250: Infinite Fleet! An Asymmetric Risk Play?

Buck: Welcome back to the show everyone. Today my guest on Wealth Formula Podcast is Chris Wood. Chris and his team have been on the show before. He’s with Pixelmatic. He joined Pixelmatic in 2016 as a project manager and Pixelmatic is a company which we’ll talk about in more detail which is basically they make video games and not the kind that you and I probably grew up on back in the old days like Pong and Pacman but things that are slightly different than that Chris is the CEO of Pixelmatic and he’s here to tell us a little bit about investing in this space and specifically a little bit about the opportunity that Pixelmatic has right now that I know that some of you have already invested in either in the seed round or in the current round that we had featured on a webinar. But now we’re you know this is a Reg D 506C offering so I thought hey let’s bring it out to everybody and make it public so not public to everybody but it is a credit investor so you could but anybody can listen in Chris welcome back I think you’ve been on to the podcast as well. Welcome back to the Wealth Formula Podcast.

Chris: Thanks very much for having me. It’s always a real pleasure to catch up with you.

Buck: Yes and you are just you are a good sport here you’re in where are you you’re in England?

Chris: I’m in Shanghai in fact. Well, it’s 8 a.m in the morning for me right now so I’ve not quite had my morning coffee.

Buck: So look at me I was thinking well English accent he’s probably in England or something like that but no Shanghai all right good. I hope you’re staying healthy over there Chris. I want to start out a little bit, you know kind of start out at the beginning here. I know we’ve had these conversations before but I think it’s an interesting topic. It’s different from what we usually talk about. So let’s talk about gaming in general. When we say gaming in the gaming industry for you know for those of us who really have not been involved with video games since you know the 80s and 90s specifically I mean I’m thinking of me like you know back in the day I was a pioneer for Atari when I was six or seven years old and then maybe graduated to Nintendo you know they had the Mike Tyson game back in the 90s and that was pretty much about the end of my video game experience but this is a completely different ball game. Can you explain or describe what exactly the gaming experience for people is now?

Chris: It’s completely different. I mean I’ve been gaming since I was four years old and you know I’m in my mid-thirties now and even I struggle to keep up the incredible waves that the gaming industry is making. It’s an entire ecosystem that is not what it used to be. It’s not the old dungeons and dragons or the old Atari you know sort of basement-dwelling nerds kind of thing that you know certainly when I was a kid it was still just nerds that played games as such just you know kidding of course but now it’s very mainstream. I mean I’m sure a lot of your listeners you know their kids or you know themselves are playing Fortnite or they’ve heard of it at least Minecraft, World of Warcraft all these things and you know these games are huge there’s millions and millions of players they’re generating billions of dollars it’s an unbelievable ecosystem and it’s not just the games but of course I’m sure the listeners will have seen people doing streaming which even I at first was a bit well this is very odd watching people play games and I mean I don’t think that’s huge.

Buck: I want you to assume we know nothing because honestly, I don’t know anything what you’re talking about I don’t know the streaming and stuff like that so okay so let’s first talk about this now because I know a little bit about what things look like now but it used to be that you used to play maybe used to play with a friend who was sitting next to you/ That’s changed right?

Chris: Completely. Well everything’s online now right I mean even those couch games that people play together they’re dwindling gamers you know the companies aren’t really doing that so much anymore what they do now is they have these massive online games where usually you know averagely you’d get 32 or maybe 64 players playing together at one time in some shooting game or something like that and how they often make their revenues is either by you know you buy the game upfront like you used to do as a kid or people will buy these digital items in the game you know they’ll buy like suits and things like that that just make them look really cool right and it doesn’t necessarily make them any better it just makes them look awesome yeah this is a huge industry.

Buck: So you’ve got people who are playing from all over the world right and so might be playing against somebody in Russia or you know in Shanghai and basically are you’ve got these games that monetize from I guess it’d be a membership or buying the game first right?

Chris: There’s lots of ways. So there’s the traditional way of course there’s some that have subscriptions like World of Warcraft you pay every month these people you know if you think about they have seven million players I believe right now and they have subscription fees so every month players pay this money which is you know incredible that really took things to a new level and of course like I say yes this free to play model where people have little in-app purchases you know you may have seen that on your phones or something like this where people drop a dollar or two for some something in-game.

Buck: And then you know their weapons and whatever you know bling they may have for games and as you mentioned some of those are I mean you can get like one-of-a-kind stuff right I mean you can get I mean I know a little bit of this because I had invested in a project you know called a worldwide asset exchange some time ago wax token but you can you know you can get one-of-a-kind sort of you know things that you can bring into games right and people pay we’re talking big money for some of this stuff right?

