Hong Kong-based entrepreneur Yat Siu is widely recognized as one of the tech industry’s most visionary individuals today. Having started programming in his teens in Germany, Siu’s resume includes some of the biggest companies–Atari, Silicon Graphics, Lexicor, AT&T, and now Animoca Brands.
Siu was a guest on the Beacon Podcast series Web3 Unlocked and shared his wisdom of years, including the story of building Animoca Brands. But first and foremost, why does he believe in Web3?
“My favorite thing about Web3 is that it creates this new equitable form of capitalism, which we describe as stakeholder capitalism. It reframes something that I believe in, in terms of what helps drive innovation and entrepreneurship forward, which is capitalism,” he says.
However, Siu believes capitalism in its current form–shareholder capitalism that concentrates value only in the hands of a small portion of people–is broken. With Web3, he says we can own a piece of the networks we help co-create.
Siu’s business acumen is evident throughout his career, especially in how he entered the mobile application space. When his first child was a toddler in 2009, Siu got the idea to put educational flashcards for his toddler on his iPhone. His team built the app and set it for free on the App Store:
“It really sort of saved my life in that sense because we could actually enjoy a meal for at least 20 minutes.”
This app ended up being downloaded millions of times. After its success, Siu’s team created a paid version, which led them to make millions of dollars on flashcards. Here, he got another valuable lesson:
“To see the future, you need to observe your kids. This is what got me into the journey of mobile gaming. The game Angry Birds had just literally come out and we launched with an app called Pretty Pet Salon, which became a sensation–it was one of the top apps in the world. This was the beginning of the original Animoca, then originally called Moca, which was in 2011.”
For that year, the company dominated the App Store. This was another useful lesson in the making:
“If you cross-promote apps frequently, then you will get to the top of the App Store, because the App Store had a very primitive algorithm for discovery.”
This algorithm was eventually removed by Apple and though Apple deplatformed the company in 2012, they had become a multimillion-dollar business. This gave Siu his first taste of the demerits of Web 2.0: a “de-platforming by basically a digital king, which in this case was Apple.”
Apple eventually let the company back in over a year later because they needed China-based developers.
Inspiration To Work In Web3
Fast forward a little bit, Siu’s company had done various things during that time. They acquired a company in Vancouver whose cofounder was also involved in a company called Axiom Zen. Axiom Zen had a science experiment, which was Crypto Kitties, and they knew how to build tech around that. In 2017, crypto kitties took off:
“What was fascinating was that we weren’t crypto OGs in the sense that we didn’t make Bitcoin. We weren’t involved in the early days of the theory of ICO. To us, those were very financial in nature, it didn’t appeal to us, and frankly, probably we didn’t understand it. But when it came to NFTs, we understood it from the gaming context. We understood what owning digital items means. It’s something that appeals to us intrinsically and is a way in which we can reframe the narrative of what ownership means and how you build on top of these platforms.”
This was the beginning of Siu’s Web3 journey, emphasizing NFTs. It wasn’t so much about crypto or rather fungible tokens. Siu and his team invested in companies like OpenSea and Axie Infinity, because they needed to help grow an ecosystem that did not exist.
His company faced hostility from the crypto community, however, being seen as taking space away from “what should be more important.” For those who entered crypto for financial reasons and had a “very strong slant on pure utility,” the focus on NFTs, which in contrast was meant to be of a “fun and whimsical nature,” was seen as corruption. “They didn’t know much about this idea of digital ownership, and that blockchain technology could have a use, ” he says.
Transforming into Animoca Brands also gave Siu another taste of Web 2.0: Animoca was a publicly listed company in Australia at the time. Because when they decided to go into crypto and NFTs, they lost their listed status.
“It was a difficult choice: you either had to give up crypto and stay public as a listed company, or your conviction had to be so high that you were willing to give up publicly listed states and deal with the shareholders, explaining to them why this is a better choice. Being delisted actually ended up being a blessing because we were then able to really grow as a business sort of unshackled.”
Web3 and Digital Ownership
So where did Siu’s sense of conviction in Web3 come from? In one simple word: ownership.
This is what led to Animoca issuing their thesis that “Content is the Platform.” The premise of this was:
“Content, which was something that we didn’t own, could now be owned by us as it could become an asset. And by content becoming an asset, it becomes a platform, meaning that, we felt, that network effects were built on top of the ownership of what we had, not on going somewhere.”
This thesis honed into the thesis of digital property rights which became Siu’s North Star, and he never looked back. The idea is that decentralized ownership means that people can now do business with each other, because they are the platform, not the App Store:
“When we think of a platform, we think of Apple or Facebook. We don’t think of ourselves as platforms, at least in the digital context. But in the physical world, we are platforms.”
