Mitch Lasky - The Business of Gaming

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (1:37)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
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**Patrick O'Shaughnessy** (2:02)
My guest today is Mitch Lasky. Mitch is a partner at Benchmark and one of the leading figures in the video game industry.
Over the last 30 years, he has built, led and invested in a number of the best gaming companies in the world, including Activision, EA, Riot, Snapchat and Discord. I couldn't think of a better person to break down the anatomy of a great gaming business and Mitch does not disappoint. His insights are remarkable. Please enjoy this excellent conversation with Mitch Lasky.
So Mitch, I was toying with where to begin our conversation today. You and I have had so many interesting conversations about these topics and I've learned so much from you. A fun way to begin would be to talk about the investing side of the gaming industry. There's a conflict that interests me, which is that there's obviously a ton of enterprise value in this world, a lot of it private still in companies like Valve or Epic, but a lot of it public too. There's been some huge acquisitions in the last year or so since we started talking about this, but there don't seem to be very many famous gaming investors. As far as I can tell, it's you and a very small handful of others, which is strange. Why do you think that is? Why aren't there famous gaming investors public or private like you have in so many other sectors and industries where there's a lot of enterprise value?

**Mitch Lasky** (3:15)
It's very interesting because I think historically it's been obviously a backwater for venture.
It didn't really get the attention it deserved. It was always viewed through this prism of it's an entertainment business, it's a hit driven business. The real investors in the games business are the aggregators and the publishers, not really the venture capitalists. And there wasn't really a model that was well understood by the venture industry about how you could translate success in the games business into value.
Starting around 2000, maybe 2005, you started to see these what I would call forever games. Games like World of Warcraft, later League of Legends, which I was lucky enough to be able to invest in, but you see it now with Fortnite and a number of other games which have durability over time that never existed before. Historically with the console business and the PC business and even the mobile business, games would come and go in a fruit flies lifespan. They were extremely short lived. You could understand from an investor's perspective how hard it would be to figure out continuity of value when you had that temporal mismatch between the way the business rolled out and the needs of the investor. That change was not well understood by the venture industry and there were a few people like me, Bill Gurley, my partner was really a pioneer in this as well. You had a couple of others, Bing Gordon at Kleiner was very active during those years, did Zynga and a number of other really interesting investments but really it was generational. As we have aged out of the business to some extent, what you're now seeing is a really interesting new crop of investors coming in behind us who had learned from our experience and I think are taking it to a new level. It's never been a better time in the history of venture for games companies to raise private money. I'm actually really excited about what's going on. I've made a couple of small personal investments in some of these new funds and have mentored a couple of the younger investors. I think we're going to see a change over the next five years or so.