Building a #1 Earning VR Game

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most sophisticated fraud attempts with decisions made in under half a second and up to 98% approval rates insure AI ensures more legitimate transactions get approved delivering a seamless experience for players plus with a chargeback guarantee you can focus on growing your business while the risk is handled for you key players in the game and turn payment fraud into a profit center with insure AI to learn more simply head to ./ gaming or check out the link in the show notes now let's jump into the episode welcome to the novic gaming podcast I'm your host David Taylor and today my guest is the co-founder and CEO of spatial a company that has undergone a wide- ranging Evolution over the years from its early days as an AR collaboration platform to its recent position as a Roblox competitor with 2 million plus creators and now a VR game developer with the top earning VR game on the medaquest store at the time of this recording called animal company

spatial has raised almost $50 million according to crunchbase since its Inception based on the Founder's conviction that 3D virtual spaces are the future of social experiences in this episode we'll explore how a Founder decides when it's time to Pivot the Dynamics of competing with Roblox and what the future holds for VR ugc games and web-based games so without further Ado Anan Argo Wala welcome to the novic gaming podcast thank you excited to be here can can you kick us off by giving us a bit of background on you and how you came to found spatial sure yeah so spatial is my second company um in the 3D user interface space uh my first company was called bumptop started that off as my Master's thesis in 2004 uh over 20 years ago woo um and uh it was a a 3D user interface that used imagine your computer desktop you know use a phys use a physics engine the noex physics engine to make your computer desktop feel like a physical simulation so you could pile everything up like a like your like a real desk you'd pin

stuff on the walls have sticky notes very tactile uh in that and so um uh it was that was back in4 before the iPhone existed so the idea was when we move to touch interfaces how is that going to change interfaces that company was bought by Google in 2010 and we joined the early Android team so I was one of the first PMS on Android um and got to see that rise and then Google worked around on Google photos and and um uh Google Glass a little bit but ultimately left Google and when you were when you were building that already interrupt but when you were building that did you know touch screens were going to be a thing or did that sort of come about separately well it's interesting it's like it's a hunch right because I think like researches I was I was doing it in University of Toronto so the hunch was that touch interfaces but it was all about the stylus back then if you remember Tablet PCs the idea was it was going to move to touch but with stylus based computers and of course Steve Jobs was like we don't need the stylus when people lose that forget it and so similarly I think like people had the hunch when we started spatial that things are going to move into a VR

headset and that's going to be your next computer um and so Sim similar Trend got it okay so sorry I interrupted you're saying you you found it spatial yeah so after leaving Google trying to figure out what to do went on a Vision Quest you know try you know did a gap here and uh eventually create a Vision Quest tell us more about that well you know it's like okay when you leave a company everyone's like or like when you've had us exit everyone's like what's your next thing what's your next thing what are you going to do next and and like I felt like it was important to just kind of Lose Yourself and like re derive from first principles if you're going to start something again and and and and and know why right and so like you know I kind of just like and just seeing where it goes you know travel do cross off The Bucket List stuff you know enjoy life you know learn to DJ you know stuff like that I became a male model briefly uh which was crazy Bergdorf good me that was crazy uh very briefly did not last I'm glad we're doing a video recording for exactly

so they can verify exactly um but uh but then I think eventually I realized like oh wait I'm a creative person I need to build and I the key moment for me was trying the hall lens one because I think like um VR was hot at the time around 2016 um Oculus had just been acquired by uh fa by Facebook then um and you know VR didn't really click for me because I felt like it was very dissociative that it was like kind of pulling you out of the real world um and and uh and and and then I tried the Hallens that was the game-changing moment I was at a conference in Minneapolis and um called IO festival and I tried it and I was like holy this is so mind-blowing this is exactly the type of um like it was so clear and so vivid and even to this day I think it's like the quality display is is you know better than a lot of the stuff out there so and so it was just mind-blowing for me I was like I thought AR was way out there in the future and now um you know it's actually it's it's a lot quicker and then I I

assumed that the curve I saw at Android and mobile phones of how quickly that ramped that that was going to happen to AR and VR as well and so um I was and and I'd been dreaming up all these speed user interface ideas um at you know at bumptop and then at Google as well where you know it was just like okay sweet we have now the inter the device to now make this happen so the idea was hey your next your next computer going to be a pair of glasses it might not be today it might be in a couple years out but we want to seize this opportunity to create some of the foundational apps and experiences and way we collaborate in in AR and in this new world and it was a chance to put our fingerprints on History right like the idea is that is the last visual interface that's going to exist and uh we have a chance to correct some of the things and and um you know like that that were encumbering Us by you know like you know tons of notifications thousands of tabs open you know just things that don't really feel

natural and as and as Humane is using a pencil and paper um using your desk and so following through similar themes of of the last piece of work so the idea was start spatial met my co-founder I convinced my co-founder J to move from Korea and start this company didn't exactly know what the product was but the idea was like okay um back us we you know we want to create some AR is the next big thing we want to figure out the next um big um we want to figure out what those foundational interfaces and experiences are of this new world got it cool well and so I want to I want to read some headlines to the audience because you guys have had a long journey since that original uh founding story a lot of pivots um and just to give some context on the various areas you've explored and I think we'll explore even more than when what these headlines suggest them adjust adjustments okay adjustments yes because they're all sort of in the same theme of of of of 3D imers

