FYI - For Your Innovation: Exploring Virtual Worlds with Yonatan Raz-Fridman from Supersocial

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Hello everyone and welcome to another episode of FYI. I'm Nicholas Gruz,

Associate Portfolio Manager at Arc, and today I'm joined by two very special guests. Joining us are

Angie Dalton, an advisor and theme developer for Arc, as well as the CEO and founder of Sygnum

Growth Capital. Additionally, we have Jan Ros Friedman, founder and CEO of SuperSocial,

the leading development, publishing, and technology company focused on next-generation

gaming platforms. Jan, why don't we kick it over to you and if you could give us a bit more about

your background, that would be great. Thanks for inviting me. I'm an entrepreneur,

first and foremost. I'm a company builder and a repeat founder. Some of the companies I started

before SuperSocial have been Kano, a computer company, Sosu, a robotics company, Kodo, an

interactive VR company, and all of those really set me on a journey over the past 10 years of

seeing the evolution of gaming and virtual world, especially with younger demographics and how it

really becomes next-generation social experiences on the internet. Ultimately, that proposed me to

start SuperSocial in June 2020 at the beginning of COVID. What a better thing to do at the beginning

of COVID than start a new company, fully remote. As you correctly described SuperSocial as

the leading development, production, and technology company that really focuses on

the next generation of the internet. A big part of that is gaming, but really it's about

virtual world that are becoming the next frontier of where people of all ages will be spending their

time, we believe, in the coming decades. That's what we started the company for, to really build a

power hat that helps bring billions of people into this new frontier in the next 10 to 20 years.

So, I have a follow-up question on SuperSocial itself, because when we first met, there was

kind of this mix-up. I kept describing it as a gaming studio, and you politely corrected me and

said, no, we're much more than that. So, can you just describe how SuperSocial is different from

a traditional gaming studio that many of these listeners are familiar with?

And it connects directly to what I've described a couple of minutes ago, which is if you look at

what happened over the past 10, 15 years, gaming has been, continued to be a key content ecosystem

that people started to build more games in multiple different places and devices, right?

There's still like web games, PC games, mobile games, of course, console games. All of those

categories continue to evolve alongside the devices that have evolved, the next generation

consoles, et cetera, et cetera. And we believe that mobile gaming, per se, PC gaming, console

gaming will continue to grow as a category of quote-unquote video games. But what we've seen

over the past 10 years, which again is why it played such a key role for us in starting SuperSocial,

was that virtual worlds in 3D is really gradually becoming the next evolution of the consumer

internet. If you think about websites initially, and then we had mobile game, mobile applications

powered by powerful clouds, we that what happened between 2010 and 20, the emergence of Minecraft,

the emergence of Roblox, the evolution of Fortnite into Fortnite creative, we believe that all of

those things were a precursor to what is going to happen in between 2020 and 2030 and beyond,

which is really the evolution of virtual worlds in 3D, in becoming social spaces, places that

connect gaming and socialization and human expression through 3D avatars and commerce.

You know, we believe that we live in a world where people will care and already some do about their

virtual identity as much as they do about their physical identity. And so if we think about all

of those things coming together, SuperSocial was born to address that virtual worlds are going to

be so much more than a platform for kids to play or a place for gamers to connect and play. It's

going to become a place where we do so many other things like socializing, expressing ourselves,

playing games together. So while gaming will continue in our mind be an important key piece of

quote unquote, this new frontier, we believe that there are going to be so many more categories

that are beyond gaming that are still powered by the sense of presence in these places, the immersion,

the connection, express self as an avatar. And so SuperSocial is really focused on building

the most iconic, most edge virtual worlds that power that socialization of a new age,

that human expression, that immersion and sense of presence. And we believe that these new generation

of video games, so to speak, are going to be so much more than games. And so what we're excited

about is really redefining what a video game is and evolving it from what it is today, which will

continue on its track, but showing that gamified virtual worlds are going to be places where people

will spend a considerable amount of time. And I think that's what we set out to do, building that

future, which at the moment is kind of a bit wacky to to see clearly. So you're really capitalizing

on kind of the newest trends within gaming, which is taking gaming from just as you mentioned, kind

of just gameplay and moving it more into this space of the metaverse virtual world socialization,

which I think is really fascinating. So I'm curious, what platforms are you working with

today? And, you know, what is your outlook for kind of this space going forward? Where is all

of this headed? You're in the weeds, you're building on a number of different platforms

are going to be intent. And so I'm just, you know, really curious about kind of your take

in how you see this all evolving. Gaming at the moment, or playing games online is still a big

part of when we think about virtual world is still very much a large part of that. But I think

what's really being redefined is that video games always sounded like something kids do

in their leisure time, or people who are, I don't know, older, but are still like quote unquote

gamers. And I think what's happening now is that we are helping to redefine who is the audience

of these video games. I know there are several billions, several billion people that are playing

video games. I think what people are going to start doing in those type of virtual worlds

is going to be not just about play, they're still going to be played or even better say fun involved.

