Bing Gordon

Partner at Kleiner Perkins, Kleiner Perkins

363 TIP. The Game of Investing w/ Bing Gordon

🎥 Nov 01, 2021 📺 Preston Pysh ⏱ 57m 👁 2653 views

Trey Lockerbie sits down with Bing Gordon. Bing is a legend in the silicon valley world, having first been a co-founder of Electronic Arts (EA), then went on to be a director at Zynga, Audible, Zume, Duolingo, and others. For the last 18 years, he’s also sat on the board at Amazon. He’s now sitting on the other side of the table, as a partner at the prestigious VC firm, Kleiner Perkins Caufield & Byers. IN THIS EPISODE, YOU'LL LEARN: 00:00:00 - Intro 00:01:33 - The gaming industry and how it’s evolved since Bing Gordon's time at EA 00:14:51 - What it’s been like to sit on the board of Amazon...

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About Bing Gordon

Bing Gordon, a partner at Kleiner Perkins and former chief creative officer at Electronic Arts, has continued to speak publicly about the evolution of the gaming industry, the metaverse, and investment strategy. In a June 2025 podcast appearance, he discussed his early career at EA, including writing the company's business plan in 1982 and raising $2 million from Kleiner Perkins and Sequoia. He stated that his metric for a board is "one valuable idea received by the management team per hour of a board meeting" and that "companies go astray when the boards don't ask hard questions." In a March 2024 keynote at the Game Developers Conference, Gordon argued that the game industry has historically been underestimated by investors, stating that "75% of the time investors could prove that the game business would always suck." He also described the metaverse as a "fundraising tool" similar to the "Information Super Highway" of the 1990s. In a January 2024 interview, he predicted that the law will eventually "start recognizing virtual worlds as physical real estate." Gordon has also emphasized the importance of founders as "learning machines" and noted that venture capital firms like Kleiner Perkins seek "every now and then 100X return" over a seven- to ten-year period.

Source: AI-verified profile updated from Bing Gordon's recent appearances. Browse all interviews →

Transcript (112 segments)

Trey Lockerbie0:00

On today's episode, I sit down with Bing Gordon. Bing is a legend in Silicon Valley, having first been a co-founder of Electronic Arts, or EA, and then going on to be a director at Zynga, Audible, Zume, Duolingo, and many others. For the last 18 years, he's also sat on the board of directors at Amazon. He's now sitting on the other side of the table as a partner at the prestigious VC firm, Kleiner Perkins Caufield & Byers. In this episode, we cover the gaming industry and how it's evolved since his time at EA, what it's been like to sit on board at Amazon and how that opportunity materialized, what makes a great investment, and how founders should be protected at all costs, and so much more.

Bing is one of the most interesting people I've interviewed so far. He brings a wealth of experience and knowledge to everything from entrepreneurship, to fundraising, to investing, and beyond. I know you will enjoy this as much as I did, so sit back and enjoy this discussion with the fantastically brilliant Bing Gordon. Welcome to the show, Bing.

Bing Gordon1:04

Thanks, Trey.

Trey Lockerbie1:05

When I was kind of looking into your background, I've got to tell you, it was one of the most interesting bios I've come across. You're a pretty interesting dude. Started working in Disneyland, then went into commercial fishing. Ended up in gaming and everything else, and I even read that you go to Africa on occasion to study tribal dance. Is this true? Is this all true?

Bing Gordon1:27

Yeah. There's photographic evidence of many of the above.

Trey Lockerbie1:31

Incredible. So why don't you tell us a little bit about, through all that, how you came to be an executive at EA?

Bing Gordon1:39

There's the really, really, really long story, there's the really long story, there's the long story. The short story is that I became enamored with the concept of virtual worlds when I was a punk-ass kid working at Disneyland. They have these robot characters fixed in place, all audio-animatronics, and there was one of Abraham Lincoln for example, and then there were a lot of them in the rides, like Pirates of the Caribbean, all the pirates would do stuff. And I had this fantasy that they could come to life, walk around, and I could save and restore stories with them.

And then commercial fishing, one day we were weathered in, and then my other deckhand while I'm cooking after we worked all day out in the rain fixing nets, came in with a Heathkit catalog, the cover of which was, 'Build your own home computer.' And I went, 'Aha, that home computer is going to allow me to build what I call virtual Disneyland.'

And then through another series of fortunate events, I wended my way to Stanford Business School, and at Stanford Business School, I met a guy who wanted to do the same thing for Dyson, card sports games, based on a baseball card game called Strat-O-Matic. And five years later he said, 'I'm going to start this company,' and I said, 'Great. I've got three award-winning guys to start an agency.' And he said, 'No way, you've got to come on board.'

So I did, and seven years later, Electronic Arts IPO-ed, and seven years later, Goodby Berlin and Silverstein, which would've been Goodby Berlin Silverstein and Gordon, got picked by Ad Age Magazine as the advertising agency of the year. So multiple good choices, but all happenstance along the way.

Trey Lockerbie3:29

When you look back at your time there at EA, what's the most memorable event that comes to mind? Were there any other big wins where you rang a bell and you said, 'This is kind of a career changer for me?'

Bing Gordon3:42

There are many. I found that the moments that most resonate for me in gaming are moments where I've got a mental image of a loved one or best friend combined with a screenshot. That was the surprise. It wasn't like film or TV where you'd just look at the highlight. It's the highlight attached to a person. So a lot of the moments were when my daughters played games I was working on and gave me feedback. Those were the most resonant.

