18. Yuga Labs Huge Valuation, Metaverse Utopia, Security Risks, FTX Good Luck Games, Gamefam Roblox
In this episode, we discuss Yuga Labs securing a $4 billion valuation after a $450 million raise, Zaha Hadid Architects developing a utopian digital world, the risks that come with companies entering the metaverse, FTX supporting Web3 Gaming and launching NFTs, Gamefam raising $25 million to build games in Roblox, and so much more!
Episode 18 Keywords: Yuga Labs, Zaha Hadid Architects, utopian digital world, metaverse risks, FTX, Web3 Gaming, NFT, Gamefam, Roblox
Transcript
Welcome to the metaphysics podcast. The Metaverse and web three are bringing about the
Unknown:biggest revolution since the internet itself. With your hosts Paul the prophet Dawalibi And Jeff the
Unknown:juice Cohen. We will be bringing you the latest Metaverse, business news and insight into what it
Unknown:all means. The meta business podcast starts now. From the boardroom
Paul Dawalibi:to the metaverse. This is the meta business podcast. I am Paul the Prophet Dawalibi.
Paul Dawalibi:I'm joined today by my friend and co host, Jeff, the juice Cohen. For those of you who are new
Paul Dawalibi:here, welcome to the official podcast in the metaverse. What we do is we cover the most
Paul Dawalibi:pressing, Metaverse, topics and news of the week, we look at all of it through a business and C
Paul Dawalibi:suite lens, we dissect, we analyze the business implications of everything happening in this very
Paul Dawalibi:exciting industry. For our regular listeners. Thank you guys for tuning in tuning in every week,
Paul Dawalibi:I've seen many of you who have left reviews on our podcast. If you haven't done that already in your
Paul Dawalibi:regular listener, go leave a review. let everyone else know how much you love the podcast. It's how
Paul Dawalibi:other people find this on Apple podcasts or Spotify or Google Play or wherever you get this.
Paul Dawalibi:And make sure to send an episode or two to a friend, a colleague, a co worker, whoever spread
Paul Dawalibi:the word, let them know how much you're enjoying the meta business podcast. Jeff, how you doing
Paul Dawalibi:this week?
Jeff Cohen:Good, good. Ah, busy week. As always, I feel like I haven't talked to as much as maybe
Jeff Cohen:maybe normal. But you know, the show show must go on here. This was where you are in the world. You
Jeff Cohen:know, the show must go on.
Paul Dawalibi:It has been an interesting week, I will say, you know, I get this feeling like every
Paul Dawalibi:episode we're peaking right like we're hitting new peaks. I will say the last week's episode I
Paul Dawalibi:thought was our best. If you haven't listened to that. If you haven't tuned into that one, go check
Paul Dawalibi:it out. It would be episode 17. I really enjoyed it. And I think we should start Jeff with a bit of
Paul Dawalibi:a. I don't know like I don't want to like a little bit of a throwback to last week's episode because
Paul Dawalibi:we talked about yoga labs, and the board a yacht club, obviously in that episode buying crypto
Paul Dawalibi:punks. But this week, we had I think an equally big and important story coming out of board a
Paul Dawalibi:board a yacht club. That's a mouthful to say fast. And I'll bring up this first story here. board a
Paul Dawalibi:yacht club creator raises 450 million to build an NFT metaverse. So we had discussed that their
Paul Dawalibi:pitch deck had leaked last week, right? And people were sort of dissecting it. And it was
Paul Dawalibi:interesting. But now we get all the details. So they've raised 450 million, obviously that we know
Paul Dawalibi:they're buying crypto pugs, and it values yoga labs at $4 billion. I don't want to spend a lot of
Paul Dawalibi:time on this. It's a good update to sort of the story from last week and to encourage you guys to
Paul Dawalibi:go listen to last week's episode. But any thoughts on valuation here? sighs the raise?
Jeff Cohen:We covered a lot of that last week where on the surface, it sounds like a lot, but we
Jeff Cohen:think we were both pretty impressed with, you know, some of the numbers that were in that deck.
Jeff Cohen:So you know, neither of us thought the 4 billion was that outrageous? Obviously good on them now
Jeff Cohen:kind of getting that the tape? The No. The other thing that was interesting, I think they did a
Jeff Cohen:drop, right, like a token drop a reviewer. You're seeing that this ad token?
