0:00:01 - (Matt Widdoes): Welcome to another episode of Growth@Scale. I'm your host, Matt Widdoes and CEO of MAVAN.com, and today I'm joined by Josh Lu. Welcome to the podcast, Josh.

0:00:09 - (Joshua Lu): Thanks for having me.

0:00:10 - (Matt Widdoes): Yeah, so just for a little bit of background, Josh is an accomplished product executive, currently a partner at a16z Games, investing in companies from Series C to B, and is the general manager of SPEEDRUN, their gaming accelerator. During his time at Zynga, he led product and growth teams, steering titles like Words With Friends to unprecedented success. He's also worked as VP, commercial leader at Blizzard Entertainment and director of product management for Horizon Worlds at Meta.

0:00:34 - (Matt Widdoes): Josh, I'm so excited to chat today. I appreciate you joining us.

0:00:37 - (Joshua Lu): Matt, you left out the most important part. We were former colleagues.

0:00:40 - (Matt Widdoes): That's true. We were former colleagues. And it was. You also preceded me at Zynga. So you got to see a ton of the evolution there. And so that was even the time I was there. There was a lot of evolution for the better, I think. And so that was great to see. So, yeah, for people who don't know you and who haven't worked with you in the past, tell us, who are you? What do you do? Where have you been?

0:00:59 - (Joshua Lu): Yeah, I'll give you the long form version and just roll your eyes or something and stop me if this is like, too long. I joined the games industry back a long time ago now probably 15 years. I got my start at Playdom, making MySpace, in Facebook Games. The first games I trained on were text-based RPG's, Sorority Life, and Mobsters. And back then, it was. It was really, really crazy. But I had always wanted to get into the games industry. When I was in.

0:01:29 - (Joshua Lu): When I was a kid, my dad was a professor at Oregon State University, and so he had a lab of computers. So as a kid, I would, you know, that's my first experience playing computer games, was going into his lab and, you know, playing, you know, text-based, you know, games online on those computers, and then graduated in amuds. Then, you know, I ended up playing games competitively, basically my entire childhood, from Tetris to Halo to Guild Wars, et cetera, et cetera. And so I always wanted to get into games.

0:01:59 - (Joshua Lu): When I graduated from school, I took this trip out to Asia, and I was staying at a crappy hostel in Korea with only public TV channels. And I noticed that the five channels available, two of them were dedicated to Starcraft. And that's sort of when I knew, like, hey, you could actually make a career out of this potentially. And it's a cool business opportunity. And so I came back home and set out to work in games and the rest is history.

0:02:25 - (Joshua Lu): Ended up working at a bunch of places, cool places. As a product manager, Scopely, I was very, very early there. Back before Scopely was even a games company and we stumbled into games. Luckily, I was at Zynga for many years. I was at Blizzard and then most recently Meta before joining here. Now we have a games dedicated practice at a16z with $1.2 billion under management. And we invest all across the games industry, from studios making amazing games to gamified consumer platforms and social platforms, to picks and shovels, AI infrastructure dedicated to the games industry.

0:03:03 - (Matt Widdoes): It's funny, those are all behemoths in their own right. And most of those you were at prior to them being massive, because even Zynga. What year did you join Zynga? Roughly?

0:03:14 - (Joshua Lu): I joined Zynga after the IPO. So this was, Zynga had gotten massive, then Facebook did the rug pull and then, you know, I joined sort of as we were transitioning into mobile.

0:03:24 - (Matt Widdoes): Right. So it's like they were going through essentially a rebirth there. And then Scopely is now number one game in the world, essentially. And I don't know how many billions in revenue they're doing, but it's, it's not, not a small operation. I'm curious from the gaming perspective. And I also grew up playing games also just a games family. So we were, I tell people this is true, but I learned to count with a deck of cards because the rule was you couldn't play.

0:03:50 - (Matt Widdoes): My grandpa wouldn't let you play Go Fish unless you knew what the cards were because he's like, you can't have like a kid sitting here who doesn't know a three from a seven or a Jack from a King. And so that motivated me to be like, okay, like, I just very distinctly remember the summer we were visiting them and I was like sitting in the living room drilling these numbers so I could participate at the breakfast table playing Go Fish with my sisters and him.

0:04:12 - (Matt Widdoes): So. Always been a major part of our family, and it still is today. We play games with our kids every night. It's literally a five to ten minute period where we, it may just be hide and seek or some run around thing, but it's a big part of our family's culture. So I'm curious, like, with your own parallel there, and obviously from Tetris to Starcraft to Halo, these are all very different games. What game would you say? I'm just curious, personally, do you have the most hours in, do you think?

0:04:39 - (Joshua Lu): Oh, man.

0:04:40 - (Matt Widdoes): And you're playing, I also get that you're playing like every new mobile game all the time anyways, because almost for work, as funny as that sounds. But yeah, any game one or two that jump off is like, I've got a lot of hours in that.

0:04:52 - (Joshua Lu): I'm guessing it's probably either Tetris and specifically an online client called tetranet, which is sort of like the first Battle Royale client I ever played. This is like, you know, like in the early 2000's, late 90's maybe. Yeah, probably more than, more than, you know, 10,000 hours in that. I think I'm pushing 10,000 hours in Hearthstone Battlegrounds.