The first great moment that I, we wrote a business plan and said, 'Someday, games are going to be bigger than movies or music,' and everybody went, 'You're so dumb, but we'll invest in you anyway.' And we said, 'Someday, there's going to be games that sell a million units.' And a few years later, we had launched the EA Sports brand with the tagline, 'If it's in the game, it's in the game.' And I'm in New York going to see kind of various retailers, Toys-R-Us, New Jersey, and we'd stay in New York. And I get in the cab, and the cabbie looks at me and I'm carrying a little briefcase with an EA Sports logo on it. He goes, 'EA Sports. It's in the game.' And that's when I thought, that's what a mass-market feels like. That was kind of the first great audience reaction moment.

We had plenty of other moments around games. We had some wonderful moments with Dr. J when we did the Dr. J and Larry Bird game. Pat Quinn of the Vancouver Canucks, we were doing a hockey game. And both times they just said, 'Hey you guys, stick with your day job.'

Trey Lockerbie5:19

That one really resonates with me with the cab, because I can't hear EA without saying the entire tagline in my head, every time.

Bing Gordon5:28

Interesting enough, this is a lesson to anybody doing marketing. The client gets tired of the brands before the consumers do because after doing 'EA Sports, it's in the game' for one year, the CEO of EA at the time came and said, 'Okay, what's your tagline this year?' I said, 'What do you mean, what's the tagline this year?' He said, 'Well you know, what's new this year?' I said, 'No, you don't understand. This is it for the next 30 years.' He said, '30 years? No brands last that long.' And I said, 'Over my dead body.'

And similarly, after we did John Madden Football, I'm in charge of it the next year, the EA salesforce says, 'Hey, we can't sell another one.' Walmart and Toys-R-Us and other retailers said, 'We won't even carry it.' And I had a guy named Rich Hilleman who I worked with for a long time. We looked at each other and said, 'We'd buy it,' and so we went ahead and did it. So you learn again, and again, and again, and again when the experts are wrong, and sometimes the experts are your own selves, so you do have to pay attention to not taking away too many forever truths from temporary failures.

Trey Lockerbie6:30

That's great advice. Would you say that… is it a gut feeling that mostly drives you? Is it sort of a scratch-your-own itch that seems to win out for you in these choices over time?

Bing Gordon6:40

There is instinct. What I discovered, so I acted a little bit in New York for a while and found out about a third of playwrights who had hit plays never had another one. In music, it was called one-hit wonders. And nearest I could tell, the issue with one-hit wonders is they make their first artwork for themselves, and then they become successful and they no longer are the common man. So if they make something for themselves after they're successful, it doesn't resonate with large audiences.

So the trick for creative people is, you make the first thing for yourself, but for the second thing, you've got to make it for specific others. I know I learned this in advertising. Creative people are not inspired by averages. They want to know, Show me Trey Lockerbie, show me his Facebook page, show me his LinkedIn page, show me his Instagram, show me his TikTok. I want to know this exact person, and I'll solve for this exact person, but I'm not going to solve for a white male, 34, lives in LA, drives a Prius.

Trey Lockerbie7:44

It's a Model 3, but I'll take it.

Bing Gordon7:46

Well, I was going to say, maybe you're a little more new-age than that.

Trey Lockerbie7:51

Going back to gaming will be bigger than film, gaming will sell more than a million units, I mean we have far exceeded those expectations. Did you ever dream that gaming would become even what it is today?

Bing Gordon8:04

No, it's bigger than we thought. We thought that one day, 50% of humans would play games every month, but I think the number's about 70% now. The guy who is the marketing consigliere for Intel and Apple, for Steve Jobs, and the various leaders at Intel was named Regis McKenna. He was a first-rate marketer in Silicon Valley before Benioff and Dell and all that, and he had an ad agency, a PR agency. And I spent a lot of time with him kind of back in the '90s, and he had a resonating piece of wisdom that I've since seen elsewhere. He says technology always takes off slower than you think, but when it works, it's bigger than you could imagine. And that's kind of what happened to games.

And by the way, that's what's happening with the internet, that's what's happening with Livongo, and that's what's happening with Airbnb. So this technology does have a way of making more dramatic changes than you can imagine. It's probably going to happen with Bitcoin, it's happening with Stripe, and it happened with games. Then it happened with eCommerce. I remember kind of in the late '90s, I was becoming enamored of Amazon, and thought the future of games was going to be digital, not package goods. Because I was there when package goods got invented. When I started in games, games shipped in baggies. So package goods, boxes were like this innovation. People who came in the games business after boxes thought, 'Well games are always in boxes.' No, no. That was just a temporary invention. The next thing is going to be digital. They said, 'Well, you're crazy. Games have been in boxes my whole life.' And I said, 'Yeah, not in mine.'

Trey Lockerbie9:43

Yeah, I'm curious about that intersection between gaming and commerce. I'm not that familiar with the gaming industry, but from what I'm hearing, the most popular model right now is this freemium model where you can play the game for free, but then there's sort of these pinch points along the way where you can then pay more to kind of continue with the game. And that raises some questions around impulse control and other potential gray areas around it. I'm curious, what is your take on the freemium model?

Bing Gordon10:08

Television is a freemium model, kind of with advertising. There's a guy, Dmitri Williams at USC Annenberg School, and he found out that 30% of the value in a freemium community was people who never paid. And just think about it, you'd rather be in a stadium full of people for a U2 concert even if a third didn't pay. If there are empty seats, you don't like it as much. So when I was growing up, commerce was… there was a saying, caveat emptor, which is Latin for buyer beware. Which is, you give me the money, and if you're screwed, your fault. You didn't pay attention. And that's kind of the history of commerce back to the Romans, caveat emptor.

