In an exclusive interview with cryptonews.com, Alex Connolly, CTO of ImmutableX, talks about onboarding the next million gamers to web3 and how ImmutableX is powering digital asset ownership.
About Alex Connolly
Alex Connolly is the CTO and Co-Founder of Immutable. Alex has been passionate about in-game assets his entire life. At 9, he wrote scripts to gather pricing data from the Runescape grand exchange. At 13, he was the top contributor to the largest TF2 item pricing website in the world. Alex invented the most scalable system for creating NFTs ever designed, which has been used to create millions of Gods Unchained cards with no network impact on Ethereum.
Alex graduated high school as the equal-highest-ranked student in Australia. A couple of years later, he joined Immutable after dropping out of a combined Computer Science & Law degree at the University of Sydney, where he was building a blockchain-agnostic programming language for smart contract VMs.
Alex believes that virtual worlds built using blockchain assets will be better, fairer, and more just than current digital economies. In fact, he thinks programmable assets will be ‘realer’ than physical assets.
Alex Connolly gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- How ImmutableX is powering digital asset ownership
- Onboarding the next million gamers to web3
- Web3 games and the prominence of streaming
- As a 9yr old, Alex wrote scripts to gather pricing data from the Runescape grand exchange
- Gaming economies and peer-to-peer networks
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We’re buzzing as always, and I’m super pumped to have today’s guest on the show. We have Alex Connolly, the CTO and co-founder of Immutable, also known as ImmutableX. Alex has been passionate about IN-GAME Assets his entire life and one of the craziest stories I’ve ever heard at the age of nine. This lad wrote scripts to gather pricing data from RuneScape from the RuneScape Grand Exchange. And at thirteen he was the top contributor to the largest TF2 item pricing website in the world. Alex invented the most scalable system for creating NFTs ever design, which has been used to create millions of Gods Unchained Cards with no impact on Ethereum network. Alex graduated high school as the highest ranked student in Australia. Couple years later, he joined Immutable after dropping out of a combined Computer Science and Law degree at the University of Sydney, where he was building a Blockchain Agnostic Programming Language for Smart Contract VMs. Super pumped to have this guy on the show, Alex, it’s been a while can wait, here we are welcome the show pumped to have you on.
Alex Connolly
Thank you very much and excited to be here.
Matt Zahab
We got to start with the RuneScape story, man, that is absolutely bananas. I used to RuneScape back in the day as well. I think that was like the first game that I really sort of a Peer-To-Peer game that I started playing. I want to say it was in like grade four, maybe younger than that grade three, all the boys and the girls got into it. It was like a school wide thing. In the schoolyard. You’d be kicking the ball around shooting hoops, playing hockey, doing whatever and talking about RuneScape. How the hell did you write scripts to gather pricing data to build this massive exchange at the age of nine? That is absolutely bananas. I want to know everything about it.
Alex Connolly
Yeah, like I don’t want to claim I think any sort of like technical genius level of contribution here, I think I had a very similar experience, which is, hey, a whole bunch of friends, we were all playing RuneScape we’d love the game, we’d love like talking about it, trading sort of I remember, people would get membership, or I would sort of do chores to be able to pay the $7 a month or whatever it was. And I think the Grand Exchange as I tried to convince my parents that RuneScape was like an educational game. And that’s how I was able to play it quite a lot. But obviously, you needed to sort of have a fairly grindy MMOs. And obviously, with a Grand Exchange, there were like new things that I’d never really seen in any of the games that I played previously, which was the opportunity to trade items, the opportunity to make money. And like I said, I needed to make money inside the game so that I could do more things inside the game. And I think that led really naturally into like, there started to be there were graphs so you can track the prices of different types of commodities over time, you can see the prices of walls and the prices of expensive items. And basically, the question that was there for me was, I would like to make more money in this game, what’s the easiest way to do it. And so I just started going on Google looking up things instead of like, eventually, that turned into like, your little systems myself to track prices and make decisions based on that sort of stuff. I don’t think looking back on it. I think now having spent a lot of time in professional software engineering, I didn’t think I was doing anything magic. But I think it definitely spoke to like just how much people care about these economies, even for like a really young age willing to put you’re putting your time into it, you’re putting your energy into it, you’re putting like your thought into it, you’re really trying to build the best type of things that you can build. And I think that’s what like, you know, there was so much depth to that game and economy. And obviously, I think that, you know, having that experience when you’re so young definitely sticks with you about the power of the game I’m trading.
Matt Zahab
You got to give yourself some credit. You were nine years old man. Like that’s how did you even learn how to write script that young? Did you ever like were one of your parents devs or software engineers? Were you just a big guy?
