This week I am interviewing Steve Hoffman, also known as Captain Hoff. We cover AI, space tech, CRISPR, and blockchain. Most of our conversation revolved around web3 and the metaverse. Enjoy ✌️
Steve and I met a few months ago when both of us spoke at an event on entrepreneurship. From the moment I met him, Steve impressed me with his contagious enthusiasm and positive attitude. He is the very definition of a person who has embraced rational optimism. The more I talk to Steve, the more he reminds me of Peter H. Diamandis, one of the space industry pioneers. Both of them have an abundance mindset and believe that technology will solve some of humanity’s most significant problems.
In my conversation with Steve, we touch on many topics across AI, CRISPR, Space tech, and Web3. However, we spend most of the time talking about the metaverse and web3. Steve’s background in video games creates such a unique perspective. He recognizes how gamification drives the incredible engagement and volume in the web3 space. Last but not least, we touch on how he finds inspiration and his advice on how to enter the metaverse.
Table of contents
About Steve
Innovation across AI, space tech, longevity, and blockchain
On Web3
Gamification, the metaverse, and NFTs
Investing in the metaverse
Growing the metaverse
On learning and inspiration
How to enter web3?
Glossary
Transcript
About Steve Hoffman
Steve Hoffman is the chairman and CEO of Founders Space, one of the world’s leading startup accelerators. Throughout his life, he has been working in television entertainment, game companies, started a few of his own startups and ended up building a startup accelerator to help founders build great businesses. Last but not least, Steve, also known as Capitan Hoff, has written several books, including:
Innovation across AI, space tech, longevity, and blockchain
Viktor: As a person who has been working with innovation during the past decade, I'm sure that you have worked on many exciting projects. What excites you the most in the tech world right now? In a way, my question touches on your latest book.
Steve: It's so amazing to be in tech right now. Innovation has been abundant in technology across all sectors. For example, the whole space ecosystem is booming. It's not just Elon Musk, Jeff Bezos, and Richard Branson. The little companies in that ecosystem are growing in numbers too and in the process, making everything from software to different parts of a space shuttle. Such an explosion in innovation helps humanity go into outer space.
On another note, look at gene editing with CRISPR—this amazing new tool in healthcare and biotech. We can now take evolution into our own hands. We can create new species of plants and animals and cure diseases that were incurable before. Its absolute potential is so far out there that I think most people don't even realize what's coming down the pipe in terms of technology innovation. And then you get into the whole artificial intelligence, which has swept every industry. Or perhaps, blockchain and DeFi, the list goes on and on. If you asked me what I'm most excited about, of course, I'm excited about all of these. They're just exciting in different ways.
On Web3
Viktor: One thing that's been on my mind recently is Web3. Everything related to blockchain, DeFi, and NFTs.What's your view on the web3 space?
After all, all of these remarkable innovations have been happening for the past ten years. But lately, all the progress in that space accelerated. What are your views on that?
Gamification, the metaverse, and NFTs
Steve: First of all, I think the amount of innovation happening in technology is phenomenal. And some fantastic companies out there are just experimenting all the time. There are no rules when it comes to DeFi and blockchain. People are out there doing the craziest stuff. I mean, if you look at Non-fungible-tokens (NFTs), for example, it's sort of insane, like the amount of money people are paying for these small images and videos that they can get for free online but they want to say they own them. And nobody quite knows what that means. Is it legal ownership? What's the difference between legal and actual ownership? There's a lot of nuances there. Somebody may still own the copyrights, and just because you bought it on the blockchain doesn't mean you own the copyright. It's going to be very interesting, where this goes in the future. I would say there's a lot of hype around NFTs right now. It's an exciting space.
There's a lot of people promoting NFTs all over the web. So you can imagine how celebrities and corporations can really cash in on these. For example, Warner Brothers own Harry Potter; what could they do with all those NFTs? How much will people pay for the wand or the cloak? And you know, the invisibility cloak could be an enormous amount of money on the blockchain. So it is an exciting game that takes place in the virtual world, aka the metaverse.
