Summit | Interview with Justin Kan

[Music] [Applause] [Music] next up we are ready for our next talk and when i invite justin khan for a an interview i want to take this opportunity to kind of welcome him and introduce him uh most of you know justin as the co-founder of twitch but as of recently justin is ceo and founder of fractal so uh we're gonna cover a handful of things around how this event is going um and a few things that i think you are uniquely suitable to kind of give your insights on and uh we'll kind of jump right in welcome thanks for having me how are you i am doing great i kind of did a poor job at describing uh your background so um what i'll do is i'll let you kind of give us a quick overview of sort of what fractal is and sort of how you got to it and uh and your journey from kind of twitch to to where you are now sure yeah so i've been an internet entrepreneur and investor for the last uh 18 years now kind of started my career right as uh web 2 was kicking off and built a lot of different companies the one that people know about is twitch which started off as us building our own streaming platform actually us trying to build our own streaming show first and then turning it to a platform and then eventually really focusing that platform on gaming and it turned out to be much bigger than we ever thought and uh we sold twitch to amazon in 2014 and after that i've been investing in companies incubating companies and most recently been really interested in crypto and web3 and a couple months ago i started working on a new project called fractal and the high level of fractal is fractal is a marketplace for digital in-game assets so uh gaming nfts uh i think there's this huge wave coming of gaming blockchain games that are all reaching you know a new capital market new player base through selling the assets digitally um and we want to power that revolution you know so that's that's what we're doing now you introduced me as a ceo but my co-founder dave is actually the ceo and i'm uh you know i found it with him in an amazing team um well i apologize for that um this is great um i do want to dig into fractals for how you sort of landed on this idea but maybe i'd love to kind of learn more about just sort of why or how did you decide to jump in now into crypto obviously i think you've been exposed to this space for for a handful of years so i'm curious to kind of get your background when do you kind of hear about crypto when it become interesting from a hobby to sirius and what that experience was like yeah well i think i first heard about bitcoin pretty quickly i mean it was like 2011 something like that but i you know i was kind of like it was an experiment you know i think it's probably illegal it's like not you know i don't know if it's gonna work so i didn't pursue it at all and then in 2013 was when i first started buying bitcoin because i sounds like you know the price i think that was one of the first price run-ups and i was trying to invest in coinbase and my friend brian's company and kind of missed the seed round but by someone goes just going to kill me you know so i uh i bought some at like 800 which is and it immediately crashed like 200 and i was like i'm like literally the bag holder i'm such a sucker uh and then i just forgot about it you know and so then obviously like years later the price was accelerating and i was like okay you know something's here this thing has existed for years now um and i saw ethereum come and start to get some traction and i was like i don't know what's going to work here so i just invested in some crypto fonts like i will be a few crypto funds that turned out to be a pretty good idea but as a programmer i was like i don't know if any of this stuff is going to work for the type of thing that i like to do which is you know consumer based applications i didn't really see kind of like a high transaction throughput application being able to work and so i actually at the time became a provider a few people building projects that were applications one was called audius which is you know like a decentralized music platform and but i was like still like i don't know if this is gonna work technically and then it was really about a year ago where all them build their you know launch their application and it was you know pretty streamlined application like you as a user who just goes to audio stock code you didn't have to know anything about to like try out but the whole thing's running in this decentralized way and that was very inspirational to me so that was like made me think okay this is you know this is something that's gonna work and um at the same time another friend uh build this project uh called braintrust which i think is on polygon actually and it's a decentralized platform for work and um you know i saw them get a huge amount of traction by distributing their their token to this community of freelancers uh and you know that's started under here's the power of of um you know sharing ownership among your community and it occurred to me that if we created twitch today we would do it you know in a as a decentralized forum um because which is something that created this tremendous amount of value and a lot of that was captured in the form of you know kind of uh partner payments or you know um for streaming right to the streamers but the streamers didn't have any way to like invest in the upside of the of the company or the project so uh that got me really excited about researching ideas and understanding like markets you know changed by start getting excited about building something oh that's amazing i think you uh you already set up the base for the rest of the questions i had because this covers in all these themes