Rec Room Part II (with CEO Nick Fajt)
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OK good to know。 So we should not shift tomorrow.

then don't do you tomorrow. Please wait.

Yeah, good. Glad we ask.

I'm gna send you the press release so you just IT has the embargo on the top.

Welcome to season eight, episode four of acquired the podcast about great technology companies and the stories and playbooks behind them. I'm been gilbert, and I am the co founder and managing director of seattle bed pioneer square labs and our venture fund.

psl ventures. And David and I am an Angel investor.

O and we are your hosts in twenty eighteen. We did episode on the early stage seattle start up rec room founder in CEO. Nick fight joined us at the time to talk about their seed round that they had raised from sqa.

At that time, they were a popular APP in the slow to develop V R landscape with a couple hundred thousand users and zero dollars in revenue. Earlier today, rec room announced in the wall street journal that they had raised one hundred million dollars at a one point two five billion dollar valuation from existing investors, sequoia and index ventures. They are now a product that spends across many platforms from, of course, virtual reality, but also to xbox, playstation and IOS. They have had astonishing growth numbers over the last year where they grew revenue six hundred and sixty percent and now have over fifteen million lifetime users, two million of which are creators on the platform.

Who and we knew them when.

Indeed, the background of all of this is that twenty twenty was a heck of a year for the entire metaverse category. You have epic and fortnight's growth they're currently rumored to be raising at a twenty eight billion dollar valuation.

And of course, robo ks blockbuster IPO that they pulled last december because there was too much demand and instead raised private capital and then did their direct listing this month and are now valued at forty billion dollars. The Price was too high. Here was too high.

You could say it's been a transformative year for reckon in the entire industry, to say the least. So today we are back to tell part two of the reckon story. And again, with the best person in the world to join us, nick, fight. So nick, welcome back to required.

Thanks for having me back. I'm i'm excited to dive back in is great.

I think you are the first repeat guest on the main show.

Oh, all right. cool.

yeah. And over so many different stages in your company. I am the premise of part one was how to raise your seed round with this guy we know who's raised IT from zoia and he's got this cool company and who knows about this very speculative space. Then here you are like a mature, grown up company back to tell all of us how to do IT.

And I was just a straight line from those showing inside there was no hardship and between, yes.

as IT always is, especially in in consumer entertainment, i'm sure. Well, listener's are you and acquired slack member? If not, what have you been waiting for? IT is a spectacular community discussing, of course, recent acquired episodes.

But more importantly, it's just a genuine and smart group of people having a thoughtful, ful nuances and respectful discussion about the tech and investing news of the day. Fun fact that I just learned is one listener recently hired three other smart members of the acquired community this month into his company. Directly from the slack community, you can join at acquired data, F, M, slash, slack. Okay, listeners, now is a great time to tell you about long time friend of the show service now.

Yes, as you know, service now is the A I platform for business transformation. And they have some new news to share. Service now is introducing A I agents. So only the service now platform puts A I agents to work across every corner of your business.

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Yep, with service now, AI agents proactively solve chAllenges from I, T, H, R. Customer service software development. You name IT. These agents collaborate, they learn from each other, and they continuously improve handling the busy work across your business so that your teams can actually focus on what truly matters .

ultimately service. Now, an agenda I is the way to deploy A I across every corner of your and they boost productivity for employees and rich customer experiences and make work Better for everyone.

Yeah, so learn how you can put A I agents to work for your people by clicking the link in the show notes or going to service now doc m slash A I dash agents. And lastly, I will keep this brief today. If you are not a limited partner, you should become one.

We had a delightful L. P. Call with so many of you last week, and we're looking forward to ward to come.

You can join at acquired data FM slash LPL. We can't wait to see there. David. Nick, let's dive in.

Let's do IT. I'm ready. Let's do IT. okay.

So as been said last, we left to you, you guys the plug, I reckon crew IT was february twenty eighteen. You'd raised this great seed round from sekou. You'd also raised an internal a from sekou. He didn't announced by them. Everything seemed to be great, but I was actually wondering before we get into what's happened since we didn't talk as much about the sort of real founding story of record in back that I wondering if we could revisit IT this time of how you guys actually came together out of microsoft and started this company and he could would be really good context for for entrepreneurs there to understand maybe that there's not always a big grim play on to become a billion dollar company from the beginning.

Yeah I mean, I think the founding stories you Normally here, it's like very cleaned ed up narrative like I had this visionary, I was doing this mundane task and and I this light bulb like went off and and that was not true for us. So I was working on the hollow lands team at microsoft and I had been working on IT, don't know, maybe like four, five years and I was right before the first heads that launched.

Um my team was really focused on kind of consumer products for all. And so like video games, uh, essentially like what kind of games are people going to play all lands. And then as the hollends team progressed, IT really shifted far away from consumer towards, you know, less let's shoot aliens in your living room to, let's help boeing assemble jet engine.

That was really when enterprising and military and IT left my team that I was working with as a you know kind of irrelevant and a bunch of us got rework. Um so we had the team we I call loved work together and then the team got, where do you get reward to? I got reworked to the microsoft edge browser.

Uh so and I and man, that was so IT was so difficult because I was like i've been working on the future for like four, five years and now i'm working on microsoft second browser that I don't quite understand, like what's wrong? Why can we fix the first one? Like quite there another one.

So you know I found I was I was moving over there um and I was just so passionate about the A R and V R space I wanted to stay in that space. And so as soon as I found that there was going to be a remark I actually applied to, like every company that was doing that, I applied to oculus, I lied to magic leap. I applied to google.

I think I applied to like unreal, epic, uh, because I I the engine was focused on, and I got turned down everywhere. So no one, no one wanted to hire me. I was like, man, I feel like I have this .

valuable skill.

like shouting somebody a and I think there were a couple other people that felt like I did so. So shortly after this reg, I don't know, maybe like thirty to fifty people left, uh, microsoft were just like, you know, I don't know what's next, but it's not going to be groove music and it's not going to be .

the the calendar APP know. And to set some context, microsoft had been experimenting with what would become the holy lens for like seven, eight years. I mean, I was I was appreciated the work done on oculus.

right? Yeah yeah I mean, I think I I think my first demo pollution was in like twenty eleven, maybe yeah super early. So very, very early. Um and I have been working on this for years. But you know I think when microsoft started that, they thought as a successor to connect in the overtime IT was like, well, you know enterprise makes a lot more sense given the use cases were able light up right now in the expense.

So no, in microsoft fense, like everything they did made a lot of sense, like this was not ready to be a consumer product that was a way too expensive and the the use cases that we could light up at the time just didn't make sense. And so having a bunch of game dev s focus on this like I didn't make any sense. So a bunch of the game debs left you know a couple of them formed various companies that kind of focused on V R.

And uh against gravity happened to be one of them. So um me and and five other people came together uh to form a company called against gravity and to just give you an idea like how little of a plan there was. Like the reason the company wasn't called record was we didn't have the idea of record.

We had no idea. We actually, we actually thought maybe we could leave and like maybe microsoft, like let us keep developing stuff for hollow lens. We could not get a dev kit like.

so so not only did you done have the a for record, you had no idea the plan was just we like we're going together. We're going to get together. We're going to do something.

yes. So as I said, I think like thirty more people left and in a bunch of them were like, uh, you know, i'm going to form this company. We're going to form that company.

And then against gravity just happened to be one of those off shoots. The name against gravity actually is is a demonstration of how little of a plan we had. The halloween ends headset internally was code named gravity IT was IT was so heavily like, know, they were called gravity a in its gravity b units.

And so we were just like, well, we don't know what doing. We know moving away from that. I guess we all against gravity, we were like actually still very excited to go build holylands software.

We just can get a hold of a hollow lands. Some friends at valve hook us up with an H. T. C. vive. And we were like, okay, well, here we ve got a piece of hard where, why don't we start messing around on this thing? Wow.

that's so cool.

I think honestly, all of us thought like, oh, microsoft will eventually get back in the consumer A R space, all just go back there. But in the answer and what i'll do this um so yeah I would say there was like not a ton of intentionality that I was IT was more like maybe some egos or Bruce and was just like, yeah I guess well, we'll take a chance and try something different so I got to ask.

you know where you to tell the whole story about with everything since you're seed around and how you've gotten to hear but 这 as sort of an analysis question up front， do you think that figuring things out as you went in those early days, has that served you well in getting to hear? Obviously, most other VR companies that were started around them are certainly that doing what you guys are doing or as well as you guys are doing? Or would you say is like now that was just how we started, but things have changed.

I think it's certainly gave the culture of the company a specific flavor. I wouldn't claim that it's like the right choice. But IT. IT was our choice and I think it's LED the rest of reckon to have a very improvised you know style. We don't get too attached to ideas because there wasn't know everyone early on that I think we were really, really attached to.

I think we have seen some chAllenges hollands about like, you know, we kind of all envision this like a metaverse world where, you know, maybe different people are authoring rooms and objects. They all work together. We did see that problem like at holylands, there was an APP that some people were working on that was like a travel good, like match peach or the color seen.

There is another one that was doing that. Yeah, there was like another one that was like, I think IT was called hollow skype. And so you could like chat with somebody who was like, maybe hundreds of miles away, and he was really cool.

And there was A A final one, which I don't think many people saw. IT was like a pet, and IT was like this, like a little virtual dog. And you can teach tricks and stuff like, but one of this work together like you, we we couldn't be chatting on skype and then like, go to the color C M, and then be like, let's let our pets run around.

The color c like, IT was one of the time. So you like, saw your pet, we saw your the collegium, we saw this person. And and so that kind of highlighted for us like, you know, there's something about the apple model like that doesn't work in this space. And so I think that got the gears turning a little bit of like ah maybe we could build like a we sports version of IT that like you know kind of express our idea. But I would say like that was definitely no like grand world conquer plan that was like how do we survive for a little one?

Ll a nick. Like just to put a fine point on what you're articulating here, when you are saying that maybe the sort of APP style doesn't work as well in this you know metaverse type world, can you help us understand what reckon is for folks who didn't catch the last time around and maybe especially articulate this notion of like IT is just one big world? Like how did you come to that and and what does that mean?