Alex Connolly
I think a very funny part of the fun part of this story is that both my parents are very both sort of like humanities PhDs, like very like math, computer science, coding is not at all their thing like no connection to it. Like, again, really it was super organic. It was I had a very real problem that needed to be solved, which was like, how am I going to be able to like, try and make more money on the Grand Exchange. And that led to Googling RuneScape API. It’s what other people have done in the space previously. I don’t think I really had this magic. Like, you know, I knew exactly what was going on at the time, but I could see what other people had done. I could work out how the functions are working. I could change things, just where there’s a will there’s a way and I think even you talked about there being a certain age or anything like that. You’re ultimately if you really want to make these things happen, I think I’m sure you’d see if you’d go look at the Roblox economy today. You’d see a ton of nine year olds trying to build games or trying to like make money those kind of it’s like it’s just when there’s like that really strong connection and motivate to a particular problem. And you can get away with it doesn’t have to be perfect system design, it can be a bit hacky, yet it can just sort of like, not work. And you know, the amazing thing about being nine is you have a lot of free time. And so you can sort of struggle through it until things work out.
Matt Zahab
Grind that school, come home and build a RuneScape Grand Exchange just crazy. Well, how nice was your setup in RuneScape? You must have had a pretty nasty setup.
Alex Connolly
Yeah, no, I think I was pleased that I got to, I think, definitely, where I got to after a few years, I sort of stopped playing after a while. But I think I played some more like games that were a little bit less grindy. And then maybe when I was about 14, or 15, we had a bit of a resurgence in high school. And I was like, Well, guys, like I’ve been here before. And so we’re able to relive some of the glory days a little bit. But I think I was definitely I’ll say we’re talking a little bit later about the STEAM Ecosystem. I was definitely sort of like financially more invested in that ecosystem for sure.
Matt Zahab
What a crazy story. And then you graduate high school as the equal highest ranked student in Australia. That’s quite an honor. Congrats on that. And you take a very admirable degree, a combined degree in Computer Science and Law and decide to drop out.
Alex Connolly
Yeah.
Matt Zahab
Clearly it was the right choice in the long run. But like, I’m sure your parents were, you know, up your derriere about it. I’m sure your whole network and support system was like, Is this the right choice? Walk me through that whole scenario?
Alex Connolly
Yeah, I mean, the first thing is I didn’t, you got to control the messaging here. So at the time, I didn’t say it was I was fully dropping out of uni. It was I was deferring uni for a semester to go and work on this, I could always come back and do it. And I think that’s an awesome thing, which is, there are so many opportunities out there, particularly in Computer Science, where you’re able to like a you can get jobs without degrees, but you can just build things in public. And if people liked them, they’ll use them. Or if you know, people will see the body of work that you’ve done. And that matters, as well as obviously a formal education.
Matt Zahab
So you were always interested in gaming models, gaming economies, Peer-To-Peer economies, I feel like RuneScape and just sort of gaming as a whole must have kick started that whole love for you. Like what was there another sort of aha moment? Or did that just this just seemed like play from day one.
Alex Connolly
I think RuneScape have definitely kick started that for me. But I think where it really became like, a more of a direct obsession was definitely in the days of sort of STEAM item trading for me, right. So I got very into games like Team Fortress, Counter Strike, I played at a fairly like competitive level for Team Fortress here in Australia. And what that sort of produced was a recognition that these economies could be worth a lot of money. And there were millions of dollars changing hairs. People were having like huge economic decisions. You mentioned in the bio tablets already got. But that’s a good story that, like I was very dedicated to, like trying to make the T2 economy in particular work better, whether that was like pricing suggestions for rare items, that sort of a period of like, great change in the economy. It was just so interesting all the time, there was like all these things happening. And yeah, I was playing the game a lot. So that gives you like this sort of like connection to it. And hey, you’ll eventually trade up to a particular item, and you can wear it and that’s cool. But actually, the original point where I wasn’t doing as much trading as I had any more, I was just really interested in like, either building tools or like contributing to things or like writing big long, sort of like nerdy blog posts on, you know, the way that the economy was going and what things I thought the DAO should change, like, those types of things. And I think it just always struck me, like growing up through that context of like tradable items and video games, gives you a background to really sort of like say the importance of this to people’s lives like there’s never a doubt for me. Yeah.
Matt Zahab
No, that’s it’s so true. Do you mind I’ll take a stab at as well. But just in case any listeners aren’t familiar with STEAM is what the largest game marketplace on desktop.
