Ep 34 - GDC

[00:00:00] Fraser Kelton: It feels like there's a big gap between the capabilities and a durable product.

[00:00:07] Nabeel Hyatt: even in a three minute experience that you're having with somebody, there is a thing that excellence feels like and we can't confuse short with great.

[00:00:17] What the industry could really use is a handful of people ambitious enough that they're trying to rewrite the rules of the games industry versus playing by the current rules. If you shake the trees, a new innovation comes out, and that makes everybody think about where they might move next.

[00:00:35] If my voice is a little gravelly, it's because it's been GDC week. So I have been talking 14 hours a day for four days now. So anything inspiring? Yeah, I mean, we could make the whole episode about games and ai, uh, given the processing that that happened this week and the timing. If we were gonna do anything, we could do a short episode on just the GDC debrief, anything interesting.

[00:01:00] I'm trying to find the thing that I could say to be positive instead of whiny. You know, I sent a, a tweet out that I don't love sending negative vibes out as a, it's hard to be a founder. It's hard to be out there, especially when the market for games is a little bit tough right now. Yep. But even more hilarious.

[00:01:18] I sent out some tweet that was something like, you know, why don't games take more risk? And. I'm not seeing the same kind of innovation and creativity in this world that I, that I'd love to see, blah, blah, blah. And then I had a friend point out to me yesterday that at GDC last year, I basically send some version, the exact same tweet.

[00:01:41] Yeah. So I had a very wonderful GDC dinner, AI dinner that I've been running for. Whatever it is, three or four years now. Quite a while. And that original AI and games dinner was like four people or five people. 'cause that was about everybody, uh, who was doing ai, AI and games back then. Most of them inside of r and d groups, inside of EA and other places.

[00:02:02] And you know, it's now 25. I probably could have been 50 if you changed the bar a little bit, but for the people that I was trying to speak to, mm-hmm. I was probably 25, which is great. That's like the positive is that there are at least 25 people at GDC, nevermind the ones at home that are actually just working and so and so forth and not gonna a conference.

[00:02:22] Fraser Kelton: Right.

[00:02:22] Nabeel Hyatt: That are trying interesting things in AI in games that are not just about cost reduction. Right? Right. This isn't just, how do I squeeze an extra cent out of this creative process by removing one person who's doing a concept art? How are these sets of people using it to create new and better things and to.

[00:02:43] Take more creative risk in the industry. Sometimes it's reduced cost to be able to take more creative risk, but still it is this world where the output is not just extractive anyway. And I'd say they're like, that is growing. It's not growing as I want it to grow. It's not growing as fast as I'd love it to happen.

[00:02:56] There is innovation happening there, and I did see, I. One just legitimately funny demo for an AI game that was just great and came from a creative place and was okay still early and broken in 15 ways and blah, blah, blah. But like I don't think I walked away from a single AI demo in games last year with a smile on my face and I did this year.

[00:03:19] So that's good. Funny, like funny with intention. Absolutely funny with intention.

[00:03:24] Fraser Kelton: What a teaser. Yeah.

[00:03:26] Nabeel Hyatt: And then I have another idea, which is I want to, I've been trying to think about what would be the right way for an AI studio to get started. 'cause like these guys, the issue is they can't hire researchers.

[00:03:34] Not really. Yeah. And you'll probably hear me repeat this somebody, but it strikes me that we, what the industry could really use is a handful of people ambitious enough that they're trying to rewrite the rules of the games industry versus playing by the current rules. The current rules are, I'm just gonna make, you know, content packs for Fortnite, or I'm gonna take eight to 10 years to ship GTA And that works.

[00:04:01] But that works for like five companies, right?

[00:04:04] Fraser Kelton: Yeah.

[00:04:05] Nabeel Hyatt: And or I'm just completely beholden to steam, or I'm completely beholden to the App store. Mm-hmm. And the completely beholden to the App Store is kind of like Asim toting to. Match three casino game. Like it's, it's somehow found some, like, you know, survival of the fittest thing, which is like boiled essence of junk is exactly what the, what the app store is turning into for games because it's the only thing they can pay the cac, right?

[00:04:32] Like it ha it ha to pay the CAC to get a customer. It's a casino, it just needs to hit this thing so hard. So I give you the $5 so I can pay the cat and get another user that without Apple really doing something that's. Where it's headed.

[00:04:47] Fraser Kelton: That's so sad. I was just gonna say, it's really sad. It's so sad.

[00:04:52] Yeah. Wait, and that's gotta be a failure of the platform owner, like, 'cause that can't be healthy long term.

[00:04:59] Nabeel Hyatt: It's not, yeah, it's not healthy long term. It reminds me a little bit of what. Facebook's kind of treatment of games on the games platform. I also just think they treated, you know, like they just didn't treat them as good citizens. They didn't understand. They didn't understand those U users and so they never really understood games. They didn't understand they got the best out of them.

