How to Thrive During a Crypto Winter

DIVE BACK INTO SOME WEB3 STUFF. SO WHILE WE HAVE BEEN IN A BIT OF A CRYPTO WINTER, THIS NEXT COMPANY HAS DEFINITELY DOUBLED DOWN AND RAISED THE STAKES AND SEEMS TO BE DOING PRETTY FREAKING WELL. SO LET'S HEAR IT FROM HIM, PLEASE WELCOME TO THE STAGE CO-FOUNDER AND EXECUTIVE CHAIRMAN OF ANIMOCA BRANDS YAT SIU AND YOUR MODERATOR LUCAS MATNY. WARM WELCOME, PLEASE. [ APPLAUSE ] >> HEY, EVERYBODY. WE TALKED A GOOD AMOUNT ABOUT CRYPTO THIS YEAR. IT IS A BIG THING LATELY. WE HAVEN'T TALKED AS MUCH ABOUT NFTs. SO, YOU KNOW QUITE A BIT ABOUT NFTs. YOUR COMPANY IS WORTH $5.9 BILLION OR $6 BILLION? >> GIVE OR TAKE. >> ALL RIGHT. SO TO PEOPLE WHO LOVE NFTs, THEY MAKE A TON OF SENSE. TO PEOPLE WHO DON'T UNDERSTAND NFTs, THEY EITHER MAYBE AREN'T SURE HOW THEY FEEL ABOUT THEM OR THEY HATE THEM, HOW MUCH TIME DO YOU SPEND THINKING ABOUT THE NFT

SKEPTICS? >> I DON'T THINK WE SPEND TOO MUCH TIME THINKING ABOUT THE NFT SKEPTICS, WE'RE BUSY BUILDING. OUR PERSPECTIVE ON THIS IS THAT PARTICULARLY IN THE U.S. A LOT OF PEOPLE DON'T LIKE NFTs, IT IS A REFLECTION MORE TO DO WITH THEIR VIEWS ON CAPITALISM. SO, IN OTHER WORDS, THE SAME PEOPLE PARTICULARLY YOUNG PEOPLE LIKE IN GAMING FOR INSTANCE THEY IN AMERICA TEND TO LEAN MORE SOCIALIST THESE DAYS, CAPITALISM HASN'T WORKED FOR THEM AS WELL. THEY LOOK AT BASICALLY SORT OF CRYPTO AS ANOTHER TOOL FOR THE RICH TO GET RICHER AND NFTs IS ENCAPSULATED WITHIN THIS. WHEN YOU HAVE NFTs, IT IS LIKE — >> I CAN'T BUY A HOUSE, BUT THEY CAN BUY MONKEY PICTURES FOR — >> REALLY. FEELS REALLY UNFAIR. BY SAYING THAT NFTs ARE — IT IS LIKE SAYING THE ENTIRE CAR INDUSTRY IS LAMBORGHINIS. THEY DON'T UNDERSTAND THE USE CASES IN THE SAME WAY IN COMPARISON TO ASIA, FOR INSTANCE, WHERE IT IS THRIVING AND GROWING REALLY FAST BECAUSE MOST PEOPLE IN THIS — IN ASIA

DON'T HAVE A SORT OF ISSUE WITH SORT OF OWNING THINGS IN THAT SENSE. DIGITAL COPY RIGHTS IS ALSO A BIT OF AN ALIEN CONCEPT. THE IDEA I CAN OWN THE DERIVATIVE OF MY DATA RIGHTS, THAT'S SOMETHING AGAIN THAT NEEDS TO BE EXPLAINED. I MEAN, WE APPRECIATE OUR PHYSICAL PROPERTY RIGHTS, AND WE KNOW PHYSICAL PROPERTY RIGHTS ARE ATTACHED TO OUR PHYSICAL FREEDOMS, AND ECONOMIC FREEDOM AND FREEDOM TO TRANSACT, WE DON'T APPRECIATE THAT DIGITALLY BECAUSE WE HAVE BEEN BASICALLY IN THE GARDENS OF THE FACEBOOKS AND APPLES AND GOOGLES FOR SUCH A LONG TIME, WE THINK THAT'S NORMAL. I THINK THERE IS A LITTLE BIT OF EDUCATION THAT HAS TO HAPPEN AS WELL. I THINK IT BOILS DOWN TO THIS IDEA OF INEQUITY. THAT IS A BIG REASON WHY PEOPLE DISLIKE NFTs IN THIS PART OF THE WORLD. YOU KNOW IN ASIA, I SAY THIS IS THE AMERICAN DREAM IS ACTUALLY MUCH MORE ALIVE AND WELL IN ASIA THAN IT IS IN AMERICA AND I THINK THAT TRANSLATES A LITTLE