Alex Connolly
Yeah, so STEAM is basically the exactly as you put it, like the biggest sort of like game desktop, it’s sort of like a developer platform. So it’s got a bunch of features for game developers, but also sort of an aggregator distribution model where people will publish their games into the store, they’ll sort of manage sales for you. And they’ve built a bunch of tools for developers, which include things like there’s a marketplace where you can sort of take and trade your assets with each other. The marketplace has got some challenges. So the first is STEAM takes a 15% cut on all the trades, which makes it very hard to sort of like find profitable trading strategies. But the second is the like when you’re selling, you’re not selling for real money, right, you’re selling for STEAM dollars. So you can only go and you can spend that on games are reinvested in but you don’t get real money. There are all sort of other restrictions doesn’t support a lot of types of trading. There are lots of like, more complex or complete things that aren’t available to you like, but even then, I think like a really classic one is there used to be all these websites where you could trade items from your money, but the way that it worked was basically you had a sort of a middleman that would sit in between, you’d pay the middleman $10,000 or something. You’d send your item to the other item to the middleman. And they would make the switch right because you couldn’t do real item for money in one Atomic Transaction. So you had to sort of rely on someone in the middle and obviously, this system had some problems. But we sort of set up a reputation system where you could like, if someone didn’t scam you, as a middleman, you’d like give their reputation and like, they would use that, like maybe you pay this cost the fee and people didn’t want to risk their reputation. But eventually, the amount of money would get too much or like someone would run off and there’d be a big scandal like, we sort of built his whole economy built on like, I would say, fairly shaky ground. But obviously take advantage of STEAMs massive distribution, the fact that all these games were so popular I’d had existing player bases meant that it really was the ecosystem where the most islands were being traded even then.
Matt Zahab
Does STEAM have any Web3 games at the moment?
Alex Connolly
No, STEAM doesn’t have any Web3 games, I think there are a couple of games, which you can publish, which like do have a version that’s available through STEAM, but STEAM actually in general have been sort of like fairly anti NFT. Generally like that they looked at that as like a partly competitive to that marketplace top product, and be just like something that they can be. You know, they have essentially a monopoly on desktop gaming distribution. Obviously, the Epic Game Store has been stepping in there, they’ve been a bit more friendly to NFTs because they’re looking for distribution. And they’re looking to be a challenger to STEAM. But so far, STEAM been relatively reticent to roll out to like see substantial support for Web3 games.
Matt Zahab
Do you feel like STEAM is one of those brands that a lot of boomers wouldn’t even be cognizant of, but it’s what a multibillion dollar company and so front of mind, and important and powerful to the to the younger generations.
Alex Connolly
Yeah, I think they have, like some absolutely crazy stats, both in terms of like the size and the growth of, the business but also like, in terms of how sticky those users are. I think they’re like monthly active users to daily active users. Like, it’s like 50%, like, so half of the people who use it every month, use it every day, right? So like crazy numbers about how like, people love gaming, right? And STEAM has done positioned themselves super well to like, lead and dominate that market on desktop.
Matt Zahab
Especially with the prominence of streaming and like it’s pretty darn difficult to stream anything mobile. So you got these younger kids, and these kids are making so much bloody money. It’s absolutely crazy. I just wonder like, Oh, I wish I was not, you know, of course everyone wishes they’d be younger, because then you know, live more life, but 15 years younger man and the you could put me in front of a TV with not a care in the world. And no, you know, no job, no need to put food on the table or do anything like that and just be cranking out content all day. These young kids, they literally just chat. Which STEAM games should I play today? Fire up a game and boom, it’s off. It’s crazy. That leads us into Web3, I’m going to put you on the spot on your hot take. Are there any Web3 games that are like ready employees to be a very like, widescale, streamable game? Do you have any on your radar at the moment?
Alex Connolly
Good question. I mean, I think some of the Web3 games like what where we really are with Web3 games is almost like we have there. There’s a big wave of what I called sort of, like, almost Web3 mini games, right? So things that you could play on browser, like you could buy the assets but really, the game itself wasn’t very fun. And so fairly like core reason for that which is building fun stream-able games takes a long time and a lot of money, right? Like if you actually want to see strong games come to market and the three ones that I’m excited about for sure. I think we can go and play Gods Unchained which is the game that we make you’re an Immutable today you have a stream that with these followings I think I’m really excited for Illuvium launch which should be sometime in quarter one, we’ll see exactly where that happens. You know, ask your enemy live in community don’t ask me but I think that I’ve we’ve played that particularly the one about LA like there’s just really cool stuff going on there. I think that will start to be like crossing the threshold of streamability but also the threshold of like, is this actually a game that is going to like attract a mainstream player base who are playing not because of like, there’s a crazy strong financial incentive but because hey, we like the game and the trading is a benefit on top of that. I think there are other strong Web3 games that they’re more in the mobile genre, like Guild of Guardians etc. I think those are ones where you probably won’t see as much streaming activity but I’m very excited about them as well.
Matt Zahab
Web3 is a whole is obviously it’s been a you know quite the year it’s been an absolute shit show to say the least. But I’ve seen a lot of really interesting takes regarding the transition and sort of the timeline of Free-To-Play back in you know 2005 to 2010 and comparing that to I’m not gonna say Play-To-Earn because I think Play-To-Earn is dead and now it’s just Web3 gaming right, the Gen pop has realized that playing a game for financial incentives is just counterintuitive. The whole point of playing a game is to have fun, shoot the show with your friends, create memories, it’s not to make money and Web3 finally figured that out but Free-To-Play was literally it was fully dismissed and it was just a fad by the Gen pop from like 2005 to 2010 and now almost every big game with the exception of your like Call of Duty and FIFA and whatnot, it’s all Free-To-Play like your Fortnite, even your Warzone, right it’s just that’s the name of the game now especially with all the mobile games. Do you think Web3 game is going the same sort of transition and timeline? You think in a couple of years? We’ll just be like, Wow, we should have seen this coming.
