🎙️Crashing Up Podcast
Meet Taylor Hurst.
Taylor is a Senior Associate at Konvoy Ventures where he focuses on investing in video gaming technology.
By years end, the 2020 gaming market is expected to bring in over $159 billion dollars from a community of 2.7 billion global gamers. Initial thought of as a lazy hobby, gaming has now transformed into wildly lucrative career. In addition to the gamers and streamers, there are millions of others who work to build the tools and infrastructure necessary to develop, deploy, and market all of the games we know and love.
🎧 To learn more about the increasingly blurred line between real life and virtual games, how marketers can tap into the world esports advertising, and other emerging trends, click the play button on the audio player at the top of this email.
RG: Good morning Crashing Up family and welcome to another edition of the crashing up podcast. Notice how I didn't say Friday Features. That's because since these interviews are now being launched on Monday, the Friday features name does not stick exactly as well. So I will be coming up with a new name, but is still to be determined. So for now, this will be the crashing up podcast, I'm really excited about today's guest.
He's the Senior Associate at Konvoy Ventures, where he focuses on investing in video gaming technology. Gaming is one of the fastest growing most popular spaces and industries right now. And honestly one that I don't know too much about, even though I'm very interested in it. So I'm super excited to dig more and learn about what is going on in that space. So without further ado, I would like to introduce Taylor Hurst. Taylor, thanks a lot for being on. I really appreciate it.
TH: Yeah. Thanks for having me, Randy.
RG: Awesome. So first, I want to know a little bit about yourself. How did you get into the gaming industry and esports and where did that interest come from?
TH: Yeah, so my route isn't isn't very traditional. I actually started in edtech company in college, that was what kind of got me my first experience in the startup world and we went through the ASU startup accelerator there and graduated, our co founder decided that it wasn't going as fast as we expected. So we decided to put on hold, but that was kind of that got my first taste.
Then I went to a typical financial background. I was a Portfolio Manager at a family office in Maryland, actually, where I'm from, and it was, it got to a point where I needed to get back into the startup space, but I wasn't ready to start another company. So I decided to see if I could get into VC, which isn't isn't the easiest career path to just hop into.
So actually decided to quit my job and work tons of internships and see what what different firms or companies would give me the opportunity to just kind of learn and figure out what makes a successful VC. So I actually ended up in Denver working for Rocky's venture Club, which is a funding Angel syndicate in Denver and did their investment analyst program. Then after that ended, I actually went to went through a program in San Francisco, which is where I met Josh, and Jason over to the partners, at Konvoy. So getting into gaming eSports actually was never really the plan, it was something that just to me, that the stars align. And when I heard what they were doing before even raising the first fund was actually I couldn't, I couldn't stop thinking about it, I was I basically was doing work for them.
After after hours on the weekends, sourcing deals for them helping even try to source capital because I wanted to be part of this. And you got to a point where we actually made a joke about it that I know, someone hacked my way into this because they they didn't, they weren't hired anybody at the time. But I basically told them, , I'm not, I'm not looking for a salary, I'm looking to find a career that I enjoy. And the idea of investing in early stage gaming companies and or gaming and eSports coming to the time was something that just started looking that I could do for the rest of my life. So I that program that I was in, in San Francisco ended on a Friday, and they told me that they would give me the shot and I was I was in the office the next Monday morning and now we're on our second fund here.
So it's worked out and it was but it wasn't it was never really a planning in the esports gaming space. I just actually when I when I heard that it was it was possible it was something that I had to do.
RG: Awesome. The idea of just breaking into VC in general like you said is no easy feat. So kudos to you for grinding and doing that. Did you grow up as a gamer?
TH: Yes that was so that this is actually quite like, I I feel like every time I get on the phone my parents again to just catch up it's another day of trying to explain that there's there's a career in this in and that I'm not just playing video games all day anymore because they they bought me and watch me spend time on the 64 and every generation of Xbox and now that I'm telling them that I have the ability to build a career around this it's still one of those things that it's tough for them to grasp but to this day, I'm still an active gamer. I am part of the the the Xbox class that is it is a that is also a hotly debated topic internally about which which access ecosystem is the strongest but I know I'm pretty confident if the Xbox.
