Today I am with Jason Yeh, co-founder of Patron. Jason was previously a VC at First Mark, where he led diligence on Riot Games. He then joined Riot really early. He worked on League of Legends expansion and creating e-sports internationally.
Now at Patron, he focuses on the convergence of games and the consumer internet. Jason, thanks for coming on the pod. Why don't we start with the basics of what you're working on at Patron.
Sure. Yeah, so at Patron, we describe our thesis as the “spectrum of play”. And so for us it's kind of thinking about what does the future of the consumer internet look like? And for us, we just believe that it's going to be more fun, social, interactive. And so a lot of the things that we learned during our time at Riot, kind of scaling this massive global community and focusing on delivering value and creating products that people can use for thousands of hours is gonna inform, not just like how to make games, but can inform any type of consumer application going forward.
Great. I have a lot of questions on that, but let's go back to investing in riot and maybe start me with your time at first mark. Yeah, so first Mark was a firm that was based, or is based in New York City. It's focused on investing predominantly at Series A. so I was at the firm when they spun out of Piqua and rebranded us first Mark. And so the partner that I work with, Rick Heitzman, was.
A lot around kind of digital media entertainment. And so we saw ride games together pretty early on. And I would say like it was at a time where people were starting to invest in social games and in like, Facebook was becoming big as like a gaming platform.
This was just before like Zenga had come out. And so it was still pretty counterintuitive to invest in a PC game or to invest in this kind of idea of a free to play online. But Riot was that type of kind of non-traditional bet, which yeah, I think like over time it changed the course of like how people build live services around games and how you can use this business model to actually scale a really large business.
Build live services around games. What does that mean?
So that means like when we launched League of Legends, there were 30 champions and the expectation was, That we would continue to add to the game, create more champions, continue to evolve like the features within the game, build new maps and game modes. And basically it was like a living, breathing product that over the course of time would continue to get better and would stay kind of fresh and fun for I think in console gaming, like a popular model, for any kind of sports game is like you're. Mad in 2000 and the next theory, there's mad in 2001 and then mad in 2002. And so instead of thinking about creating like a sequel or like a new version every year, it's just like a live product that continues to kind evolve.
And we were patching the game in the beginning every like two to three weeks.
Okay. And now Ryan is a huge, important LA institution. What was it like when you invested and what were some of those key insights that unlock the growth? Yeah. So when, we originally invested, we co-led the Series A with, uh, Michella Benchmark. And so the idea was, uh, Mark and Brandon, the team wanted to launch a free to play version of Dodo, which was just an incredibly popular Warcraft f Mo. but Blizzard wasn't really paying a lot of attention to it because it wasn't kind of the core game that they developed.
It was what a mod community built on top of the. And so the idea was that you can take this free to play business model and actually create a AAA premium game experience that people could spend hundreds of hours, if not thousands of hours, and that we wouldn't necessarily gate access to fun by requiring people to spend money.
We would give people the same experience, whether that you could spend a thousand hours having fun in lead, whether you spent $0, or whether you spent a hundred dollars, or whether you spend a thousand dollars. And so I think one interesting thing about League is that It wasn't successful right away, and it wasn't like there was some big launch where we did a lot of marketing and promotion and tried to get like in front of a lot of people.
It was a game that really had this kind of grassroots, organic, like it was a game that was really hard to learn for a long time. And so it's just a game that's more fun to play when you play with friends. And so from very early on as a company, we focused on kind of harnessing and, and being part of the community.
Using the community itself to like help make the game more fun and to kind of create a lot of these things like around the game. And so yeah, it was something which I would say probably over the first 10 years or so, the game continuously just like organically grew. And then the other way that we kind of strategically grew the game was by launching the game into new markets.
And one thing that we did differently that not a lot of other American game, Tony did. We decided to self-publish the game in almost every market around the world. And so we built our own local teams and basically wanted to make sure that like, whether you were playing from Turkey or Europe or Singapore, like you weren't considered a second class citizen to in terms of the gameplay experience.
And we wanted the game to feel like it was locally made. And there's a lot of local fun and engagement around the product for, for users every.
Uh, So many questions on that. So self-publish allows you to be just much closer to your users.