But really crafting a virtual world that people want to spend time, socialize, have fun, play

some games, express themselves, immerse themselves in new type of content with new type of brands,

and new type of IP and doing it together as friends. I think that's really where we see

the biggest evolution. And also from our experience building on the platform like Roblox,

which I'm now answering a bit of your second question of where super social operates today,

we started on the Roblox platform when we started the company. And we said, look,

this evolution of virtual world and the emergence of quote unquote metaverse

is going to take time. It's not something that is happening tomorrow, which is why I'm finding it

really entertaining that at the beginning of 2023, so many big media outlets were like,

the metaverse is dead. Now what? I'm like, well, the metaverse cannot be dead. It didn't even arrive

yet. Right. So, and that's kind of part of that fighting against the momentum, the trends, like

people need the hype. We started super social June 2020. Roblox was a privately, privately held

company with a valuation of $4 billion with about 22 million daily active users. And look what

happened since then. They almost tripled their user base. It's now at around 67 million daily

active users. But the reason we started on the Roblox platform was because we believed Roblox

was an era defining platform. It has a game engine, a publishing platform, a social network,

a thriving economy, cloud services. So really suddenly anyone at any age, a small developer

in a house in Wyoming to a large venture back studio like super social can suddenly come and

build experiences that are built rapidly for a large audience with a thriving economy. And we

can monetize everything we did that one ecosystem. So almost like a prototype of what a metaverse

could be, even though it's very focused on under 25 year olds. And so that was a primary reason why

we started on the Roblox platform because we believed and still do that it was an era defining

platform that there was that was second to none in what it offers. And also the ability to really

prove our main use case, which is 3d virtual world as the next kind of modality of human

interaction and human experience on the internet. And so this is where we've been focusing 100%

of our time talent effort and capital now almost for the last three years since we started the

company. And we believe Roblox will continue to grow and we can see that gradual progression with

all of their key KPIs. Alongside that, we obviously see other platforms, first and foremost,

Fortnite Creative, that over the last three to four years, Epic Games continuously developed

the integration of Unreal Engine editor into Fortnite Creative. Now it's named UEFN, which

essentially the purpose of that in our interpretation is to evolve Fortnite Creative into a place where

it can become more of a marketplace and more of a platform versus just building small, simple

islands slash maps that are still very much associated with the battle royale genre of

Fortnite that attracts, you know, 20, 25 million daily active users, mostly male, mostly 18 to

25 year olds. We believe that UEFN provides an opportunity for companies like Super Social to,

you know, expand beyond that audience and really show that we can use Unreal Engine editor on places

like Fortnite to really build next generation games and experiences. And our DNA has always

been as a company. I mean, always, three years old, but from day one, our DNA has been a couple of

things, pushing the boundaries of what's possible. And I think we've done it on the Roblox platform

and are still doing it. I'm so excited about the stuff we're launching this year with some of the

greatest brands in the world. But last year, Nars ColorQuest with Nars Cosmetics, a prestige beauty

brand that most people on the Roblox platform never heard about. I don't know how many teenagers

buy Nars Cosmetics, but not many probably. So we took that brand and together with the brands,

we built something that within three months became the number one branded beauty experience on the

Roblox platform and a top five general brand world ever built on the Roblox platform from a rating

and visitation perspective. And the reason it happened is because that's key to the long term

vision of Super Social, which is we took a brand, we're broken, we're broken it down to its essence,

and we built a game world around it that resonates with the community, which led me to the other

piece. If the first piece is pushing the boundaries of what's possible, building for the Roblox of

tomorrow, not for the Roblox of yesterday. The second thing is really making sure that we're

building for the community, for the users that are there, for the users that are staying and showing

that what they played with could really be elevated to new heights that no one thought was possible.

And then the third piece is bringing the people from within these platforms to work with us, to

join Super Social, what I think of as the next creative generation, the people that are really

going to push the boundaries, the rebels. So if I think about Roblox and Fortnite creative and

platforms, what is really exciting is it's about arming rebels that are going to build next generation

experiences that will be an evolution of the gaming industry, but in my mind, in a whole new way.

It's so exciting to hear you talk about this, Shawn. You and I got to hang out together at

GDC and get excited about UEFN. And one thing that we talk about a lot is this idea that Roblox

kind of was a defining moment, like you said. And then Unreal Engine on UEFN can really take that

platform to a whole new level because of the technology and the fact that I think they,

Nanite and Lumens specifically is what I think it is, but it has that kind of cinematic quality

of TV and movies, whereas Roblox looks a lot like Roblox no matter where you go.

Not that there's anything wrong with that, but what are some of the things that you're really

envisioning with this new technology of Unreal Engine 5 opening up for brands and for you?

Yeah, I definitely think that Roblox has made amazing strides over the last few years pushing

their engine forward. I mean, we see that with a few games now. We see it with the work we're doing.

