Welcome to another Founder Wisdom Pod. We have Yat Siu for round two. Last time we covered his background, which is pretty fascinating. Today I wanted to speak more about the brand that he founded. It's called Animoca Brands, was pretty big and still is. It was on the ASX at some point and it's into gaming. You can recognize some games that they publish, such as CryptoKitties, right? So, hell of a story there. Yat, welcome to the podcast for round two. Tell us a bit more about yourself and Animoca.
Well, thank you for the invite. It's a great pleasure to be here again. I think last time we had a nice sort of philosophical banter about the state of the web, broadly speaking, and everything else around digital property rights. But very quickly, my background: I've been a really sort of a tech entrepreneur for almost 40 years. I hesitate to say that because that just sort of marks my age, I would say. But I've been doing this for a while. Most recently with Animoca Brands, which is a company that was originally founded as a gaming studio way back in 2011, and today is considered one of the largest, certainly, consumer brands in the whole blockchain space and also the agentic space. We have over 600 portfolio companies, and most recently we're also a leader with AI agents with Mocaverse, which is, you know, one of the top three sort of personal agents on OpenRouter today.
And Animoca, I think, was founded around what, like 2018? 2015, sorry. That was a bit... that was a couple of years after Satoshi published his white papers, right? Like, give us a...
Yeah. So the background on this one... yeah, and the background on how we got into the blockchain really was really sort of not really related to Bitcoin. But actually, just to sort of go to the background: Animoca started in 2011. So that was literally just like two years after Satoshi wrote the white paper. But we weren't really involved with anything in the crypto space at the time. But we had basically rebranded ourselves as Animoca Brands and went public on the ASX in 2015. So on the official records it would say we, you know, started in 2015, but really the origin story started much earlier than that because we were basically sort of refactoring the business to prepare ourselves for public listing. And today we are the same company from 2015, hence the 2015 founding date, because we are an Australian corporation as opposed to, you know, a Cayman corporation, which I think was the original sort of Animoca.
But one of the things how we got into the space was one of our studios was involved in building CryptoKitties back in 2017, and that's how we got a front-row seat into NFTs and sort of basically other forms of digital assets, and that's how we got into the space. So, we got into the space because of culture and entertainment. We didn't get into the space originally because of Bitcoin or new forms of money, shall we say.
And what was the premise of the company? Did you know it would be publicly listed and grow that big one day?
Well, no. I mean, I think, you know, you don't... Well, certainly my own philosophy is that, you know, we do want to sort of build something with impact and purpose. So you hope that it will have scale, but we don't go and say, hey, it has to be worth billions or it has to be worth hundreds of millions or whatever. That doesn't seem to be the right frame because really you focus on just building the business, right? And if you succeed in building it, then you will receive essentially the value as the rest of the sort of market appreciates it. And so it's really about sort of, you know, are you delivering something that's of value? Does it have an impact? And more importantly, is there a deeper purpose behind it beyond just value, shall we say, right? And I think this is sort of how we've always decided to build stuff.
And, you know, one of the things that, you know, we had in the early days for Animoca before we sort of saw the light, shall we say, on, you know, the importance of digital property rights was that we were talking about basically making the world a happier place through fun and entertainment, which was also a purpose of a form, right? And so video games was a way to deliver that. So if we can make the world a happier place, then we will do so with sort of forms of digital entertainment. And then we also thought about educating people, you know, or children really, in new forms. And so again there was an impact and a purpose behind that, but not every impact and purpose is grand in scale necessarily. You might hope it will be, but you don't necessarily know until you roll it out. And then, you know, sometimes it becomes big and, you know, sometimes it doesn't. And when it came to blockchain, NFTs, and generally the entire tokenization space, that ended up becoming today a roughly $3 trillion market and will continue to rise.
Right. What was the ups and downs of Animoca? Because yeah, I love the vision, right? And it might not look like nothing on the front end, but on your back end, you have like this flame and this desire to scale things or to make things bigger, right? You have this excitement that is uncommon in most people that I speak to, right? So, and sometimes the market reacts well to some of these products you've published. Sometimes there was issues. Sometimes it's overleveraged, right? So, what has been the roller coaster ride of Animoca so far?
Well, I mean, first of all, we're in crypto, so the roller coaster ride seems to be every day, if not, you know, maybe every week. So it kind of goes pretty wild. I can describe a few highlights, but, you know, maybe just to answer your sort of question specifically as to sort of what brings the spark and what brings the ambition, shall we say, it's really sort of wanting to, you know, it sounds corny, but it's wanting to sort of make the world a better place, right? And it requires a healthy dose of optimism, right? In other words, you have to be sort of... you have to feel optimistic enough that you think you can make an impact and that sort of people will receive that, as it were, right? So that's kind of a really sort of important part.