Yeah, self-publish allowed, allowed us to just have the direct relationship with our audience we could control both their experiences inside the game and also have a lot more influence over the experiences they had around the game. And I think from very early on, like League was, it was probably one of the first games that kind of.
Grew up alongside Twitch, alongside this like culture of like cost play alongside this, phenomena of like people self-organizing, like community events or even like taking over some of these like, larger trade shows.
Hmm. And so let's talk about that experience. Cause I think it bleeds into investing. Huh? What makes League of Legends fun?
so there, there's a couple things. I think one thing which is true about this style of gameplay is that , it's a team-based game and it's incredibly replayable. it's not the easiest game to learn, but it's like even harder to master. And so presumably as an individual player, there's literally.
Like hundreds of champions that you can learn and play and there's so many different permutations of like team comps cuz you're, you're not just playing by yourself, you're playing in teams of five against other teams of five people. And so it's an incredibly replayable game, really high skill ceiling.
And uh, we create a lot of kind of systems in the game that allow people to track their progression and want to like, get better and show that they're better. And then I would say, Making the core gameplay balance for any kind of deeply competitive game is incredibly important. And I think it's something that's really difficult to do.
But I think one thing that Ry did well outside of that was we saw that that was a starting point, but there were all these other kind of like micro communities that formed around things like Coplay, like eSports,
You've said this twice now. What is it? Cost play.
Coplay. It's like where people dress up as the characters in the game.
Yeah. So like at ComicCon, So it's more like this idea of like, your experience in the game bleeds into your out of game life. And so it's not just you're thinking about league legends when you're playing the game, it's actually part of your identity. You spend time thinking about the characters and the world and following the sports.
And I think now, I mean, Ride's invested for over a decade in, kinda this, uh, music and film. And then last year obviously we, we came out with Arcane. like it starts with the game and I think the game allowed us to build this huge audience, but it didn't end with the game.
That was just a starting point to create all these other experiences.
Super interesting. So keep going and tell me what are the lessons that you took from riot that you take into investing in consumer The Internet
For sure. Yeah, so I, I think first and foremost, like big part of Right DNA and I think bled into both my co-founder Brian and I, is this idea of just like deeply understanding your audience. What motivates them and allowing you to kind of build a really passionate community around a specific product or a specific experience.
And do you think that building that's very passionate community is better suited to certain products or certain verticals? Or is it something that we'll see across the consumer? Internet I think the most successful products and applications will have passion. It's like a, it's a characteristic of things that become success. . And my point was more that if you intentionally focus on building that from the beginning and it's kind of in the DNA of the company, is to like understand the audience you're serving, why they use things, how they find things fun, how they connect with other people who are using it.
Um, I think that that's an advantage that other people who don't do that won't, won't have.
Do you have anything? If you keep going with that thought, like once you understand your users, do you have a way then to make, to turn that into more of a community? I mean, as opposed to just, I understand them so I can build product, but I can foster that. Interaction or,
Sure. I, I think it goes to this idea, and this comes from gaming directly, but this idea of like single player versus multiplayer and like if you're using a product by yourself, because there's a very intrinsic kind of motivation and benefit that you get from it versus. when things become multiplayer, then you can form these like bonds with other people who are also using the product.
Also, sharing the experience and maybe the fact that you're sharing the experience can make your experience in that product better, which is certainly the case in sort of competitive team based games. Do you have any examples that are maybe surprising examples or just really illustrative?
I think one is certainly dual lingo , they did a great job creating a single player game like experience that allowed people to continuously come back to study and practice and learn.
And I think one of the biggest challenges with any kind of education is this idea of like, once you're outside of a school, The commitment to actually consistently do something is really hard. And I think they did a great job kind of taking some best practices of mobile games to create this kind of a product experience that encouraged, incentivize and rewarded people for continuously using the product.
And I think over time they're trying to find more ways to create multiplayer experiences around it and to build more communities and help their users connect with other people Um, Education broadly, like we, we think about quite a lot in terms of like how you can have better like digital native, social native products across different verticals within education.