Again, super excited about some of the incredible fidelities that we're going to launch this year

on the Roblox platform. Having said that, Unreal Engine is obviously a different level of a stratosphere.

It's a different level, as you said, and I agree with you. It's kind of a cinematic look and feel

that when you play Fortnite or Unreal Engine based games, it's really like you're playing a video

game that is cinematic. And that is really unique to the Unreal Engine, which is why you have TV

shows like Mandalorian built on Unreal Engine to some extent. My perspective is that and what

I get excited about UEFN and what Fortnite Creative is doing is really combining the marketplace and

the ability to build next generation game experiences virtual world for a whole new audience,

but doing it inside a technical environment that can really push the boundaries on that

cinematic effects. And so that's a big part of what I think is really exciting about Fortnite

Creative as they integrate the Unreal Engine. It's really showing like, wow, we can build those

rapidly iterative games like we're building on Roblox where we build things in four, six, seven,

nine months that would probably take us five years on Unity or Unreal Engine. I think what's

really exciting here is that Epic Games essentially for the first time truly democratizing the Unreal

Engine and now making it accessible and available within the Fortnite Creative ecosystem to build

those next generation experiences inspired and powered by something like the Unreal Engine,

but now doing it in a much more, I would say, scalable marketplace environment that really

mimics the type of ecosystem that Roblox have built over the past 15, 17 years. So that's one big

thing. We're really excited. The other thing that I think is interesting about Fortnite Creative,

which I think is a challenge and an opportunity, is if you look today at a lot of the maps and the

islands on Fortnite Creative that people have built without the Unreal Engine, kind of let's call it

Fortnite Creative 1.0, these are all very much still associated with the Battle Royale genre

on Fortnite Creative, either because people use them to build their XP or because this is just

what people are excited about them. And the reason is because majority of the players on Fortnite,

per se, come for the Battle Royale genre. I personally am not a player. I'm a horrible

first person shooter gamer. I'm just terrible at it. Do not invite me to a game on Fortnite.

I'm just so bad. I don't know even where I'm shooting. I actually want to invite you now

because it'll make me look better. Exactly. Please do, please do. So the challenge here

that I think Fortnite Creative and let's say Epic Game in general will have is

there is obviously a clear perception globally that Fortnite is a first person shooter game and

in fact, they've kind of reached a max player base. So yes, sure, they can grow a bit more,

but it's not going to go to 100 million daily active users for first person shooter game.

And so the challenge is that the perception of people of Fortnite is still very much a first

person shooter game. The opportunity is that with the UEFN possibilities or Fortnite Creative 2.0,

one can now build completely new, complex, imaginative games that has nothing to do with

first person shooter. And so that's a big part of what excite me, which is exactly why we came

to Roblox, which was, okay, there's all of these amazing games, Adopt Me, Jailbreak,

kind of classic Roblox successes. We want to build the next stage. We want to build, as I said earlier,

for the Roblox of tomorrow. And so coming into a platform like Fortnite Creative,

this is definitely part of what we're going to care about, you know, should we expand there,

which is building for the Fortnite Creative of tomorrow, not for the Fortnite Creative of

yesterday. And I think there's such an amazing time over the next 12 to 18 months to rebuild those

next generation games and help Epic solidify Fortnite Creative potential marketplace. And again,

it takes time. Building a developer ecosystem like Roblox has built over the last 17 years,

with that level of commitment and obsession, almost like a cult, that's going to take time.

It's really interesting the way you describe Roblox. My daughter is an 11 year old dress store

owner in Roblox. And she would definitely not consider herself a gamer. And yet she spends

most of her free time in Roblox with her friends hanging out, you know, doing stuff like that.

And she would consider people who play Fortnite as gamers. But that whole mentality of just we're

just here for the social aspect and creation and entrepreneurial kind of spirit that we all have,

it's really interesting to see how that will evolve.

You know, I remember in the in the first few months of when Super Social started and we had a

little kind of pre seed round, and I was trying to explain to investors Roblox, because everyone

thought like the best case scenario that people understand that Roblox is not a game for kids,

it's actually a platform of kids making game for kids. The worst case scenario was people think

Roblox is literally a kid. It's an app, it's a game, and it's for kids. So we had to like not

only take people on the journey of explaining the long term vision of where we think the category

is going. But one of the slides I had was, and I thought it's still very much relevant today,

you can think of Roblox as the new internet homepage of a whole new generation. Angie,

I bet when your girl gets the phone from you or you give her your iPad, she goes to Roblox.

So in a way, Roblox is the homepage of this whole new generation. And Nick,

you asked me earlier about the difference not being a gaming studio. This is exactly why.

What's happening now, which is so fundamental, this has nothing to do with gaming or technology.

What we're seeing when people talk about the metaverse and why I'm excited about virtual

world is because it's about human behavior shift. You now have a whole generation that is the first

metaverse native generation that for them, the games is almost like accidentally happening.