These ideas aren’t new. We've had virtual worlds and virtual currencies in the past. It's been around for a long time in the gaming world. My background is in games, so I know this. I ran a virtual world-based game a long time back. So these aren't new concepts. But the idea of moving them to the blockchain, a decentralized system tracking ownership, is precisely a new thing. And it's fascinating that it's become so heavily monetized. I think that's because of the whole crypto boom. It’s getting easier to participate, especially if you have a bit of cash on aside.
There's indeed a lot of speculation going on, but it's fascinating. And when it comes to crypto, I have a lot of ideas on crypto.
Steve: My firm belief is that crypto is the gamification of investing. I come out of the gaming world, so to me, it's pretty apparent. Investing used to be based on certain fundamentals. For example, there's a stock with its P/E ratio; you look at the company and where it's headed, assets, and who owns some of it. On the other hand, think of some crypto examples. They started as a joke. Like Dogecoin was a meme out there, and see what happens now. Nobody can say what their value is except the marketplace. Different forces are going on, a lot of speculation, as I said, but there's also gamification. The long-term value that this coin may provide, no one knows that? It's such a big unknown, and some people do not care. There are so many variables that come into play because there are so many coins out there.
While we see Ethereum and Bitcoin primarily, we do not know what other tokens may break through. At the end of the day, a lot of people don't care. It's a game to them; they're active participants in that game.
It made investing so much fun. In regular investing, if a stock goes up 50% a year, you're like, wow, that's amazing. Then you're looking at the crypto world, and these are going up even higher. Oh, it went up 3,000% this year. While an average company just doesn't do that. So if you look at gamers and what gamers want, it's the excitement of something going up 3,000%, 5,000%, 10,000%. You don't get that anywhere else. Only blockchain technology enables that.
There's been this whole shift towards gamification.
Look at the NFT market. It's the same thing. People are entering, whether it is crypto punks, crypto kitties, or whatever else it is. They're bidding up on these little videos and GIFs. These things are going for insane amounts of money. But when you look at it as a game, if the whole process of buying and selling is a game that you're playing with real money, then it makes sense; it makes a lot of sense.
This is the hot thing right now. And whatever the hot thing is, people will inevitably move there. That trend continues. But I also see all this influx of money driving fundamental tech innovation. Blockchain is not static. We see it's continually evolving.
Where does it take us next? Nobody knows. But what we do know is it's evolving fast. And it will be taking us in whole new directions and open up new vistas that we couldn't predict before, just like with NFTs. Nobody thought it would be a big deal to put an image on the blockchain. Then, all of a sudden, it exploded. There are going to be a lot more explosions in the future taking place in the virtual world.
Investing in the Metaverse
Viktor: Here in Asia, we have this phenomenon in the Philippines where people leave jobs to play games to earn money. There are a few quite popular play-to-earn games. Games that have been tokenized. In turn, people actually make a lot more money playing games than they do from their regular jobs, which is such an interesting phenomenon to see. I think emerging markets will benefit more than developed markets because you don't need a lot of money to have a pretty decent quality of life. These kinds of platforms are enabling that. And since you talk so much about games and NFT applications, I'm curious, have you started investing yourself in the metaverse?
Steve: I diversify my investments, just so everybody knows. So I invest in many different things because you never know what will happen in the future. I think that's an intelligent strategy. So I use a diversified investment strategy across everything. If we really look at what the media says, I don't think the metaverse is Facebook. Everyone talks about Facebook’s announcement and rebrand to “Meta.” In my opinion, the metaverse fundamentally will revolve around games. In terms of people actually earning a living in the metaverse playing these games, this was going on before the blockchain tech. Some people earned a living off World of Warcraft, farming, and doing all the stuff they need to do to build up characters, get items, and then sell them off.
All that existed before the boom in crypto. But now it's being taken to the next level; it's much easier to get in and out of all the hype. In the past, it was hard to do transactions, now we've opened it up. It's easier to do transactions between all these currencies, worlds, and tokens. So much more fluid and liquid, that's exciting. I would say a huge number of games are going to be popping up here. In the future, say ten years in the future, many people will be earning their living in the metaverse. The virtual world enables doing all kinds of digital activities across games and entertainment.
I know people are doing it in the Philippines. In fact, some people are doing it here (the USA). People are definitely leaving their day jobs here to trade crypto, which is essentially the same thing. A whole another gamification level. They're like, I could earn this much at McDonald's every week for a minimum wage, but I can go out there and in crypto. In a day, I can earn a month's salary. So I'm going to go, and I'm going to try that. So we're going to see more and more of that trend.