[00:05:21] I will give Apple credit that they are trying to do this subscription model for, for games with the idea that it will give up harbor for premium games and like interesting scripted content games inside of there. But speaking with devs, obviously there's not enough money going into it. Apple Arcade is just , rehash games that existed before. You know, please take Fruit Ninja and build Super Fruit Ninja. Uh, which is like, fine. But compare that to their TV strategy where they really believe, and you see the difference. . . And then Steam is this weird situation.

[00:05:56] I don't know, do you know much about Steam? Do you ever, you don't play many games, right? No. Steam is the PC appstore for games, and a business case where. Everybody likes Valve and everybody thinks 'cause they're indie and they're non-corporate and they never raise venture and they're not a public company and it's a bunch of kooky dudes up in, up in Seattle and like it, you know, they have, they give off good vibes.

[00:06:17] Fraser Kelton: Yeah.

[00:06:18] Nabeel Hyatt: But realistically, they don't allow any real ads on the platform, so you can't really acquire users. No ads has bad secondary effects. So there are these really crazy dark patterns happening now. One example, they prioritize the promotion of your game based on how many things are added to the wishlist.

[00:06:36] Fraser Kelton: Okay.

[00:06:37] Nabeel Hyatt: Like you can add a, you can go to a game and be like, Ooh, this is an interesting game that's gonna come out in three months.

[00:06:40] I'm gonna add you to the wishlist.

[00:06:41] Fraser Kelton: Okay.

[00:06:42] Nabeel Hyatt: Instead of a world on Apple where you're paying for installs, there are now game companies paying for you to just add to the wishlist.

[00:06:50] Fraser Kelton: Just to be a wishlist.

[00:06:52] Nabeel Hyatt: Yeah. It's this kind of like a communist world. Where you're like, if you just don't accept the ideas of capitalism and market dynamics in a society.

[00:07:03] Capitalism will find its way into your world in a much worse way, uh, than a design system.

[00:07:09] Fraser Kelton: Yeah. Wa water's going to find every little crease and and crack. Yeah. Right. And then work gets there. Exactly. Happens to be wishlist, promotions. And

[00:07:19] Nabeel Hyatt: so there's just like completely, it's just so weirdly shaped and valve still takes 30 percent for nothing and restricts most innovation , and then you don't, you also still don't own your customer and so and so forth.

[00:07:28] So the whole ecosystem , is kind of broken and that obviously affects the games that get released . Netflix and Discord have shots to change this, but that's a longer conversation. Anyway, I ranted for a really long time. Thanks for listening to me for four minutes, but that's why we want to do this. I'm still trying to process what the startup opportunities are in games , you know, like what is the venture role in games in in 20 25, 20 26?

[00:07:54] I don't know.

[00:07:54] Fraser Kelton: That's a question that I don't have an answer for, but I am going to give you a version of an answer that has been on my mind and that is, I think it's hard to ignore what's going on with the vibe coding games over the past couple of weeks. And yeah. I know that we've talked about this before and I know that you, like rightfully pointed out that it's like as much, the game making is the entertainment for that levels guy that is flight sim is, is what it is.

[00:08:21] But I, I feel like it's more than that. There's this joyous sense of community that even the early internet had where you, like, you're all kinda like piling in and you're, you're playing this stupid game and then you got hacked. But the hack itself was kind of funny and there's a lot of joy going on and I was thinking about, I.

[00:08:38] My interest. Stick with me on this. Yeah, yeah. Go, go. Um, my like, my, my like curiosity and like intellectual interest in web sim and I remember making games with my kids and the joy of making disposable games that we played and like my daughter goofed on her, her brother by making a game.

[00:08:57] Mm-hmm. Where like he was the villain and we played it for an an hour and we've never played with it again. The levels flight sim thing, and then what we did on web sim are like. Two pieces of the same puzzle. Yes. And there's going to be something that feels like a games platform, but isn't a games platform.

[00:09:18] And it's easily written off because it's going to look like lame flight sim with horrible graphics that's not really playable. And you play it for 10 minutes. Yes. And then you don't play it again. Yep. And that's it. Patience and discipline and first principles thinking pay off at some point for us.

[00:09:39] 'cause we will see the thing that we've been circling around with curiosity for some time. Yeah. And it will be like presented into the world in a way that actually makes sense and resonates and the world's ready for it. That's just, that was on my mind last night.

[00:09:54] Nabeel Hyatt: Yep. It is, um, unsurprising that the last couple of major breakthroughs.

[00:10:02] You know are things like Roblox and Minecraft, which are now old. To be clear, they're not. Mm-hmm. They're not new, really old or they're things like Monopoly go. They are on either end of the complete spectrum. They are these like crazy weird. Almost feels uncommercial at first, right? Playgrounds that don't even feel like they fit in the games business, to be honest.