I mean, very gradually, and I wouldn't say I came to IT, you know, I would say that there are many, many people on the team that contributed a lot of you know there were a lot of tiny choices that can help help build where where IT is. But yeah, so red room backing on the way up reckon it's a viral universe. It's made up of millions of different rooms and all these rooms are unique experiences.

So there are battle royal islands, there are escape rooms, there are fashioned S. T. shows. You could have a family reunion in rec room, you could have a book club, uh, you could have a live performance of hamilton. Like all of these things have been done.

So record is just is like a very flexible environment where you can come together in a third world and users get to build these rooms and I can build and publish them. And the way that they build is a very unique. Like rather than building in a game engine, you're just building kind of the way that you would in minecraft.

We are like in the game, manipulating objects, and you can do IT socially. So you can have up to forty people in a room that are like chatting with each other and talking about the room that they're creating and maybe want to build like a castle crushers game. I could be like, then why don't you go build a more like David, go build castle. I'm going to work on the scoring and put a goblin army over here like we can just have that creation experience together. And so IT makes creation very accessible to people even if they don't know how to code, even if they don't know how to 3d model。

There's unlike the robots, which will talk about more as we there's no separate creator APP. It's all it's all one world.

Yeah the blocks has another APP called robo ks studio, which is where you go and build that kind of looks like unity or unreal and it's a really powerful to IT does precip SE some knowledge about like, hey, you understand scripting and like what prefabs are and you might need to manage some like network authority or something? Reckon you're just going like building mine raft style.

And then when you press, publish like, great, we put your your room is now accessible on phones and pcs and x boxes and play stations and V, R heads that will just like hosted for you and you don't submit to like a third body anything like that. Um so it's just this it's like the wikipedia games, like there's just like a lot of people contributing to this world and new rooms are constantly popping to the top of like a new hot list that people are discovering. You can follow creators to see concentrative created um and get notified when they build new stuff.

And then um we've started letting users monomoy zed in their rooms. So we have in game currency that users can uh they can charge currency inside their rooms. And if they have mass enough of the currency, we will actually pay them out for the currency。 And so we've got, you know like fourteen, fifty year old kids and there who are earning six seven grand a month in in reckon.

And you know we're trying to scale that up. We think that can be like a lot, lot bigger. But I think IT just gives you an idea of like the accessibility of the creation tools, are you it's really anyone can go in and you know realize the idea and that's in their head, and they can really easily distribute.

well, IT shows up in the numbers. I mean, classically, the internet was one hundred percent people consumed, and then ten percent of people commented, and then one percent of people created. And that those numbers haven't held exactly true for a long time as we ve entered the social aera.

But that was sort of old, old monitor. But like you look at two million of the fifteen million users that you have, our creators on the platforms to dramatically higher percentage since they are able to author right there in that environment. And you know i'm cheating a little bit because I I um you and I went in and played and you should be the maker pen and I got to like build my own little world. But like it's remarkably easy to use tools like that to create.

It's certainly a lot more accessible. And I think if you're the generation that grew up living on the internet, living in games, it's a very familiar medium for you to create.

Yep, yeah.

Well, so let's dive into the history here a little bit. So you told me a moment ago that you publish across x box and IOS and V R headsets. Last time we chat, you were just A V R company.

So the VR boom didn't really arrive in the way that we were sort of speculating and hoping. How did that affect you as a company? And how did the calculus of hey, maybe we should have a contingency plan come about .

yeah so how I mean to to give a rec cap I think of the the previous episode like we we raised a seed round in twenty sixteen, we had launched the APP and I was doing pretty well for a look of V R APP. Um and so we were able to launch a seat around around that. And then a couple months later um after working with our investors, we had a good track record of involving the product in finding growth.

And so we were able to raise a in a round from um from Scott as well. So is just the same investor that to the a that happened about nine months later. And we are just going to keep in that secret as we can play and out what was next.

Uh, when we chat and we had just rounded out holiday twenty seventeen, we have seen a lot of growth like probably from october to december twenty seventeen. The applause five. So like we actually we were doing really well.

Um IT was kind of a weird situation. We we had had all of this growth, but then we were looking out over twenty eighteen and we were like, men, there are no headsets on the rising. Like are there any headsets into one thousand? There was like, man, like Normally where people are shipping us dev headsets. You know, twelve months had a time and y're kay, you're are going to do this in the holidays and like, get ready and we just had nothing and we were like, you know, like this growth is good, but this is not this is not a venture scale business.

And and your growth was basically capped by the number of the hard set sets, right? If you are a free APP, so everyone would go or a lot the majority of people who had a head that would go download you, you are basically your growth was governed by the headset .

growth one hundred percent. So to give you idea from like december twenty seventeen for the next twenty four months, V R did not grow like at all.

So your market no, groth zero is a growth.

Yeah, totally. I think we were fortunate, but like we sobered up and realized IT like january. So I credit to the team. I think I think that would have been really easy to be like I was just five x like our world beers like are amazing, keep doing.

But I think IT was well, we use five bags and that's IT like this is not there's nothing on the horizon for us there like this. Is this here? So we need to figure out some path for more growth into that point.

We have been building all the content ourselves. So record was a universe of rooms but they were rooms that we were building and they were only like maybe ten or fifteen of them um and we are good at building rooms like, you know, we really enjoyed IT. IT was really fun.

We are building this like a little quest like you're going to go, you know, battle space aliens with, like, laser blasters or you're going to, like, take to the high seas and battle armies of skeleton. Ince, this is really fun. We are building this like little kind of contained rooms. And we are like, okay, well, this is just not going work anymore like we have to do something very dramatically different.

And so the two ideas that I think we seized on, where the community was so creative, like the community was a really bending and breaking reckon to do other things like we'd hear stories where people are like, oh yeah, we went to, like, I just invited a bunch of my friends to go play, you know, disc golf. You have a desk, gulf room. And we just turned off the rule sets and we have like a little picnic in the park and really like ah okay like that know somebody else was like having murder mystery parties in one of the rooms. They were just turn off the tool set last.

We decided to people had actually gotten .

married yeah yeah totally yeah they so but there wasn't like there wasn't really the system is is like creative community. We we were sort of like people are hacking the game to get IT to do things that that we hadn't intended. We like, okay, well, what if we lean into this? What if we? What if instead of our rooms, it's their rooms.

And what would IT mean to to kind of embracing this creativity? Like people are going through all these hoops to build these like amazing murder mystery parties, but they can't save anything. And if you're not in the room with like the host, like IT doesn't work.

So what would IT look like if, you know, they could set up a room and they could publish IT and other people go there and have that same experience, even without the host? So that was sort of that, one of the big problems we started playing with. And then the second was, all right, we've gotta find growth outside of V.

R. There is an APP called V R chat that had had really started scaling cut around the same time outside of V R had really found this like pretty devoted audience on on P, C, and like cooky. Well, hey, there.

IT has worked for someone. Someone was able to find a marriage between V, R. And a flat APP that works. And like that gives us confidence that we might be able to do IT as well. So we really started like lean into user generated content and and screens.

I was kind of went at least you went to I O S. Next, right? That was your first flat world experience.

our first flat world experience was actually police station 哈， supply station and and A P C.

Because you you have a uptake from the P, S, V, R. That was probably your big growth holiday. Twenty seven.

yeah. P, S, V R was the big 27 growth sport。 And then we were like, okay, well, we're all yon P S V R. Like what would you mean to make IT work on P S V R with help the headset and kind like the same question for for P C.

So that summer we like did this big unveiling and we were like, right now, you can have players from outside of V, R. Now we're like mixing in your rooms with our rooms. And IT was like dark days, like the community was not happy about IT.

IT was a big departure from what we were doing. And I think there was like a lot of, hey, we want this to just be what I was like. We don't want this to evolve in the way that you you're doing this .

and and what was a downside to them of having someone not in a headset coming in?

Well, I mean, I think a lot of the users who who care deeply about heads that know that kind of easy zone community itself. And so, you know, there probably was this like bonding element of people coming in on heads. S no, you care about V R.

I care about V R. Like this is great. We both care about V R IT. And like that is a magical thing that we want to preserve, like we want to have V R rooms where these people that care about things can find people.

I think the big mistake we made out of the gate was we were like we're done like one big community. We're gonna dump everybody into the same room together regardless of interested intent um and that was chAllenging like that was probably not the right move. The other chAllenge was like our user generated consensus were really, you know, they were in their infancy and so the rooms that people were building were like not very high quality.

Our belief was like, look, if we can shine enough light on them in the the right and like maybe eventually we can get them the moment that we we made the shift like IT was probably pretty abrupt. So I think the thing that we learn like I think for for you know two years we were like, all right, let's you know we're going to be really either tive. We're going to experiment in public like we're going to ship stuff and we're not going to be embarrassed like by are just going we want feedback from the community. And I think we probably realized like this, probably like some metabolism like of the community can you know evolve in this at this speed. And we probably pushed IT is too .

hard then this is right after we did our last episode. You guys are pretty deep in the trophy arrow at this point, right?

Oh yeah. I mean, like from twenty seventeen, like all the way through twenty nineteen, IT was like no one wanted to do any VR stuff but the VR users were like very passionate and IT was hard to explain to that that group IT was like, yeah like we know you just want us to focus just on you, but like there's so but like if we want to keep serving you ten years from now because we need to keep scaling this business.

And you know, I think some people really understood that they are like, okay, hey, in order to make sure like we weren't charging any any money so that there was no revenue coming in to really like, okay, like I think if you start up, you have to life blood side the revenue or a growth and we didn't have any revenue and we weren't going to find any group in VR. So was like, okay, well, we are how to going to make this a thirty dollar paid up, which I don't think that serves anybody well or we need to go fine. Growth outside of V, R.

Did you consider trying to get profitable? Were you like, okay, if we were to turn on monitise ation, how long would that take to find something that work? How much could we actually cover our our burn and get to like a zero net burn? You know what our investors beyond board with that? What does the calculus look like when you are sort of exam? That is a potential.

I think I mean, what it's unreasonable question, I think once we looked, the really bright spot for us was the user generate of content. We were like, this is gonna take A A long time to make IT click. But like eventually, if we can take these V R creators, if we can scale their creations, if we can get them monodist ing a user base that's at a mobile scale, they will be happy.

