Next trends of the gaming industry with Kevin Chou, founder of SuperLayer, Rally, Forte, and Kabam
In a special talk given at the SCET’s Fall 2021 Newton Lecture Series, distinguished founders Kevin Chou and Mike Li tell the audience their stories of founding multiple startups and give advice to young entrepreneurs.
“Go figure out what’s weird and wacky about yourself. Find your weird curiosity and try to think about how to do something around that.”
— Kevin’s biggest advice to young entrepreneurs
In fall 2021, Kevin Chou and his business partner and fellow Cal grad, Mike Li, came to speak at the A. Richard Newton Series, A Berkeley Changemaker™ Course to narrate their difficult, risky but also fun paths to founding several companies after graduation at Cal. As one of the most experienced entrepreneurs in the gaming industry, Kevin predicted that the next trend in the gaming industry will be focused on NFTs and cryptocurrencies, which currently do not play a major role in the traditional gaming experience.
Kevin Chou is the founder of multiple companies in the crypto, gaming and esports industries. He has been honored by Fortune receiving their 40 under 40 designation, by CNN as one of the Smartest People in Tech, and in Business Insider’s Silicon Valley Top 100. In 2019, Kevin was honored as UC Berkeley’s Alumnus of the year.
Kevin is currently the founder of SuperLayer, a new crypto venture studio aimed at building easy-to-use consumer crypto products with the goal of bringing the next 100 million people into crypto. Prior to SuperLayer, Kevin was the founder of Rally, a creator economy crypto protocol, which reached a fully-diluted market cap of over $10 billion in 2021. Before Rally, Kevin was the founding CEO of Forte with the mission of building a more collaborative future in gaming through realigning the economic relationship between players and developers.
“We’re not trying to be a company that goes public or have shareholders that we have to answer to in a traditional sense.”
— Kevin Chou
The lists of accomplishments don’t stop there. Kevin currently serves as the chairman of Gen.G, a new esports enterprise that bridges Asia and North America. It is the parent company of the Seoul Dynasty in the Overwatch League, and 2017 League of Legends world champions. Previously, Kevin was the CEO and founder of Kabam, a top developer of mobile games. Kabam has leading partnerships with Marvel, Star Wars, Fast & Furious, Lord of the Rings, and The Hunger Games. In 2017, Kabam was acquired by Netmarble, and then sold to 21st Century Fox, and GAEA, generating nearly $1 billion in value.
Keywords about Kevin Chou: #crypto, #gaming, #blockchain, #videogames, and #entrepreneurship
The series of startup journeys after Cal
Kevin’s timeline
The interest in venture capital all began at Cal, when Kevin was a junior in 2001 and listened to a lecture given by renowned venture capitalist John Doerr at Berkeley’s Haas School of Business.
“Never heard anything about venture capital before until I met a venture capitalist in my life.”
– Kevin
At that time, Kevin’s mind was set on studying finance and business and getting good pay after college, which left him little time to think about his interest in venture capital. Immediately after graduating, Kevin got his first job as an investment banker in Deutsche bank with the highest pay any new grad could dream of.
However, just as life became too good to be true, Kevin and Mike got laid off in 2002, along with many others due to the dot-com recession in the early 2000s.
The layoff hit Kevin hard, and for six months he did nothing. He didn’t apply to new jobs, but sat back and thought about what he should do and what was he trained for. He said, at that time, “I don’t know what to do with my life.”
As his partner, Mike points out after you have been through all the hardships, you will realize that “failure and struggles are more potent learning experiences than success can be.”
Then, in 2006, Kevin and Mike started their first company, Watercooler. They started with the idea to build a business-focused social network as a competitor to LinkedIn. They wanted it to pivot to consumer, social, games, and mobile games. This first idea failed, however, as within 6 months the site tanked without a proper hook and active user.
For start-ups: “The idea you started with is often not the idea you ended with.”
– Mike Li
With the first failed attempt in mind, they rebranded Watercooler as an ad-driven sports app on Facebook, offering user-generated trivia games and fantasy football. This time, it was a hit. A million users joined the first month. In 2008, the company continued to grow and Chou spent most of his time looking for series B funding. By mid-September, he had succeeded. The documents were signed, and they were ready to launch new ideas.
Then, just a couple of weeks later, Lehman Brothers went bankrupt, and the Great Recession was on. The deal was off, and their startup went back to where it started.
It was a difficult time, and it hit him particularly hard, said Kevin during his speech with Berkeley students. As the only child of a Taiwanese immigrant, he came to America understanding only a little bit of English.
This unfamiliarity made Kevin somewhat scared of talking to people, “When there was a school presentation, I had to memorize and rehearse the talk for days.”
In 2008, desperate to save the enterprise, Kevin met more than 100 investors and was turned down by most of them. Kevin joked during the talk that when you have to convince people to give you money and trust you and your team, that definitely helps improve your public speaking skills.
“Funding, recruiting, and building a business partnership are very important to any startup.”
– Kevin Chou
“Another one of his superpowers is his silver tongue; he’s able to weave together a phenomenal story and leave investors who’ve heard it all to go, ‘Oh my God, this is really big,’” said Liu, one of his co-founders at Watercooler.
“My hook to convincing investors is: understanding who your investor is and making sure you’re authentic, you’re confident in your business and your business strategy is aligned with what the investor is looking for.”