[00:10:25] They don't. They're not part and parcel of the games business to be real. And then the other end is just like late stage capitalism, like hyper optimized, like every little edge is. Polished, you know, human experience. And not to say that people didn't get fun outta Monopoly. Go, and I, I met with a couple friends that I know that work on the team, and so the rest of that stuff, like, it's a thing.

[00:10:45] It, it takes a lot of

[00:10:47] Fraser Kelton: Yeah.

[00:10:47] Nabeel Hyatt: Um, skill to make that right. I am not saying it's sloppy. I'm actually saying it's, you know, it's like playing pro basketball. Like it is, it is a very, very high level sport to make a game like that and make it work. The only other thing that has worked, and it kind of feeds directly into this, is like.

[00:11:02] A couple of folks making something that's almost non-commercial and it hits, right. Balatro was the biggest mm-hmm. Talk of the last year in games, which basically poker meets a deck building Roguelike game. You're just trying to make hands of poker. You could play it and you'd love it and it's made by like a dude, you know?

[00:11:20] And like, is that gonna be a 10 billion company? It is not gonna be a 10 billion company, but it's like the thing. And everybody got joy outta playing and it felt fun and so on and so forth. Should that thing have been vibe coded in 2026? Like of course,

[00:11:33] Fraser Kelton: right?

[00:11:34] Nabeel Hyatt: Like of course.

[00:11:35] Fraser Kelton: Right.

[00:11:36] Nabeel Hyatt: Is there a world where you have 10,000 more of those?

[00:11:38] Yes. Is Roblox too hard to build for? Yes, I agree. It sits over in the land of play. More than it sits over in the land of like, let's do a pe rollup of game studios and help to give them more creative direction to, to build a more, even to build more indie hits or something like that.

[00:11:57] Another thing. VCs like to back game veterans. But maybe vets are not the way through to more risk. There are worlds where the thing is so new. Is so outside of the norm, new market creation, that it is better to have a new person to that market.

[00:12:16] Yeah. Than it is the vet. Like the vet's so burdened with what has to be Right. They can't get there.

[00:12:21] Fraser Kelton: Yep.

[00:12:22] Nabeel Hyatt: Right. Yep. And there's a world where you walk yourself into, you know, what is the web sim of games? Or what are these platforms? And, and you, you'd, you'd say it needs to be that it needs to be an outsider coming into the system.

[00:12:37] Uh, but I'm not sure if that's true. I think at the end of the day, the reason it that would be a problem is that a consumer still comes in with expectations. The truth is Fraser, if you popped open the next vibe crafting game creator, you would not create a new genre of games in the first 30 seconds. No.

[00:12:57] You would do what people are doing on Twitter. You would make a flight sim. That's right. You would make, you would make a version. Of the thing. The cheap version. That's right. That was like your childhood. Yeah. Like love, like you'd be like, I want it to be, I'd make

[00:13:10] Fraser Kelton: like a double dragon too.

[00:13:12] Nabeel Hyatt: There you go.

[00:13:13] Yeah. You'd be like, I want double dragon. two. But I want it to be like something closer to an IP that I like now, but not actually that. And then I also want it to be, you know. Mashed up with some other thing that I like. And the problem is that each of these genres comes with an awful lot of know-how to make it fun.

[00:13:34] Fraser Kelton: Mm-hmm.

[00:13:35] Nabeel Hyatt: And look, having, having shipped a game, it's an incredibly painful process and the last 20% takes 80%. And just even understanding what infrastructure, you would want on the insides feels like something. That is not an amateur sport. So it leads me to think that the right founding team is gonna be somebody who has actually shipped games before, who has made, you know if they're gonna make an.

[00:14:04] Thing that's so good at making RPGs, then they need to have not just played RPGs, like they kind of need to understand how RPGs are built at a fundamental level. Because what you want here is it's not, it shouldn't be Claude code writing every single line of code. Obviously there's like base sets of libraries.

[00:14:22] How do you do multiplayer server work? It, you know, with latency that works, how can I manage the stat system for combat? Like the, there are base libraries that you can, you know, kind of like function calling in LLMs. I don't imagine this being cloud code with some graphics. It is more like. You know, function calling it is more like mcps.

[00:14:42] It is like right, a set of libraries that are actually kind of probably relatively fixed. 'cause we're talking about genres and then it just understands like, oh, you said R-P-G-R-P-G probably means I need to call these nine libraries and pull them in and then we'll work from there. Or, oh, you said first person shooter, well then clearly I need like these sets of libraries, let's pull those in and let's get going.

[00:15:00] It feels like it's much more like that. And if you've never shipped a first person shooter. I think you're starting from very far behind on getting something that actually feels more than just loose prototype e You know, that anyone would play for more than two minutes, but maybe I'm being old.