And the freemium model is vendor emptor, seller beware because it costs you money if you don't make people happy enough to ever pay. So Facebook started out that way, Duolingo started out that way, and these digital businesses having lots of usage helps you tune your product rapidly. And when your product gets perfect and it makes people happy, some will pay. So the interesting thing about the freemium games business that the rest of the world hasn't figured out yet is, people only pay when they're happy. Imagine how great that would be if commerce was such that you only paid when you were happy. And literally in the freemium model for games, we discovered that people can play 10 days, 20 days. They don't actually give you money until they think they're going to play it for another 30 days.

Trey Lockerbie11:42

When you think of games, they almost seem just like this benign thing that is just for entertainment, but in digging a little bit deeper, you start to discover how much tech is really behind this. I mean, when it comes to consumer insights, it's almost unprecedented.

Bing Gordon11:56

There's even more data. Zynga when it first started getting big, it was getting petabytes of session data. I started in the games business when 140 K seemed like a lot. I remember when IBM AT and the PCAT came out, and it had 640 K of RAM. We were like, 'Oh my God, now we can really do something. Now we can make an endless game.'

Trey Lockerbie12:22

Yeah, and you obviously helped pioneer this over at EA Sports originally, but did you ever think that gaming would get to this point where you have such incredible data about the customer?

Bing Gordon12:33

It's still more potential than actual. In games, if you're a startup, the business model is you make more money per user on average than it costs to acquire them, and you make much more money from the user minus the cost to acquire them than it takes to build the game. And games generally don't become valuable until they're $100 million revenue per game for multiple years in a row, so that's kind of the number. And in 2010, these freemium games averaged about two cents an hour. When we started Electronic Arts, I set the goal of a dollar an hour of value for the customer, so they'd go to a local computer store and buy a game for $40, then let's make sure that it's 40 hours of gameplay.

World of Warcraft, they figured out that they averaged 19 cents per hour of play. By the way, Netflix is 11 to 14 cents an hour, and cable TV in the US is monetized at 17 cents an hour. So games monetize about like streaming movies, about like streaming music, but it wasn't always the case. I can't remember where I got off on this. But if you go to a motion picture theater, for example, your ticket's $5, lasts 100 minutes. So now you're kind of $3 an hour, but if you put in the parking and the popcorn, it can end up being more. Paperback books, if you read 60 pages an hour and you get a 300-page book hardcover for $25, that's four or five bucks an hour. Paperback at $10, that's a buck and a half an hour.

This is not just games. This goes all the way back to Michelangelo. Creators have always had to, on the one hand, make good stuff, and then on the other hand figure out a business model. Influencers have to be entertaining, but they need to figure out a business model. That happened on Pinterest, it happens on Twitch. It happened with the authors. It happens with podcasters. You say, 'I've got a voice. I can entertain the crap out of people.' You're not an artist if you can't figure out a way to turn your hours into money, either directly or through an intermediary.

Trey Lockerbie14:50

Well, I'm glad you brought up Twitch, because that was acquired by Amazon for nearly a billion dollars, which seems like a steep amount but turned out really well. And you've had quite an amazing career on the board at Amazon, and one story that I imagine a lot of our listeners aren't aware of is the fact that you came up with the idea of Amazon Prime on a bike ride with John Doerr, so can you share that story with us?

Bing Gordon15:15

So Kleiner Perkins, the storied investment firm, was series A investor in Electronic Arts, so I got to know Brook Byers on the board for a decade. He was a founding partner of Kleiner Perkins. He always told me, 'You've got to meet this prodigy named John Doerr,' who was the best young salesperson at Intel at the time. And so I met Brook, and then John. And in fact, my wife was John's primary headhunter in the late '80s and early '90s, so we've known these guys forever.

And so in the late '90s, John and Brook invited me as kind of a friend of client or sort of a fan, to participate in investing, but then also I came and gave a speech at their CEO conference. So it was kind of legendary to bring people together, this would be four other venture firms, convened CEOs for shared peer-to-peer learning. And so I did that, and the next year I didn't have to talk. I came back as an invited guest. And a couple of months later, John and I are out for a bike ride. John's kind of an aerobic athlete. And he said, 'I forgot to ask, how'd you like the CEO conference this year?' I said, 'I liked it. First, I didn't have to speak this year so I could just enjoy it, that was great. And second, I really liked seeing Jeff Bezos in person, but I think he's doing it wrong.'

And John goes, 'What do you mean?' And I said, 'Well, I'm an Amazon customer. When the boxes show up at my front door, it feels like Christmas. I think it's kind of what I call an internet treasure. This is a company built on the internet that has proved that my generation is better than my parents' generation. It gives me joy. It kind of up-levels my self-image, and Amazon is one of those. But Jeff talked and he said, 'We're the most customer-obsessed company in the world, that's our goal,' and he didn't tell a single customer story. How can you be customer-obsessed without talking about people?'

And he goes, 'What would you do?' And I said, 'Well, I'd start a loyalty program for people who want to be VIPs to Amazon. That's kind of the way I feel about it.' And he goes, 'Huh.' And I said, 'Well they don't always work, but it'd have to be done right.' He says, 'Well that's interesting. What would you do?' I said, 'Well I'd give better shipping,' because they were doing Super Saver shipping at the time, for $25 you'd get two days shipping for free. And at the time, analysts thought they were famously crazy for giving away so much. I said, 'I'd give even a better shipping benefit. I'd give a concierge for out of stock items or popular items, and I think I ought to get a customer letter, like Bezos's shareholders' letter,' which I was already a fan of, 'Every month.'

And he goes, 'Huh, that's interesting. What would you call it?' I go, 'John.' He goes, 'No really, what would you call it?' I go, 'Amazon Black.' I said, 'I've always admired American Express cards. I've never had one.' But anyway, he pulls one out. They're kind of a total all-star. And then I go, 'Wait, no. Amazon deserves better than that. That's derivative. American Express already uses it.' And he goes, 'Well, what would you call it?' I go, 'Amazon Prime. Nobody's ever used Prime before.' And he goes, 'Huh. Okay.'