BIT INTO THE THINKING OF MONEY. I THINK IT IS ALSO A VALUE THING. >> IN COMPARISON TO YOU KNOW, BASICALLY PEOPLE WHO MIGHT THINK MORE IN STRONGER SOCIALIST ENVIRONMENTS AND MORE CONTROL WHERE THEY'RE ACCEPTING OF CENTRAL CONTROL, FOR INSTANCE, OF WHETHER THEY THINK IT'S THE RIGHT APPROACH. >> AN OPEN INTERNET, IF YOU'RE TOKEN GAINING A LOT OF EXPERIENCES, THAT COULD LEAD TO MORE CLOSED INTERNET DOWN THE ROAD, POTENTIALLY. >> I THINK THE MAIN POINT IS NOT WHEN YOU OWN AN NFT, THAT BECOMES AN EXCLUSIVE ACCESS. IF YOU OWN A SANDBOX, THE FREEDOM OF SOMEBODY OUTSIDE SAY OH, YOU OWN LAND AND SANDBOX, LET ME OFFER A SERVICE THAT'S USEFUL TO YOU. IN A GAMING, IMAGINE THAT FORTNIGHT SKINS WERE AVAILABLE ON CHAIN. SOMEONE ELSE AROUND THE WORLD CAN OPEN FORTNIGHT FASHION WEEK WITHOUT HAVING TO SEEK PERMISSION FROM EPIC TO DO SO. THE EXPOSABILITY MAKES IT THRIVE AND GROW. BECAUSE I CAN NOW HAVE ACCESS TO

A FORTNIGHT CUSTOMER BASE. THIS IS BY THE WAY HOW THE PHYSICAL WORLD WORKS. THE FACT THAT WE HAVE DECENTRALIZED PHYSICAL OWNERSHIP OF CARS IS THE REASON WE CAN HAVE UBER AND LYFT AND CAR BUSINESSES. THE ECONOMIC ACTIVITY AROUND THE OWNERSHIP OF CARS IS MUCH BIGGER THAN THE SALE OF CAR ITSELF. THAT'S HOW WE THINK NFTs ARE GOING TO GROW AND PROLIFERATE. >> WE'LL MOVE ON FROM THIS. BUT I THINK A LOT OF PEOPLE SAY OH, I UNDERSTAND NFTs IF I CAN BUY A GUN OR A CAR IN THIS GAME, THEN I CAN TAKE IT TO A DIFFERENT GAME. SOMEONE WHO MAKES ART FOR ONE GAME IS PROBABLY NOT GOING TO LET ANOTHER COMPANY DO IT. THAT'S HOW AT LEAST WHEN I THINK OF THE BIG AMERICAN GAME PUBLISHERS. DOES THAT THROW A WRENCH IN THAT? >> SO IF YOU OWN AN NFT, THERE'S A LICENSE AGREEMENT ATTACHED TO IT. THIS IS WHAT HAPPENS WITH COOL CATS OR LAND AND SAND BOX. YOU OWN THAT. SO YOU HAVE THE FREEDOM TO MOVE

IT AROUND AND TRANSACT AS YOU WOULD WITH PHYSICAL PROPERTY. IF IT HAS RESTRICTED LICENSE AGREEMENT, THEN YOU CAN'T DO THAT. IF YOU ACTUALLY OWN IT, A THIRD PARTY CAN OFFER YOU A SERVICE. ALSO KNOW WHERE THE ASSET SITS, I CAN REACH OUT TO YOU. OWNERSHIP OF CONTENT BECOMES A PLATFORM OF GROWTH, WHICH IS A THREAT TO THE CENTRAL PLATFORMS, BECAUSE I'M NO LONGER GOING TO THE APP STORE TO FIND CONTENT. CONTENT COMES TO YOU. YOU HAVE A BOARD APE SO WE OFFER SERVICES JUST BECAUSE YOU OWN LAND AND I CAN MAYBE BUILD A SERVICE FOR YOU. THAT'S WHERE IT FLIPS UPSIDE DOWN. IN THE CLASSIC GAMING, ASSETS ONLY SUPPORT THE GAME BECAUSE THE GAME WAS ALWAYS MONETIZED. GAMES EXIST TO SUPPORT THE ASSETS IN AND OF ITSELF, WHICH IS KIND OF HOW THE PHYSICAL WORLD WORKS. >> WOW, WE GOT DEEP INTO STUFF VERY QUICKLY BECAUSE I LOVE THIS STUFF. WE'VE HAD A FEW PEOPLE ON CRYPTO — FROM THE CRYPTO BEAT ON THE DISRUPT STAGE SO FAR.