0:05:16 - (Matt Widdoes): Okay.

0:05:17 - (Joshua Lu): As well.

0:05:17 - (Matt Widdoes): Yeah. Cool. Yeah, I went, I went very deep in, I guess it must have been college in one of the Grand Theft Auto’s, I think it was three or something like that. But it was, those are like games that you can just never, you never end, basically. Cool. And then another thing is that you were part of what growth means many different things to many different people, and you've had some, literally, growth in your title or clearly de-marked in your function for a long time.

0:05:44 - (Matt Widdoes): I'm curious, your thoughts and perspective on how growth as a word or as a way to describe what we're doing inside of a business has changed over the last decade. You know, it still means very different things to different people. But from the inside out, how have you seen it as somebody carrying that title?

0:06:00 - (Joshua Lu): Well, you know what's funny? My first title ever was an Associate Product Manager of virals. And so this is even before, kind of like the growth movement is like on Facebook. We were shipping games, and literally my job was to reverse engineer Facebook channels and help make our games more spammy. That's maybe like a cynical interpretation of get it in the hands of more people using viral channels.

0:06:29 - (Joshua Lu): And, you know, at the time, I think the one of the reasons I was successful is because I came into the job without any baggage. Right? Like, I hadn't been in the games industry before, and so, and I was like the first generation of people that grew up with Facebook. So I knew the channels really well. I knew what people wanted to see in the channels. And so I was able to go all in and just like, you know, spam the crap out of people. And that was a good, you know, that was a good set of learnings in and of itself.

0:06:55 - (Joshua Lu): There were a bunch of people with, like, you know, maybe more scruples than me or, like, didn't grow up with a platform that had a harder time. Sort of like, you know, just experimenting with all the different, you know, copy and creatives and all the different things. But I had a blast as a virals PM. And then, you know, of course, you know, the growth function, you know, really started to take hold over the next couple of years. That ended up splitting into growth as performance marketing, you know, related, and growth as sort of, like, you know, retention core product.

0:07:26 - (Joshua Lu): I always sort of sat in the intersection between those two because in free to play titles like free-to-play games, product and marketing are so intertwined. You create the product in order to allow it to be marketed because, you know, on Facebook and on mobile, like, the entire ecosystems were built on sort of distribution platforms, and these distribution platforms had their own quirks, but you had to, you could not just have a good product.

0:07:53 - (Joshua Lu): You could not just have good marketing. The only games that survived were the ones that had both and had integrated teams. And so I was very fortunate to, you know, work at companies and work on products in which the growth function sort of was a whole bunch of people from different backgrounds working together on stuff. And I know that wasn't always the case at other companies. You know, as an example, just mechanically, we would have roadmap reviews, like hardcore product roadmap reviews, where our UA team was invited to all of the product reviews because at the end of the day, anytime we would have a feature that would go out or a learning, you know, an optimization for, you know, a thing that we were doing, a, the marketing team needed to know about it because they would have to market it and, like, ultimately.

0:08:40 - (Joshua Lu): Exactly. But also, there were a whole bunch of learnings on the product side that ended up making a difference for UA creatives and vice versa. Right. Like, you know, if the UA team was testing a creative that just really happened to work a theme or something, that was an interesting learning about the audience, and we would oftentimes take that back into the product and go, okay, like, we know that people really like this character for some reason. Can we do something more with that in the product?

0:09:05 - (Joshua Lu): And that was just a really good cycle.

0:09:07 - (Matt Widdoes): Yeah. And it's funny because so many companies, it's so obvious if you've worked at a major gaming company because, and I don't know why they were ahead of the curve there. Maybe the product is unique in some ways where it forces that or it benefits from it. I think maybe part of it also is that the volume and frequency of data is so high that if you have really, if you also have really competent analysts and others throughout the. And really, almost everyone's an analyst within the. But looking at that, they can divine what is possibly driving that much faster and with higher frequency.

0:09:44 - (Matt Widdoes): And so I don't know if that's tied to it. We still see this today where you'll have, like, the stereotypical example I'll use is that sales isn't selling much. And so they say, well, if marketing would get us better leads, we would sell more. And then so you go to the marketing team, and the marketing team says, well, I mean, we could market this thing better if the product team would just get these features in that brought us to parity with the competitive set, or they would change our pricing like we've been saying they should. We want to do a free trial. All of our competitors do a free trial. And if we could just do that, if Product would allow that, we would be able to market this better. So then you go to the product teams, and they say, well, we'd be able to build all that stuff if sales was selling more.

0:10:21 - (Matt Widdoes): And it's like, well, hold on. We can't all be pointing at each other like, aren't we here to, like, are we here, you know, for our function? Or like, is anybody talking like, why aren't you guys trying to solve this collectively? It's like we're all on a boat with a hole in it, and everyone's like, well, that's not in my corner. So I'm unconcerned about it. It's like, well, you should be really concerned about that. And so, you know, this approach of kind of  really holistically looking at it, if you were trying to grow a, you know, county fair award winning pumpkin as, like, another example, nobody would ever question that. Like, the soil matters, the nutrients matter, the sunlight matters, the air matters, of course, the watering matters, and, like, all of these things at the right depth and the right sequence at the right time.

