Justin Banusing: Philippines Gaming & ESports Boom, Founding Communities & Startups and Content Creator Monetization & AI - 396

· Philippines,Founder,Start-up,Podcast Episodes English


“When I was starting out, I was walking in the dark, figuring things out as I went. I was lucky enough to find light at the end of the tunnel. And even then, it's always an iterative journey, but there are just as many kids who don't know where to go, don't know where to start, and even need guidance. I started AcadArena with my co-founders with the ethos of ‘let's build more heroes’. Let's normalize people doing cool things. Let's normalize more kids being proactive with their careers.” - Justin Banusing

“Gaming is a universal language, but you probably have a hobby that's super deep in the real world. The majority of young kids in the US go to music festivals and raves, or they go bouldering. Here in Southeast Asia, you spend your day mostly stuck in traffic, mostly working, finding ways to pay off rent in this incredibly unfair economy. So you delve deeper and make your primary, if not only hobby, digital hobbies. I feel like that's a very dystopic answer, but I don't think it's bad at all. It's mostly just circumstances. Gaming is a great hobby, but outside of the fact that games are fun, I think this whole socioeconomic factor is the reason why if you look at the charts, Southeast Asia and Asia in general, is one of the most active gaming markets out there compared to anywhere else.” - Justin Banusing

“The value chain in eSports is a lot more convoluted. On top of the existing gaming value chain of tool developers, publishers, marketers, and players, there are also the people producing the events, commentating, and producing media. It's an incredibly convoluted value chain that's more akin to a media IP-slash-sports production rather than gaming itself, and that's a strength and a weakness of the eSports industry. Because it's so multifaceted, it's created a lot of potential VC narratives or business narratives that this industry can grow super large because there's so many moving parts.” - Justin Banusing

Justin Banusing, Cofounder & CEO of Clout Kitchen, and Jeremy Au talked about three main themes:

1. Philippines Gaming & ESports Boom: Justin shared that the Philippines, and by extension, Southeast Asia, has a vibrant gaming and esports ecosystem. He attributed this enthusiasm to the country's usage of mobile gaming and esports as both socialization and competitive engagement in the realities of an urbanizing emerging economy. Justin highlighted the "loading screen of commuting" (local challenging commute conditions) driving mobile gaming's popularity. He also delved into the symbiotic yet complex relationship between publishers, fans, third-party companies, and creators - and the inherent challenges and opportunities in monetizing and sustaining a viable niche within eports in Southeast Asia.

2. Founding Communities & Startups: Justin shared his beginnings as a high school student passionate about gaming and organizing a Super Smash Brothers gaming tournament in a Chinese restaurant's back room. He went on to found AcadArena, the leading campus gaming startup that scaled to 250,000 verified students across Southeast Asia and Latin America. Justin talked about his commitment to building in the Philippines despite the allure of opportunities abroad, and his eventual decision to remain in the country to contribute to the growing startup ecosystem. He also highlighted the importance of taking risks and the potential for significant impact through building companies that address local needs and opportunities and encouraged others to dream big and pursue their passions with determination.

3. Content Creator Monetization & AI: Justin touched upon the potential of digital creators as the next generation of entertainment icons, and their broader evolution beyond gaming as a content vertical. He also discussed the hurdles they face, such as time constraints, scalability and earning more. He explained why he founded Clout Kitchen, an AI studio aimed at transforming content creators into interactive digital experiences, and highlighted their mission to facilitate deeper fan interactions with creators.

Jeremy and Justin also discussed the importance of aligning business ventures with personal missions, the impact of digital hobbies and gaming on the region’s youth, the socioeconomic factors influencing gaming habits in Southeast Asia, and the nuanced understanding of privilege in the startup ecosystem.

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(01:33) Jeremy Au:

Hey, Justin, really excited to have you on the show. We've known each other for some time and really excited to have you share your perspective on the Philippines as well as the Gen Z folks out there. Justin, could you share a little bit about yourself?

(01:44) Justin Banusing:

Yeah. Hi, everyone. Thanks, Jeremy, for having me on this podcast. You know, I've always been a listener to the Brave podcast ever since, even before I was a startup founder. So pretty cool to be here. So a little bit of background about myself. I'm currently the CEO and cofounder of Clout Kitchen. We're an AI studio helping turn content creators into interactive digital experiences. And previously I started AcadArena, which was the number one campus gaming startup in Southeast Asia. So I started out back in high school back in 2018 and took that to a series A startup with 250,000 verified students across Southeast Asia and Latin America. I took a break last year for a little bit, explored VC, explored some other stuff, tried some full time DJing for a bit, but I guess I'm back to the founder game now.

