GamesBeat

How Rick Thompson became the über investor for gaming (interview)

Vorhaus: The stock just moved 2.25 percent in the last minute. So there you go. Do you own that many stocks?

Thompson: Not very many. I have a few favorites, and I dabble every once in a while, but I’m too busy working in private markets.

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Vorhaus: What’s the one that got away for you? What’s the one you said no to that you truly regret? Your wall of shame?

Thompson: That’s a good question. I don’t look backward too often. It’s probably not a good thing to do. That wall’s pretty clean.

Vorhaus: I stand in the presence of some people who want to write you some pretty big checks for your fund. Your track record would suggest that would be a wise idea. What would you want in a limited partner? What do you want before you take somebody’s money? How do you decide between one $10 million and another $10 million.

Thompson: This is a first for me and my team — taking outside money. First is people that we want to work with. It’s very important that we create relationships that have good outcomes, that can endure. People that we like being around. People that will understand that we go through peaks and troughs and help us manage our business.

Vorhaus: Is there ever going to be a Kickstarter of venture capital?

Thompson: That’s going to involve the SEC. It probably isn’t a good idea.

Vorhaus: What do you see in terms of major trends on the horizon? You’ve operated in a macro category. What do you see being disruptive? What are the trends we’re going to see in your areas of expertise over the next five to 10 years?

Thompson: I can’t ever go out that long. I’m not usually the one to see the next big platform. If I was, I’d be doing it. The next year, communications, messaging, chatting, and sharing on mobile are going to create a new huge company that we don’t know of yet. They’ll come out with a lightweight app that lets you connect with your friends in the way that you want to connect with them. I believe that very strongly. That’s one of the things that we’re looking for. Educational technology has started to take off. It’s a national travesty that our education system spends as much money as it does and is in such bad shape. It’s ripe for major change, in spite of the political obstacles. Google Glass, maybe in 2014, will become something very exciting. Instead of a smart phone, you’ll have smart glasses. It’ll do the things we now think of a smartphone doing in a much more convenient and easy fashion.

Vorhaus: Just to be clear about this, you’re not talking about edutainment, right?

Thompson: No. We do education; we do entertainment. I think that edutainment and crossing the two is really tough. Edu-charity and enter-charity, those are also very tough. They’re different things. You can make learning more fun. You can gamify. We do that. But we wouldn’t call it edutainment. We’d call that a great learning app that engages its users. We wouldn’t do any sort of hybrid deals, though.

Vorhaus: How do you develop and find new talent? Are you hanging out in garages in Palo Alto?

Thompson: One of the benefits of success is that it breeds more success. We’re very conscious of working with our entrepreneurs and our teams to create outcomes and strong relationships. The conflict you mentioned previously with founders and investors, it also exists with founders and employees when their interests are not totally aligned. We’re very careful to structure deals and growth that also take care of early and leader employees, to make sure that they’re well treated. That’s largely where our next-generation deals come from — people who know us through our working relationships with their previous companies that they helped build.

Vorhaus: I see on this list of companies one or two that look like they may be data companies. Where do you see big data, and how much are you in that space?

Thompson: We work now with somewhere between a half-dozen and a dozen companies that provide live services, and analytics and optimization are important to virtually all of them. In order to implement analytics and optimization, that requires a fairly large team and a complex infrastructure of servers. The realtime analytics and optimization, we see that as a 30-year investment thesis, where that’s going to continue to improve and be more successful now until they get Google and Yahoo … .  I think Microsoft can do it. But over the next few years, that becomes more accessible and in demand for more customers. We’re actively investing in that space.

Vorhaus: As you know, thanks to the fourth estate, Zynga and Facebook got slammed pretty bad. I recall you have some applied physics in your background. Is there going to be an equal and opposite reaction? Will we see a potential swing back toward Zynga? God knows we’ve seen it this month from Facebook.

Thompson: I never fully appreciated or understood the Facebook/Zynga relationship. At one point, the platform on Facebook was called the Zynga platform. They dominate with something like 14 of the 15 top apps. I suspect that relationship is not serving either company very well, with Zynga dominating Facebook and Zynga constrained by Facebook. They’re clearly going their separate ways. Zynga needs to get into mobile. They’re probably using their Facebook properties as a cash cow and not reinvesting. For Facebook, that means they need to create an ecosystem for developers and create some diversity and some innovation on the platform.

Vorhaus: Are we in a mobile bubble or not?

Thompson: In the long term, no. Things may be exaggerated in the near term. Maybe there’s overinvestment for the moment. But mobile is clearly where everything is headed. We have four platforms now: the web, a walled garden called Apple, Google, and then Amazon trying to create their own walled garden. It’ll be interesting to see how that plays out. Ultimately, I’m a believer in open systems. I think those gardens will crack. How exactly they’ll crack I don’t think anyone can say, but in terms of two, three, four years down the timeline, we’ll see an opportunity within mobile that presents itself in the way that the open web did for e-commerce and for free browsing.


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