Jenny Lee: Investing in BUD, Game Tech Trends and NFT

Rita Yang 00:45

Hi, Jenny, welcome back to the show, and great to have you here. We’re talking about BUD today, super excited about this new portfolio company. How do you understand BUD from an investor’s perspective? What about the company that particularly excites you?

 

Jenny Lee 01:34

We spoke to the company’s founders and their management team very early. So I would say when we came in on the ground up, we had some idea of how the app is gonna look like. Today if you look back, where they’re shaping up to be is a new 3D social network, right? And so, there are different ways you can call it. The new Metaverse, or new online virtual platform. The review that we have gotten is that it’s a very fun place to be. So, we encourage users to go download and try the app, figure out how fun it is to create their props. And to go visit other people’s communities and sites as well.

 

Rita Yang 02:20

Yeah. And then from a business type of perspective, do you think of it as a social gaming company? Do you think of it as a social media platform? How do you think about that?

 

Jenny Lee 02:32

I think that it may be too early to define whether it’s a platform. Most people like to create platforms. But I think platforms are created or evolve over time. I think today is a fun element. And you can say it’s gaming, but it’s not deep gaming. So, this is more like an engaging community where you can go and have fun. I think that the community also has a little bit of slanted towards women users, given the way of arts, characters, avatars, and the environment. So I wouldn’t say it’s a deep gaming app since it’s not a platform yet, but I think it has elements of good community interaction.

 

Rita Yang 03:19

Cool. And the co-founders, as you mentioned, that we met them quite early when they just had the idea. They’re incredibly young, they’re both Gen Z post 95. And they are first-time founders. Their first job was with Snapchat, and that was before they founded the company, how do they convince you to bet on them?

 

Jenny Lee 03:38

I just like them. I think that when you think about any new community, whether it’s a social platform or gaming elements, it tends to come from the new generation of users or consumers, because they have seen what the old platforms are alike, and they are in search of a potential new platform. And so the fact that they are young is an advantage, right? And they are coming to the market with a product that is not only for their age they are targeting a younger age group, even the younger age group, like the gen-alpha. So the Snapchat background is very important because it’s has a community that is a lot younger, relative to the Facebook community. I think the background is good, the fact that they have been in a US start-up that has gone through how the platform was built, how user experience is done, how the technology can support the front-end interaction, I think all that will benefit to their first-time entrepreneurs work experiences they had. It was quite relevant to this case. Then as I mentioned, I think that if you meet Risa for the first time, you’ll love her too. For early-stage companies, you want that passion, but not just raw passion, but the passion that comes with a bit more of a thoughtful direction, right in terms of how they want to build it, what they want to build, what they want to create. And I think that was what impressed me most about the founders they directionally seems to know where they want to go background seems to have the right background to do it. And the passion comes across quite clearly as well.

 

Rita Yang 05:27

Yeah, and I have to say, like having worked with both Risa and Shawn for a couple of weeks now, I’ve learned so much about gaming and Gen Z terms from them. As you know, I’m a millennial, quite old. So even though the company was founded long before Metaverse become a buzzword, I’m just curious, what’s your take on this trend? And how do you distinguish between signals and noises in this sector? I bet that Metaverse wasn’t even on your mind when we made the decision.

 

Jenny Lee 06:00

Yeah. So I would say that if you strictly define Metaverse, that’s not what they are on. Right, they are creating that community for a younger generation, so they have a place to go create props and have a place to hang out with the rest of the community. When we think about metaverse straightly it is all about the code. You go technical about it. It is all about the fact that the community should not be centralized. It should be decentralized. And in that sense, the whole technology set up to build strictly, you know is different from what BUD is about today. Right? So, if you say Facebook built the metaverse, it’s not right, Facebook is not the metaverse. It’s a centralized form. I would say metaverse maybe not the right word. But I do feel that what is evident is that consumers, existing consumers, whether it’s, you know, those in the 30s, or 40s, or even the young ones that you mentioned like the 20s, they are looking for a new way to engage. And that new way to engage is about more ownership in terms of how they want to create their world, how they want to interact with other people. Taking back their control rights, then, if you take back control of your creation, your interactions, your own friends list, yes, in that sense, it may be a portion of what could define the next metaverse.