Okay, that makes sense. What about making something. I'm just gonna go back to that I think like one thing which is really important is just like understanding somebody's motivation for using something. And I think playing a game, it can either be to like spend time with your friends. It could be mastery, like proving that you're actually the best at something. It could be range, showing that you can play like a variety of different characters And so I think that is something which like is harder in verticals where you think it's like a subject or topic that people naturally don't think of spending time. But I think it goes back to just the first point of like understanding your audience, what motivates them and. What they generally find fun and creating a new way for them to experience that with your product.
So before I totally move off, Riot other lessons learned, and one area that I find fascinating is that you really built out eSports leagues internationally, right?
Yeah. I, I think like one thing that a lot of our early team focused on eSports thought heavily about is like, , What is the purpose of sports and like, why do people follow sports? And there's this huge sense of within your own family, like a lot of team allegiances come from like, Oh, my, dad or my parents, like watched this team and growing up it's like a memory that I have that it's like past, from generation generation or I grew up in this region or the city and this like team represents that city.
And so like I grew up supporting there. And so I think one thing that we thought a lot about is. how can we form that type of feeling for players in our game when the game hasn't existed for that long? So it's hard to say like, we created something that has lasted for like hundreds of years, but they want to create that same kind of passion and tribalism and excitement.
And so one thing that we decided to do pretty early on, and this goes also to like game publishing. Cause we, like I mentioned, we self-published the game. We didn't license the game to a bunch of third parties. Think about just like grouping a lot of regions at a macro level. We went very like local in kinda publishing the game in each market.
And I think same thing with eSports. If you think about sports, uh, I think one of the most global team sports is football or soccer. Um, and so if you look at soccer in different regions around the world, there's literally country based leagues and there's like city and town based teams in almost every country in the world outside of the us.
And so we, spent a lot of time early on building like local pro leagues.
Mm, mm-hmm. . So keep going then I'll let you get off. Right. And tell me more about Patron. And I think you said it's seeing consumer internet through the lens of games and crypto. Is, there a crypto piece in there? Uh,
Yeah, so I think what we found after we, So we raised a $90 million fund last summer. We started investing and so our model is that we typically lead and co-lead, seed rounds. And one thing we noticed very early on was a lot of the strongest founders and repeat founders in our network, whether they're coming from game companies or Google or Meta or Coinbase or wherever they were leaving those companies to build in Web three.
And so that was something that we,, we were very interested in, kind of like diving deeper into and getting an understanding of like, why were they doing that and , what is the opportunity? And so over time and having now invested in, I think, 10 of our 15 companies are building in web three.
Um, one thing that we've seen consistently is this idea that similar to how we viewed gaming as a lens that can make the internet more social and fun, it's this idea that Web three and blockchain can be a technology that allows, for a better version of the internet, allows for more ownership by the communities, allow for more personalization in terms of your experiences.
So talk to me about how things might really change with personalization, for example.
Sure. I think one, one thing we think about is that over the last like 10, 15 years, specifically around kind of Web two and these large social platforms like Facebook and YouTube, is that. There hasn't been a lot of improvement in the end user experience. If anything, it's like we've spent a lot of like our best time and efforts to make advertising more targeted or to like see slightly more specific ads.
And so a lot of the core business model around the internet is still how do I aggregate people's attention and how do I sell advertising against it?
And so one thing that we think blockchain enables is this idea that people can get more credit for the things that they do online, whether it's on chain or off chain. And so I think one example we think a lot about is like, as a music fan, if I've watched hundreds of hours of like YouTube and listened to streams on Spotify and gone to concerts when the artists that I love, like have an event or release something new, like my way to interact with it on the internet is the exact same as somebody who had never heard of the artist before, but just happened to like, click on a link or, or go, go to the web.
And so this idea that there should be better ways to segment, uh, user bases and kind of like allow them to accrue value for the things that they've already done online to give them a slightly better or more personalized experience Um, and also just this idea of how do you manage communities and how do you segment your audiences and how do you reward people who are like your best customers
I think that's a really succinct high-level summary that when you and I both go online, we'll see personalized ads, but the content and experience we have is pretty similar. Yeah. More or less.
