Yat Siu - Animoca Brands

Not on the ASX.

It was. That's correct. Yes.

Well, so no, first of all, thank you very much. It's a pleasure to be here. I mean, I would say generally I think of my life as fairly blessed, right? In the sense that, you know, it wasn't easy. You know, we didn't come from money. We grew up. My mom was a musician. And for the most part I was raised as a, you know, my parents split when I was quite young even though both studied music. So I was raised by a single mom who basically as a musician you had to go on tour. So I lived mostly by myself. Um you know, which is also interesting because today the idea that someone who's like a, you know, like a tween would live by themselves is considered kind of weird. But back then, you know, everyone was like, yeah, you know, whatever, you know. So people do what they do. Uh but but I think that helped shape basically sort of my experience. Um you know, I have no regrets. Everything I look back in life are all lessons that I see that helped me sort of get to where I am today and continuing to build. Um and you know, and and without going into the full depth of my life story, you know, I think um I think one of the insights for me maybe there's two that sort of had a real big impact. You know, studying music wasn't my thing, it was my mom's thing. But uh seeing how artists and creators struggled and you know, in the beginning I didn't really understand it, but I became I got to understand later on that, you know, she was incredibly talented as many people in her craft, but she didn't know anything about money. And and and that was uh you know, and growing up in Austria, nobody talks about money. Um and in fact, in most of Europe, you know, still to this day, you don't talk about money. It's kind of dirty, you don't want to talk about it, it's uncouth, you know, all that type of stuff, right? Like the German phrase for it would be like verpönt, you know, something that you just don't do. Um but the problem is that, you know, uh the people who do understand money were the ones who were managing stuff for my mom, took everything, right? Uh so, that was kind of one experience that um and then the second experience is you know, my mom was uh you know, this is so I'm a child of the '70s and my mom used to work um basically in the Eastern German part um of Berlin at the Komische Oper. So, I would, you know, basically cross the border on occasion to see my mom. Um and you know, take the train and all that kind of stuff and then basically cross the border and you would see that um you know, another part of the world, shall we say, which you know, people talk about oh, communism, you know, all these socialist and communist, they have not seen communism. Okay, right? Like literally, when you cross the border into, you know, what was East Berlin back then, it was truly poverty and chaos.

Well, the thing is is that it wasn't so much chaos because everyone was frightened, but it was just stark because people didn't know. It was like really information control. So, like imagine going to a supermarket and you have essentially food items that are about a meter apart from each other because there was too much space. I mean, this is unimaginable to think, you know, that when you go into a supermarket today, imagine there's a banana and an apple 1 meter apart. And another banana. And maybe maybe maybe, you know, I don't know, a pear. Like it's mind-blowing today to think about that. And so

Exactly. Absolutely opposite of abundance. And that sort of definitely shaped my thinking around sort of, you know, um what isn't good and and sort of the whole issue of equity and and what that all means. Although again, I wouldn't really know what that means later. Then I went to America because of Atari. I experienced capitalism on overdrive. And then I came to Hong Kong. And capitalism was so extreme. I mean, so extreme where you have, you know, it's better today, but back then when I came to Hong Kong, there was no social safety net. Zero. So, you would have 70-year-old sort of, you know, senior citizens literally carrying up trash, right? They're like it's a So so you have the complete opposite extreme from coming from a sort of social democratic place to, you know, an ultra-capitalist place. Right? And and so I saw that as well. I said, 'Well, that's not right either.' So there were different constructions of these things that I had experienced that helped shape my worldview. And over time, I found a lot of this to influence me in the way that I think about the world and in the way I think about our business.

So, I I like to describe Hong Kong as a back then certainly Milton Friedman's wet dream. And and the reason being is that everything basically was just centered around the capitalist nature, which is basically, you know, free market competition. And if you look at the rankings of Hong Kong, Hong Kong consistently has ranked as the freest market in the world.

