we're actually providing to the network effect. We make the game better, more fun and more enjoyable to play. When we're on Facebook, we give them our data and our time and attention, which makes Facebook more valuable. The other way to look at that is we're working for Facebook or we're working for, I don't know, Fortnite, for instance. And every day, because we're spending hours and hours of time on it,

we're basically giving valuable insights and valuable data to them through our actual labor. If you actually accept that to be true, then that's the equivalent of maybe slave labor, right? And so we're actually living in a kind of digital serfdom. We're being digital colonized and we work for these digital kingdoms who, by the way, as we labor our way inside Facebook or Instagram or Fortnite or whatever title that we're playing with, can easily de-platform us anytime they don't like us, even if we have added a lot of value to them because we have no rights. We have no property rights. We have absolutely no say in the matter.

So, the North Star and the mission is to build this open metaverse where people have digital ownership because we think that data ownership and the derivatives of data as a property can solve many of the inequities in the world. People talk about the future with machine learning and AI taking over all the sort of classic labor jobs. And we all know that existing classic labor jobs are not going to be sort of the way that we can sort of create sort of productive sort of value for most of humanity. But the one thing that we do have as people is sort of our time and attention on our creative capacity. And that comes from our data. And that data ought to be valued. Now, imagine if all of us stop using Facebook, what's the value of Facebook?

Not much at all, right? So why shouldn't, for instance, Facebook be paying us for our time? And that means that if you look at sort of the value we all generate, if we get paid for that time, then wouldn't that solve many of the sort of income problems we have and ability to solve some of the problems that we see today with the inequity because of the fact that we're literally being farmed for free basically every single day. In the future, that means we're going to be digitally existing in a manner where we own our property rights. We have the ability to earn income from our time in any of these platforms. The earliest forms of this we can

see in blockchain is already that people describe as either play to earn or play and earn, for instance, in blockchain gaming. But this is already happening in things like yield farming or other activities that we're doing in the DeFi space. So all of these things are already adding value in a very sort of virtual context. And we think that the whole world is going to go there. So we think of this as the future of work. And hopefully we'll then rebalance basically the sort of, I guess, power and equity balance that currently is very unbalanced in the world right now. So when you start to think about this, the vision is so inspiring, right? And this idea of like where we're going, if you had to pick one thing that is the biggest challenge, friction

point or obstacle, what's the one thing and how do we solve it? Well, I think the biggest risk I see at the moment is really the sort of the giant Web2 platforms for the time being. And the giant with two platforms, the reason why they are a challenge is not because they don't necessarily sort of see the way that the world can go to. It's just that the business model is incompatible with this because they make money from our data and our time. And so, actually, the way this works is that you have to decentralize and you have to open up the frameworks, right? It is only through decentralized ownership that you can actually then have innovation built on top of things. You know, one way to think of the sort of the construct of this is that, you know, all

societies that have strong property rights in the physical world have very strong GDPs typically and good economic output, whereas all countries that have low to no property rights have, you know, very low productivity. And part of the big reasons when you think about it logically is that without ownership, you can't invest. Without ownership, you can't construct innovation on top of things. The fact that I can own a house with the certainty that the house can be there with that ownership intact because of a strong government, for instance, is the reason why a bank can give you a mortgage for 20 or 30 years, which basically introduces capital efficiencies into the market that wouldn't otherwise exist. If we're all renting or we never own anything, then that service can never exist.

The fact that we can own physical cars in a decentralized fashion across millions and millions of people in the world is the reason why Uber is possible, why Lyft is possible, why you can have car wash companies, why you can have separate mechanical people who are sort of servicing your cars and people who create baby seats. And the industry around the ownership of cars is far, far greater than the sale of the car itself, right? So that's what's necessary to create these frameworks with these property rights. But the problem is, just like feudal kingdoms of past, you know, the feudal kingdoms today are the Web2 platforms who have all the power, who own our data, who are basically farming us for that. And, you know, if that happens, they have to completely change. And we saw in history what happens when feudal kingdoms have to suddenly sort of, you know, basically adopt, you know, democratic systems and a capitalist framework where they have to share power. Most of any of them actually really willingly give up that power. So they're going to resist.

