CC024: investing in the picks and shovels of esports and gaming // a Coffee Chat with Josh Chapman (Konvoy Ventures)

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Josh Chapman 0:00
But I would actually turn this more into less about traditional sports being the parallel and more about music and entertainment in the parallel. Because plenty of rappers and singers and artists get recruited well before 18 because they see the talent in someone early, not all the time, but many times. And so the same thing is happening in gaming, which I find more interesting than sports because digital entertainment is being driven by the future gaming.

Jay Clouse 0:29
Startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them.

Jay Clouse 0:42
Welcome to upside.

Jay Clouse 0:57
Hello, hello, hello, and welcome to the upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co host, Mr. Playing games to relax himself. Eric Hornung.

Eric Hornung 1:10
Do you ever get stressed out? Jay?

Jay Clouse 1:12
Do I ever get stressed out as an?

Eric Hornung 1:13
Yeah,

Jay Clouse 1:14
As an entrepreneur? Yes. better question. Do you ever get not stressed out, Jay?

Eric Hornung 1:21
Well see, the way I get not stressed out is I play Call of Duty. I don’t know why. I don’t know what it is. But something about either. There’s three things that like de stress me one sauna so I think sometimes that can also be stressful to shower. So that’s where I think can also be stressful. Three call duty. Zero thinking involved. And not stressful. A lot of rage. Sometimes we’re not playing well. But that’s good. It’s like it’s burning off steam.

Jay Clouse 1:49
A nice dinner with friend of the podcast, Colleen doesn’t de stress you?

Eric Hornung 1:52
Um, no, not really. Yeah, there’s still a lot of stress. It’s just that’s mostly just venting. At that point,

Jay Clouse 1:58
You know, can’t wait to make a flip out of the this.

Eric Hornung 2:00
Yeah, she’s gonna love that huh.

Jay Clouse 2:04
Which call of duty?

Eric Hornung 2:05
Right now. It is called Duty Black Ops, or whatever the newest one is. There’s a new one getting released this year. But whatever. The most recent one is where it has be fortnite knockoff called blackout play with two of my friends.

Jay Clouse 2:18
Is nazi zombies still a thing?

Eric Hornung 2:20
Nazi zombies is still a thing. Yeah. And now it’s all online. I don’t know if when’s the last time you played this?

Jay Clouse 2:26
Pretty much never. And actually, it was a problem for me. All of my friends played Call of Duty online and I did not and I literally felt my friendships weakend, because I was not doing that.

Eric Hornung 2:35
It’s actually great because it saves you a lot of money. You know, like some some Friday nights, instead of going out to the bar and spending a bunch of money with my friends. I’ll just pick you guys just want to hop on the sticks. And Eddie, who’s in Denver, and Pat, who’s right here in Cincinnati. We’ll just hop on and we’ll spend zero dollars, maybe order a pizza. So you know, that’s that’s some money, but spend zero dollars, hang out with your friends, shoot for couple of hours and play some video games.

Jay Clouse 3:02
Have you watched the new season of black mirror?

Eric Hornung 3:04
I haven’t watched a single episode of black mirror.

Jay Clouse 3:06
Whoa, well, first of all, you’re doing that wrong. Second of all, the new season has an episode about virtual reality gaming, that I think is very relevant to you playing games, dear friends?

Eric Hornung 3:18
Is it like Ready Player One?

Jay Clouse 3:20
It is not at all. I’m not gonna ruin it for you. Because when you do watch it, you’re going to realize how much of a burn that was I just made on you.

Eric Hornung 3:28
Oh, you’re making fun of me in the future.

Jay Clouse 3:30
We’ll see.

Eric Hornung 3:31
Okay, great. Speaking of the future, today, we are going to look into the future.

Jay Clouse 3:36
Yeah, today we’re talking with Josh Chapman, the co founder and managing partner of Konvoy Ventures. Konvoy is an early stage venture fund focused exclusively on eSports and video gaming. They’re dedicated to partnering with and supporting founders in the video gaming industry and esports industry at the earliest stages. They were founded in 2017. And based in Denver, Colorado, Eric, we’ve been looking for someone in the esports, around for months to talk to,

Eric Hornung 4:04
I would say longer than months, it has been a while. And I think we found a great guest here.

Jay Clouse 4:10
I hope so we’ve been very intentional, we’ve been very thoughtful and actually been very difficult to find a guest in this industry that is not based in San Francisco.

Eric Hornung 4:19
That’s true. San Francisco seems to dominate the esports virtual worlds area. But Konvoy is based out of Denver. And that fits our checklist, even though two of their three portfolio companies are in San Francisco. I’m excited. I’m excited to talk about the future of Esports, the history of Esports. And really just learn a little bit about this because everyone seems to believe and maybe this is when something’s wrong. But everyone seems to believe that eSports is going to be huge, but it’s hard to find people who have detailed rationale why other than Oh, yeah, it’s gonna be big.

Jay Clouse 4:55
Yeah, I’m lacking a lot of context. And both historical and current, you know more about this industry than I do, probably. And I don’t think you would fancy yourself very deep into it. So we’re going to spend a lot of time I think, learning about eSports and video gaming as a whole before diving into talking about Konvoy, but I’m excited. Ready to dive in?

Eric Hornung 5:17
Oh, yeah. I’m super excited.

Jay Clouse 5:21
Josh, welcome to the show.

Josh Chapman 5:23
Hey, guys. How are you?

Eric Hornung 5:24
I am doing well. It is beautiful out finally, where we are, at least in Ohio. Finally, finally. So Josh, on upside, we like to start with a background of the guests. Can you tell us about the history of Josh?

Josh Chapman 5:38
Absolutely. So I grew up overseas. Growing up in Asia, Africa, Latin America, was the son of a US diplomat. I then went to school in Chicago, worked in New York for a bit and then about a year and a half ago, I moved here to Denver, Colorado. My career has primarily been in finance. I’ve grown up a gamer all my life. And that today was Konvoy Ventures, this is essentially kind of the merging of my professional training on the investing side. And my personal passion as a lifelong gamer coming kind of coming into you know, one thing.

Eric Hornung 6:12
Most people when they say overseas, they really just mean oversea, like they were over one sea you did multiple seas for real.

Josh Chapman 6:19
A couple a couple. Yeah. Before I was 18. I think I spent 13 or 14 years overseas. So most of my life was overseas until coming to the states for college and then working in New York, and now Denver. So it’s also a beautiful day in Denver, Colorado, by the way, but it’s always a beautiful day in Denver.

Eric Hornung 6:36
Yeah, you guys have like 300 plus days of sun. It’s unfair.

Josh Chapman 6:39
We do i do we ski, we play golf, and we play video games. So yeah, those three occupy my life.

