Yat Siu – the metaverse, digital property and his US$5 billion company Animoca Brands

Metaverse maestro and champion of digital property rights Yat Siu talks tech with The Wealth Report’s Deputy Editor Flora Harley…

Yat Siu may not be a household name, but like our other tech titan Dame Stephanie Shirley he will go down as one of the most innovative and influential entrepreneurs of his generation. Similar to Dame Stephanie’s, his fortune didn’t appear overnight, nor did he ever set out to create one. And his journey, just like hers, also started as a child in Vienna.

I never realised it, but Siu, who now lives in Hong Kong, was on my radar long before our conversation for this interview. As a bit of a crypto fan myself, I remember being struck by something mentioned in an article in the 2019 edition of The Wealth Report exploring the synergies between art and newly emerging blockchains.

Almost jokingly, the article mentioned a game called CryptoKitties where contestants breed and trade digital cats in the form of non-fungible tokens (NFTs) using the cryptocurrency ether. One, we breathlessly reported, had been sold for the ether equivalent of US$170,000.

What the article didn’t mention was that the publishing rights for CryptoKitties, which at one point was so popular it threatened to collapse the Ethereum blockchain, had in 2018 been snapped up behind the scenes by an outfit called Animoca Brands. The co-founder of that company? Yat Siu. The net worth of that company now? More than US$5 billion.

But back to Vienna. Siu was the only son of classical musicians who’d escaped China’s Cultural Revolution in the 1960s. He was also being groomed for a musical career – “think of tiger parents and that was my mum and dad” – but, struggling with his compositions, he resorted to creating open-source programs on his Atari computer to help him.

Other Compuserve users started paying for his software: “people were sending me cheques, but I didn’t even have a bank account,” he says. When eventually Atari itself came knocking he was still just 13 and had, almost by accident, stumbled on to his future career path. It’s a trend that keeps recurring, he says: “I tend to end up in places because I’m doing stuff, not because of any pre-ordained strategy.”

When he was 18 he moved to the US to work for Atari, but when the business stopped making computers in the early 1990s he helped set up a company focused on Virtual Reality Markup Language. That led to an acquisition by SGI, which in turn brought him to Asia. Looking to test the waters of the Far East, Siu – at the time, “the only Asian in the firm” – ended up in Japan, Taiwan and eventually in Hong Kong where he was able to claim residency because of his father.

A number of trailblazing business ventures followed including Hong Kong Cybercity, the first free email provider in Asia, and then Outblaze, which developed web-based communication and collaboration services. In 2002 he was named a World Economic Forum Global Leader of Tomorrow and in 2006 a Young Global Leader. But it was in 2009 that Siu’s first big taste of commercial success came with the sale of the messaging division of Outblaze, which by then had 75 million users, to IBM for an undisclosed sum.

Animoca, a mobile games developer, emerged in 2011, and from that Animoca Brands was spun out in 2014. Fast forward to 2017 and Siu is in the Vancouver office of Fuel Powered, a firm he’s looking to buy. Sharing the office is developer Axiom Zen, which is working on a new game called, yes, you guessed it, CryptoKitties.

It’s here that his quest to reinvent cyberspace and empower the people who use it through a new version of the internet referred to as Web3 really began. “Animoca Brands has a mission to deliver digital property rights to the world,” Siu says. “Some people look at us as a gaming company because we’re starting with gamers. But we’re doing this because we feel gamers have the most obvious understanding and relationship with their assets in the context of ownership being virtual.”

NFT investing

Inspired by the potential of NFTs and blockchains that Siu saw in CryptoKitties, Animoca Brands went on a spending spree that, to date, has seen it make “more than 150 investments in NFT-related companies and decentralised projects that are contributing to building the open metaverse.”

The crucial word is “open.” Mark Zuckerberg sparked metaverse mayhem in 2021 when he announced that Facebook was rebranding as Meta and creating its own digital universe where users will hang out, date, exchange news and views, shop, game and invest, all virtually. But it will be closed. The platform will still have control. Siu doesn’t think that’s right; and it’s now that our conversation starts to get really interesting.