0:11:04 - (Matt Widdoes): And if you were all on a team who was meant to grow and exit this big pumpkin, you wouldn't really be, like, bickering about these nuances of why I think you gave it too much water. I think you would just be testing it. You'd be looking at the soil, you'd be researching it. You'd be working together. And so often we find that teams are really siloed like that. And many great teams, many teams that are succeeding are still siloed. But it begs the question in my mind always, of what could that  be if some minor tweaks were made within the to where that kind of singular vision was enacted and people were working more closely together.

0:11:42 - (Matt Widdoes): I'm curious like thoughts on your side from that because obviously you've lived that path as well. But what is your approach to nurturing that type of cross functional collaboration either in orgs where when you've come in they don't have it and they need it and they're desiring change there or teams that have it, but you're just trying to maintain that and like further strengthen it and make it, make it, you know, the connective tissue much stronger.

0:12:07 - (Joshua Lu): Yeah, I got to live this a little bit when I went to Blizzard because, you know, Blizzard, they hired me to do all their new stuff so I was the, you know, the commercial leader for all their incubation things. A big part of that was they wanted to make a lot more mobile games. And you know, Blizzard, as you probably know, is a longstanding, you know, company with a ton of history. They had massive success doing things a certain way, but when I got there, they were not really thinking in the way that a free to play mobile games company would think.

0:12:40 - (Joshua Lu): It was very much about craftsmanship. It was very much about shipping things when they were ready. All of these, by the way, are valuable lessons for free to play mobile companies too. But you can be too extreme in certain ways. When I got there, they didn't have a ton of experience. As an example, doing UA for mobile performance marketing. And that makes sense, right, because on PC and console attributions a lot harder and like there's a lot more brand stuff and blah, blah, blah.

0:13:08 - (Joshua Lu): And so as we started building out our mobile teams, I had to, I got the chance to sort of build that culture from the start. And the single most important thing that I did, I think was just to start getting the teams together and teaching each of the teams the other functions job. This is the most important thing I think is because, you know, when it's working really well, the reason why a product manager is going to be really interested in what the UA team thinks is because they understand how freaking hard it is to acquire for a free to play mobile game and vice versa. Like, you know, a UA manager is only going to be interested in like what the product team is doing if they really understand what drives product success, what drives LTVs, such that they can go and do interesting things.

0:13:59 - (Joshua Lu): And so you have to teach each the functions the other's job first. That is the hardest part because each of the functions has a lot to do. They've been trained specifically to do a thing. Learning another job is not so easy, but what you can do is just get everyone together. You can have everyone do shared updates that then teaches sort of like what's important, what's not important to the other functions just by virtue of like having to listen to the updates.

0:14:27 - (Joshua Lu): Something that worked really well at Zynga that we brought over to Blizzard was, you know, doing just these product updates where there were shared KPI's and everybody contributed to the KPI's, right? Like, you know, the analysts of course, put together the data but ultimately it was the product and marketing teams coming together to have shared targets to track progress against those targets. And when you force people to basically have shared targets then they come up with their own ways to do it. And if you make them do it together then that just leads to a lot more understanding. This, I think is like, it sounds really obvious when you say it out loud, but it's kind of the key to getting the teams to work together is like as a general manager or as a leader of the team, you can have people have shared goals, you can have people in the same room talking about those shared goals, progress against those goals. The things that you're doing to like impact those goals, that exercise. It's a lot of time and effort and like investment. But I do think it's worth it because when you're live and, you know, you have live ops coming at you and things are breaking and blah, blah blah, you just don't have time to like build that. So if you have time early on to build that sort of culture, it's just way better.

0:15:38 - (Matt Widdoes): Well, and I think to that point on the liveops and things hitting you, you know, something going even outside of liveops, something just going down or something massive, changing, maybe some new competitive launch that you hadn't anticipated or it hit sooner than you had planned, like all of those things, if you're going to react to them quickly and effectively requires the teams to have so much context together to just hit the ground running because they're like, okay, cool, I already kind of know what's happening there. I know what's happening here and actually because I know what's happening here, I want to have a talk with that person because I think I had this idea last night that I think might benefit that thing even though it's not my realm. And I'll admit, like, I'm not an expert in that area, but I've seen this and I think we could kind of do something like that.

0:16:19 - (Matt Widdoes): And I think the other piece and kind of ingredient that's required there is this kind of lack of ego and not only willingness to learn, but like an innate desire to learn. So that when you bring in these other functions and they're learning about what everyone else does, it's not rolling their eyes and like, oh, I have to be here. And like they're just checking their email or they can't wait to get back to their desk. They're actually like, I'm so excited this has been put together. And I have so many questions.

0:16:43 - (Matt Widdoes): And the other side is like, dude, I have so many questions about what you do and they can nerd out on it versus like, oh, the GM says we have to meet now because of this or that. And then the other point and that's like a people challenge. So it's like you have to solve that separately. But the other piece that you mentioned is that like, as a fundamental, I believe a fundamental piece of growing quickly at scale in a way that is predictable is that we all have a singular vision and that has to come from leadership. And so if you have your leaders in these various functions that are operating against different KPI's or they're sometimes at odds with each other, right. Maybe one is incentivized on new users and they get paid more the more users come in and the other is incentivized on retention.