(02:21) Jeremy Au:

Awesome. There's such a lot to unpack in such a young age as well. So yeah, could you share a little bit more about what you were like as a high school student? I mean, you started building at that time. But what were you like? I guess you were gaming?

(02:32) Justin Banusing:

Yeah, so, funnily enough, when I was a high school student, the one thing I always wanted to do was basically just I had an addiction towards bringing people together. So my first instance of this, was funnily enough, right as I entered high school, I joined this TV show called Junior Master Chef, and I ended up getting kicked out of the first round because I didn't know how to bake.

So suddenly, I had so much free time on my hands. I didn't go to school for a couple of months because I ended up taking a break from school because of the TV show. And I ended up getting super big into this game called Super Smash Brothers And at the time, it was a really kind of like niche game here in the Philippines, especially my hometown. So I was like, Hey, if no one's running tournaments for these, why don't I do it myself? And that's what kind of led me to my first entrepreneurial experience. I ran a Smash Brothers tournament in the back room of a Chinese restaurant. And then, I was like, hey, you know what? Maybe I'm not too good at this gaming thing.

I realized I wasn't so great at the gaming part, but I did enjoy putting things together. I enjoyed bringing people together. I enjoyed coming up with business plans. I enjoyed, you know, kind of like the whole metagame behind like putting things together, whether that's a business or an event, so from then on out, that kind of started my whole, I guess, like entrepreneurial slash operator journey. I realized that I had so much more to learn at this than I currently knew, especially as a small town kid from the middle of nowhere in the Philippines. So I ended up applying for a bunch of jobs, a bunch of internships at random startups here in Southeast Asia. And funnily enough, some of them never ended up checking my age. They never end up referencing that so starting when I was 13, 14 and onward I started ,working at a bunch of startups. So I ended up working at companies like what is now Tier One Entertainment. I was their first intern. Started working and contributing to ESPN as their first writer here in Southeast Asia for eSports And from then on out, I kind of just had everything flow on. Throughout high school, I was kind of like, basically working full time, honestly. So I would spend Mondays to Thursdays full time at school, coming in during the morning as soon as I can, probably doing some work during lunch. But then on Fridays, I would actually sneak out of school. So I ended up forming a good relationship with the security guards at the school to basically you know, not mind me when I would sneak out, because as I started as a content producer and journalist, so I would have to fly out to other cities, other countries during the weekends to kind of cover events, right? So I would end up escaping from school in the middle of a Friday to go to another country, to go to another place. And that kind of shaped my high school life.

(04:49) Justin Banusing:

It was really a duality of building my own career while also doing a normal high school student life. And I think these experiences kind of shaped my own personal advocacy. I was like, hey, you know, this is pretty fun, but it's also pretty, it's also pretty hard, right? I was lucky that my parents were supportive, but not all kids had access to the same opportunities I did, not all kids have supportive parents, and especially not all kids are, I would say, have the luck to run into people that would give them the same shots that people gave me. So, towards the end of my high school life, after I, after, you know, I kind of like, juggled all my career stuff in like school, I told myself, Hey, why don't I take this a step further? Why don't I build something that helps people my age, get into the gaming industry the same way I did when I started out. So that kind of led into the story of my first startup. So, my whole startup entrepreneurial, I guess, operator journey was kind of intertwined with my high school life and there were like a lot of interesting stories in between then too.

There was even a time that I ended up starting a pro eSports team because I was like, Hey, I kind of want to see what running a team is all about. So I ended up starting that team and then ended up exiting that company to actually one of your old podcast guests, Mr. Bren Chong, a couple of years back. So that actually ended up paying for my college tuition with the money they paid to exit my first cup, my first like a gaming team.

(06:00) Jeremy Au:

You know, what I'm interested in is like, how did you even get started this ? Why startups, why business?

(06:05) Justin Banusing:

To be honest, right, it wasn't really the idea of running a business. It wasn't really the whole like, Hey, I want to build the biggest startup in the world. Or, Hey, I want to raise millions of dollars, cause those were things that weren't in my vocabulary growing up, right? To be honest, the whole term of like startups and venture capital, those are terms I only really learned years down the line. really drove me towards building things was bringing people together, right? So, I felt that rush, or that, I guess that great satisfaction of bringing people together and doing cool things for other people when I ran my first gaming event, when I wrote my first piece of content, when I started freelancing for my first major convention. It was all these things that kind of like just sparked an interest in me, where hey, If I want to bring more people together and do cooler things that all like that kind of serve that mission of giving people a fun time, then I have to build a bigger business. I have to become a better entrepreneur. So really the entrepreneurship was secondary to my own personal mission of building cool stuff that brings people together.

