Yat Siu is the co-founder and executive chairman of Animoca Brands. He is a veteran investor and technology entrepreneur; known worldwide for his leadership in blockchain technology and gaming. Coming off the back of Animoca Brands’ huge valuation of $5.9 billion, the Metaverse Insider had the pleasure of interviewing Yat about the future of Animoca Brands of the open Metaverse. Check out our interview below.
Why did you found Animoca Brands in 2014?
“Animoca Brands was founded in 2014 through the spinoff of part of the app portfolio of Animoca to focus on developing and distributing games based on licensed content.”
“In 2018, Animoca Brands acquired a gaming company that was involved in the development of CryptoKitties. That was our first involvement in blockchain gaming and NFTs. We immediately recognized the power and benefits of this technology. We saw that NFTs could revolutionize the gaming industry by delivering digital property rights, marking an important shift in how the digital world operates. We, therefore, pivoted the company to focus on NFT-based gaming.”
As Animoca Brands chairman, what does your day-to-day role entail?
“I spend a considerable portion of my day on calls and meetings with external parties, particularly with potential M&A or very tactical investments, partners, and industry peers. Managing the company and our subsidiaries requires me to frequently meet with key executive members and operation personnel on strategic matters. Part of our mission is to evangelize and promote the growth of the open Metaverse, which means I and others are also often in talks and media interviews.”
How would you define the Metaverse?
“Too many people – and many companies – the Metaverse is some 3D/VR/AR environment where you can roam around and meet friends and maybe shop for stuff. We think that completely misses the point. Those are just interfaces.”
“The true experience of the Metaverse lies beyond the interface.”
“We define the Metaverse as an open, decentralized network of systems and environments connected by true digital ownership, interoperability, and community governance. This open Metaverse is enabled by cryptographic tokens (including NFTs), which provide natural property rights for virtual goods.”
“The real Metaverse will be open and serve the majority’s interests. This is why the companies currently attempting to build closed and controlled metaverses and ecosystems will ultimately fail in their attempts to extend their Web 2.0 hegemonies.”
“For example, Facebook, or Meta, is not open. It is like Disneyland – a walled garden with its own rules that may be fun to visit but would be a terrible place to live in. You don’t want to live in Disneyland because you can’t own anything there: you are a tourist, spending your time and money on a temporary experience.”
“We see the Metaverse as a new model of the online experience that recognizes your property rights, including the right to own your personal data and the ability to benefit from that ownership. VR and AR are Interfaces to experience the Metaverse, but they are not the Metaverse.”
As chairman, how do you and Animoc Brands seek to facilitate the metaverse and web3 enablement?
“Our primary efforts have been to advance property rights for gamers and everyone more broadly. Gamers already have a good relationship with virtual assets, so they understand that items that are not physical can still have value. Gamers have been habituated for decades to rent their game experiences, and we want them to be able to (truly) own those experiences instead – and the time and effort that went into them.”
“We’re still in the early days of the open Metaverse, but I believe that within a couple of years, its users will number a few hundred million, enough to have a substantial impact on the entire online world.”
“We do this not only by building our own experiences (such as The Sandbox and Phantom Galaxies) but also by investing in the infrastructure, dapps, and services that make this ecosystem possible, such as OpenSea, Consensys, Dapper Labs, and others.”
How do you work with portfolio companies like The Sandbox to help grow their platforms?
“The Sandbox is one of our subsidiaries, for which I currently chair the board, and a good example of how we operate, working very closely with the co-founders, in this case, Arthur Madrid and Sebastien Borget. When we acquired The Sandbox in 2018, we helped it to raise funds, grow its business, and set the strategic alignment that contributed to its current trajectory.”
How do you see the Metaverse and web3 shaping up in the next decade?
“Metaverse will be the new Internet – the Internet evolved. The majority of its users will enjoy digital property rights, which will be one of the most significant paradigm shifts in the history of information technology.”
How do you see the NFT market evolving? Are there any concerns about this most recent downturn?
“What you are seeing now is part of the cycle. Of course, there are price adjustments, and we are all aware of the many outside influences that impact crypto (inflation, stress on the economy, the invasion of Ukraine, etc.). But, overall, NFT activity continues to grow, even in the recent down market. We were involved in The Otherside deed sale, which was the biggest NFT launch in history and suggests that the market is far from finished growing.”
“The NFT market is still far from “mature.” There are people who are in this space purely to speculate, but that’s not who we’re building for. It’s all about utility, which is something that a token either has or doesn’t have – it’s pretty clear. If a use case is defined and established, you can argue that a token has a certain value. And when it’s considered normal for tokens to have utility – instead of being purely speculative – then you could argue that we are a step closer to a mature market.”
“NFTs will touch every industry. Ultimately NFTs represent a permanent and immutable record and proof of authenticity, which offers great value for medical records, financial records (like in DeFi or what you see already with Uniswap V3, e-commerce, etc.), or any kind of record.”