I DON'T THINK ANY OF THEM DO QUITE AS MUCH AS YOU DO AND HAVE AS MANY PROJECTS. ANIMOCA BRANDS. >> FOUR OR FIVE YEARS, WE'RE VERY EARLY. WE ACQUIRED SAND BOX. TODAY WE HAVE OVER 380 COMPANIES IN THE GROUP. IN THE PORTFOLIO. 30 OR SO SUBSIDIARIES. SUBSIDIARIES RUN. AS OF LAST YEAR WE HAD INCUBATOR 63 COMPANIES. PUSHING DECENTRALIZED PERSONAL PROPERTY RIGHTS. WE ARE A GLOBAL. WE ARE AN AUSTRALIAN COMPANY. HONG KONG. OUR LARGEST OPERATION IS IN ARGENTINA. AND WE'RE PUSHING ALMOST 1,000 PEOPLE RIGHT NOW. WHICH IS STILL FAIRLY SMALL IN COMPARISON TO THE BIG TECH COMPANIES. OBVIOUSLY FROM OUR PERSPECTIVE, WE THINK THAT, YOU KNOW, WEB3 IS THE NEXT SITUATION OF THE INTERNET. AND DIGITAL PROPERTY RIGHTS AND THE BENEFIT OF THAT IS WHAT WE BELIEVE SO MUCH OF. THE RESULT IS WE MAKE MANY OF

THESE INVESTMENTS OUT OF OUR BALANCE SHEET. NOT ONLY DOES IT ALLOW US TO HAVE A LONG TERM LENS, WE LOOK AT THE NETWORK EFFECTS THAT CAN BE GENERATED IN ECOSYSTEM TERMS RATHER THAN IN RETURN TERMS OF THE EQUITY. OPEN SEAT, WHICH IS VERY SMALL VALUATION BACK IN 2018-2019. IT WASN'T BECAUSE WE HOPE THAT OPEN SEAT WOULD BE A DECK OF CORN. WE DID IT BECAUSE OPEN SEAT HAD LOTS OF NFT. RELATIVELY GOOD NFT VOLUME AND WE WOULD PUSH THAT. SO WE THOUGHT ABOUT THE ECONOMIC IMPACT. GAMING GUILDS IN AND OF ITSELF MAY NOT APPEAR THE BEST KIND OF INVESTMENT. BUT THEY BRING CUSTOMER ADOPTION. WE HOPE FOR MULTIPLIER, RATHER THAN PURE RETURN CYCLES. THE FACT THAT THE MARKET GROWS, AND TOKENS HAS OBVIOUSLY BEEN A BIG BENEFIT FOR US. BUT THAT WASN'T THE ORIGINAL REASON WE MADE THE INVESTMENTS. >> I GET A LOT OF EMAILS ON VARIOUS ANNOUNCEMENTS FROM COMPANIES RAISING MONEY.

I GET A LOT OF EMAILS ABOUT AANY NIMOCA. YOU GUYS HAVE SEEMED TO AVOID THE DOWN ROUND SO FAR. WHAT YOU DO THINK ABOUT THE GENERAL CRYPTO OUTLOOK FOR RAISING VENTURE RIGHT NOW? THERE'S A LOT OF MONEY OUT THERE. >> THERE IS A LOT OF MONEY OUT THERE. IF YOU LOOK AT JUST WEB3 META INVESTMENTS. >> FOR YOU GUYS THAT NUMBER. >> WE WERE FAIRLY MODEST. IT WAS ONLY ABOUT $100 MILLION IN COMPARISON. >> CHUMP CHANGE. >> IT'S A VERY VIBRANT AND ACTIVE SPACE. EARLIER THIS YEAR WE DID RAISE $350 MILLION. BUT YOU COULD ARGUE THAT WAS SORT OF AT THE BOWL. RIGHT. THE SPACE CONTINUES TO GROW BECAUSE PEOPLE WHO UNDERSTAND AND SEE IT VIEW IT A LITTLE LIKE THE INTERNET IN 2000 AND 2001. MEDIUM LONG TERM VERIZON WHERE YOU UNDERSTAND WHERE THE SPACE IS GOING. IN OUR CASE IT'S UNIQUE BECAUSE VERY FEW COMPANIES HAVE OUR