Chris: Absolutely recently there’s been some of these what they call NFTs I don’t want to get into too much today but these rare items that people will drop I mean there was a recent one which was a record-breaker that went for eight hundred thousand dollars I believe so I mean it’s quite huge and even there was you know in fact in the early naughties there was a game called second life where people were flipping real estate which is quite funny I’m sure yeah quite funny that’s interesting for hundreds of thousands of dollars in fact.

Buck: Yeah so literally people are I think it’s a change in perspective for people I think who are you know in their 40s or 50s maybe even 30s I guess where you look and you say well why in the world would people be dropping money like that on things that aren’t real and part of the change in perspective is well what’s real is kind of different now for a lot of people right if they spend a significant portion of their lives online well then that is a significant portion of their life so whereas it might you might not think it’s a crazy idea to spend a couple hundred thousand dollars in a Ferrari in the real world if most of your life is spent in the online space you may think it well, of course, I’ll spend 100 grand or 50 grand on something if I’m spent and is that sort of the paradigm shift where kind of you have to kind of get to understand this?

Chris: I think so and covid has only just accelerated that really I think everyone’s at home and you know everyone’s sort of digital these days you’re absolutely right it’s all about kind of peacocking and standing out and looking cool in front of your friends right I mean there’s so much of that I mean that’s what Fortnite is so famous for really is that they have all these different things that you can change your character to look like you know these massive IPs that are in there so these kids are running around like James Bond or whatever you know and that’s and they think that’s great and it’s understandable because like you say it’s the new Nikes right it’s the new that you used to wear as a kid and when you’re going out and playing with your friends.

Buck: Right so for perspective, we talked a little bit about how this is really a global industry and more way than one I mean it’s you know people are playing everywhere they’re playing next to each other they have no idea you could have like you know a 40-year-old person in Ukraine playing against an eight-year-old in Iowa and but the globe how big it is gives us some perspective on how big of an industry the gaming industry is and the growth of that well it’s there’s 2.2 billion gamers worldwide.

Chris: It’s absolutely massive so I think what you know to really put it into perspective it’s bigger than music and movie industries globally combined that’s Hollywood, Bollywood everything all combined video games is bigger much bigger in fact it’s currently I believe 106 billion and forecasted for 200 billion in 2023 and so you’ve got this you know the compound annual growth rate the growth rate’s been about I think 10 over the past five years and it’s still maintaining that it might be 9.5 or something off the top of my head but at the end of the day it’s been blasting all predictions I believe in 2014 they expected it would be 90 billion by now but it ended up being 160. just because you know there are more and more and more gamers constantly more people have access to games on their mobile phones you know phone game is huge and yeah it’s just becoming more and more mainstream and that the train isn’t stopping anytime soon most people are gamers these days.

Buck: So give me some examples you mentioned Fortnite give me some examples of you know some of these what makes a game in your opinion at Pixelmatic and what makes them successful and how they end up and how do they make people money I mean you’ve touched a little bit on how they make people money because you got all these things that you can buy is is an investor in and you know who’s getting paid by the gamers and stuff but what do you think makes a successful game?

Chris: Well there’s a lot of different things in different markets like for in for example in China there are some more predatory techniques you know some like very addictive games where you can just pick up and play them and and you just spend small amounts of money the game that we’re building is what we call a massively multiplayer online game so that’s something where you have hundreds of thousands of people playing together this is like the World of Warcraft kind of game where people assume this second identity they spend hours on this thing like you know some people spend like eight hours a day or more on these kind of games it’s really a second life very immersive so these kind of games are hugely successful because they offer this rich experience where you can kind of escape from reality somewhere and go and become a hero and and this kind of thing games like Fortnite are so successful for for a number of reasons really I mean there is there is kind of a magic formula to something like this but of course the way they look the way they feel the network effect where it’s simply you know if I play this game and I refer friends it helps and they they love to play together right the idea of course is that you make teams together and so you you bring your friends and and kids generally speaking of course will will all you know the word of mouth is is huge but for a game like ours it’s more about having really detailed lore and story and amazing visuals and you know quite technical gameplay where players can because ours are all about spaceships so they can go into these spaceships and swap parts out and do all this

Buck: Why don’t you talk about the game. Talk about it. So it’s Infinite Fleet right? So what is the game and what’s the game, how do you win and you know that kind of thing?