RG: I'm an Xbox users myself, so I agree with you. I know Konvoy invests in infrastructure tools, platforms, can you talk a bit more about their investment thesis and some of the trends that you're seeing going on right now?
TH: Yeah. So we, we really want to invest in the foundation of gaming which the future of gaming will be built on. That's, that's really important to us, we, we really believe that you can always want to invest in the next Fortnite. That's, that's what everyone when they when they reach out to us, that's, that's like, the first question is, how do we how do we invest in the next Fortnite, and we always don't, that's actually not what we want to do. So we really want to invest in the infrastructure, the picks and shovels of the market and kind of what the future of gaming will be built on. And that to us, is really interesting. Because there, there's so much that goes into building a game, and there's so much that goes into making a game successful. And picking titles is, is terribly hard to do, you're already going to be competing with the the likes of the triple A studios.
But the thing is, is every even the triple A studios, use third party tools to build these games and and help them become more successful. So we look at it and look at we look at things like like user acquisition, that's a that's an area where we know a majority of the budget for any game is going to go into and we want to, , we would rather say let's, let's figure out how we can help a ton of game developers instead of begging on that one title user, which is a great area for that.
We've also looked at the , the traditional buzzword, typical buzzword of UGC tools, and this is actually something that, , while it is it is buzzword, obviously with the hype around this and Roblox we just we just think this this idea around democratizing development process is going to be something that accelerates gaming to a level, we haven't really seen. Giving gamers and, and anyone I guess the tools to build games, and create the way they want to create is something that were really passionate about every it seems like every year, it just becomes a little bit easier to build what people want to build. And we're excited for what the future is when building seamless and I think discord uses the term. The third place see that as just being in games and that's where people are going to hang out where they're going to experience things. And we want to make to make it easier for people to create within these spaces and hang out with them and hang out in these spaces and build communities. And these things we believe are what was gonna bring gaming to the next the next level of entertainment.
Unknown Speaker 7:50
RG: Yeah, hundred percent. And I know a UGC, user generated content, right?
TH: Yes.
RG: So it's interesting because you talked about UGC and you also talk about customer acquisition. You mentioned Roblox, and you have Among Us, which is picking up like crazy. You have Minecraft who's been popular forever. A lot of these games, the three I mentioned, for the most part have been around for a while, but now they're seeing these crazy spikes in usage. What do you think is the reason for that? Is it COVID? Are their trendsetters within the space, whether it's streamers, or people with influence, who start using it, and everyone else picks up? So I think those three games really encapsulate what you just mentioned, the idea of creating a community bringing people together and having people build their own, with the exception of Among Us building their own worlds inside the game.
TH: I mean, I think COVID accelerated the process, I think it was going to happen. And from a gaming perspective, it was COVID can absolutely be seen as an accelerant. But what is really interesting, we mentioned was the streamer side of this and I also want to bring into the fall guys, which when we were everyone was so engaged in August for what seemed like a a relatively short period of time like 20 days where it was consistently about getting a win.
But that drove so many purchases in the game and more people were playing the game. And that was so streamers have so much influence and among us is a great example of this where the developers are looking to plan on shutting the game down and working to play it and then they are they weren't going to continue to update it. And then it got it was somewhat popular I know in like South Korea, but not popular enough for the for developers to continue to build and update the game but then it became the perfect streamer game, the game where you could see streamers interacting with each other in a way that's not not the same way you would interact in like a Fortnite or, or a WarZone where you’re just playing ateam to get to an objective. Everyone's kind of free for all.
It was Among us that ended up being this fantastic viewing experience for, for anybody who was watching streamers, which then which then made made it a more popular game for people to buy and play with their friends. So, , we're the streamer side of this is super interesting because they became a medium of marketing games that I don't think I only think there's anything even prepared to watching us to replay a game at the highest level makes me want to buy that game, or watching watching all the tumors that I follow playing together makes me want to do that with all my friends. And to me that is it's just something we haven't really seen. I think it was an apex legends really kind of kind of sparked this flame.
