Cryptokitties Co-Founder on Go to Market in China and the Future of Blockchain in Asia
“A trend you will start to seeing in the next 3–6 month in Asia is that, in these large tech companies in Korea, Japan, China, they will come up with their so called “blockchain solutions”. Most of these are private blockchains, but they have the keys to 300mn to 500mn people, and they will onboard these hundreds of millions of people onto what they say is the blockchain.
This is something I’ve been thinking about, which is the entire crypto space around the world is more or less around 60mn people currently, and we have come to recognize that Bitcoin is crypto and Ethereum is crypto, and that it means a distributed ledger. But I think these conversations will be challenged in the 3–6 months by these big companies saying “no no no, that’s not blockchain”, THIS is “blockchain”. And their perspective of blockchain may actually be much different. “
One of the many great insights from Benny Giang, co-founder of Cryptokitties, during his conversation with Global Coin Research. Save the podcast now so you won’t forget to listen to it. We also have the conversation slightly less edited in video, available on Youtube.
Checkout the list of questions and topics we’ve explored (with timestamps to the podcast):
- 2:06?—?Why is Benny Giang Fortune Cat? The early days of CryptoKitties, relationship with Axiom Zen and the team’s culture.
- 5:03?—?Announcements from Jun 26th on the launch of KittyVerse and the Nifty License.
- 9:25?—?What drove CryptoKItties’ decision to go to Asia and what were some things unique to the China market?
- 15:50?—?How does Cryptokitties feel about the other Asian countries besides just China?
- 16:20?—?Company’s experience dealing with both local gaming companies like Tencent and crypto regulators.
- 18:00?—?The spectrum of decentralization relating to games like CryptoKitties vs that of SpankChain
- 20:02?—?What measurable goals are CryptoKitties aiming to accomplish in Asia
- 21:15?—?Benny’s future predictions about Blockchain in Asia that may vastly be different from what we come to understand in the West
- 24:17?—?The rapid rise of large tech conglomerates in Asia implementing tokens across all of their products such as 17Media’s Mithril
- 27:00?—?Practical advice and insights from Benny around how to go to market in Asia including diversifying your audience, dealing with difficult regulators, and finding the right type of partners.
- 36:17?—?Benny answers questions that we received from our Global Coin Research newsletter readers. ? Be sure to tell your friends to subscribe at globalcoinresearch.com so they can participate in future questions!
- What are the company’s plans for the $12million dollars that it just raised from Andreessen Horowitz and Union Square Ventures?
- Is the news on active users of CryptoKitties going down to a few hundred true? If true, what plans are you doing to re-ignite the user base?
- 42:39?—?How does Benny think about the different Crypto communities globally?
Benny and I covered many topics in our podcast and I want to highlight some specific ones that I found to be quite unique.
1. Why did Andreessen and USV fund the company a whopping $12mn?
This was originally a question from a GCR Newsletter Reader: Why did Andreessen and USV fund a whopping $12mn in Cryptokitties?
Well, first, listen to the podcast (time at 36:17) and hear from Benny. And second, I would argue that’s because Cryptokitties is trying to build the first global Crypto gaming platform. Benny mentioned that Cryptokitties has been profitable since week three, so the main purpose for a company like CK, with a digital product and low-cost overhang, to raise so much money is for expansion purposes. In this case, CK is using it for hiring, building a platform and ecosystem, go to market and consumer education. Frankly, having enough capital to not worry about cash flow as the company is stepping on the gas is quite helpful. CK also initially differentiated themselves from many other Crypto companies out there by proving that they could make money first. Jimmy Song once said to me, you can make money 3 ways in Crypto, and those are “selling mining machines, starting up exchanges and organizing Crypto conferences” ?. I agree with that wholeheartedly (see past write-ups on Binance and Bitmain). CK does not belong to any of those categories but has succeeded thus far nonetheless.
2. Reported “DAUs” going down
This also originated from a GCR Newsletter Reader question: Is the news on active users of CryptoKitties going down to be a few hundred true? If true, what plans are you doing to re-ignite the user base?
Let’s step back from this question for a second. Despite however much money people have thrown at the Crypto space, I think most would agree with me that there is a lack of reliable Blockchain analytical tools. More importantly, there is a lack of standard when defining user metrics.
Traditionally, in gaming, daily active users can be defined as something like “unique product users visiting the product daily”, Wikipedia (May per not be the best source of definition but every company’s DAU definition also varies). And the general purpose of the these DAU type of metrics is typically a measure of “stickiness of internet products.” However, we need to take into account several unique factors about Crypto. For example, in this decentralized world, we own these CK cats forever, even if CK ever disappears for some reason. So how should we take this “forever ownership” factor into account as part of the metric, if we decided to? Additionally, the definition of “stickiness” in the crypto world certainly hasn’t been hashed out enough. Do you consider someone who is in CK’s Telegram or Discord channel all day sticky? Do you consider someone who is playing in one of the many games in the KittyVerse a daily active user? That sounds pretty sticky to me. Many of these interesting points were brought up by Benny, so be sure to listen to what he says on that.
I certainly hope to do a post on Crypto metrics down the road but it sounds like none of us have it figured out (this applies tonon- crypto tech companies too ?). Even at CK, it’s an art and science of triangulating smart contract data and multiple product data sources, which according to Benny is what the team considers to be the most reliable right now. If you are a Crypto analytics company, I’d love to talk to you.
3. For Crypto companies that truly want to disrupt gaming, check out Asia, but be thoughtful
Unless you are Bitcoin or Ethereum, how can Crypto companies get true, mass adoption from the rest of 99% of the world that doesn’t understand Crypto?
In the gaming space, Benny advises Crypto companies to go to Asia. He has identified that the intersection market of gaming and crypto users is still pretty limited in the Americas, which is one of the reasons CK is going to market there. Asia has potentially a larger group of target audience because of 3 reasons-1) the awareness of Cryptocurrency and Blockchain is larger, 2) the Crypto and regulatory markets are more developed, and 3) there are a significantly larger number of gamers.
Secondly, to attract users outside of those who understand Crypto, it is essential for Crypto companies to create beautiful websites and great user experiences that are local to those communities. Modern internet users are used to beautiful and intuitive user designs. But when you create a website interface and portray yourself akin to a traditional internet company, you are then mandated to get internet licenses and work with regulatory processes there. Benny discussed in the podcast this experience they’ve had with China. He advises finding 2 local partners- one in Crypto and one in gaming to help navigate the landscape. To me, this kind ofwell thought-out go-to- market-strategy requires hard work that very few Crypto companies want to do. Most typically would leverage their “global communities” and incentivize their local members. Nonetheless, that types of marketing approach will only be as effective as targeting the number of people who understand crypto locally or who wants to make a quick buck.