We will be happy. This will be and like a really strong business with with great network effects, very scalable. And if if we just pv IT hard towards like we are going to try and extract the maximum number of dollars from the very limited number of uses we have so that we're cash for neutral, like we're just not heading along that path. Um so I think we were just more comfortable being like, okay, hey, we think that the promise land is really this user generated concern ecosystem where where we're rewarding our best creators for the amazing work that they're doing that just looked at different. Um so I I don't know that we ever really looked at IT with their example.

Companies are products. You guys were looking to a sort of lake either inspiration or like A A vision of what the promising and could look like like i'm looking like we're you looking at something like an instagram would be like, yeah like if you can get this ug c fly will go or maybe even rebooked at that point in time, which IT was starting to spend even though most of the rest of the world .

didn't know IT yet. Yeah I mean, I think, you know we were definitely aware of road blocks. We were looking at probably a lot of stuff like a youtube switch.

We are like, okay, look, they have this creator class. They're able to reward the best of them. IT creates really great incentives throughout the ecosystem where like the platform is not pestering you for money all the time.

You're really only rewarding the creators that you care about if you are consumer. And then the creators are really acting as wonderful of Angela s for your APP like you. You shouldn't need to spend a whole bunch money on marketing because the creators will you can have creator let growth, basically. So we were looking I I think twitch was like a really interesting one for us to to look at there. You.

this, me, when IT actually happened, might come a little leader with when you introduced reck tokens in the economy. But one thing I know you guys did that, I think was really interesting was incentive sing. You you had this problem where you had this very passionate user, you wanted new behaviors out of them. You thought they were capable of new doing these new behaviors and doing them well, you had to incentivize them to do IT. And so I think if i'm getting IT right when you launch direct tokens, you got rec tokens for accomplishing specific actions that you guys set up in the environment .

rate yeah the economy has evolved. So David's reference and I think called rec tokers, which is is basically the in game currency that we we use. And you can use the in game currency to buy things to like kid out your um avatar, think my shirts and hats and gloves. And you can also buy virtual food. We sell a lot of virtual food like root beer and pizzas and donuts and so like that.

And then and people buying those both from you and from each other, right?

yeah. And then creators can charge for things inside the room so you could build like a nightly b like a VIP lounge and the costs some of there, or you know fashion show and like different outfits costs different amounts of money. Or maybe you're in like some haunted mansion. And you know, creators are selling like flashlights and like about her, like and you know like about .

water in the desert. Yeah.

totally. So people are doing all, all kinds of really interesting stuff for that. It's a pretty flexible system. But like if you look at where IT is today, like IT went through a number of different stages of evolution to get to that point.

Um for a while, we just had avatar items and we you know you just did something good in the APP like you have an up or you made a friend or some action we cared about. Here's an item we then started. We're like, okay, we're not going to give you items anymore.

We're going to give you currency instead. And then here there's a store with with the items. So you started getting used to like, okay, well, i've got currency and like, what do I want to buy and currency equals this much item and then we unlocked inability to buy the currency and then. We turned off the ability to earn the currency except the ability for you to earn the currency, then shifted you, okay ay, well, you know you maybe not you you can earn through leveling up necessarily, but you can earn IT through a so you can create something.

You can earn IT from us here. You can earn IT through other people finding value. And and that's .

not entirely true, like there is still, we do prince a good amount of currency every day to like, stimulate to me and right.

you so weak, the little record fed and yeah exactly we're like.

yeah qum save easing in record yeah so I mean, we do prints an amount of currency as well because, you know, we do see behaviors we want to reward. We're just probably a little bit more careful about the way that IT IT works so that it's not um it's not an easy to game system. You can create like a thousand smarth accounts and like hot the currency and move IT around.

And so for people familiar with games, that sounds like what you had as you had only items and then are reduced to soft currency. And then you took that soft currency, made IT a soft and hard currency and then made IT a basically inclusively a hard currency. And soft currency as currency. You earn hard currency as currency that you buy.

yeah. So if you looked at like a gaming textbook of like how to build an economy, reckon did all the wrong things, like you should never have, you should never have. You should never be crossing the streams of your harden in your soft currency.

You shouldn't shift one to the other. I think we just had this idea of, like, okay, this is where we want to get to you. Like, creators are making money. Like, that's that's the end. Go here and like, what are the like if that charges are like, were a charge mander, how do we like evolve into that thing?

Can I ask, as this is a derivation, but a team question, once you realized you're gna do this, and as you're doing IT, are you like who we should have like an economist at our company? Like how do you is IT A P M. Who who owns this?

Clearly not since he broke all the rules .

that we've had. Um we really have like focus pretty hard on having generalists tackles many of our problems as possible. So the t behind this IT was like there was an amazing designer um that had worked in in mobile gaming for a while.

There was an amazing devi that worked with me um at hollands and you know him and her worked on this this problem over probably two years like OK like we have this currency, we have this economy that doesn't match at all of the goal that we want. Like how do we keep evolving IT without? And I think that was largely informed by our choice.

Early ones like, okay, here's screen players, here's user general concept and that did not work like IT was too much too fast and server this when they were kind of lake, okay, what are the stages we need to go through where the community will understand incentives? They will go they will be excited for each of the changes that we make. And I think they're just really thoughtful about IT, and they Carried IT out you know, very intentionally over over the course of probably about two years .

and then shifting took kind of the the creator side, what kind of behavior you observe like, let's say, I build a really successful haunted mansion selling flashlights. When do people decide to keep the red token s that they ve earned? And when did they decide? You know what, this is a job for me and I i'd like to make some cash on IT.

It's probably a scale question. You know the currency. It's kind of like, I guess if you went to like a thrift store, you like i'm going to trade in some clothes and like, well, you can have this much in store credit or this much in cash yeah that kind of depends on like what those .

number r me stop game stop .

kind of the same deal yeah um and so know if if you go in and you're like, hey will give you sixty box or three hundred dollars and store credit a game stop you're probably like, well i'm going to buy a couple of more games. Give me three hundred box if if you add you know two zeros to the end of that like you can have you know thirty thousand dollars in store credit or you know six grand you're like, well, six grand sounds Better.

You know what? You want to be a real entrepreneurs? Arara trac real IT depends? Yes, it's kind of like a capital allocation question, right? Like if you're a creator, you like, well, how much do I want to pull out of this business? Where is keep reinvesting because they can distribute those tokens to their users by incentivising behavior.

They can do there some element of that they can basically place for gifts inside their rooms and they can pay for the gifts and to try and drive activity towards their their rooms up. So yeah IT really comes sound like, you know what do you value um and how much of this currency you have one of the classic game economy problems is you will end up with users who have so much currency that can kind of like ruin your economy .

and so it's mean like billions.

yes, and some. Like the the chance like and it's the same like a state tax sort chAllenge. Like the problem that they run into is like these people get tired of the game because it's like no fun anymore.

Like I can buy everything, so they'll just give their account to somebody else and it'll ruin the game for that person. Then two because like, well, they don't you know, it's just like the game Jenny has been turned on and now everything's free. And really what we're trying to do is like, okay, well, hey, some of these users are going to have screwed make duck size piles of in game currency. How do we pull that out of the system so that there are incentives stay line with hours and they're not just like dropping you.

There are a fun name for the state tax?

No, we we do not have IT is fascinating .

that I mean, very quickly, even with the most so simple mechanics, you quickly get to a place where, I mean, even David and I like this is the first time i've heard of rec tokens. David did a Better job researching than I did, and my mind is race and all the ways that I could I could game this thing. And I am sure you just have you very .

carefully. You need because of skin record.

I mean, I think these systems are, I think you going to see more of them in games. They are fairly complicated to set up there. There are lot of things to be mindful of, both from like, okay, you don't want to be a bank, you don't want to create a security, you you wanted here to you know know your customer laws and and self like that.

So there is a lot of complexity behind the scenes. And then also, there's a whole bunch of complexity for, like, okay, and how do you ensure you're not getting canned along the way here as well. So that's why we have a fairly large team focus that problem. And you know today it's worked pretty well.

That's good. So what is through these these three kind of like major, major things you figured out since our last episode of multi platform ugc fly whe creating this economy, what is the two tory of the the business in the company look like through this time? I like something you'd raised between the seed in the a was about fifteen million dollars from siloane initially.

How are you, how are you living during those that tall, those troof sorrow years you wear? You didn't have revenue coming in fundraising. Moore was probably gone to be a chAllenge.

yeah. I mean, I think again, you know going back to the roots of of reckon, and I don't think we were I don't think we had a Normal founding story. I don't know that we had Normal founding ambitions.

And I don't think the people that we hired were like quote and quote, start at people I don't think they were focused on in the valley that spent two years in a place, got their options and then bounced the next, hopefully, facebook. So I think the people that we had hired to date or like a love, reckons I love V R. I see the problem.

Like I see the chAllenge that we're facing and it's an inset of chAllenges. So I I think because we had sort of an unconventional funding, we had a hired kind of unconventional backgrounds that we're like. I'm willing to see this through the the likely tough times.

Um so we had no attribution during this point at all. H which was really cool like nobody left. Everybody was like A I understand the chAllenges and like this kind of is painful, getting yelled at by the the community you know during these transitions.

But like we've really do think is in their best interest, like we really do think if we want this thing to still be around in five or ten years, like we have to go do this stuff. Um and so it's it's worth getting some some yelled out on redit. If IT means a couple years from now, we can start having these creators earning like a ton of money. But that's a really interesting world to go and live in and it's worth a little bit of temporary pain.

So and when you say the temporary pain, if you think about the true, the V R true believer s obviously have a flash too far forward today. But like the oculus quest two is out by all reports that doing very well with psl ventures. We've a portfolio company, big box V, R, with a game called population one. They're seeing IT know that it's been fundamental successful. I think you you know china in the CEO.

Well, the great game, yeah, they build a lot of good stuff. They will. They build smash box.

Their engine is awesome. They're great. yeah. And so like we could be at a little bit of inflection point now where you it's too soon to tell, but know VR could be here in in a major consumer way.

And when you were thinking in the in the long term, best interest of these users who are V R die hard, where are you thinking like like the long term for reckon is we will be A V R thing, and this is sort of the way that we survive in the meantime. Sure, it'll be multiple platform kind of forever now that we've taken the gene out of the bottle. But we're always thinking like the N L B will be V R.