0:17:26 - (Matt Widdoes): Well, those are drastically at odds with each other because they're not talking about the same level of quality. And so that requires some additional effort from the leadership team. And I've heard this before, I think it's just, I don't know that it was ever proven exactly, but the saying of like 1 hour in strategy will get you back ten in execution. And sometimes people want to skip that strategic side and say, yeah, yeah, yeah, we know what we need to do. Let's just do the thing. Do the thing. And you wake up three quarters in, or five years in and everybody's running around and they don't really know, like, why are we doing any of this? And what is the end state? And most importantly, how do we know if we want?

0:18:03 - (Joshua Lu): Yeah, if you'll just allow me to rant about goals for a second.

0:18:06 - (Matt Widdoes): Yeah, let's talk about it.

0:18:08 - (Joshua Lu): You know, like you said, having goals is incredibly important, right? Because if you have bad goals, then it leads to all of these sort of like perverse incentives to do different things. And so crafting really great goals for the team is like, it's kind of an art.

0:18:23 - (Matt Widdoes): It's a game in itself.

0:18:25 - (Joshua Lu): It's a game in itself. And like great leaders can do that, not just because step one is like actually creating goals that like create the most aligned incentives. Step two at a big company is actually like managing upwards. Because sometimes the instantiation of a goal that's really great for the team is like going to be weird and different and like the board's not going to like it or Wall Street's not going to like it or what, you know, whatever it is. And so like there's actually quite a bit of work that goes into making really great goals that are actionable for your team, that aligns in incentives and then maybe just the other thing on goals is like, and this is also going to sound obvious, but I think it's worth stating is like the very best teams have been a part of.

0:19:04 - (Joshua Lu): When you hit or exceed your goals, there is actually the team does not get to celebrate unless the team has proven that what they've done to hit or achieve the goals is repeatable.

0:19:16 - (Matt Widdoes): Repeatable?

0:19:17 - (Joshua Lu): Yeah, that they've learned something from it and that it will make future endeavors to hit and achieve and beat goals. De-risked. Similarly, if a goal is missed, if you miss forecast, that is not a problem. Unless the team does not do a deep dive and figure out exactly what it was about their execution or sometimes even the forecast for why they missed the goal. And as leaders, we can then reinforce kind of that culture, right? Like how we talk about goals, how we talk about our numbers, not just to the team, but again upwards to like, you know, divisional heads or your CEO or the board or whatever.

0:19:54 - (Joshua Lu): Like that is actually the hard work that goes into, I think, creating the culture that you just talked about.

0:20:00 - (Matt Widdoes): Yeah. And I think that people, kind of the best people I've ever worked with, they also want to achieve and they want to progress. And so it's funny how many parallels there are with mobile gaming, but they're like they have this innate desire to win. And so it's like you have to create the conditions necessary for them to win, which there are many, and also be willing to take that honest look at in like a post, in a debrief or deconstruct of a quarter of.

0:20:31 - (Matt Widdoes): What did we learn? What were the assumptions that we got wrong? To your point, how do we avoid those in the future? Like always looking at root cause and not being super overly reactive to minor things. Because these wins like stack over time. And if you can keep stacking wins, it builds even in moments where it may not appear that you're winning because on paper, you either hit, missed a goal or revenue is down.

0:20:54 - (Matt Widdoes): But within that, and to your point, there were really meaningful learnings that came out of it. So it's not a, like, it's a failed test if you didn't learn anything from it. We can measure the test by how much we learned, and that can be learned not to ever do that thing again. Right. That's a great learning if it's. If it is consistent and can be applied infinitely into the future. And I think that was one thing that Zynga did really well, particularly in a gaming company where you essentially, for anybody that hasn't worked in gaming, most of them are built around centralized services.

0:21:24 - (Matt Widdoes): Oftentimes that would include things like legal and finance, in most cases would also include things like user acquisition. But each one of the studios essentially is its own business, with its own PNL, with its own leadership, its own team of 200, 500 people, its own budget, everything. And they're measured independently of the rest of the business. So you can have one studio that's celebrating because they're winning and making money hand over fist, and the other six are failing, and the company is doing well on the street.

0:21:51 - (Matt Widdoes): It's like, okay, but it's really tough inside those walls for those individual studios. And so oftentimes those studio heads are at odds with each other. So they don't, because they're not thinking about it. They're not incentivized to think about the broader business. They're incentivized to grow their individual unit. And therefore, when you look at things like cross promotion, where you say, hey, if you've got a bunch of laps users, why don't you run an ad in your game to send them to my game?

0:22:14 - (Matt Widdoes): Every studio head I've ever met is more than willing to take those, but very often does not want to give them because they're like, no, that's my waste over here. I'm going to do something with that at some point. Whereas again, the leadership team, if you're thinking about the broader book of the business, is like, well, that's kind of crazy. So that kind of preamble is to say, set up that a big thing that you had done at Zynga was actually bringing that PM function that had traditionally sat in kind of these silos and creating a centralized service for that. So that if we saw that something was working in game a, that those learnings, good or bad, could be transferred to other studios or shared so that they could be learning from each other because our competitors were sometimes individually owned and singularly focused and more than happy to share those learnings internally with everybody versus a studio model where you've got, you know, multiples. Any, any insights there of, like, how to get buy-in from these studio heads that oftentimes maybe, you know, it's a give and a take, but like, any, any thoughts there or any war stories from there that are worth flagging?