Uh, and so is that because , the sort of, the way you were describing it is that because my identity is defined on chain whether it's on chain or off chain, it's just your identity. It's the things that you do. And so some of the things, when you interact with things that are on blockchain, it'll be captured on chain When it's, you're interacting with things that are on traditional internet infrastructure, it'll be off chain.
And so I think the most effective companies in the future are gonna be the ones that just like, they focus not on like web through web two, but they just focus on like the internet as a whole.
Uh, Just like I would say the last like major paradigm shift was this idea of like mobile versus desktop web, and. so You didn't just do things on mobile and it didn't exist on the desktop anymore. It was just like a new and different way that a lot of people were able to experience the internet for the first time or in a better way.
And so I, think of like web2 and, web3 similarly, as a user,ideally, I shouldn't have to think like, Oh, I want to connect my wallet to this website, or I want to use like a crypto service versus an service. It should just be.
I'm using things on the internet and they work and they give me credit for the things that I do and, the things that I love,
I mean, probably like you though, I, I see tons of startup pitches for, here's a way where you can get paid for seeing ads, like that sort of theme,
Yeah. there will always be people try to build businesses that like pay you to do something that people don't wanna do. And I mean, to some degree, a lot of like the first wave of. Crypto games was creating a similar mechanism of like getting one group of people to pay another group of people to do some activity that they otherwise wouldn't have done I mean, I feel like the sentiment has changed some on Web three a bit. What do you think people get wrong about Web three? Blockchain?
I think a lot of the earliest use cases have been centered on a relatively small user base that . The reason why they engage and are early adopters of crypto and trade crypto and, buy and sell NFTs is this idea that like, that experience of like collecting and trading and winning and making money is really fun for that audience.
But whether or not that extends to like the broad kind of mass consumer audience, I think it's unclear that it does. Just like how in the traditional investing, There's a subset of people who are like avid day traders and, stock traders, but that's not like the majority of people. And so I think one, challenge is thinking that the potential for a technology is limited to the initial use cases, I think is like not necessarily correct.
Okay. Let me bring it back to Patron and what you're doing here. this is fund one right now, $90 million fund. Did you say lead and co-Lead only. Does that mean you wouldn't follow?
Yeah, we're the largest check in all the seed deals that we took, so we either price or we split around with a co-investor.
Okay. What did you guys, well, first just introduce Brian A. Little.
Yeah, so my, my co-founder Brian Cho, we met uh, we overlapped at Riot. We have somewhat similar background, kind of bridging this like riot experience plus venture. early in his career, he joined the team at Ensen and worked closely with Chris Dixon. He was hired into Riot to build and run corporate development and business development.
Um, and so riot. Deployed off the balance sheet. I think he invested in over 20 companies and we acquired a handful of studios, which became the development teams that created some of the follow on titles, the League of Legends. so that was kind of his, his background Like when you and Brian were setting this up, or even now, what are your active conversations? Where do you guys diverge? what do you argue about in the friendly sense of that word?
something we, we debate a lot about, especially kind of given the current macro environment and also the current state of the crypto market, is this like idea of like building for current users versus building for future users. And this idea of like market timing. And I think in venture, like one of the biggest challenges is to get timing right?
Like a lot of people have like similar ideas for like what the world could look like, but if you invest too early, not great, you can invest too late. Also not great. But I think that that's just a general kind of question for all C stage venture capitalists Yeah. although I think it might be true more even in consumer than where I invested, you know, do you have any interesting examples where it's like, you really believe the future is at X, Y, Z, but you're just not sure if it's in one year or 10 years?
I think one that we, and this is a very LA centric one, is this idea of like the entertainment industry and creators and building I. And so like Hollywood traditionally is like a very centralized, top down studio led ecosystem where very few key people capture a vast proportion of the value created by a large population of like creative talent.
And so I think one thing that we, in terms of like what are verticals that like blockchain can enable, better organization incentivization and rewarding of talent across the spectrum, I think like entertainment is an interesting. . But then the question is, well, who are the people that you need to organize and what are the outputs that are actually valuable?
And I think that's something which is still somewhat experimental. Um, we recently led a C round for a company called Story Do, So this idea of like on chain media and using uh, tokens as a way to organize groups of creators to basically build and develop IP around specific verticals.