I'll put in this way like there were a bunch of companies in twenty eighteen that had built V R things and then pivoted to we're not going to trying to a cross the form more just gna like this done. We're moving to that was never a conversation for us. We were just like, we really love V R, man.

We we really hope is the thing there. There's not a ton in our power to make that happen. We certainly think like a cheaper device with Better marketing and west cables that works a little little Better. We do well, but you know we don't know and we we can't really affect that ourselves. But we never talk like we never talked about like I just to do a hard of IT out of V R, even though almost everyone that that I you know was chatting with in the VR space was just like we're hard pivoting to like, you know.

this new APP. Yeah, yeah.

I just we're just totally, totally different things and we we really wanted to like see the V R journey through. We we just new like, okay, we exclusively focus on V R. Either this is gonna be like a six percent team for two years uh, while we wait or we can go trying to find growth somewhere else through user generated content and through other platforms.

And we think we can actually ultimately build a much larger business that you know, at the end of the rainbow IT, it'll have a much larger reward for V, R users as well because they will mean if they create content instead of reaching just V, R users, they can reach V, R and x box and play station at iphone. And all of those users are potentially monitor able to them. And so their reward can just be so much greater.

And then I think we started seeing like I think there were were like a lot of V, R, hard core users that were like, okay, well, like I can't. I didn't like this to begin with, but you know, there is something nice about me just being able to hop into a room like really easily and not move my coffee table out of my way. And I can just check and see if users are in there.

I can just check on my room real fast. And like I can now do that without like or or like onest ly because all the headsets, we're getting old. We have a lot of users that we're like.

My entire social life is in reckon, and my controllers broke and I can't get H, D. C. To fix them. But I can still hang out with my friends because, like, I can still make an in here. And I think there are a lot of benefits that people started seeing from IT definitely was not apparent when we first did IT. I think there are a lot of people that like ah I don't know that this is the right move.

There is also another dynamic that I I want to talk about you that you explained to me a little bit ago that may be you can talk about here, which is if you guys had said, you know what, we're gna fork this and there's going to be the vi verse in a recreation, and we're also going to make the flat cream versioning recruit, that would be fine. But but the experience, what you can do, even in a flat screen environment when your platform is architecture for V R, is so much more than you explain IT to be assert as the different of, like in a video game, in like story fighter, whatever, like you put, you hit a button and you punch in record, you punch IT already, you jump whatever. Like.

yeah, I think yeah. If you look at screen games, you look at mobile games, so you look at like keyboard, mouse or controller, generally the behaviors that your avatar can do, they are fine out so they can jump, or they can punch, or they can pick up things, or they can place things. Um but there there is a finite number of them.

There are n things that your player can do because there are an n combination of these buttons for red room. Because we started in VR, the player actions were always infinite. IT was like, well, could somebody back flip? And it's like, well, we can't stop them, right? Like you're wearing a headset and you do a back flip like that, that can happen, right? Players lie down well, yeah, definitely.

Like can players like juggle? Yeah, of course. And so we we start like with the ugc system. We started seeing all these rooms that were built around behaviors we had never anticipated. IT was like, okay, well, this is an a scape room.

Or you need to, like, crawl under this thing and like, while crawl and you know, you need to pull out a letter to like, like this candle and the candle and so IT was like, well, okay, are going to make this work on mobile or going to make this work on a keyboard mouse. Like we can't have a crawl, plus like WIP out lighter button, like that's not going to work because we don't know these things in advance. We just need to build an avatar that's really, really flexible and and like you as the you controller of that mary and net, you need to be able to make this avatar do like damer or anything.

And so I think you just made to a very different control scheme. And then you see in most games, like the way that you can control your reckless characters hands, you have independent control over left and right hands. And you can make them do a whole bunch of wild and weird things like dancer, like wavered, you know, are all source of.

Which is so different than like, you know almost everything out there really fortnight like for night night. Great, it's amazing. But like, you hate a and you jump ed, you hate A N N, and you did like that.

Well, I what we're getting at here, there was reasonably easy path that's like for squashed down to two d and then use the same input system that, you know works on iphone games. And then there's a harder one. It's like, can we keep IT all one world and let you do? I assume not all, but a lot of the same flexibility from a dream that you can do in V R. And I have to imagine that now that if cross that as i'm and taken, you know, door door number two, IT pays off in all these ways of having a critical mass of people at all .

times in a single universe. So there are start away like, I think our original idea was like, yeah, let's just jm all this into like buttons. And then at some point I was like, oh my god, we've got like forty buttons and old buttons and shift and control buttons.

And like, I was really adamant ant, that the game on screens be the third person for a while. Like that was an example of like, really bad design on my part, uh, because I made IT really impossible for creators to, like, build a world that was cohesive because maybe theyd build like an escape room in V R. And they are like, I played in V R. And IT works in VR and then you go on screens and IT was like, okay, well, I need to pick up this post that no, read this really tiny writing and I can't do that because of in third person and so that was like a dumb move on my part.

but you can see what to happen like, I remember you you were showing me you're like, well, here's the and this was in what twenty 2， twenty eighteen IT was like here's the view. If you want to stream on twitch, IT goes to this like third person view so that you know, it's not this like I want to vomit because i'm seeing through someone else's headset uh, it's it's a third party sort of camera behind me view. And you could imagine like what we cha translate that you can see why you would want that to be the case.

That was my design contribution that probably wasted like six months of death time for somebody. So if they're listening now, I apologized to them.

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Yes, is just like bason what we talking about, was this a consideration when you were thinking about your your currency like way a minute? Can we get cash on the baLanced? Like can we have a nice cash flow dynamic here from asking users to buy rec tokens and then maybe we don't need to raise money as soon?

Oh from like basically like in this as a yeah I mean, honestly, the way that I played out is is is kind of like when we first introduced ed, the system, still the majority of the currency was coming through like our sort of items said so yeah basically was like, well, yeah mostly what people are buying is government services and and so like that wasn't a huge consideration for us.

You know you can see like as more and more of our economy shifts from like a reckon specific like worst selling shirts to users selling shirts. Yeah, you really do get a float on this. Like but the benefit of like these kind of ecosystems is it's not so much the float.

I mean, the real value is like this is a much more scalable way of growing your revenue like it's it's hard to grow your revenue by being like I am going to continually come up with new services and new items. And like every time I want to have a new hat or more hats, I need to hire more people over here. But if you build tools to let people do IT, you just get a much more scalable catalogue. And so you know in the beginning, it's a much harder way to grow revenue in the long term is a much a Better way growing revenue? 嗯。

fast.

So speaking of by summer early twenty nineteen, the summer twenty nineteen, you see in some Green shoots and the you starting to get through the trophy. Ara, what are .

Green shoots?

David? Green shoots by, yes. So if i'm gone here, like i'm looking at our our summer twenty nineteen numbers.

So by that point, screens have passed. V, R. So like a larger audience, we have launched on mobile. Mobile was our fastest growing audience, and V R was still doing well to step growing since since 2 teen at least user base we were really we grew up a lot on the engagement side um but the user base stayed around the same。

Uh so we were like, okay, we found growth outside of V R, and we actually raised the series be in in April twenty thousand. And largely IT was like, look, we took this V R, V sports and we turned IT into a cross platform user generated content platform and we're about the launch on mobile that was kind of the story for the series. B was like, and when I I was like showing people the mobile build and like praying IT won't crash, well, I was like down. And because, you know, we had basically taken like a play station APP and like we're gonna run IT on an iphone and that should work fine.

I IT was that did majora ly that round locally? That was index. Actually.

that was index.

That was index. yeah. So that round was still kind of a story around, right?

yeah. I mean, I think I think the thing that they were looking at was well, IT would be interesting to ask them like what what their thesis on IT was. I think the the interesting thing that they were seeing was this is an APP that has been around for years and is still growing and it's taken some like interesting turns.

Like this user generated constant thing is clearly not what they were doing to begin with. This multi platform thing, clearly not what they have been doing from the beginning. But like both of them are working now.

And maybe this team has you know more a more ways I can evolve. So I think IT still was that story. Like at that point, our revenue was really the minimum.

Yeah, our revenue was barely existent. I think I think I think we had like one month of revenue. 全国人民 we made like twenty grand。 And you know I think we were yeah .

you you you had a twenty twenty one revenue multiple on your twenty year revenue.

And I think monitor one platform might in IT, I think we are maybe only modest zing and like steam, but not on play station and other self. So it's a growing like pretty quickly after that. Um but at the time, I was largely, you know I think we have interesting engagement numbers.

We were like soaking up a lot of minutes. But in terms of like a business IT was IT was you really had a sequence to see IT. So custos to index for sequences pretty hard.

So then so I think I want to ask you about this. I think once you you turned on modification across all the platforms and the economy started to work IT seems like pretty quickly after that, the business became a really good business, right? Like you you are generating at a significant amount of revenue at pretty high. Yeah.

I think I think you can especially if you break out like, okay, what's fixed cost versus variable cost, right? Like the the cost of supporting the service of reckoning is is relatively small. Like, okay, well, we need this the services.

Like, we need asure services and we, you know maybe this networking meet are and then we need moderation teams. So you like, okay, what's that cost? You like, well, all the scales really nicely.

And so like, you know, most software businesses is really okay. And how much do you want to spend on R, D, ensure that you are growing years down the line. So yeah, that the business is the business is growing really nicely.

I think there's really, really interesting dynamics from the user generated content. I just because the the revenue can grow really nicely without much input from us. And then if you look at like the way like we have slightly lower margin on that revenue .

verses out to creators totally.

but it's really like we're happy to pay that out because those users are so um valuable, they create so much value for us. They do such a good job of evAngelizing hap and going in finding new users. Um I would rather spend money on that all day long then then buy more ads on .

this is so the two things I want to that highlight here you just did is one the beauty of this model is you don't really need to spend much of anything on. Use your acquisition, right? Because you're as as you said, you're creator LED growth that your creators that are creating amazing things that are spreading the word about IT that are bringing in and user.

So yeah, I mean, we we've got we started doing some paid advertising like maybe two months ago. So we're like experiencing with that. I mean, I think there's probably some number greater than zero where that makes sense, but I think got everyone who's been and the venture game knows that performance marketing is not you do not get economies of scale, right? In fact, that goes the other way like the more years spending the the worst each incremental dollar gets. But that's not sure.