0:23:17 - (Joshua Lu): That job was one of the one of my favorite jobs I've ever had in my career. It is also kind of a weird unicorn in that in order to have a function like that where you have some central pm person tell you give, you know, and you know, that that feels comfortable going to a studio head and saying like, hey, I disagree with how you're prioritizing your roadmap, actually, because all these other, you know, knuckleheads have done a thing that, you know, that that actually works.

0:23:46 - (Joshua Lu): You may not like it, but we are actually just going to put this on your roadmap because we know it works. That is a very, very difficult thing to do. At most big companies, you really do need to  sort of support. You need two things. One, support from the highest, you know, leadership position possible to sort of, you know, give that, give that person teeth to, like, you know, go and do the thing. You also need, I think somebody who was, uh, who really understands the studio heads and, like, knows them. There's just a lot of trust involved.

0:24:15 - (Matt Widdoes): Yeah.

0:24:16 - (Joshua Lu): And so you can't just, like, put anybody in there. You have to. I think you have to have somebody who, like, just knows the system has come up in the system. And so it was a combination of things that I think allowed me to be successful in that role and others who have been in that role to also be successful. If you think about all the people that have been in that role, they were all people who sort of came up in the Zynga system and knew all the people that said, I do wish that this function existed in other places more often.

0:24:45 - (Joshua Lu): There have been instantiations of it at other gaming companies, but I don't often see it in non-gaming companies for all of the challenges that, you know, we just described. But it is always great to have that function because it signals to the rest of the company that we as a company have invested structurally, organizationally into becoming a learning machine. I think it's easier for games companies to do this, especially free to play games, because the free to play games business is, it lives or dies on the margins. I mean, you're talking about businesses where fewer than 5% of your audience will monetize ever.

0:25:22 - (Joshua Lu): The difference between you being a billion dollar a year company and being a $50 million a year company is often like 3% difference on day 30 retention. That doesn't sound like a lot, but it's actually a world of difference in free-to-play games. And so businesses are won and lost on the margins. We used to at Zynga crow about, literally basis point differences, you know, like we would say, oh, yeah, this experiment increased, you know, long-term retention by 15 basis points and everyone would cheer.

0:25:51 - (Joshua Lu): And that's just kind of like the. I always used to when I, when I joined Blizzard. I joke that, like, AAA, you know, game development is kind of like, you know, being in Westeros, if you're a Game of Thrones fan, it's like there's feasts everywhere and it's warm and like, you're in the city walls and being in, like, free to play mobile especially, is like being on the Night's Watch. It's cold and it's dark and there's monsters everywhere.

0:26:14 - (Joshua Lu): If you're not paranoid all of the time, you're just going to die. Like, you will die. And so, yeah, so, you know, by virtue of being in an industry that just forced us to be paranoid all the time, we became learning machines and that ended up paying long term dividends even when the market matured a little bit, even when the company was in a much better spot in terms of just having predictable revenue and having market share and all the things like those are advantages that persist.

0:26:40 - (Matt Widdoes): I've never thought of that as being the catalyst, a potential catalyst for that approach, because we oftentimes are dealing with companies that are far outside of gaming, but they have a subscription model or they have something that's just way more consistent. And you're worried mostly about the upper and middle funnel, but the lower funnel takes care of itself on some level. The frequency of the data and all these other things is different.

0:27:07 - (Matt Widdoes): However, those learnings and that effort that we put into and we're able to put into free to play mobile games, like really intense data scientists on forward looking PLTV curves to understand within two days whether or not all that money is going to be profitable or not, which obviously creates a ton of heat in my world of media buying, you don't get to say, like, well, we'll see how those guys do in a year, let's go buy some more. It's like we know within two days whether or not that worked.

0:27:33 - (Matt Widdoes): And therefore, we have to make this night's watch iteration at scale. I mean, you're spending a million plus a day in most cases. And so if you're like, cool yesterday, that million that we spent, 250k is going to come back. It's like, okay, well, what are we doing about that? That happens like six days in a row. You kind of don't have a job anymore on some level, because it's like, well, what is this guy doing?

0:27:53 - (Matt Widdoes): And so the metal that is forged in that type of fire, I do feel, is way stronger. But the lessons that are learned apply universally. But I think oftentimes people don't have the same levels of stress or the same levels where those basis points really matter. And so it's just like, okay, well, like, we can, we can be kind of light on lifecycle. Like, lifecycle doesn't matter that much. It's like, lifecycle could grow your revenue 25%. It's like, yeah, but it's gonna, we'd have to hire two heads and like, that'd be an investment of, it's like, you do a billion a year in revenue.

0:28:27 - (Matt Widdoes): So anyways, whereas in gaming, it's like, well, yeah, obviously run that and like, let's see. And again, if it doesn't work, like, let's kill it. But like, that test and learn across every function of the business, on every surface area is just so ingrained in gaming. And maybe that's why I'm curious, like, from your, you know, you started off in games, essentially at your dad's lab as a young child.