[00:15:15] Fraser Kelton: I was just about to find a Yeah, you could be.

[00:15:17] You could be straight with me, dude. A way to ask if you're, if you're thinking about it from the perspective of somebody who's been in the industry for a long time, like undoubtedly everything that you just said is true if you're trying to build a great game. Mm-hmm. Right. But what happens if you slide the slider even further into the realm of play and creativity?

[00:15:38] What about if you're just trying to build a toy? Yeah. And like the games that you play are like, what if they're like five minutes and then you move on to the next one? And maybe the most you ever do is 10 before you then go and try and build and fork and make a derivative of something else that somebody else plays for five minutes.

[00:15:57] And then, and then where I went on that is like, what does that end up with? Because. That feels fairly shallow and unfulfilling over time.

[00:16:05] Nabeel Hyatt: That's my problem. Like for all our conversation about TikTok and it's only, you know, I'm watching a video for two minutes and blah, blah, blah, and like this is not a movie.

[00:16:13] There's an unbelievable level of good execution on TikTok. Yeah. Like phenomenal good execution on TikTok. And my worry is if it's really, really only shallow. You don't, don't get to excellence, and that's what I'm saying. E even in a three minute experience that you're having with somebody, there is a thing that excellence feels like and we can't confuse short with great.

[00:16:38] Way too many of the early experiments with like, hey, game makers way, pre l lms. There's been all kinds of like wizzywig make a game stuff and like little game makers on mobile and things like that. The real question is like, can you build anything compelling? With it that you would actually wanna play, right?

[00:16:55] That 10 people would wanna play twice. I don't think you have to play it as long as you play grand theft auto online, but you certainly have to get a sense of joy from playing it. That feels interesting and unique and it's not, you know, it's not just skinning, you know? The other threat I would pull on that would be possible is.

[00:17:15] Not that the playing is the best part, but that the making is the best part. Yeah. Two threads I would pull is that you could pull a thread on the playing is the best part, in which case you need to have strong sets of libraries and it needs to be able to like spit out an FPS fairly quickly. Now there's actually lots of libraries online, so like there's a way to do this without it being like a five year endeavor, to be honest.

[00:17:37] I suspect that's what consumers want. Because when consumers say they want to make Double Dragon, they actually really mean double dragon. Like if I then give them really, really crappy, you know, A SDF, like, like they're unhappy, like it's not, it's like they're not satisfied. They will not come back to that platform.

[00:17:54] And I think we have lots of examples of that. Quite frankly. That's the consumer side. The second version, Uhhuh, would be that the coding is the fund itself. That's actually the point, and it's the journey of the coding is the fun. I said a thing like maybe I don't remember two months ago or three months ago, which is like the consumer AI startup that I yearn for is not like a vertical or a market.

[00:18:16] It's that feeling, you know, 90 minutes before bed, you're super tired, your brain is fried, and you would instinctively reach for something that like. Is like in flow. It just like doesn't challenge you too much. It's just joyful and you can just use it. It's Netflix. Mm-hmm. It's a book, it's Instagram it for many.

[00:18:36] It's like one last Fortnite run or one last League of Legends run before I go to bed, blah, blah blah. Like right. That should be vibe coding. And that's, we vibe coding a game. And the issue is it cannot. Test you too much. It needs to actually be in flow and fun the whole time. 'cause it's something you're doing 90 minutes before bed.

[00:18:54] Your brain is fried. There's a world where you're optimizing, like everything about the gaming platform is for that feeling.

[00:19:02] Fraser Kelton: Mm-hmm. My kids have have. Discovered on their own Canva. Oh. And I thought that they would use it as a Photoshop replacement. Like, I'm going to make an invite for my party to send to my friends.

[00:19:18] They use it for what you just said. They, they like go down to the computer, it's messing around, and they just are, it's crafts. It's creating and, and they're like, oh, it's

[00:19:27] Nabeel Hyatt: amazing. They're scrapbooking and they're, yeah.

[00:19:30] Fraser Kelton: Yeah. And they're. They're like, dad, you gotta see this. I've made a movie. I'm like, you made a movie.

[00:19:35] The movie movie is ephemeral, but they've spent like, you know, 30 minutes putting transitions in slides and music, and it is clearly scrapbooking for them. It is like you and Midjourney, and it is a delightful outlet for them right now, if I really internalize it, like the, the joy that I had. Building these, like, I hesitant to even call them games on web sim with them.

[00:19:58] Was was again the creation process. Like, no ha ha ha, you got your brother's like face moving around and you're the tank that blows 'em up. And, and the, the playability of it was, was like the small, the small slice of what.

[00:20:10] Nabeel Hyatt: So the thing that's missing from that, then in everything I've seen, like if you're gonna optimize for that, then it needs to feel closer to Figma and it needs to feel multiplayer.