Jay Clouse 6:46
What was the longest period of time you occupied any one of those different cities or countries overseas?

Josh Chapman 6:52
Yeah, three years. So Costa Rica was the longest anywhere. And there was Nigeria, Mozambique, South Africa, Taiwan, Brazil, Bolivia. And so all these places were, you know, not only a key part of just how I grew up personally, but also, you know, key part of where I, one first started gaming, and then to just how my family kind of grew up.

Eric Hornung 7:14
What was your least favorite place you lived?

Josh Chapman 7:17
It was probably Lagos, Nigeria, and back in the late 90s. And so it was a long time ago. But at that time, it was very crowded, lots of traffic. And as a kid, that wasn’t the funnest place to be more fun to be in, you know, jungles or in like places like Mozambique, or South Africa. So was probably the least favorite.

Jay Clouse 7:39
I’m going to fight the temptation to spend like the entire interview on this, because I probably could. But were you doing like, local public education? Do you have to learn the language? What was social life? Like? I have so many questions, and I’m just gonna let you riff on that.

Josh Chapman 7:52
Yeah. So I grew up, my family’s very close. And so I grew up in, you know, American private schools. We had to learn the language in Latin America, learn some Spanish, in Africa, in Mozambique, they speak Portuguese in Nigeria, they speak English in South Africa, they speak English. And so there was really just Spanish, but cultural assimilation and being you know, a visitor in those countries and living there in the culture was certainly a life changing thing that carry us to this day, for sure.

Eric Hornung 8:24
What about this gaming that you were doing growing up? it? The Internet wasn’t really a thing yet. So it wasn’t online gaming, you weren’t interacting? What kind of gaming? were you doing? What was your first now let’s start with what kind of gaming were you doing?

Josh Chapman 8:35
Yeah, so it was twofold. One, I first started gaming in these small internet cafes in Latin America. And so we’d go to this internet cafe that would have, you know, anywhere from 10 to 40, computers, me and my friends in middle school, and we’d play Counter Strike and game for hours after school. So from 4pm till 9pm, or something like that or much later. Secondly, my parents actually bought us an Xbox and a projector and a couple computers. And so we had land parties and my place where we’d order 10 pizzas and play Halo one and Halo two a ton. So I grew up in that sort of World of gaming those contexts. And that was very formative for me.

Eric Hornung 9:19
What’s your first memory of seeing or playing a video game?

Josh Chapman 9:23
My first memory of playing a video game? Hmm, no one’s ever asked me that question.

Eric Hornung 9:29
You called us out earlier. You said you could ask any question I’ve been asked them all.

Josh Chapman 9:32
Yeah, that actually I’ve never been asked. So my first memory of someone playing a video game was when I’ve watched my parents play a game in Nigeria that was hosted locally, just on a desk in Abuja, Nigeria. And they were super into playing this game where they would explore and like unlock levels. And it was kind of like a problem solving game. I saw them kind of get very engaged into that. And I didn’t think much of it. And then I first started playing video games was probably Starcraft, and then very quickly after that was Counter Strike and Halo one. So those are probably the first games that I really, really played. A lot of people started on Nintendo. And I really don’t think that’s where I started. I think I got to that later. I’m always been more drawn to more complicated games versus I love Mario Kart. But, you know, I quickly wanted to play Halo or Age of Empires, or even things like Sim City or roller coaster tycoon or something.

Jay Clouse 10:33
Why are games called video games? Are there audio games? Are there picture games? Like why do you think video games became the title? And is not still referred like now I hear that I hear gaming much more than I hear video gaming, so has that phrase kind of gone out of style.

Josh Chapman 10:51
It hasn’t gone out of style, because gaming oftentimes is referring to the betting industry and gambling. So that is oftentimes called gaming industry. You’ll see gaming conferences, and then quickly realize it’s being hosted in Vegas, and it’s all about slot machines. video gaming, I think goes back to this industry started in the early 1970s. And so this is a 50 year old industry. Now, I believe it started in video because this was first played on monitors, where you would have a video display of something that was happening digitally. And so I think it was a game game. And that time would either be like a game you play outside or gaming play on a board game, like monopoly. But a video game was the way that you segmented though? What Atari and Nintendo we’re doing. So I think that that’s probably the origin.

Jay Clouse 11:41
Can you walk me forward or kind of give me a history I guess, when online multiplayer gaming started happening, and what the trend has been in growth in that, in that industry, like what has been the catalyst of that becoming such a dominant force for I remember when I was in high school school it was huge when I was in middle school, not as much

Josh Chapman 12:03
So that it is primarily due to the rise of technological innovation alongside consumer adoption of video gaming, the history of video gaming goes back to the 1970s, you had the rise of games like Pong, you had the video game crash of 1983. This then led to things like the N64 coming up, Nintendo in 1991, 1992, decided to try to partner with Sony. That deal fell through in 1994. And then Sony learned so much from their negotiations with Nintendo that they came out with their own console called PlayStation one and 1994. In 1995, you had 100 million people playing video games. Fast forward to today you have 3 billion people playing video games, approaching 40 to 50% of the global population. And so in 1995, you know, you’ve had a lot of people playing games was primarily on console, which is where video games started within 64 and Atari. As you approached 2000 with the .com bubble, you had people still playing primarily on dial up or local area networks, because online broadband technology wasn’t quite there yet. In the early 2000s, as you walk towards and closer and closer 2005, 2010, you had online capabilities and online broadband got a lot faster effectively. As that became faster, it allowed people to become more social with their gaming. So people now are able to game with anyone they want in anywhere in the world, any language, not only just one on one or two on two, but a 100 people at a time across hundreds of thousands of lobbies, right. So because the rise of 4g allowed technologically for gamers to be more social and to be more online multiplayer. That’s where you come to today. And so a quick segment from that is that there’s a stigma around video gaming, that it’s an anti social industry that isn’t without merit, because 20 years ago, as you brought up, gaming was inherently technologically had a barrier to be antisocial. If I chose to video game, my mom would have to drive me over to my friend’s house, I’d carry my Xbox, or I’d pick up their controller, and then my mom would pick me up three hours later, and then I’d be back home playing alone. This led to this the stigma and the visual that people have of what a video gamer is. Today, though that couldn’t be more not true. Because gamers now are incredibly social. There is entire communities online, their communities over voice and video, look at Twitch, look at discord, look at Reddit. All these things are are crushing the community thing. When you look at the gamer today, you know accessory sales in the United States from 2017 to 2018. We’re up 87% year on year, that’s primarily driven by things like headsets and keyboards and mouses because gaming is now more social, you want a better headset so that we can better communicate so that I can hear footsteps and in game sounds because I want to be better in a social context. And so because technology is allowed for that, we’re at a very unique moment in gaming, not only in the United States, but globally.