And then we went bike riding again. He called me the next day and said, 'Would you fly up to Seattle and go have lunch with Jeff Bezos?' And I said, 'Well yeah.' And weeks later, this is fall of '02, so now it's the day before and I'm thinking, 'Oh, God. I'm going to meet Jeff Bezos. He's been on the cover of Time Magazine.' And I didn't know Amazon and all that stuff. So I sat down and wrote my five Amazon ideas. I said, 'You deserve it.'

Then we walked into lunch, and he came in kind of bouncing on his toes. He's always had abnormal amounts of energy. And he comes in, and I'm sure in the first minute his big laugh broke out, but he was absolutely charming and totally at the moment. And I handed out an eight and a half by 11 pieces of typed paper, and he says, 'What's this?' I said, 'Well, I'd feel like kind of a dork just showing up. I know John said why don't I go meet you, I thought I'd at least bring a gift, so here's my five ideas for you.' And he went, 'Huh, well that's interesting,' and said, 'Nobody's ever showed up for me with kind of a document before to get started with.' Of course, find out later that Amazon was becoming a writing culture.

That eventually led to me getting invited to be on the board. And founders make the mistake of thinking that board meetings are like going to the principal's office, you're just trying to get out alive. I tell founders, 'Your job is to get five usable ideas that you actually write down and calendar by the end of the meeting per half-day board meeting.' You've got to tell your board, 'If I don't get five useful ideas, you all suck.'

Trey Lockerbie19:55

The board meeting is really interesting, and you've sat on a number of boards now, and that Amazon experience is I'm sure very informative for that board experience that you've now had at other companies. Amazon is famous for 14 different leadership principles that they abide by. I'm curious how you compare those leadership principles with other companies you've worked with, and if you started your own new company today, if there are any of those principles that would be must-haves.

Bing Gordon20:23

Let's see, so Jim Collins in the book Built to Last, says that the values you espouse for your company as near as he can tell, it doesn't matter what the values are. It's how well you follow them, and it's the alignment that matters. Kind of the clarity and the alignment. And if you were ever a teenager, you know how crazy it drives you when your parents say, 'Do what I say, and not do what I do.' So it's this conundrum. You want kids to take risks and do stupid stuff, you just want them to do the stupid stuff that in retrospect you realize was riskier than you thought at the time.

The leadership principles I like. I've seen a bunch of people get recruited into Amazon after other success, and they find it hard to believe that values and mission statements actually matter until you see it tested and borne out. Amazon, it's in the public record that when people interview at Amazon, they get interviewed against those leadership principles. And so if you're adding 25% new employees a year, and you interview 10 people to get one, it means every employee on average has to interview two and a half people a year. Managers do more than that, so it's in your face when you get told in this interview cycle, you're interviewing Trey, you're interviewing on think big, and disagree and commit. Find out, what has he done in his career that proves how aligned he is with those principles? And then you get together with everybody else with the interview loop, and everybody says, 'Here's what I think based on the two I covered. Here's what I think based on the two I covered.' The principles are operationalized that way.

At Electronic Arts, the way we operationalize the values, where once a quarter, the six values, A-C-T-I-O-N, a pneumonic to make it easier to remember. And every quarter, one employee we get a statue of one of the six values, but that was it. And then we kind of informally thought, never promote somebody to the VP who isn't an icon for one of the values, never promote somebody to VP who's deficient in one of the values, but that's kind of soft, and it's not operationalized. And Amazon did operationalize it. It's kind of the genius of Bezos, to figure out how to automate stuff to reduce kind of friction and confusion along the way. He just saw it as, many founders should think that building an organization, it's a web service architecture with modules, which were teams, with I/O. And then there's an API layer, which is cultures and goals and communication processes.

I've called Jeff the inventor of invention. It's astonishing to me how much parallel invention gets done, and he does it by basically making the inventors in the company be able to have a hands-free relationship with the rest of the company.

Trey Lockerbie23:27

Do you think Jeff Bezos's skillset is replicable? Do you think it's learnable, teachable?

Bing Gordon23:33

Yeah, it's learnable because he learned it. The best learners, there's two things. Learning is motivation, but it's also reducing stuff to first principles. So the best thinkers, Jeff and Reid Hoffman, Andreessen, and scientists, they go to first principles. And Bezos says, 'I build strategies not on what changes, but what endures.' And so the speed of light endures. TikTok does not. Trying to capture ephemerality with comets going through the solar system is just probably not quite as good as being in touch with kind of the whole galaxy.

The flywheel is kind of written on the back of a napkin, and it's- there's this, 'what do consumers always want?' They want immediate selection and lower prices. Any questions? And each one they deliver can improve the next one, and then what do you inject into the flywheel to make it spin up? And that's kind of the secret to digital business, is low friction and creating flywheels.

Andy Jassy, interestingly enough, talking about how do you interview people. And Jassy not only has this amazing work ethic and high motivation and real clarity, Jassy might be the best writer in the company. He is really, really good. You talk about music, he started out wanting to be a music promoter, and he kind of wandered in a different direction. But he just says that the key for him in an interview is, does the person that he's interviewing have a mental model of how they learn? It's a thing that investors never talk to founders about, but how do you learn? You talked about games and data, having data isn't that useful. You want data that the more data you have the more you can learn, and then the learning supports new experiments, and that's its own flywheel. Usage leads to data, which leads to an improved product, which leads to more usage. And then experiments as an input to data and product improvement.