So their first one, Sci-fi theme. Their second one is like murder mystery, kinda like knives out theme. And so I think this idea of like on chain media and using blockchain as a way to like organize creative talent is interesting. But does that mean that in six months are gonna be a Netflix series or Hulu series that spawns from an IP built by this type of group?
I don't know. I don't think so. Nor is that necessarily the goal of like the, this team that we. But I think trying to think about like what are new ways for consumers to interact with entertainment and IP and be more involved with it and more actively kind of support and help to imagine what they can be is interesting.
And I think generally speaking, like we believe a lot in this idea of like using technology to allow people to like capture value for their talent, like capture value based on things that they can. And I think starting with writers and, and looking at Hollywood is one nut for us. It's like very interest.
So interesting. I mean, content is just growing so much in importance and you're seeing it across everything. And I kind of wonder whether it's not the next Netflix movie, but then what is it? I mean, cuz it can be, content is now being used by everyone for everything.
Yeah, no, I mean, if you think about it, like , every consumer facing company is a media company and you need to be building content for TikTok or Instagram reels. and so like every interaction and touchpoint is like one that you could potentially be like converting customers or selling something.
And I think that also goes back to the question of. who is your audience? What platforms are they on? And making sure that like yeah, your products are on those platforms.
Are there other areas where you have strong theses or just interesting areas for verticals that you think are gonna transform?
I think one, one that's kind of been sort of a taboo subject because it's pretty controversial, is this idea of like gamer aversion to crypto and NFTs and just whether or not like NFTs can be relevant for gamers.
And I think the challenge, going back to what we discussed earlier is like a lot of these like earliest examples of products that became quote unquote popular, so like the Xfinity and Step In and things like that, like they didn't necessarily resonate with those other gaming, like core gaming audiences.
And so one company that we backed this company in Brazil called Space Caps, so they, one of their core business is they were the creator of this eSport organization called Loud. They actually have over 10 million fans on the YouTube. And it's one of the most followed like Western eSport orgs in terms of fan community in the world.
And for them, instead of thinking about monetizing the audience solely through advertising sponsor, They thought about basically using them as like a distribution hack to build like Venture Studio to launch businesses like Launch digital businesses, targeting that audience.
So I'll use the example. They run this gta r p so grant theft, auto role play is this kind of like subset of like the players of grant theft auto where people actually create characters on these servers and basically act out effectively like reality tv. And you're like going on TWI and watching people act out these like scripted, showsAnd so when they do this, like they literally have hundreds of thousands of people watching in Brazil And so one thing they decided to do early on was to like use blockchain as a way to like, sell access to the server and specific items on the server.
And so they presented it, not like, Hey, we're selling NFTs to our 10 million fans. They sold it as like, Hey, this thing that you love to watch, like we're gonna use this technology that streamlines your ability to like, get access to actually play in it and be a part of the stream.
Uh, the second big kind of project they're launching now is kind of like a tokenized fan community. So this idea of. As a fan of Loud, as I'm like watching things on YouTube and Twitch and commenting on Twitter or liking and retweeting on Twitter,
My fan token's gonna like evolve and give me credit for all these things that I do, both on and off chain. I think in a lot of international markets as well, like Southeast Asia, Latin America, Brazil, there's generally more openness to the idea of NFTs within the court gaming population.
But I think we, firmly believe that in US, Europe and other markets, it will follow. So let's talk about the different markets aspects, like in consumer internet, the super app phenomenon is really big in other countries, I think some of these other countries, like markets had, very useful, apps that people would use every day. So I'll use like in the example of China with a WeChat you had apps that people were effectively using for like, like many times a day for effectively many minutes or like hours each day.
And for them it was easier to think about how to like integrate and tie in like other things that people also wanted to do into that app experience and then kind of like balloon from there. And I don't think necessarily they decided from the beginning like, Hey, we're gonna allow you to do all these like 20 different things within the app.
But it was like initially through partnership and acquisition, then they basically created this like ecosystem within the app where people just didn't have to leave the app. I think the challenge in like the US market specifically and a lot of western markets, You have a lot of like single utility apps that like, people are used to having, like, I mean, my iPhone, I have to scroll through like five or six different screens of, of apps and there's like an app for everything,
And so the idea of even doing two things within an app is like pretty foreign or just like not as common. And so I think given that like if you had a choice, Use one app that does two things or use two separate apps that presumably do those two things individually better. Because we have like no limitation on how many different apps we have on our phone.