It was British Hong Kong at the time. But even as it moved was it was handed over to China, China, you know at the handover, China maintained very much of its capitalistic enterprise. So a couple of things that really sort of stand out, right? Zero capital gains tax, right? Um you know, taxes would only be paid once a year. Flat taxes for corporates, um you know, 16 and a half percent. A staggering tax basically, but maximum I think 15% or 70% whatever it is, but more importantly no dividend taxes, right? And so what you end up having is a system where people who are very wealthy, they don't pay themselves a salary, they just pay themselves a dividend, right? Um and but because Hong Kong has so really expensive real estate and the land is controlled by the government, a lot of its revenue comes from land sales. So it didn't really need to, you know, it didn't really need to have a sort of necessarily a big sort of VAT or typical type of tax base. But I think the other thing also is that, you know, we have a local, let's call it gambling setup with the Hong Kong Jockey Club. A lot of that funding goes into public works, right? Hong Kong is a very one of the safest cities in the world. Um you know, it's great, it's got nature, it's got high-rise buildings, it's very very modern. Certainly a lot of things work a lot better, you know, in Hong Kong than many other parts of the world should I say, including the Western developed countries for those who have visited it. So it's a really well-functioning system. But it also has the worst or one of the worst Gini coefficients in the world. Okay, right. So you have effectively a population around 8 to 9 million people, a million people who live um basically at the poverty line um despite the fact we're talking about a, you know, city-state that has reserves greater than, you know, some of the big names in the world in terms of US dollar reserves, fiscal reserves, and is an economic power hub and one of the major stock markets in the world, right? So you have that kind of sort of, you know, unequalness if you will. Uh and that was the '90s and the '90s was very sort of, you know, very flamboyant as well. I remember going in there. This was still when the airport was in um Kai Tak where you would, you know, the famous thing where you land into the city through the buildings, right? We don't have that anymore, but that was back then. And I think it had two interesting, you know, I'll liken it as a little bit more dubious as dubious stats, but let's just say those were the stats at the time. I think highest Rolls-Royce and highest Rolex per capita at that time. Um and and frankly, you know, that gave rise to a lot of sort of vibrant activity, a lot of business activity, but also a lot of noise and a lot of bling and a lot of, you know, things that maybe were not so good. Now, I would say many countries that have experienced this or places, it goes through these cycles. I mean, I think the most recent example pre-war would have been Dubai, right? Dubai is a wonderful place, a lot of things going there, incredible enterprise, but at the same time also a lot of bling. And you know, probably per capita highest in I don't know, gold watches, whatever it is. Yeah, right, exactly, right. So anyway, so you see these cycles, um and and there is um and I think it's a philosophical perspective to because in Hong Kong, this idea, which I think is shared amongst many people, is like, you know, taxes aren't good because it takes away from people putting back into investments and so on. Um and I think there's a nuance around that, right? Because I think, you know, in those places, you also have a case where unfortunately, you have a lot of excessive greed, right? And then you accumulate for the sake of accumulating, which then doesn't become productive capital either. So I think a balance needs to be struck. I think, you know, places like Hong Kong have changed. So now we do have a social security net. You know, um there is talk about making changes, but on the other hand, I see other places like in the rest of the world, I'd say in Europe, I feel like they're going extreme on the other side, which is stifling innovation and stifling entrepreneurship. Because you would say, well, if I'm working so hard, if I'm building a business, who am I building it for, right? So I think there is that counter balance and of course, the US is right in the middle of it.