but um I'll just read these these three that I found um through some internet things so chat up Telly feels like FaceTime built for AR spatial raises 25 million pivots to nfts that's 2021 the last one was 2020 Roblox competitor spatial announces ugc games and unity integration that was 2023 and I was looking for a headline about animal company but there no one's written about it yet which is awesome because then we can break some news about it yeah um so so yeah just to just to follow up on that with a question like I'm interested in the founder perspective right like you've had these these um these evolutions and and I want to sort of understand like what's the point in which as a Founder you know okay this this product is needs to to evolve like it's time to try something new um and then how do you also approach what that new thing is yeah yeah it's a good question I mean I think like um those headlines are a trip down memory lane

um you know we were we started an AR company in 2016 and it's almost 10 years later and we don't have everyday AR headwear you know and so um you know it's been a long journey to try to stay alive and try to do something impelling and continue to grow our user base and part of it was like really I think one so we were always searching for Signal you know where can we and what would what would the general Arc that happened is like we started off our first device was Holland um and we kind of became the biggest app on Hall lens one and we're like okay we've saturated this Market you know we can wait for it to grow but how do we get to the next level and then covid happened 2020 um quest one and Quest two was happening and we're like we you know we had some issues with VR and because we wanted this to augment you know your your real world experiences um but everyone stuck at home people were totally fine with VR so we shifted to um Quest and that gave us another order magnitude number of users um and and we became one of the most popular you know

non-gaming apps there and then we kind of saturated that and we're like okay how do we get to the next level of growth we got to go to mobile um and so mobile helped us get another order of magnitude growth um and then eventually web um and then web helped us get another order of magnitude growth and meanwhile like when we started building this company I think lessons from the last company because bumptop was meant to be this futuristic interface vision for the future but um when touch Computing got there like AK the iPhone nobody needed a desktop and so I was really burned by that experience because like you know I wanted to really future proof as much as you can um you know my next startup spatial and so like you know we didn't know what the the final headware was going to be when we started on the Hallens one but we knew that it's going to generally be made by Apple or or like it's probably going to run iOS or Android um it's going to be a touch interface or a pointer or um a wand or something like that we could abstract certain things away we knew

multiplatform would still be relatively important um you know not only between headsets like just in the same way WhatsApp connects iPhone and Android users you can imagine a need for that within a multi headset world but also um you know um uh use connecting it to your phone like your phone will still be important um you know for a while right we still use desktop computers even though tons of time on phone so trying to take as many of these learnings as possible into the construction or the kind of strategy and kind of you know um approach of the startup and so you know as we're growing we're trying not to lose sight of that fact and like expanding the capabilities of platform expanding the users you know today we are majority web even though you can run a user can connect from you know put on a VR headset like a quest and join a user running from mobile joining from a user running from um the web and the web's our biggest platform I think it's like 70% of usage right now but um and it's meant to be a doorway to the Future like we also a lot of those learnings came from actually putting the product

into tons of Fortune 500's hands and they would um you know we try to get them meeting or I mean they would run regular meetings we had customers like fiser Mattel um some great Fortune 500 Partners Purina and they would use these things and they would try to have a meeting with 20 people and invariably someone wouldn't charge the headset or they couldn't get it on or whatever and that convenience of just clicking a link and you're into a zoom you know we try to replicate with our web app so we have you know a spatial IO link you click it you're instantly in and just really removing that friction even if you're just getting your headset set up because you know for whatever reason so that you know that's an example of kind of the constant Evolution I think um yeah so we were just always finding trying to find signal trying to get to a bigger and bigger Market um and you know we we' get to the kind of maximum of where we were in that market and and and kind of keep looking Beyond and so yeah it was just a signal finding where did did each of these markets that you go into sort of have I mean I know vr's always been sort of over projected in terms of the amount of demand like was that sort of the case

that each time you made these pivots there was sort of a market signal that these these were going to explode and then they just never really took off the way that they needed to or well kind of but well was it more of a strategy of like we're just gonna we're just going to win each of these markets you know until we till we get well across all of the markets a really big big uh user base sometimes I mean sometimes the the headsets went away and so you know like there was some headsets that were like AR headsets that plug into a phone and so that those didn't really take off uh but we did invest in those I mean the headsets didn't get to the scale of phone and desktop but phone and desktop are are pretty huge and we you know I wouldn't say we've won those markets by any means um but uh yeah there you know it's also about like is there a product Market fit here for users of that market right so there there's a bit of a a balance what would you say is the common thread across all everything you've done so far we're going to get more into so like it

sounds like you sort of yeah you eventually move to web desktop uh mobile and and you even started creating content we haven't got to that part yet but I'm just wondering like what what's been the common threat across everything you've done so far I think really I mean the conception of the company was invent the future right I think like and we think that like like if you think about static 2D interfaces that we use on desktop and mobile um really it's like to pull those in the future we think the future of interfaces is immersive it's multiplayer it's spatial it it fills the room around you it's ideally meant for headsets that are that let you seamlessly blend the real world and the physical world so you can sit on a desk and it can feel like a virtual colleague is sitting right next to you um and so pulling th bringing that kind of futuristic vision of how we see you know the future of the internet the future of computing as the social spatial um thing you know we even called I think like um yes collaborative Computing uh we're trying to build the world's Force collaborative of computer because it's

the we can all use this thing at the same time um you know we we even called it like you know the way a basketball team you know moves up the court um and you know like they non-verbal communication you know kind of know where each other's going to be that feeling can we get that feeling in um Computing in in in a computer that we use together and can collaboration feel like that on a computer rather than email like email inboxes and slack threads and and that so um um I forget the question what was the yeah what's been the comment thre across everything so is it is it the is it the is it more so I I talked about it like social but it sounds more like you're focused on on co-working and and you know connection within within the workspace I think it's um pulling this vision of the future this immersive collaborative social um into everything you know everything we do now it started off on arvr is a more Enterprise collaboration thing it's moved spatial