Chris: Sure sure so I guess the easy way to frame it would be something like star trek you know so if you imagine obviously you know you’re essentially captain picard and you’re out there with your with a fleet of ships actually not just one you’re exploring the universe it’s a massive universe with millions of stars that you can go across and in this universe you can build space stations you can colonize planets you can mine minerals and take part in a in a real world economy as well and really yeah spend your life in this this in space essentially exploring and what makes our game very special you said you said what makes a game successful why we think our game is going to be successful is because we’re giving an experience that players haven’t really had before where in our game what you do in the game actually matters so what an example that I like to give is that if the alien you know the evil aliens that come to attackers if they come to earth for example our players our hundreds of thousands of players have to come together and fight back and if they failed then earth could be destroyed and for the rest of the history of this well the future of this game earth would be gone and all these key characters would be wiped out and were some nomadic space-faring race now that hits the core motivation of players because it’s it’s the old choose your own adventure stories you know the ones where it’s like you turn to page 72 or something if you make this decision yeah that’s what’s exciting.

Buck: And you guys have in you know a big part of this is you know obviously trying to find you know the right people and the personnel the reason I know about this at all is because I had met Samson Mao sometime for a friend of a friend in Samson obviously is you know well I had interviewed him about bitcoin some time ago is obviously he’s a fairly well-known person in the bitcoin space but he’s also you know one of the key players in Pixelmatic and so that was sort of how I had heard about Pixelmatic and what you guys were doing but one of the things that I thought was really appealing about it was it had people like Samson and now you’ve really got what I would call what looks like a really all-star group of personnel and also some really well-known big you know investors that you can potentially tell us a little bit about as well.

Chris: Right and to be honest I’m not sure where to start but we’ve just got such a yeah you know so many but yeah I think I mean I think it’d be great to start I guess with samson you know I mean obviously he is as you said just a massive influencer in the crypto space I mean he’s been around for a while and he’s he’s driven a lot of this this bitcoin especially ecosystem he’s the man the man’s a visionary you know I mean don’t tell him don’t tell him I said this but he always gets his blooming predictions right you know I mean he always seems to know where things are going but but the thing with samson as well he was actually all also an executive at relic and ubisoft as well which are just that these are AAA studios like massive global studios and he was basically responsible for the success of ubersoft in asia in china he started the cendo office there and released the smurfs which I’m sure is an ip that that you know you guys will be familiar with he released that globally on facebook and it was one of their biggest most successful games so that was you know he’s is really great on that but in terms of yeah we we have 40 people currently distributed fairly globally but they’re led by these top top people so we’ve got jason who’s our chief creative officer now again I don’t want to rattle off all these I’m not sure if your listeners are going to be too aware of them but an example would be age of empires he was on the most recent age of empires game as a senior game designer which is just a massive ip for strategy game huge ip just like an all-star crowd basically who’ve worked on a number of very very successful games in the past that’s right and studios like sega you know bandai namco nintendo disney all of those with these these guys most of them have had at least 20 years experience in this industry and we’ve released you know the team has basically collectively released about a billion dollars worth of AAA games.

Buck: We were lucky enough actually to get into the seed round because of you know the relationship that we had and it was an unusual situation obviously you know I’m not on you know executive side or anything but I thought initially it was like well do you want to you know would you like to invest in this and I said well let’s bring it to my group the seed round and so that was I don’t know it was like a year or two ago right and now you’re on to another round maybe you could talk a little bit about kind of where things were during that initial seed round where people got involved and you know where you are right now in terms of development.

Chris: Sure so obviously I’m very grateful for you guys getting in the first place you know a few of your network jumped in which was wonderful at that time you know it was still very early stages it was it was very early stages but the but the great thing is that now I mean by the time we release this podcast it could be that the alph the alpha of the game’s online you know it’s gonna be a matter of days at the moment so we’re really excited about that and that’s gonna be open to the two investors in the first place and then we’re gonna be you know gradually releasing more to to the players and so you know every month or two we’re going to gradually increase the amount of content and increase the amount of players that get in and so this year is really important for us this year is really when we’re launching the Infinite Fleet it’s very very exciting indeed yeah but I actually I want to circle back you asked about the investors and how things are going and that is something I really want to impress as well because we recently announced that tether the stable the stable coin have actually invested in in exordium limited as well and obviously I mean they’re huge they’ve got like a 26 billion 26 million billion sorry dollar market cap yeah and also I don’t know if you know Phil Potter as well he was the CSO of bitfinex one of the world’s largest crypto exchanges and a couple of strategic investors too so we’ve got Bamboo Sofola who’s the head of Xbox emerging markets so we you know the games coming out on PC but we intend to port it to consoles as well Microsoft Xbox and so on and also heisenberg capital so that’s Max Keiser and Stacy Herbert right you know from rt.com and the Keiser report they’re just huge financial broadcasters so they’ve really been helping out as well so we you know I mean we’ve got more I could keep talking we’ve got more and more of these incredible investors that have come in so I really you know.