Paul Dawalibi:Yes. Yes. But only two owners? I think. Yeah, the priority was to owners of
Jeff Cohen:Yeah, so basically, the way I understand it, right is if you owned an eight, you
Jeff Cohen:basically got dropped these tokens, which adds a significant amount of value. So pretty cool, you
Jeff Cohen:know, that the the early members of the community were rewarded for that, you know, buying in early
Jeff Cohen:and got big allocations of those tokens. Look, I
Paul Dawalibi:I've been privy to the deck. I went through it. And it's you know, there's definitely
Paul Dawalibi:impressive things in there. Or they did, they did 137 million in revenue last year selling JPEGs
Paul Dawalibi:like let's can can we call a spade a spade, right, like selling art, which is phenomenal, right at at
Paul Dawalibi:huge kind of margins. So it's hard to it's hard to knock the $4 billion valuation. It's hard to poke
Paul Dawalibi:holes in this. I think the one area where I worry about this is they a big part of their deck is
Paul Dawalibi:this Metaverse project right to this game. They're building an MMO RPG like World of Warcraft style,
Paul Dawalibi:obviously not in that universe. But it's a game right and a lot of this valuation I feel like in a
Paul Dawalibi:lot of the future of this business hinges on this game being a success. And what scares me and this
Paul Dawalibi:is my this is not a yoga lab specific comment. This is a industry wide general comment. Everyone
Paul Dawalibi:sort of makes the assumption that building a huge really successful game is just sort of easy,
Paul Dawalibi:right? Like, we just have to say we're making a game. And the game will be fun and successful. As
Paul Dawalibi:if that's not like, incredibly, incredibly hard. And, you know, like most other forms of
Paul Dawalibi:entertainment, right? For every one game that's for every fortnight or Wow, or any of these huge
Paul Dawalibi:successes, there's 1000 games that are made that no one ever plays. I worry that so much of this
Paul Dawalibi:valuation, and so much of this company's future really is hinging on the success of this game.
Jeff Cohen:Well, it's an interesting point. I mean, that's something I was actually going to ask
Jeff Cohen:you. And maybe you sort of already preempted that with the answer. But do you think the investors
Jeff Cohen:investing in this are looking at UGA as gaming company, a media company, an IP sort of just
Jeff Cohen:brand, or I guess, a tech company? Like what's the core advantage that they have?
Paul Dawalibi:I can tell you, their deck really opens with none of those words, it opens with,
Paul Dawalibi:we're all about culture, right? So it's a culture company. It's a meaning like, it's changing
Paul Dawalibi:culture, it's changing society. And, you know, like the, they're tapping into sort of this, this
Paul Dawalibi:cultural shift. And, you know, there's a lot of like that, at the heart of it, I think, reading
Paul Dawalibi:between the lines, because they never actually explicitly say it. Almost this this company's
Paul Dawalibi:future really is as a gaming company, right? It just so happened, it will just so happen to have
Paul Dawalibi:this foundation of NF T's and blockchain and those kinds of things. But I think all of their success
Paul Dawalibi:that really hinges on this game so hard to not call them a gaming company. Now, are they that
Paul Dawalibi:today? Obviously not right, today? It's more I don't know what you would call it today. To be
Paul Dawalibi:honest, it's the it's closer to an art gallery than a than any other business. Really. Yeah. So
Paul Dawalibi:we'll see. I don't know, I'm not I have seen nothing about the game, right, obviously, hard to
Paul Dawalibi:make judgment, but I suspect they're gonna find it's harder, especially the category of game. You
Paul Dawalibi:know, we host the business of esports podcast also, which we spend all our time talking about
Paul Dawalibi:gaming. MMO RPG is like the universe is littered with MMO RPG failures. Even New World right didn't
Paul Dawalibi:work and that had Amazon behind it and a ton of hype early on. That is a really, really
Paul Dawalibi:phenomenally difficult genre to go after. But if they succeed, for billions gonna seem like a, like
Paul Dawalibi:a, like small like peanuts, right? Like, the sky's the limit if they do succeed, so I get I get the
Paul Dawalibi:bet. All right, let's, um, let's move on. Let's talk about and this has come up. I think we've had
Paul Dawalibi:some interesting conversations around this. It's good that you put this story in here to touch on
Paul Dawalibi:the headline here inside plan for utopian Metaverse city that will have almost no rules or
Paul Dawalibi:police. So an architecture firm has plans to design a Metaverse centering around self
Paul Dawalibi:governance. Zaha Hadid architects, one of the world's most prominent architecture firms, has
Paul Dawalibi:shared plans to develop a utopian digital world, according to a new report by CNN. Several
Paul Dawalibi:illustrations of the futuristic and urban Metaverse, which by the way, if you're watching
Paul Dawalibi:this, you can see them on screen if you're listening I'm sorry. Designated liber land I think
Paul Dawalibi:that's the pronounce it. We're also shared by Zaha Hadid architects, curved buildings a city hall
Paul Dawalibi:collaborative working spaces, shops and business incubators can be found throughout the virtual
Paul Dawalibi:platform. Perhaps most notably, it says that architecture firms digital community will focus on
Paul Dawalibi:self governing ideals based on Liberland. A micro nation founded in 2015, by Czech politician vit
Paul Dawalibi:Jedlicka. It says if you start off with a clean environment and you don't throw garbage around
Paul Dawalibi:that can be maintained without much policing. Zaha Hadid architects, principal architect Patrick
Paul Dawalibi:Schumacher told CNN so, you know, we you and I have had this discussion. Should should the
Paul Dawalibi:metaverse be sort of like international international waters. Anything Goes right. And it
Paul Dawalibi:feels like that's the direction this is taking. I think there's also an other interesting
Paul Dawalibi:conversation here around architecture firms getting involved in the design of Metaverse or
Jeff Cohen:at that, I mean, they're true, incredibly well known.