 

Rita Yang 07:32

Yeah, GameTech is an area where you have been looking for quite a long time. What do you think about, you know, GGV’s current portfolio in this sector? And what are some earlier trends that we spot on that shaped this portfolio?

 

Jenny Lee 07:46

Without going to specific companies, I think we have very early days, when we invested in gaming, it was all about the game operations, right? Whether it’s the MMORPG games, which depends on getting the right game license and operating it well, and evolved into a different format, where there are browser games, and then it goes casual. And of course, 2D, 3D, multiplayer as well. Then it goes into a kind of mobile period. So when we look at how the gaming world has evolved, it’s gone through those steps. And with that step, it’s because of the change in the device, right? Whether it’s the device, the environment, the engines have also gotten a lot more mature, whether it’s a Unity engine or epic engine for games. I think the next generation is where we see that there may be potentially new disruption across all the different tech stacks. And if you start at the bottom on the infrastructure side, then it’s all about cloud-native games, right? So what happens is games are no longer kind of client-server, they are based on, coastal on the cloud, right? What does it mean is in terms of infrastructure that’s needed to support a certain type of environment? In the Multi-cloud environment, will new engines have a chance now to surface because the requirements are different. So that’s one kind of question.

 

Now, once you go above the infrastructure layer that you the question is what happens within the game? Right? So within the games, that could be a lot more interaction, as I mentioned you could have different features to target different users. Again, the game genre may change, but we are all looking for the game interaction to be smarter. Right? Does it mean that now you have more AI, computation agents within the games, so you’re not playing with dumb bots, but you’re playing with not a real person, but a pretty smart AI counterpart? So then that’s the second evolution that we’re looking at with technology with better computation and better personalization. Does it mean that the in-game experience is going to change and experience change may be different for different types of users? Or if you’re a heavy game user, you may be looking for the smarter AI type. If you are a female user then you’re looking for friends, right? Please hang out and the avatars that can change clothes every day. So for example, I think that’s where it may also require a new way of engagement, but it will be off that new infrastructure that I talked about. And I would say the last couple of quarters, kind of renewed efforts to look into new game engines, and of course, a new form of playing methods, we have not gone into distribution, which I think that may also evolve If you think about the newer game environment, entertainment type environment on the cloud-native, then definitely the distribution and the publishing site would be changed. There are already new channels like that, we have not put in that much of an investment dollar that but that potentially could be an area that we will have to look at some point.

 

Rita Yang 10:52

So among other things that you mentioned, just now, are there any particular opportunities we are looking at in the next 10 to 12 months?

 

Jenny Lee 11:01

Yeah, I think that’s one area that we’ve been paying attention to. And that’s the whole NFT world. So when you think about the most fundamental in gaming experiences, entertainment experiences, as historically, you spend so much time and effort creating, boosting up your avatars or your game character, and when you leave the game, it’s gone. It doesn’t stay there, right? But you can log in and find the same guy. But you know, that IP or that creation is not transferrable, it doesn’t allow you to continue to create value or you cannot sell outside the game. And so I think the interesting angle that we are learning about, I wouldn’t say we are expert, but I think we’re learning about is when you cross into the NFT and when all games now move on to not just the Cloud Platform, but on to a new platform on the chain, where the users really can play and take with you, then it’s very similar to the physical world where you will go buy a pair of Nike shoes, and that’s yours, right? So you can wear it everywhere. So now, when you have a little avatar with you or a game pack. You can bring that pack with you everywhere. Why not? Right? But for that to happen, the game design has to change, larger companies have to endorse this to allow the accessories or even your characters to migrate to other games. It goes against the current grain of the close ecosystem that the game companies have kind of built all these years. And so I think it’ll be interesting to see if there will be new start-ups or new paradigms of a business model that can support this. But it’s a pretty big, interesting trend that we are doing a lot of work on. So we do would like start-up founders who are doing work here to come to reach out and we should love to learn more from them and see if there’s a play for us here.

 

Rita Yang 12:54

Yeah, looking forward to GGV having its NFT someday.

 

Jenny Lee 12:59

Yeah, I mentioned this before. I’ve done over the many years, perhaps we should be leading with that front.

 

Rita Yang 13:09

Thank you so much for being on the show, Jenny. Enjoyed it. Thank you.

 

Jenny Lee 13:14

Great. Thank you.