Eric Hornung 15:18
Who’s left out of this 3 billion out of seven point whatever we’re at now. 7.2 7.8, who knows what large swaths of people aren’t being included or are underrepresented in the video game space.

Josh Chapman 15:31
It’s primarily the emerging world we’re talking people who don’t have access to internet yet don’t have access to the latest smartphone yet don’t have access to internet cell towers that can provide them connectivity yet, if you look at much of the Asian market, gaming computers, if you adjust for inflation have been coming down in price over the last decade. Same thing with console’s you just for inflation. They’re about $200 cheaper today than they were 10 years ago ago. That is a really interesting thing for the consumer. Much of you know, let’s take China, for example, at the rise of mobile in China, they skipped PC entirely. they skipped console entirely and jumped to mobile primarily because gaming PCs and gaming consoles were so expensive. For a consumer that might be making that in total a month or a year, much less depending on where you’re looking right. And so a lot of that population has gone to mobile. The thing though, is that gaming is a much better experience on PC or console, and you have a large desktop. And so today, I think you’re going to see the next 2 billion gamers, the next billion gamers that are going to come online will primarily come from the emerging world. We’re talking parts of Latin America, much of Africa, bunch of people in the Middle East, India, a lot of different lot of different countries where more people are not only making more money, but also the cost of entry to gaming is coming down. And that’s a perfect recipe for another billion people to join the community.

Eric Hornung 17:01
How come women don’t game as much as men?

Josh Chapman 17:04
45% of gamers are women, which is a fun fact. 35% of Esports viewers are women. And it’s just depends what games they like to play. So some of the games that you think of when you think of the most popular games may or may not be some of the most hardcore games, let’s take Halo, Counter Strike, League of legends, Dota, whether it’s true or not, you might think that women don’t play those games as much. It’s actually a lot of women play League of Legends, a lot of women played Dota. And a lot of women are actually becoming some of the top Rainbow Six players. CS go players, and they’re actually competing at the highest levels. One thing I love about gaming is that gaming is actually a truly level playing field within within the world, doesn’t matter how tall you are, how good looking you are, how strong you are, how fast you are, you know, from a running track and field standpoint, there’s no reason that men and women can’t be on the exact same level within eSports in gaming. And I think that’s very unique, right? You know, biologically and physiologically, men are typically stronger, faster, taller than women. Right? On average, right? But even at the top of the level, they’re still there is that edge within gaining that edge is eliminated. And so there’s no reason that we shouldn’t have coed eSports leagues forever. And there’s and those are already happening today.

Jay Clouse 18:28
I’m think I’m jumping a little bit ahead here into eSports. So before I ask the question I was going to ask Let me ask this primer, you threw eSports out there, we’re talking about video gaming, if I’m a casual gamer playing League of Legends, or even fortnite, or some of these names that people have probably heard of, when does it become? I’m participating in eSports versus I am gaming?

Josh Chapman 18:47
Great question. So with 3 billion gamers in the world, 480 million people watch other people play video games, and that is referred to as the competitive audience layer that is supporting the world that we call eSports, which stands for electronic sports, this competitive layer of Esports is typically has to do with people that turn a casual thing that they enjoy into a competitive thing that they start taking more seriously into, hey, I actually want to make this like a career track. So that’s anything from me playing pickup basketball with my dad growing up to me going to basketball camps to be getting recruited into a D1 school, right. And there’s a just says, you see that in sports the same thing as an Esports. Just because you play in a tournament. And just because you play intramural, frisbee in your college does not make you a professional athlete. The same is true in gaming, just because you play in tournaments, you go to land tournaments you play in local leagues, doesn’t mean that you’re competing in eSports. To compete in eSports, you need to be in the top point 001% of 100 million monthly active players who are competing at the top of the game who are training who have coaches who have psychologists who have, you know, workout routines. It’s a pretty extensive industry. So I would say anytime you’re wondering way, when do you become an Esports? athlete? Think when do you become an athlete, a professional athlete and traditional sports. And the analogy will will carry pretty parallel.

Jay Clouse 20:19
What about like collegiate league? Because there are some colleges doing this now? Right? So there’s eSports, that’s not professional, right?

Josh Chapman 20:27
Yep. So there’s about 140 colleges in the United States that offer eSports programs. The way that they’re being structured today is they are not governed by the NCAA. They’re governed essentially kind of like club soccer or club frisbee leagues should just keep that analogy going. The NCAA has just chosen not to govern this at this point. I think that’s actually if you ask my opinion, a healthy thing, as right now, especially given that the average age of an Esports athlete is considerably younger than the average age of a professional athlete in most sports, usually, by the age of 24, 26. Professionally, sports athletes are retiring, primarily because they cannot click or have the reaction time. That’s fast enough. That’s typical. And it varies by game, right? Hearthstone is a card game, it’s very different. It’s kind of like saying that’s like chess, whereas Counter Strike, and Dota is like your professional basketball or hockey or something like that. And so when you look at the collegiate scene, I would kind of say, it’s still no different than traditional sports, where you have a lot of people that are like, I play D1, D2, D3 basketball, but I’m not going pro. I’m just not good enough. I wasn’t naturally gifted enough. I haven’t trained hard enough, whatever the reason is, a lot of these athletes, you know, they have aspirations, maybe. But is it realistic, maybe maybe not. There’s also an interesting point that when you go to college, you’re between the ages of 18, and 22. But an Esports, a lot, these athletes are being recruited at age 14, which is creating a lot of complexities not only around recruitment, but also under age recruitment, right. And so if these things aren’t governed by the NCAA, then who governs them. And there’s a lot of stuff in the industry right now around parental consent, around contracts around agents around entertainers, very similar to have, but I would actually turn this more into less about traditional sports being the parallel and more about music, and entertainment in the parallel, because plenty of rappers and singers and artists get recruited well before 18. Because they see the talent in someone early, not all the time, but many times. And so the same thing is happening in gaming, which I find more interesting than sports, because digital entertainment is being driven by the future of gaming, when the CEO of Netflix says that he’s more worried about Twitch and YouTube than he is Hulu, and HBO Go. That to me is like one that’s 36 months too late to say that, but at least you were there. And so now we’re at a point of Yes, this is where the audience is the consumer is entertainment is. And now competitive entertainment, you look at eSports, the average age for eSports is about 25. Globally, the average age for traditional sports is about 50,55.

Jay Clouse 23:22
For the viewer?

Josh Chapman 23:23
For the viewer, for the viewer, that’s correct. So for the viewer, the average age is globally about 25. And for traditional sports is in the 50 to 55 on average. So you’re literally looking at a 25 year gap here. That, to me is astounding, like what happened last 25 years here. So that’s interesting to me.

