 Hello! Thank you guys so much for joining us. We have 20 minutes to dive into the vast subject of NFTs, so hopefully you guys are excited as I am to learn and think about the future of this very exciting space and thank you guys for joining me as well. So before we get started, I'm aware that NFTs is still somewhat of a niche topic, so why don't I get the expert himself, Alex, to explain in brief what NFTs are and your history as well with Crypto-Kitties and where you are now. Yeah. Hi everyone. I guess NFTs might be a little bit scary for some, but really it's just a new primitive. The way that I see it, they can be used for many different things. Probably most known is that you can use them as game characters, for example, in Axi or ART. So what it just means is that it's a unique digital asset that can be represented by many different things. Yeah. So when I first learned about it was very late in 2017 when we played Crypto-Kitties together with the rest of the founding team of Axi Infinity and we felt that this is probably going to change the way that people think about ownership of digital assets forever. So we see them as the beginning of your digital identity as well. So whatever it is that you do online, if you are experiencing something, that can be stored as an NFT and then should belong in your wallet. Exactly. Brilliant. Thank you. So it's been hard not to hear about NFTs over the last few months. They've been everywhere, Twitter, Crypto-Twitter and beyond, mainstream now. So as investors, I mean you're at the forefront here of thinking about this and you're having to, in theory, invest in the future of this space. So tell me a little bit about what's inherently interested about NFTs either as opposed to previous iterations of blockchain and crypto or as an extension of that. Wendy? Shall I start? Yeah. Well, if you think about the words non-fungible token, does everybody know what fungible means? Non-fungible literally means that you cannot replace it with another thing, which means it's just a unique thing. And so if we look at NFTs, it's truly just, it's a digital thing. And that's as general as it can be, but also it opens up such a world of possibilities in terms of what you can do online for the first time if you attribute that thing to a unique digital wallet. And so I look at NFTs as potentially enablers of storage of identity information that you can pass on to your entire sort of digital life. There's also the possibility of encoding financial contracts into an NFT. Imagine taking out a loan against your previous credit history that's stored in an NFT. There's obviously the value of building art into an NFT, and then you can do cool things with the art as the NFT continues to gather more data because it's a unique thing. And I'm sure there's probably a world of possibilities that we haven't imagined yet, and I think every time there's so much consumer interest in this category, it makes me so excited because all this tooling and infrastructure gets built out so that we can explore all the possibilities with these things. And then the next time, you know, it comes around new parts of these things start to emerge. And so I'm sure we haven't seen the end of NFTs yet. And also not actually investing now in this space, right? The infrastructure and, you know, the companies that produce them themselves. Brilliant. And, Andrea, I mean, obviously, Axel are backers of Alex's new business. So tell me a little bit as well why this space is so interesting to you now. Yeah, it's interesting. I really think of NFTs enabling the decentralized internet. I think of them as the bricks of the Web3. And while I do agree, the infrastructure evolution is quite meaningful. It's a great, I guess, technological innovation. I'm actually quite excited about the broader consumer applications that can rely on NFTs. Talking about Axi, specifically, you can have an amazing game, an amazing community with folks who may not truly come to the game for the NFT element, but the NFT element enables that true asset ownership, enables that distribution of in-game rewards and economics back to the users as opposed to back to a centralized publisher, making the whole community and user base better off. And I think it's, we're only scratching the surface here when it comes to the broader impact of NFTs. Axis, yeah, close to 3 million users. There have been less than a million users on OpenSea so far. I think of Roblox, 40 million users, Twitter, 200 million users. All these platforms could be rewritten by sitting on this NFT backbone where you own the data, you contribute to the platform, you become a key contributor. Can I put it? So one common criticism that I often get, or when I'm talking to people who are very new to NFTs, and especially those who are looking at the art scene, they see NFTs, oh, I can just like save, click, save this Joe Jobpeg. It doesn't mean anything when I sell it. And it's not really as clear when you have just an art piece, you have it in your wallet, you're looking at it, okay, I sold it, but I can still see it. What did I really sell here? In reality, you sold your access to proving to other people that you own this asset. Now, for art, that's a little bit more unclear because right now there aren't many like vernisages or places that you can show that you own this NFT to. But in games, it's super easy because