[00:20:20] And I don't mean the output, I mean the input. Yeah. It needs to be like me and you are gonna hop into a code base with an AI and it's like the three of us, me, you and the AI are, are messing around. The multiplayer game is the making of the game. Yep. That's cool. Is another way of wording it. I can get my head around that.

[00:20:39] And if I go back to like, that doesn't exist, I haven't come across anybody who's thinking that way. I have come across people that are trying to do three Js who try, who are trying to do vibe coding, either at the JavaScript level or at the deeper level, forking some open source code or something like that, and trying to make it write deeper level code.

[00:21:01] Right. I don't think any of them are treating the authoring itself like a game.

[00:21:05] Fraser Kelton: Mm-hmm.

[00:21:07] Nabeel Hyatt: At least not in a way that's manifesting itself yet.

[00:21:09] Fraser Kelton: Here's one that I've been been working through and I, I gave you a version of it in our meeting with the team earlier this week, is we are like on the exponential of just coming across like raw capabilities that we've never had before.

[00:21:24] Like the first time that I used Dolly and you, you type in text and outcomes. Mm-hmm. It's, it's everything over the past five years like Right. Is like, you, you do this and they're like, oh man. That's magical. That is, that's something I, I've, I've never, I've never been able to make music. I've never been able to make a game or software or anything else like that.

[00:21:45] You start with the capability. Yeah. And there's now a growing number of people that's non-trivial who just want to try the capability. They want to experience the magic.

[00:21:54] Mm-hmm.

[00:21:55] And if you look at that, it can be very exciting. Because you now have millions of users or, or millions of dollars of revenue if people are then paying to try it.

[00:22:06] Mm-hmm.

[00:22:07] But it feels like there's a big gap between the capabilities and a durable product. And I know that, like, that's simplistic, but it feels like there's like the the start of a way to think about what we're seeing in the world. Yeah. Like if you bring a capability to market early, when are you in a good position?

[00:22:27] Also become the group who turns that into a durable product versus like you're just the first person who brought the capability into the market. And there's like a little bit of heat, but it's more a reflection of the fact that you're giving people the taste of the future.

[00:22:43] Nabeel Hyatt: Getting a million users to have your product is necessary, but not sufficient for success Today there are just a million users that seem to be running around.

[00:22:52] Trying to try AI products on any given week and, and you may catch the zeitgeist one week and have the million come through. The issue is the million don't necessarily stay 'cause they have another AI product to try next week. And that's certainly a, a behavior that we're seeing across startups right now.

[00:23:06] And I guess what you're trying to say is. What are the indications if you were a founder and you have the million flow through, you are trying to figure it out like, Hey, how do I now turn this lightning in a bottle into something that lasts? And how can I be the one who's introduced unique capability that wows you, but I still wanna be the guy here or two years.

[00:23:25] Like, I want to turn this into not just, I dunno, a funding round or a couple of hires this week, or whatever it is. Yep. But I, I wanna be the lasting change. I think this is why you're getting so many conversations right now. Amongst the builder class about pace and about speed, because I think the truth is that you don't have a durable edge right now.

[00:23:47] And so the only thing you can do is stack wins on winds. On winds. Right. And at some point it becomes durable at some point it becomes habit forming at some point. We get out this window that we talked about before where like, I'm no longer comparing toothpaste. I, I'm just gonna use the thing I wake up to use every day.

[00:24:03] And then you don't change toothpaste for 10 years or ever. Ever. I use the deodorant in my. Dad used and my son uses the same one. Like, that's right. Like it was just, why, because there was no reason to try another one. It was like, I don't know, it seems fine.

[00:24:20] Fraser Kelton: I, I didn't need to re-litigate my laundry to church and it was tied and then, you know this.

[00:24:24] Nabeel Hyatt: Yeah, we a

[00:24:25] Fraser Kelton: tied family somehow.

[00:24:26] Nabeel Hyatt: That's a weird thing. These things will metastasize. But the awesome thing about technology in that we, we like this stuff, is that there's a little, you know. You shake the trees and new innovation comes out and that makes everybody think about where they might move next.

[00:24:40] But in the meantime, it's just stacking winds. And those winds can not all be revolutionary, but some of them can just be about pulling your attention back two weeks, three weeks later. I had this conversation with a founder last week. It like the surface area, your product changing a little bit, adding another value to somebody that, in a way that a user can see, not like a just a random bug fixer infrastructure improvement, but something that like a user can.

[00:25:03] Talk about or think about, like those things just really, really matter. They really actually matter to those million, to 2 million to 10 million people. Because the thing that you get is everybody doesn't wanna actually re-litigate all these products every single month. Right. And so the thing that's happening when you have high pace is the first thing, which is the obvious first order effect is like, Ooh, shiny penny, new thing to try out, new thing to promote.