Alex Connolly
Yeah, I mean, that’s definitely something we look at as a success metric, like here in Immutable. We don’t think that every single game needs to be a Web3 game. But we think when people like really have in their minds, hey, there’s two different ways that I can own this item. Right. You know, I can in minutes. It’s a centralized thing in a database, and I can’t do anything with it, or I can decide, but I can sell that I’ll try that and like, that impacts my purchasing decision, like how much I’m willing to pay for that, right? How like, what my attitude to the game is like getting to the point where people would just have that internalized model as like, oh, this game is different from other games. So these items in this game are different from items and other games. That will be a very powerful point. But I think pointing at prior examples, I mean, it’s not just Free-To-Play gaming, like I think we’ve seen the same thing happened like four times with mobile gaming, right, which is initially dismissed as like gimmicky games that weren’t very fun. And like, desktop gaming would always be better graphics wise, and things like that. Now, it drives the majority of revenue to the industry, things like social games, right? So like, some of the like, all like hyper casual, like I sort of, and that’s not to say, hey, just because people dismiss it, therefore, it’s going to be successful. I think there are lots of things that haven’t made it successful. What I will say, though, is I think that people who are too dismissive of areas of innovation, like this, I think, are not looking at the history of the gaming industry, where we have areas where there’s like, substantial new potential value for players. And it’s essential new opportunities for game design, innovation, monetization design innovation, like, what we want to do is put the tools in the hands of, you know, like, we don’t think that you know, us in Immutable, wherever you’re going to design, the one and only perfect game, the one and only perfect economy, we want to put better tools in the hands of the people who make great games, the best game designers in the world, new tools equals new ways for people to have fun, equals new ways for people to realize the value of their assets. I think that’s going to create that same type of movement, where for a while, you know, the games are small and gimmicky. And everyone’s like, this isn’t gonna work. And then the games get better. Now, suddenly, it’s not a gimmick, but like, wow, that actually is quite powerful for users.
Matt Zahab
This is fun.
Alex Connolly
And I think, for me, coming from that background of like seeing people trade items, and video games, seeing all the problems, they’re like seeing the challenges of being an even with all those problems, seeing how much depth and engagement they added to those games. Now doing that, when it’s like the trading can be 10x better, and more powerful, those economies can be better data built or designed. Yeah, that’s a really powerful story, I think we just have to wait for that to be the tooling necessary to make those games successful. And the game designers and game teams who actually leverage those tools in such a way as to create like, long term sustainable successful games, rather than things that are sort of like a flash in the pan.
Matt Zahab
That’s literally exactly what you guys are doing at Immutable, you guys are building the tech stack for incredible game studios, developers, creators, makers, so on and so forth, that just come in work, they work their magic and build beautiful games. And it’s crazy seeing you guys, the run you’ve been on is just incredible. Congrats. But well, you know, it’s maybe a little too early to say congrats. But literally, it’s insane. And when you think of brand recognition, and just like, what Web3 brands have a very solid track record, and just really do good. Like, you guys are pretty close to the top of the food chain. Like you know what I mean? When you think of Immutable, you’re like, these guys don’t fuck around. They ship incredible software for game developers. And are just a net positive for Web3 as a whole? Like, that must be a pretty good feeling.
Alex Connolly
Yeah, I mean, definitely appreciate it. I think always, we’re eternally always really critical of ourselves thinking about what can we be doing better to make life better with Web3 games? Like? I think, like, we definitely are, yeah, maybe I won’t express it in terms of like pride for what we’ve done so far. But like, we really feel the responsibility of like, we think there are we have such a great experience in both building Web3 games and building the platform for Web3 games, that if we’re able to execute on that mission, we’re going to be able to set up an entire industry for success. And also we can be people who like actually take a Web3 games, and put them in people’s hands, our big thesis around like, Hey, why do some people like Web3 game, some people are very anti them. Everyone’s got opinions on theoretical concepts, when you actually give someone a game that they want to play and say, Okay, now you bought that skin in Fortnite now you can sell it previously, you couldn’t sell it at all. Now you can sell it for $5. Right? Put that in someone’s hands, and suddenly they get it and I think are sort of providing infrastructure to do that. And just honestly being there being consistent, go having like a strong sustainable business, making sure that we like have integrity around the way that we deal with our partners and our customers. That’s been a really like long term successful strategy for us. So we hope it’s going to be the way that we always operate.
