Founder and CEO, Xsolla (Xsolla Inc.)
FinTech World - EP: Shurick Agapitov - CEO of X.LA
Fintech World explores the Meta-Verse with one of its pioneers and key contributors to the space Mr. Shurick Agapitov founder of ...
About Shurick Agapitov
Shurick Agapitov, founder and CEO of Xsolla, released a book titled *Once Upon Tomorrow: Harnessing the New Opportunities the Metaverse Creates* in March 2024. In interviews promoting the book, Agapitov described it as presenting his vision for a "new internet" that some people call the metaverse, which he characterized as a 3D, video game-like iteration of the internet. He stated that he wrote the book to inspire the next generation of internet entrepreneurs and to encourage readers to find opportunities for themselves in what he called the "3D internet." Agapitov also discussed his earlier venture, X.LA, which he described as a platform intended to facilitate revenue distribution for intellectual property creators and owners, allowing contributors to receive a percentage of sales rather than a one-time payment. In various interviews from 2022 to 2024, Agapitov elaborated on his definition of the metaverse, stating that it is not necessarily about virtual reality or specific platforms like Roblox or Fortnite, but rather a new internet built with video game technologies. He expressed the view that the metaverse will consist of "meta sites" — 3D spaces developed by video game developers for brands and intellectual properties. Agapitov also commented on the role of large companies, saying he would not be surprised if Facebook (Meta) fails within four to eight years, and noted that the inability to create a currency that governments allow for transactions is a "deal breaker." He emphasized that he believes people in the future will work more for protocols and themselves than for corporations.
Transcript (36 segments)
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Sean McKay0:02
Hello everyone and welcome back to Fintech World. I am your host Sean McKay. This is the show we talk all about the fintech industry and all kinds of exciting things happening in the world of fintech. That, of course, includes blockchain and cryptocurrency. And today we're going to dive into the metaverse. And we have a very interesting gentleman with us, the textbook definition of a UCLA entrepreneur, Mr. Shurick Agapitov. A little bit about Shurik's background: as he put himself through college and learned to code when he was just a child, and like many successful entrepreneurs, he saw an unmet need in the industry and a space that he could help with. And that involved allowing video game developers and publishers to collect money within games. So that was his company. Works with the top video game producers around the world, including Ubisoft, Epic Games, and PwC Corporation. And earlier this year, he formed a company called Xsolla. So I definitely want to welcome with a big hello Mr. Shurick Agapitov to the program. Shurik, thank you for joining us today.
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Shurick Agapitov0:58
Thank you for having me.
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Sean McKay1:01
So we were more than thrilled with your bio and we read through it. Definitely you've been a huge part of the web3 space for some years now. But before we get into some of your newer contributions, some of your technology, could you just tell us a little bit about how you got into it? Like what were things like when you were a child and you were getting into coding and so forth?
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Shurick Agapitov1:21
So I was born and grew up in Siberia. I started this company when I was 21, so I'm 25 made it and I moved to Los Angeles, which is the best place on Earth. As you mentioned, my company is Shopify for video games. Individual games, those who play, there's no less knowledge, plenty of the Amazon of the video game says that it's an app store, it's an Xbox store, PlayStation stores on the PC with this team. So some of the customers are game developers who want to go direct to consumers; they use my solution. I'm helping with everything to run their store on their own website. Their payments are a big part of it. And in the video game industry, they know me as a company who aggregates payments. I want to become the company who aggregates opportunities. Meaning we're launching new products like helping the game developers find new users, create the user-generated content pipeline, and all of them are involved in revenue share. So when I invest in video games, I like project financing and video games. My new company, a web3 company Xsolla, is based on revenue share.
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Sean McKay3:01
So obviously you're ahead of the curve as an entrepreneur and a guy in this space. What were some of the trends you noticed that kind of led you?
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Shurick Agapitov3:11
So today it's really, really straightforward. All of the brands in IP are going to be in web3 commerce. Those web3 commerce items are going to be used in the metaverse using video game technology. What I see is there's an opportunity to create revenue share, put that all in the contracts, just create those items on the blockchain and execute it so everybody gets paid, right?