POSITION IN NOT ONLY INVESTING IN THE SPACE BUT BUILDING THE SPACE LIKE SAND BOX OR GALAXY OR RACING. WEB2, I GUESS TRADITIONAL GAMES, AND MOVE THEM INTO BLOCK CHAIN GAMES. ACCESS OF THESE GAMES, FOR INSTANCE. FOR SOME REASON WE'RE STILL ONE OF THE ONLY COMPANIES IN THE WORLD DOING THAT. AND IT'S BEEN SUCCESSFUL MODEL FOR US. EXECUTION IS ONE OF THE REASONS WHY MAYBE WE'VE BEEN ABLE TO ATTRACT CAPITAL. FROM AN INSTITUTIONAL STANDPOINT ALSO, WE HAVE A STRONG MANAGEMENT LEVEL AS WELL. WE ARE MORE INSTITUTIONALIZED. WE HAVE STRONG CFO, TREASURY FUNCTIONS. MANAGEMENT TEAM WITH SORT OF DEEP EXPERIENCE. WHICH IS ALSO I THINK ANOTHER FACTOR AS WELL. WHEN WE LOOK AT FUNDRAISING, WE ACTUALLY DON'T LOOK AT IT FROM A CAPITAL RAISING. >> SEEMS LIKE YOU GOT A LOT OF MONEY. >> OUR TOKEN BALANCE SHEET IS IN THE BILLIONS OF DOLLARS.

SO WE DON'T NECESSARILY NEED TO RAISE CAPITAL. WHEN WE LOOK AT CAPITAL RAISING AS BUILDING ALLIANCES. WHEN YOU THINK ABOUT PEOPLE PLAYING BLOCK CHAIN GAMES, PLAY TO OWN. THESE ARE THINGS WHERE PEOPLE MAKE MONEY AS A LIVING. PARTICULARLY IN DEVELOPING COUNTRIES. SO FOR THAT, YOU NEED REGULATION, LEGISLATION AND THAT KIND OF SUPPORT. SO WE CAN'T JUST SORT OF GO IT ALONE AND HOPE IT WORKS. WE HAVE TO BASICALLY BUILD ALLIANCES. AND ONE OF THE BEST WAY TO BUILD ALLIANCES IS TO BRING IN FRIENDS. >> SO YOU'RE NOT SEEING VCs PUSHING FOR A MORE — >> OH, THEY'RE PUSHING. >> WHAT KIND OF STUFF ARE PEOPLE PUSHING FOR? >> WE'RE A BIT ODD BECAUSE WE ONLY HAVE ONE CLASS OF SHARES. SO THAT MEANS BASICALLY WHAT WE DO IS WE DON'T GIVE ANYONE ANY PARTICULAR SORT OF ADDITIONAL BENEFITS. NORMALLY VCs WILL TRY TO COME IN AND TRY TO ASK FOR PROFESSIONAL

RIGHTS. WARRANTS. I DON'T THINK YOU NEED TO PRESSURE YOURSELF. IF YOU HAVE A GOOD BUSINESS, THEN PEOPLE WILL COME TO YOU. I THINK YOU KNOW, YOU HAVE TO MAKE A BALANCE THOUGH. LIKE FOR INSTANCE, WE COULD ALSO TAKE THE OTHER PERSPECTIVE. DO WE WANT TO TAKE A HIGHER VALUATION UNLESS WE RAISE MONEY. THAT'S NOT THE THING FOR US. IT'S MORE ABOUT BRINGING THE LAST ROUND. ESPECIALLY FOR BOYAR AND GGV THIS WAS THEIR FIRST BLOCK CHAIN CRYPTO INVESTMENT EVER. AND THAT WAS IMPORTANT FOR US. NOT JUST BECAUSE THE AMOUNT OF MONEY THEY PUT IN. IT'S THE FACT WE GOT A NEW MAJOR INVESTMENT GROUP THAT MANAGES BILLIONS OF DOLLARS CURIOUS ABOUT CRYPTO, SEEING THE POTENTIAL. IF WE CAN EDUCATE THEM, HOW MUCH MORE MONEY WILL THEY INVEST IN OTHER STARTUPS. >> I'M CURIOUS. THERE HAVE BEEN MAYBE MORE ON THE CRYPTO PUBLICATION SIDE. BUT SOME NOTES TALKING ABOUT WHAT ACTIVE USERS LOOK LIKE IN