if you have an NFT in your wallet, it gives you access to play any type of game that people have added utility to that asset for. But if you sell that, you won't get access to anything. So access passes is the easiest way to explain what NFTs are to people. Yeah, I mean, that's quite a tangible way to explain to people why this is interested. Otherwise, it can be a bit meta. You have this proof of ownership in the digital space. I mean, you're not going to go to a party, or maybe you would, but be like, this is my NFT. But do you share a little bit more about your gaming background because you were saying that this is something that you wish you'd had in your gaming history to prove your previous victories per se. A lot of this will feel intangible to people. So I just want to give that a shot. Sure, like a very clear example. So I'm born in 1986. I used to play games before it was cool, as I'm sure a lot of many, like many people here. I was playing very competitively. I represented Norway in World Class 3, and we were playing against Sweden. And I remember I was so proud of that moment. I think we tied Sweden. But the point is here is when I'm trying to find that history or saying, hey, this actually happened, but nobody covered it. I might have to go to a random Russian webpage. I see my nickname. And it's very hard to prove that. I actually did this. But imagine if when I played there, I would have had some NFT that belonged in my wallet. And it wouldn't have to be that I would have sold it. It didn't have value for anyone else, but me. I think that's really important that people consider the implications for these assets more so than just like, hey, okay, we can speculate here. Like one NFT is now suddenly worth, you know, an Axie land, for example, sold for $2.3 million less than two weeks ago. That is stored as an NFT. You know, these are cool speculative things, but if you try to look at it from other perspectives, like the use cases are basically infinity. What about, I mean, CryptoKitties, Wendy, I knew you were an early adopter of this. Does it, how can it be inherently interesting to own this digital cat, which we also saw at the time was very exciting, but now that the price of that has dropped. And we don't know really what the value of those CryptoKitties is going to be in the real world. So maybe you can share a little bit about that example. So fun fact, a while back I bought CryptoKitties to represent every single one of my North Zone colleagues and I gave them cat pun names. And I think it was, you know, there's the claim for Christmas gift if they wanted to and some of them did claim them because gas fees were quite low back then. But, you know, I think the emotional value of being able to share an experience like that with your colleagues that is still digitally unique, you know, I think sometimes people buy domain names for their friends. It's somewhat similar, you know, I'm very much concerned with trying to understand now what are the real aspects of utility value behind some of the use cases of NFT we're seeing today. As mentioned before, there's, you know, endless possibilities that we probably can't even imagine yet, but for things like arts and gaming assets and others that represent kind of, you know, some of the biggest markets in NFTs today, very concerned with understanding how to measure the emotional value that people have. And some of that is because they identify with the NFTs that they own, they work super hard to earn them by playing games or, you know, they might have bought them for a very high price from an artist that they love. And we haven't yet seen very good sort of metrics to define that, but I know that there is sort of that emotional value out there and I think that's an important thing to kind of understand and to learn about this ecosystem, but also I'm really excited to see more tooling being built to help people channel that emotional value. So when someone buys an NFT and puts it as their Twitter picture, that means they're identifying with it in some way. And I think they're probably going to be, you know, many, many really slick, productized ways to show that emotional value. That will allow us to start to collect those metrics to understand kind of that utility value aspect of the NFT use cases we're seeing today. I think, Andrew, you do have your Twitter photo as your NFT, if I'm not mistaken. My Slack photo. Yeah, your Slack photo. So I mean, do you see this as something for the every man or is it okay that this maybe is kind of a niche product for the gaming world or the art world? Can you see this being mainstream or is that not necessarily part of the thesis? Very much so. I think, as Wendy mentioned, the utility aspect, those are the experienced aspects. I think folks in Brace NFTs, because of what they get in return, I think there's a small minority of folks who actually care about the underlying technical details. When folks buy a board Ape and join that community, they do it for the community, the status, the events they organize. An interesting company we back to Sorare, which is this digital football collectibles platform. And it's a global phenomenon where you bring die-hard football fans with clubs, the collectible element and fantasy sports all together in one. And these cards allow true ownership and the ability to really engage with your favorite