It's really about expression, ownership, participation, socialization. They sit on

discord on the phone while playing on the iPad, and it's all happening at the same time. It's

almost like the perfect dream most ideal ever built pretend play. That's kind of the way I

think people who are listening to us today should think about Roblox, about Fortnite creative.

It's not about the game. It's about this is a global scaled virtual manifestation of our

little village, our little neighbor. Yeah, it's fascinating to hear you describe it in that way

because it's similar to someone going on to Google searching and then being taken to a 2D

web page, right? But in Roblox, you have your own search bar. And when you search, it's a 3D

virtual experience. So it's its own internet as you speak. And that I think is really the

correct way to think about this and this trend happening in the space. It's so pivotal. It's

so different from what we've been accustomed to because it's there. You can access it on any device.

It's not device restricted. It's just it's a new form of the internet in its own way.

Do you think that we will need to wait for those kids who were kind of raised on Roblox to evolve?

Or do you think that we will see, you know, mainstream influencers, streamers? I mean,

I, as I think, you know, on the board of face clan, and I'm very close to the esports world,

and I'm thinking about not even gaming oriented influencers and streamers, but just mainstream.

Will they come or will it be the Roblox kids growing up? That's probably like the trillion

dollar question. I can share my perspective. And my perspective is it's probably a combination of

both. I think that the most dynamic evolution is going to come from the younger demographic aging

up, right? And I think we're looking at a whole generation, you know, below age 2022, you know,

anyone who essentially was born in 2000. And the reason 2000, by the way, is because when they were

nine, 10, 12, Minecraft was launched. So Minecraft was really the first precursor, the inflection

point of virtual worlds becoming a place of creativity, socialization, and so on and so

forth. And so I think that generation definitely is going to be, in my mind, as a metaverse

native generation, that's the generation that is pushed the boundaries of the internet as they age up.

And there will be companies like Super Social that are building experiences and worlds

for that audience as they mature and evolve and expect something that is similar to their avatar

expression and interaction when they were playing Minecraft or Roblox when they were eight and 12.

So I think that's definitely, I would say, the more dominant vector of impact. However,

I do think that in a more challenging manner, anyone above age 2025, which is also funnily

enough, the people you need to explain the metaverse to because anyone below 20 lives in

the metaverse already, to some extent, right? You don't need to explain to your 11 year old girl,

Angie, like, oh, you know this metaverse, you can express yourself and you can purchase stuff.

She's like, Mom, what are you talking about? I've been doing it since I'm five.

By that point, she has my thumb on the iPad and she's buying more robots.

Exactly, right? And what's beautiful is they're learning about economy. They're learning about

purchasing and selling. It's like, I don't think people understand the impact that Roblox has on

people's brain. They live in a virtual economy, I mean, literally. So that wasn't available to us

and they're doing it while socializing with their friends and so on and so forth. So,

however, going back to the older demographics, look, because at the moment, virtual worlds are

very much about, I think as technology is evolving, it's very much about still games and playing and

having fun. I think older people, like anyone above 25, like an adult with a job and a responsibility,

I think are just more busy, have less free time. And also, I think it's still probably not as

intuitive to me. I'm almost 40. It's not as intuitive for me to just roam around virtual

world expressing myself as an avatar and going on socializing and having fun. I can do that.

It's easy, but it's still not the same as a 15 does. And so I think what I expect that will

happen, there will be like a, I call it like the Facebook education timeline, right? Facebook was

born 2005. It took like a decade to 15 years until parents started to use it. Now, my mother,

who is 70 plus using Facebook way more than I do, right? So I expect that the younger demographic

are going to be the ones who push virtual world into mainstream. And when it comes to mainstream,

I think the technology and the use cases will become more relevant for the people who are 25,

35 plus. But I think that's the gap of like, I think the next five to 12 years, I would say,

of that happening. Ultimately, I do believe that by the end of this decade, until mid next decade,

so like the, let's say the next 10 to 12 years, within that timeframe, I believe we're going to

reach an inflection point where they're going to be a large part of people in the world who will

care and invest as much in their virtual identities as they do in their physical. And I expect that

there will be some symbiotic relationship between the two. So you mentioned, and this might be

tangential, but you mentioned Minecraft as this kind of pivotal moment. Why is Minecraft not in

kind of the same stratosphere level as Roblox or, you know, now Fortnite? Like, what did they do

wrong? And it's still, you know, an amazing game. They have a ton of users. So it's not a knock to

Minecraft, but they don't have this developer ecosystem in the same way that Roblox does.

And it's, I'm assuming you have an answer here, because you're so entrenched in this space. But

it is kind of confusing. Like, where was the misstep in their journey?