Paul Dawalibi:I'm so curious to get your thoughts on both of those.
Jeff Cohen:Well, the first one is, or the second one is I guess we kind of hit that one verse a
Jeff Cohen:little bit. Yeah, it's interesting, right? I think, you know, it's probably to be expected.
Jeff Cohen:We've always said, you know, ever every business is eventually going to have to shift or have some
Jeff Cohen:focus into the metaverse. So it may it makes all the sense in the world that a firm like da deed,
Jeff Cohen:who their buildings in real life are pretty impressive. architectural feats like they're each
Jeff Cohen:always like very unique and like they're not just like cookie cutter buildings. I know there's a
Jeff Cohen:bunch of them in New York City, our city we both live. So yeah, it's pretty. It's pretty cool to
Jeff Cohen:bring bring kind of that real world architectural experience to the metaverse to build some of these
Jeff Cohen:cool, unique structures there. I'm not sure I understand the thread between what you know that
Jeff Cohen:for bringing this whole libertarian, no police ideal, which is interesting. I mean, I don't know
Jeff Cohen:from a legal perspective, how that will work is obviously it's one thing to say, hey, there will
Jeff Cohen:be no laws in the metaverse and I guess the question is like, when we talk about policing, is
Jeff Cohen:it like, Hey, you do something in the metaverse like, let's say I go and kill someone in the
Jeff Cohen:medical digital avatar like, yep, technically, that's not illegal. When you kill someone in Grand
Jeff Cohen:Theft Auto you don't the police don't come to your house and like, kill him and put you in jail.
Jeff Cohen:Having said that, you know, then there are the questions of Okay, what if I steal your money?
Jeff Cohen:Right? What if it's real money, you know, money that's in the metaverse, but it can obviously has
Jeff Cohen:a Fiat, you know, element where you can transfer to fiat. If I steal your money in the metaverse.
Jeff Cohen:Should there be a Metaverse police? Should there be this wild west where there's no laws? Or is you
Jeff Cohen:know, law enforcement gonna come and say, Hey, you stole $100,000 from from the prophet like, now
Jeff Cohen:you're going to jail? Like, I don't know where I fall on that. I'm curious. Start where you fall.
Paul Dawalibi:i You said something I want to just key in before I answer that, which I think I
Paul Dawalibi:hadn't thought of. But when you said it, I was like, Yeah, you're right. Like, what's the
Paul Dawalibi:connection here between the architecture firm? And this idea of like a totally lawless metaverse.
Paul Dawalibi:Seems weird. And then it got me thinking like, why do we need traditional architecture firms in the
Paul Dawalibi:metaverse anyways? Right? Like, one of the things architects do is they work with engineers, they'll
Paul Dawalibi:they'll come up with a design a shape, right, but they want to make sure that the building will stay
Paul Dawalibi:standing, right? If you make a huge dome like that it's supported properly, right? It's all these
Paul Dawalibi:kinds of building considerations, none of which apply in the metaverse, right, like almost none of
Paul Dawalibi:the skill set other than the creativity involved with architecture. Literally, nothing applies in
Paul Dawalibi:the metaphor. So I would argue we don't really need real world architects operating in the
Paul Dawalibi:metaphors, if anything, the experience of a real world architect may limit what we do in the
Paul Dawalibi:metaverse because you're sort of you're rooted in these ideas of physical, you know, metal and
Paul Dawalibi:concrete and glass. So I thought that part was weird. But then I agree. It was also weird that
Paul Dawalibi:like, why why? Why are they saying it has to be lawless? Like, what is? What are the art? What
Paul Dawalibi:does the architect care about? How this Metaverse is policed? My my stance on this, I think
Paul Dawalibi:continues to be it has to be, it has to be a completely open space. Now. You're right to bring
Paul Dawalibi:up this idea of theft, right. But that, to me is no different than if you play a game, right? If I
Paul Dawalibi:play WoW, let's say, and there's a bug that crashes my computer. I go to the developer of wow.