and uh and it's interesting because obviously the last talk also covered kind of how we think crypto will change gaming or just weapon in general and uh my kind of first question to you here is um was it specifically a timing thing or was it just that you kind of just are more naturally excited about gaming and just that as a frontier because there's the experience with twitch that you realize that's where the biggest opportunity is and kind of how do you kind of think about gaming versus ownership and are they the same to you as you kind of thought about starting fractal yeah so i think um there was probably like a timing of when you know there's a bunch of infrastructure now you know like uh solana or polygon or like there's all this infrastructure to make i would say a higher transaction throughput application happen right in in crypto and um those are the apps like things that are more consumer focused are probably one i'm naturally interested in you know the d5 stuff is like very interesting but it's not really my area where i'm like okay that's something that i want to pursue as my job you know so um for me i think that there was this timing where the technology like now plays we're creating something that's you know things that can be like used by normal people and that was very exciting to me um gaming specifically i think you know i've watched this whole nft uh rise and was a very tiny investor in openc and it was like this is you know really interesting and saw how inspired huge booms art market and uh is a way that creators can you know now like a new business model for creators so that was really exciting and i think you know the next wave of nfts is pretty clearly to me it's like entities that have some form of utility and gaming is very natural as a place for that to start because you know the idea that digital assets and gaming have value has been something that's you know 25 night concepts it's like 25 years old you know i played ultima online when i was um in the 90s i was in high school and i used to sneak downstairs and play with my midnight like 5am when my parents were asleep and uh you know that game was like people were buying and selling stuff in that game like on ebay back then people uh you know other people were players were mind blown that anyone would value this stuff but you know now that's become the predominant business model of gaming is uh selling stuff in the game you know whether that's skins and in fortnite or or counter-strike or like other types of assets it's like that's that's how people uh that's how gaming companies monetize now and so to me the next step the national extension is like making that economy from a closed one to an open one uh and giving the like ownership of those assets to the players so that they can not just buy them but they can also sell them or trade them that to me is like a very obvious evolution that is going to happen over the next 10 years in gaming i absolutely agree and i think this kind of kind of opens up a whole series of questions around just how do you think gaming and what three would would be like so my kind of first question there is do you kind of believe that using blockchains or just different parameters in crypto is just a different abstraction to how games are built right now or do you think crypto games will be inherently entirely different from what we see from all these studios well it'd probably be a blend i think that you know crypto and gaming or web gaming is like a it's a mix of different things right like different innovations one of innovation is it's access to a new capital market it's like a new funding model right um where you're selling a set of nfts or or other digital tokens to an audience of early supporters and those people are oftentimes before you have a game those people are basically pre-funding the game and you know they've done that for a long time you've had games like star citizen or something that that are starting to develop they raised 400 million dollars now in terms of uh platformer i have like players get the opportunity to have some sort of real ownership in the asset so if the game is successful maybe they're you know their assets increase in value but you know they get something and uh so that's one part of it i think another part is um kind of like this putting the stuff on the blockchain makes it open and programmable and so um there's going to be this open ecosystem where games you know create their assets as nfts and and then other people like make experiences on top of them and as a program that's what i'm particularly excited about it's like the opportunity to um kind of like connect all of this stuff that's online and like and i think people will invent new and interesting ways and like experiences and utility that that can sit on top of um the nfts that are created for these games and metaverses and uh i'm really excited for that future yeah no i i think that's one of those things where we kind of officially unlocked that world and being able to see different universes that have the same bases is an incredible theme that i think we're just seeing very basic implementation applications of so we haven't even seen that too uh to full capacity yet um i'm curious to kind of hear your thoughts on sort of what are some interesting ideas either you've come across or what you would like to see that actually take this level of composability um to some interesting experiences yeah well there's some like very obvious ones you know like i was just talking to founders of this company web with two bees and they you know they let you take in your digital avatar from other pfp projects and like they render them as they have like they run them them as like a 