0:28:52 - (Matt Widdoes): You've watched this grow. We were both part of the first kind of adult cohort going through mobile gaming, right when iPhones dropped. And we remember when the App Store had 100 things in it, and it was like a beer app that you could turn and look, the beer pours out, or some other app that was not really that heavy. And now you look at the games that we have, and it's incredible. In such a short amount of time, where do you see kind of mobile gaming evolving?

0:29:20 - (Matt Widdoes): Maybe since you've started, obviously, that could be a whole other podcast in and of itself. But where have you seen that kind of transition? And where do you kind of expect from where we sit today, looking out five or ten years? Like, what do you anticipate coming? I think back to even just three or four years ago when we were all kind of like, AR is going to be really, really big and it hasn't been and other things, but I'm curious, like, what are in the camp of, if you have things in the camp of things that you think are maybe overhyped or things that you're just like, I'm observing this and you know, I really do think that we're going to see more and more obviously AAA art or whatever that might be. What's in that camp for you in the future.

0:29:55 - (Joshua Lu): Yeah, I'm super bullish on just classic mobile gaming in general. I mean we are much more mature now as a platform. I think like, the barrier to having a breakout hit continues to rise and rise and rise, but that doesn't stop dream games from coming out a couple of years ago and reinventing match three and now doing billions a year. Just last year we have Monopoly Go launch and that's gonna, you know, that's been, you know, crushing it $2/3 billion a year in revenue and, you know, massively profitable. And it's just, it's very rare to see platforms like this mature. I mean, we're now, you know, a decade plus into this thing, you know, continue to just have these like massive breakaway hits.

0:30:39 - (Joshua Lu): That's not to say that it's easy, right? Like, you know, there aren't many of these coming out, but the fact that you can take something like match three or like casual games and continue to have these like, you know, transformational, generational hits come out, you know, year 1011, 1213, 14 into the platform is, is amazing and should have everyone excited about, you know, the future of mobile. I mean, the fact that you can still build these amazing experiences and have them hit as hard as they do. And by the way, like, it's not like Candy Crush has gone away, right? Candy Crush has gone grown revenue every, you know, ten plus percent every year, you know, for the last, like, you know, six, seven, eight years.

0:31:17 - (Joshua Lu): It's amazing. So it's not a zero sum game, it's expanding. And so I'm still excited about just like classic mobile, right? Like, I think that there are lots of opportunities, you know, we have seen over the last couple of years the hybridization of casual, right? Like, you know, you had all of these people who maybe never played games before. Like, you know, kind of what happened with Farmville, right? Like there's a whole bunch of people that had never touched a game before would not call themselves gamers ever who were spending three, 4 hours a day, you know, in a spreadsheet like trying to figure out like when to plant corn versus like tomatoes or whatever.

0:31:50 - (Joshua Lu): You had kind of the same thing with casual and mobile and all of these new gamers are now maturing themselves as gamers. They have become better at more complex controls. They have now been on-boarded onto a whole bunch of like, complex systems. They've become payers and like, understand what a good versus bad deal is. They can like kind of do the mental accounting of like, you know, whether a deal is valuable or not. And like, you know, they've moved from a spreadsheet into their own mind palace.

0:32:17 - (Joshua Lu): And so all of this is a long way of winded way of saying like, um, it makes sense that the hybridization of casual has sort of happened where you take all of these like very, very casual mechanics, like match three or merge or, you know, whatever it is, and then add progressively deeper systems and increase ARPDao, RPPU, and then obviously LTV as a result of that. And you basically have an ultra wide top of the funnel because match three, everyone knows how to do match three.

0:32:44 - (Joshua Lu): And still a very, very robust bottom of the funnel where you have strong monetization. That's a huge opportunity. I think that has been a huge opportunity and will continue to be a huge opportunity in games. And then it's funny, I started off as a viral PM, and mobile, I think for many years was like, it's just a little bit harder to do that kind of like viral thing. There's like not as many channels on mobile.

0:33:08 - (Joshua Lu): I remember one of the first crazy experiments I did at scope ly was we did an incentivized text invite to your entire contact list.

0:33:18 - (Matt Widdoes): What did you get for that?

0:33:19 - (Joshua Lu): The yield was pretty low, but, but like, you know, an absolute number is quite high just on a percentage basis.

0:33:24 - (Matt Widdoes): What's my incentive?

0:33:26 - (Joshua Lu): It's some in-game currency. And by the way, at the time, people just didn't really know. This is very early mobile, and so people would just click the thing and not know that it would send to all 400 of their contacts. It was brutal. And today that would be a lawsuit, and that's maybe a bad example. But I do think that there is an opportunity today to do a lot more interesting referral stuff. And we've seen consumer applications get very, very large with interesting referral invite systems. And I think games have a lot to learn from that. And then games also have the added benefit of being able to build features for the purposes of being social.