Paul Dawalibi:And I say, hey, this bugs crashing my computer give me customer support, right? It's not a I
Paul Dawalibi:don't. I don't like I'm not looking for the police to rectify the issue. And you're right, stealing
Paul Dawalibi:real, like, in game currency that maybe has a like, if someone trades me something in Wow. And I
Paul Dawalibi:pay way more for it, because he tricks me than what it's worth, like, should I should he go to
Paul Dawalibi:jail for that crime? It feels it feels weird to connect virtual worlds in real worlds, from a
Paul Dawalibi:criminal sense. But I do think there has to be some kind of recourse to solve problems like that
Paul Dawalibi:with the developers and owners call it of these meta verses. I don't think it should just be well,
Paul Dawalibi:you know, sorry. Like, screw you. You lost your money. There has to be some recourse but I don't
Paul Dawalibi:think it should involve any kind of policing and definitely not real world police.
Jeff Cohen:Yeah, I guess I guess it depends what what lines you're crossing, you know, I can stick
Jeff Cohen:up scenarios that, you know, where issues occur in the real world based on interactions in the the
Jeff Cohen:metaverse. You know, obviously, that that that becomes different. But you know, the examples you
Jeff Cohen:said, Yeah, I don't think we're going to see a world where you're going to be bringing in like
Jeff Cohen:the SEC to enforce, you know, transactions that occur in the metaverse. Having said that I am sure
Jeff Cohen:that as more and more of commerce and just the economy moves into the digital world. You're going
Jeff Cohen:to have these agencies and maybe there'll be some sort of Metaverse, enforcement agent See, you
Jeff Cohen:know, the different countries will have. And you know, based on where the player is or like where
Jeff Cohen:the players physical body is. There will be an enforcement agency that that kind of oversees
Jeff Cohen:behavior and activity in the metaverse. Right. I mean, you wouldn't have thought that for social
Jeff Cohen:media. But you know, you do have that not? Well, so we don't have that for social media. No, but
Jeff Cohen:you we do you know, there are rules and laws and like, hate speech and cry, like, you know, there
Jeff Cohen:are things you can say on the internet
Paul Dawalibi:that you can get controlled by the platform's fair.
Jeff Cohen:That's fair point, right.
Paul Dawalibi:Like, is this not like, like the point if I, if I go and say something horrible on
Paul Dawalibi:Twitter, right? There's no police that's gonna show up at my door. I may get canceled. I may.
Jeff Cohen:Yeah. You know, like this amendment here in the US. But if you did that in a different
Jeff Cohen:country, you you might actually
Paul Dawalibi:this is why I think there there can't be right. Like I think it's a slippery slope
Paul Dawalibi:of trying to figure out too many scenarios. And I think we're just better off by saying, it's open,
Paul Dawalibi:right? Like, if I steal your money in the metaverse, you can go and complain to whoever the
Paul Dawalibi:developer is, right? But if you come kill me in real life, because you're so pissed as a
Paul Dawalibi:consequence, like we've solved for that, right, like real police will then get involved. There was
Paul Dawalibi:no like, there's no requirement to police. The Metaverse in that sense. There's a real real life
Paul Dawalibi:crime. I could see that but I don't know, man, maybe which it's hard to sort of think through
Paul Dawalibi:every possible future scenario when you don't really know how it's all necessarily going to play
Paul Dawalibi:to preface
Jeff Cohen:this next story that you're about to swap. I mean, this one done, I'll let you do your
Jeff Cohen:preamble. But this one does bring up an interesting scenario that I actually had never
Jeff Cohen:thought of. But when I read it, I was like, wow, that actually could happen. It makes a decent
Jeff Cohen:amount of sense.