I like to look at icons in the world of digital who are learning machines. I think Brian Chesky of Airbnb, who I don't work with, is just a learning machine. And you can see, even Jeffrey Katzenberg, he famously tried to have lunch with a new person he found interesting every week for 20 years. There's a bunch of ways to learn. You can do it with books, you can do it with people, you can do it with experiments. Sometimes you just do it with paying attention. But the founders who turn into great CEOs at scale all tend to be learning machines. And by the way, that says when you put together your board, your investors don't optimize for valuation. Optimize for your personal learning.

Trey Lockerbie26:25

I love that. So you're no longer on the board at Amazon, but you spent about 14 years there. And if we go back to talk about endurance as you were just touching on, I'm curious as to what your opinion is on Amazon Game Studios. You mentioned this kind of effect with technology where there's a long tail advantage over time, but so far Amazon hasn't really produced any big hits on the gaming side. Do you think it's just a matter of time before those land and Amazon Game Studios start to compete in a bigger way?

Bing Gordon26:56

Probably. I'm optimistic, the two games that are now in various stages of release, one called Lost Ark and one called New World, both have a lot going for them and getting a pretty good kind of beta test reaction. One irony is that many of the companies in games that have become hyper-successful failed miserably prior to that. Activision failed miserably. EA had one week where the stock went from 41 to 11. Supercell got… it was a studio and a failed company, and they all got laid off. So sometimes the failure is a precursor to success because it really focuses you.

It's a lot easier to have easy success, but by the way, success can sow the seeds of failure. Think about it, if you're a football fan, when your team runs back the opening kick back for a touchdown you go, 'Uh-oh.' Now everybody thinks it's too easy, and you often have a tough fourth quarter. And when you're a coach, you know that. When it's too easy for your team, that's when you eviscerate them. And they go, 'Wait, wait. We just scored. Coach, why are you being so hard on us?' 'No, no. This is going to get worse. Come on. We may have got a touch on that, but you missed that block. Don't ever do that again.' I think I end up looking for micro signs, and when do you get optimistic, and what caused the optimism.

Amazon also does a really good job of focusing not on outputs. So revenue's an output, and what are the inputs? Well, milestone delivery is an input quality. Milestone delivery's an input quality, people's an input. I have found that the thing to pay attention to in the creative process and how people are doing along the way.

Trey Lockerbie28:47

So the secret sauce is in place there. It's not the recipe that's the issue, it's just a matter of time in your opinion?

Bing Gordon28:54

Amazon has a feature called Prime Gaming, which is very much like Prime Video and Prime Music, if you're a Prime subscriber, it used to be if you subscribed to Prime, guess what? You got a shipping benefit. And Jeff figured out really early on, oh no. This is so valuable. Why don't we give them free movies? Why not give them free music? And now free games, because games and entertainment media are unique that people will pay for snippets. Snippets of music are free, they're in the public. Five-second stems are in the public domain. Nobody pays for a page of a book. Nobody pays for five seconds of a movie. Epic sold seven million Skull Trooper digital costumes in a Halloween week a couple of years ago at $15 apiece.

So Prime Gaming does add some… 'Hey, you're a Prime customer. You get some valuable stuff for free in your favorite game.' I have told people forever that, what do you give to the friend who has everything? A virtual sword in the game of their choice.

Trey Lockerbie30:02

Twitch is a total anomaly. It just boggles my mind. I'm not close to the gaming industry at all, but from the outside looking in, it's just kind of baffling what the appeal is for that, and how it's become such a massive business.

Bing Gordon30:16

You ever watch MTV?

Trey Lockerbie30:18

Back in the day, sure.

Bing Gordon30:19

Yeah, back in the day. So interestingly enough, so Emmett Shear, he and Justin Kan, and Mike Seibel did this thing called Justin.tv, and it was basic video blogging, and it didn't work. Video at the time was really expensive. They were doing that right before Instagram came out. It was really expensive. So the three of them went three different ways trying to figure out what to do next, and Emmett said, 'There are some people who are blogging their video gameplay. They do something that's a Leroy Jenkins moment, they want to show it off. And instead of on YouTube, they put it up live and talk about it. I think I can make a company of that.'

Mike Seibel said, 'Instagram of video. I think I can make a company of it.' He called it Socialcam, he sold it to Autodesk. Now he's running Y Combinator. And Justin Kan said, 'It looks more fun to put money into other people and let them do the work, so what I learned from Justin.tv is it's easier to invest and advise than to actually do.'

They all succeeded in big ways, coming from what was basically a failure of Justin.tv. And what Emmett started out, and I knew him all the time, what Emmett said is, 'I've got to make it work for streamers, just as Pinterest had to make it work for pinners, and YouTube had to make it work for creators.' And so the first five years, Emmett just solved for a team, a pretty good original team. They just solved for, how do we make streamers happy? And Emmett had this early aha that game streamers wanted only three things, money, fame, and love. And not necessarily in that order. If they got fame, they figured they could make money sooner or later. And so he built this site with a bunch of tech. Genius tech there, because the video's really hard. To help people get money, fame, and love.

And then when Amazon got involved, the flywheel of Twitch kept going which is kind of more streamers, more audience, better tech. And if you go to TwitchCon, it's a bunch of colorful people, and they are kind of like the new Jon Stewart. They've got a gift of gab. They can talk for four or five hours at a time. The interesting thing about video games is it's a high-resolution video image that you can project your face over the top of. You don't have to go out with a camera and create a video, so games is kind of a natural… it's interesting on Twitch right now is, musicians are starting to use Twitch. Even AOC, the politician, she used Twitch.