is now more brand focused metaverse we've got a really exciting launch with Walmart this week that where we basically built like what looks like a PlayStation game that runs on the web uh but that's kind of the common arc is like can we push push us into this more um immersive tangible future the idea is that the future of the internet is not going to feel flat 2D and and singular like it is today um we want the the we think the future of the internet can be this embodied social you know richly visual um collaborative thing and and that was that's been kind of the common arc all right so we're talking about this uh platform that you've been building where any Creator or developer can come on and pretty easily build uh experience in a 3D virtual space similar to Roblox but also maybe more targeted towards VR than Roblox so what I want to understand is you know you're basically you're competing with Roblox you know what Roblox has been able to achieve is to get a flywheel going where content

creation is driven by an existence of a player base and creators wanting to build experiences for that Creator base or sorry that player base the player base is there because there's already content on the platform so you have the classic chicken or an egg problem like we can't get players unless we have content we can't get content unless we have players and they've managed to you know get past that phase get to scale and now it's all you know gravy for them more creators keep coming to the space they keep making more money um so how do you as a new platform take that approach you've been doing it for a few years now what have you learned in terms of uh the things you've tried and what's been successful and what's not been yeah I mean the initial thesis was like the ugc was blowing up Roblox ufn just launched and so um the idea of like ugc in general um was really really um strong at the

time that we started going into this about two years ago and I think like our idea was we want to bring the Roblox model to um Unity developers and uh and to the web so like ideally two untap markets and you know Unity developers majority of games are written Unity majority of game devs are unity developers however if they wanted to build a um ugc experience on the major platforms like Roblox or ufn they've got to use totally different set of tools Lua you know got to learn um you know ufn you know Etc so the idea was like let people and and you know we were the we are the only um platform we put a lot of hard work into basically allowing Unity developers to actually use CP because there's other languages that um there's other platforms ugc platforms that allow you to use Unity but not CP so the idea was let users use the exact tools that they want developers um and give them monetization tools make multiplayer really easy multi platform really easy um you know and just really

simplify the barrier to entry um you know where you can just you literally like blank scene hit go it's instantly multiplayer it's instantly hosted in the cloud it instantly works on mobile VR and web um and so that was a thesis um and I think like like you said there's a bit of a chicken and egg problem now we had a huge coming out of the gate uh and there's a ton of unity developers and people um developing these these compelling experiences um you know we also were trying to bootstrap it with our you know U needs fortnite to exist right and so where's our we were like okay we've got compelling tra traction but we want to get to the next level um and get uh find our hit we need our hit game to help get this to the to elevate it right and so we need to build our fortnite so we started building um a lot of different um game types because we weren't sure what would resonate with this marketplace with this audience tried clicker games we tried sniper games we tried dress up games um all kinds of stuff to just what were you looking at to determine what type of games to

make um you know what variety of factors I think like what you know what what's hot right now is there some Trend in games that that could be compelling what's working on web or on mobile um where we've seen things kind of take off when I was looking at your guys' games it felt a lot like some of the games you see on Roblox like number go up games like like punch hero or something along those lines y uh you guys built an only up game so it seems like you're drawing a lot of influence from what's popular on Roblox and fortnite there was a yeah there was definitely like um that was definitely one of the thesis we were trying right we trying a bunch of different things so for example we're like hey these fast growing games like at the time uh punch simulators were the hottest uh one of the hottest games on Roblox and so we were thinking hey can we bring that game to a different audience you just click a link and you're in that same click a link you're in that we in you know came up with for the the collaboration scenario because we're using the same platform that we've been building all along for eight years click a link you're in into punch hero

and can we make this game way more accessible uh you know you don't have to install anything just runs in the browser um and and that was a thesis there um on only up exactly it was a super hot game and we we you know our thinking was like Hey stumble upon bring sorry um stumble stumble guys brought uh um uh you know Fall Guys to the mobile audience um and made it like you know made it super accessible for folks you couldn't play it there and we were thinking can we do that for with L up you know one of the fastest during games as well and so um yeah so we were trying a whole bunch of different stuff got it cool so so you're going through that process what did you what was sort of the takeaway after you know trying to build your own games for for a while yeah we built a lot of games internally like well okay we built a lot of games inter internally about 20 uh animal company is our 21st games so I like to say 21st times a charm um you know and like we we started initially building them in-house and then we're like well let's try getting Studios

externally to do it and um and um and and so we tried that we also tried like um uh codev where we like find a studio that um has successful games but they have more skin in the game we also tried we tried um a shark tank Style game show wolves den where we got um IC tea and other judges to try to stimulate demand um from a from a gaming perspective yeah Cliffy B um you know uh as well to so try to stimulate demand of developers to come onto the platform uh and we also tried porting games that were successful elsewhere from developers um using the unity based SDK because the idea is it's very easy for them to bring over so tried a lot of stuff um you know to to make it work um yeah got it and so did it were there anything that worked particularly well or was it all sort of like you know really difficult to get the the flywheel going I think I think the SDK is super powerful and um you know the games by

kind of mobile and uh like mobile success standards you know probably not there um I think the web audience is very fickle it's very hard to get um something sticky um on web and uh you know I think what like we really learned is that like at the same time that this gaming stuff was happening brands are loving our SDK and Studios like pigiama kusama are loving our SDK and so we're like okay and that that segment start starting to take off in terms of monetization the Enterprise brand segment and so we return to Our Roots um on the spatial IO side and um and now spatial IO generally um yes you can still use it um as a public facing kind of SAS platform CL you know for um you know easy one click metaverse stuff but um Brands Enterprises is definitely the the bread and butter um and that's working really well for that SDK we honed for gaming because they still want those brands still want that gaming element that and