2d sprite and you could like use this you know as your avatar in this 2d world right like it's kind of like an 8-bit uh realm like metaverse and um so that's like kind of like an obvious one i know other people are working on that as well for their various pfp projects which is doing something like that as well uh so there that's kind of fractals fractal of a hundred thousand uh fractals so these are unique uh digital snowflakes with attributes they belong to different factions uh with different rarities and then there's you have like you know velocity and span altitudes and we kind of thought of it as to be like a gaming primitive on top of which people could build various experiences so it's everything from very simple things like you know certain fractals getting uh whitelist access to buying a certain sales but then it's also like people building experiences like special levels or tournaments or events for fractal holders all the way through like different cosmetic pickup great but then they're both a fractal and so um i'm just starting to see that happen right now and that's you know i think it's excited about is the stuff that i can't even i'm not even imagining right now you know because when something's open or programmable like people are going to create new stuff that you never would have guessed exactly fair enough um no 100 um in terms of kind of kind of contrasting that with what's happening on the web 2 side we obviously all of us are excited about sort of gaming becoming a really nice way to bring in millions if not hundreds of millions more people in because they understand how that works it's a clear audience but when we talk about mass adoption um do you do you think it's do you think scalability or maybe the transaction costs were the only bearers to entry like how would you kind of think about what's preventing right now from getting like 100 more million people trying out what three games from you know uh the last talk nailed it where it's like it's all about product and it's all about ui ux right um so it's it's really how can you like that's one of the innovations with twitch and justin tv before i like we you know there was streaming on the internet before but we made it like really easy and like have to install any plugin or anything like that so i think that you know what i what i'm excited about is people are creating more ways for uh crypto to be easier to onboard you know uh that could look like different things it might be you know custodial wallets for example or um it's there's there's like i feel like there's a lot of things that that games can do to make the ui ux just like much simpler in terms of like how do you onboard and actually provide some of that uh like make it like provide some of those rails for for users and so i think games are a good way to do that because people are you know the games like the gaming industry is like highly optimized in terms of you know getting players on and like making sure that marketing dollars are very efficient and so um i feel like that could be that is potentially a way that um millions and tens of millions of users get onboarded into into crypto in that world do you do you um how do you kind of think about the trade-offs between the abstractions needed to sort them some of those ux barriers versus kind of compromising on anywhere from decentralization to the end user owning the underlying asset i think i feel like usually we've seen them at different ends of the same kind of rope and um right it's a trade-off right there's a trade-off between uh abstractions that are forms of centralization versus decentralization right and i think there's the question is like how much not every app needs to be fully decentralized i mean there's probably some you know evangelists who believe that to be the case um you know but that's you know that that's the um i think that's true right like so if you're moving huge amounts of money in db5 and then perhaps you really care about the decentralization and sovereignty but if you know you're playing a game where the stakes are much lower um perhaps you're willing to at first try that game in a way like where you load it through a custodial wallets provided by the game so you don't know anything about you know you don't have to know anything about um you know uh decentralization at all or crypto at all and then once you maybe if you're very invested in that game you're investing a lot of capital tokens a time whatever then you can you know take that sovereignty back and like put you know take that wallet once you're like you understand what's going on you know and so i think um where when people create these applications uh you know there is a little bit of a user of a trade-off the user trade-off i mean coinbase is a great example you know they've onboarded you know tens of millions of users into crypto and um you know there's a trade off there because you're using you know most of those users are custodying their their uh crypto at coinbase right and and we don't have to expect everybody to kind of do this too and they as long as they have a choice um they get to kind of pick the experience they want either as well um no i agree does that matter to you for for fractal or how you can envision people who are practical users kind of experience this i think what's interesting about nft is like in general and then gaming nfts is that by putting to something on a blockchain it's effectively like it's almost like an asset backed by blockchain right um a lot of these assets you know they're not going to be successful if the game itself is not successful and they don't create a client that like does something with this asset and so it is there's a point of centralization