Paul Dawalibi:So let me introduce the story. It says here, which I think is interesting connected
Paul Dawalibi:to the last one obviously, does the metaverse may bring new cyber risks. Here's what companies can
Paul Dawalibi:do. And it says here, the metaverse has drawn, there's three bullet points. The Metaverse has
Paul Dawalibi:drawn hype in recent months with companies like meta and Ralph Lauren rushing to get their foot in
Paul Dawalibi:its virtual door. But cybercrime in the real world is already becoming more rampant. Checkpoint a
Paul Dawalibi:cybersecurity firm reported a 50% increase in overall attacks per week on corporate networks
Paul Dawalibi:last year, compared with 2020. As businesses rush to plant their flag in the metaverse, not all may
Paul Dawalibi:realize the full dangers of this new world. And they start with you want me to read this example
Paul Dawalibi:in the beginning because I think that
Jeff Cohen:was worthwhile. Yeah, I
Paul Dawalibi:actually thought was pretty cool. So it says here starts it says, imagine discussing
Paul Dawalibi:a confidential multi million dollar deal with your boss, the conversation ends, and you both leave a
Paul Dawalibi:while later, you both meet again and you bring up your earlier conversation, but your boss has
Paul Dawalibi:absolutely no recollection of the deal. What just happened in the metaverse, this might mean you
Paul Dawalibi:were the victim of a hacked avatar or deep fake said Prabhu rom head of the industry Intelligence
Paul Dawalibi:Group at cyber Media Research, deep fakes, referred to manipulated digital figures that look
Paul Dawalibi:or sound like someone else. So it is an interesting example here. Right? It's, it's, it
Paul Dawalibi:comes down to identity security, right? Where, because, you know, you don't see me, you see some
Paul Dawalibi:digital avatar that anyone says could sort of be behind it and faking me that, you know, people
Paul Dawalibi:faking me in the metaverse may try and do nefarious, nefarious things. Do you see this as a
Paul Dawalibi:real risk, Jeff? Or is this a little overblown? And a little bit like, you know, scare tactics for
Paul Dawalibi:a headline?
Jeff Cohen:I think it actually is not sinner. I mean, certainly, if we're talking about
Jeff Cohen:enterprise, you know, enterprises moving into the metaverse, and if you you're going to have a
Jeff Cohen:confidential meeting, you know, in a boardroom, like where you're discussing quarterly results or
Jeff Cohen:something like that. Yeah. I mean, like, if you don't know who's there, that's, that's a huge
Jeff Cohen:enterprise level security risk, right? Like, let's say, you know, and this is something that's
Jeff Cohen:common, you know, you see, enterprises have to deal with this now with Zoom and different
Jeff Cohen:conferencing technology. But imagine if you were talking about a confidential deal, and then the
Jeff Cohen:telephone dial a number was public, and you didn't know who was online, because they're not talking,
Jeff Cohen:but they happen to be dialed in, and you're, you know, either listening or or they're talking and,
Jeff Cohen:you know, they're using some voice emulator. That sounds like someone on the view that you know, it
Jeff Cohen:it is a risk. You know, it's the same risk we see right now with maybe social media, stuff like that
Jeff Cohen:anyone can go online, create a fake profile on LinkedIn, and reach out to people and you see it a
Jeff Cohen:lot and people get tricked, not knowing who they're necessarily speaking to, because it's not
Jeff Cohen:that hard to create a semi credible LinkedIn profile or email address with one letter or
Jeff Cohen:something like that. So it is a risk. is not an unmanageable risk. But it is it is probably
Jeff Cohen:something as enterprises are thinking about coming Metaverse something they have to they have to
Jeff Cohen:consider. But we agree on the blockchain technology. But yeah, it's it's definitely a thing
Jeff Cohen:something that will have to happen.
Paul Dawalibi:I mean, wouldn't you agree though, that the metaverse in some ways, because it
Paul Dawalibi:increases the complexity required to fake an identity, in some ways, probably reduces the
Paul Dawalibi:overall number of these kinds of cyber crimes like, and I'll just give you a real example.
Paul Dawalibi:Right? Like, when email the internet first came out, it would have been phenomenally easy to spoof
Paul Dawalibi:someone's email address, right? Or make it look like an email was coming from someone else.
Paul Dawalibi:Because it's not it's just text on a screen. It's not that technically difficult, right? You just
Paul Dawalibi:change the header in the in the, you know, the the email and you can sort of fake the where the
Paul Dawalibi:emails coming from. Whereas like, with the metaverse, while, technology has gotten better.
Paul Dawalibi:Doing a great deep fake, whether it's emulating voice emulating a face, right, in real time,
Paul Dawalibi:requires a certain amount of computational complexity and AI and all kinds of tools, right,
Paul Dawalibi:like, it's doable, but I find the complexity to commit these crimes is, is increasing. It's not
Paul Dawalibi:decreasing.