[00:25:28] Great. Right? Sure. Also maybe something that somebody else has to play catch up with right against you. So you're saying ahead. Awesome. That's the first order effect. The second order effect is that I think consumers get tired quickly. They just want the job to be done. But more importantly, one of the jobs that they want to be done in this age is, is this a company that will keep me up to date?

[00:25:52] With all the changes that are happening.

[00:25:53] Fraser Kelton: Hmm.

[00:25:54] Nabeel Hyatt: And so by having pace and by stacking three, four, or five wins, you also start to represent in, in like a brand for your users that is, Hey, this is one of the innovators. Like, so if I'm using this photography software, or I'm using this coding software, or I'm using this, I, I feel this way about Windsurf and Cursor.

[00:26:15] Right now they're pacing so quick and close to each other. That like I feel comfortable using either, right? Because they both represent a brand for me of innovator. Like I know if some new thing comes out and it's awesome in AI coding, maybe cursor got there a week ahead of time, maybe Windsurf got there a week ahead of time, but I know the other guy's gonna cover it a week later.

[00:26:38] So they both have this like represented innovator brand in my, and so I don't have to re-litigate which one I'm using every week. I pick one, nevermind which one I use, but like I pick one and like I feel comfortable and so it just means I don't go through the process constantly. And that's what you want as a brand.

[00:26:54] You want the consumer to feel like, yeah, yeah. Don't worry. We're like, we're your AI steward. We're gonna carry you through the next 15 model changes and crazy things that are happening and blah, blah. Like. Just come to us, we'll cover it.

[00:27:05] Fraser Kelton: Yep, yep, yep. So then from our perspective, trying to make sense of the opportunities.

[00:27:10] I really like the concept of stacking winds rather than pace and

[00:27:15] mm-hmm.

[00:27:16] Why? Well, wind has connotations of like delivering on the vector that matters, whereas like pace just means like, I'm moving very fast and doing a lot of stuff. You don't like

[00:27:26] Nabeel Hyatt: the empty calories kind of feeling the hamster on the wheel

[00:27:29] Fraser Kelton: kind.

[00:27:29] Like, of course not, but like. I think like if you're first to deliver a new capability or to like help people experience a new capability, stacking wins means delivering what users want from that moment on. And like the win I think in that case is like connotation for like delivering what users value and what they want and what they care about.

[00:27:53] Nabeel Hyatt: Yeah.

[00:27:53] Fraser Kelton: But like you could imagine a place where somebody delivers the new capability. They move exceptionally fast down the capability curve, but that has diminishing value for what people actually want in the product, if that makes sense.

[00:28:09] Nabeel Hyatt: Yep.

[00:28:11] Fraser Kelton: Right. And so like my, like very tenuous thought here is that like a lot of times we get excited about a new capability 'cause it feels like magic.

[00:28:19] Mm-hmm.

[00:28:20] And often, more often than not, that new capability is likely going to make its way into a project experience that like solves jobs to be done for us, but usually requires like good product work to, to get there. Right? Like stacking of the winds is the good product work to get there, if you will, rather than just like.

[00:28:39] Banging on the capability and making it ever more capable, uh, as like a simplistic example.

[00:28:45] Nabeel Hyatt: Yeah. In other words like , the execution. You do need to keep thinking orthogonally and delivering new value to a user. It's not just that the thing got, uh, 0.03% faster this week. You still want a little surprise and delight.

[00:29:01] Fraser Kelton: I think. So the reason that I've, I've been like wrestling with this one is. To try to sharpen my thought for when we do see something like this, what is it where we would be more inclined to lean in, even if we just went through with that. , you either do it the day before or three months later and I, I just come back to what you said around stacking wins in the meeting and that the direction of the wind that they're stacking is the thing that matters.

[00:29:28] Nabeel Hyatt: The moment that there's an inflection point and something feels like it has product market fit. But you're seven days in, it's probably the worst time to invest. You should have done it right before it launched, or you should have done it three months from now, six months from now, when you have evidence of retention and engagement and Right, and importantly that they can continue to have pace and stack wins, right?

[00:29:50] So right. If you play that back, what are the few times when that moment of inflection and the hype cycle is high, and so the price is at its highest? What are the times when you think. Screw it. We should be involved now anyway. And it's when you feel like you have an insight to the other bits we just talked about.

[00:30:09] Mm-hmm. Right? It's when you can reach a confidence threshold that is like, no, I actually think they're gonna stack wins. Right? I haven't seen it yet, but we have a conversation about, this is why we have a conversation about products, why we're product oriented, right? Because I think the kind of conversation about being founder oriented is all wonderful, but founder oriented only means one of two things for me.

[00:30:27] It either means you have a fancy resume. So, and there are VC firms that act this way. It's like, I don't know, that person was a senior executive at Microsoft or Google or Open ai, whatever their, whatever their thing is. And so like, I'm really investing in resume 'cause you don't know these people.