THE CRYPTO WORLD. THEY'LL SAY LIKE THE CENTRAL LAND HAS 30 USERS AND IT'S WORTH X-BILLION. FOR YOU GUYS, YOU HAVE SAID YOU HAVE — >> FOR SAND BOX. >> WAS THAT THE MOST POPULAR GAME? >> NO, GAMIE OR BENJI BANANAS. ONE OF THE REASONS WHY PEOPLE SORT OF TALK ABOUT THESE NUMBERS IS BECAUSE YOU LOOK AT ON CHAIN TRANSACTIONS. WHEN YOU LOOK AT THE NUMBERS OF DECENTRAL LAND OR FOR INSTANCE, SAND BOX, WHAT YOU'RE SEEING IS A NUMBER OF TRADES THAT HAPPEN BETWEEN LAND. USERS CREATING HUNDREDS OF BILLIONS — YOU DON'T BUY YOUR HOUSE SO YOU CAN SELL TOMORROW. SOME OF US DO. MOST OF US DON'T. WE WANT TO DEVELOP IT. WE WANT TO STAY THERE. WE DON'T BUY A CAR TO SELL IT TOMORROW. WE MAY SELL IT IN A FEW YEARS. BUT WE ACTUALLY USE IT. YOU HAVE TO REMEMBER THAT CRYPTO STARTED AS A FINANCIAL THING. RIGHT. WITH BITCOIN.

IT WAS REALLY SORT OF TRYING TO SOLVE A WALL STREET BANKING ISSUE RATHER THAN SORT OF A CULTURE ISSUE. WHICH IS WHAT WE SEE NOW IN NFTs. CRYPTO WAS MOSTLY PEOPLE WITH FINANCIAL REASONS. BUT IN LAST YEAR AND A HALF, MOST PEOPLE ACTUALLY WHO JOINED CAME FOR CULTURE. SO FOR GAMING, FOR ART, FOR SO ON. AND OF COURSE SOME SPECULATE BUT MOST DON'T. AS THAT TREND SHIFTS, WHICH I THINK IS MORE NATURAL. WE'RE GOING TO CONTINUE TO SEE THE GROWTH IN THE SPACE BUT THE SPECULATIVE NATURE IS GOING TO CONTINUE TO DROP. YOU CAN'T REMOVE IT. I THINK IT'S NECESSARY. BUT IT WON'T BE THE MAJORITY OF THE TRANSACTIONS. THAT'S WHAT YOU SEE RIGHT NOW. SO THE 200 PEOPLE THAT ARE PLAYING SAND BOX, ONLY A HANDFUL TRADE. WHICH I THINK IS HOW THE REAL WORLD WORKS AS WELL. >> TALKING ABOUT SAND BOX, THAT'S LIKE A META VERSE TITLE, CORRECT?

>> THINK OF IT AS MINECRAFT UNCHAIN. >> MONTHLY ACTIVE, MAYBE WEB2 PLATFORMS. THERE AREN'T MANY IN THE WEB3 WORLD THAT HAVE THAT MANY. BUT THERE ARE COMPANIES SAYING THEY'RE BUILDING THE META VERSE. SHOULD YOU NOT HAVE TO SAY IT IF YOU ARE BUILDING THE METAVERSE? >> I THINK THERE'S DIFFERENT IDEAS OF WHAT THE METAVERSE IS. I THISNK A LOT OF PEOPLE HAVE ARGUMENT ABOUT WHETHER IT'S VR OR AR. IT'S ONE WHERE YOU ACTUALLY HAVE DIGITAL PROPERTY RIGHTS. WE LOOK AT IT FROM A CONSTITUTIONAL FRAMEWORK. JUST LIKE GEORGE WASHINGTON SAID YOU CAN'T HAVE FREEDOM WITHOUT PROPERTY RIGHTS. SO OUR PERSPECTIVE ON THE OPEN META VERSE HAS TO START WITH THAT. THAT'S WHERE SAND BOX STANDS OUT. YOU CAN CREATE META VERSE IN A CLOSED WALL GARDEN. BUT THE VALUE YOU CAN GENERATE IN CLOSED ECOSYSTEM CAN GENERATE. THE FACT I CAN HAVE NFT AND HAVE SOMEONE ELSE PROVIDE A GAME OR