“Recently we have announced the expansion of our efforts with Web3 and NFTs into the field of edtech through our acquisition of TinyTap.”
How can we make more people embrace the Metaverse?
“One significant difficulty in getting more people to embrace the Metaverse is explaining to people what digital property rights are and what they mean. This challenge will be solved by education and communication, and it won’t happen overnight.”
“Most people don’t realize that the data they generate online (one of the most important resources not just of the Metaverse but of all online presence) is being harvested by centralized platforms for their own gain. The diffusion of digital property rights will change this. When people understand this paradigm, they will not be willing to return to an environment where they do not own their digital time and effort.”
“Another difficulty is the expectation of a very friendly user experience (UX) that makes onboarding and usage smoother. Young technologies often face challenges in UX. When I was a kid, to launch a game on my personal computer, I had to type esoteric stuff like:”
“Now we point and click, tap on an icon, or issue a voice command. UX improves as the technology matures.”
“We think that gamers will drive mass adoption because they understand virtual worlds and goods and are already familiar with the proto-metaverse experience of game worlds.”
“That’s why we are focusing on making high-quality blockchain games. Our acquisitions of companies like Eden games, Darewise Entertainment, and Blowfish Studios allow us to create products that will help onboard the next billion people into the open Metaverse. Take a look at our ultra-slick space mech game Phantom Galaxies and MMO Life Beyond to see what I mean.”
What are your investment criteria – how do you and your team evaluate companies?
“We see the blockchain industry as a massive opportunity, and we think NFTs represents the best chance to make the open Metaverse a reality. To that end, we have adopted a strategy of seeding the entire ecosystem to assist its development. The result is that we have invested in over 340 companies and projects in this field.”
“We are particularly interested in projects that have the potential to drive mass adoption, and in this, we consider metaverse-related companies to be critical. This includes not just builders of metaverse worlds but also companies that can provide the open assets that will be used in the Metaverse – for example, virtual car manufacturers.”
“We generally seek blockchain companies that are focused on NFTs and open to openness. We invest preferentially in projects that grow the open Metaverse and facilitate the delivery of true digital property rights based on assets that derive utility from being open, interoperable, and composable. This includes platforms and protocols (Flow, Polygon, etc.), marketplaces (OpenSea, Bitski, BNV, etc.), and consumer products like games and worlds.”
Do you see a use case for tokens like $SAND and GMEE outside their ecosystems?
“In a decentralized ecosystem, tokens have diverse use cases extending well beyond the ecosystem. For example, see how ApeCoin has been adopted to provide utility outside the Bored Ape Yacht Club ecosystem, including in our own Benji Bananas mobile game. We see the same process happening with SAND, GMEE, REVV, and others. Ultimately if you want to tap into the community of any given token, you have to provide it with some form of utility in your own products. That potential for interoperability is the beauty of Web3.”
How has your community embraced your business?
“Our community evolved directly due to our various businesses and (more particularly) projects, so I would say it has gone very well. Our community generally believes in what we are trying to do.”
“The gamer community is a bit more divided at this time. An enormous amount of misconceptions and misunderstandings about Web3 gaming are being amplified by a few highly vocal people, mostly in the western world. This will improve over time as those points of view move to the margins.”
What excites you most about the Metaverse?
“It begins with digital property rights, made possible on the blockchain. When you have the right to own property, you also gain economic freedom over it (you can sell it, use it as collateral, etc.). This means you can leverage your virtual real estate to get a loan or sell the currency tokens you earned in a game or from a sale (GameFI and play-to-earn), and so on.”
“Because of these possibilities, the Metaverse offers an opportunity for new forms of employment, new economic opportunities, and even the hope for a better future thanks to the mechanism of true property rights over digital goods, including personal data and the derivatives of that data.”
“For the Metaverse to function and fulfill its promise, it has to be decentralized and open and not under the centralized control of the giant tech companies and platforms.”
“Achieving this openness in the next evolution of the Internet is one of the most important goals in our lifetime.”
“Data is a valuable resource, like petroleum. But, unlike oil, this resource is not limited or difficult to obtain – our online activity automatically generates it. Right now, the data we generate is taken and traded by publishers, operators, and data brokers, and we think that’s wrong. Since we produce the data (it’s a resource that comes from us), our position is that we should be fairly compensated for the time, attention, and cost that it requires to generate it.”
“With digital property rights (especially the ability to own one’s data), we have the opportunity to upgrade the current model of capitalism into something more sustainable, more ethical, and more equitable.”
Personally, how do you want to make your mark in the Metaverse?
“Suppose we can achieve true digital property rights for everyone so that everyone can fairly compensate for their online time, effort, and data. In that case, the world will have come a long way in truly democratizing the internet and creating fair and equitable value for all.”
We want to thank Yat Siu for taking the time to talk to us and Animoca Brands for organizing this interview.