Buck: Yeah right big names like obviously I mean it’s in many ways you know it’s like kind of like you know you’ve got a track record you’ve got big-name investors you that are actually it also seems like they’re some of them are strategic investors it sounds like it in that regard too but so so those people just you know some of them just came in it sounds like and where are you though with so you said you’re basically at an alpha you’re gonna be releasing off within days yes I got it yes got it so how do you think you know I guess the question people have obviously because there is a current well, first of all, I want you to tell us a little bit about like if you’re it sounds like you there’s still this next round it’s not the seed round that initially we had a couple of years ago but now there’s a current round where people can accredited investors can still get involved do you want to talk a little bit about that round?

Chris: Yeah I’d love to yeah so basically it’s kind of split into two so we had jurisdictional purposes we did we’re doing one raise in the u.s and one for essentially rest of world but it’s it’s through an eu issuer so we’ve been very much promoting the eu side of things because it is open to is publicly open to eu residents but on the us side as you said it’s a Reg D 506C so that means accredited investors of course we’ve been talking to your guys we haven’t really started yet you know we went we recently went on to your show and we got an amazing response from that so you know thank you yeah yeah obviously it’s great yeah what he’s referring to is within our accredited investor group occasionally well you know we do some of these one-offs we don’t always just do real estate but this was an opportunity that Chris presented to the accredited investor group which is obviously limited just to our accredited investors so that that’s what he’s referring to as a webinar but go ahead yes sorry and then now we’re in advanced talks with the vc fund that’s going to be put in quite a large chunk so that’s that’s looking good and then we’re going to be opening you know we’re going to be more public and more driving this thing within within the next month because right now we’re focusing a bit more on the eu side of things but certainly for the american you know we’re making connections and with with brokers and things to to clear that round so I think it’s going to be going pretty swiftly because like I say we’re in some advanced talks and once it gets a bit more more public I think I think there’s gonna be quite a lot of appetite just because of the you know the weight that’s behind it really the EU rounds going really well so I’m pretty excited about it

Buck: So yeah and then so in that regard it sounds like an opportunity for people to potentially get involved and I’ll give you give your contact information in a second but let me ask you this because obviously you know there’s a pro forma there’s all this you know the usual stuff for any investment but really this is one of those things where it’s hard to predict isn’t it, I mean if something goes viral becomes the next fortnight, yeah you’re not I mean you’re not you have no idea right I mean you’re going in there and you’re giving a pro forma for a game and some you know level of success but you’re not giving a fortnight you know this is going to destroy it kind of thing right?

Chris: I mean no so look I mean in terms of framing it look there’s always risk there is always risk, of course, you know this you’re an investor there’s always risk in whatever you do at the end of the day we’re making a media product and people have to like the game so what do you do when you need to make a media product and people have to like it you form the best team which is exactly what we did so we’ve got the top people driving this thing but what I will say is there’s something different between Fortnite and what we’re building and there’s something a bit more stable behind it why is that because Fortnite is a shooter there are so many shooters out there it could have you know for every fortnight there’s a thousand that don’t work okay it’s a very standard type

Buck: I mean like a shooting game.

Chris: Yeah it’s just a shooting game where you kill each other essentially but it’s quite cool it is it’s quite cool you know but you know they obviously got the formula right but what we’re doing is this a much higher ambition level of immersive gameplay where all these people are playing together and it’s more there are not that many of this type of game and the ones that exist are all unbelievably lucrative we’re talking World of Warcraft EV online black desert online if any of these people have heard of these games they’ll know that these things are huge right and there’s it’s just the thing is the barriers to entry are a little bit higher you have to have top people in the team to get there you have to have some money behind it to make it work sure once it’s launched and once it’s out there and you’ve got you know the right networking and infrastructure behind it these games are just huge they’re just really really huge right

Buck: So from the standpoint of like you know when you do a pro forma on these you’re not but you’re being fairly conservative on that.