[00:30:41] Fraser Kelton: Yep.

[00:30:41] Nabeel Hyatt: Right. And so it's either one, you're investing in resume, that's what founder is. Two is, you maybe do know them for a really long time. You do have really strong intuition, but that's another way of saying you think they're gonna make good product decisions and good strategy decisions, which is, which does happen, and like I respect those people.

[00:31:00] Or the third is, you know, the good founder thing is PT Barnum. Like, I don't know, they make a good pitch. Like I was swept away by their reality dis distortion field. Well, it turns out that like lots of PT barn and people can't execute worth crap. They just have a good pitch and that's all they have.

[00:31:15] Fraser Kelton: It's interesting is Brendan at Sesame had all three, at least from my experience, right, like, we have history where I.

[00:31:22] He has made good product decisions, so we have confidence there. It looks like he has made good product, like thoughtful decisions and like projects into the future, good, thoughtful product decisions, and there's like a little bit of PT to Barnum.

[00:31:34] Nabeel Hyatt: I I, I am not saying you don't have to be a wonderful pitcher to be a good CEO.

[00:31:39] Like look, there is marketing to all of this and yes, Brendan, for us Brandon at Sesame is , we've known him for a long time. We can clearly see that he executes, he's tapped into something huge, but also there's also more than one win there internally.

[00:31:55] Fraser Kelton: Yeah.

[00:31:56] Nabeel Hyatt: Yeah. Like that business, it might not be launched.

[00:31:59] There's more than one win already happening there, and you can feel pace. Yeah. So that's a, that's a good, that's a good qualifier, but on the far edge of risk where you're like, not really sure what you're trying to get there. I like our way of processing things, which is just figure out whether you think they're gonna stack wins into the future.

[00:32:14] Right. It does make it harder. Like we have a harder time doing the, Hey, this is a amazing thing to play with right now, but the founders have absolutely no idea what's gonna happen in the future and there's no durable moat yet. And like, right. Like hard reach confidence in those people. We just met the person two weeks ago.

[00:32:31] Right. They seem great. Demo's kind of cool. No idea how they're gonna, they're gonna navigate into the future 'cause they have no idea what they're gonna build next. I think the only one we can get really comfortable, there are areas where there's like just a lot less competition. So actually, ironically, we could say on the same subject when Brendan and the team came in with Oculus, like that's a good example.

[00:32:53] We don't quite know what it's gonna turn into. We don't know where the winds are gonna be a year from now, but the demo's amazing. And you're like. Nobody else is building this. Like, like, like, like, come on. Like VR has been a dead market for 20 years. Like, come on.

[00:33:09] Fraser Kelton: Right.

[00:33:10] Nabeel Hyatt: So that's, that's, that's an area where maybe, you know, part of the heuristic we're having in AI right now is that if somebody releases is taking advantage of some new model capability in ai.

[00:33:19] The thing that you know is that there's gonna be five YC companies in three months tech tackling the same thing, and you're, it's gonna be 500

[00:33:26] Fraser Kelton: people doing this. Yeah.

[00:33:27] Nabeel Hyatt: And then you're gonna see two guys spin out from Google that are trying to raise a hundred million dollars doing the same thing like. It is the nature of this kind of like feeding frenzy thing that creates a different decision matrix for both the company and investors.

[00:33:40] Right?

[00:33:40] Fraser Kelton: Right. That's a great call out. Is that like, what's the nature of the competitive market? Yep. Is it obvious and everybody's going to do it in three months, uh, is very different than like, oh, nobody in their right mind would ever do this.

[00:33:53] Nabeel Hyatt: Yeah. And I will say, to loop back to it, the craziest thing about the games business right now.

[00:33:58] Is that, you know, we teased about one thing that I think we both had nod around, which is vibe coding in games gets you outside of the normal game cycle. It will be fun, it will be a thing, it should happen, and there's a really sizable company to build there. Awesome. Mm. But I will say there's nobody really doing much of the riding the model capabilities.

[00:34:21] Inside of games right now.

[00:34:22] Fraser Kelton: Mm.

[00:34:23] Nabeel Hyatt: Like if I'm trying to ride the edge of reasoning and model capabilities and I'm trying to make a B2B law startup like it's ants on cheese, like it is just a complete feeding frenzy , you know, but,

[00:34:36] but if I did the, literally the exact same thing in games, I'd have to figure out the form factor. But I don't think there's anybody doing that. There's no framework for. Uh, a play space where I'm the author, so forget the kind of people making their own games. I'm the author of that game experience, and I am just letting you play my game but in a mod framework with whatever new awesome model capability that happens.