Jeff Cohen:That's fair. I think it depends what you're comparing it to. I think, you know, if
Jeff Cohen:you're comparing email apps 100% agree with you. They're there. You know, obviously, this example,
Jeff Cohen:the article was written with purpose, like you said, at the outset, a bias, if you will. But if
Jeff Cohen:you're comparing it to, in person meeting, or sits, it's less
Paul Dawalibi:true. I mean, I think in person meetings, I was going to be the most secure. I
Paul Dawalibi:just, I find some of these articles, like when they say 50% increase in overall attacks per week,
Paul Dawalibi:like, was it one, and it went to one and a half, you know, like, right, like, the percentage
Paul Dawalibi:increase isn't really telling. And so hard, like, my gut tells me there's not a real serious risk
Paul Dawalibi:here. And the solutions are sort of simple, right? Like, it's not that hard to have some kind of even
Paul Dawalibi:like biometric on the human end on the real life end. And then a badge, you know, that's impossible
Paul Dawalibi:to fake because it's on the blockchain, whatever, in the metaverse that says, this, this is who I
Paul Dawalibi:am, right? Like, I all these problems, I think are solvable. It is interesting to think, though, that
Paul Dawalibi:there will be an entirely sort of new set of cybersecurity products, companies, etc, that have
Paul Dawalibi:to tackle them. And don't
Jeff Cohen:last part is the key. I didn't take the article to read like, Oh, my God, this, the
Jeff Cohen:metaverse won't work because this insurmountable problem. It's more like this firm trying to get to
Jeff Cohen:be one of the thought leaders of figure out what those solutions aren't, you just identified two
Jeff Cohen:pretty pretty darn good ones. But there will be a whole industry of these same we wouldn't be
Jeff Cohen:internet and when computers came up, you start having cybersecurity kind of 1.0 2.0 or
Paul Dawalibi:3.0 if they whatever they want to stay consistent with. Let's talk about FTX FTX. In
Paul Dawalibi:the news this week, Jeff, and this one. The headline here FTX announces support for Web three
Paul Dawalibi:gaming begins in house NFT game development, Sam Venkman, fried, who's the founder and CEO of FTX
Paul Dawalibi:announced FTX his entry into web three gaming through the acquisition of good luck games. The
Paul Dawalibi:the FTX CEO revealed that the in house developers would build a white labeled package for the
Paul Dawalibi:exchange FTT price attempts recovery in response to the key developments in the FTX ecosystem. So
Paul Dawalibi:here's what I want to focus on, though, I think, unless you have some other ideas on this is the
Paul Dawalibi:tweets that Sam put out, which I think are extremely telling where he announced this. And
Paul Dawalibi:I'll just read some of them. I have them up here, but I'll read some of them. He says FTX is really
Paul Dawalibi:excited to support Web three gaming, but we have a very specific approach support great games. Too
Paul Dawalibi:many times our ecosystem has tried to build out NFT enabled games, but forgotten the first step,
Paul Dawalibi:which is to build a great game. And just as importantly, web three should make a game better,
Paul Dawalibi:not neutral or worse. If integrating crypto hurts a game, we don't want to do it. We're excited to
Paul Dawalibi:support a number of our gaming partners with a full web three suite. We also want to have an in
Paul Dawalibi:house case to develop our white label package. But the single most important thing about that in
Paul Dawalibi:house game is again that it's a great game. Now he goes on to talk about how they love the team and
Paul Dawalibi:you know some of the other reasons why they're so excited about this and that they play the game
Paul Dawalibi:which is doubly interesting. But look I can't help but good like the Prophet was right you know one
Paul Dawalibi:of those moments when put up all the graphics. Well, no, I got so much
Jeff Cohen:explanation series of the problem. was right or Sam is listening to the podcast. So, of
Jeff Cohen:course,
Paul Dawalibi:Sam was listening to the podcast, of course, he got this idea from the meta business
Paul Dawalibi:pi test. And but I got a lot of hate. I'm telling you a lot of hate. For the comments I made at the
Paul Dawalibi:PLATO earn crowd create conference thing I did, where I said, everyone's lost track of what's
Paul Dawalibi:important here, which is making a great game. And Sam, I consider a genius, obviously, is built,
Paul Dawalibi:maybe the most incredible company in the entire crypto industry. How, like, it's impossible to
Paul Dawalibi:disagree with this approach. Right. But it feels novel.
Jeff Cohen:Well, you know, I'm Mister devil's advocate. But here I don't I mean, this has been
Jeff Cohen:our mantra sort of all since we started this podcast and started talking about playing around.