We kind of have gotten used to this idea of just like downloading whichever app we feel like does the thing better. But I think that it's just the way that the consumer kind of experience has evolved around mobile internet within these app stores over the last decade.
what about just sort of the internet diverging, if you will, like. You know, in the B2B context, we just see people, you know, they're launching on AWS and American infrastructure. They're launching on Chinese infrastructure. Like do you think the internet continues to diverge?
I think that's, Tough to say. I, I think one thing that's true is like the internet in general is making. The audience everywhere. More global. I think one really interesting thing about kind of post pandemic, at least in our household, so I'm Chinese, my wife is Vietnamese, but we've probably watched more Korean TV shows than any other, including English like Americans film TV shows over the last two years.
And I think that's a result of. Not only Netflix, but like Disney plus is licensing. Korean shows like Hulu, there's like streaming services that only license a Korean and like have shows. And so I think like internet is making the world much smaller and everybody has access to everything. and a lot of. Like stories, even if people have to read subtitles, they resonate with people. And so I think that there's gonna be more and more ways for people to have like, shared experiences around the world.
And it's also making it easier for these communities actually organized to support and. Basically make whatever they want to support, like bigger, uh, if that makes sense.
. . Mm-hmm. . Anything else on Patron that you really wanna get in? I think one, one other one that we've begin to notice is that like there's more and more people. From the games industry, leaving to build companies in other verticals. I think that game companies have for many years, like been on the forefront of like UX design and like systems design and basically creating ways for people to have fun and ways for people to connect with other people. I think a common sentiment is like the next big social network is gonna start out as a game and then people point to like Roblox , and so And that's something that we're excited.
Yeah, it's also exciting for the LA ecosystem. So. What have you been reading or who have you been following recently that's been interestingso I, I don't know if it's probably more like, this is the opposite answer of, of what you're asking. It's like the brain damage that I've suffered. But I think um, being on Twitter in general and then crypto Twitter specifically has just been, uh, fascinating experience over the last kind of 12 months as like the crypto markets in the NFT market was just like exploding.
And then as things have. In the other direction,um, it's kind of like the overreactions in both directions of like, what has arrived and then also what's missing . Like what's, what's going on?
but I think one thing that we've discovered as VCs is like, there's a lot. Interaction and discussions that happen on Twitter. It's a very small subset of like the founder and investor community, but it's a very vocal one.
it's just like a microcosm that's like amplified, uh, within this echo chamber.
Okay, great. Uh, Jason, where are you from? Where'd you go to?
Yeah, I grew up in Princeton, in New Jersey, and I went to high school in Lawrenceville, which is a small school that's just outside Princeton. And then I went to undergrad in Philadelphia. So most of my early life, uh, all the way through when I was at first Mark was, uh, on the East Coast. And then moved to LA for Riot
how do you find, if you characterize LA Venture versus New York Venture?
You know, there's a lot about LA Venture today that reminds me of New York Venture. So New York Venture in like 2007 to 2009. When I was working there. it was this like upstart where like San Francisco was still like the capital of everything.
And I see a lot of that now, Like moving from Berlin back to LA last summer. It seems like there's a lot of like excitement everyone wants to like, work together to kind of like , build this thing.
Um, and so I think , that's been really exciting. And yeah, it reminds me of New York.
That's great. Okay, final question, Jason. How do your friends
How do my friends describe me? They'd probably describe me as justhaving very diverse experiences. Like the fact that I grew up in New Jersey, uh, lived in Germany of all places for like eight years. Uh, Raised kids like internationally. So I think like, yeah, very like multicultural, And you're watching Korean TV on Netflix. So Jason, this was great. Really great to know where to send all the consumer internet companies. Congratulations on patron fund one
Cool. Yeah. Thank you so much for, for doing this. I've heard a, a bunch of your interviews with different uh, investors here in LA and it's also just excited to be an investor based here in LA as this kinda communities form.