players much better, right? And what's interesting about Sorare are actually infinities that most of these folks may not have bought any crypto ever, right there. In some sense, this is kind of the gateway to crypto, which I think is really exciting, where you're abstracting the complexity in the background and enabling folks to embrace Web 3 in a very experienced, rich and organic manner. And when we talk about Web 3, again, maybe we can be more specific about what that means. In one instance, we don't really own our Twitter profiles. We don't really own our Facebook profiles. They are centralized and they could disappear like that. So do we think that the future of Web 3 is basically the next version of that, something that we as individuals do own? I mean, maybe we could own digital souvenirs from our football club, et cetera. And how does that materialize in a world where we are still physical beings? How do you engage with that on the day to day? Or is it just for the metaverse or the digital world? I mean, what do we need, basically, for people like us in the real world to enjoy that ownership? Yeah, I think, to me, Web 3 is about the ownership economy, right? People should own their stuff. That's generally one of the reasons why I wanted to work with Axia, why I felt that NFTs would basically change games. And when I'm then looking at, okay, right now, in COVIDs, we've had a lot of traction. And what we're trying to do now is basically have real-life events of where we can meet the people who we have been playing with who actually have had their lives changed with Axia. So kind of peaking back on what Andre said, right now we have about a little bit over one million players in the Philippines alone. And about 50% of them have, they've never touched any crypto before. And 25% of them have never even had a bank account before. And when you look at these metrics, you realize that this is basically the gateway into more financial inclusion, more freedom for people. They don't have to rely on existing infrastructure that might be corrupt. I mean, let's be real, here in Europe, we probably don't, we trust our institutions. Everything is kind of fine and dandy. But if you look outside of the bubble that we're here at and into Asian countries, for example, especially some, it's much less safe there to have your money in the bank, for example, or to trust that they will take good care of you in the long term. So I generally believe that people should own their, have their stuff in their own wallet, and then there could be different front ends that allow you to see or use your asset in specific ways. And if we look at, kind of take the metaverse aspect here as well, you can see, oh well, what if it's gated by hardware, right? For example, the VR glasses. All right, so if you have the ownership layer at the bottom, you would have kind of the VR glasses on top that then they kind of can check through APIs and see if you own ACSI assets, you can use them. But that doesn't mean that it's tied only to that experience. There could be other front ends, so like the ACSI game itself, where you can play with your NFTs. And I think that's just, you can replicate that across many, many different assets. It's not only for, it's not about gating, it's about opening things up again, and then anyone else can add value to your assets. Yeah, I mean, I guess to play devil's advocate, if you talk about financial security, the other side of this in crypto in general is that consumers are dabbling in it and the price can go down as well as it can go up as we all know. Is there a danger, Wendy, that people buy NFTs, hoping if you like to have that exponential growth in price that we've seen for some of the most famous NFT sales, and the price goes down and they lose it? I mean, is that a risk to the space? So I think we've now seen three or four bull and bear cycles in crypto, to the point where people kind of, who have been building in the space for a while, kind of plan around those. And my hope is that retail investors are not investing non-expendable income in NFTs, but in anything really, like that is highly volatile. But I think the other aspect of Web 3, which we haven't talked about yet, which is also super important, is it, and this ties to the pricing of it all in some ways, is that it not only allows us to own our data on digital records or things, such as NFTs, but it also allows us to build the infrastructure to trust each other. And the bigger that network grows, the harder it is to sustain and maintain that trust without better tooling and understanding and values and kind of product driving real utility value into the space. And so I think one of the exciting features of NFTs, tying it back now to the topic a bit, is that it allows digital things of value to be owned in different ownership models by things such as DAOS, which is the whole other hairy beast, decentralized autonomous organizations where people can come together and own something. And that requires a ton of trust to the people that you're in the organization with, but also that trust is facilitated by technology, because there are rules or protocols that say, when can you do this, when can you not? And so tying it back to kind of the price volatility because so much of this is reliant on our trust in the ecosystem that fosters value for these assets, it can have fluctuations