[00:35:00] And I'm, I'm glossing over the nature of building games and finding the fun and a little bit of the things there on purpose. But I will just say, if you do this in games, like it's pretty greenfield, man. Like I just came outta GDC, I just had like 35,000 meetings. Like there are not that many people doing this.

[00:35:17] Fraser Kelton: I may regret this question. Why not? Like why, what's your thinking on why this isn't happening?

[00:35:22] Nabeel Hyatt: So I think it's the, the best way to describe this is to describe GDC. So GDC is a five day event. It's huge. I don't know how many people come there. 50,000. Monday and Tuesday, historically have been the summit days.

[00:35:34] The summits are two things. The, the first thing they do is like, they have a sound summit, like an audio summit. They have a like technical artist summit. So basically they have small niche things for specific parts of the gaming world. And then the other thing they do is like whatever the new cool thing is, they run a summit for it.

[00:35:52] So there was a virtual world summit. When virtual worlds were big, right? There was a VR summit when the VR summit was big. Like these kinds of things were a real thing in the day. Not surprisingly, there was a game AI summit this year and there was a machine learning summit This year, 10% of people go to the summits on Monday and Tuesday.

[00:36:13] And then Wednesday GDC kicks off and like 90% of people show up. I see. And it's all console and pc. It's all PlayStation and Xbox and you know, to the next GTA and Call of Duty and all the rest of that stuff. And so that, that should tell you a lot about what the games industry is like and what it feels like, which is most people want to make cooler looking guns and they love games.

[00:36:41] They grew up playing games. They play. Call of Duty all night long and they wake up in the morning and they wanna make the next Call of Duty or something close to it, or Board of Warcraft or whatever it is that they grew up with, which is to say that, that it's super crazy interesting and satisfying to build something that's only 2% or 8% different, right?

[00:36:58] It's just fun to build games. It's too fun to build games. I see Fraser and so people don't. Innovate enough. They don't take enough risk on the creation side.

[00:37:08] Fraser Kelton: That is so counterintuitive.

[00:37:10] Nabeel Hyatt: It's the same thing as movies, right? You're, you're not trying to make the weirdest movies in the world because you just love the craft of making a movie.

[00:37:15] Right? I don't need to reinvent whittling wood or playing the guitar because playing the guitar is fun. It's great. I love it. I'll do it for an uneconomic reasons like supply of people wanting to build games. Far outstrips demand. A

[00:37:29] Fraser Kelton: AI feels like we're going to give you a new whammy bar on your guitar.

[00:37:33] Like I'm trying to make the analogy like it feels like it would just add to the, it should add to the experience of creation.

[00:37:41] Nabeel Hyatt: Yes, it does add to the creation experience, but it's hard and different. I see. And for, for most people. They're quite, it's like, it's like what's the satisfaction bar of creation before you feel satisfied internally.

[00:37:58] Fraser Kelton: Mm-hmm.

[00:37:58] Nabeel Hyatt: Mm-hmm. And that, that's what, that's what happens when you're making something. When you're building. Yeah. And in games like taking. Doom and just putting Bart Simpson's head on the demon is like pretty satisfying as a fourteen year old.

[00:38:13] Fraser Kelton: Yeah. Yeah. I get it. And

[00:38:15] Nabeel Hyatt: that's just a mod, right? And so I think for a lot of people, they're happy to build.

[00:38:19] I. Genre games. That's the way of putting it. Right. It's very satisfying to build a genre game.

[00:38:24] Fraser Kelton: They give 'em the flow. They have the tools. They're, it's familiar. They're, they know the audience is going to be there already. It's, yeah. Yeah.

[00:38:32] Nabeel Hyatt: All right. I, I had a, I had a founder yesterday give me a very common piece of advice that he said it was really hard to learn, which is the plus one.

[00:38:41] Model of gaming, which is you do a game that is exactly like another game that you like and you had one small thing. I have another founder friend that I've known for 20 years. I will not reveal the way he talks about the way he wants to do games. He's really a lot of really successful games over time and like he has the like one thing the same, one thing mildly different and one thing wildly different.

[00:39:03] And like that puts him in the far edge of innovators.

[00:39:09] Fraser Kelton: I see. Interesting. Interesting. The, the, the game world is like. You would assume it would be very similar to like software engineering and, and like software products. But it's very different.

[00:39:19] Nabeel Hyatt: Yeah, it's very different. Anyway, let's be done now. Is there anything else we should, you, you wanna talk about with me that's off topic or whatever things you're processing fun for the week?

[00:39:27] Fraser Kelton: I'm in town on Thursday and the NCAA uh, tournament is in town on Thursday. Do you want to go to an NCAA game?

[00:39:34] Nabeel Hyatt: Let's just say yes.

[00:39:36] Fraser Kelton: Well, let me know and then I'll chase down tickets of a sort.

[00:39:38] Nabeel Hyatt: Let's, let's take back and forth and figure out what we wanna be. Yep.