Matt Zahab
Love that, Alex we’re gonna take a quick break. And when we get back we are going to talk about your crazy partnerships with a couple of big names GameStop, TikTok ever heard of them. But until then, gotta give a huge shout out to PrimeXBT our sponsor to the show. I’ve been using PrimeXBT for a hot minute and absolutely love it as they offer a robust trading system for both beginners and professional traders. It doesn’t matter if you’re a rookie or a vet you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT is also running an exclusive promo for listeners of the Cryptonews Podcast. You get 50% of your deposit credited to your trading account by using the promo code CRYPTONEWS50, that’s CRYPTONEWS50, all one word, to receive 50% of your deposit credited to your trading account. Now back to the show with Alex. You guys have been on just a partnership rampage over the last year like absolute banana lands just big name after big name after big name. More big names. Couple that standout are GameStop and TikTok these are behemoth Web2 companies that were talking about. I’m sure you sat and you’re the co-founder, the company or the current CTO, what did those boardroom meetings sound like, look like, feel like? Must have, you know had a couple of butterflies getting in a room with the big dogs from companies like GameStop and TikTok, like why it makes sense. But why are they so interested in you guys? Why are you interested in them? Tell me more about these partnerships and how they came to fruition.
Alex Connolly
But also, what I’ll say about these partnerships is I think what these partnerships are driven forward by you talked about being in the boardroom together like one thing that we’ve been really excited by is our sort of internal timeline that we had their heads for, like, hey, when will big mainstream businesses or like AAA game studios, we’ve probably talked to all of them, you know, what’s their timeline for coming in here. And we sort of had that pushed out by even a couple of years from now. And obviously, like the boom in NFTs over the course of 2021 and 2022 to definitely accelerated lots of those timelines, which was awesome for us. We were just scrambling to react in many cases, just to at the growth of the industry and how fast these partnerships were coming on board. I think what we were excited about across the board was that these companies were genuinely interested in building cool things and metrics, these companies move at different speeds, that they’re not a start up. But they’re not going to sort of like immediately go and pivot the entire business to focus on it, right. They’ve got existing customer bases, very strong revenue propositions, huge internal teams. But right at the highest levels of both businesses, we actually talking there about TikTok and GameStop, there was strong appetite for what we could do it in Web3, and how Web3 can solve challenges for those businesses that’s really meaningful. What we’ve done with GameStop, we’ve built a, an MC Marketplace together, you can go and check that out @gamestop.com. And that’s going to be a continuing big stream of business for them, where they are able to basically monetize the audience that they have, but also the amazing access to content that they have, IP Partnerships like finding ways to connect to that audience, and also just offering a place to try game modes. So they’re super excited about all the stuff that’s both live at the moment and what’s coming up. And I think definitely, I really recommend checking out what that business is doing. Obviously, the Tiktok side, things have been like really interesting. We did a collaboration with a bunch of their top creators back in late 2021, where we basically sort of ran auctions for someone or whatever it is, you also did a bunch of like higher mid volume, NFTs. And we were talking with them ever since about basically like, what are the ways where NFTs can add strong value at big scale to that product? Are there opportunities for NFTs to be more integrated, I think what we have seen is that sort of a lot of people have dipped their toes into the water and done initial collection, sort of like early things to get a feel for the space. I think when we have when things come around for the second time, what we’re really going to be seeing is more like now these businesses understand NFTs substantially more than I think they did at the time of like the sort of like Pig Mania, like what they’re really going to look to do next time. It’s like, how can we do a widespread, sustainable, integration of entities into these products, like we’re seeing with things like Instagram at the moment or things like Reddit, like these types of long-term sustainable integrations that are going to form part of their like, ongoing business model? That’s super exciting for us, of course.
Matt Zahab
On the tech side, which I’m so interested in on the tech side of ImmutableX like a CTO, walk me through sort of the day to day with your team, and I know you can’t give me the whole secret sauce but like, do you guys work on sprints? How long are they you know, what KPIs do you guys have? How often are you shipping? How do you prioritize what to ship like I know, you got a massive team under you. How do you ship so much gold? Like this can’t be easy.
Alex Connolly
Yeah, I mean, I definitely say we want to be shipping more we want to go always faster and ship better things I’ll say. I think one thing that people will sometimes expect some of surprises people is that actually a lot of our engineering processes and culture look fairly similar to like a standard software scallop. You know, like, for a lot of these friends throughout. We have sort of like Ladyship Design Product Engineering trying out on our teams. We have like your midterm roadmaps and visions, like a lot of that stuff is really familiar. But we have to sort of balance as Immutable as a really interesting balance, we have to balance like Web3 innovation, and a lot of like really core in the technical details, like strong work with like, making sure our customers have access to the latest roll up technology and things like that. With a lot of, hey, we also need to be able to develop to deliver a developer platform at scale due. If you’re delivering things to games, like any one game, if we go if it goes on become successful, instantly millions of customers and making sure that you have products that are going to be scalable, reliable, well-educated by developers but there’s a lot of like, sort of, we see ourselves bridging the gap between sort of Web3 and Web2 infrastructure, there’s a lot of engineering work that we do that actually is more traditional, because if all you ever do is ship things that are on the Web3 innovation side, you won’t have effectively solve the actual problem that many of our customers have. And for us, that’s like, Hey, how can we help these game studios build great Web3 games, a lot of these people don’t have deep Web3 experience, they have to sort of like come along that journey, they have to have things abstracted for them to have the right problems. But at the same time, that doesn’t mean diluting all the things that won’t make Web3 great, including things like self custody, like we have to be capable of sort of like bringing these benefits into this context. And we spend a lot of our engineering time figuring out the right balance of, hey, here’s cutting edge innovation. And here’s delivery mechanisms that are going to like scale, the reliable actually deliver customer value, we have to go out put a lot of time to things like product management, where it comes to like, one challenge for us, because there are so many things that you could do in the NFT ecosystem, right? There’s so many things you can even do in the gaming, we have to be like really ruthless with our prioritization to make sure we’re solving the actual most important problems for our customers. And that’s honestly something we get wrong all the time. If you’re one of our customers, listen to this, I hope, like keep us feedback. And we’ll make sure we dial it in and future like, this is a really interesting, innovative space. And I spend as much of my time on product as I don’t take for sure.