OTHER FORMS OF NETWORK EFFECTS THAT FREEDOM TO TRANSACT AND MOVE THE ASSET AROUND ACTUALLY GIVES IT MORE VALUE AND ALLOWS CAPITAL TO FORM. >> YOU USED THE PHRASE "CLOSED WALL GARDEN." CAN IT WORK WHEN THE APP STORE MODEL TAGS ON THIS BIG COMMISSION TO MOST TITLES? >> THE APP STORE EITHER HAS TO FIX ITS MODEL OR IT WILL DECLINE. THAT'S BECAUSE IF YOU LOOK AT FOR INSTANCE WHAT HAPPENED WITH AXI OR WITH GOOGLE PLAY, PEOPLE WERE DOWNLOADING AXI AND SIDELOADING IT. FROM AN ECONOMIC STANDPOINT, IT DIDN'T MAKE SENSE. IT'S ABOUT THE VALUE. SO IF YOU'RE ALL COMPETING ON — THEN YES. THE APP STORE, 30% CHARGE MIGHT MAKE SENSE. ACTUALLY IF THERE'S AN ECONOMIC INCENTIVE LAYER THAT SAYS YOU DON'T HAVE TO PAY THAT COMMISSION, TO GO SOMEWHERE ELSE TO DO THAT, PEOPLE ARE WILLING TO DO THAT. EVENTUALLY YOU'RE GOING TO FIND A BALANCE AROUND THAT. THE ECONOMIC ACTIVITY IN THE

BLOCK CHAIN GAME IS POWERFUL. RELATIVE VALUE PER USER BECAUSE YOU HAVE CAPITAL FORMATION. WHICH IN THE WEB2 GAME IS MAYBE ONE OR $2. WHICH MEANS YOU MUST HAVE TENS OF MILLIONS OF USERS. BUT IN THE BLOCK CHAIN GAME YOU REALLY ONLY NEED HUNDREDS OF USERS. YOU DON'T NEED TO BE ON A PLATFORM TO SHARE 30%. THE SECOND ONE WE THINK IS GOING TO BE FLOURISHING, KIND OF LIKE A RENAISSANCE. FOR INSTANCE, INDIE GAME DEVELOPERS. WHO CAN BUILD GAMES WITH MORE DIVERSE CONTENT. THE PROBLEM WITH WEB 2 IS WE'RE ALL BEING TREATED THE SAME. YOUR TIME ON FACEBOOK IS BEING VALUED THE SAME AS SOMEONE IN AFRICA, FOR INSTANCE. A MUSICIAN ON SPOTIFY'S TIME, JUSTIN BIEBER IS VALUED THE SAME AS A CLASSICAL MUSICIAN. THAT DOESN'T NECESSARILY MAKE SENSE. WHEN WE GO TO A CONCERT, WE'RE WILLING TO PAY PREMIUM FOR ONE MUSICIAN AND NOT ANOTHER. SO WHAT WEB3 DOES IS IT ACTUALLY TRANSLATES THE REAL VALUE.

YOU CAN MONETIZE THAT BETTER. IT'S HEALTHIER FOR THE ECOSYSTEM. WE THINK THERE'S GOING TO BE A GR GROWTH. >> YOU BROUGHT UP FACEBOOK, WHICH TRIGGERED MY MIND. I GUESS SO MANY PEOPLE HAVE I DON'T THINK NEGATIVE CONNOTATION IS EVEN THE WORD IN RESPONSE TO METAVERSE. THEY LAUGH ABOUT IT, MAYBE NOT YOUR FRIENDS. BUT WHEN YOU THINK ABOUT SOME OF THAT STUFF, A LOT OF PEOPLE TAKE IT SERIOUSLY BECAUSE META IS INVESTING. AND YET IT'S RAISED EYE BROWS. WHAT DO YOU THINK ABOUT IT? >> I DON'T KNOW WHERE IT EXACTLY TOTALLY WENT WRONG. BUT I WOULD SAY THAT CERTAINLY ZUCKERBERG DID GET IT RIGHT IN TERMS OF CONSTRUCTION. IF YOU LOOK AT FOR INSTANCE, APTOS. THESE ARE BASICALLY BLOCK CHAIN PROJECTS THAT EMERGED FROM THE TEAM, FROM FACEBOOK TEAMS. SO HE UNDERSTANDS BLOCK CHAIN. >> HE DOESN'T GET TO BUILD IT THOUGH. >> HE DOESN'T GET TO BUILD IT