And so one of the reasons that we invest so aggressively across the board is that our goal is to create so much weight in the open metaverse, in open sort of systems and open assets, particularly with NFTs, that it no longer becomes possible for them to start to build a replacement. I mean, if you're a big game company, arguably that already has 100 million users, you could build your own blockchain, for instance, or quasi-blockchain. You can build your own data infrastructure and say, hey, all these assets do belong to you under our terms of service, for instance, and eventually create sort of a more dystopian type future in which there's no accountability and which basically they call all the shots, for instance, because they basically become a kind of tyrant. Even if it's a sort of benevolent one, they still call all the shots.

We need to try and stop that. Now, if the economic size of the open market is so large, it becomes like how free trade operates. You can't really run a country in the modern world today without joining the WTO and being part of a global trade organization. If you don't, then you become like North Korea, which isn't very great. So the benefits of joining the open systems comes from the fact that we can all globally participate, which we think then connects everyone together and creates more transparency and better markets and better frameworks.

I love it. I literally could talk to you for hours. I feel like you guys have such clarity in terms of where, uh, the North star is, what you're building, um, and, uh, kind of what you guys are funding in the strategy. So, so it's, uh, it's pretty refreshing to, uh, uh, to talk to you. I have one last question for you, which is, uh, as markets fall, uh, people all freak out. And I've talked to many fund managers, uh, and they're all telling me, uh, I'm getting

no sleep. And then I go and I talk to founders and they're telling me I'm getting no sleep. And then I go and I talk to, uh, people who own businesses and they're like, I'm getting no sleep. Uh, one of our sponsors is eight sleep and their whole job is to help people sleep better. What's your sleep schedule look right now? And, and, uh, how are you holding up in terms of the market conditions? That's, uh, that's great.

So first of all, um, I would say that, you know, the, I generally don't sleep that much just because of the fact that I'm just really excited about what we're building. I, you know, I have a lot of empathy for people who are going through the struggles that they are right now. um you know i you know not just because of the fact that we obviously uh you know we're struggling certainly sort of many years ago but also because it's it's a it's pretty cool circumstances in terms of what's happening in the market right now but you know one of the powerful things about the space that i tell people is you know we're still early and while it's volatile you know whatever

you think you may have lost you can rebuild you know you know just if you just look at the you If you believe, as we do, that the metaverse is Web3, is the next logical iteration of the internet, which basically will encompass every person in the world that is online and beyond that, which today is close to 5 billion people, and yet when you think about the DeFi space and people who are playing blockchain games and basically interacting with DeFi wallets, it's just in the tens of millions, really, if you think about it. Then you still have a really, really white space of growth that is there. So you may feel like you've lost everything and that's tragic, but you're not at the end of the road. In fact, many of the stories actually of people who have emerged from these environments of sort of difficult circumstance come out far, far stronger, right? And not just because they have wisdom, but also because they're participating in a market that is going to continually grow.

So I'm, you know, am I, you know, am I losing sleep over the markets? Actually, I'm not losing too much sleep over the markets because as a business, we're not heavily affected and we're here to support people. So if they need our support as a portfolio, we're here to sort of, we're here for them. But, you know, I'm losing sleep over the fact that we're continually building, right? We're continually sort of trying to sort of make the space work. And of course, you know, with what's happening in the market, we have to be responsive, right? But that we do as a team.

That's not just something that I do. Every one of us sort of shoulders that burden together. Awesome. I'm cheering for you guys. I love what you're doing. Thank you so much. The audience also loves it as well. They're already like, hey, bring him back.

Bring him back. So we will have to coordinate that for sure. But yeah, thank you so much for taking the time to do this. Best of luck as the world unfolds. And we'll talk soon, my friend. Thank you. It was an honor. All right.

See you later. thanks so much for listening to today's episode i really hope you guys enjoyed this one make sure you're subscribed on apple spotify or your favorite podcast player and if you're looking to try to transition to get a new job in the bitcoin or crypto industry we've got you covered head over to palmscryptocourse.com we've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more, and I'll meet you guys for the next episode.