It's it's me playing pinball like I put a quarter in every time and eventually the ball goes to the bottom .

yeah except you're like you run out of like the good pinballs early yeah there's .

somehow there's worse and worse product market fit with every additional pinball that gets loaded.

And totally because I mean, think about IT, like let's say you're building a uh a golf game on I O S that's like cartoony. So like the first couple of users you buy, I like I love cartoons and golf and I have a phone and then like .

exactly what I was looking .

for from then you're like, okay, well, we've got all those users next up we're like, you kite, like the P G. A. And like maybe we can get you into this like cartoon golf game because you like golf in some way, right? And then you get all those users and then, you know instagram, like, well, these users like being outside, I think, and like maybe sports and like that kind related think is fun.

Trust us. Yeah so you're paying incrementally more and more to attract these users that want your thing less and less. And and so you know I think there there's default in the amount that makes sense to spending for performance marketing.

But like I think this is how a lot of people get in troubles like they're going to force performance marketing work like forced IT to work is like you spend on those users that don't really want your thing um and that with the creators, like I would much rather pay creators more money and help them figure out like, okay, here's more money. Now you're intent of just going up. Go find the sub community that really vives with the content that you've created.

They don't need to even love every part of record. They just need to to love the thing that you built. So like we can have these kind of sub communities that are you .

create or like I love very specific parts of youtube. They're very different than I bet what you guys love, certainly what Jenny loves like that's great.

Yeah I think twitch does this really well. I think there's like a lot of different tones and cells and personalities on there and you know y'll go on at in there there people that makes for them. And that's what we want to happen in record as well, like we want you to go be able to build your little sub community we want and if you are user, we want to help you find your tribe. So like when you come in, we want to help direct you towards ds, the content that we think is most likely to light up your interests.

It's very akin to the concept of marketplace liquidity. I remember the great realization that dan Lewis opened me up to when when we had on for the convoy episode was he's like, look, we got the reason we need tons and tons of loads and tones and tons of truckers is because like there is one truck er load pair that is optimal.

And then the further and further you get from that, like literally physical distance, the worse of an economic deal at is for them because they are going to have to drive to come pick up the load they may not want to IT might be the wrong day. And like if we can get everyone on the platform, then we can always find the perfect match. But when you're subscale, you're in this territory of like most of the time, it's probably so optimal and it's probably too expensive of action.

And you can just sort of see that playing out in the world of games where you know where are I expose to the world of metaverse where the the more people there are on the platform and the more sort of um uh flexibility there is in the system, the more opportunity there is for people to find their tribe. So why the internet is so great? There's incredible marketplace liquidity.

yes. I mean, I think and that's that's the battle about to be fought is like what is the long tail of .

your metaverse.

right? So the other aspect that we've already you know well, it's probably not maybe not something you guys think about is actively did do you get a float out of that? The users by tokens of front and then they use workroom and then they spend those tokens over time to creators who then over time, I the cash matter, don't you guys are generating fluid at the same deal with the, you know, robots that hasn't been covered enough about why people say the box is unprofitable of all the revenue numbers are still it's like.

no, it's accounting .

box is very, very profitable. Yeah very, very cash generated here. So this like all shifts, the business pretty much like everything slow and then fast. So last fall, you raised your series c right?

yeah. So in november, we raised the series c. We raised twenty million from madrona.

and that's that's like eight months into the pandemic.

That was eight months into the pandemic. Let you know, look, the pandemic had been IT. IT has definitely driven an activity for record like the moment locked down happen.

You can just you can just see the jump. And reckless started to getting used for a lot more unusual non gaming things during the pandemic. That was where we saw, you know, teachers teaching classes in their, people holding group therapy sessions, people having family reunions.

There are a lot more weddings in reckon. So these are just a bunch of things that we were really excited about. Now I just show the flexibility of the platform. Um so we did that uh raise in november and then uh we launched on x box in december and then quest two back to the point about like V R, like you know platform shoes and oversize denim jackets, like IT goes in and out of style, man, and like it's coming back in the style.

Um and you know quest to like oculus, like I have to give them props, like they build T A, an amazing headset, an amazing Price they did a great job marketing in. And we're seeing like amazing V R growth. And I think that's poised to continue as more and more people start jumping into that A R and V R world. And IT seems like that's likely to happen over the next couple years. So we're really excited about that space.

Do you see the six hundred and sixty percent growth in twenty, twenty more attributable to we have the best product market fit on V, R. And there's this incredible V R device now that sold well or is selling well or do you see a primarily attributable to it's the panama and people need a place to congregate is not the the real world.

You know I don't know that I can to sign IT a one variable IT was kind of like all these variables kind to click at once like we launch on x box and we were like the number one three APP on x box for several weeks around holidays.

which was very you double your user base like in one week just by being .

launching on A X box was huge of growth for us. And we were really surprised by that. Like we didn't really do any marketing as a pretty soft launch in terms of like commish noise we made about IT.

But there is a lot of time up to there, uh, the mobile APP was clicking and it's been the fastest lake growing group. And then you see V, R, certainly to take off all the while. The ugc ecosystem, you're seeing great consent getting built and we we start paying creators and you just see like all the things of spin a little bit faster.

So it's kind of all of these things kind of clicking at the same time. And I don't knew that I could decide, oh yeah, then I guess there was like cover happening. If kids are only going to school for like two to three hours a day, they have an additional couple hours to play video games.

And that's largely what you're doing with IT. And so we saw all of these converging factors, and IT was really like woh y business is doing very interesting things during the last months of the year here. But like I guess, the thing to take away from this, and I would tell anybody else, is like starting a company, is these are things that we started to talking about my twenty seventeen and and it's like twenty twenty one.

And it's like, okay, well, now it's not a it's not a miracle that needs to happen anymore. It's like a system that exists. And now we need to like optimize IT, but like very little very few things that are like worth building can be built quickly.

You guys are ever a testament to that. So I imagine, you know, without we can get into whatever level detail you want. But you know, going from the whole dynamic, imagine must just have been so different going from a hey, we need to raise money and beginning to like build this thing to them like we need to raise money like it's so story, we're build this thing that now you don't need to raise money in and case in point, couple months after your last race, your insiders like, let's have a lot more money at a mattia valuation.

Like what is that? What does that felt like? Like did you see this transition commenting as A C E O? Or or has IT been surprising as it's kind of happened?

I I an I think it's definitely that eventually been surprising. I mean, I think I think like the entire ride of of reckoning has been surprising. And and you know, when I look back at h, what I was thinking during all of these different months in the past, like I was wrong, like a lot, like I was wrong all the time.

And and I think the thing that we built was that we built a really robust organism that can survive me being wrong a lot like that's what record is, is I don't need to be very right about like what's we are gonna do this quarter because like our businesses in depend on that and I don't need to build like the best room in reckon this quarter to drive growth because like users are publishing on twenty five, thirty thousand rooms a day. So like there's plenty of content there. Um and I don't need to worry about like what's our next revenue generation tool because we've built tools for users to can figure that out and they're experimenting.

And so like when we were fundraising, I think there is a lot of times I like most of our fundraising, we were just like, look, we're playing for time like we think we're out in a point where we can fund aries. And we think that the combination of the partner, the plane and the Price match up like we like the partner we're willing to like entering to a marriage with this person. The plan for what we can go build with this money is interesting and has a possibility of inflecting the business.

And then the Price is a good risk adjusted value for both the investor and us. So that was basically like the calculus that we've done for every races. We very rarely burned IT down like I I don't think we ever burned IT down to like we have two months to live. And if we don't raise, like we we were always raising, you know, pretty far out from from, you know, day zero. And then I .

assume this foundation ies felt very .

different foundation.

This was not like, hey, would be nice to have more cash. This was this was the first time you didn't approach an investor. But in an investor approached you, is IT fair to say that I mean they're insiders. So yeah and constant communication.

No, I think that's accurate.

I mean, the dynamics of this round or really I think IT was IT was an internal got check for us of like, do we think we can build something that's going to last for decades? And if we are, what's that plan look like? Know what does this look like as a stand alone business? What is he going to take from a capital perspective to get this to stand alone business? And if it's really going to endure, like what is the scale that he needs to get to? And you know, I think we just kind of work backwards from there like, okay, it's going to take whole lot of money, going to take a lot time, going to take a lot more people than we have right now.

And if we can be patient about IT, we know we think we think there's a huge business that can be built here, which is just going to take money in time. And do we want to we've seen what the assocation of the market look like. We've seen the peaks of V.

R happiness. We've seen the towers of V R. unhappiness. Like the same thing might happen here, like metaverse s. Might be hot this year. They might right true next year, for two years.

Rob lox is a forty billion dollar company on the public markets today. A year ago, I was a four billion dollar company totally.

And so we were like, do we want to this is our opportunity to untether ourselves from the emotions of the market and really take a long term play here. So I think that was really the question we asked ourselves, was like, okay, what what does that look like to what does that look like for for reckon to be you know one hundred, five hundred times bigger, five years from now, ten years from now was going to take.

And I am thinking a lot about listeners out there who have fundraised for their startups and they always, you know, there's the deck and then the one of the later slides as a use of proceeds. And you always got to say, like here's what are going to do with the money and then here's the milestones are going to hit with the money.

And when you have a very different funding rays like this that is an upcoming to you, like do you have to have a plan to use the money? Or is IT OK to say, like we may not spend all this money like we might go public with this much money in the bank still just like zoom? And that's okay.

Well, I can tell you, I mean, there are a lot of things about reckons that are probably videos in cradle and like there, there are many things that we did that I I would probably advisedly other startups not to do. But we we've always been kind of vogue around user proceeds like in past rounds because we're going like well, that you know that the charm of reckon is like there is not really like were making .

IT up as we go on.

Yeah totally you know we kind of point to the past of like, you know, here's things that we thought we would do that we did and here's things that we never thought we would do, that we did. So I can like make up aside for you and show you what those things seem like today. But like, know that this could change.

So I mean, we were always upfront about that and I think itself selected. And there are some people that, like, this is bananas. Like, what do you guys doing? Like, this is your deck. This is crazy. And then I think about other people, like, well, this is a refreshing level of honesty because, like, i've been in enough board meetings to know that like none of these plans survive contact with reality yeah so for this particular one, yeah, I think there was there was more a conversation around how big do we think this thing can get?