I might be wrong, but I think it's a feature, not a bug. And what I mean by that is I think it's a

intentional strategy from Microsoft to protect and nurture the golden goose that gives them

so much with that audience. And I think if I had to make an assumption, and maybe we should invite,

you know, the Xbox chief to the podcast next time. But if I had to make a guess,

it seems to me just a really core to their strategy of developing franchises. And they've

tried that with Minecraft, Minecraft Earth, Minecraft Dungeons, they really tried, they really

went the route of Minecraft as a game, let's expand it as a franchise and monetize it in new

way like they do with all other franchises that they own, if it's Halo and all the other collection

of IP that they own, versus looking at Minecraft as a platform. And so what they haven't done, and

again, I think that's intentional, they haven't opened up Minecraft, they haven't turned Minecraft

into a platform, they haven't made Minecraft an ecosystem where developers can actually build

businesses and build new content and new worlds, rather than some community modding that you can

have some private servers and so on so forth. And so, you know, to me, it's less and I used to think

that like, oh, they're making all the right choices with Minecraft, like why are they're not going

and building a marketplace as an ecosystem of development. And I think I came to realize that

probably to Xbox's strategy, Minecraft plays a very specific role as a franchise versus building it

as a potential competitor to Roblox and Fortnite. Now, I may well argue, and I would, that under

a different owner, Minecraft would may have well become a platform or a contender. But I think

that's clearly not what I'm seeing with Microsoft over the past decade.

That's really interesting. Yeah, to describe it as a feature, not a bug, when you see kind of the

success of Roblox and Fortnite, but again, not a knock on Microsoft, I don't want to get any

messages. Not at all, not at all. And I think it's interesting because Microsoft historically,

you know, it's one of the companies that build the most large developer ecosystems in the world,

around Windows, around Office, right? And so it's interesting that they haven't looked at Minecraft

at that in terms of potential, while funnily enough, everyone is trying to build a Roblox

competitor. And they have like one of the jewels of the of the generation. And it's just so fascinating

that they're not going that route quite the opposite, they're going against it.

Okay, I want to circle back to branded experiences, because I think this, you know, idea about brands

being in these virtual spaces is so important to the next decade of gaming and virtual worlds.

From your experience working with brands, what do they currently understand about the opportunity

and what do they still not get? Like, what are they still missing about, you know, how powerful

these virtual worlds really can be to a brand? I mean, first, just for context, you know, super

social we have for business lines, right? We create cutting edge content, we create, we have

incredible enterprise solutions for brands that really allow us to work with brands on building,

promoting, operating, growing virtual experiences on platforms like Roblox. And so we work with

brands kind of as I think about it on a 360 model, we really brands come to us and we work with them

on the whole thing from strategy to implementation and growth through analytics. So when brands come

to us, there's definitely a high level of education that is still happening. Again, of what exactly

this platform mean. And most importantly, how do we build a virtual world that can become a business?

And so what I see now at the moment, I would say is 80 to 90% of brands are still thinking about

virtual worlds from a standpoint of a promotional activity, promoting something else that they sell

and monetize, which by the way, not a bad thing at all. I think we're still at V1 of what virtual

worlds mean, you know, for brands and IP owners. And that's still the large, the majority of the

project that we're seeing coming to life is really thinking about it as a part of your marketing mix

as a brand. And that's okay. There is a small portion of brands and IP owners and a small portion

of project, which is actually interestingly, majority of our projects and our partnerships are

about the V2. And the V2, and what I think a lot of brands and IP owners, and I really encourage

people to rethink that these are not mutually exclusive, you don't have to do something that is

just marketing or business, it could be and it's not mutually exclusive. But what we get excited

about as a V2 for brands engagement in virtual worlds is how do you build something that becomes

ultimately a business asset, where you really create IP, you're really sure you can sell jeans or

make up products or iPhones or cars or you name it, whatever the consumer segment is.

When you think about virtual world and building relationships with the community,

and the commerce possibilities and the avatar expression and the fact that one out of five

daily Roblox changes their avatar outfits every day, in and of itself, that's about 16, 17,

18 million people. Think about that just like we change our clothes every day. There are millions

of millions of people who do that in virtual worlds today on Roblox and other platforms. And so

what we get excited about, which I think a lot of brands and IP owners are still missing, but I

think it's going to be a gradual evolution, is the fact that when we think about virtual worlds,

we think business assets, we think IP, we think worlds that you own, operate, can monetize,

and those relationships ultimately will evolve to include integration with IRL experiences,

real e-commerce purchases, because these things will come together. As I said, I believe people

will care about their virtual identity as much as they do about their real identity, which means

people will continue to spend money on buying real products, but they're going to continue and

purchase a lot of virtual goods, a lot of virtual products. And so for us, it's how as a brand,

you're really starting to think about what you could mean as a brand for these communities and

next generation audiences, but also making sure that you're open and willing to experiment with

monetization opportunities, not to the extent that you believe, okay, it will replace my physical

product and I'm no longer going to sell Chanel bags in real life. No, for sure that will be the

dominant revenue stream of a business of that nature, but I believe that the revenue that will

be generated and the reason why it's so important to build persistent worlds, not just time-based

activations, is because of that opportunity. And I think the brands that will do that the best

are the brands that will benefit and will be able to position themselves ahead of the curve

and build relationship with quote-unquote young people who ultimately can become consumers of

their real products while also purchasing their virtual products as well. Yeah, for us, it's always

been about authenticity. And when you're describing that, I'm thinking about brands and brands getting

their heads around that concept that it's not about really selling something specific right now,

it's about developing an authentic kind of environment. It's almost like their branding

campaign has to be 3D live all the time. Can you give us an example? I know you have a lot of

brands that you talk about a lot that are doing great things, but could you just give us an

example for some of the listeners just to have kind of a vision of this, of a brand example?