Matt Zahab
Of all the pieces of software that you guys have shipped. What’s been the most difficult feel like the marketplace has to be up there.
Alex Connolly
Yeah, definitely marketplace, I think probably like this, there’s some really cool stuff that we have, which I think is somewhat differentiating for us, like obviously, sort of like the takeoff engine, but also things like you’re supporting a Global Order Book, The Global Exchange backend. So we do a lot of things where it’s basically like if your marketplace wants to integrate with us, we can make it easier to build many NFT marketplaces, people like GameStop. Like have you announced NIFTY Gateway today, like wearable people, I’d say, like, offer a software to them, that’s going to work perfectly at scale, where you’re dealing with people’s money. And, you know, Oh, I saw this item on this marketplace. And this might someone else bought it off that marketplace at the same time. Lots of fun, interesting challenges there. Obviously, combining that with you know, we’ve worked with stock were one of the best in from the space on the scaling side, to make sure that the roll up tech that backs that is efficient performance, resilient to things going wrong. All those types of things, to really fun technical challenges for sure.
Matt Zahab
Do you have any, do you have a non-obvious answer for me to the million-dollar question, which is like how can we onboard? You know, the next million or I believe your guy score was 3.5 billion, which is sort of the current total gamers in the world right now. But do you have any non-obvious answers to the question besides the classic like, you know, build beautiful Web3 games that look and feel like Web2 games? Don’t scam, you know, blah, blah, blah, all that kind of stuff?
Alex Connolly
Yeah. Well, maybe for answering this is like, I think I can talk specifically about the Delta. Like what’s stopping people building really good Web3 games, like there are a few things. I think wallets and payments can sort of combined are a big problem. Like that onboarding experience. That is an ongoing challenge for most people. And I think a lot of the tradeoffs that people like solving that we’re like, okay, but no, then we just sort of like, each game is gonna essentially, like they’re gonna run their own back end, which stores all these awards for that game, but those ones aren’t gonna be portable to any other game. Like, some of the solutions that people in Web3 think are like, Oh, that’s a really easy solution. We just plug and play this, like a, there’s lots of benefits you lose by doing that. But also, there are lots of like actual UX challenges that when you really map out the whole way to build an ecosystem, are really thorny to solve. I think we’re gonna need good solutions for that sort of like onboarding payments, taking the same wallet to multiple games, right? If you’ve got five or $10 in my Call of Duty account, like the idea that like, Oh, of course, that’s not available in my Fortnite account, like, you know, it doesn’t make any sense to people. And I also think there’s lots of challenges on ramps, we need more, we need better we need lower fees. We need more currency options, like just everything that is there is a it’s really finicky. I think the other thing that we probably need if we’re going to onboard gamers through games, is sustainable game design that actually makes sense to people. I think the sort of like onboarding people we talked about Play-To-Earn earlier, like, our view is like, there is a place for and I was like, Okay, can we play and on the way we said this type of thing is like, the idea of rewarding players with a stake in bootstrapping a game, I think is really valuable. Like the first million users of Facebook provided much more value to Facebook than users, 1 billion to 1 billion to 1 million, right? Like the big bootstrapping of that network effect. So you’d have some people to talk to, is really valuable. Sharing that piece of the pie with the players who make that possible, is a really cool incentive. There are also things where we say like, at the moment, most games companies, the way that they do their like, the way that they do customer acquisition, is by spending a really large amount of money on Facebook ads, I’m not sure. It’s not just Facebook, but like all social ads. Like one thing that people don’t understand about the mobile games industry who don’t work in mobile games is in particular, right? The margins, of course of selling things like IN-GAME currency, or skins, etc, you have a fixed cost to build the game. And then sort of like you have a live ops cost, which is quite variable, or at least a little bit variable, then you have very high margin selling of these IN-GAME items. But these games actually run on relatively thin margins, because what happens is you basically have to pump all of your money into Facebook ads, right? And using it as a proxy, right. And you sort of do that until $1 spent on Facebook ads, if it converts to $1.10. And engagement, indefinitely amazing business, right? If it converts to 99 cents, you’re broke, right? And so finding, people are constantly optimizing these ads, they’re sort of like finding the debt. They like increasing how well the game monetizes for every time they convert a customer, like customer lifetime, like all those types of things. It’s a very optimized industry, very data driven, converting some of that span, which at the moment just ends up in the pockets of large social companies to like, Hey, we’re paying people directly to use these games, there’s probably a lot of fat to be made that right. I think just like straight up handouts to play games is probably not the right way to do it. But some degree of sharing value with people, I think, as a replacement for ads spent customer acquisition cost. Very interesting. I think the sort of like, the second prerequisite is people figuring out the right designs for those economies that are not sort of like quick cash, grab them and were out and not okay, we’re going to like sort of set it up for a very ponzinomics. Like, we need more players all the time, or the economy is going to fall over. Like actually having economies that onboard people who want to play the game, who actually get exposed to Web3 as well. Wasn’t that cool? I just got to sell my asset for money. Right? Not opposed to like, the only reason I’m playing this game is playing on a 20 phones at once. And I’m playing it because this pays more than like my regular job. In a developing world country. That is not I think, a good system that’s going to be sustainable for also, it’s just a tariff, like, I think it’s not very fun. Like it’s just not a sustainable future again,.