And then, by the way, if you have that optimism, then, you know, there will be struggles every day, you know, in terms of sort of things that don't work or frustrations and so on. And that's what it's like running anything really. I mean, if life was always sort of smooth sailing or smooth sailing most of the time, actually, it would be pretty boring, right? So we're big believers that sort of change and innovation can only come from friction. And I think if you look at sort of, you know, I guess life's greatest impacts that we have, not just in the company but on personal, we tend to grow when there is friction, right? When there's no friction, it's nice, but it's kind of boring and nothing happens. But when there's friction, there's an evolution, there's a learning, there's a change, there might be failure, and from that you evolve, right? And so I would say that the more friction you have, the more challenges you face, the faster you learn, the more evolved you are, and the more rapid you are able to make sort of these changes.
Like one example would be, you know, we're one of the leaders now in personal AI agents. We launched a product in February, but really, if you think about the sort of state of the market, agents really only came into play probably at December or January of really sort of, you know, sort of late last year. So if we, you know, if we were just, you know, not moving quickly or didn't have the ability to do so or weren't sort of, you know, flexible enough to do so, then we would be behind like most other companies are today, which don't even have sort of an agent strategy, let alone an agent platform, for instance, right? So there is that.
In terms of ups and downs, I mean, you know, there's a couple sort of, I guess, sort of seismic events in our industry, if I had to sort of pinpoint, certainly in 2023... sorry, '22, when FTX blew up and when Terra Luna blew up, that essentially sort of really set our industry back for several years. We also had a very hostile US regime under Gary Gensler, under, you know, basically sort of treating tokenization and anything tokens as securities. So we had to fight that as well, right?
And I think one of the things that maybe I would say is the harder part is not even sort of the ups and downs of the business, which is something you have to manage and sometimes you have to let go of people and you have to right-size and restructure, and that happens all the time when there's big changes, but it's the fact that because of what happened, we had to constantly fight off the image that, you know, because crypto had a bad reputation amongst certain people, that, you know, when you say you're in that industry, people, particularly back in the day, were just like, oh my goodness, this is like, how could you be involved in such an industry? This is terrible. Blah, blah, blah, all that kind of stuff, right? And so if you don't have conviction, if you don't believe in what you do, then, you know, these type of things can be disheartening. But if you really believe in what you do, then it doesn't matter if people throw rocks at you because, you know, what you're doing is right.
Right. So there has to be a certain level of, call it, righteousness. And I don't mean this in sort of a moralistic way, but in a sense where you feel like the path that you're taking is the right one because it is the better path for the people that you are supporting, or for you, or for your family, or whatever that may be, right? And then you can endure, shall we say, right? Because, you know, the part I struggle with in terms of, you know, what are the ups and downs is that, you know, I don't think there is ever such a case where there isn't an up and down, right? In fact, if you, you know, sort of the belief that certainly I and we as a company have is that volatility is the nature of life, right? And so every company ultimately deals with volatility.
You know, what if, you know, like, you know, what Trump has done recently in the crypto space, for example, has been incredibly volatile and has actually been in many ways also negative for the industry. It's not just been positive on the regulatory side, but on the stuff that's been happening on other areas has had a negative impact, which is why the CLARITY Act initially failed for the time being because of the ethics bill, for instance, right? These are examples that sort of set our industry back, right? Or Bitcoin dropping from 120k to, you know, at one point, you know, somewhere around low 60s or maybe even below, right, in a span of three to six months and, you know, people's confidence shaken in that sector. These are all crises, if you will, right? But you have to sort of ride through them. And again, if you believe in the longer-term picture, then they're basically footnotes in the history of the business.
But yes, I mean, so as I said, you know, there's been pretty big seismic events in our industry that are not necessarily in our control, whether it's big frauds, whether it's regulatory, or even the most powerful man in the world.
Right. How the heck did you scale to 600 projects and are you still like an agency, like...?
No, no, we're not an agency. We're never an agency. We're kind of more like a venture builder. A lot of people sort of look at us in the construct of being a VC, which is partially true, but we're not a fund. We invest out of our balance sheet. So the vision, you know, why we sort of took that is we were trying to build an ecosystem in the space. And to build an ecosystem, we feel like it's better to build it together. And what we did was we took, you know, basically sort of, you know, our sort of profits, as it were, of the business and redeployed it back into the industry because in the blockchain space there is a kind of shared network effect. So if you build, for instance, in an ecosystem that is tokenized, actually through the building of that network, as you empower others, they add value to that network, right?