that customizability um but then we that also through that we stumbled upon the VR Market as as we were trying to again signal find and try everything try web try mobile Etc well you guys also tried building a couple ufn games did you build any Roblox games we looked at it I think um we looked at both we never shipped anything on uan or Roblox it was just like try it was it was kind of like a signal finding you know we're in a brand new Market let's figure out you know just how we can claw for life and and get something that kind of takes off and um you know as we got into it I mean like I went to RDC I went to um unreal fast and like I saw the people making the top games and like it felt like you know we were in another League I mean like I was definitely 20 years older and uh they just loved and breathed the platform so much like um and like they were just so in it that like it it was going to be pretty hard to compete with that level of you know person I think that just

understands the the the the culture but you guys are you guys are you know a very talented group of developers you know most people who are successful on Roblox and and fortnite didn't start off as like talented developers you know they just happened to make something that they thought would be fun and then all of a sudden it turned out like you know hundreds of millions of people agreed with them so uh like I guess you know how do you you didn't think that you could just sort of make make a a better version of of the games that you were already seeing on those platforms I mean they were so I think like what we found when we got into it Roblox hyper competitive um really hard to get through um you know hard to get our developers to code and Lua because there's a lot of it's a big uphill curve um to kind of do that um you know I think and then um ufn um it was just very difficult to make um you know the surf area of what you could build in ufn at that time was

very small like basically any idea we'd have was like just o we can't really do anything there's no persistence there's no you know so like and most I don't know if it's changed much but when we're looking at it most things were effectively kind of training combat simulators for the real game um and and hard to kind of break out of that so um yeah challenging yeah the platform has evolved significantly I would say like if I think if you guys took another look today you'd be like oh there's some things that we can build uh I think the the the persistence is is finally there but there's also some limitations around persistence like you can't have persistence across uh different uh experiences which means that like you can't create an RPG game where you know you have multiple different Maps within the same storyline so yeah uh that totally makes sense so then tell me about how you came to decide to build a VR game you know you look at these other platforms you're like there's nothing here for then you look at VR what were

you seeing yeah I mean after building about 20 games um and not getting to the level of success we wanted to see um one of the areas you know I mentioned we're like we're looking at everything ufn fortnite sorry ufn Roblox web games like every you know SEO is a growth mechanism you know portals you know just the whole gamut um where can we find that kind of ability to break through which I think is very I mean that's one thing I noticed going to gaming conferences and just absorbing um what people are doing is it like game people like when people have that first breakthrough that first casual game that breaks through they're just kind of like trying a whole bunch of different stuff and they'll find a little crack of opportunity and exploit that and so like you know similarly we were kind of trying to do the same thing um built all these games mobile crazy hard you know the whole industry I think last year was like flat minus Monopoly go or you know like um and and mobile super competitive um web um you know also kind of at the mercy of portals um and uh if you want to get traffic if you

don't have it already um and so that's a challenge uh and so we and then all of a sudden like one of our advisers um uh Charles jeu he was looking at VR and saw an opportunity there and uh you know what's funny is we've been on quests since like quest one um you know we and and we never you know we knew V Gill tag we saw you know but we just thought it was this isolated thing and um you know not really replicable and and you know we just we didn't even consider you know doing a VR game it was right under our nose um but uh as we started talking to some VR developers people were making like decent revenue and the the doll you know the arpo was like whoa okay this is interesting can you share some numbers um trying to think not without I don't want to reveal you know you not to say did it say like how much money were you hearing well okay well gorilla teg has mentioned that they've um released uh

they they've made $100 million in three years okay now they're literally the top top top top um although um you know yeah so that like um and that was a couple years ago I think those numbers are slightly older so you could imagine that the Market's grown a bit and they're making more than that but that gives you a sense like of um you know where they're at right how much is the market growing just I'm just trying to wrap my head around the VR Market just to get you know grounded in that yeah yeah it's hard to say I mean like you know holiday like we've grown 4X since December um which is awesome um certainly there's a bit of bump from like Quest 3s launched this December um and you know definitely there was an influx and that helped drive it like you know Christmas was our biggest Day Ever um all those 3 s's opening up and stuff um we don't have meta information like no pun intended on how the platform's doing but um 3s is definitely been helpful um you know I

think having something at that lower price point is really key um CU people still love like the audience that plays gorilla Tech and animal company Eeps they still love the 199 price point you know and I think like um yeah there's a certain like that audience and that price point is like a really good fit got it and and so I guess it sounds like people on VR sort of used to this this price point it's better like 1999 doesn't sound like you're making a ton of money on you know from every player but oh sorry I meant one $199 for the headset itself I got you I got you so so so like like like I um I think the quest 3s is 299 um but 199 is really like you know where you could really like players on the hardware are somewhat C sensitive it seems and the lower the price goes because I think the the quest um three was closer to $500 and that was the only head set in Market until Christmas or until end of last year and so it was kind of an art maybe an artificial drag on the market because they're trying to sell out their old Quest 2 inventory um

and you know that was slightly cheaper on special whatever but tldr cheaper the headset I think the cheaper this audience kind of loves it and what this audience is it's the gorilla tag social freeo play um younger audience um yeah got it you's seen a lot more engagement in the last few months because this new lower cost headset came out in you know a lot of people picked it up around Christmas yeah yeah and the good news is like so far we're still seeing like February's still been strong and you know like there's some seasonality that you know generally cools off in Jan but we're still seeing in Feb so I don't know if that's like the the the the growth um of the underlying platform um or you know something we're doing or a bit of both probably a bit of both got it okay in terms of the total VR Market do you have a sense of that I was just doing some quick Google searching looked like it was around like 17 billion