Matt Zahab
That was great, a little tangent there. I will definitely be relisting to that one. Another thing that’s crazy, too, is when you build a game, like you’re really just throwing a dart at the board and hoping it hits you know, like you put millions and millions of dollars into a game to hope to create this game economy where people have enough fun. So you’d be profitable. Like that’s another sort aspect where it’s got to be one of the highest risk highest reward industries out there. Like it’s bananas.
Alex Connolly
Yeah, for sure. And this is what we call sort of like things that are like idiosyncratically risky is sort of the way that people describe it, right? Which is, there’s no magic formula for making a hit game. That’s not to say it’s like fully dartboard. I think there are lots of things that are like, Okay, you’re gonna have to check these preconditions, or it’s probably not gonna be very fun. Games, companies invest a lot, they release games in, like, certain markets get testing, and they’ll care of the game, right? Like, if the if the download rate in a test market in Eastern Europe or somewhere is not high enough, like major carriers will forget, right? It’s a very data driven industry, people take it super seriously. And there are ways of knowing otherwise, other than just like, hey, we shipped a game doesn’t work on it. And also, games are relatively capital intensive, depending on the genre. So you want to go out there and build like a AAA shooter or something like that. Now, you can obviously take advantage of some really strong engines, some template games, but it’s gonna cost you a lot of money to do all the art like to create all the mechanics to pay all the programmers to big capital investment. And if you do that, when you don’t know the game’s gonna work, that’s a big challenge. One problem with Web3 games have been like, the interesting at solving is like, hey, it’s an alternative funding mechanism for some of these games. So they can underwrite some of those baselayer costs and sort of stage it out. I think where that’s dangerous for players is, hey, we don’t know if the game is going to be successful. Right? So if the game is sort of like selling IN-GAME items to players relatively early on, or not to be successful, then they’ve lost a lot of money, right? But obviously, if the game is successful, then that can be like the players gonna have items to use in the game. And that’s awesome. I think figuring out the right sort of balance of all those things is definitely something that games are still like, experimenting with and working on. But also at the same time, people get into the games industry. It’s a fundamentally creative industry. I think creative industries are ones where you never see the like, you’re not running a SASS company where it’s okay, we sort of like we can measure. We’re doing database sales, we go like, okay, it’s like writing a novel, or like me really releasing a rap song or something, right? Like, maybe it works, maybe it doesn’t. And if it doesn’t, maybe I’ll try again. And it cost me a lot of time, a lot of effort, a lot of money, potentially, and put it out. But people, like want to give that creative energy of themselves to the world. And I think when you do anything creative, like you go and write a play, maybe everyone hates it, right, but if no one wrote plays, we’d be in like a sad world. Right? So like, I think we just have to encourage creators to like, Yeah, I think you’ve got to be okay with Hey, wait, we made a game and people didn’t like it. Let’s do one of the notes from that. Yeah, let’s see what we did wrong and let’s fix it.
Matt Zahab
Take another kick out the can Oh, Alex we’re on roll here. I want to learn a little bit more about Alex, what gets you going like what do you do? Obviously you work your ass off but what do you do outside of work, like you rugby guy, any soccer or football as our you know, I guess everyone else except North America calls it you golf at all? Like what do you do? What do you do to cool down and just sort of decompress?