But, um, and then on the , on the Roblox side, I think what what they really benefited from was the people that were kind of forced to stay home that the this this younger age group of people whose entire lives have been around. Going to school and seeing their friends every day. Last that Roblox give them the ability to hang out with their friends, again, play and chat and and kind of get the experience of, of community and, and friendship building that they weren't getting anymore at school. So that was , it became the go to area for them, which I think it accelerated it and now it's going to, , we're going to see how how well they can hold those numbers. But I really think now, that's like, that's what those those kids are gonna grow up with is we all hung out in in Roblox, like, just me and my friend, we still play call duty, every son every day to go home and be having Call of Duty. It's like it's natural for us. And so I think, I think that's, that really, really helped. A lot of these a lot of these kids get over the issues of, , being alone.
RG: Yeah, I know, growing up, I put in some serious hours on Minecraft, and I'm not even a huge gamer. I'm honestly terrible at most video games, and I had my COD phase and I played a bit but Minecraft was really the game that I put a ton of time in because I was be able to be on FaceTime or video chat and just with people, and you had the servers where you had the whole community aspect where you can meet people outside of your initial friend group. So yeah, I agree with that. And on the Among Us run, I think one of the beauties of among us is the fact that while Minecraft, and Roblox you can play at any age, there is a strategy aspect of Among Usthat people who the older you are and the more developed your thinking is, you almost have a whole different viewpoint on the game, and I have people from work and Bombas who will like the day will be over, it'll be who wants to play Among Us, because people really love it. So I think like you mentioned, both games really fall into both of those niches. I want to take a step back on to the gaming industry as a whole. I know we talked about streaming we talked about the games and infrastructure Can you break down any other sub industries within this big umbrella of gaming?
TH: Yeah, so I know we did touch on you're going to have like when you look at sub industries, you're going to have the obvious stuff , your developers and publishers who's building the games who's publishing the games on the other side of that is also distribution where you're gonna have , steam which is obviously the dominant player on PC you're gonna have the epic store which is which , they're hoping to kind of shake that space up with with a much more developer friendly revenue share model you're you're gonna have your your engines your your unreal, your unity go dot you're also looking at things in the user acquisition space like app love and tapjoy iron sores these guys and then streaming tools like Twitch and YouTube like these these all became these these very, very valuable sub genres of gaming like people like I mentioned the very beginning everyone would talk about gaming testing, they're like, oh man fortnight made $300 million in a month and but it's there's there's so much that goes into building that and there's so much that goes into making that successful you mean you're gonna even have your social tools like like discord or Teamspeak where people are people are engaging outside of gaming outside of the game itself but still hanging out and talking and enjoying themselves. So this , this this the sub genres just they go on forever. I mean, I can you can even sit here and talk about UDC tools outside of like Roblox and stuff you're looking at, like Garry's Mod or, or mod.io or more verticalized solutions, like, actually two of our portfolio companies like hybrid world or Dorian, where they've, , they've taken to the idea of UGC and you , you look at a specific genre in gaming and build on that and allow people that are passionate about that type of space to build and distribute through the tools you build.
RG: I want to touch base on the streaming aspect because I'm very interested in the esports side, which I feel like those are kind of directly connected in a sense. Um, I hear the saying that influencers are the new athletes on the internet. And I think that eSports athletes in general are really combining the two, they are athletes, and they're on the internet, how do you see brands who might not be traditionally in the gaming space, they now take notice of this, and they try to partner with eSports athletes for marketing, or advertising? or just general partnerships? Have you seen that the massive trend? And what do you think will continue?
TH: Yeah, so this, I always felt like the streaming platforms offer a really scalable solution to marketing. One one brand I always like to bring up that I think is is rarely talked about is cash app. So , you have the obvious one word, , they sponsor hundred thieves. And, , their facility is is sponsored and partially funded mostly by cash app. But what they also do that is extremely underrated as they've, they've kind of hacked the the twitch ecosystem, and they found out that for, , maybe $500, you can, they can donate subs to a streamer, which then puts their their brand at the very top of the chat for weeks at a time I've seen on Tim the tap man on Pokemon. And these, these streamers might have 30,000 to 50,000 concurrent viewers. And cash apps paying $500, which half of that goes to the streamer and half that goes to twitch to be front and center at all times.