Well, the Gini coefficient is really just a statistic, right? And you could have places that have high inequity, but you could still have sort of a degree of high hope just because you are at the bottom end of the spectrum doesn't mean that you don't think you can make it. And I think the problem we face in the world today is that hope itself is in shorter supply than it used to be. So, you know, and when you talk about the American dream and I sometimes joke about it, but I think it's very very true is that the American dream is much more alive and well in Asia than it is in the US, for example. So, and it has a lot to do with the sort of idealism of, 'Okay, I went to college, you know, I did everything I was told to do, and then I can get a job.' Right? That's one. And then, 'Oh, I do have a job.' But then, because of, you know, I remember like back in the '80s and '90s, um sort of, you know, the money printer wasn't going the way that it is going right now, right? Um inflation, you know, the whole thing looked different. So, you had essentially curbs on money was considered a store of value. And today, if you say money, you end up losing value because of, you know, what happens with QE and with the whole devaluation of currency. So, as a result, those who have assets end up accumulating more wealth and accumulating, you know, ultimately more power. And no matter how hard you work, you end up basically being left behind. And I think this is the challenge also of our time because too many people are still being told that labor is essentially that true source of value, you know, and I grew up in German-speaking Europe, right? And you know, Arbeit ist gut. Also, so the whole idea that, you know, work is good for the soul and the morale, and, you know, the whole sort of, you know, proletarian and Protestant value system around sort of, you know, work. And again, work definitely has dignity and honor. But the thing is is that if you don't know how to invest, if you don't know how to use money, then you're left out. And that's exactly what's happened. And so, in Hong Kong, for example, even though we have a high Gini coefficient, we also have a very high financial literacy rate as a financial capital. So, the consequence is is that even if you don't have that much money, you see a possibility that, 'Oh, okay, maybe I invest in stocks, or maybe I do a startup, or maybe I do something, right?' Um and as a result, there's opportunity despite the gap. And to your point, it does motivate you, right? But if you don't know this, if you're somewhere else where nobody knows um you know, how to like somewhere in the countryside, somewhere further away, right? Um and you witness this sort of, you know, inequity and you see it on social media as well. You go like, 'There is no way I can do this and nobody will teach me how I can get there.' Then you have this problem. Like, you know, you will have high inequality certainly in New York and in San Francisco, right? And Seattle, you know, you'll get that. You'll get high inequality. But do you see people really really I mean, people will be upset, but people will be motivated to work because the pure environment demonstrates it and you have tools in which you can say, 'Okay, fine. Maybe I should invest in this or maybe I should understand this, right?' But then when you're somewhere else where your peer group doesn't do this and you have no information on how to do that, which is most of the world, then you basically just get unhappy and then you get envious and you get all these problems, right? Um and you have tall poppy syndrome, which is particularly an issue in places like Europe for instance, uh which basically has killed the entrepreneurial spirit. It's almost, you know, um in some circles, it's almost like embarrassing if you're successful to talk about it, right? Um and you can't do that. And that's hard. And then if you're a young person, you don't have somebody to look up to, either.

Well, I mean, I think the big thing, first of all, from a tooling standpoint is that with the AI, we have a lot of tools already today. The issue is is that most people don't know how to use it, but it is there, right? And your capacity to speak and your capacity to write is available for most people. So, I think that's the first point, right? Which is that you will now have the tools, if you wanted to, to grow exponentially. In a way, you could argue that exponential growth was only available for a familiar few. If you were in technology, if you know how to code, if you had these contacts, you know, or if you knew about money, that's a certain thing. But in a way, AI is a great equalizer. Um first as a tool and now through generative AI, you have the ability to basically do things that you couldn't do before and they could literally be your co-worker for, you know, basically dollars. Okay? So, in that sense, I think the opportunity is there. So, I think part of the big mission is to teach people that you now have the same superpower in a way that everyone else in the top class has, so to speak. And so, the parallel I put is a little bit like, you know, in I remember in the '80s, knowledge was essentially power. Like in particular. Uh and if you had access, if you were a wealthy family, you would have an Encyclopedia Britannica in your house. That was power, right? Uh and others would have to go to the library and they would have to borrow a book and they could only go to a section. And so, that little segmentation was that knowledge gap. And then, you know, after the internet came, we all had access broadly to more information and it actually created a certain type of equalization, right? Now, we have this equalization of basically doing, so to speak. Like, I might not be interested in finance, but you know what? My agent can help you with this and then I can make some intelligent choices around that type of stuff. So, from an execution standpoint, I don't think we have that gap anymore. But what we do need is people to be inspired. And I think one of the big challenges big things about like I look at entrepreneurs, I look at the headlines, right? So, if you're in America and you're like an Elon Musk, you are a cover boy, right? It's like the hero archetype. When you go to Asia, it's usually the team, right? It's like, you know, we're a team, we're communal but they still celebrate them, right? For the most part, right? But it's very rarely one individual. I mean, some there are, but really the way they present themselves is it's the team. It's like you know, 10 guys or three people or something like that, right? When you go to Europe, the headline is um you know, it's like the problems with AI like it becomes something negative, right? And those perspectives matter because that's why in America you can it's not just about the money. It's like, 'Hey, if I'm an entrepreneur, I could be like this.' Right? You role model it. If I'm an entrepreneur, I'm part of a team. If I'm an entrepreneur in Europe, I could be ostracized. Uh my friends might not talk to me. I maybe I did something wrong. And like this is the And again, I'm exaggerating a little bit. It's not true everywhere. But if media doesn't play its part to promote growth and enterprise, then what happens is it self-reflects. I mean, it's just a mirror, right? So, nothing else you can do. Uh and I do think policies need to be put forward around if you really want what's best for the country, maybe you need to talk about the successes more than about the dangers.