(06:59) Jeremy Au:

What's interesting is that bringing people together has been a theme you. So how did you end up deciding to do that, for example with AcadArena?

(07:08) Justin Banusing:

Yeah, so it was towards the end of my high school life, like I had started my first convention, my own personal convention back then called Conquest, took that to 3,000 people by the end of my high school life. Now it's like a 100,000-person event, but back in high school 3,000 was a lot of people for me, right? But I was about to move to the U. S. I ended up getting a partial scholarship to study in the U. S. for gaming stuff, and I told myself, hey, maybe this whole thing of doing one-off events, doing like these pop culture stuff is pretty cool, but can it really be scalable if I'm the only person doing it especially if I'm going to be going to the US, there's going to be no kids here in the Philippines doing this kind of stuff.

So I was like, why don't I start a startup or a company rather that helps other people get the same start or the same thing that do the same thing I did when I was starting out. Cause when I was starting out, I was kind of like just walking in the dark. I was walking in the dark, figuring things out as I go. And I was lucky enough to find some semblance of light at the end of the tunnel. And even then, you know, it's always an iterative journey, but there's just as many kids who don't know where to go, don't know where to start, even that need that kind of guidance. So I started AcadArena with my co-founders with the mindset or the ethos of let's build more heroes, right? Let's normalize people doing cool things. Let's normalize more kids being proactive with their careers.

(08:19) Jeremy Au:

Yeah. And what's interesting is that you made an interesting decision then to build could you share about what were some of the principles you had in building AcadArena?

(08:26) Justin Banusing:

Yeah, I think there were three core principles that we had right when we were starting out. The first one is that we really wanted to be student-centric as an initiative because most of the grassroots gaming initiatives back then were really like, hey, let's do barangay or like city to city eSports. Let's do amateur gaming tournaments. We were, we wanted to really focus on the student space because at the end of the day here, here in Southeast Asia, we're a very academic culture. Parents still care about that kind of stuff. So if we want to really boost the gaming industry and legitimize it, we need to work within the existing frameworks and ecosystems.

So second principle, we really wanted to show that gaming was not just play. Gaming could be a bigger force for good. We really wanted to show that there was something outside of just the gaming part of gaming and really show people that there was a lot of development that we had in both the professional and personal sense, if you involve yourself in gaming. So that's why our motto was not just play. We wanted to provide kids with ways to enhance their own personal and professional development through the things they were doing, right? So our student leaders weren't only just getting better at the games they played or getting deeper into the fantasy were involved in, but rather learning new media skills, streaming, broadcasting, software development, leadership, event production, really all that jazz, because our company's slogan was not just play. So we really wanted to show people there was a career to be had a life to be had inside the gaming industry.

And then the third pillar that we had, which kind of evolved over time, is that we always knew there was a lot of commercialization potential to this, but we wanted to operate more as a pure community from the get go. You know, give first and take later, actually not even take later. We never really answered a question of take, which is kind of like another lesson that I want to talk about later, which is like, it's always good to think of a startup as more of a mission based thing first, but you should always probably have a plan for commercialization towards the end, because that was something that we always struggled with in the company, but for most of the part for AcadArena, we really didn't care, or we really didn't want to talk about commercialization or monetization. One of our core pillars was really just community first and giving back from the get-go. And I think that's what really led us to grow really fast in the beginning. We didn't really monetize. We didn't really think of hey, how do we scale this? Or we always thought about how do we be of best service to the community? And of course, that community kind of changes, right? When you start having investors, when you start with clients, because those people become a part of your community as well. But at the beginning, it was really incredibly pure. We were like, How do we help students as best as we can.

(10:41) Jeremy Au:

So, why is the Philippines really into gaming, from your perspective?