0:34:08 - (Joshua Lu): World of Warcraft has Guilds, and that was actually one of the main inspirations for a lot of what Mark Pincus did for Farmville and other games. I think there's lots of opportunity to do interesting social features in mobile. And then maybe a couple other waves that I'll just mention very quickly that I'm excited about. One, of course, is AI, for a number of reasons. We've already seen AI meaningfully decrease the cost of production for certain types of games.

0:34:37 - (Joshua Lu): And there are some teams that are out in front of this who have gone all in and have figured out how to do some really clever things. You know, like I said, like we said earlier, in mobile games, when, you know, businesses are won and lost on the margins, having a 10%, you know, increase in efficiency on live offs is massive.

0:34:58 - (Matt Widdoes): And, yeah, at scale, it's always so big.

0:35:01 - (Joshua Lu): Yeah.

0:35:01 - (Matt Widdoes): It's like, what does 1% do on a $5 billion a year business? It's like, that's not, that's worth attacking.

0:35:07 - (Joshua Lu): Yeah, I hear a lot of cynicism, I think, from studios who have, like, kind of tried to look at off the shelf tools and have not quite gotten there. And I think a lot of those folks who are tourists will just not see the benefits. But there are a couple teams who have gone really deep. We're seeing the benefits. So I just encourage teams to do more exploration.

0:35:28 - (Matt Widdoes): Well, I think what it allows to, for the user's experience on personalization level, like, even. Just imagine, even outside of gaming, if I have, let's take quickbooks. And every time I log into Quickbooks, I go to something that's five clicks deep, we can just bubble that up and be like, cool, there it is. Here's your new dashboard. Just based on your usage. You didn't have to do anything. It's just right there. That's that thing you're always looking for in gaming. Obviously there's tons of parallels, but even just from, like, it's like, limitless on how many things that could go there. But for anybody who's kind of looking at AI right now and kind of shrugging and saying, like, yeah, so what?

0:36:01 - (Matt Widdoes): It's a classic mistake of anything of any new innovation. People did it with e-commerce. Like, people did it when they, when dot coms came out. People did it with mobile gaming where they're like, yeah, yeah, cute thing. But, like, I do. I make these things that live on consoles or I make these things that are real games on PC, and, like, mobile is just uninteresting. And then you wake up one day and you're like, oh, my God, what have we done? And you could have been. You were well suited to be the first group through that and to actually own that and control it. And so, but it's almost a prerequisite to, to work with it in its infancy so that you can not only understand it, but in some cases shape it because the rules are being written as you go now.

0:36:38 - (Matt Widdoes): And it's those people who hold onto it early who are like, yeah, by the time, three years from now, by the time everyone's like, all right, we've got to do that now. This is the year that we do it. They're so far behind, the teams are behind. The experts on those things, live somewhere else. And so anyways, I think it's just a, it's a classic mistake. We see time and time again. You saw it with. We saw it with film and digital. Like, people were like, yeah, yeah, cute digital camera. And then one day it was just everything and nobody was in dark rooms anymore.

0:37:07 - (Matt Widdoes): And all the companies selling film went out of business, but they had the chance to be ahead of it. So we talk about that a lot with Kodak. They invented the digital camera, but they sold film and then they went out of business the day of the Instagram IPO. So there's the lesson there. I'm curious, like, with what you're seeing in both from your historic perspective and looking out with what you see as the future and just kind of what you know about gaming and teams, what criteria are you looking for now that you're an investor at a16? You're focused on kind of everything from C to B, but also like very singularly, narrowly focused in SPEEDRUN as the GM there of investing in early stage, very early stage gaming.

0:37:47 - (Matt Widdoes): What kind? In a sea of unlimited people that want to start a gaming company, many of whom have never done it, many of whom have done it deeply or many times and failed or many times and won what I think the winners, though, oftentimes have no problem gathering, gathering money. What are you looking for when investing in a new gaming startup these days?

0:38:05 - (Joshua Lu): Yeah, I'll talk specifically about SPEEDRUN. So we created this program as sort of a love letter to the games industry. We noticed that there were a whole bunch of people at games companies who had no idea how to start a company, because when you come up at a game studio, it's very comfortable, there's good snacks, you're paid a lot, you don't know how to start your own company. And then there are also people who love games, who are either founders of non games companies or tech companies who have no idea how to break into the games industry. And we wanted to bring those two groups together and really support them.

0:38:38 - (Joshua Lu): We invest very early as part of that program. I mean, sometimes it's early as two people, a deck and a dream, haven't even incorporated yet. And I think when we're looking at early stage companies, this is going to sound rote, but it's really just about the team. And because at the end of the day, ideas change all the time. Even markets change. When I got my start is MySpace games and Facebook games and mobile games and VR games and instant games. And I was just doing a metaverse thing at Meta.

0:39:11 - (Joshua Lu): The platforms change all the time. And even within these platforms, people's expectations change all the time. We just talked about how much mobile has matured so much. And the very best companies are able to not only create a version of the world that they think should exist, but also actually throw away some of the universal truths that they think are true in order to adapt. And so really it's just about the team, their ability to go fast, their ability to have conviction, their ability to tell their conviction to other people in a way that other people believe them, right? Not just investors, but when they try to hire somebody outside, you know, out from Google who's getting paid a boatload of money to join this, like, scrappy little startup.