dollar which for the broader so this is VR game game Market specifically I think the VR Market is probably significantly larger than that but um but you know if we think you know 200 billion is the current market across mobile PC and console then it's roughly like what is that eight and a half% of the total games Market at the moment which is not insignificant I think yeah I mean I don't know what the number is that those ballparks sound about right I think the difference is like you know maybe how competitive it is right like try to get a mobile hit game you know like we built this game in three months and we launched it um you know in July Fourth of July maybe um and I'm a Canadian but I I celebrated Fourth of July this year uh uh but with animal company release and you know in and then within like 6 months or whatever or I think like you know since then like we're now the number one earning game on the platform which is crazy like I think

that that you don't hear about that kind of stuff happening in Mobile anymore I mean imagine being the number one game on mobile like just in Period like that seems kind of like like for an indie team you know I mean I know we're not indie technically speaking but for a small team that seems kind of impossible so I'm what I'm trying to say is like the Dynamics are different yes the market size is very different but the competitive Dynamics are also super different and there's an Engaged audience here like this like gorilla tag publishes her CCU on the website you can see like they're you know they're clocking um 70 to 100K CCU um you know and they're like and and you know like they're making like those guys are monetizing as well yeah so and it's interesting because you said you launched in July but it did become the top earning game until around now you know January February what was like what was that whole time period like because I when I think about a big mobile game launch I would assume that they become the top earning game pretty quickly after launch because they're doing a bunch of advertising so that didn't happen for you guys it sort of was it

this slow growth or what were you guys it's interesting I mean we didn't even launch monetization till September so we launched in July we didn't have monetization until September um uh right so like what was crazy is like we this was one of our game experiments like you know we tried a ton of games we spent roughly three to three to five months building them generally speaking and this was one of those it was like a Skunk Works project building a game within spatial which we had done before um and the team wanted to at the three-month Mark the team wanted to work on it longer and uh you know it had it was kind of like a gorilla tag clone in the sense that it was like all Gorillas with jiggly butts and they were really fun and silly and goofy like the I popped out of your head the butts jiggled and they was just it was just silly and fun and stupid and uh and the team was like no no we can't launch this it's too much of a a clone and I was like guys this is awesome we have something special here like a good pop song when you first hear it sounds like something you've heard before there's an instant familiarity with it right and so I think we captured that with the initial thing because people instantly could connect with these gorillas and

and stuff like that and so um that really helped um but we were not sure like but I also said like guys we want to spend as little time on this as possible because we need to the ability to be wrong and build another game in the kind of time allotment we have right rather than like work on it forever and then ship um and so we didn't even like basically from when we launched it had super strong CCU growth um t talk social you know I'm sure we'll get into it but like that was a big driver for us but like it was kind of up up up up and every month you know we're were reaching new highs in terms of usage retention was really strong out of the gate I think we had like possibly near 70% D1 um you know 60 70% D1 out of the gate like it was super super strong and the numbers we're seeing were really inspiring and so you know but we wanted to do monetization right um and uh it took us a while to get there a lot of the like the first couple months was just firefighting like make sure we can like get releases out and like you know

systems are breaking and we just like players trying to hack us and were there anything that translated from the spatial work to the VR work or was it like learning a new like language no I think well no a lot translated I mean for one like some of the team members who made animal company have been working here six years you know like and so we're like a well oiled team and well oiled machine we had weekly releases with with good engineering practices so on spatial we had weekly release cycle um QA Etc and so like I you know I think um that's been a really helpful thing for us is being able to um bring over all that like this well oil team that um you know is like um producing at a weekly Pace with with in systems and and we were able to bring over code too which was exciting like our Avatar system is pulled over from spatial which lets us morph um any clothing any cosmetic to any different body mesh uh which is awesome because it gives us this really rich sophisticated um kind of

best-in-class um Avatar Cosmetics system in VR so not only were we pulling um processes expertise but also code um and we were able to get a bunch of Head Starts because we had already built a monetization system you know for spatial ugc platform and and stuff so there was a lot to pull over for sure um and just the domain expertise of building something because we and we had reps of building games and as well so we got a lot of reps in I think before this got it we've gone pretty long without actually saying what animal company is so can we can you give us a description both on what is the what is the game play What's the you know what's the objective and then also how are you guys monetizing sure yeah so um we so animal company is a kind of a in short kind of a gorilla tag meets lethal company um lethal company the horror friend game um you know so you're a bunch of animals start off with gorillas and you know but now it's all kinds of stuff goats and

moles and all kinds of stuff that you can be um and you go out on adventures fight monsters um find loot um you know go in caves there's a m there's mines where you can mine stuff and find um you know find loot there as well um and so it's really exciting we we've got a very um Regular pace of updates which is what our players love um on monetization it is um and and you know we started off as this horror kind of game Loop where you'd go you get scared it was very scary but we are moving to more kind of broader-based social Adventures um things you can do together um and and and um and even a potentially creative mode coming up um haven't lost sight of the ugc nice is it PVE or or PVP yeah PVE for now okay um wink wink um but um yeah so and then um IM monetization started off with cosmetics um and you know all kinds of cool you

know wearables and and like uh not not just Cosmetics you wear but like full-on you can buy their mole pack and be three different moles or what have you um and then we move to um uh like items as well like item based monetization we've got all you get a grappling gun or um you know that that sort of stuff now what's cool is that we have a tech tree but our teory is amazing you go in you put a heads you literally put on you're already in VR but you put on a VR headset in VR are and now you're in this like crazy expansive environment where you're literally immersed in this like huge scale Tech Tree so you're swinging across like a gorilla uh you know um you know collecting items making sure you're trying to fill out your tree and stuff so that was a really successful update for us um so far we've been hitting on every like major game update we've done like we did the tech Tre update was which was really huge for monetization and engagement um also our mining update was really big for that as well very cool um and I you sort of mentioned it before I interrupted you but you're