So, yes, I would say so. Um I mean, I would say the big thing and the so the counter thing obviously, the way that social media has I think of AI as the great counterweight to the kind of frankly toxic social media that we're often seeing. Because social So, both of them are actually leveraging something that's very innate to us as humans, which is essentially our thirst of knowledge, right? To keep learning, our curiosity. You know, we have this dopamine loop. When we learn something new, it's like, 'Aha!' right? And the brain basically lights up and you go, 'Oh, this is great,' right? And that's actually why we as a species keep evolving because we are fascinated with the new learnings and we want to see the surprises and we just want to see the innovations, uh you know, in big and small format and then we keep progressing and progressing, right? Um what social media does is hack into that system. That same form of novelty and surprise but then they just end up doom scrolling, right? Um to capture your time and attention and sell you ads, right? Um and with the very interesting and this is a parallel because we come from the gaming industry, you know, one of the challenges the gaming industry has had A lot of people are like, 'Oh, gaming, you know, it's slightly declining or not new content.' You know, it's actually much more simpler than that. I mean, there are some demographic issues in terms of, you know, less children being born in the developed countries, but really the big challenge for gaming was TikTok. When TikTok came, it sucked all the attention from the same crowd that would normally be playing games, right? But guess what? What's TikTok scared of? AI, right? Because now the same people are spending more time on AI than on TikTok, right? So, you have this interesting sort of thing that's happening and I actually think of it as a net positive, but we have to think about how AI is used, but then that's positive because AI is mostly a knowledge tool and they've actually created a system where I ask a question, I get an answer. That is interesting. I ask another question, I go further. And I think the next step from that is the agentic system because the agentic system is no longer passive, right? So, ChatGPT is passive. It's like, okay, I ask a question, you give me an answer. It's a better search engine that's more precise, right? And maybe more deeper, but it's still answering only your questions. Whereas an agentic autonomous system comes to you. So, imagine you having a conversation and then you're done and then an hour later it comes back, 'By the way, um what you said before, I have a suggestion or I have a discovery or something else that completely flips the script.' A lot of people think it's not that special but it's a very small nuance that makes all the difference and this is happening right now and I actually think this is where the farmer gets engaged because he's no longer prompted by his own because the limit of the farmer should we say is not that he's not a smart person. He doesn't know what to ask. The you know, what is the most valuable thing that we have given all the AIs? It's our questions that we ask. It's not the knowledge. The knowledge is the index. It's the question we ask. But what if I don't know the question to ask which is what the problem is generally speaking. I don't know what to ask. Well, now AI through the agent will ask the question for you. He will prompt you. You know, we're talking about sort of loop engineering and graphs and so on. What are they really doing? They're re-interrogating the system for better results, right? And so you as a human can now witness that and you can learn from that and that's the equalizer. That to me is the opportunity.