And what's emerged on Twitch is this community aspect, which is when you get enough Twitch people with a streamer, they start talking to each other. First they talk the streamer, then they talk to each other. You can even see on something like the Crown channel, Twitch live, that if there's a bunch of concurrents watching, and the chat is going like crazy. People go, 'What's going on? This isn't Twitch, you guys. Talk some more.' As with anything, when you start posting you feel more belonging when you post and you get something back from someone else. You feel more like a member. The next thing you know, you start building this together.

It really is, this live streaming of community is kind of magical, and you don't really see it anywhere else. So much of the history of entertainment is one too many. Celebrities, they don't even see their fans anymore. Twitch is all about… it's like a mosh pit with words. I think it's going to become a model that we see more often, with this participatory community media. It's like kind of Reddit, a subreddit with video.

Trey Lockerbie34:07

That's incredibly interesting. Going back to your early dream of creating a virtual Disneyland. It seems like from the outside looking in that that has essentially arrived. There was a flood of investment into virtual reality about five years ago, but it seemed like the market maybe wasn't quite there and the money dried up a bit. But now it looks like the hardware is well priced, the overall tech is compelling enough, it's at mass-market levels now. What is your take on virtual reality? Do you see investment moving more into this space in the near future?

Bing Gordon34:42

What I've found again and again and again, if you start measuring for immersiveness, we found that people acted more immersed on a flat-screen than on a curved screen. What causes people to immerse, we could see it again and again, is a challenge, pixel accuracy collisions, you don't want to feel uncoordinated, and fast response time. You want kind of 60 frames a second response time, so it feels like you're in the real world. Then you want geospatial sound, surround sound. And if you get that, people forget that it's a flat-screen. So if you put on virtual reality goggles, guess what? You no longer have that pixel accuracy. You reach out to touch an ax, and it's kind of plus or minus a couple of inches.

And it can be fast, and the sound can be pretty good. You can do spatial sound. But so now the question is, do you want to give up that centimeter accuracy in order to get this new trick of virtual reality, which is it fools the inner ear into thinking you're in space. And the problem with virtual reality first is the goggles are hard to do, but originally they were tethered. So all the Oculus first-party games, if you wanted through a space, you had to teleport. And your feet don't move, so you can tell you're not doing anything. So the trade-off of, you are there for your inner ear, didn't kind of match your optical recognition and your sense of motion.

So then the location-based VR with things like Dreamscape and The Void was pretty interesting because they discovered they could project a virtual reality, a stone wall or a spaceship wall, and then they'd put a piece of plywood with crummy carpet on top of it, and you'd reach out and you'd touch the carpet, it would be kind of… not centimeter accuracy, but maybe inch accuracy, and you'd touch it. And your finger would say Goodwill carpet, but your brain would say stone wall. And so bringing the hands in made a huge difference. Then they had other things like they'd give you a stick, and they'd project your torch, and then they'd put your face near a heat lamp and you'd go, 'Dude, that's a torch.' As with the movie business, we're in this suspension of disbelief.

The most interesting to me about VR is the way that it works your inner ear. I haven't found anybody get tired of it. You don't see through it, whereas video games since the Atari VCS, every six years there's an order of magnitude increase in polys per second and RAM. And so the first two years of every new console system we go, 'This time it's real.' And my daughter grew up kind of in the shadow of gaming. She goes back and looks at popular video games of the '80s and goes, 'Dad, did you guys really think this was realistic? It's stick figures. It's kind of Looney Tunes.' And yeah, we did at the time.

Dr. J and Larry Bird, which are just stick figures, and Dr. J famously had a finger roll. It wasn't in the animation, but people could see it. It was kind of near it. And like thinking that Mickey Mouse really has five fingers, your brain tells you it's there when it's not there. So VR's got to get to this pixel accuracy. It's got to get to moving around. Right now the accuracy in Dreamscape is because there's cameras in the ceiling. They spent $100,000 on cameras in the ceiling to get inch accuracy. Most people can't do that at home, so there's still some hardware issues.

And then as a gamer, I would think that all platforms need killer apps, so my simple mantra is, consumers buy new platforms for one piece of software. So when the Sega Genesis costs $150, and John Madden Football costs $50, they're basically paying $200 to get John Madden Football, and so we had to make it worth $200. And there's not sort of… the Oculus Quest 2 costs whatever, I think like $200, and software costs $40. There's no piece of software right now worth $240.

Trey Lockerbie39:00

In AR, because I'm especially interested in that as well, what's the best innovation you've seen to date?

Bing Gordon39:07

I'm a fan of Pokemon GO. I've been playing that every day since it first came out. But interesting enough, Pokemon GO, the AR is really the Google Maps. So it's the 2D mapping with a little bit of 3D, but it's the 2D mapping of the world, and same place in the world is astonishing. They did a game that didn't work, that was a Harry Potter game, and they had a thing called Portkeys where you'd… think about in the Harry Potter, there's train 8 3/4, 9 3/4, something like that where you'd walk up, and if you're a wizard you could find a rail line between two Muggle rail lines. And so it was promised of AR to make the world better. There was, Neal Stephenson was doing a game for, the author was doing a game for Magic Leap, and there, what you want to do is you put on your AR goggles. I still see my friends, but now there's new, better stuff in the world.

Jay Allard had this vision at Microsoft kind of in the early days of the Xbox, as you can be Arthur. You can put on goggles, walk through the world, and you can see a virtual sword stuck in a rock. And now the game is, how do you pull the sword out of the rock? Either you be Arthur, or you do something to become the Arthur who can pull it out. And so now everybody can find a sword in a rock. Everybody can be an Arthur, and it's just a matter of computer programming.

And I think VR is in your ear telling you, you are there, with problems about collision accuracy, and problems about nausea, and problems about performance, and problems about pixel resolution. AR is the promise of, see other people while you do stuff. Make your world better. And there, the problem is power and clarity, and brightness. Turns out it's easier to… Moore's Law is better for increasing logic at a rate of 2X every 18 months, whereas batteries and power and displays are not increasing at the same rate, so protons are easier to improve than atoms.