saying that ugc might be on the way which I think is I love that because it's like you're spending all this time trying to build games uh to sort of start that flywheel on your own platform and now you've gone to you know a different platform you know the meta Quest platform and you built a game there and now this is successful and now you can bring in the ugc because you already have the player base I think yeah we're doing it more closer to what fortnite did which which is get the hit game and then you know um you know extend it I mean I think like and what's cool is like we're seeing kids are already using the the rocket packs to make Angry Birds like and piling up the crates and like they're already finding ways to make games and make a creative mode without an official creative mode so it's pretty it's going to be pretty amazing to see them um actually do it uh for reals that's awesome yeah and I feel like rec room is sort of your ally here where they've been like training these kids to use VR headsets to be really creative for like

the last 5 to 10 years uh I don't know if it's quite been 10 Years yet but you know almost there um so there's this whole you know audience who is used to using ugc tools and used to VR headsets that I feel like you've sort of probably brought into your game in a large capacity yeah and it's really leveraging the loop that um that you know Roblox like I I think like in Roblox you kids play the games they love them and then they kind of graduate to being a Creator and making stuff and like it's like this virtuous cycle and what we're seeing like what's different about like games like these games today versus how you know when we were a kid you know like where you buy the game you know for the Nintendo cartridge you put it in and what whatever's on the cartridge is what you're playing and that's it um these are like the loop I'm seeing now is so cool because basically kids they they down they get the game they also go in the Discord and they are like voting on

features so there's like a there's a there's a um conversation with developers on that right that they're like um we like this feature we don't like this feature so like I wish I had a game like that when I was a kid where I could tell developers like what features they want and stuff like that and also they're playing the game they're M everyone want you know kids all want to be YouTube streamers they all want to be the next Mr Beast so they're making content and then they're putting it out there and then other kids see the content and then they come into the game you know and and then play it and so that's that Loop um which I think is like you know the kind of the almost the core meta game of um of you know this and other other um things that are taking off that's the core uh the core meta loop I guess that's empowering um some of our growth and also other platforms yeah I feel like one of the things people don't appreciate about ugc game platforms is just how much work goes into the Community Management side for by game creators and they're managing commities of 10,000 to 100,000 sometimes a million

players and that's incredibly valuable to the platform and and a lot of times it's overlooked but like you basically you know Roblox for example has like 10,000 creators who are managing communities uh that are massive uh and so like yeah I think to the degree that you can sort of facilitate and Outsource all of the things that go into live Ops the other thing that's interesting is with VR That's Unique is that you know it's got a finite battery life so they need something to do while they're not in the headset while it's charging right um which is interesting and we notice that our playtime is like kind of has an upper limit in some ways because it's like okay like that device is going to die you know after an hour 90 minutes whatever it is no one's invented a a plug that can well there there is but you know people you're moving around so much and stuff you know people don't really want the plug right like um um yeah got it um cool so um I want to sort of

transition to looking ahead a bit so what's next are you going to be a VR developer now or are you really just doubling down on animal company and going into ugc and then you're just going to sort of man do what you wanted to do on spatial but on on on animal company what's what are you thinking yeah I mean so the the exciting thing is we have two businesses that are pretty interesting so we have spatial still doing really well uh we've got that big Walmart launch this week um which you're your listeners will be able to see and it's uh crazy compelling uh Brands um Enterprises uh continue to use it we've actually got some pretty cool AI uh agent work coming in there um as well like where you know there's AI agents generally that's a text box but there should be a mechan shouldn't there be a way to like enrich your virtual world with these AI agents that can teach you stuff for like you know corporate training or show you around or

you know chat with you whatever so I think that virtual element visual element is is quite compelling for spatial so we're going to continue to grow um spatial there and then um animal company is just growing by like Leaps and Bounds I mean we really want it to be um the next you know Angry Birds or or like big you know doop me like that kind of household name um you know it's it's the sky's a limit I mean every time like it's so touching to see on a discords like people are making their own plushies they're like you know drawing like in terms of fan art and this stuff is posted like like multiple times an hour so um we think like the ability to become just a real franchise is crazy exciting um you know I think um yeah the future is bright so and I'm curious on the on the meta Quest side what is the what are the platform fees that you're that you're dealing with similar to um apple right 30% on um yeah exactly got it um and to that to that end I saw that meta just announced a $50

million Horizon world's fund I'm curious to get your perspective on the you know you've done this before right you've you've done all of these things incentives for creators uh now you're also a developer yourself on their platform so when you see Meta sort of taking these steps you know investing larger amounts of money in to incentivizing Creation for you know their their uh you know ugc game platform or ugc you know social immersive World platform what what does it mean like are what does it mean from your perspective yeah no it is interesting because I feel like yeah we've tried I mean they're obviously trying it like with a lot more zeros than we were able to throw at it but uh you know we did try a bunch of that stuff before they don't have a fully Unity based um development platform so you kind of need to have a bigger incentive uh to get people to learn to use your tools because nobody wants to learn nobody wants to use your tools unless they're already players and they're already or

or or or there's a massive audience that's monetizable um I think they tried the let's make our hit game internally thing with that uh paintball game um you know and I think like you know that got Li you know decent success but like not quite the Breakaway that they wanted um and now they're they're doing the developer incentive thing which you know good on them for trying there's always a natural tension because it's like you know they also are a they're a Content developer as well as a uh you know um you know app store for us people like us so um but you know I don't know I mean like if they make it take off what does that mean does that mean we make a animal company for metah Horizon I don't know I mean audience is kind of um different I guess because like if you look at how the experiences are targeted like comedy clubs and things like that karaoke it seems to be targeting an older audience but then if you jump in the experiences they're kind of a younger audience and so um I don't know they got to kind of reconcile um some of