(10:44) Justin Banusing:

Yeah, I think it's a pretty interesting thing, right? I wouldn't necessarily say gaming, but rather the whole concept of eSports in general, as well as mobile eSports, which is like another thing I'll delve into later. So, one of my hot takes is that the Philippines is really into eSports and competitive gaming because we suck at traditional sports. We're not vertically blessed. We're not physically blessed compared to our other Southeast Asian peers too. And with the rise of internet cafes and everything in the Philippines making gaming super accessible, Filipinos found a way to express their competitiveness through gaming. And mobile gaming in particular was really, really big in the Philippines because, just like Jakarta where mobile gaming and eSports is just as popular, traffic in the Philippines is really, really bad. People spend the majority of their day commuting. People spend the majority of their day in jeeps, in buses, in Grab, to the point where, hey, you know, if you're gonna spend maybe one fourth, one third of your day riding a car, why not play video games? There's an abundance of free time here in the country, and gaming is an incredibly cheap and accessible hobby that people can do, compared to other things. Especially with the way things are expensive.

And I think going back, I was actually talking to my friend. It's like, why are Filipinos so heavy into escapism type hobbies, right? Why are they into anime? Why are they into games? Why are they into pop culture in general? And then why in the U. S. right now, in Western countries, we're actually seeing a giant shift towards in-person things. If you looked at Y Combinator recently, a lot of the non-AI startups that they backed were all real life experience startups. There's this startup called 222, where it's like a giant marketplace for bespoke real life experiences, right? And I was actually telling my friend, yo, that's, such a cool concept. Why don't we have that here in Southeast Asia? Why don't we have these kinds of focuses on real life, bespoke, in person experiences, right?

(12:28) Justin Banusing:

So, my friend told me like, frankly speaking, real life experiences or, I guess super bespoke experiences are a privilege that only really first world countries have. So if you live in the third world, like here in Southeast Asia, you kind of turn to more escapism-slash- accessible hobbies like gaming, which there's nothing wrong with what hobby you choose. It's more so the circumstances of the economies in the countries we live in, have kind of created this ski right where if you're a Gen Z person living in North America, odds are you play video games, right? It's a hobby that's universal. Gaming is a universal language, but you probably have a hobby that's super deep in the real world. The majority of young kids in the US go to music festivals, they go to raves, they go bouldering. Here in Southeast Asia, you spend your day mostly stuck in traffic, you spend your day mostly working. You spend most of your day finding ways to pay off rent in this incredibly unfair economy, so what do you do, right? You delve deeper and make your primary, if not only hobby, digital hobbies. And I feel like that's a very dystopic answer, but I'm like I don't think it's bad at all, right? It's mostly just circumstance. I think gaming is a great hobby. I mean, I'm a gamer myself. That's my main hobby. But I think like outside of the fact that games are fun, I think it's really this whole economic, socioeconomic factor is the reason why, if you look at the charts, Southeast Asia and Asia in general, is one of the most active gaming markets out there compared to anywhere else.

(13:41) Jeremy Au:

Yeah, I think that's right on. You know, it reminds me of this Reddit comment, can't remember and I don't, can't attribute to who it was, but it was basically saying look, we're all going to live in Cyberpunk 2077 because at the end of the day, like you said, digital experiences are going to be cheaper and cheaper, Right? You probably couldn't watch all of Netflix, finished the entire library in, I don't know, 10 years and the subscriptions is 10, 20, 30 bucks a month but cost of food is obviously flat, but of course the cost of rent keeps going up over time, right? , So, digital experiences will always be higher or even better return on investment, I guess, in terms of cost. So I agree with you about that. You mentioned that there's a difference between eSports and mobile eSports. Could you share about that?

(14:18) Justin Banusing:

Yeah. I mean, at the end of the day, consider them all eSports. I consider them all like equally as good and as equal expressions of your fandom for gaming and competitiveness there, but traditional eSports is very stuck towards I would say Western sensibility because most people in the West, it's a very linear thing. Wake up every day, you go to work. You drive, you come home. It's a very predictable kind of like, life thing. And that's why the majority of popular games in the U. S. are console games or PC games because you have access to these things that are relatively expensive. You seek of it as a kind of an escape or as a hobby that you have after you get home. But the inherent, I would say, motivations or the intrinsic motivation for people participating in gaming in the West and in Southeast Asia actually diverge at a certain point, right? Because in the West, it's something that you do to have fun at home, to maybe have fun with your friends when they're there at your home, or to connect with your friends there, right?

But mobile gaming really had its spurt, or kind of really had its growth. And in turn, mobile eSports grew as well as kind of a, not necessarily countermeasure, but more so a emergent behavior in Southeast Asia being a commute heavy economy, right? So, mobile gaming really had its mark. Mobile eSports really had its mark by serving as an escape for people while they're in the loading screen that is commuting.