That's To me that is it is just wildly valuable. And then you have the value of being you're actually sponsoring a streamer, which then typically goes with you might have a ninja where he has his Red Bull cam behind him at all times. Or, , you have a post mates that that will sponsor a streamer. I know they they sponsored ninja shroud. And I think Pokemon as well, where they're their brand is always front and center on the stream as an overlay. And what makes us really scalable is that every time that a twitch clip is done, or a VOD is created with, with that stream, their brand goes with that, and lives within that video forever. So you may , a ninja can post a video on on YouTube with post mates logo in it, that thing is going to get another two 3 million views on top of them always being visible on on the stream itself. And , that's it's invaluable.
If you actually you it's kind of hard to actually to guess how many views they will get. And you might even you might even have into a viral clip where ninja didn't post it and but somebody took the clip and they posted it on Twitter and then it went viral but Postmates lives or whatever brand what are the brand lives within that, that clip and then you have the the in game side which I think is also really interesting because again, it's very scalable every time that something's clipped or posted somewhere else it follows so you have like a , Louis Vuitton and League of Legends for example, they they have their own custom skin, if any, if any. it's obviously it was it was bought, , they will get a revenue share with that.
But on top of that, every time I click shared or videos posted, I believe a time skin is being being shared or you'll get fortnight in the Marvel Universe combining and it's funny, , you've just they had their their season, the season ending event yesterday. And actually restaurant Matthew ball tweeted it out right before or right before it started that three 3.2 million people roughly were watching on YouTube and Twitch on top of 15 million people in the event itself. So , part of that event was Iron Man talking to you Wolverine jumping on the bus with you. And that's that's going to be posted all over with streamers. We're streaming it so everyone can watch it didn't get into it. Obviously with the 3.2 million people watching and then clips are gonna be made a bit and I have I got to play engaged somewhat with those characters myself. So that's like that that was , it's a great marketing structure in a way to get people engaged in in the Marvel brand and Marvel IP.
RG: Yeah, that's a great point I didn’t even think about what you mentioned with the virality of just all these people who whether it's the streamers themselves sharing it or just fans creating content, how is constantly shared and just really circulating around the internet and you can't really quantify the amount of impressions that you get on something like that. And on the cash app front, I know that they do that a lot with Barstool on the PMT stream. I know Barstool is playing directly into the gaming hype, and they're playing Among Us or Roblox or whatever they're playing and Cash App is a big sponsor for them as well. I'm thinking on the in-world games kind of combining this idea, like you mentioned of how you can have your world inside the game and they're bringing real life things into the game. All the Fortinte concerts, I think those were some of at least the ones that I found the first that really gained mass adoption, where you had people tuning in, like, holy shit, there's marshmallow or Travis Scott, in your game? Do you think that the concert aspect is something that's going to continue where theres these live events, and you actually are partnering with celebrities?
TH: Yeah, cause then another one was a Lil Nas X did it in Roblox and like this, it's another way there's so much value for the artists there to get to engage fans, they might not typically engage with, , all three of those artists are not really my cup of tea. But I'm absolutely going to go experience that and in the fortnight event, or the, or the Roblox family, that's, and there's tons of people that are going to do that, not everyone's not going to a concert physically. And this does allow people to engage with fans, I typically wouldn't get to engage with and give them an experience and also a concert can give because, , within a game, it's really, , limitless possibilities, , this tribe has got flying around, obviously, it's not happening in a real concert.
And I think there's, there's so much value, to making it even more engaging and more fun. And you get to experience it with your friends in a in a way that's, , more valuable to your, to your friendship because you get to be in a party together all being chat together, that doesn't really happen in a concert, , you're not, you're not talking to your friends or, , flying around a world together and , and laughing and talking about it right after there's and then obviously, there's the , the the sell through model of this where you're part of that concert was Travis Scott's ins and everyone wanted to buy it. And , it came out I think the article came out today around or has been certainly more around today we're gonna Travis got a contract generated $20 million. Not all for not all for Travis Scott. But he also mentioned that he never once went to the epic studio. Like that's That to me is, is crazy.