Eric Hornung 23:44
The parallel that you laid out earlier, almost reminds me of hockey, where, you know, Sidney Crosby was getting recruited it 7,8,9 years old, and the best hockey players don’t go to college, they go to the juniors and like work their way up. And then if you’re good enough, but not great, you go to college for a couple of years before you maybe make it to the NHL, maybe don’t. The question I have about kind of this analogy is where do you like streamers fit in? So people who aren’t in that .0001% they’re not the best at the game, but they’re super entertaining. They host huge Twitch audiences like how do they show up? How are they do they have to be a certain level of good? Do they have to be like, I just have so many questions about like, where that sits. In this whole picture we’re painting,

Josh Chapman 24:29
The rise of gamers in streaming is is very analogous to the rise of entertainers and digital media in general. And so let me explain. So you have professional actors like Tom Cruise, or Tom Hanks, or any of these professional actors who make a craft out of being really, really good at acting, they have their genres, they have their expertise, they have their, their theme, and they spend all day every day practicing and, and doing that to the best of their ability. That is the esports athlete, they have no time to entertain. They’re just focused on their craft. This is all they do. Then you have Jimmy Fallon, and you have John Oliver, right. These are what I would argue very, very talented people who have chosen a little bit different path who one maybe acting wasn’t available to them to maybe they didn’t even want to do that. But they are still actors and entertainers at heart. And so more people are signed up to watch ninja. And most people watch the Tonight Show with Jimmy Fallon. And so if you think of Ninja, or Dr. Disrespect, or Strout, or Teefo, or any of these guys, these guys are John Oliver and Jimmy Fallon of tomorrow. And by tomorrow, I mean yesterday, like this is already happening, right? So that’s the way to really look at the streaming career is effectively become an entertainer. The tonight shows and Saturday night lives are the same thing, becoming an entertainer. And you can do very, very well at that. What I think it’s interesting, though, is that if you look at the evolution of media of the last 20 years, you had linear TV, where at 7pm, every day was wheel of fortune and at 730 was Jeopardy, right. And if you didn’t turn tune in during that time, then you missed it, then we had DVR and you could record it, but you still had to record it at that time, then you could record it, then you had Netflix come in and totally blow that up and said you can watch whatever you want, whenever you want. But we still curate What is your library, right? Today, if you look at YouTube, twitch mixer, and then a ton of other streaming companies around the planet, you’ve eliminated the middleman and you said, if you are good and entertaining and can build a presence online, no one is going to stop you from doing that. Like you can go direct to the consumer you’re jumping past Hulu past Netflix pass the curation process direct to the consumer. So the evolution of digital media and digital entertainment has been driven by these types of platforms. Today, it’s dominated by the gaming community with 3 billion gamers 480 million eSports viewers, 100 million monthly active people on Twitch 150 million monthly active people on the streaming sites in China. This isn’t going away at all. And so when you think about the streaming careers, think of it more as a career in entertainment than anything else.

Jay Clouse 27:30
I think I probably compared twitch too much to YouTube. So I’d like to hear one if that’s a valid comparison. But two while we’re on the streaming topic, can you talk about how and who is making money in online gaming streamed?

Josh Chapman 27:46
The comparison between Twitch and YouTube is effectively a battle between Amazon who owns Twitch and Google owns YouTube. Microsoft owns mixer, by the way. So the largest companies in the planet with the largest fast sheets, see the consumer and want to own the platforms that the consumer is consuming content on. The difference between Twitch and YouTube is not not very big. In general, it’s essentially a land grab of them competing against each other of how much you can offer the streamer and economics, which we’ll get into in a second. How much are you going to pay them to exclusively stream on YouTube and not Twitch, there’s some streamers will choose to do both or both simultaneously. Facebook did this where they started paying streamers $10,000 a month to exclusively leave those platforms to be on the Facebook gaming streaming service. And those contracts are being done in the backend all the time. Because you’re essentially trying to pull in audiences to keep them in platform in network in YouTube, in twitch in the Amazon store in mixer, which is you know, supported by Microsoft in Facebook so that you can keep the ecosystem going within the Facebook world. So it’s a lot of attention, competition by the largest companies in the planet. When it comes to the economics of how these streamers make money, there are effectively three primary ways. One is they make ad revenue, and they split that ad revenue with the platform, there’s usually kind of a set number that they’ll get anywhere from, you know, 40 to 70% goes to them, the rest goes to the platform, they have more leverage that bigger of a deal they are, but sometimes not really depends. If you are not negotiating with a startup, you’re negotiating with larger companies on the planet. So they really have a lot of leverage, as well. Secondly, you make it on subscription. So like on Twitch, you can pay $5 to subscribe, which basically is like your Hulu subscription saying no ads, right? And ninja will keep $3 and 50 cents of that and Twitch will keep $1.50

Jay Clouse 29:48
is that determined by the gamer is that across the platform, the price

Josh Chapman 29:52
that’s pretty standard right there. Each gamer or each streamer may or may not have leverage to push on that a little bit. But a lot of times you won’t actually even know so that’s kind of a private conversation between youtuber, Twitch and the streamer. But that’s pretty much the typical that you’ll see. So why is ad revenue for the guys who won’t pay and it’s just free. That’s why you do pre roll, mid roll, post roll kind of stuff to subscription revenue, we have that type of breakdown. So if you look at ninja having 50,75, 100,000 subscribers a month, at $5 a month times $3 and 50 cents for him, those numbers get really big really, really fast. Now that’s of course the top of the top of the top. But actually, if you think about this business model, it does create a path to you actually making 40,000 a year 60,000 a year 80,000 a year, there is a path to where this can become an actual livelihood for tens of thousands if not hundreds of thousands of people. You only need 500 people a month to pay you five bucks and you are covering most of what you got. So that’s really interesting as you’re looking at the future of employment as a future of the gig economy and the future of work from home. This is really interesting category. The third way that streamers make money is through sponsorships. So behind the streamer, you’ll see red bull and you’ll see Buffalo Wild Wings you’ll see Applebee’s, you’ll see Gillette you’ll see Geico, you’ll see Intel all over their either wearing on their jerseys. They’re wearing our T shirts. They’ll in between games, like take a poster and talk about it. They’ll put links where there’s affiliate link marketing sort of business models here. But those are the primary three ways. So one advertising to subscriptions, and three sponsorships and advertising.

Eric Hornung 31:39
So we’ve talked about eSports as an emerging field, we talked about streaming, we talked about the casual gamer, we haven’t talked about the underlying foundation of all of this, which is the actual video games themselves. Like I know you have Electronic Arts I know you have Tencent, Activision Blizzard, couple others, Sony that are making games, but is their new startup and activity and innovation in the games as well or is it just the big players making big games?