that's really important right which is his initial game eventually maybe the set of assets will become big enough that they exist beyond one game experience and so they have like some durable value there but i think the blockchain component at first as like a weight if people uh you know it's kind of like how the u.s dollar was backed by gold and that that might give people confidence to invest in this as a currency to use it right uh and you know different philosophical views on a good idea or not but i think of that you know the the the idea that you put your ass that's a watch i think is this way to give people confidence and like they have ownership and and so that gives them the you know this you know to participate in the in this market or this economy this game uh ecosystem and um so you know to me that's like that's kind of like the important part you know it's it's almost like it's more ideological than it is technology actually i think that's a really interesting way to kind of think about it i guess in that in that world it's sort of related but not in directly related but do you feel like the nature of everything being able to be priced or resold or repackaged in some form whether it's creatively or not affects kind of the nature of the games themselves do you think everything becomes too transactional and people don't play things for fun because they think there's money to be made or not made or lost or sold here and and do you think the second we started battling everything that ideally we couldn't to the full extent in the web too uh kind of anything from ruins to it diminishes the the gaming experience well i have two thoughts on that one is that since before you know a couple years ago before the running blockchain games games were primarily played for fun right there's probably a scale of like you know and they were mostly fun and maybe there was a little bit of economic activity you know there are a few people who are selling world of warcraft gold on ebay or something but mostly people were playing for fun 99 of players and then now you know with blockchain games in these early games like actually infinity like maybe people are playing more you know there's a huge contingent of people are playing as a job right and um maybe if they're you know if they weren't able to make money off of it they wouldn't play the game or some percentage of them wouldn't play the game i think what that as the games you know what will happen is the games will shift back to be more fun most people will be playing for fun like maybe 80 and then 20 of it will be like oh i can you know i do have like i can if i want to play different game i can like sell the stuff in this game right like i get you know there's some economic component of it but it's not their like primary reason for participating in in this gaming universe i think that's like the end state you know because those people do want to play games for fun i think so that that's kind of we'll see this shift back as the games become you know more gain you know better experiences right we're in this very early phase of blockchain gaming it's kind of like free to play in 2008 where you know like the free play games that were on like social networks like facebook like these games were more they were viral you know they but there was a lot of criticism of them but because by you know real gamers because real they were saying gamers would say this isn't a fun game like it's a you know wonky business model i don't believe in it uh and you know now 14 years later that's the predominant business model game and you have games that are much more immersive experiences like fortnite that are built on a free play model so i think blockchain is going to go through blockchain games that will go through that similar uh transition okay the last thing you said is like the financialization point which i didn't address so you know uh do games become less fun as like everything becomes has the ability to be financialized within the game um i don't think like in these blockchain games i don't first of all i don't think like every asset or every interaction will be like something that can be monetized or like turned into an nft you know oftentimes what i've seen is like people are you know there's some core assets and that are nfps in the game like your player or your avatar like some some major things but then there's a lot of stuff that's you know interactions in the game that are not like monetized um and i think that uh with these with these um with these games like it's you know like i kind of think about like the creation of the car the automobile right like in the early 1900s like we created these like cars and people bought them and then there's this whole industry of financialization that popped up around it right like you could get a loan for a car then and then you could uh you can you know rent your car out or like people would buy cars and rent them out at airports or whatever you could like rent your car out on get around and turn it into an asset or you can like get a loan um against your car right like uh and and use it as collateral and so i think that gaming assets will go through a similar um transition yeah where where like gaming assets started off as like you know there's just something you have right you buy to play but then eventually you know something that's valued by other people then you can and it's programmable it's online it's easy to like uh do all this financialization around people will will um create all these different you know methods of financialization and that's that's gonna be pretty exciting i don't know but it's interesting it's a really good analogy because i think i'm also by the way i'm mixing some