It's he had to do basically nothing besides sign over his, his brand, and his likeness for concert that generate epic, and him millions of dollars. That is, it is valuable, and I think more people will, will continue to do this. And I think it's just , it's, it just it seems too obvious to to not do when you see how many people are going to these things, were going to talk about this, just step back a second, the 15 million people in the event yesterday, like you can't you're not getting 15 million people in a stadium, it's, it's a way to, it's a way to really get people to, to engage and it's it's a, it's going to become that the FOMO type of feeling where everyone want everyone's gonna want to go to just the experience is going to keep getting better and better, I think we'll see, I think we'll see a lot more of this.
RG: And on the artist side, too. For him, like you said, the mass size and the sheer amount of people viewing is great for even Travis who's one of the biggest artists in the world. But Travis concert tickets are historically incredibly expensive. So for someone who might not be able to afford a $350 ticket, or even $100 ticket, this is really the next best thing. So I think this is a great bridge for people of all demographics, all ages, just any type of fan level that really gives them exposure to whoever the artist or brand is.
TH: So yeah, it's fun. On top of that, too. I know fortnight also did the tenant trailer, where you got to you can watch the tenant trailer there. And , there could also be a future where we're seeing arrays, , a lot of these direct platforms, types of movie releases Disney's obviously doing because they own so much IP and they're able to they're selling it for, , they might sell it for more than movie ticket, but people are going to get the benefit of staying home. But the idea here could also be that you and your friends watch a movie together in in fortnight in a world where every now and then you can start charging for it. One even like one $2 imagine yesterday if you had to pay $1 for that event. And they were able to still reach 50 million people that's a that's a pretty serious return on investment. Right right then and there. So , I really think this is gonna there's gonna be a lot more stuff like this even outside of concerts.
RG: Yeah, definitely. I want to jump now to sort of this same idea. We're talking about the real world and virtual being combined. Now we have eSports and real professional sports being combined to I know the NBA has their 2k league. I'm a big, big Knicks fan. I know the Knicks have their team and MSG has a show that's like a reality TV show around their Esports team. How are you seeing this bridge start to come together between the two worlds? And do you think that soon people will be as big of fans of their Esports teams as they are of their normal team? So it's just an extension of their fandom?
TH: Yeah, this it is interesting, similar to you, I'm a huge Washington sports fan. And , they've they've really leaned into the esports space, , Ted Leonsis is the owner of the caps and wizards he's also a partner with axiomatic and which which is a holding company for Team Liquid and also makes investments in a gaming eSports companies. But I do think this is a great way to start engaging that younger crowd because I think, , there's there's a lot of talk about how how engaged younger generations are in traditional sports, how little these these individuals are also playing sports because I , for me, growing up I played sports, I mean, a sports fan, , I was played basketball, my favorite sport is basketball. And this in creating these, these, these more virtual experiences for people to be fans of allows them to also they kind of, , push their team, , be a be a fan of of the cap scheming, which is the , Washington Capitals, NHL 20 team, and then you be then you kind of sort of learn more about the Washington Capitals. And this creates this, , this a more and more engaged fan to your traditional sports in which right now is much, much higher monetization level for sure. I mean, looking at eSports, which might have a monetization anywhere from one to $4 per fan. And then you're looking at like the NFL alone, it's estimated about $200 per fan.
So like, there's, there's so much, there's so much room to grow here. And at the minimum, you can push those eSports fans to also be a fan of the traditional sports, then you have so much more value from a monetization perspective. So I really think it's going to be a much bigger investment for me. I can't even think like Ronnie James just signed with FaZe clan. Yep. You have. No Josh Hart is really big. No judge her. Does he know that? The pelicans now? Yeah, yeah, he, , he's he invested in play versus I think you've made a couple other investments as well. , you're I think you're gonna get your David Beckham, part of the esports organization is just went public. These these brands are, so are so big already, that they can start to, but they need to find ways to engage and create fans with these younger generations. And I think, going eSports and gaming is a great way to do this.