For sure. So again, last year, one of our most incredible success stories has been with NARS

Cosmetics, where really the idea was how do we take the brand products like actual real products

that NARS Cosmetics sells and turn them into an immersive embedded experience that pushes the

boundaries of self-expression in a platform like Roblox. And what we've done, we've created so much

innovation both technically and creatively inside what was called NARS Collar Quest, which is the

name of the experience that again, as I said, in three months became the number one branded

virtual world on the Roblox platform with more than 42 million play sessions, 86% community voting

and so on and so forth. And some of the things we've done, Angie, to your question is we took real

icons or that kind of the way NARS through their products and we've turned that into, for example,

avatars. So we almost gave a sense of humanity to the products and we turned avatar that sits in

an island that you explore as a player, as a user and you roam around and you collect different

shades in the game that you can then go and unlock new capabilities and outfit the avatar face,

which leads me to one of the other innovations we've created with NARS Collar Quest, which was

what we called Lookbook. We did the first feature on the Roblox platform that allowed players to

customize the faces of their avatar in full control with the shades and the colors of the brand.

So suddenly, we can creatively express who we are, who we want to be in an unlimited way,

inside platform like Roblox. And some of the things we've seen that are happening,

we've seen young girls as old as 18, 19, 20, customizing the faces of their avatars in the game

and then go offline, buy the makeup product, put it on their face and then tweet both images

of their real face with the makeup colors and their avatar face with the makeup color to match.

That's what I'm talking about. That's the symbiotic relationship that I'm talking about,

that I think within a decade, that example will be basically happening all the time.

People will completely reimagine how they want to express themselves and that's what I'm really

proud with what we've done with NARS ColorQuest is we already in 2022 on a platform like Roblox,

we've shown that we can build a virtual world that really pushed the boundaries on the way people

want to express themselves in terms of creativity, but doing it inside a world that is fun, is immersive,

that is absolutely stunning from graphics perspective, that pushes the boundaries of what's

possible on the engine and then also showing quite organically, to be honest, that there is an

impact to that on people's lives actually in IRL. I think that was really, really, really cool.

To be honest, I think that's a big part of why we've seen such an amazing amount of world-class

brands from multiple different consumer segments who wanted to work and are now working with Super

Social because they want to push the boundaries. They want to build a business asset. They want to

be the pioneers of 2023 and beyond and showing that they can bring their brand, whatever they're

selling, to that new frontier, Angie, to your point and you nailed it in an authentic way.

It's just so interesting to think about all those players that didn't have any idea who

NARS was and now we're at a point where the actual shades are almost skins, right? I mean,

they've branded the shades as skins. That's pretty mind-blowing, if you think about it.

The colors are identical. You would not imagine the amount of time that our teams,

the NARS team and Super Social, worked on really nailing the shades, the colors and

it's so beautiful. There's a lot of links. There's been millions of videos generated by

users inside NARS ColorQuest on YouTube on their own, just basically sharing what they're doing,

sharing their experience. This is why at the moment fashion beauty are two of the most active

categories of brands in virtual worlds because it's about that expression. Angie, you have an

11-year-old, so you know that, right? The ability to freely express herself without limitations

and that's why for them, I think, for this new generation, virtual world are essentially

not a mimic of real life. It's a whole different frontier because in real life, I'm

Jan, I'm now wearing this in the meta of anyone. Angie, you asked me one time, I think, on your

podcast, you asked me how many people are going to be in the metaverse and the question,

the answer I gave you was, I think about 100 billion. You're like, wait, what? How did you get

to 100 billion? And the reason is because exactly because I think 10 years from now,

the world population will be 9 billion people or something like that. Each person that will be

living in virtual world can have three, five, 10 different identities because we can and we can be

anyone we want and then we can select which one relates to our physical identity and we can

integrate. And when you think about that in the ramification of commerce, when you think about

the ramification of what type of products people or companies will build once they learn what people

want in virtual worlds, when you think about how more rapid it is to experiment and prototype in a

virtual world or in a digital twin, like what people actually want to do and predict that to

inform decision-making on what products and services you build, that's where I think talking

about virtual world takes a whole different meaning that we're not even touching and why, Nick,

I've mentioned earlier why it's so much more than game. I mean, it is. And just hearing you

describe this branded experience, one thing that I think most investors or just gaming enthusiasts

think about Roblox when they hear it is user-generated content. But when you talk about it from a brand

perspective, you're talking about user-generated advertising, user-generated branding that then

moves off the platform and is then amplified by the social media posts as you described, right?