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Sean McKay3:55
It's such an exciting time here. But there really is a lot of controversy around web3. I mean, there's been a lot of pushback about ownership and decentralization and so forth. I mean, you were quoted saying a single entity cannot own web3.
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Shurick Agapitov4:12
So I built a successful web2 company in Xsolla with the video games, comics. So now what we build in Xsolla is going to be technology which is expected to be open source. We have a greater chance if we make it not a walled garden like companies like Facebook or Apple are trying to do. I'm not going to own it. Whatever I build, I'm not going to own it, which as an entrepreneur is really hard to wrap my mind around. So whatever I'm building, I'm enabling maybe some of my future businesses, but most importantly, the businesses or creators of those digital items.
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Sean McKay5:08
You guys have a big belief in the power of education. It plays a lot into your attack into your organization, right? Can you speak about that a bit?
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Shurick Agapitov5:18
Yeah, so as I mentioned before, I grew up really, really poor, and the internet provided the opportunity for me. It was my equalizer, great equalizer. I was able to learn and earn on the internet. So that reasoning stays with me. Now I'm in a privileged position where I can create the tools and show the opportunity to the people who are able to learn how to create digital items for various worlds. And partner with the big brands and Nike owners to collaborate on those digital items and monetize them. I think it's what's fair. Also, how I got successful with my website business: I've been successful not because I get paid a high fee, I get 5% from the sales. So you can imagine somebody who is working even at big corporations today. Imagine somebody who worked at Disney, a successful animator creator of a character for one of Disney's big projects. But all over the weekend we can create a character for an indie game, and the indie game would happen to give them, I don't know, 5% or 2%. So which is not available to Disney as a public company. They maximize for shareholders, not necessarily for the creators. Now they treat the creators really well, inside Disney it's incubating talent, they pay really well, they have stock programs, but they don't have a direct pay-for-performance in that category where you have a percentage of sales. So that gives me belief that people will not work for corporations anymore; they're going to work for themselves, participating in different projects. And again, I remind you, all the IP, all the brands are going to be on the web, there's no doubt. So somebody needs to create those items.
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Sean McKay7:48
Yeah, I know it's an exciting time. There's a lot of innovation and a lot of amazing ideas floating around. We were recently down at Consensus in Austin. I'm not sure, were you part of that conference? Were you down there?
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Shurick Agapitov8:04
Yeah, I got there. I had a nice party with the peers and I got COVID, unfortunately. But you know what was interesting? Walking around, all the amazing companies that were on the floor, a lot of new startups, a lot of people that have been in the industry for a while. But the metaverse area over there was really what caught my attention, and I spent a lot of time over there talking to a bunch of different developers.
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Sean McKay8:26
What was your first interaction with dealing with the metaverse?
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Shurick Agapitov8:31
I kind of started my business almost 20 years ago, and we didn't call it the metaverse. We in video games – I'm still playing two or three hours a day – we kind of live in a virtual world. We have virtual items. My company sells virtual items. So it's like redefining them as NFTs, but NFT is just a different way to store and exchange items, a very new idea which opens up and merges basically a bunch of video games. So it was no doubt the metaverse is going to be created with video game technology. I'm native to video game technology and video games. I spend most of my career in video games.
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Sean McKay9:21
What were the key reasons that led you to believe that the world needed a better place to ensure everyone was working and creating equally? Like what led you there?
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Shurick Agapitov9:34
Well, look, with a lot of the people on the internet now, looking, we can make money there, with 200 million influencers today who can produce content. I think Facebook and YouTube are in a position to work with them, but not necessarily on great terms. But if you think about it, if you get 100,000 influencers and each of them have maybe a mid-tier influencer database with 10,000 followers, that's a billion people. So I'm taking 0.1% of the whole population of influencers and creators, and they can reach a massive audience. The same in video games: there are 2 billion people playing video games. But at the same time, every time video games need to get new users, they go to Facebook, they go to Google, they go to Apple – companies that have all the cash on the planet. They pay them cash to buy acquisition. There's definitely an opportunity to work better – for video game creators to work better with influencers and brands, and work better with people who not necessarily are creators but they created pretty things in virtual worlds. It's artists, it's developers who make the item work in different virtual worlds. All this community can be better together if they find a way to work with each other. So those internet strangers who don't know each other need to find each other on the internet and make a deal, and handle complicated revenue sharing. Could be complicated like a movie, when you see the movie and all the cast, most of the cast get fixed pay. So if they all align on a revenue sharing split, that would be something interesting. That's my vision for the disintermediation of the business.