Like realistically, what do we what do we think of the the value of this thing can be? And I I think, you know, we I spent time like I basically like right little notes to myself over the years. But here's home feeling on this day and like here's what i'm thinking and and you know, when I look back, things always took a longer than I thought, but they were always bigger than I thought.

That was kind of like the like. If I could write one lesson for, like all the things that I was looking out over the years. I was, I was always like, man, I ish.

This thing was happening faster. Man, I wish this thing happening faster. But when I finally did happen, oh, oh, is so much bigger than I thought. This is going to be like a fifty percent increase, and it's like a tax increase.

like you're play out ahead on an I R R .

basis even though IT took yes, exactly. yeah. It's just like, no, I think we don't to do a good job of thinking about nonlinear growth like humans.

And so this was an opportunity to like, okay, ay, how do I protect myself against my own biases of an inability to predict, okay, well, having a lot of money, hiring great people, making IT clear than what the problems are, and then stepping back like, but this money lets us do that. And IT also IT also puts you into a league, uh, that I think helps with the recruiting in a lot of ways. Like there are certain dollar amounts, like there are certain valuation amount where where you're like.

Well, i'm not joining a start up that might not be here in a year, which I think is is definitely a fear that many people in seattle have. Like, I think if if you're working on amazon or microsoft, any start up seems like impossibly small, whether it's two people or one hundred people. And so this this was one that I think we thought could help a lot of people in those bigger companies get comfort about.

Okay, I gonna go join this company. It's legit. It's gona stay around for a while. But they're still really taking risks and thinking big, like we wanted to have IT both ways. So this allowed us to do that.

And you're like, sixty, seventy people. Do I have that right?

We're like about ninety now we're higher and a lot cool.

David, do we want to move on to powers?

Yeah that's what I was thinking. Um so long time listened to the show obviously know we're huge fans of hamilton, helmer and seven powers. And one thing we like to do when we you just spending me analyze companies is we we decide what we go through the seven different powers of ah that companies can have according to hamilton, and we identify which powers companies have. I don't think we've ever done IT live with a CEO before. If you are ready to be .

a ginny pig, sure.

go for IT. Let's do IT. okay. So the seven are counter positioning, scale economies, sweating costs, network economies, process power, branding and cornet resources. So maybe, maybe i'll jump in first.

give IT. Let we did that lp show on road blocks and i'm trying to like, remember exactly what I said. There are accidents y why I would be a link different in this case and I I know I argued for eventually for something and i'm tried to burn. That was I don't contradict .

myself and be like I know h this by well, okay, i'm i'm going to go first uh self lessen to give nick break to think selfishly to take the incredibly obvious one of network economies. It's not just a network economists, but it's a network economy economy with the layer of rec tokens in your own currency as well.

Um and the value that like the way to think about network effects, network conomo is you know it's it's as more users get added to the system, IT grows value for all the other users and the system great. But the thing about IT is there's a multiplayer like a talking about an ultimate question. There's like a there's a constant that you have to put in front of that value, which is how much value does each inker r mental user .

efficient one might say.

what's the coefficient exactly? Yeah, thank you. Then what's the coefficient? And for something like red room, the profession, I think, is actually really quite high because you have such a high conversion rate from user to creator and wants to become a creator than that value that you're adding back into ecosystem.

Obviously, there's a scale. Some people adding tons of values, some people are adding little value. But overcoming that hu B2Become a c re ator tha n ena bles mor e sup er cre ators. That's my thoughts.

I'm going to let nick go next. He's had a long time .

to think you just .

want to go last.

I think we think we talk about scale economies a lot. I mean, I think that that's especially for our creators. We are like, you know the the bigger reckon is the more people you're theoretically reaching.

And so the higher your potential reward is, you know a viral hit in reckon is worth x today, and we hope it's a thousand X A couple years from now. And so I think that, that contributes a lot to the you know, if you're a creator like you, anna, jump on these ecosystems early while they're growing to try and get the value from that. You're like, okay, now it's it's achievable for me to chart. If I weight a while, maybe I won't um in the value in the future will be so much greater. So if I can get that positioning now, I can benefit from the scale leader.

Do you guys do? If we should ask this before, do you do any highlighting of creators? Uh, to the user base?

One hundred percent. yeah. we. We select like featured rooms every week. Um we're constantly looking for a weight like I I would say if you come into that room, you'll see a mix of like here is an algorithmically generated listen, then here is an editorial list that selected by staff and .

are you looking for either in the algorithm or editorial accommodation of established creators that you know this stuff is awesome and new creators to can keep constantly seeing the ecosystem and giving new people chance.

I mean, we run contest. All a good example would be like every quarter we run a contest where were like, I think the last contest we run was like movie magic so well, like, okay, I built a room around the concept of movie magic can be like a scene from one of your favorite movies, or you know, can have like some cinematic flair to IT or something like that and we we actually do like a an in game ceremony where we're like, okay, but know the best horror room was this and you get to come up and like take your trophy and give a little speech.

Sort the roommate um and one of the ones that we highlight is like the the emerging creator, like who haven't we never seen an context before that has really impressed this because yeah two contest later. Those people are like the masters of of reckon tools and they're teaching classes in reckon about how to use these tools and bend them to their will. So yeah, I mean, we're really on the look out for that like Young, nicer talent for sure.

And we've higher actually a quite a few people that have like work at reckon today where people that we're in the community and we were like, good god there building like amazing stuff, like I wonder if they would come and give us feedback, unlike the tools were building, or help us test them to make sure we not breaking them or explain the way that the tools work to other players like teach classes in recurring. So record has been like we keep an eye at one because it's like for the ecosystem. And two, it's like a great source of right.

The only last one that I was think he rose. Do you guys think you have switching costs like apple podcast has switching POS costs over David and I like if we were to move and be like, okay, we're done with podcasting. We're going to be youtube s now like that. We would never do that because we've sunk so much into this investment wise IT would take us years and years and years to rebuild the same sort of not all the audience, but Frankly, like understanding for the medium on a on something that's not podcast. Does the same thing happened to creators in reckon?

Oh, I think so. I mean, I think I think there's the way that you build in record is is so unique and that lets a group of people that otherwise can't create create um like every other tool like unity, unreal or even robo c studios just feels really, really different from reckon.

And so I think it's hard to transfer those skills over um that non transferability though is also the thing that like let's all those people who who could not otherwise create create yeah I think once especially once you build up your audience like you have tens of thousands of subscribers in rec room and they get notified every time you build a new room as well, like there is a cost to switching to another platform. You maybe don't have that audience. You don't have that that notification engine.

Yeah the last one I want to uh we'll be remiss with in at least to ask you, I suspect I know there. Ask you first, is there an element of counter positioning here versus road blocks relative to the age of your user base?

Remind me what kind of position .

is maybe kind of physical ing is if you are doing something in your product or business that if you're competitor, if you're establish in trench, the in combating competitor did IT IT would torpedo their business or at least .

we value destructed to them such that it's not economically worth them chasing you into the thing that you're doing?

yeah. I you know I don't know if that's true. I mean, I think rob locks like they definite have a very Young user base, and I think they're trying to grow up with that user base. I don't know that there's anything we're doing that necessary precludes them from from doing that.

I think we we think of reckon is like fairly distinct from row blocks like rob locks has sort of more of like a two side of marketplace where there's like two kind of independent groups like creators and and consumers and those groups are separated by probably like a twenty year age gap. It's like there's nine and two thousand year old players and then the creator basis is probably like you know mid twenty and thirties, maybe older like you you're coding. You're you're using a game engine and record kind of just sitting between there or like, hey, we just want like teams who basically want to play games or create games, and you can do both of those in the same session.

So I think that the difference between nosis maybe more maybe like in like look, instagram is very different than photoshop, right? Like photoshop has a more powerful tool set, but you know, the people that are looking at the content that are produced in photoshop, the people that are working in photoshop, is not the same group. But instagram is probably closer. Like, well, you know, I could be a creator, I could be consumer tools are pretty simple. I think we kind of a sit more in that category.

I love that analogy. I thought you .

were going to say different students to experiment facebook in the networks in the ages. But yeah, no, I like, I like that. I like that algy even Better.

Well, I want to jump in to a section here. That's the it's an acquired staple. What would have happened otherwise? And this is an opportunity, nick, if there's any that you're comfortable sharing with. Is there any counterfactual that, that we should talk about, you know, uh, this could be that the company got acquired or that the company shut down or you know you decided to sign some big partnership.

Anything happens a moment when history turned on a knife point.

You know, I think that I think the ones that probably jump out in my mind where IT was a very intentional choice to like, I think we could have buried or having a sense with the VR thing, and we were like, look, we we've had success today. Every you know, science is pointing with this being problematic, but like, dam the torpedoes, full steam ahead. And I think that would have been a really bad idea.

I think we probably would run out of money in my twenty nine. I look, there are plenty of other I don't need to come up with account of festival for that when I think there are other companies out there that have proved that that that for me. So i'm really happy we made that choice.

I was tough that like that was really, really tough. Um that was tough for the community. IT was tough for the team too because I mean, I think you know the team is really sensitive to like what the community thinks of recruit IT really means a lot to them. And so if we ever make any changes where the community is not happy, like, man, I I feel IT like in my stomach. Like I, I wake up with that every day like really pains me um and there were a couple months of that for sure um I mean you .

were in a little bit of a koby asian maru situation where like the if you had buried your head in the same gun V R, V R, V R, like you would have died if you had completely vivid and be like we're going to be an APP, then you wouldn't nearly have the power that you have today as a business and you decided hydas, there is a door number three. Like we don't have to pick between these two kind of impossible, neither are good options.

yeah. And I think even when we are making that choice, we like are we just falling ourselves to think that is like really like this is really gonna .

so happy that we definite .

definitely did not. And then you know at various points in Ricky's life when when IT has been um harder to find growth or harder to find investment capital, we have had chats with with various folks about like hey doesn't makes you like you never need to worry about financing again. Just come into the big warm arms of the the big tech company and we can we can figure this out for you.

And you know I don't know what that looks like. I think of the moment that you accept that you are giving up your agenda for someone else is agenda is no longer like our reckon room, is no longer the communities work room. Some large company is buying IT for a goal and agenda.