Showing your Roblox avatar next to your real, like that is so important for a brand to have

all of these YouTube videos that these young gamers are creating, showing them being inside

these branded experiences. Like that goes so far. I feel like it's still not really appreciated that

these users are just advertising for you. They're doing the work of an advertising agency,

and all you have to do is give them essentially the keys to the kingdom and say,

here's an experience, go enjoying it. And then they just take it with them across the internet.

And that to me is just like so underappreciated in the story for Roblox, for Fortnite, for Super

Social. Like this is a momentous point in kind of the internet's journey, especially when it comes

to advertising and branding. The big winners from brands and IP owners, I believe in the

next 10, 15 years, are going to be the one that think about this as how do we build a persistent

relationship, right? Customer relationship management is basically being redefined,

and building those persistent relationship with this audience, with these communities,

give them a reason to care about your brand is going to dramatically change. It's no longer going

to be, oh, I see an ad on a billboard on a street. I go buy a pair of jeans or some shirt or a makeup

product. It's going to be about, is this product something I interact with in a fun social way

in the world where I live in virtually? And I discover, and it's kind of being embedded into

the way I want to express myself, like, I believe that sort of grassroots brand adoption is really

at the beginning. And we're seeing some great brands that are taking great strides. For example,

again, Nars Cosmetics, that is a partner to SuperSocial. And I think these are the brands

that are in and become even relevant in the next 10 to 15 years versus the one that are really

thinking about it in a transactional manner, which is, oh, how do I connect people to my e-commerce

tomorrow so I can sell them more product? Sure, that's okay. But that's a very short-term way

of looking at this new frontier. So speaking of commerce, because it does

bank the question, like, it's going to be important in this, right? You have this,

essentially, ability to advertise. Do you today have the ability on these platforms to then monetize

directly on platform? You had mentioned these girls were going off platform to purchase directly

on the website. Do you see a world where Roblox, Fortnite are transacting and facilitating this

commerce where maybe you have an avatar pickup, a Nike shoe, and it's a digital one, and you get it

both in the game and then it also shipped to you in the real life. How far away from that world

are we? Because I would love to be living. I think it would be so cool.

It is. I mean, imagine walking around and walking around a game world that you have,

you suddenly see some items that you would love to own for your avatar and how natural that would

be. I mean, it's so difficult for me to go sometimes and find clothing that I love on

Far Fetch or Theory. I'm kind of disclosing some of my places, some of my go-to places.

And so imagine for these young audiences especially, and again, it goes back to what is the

velocity of adoption, Angie, that you talked about, right? And why what's happening now,

it's really transformative because we go to an e-commerce website. I go to my phone,

I go to the app, I'm like scrolling down, I see stuff. That's not how this generation is going

to discover products. They will be discovering and I'm answering your question, Nick, which is,

I believe, to a large extent, this particular generation is going to discover things in their

worlds they live in, in these virtual spaces that are where they are embedded and have a sense of

presence. There are so many implications and logistical questions. So to answer your question

of how we actually make that happen, how do you see a virtual good and you want it as a physical

good and then you click and you purchase and it arrives to your home through an Amazon Prime the

day later, if that's what you're talking about, I think it will happen. I think the timing of that

is so challenging to figure out because there's so many things that these platforms need to decide

how they do, what they do. I would be cautiously optimistic in saying that I think it will happen.

We will see the beginning of that in the next three to five years and I think in 2025 to 2030,

I think we will see rapid kind of, I would say, evolution of a whole new category of commerce,

which is e-commerce powered by virtual worlds and that is incredibly, incredibly exciting and

where I think our virtual identities and physical identities can really start having a more symbiotic

relationship and a lot of the thing that it's super social, especially in our area of building

proprietary technology, these are definitely areas we are already thinking about experimenting with

and are looking to really build some innovative proprietary product, but also how do we serve

that as a solution to the brands and the IP owners that we work with? It's so exciting for brands

right now. Just hearing you talk about it, I think about the idea that brands really had

an access, they had access to the living room through the TV back in the day. Everybody left

the living room and went other places and they never got into games because gamers didn't want

advertising. They never really got into social media other than direct advertising, but the

branding, the real kind of brand engagement finally has an opportunity to reemerge in a way

that is even more powerful. It feels like just hearing you talk because if I am on that platform

in that world, in ours world, I'm actually collaborating with them and so that ownership

that I feel will make me so much more loyal if it's a great experience. It's really exciting.

