As we explore more gaming opportunities for the fund as it relates to crypto (i.e. play 2 earn models, NFTs, metaverse), I can't help but often think about my time playing World of Warcraft (WoW) as part of the journey that led me here. When people ask me how I got into crypto in 2015, I generally say two things: 1) Lifelong PC gamer and 2) My experience in open-source database and analytics companies early in my career. I wanted to put together some thoughts on how these forces helped me digest Bitcoin and digital assets much more readily, and pay homage to these foundations.
I first played WoW in 2004 shortly after its release. I had no idea at the time what I was getting myself into, as I wasn't as familiar with the MMO genre and had come from a background of playing mostly first-person shooters and Blizzard RTS games. Little did I know, it would take up thousands of hours of time (it became painful to type /played to see the sheer number of days played. If you know, you know).
While this seemed like a time sink at the time and still makes me question how I could've better used my time, it did a few things for me. First of all, it allowed me to understand virtual, immersive worlds and where gaming was going from that perspective. I was hardcore. Our guild had realm first raid kills in Molten Core, Blackwing Lair, Ahn-Qiraj, etc., and for those that know how challenging the original WoW was, this was no easy feat. Organizing 40 random people and leading them into complex boss fights is something that sounds simple on the surface (and I've had non-gamer friends and family laugh at the concept), but for those that know, this was seriously difficult to coordinate. It taught me how to work with people and communicate remotely on a complex task. More broadly, there was an increased understanding of virtual assets (in-game items) and markets (auction house). And of course, the infamous WoW gold trade.
I was a Warrior class and the main tank of my guild, which meant my job was to soak all the damage from less resilient classes on my team. I led my guild of 40+ players through all the new content, often buggy, extremely imbalanced, and difficult in the early days – but that was part of the fun and challenge. The next generations of WoW were simplified for the "normie" player (aka carebear), but the original WoW was indeed hardcore.
What also happened to main tanks is their heavy armor repair costs were extraordinarily high. Tanks were also terrible at accumulating gold due to low damage and poor farming. Because of this, I was totally poor in WoW. Our guild had a treasury where I would occasionally get my WoW gold UBI payouts from ;) otherwise I resorted to a darker place to get my gold: International gold farming businesses.
Many know by now, but at the time there were 'dark markets' in WoW for buying gold. People would buy gold from gold farmers, often individuals from Eastern Europe or East Asia, who would tediously kill monsters and sell items all day to accumulate gold to sell to other players for real world cash. There was real demand for this, and people even started to invest in gold farming companies (e.g. IGE - Internet Gaming Entertainment). So after your shameful online WoW gold purchase, the farmers would meet you by the town mailbox, or if you were embarrassed like me, in some dark alley in the back of Orgrimmar, to give you the gold you purchased from their shady website. Time was still money, even in WoW.
The Crypto Connection
A number of factors contributed to my eventual forray into Bitcoin later on in 2015. At the time, I was working for a company selling quant data feeds to hedge funds and some of them wanted Bitcoin onchain data which back then, was very disorganized and chaotic compared to today (thanks to services like Glassnode and various explorers that didn't really exist back then). It got me thinking how real this asset class was becoming. With crypto, my career experience in the enterprise data space and open-source software, along with my gaming hobby all came together in a way. I had also recently experienced a successful exit at Pentaho (acquired by Hitachi) and had made a substantial amount of money through my time there. For the first time in my life, I had expendable capital and started investing in stocks (chip stocks of course) and crypto shortly after. The rest is history.
The secular trend of digitization was clear across all markets. Except now with crypto, liquid markets of all kinds could be created. What if WoW (or any game) had two-sided, peer-to-peer, liquid markets in the auction house? What if all those Epic in-game items I worked for held actual tangible value and could be paired with crypto assets? What if in-game currency had transferrability and value to it, with its own robust economy? I remember at one point, given my various WoW characters' levels of gear and weaponry, I could have sold my entire profile for ~$8,000, which was considered top tier back then for a character. But again, this was done through a shady, international third-party service. What if it was peer-to-peer and simple? If so, I probably would have done it.
The anecdote around Ethereum being created in part due to Vitalik Buterin's warlock being nerfed, leading him to question centralized services more broadly, resonated with me early on. It definitely helped make the crypto connection for me as I was going down the rabbithole, especially meeting so many colleagues in crypto who were gamers or ex-gamers.
Perhaps I am writing all of this to justify those thousands of hours of in-game /played time, but I do believe it turned out to be a net positive experience. I ultimately stopped playing WoW after about 5-6 hardcore years, moved to Silicon Valley for a few years, and focused on my career. But the experience still lives with me and anyone that played WoW knows how deeply nostalgic it is. It's also funny to see WoW terms like Guild, Quest, and Soulbound merge into crypto now, almost as a reminder of these roots.
Investing in this Area
Many of the crypto-based games launching today do not have staying power in my opinion, nor are they as focused on the game design nearly as much as the monetary aspect, which has sort of an empty quality to it. Axie Infinity is obviously a major success story that focused less on game design and more on earning but we don't think this will be as replicable as many others believe. Certainly on a shorter term speculative level we will see other gaming projects have interim virality, but we are looking to invest in long term, compounding giants that can survive and hold their own without bull market hype.
As of now, we are more interested in investing in bridges from 'traditional' gaming into crypto (e.g. our recent investment in Oorbit). Products that help Unity developers build on web3 for example, or APIs and middleware that make NFT offerings easy and interoperable for Fortune 500 media companies. Almost all game development talent exists in 'traditional' gaming studios that are now moving towards crypto and NFTs themselves. We do not believe the 'traditional' game developer to web3 game developer talent pipeline is as strong as let's say the 'traditional' finance to crypto/DeFi talent pipeline is. Gaming has far more of an embedded community and even 'traditional' games have massive growth potential and innovation left, unlike traditional finance.
There will certainly be some successful web3 game studios and individual games and we are open to those opportunities, but have turned down countless projects. Too many are lacking in quality game design talent, where the game is secondary and the tokeneconomics design has the lifespan of a fruit fly. There's a lot of noise in the market right now, so we are being fairly patient in vetting the best single-game or game studio opportunities.
I still occasionally game to this day (PUBG, DOTA) and most founders in this space appreciate this background story and connection. We are looking forward to continue investing in this area and have been waiting for these areas to converge for a few years now. We have some exciting announcements coming in Q1 around our focus here.
Last but not least, if you are building in this space or you come from a similar Crypto/WoW pipeline and this resonated with you, please don't hestitate to reach out!
And for the record, LFG = Looking For Group, not the other thing.