Josh Chapman 32:06
So video gaming is 140 billion dollar industry, it’s growing and about a 14% compound annual growth, much of that revenue somewhere I believe around 80 billion comes from IP alone. So intellectual property, which is effectively the video games that you’re talking about. Most of that revenue is generated by the top 10 to 20 guys. So you’re looking at Tencent and Ubisoft and Activision and Riots and EA and all these guys know most recently, you’ve got blue hall with hub G, you have Epic Games with fortnite, My list can keep going, but those guys really do dominate at the top. You do have innovation, though, at the bottom, where you have indie games, which is effectively kind of like indie films that are these flyers of hey, maybe people will want to play this. That turns out really well, sometimes fortnite was that PUBG was that both of these games generates billions of dollars a year in revenue, and have become, you know, the next level of the top 20. So the answer is, it’s mostly the top. There’s a ton of little games at the bottom of which, you know, in the App Store, about 10,000, new games gets uploaded to the mobile app store every month. And so tons of people trying to create games, but very few succeed. And so that’s primarily because there’s been a trend in the gaming industry where it’s kind of become the big guys win. And the little guys can’t, unless you have 100 million dollar budget, that is a very real dynamic in the industry today, that I think over time will probably not change dramatically. But I think that you will see more games pop up that become really innovative and become Fortnite and become PUBG. Just last night, you had splitgate come out a free game on Steam. That’s everyone’s streaming right now on Twitch. And so, you know, could that be the next big thing, maybe look at Apex legends that’s released by EA. But you know, games come out that can become category changers, impossible to predict, truly impossible to predict. That’s why we don’t invest in video games. And we don’t invest in professional eSports teams, we invest in all the technology and infrastructure around the space because we don’t like the binary risk of the game itself. Because I even as a gamer, and doing this with 110% of my time, I still don’t know what’s going to be popular tomorrow.

Jay Clouse 34:27
Definitely hold that thought because I want to ask the investment questions. But I have two more questions that I need to get out of the way. So I can come into that educated. These entertainers that you’re talking about? Do most of them seem to be indie creators, like people that are streaming and making a living streaming as entertainment. They seem to be indie creators who are doing all the infrastructure of like streaming and then posting the videos and managing some sort of audience engagement. Outside of that are these people building small teams,

Josh Chapman 34:55
As they get larger, they are building small teams to help them out. A lot of times, there are now agencies that represent them and help them. And so as if you get above a making up a number 10,000 followers, 1000 subscribers, then an agency, whether small or large, will start to take a look at you and say, Hey, we’ll take on all of your social media, all of your posts, all your graphics, our social, everything will take care of it for you, and will connect you with brands and sponsorship deals. And that’s really meaningful for someone to be represented in the same way that people are represented in comedy and music and acting and everything. So this industry is is really following a well proven path there.

Jay Clouse 35:38
And so there, there’s a whole bevy of games that people play competitively. So you can almost I would assume liken that to like you have the NBA and the NFL and the MLB. But I’d love for you to kind of give us a primer on how many professional teams there can be. I was just explained what cloud 9 is, which seems like they span multiple leagues. What does the future of like stadiums look like? Because there’s not a Columbus eSports team will there be doesn’t matter. I’m just giving you a lot of stuff that’s in my head, I’m going to let you organize it yourself and riff.

Eric Hornung 36:13
That’s what great interviewers do, right? You’re wondering, they just thrown a bunch of terms. And then yeah, you got this. You got this make sense of what I don’t know.

Jay Clouse 36:23
Please.

Josh Chapman 36:24
But I love it. That’s awesome. All right. With the backdrop of 3 billion people playing video games on the planet, right, you have this large, engaged audience of people that enjoy what they do very much on mobile console and PC. Secondly, you have this whole evolution of media entertainment that’s starting to be built that’s already been built the we’re not even scratching the surface of things like twitch,YouTube, mixer, then people really start to take their casual hobbies more seriously. So then you get into the world of Esports, where you get people competing, and then they’re like, well, I really want to compete. Now I really want to compete, I want compete at the highest level on the planet. That’s the evolution of what we have today called eSports. The competitive layer on top of the bedrock of video gaming, that’s what eSports is, you can think of it as like kind of icing on the cake. And that’s really what’s happening here. video gaming $140 billion industry eSports about a one to 1.5 billion. From a percentage standpoint, that’s very small. From a audience level that’s very large, because you have 480 million people watching other people play video games. Also 40% of those people watch people play games, they do not play themselves a stat that usually confuses the heck out of people. But what I would say is, have you ever played hockey before? I haven’t. But hockey is one of the funnest things I’ve ever watched in my life. Now, still on that for a few weeks, a few months, and then video game, it will start to make sense, it’s a little hard to relate why you would watch Hearthstone, or Dota right off the bat. But spend a few hours have a few drinks with some friends. And this might start to make sense just like your NHL, MLB or NBA experiences. So when you come to the competitive scene of Esports, you’ve got a lot of gamers that want to play. Eventually, what started happening over the last 10 to 20 years is people started saying I’m going to put together a roster and we’re going to play in the top tournaments in the world. We’re going to play for prize money sponsors, we’re going to have jerseys, and everything very much like a traditional sports team. These eSports teams are structured kind of like the university model. So if you take Duke University, Duke plays in men’s lacrosse, women’s lacrosse, men’s basketball, women’s basketball, they play in volleyball, and they will enter or exit those games and those sports based on whether they are popular whether the economic model can work, etc. And the same is true of a group like cloud 9 or fanatic or Team Liquid. They choose to enter Counter Strike, Dota, League of legends based on whether they are popular or not whether they can find talent or not, whether they can afford it or not. And so they play all these games and become essentially like a media conglomerate that plays across all these games. They manage the talent, they manage the schedules, they manage the salaries, etc, etc, the brand, the social and all that stuff. So these players become not only competitive athletes, but they also become icons, right? They become at the top of their level where there’s 100 million people playing League of Legends. And they’re in the top 20 players in the planet, you better believe that these guys have 3 million followers on Twitter. These guys have more followers than most professional NBA athletes on Twitter. And so they are crushing it. And so this competitive scene has created a whole ecosystem not unlike traditional sports.

Eric Hornung 39:41
For context. How many people do you know how many people play soccer?

Josh Chapman 39:44
No, it’s gotta be like a billion.

Eric Hornung 39:48
Okay.

Josh Chapman 39:48
That one’s a crazy one. Because it’s like, literally everyone can play.

Eric Hornung 39:52
Right?