Growing the metaverse
Viktor: Yeah, I also have a friend who makes a lot more money, just trading all day rather than having a stable job. I see it happening not only in emerging markets but all over the place. But you know, despite all the good things happening in crypto, there is a bit of a bad reputation. Maybe that's because of all the ICOs that took place in 2017.
I was looking just yesterday at the total number of users of Metamask, one of the most popular crypto wallets. It seems like it's about ~12 million. A lot of people think that's the approximate size of the market. So we're still in the very early days; we have about 10-20 million people that are actively trading or playing, so what do you think needs to happen so that we can onboard the rest of the world onto the metaverse?
Steve: It earned a bad reputation. Let’s face it. In all things, and especially in the metaverse, there are scammers. There were corrupt exchanges; people were doing ICOs with bad intentions. So many people jumped in, thinking it was the next big thing without doing their diligence, and they got burned. So there'll be more of that, no doubt. So this is why I tell people you know, diversify. Don't put your kids’ money for college in such investments, don't put your retirement money in there. Invest the money you can have fun with, like in a game, the money you can lose. So that's what I tell people because it is highly speculative, highly risky, highly volatile. Like that's how it's designed, that's the attraction of it, right?
Steve: You said there are probably 20 million people; it's a small number of people when you look at the world's population that are actively doing this. So what do we need to do to get everybody else onto the metaverse?
Well, I think that will happen naturally. So anything that adds value, anything that creates an experience you can't have elsewhere, will attract people. So right now, the people who tend to be in it are the more adventurous people, the more technically inclined people. Although with Coinbase, Robin Hood, and all these things, you don't have to be very technical to get into it anymore. That's broadened the onboarding into this whole crypto and NFT universe. In the old days, it was extremely hard to buy bitcoin, you had to be a geek, and you had to work on it to figure it all out. Now, it's a pretty brain-dead simple; it's only going to get easier. So what holds a lot of people back is that they just don't understand it.
Recently, I traveled across the whole US and talked to people about it; they don't understand it. People are afraid of what they don't understand. I think it's going to take time for people to get used to the idea of dabbling in it and then to participate more fully. You'll see many more young people doing it than older people; it is too far beyond the older people. We're going to see a lot more young people adopting the metaverse. They will create social networks, virtual worlds, augmented reality; all of these will be happening.
The more applications out there, the broader the appeal and the more people will participate. Many young people don't have much money; hence, the speculation isn't as attractive to them. But they'll be more interested in the entertainment and socializing part. We're also seeing all the big players jump on. Lots of big investment banks, Goldman Sachs and JP Morgan, and all these other companies that are generally very conservative.
Facebook, on the other hand, has embraced blockchain early on, and that effort failed. Launching Facebook’s token didn't amount to anything because Facebook doesn't really deserve to have a win there. They haven't behaved ethically in the past, and I wouldn't trust them in the future.
The Meta story, honestly, I think that's Zuckerberg's way of deflecting all the bad attention that they've been getting for all their really irresponsible activities. So I don't believe that naming his company Meta will make any difference at all. I think there are different types of people out there that I want to address. Let's say that Facebook moves into the space and creates a virtual world augmented reality, which I'm sure they're going to do. Will it necessarily be successful? Will they even build it on the blockchain?
There's no guarantee that just because it's Facebook, it's going to be successful. Google tries a lot of stuff, and it often fails like it attempted its own social network. These big companies aren't necessarily the ones who are going to be pioneering the way. They're not going to be pushing the envelope, they're not really going to be defining the future, they may buy some of the winners, and that's where they're more likely to be successful. Just like Zuckerberg, he's not a dumb guy, right? He bought WhatsApp; he bought Instagram. His acquisitions have been quite smart, their internal development of all their different apps and stuff. However, their track record Isn't that great.
But let's face it, it's hard to launch a hit app. That's why the valuations when you launch it are so incredibly high. You know, they're unicorns because it's really, really hard to do in the metaverse. My feeling is that Zuckerberg has two reasons. One is to deflect attention from all the bad stuff he's been doing. But number two is he doesn't want to be displaced. So he is hedging his bets. He is basically saying that we've got to be on top of these latest technology trends. Because if we aren't, somebody else will, and they'll create the next version of a social network.