Trey Lockerbie41:21

Where do you see things like NFTs or even digital currency working their way into the gaming world?

Bing Gordon41:29

Well collectibility, I learned really early on from child psychologists that the urge to collect is part of child development. It's kind of age seven to 10 when you do stamp collecting, and rock collecting and Barbie collecting, and Beanie Baby collecting. And it's kind of a normal… the first manipulative in world competence. We start out learning names and learning words, and that's kind of learning. But this collecting is, 'I want to put stuff together.' And for most people, there's some kind of urge to collect that sticks with them forever. It kind of hearkens back to their good old preteen days, before life became complicated.

We've just always found that collecting matters. Pokemon got to catch them all. I grew up collecting baseball cards, and I was a mediocre collector. I never actually finished any collections. I'm not as much of a completionist. There are collectors of all types. And in addition, there are speculators. And so with NFTs, there's a combination of collectibility with blockchain cryptocurrency-type speculation. So if you missed Bitcoin or you missed Ethereum, here's something new that you can speculate will follow the same kind of bumpy growth path. But you're going to find some people to make things catch fire. There's got to be some people that want to just collect and own and don't want to sell, because nobody really wants to own a Seth Curry card, Seth and Steph brother card. They just want to keep it in liquidity. It's just not as valuable if some people want to own it for a long time.

So I think in general, you want about a third of the people who just take something out of market because they want to own it forever, and of course, makes everything else more valuable. If nobody wanted to actually own a Van Gogh, their value would go down. And so the NFTs, I think it's two things. It's the forever instinct to collect that probably goes back to cavemen and cave ladies. 'Look at my collection of wooden clubs I've got, or bears' teeth,' then there's speculation that it might become more valuable.

So the interesting thing about NFTs is, for the first time, you can build an artwork or a creation where every time it resells, there can be perfected a royalty back to the originator.

Trey Lockerbie44:02

I want to talk a little bit about your investing philosophies. You're now sitting on the other side of the table, right? As a partner at Kleiner Perkins. What has been the biggest shift for you, going from an operator board member, now on the venture side?

Bing Gordon44:17

Early on, I was surprised by two things, especially at a venture firm like Kleiner Perkins that thinks so big. I always thought put money in, get a 100% return in three years, that's really good. But a place like Kleiner Perkins, they're looking for every now and then 100X return and knowing that they're going to stay involved with that founding team for seven to 10 years. So you end up having to go bigger, longer than I'd imagined beforehand.

And I'd say the next thing is, I kind of thought it would be cool to see all these new things I could learn. And my friend Vinod Khosla who used to be a client and just said, 'It's really competitive out there. You end up investing in stuff you know. So, Bing, nobody else knows kind of games like you do, so stick with that.' And I thought, 'Well, you don't exactly want to invest in direct competitors, so I've got to go look for some other stuff.'

And it turns out there are so many investors, so there's so much money, that if you don't have time to learn about an industry you can't create enough value. So there are some investors who are kind of traction investors, so when they find out everybody wants in, then they want in. And one way or another, you pay a higher price or you charm, or you do something else. But most of the investors I know, like Ted Schlein at Kleiner Perkins, he's probably the best investor in cybersecurity. He's been doing it for kind of over 20 years. He's got a reputation, he's got a reputation in Washington. He's built this cohort of followers again, and again, and again. So I think that's, having kind of a narrow focus, I've tried to end up primarily focusing on games and gamification. More broadly I think about it as where numbers can make people's lives better. My goal is the hall of fame contributions to the game business, and hall of fame contributions to the hall of fame CEOs. So CEOs and then hall of fame works.

Yeah, I think investors, especially at the venture level, are not as fungible as I'd originally imagined. And I did say that founders who want to get five useful input ideas per half-day board meeting, well if you already have a lot of experience in a certain category, it's easier to add value to the founder.

Trey Lockerbie46:47

You've done a lot of executive coaching and worked with a lot of founders. I'm curious if you have sort of a common denominator, something that with every founder seems to be some kind of issue that they have to overcome.

Bing Gordon46:58

Two things for you. The first is, there was a book called Passages about life. All teenagers have this body chemistry issue, and then they're psychologically trying to figure out the identity. And late in life, people have pretty typical issues. Well, founders have pretty typical issues that are scale-related. And you go from kind of a tribe to a village, and somewhere at about 25 people, you start having to put in place processes. At 50 people, you have to hire your first bureaucrat. At 100 people, you don't know everybody in the company's name anymore. And then at somewhere between 150, 250, you become a leader of leaders.

Most founders can still operate as chief product officer, chief technical officer, or VP sales even at 250 people, but at about 250 people, you can't anymore. You've got to start working through other people. And my experience is, high potential cognitive prodigies can learn stuff fast. They can't learn at the rate of Moore's Law, but they can learn stuff fast. And the hardest thing to learn is people skills. First, one on one, and second in groups. That scale from five to 25, to 100, to 250, to 1,000, to 5,000, almost all founders run into the same issues along the way.

Daniel Ek with Spotify would say the thing to be prepared for is you can outgrow some of your execs at each one of those stages. It's just unlikely that 100% of your execs are going to have the learning skills and the motivation to improve to the next level. It's shocking that it's not part of the investor/founder discussion, but it's so predictable.