Josh Chapman 39:53
What I think is interesting about gaming and progressive soccer is that the price to enter gaming is coming down so fast. And with the rise of things like 5g and global connectivity to the internet, you’re going to see gaming become five bucks a month, eight bucks a month to play a game, versus the high cost that it has been historically and is today. And at that point, playing soccer or playing League of Legends, all of a sudden, it just became pretty, pretty close. The brilliance behind soccer that hockey will never have lacrosse will never have is that it’s cheap, and it’s affordable for the global population. And everyone can connect with it. Whereas even with basketball that can be hard. That’s a very unique court that you need and all that kind of stuff. So

Jay Clouse 40:37
Eric’s a lacrosse guy, and he was not a hockey guy. He could not play hockey. But both of those are inaccessible to me in my in my upbringing, but like some of the most exciting stuff to watch.

Josh Chapman 40:49
But yeah, in this analogy of like affordability and mass adoption, like there’s no way hockey ever gets there. But like league of legends could. And that’s, that’s really fascinating.

Jay Clouse 40:59
So here’s, here’s why I’d like to take this then. And I think you might have answered it when you compared eSports more to an artist than a sport. You know, like, if I go to a murder by death Concert Band, I like I was thinking Taylor Swift, which is be a weird example. So we’re gonna take a band I like

Eric Hornung 41:17
You also like Taylor Swift. You don’t have to lie about it.

Josh Chapman 41:19
I love Taylor Swift as well.

Jay Clouse 41:21
Okay, so let’s say I’m going to a Taylor Swift concert. I don’t go to a Taylor Swift concert because she’s from Columbus. She’s not from Columbus, I’m a fan of her otherwise. So is that the argument for the lack or probable lack of Esports stadiums or like geographically located teams.

Josh Chapman 41:40
So I would say that the traditional athlete like LeBron James, or Cristiano Ronaldo is a good comparison for the professional eSports athletes who plays in the professional teams. They’re very similar of like skill level top of their game, fandom. They become sponsored. They play in tournaments, they have training, they have coaches they have houses, they’ve psychological coaches, everything on the artist side of like an entertainer like Jimmy Fallon or Taylor Swift or Tom Cruise, that is more like the streamer world of the entertainer becoming more like that. But both are now coexisting one is says, hey, look, I don’t have time to stream 14 hours a day, I train 14 hours a day, and I don’t need you to watch me do that. The other guys like, hey, I want you to watch me I’m super funny and entertaining. You should watch me and that’s how I build my audience. So those two are coexisting in eSports just as they do in the more broader entertainment industry around music and sports. When you look at the evolution of to your question around cities, gaming, by by nature is very geo-agnostic. And so it’s kind of globally distributed. But the Overwatch league is taking the approach of a city based model. Overwatch is a game owned by Activision Blizzard is sold their first franchise spots for 20 million each. Then they sold the next one for 35 million each. This League, unfortunately, has viewership that’s quite down on season one to season two, because the viewership experience is not ideal. But they have approached it more as a city basically, the Houston outlaws, the Dallas fuel, the San Francisco shock, they have teams in China and Korea, and they’re taking more of the city approach. Traditionally, though, eSports is followed more of a just agnostic wherever approach, we’re going to host a tournament in LA, but we don’t care if you fly in from Brazil, Holland, or Sacramento really don’t care. So just just come and play. And so that’s, this is actually a very active discussion. eSports right now, should it be Sydney based? Should it not? My argument is I’m not really sure. If there’s an answer to that yet. I don’t think it’s as clear cut as, hey, let’s not assume that what works for sports should have to work for eSports. They’re very different. You It’s like putting a square into a circle peg like, it’s just they’re different. And the community is different. The adoption is different. And unfortunately, most of the money that’s come into eSports has primarily been from traditional sports, and sports owners of that. But we think that that doesn’t always make sense. There are many things that can be learned and drawn from like sponsorships and professionalism and player contracts. But geo location based stuff for an industry that over the last 50 years has been inherently global. I don’t know if that’s what we can just take a hard right turn at in 2019.

Eric Hornung 44:29
It’s interesting, because if it’s geo agnostic, that means you can segment teams on really whatever you want, you can segment them on anything that’s like based on tribalism, right, that you can have a fan base around. So you could have a team that’s like super pro tax reform. And that’s like what they do. And then you’re just like, on their side because of it.

Jay Clouse 44:50
That’s fascinating. This this tribal thing is like that might be the answer. I was thinking like, you’re always going to have fans that jump on the bandwagon of like a really good team, you’re going to people that are rooting for an underdog. But if you have 30 teams in a league, you’re going to have like 20 plus middling teams, how do they grow a fan base,

Eric Hornung 45:07
like they’re all farmers, or they’re all whatever, like they have some something in common that threads them together and connects them with the fan base that isn’t geography, which is what we’ve relied on heavily to date. I want to get to Konvoy, and I want to get to what Konvoy invest in, because you just gave us like this incredible lesson about what the landscape looks like. So with that in mind, where are you interested in putting your LPs money?

Josh Chapman 45:35
Absolutely. So we are a early stage seed series, a fund based in Denver, Colorado, we are focused on investing into the tech and infrastructure and pick some shovels of Esports and video game. So let me break that down. The three ways to invest into eSports and video games today. One you can invest in games themselves, try to pick the next fortnite try to pick the next PUBG, that’s incredibly binary, it could turn on incredible, it probably won’t, two. You can invest in proteams, you can go invest in cloud 9. 24 months ago, cloud nine was worth under 100 million. Now they’re worth north of 300 million. These teams are going to surpass a billion dollar valuations within the decade, no question. And so that’s a second way but their business models are incredibly early days are overvalued at this time, they trade about 15 to 20 times revenue, many times more than that, when traditional sports teams trade at five times revenue. And so that three x delta would inherently tell you that, hey, there must be a scalable business model here. Today, that is not the case. So therefore, we’re avoiding teams because we think they’re overvalued. The third way to invest in this is to invest in the technologies and the infrastructure and the picks and shovels of the space. analogies is the best or like own the pipes, not the oil. If you come from oil, you know, you want to own you know, the infrastructure behind this industry, not whatever is kind of front and center. And so we take that approach, tangible examples of that are, we would have wanted to be and I wish we had been, but we weren’t some of the earliest investors and just companies like twitch or discord, right, multiple billion dollar companies that are game agnostic and game genre agnostic that provide a service or platform, whether b2b or b2c to this industry. And so this includes a ton of different companies. But this industry is we’re focused on eSports and video gaming, because as I mentioned before, Video game is 140 billion dollar bedrock. That’s more than double the size of Hollywood and music combined as an industry. And so this is the largest digital entertainment industry. That’s happening right now. And we’re very excited about it. And that’s that’s what we’re focused on.

Eric Hornung 47:47
I have a question. follow up question on that. But first, is there anyone investing in baskets of streamers? Because they have this kind of like maybe an income sharing agreement type investment, not a VC investment? I’m just generally curious. If people are investing in like 100 streamers? And if a couple of them hit, then they do well, is that even like a thing that people are doing right now?