that stuff but um yeah yeah I feel like I'm curious to see 50 mil is a lot of money yeah and it's it seems like it's on top of the already like the incentives they already have right because they're they give around 50% of spend in Horizon worlds already uh which is significantly more than what Roblox gives uh and I won't even get into ufn because the calculation is all wonky but uh so like they're giving pretty favorable incentives to creators in terms of you know um take rate and then also I think this 50 million fund is on top of that right it's like engagement based payouts so I don't know I wanted to get I wanted I was curious if like you know you guys would be like all right let's go after that that pie or if you know you're you're happy to explore the you know the the app ecosystem instead I mean so far it's very fun developing for the app like for Quest players it's like it's an awesome audience um they're super

engaged um you know we got the profitability in December as a company which is crazy exciting um and you know I think like Sky's a limit like yeah yeah so so when you say profitability are you do you mean like on a month over Monon basis you have operating profit are you saying that you've paid back all of your you know your expenses over the last eight years that you've accumulated right no month over month profitability and yeah on a path to that um that second thing but uh yeah since December things are looking very good we achiev profitability as a total company um revenues are continuing to increase and ramp up from that which is crazy exciting um hasn't cooled off given the seasonality yet even like we're in February and things are still going up so yeah profitable and on a path to um yeah clear all expenses how long has uh Guerilla tag been a top game in like maybe using that as sort of a a benchmark for how long your guys's uh

engagement will will sustain I mean I believe they came out in um like covid you know 2020 2021 sort of time frame so around four years um I mean it's hard to predict like to fully correlate it to us because it was a different time there was no Gorilla Games um they kind of broke through and and you can buy Gorilla te gift cards and like you know a Safeway now and stuff right so um they're a new level of scale but yeah we are um I mean one we love Grill T they're an awesome for the community they share their their share their gorilla T code they share their ccus um and so we're yeah we're happy to be um on that path with them does have there been other gorilla tag you know I won't like heavily inspired games that have come and gone or you know I'm trying to get a sense of your confidence on you know your ability to sustain this for the long long term and be one of those you know top plat top games on the

platform for for a while yeah I mean I think um if you asked me six months ago I'd be a lot more nervous I think the things that make me um I'm usually not very confident about this type of stuff like I'm not you know but I would say that like uh I mean it's hard to say games that have come and gone yeps has been yeps came out I think earlier maybe a year had start or eight months Head Start something like that and they've been quite steady um you know I think there does seem to be if you look at um the the the the top 20 on on Quest a lot of the titles seem familiar like there is there is some stickiness to it um but I mean we have a lot more confidence now because um we're just seeing like the the the kpis we're seeing around Revenue continuing to increase or conversion rate continuing to increase um on users and then just Dow I mean uh Dow and Ma like our our Dows up you know Forex from December 1 so um I think like yeah

basically you know we can't predict the future but you know we we're also like the number two game by popularity um so things are continuing to grow which is really exciting we think that if we keep like hitting on updates content updates and things like that we can continue to grow the pie and and hopefully stay top is this so is this a I guess I'm wondering are you eating gorilla tags lunch right now um or or are we growing the pie it's hard to say I mean like certainly I think there's some correlation in the audience like when we have an update you know and they don't you know or they have an update we can feel it in our metrics kind of thing but I think we're growing the audience like I think gorilla tags you know slightly younger I think they actually allow T and up if I'm not mistaken um and um you know it does feel like a bit of a different audience cuz like we have a different you know we have we're more horror and we have different animals and you know I think um yeah I think it's

there's certainly some overlap but it does feel like a bit of a different audience um yeah yeah and So Meta doesn't share that data with you on sort of what your what the most played games are or what percentage of your audience is playing other games you're sort of looking at C no yeah they they do share how you're doing on the platform generally like your Revenue like they your benchmark on revenue and engagement and we're top on that which is awesome but they're surely top tier too um and um yeah I mean they're also very like I would say they're very good stewards and Samaritans of like trying to you know bring the bring the teams together trying to like you know addess challenges together and stuff like that so um you know hopefully we can all grow that pie together uh and get more gorillas out there yeah it's interesting it's interesting that you can you know achieve a similar type of scale because you know on roadblox when you see these copycats you know they can achieve scale but never quite the scale of the

original um I'm not saying that animal company is a copycat of course but uh given that there seems to be some heavy inspiration I'm just drawing the connection yeah yeah of course I mean there's it's I think it's like it's a really it's like honestly gorill is the most important like launch on the VR platform I think since beat saber probably like beat saber I feel like showed this whole new level of embodiment like a lot of games before beat saber you know Arizona Sunshine except super hot they were very FPS you got guns in your hands you're moving with a joystick um super hot had a bit of embodiment and and then beat saber it was all embodiment right you saw a bunch of Fitness Games come out of that and and and you know a Tailwind uh or draft drafting that people could do off that and the gorilla tag took the embodiment and and uh to a whole another level and um and now there's all these game this cracked open this brand new genre and this new Market of these these uh these kids uh