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Sean McKay12:16
Well, that sounds like quite the smart contract, I suppose. Yeah, yeah, that's amazing. So let's talk about Xsolla then. I'm sorry, I know you've been talking around it and some of the concepts you've been talking about are part of it, but what does it describe in general? And what are some of the highlights that came up when you were creating and launching it?
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Shurick Agapitov12:38
We have 75 employees who get payroll from Xsolla, and we started whiteboarding – what's the future, what's our web3 going to be, how we're going to create our own top three tool for our business. And we found out that Xsolla is a place where we want IP and brands to meet digital items creators to make this item work in virtual worlds and video games. What we found is the missing piece: it would be great if we have a platform where we meet each other and contract, chat. We're still a lot in the whiteboarding stage, so we're looking for partners who can help us execute this quite wild vision. And again, we're happy to share what we have and what we're building. We're not going to own this; it's going to be a public good. But there is opportunity around that. Imagine if we already have this marketplace – there is opportunity to create businesses around. So Xsolla is the best place to run this business because we have a lot of IP owners here and a lot of people who know the production of digital goods and animations and creating stories. That's an absolutely necessary component. What we see a lot from web3 is a massive infrastructure already built, but often it's a solution looking for a problem. So we are a very free company; we're not going to do our own layer one or our own technology. We're looking for partners in the blockchain space who can help us utilize existing technology to solve this massive problem.
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Sean McKay15:00
Well, it sounds like you guys give a lot of thought and consideration to the creator. Let's get into some of the technical aspects of the platform. Tell us specifically how Xsolla gives content rights back to the creators.
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Shurick Agapitov15:18
My vision for this is: imagine you're a big IP studio and you have a catalog of IP and you don't mind monetizing that IP for big digital web3 items. All of them want that, but every business is going to be present in the metaverse. The metaverse is a landscape: there are people, spaces, and items. I want to talk about spaces and items. Imagine you have the only superhero and all the locations. Let's say John Wick – I'm a big fan. There's a nightclub he has created. You own that. You have a lot of talented people on the internet who are able to create their version, their visualization of John Wick. They can create multiple versions of the appearance of John Wick, and that's going to create the concept of the multiverse. Some of the universe's John Wick is an alligator-like walking wood. So they can create this base character and create fan art, but fan art becomes an NFT, and this fan art can become an item that works in different virtual worlds, different spaces. From a technology perspective, even if it's the same item, it's a lot of work to develop to make this item work in a specific environment. So with a lot of coordination and revenue share, imagine this item could be created by 8 to 10 people. So coordinating that when you negotiate a deal for movies, there are 20 parties who can get the royalties and body parts. It sounds complicated, but for the artist, it's going to look like: I draw all day long, some sort of characters. I draw 20 characters, I like 10 of them, they get approved, and I start getting my paycheck. I don't need to go invoice people. Yes, yes.
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Sean McKay18:06
How do you deal with the ability of needing to change things down the line?
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Shurick Agapitov18:10
Well, each of the items, what I see, we need to create a standard one as NFTs upgradeable. If you make the digital item as an NFT work in one world, it's not guaranteed from a technical perspective it will work in a different world. So you need to invite professionals or individual contributors, internet strangers. Somebody say, 'Hey, I have this item that works for this world, I want it to work in that world. If it's going to monetize in that world, I want to pay 40% revenue.' So who can make that work?
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Sean McKay18:58
Yeah, I understand. That's the race to that solution for sure. It sounds like you guys have definitely uncovered some real practical workarounds for that. Speaking of that, what are some of the other untapped opportunities you believe are floating around in this space?