Alex Connolly
Yeah, big sports guy. Love us whatsoever. I was actually I was born in New Zealand, though I moved over to Australia young enough that you won’t hear any trace of the accent. But that I think means that rugby is in the blood. I still play. I’ll still like training at the gym, those sorts of things. But just love sport in general, huge F1 fan. Also love football or soccer. American wise, like, we have a lot of sports in Australia rugby league, Australian rules, like it’s just a very sort of big cricket fan. Like, I just love being in that. And I think definitely when you’re working on something, which is like as all-consuming, as a building Assad and be just like being involved in the Web3 economy, like you’re on Twitter, and I’m sure something crazy will happen. By the time I get off this call. Like having that vibe where you can like fully decompress is really important. But also things you can do. Like you know, like love reading, love writing, love, like science fiction, philosophy, religion, like those types of subjects like super interesting and exciting for me. I think you’ve got to have things that you can like fully throw yourself into outside of work or will be like in this industry like a real challenge.
Matt Zahab
So true. You’re from New Zealand. Wow, that’s on my bucket list, man. And you guys got some of the best golfs in the whole planet. Like it literally looks like you’re golfing in on like another planet. You ever golf in New Zealand?
Alex Connolly
I’ve never gone through this. I have golf quite a bit in Australia, including up on Hamilton Island. Hamilton Island has a great course. But definitely the South Island of New Zealand, just in general like nobody. I wasn’t one of them. But I will say the South Island of New Zealand is like whether you’re golfing or not. It’s amazing, but also just in general, get the go down and rent a car like drive around and go to Queenstown. Like over to buffets out like there’s so many amazing things to do on the South Island. Strongly recommend.
Matt Zahab
Love that man Alex What a treat really, appreciate you coming on. We got one more segment and then we’ll wrap it up, it’s called the hot take factory, you and I both jump in we put our shit kickin’ boots on, right up to the knees, maybe all the way up to the size your rugby player you probably got you know you probably got tree trunk legs so you’re gonna have to get some extra large ones there but give me a couple Alex Connolly hot takes only shit that you believe in that no one else does. Doesn’t have to be crypto related can be anything in life health, wealth, happiness, politics, sports, nutrition, food, space, you name it, give me a couple Alex hot takes to finish the show off.
Alex Connolly
A couple of hot takes who just got? I think one thing that I’ll definitely say is that too much crypto Twitter is actually not a good thing. Right? I think people spend a lot of time focusing on things that are like interesting. There are a lot of things that do not matter. And spending time like actually building and making things is usually much more important.
Matt Zahab
Always more important. Sorry, keep going.
Alex Connolly
General, like I would encourage everyone to have more intentionality, right, like actually deciding, hey, what do I want to do? You can do basically anything, right? But you can’t do all things and you also can’t do anything, if you’re not willing to actually try like, Okay, I’m really gonna put all of myself into this, figuring out what the right thing is important. Also, just picking something and getting started is also really important. I think most people sort of like, let life happen to them a little bit too much. I think there’s obviously you know, I think there are the lots of challenges that will face that make that more challenging, but even a little bit more of that will just make it like a massive difference in terms of like, actually being able to enjoy life a little bit more. So I strongly recommend that as well.
Matt Zahab
I love that. What a great way to finish. That’s so true, too. I have a I also do a bit of reading and writing myself. And one of the things I always write down is offense over defense, you know, and you’re an ice age I’m 27 I assume you’re similar age to myself. We gotta be playing offense, man, you know, maybe not you because you know you grew Immutable but unless you set for life you got to be playing oh man, you got to be making shit happen. You can’t sit back and wait life and wait for life come to you. And another good analogy just to build on your point to shout out my old hockey coach Phil Wolfenden. Back when he’d always tell this to all of our defenseman in hockey, there’s a play where like the demon defenseman pinches down to high risk high reward play. And the worst thing you can do is start your pension then you know stop and then backpedal start skating backwards and he would always go boys he can’t be half pregnant because like you’re gonna do some don’t have fastball and you can’t be half pregnant so those two things always stuck with me but Alex you brought the noise man really appreciate this had a blast forever out in your neck of the woods I would love to meet you in person have a pint or dozen but until the next time please let our listeners know where they can find you and Immutable online and on socials.
Alex Connolly
I mean, immutable.com, @Immutable in Twitter, I’m @0xConnolly, spelled as it will be in the description on Twitter.
Matt Zahab
Alex, thanks for calling them a lot of fun, really appreciate it. Last thing what’s on the whiteboard behind you any gold there? Should I be zooming in and snagging?
Alex Connolly
I did scan the whiteboard before we started to make sure there was nothing too big to say like we’re always working to make your SDK is better. And I think there’s some design stuff going on for the next version. So nothing that is too kind of confidential for those trying to get to alpha.
Matt Zahab
Love it. Folks, what an episode with Alex Connolly, CTO, and co-founder of Immutable, these guys are building the tech stack for Web3 gaming, if you’re a developer, creator gamer or anything of the life you go check them out. These guys are really moving and grooving. Alex brought the noise we really appreciate him for coming on, to the listeners thank you so much guys appreciate you, to the team, love you guys, thank you, could not be doing this without you, and back to the listeners, keep on growing those bags and keep on staying healthy, wealthy and tuck. Bye for now. We’ll talk soon.
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