And then the thing that I've kind of invented that's kind of proprietary to me I call forever OKRs. And OKRs were invented at Intel, I was actually at Intel kind of doing it part-time while going to business school. But it's basically a rule-setting with an attitude. Most people who start trying to do OKRs and management objectives find it really frustrating. The reason is, at first, you set goals as tasks. Like, 'Hey Trey, your goal is eight podcasts in the next quarter.' And you get to the end of it and say, 'I did my eight podcasts,' and they go, 'Yeah, but we forgot the goal was wrong, because somebody else did 15 and they just kicked ass on our podcast, and you went from number one to number seven.' 'Oh, well you should've set that as a goal.' 'Well, I thought that if it was going to be eight podcasts that you would hit that goal, but actually it was a different goal.'

So I started out with what I think of as forever OKRs in personal life and in work life, and I've got my own checklist of what they are. But I can actually sit with founders and say, 'Benchmark the world to figure out your forever OKRs. So you want to be a podcaster, who do you admire? Tell me all the people you know who are podcasters. Who do you rate at 10, who do you rate at nine, who do you rate at eight?' And a forever OKR is the factor on which you'd differentiate a 10 from an eight.

And then it does turn out that in forever OKRs of have a good life, there's only been one… it was a Harvard study of a bunch of graduates kind of at age 20 to 22. 'So what do you want to do in life?' And they found that late in life, the people who reported high satisfaction with life, had no substance abuse, no chronic illnesses, between one and three long-lasting best friends, and lasting, good marriage is a key to it.

And so it's do something you like, have long-term friends, and don't fall prey to the sins of disease and substance abuse. I would say I want to have a good life. Then I'd go even further and say, 'Well, have an all-star year and get in the hall of fame, or whatever you're going to do.' So then I'd say, 'Hey Trey, what's a hall of fame for podcasting?' You go, 'Well, Michael Lewis is in my hall of fame.' 'Okay, what does he do that you don't do? Now what's the difference, and how do you get from here to there?'

So there's forever OKRs. The number one job of a CEO is, have product/market fit. The number one job of a salesperson is, hit the sales quota. And an A+, 120%. By the way, most founders don't know how to set goals for their direct reports. Nobody knows how to set goals for a CFO. Nobody even knows what a COO job is. So I encourage founders really early on to start having a discussion before people underperform, about what good looks like, what your goals are, but what are your forever OKRs?

And so for a founder, Eileen Lee coined the concept of unicorn. The founder, if you're going to start a company, change people's lives, get the unicorn valuation. Now maybe it's decacorn, but when you start out, why not go for greatness? Just as if you're drafted as an athlete, why not try to get in the hall of fame? Well, you start off thinking, 'No, I want to feed my family and get a house for my mom.' Then, 'Well, I want to start… why not aim for the hall of fame?'

And then you get to somebody like Jerry Rice, so it's, well, you got the skills, but work ethic is the best way to do it. Work ethic and forever motivation. And so professional athletes, which I like as a metaphor for a bunch of things, work ethic is almost always what separates the great from the good. So forever OKRs. And I love processes that are repeatable by anybody, and if you'll do the process, you can self-judge how you do it and put it to work.

Trey Lockerbie53:07

See, this is what is so fascinating about you to me, is that you are obviously an incredibly creative type of person, right? Acting, doing all these. Dancing. And yet you have adopted such a systemized approach, and how do you balance those two things? Almost like the computer science element of running a business with the creative.

Bing Gordon53:30

It doesn't seem like a thought-through option. It's just if you want to get good at something, how do you do it? I've found I do kind of have the soul of a teacher, even though I was pretty unteachable. That chip on my shoulder for authority figures. So I'm trying to learn from mental models, again kind of the first principle. So how do you create the mental models? I wish I knew then what I've learned now. If I would've been better with grownups, I maybe could've found somebody who could've helped me learn in a way when I was 20. So I've been trying to kind of makeup for my own deficiency with other people ever since.

Trey Lockerbie54:09

All right, I have a lot more questions, but I want to be respectful of your time. I've heard you talk about your one and a half rule, where the audience might take one to one and a half key insights away from the discussion. Given that our audience are primarily investors, entrepreneurs, is there one key insight from Bing Gordon that you want to leave?

Bing Gordon54:28

Founders are irreplaceable, so your job as an investor is to find ways to help future proof the founder. And you can't do that if the founder isn't motivated to be a learning machine, but in that case, you want to not be an authority figure, but a consultant to their success. It's just shocking to me that that's not even in public discourse. It's usually investors who say, 'We're going to help the CEOs.' They don't really mean it, because they don't think it's in their business model to help the CEOs be better. Again, I mentioned Reid Hoffman, he's somebody who's always there to help. I think Ben Horowitz, always there to help. Some pretty famous… so Doerr's always there to help, Schlein's always there to help, but most just give it lip service.

So after you get through the dance of kind of valuation and investment, once you've won your way in, a little like dating, forgetting the phone number and the first date, yeah, that's okay. It's fun for a while, but you're really trying to figure out, how do you help the other person grow and have that hall of fame life? I think it was just the wrong mental model of board members and CEOs. And CEOs aren't demanding enough of their investor board members, and that's probably because they don't know how.

Trey Lockerbie55:49

Amazing. Well Bing, thank you so much for being so generous with your time. It's just an incredible career to study, and I really appreciate all the insights you've left. Especially as a founder myself, there was a lot to take away here. So I took a lot of notes that will be in the show notes, so if you guys want to check it out, you'll see that on your favorite podcast app. And with that, Bing, I really hope we get to do it again sometime soon. Thank you.

Bing Gordon56:11

Awesome, yeah, the version 2.0 sooner or later.

Trey Lockerbie56:14

All right everybody, that's all we had for you this week. If you're loving the show, please go ahead and follow us on your favorite podcast app. Make sure you're getting these episodes automatically downloading every week. And while you're at it, be sure to leave us a review so we know how much you love the show or what you'd like to hear us discuss.

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Outro56:44

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