questions from the audience so for the audience feel free to type any questions and i'll be able to ask them and merge them in with the list of our questions but there's a question around just how do economies work in crypto because we've seen games that have like immensely tweaked and kind of curated economies for how their in-world works but now you get to interact with everything else too so you're basically thinking of a virtual country a set of countries and and all these kind of premises that we understand real world can be applied we haven't seen them to most extents but it's kind of becoming popular so this car analogy works so it works really well it's a that's a really good way to think about it um i want to kind of get to an interesting point which is our kind of topic here which is understanding the role of existing game studios and what two sort of game publishers we've kind of seen a handful of uh them kind of talk about or hint they're thinking about doing nfts or just think about what in general and it's just going to come with massive resistance from whoever's online basically um and and kind of the question is i'm not asking you to comment on any of that but uh it's more of a sort of how do you think they they'd get to adapt what they should adapt or maybe like what their role becomes in this world like will they be forced to transition do you think we'll just get dethroned by what three native things or just what happens in this this point that we're at yeah i think we've seen this movie before right like with free play like when you know free play started off it was and then mobile you know like was kind of the next uh was the real catalyst of this like at first all of the new all the successful games were new entrants right it's an innovator's dilemma right it's you know you have these incumbents they're like we're making all this money making games for xbox or pc or whatever do we really care about mobile it's kind of nascent and then new entrance startup you know the zynga's of the world and then people those become successful companies and then like the incumbents are like okay we need to pay attention and i think the same thing will happen with blockchain games where you know the comments get get all this criticism um because their players are like oh that's not serious that's not gaming that's like not what we know right people are resistant to change and so uh they'll be like players will you know someone's a traditional company's like oh we're gonna sell nfts and then players are like this is a cash grab this is a bad premium there's all these of criticisms right and incumbent like new entrants like there's a ton of people who are uh game developers from big studios you know they're from riot or ea or active vision and they're transitioning you know they left their jobs to build something that's a blockchain game and uh they don't have that innovative order right they have nothing to lose so they're going to go out and create these new games and then some of those games will become incredibly successful and then in five years you know we'll see the incumbents like kind of just fight the bullet and like they'll they'll participate yeah gotcha and so and i guess if i were to kind of analyze and just see if i can tie this into something you said earlier it seems like one of the things that sort of eases people's kind of opinions on this is if they have a great experience and a great game then sort of makes it easy for somebody just like okay maybe we should consider this and uh and we just haven't seen too many of those moments they're coming and we're seeing hints of what's kind of happening but uh uh seems like it's uh anytime soon kind of kind of the window of opportunity and maybe we'll get a bigger crowd to turn over i mean it's like this this whole industry is like i mean i know actually got started like in 2018 but like it's like one year old really because they you know it started accelerating like a year ago right or maybe 18 months ago something like that so like it takes time to make a game right like if you want to make a good game it takes like a year or more i mean so you know like people these games are coming um if you are in the industry if you like kind of peel back the curtain you're like talking to people in the street there's a tremendous amount of talent that's coming to this industry but you know there's a lag time it's not like uh you know it's like not like you know refractor we like conceived of it in november like release it a month later right because it's a website and we were we have an amazing team we built it but we couldn't have built a full aaa game in like a year right so it's going to take some time uh so i think there's um you know these transitions seem to happen they they they seem slow but then they're they'll it'll be all of a sudden i think like so absolutely i have a question from the audience and i'll kind of just uh phrase it out there i think it's a little bit uh abstract so i'll kind of give you room to uh to parse but how do you think about copyright ownership in this world and sort of um do you think that's going to end up either being a barrier or an issue as people think about ips for these assets yeah so obviously you know having just having an nft of something doesn't necessarily uh dictate like doesn't necessitate a certain level of copyright ownership right and i think projects have tried to do different things right um like whether you know maybe they're reserving them maybe they're they're they're granting those to the nft holder i think what we'll see is like um you know every game is going to want to become a platform with their nfts right or well i i don't know if they know that right