Chris: Yeah I mean obviously the numbers the numbers are pretty high for when you when you look at the the financials but when you’re looking at the competition it’s it’s very small indeed I mean we’re we’re looking to capture a very small amount of the market in the first in the first five years like something like coming under the number of my the top of my head it’s like 0.05 of the sorry 0.5 of the the the MMO market which of them it’s forecasted to be 42 billion in the next couple of years so for us you know in the in the first five years yeah we’re you know we expect to make some really good numbers but in terms of the competition it’s not that high we are intending to be competitors to the top mmos long term without a doubt and we have to remember behind it World of Warcraft, Eve Online this kind of thing these are these are making hundreds and millions of millions of dollars there are hundreds of millions and we are aiming to position ourselves there but also just quickly before you know before we do wrap up I want to emphasize that it’s not just an investment in the game but the publisher of the game so this means that we’re also going to have a library of games that uh you know it’s not just Infinite Fleet but loads of other games in the long term as well that’s the plan we and we intend to be the next Valve which releases a platform of games essentially that’s the goal here yeah so right now minimum investment cost and what does that get you that’s 10k. So 10k is the minimum USD of course so that’s 50 cents per token so the minimum investment is 10 000 US and it’s 50 cents per Exo token which is a security token we haven’t really talked about that I’m not sure if

Buck: yeah you want to do you want to just you want to talk about a little bit about how that works?

Chris: Yeah sure just keep things you know as simple as possible so basically this is a security token so it means it is a crypto token which is a representation of a share of our company exordium limited so it is essentially it’s a share in our company essentially it offers you a pro rata dividend essentially of 20 of our net profit pool annually so all the the 20 of our net profits every every year will be paid out in a dividend pro rata to the holders of the token also it is equity as well so if there was an you know an event where we’re acquired or something like that then the capital from that would also be distributed 100 pro rata to our token holders now I don’t want to get into too much technical detail about tokens you know people can reach out to me and I’m happy to discuss that but the basic simple thing about it is that it is liquid equity it means that these tokens even though it’s reg d usually if you’re investing in startups or whatever it’s very hard to liquidate we will be going on exchanges so that means that you if you wish you could sell your tones on exchanges very soon we’ve already announced a partnership with inex which should be coming up within months basically so that’s the security token platform no correct exactly so that’ll be as a security token exchange which in you know you could should you wish sell sell your tokens at that stage in future they will be going on the market within a matter of months in fact is there any restrictions on that with the us and all the sec currently yes because of reg deep but we are applying for a Reg A plus so that means it will be not accredited all these tokens are going to be registered with the sec and that means they will be publicly tradable.

Buck: Right yeah and so presumably you’d need to hold on to them for about a year and in this not when the reg A comes into play.

Buck: Well would the Reg A come in to play anytime soon you think?

Chris: Yeah I mean it obviously it’s up to the SEC we all know that they can be kind of slow so we’re in that process Form 1a well we’re in the final stages of our form 1a right now so it’s not gone to the SEC yet but it will within a matter of a week or two and then it’s kind of you know a bit of back and forth with the sec so it’s hard to say it could be a month it could be three I mean it really depends on the regulator.

Buck: Sure that and that’ll translate over to people who have invested in the 506C

Chris: Yes those tokens will all be registered in this offering.

Buck: Okay and then the I and then at that point Americans can trade on that at that point correct?

Chris: Absolutely.

Buck: Interesting got it so and then if there was an acquisition from a large company is that something you see for these kinds of things typically?

Chris: It’s potential it’s something you know it’s not something that we’re actively on the roadmap looking for obviously at this stage it’s still early days for us where you know Infinite Fleet for us is a passion project it’s something that we expect to run for 10 15 20 years but let’s just say we’re not averse to the idea should we get serious traction.

Buck: Got it. Very good. How do we get ahold of you if we’re you know for the accredited investors out there they know it’s Reg D 506C how do they get a hold of you?

Chris: Okay well the best is my Pixelmatic email address I guess so it’s just Chris the usual spelling Wood sorry [email protected]

Buck: So it’s pixel p-i-x-e-l-matic m-a-t-i-c dot and also if you can’t remember that and you want to just email me feel free to and I’ll forward it to Chris I know that’s what I did a lot of you guys did that last time you can just email me [email protected] and in the subject line you know just put Infinite Fleet forward to Chris and whatever you want to say to Chris and I’ll be happy to forward it to you. Anyway, this is good stuff. I think it’s a really interesting opportunity. I want to thank you for waking up early there in Shanghai and getting on the podcast.

Chris: No problem Buck. For you anything. For you and your listeners anything.

Buck: All right good talking to you and we’ll be right back.