Jeff Cohen:And I don't think I know you said you got a lot of hate it. But I don't think it's a super hot Tech,
Jeff Cohen:I think the industry is starting to recognize that some of the early iterations of these games
Jeff Cohen:weren't fun. And it was always a fun games are coming. So I think that Sam is absolutely right.
Jeff Cohen:Prophet was also absolutely right. I don't have too much that because I think we're fully in
Jeff Cohen:agreement here. It has to start with the games and it becomes a mechanic. Nobody would ever say, hey,
Jeff Cohen:I want to create an in game purchase game. Like no, no, you have a game. It's fun. And then
Jeff Cohen:there's in game purchases. It's a monetization metric, not the game.
Paul Dawalibi:But he says a couple of things that I think you're right, I think maybe people are
Paul Dawalibi:coming around to the idea that good games are around the corner, which I don't know, right? They
Paul Dawalibi:may be. But he says something that I think most of the crypto world misses, which is he says web
Paul Dawalibi:three should make a game better, not neutral or worse. And I will I will extend his comment one
Paul Dawalibi:step further. And it's it, we have to communicate to gamers how it makes it better it can like if we
Paul Dawalibi:can explain how this makes it better, in some very real way for that gamer. No one's gonna care,
Paul Dawalibi:right? And that the masses of gamers that everyone wants to pick up in the crypto world, what none of
Paul Dawalibi:them will care. And so I think it's, it's a level of insight I haven't seen from anyone else yet.
Paul Dawalibi:And to get the CEO of a big crypto company saying if integrating crypto hurts the game, we won't do
Paul Dawalibi:it. Right? Like, that's an interesting take. Because he could have said, Look, if integrating
Paul Dawalibi:crypto makes us a ton more money, we'll do it, even if it hurts the game a little bit, right,
Paul Dawalibi:which is the position of just about everyone else in the industry. So I thought this was really
Paul Dawalibi:refreshing as a take. And it'll be interesting to see in my mind, Jeff, what they do with, you know,
Paul Dawalibi:with with a game development studio in house, and how they manage to build that while also trying to
Paul Dawalibi:push, you know, the adoption of digital assets, which is their whole mantra,
Jeff Cohen:do you think this is part of a bigger strategy to bring a lot more and that's because I
Jeff Cohen:know they're building the white label product. They've hired a bunch of people in gaming. So
Jeff Cohen:obviously, they have a bigger strategy here. But I guess I hadn't been aware of previously that it
Jeff Cohen:was going to be to bring a bunch of development teams in house. So do you think, do you think fast
Jeff Cohen:forward 18 months from now we're gonna see FTX be as big of a brand in gaming as as Zynga. And
Jeff Cohen:that's obviously a little bit hyperbole, but they're gonna have 10 different teams building
Jeff Cohen:1520 games.
Paul Dawalibi:I don't know if it's the numbers 15 or 20. But I definitely would get behind and we'll
Paul Dawalibi:probably put money on betting that we see at least another two kind of bets, whether it's an
Paul Dawalibi:investment or an acquisition. When you're at the scale of an FTX, right, like you can't go timid or
Paul Dawalibi:go like small scale. I think the the interesting part of this play is there's clear conviction
Paul Dawalibi:around gaming and how it it integrates with their core crypto business. I wouldn't be surprised if
Paul Dawalibi:FTX over time, you know, puts a billion dollars more into gaming. That would not shock me. And I
Paul Dawalibi:think that it's also just smart. And it's gonna increase the competition for game developers,
Paul Dawalibi:which is an already like, super heated market, which I think is interesting. When you start a
Paul Dawalibi:game development studio like a year or two. I just I want to end on on one last very quick story
Paul Dawalibi:here, which we'll spend two seconds on. And it's another game developer, which I think is
Paul Dawalibi:interesting game fam raises 25 million to build games for Roblox and I have just one quick
Paul Dawalibi:question for you here. Obviously, we're big fans of Roblox from a Metaverse perspective I think
Paul Dawalibi:they're ahead of the curve of stripe anyone else. But is that a lot of money when you're building
Paul Dawalibi:for only one platform, Jeff like is that how Big as the risk when you're so tied to the success of
Paul Dawalibi:just one platform who future is bright, but it's definitely not certain.
Jeff Cohen:It is a risk. I mean, it's a risk in a couple of different ways. I mean, one, the the rev
Jeff Cohen:share on Roblox is actually super low relative. So actually, it's funny people, all the developers
Jeff Cohen:complain about the 30% rev share on on Apple and Google, it's actually robots take 70% of revenue.