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Shurick Agapitov19:19
Well, the metaverse represents three opportunities, and I think every corporation and everybody who wants to participate in the metaverse should pick one: people, spaces, or stuff/items. People: if you have a user base, you need to make sure you open up this user base, how your users can be part of the metaverse – identity, logins, wallets. So if you have a user base, you think about what kind of partnership you can have to monetize this user base and open up to get those users metaverse-ready. Spaces: if you're able to create environments or experiences like Roblox or VR Chat, so how we make them work? I personally believe and I choose to believe, I want to create experiences based on what today are called games. It's like video games run on the server and you're watching essentially like a YouTube video but you can control your YouTube video. So it's available today for games. Basically you need a high-speed internet but you don't need an expensive computer.
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Sean McKay21:12
Is that something like Steamworks? Is that where you're speaking of something similar to that?
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Shurick Agapitov21:16
It's more like Xbox Cloud and PlayStation. But I envision that those experiences are not complete games, because a game is expensive, you need to ship it and put it together in a box. So it's more like an unfinished game, an experience in your room, works in the game but they're going to work on the web. That's going to be like your 3D websites. Today, like the metaverse, they have rendering on the computer, the graphics are not into Unreal Engine but there is technology which is a world where you stream on Unreal Engine 5. So I believe this space is going to be created. We'll work with the pilot up with some of the nightclubs. We want legendary nightclubs have that, and we can have other items inside these nightclubs and people can gather together. We know that this is not an empty space; we need to have good content. The last piece: you're able to create the items or you own the items, so you own the appearances or you want the music. That's a really important part.
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Sean McKay22:41
Sure, so those are the challenges at foot. Yeah, I've only got a few questions here and we'll wrap up. Speaking to that, what would you say some of the major restrictions are? In terms of some of the challenges you're trying to overcome in working with the metaverse?
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Shurick Agapitov23:01
Definitely technology. It's massive, technology is going to be improved, it's not going to improve itself. Mindset of the people who are ready to switch outside, require a lot of open-mindedness, looking for the ability to see this future. And lastly, what we face in the metaverse, we want to bring revenue share and we believe there's high potential for the long run, but there's a lot of reality as a modern business – it requires some upfront payments. We expect people would be super enthusiastic about instead of the pain of paying upfront and limited to have the long term. So it's not that all of them are not super enthusiastic; they want to have both. Can they have both? Find a way how to have both. That requires some investors and capital who would be able to invest in the digital items created by IP and participate in that.
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Sean McKay24:22
What are the real opportunities that someone at a 10,000-foot level needs to understand?
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Shurick Agapitov24:30
NFT is now a household name, everybody heard about NFTs. But the number I see is only 3 million people who have touched every experience that has been created in web3. So from 3 million to 3 billion people like in video games and digital items, we're still very, very early. Creating those items in the metaverse and eventually items – that's a huge opportunity. But you want to find a metaverse partner who understands how to create those items.
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Sean McKay25:13
Tell us what the road ahead looks like for you guys.
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Shurick Agapitov25:16
We're not a startup that do or die, because we have a privilege. My previous website business, I'm 100% on that business, so I can afford to whiteboard and fund over two or three years. But I hope we're going to launch next year something to show. We're looking for partners we can knock down this wall by ourselves.
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Sean McKay25:42
You're nothing but fascinating, dude. You've done a lot of amazing things in your life. Your company is definitely on its way to success. We are thrilled to have you on our show here today. We can't thank you enough for giving us some insight into what you do. What's the next show you're going to be at? In terms of a conference, which one are you planning on going to next?
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Shurick Agapitov26:02
I don't have it yet.
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Sean McKay26:05
Thanks so much for your time today. Thanks everybody else. We're going to leave links to all your stuff below for everybody. Just check out down below to see more and read more about Shurick. Like and subscribe and all that good stuff. Ladies and gentlemen, until next time, this is Sean from Fintech World and we will see you later. Thanks again.
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Shurick Agapitov26:28
Thank you so much, my friend.