And again, I agree with you and I think that's why it's so important to build worlds that are

authentic that they really care about the user experience and you want to bring something

unique, not just advertising. I'm personally not excited about advertising per se in the

metaverse, like billboards, ads, super social, may or may not want to do stuff like that,

may or may not want to experiment with that. That's not what we're excited about. We're excited

about how do you do that in an embedded, authentic way to the form factor, if I may say that, to

the form factor of being an avatar in a world and how can you as a brand, like we've done with

NARS Color Quest and we'll do so many more this year, build something that really resonates with

the audience and give them the motivation to continue and be part of it because we all know

that brands being some sort of a church of the 21st century, there is such an emotional connection

between people and brands and as virtual worlds done right, are going to take that relationship

and intensity to an a whole new stratosphere that we have only seen with more imaginative,

unreal things while now we could connect to actual real things that are happening in the world and

I think that's what's really, really powerful. Yeah, it's just such an interesting time, like

Angie, just going back to your example, like when you're watching a television show or a movie,

if you're the viewer, you're always asking yourself, am I the main character in the show?

Would I be the sidekick? Would I be the villain? When you play games, you can be any one of those

characters and you can play out each one of those plot lines and then for a brand, you could have

them be dressed in whatever it may be and I think about Fortnite and what they were able to do

with the Marvel movies because that was when I was heavy into Fortnite, being able to play as

Thanos or being able to play as Spider-Man, like that was so powerful to me to then,

you know, it made me want to go watch the movie again and so that cycle of like, you know,

being able to follow along the user journey as they go through these different entertainment

mediums and feels like gaming is at the epicenter and it's like the most powerful format because

you can choose your own adventure and you can brand that adventure. For brands, they can brand

each one of those adventures in different unique and authentic ways and if the right brand does it

in the right way, it's going to be so successful and it's just going to happen over and over and

over again. And everyone loves games. The reason people stop playing games as they get older is

because they get older and more busy, but everyone loves playing games. That was never the issue.

Yeah, we won't be as busy if AI is just going to do all of our work for us, so maybe we'll all

just become gamers again. Like in Wally, we'll sit like a sack of potato on a couch and play games

all day long. It feels like it's going to be, it feels like this whole idea of like, you know,

gaming is going away and just entertainment as we know it includes gaming or includes all these

activities because you really have, you know, you have only so much free time and it's all kind

of melding when you're in these worlds. It's very cool. I think we're going to see, we're already

do, but you know, we're going to see virtual worlds that are really meshing all of those things

together. Music, sports, social experiences, concerts, movies, like watching a movie, sitting

inside a virtual cinema that is part of a social world, like it will give, it will extend what we

do and what's possible in real life. I don't think it will replace. And that's a big part of what

people are fearing is like virtual worlds will replace our life. I mean, unless you live in a

ready player one world where in 2049 Columbus is a rack of a place, you know, I happen to live in

Columbus, so I'm planning for it to be more nice than that. But unless you live in a ruined world,

you don't want to look at virtual world from a point of view of escapism. You want to look

at virtual world from a place of an extension and an elevation of what's possible in real life.

And it feels like, you know, we all experienced how this can all play out during COVID because

we're all locked down and everyone became a gamer. And everyone was forced to experience these virtual

worlds. And now in like the last year or so, there's been this like rebellion, like, no, I need

sunshine. I have to go back outside. I need to live my life. But those those tendencies you've

picked up during COVID, you're like, no, gaming is really fun. Like I forgot how much fun I used

to have with my friends. And I feel like it brought a lot of people back into the fold and made them

realize like one, we're in a different time with gaming. And, you know, we just described all of

these new waves of innovations and everything that's happening. But also just how important it is to,

you know, socialization on the internet. It's like one of the only ways to like truly connect

with people in an immersive way, aside from like zoom. But even this is the 2D experience,

like we're viewing the 3D world through a 2D screen. But when you're playing gaming, it's just

so much more immersive. When you're in those chat lobbies, when you're talking with friends,

you feel like they're in the room with you. And, you know, sometimes they are, but, you know,

oftentimes they're hot. And it's just like such a powerful social experience.

It's like social media is dead, long live the new social media. Because there's nothing social

about Instagram, about TikTok, you know, there's nothing social about it.

Yeah, I was talking to a video game analyst yesterday. And he said, I don't, I don't really

know why you care so much about this idea of watching TV and movies inside these gaming experiences.

Because people, gamers have been watching Netflix and playing games for a long time.

And I said, because that's not social. If I'm sitting there in my daughter's dress

store in Roblox, and then, you know, let's say that I occupy the dress store, I invite my friends

and we watch a show together. That's what I think is going to be different about this.

Yeah. Give me the opportunity to throw some virtual popcorn at the back of my buddy's head.

That's what I want while we watch a movie. It's the simple things in life. Okay, well,

I think we've hit our mark. Thank you both so much for coming on, Yan and Angie. This has been

amazing. I think we've hit on everything I hope we would. And hopefully the listeners enjoyed

this one. I certainly did. So thank you both. Thanks for having me. Thank you, Nick. Thanks, Yan.

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