Jeff Cohen:So it's, which is, you know, kind of mind blowing, if you think about where's Tim Sweeney? Yeah, that
Jeff Cohen:they're able to get away with that. I guess it's because most of the developers on there are UGC
Jeff Cohen:and small creators. So they probably don't even necessarily realize and certainly can't, and
Jeff Cohen:bargain that I imagine that number will start to shift, because Roblox is incentivized to bring
Jeff Cohen:more creators on, they've talked about that. So I would maybe that number shifts over time, but big
Jeff Cohen:rev share, take. It's also still limited in terms of geography and age, right. So you're developing
Jeff Cohen:for a very limited demographic and Mindo robots, massive steps towards trying to expand both those
Jeff Cohen:things. But it's still been a challenge to them. So you're kind of limited there. And then the last
Jeff Cohen:thing, and probably the most important as we're thinking about sort of the professionalization of
Jeff Cohen:UGC platforms, which I think is actually a pretty cool trend. And I'm a big fan of the guys that
Jeff Cohen:game fam. And actually, we know some of their investors conference, he was the lead investor,
Jeff Cohen:which we're big fans of them. But discoverability is a big issue for these platforms. There's no
Jeff Cohen:real way to advertise very well and do publishing on the platform. So I'm sure you know, that's
Jeff Cohen:something they're they're doing in other places, but there's no great app store optimization or
Jeff Cohen:advertising there is with Apple, and Google for robots.
Paul Dawalibi:Yeah, I think this is great for game fam. I think it's exciting. When you get a
Paul Dawalibi:big raise like this in the industry in general. I think the investors here are not going to make a
Paul Dawalibi:good return. And I probably not anywhere near what they think they're going to make just because like
Paul Dawalibi:the numbers are what they are. $25 million raise means the business at least worth 100 million. If
Paul Dawalibi:you're a VC fund, you need to have at least a billion dollar exit. Right? That's what you need
Paul Dawalibi:to believe you can get to I just don't see how you build a billion dollar game development studio
Paul Dawalibi:just on Roblox today. Now,
Jeff Cohen:that's a great question that be radically different for it because that is a good
Jeff Cohen:question. Like how big does Roblox have to get? Because I could I guarantee you there were
Jeff Cohen:probably people saying that about mobile, you know, 10 years ago, and mobile there's only this
Jeff Cohen:many gamers, there's only this many call like, and I don't know what the adoption curve needs to look
Jeff Cohen:like and what the math and the model kind of shows. But I suspect there will be a billion
Jeff Cohen:dollar company built that builds you know, is be sort of the Zynga for robots. Like I bet there
Jeff Cohen:will will be game fam I have no idea but we are bullish on Roblox. I know that so you probably
Jeff Cohen:should believe
Paul Dawalibi:I'm very bullish on Roblox, but I don't think I don't think other people can just
Paul Dawalibi:hitch it's like, it's like saying why haven't we seen even take an even bigger example? In more
Paul Dawalibi:traditional media? Right? Have we seen a billion dollar media company built just on YouTube? No,
Paul Dawalibi:no, there's media companies that are that big that put their stuff on YouTube, but among other
Paul Dawalibi:places, right. And there are there are influencers and creators on YouTube, who are make good living,
Paul Dawalibi:right, maybe even great living or maybe 50 100 million dollar businesses, but multibillion dollar
Paul Dawalibi:scale where you're you're sort of locked into just one platform. And YouTube's what 10x The size of a
Paul Dawalibi:Roblox right now. Right? Like it, it feels like a large hurdle. And I worry that maybe the investors
Paul Dawalibi:didn't think that one through I don't know it. It's a lot of sexiness. Right. And Roblox growth
Paul Dawalibi:has been tremendously good. And maybe it's just a 10 year play, right? Like, Jeff, I think you could
Paul Dawalibi:probably convince me if you're saying, yeah, in 10 years when Roblox is that half a billion users?
Paul Dawalibi:Could we see that? You're right, like maybe someone was saying this 10 years ago about mobile,
Paul Dawalibi:so I couldn't buy maybe the longer term story. I don't know if I buy sort of the, hey, the venture
Paul Dawalibi:fund that's in here needs an exit within two or three years that I'm a little more concerned if
Paul Dawalibi:we're if we're shortening sort of the time, the time period. Man that time flew by Jeff, that
Paul Dawalibi:brings us to the end of this week's podcast. I just want to remind everyone, go leave a five star
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Paul Dawalibi:All the topics we cover on this show, Jeff, thank you as always, to our audience. Thank you guys for
Paul Dawalibi:tuning in every week. And don't forget the future is fun. We'll see you guys next week.
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