That's not hours. And so I think IT really depends on what the company is to figure out if that if that lines I I would say to date, we've never lined up like, hey, we think this is in everyone's best interest to to join powers with with this other thing. And actually, it's been great. Like I think that was one of the things that really attracted us to this round was like, hey, we there isn't a capital deficit that we need to go solve um we can just go build that's that I was .

going to say think that's one of the things that um you know I hope in a few years when we all look back on this period in history, you know we may be laughing a little bit at the exhibits in the market that certainly lots people talk about and I don't mean we got I think your valuation is incredibly well deserved that you've done yeah .

but living and I think about raising money like not the worst the but I do think .

I hope that this will will be a really good endings outcome of IT, which is the you don't have to sell your company anymore like things are working. And even even if like if you think things can work in the future, you don't have to ever sell because you can raise money in the private market. That's been true for a while, but you can also be public now, like there are then i've talked about this, a lot of team on the show.

There are so many more five to twenty billion dollar tech companies out there and will be out there than anybody ever realized whether I think before this error was kind of lake, okay, great. You're going na sell your company for a lot of money to a big tech company or you're going to be one of the very, very few that can be an enduring big business. And I just don't I don't think that economy exist anymore.

I think to the point, yeah, I mean, I think especially on the consumer side with more uh, I think you've see more consumer apps shift away from the advertising model. And I think the advertising model really was like there will be one, right? Like there are so many party involved like having a subscale add business just sucks like you're just going to have a bad business .

and you have an inefficient marketplace.

yeah. I mean, like you, it's a testament to what google and facebook built. Those are like on a salable business, right?

Like and having, you know one tenth of their scale is worth one one hundreds of the value they have, right? Like is just you your you're pushing the that's the system is pushing a bolder up a hill. You're never going to make you right, like it's just never gonna en for you.

And I think with more companies, especially the consumer side going like, hey, we are we are not going to use in an advertising models just going to be uh uh this different exchange of value. You you can often build you know Better businesses at smaller scales and they're not as subject to like winner take all sort of mentality. I think that that's what you see in the gaming space.

There's like a lot of very big profitable games. Um there's not just like one game, uh, but it's not as true in the social media space. There's that is like one one rings a little in all a it's a really great point.

especially as social media heads into the world of microtron actions and a little bit away from advertising. I am assuming the next generation of social media is V R N A R, then it's very likely that there is gonna be a direct supported model of the the next sort of platform where everyone spends time in interact with each other.

You know i'm probably like under educated on this, but uh and my impression is that the market in china is less advertising driven. And i'm i'm curious to know like how that's affected the dynamics of like does that create more room for you know smaller companies to shoot up? Um yeah hard .

to say what the sheer .

number of people yeah, there is definitely a lot more medium sized companies shooting up. But ah to what to attributor, it's kind like you're coming earlier. Five things are happening all the same time and it's kind of hard to to have attribution before I move on ni, I want to ask sort of one.

I think as you're a friend, I feel comfortable asking this on the show. But the warm embrace of a big company is a very rational decision for founding teams to make, particularly economically. And is there something you feel as you sort of look at yourself for your confounders from a personality characteristic where you're like that actually probably played a role in us deciding to state independent?

嗯， is a reasonable question. I guess I ve never maybe examined as deeper as I should. I I mean, look at, I think anybody in my shoes is trying to IT like the larger of these things get, the more incentives, like the more people that have incentives in these sort of decisions.

And at this point, i'm, you know, i'm always trying to find choices that are line well with of the community that's playing rec room, the people who are working at rec room and the investors who who have invested. And I think the longer you go like the thing that got you here was betting on yourself, right? The thing that got you here was betting you could keep making IT bigger and bigger.

And so when you come to those crossed as you're like, well, hey, the thing is work for me in the past. Like do we take the chips off the table or do we double down? While double down has been the right choice for as long and it's worked out for the parties involved.

And so I think it's just like that. The that's the decision that we've gotten comfort with, for x many rounds so far. And so it's not to say that will never get comfort with with you know maybe hanging up with the big company.

But I think we've been through enough good and bad that we're like, look, there could be a bad coming in. That bad could last for two years. But we know there is going to be a bright spot on the other side and we won't get moralize.

We've seen the team holds together through those like storms. And so I don't worry about IT as as much as maybe I did for a while. I think a lot of people worry like, oh, everything we're going to we've build that will could disappear in six months.

And and I definitely worried about that more like in the early stages of the company where I was like, man IT feels IT feels like this could all disappear. Like I can't believe we got here in the now now that i've seen, like the team really persevere through some some dark times. And like, okay, engine that we have built has a lot of grit, so IT just makes IT tough.

I mean, I think when you're chatting with other companies, then like they need to believe in what you've built more than you believe in what you've built to make the Price work. That is essentially what he needs to happen. And like i'm pretty i'm pretty bullish. And I think like, like I think that's that's just the chAllenge that you run until I can think longer. You go right?

Well, thanks for answering that.

Sure, I did. I appropriately like dodging question.

No, that was perfect. This great in public. C. E, O.

here.

great.

It's a great it's a great, great into playbook, uh, which you know I think we've touched a lot of themes here. They don't need to be rehash, but there is one that I really want to highlight here. I can't I can't say enough to at least my perception from the outside, the value this create a one single world across platforms, across no, you're not creating a bunch of servers individually like like minecraft or something like that.

You have a fluid economy and a fluid set of social experiences that are able to all happen on on one single place. And sure, you have rooms and room has have limits. But IT seems to me like we've touched on this idea of liquidity or of finding the perfect match between creator and someone experiencing something in red room. I just wanted to sort of like post this question .

back to you for how much .

gravitates I give that characteristic of your business. Do you feel that, that sort of as important as i'm drilling in here?

H like that this is one co is the world that's like go. yes. yeah. I mean, I think IT is I think IT is really important.

I think it's the element that gives you brand like every picture that anyone takes in. Reckon is recognizably reckon. I think it's the element that gives you economic control.

So people often ask, ask me like what are you going to do anything with that are like there a couple years ago, like ics or all the craze? Like are you guys going to make crypto currency? And my statements to a lot of people are like, look, the value of those entities is that they are decentralize.

That's the value in the value that record derives out of its economy and its things is they are central. That's the value. So like we would be throwing that away for a buzzard, right? Like we don't need deal like in fact, we don't want the centralization. We want centralization because it's like paramount. If you think about the economy transition that I was telling you about, like imagine going through that with like like a critical currency.

like you would never be able to do that, right? right? Lobbying fifty percent plus .

of the community to be subject stupidity. I put down in my White paper five years ago like and like, I guess that's the that's the thing that I I tell most people. Like maybe other people are really good at forecasting. Like I am not and like that we we just like face that that decision had on. And so okay, how can we build optionality into the business so that when we're wrong, were not trapped in a corner and into centralization in that one big world gives us a lot more control over being when we're right. And when we're wrong, we have a lot more levers to like try and shift the game of the economy or you know the ranking algorithms to favor activities or or actions we .

care about a makes a lot of sense. Well, the other one that I I do think is worth just highlighting here, exit IT IT so dramatically affected the dictate, the businesses, the realization you had that you are your growth was governed by someone else's growth and by being captive to one platform and betting on that future.

To the extent that you make the decision to become a venture funded business where the capital you're taking is expensive and you know IT is intended for ultra high growth, businesses like you become a business that needs to go see growth. And I I I, I don't want to put on you that capital was sort of dictating that to you. I think that was a goal of yours to but IT does strike me that there is a lesson in there for other entrepreneurs. But they can sort of look and say, uh, in the business that I am starting, am I in control of my own growth or is my growth governed by someone else?

When we first started the company, like I had never heard of, like a series a round like I had never heard of. I didn't know how you pitched investors actually probably like one of the the best stories that I think I i've got is like madrona who let our R B. round.

I went to pitch them for a seed round. They were like, this was not very good. Like this. This was bad.

I I didn't make IT to the next meeting and I mailed them back and was like, can I come back next week? And like I worked on my page and like there like, no, I got how this works IT. Oh, but I mean, like that, how dumb David. They were not David, no, this is before I met David was so funny because .

when when nici did be later and I didn't know they could talk other folks said and I tell you, like i've in this country, people like we talked about the same person here like I .

saw I think the learning curve was was sharp. We just started at zero. Like let's so our first couple interactions with venture um did did not go very well.

And so we are also looking for publishers. And so publishers, if you're not familiar, look in the game space, they'll basically pay you per project. So you're like, hey, this is a project I want to work on. It's going to cost me ten million dollars to do this thing that a great .

will front of money like cr, it's actives.

Yeah totally. There's a bunch front you the money and will pay you for this very specific project. And at the end of the project, we want x percent like we want to get paid back and then we want x percent of the excess capital of this thing brings in. And that can be the right decision for a lot of games.

But because of the way it's finance, IT really does finance a very specific type of game you are not going to build a services game that has like an uncertain road map with that model because you you have to know up front like, hey, two years from now, i'm gonna this thing and the moment that ships, I have to step away because I I actually can't finance IT anymore like the publish has only financed for these two years. And so that's where you get these like disks, that ship. And then the moment it's up the door, you like, okay, we're on the equal for that thing because you have no way to finance the continued growth and iteration of the project.

And even if you could like the economics are really not in your favor, you're like you're probably splitting the revenue, right? Like fifty, fifty, maybe worse with the publisher. It's a movie.

It's like a band of contractors that comes together, has a budget, burns IT down and then there's no more dollars left.

Not like to do anything anyway yeah I think as a result of interacting more and more with adventure space like you know a lot of people I like, uh, well, if you take venture dollars, you can be forced to grow and I I think you're more like look at is a framework for thinking like if you are the returns their chasing very specific and IT will force you into a very specific way of looking at the world and making decisions, which is not a bad thing.

It's just like you are gonna swing for the fences, like that's the the game you're playing is like it's about home runs, not about buns. It's not about singles, like it's about home runs. And so you're playing home and derby like you.

So I think that's just the the way to think about IT is like there are ways to finance any type of of project. Just understand that if you have specific ambitions, venture can be right for you or can be wrong for you depending on what your what your goals are. And I think we realized pretty quickly, very like, look, we don't have a two year plan.

We want to work on this for a long time. We a publishers never give me the right choice venture has to be the way we're financing IT. And this is the things that they are going to expect in terms of like growth and margin in, okay. So like how do we feed that back into the the decision making up? Like what is recorded going to look like?