Now what I think the challenge is, in social networks, in particular, it is tough to create virtual worlds. Because a virtual world is something that you tend to spend a lot of time in, it's immersive. You can't get into a virtual world and just pop in and pop out. It doesn't work that way. You have to spend time in it and figure it out. It's hard to navigate, and it's harder to communicate quickly. You have to meet other avatars in space and interact with them in this space; that takes time. If you look at how people use social networks today, whether it's Instagram, Snapchat, Facebook, WeChat, it doesn't matter what it is; how they use them is popping in and out, like really fast for really short increments of time. This is totally the opposite of how you interact in a virtual world environment. So in a virtual world environment, people spend a lot of time, or you don't get the value out of it. So there are two different fundamental use case ways of using these applications, which don't necessarily match.
I know Facebook bought Oculus because they wanted to stake their claim in this whole virtual world. I honestly think, at least in the near term, it will be primarily gaming, like gamification will dominate the virtual world and virtual reality. There will be experiential stuff, but it's different. What I found is that, you know, the “Second Life” was really cool. Not because people wanted to hang out there, but because of the whole economy, a niche group loved to hang out in “Second Life.” But because of the entire economy they created, and that's what we're seeing now, with this virtual world on the blockchain, right, a hyped-up economy that translates into real money. In real life, if you look at it, what is the economy? It's a game. It's like we've just been talking about with NFTs. People are buying and selling virtual goods or making virtual goods. So if you don't have gameplay in there, the virtual world is pretty dull because fundamentally, the thing that people want to do is when they chat with people, they generally want to interact with people they know.
There are two types of behavior. One, you interact with people you know, like on Facebook, and number two, you are broadcasting. And that's more like a Twitter or an Instagram, or TikTok, where you're just putting it out there for the world. But you're not really personally interacting with all these people that are viewing it. Most people don't care about strangers; you don't want to spend much time interacting with strangers. So when you go into the virtual world, you will hang out with your friends if you're going to spend a long time. If you don't want that long-time thing on mobile and people on the go, they don't want to do that. They just want in and out quick; then you're still going to stick to kind of the traditional mobile social networks. In these deep, immersive worlds that we'll see-through, there's going to be this whole person; there's going to be all these gamification activities and the ones that tie into real money. We're seeing now on the blockchain with NFTs and this virtual world where you can trade all the different items in the virtual world, buy and sell them; people love them. Because it's a combination of a kind of fantasy, combined with Las Vegas. So the whole gaming virtual world thing combined with Vegas, that's pretty compelling for a lot of people, and I see that sector grows.
Viktor: So much to unpack here, many fascinating observations and points about what's going on with Facebook and, in general, the metaverse. You’re very right that Facebook has been very successful in acquiring companies that are massive successes. I think it's a lot harder in the web3 space to do that because many of the web3 companies are actually decentralized. So convincing an entire community to join Facebook would be very hard given the sentiment about Facebook lately. So I think, on the one hand, that's a big challenge. But on the other hand, many people argue that, because it's a founder-led company, it has more probability of success than regular companies that just hired an external CEO, right?
Because founders really understand the importance of making these big bets and like pushing really hard to make it work. But let's see if things are going to work out. But yes, so many interesting observations.
On learning and inspiration
Viktor: On a different topic, I'm also curious to find out where you find your inspiration? What are the go-to web blogs, courses, people?
Steve: One of them is meeting really smart people like you, like all around the world. So that inspires me like you made so many good points just about this talk and like you just made a perfect point. Facebook can't go in and buy one of these decentralized communities; they're not going to sell to Facebook ever, right? They like being decentralized. Facebook is all about centralization. That's why their whole cryptocurrency played in work, you know, in most big companies, Google won't be able to acquire them either. So they're really in; that's some of the beauty of DeFi and decentralization. The whole thing is that the community owns it.