Josh Chapman 48:10
Not quite yet. But that’s coming as platforms like twitch or YouTube or third party service providers to Twitch and YouTube, which there are hundreds create augmented services to that, that ecosystem? Yes, I could see that happening for sure. I think the way that’s playing out today is the agency model of a bunch of people go get 10 streamers and sponsor them or lump them together under their portfolio and hoping that one of them becomes ninja. That’s probably the way they’re, they’re playing that out today. I think that I think more and more, you’ll see that happen programmatically, versus manually, where you’ll say, if you’re over x, y z KPIs in your engagement, or followers or something, you will qualify for a selection program to qualify for XYZ sponsorship dollars or XYZ partnerships, that will happen automatically at scale. And that, I think that’s where we get so what’s not scalable in the agency model, and the hand holding and the one by one becomes scalable when you have tens and hundreds of thousands of entertainers that have super engaged audiences that brands and sponsors want access to at scale, not hand by hand, it’s almost a quantitative investing approach at that point, which is crazy, because then it becomes all about the data. So you have to have cross platform data. That’s a fascinating, fascinating example. And idea. One interesting thing about about eSports and video gaming is that it is probably the most data driven ecosystem on the planet. Everything is tracked, every last thing in gaming is tracked from your reaction time to your cursor to how fast whether you turn left or right faster, everything in sports has to be inputted either manually, or semi manually, very little of it is is like truly can be tracked. 100%. Right? If anything, we’re going to be at 50 to 90% accuracy on, you know, machine vision stuff on that kind of thing. But in gaming, it’s all tracked. It’s also trackable, right, whether we’re tracking it or not, we could probably do it. And so that’s a really interesting data set to build an almost infinite number of services and startups around.

Eric Hornung 50:27
One quick question on that. And I know Jay is biting.

Jay Clouse 50:30
I have like three quick questions you haven’t give me a quick question,

Eric Hornung 50:33
Nice, he’s being so nice. And he wants to jump in. You said everything can be tracked. Are there technologies out there that can track the viewers as well? Like, can it see? Is there like camera technologies where it can see where my eyeballs are looking? Or what I’m doing, as opposed to just from the gamer side of where they’re moving? what they’re doing, how they’re interacting with the interface, like,

Josh Chapman 50:55
on a preliminary level? Yes, on a creepy level no. So I think when you talk about taking over people’s cameras, you know, thank goodness, that’s not taking place, at least, we hope but you know, I think it’s definitely possible. It’d be interesting, if one day we got to the point where consumers opt into that in exchange for something of value money or something, because that data would become so valuable around you know, consumer interactions, or laughter or frowning or smiles to different entertainers, giving them real feedback versus likes or not likes on Facebook, I think we’re at the earliest stages of what consumer feedback really looks like, versus just ranting on Reddit, I think 10 years from now we’ll see the download and the upload is archaic, but it works for now. And it shows that people actually want to make their voice heard. And why not? Instead of just your digital clicker keyboard, make it your audio voice or your facial features or something really of interesting feedback.

Jay Clouse 51:59
What’s what’s the replay value and user behavior on watching recorded streams that they missed live? And are people tuning in mostly to live streams. And then if not, they’re not watching the replay, and are people watching as if it’s like Super Bowl 30. And saying like, I remember that game, I’m going to go watch it again,

Josh Chapman 52:17
on the professional eSports seen a lot of people will watch replays of different matches. If you’re a diehard fan, just like you’ll watch the replay of the Sunday football game. But if you miss a stream, you’re probably not going to go watch that stream because it was probably a four to eight hour stream, you’re probably just going to watch whatever’s live. That’s been my experience with different streamers. I don’t exactly have the data to back that up today. But that’s my gut read on the community right now.

Jay Clouse 52:44
Okay, my last question. We got a little bit away from Konvoy, can you tell us about the investments that Konvoy has made today?

Josh Chapman 52:52
Absolutely. To date, we’ve made three public investments one into a game developer tool called Game of Whales that helps game developers with turn two we invested into Askott entertainment in Vancouver. It’s a white label, b2b eSports betting platform. And three. Our third one is into Opera Event, which allows for programmatic monetization of the influencer world at scale. And so those are three examples of us making investments into technology companies and b2b or b2c service providers in the video game and eSports space.

Jay Clouse 53:28
And if you could share, What did you like about one or all those companies?

Josh Chapman 53:32
First and foremost is the founders, each of the founding teams of these companies are well seasoned and accomplished founders who are a pleasure to work with. They’re incredibly intelligent, they know their vertical incredibly well. And so that’s the type of founder we like to back. Secondly, it certainly the products and traction is fantastic for each of them. And thirdly, they’re working in a very large market. So Game Developer Tools is huge eSports. bedding is a massive market, it’s under tapped, and influencer. monetization is something that people have been trying to figure out how to do at scale. And we believe Opera Event is tackling in the right way. So it really comes down to the founders and the product, and then the market size. And in that order. I think that that order is very important for us. We all know that gaming is a big market. So that orders is really important to us.

Jay Clouse 54:25
Awesome. Well, this has been fascinating. And I’m sure Eric and I have a ton of questions that we can ask you and a part two, maybe down the line. But for now, for the listeners, if they want to learn more about you, or the work that Konvoy does, where should they go?

Josh Chapman 54:39
Absolutely, you can go to Konvoy.vc. She’s our website, if you’re a founder, building something great in gaming, or eSports, we’d love for you to apply and reach out to us. You can also follow our medium page. That’s where we have a lot of content talking about the space insights. And we published two pieces a week talking about current events. If you’re an investor or a family office, looking at this space, we’d love to talk to you about how to put capital to work in this space. But all three of those ways are ways you can reach out to us and follow us and we’re on LinkedIn, we’re on Twitter, so but those are some great ways to reach out to us.

Eric Hornung 55:17
All right, Jay, we just spoke with Josh from Konvoy. And that was fact filled that was filled with facts.

Jay Clouse 55:25
I think I have more notes on this interview than I have on any other interview that we’ve taken today.

Eric Hornung 55:30
How do you take notes, I’m curious about this,

Jay Clouse 55:32
I literally well, so I have an Evernote document for everyone we interview standard format, where at the top, I have the day of the interview and relevant links to their LinkedIn, their crunchbase, and our website, then I have a section for the pre interview where I have the name of the guests, their company, the basic stuff that we found in research, followed by the interview section, which is just an open field for notes, I do bullet points things like grew up in Asia, Latin America was a son of US diplomat. Things like facts sometimes is the KPI questions, all right KPIs, and below that, I’ll have some bullet points on that. So this is really just marking points in the interview and things that I think will be useful for the third segment of our show.