I don't think anyone has ever articulated that as well as you just did on the show.

IT actually is really, really good. I think to gravitate all for one quick as iconic because I think is something really important there. I think people get a lot, a lot of cognitive dissents looking at the venture market and finding things where they like.

There's no plan. How do you guys have no plane and resolve this money? Like what do you need the plan? You need the plan.

But you've had the key point there, which is if you're financing a project in the context of a movie or traditional game studio, now yeah, you need to play like because there's a set amount of money and you need to set you know return on that afterwards. But that's not what venture is about. Venture is about the long term asset metric, uncapped upside potential and the way you can.

Often times, the way you can best realize that is exactly by not having a plane and via like, oh, shoot, okay, we are market dried up are what we going to do. We are going to find that growth. Well, we're going to go to screens at center .

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And David sent you, and thanks to friend of the show, Christina anta CEO all acquire listening ers get a thousand dollars of free credit van to become slash acquired. Okay, neck. So the way we're going to do greeting, since they are not like great in the transaction here, is to speculate what what is the a scenario for a record look like three years from now.

And I think there's an obvious f scenario like we those are like less interesting because like lots of numbers could go zero and anything multiply by zero as bad. But like what's the b minus scenario? What sort of where is you on like stagnation or how to think sort of like just but before we get there, let's talk about the the A A plus. Like what in the world happens for this thing to just go gaming busters?

I think there's I think if you look at the video games space, there's a couple video games that have transcended video games, right? Like they are part of popular culture, minecraft for night, robo, ks, mario, like these things, like everybody knows what these things are. They have impacts that well beyond gaming.

And so I think that's what the a scenario of a reckon is, is like we have grown into a space where recon can have a positive impact well beyond gaming. I can have an impact on what digital entrepreneurship looks like. You can have an impact on what the future of digital events look like, what the future of the metaverse looks like.

So that's the space that i'm most interested in is it's not really a financial outcome and it's not really like evaluation or we've IPO or we've made x number of dollars. It's really like what what is the lasting impact to that? The and in the product that we've built has a you know beyond the gaming space, I think that's really what would I focus on?

And would that primarily be attributed to this sort of like a creator LED growth strategy going well?

I think it's it's probably like how high up can we keep ramping those incentives for creators because right now, we're like, okay, we're paying out x and x buys us this style of creator spending this amount of time on their thing, if we can to act that, do they quit their job and then focus on this, if we can text that, do they quit their job and can invinted five other people to quit their job and form a team to build this content.

So I think it's like how high up that latter can you build? Look, if you're platform the true test of whether you're a platform is are other people building a business on top, your business that's you. You're only a platform if that's true. And I think the question is like, okay, well, how big is the business somebody to get build off of reckon.

love, IT and then the b minus, what keeps you up at night? How how could things sort of just, hey, this is, this is the top.

Uh, I mean, I think the b minus is like it's so easy to get complacent, like it's so easy to be like look at all the things that we've done, like where we crossed x like we defeated these chAllenges. And I think if you spend too much time thinking about the battles, you one you know you don't want to be that guy that like peaked in high school and is like still talking about like how they ran back some kick off, you know their homecoming game.

Like I think it's really easy to become that as a start up where like we did this thing IT is IT. So is yeah so I think that I think it's especially chAllenging as as you grow as well, like continuing to find people that want to push the boundaries of what's capable here, like keep taking ownership. And so I think the b minus scene for us is just like um and we get really content with like patting ourselves on the back and like being so proud of what we've done.

Anytime you're raising money, I think it's you have that temptation here. Like I can view this as an end point. Like like look at the success that we've achieved, its this number on that number or you can view as like, okay, the game just started again.

Like we just put on all of our chips under the table. Like, time to play. And so that's what we need to do to avoid that. B one is, like, now you gotta a keep experiment. You ve got to keep growing.

I love, I love .

that are right. Well, carvels.

nick, uh, mine is someone sent me invent and wonder, which was like a collection of writing from basso and was sort of organized by walter asics. And it's basis over, I don't know, like two decades and the consistency and like the long term thinking that you can just see IT through the writing like this. I was writing about this like the late nineties, you know, and you're just seeing IT play out today. I think looking at the writings of bezos over a long period of time just gives me a new respect for like the vision and the determination that that guy has exercise over, over just such a long period of time. I think it's it's really easy for people to forget, like there was a decade when that business was like the smaller unlove stepchild of like ebay.

wherever IT was like a really good yeah and like .

I I remember that I and I I remember like like not in a long reading these articles like yeah obviously like amazon, how an astronaut like you know, managing your own inventory. Like that's crazy. And then you look at what they built in today, and I think they just they just slogged IT out over years and years and years, and I think that's how many of the ted companies go is like for a long period of time. People are like ah this valuation is crazy and like this make any sense and wire people wasting money, they don't make any money to like, oh my god is to wait powerful 说 的这 it's crazy how quickly can switch。 And I I think this is just it's clear he he has had this idea and he had the entire time um especially looking back at these old writings.

just very impressive. awesome. IT.

Good list.

My car, val is so appropriate for this episode on so many levels. IT is my new favorite youtube channel called resonant arc. You guys started make of IT.

okay. So it's like they do a whole bunch of stuff on there. There way obviously way Better video production that we are required.

But they're some like like so nerdy, super, super, super deep dives on video games. And what got me hooked, i'd sof casually washed IT for a while. But what got me so hooked was they just did a massive five part series.

Each episode is is like three hours long about final fantasy eight, which, like I remember, plays a kid. The day came out that, like the day came out, played several times ult. It's such a if you played this game, you know, it's a very controversial game, unlike all the other final fanta. And they just like these guys go to town like fifteen, twenty hours or the content digging into this game is awesome.

Squallin heart, the main character, right? yes. All right.

I didn't realize IT was the first final fancy with the different director at the help from all the previous ones, which is why I was so different.

The more you know how I mind as a youtube video that I finally watched, that i've my to do this forever and then I was catching up with someone who reminded me that I should be actually someone who listened to our bitcoin epo de and had some feedback and we were teaching up and they reminded me you should watch this video and um it's called how the economic machine works by radio either. If you ever watch this.

think baby did a while back. It's .

unbelievably success CT. It's unbelievably digestible at any level. You're both four notches above the a economic understanding necessary to understand this video.

But it's basically a thirty minute primer on the economy. He's black. We got three big things that happen over time.

One, you have productivity growth. Two, you have short term debt cycles. And you know clearly, we're experiencing that right now. And then are you're always experiencing IT. And then on top of that, you've got the long term debt cycle.

And he sort of explains like recessions, depressions, all the different levers that the ed has that the government has that know wealth redistribution has and and when each of these different things are appropriate, it's just just like a crazy sustinet way to understand like how to zoom out from our current conversation round oh no, it's a bubble and say like, well, actually like what tends to happen over like several hundred years out of economy, especially ours in here in the us. And and you know where might we be? In accommodation of these three factors in our current one.

And it's a it's old too. It's from like twenty twelve or something. So it's not it's not written for people pining to understand right now, which I think gives us a little bit more authority.

And so um I highly recommend that will we get the show notes well worth your time. Well, with that, nick, thank you so much for joining us. Six or seven, where what do you want a plug? What what listeners .

go check out. Go go check out right room. Yeah yeah I would .

say we told you you couldn't just make recording your car output.

Yeah yeah go check IT out. Send us feedback like the APP is far from duns and we we're always interested in people's feedback.

awesome. Well, nick, we hope to have you back for for part three some day and I don't want to force out what what event that could even happen. But let's just say in the far future.

what about um nick, what about people want to uh uh get involved in record more easily. They want to work with you, they want to can touch with you, partner with you guys. What's the best .

way as we are hiring? Yes, for sure. So um so we would love IT if you so got a reckon that com.

There is a bunch of jobs that on there there is no one's being posted every week. We would love to have you as part of the team. I think we've found there are so much untapped potential, especially in the acidic northwest with the really, really big tech companies. I think you see that there's like all the talent and start up ambition in in the san Francisco space and there's like all the talent up in seattle, but like there's not as much of that Spark. And I I think there are so many people at a microsoft and amazon or a google or a facebook that would enjoy their life more, who are listening yeah who would enjoy their life more um on the start up journey, I mean, I won't a lot of them higher highs, lower lows, but definitely like a much more rewarding journey when your your second the end of a five year journey. And looking back, I think there's like a lot more there's a IT will certainly make your life much more interesting.

I'll take IT from the I both former microsoft so you you you could do you know this is another thing that dane Lewis brought up during our convoy episodes. Have to say one more time. Like you always overweight the risk of joining a startup. You always think, oh my god, s this is so risky. But like your downside is wildly kept, like you could just go get your old job or probably a Better one and if IT goes well, god forbid, like who knows what unforeseen e doors that .

opens in your future, so for sure. And like I think when most people are calculating like what is going to happen, how to start up or what is going to happen to me at microsoft, like they're using the law averages. And so I just them like, okay, are you average? Like you think you are .

an average person because I O U wow.

I love you. Well, I look, I think when the math makes a lot of sense, like if you yeah, if you if you feel like you, you're going na be subject about law of averages um and you're going to score in the middle like microsoft. Great a great spot.

If you do think you're in the top twenty five, you know the top ten percent like you're upsides really capped at microsoft. Like good. There is only so fast you can grow there. There is only so much responsibility you can get over such a short period of time. And so like that's not true at startups. And so if you really feel like, you know your career is captain, some way, you know, I think people I tell them OK, the risk is really worth IT, like you really can find a lot more responsibility and a lot more ownership and have a lot more impact on a product bet.

And I would be remiss if we did also though and also applies to starting a company for most people to totally ah I no.

no goff, I mean you don't .

start a company to go work.

I I I think I need to go back to basis the regret minimization function that he uses, which is like, hey, when i'm looking at any decision and I think about i'm onna feel in five years, when I look back on this choice, people tend to regret the decisions that they you know they didn't jump back, not the ones that they let pass you totally .

to great framework. You're like stealing all these future potential carvel. Our listeners were to rap here.

We told you about the slack, go check IT out, acquire dt F M slash. Slack will be talking about this episode. You want to be an lp that's that acquired dot F M slash lp.

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See you next time. See you.