RG: Yeah. And you even have professional players who it might not be their, their game that relates to their sport, but you have a Vale McGee who's streaming on Twitch, and he has a lot of followers. And I think athletes and gaming always have gotten together. I think you always even back in the day, you used to have ESPN stream, the Madden tournament's on TV. So I think it dates back a while and you're now seeing it fully come to fruition. And then also, I saw one of your portfolio companies ask deals with betting the betting side of it. What is the status of that now? Because I've always for years, me and my friends have sat and done like, oh, why isn't there just an easy platform where I can play someone online and Madden and wager, and there's a middleman and deals with our money? Where is that along the lines of what's going on right now.
TH: So there are tons of of wagering platforms. The, the issue here is, I mean, you have like, one of the most popular ones is Players Lounge. Drake invested in them, they're successful. But the way that works is just they're just a middleman. They're they help you find somebody to play with. But at the end of the day, the the issue with these platforms is that there's manual verification. So I know, I know, some of these companies don't have big issues with it, but it's still , you and I challenge each other through the app. it , beats, we swap gamertags we go play with each other, and go back to the app. We say who won, what the score was in the app distributes the money takes a little bit off the top. But to me that there's so many steps and , I think we're getting to a place where you look at something like maybe skills, who was also recently going public, , making making these more seamless, , having the wagering side be a part of an SDK where it's just , everything, everything is handled for me. And I just, I just keep playing against more and more people. And , the money just as I when they, , API tells him that I won, they gave me the money that that is that is where I do think it's going over the long term. I don't think it'll be able to sustain itself in a manual verification type of world.
But I do think it's, , it's very popular, it's, it's a great way to test your skills. I mean, I, I grew up on game battles, where it was the same thing. It was a, , we were, we were playing, and we had a computer next to us, it would tell us when somebody accepted it, get a message, and we'd all get a private lobby together and play and it was work, but it feels like it hasn't really changed it, , nothing has really, truly innovated since since then. And that, to me is just seems to be lagging behind the rest of the market. But it's also tough. That's the only thing , having access to every game API is not possible. So yeah, we'll see. I think we'll see it start rolling out I think maybe we'll maybe we'll see. companies do it themselves. But it'll it is, it does seem to still be a little bit a little behind the rest of the market
RG: Yeah, definitely. Because I know even when, like you said, there's just way too many steps involved. Like even if I want to find someone random, and we'll message and they'll be like, oh, send me your Venmo. Even if it's not through a standard app, like liar's loans, like you said, if there was just API that did all of the payment transactions seamlessly through that it would be a lot more easier, a lot more enjoyable. And I think a lot more profitable, because I think there are a ton of people are always going to be gambling, and people are always going to be playing video games. So I think it's just a no brainer, once they're able to figure out the regulatory stuff. And like you mentioned the tech side of it, too. Yeah. Awesome. Well, I learned a ton. Thank you so much for taking the time. I really appreciate it. Other than that, the floor is yours if you want to plug anything and use your investments portfolio companies convoyed. So yeah,
TH: yeah, well, I really do appreciate you having me on here. Obviously, a busy time, , I enjoy having these conversations. I talk to people all day long. And just just go back and forth and talk about the space of , anybody feel free to reach out to me obviously, we're always looking for early stage startups that are building tools and technology in the space and if anybody is doing that as well. We're always we're always interested to talk and , we typically take every take every single call or any any meeting that we have, we can because I like to learn and I feel like every call I have I learned something so where we were about to launch fun to visually so if anybody wants to reach out to us, feel free.
RG: Awesome. Well I appreciate it, Taylor and that is it for this week. If you like the episode, let me know you can reply to this email. You can click the field letter link in the email, you can shoot me a DM all of the feedback that you give will be used to make this the best that it can be. Thank you and I will see you on Friday.
🎙️Crashing Up Podcast - Taylor Hurst