– Kevin Chou
In 2009, Watercooler rebranded as Kabam and debuted with multiplayer strategy game Kingdoms of Camelot, leading to gaming deals with Disney, Paramount, and many others. In 2017, Kevin sold Kabam and founded 4 more companies: Forte, Gen.G Esports, Rally, and SuperLayer. With Gen.G Esports, he got to know great professional players and unpacked the power of fandom. With Rally, he was able to “build platforms allowing creators to create their own cryptocurrency that can power their own economies no matter where they’re at.” From Rally, they found out that if you want to tip the creator, you cannot pay dollars in Ethereum fees, which have to exist on a side chain and they couldn’t find one. This problem led to the founding of Forte. With Forte, they enabled video game developers and players to use Bitcoin and other cryptocurrencies to exchange game-related products.
Kevin said, “it’s all interrelated,” as both of them laughed, “that one idea led to another, and I ended up founding multiple companies and had great experiences that I couldn’t have imagined when coming out of college.”
Kevin’s guide to entrepreneurship
So looking back, here are some advice that Kevin Chou would give to you:
“Lesson that I wish I was told. I took my first job because I like finance but more importantly looking for companies that have the highest pay”
– Kevin
Lesson 1: Don’t just take the job that gives you the most money
Don’t just pick the job for money, but for what you can learn, experiences you could have. Things you learn speak a lot more when you do your future career searches. It can dramatically change the trajectory of your career if you take some risks early on.
Lesson 2: VC is more about investing in the teams than ideas
“In the early days of a career, it’s more about learning and getting to work with people that we really enjoy working with.”
“Finding reliable and capable people that you have fun working with are much more important.”
Lesson 3 (from Mike): Start early better than late
If you want to be an entrepreneur, starting early is better than late, because you are more risk-endure early on. Failure is not gonna devastate your future earning potential but probably helps you with the things.
Lesson 4: Don’t be scared of failure
Kevin: You’ve learned during the experience. This makes you a more attractive candidate for the next job you apply for. I always love to hire founders who tried and failed and grew [because of it].
There are no substitutes for startup jobs, no job that will help you figure out how to start a company. So just go out there and try, success or not, you will learn incredible experiences that you can never gain otherwise.
Kevin’s biggest advice
“Go figure out what’s weird and wacky about yourself. Find your weird curiosity and try to think about how to do something around that.”
“We live in a crazy world where you now can be weird and wacky and go on the internet and find millions of people just like you. And here’s your team! Finding suitable teammates and finding a common goal is the start of a start-up.”
“Entrepreneur for me is all about taking something we like doing and making products out of it.”
Q&A:
Where do you see the game industry going?
I think now half of the track and focus is on NFT and crypto. One of the biggest trends in gaming is definitely AR/VR or metaverse. The virtual worlds allow people to be in a different place, to visit, have an identity, and have a presence to interact with people.
Designing community-driven games are the next hit.
What would be the next big thing after the mobile games?
The next big thing is the concept of ownership.
- NFTs (non-fungible tokens) and cryptocurrencies
- We need to align game makers and game players, that’s what our companies are trying to do.
How blockchain within the context of gaming actually works?
- Ethereum-based shop
- In most of the markets when you buy something, you own it. However, when you play a game, you don’t necessarily own it, you just rent it for a decided amount of time. We want to create real digital assets and ownership.
What is your hook when talking to investors?
- Art of being authentic and almost being vulnerable when talking to investors.
- Understanding who your investor is and making sure you’re authentic, you’re confident and your business and your business strategy is aligned with what the investor is looking
How much do the things you learn in school prepare you for your entrepreneurial journey?
Mike said, “[It was] not a specific coding language I learned in Berkeley [that prepared me, but] more just the way to think, the tenacity to power through a problem in a scrappy way is what ended up powering our entrepreneurship career”.
Learning how to work with teams and solve problems is the most useful in later lives.
Kevin said, “[The] accounting class at Berkeley offered through Haas. I thought it to be very hard but it did turn out very useful later in my career. I also took a public speaking class and corporate finance class that prompted me to think in new ways.”
Advice you would give to college students?
Looking back in our lives definitely encourages you to take more risks early in life, when you don’t have much responsibility for your family, your children, and other responsibilities that come with that.
Kevin said, “My parents hated the idea that I started a company. They wanted me to go back to finance, but I know this is what I want to do. Sticking to it makes the biggest difference and I learned a lot throughout the experience.”
What is your motivation? What kept you going so far, and any wisdom you want to share?
- Mike said, “I always enjoy the process of making something. Making something from scratch, so building startups definitely gives me pleasure although it is very difficult.”
- Kevin said, “Being an entrepreneur means trading off certainty for risk, which increases the upsides but also the chances of failure. I would say I have three motivations.
- “My biggest motivation is knowing that I could put my own destiny in my own hands.
- “I wanted to work on new things and didn’t want to follow the old generation’s path. I want to do something different.
- “My third motivation is who I worked with. People I enjoyed working with actually become my top motivation now. The great thing about being an entrepreneur is that you can create your own team. I just love being on the edge, love weird wacky stuff that’s happening in the world.”
“PS: Entrepreneur doesn’t mean you have to be CEO. You can just focus on what you want to do. Focus on what you enjoyed the most, and work with a responsible team to make it work.”
This lecture was part of the A. Richard Newton Lecture Series: A Berkeley Changemaker™ course. Students interested in taking the course can find more information here.