Where do I get my inspiration? I network a lot now online because we're all doing it on Zoom. So talking to amazing people like you having these conversations, sharing ideas, hearing what you say. But I also have a lot of other sources. I love books, I not only write books, but I consume at least a book a week, an entire book, not not a summary of a book, like a whole book a week. One of my methods is audiobooks. So I'm a fanatic about audiobooks; it’s because I'm dyslexic, so I have had trouble reading since I was a child. My brain mixes up the words, so audiobooks allow me to overcome that. I've gotten good at absorbing information fast on audiobooks, so I play them at double speed. Hence, I do at least one audiobook a week, and I do across all topics. So I get books on science, I get books on business, I get books on sociology, psychology, history books, and fiction as well. So I just like all these different sources. In your mind, if you can get the more diverse sources of information, the more different sources point of view you have in different ways of visualizing the world, the better it is. So I do a lot of reading online. I just go through so many news sites, like tech blogs, everything from the popular ones, like Slashdot and TechCrunch, and you name it, I'm on all of those. I also do podcasts. So I go to a lot of different podcast sources. I'm always trying different kinds of views, seeing how they're at it. I do a lot in the blockchain space; I do a lot in the business and innovation spaces. So my technique is just the more different points of view I get, the better I become. And then I love traveling; I just took a four and a half month trip across the United States. To me, that's another excellent way to absorb information to meet people you wouldn't usually meet, get different points of view. I will do more overseas traveling, especially to Asia, as soon as those quarantines end.
How to enter web3?
Viktor: What advice would you give to aspiring entrepreneurs that want to enter we3? Because it can seem quite intimidating on the outside. Unfortunately, it's still constrained to just, let's say, 10-20 million people. It’s still very complicated and very technical. So what advice would you give to people that want to explore the metaverse?
Steve: My advice is always the same. Just dive in. Otherwise, you can't learn it. If you don't do it, nobody's going to do it on your behalf. You could try to take a course on it, but that course isn't going to do much. In today's world, things are moving so fast. You have to educate yourself continually. Even if you're in the space, you're continuously upgrading your education because there's something new and important every week that just changes in the metaverse and the blockchain tech space. So the great thing is, you can get up to speed pretty fast. If you focus, immerse yourself in the space, get an account, you can use Coinbase, you can use any of these and just start figuring it out. Start experimenting with them, go onto these NFTs sites like OpenSea, and start seeing what's happening there. Another area I'm super excited about is DAOs, decentralized autonomous organizations. We haven't even talked about that like that's a whole other area that's just exploding in the metaverse. Join a bunch of them, see how they work. That's the only way to learn. You can read about some blogs and watch videos about them on YouTube; that's all good stuff. You're not going to be able to take a great course on this unless you are doing it.
Viktor: Yeah, I just finished reading “Skin in the game” by Nassim Taleb, I don't know if you read the book, but it's exactly about that. You want to learn something; you need to sneak in the game, you need to get your hands dirty, you need to get involved. Otherwise, you just can't get to know it. But Steve, that has been amazing; I learned so much. I think there is a lot more to explore. Of course, there's just a ton of cool stuff going on in the metaverse right now. But I value your time. I appreciate you sharing all that. It's been a fantastic interview. Thank you so much for doing it.
Glossary
The interview may contain some unfamiliar terms, going through these definitions may help you understand the context:
NFTs: Non-fungible-tokens. You can think of them as web3 media assets. The most popular use case of NFTs today are pieces of art, but it can be a lot more. Music, code, tweets, gifs, access passes, digital identities, domains, game’s character skins, and even this very essay that I am writing can be converted into an NFT through a platform like Mirror.
DAOs: Decentralized Autonomous Organizations. Essentially DAOs are the natural evolution of today’s corporation as a form of governance. You can think of them as member-owned communities without centralized leadership.
Metaverse: “A boundless, 3D digital world accessed as easily as the internet, where we do things like hang out in a park, play a game, see a concert or suffer through a work conference.”
Abram Brown, What Is The Metaverse—And Why Does Mark Zuckerberg Care So Much About It?Gamification: As per Investopedia’s definition: “Gamification is a process to apply game-style behavior into non-game contexts.”
Blockchain: “A virtual computer that runs on top of a network of physical computers that provides strong, auditable, game-theoretic guarantees that the code it runs will continue to operate as designed.”
Chris Dixon, Partner at a16z
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