THOUGH. THAT'S ONE CHALLENGE. HE MAKES MONEY FROM BASICALLY MINING OUR TIME AND ATTENTION. BLOCK CHAIN IS KIND OF COMPLETE SORT OF ANTITHESIS OF WHAT FACEBOOK IS CURRENTLY BUILDING. HE'S AN INTERESTING QUANDARY, I THINK. HE'S GOT A CLASSIC INNOVATOR'S DILEMMA ON HAND. THE OTHER THING WHEN YOU'RE BUILDING COMMUNITIES, YOU NEED A LOT OF GOOD WILL. SAND BOX, FOR INSTANCE, LIKE BUILDING A NATION. WE MEASURE IT IN TERMS OF GDP, NOT IN CLASSIC PROFIT AND LOSS WAYS. IF YOU HAVE A NATION THAT HAS A BAD REPRESENTATION THAT MIGHT BE CONS CONSIDERED DICTATORIAL. I KNOW FACEBOOK HAS DONE A LOT OF GOOD THINGS. BUT IT IS OFTEN REMEMBERED FOR ITS BAD THINGS. THAT'S WHY IT'S REALLY HARD FOR THEM I THINK TO BUILD IT OUT. THEY'RE REALLY GOING TO HAVE TO REINVEST THEMSELVES FROM THE GROUND UP TO BE SUCCESSFUL IN SPACE. YES, THEY SAID THEY'RE GOING TO

SPEND $10 BILLION A YEAR TO MAKE IT WORK. $10 BILLION IS NOT ENOUGH TO MAKE THIS WORK. WHICH INCLUDES ALL THE TOKENS AS WELL. THAT MEANS THAT AND MOST OF THE VALUE GOES TO THE END USER. RIGHT. WHICH MEANS THAT WHY WOULD I TRANSACT IN SOMETHING LIKE META, REGARDLESS OF ITS VISUALS. WHEN I HAVE TO GIVE MORE THAN HALF OF IT OR HALF OF IT TO THE PLATFORM. WHEN IF I USE SAND BOX, I GET 95% OF IT. BILLIONS OF DOLLARS OF VALUE IS ALREADY GENERATED IN AN OPEN WAY, WHY WOULD I SURRENDER THAT VALUE? FACEBOOK WOULD HAVE TO SPEND A LOT MORE TO INCENTIVIZE PEOPLE TO GO INTO ITS PLATFORM. MAYBE FOUR YEARS AGO WHEN THE MARKET WAS A LITTLE MORE FRAGILE, THEY HAD A CHANCE. BUT NOW THEY HAVE TO INCREASE THEIR SPENDING SIGNIFICANTLY IN ORDER TO MAKE A DENT IN THE OPEN META VERSE. >> WE COULD PROBABLY SPEND TWO HOURS TALKING ABOUT THE REGULATORY LANDSCAPE ON ALL THIS

STUFF. WE HAD CRYPTICS ON STAGE ON TUESDAY. IT'S NOT A WEB 3 MEME BUT IT'S HOW VENTURE CAPITALISTS DESCRIBE IT. IF THE EARLY USERS OF FACEBOOK COULD HAVE GOTTEN SHARES OF THE PROFITS. BUT YOU HAVE A TOKEN. THERE'S SO MANY COMPANIES BACKED BY VENTURE CAPITALISTS THAT DON'T HAVE TOKENS. DON'T NECESSARILY LOOK LIKE THEY'RE SHARING THE VALUE WITH EARLIEST USERS. IF YOU LOOK AT SOMETHING LIKE OPEN SEAT, HOW DOES THAT WORK? >> OBVIOUSLY WE WISH THEM EXTREMELY WELL. HOWEVER, THEY DO HAVE THE RISK OF BEING COMMODITIZED. WE SEE THIS TODAY. IF YOU LOOK AT THE MARKETPLACE COMPETITION. IMPERRIC ATTACK ON OPEN SEAT. THAT'S THE BENEFIT OF WEB 3. WEB 3 HAS AN ANTIMONOPOLISTIC NATURE. IF I COULD HAVE HAD ACCESS TO AMAZON'S DATABASE. HOW MANY COMPANIES IN THE WORLD BASICALLY ATTACKING AMAZON CUSTOMERS, HEY, YOU BOUGHT THIS