So in other words, give you an example, for instance, right? The fact that, you know, Robinhood, for instance, most recently started launching a chain and started building on the blockchain has had a net positive effect not only for Robinhood but for the entire blockchain industry because these network effects essentially can permeate across other chains because it is open. The example is that if I basically make money on Robinhood chain or I have an asset on Robinhood chain, I can basically monetize that and I can move it to another chain and I can move it to another ecosystem because it's free, it's open and it's permissionless, right? This is not something that existed before crypto because if you were building something that was on Facebook or Meta, as it is called now, it would be only on Meta. You can't move it out as an application. You'd have to rewrite it or you'd have to have new terms with another business.
But on blockchain, essentially, you could say this permissionless nature allows network effects to travel wherever you like it to be. That's not to say that the network effects are going to be as, you know, powerful as if they were in the same native chain, but you have the ability to make it portable, right? And composable, right? That's the benefit, right? So in other words, as we reinvest back into the ecosystem, we make the ecosystem larger, which benefits the entire ecosystem, but also ourselves, right? And in that way, I would say, you know, you can think of it as almost like sort of, you know, how countries scale themselves, right? Like if a country basically furthers through tax breaks or investment programs an industry, actually what happens is that the country benefits because it becomes more wealthy, it creates more jobs, it has more opportunity, there's more cash, there's growth, right? There's market appreciation, right? And, you know, the country benefits, but everyone else in the ecosystem benefits as well, right?
And that's kind of how we took that approach and why we have so many investments and continue to invest in the space, particularly small companies sort of driving in the area of innovation and growth. And, you know, the parallel, the example I often like to give is: imagine if Apple actually had a fund out of their balance sheet, which you could easily do so, and if they took, you know, just one or two percent of their profits every year and reinvested it to support companies building on the platform, as on Apple. Do we think that the Apple ecosystem would be healthier? And do we think that developers would be much happier to pay their 30% as opposed to basically saying it's a tax and it's a ripoff? We think so, right? Because they know that as they help sort of pay whatever it is that they're paying, they're going to bring in more growth because that money is getting redeployed into new agents and new builders in the space that is better for everyone, right? And I think that is a philosophy that we have, and that's why we continue to make these investments sort of at scale. And, you know, we tend to be very early in them as well. So it's not that we're spending that much money, comparatively speaking.
Yeah, yeah, yeah. You and I talked a lot about AI last time, right? And you've probably read the headlines last week. I believe it was on TBPN, right? They were talking about Vitalik talking about the crypto apocalypse, right? Do you think AI is going to crack blockchain ultimately? Do you think blockchain could scale?
Yeah. So I think our general perspective is that blockchain and AI are very, very tightly integrated. And what I mean by that is that blockchain is effectively the sort of legal system of agents because the immutable nature and the sort of code nature of blockchain is first of all much easier for an AI agent to read and understand, but it's also the transactional layer. And in fact, agents want something permissionless because they want to be able to sort of build on platforms that they can freely move their assets around, right? So, we actually think that blockchain was ultimately designed, in hindsight of course, for the machine economy.
Like if you think about an AI agent, how does an AI agent have a bank account so that it can actually autonomously make payments? It won't ever, or if not for a long time, be able to have a bank account on something like a Bank of America or a Citibank, right? Can you imagine an AI agent having a bank account? You know, they don't have personhood, so it doesn't really work. However, through a crypto wallet, suddenly they become banked and then they have the ability to basically deposit funds into a DeFi arena or they have the ability to buy, you know, Tesla stock because it's tokenized, right? They basically suddenly become part of the financial system. And the same technology that enabled people in the Philippines who didn't have a bank account to be able to do that is now the same technology that can do that essentially for autonomous AI agents who are just getting better, faster, cheaper, and smarter, right?
I also believe, to the question on sort of what Vitalik might fear, is that AI agents are not only, you know, some people will do bad things, they always do, but the same technology will also protect us. And I think there's a perfect example, you know, with the Hugging Face incident that OpenAI... for those of you people who are familiar, basically in a nutshell, OpenAI sort of agents basically went amok and effectively hacked Hugging Face and, you know, OpenAI was unable to support them. So Hugging Face ended up getting a Chinese model that they essentially sort of adapted, effectively obliterated, and had them basically fight off the OpenAI attack and in the end were successful, right? So you could call it a kind of arms race, but the point is the tools are out there, right? So to the extent that there's going to be a vulnerability that is sort of, you know, made present through an AI agent, those same AI agents or different other kinds of AI agents are going to patch it up, right? And that is basically what's been happening in the world as well, right? It's like, you know, when people started stealing, people started building a police force and then started to find a way of enforcing it better and all that kind of stuff. And we're going through those same motions, just much faster because it's sort of, you know, technological and particularly it's agentic.