who just love that kind of experience and it's very social silly chaotic and it just Maps perfectly yeah and I I can I can totally see like a kid being like hey I need to get a VR headset mom because I need to be able to play Gorilla tag with my friends and obviously that's exactly what any every developer building for this platform is going to appreciate that if you can get more headsets on people yeah and I mean hopefully like you know I don't know like what H or when the kid gets a new headset like they give their old headset to somebody like something's got to happen with that old headset so you know we can keep growing the pie that way that's fantastic it's a good point you know it's kind of a forever game right like we keep adding to it there's there's still an extended richness we players don't have a way to create yet in the game and they're like kind of cobbling stuff together so we want to support that better um different game modes um you know uh as well so there's a lot to do I think it would like we don't we're a startup we're small we want to take our off the prize and go too wide um you know I think there's ways to go wide

within the original with the existing animal company you know game that like ideally enhances the experience for players or brings it to a new audience or I think there's like that that's probably a safer bet because we found something that's working you know games are hit driven businesses you know and we've got a hit and so um how can we extend this hit versus like try to make another hit you know yeah and you see you know whether it's fortnite or or um Roblox that the early you know successes end up sticking around a lot longer um you know adop me is like a 10-year-old game maybe not 10 years but like eight-year-old game per Haven you know seven sixy old game uh like these games are stick around when they when they um are the top games or and then on on fortnite you've got um you know Bed bedw Wars you've got uh the pit you've got all these games that you know were successful five years ago and now they're and they're still the top games on the platform so and you you see it on VR2

interestingly right like gorilla T has been around four years beat saer still kicking it's still a top five game um you know that's like one of the oldest games on the platform virtual desktop like some of these are OG that are from way back in the day from quest one um or even DK2 I think like so um there is definit I mean you got to not screw it up and I don't know what the list of games are that aren't still around but we're hot um there's a lot defin a Survivor bias here yeah yeah sure sure sure but it's certainly possible it's certainly possible which is exciting population one that's also though bought by meta so maybe that's you know um but yeah I mean we hope to stick around well what I love about you know this whole entrepreneurial journey is that you've just been you know exploring finding new opportunities to to generate revenue and ultimately that's what a good entrepreneur does right like they don't necessarily stick to you know the original Vision they find opportunity and they find uh you know

blue oceans to to grow so I think that what you've been doing and and I'm it's awesome to see that you've you know finally hit it with with animal company thanks man yeah it's it's uh it is like the entrepreneur Jal journey is long it can be long I mean I think like this was definitely it's an overnight success wrapped in a 9-year struggle you know what I mean uh uh uh with like lots of you know you brought up those headlines lots of uh fits and starts and and uh trying to find that new gear and and so on so yeah it's been Wild Man I mean a lot of Battle Scars you know along the way but it feels so good to to finally crack it you know after chipping away and shipping away and um yeah yeah in some ways it seems like all of those all of those you know opportunities that didn't pan out we're also still preparing you for the one that did convert right cuz you you guys had all of this VR experience you knew the platform you're able to Port a lot of your technology over to to animal company and so yeah

it's awesome to see that also like if you do all this work it's not it's not for nothing right like there's a lot of things that translate to the next thing you pursue I think yeah I think like if you think about it as just learning like we have a ton of learnings and I think like if we're navigating those um the idea maze like I feel like we've explored so many different like let's try this way nope that way doesn't work let's try this way nope that doesn't work but you know every time you try something I think you are learning a little bit more and more about what works and what doesn't work and maybe being more efficient with stuff you try um yeah it's interesting if uh you know hindsight's 2020 but if you could talk to Young and non uh eight years ago what would you what would you tell him I don't know it's it is tough I mean like it was pretty fun building all those like wide-eyed um AR augmented reality demos where we're like kind of building the first 3D web

browser and building the first uh you know meeting tool where we like literally you put on the headset in the lab and see a virtual person floating next to you like our like our friend Peter from San Francisco was sitting in my New York desk in my office and so that stuff was so compelling um you know we got to you know get in front of the you know some of the biggest Fortune 500s we down went to Bill Gates and you know the CEOs of like Delta and stuff like that um so it was um and you know and they used it you know which is really compelling so that stuff was incredibly fun um you know I like I don't know if I would tell young Anand eight years ago hey just make a VR game I mean the market was in a different place too you know we probably could have I mean we're not as as uh as smart as leming who came up with Gorilla tag like that was kind of a stroke of Genius to that that whole mechanic so I don't think our game would have even worked yesterday or not yesterday 8 years go um but I don't know it's very hard to say you could say hey don't do X Y and Z

where you could say like hey go right for gaming I mean I know we wanted to launch a lot earlier than we did but it's really hard to say hindsight's 2020 I mean we literally I don't think we could have made an animal company eight years ago we didn't even have the team some of the team members you know um so very I don't know I wish I had a more succinct message for 8-year-old to go on it no it sounds like that the message would be just keep doing what you're doing man it's all going to work out eventually yeah yeah awesome well what's the what's the best way for people to keep in touch follow your journey um if they're if they're interested yeah probably um I mean LinkedIn or Twitter I don't really update those a ton but I should do it more um I usually retweet kind of our stuff I think um my co-founder J Al Le he's way better about that the disc Bo for animal company is like really interesting um and so that's

like but that's like a fire hose so um if you want to get on that but yeah follow spatial on Twitter my handle Onex an and DX and uh what else I think animal company yeah follow animal company on Twitter and Twitter and Discord uh sorry Tik Tok after this call I'm going to go put on my VR headset that I got at ROBLOX RDC 23 and and uh I don't know what I'm going to do but I'm going to get get in man give yeah yeah give it a whir it's it's super fun awesome all right well thanks for coming on the podcast on absolute pleasure all right see you thanks David if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a fstar review and if you want to reach out or provide feedback shoot us a note at podcast nov. or find us on Twitter and Link Den plus if you want to learn more about what navic has to offer make sure to check out our website

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