Siu’s idea on this expands: the more open you make a system or a service, the more composable it becomes, and the more composable it becomes, the more innovations comes out of it. This leads to powerful network effects that you can derive value from.
When I talk to Siu, his conviction in Web3 is truly palpable. He tells me that Web3 has a naturally anti-monopolistic quality because the end users share network effects. Siu also tries to keep in mind to continue to have that ethos of digital ownership, of how to benefit the owners of these assets best.
Web3 vs Web2 founders
During our conversation, I also asked him to talk about what would make a good Web3 founder different from a Web2 founder. While he agrees that they share some similar qualities, the philosophical context differentiates between the two.
“Web2 necessitated a zero-sum outcome because of the way they’ve aggregated the data, the way you aggregate it and monopolize the system, which is also why money and value become concentrated. You just kill your competition because you have a sort of framework for that, because of the way that data monopolies would work in the web world.”
However, Web3 does not work like that. You have to build it from the perspective of community-minded people who think of it from the perspective of shared value.
“In Web3, it is a relationship of ownership, meaning it’s a two-way street. It’s a dialogue, a negotiation every step of the way, which means the founder’s nature is different. I think the most successful Web3 founders are people who become good politicians.”
And what does Siu mean by that?
“Not in the sense of politicians today […], but more their skill, that the negotiations, the communicators, they are leaders who can inspire and explain and be part of the conversation. “
One of the key differences Siu points out is that the role of a community manager in Web2 is customer service, but in Web3, this is a senior position, more along the lines of company shareholder investor relations when you think of it in traditional terms.
Building A Culture As A Founder
Do Web3 founders need to be extroverts? Not necessarily. Some of the biggest leaders have been introverts–Siu himself is one, he says.
“When you have to share something that you’re passionate about, introverts come out and say what’s important to them. They can see what’s important to them and they don’t care what other people say.”
Another interesting tidbit that came from our conversation was a statement from Siu that struck me powerfully: “The point is not that you want to have a cult, the point is that you want to develop a culture.”
Culture is built from the initial leadership because they set the foundation. However, ultimately what survives is not one leader. Ethereum is an example of an ecosystem standing on its values and ethos.
“If the people have that spirit, if the people and the founders want to do it and they put that energy into building a culture, this is great, a big purpose. It’s something that you stand above, a particular utility because it’s not something you can easily grab as a KPI. It’s something bigger than that.”
Play2Earn And Its Future
“Play2Earn is just one network effect of ownership and it’s an important one but it’s not THE thing you do.”
Siu says the original framework is that of true digital property rights, of which Play2Earn is a component. Games generally have value because “play and earn” has an absolutely valuable component to it.
In the current gaming world with its multiple levels of extraction that aren’t shared, people think of it as a scam. But the value is already there. Play2Earn just enumerates the value which can be shared appropriately.
What Play2Earn does is to get game companies to encourage people to pay money, and then that earning will be shared between everyone. Unlike Web3, you are putting out a token as an incentive for them to come in and play, instead of users playing the platforms, they will directly pay the creators.
On Raising Funding In 2023
“It’s all relative because money in 2018 was way tougher. I would say the broad rules are still the same, which is that if you have conviction and passion, and you know what you’re doing, then you’re willing to make it happen one way or another. It will come through whether you’re raising money from a VC or from angels.”
Siu says bear or even quasi-bear markets are great testing grounds. If the builders are still here during this difficult time, then investors know that they are dedicated and passionate about it.
He also emphasizes that there are many more funding options available today like ICO, for instance. If founders are passionate about it, they will find these avenues.
On Factoring External Highs And Lows
Taking into account external factors is a must for any founder because they affect business. Adjustments have to be made when they negatively affect revenues.
When you are building with a strong mission statement and have clarity around it – then navigating around that space in terms of adjustments isn’t quite as hard as people might think.
“If you take a long-term view on things, then you are willing to do what’s needed because that’s the space you’re building at the end of the day. It’s true for all human innovation and entrepreneurship. If you see this future, then you know what you’re building towards. Then that fuels you and the people around you.”
There will be times, of course, when you will have to cut costs and let go of people. This, as all founders know, is painful. However, if the mission is important, the people understand. It is when those expectations are not properly managed that disappointment comes in.
“Organizations struggle with this sometimes because I think they lose their mission and then it becomes about something else, whether it becomes about some individuals or just the money. When that happens, I think that’s actually the deeper crisis.”