0:39:50 - (Joshua Lu): How effective you are as a storyteller matters in how you're going to convert that person to, like, you know, join your startup. You know, you want people with, you know, real conviction, right? Like, at the end of the day, you want people who are flexible enough to test and throw away their convictions if they have to, but also to really believe in something and, you know, finding, you know, we always talk about MVP's as like, you know, minimum viable product, but actually nailing minimum and viable are really, really important, especially, especially minimum.

0:40:20 - (Matt Widdoes): On some level, because it's tempting in gaming to go so big and like, well, we're gonna have, we need $10 million and then we'll have the MVP. It's like, no, no, no, we've got to find something more minimum.

0:40:31 - (Joshua Lu): Totally. So, yeah, so TLDR, it's really just about the team and then, you know, a little bit of market, but, but really just about the team. And so we spend a lot of time with founders for SPEEDRUN. If we spend an hour on the product and the business, we try to spend like three to four times that amount of time on just getting to know the founders, talking to people who have worked with the founders, really trying to dig into why they want to do, why they want to do a startup. Because a startup oftentimes is thankless and grindy and sometimes you just don't get paid very much. Like, it's, it is a decision, a life decision to do a startup. And some people do it for the right reasons, and some people, you know, don't. And for those who don't, you know, they tend to turn out, you know, a couple years in, and that's not a good outcome for anybody. And so we spend a lot of.

0:41:17 - (Matt Widdoes): Time with founders, so that makes total sense. And I think understanding their ability to tell stories and essentially attract interest from others. So part of that is just selling, essentially. But, like, can they, how convincing are they, their level of resilience and conviction in what they're doing? So, like, if it doesn't work for, like, the first two years, will they hold on all that tracks? I'm curious, given the nature of this business, how much of a signal do you think is really in the fact that they have or haven't done mobile gaming in the past? Is that a prerequisite? Is that a bad signal? Is it like a neutral signal where it's like, it could be good, it could be bad? Like, is there value in people who've like, I've never done this before, but I know a lot about mobile, and I'm a gamer. I've just never done gaming. Like, how much of that is a prerequisite from your mind? It's.

0:42:04 - (Joshua Lu): It's not.

0:42:04 - (Matt Widdoes): Yeah.

0:42:05 - (Joshua Lu): And actually, it can be a huge advantage not to come from games because you don't have any of these sacred cows. Yeah, right. Like, we, one of the, one of the companies we worked with out of our first cohort is a company called Closing Theory Studios. Two guys in Austin who are making games for, you know, the 70 million people that, like, window shop on Zillow every day, and they don't come from games. And that has been a huge advantage because you can learn a lot of the game stuff, but what you can't learn, you know, oftentimes are just like, instincts about what people will love.

0:42:39 - (Joshua Lu): And sometimes in order to make a really great experience, you do have to, like, break a couple of sacred cows. You do have to do things that are, you know, a little blasphemous. Like when and when Mark Pincus made Zynga, early days on Farmville and all the other Facebook games, the entire industry ridiculed Zynga. They thought what Zynga was doing was crazy. These are not serious games. This is all B's. There's no retention.

0:43:06 - (Joshua Lu): Blah, blah, blah. They're not even games. Blah, blah, blah, blah, blah. At the end of the day. That's what it took to do a.

0:43:13 - (Matt Widdoes): New thing, and people loved it. That was the other thing. It's like you look at Mafia Wars, you look at some of these early things from Zynga. They were huge hits, I mean, in their own right. But, yeah, I think that my thought was that you may say that I'm sure there's advantages of having teams that are built from both, because obviously there are some things that probably would benefit somebody knowing. But I think, to your previous point, that can all be taught and downloaded pretty quick through. Like, you know, there's like a thousand words they need to know to understand gaming. And then it's like, okay, once you kind of know what those are, you can map those back to your own experience.

0:43:47 - (Matt Widdoes): And some of those others are harder to get. Some of those other, more intangible things are harder to find.

0:43:53 - (Joshua Lu): Yeah. Mark Pincus didn't come from games. Walter Driver at Scopely did not come from games. There have been tons of really great founders that did not come from games that ended up making their mark in games.

0:44:03 - (Matt Widdoes): Yeah. Cool. Well, great chatting with you today. I'm curious, any parting advice that you'd have for somebody who wants to get into gaming or who wants to, who has kind of a curiosity of the space more generally, any advice you'd give somebody young and coming up, you know, or somebody who's maybe more mature, looking to raise on their first title?

0:44:20 - (Joshua Lu): Yeah. Come check out SPEEDRUN. We talk to thousands, literally thousands of companies every year. We are really excited that in this upcoming cohort, we've actually accepted a handful of companies that we've been talking to, building relationships over the course of multiple cohorts. And they weren't a fit before. They made a bunch of progress. We gave them feedback, they acted on it, and now we're really excited to partner together. And so that's a really great vehicle for people who are just interested. And you can always just reach out to me. You can find me on Twitter or LinkedIn or whatever it is, and just hit me up. I'm happy to talk.

0:44:55 - (Matt Widdoes): Okay, sweet. Well, thanks again for taking the time, Josh. Always great chatting with you and look forward to the next one.

0:45:00 - (Joshua Lu): Yeah, thanks for having me. Cool.