depending on what's going on in the macro environment, people's emotions, and also sometimes big hacks and scandals. And I think that's something to be very, very weary of as an investor in this space. Yeah, I mean, on the point of being an investor in this space, there may be VCs here who are thinking about investing in NFTs, looking at NFTs companies. And I guess I'm interested, Andrew, how do you do diligence on this space, which is so nascent, there's three million people signed up and you have to have faith and understanding, ultimately, of the infrastructure that we're talking about. So maybe some do's and don'ts as an investor in this space. Yeah, for sure. And I would say, for every ACSI, folks who really blaze the trails for everyone else, we meet hundreds of other companies. I mean, there's so many blockchain gaming companies right now that have figured out the crypto side, but there's actually no game. And I think that's also an interesting opportunity to bring the crypto talent closer to the more traditional software or gaming talent. In general, I would say we're really looking for that authenticity as well as a bit of a renegade spirit in the founders, because you have to you have to change a lot of kind of old ways of thinking. There's no playbook to follow. You have to fight against traditional institutions. But you also kind of have to be authentic in that way and be very close with your community who, and I think community for web three companies is crucial because not only are there your key economic counterparts, but they're what makes a big company long-term. And I think if we see those kind of elements of a special vision and that strong commitment, we can compliment those teams with the more company building side and to say the experience more from the traditional world of building a software company or a gaming company. I think that's a great combination. Is there also a prerequisite to own NFTs before you invest in a startup of NFTs? I find it very hard to invest in something without having tried it before. So I became one of the largest Sorare card collectors before backing Sorare. I played quite a bit of Axie before backing SkyMavis. So it's, you kind of have to try it. And I think that's also an awesome way of kind of engaging with web three. It's a very inclusive space. Like everyone can set up a MetaMask account, can buy an ENS domain, can go to OpenSea. There's no, you don't have all these gates you have in the traditional world and all these folks who tell you, you know, you can do that and you cannot do that. So I find this kind of democratized access to collecting, to playing, to investing, it's just really awesome. Same question really for you, Wendy. How do you get the rest of the fund on board with this space? I mean, how do you go to your IC and say, really want to invest in this space, which is digital things? I mean, it's getting your colleagues to understand this. All we invest are digital things. No, I mean, like, I think I'm laughing a bit also at your comment, Andre, because when you say there are fewer hurdles or gates to get into web three, I actually feel sometimes it's the opposite because everyone has the ability to access it. But the usability still is at a point where it's so hard that it actually does filter out a lot of people who are non-technical, people that don't have friends who are deep in the space that can help bring them in and set them up with a MetaMask account. So we're excited about the tooling and infrastructure supporting more people to come on to this space. We've made many investments in that space, and that ties back to your question. So I think it's fairly obvious when you can look at metrics like developer enthusiasm to measure the traction that the space is getting and then look at kind of what do they actually need next to make their development experience better. I think that was what fueled the first part of our investment thesis when we invested in Open Zeppelin, we invested in Ceramic 3Box and then Live Pier for Video. Now it's starting to move upstream to users where it feels like there is a barrier to set up a MetaMask to figure out how to get Fiat onto your MetaMask account. And so then we invest in companies like Magickalink which helps developers set up a passwordless authentication experience that is very similar to a Web 2 experience but actually uses public and private key encryption in the back. So it generates wallets automatically for people as simple as a click from your email. And so really for us it's been about investing in technologies that unblock those hurdles for people to continue doing what they're already doing which is being excited about building in this space and being excited about participating in games and being excited about who knows what else, voting in DAOs and forming them to buy the Constitution. I guess Alex- Actually I have a comment to doing DD on various products. Yeah, some tips. I'm in very more concrete I would say. So what I find is that especially when we were talking to many different investors up through the ages is that if you're not like in the Web 3 space or you generally don't use the products too much, you come into it, you get a little bit scared because it could be really hard to get started and then you might judge them based on kind of a Web 2 mindset where you're only basing it, okay the