now but they will eventually because that answers my prediction yeah if you if you um you know become a platform and people start building experiences on top of your game or your game nfts then you know you there's the durability of those assets is higher and and you know the value of your ecosystem goes up right and so the question is like what legal framework is going to encourage the most of other people building on top of your stuff while preserving value for for you know your ecosystem right i don't know what that is but it probably you know it depends on like if i'm a developer i'm going to build on someone else's ip like what assurances do i need what protections do i need i i think that's what the framework people should be using to think about it also an interesting education we just talked about which is um of course it's in the best interest for the game to build a platform for their users and kind of get more but they largely also will have a separate parallel universe that's built by others which can equally be more successful or just successful and i don't think we've seen too many of those scenarios in web 2 yet and uh and the times we we've seen that actually just ends with like a clear way for somebody to just kick them off the platform um and we have a bunch of those things so i think that's one thing where i just noticed that that that's going to be a new one where we don't know what that looks like where somebody can build a better platform than you can using your own assets or user base yeah but i mean the point of web 3 is that you have a way to benefit from that right if you hold down you're selling nfts you hold back some amount or you're like have a you know open token you're you're holding some in your treasury if you create something that that is an open ecosystem that creates value then you can you can benefit from that and i think that's really interesting because we saw in web 2 you know as part of that is like there's a lot of promises by um companies saying oh we're an open ecosystem but there was no like way that that was actually you know they had complete control over whether that was true or not right and so that was true until they decided wasn't true right if you were twitter you could build a client or if you were on twitter you know you could build a client and build right all sorts of like different ways that to build on top of twitter until they decided they were like oh this is like actually sub optimal for a business facebook and and singer right like yeah exactly true for facebook i mean it's true for all these platforms and so you know and it's probably only not true for toys because we weren't like early enough to like you know really build it as a platform to be honest so like uh you know i think that like this what's interesting to me about web3 what i love about it is it's it's kind of like there was a way for it to be you to be economically incented to create an open platform right it's primarily the things that are successful are primarily even platforms and it's on the line that's subject to to create the open i think that's important because that's the internet that we want to be part of is one where it's you know you anyone can build on top of what's out there i think i think that's the best for innovation it's the best for the consumer and um yeah i i totally agree i think this is one of those things where um yeah it's going to be hard to imagine what we can't imagine yet and obviously there's a catch in that sentence alone and we're just seeing what people are going to do with this i want to end on a final question uh which is um there's i mean there's over a thousand developers here that are considering going into what three from their existing web to jobs and that's not a small number obviously a lot of them are just seeing what's possible it's a two three day hackathon but a lot of them are also concerning full-time and think about what they might be able to do so you have any advice for people who are sort of thinking about getting into web3 uh kind of comparing this with your transition or anything you want to think about for how they should think about building businesses here what would you kind of tell them yeah well first of all you should come work attractively so you know fact of that i asked you hit me on my twitter dms but um you know i mean seriously if you're you're not working on web3 yet uh i just like don't know what you're doing i mean it's like very obvious to me that this is the most exciting part of the internet um i think there's a lot of innovation like when i started in web 2 it was like um like it was like we were just redefining like how people were defining how people would interact socially on the internet uh back in 2005 2016 2007 2008 and now it's like we're you know it's being defined how people will uh regard value on the internet and that's pretty cool like it's it's it's um it's a place where you can experiment and and see what happens i mean there's obviously all these like financial motivations to do it as well but like i think for me i'm someone who's always primarily followed my curiosity and that's why i'm excited about web3 so you know i would do it for sure and then just like it's a great time to get started um you know there's plenty of companies to work for lots of different places to innovate i think one good area to look is like what are the marketplaces markets that will be disrupted by distributing the value to a large group of people that's kind of how i was thinking about it when i kind of came up with with fractal so yeah good luck awesome well justin thank you so much for your time and uh really appreciate this amazing thank you great thanks [Music] [Applause]