COMPUTER. LET ME GIVE YOU A DISCOUNT ON THIS COMPUTER. THAT'S BASICALLY WHAT YOU CAN DO ON WEB3 THAT YOU CAN'T DO IN WEB2. THE OTHER AREA THAT'S SORT OF FASCINATING THAT THE END USER THEMSELVES HAVE THAT FREEDOM TO TRANSACT. >> ARE THE ADVANTAGES ALWAYS GOING TO FLOW TO COMPANIES THAT AREN'T ALWAYS WITH JURISDICTION. >> I DON'T THINK SO. >> HAVE TO WAIT FOR THE TOKENS TO COME AROUND? >> IT'S NOT JUST ABOUT FUNGIBLE TOKENS. AND WE'RE FOCUSED ON NFTs, NON-FUNGIBLE TOKENS. WEB 2 IS SHAREHOLDER CAPITALISM. YOU AS THE COMPANY GET THE BENEFITS. AS A SHAREHOLDER, YOU GET BENEFITS. BUT DON'T REALLY SHARE THE BENEFITS WITH THE CUSTOMER. YOUR A CUSTOMER CONSUMER. BUT IN WEB3, YOU BECOME A CUSTOMER OWNER. VALUE THAT COULD BE GENERATED IF THE BUSINESS HAPPENS TO DO WELL. THAT DOESN'T MEAN FUNGIBLE TOKENS.

FLUID AND MORE LIQUIDITY. IF THE COMMUNITY OF BOARD APE MAKES IT MORE FAMOUS, WE COLLECTIVELY AS OWNERS CAN — WE HAVE A RESPONSIBILITY TO A SET OF OWNERS AS OPPOSED TO SOMEONE WHO IS JUST CONSUMING. WHERE THE RELATIONSHIP ISN'T THE SAME. I THINK STAKEHOLDER CAPITALISM IS PROBABLY THE BEST WAY TO THINK WHAT WEB3 DOES. PROBLEM IN THE WORLD TODAY WHERE MU MUCH OF THE VALUE IS CONCENTRATED. SO THE POINT ABOUT FACEBOOK. WHETHER IT'S A TOKEN OR WHETHER IT'S SOME FORM OF DIGITAL OWNERSHIP, IF I HAVE A WAY IN WHICH THAT COULD BE VALUED, WHY SHOULDN'T FACEBOOK SORT OF SHARE US A LITTLE BIT ON THAT. >> WE'RE RUNNING LOW ON TIME. THE LAST THING I WANT TO SAY OR THE LAST THING I WANT TO ASK. WE'RE IN A CRYPTO WINTER RIGHT NOW OR AT LEAST A BEAR MARKET, YADDA, YADDA, YADDA. IS THIS GOING TO LAST LONGER THAN THE LAST CRYPTO WINTER, THE SAME AMOUNT OF TIME? >> THIS ISN'T THE SAME AS THE LAST CRYPTO WINTER.

IF THIS IS THE CRYPTO WINTER, THAT WAS THE CRYPTO ICE AGE. NOW YOU HAVE A LOT OF BUILDERS GO IN. NOT JUST THE FUNDING GOING IN. BUT THE KIND OF PEOPLE. YOU HAVE TO LOOK AT WHERE THE TALENT IS GOING. >> WHEN ARE THINGS GOING TO GET BACK TO NORMAL? >> HOPEFULLY BEFORE THE YEAR. NORMALLY WHEN THERE'S ECONOMIC HARDSHIP, MORE PEOPLE TEND TO MOVE INTO NEW PARADIGMS. AS WE SAW WITH COVID. WE THINK CRYPTO AND BLOCK CHAIN WILL CONTINUE TO GROW. >> WE'LL WRAP IT