“Companies like Facebook are building a closed metaverse,”  he explains. “We intend to construct an entirely open ecosystem. Each one of our ‘games’ will become decentralised autonomous organisations (DAOs) meaning that  ultimately, despite being major holders of the asset, we will be participants and have no control.”

I ask why that matters to users. “For a start, you cannot be deplatformed,” Siu responds. To me that initially just sounds like Donald Trump being kicked off Twitter, but it’s much more serious, insists Siu. “When you lose access to the digital world you may lose your social connections or your ability to do business; you frankly become a lesser human because you have lost access to online services. But who controls those online services? The platforms do.”

It makes sense when Sui talks about apps being arbitrarily delisted or businesses being pushed off social media sites. “In the physical world, we have governments and judiciaries to protect us from that. You cannot be evicted from your property because someone feels like it. The digital world does not have that governance but blockchains basically solve that. NFTs become that model for digital property rights.”

Valuable data

The most valuable corporations in the world are all technology companies – at the time of writing, Apple had just crossed the US$3 trillion valuation mark – and that value has largely been driven by data: your data. Siu argues that we should be getting paid for it.

“In the physical world we often get paid, as a derivative of our knowledge, our time, our data, in the form of a salary or employment. The problem we have today, and the opportunity, is that this data or knowledge dissemination is limited by the number of connections we can physically and mentally interact with. In the metaverse this can be done at infinite scale. This is why digital property rights matter; if you own your data, then you’re in a position to benefit.”

Some consider the whole concept of a metaverse as dystopian. But Siu, using the popular gaming platform Roblox as an example, argues that it is others taking advantage of our efforts and personal information, in effect making us “digital slaves”, that is the real dystopia. “So if kids make virtual assets and sell them in Roblox, which Roblox allows, they get 25 cents on the dollar. That’s almost slave labour, I would say. You would never live in a place where they charge 75% tax on anything you do, right?

“We now get to own our digital identities. If you create a digital property, using your talent and creativity, instead of selling it through a platform, or not receiving value, it’s direct. You know the purchaser and can receive a fee every time it transacts on the blockchain. We think this is the true evolution.”

I ask if he sees himself as a moral campaigner as well as a digital entrepreneur. “Well, it’s a mission,” he replies. “With your capital being created by you and your data, you actually start creating a form of universal basic equity. Our capacity as both an operator of and investor in blockchain products allows us to glimpse an opportunity that goes far beyond just another capitalist endeavour principally concerned with maximising profits. We believe that we have a chance to develop the framework for a more sustainable, ethical and equitable capitalism.”

Virtual asset value

The idea of virtual assets even having a serious value can be hard to get your head around, but Siu, whose play-to-earn three-dimensional gaming metaverse The Sandbox – in 2018 one of his first major NFT gaming acquisitions – sees plots of virtual real estate sell for hundreds of thousands of dollars, says it does make sense.

“Virtual real estate functions in very much the same way as physical real estate – location is key. For example, in The Sandbox property around Atari or Snoop Dogg is much more valuable. Places that have more influence have higher value. It’s community and an embedded network effect.”

The same applies to crypto art – Animoca Brands is an enthusiastic buyer of the likes of Bored Ape Yacht Club NFT editions – fashion, and other digital assets, he insists. “In the real world when you’re buying a designer bag, what are you buying? 99% of the value is the idea and the power and the network effect of owning that designer and perhaps the rarity. It’s the same: why you buy it isn’t real, it’s the idea and the influence.”

Influence is something that Yat Siu is rapidly accruing. The monthly value of the virtual assets being traded puts the blockchain gaming ecosystem of Animoca Brands ahead of the GDP of Djibouti and Bhutan, among others. And many more businesses are likely to be added to the fold. A capital raising round for Animoca Brands in January attracted almost US$360 million from the likes of Soros Fund Management and Winklevoss Capital.

Suddenly, my hour spent chatting to the softly spoken entrepreneur seems like a very valuable commodity. If you haven’t heard of Yat Siu, or wrapped your head around virtual assets, DAOs, metaverses, Web3, decentralised finance and NFTs, now is the time to start getting up to speed.

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