Eric Hornung 56:12
Alright, well, that was way more depth into your note taking process than I was expecting. But I asked the question, and here we are. So let’s talk eSports, we came into this thinking eSports is big, very big, lots of valuations that are very big. The joke here is that everyone thinks that eSports is going to be massive. And it felt like no one knew why I believe we got some insight into that here.

Jay Clouse 56:34
I really liked the stark contrast in so many aspects of Esports, to other professional athletics. And Josh made the point that it is not most closely compared to athletics, but instead more about music and arts. And I really love that framework. And I love the framework that he shared with people who are on Twitch versus professional eSports athletes and comparing that to TV entertainers versus actors and movies. I love that some of the things you shared about the age and the demographics of these people is just very different than people who were traditionally consuming media in professional sports specifically. So yeah, as you said, very fact filled, very stark and contrast to a lot of the customers and consumers of media that we hear generally, what stuck out to you

Eric Hornung 57:24
I really just like how he broke down the differences. And I mean, I had questions about streamers, and you kind of went through a lot of this already. But the streaming versus the esports versus all of this and what’s going to be what and how is it going to work together? And how do all the big players fit in? Because right now, one of the one of the biggest questions I’ve had about eSports, from an investing perspective, is Why are there no pre series A companies, everything is like, oh, there’s this company that just started and they just raised $40 million. Or there’s this team and Drake invested 100 million dollars in them, or the there’s this or there’s this and the numbers are just so big in this space, I feel like it’s been impossible to find really small companies in this space. And I think that’s kind of due to the way the industry has been structured over the last 20 years, which is there’s a handful of big players that make all the games that control all the access. And there’s only room to innovate really around the infrastructure that kind of connects all these things together. Which is why twitch just blew up.

Jay Clouse 58:27
Yeah, to Josh’s point. So there are three ways to invest in Esports in gaming, the games themselves, professional teams, and the picks and shovels, as he puts it, and Konvoys interested in the picks and shovels, which we see that same trend falling on in industries like cannabis. People who are investing in cannabis now are much more interested in the picks and shovels type businesses than the growers. You know, so I don’t know, Eric, after leaving this interview, are you more interested in getting into eSports or less interested, not as a consumer as a potential investor,

Eric Hornung 59:03
I would consider myself significantly more interested. I think there’s a lot of this picks and shovels and pipes that needs to be built out that will be built out. And if the growth projections are correct. I mean, connecting all of these things is going to be huge. And just because it’s global doesn’t mean there’s not going to be niches that develop just like the internet, there’s niches to develop, and you can’t just have one thing that does everything really well. So I think there’s gonna be a ton of opportunity here. I also think and I know this wasn’t Konvoys perspective, but I think that there’s probably some really good money to be made in developing an amazing indie games fund, who someone who invests, maybe it’s a studio or maybe it’s a fun, but someone who invests in amazing indie games,

Jay Clouse 59:51
Totally agree with you. There’s a firm in Columbus called Multivarious. And they are, they started as indie game developers themselves. Then they started putting on this conference called G decks, which is the largest game development conference in definitely the Midwest, I think it’s like the second or third largest conference in North America. And so they’ve built all these relationships with incredible indie game developers. And they are like in a prime position to do exactly what you’re saying. But they’re so different from anything that the investment or startup community has seen here. But they can’t get much of any attention. Because when they described their pitch, they talked about wanting to be like the Hollywood studio for video games in the Midwest. And I think that’s just like such a compelling pitch. And they they understand the industry, they have the connections, that they could be that fun, too. I’m totally I’m totally aligned with what you’re saying. This is kind of a digression. But I love that company.

Eric Hornung 1:00:45
Yeah. But it’s a helpful digression because it gets to the point that there’s underserved areas of this market that everyone’s looking at and saying, Oh, this is big, like, all the big money is kind of chasing this space. And everyone just kind of agrees that it’s going to get bigger. But the money’s not following. I like I don’t understand where the innovation is going to come from right now in the way that it’s all set up. So you have these funds, like Konvoy that are hard to find, or companies like Multivarious that are hard to find, and a lot of things right now are just hard to find. So I am very bullish on the future of this, I think that you have kind of a take on the loneliness crisis that we as a country are facing. And I think it plays into this overarching thesis of video games as a way to connect.

Jay Clouse 1:01:29
It’s such a fascinating community and culture, like what’s going on on Twitch, similar to YouTube in some ways, but I was really curious about the replay value, because some people just twitch all day, and it’s hours and hours and hours. And I couldn’t think that anyone was watching the replay. And sounds like that’s not really user behavior. People will tune in when things are live. And they like that live aspects. There was somebody that would, they had a pretty popular twitch stream, and they still do, just watching them sleep, like some weird stuff going on, on Twitch. And even when you land on Twitch.com, if you dear listener, haven’t spent time at Twitch.com, go to Twitch.com, take it taking account, you immediately feel like you’re in a very different place, just from the UI, it feels extremely different than what you would see on like a YouTube. And that’s really interesting to me to learn more about. So this is given me the spur to kind of dive deeper into that creator and maker community. If not just for my own personal interest.

Eric Hornung 1:02:22
I don’t think that twitch mixer and YouTube will be the end all be all of live streaming platforms. I think there will be at some point a deluge a deluge I really should get better at words if I’m going to be hosting a podcast

Jay Clouse 1:02:40
Ode lose Beccam?

Eric Hornung 1:02:41
what? That might have been the worst joke on a podcast in history.

Jay Clouse 1:02:49
The don’t all hit. Most of them do. Some of them don’t.

Eric Hornung 1:02:52
Anyway, a deluge of these platforms that are going to pop up, I think that you’ll see more and more of them trying to compete with with Twitch and YouTube and mixer. But in specific niche verticals.

Jay Clouse 1:03:05
Well dear listener, the obvious next step for us is to talk to some companies in the esports and video gaming industry. So if you know anyone who would be a good guest for our show, we’d love to hear from you. You can tweet at us at upside FM or email us hello@upside.fm.

Interview begins: 05:19
Debrief begins: 55:13

Josh Chapman is the Co-Founder and Managing Partner of Konvoy Ventures.

Konvoy is an early-stage venture fund focused exclusively on esports & video gaming. They are dedicated to partnering with and supporting founders in this industry at the earliest stages.

Konvoy was founded in 2017 and based in Denver, Colorado.

We discuss:

  • Gaming in social context (12:03)
  • Women in gaming (17:04)
  • The difference between Esports and gaming (18:47)
  • Esports on the collegiate league (20:27)
  • Streamers rising to the challenge ( 24:29)
  • Twitch vs. YouTube (27:46)
  • About Konvoy (45:35)
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