products onboarding flow is kind of weird like for example in Axie you can't play the game for free. You need to actually buy some Axies or to find some other players to lend it to you. Now that is a messed up kind of flow and I think a lot of people might kind of just figure out this is not gonna make it basically. But what happens is if you kind of go deeper and you become like you kind of have a crypto mindset to it where you take a deep dive and you try the product, you see the community, you see kind of the meta game around the game itself and that's where a lot of the fun lies. So when we're speaking to people and they see Axie, oh well this game isn't really fun, like how do you quantify fun? Like how do you deconstruct it in a way that it's subjective? Fun for someone might be grinding something for 10 hours every day and they find meaning in this. I mean for others like they're laughing, they're playing a game, they're like oh this is amazing but it's not the same for everyone so investors might try to come off their high horse sometimes and try to take a deep dive and try to realize why are people spending five hours, 10 hours every day on these products. I think that's really when you will find the gems here and what many people missed with Axie. This sounds like VCs can just be playing as part of their DD, this sounds like a great, great supposed to be invested. Great job, yeah. I just wanna ask as well Alex, I mean obviously you've just done a massive round, you've had Axel, Andreessen come in, you've got investors confidence but I am interested in the investors who say no to you and I'm sure you're met with blank stares all the time when you're trying to explain this. When they say no, is one of the main concerns how nascent this still is? Or is it that there's just not enough understanding for that fund still in the space? I mean, what are your conversations like there? Yeah, so it's been a pretty massive journey. I would say when I came into it didn't know any investors at all. So everything was kind of a really uphill struggle. First of all explaining crypto back in 2018, impossible. Nobody wanted to invest in Axel, maybe it's at all. Coming to 2019, we had a little bit more traction from users started to see that there was some revenue here. And then people start opening their eyes because they understand, okay, NFTs can maybe be used for something more, but we didn't know exactly how big it could potentially be. And but even then, so many knows the valuations we were offered were, you just didn't make sense relative to the ambition that we had, because we realized that we needed to make not only the game, but like the underlying infrastructure and even the distribution channel. So what I would say is when you're choosing a VC or a couple of VCs, try to spend some time on that if you have the luxury, of course. Now is a great market to be a founder, I would say, especially if you have a clear vision of what you want to make and you're seeing that there is a space here for me. Then you can find the right people, try to optimize your cap table in a good way. That's the positive side. If you are struggling, take anything you can get, close it fast, and kind of keep building. That's my general advice. So there's some founder advice. Let me, we only got a couple of minutes left. So let me ask each of you, if there's founders in the room today wanting to build an NFT product, what are you looking for? What are the gaps? Let's get some ideas for the people here. Andre, let me come to you. What would you like to see be built still? We've got gaming, we've got art world, we've got collectibles, what's missing, what tool would you like to see built for the founders? Everything, I find we're so, so early. Even within gaming, there's so much that can be done in kind of more complex games, whether it's real-time strategy games or shooter games or many other types of genres. Gaming, I think, has been one of the kind of early adopting consumer categories. But think of other consumer platforms like publishing or I think there's a lot happening in music right now with enabling music rights being on the blockchain and bringing artists together with the fans in a more closer way without the labels. Social media, so I'm really excited for essentially everything that can be built consumer-facing in World 3. Music and celebrity world, what about you, Wendy? What would you like to see be built? So much of that. I think financial contracts built into NFTs access being built into NFTs. There's a couple of great projects doing this already. Credit being built into some sort of NFT-like thing. Ways to, you know, one interesting concept is thinking about kind of reparations in the Web 3 ecosystem and if a DAO or a person behaves badly, that could be an NFT punishment that gets published to their profile. Chef who's like Black Mirror. Not saying that I'm really excited to see that happen, but I do think that it could happen. And so there's, you know, they're digital things in the digital realm and so, you know, imagine working capital financing being done. There's a great company already doing this based on NFT contracts. So, so much that that's being built. Brilliant, well thank you guys so much for joining me and I hope you've enjoyed the discussion on NFTs as much as I have. Thank you. Round of applause for the panel. Thank you.