(15:31) Jeremy Au:

The loading screen of commuting. I agree with you. I mean, whenever I'm on commuting as well, I always like to kind of like peek at what people are doing. Like watching some sort of TV series or anime or gaming or listening to a podcast. So obviously, there's a desire to escape.

(15:44) Justin Banusing:

Hopefully, they're listening to BRAVE.

(15:45) Jeremy Au:

Yeah. I think most people who listen to BRAVE, a lot of them are like cleaning the house. They've cleaning or running. So something like that. So I think what's interesting is that you mentioned about the gaming side.

Could you share a little bit more about how the eSports industry is structured? Because I think that's not something very common, right? I mean, for example, I recently watched a DOTA TI last year in Singapore, the finals, DOTA 2, which is a game by Blizzard. But I'm just kind of curious from your perspective, could you explain what, how eSports should be thought of for somebody who doesn't understand eSports?

(16:12) Justin Banusing:

Yeah, I think eSports in general, it's essentially the competitive application of gaming, because at the end of the day, gaming itself is a very straightforward industry. You know, it's a new form of media, interactive media, just like you would watch a movie, you play video games you play video games there, but eSports? is kind of a more, I would say multifaceted hybrid industry. It's not necessarily just gaming, Right? It's also the business of monetizing competing, monetizing watching, and monetizing organizing things around the gaming industry. So imagine, of it like in a very straightforward way, right? If gaming is the eSports as what a basketball is to the NBA, right? It's an application of the sport itself. And it's kind of, it's kind of interesting because a lot of people who end up participating in eSports aren't necessarily people who play a lot of video games, right? It's just like how people who participate in competitive basketball aren't necessarily into super like that deep into the theory craft or like the whole lore of the sport itself, right? You've kind of had this whole interesting divergence there. Same with a lot of people who play video games. A lot of people who play video games don't really watch eSports. It's kind of like, maybe like a different side of the same coin, I would say. It's really an application of it. So, it's gotten to a point where eSports itself has kind of diverged from the traditional gaming industry, because it's an entirely different value chain because in the gaming industry, it's a very simple value chain of developer not even developer, but software middleware creators, people who make game engines, people who make the tooling, picks and shovels., Game developers, publishers, and players, and then the marketing, right? It's a very straightforward value chain.

(17:39) Justin Banusing:

But the value chain in eSports is a lot more convoluted, right? On top of the existing gaming value chain of tool developers to game developers, to publishers, to marketers, to players, there's also the people producing the events. There's the people who are commentating the events. There's the people who are producing media. It's an incredibly convoluted value chain that's more akin to I would say like a media IP slash like a sports production rather than gaming itself and I think that's a strength and weakness of eSports and that one of the strength of the gaming the eSports industry right it's that because it's so multifaceted it's created a lot of I guess potential VC narrative or business narratives that hey, this industry can grow super, super large because there's so many moving parts.

There's so much room for growth and it's not just gaming, right? Because even if you don't play the game, you can watch eSports, but at the same time, it's also kind of the convolutedness of the value chain has also made it difficult to kind of, I guess, distill that into profitable business, which like. I can have a discussion on the viability of eSports as a business or an industry for maybe like hours and hours on end. But I think one of the things that kind of makes it difficult are the reason why people have always had a struggle defining eSports as a business because eSports didn't really start to be a business. ESports was never really started as a way to make money or as a way to run a solid industry on top of it. It was always a promotional vehicle for games itself. So the first eSports tournaments, the most popular eSports tournaments run by Riot, by Valve, by Blizzard. They all really served as marketing engines for the game, so it doesn't, it didn't really matter if the games were, if the eSports sides were making money, right? Because, as long as you're getting more eyeballs onto the game, as long as you're getting more eyeballs onto the media property, which are the games, then in theory, that boosts Mao and Dao for the actual games themselves, right? So, the eSports side doesn't really have to make money. But in 2014 to 2016, VC saw a lot of opportunity in eSports as a standalone VC backed industry, and I guess that's the state we're in today, where everyone's trying to figure out, Hey, outside of me trying to push sales for the game that the eSports is, how else can this be a profitable industry? And I think that's a really long conversation.

(19:41) Jeremy Au:

Let's get into it a little bit because I'm curious about this. I remember reading about an owner who bought the Overwatch theme license and he said there was a dream that this was going to be huge similar to how valuable it would be to buy football license. For example, in America, if you could be for Kansas City, San Francisco, city license Overwatch had put together that kind of like city structure so X city or X country could have their own Overwatch theme and they sold the rights and one of the reflections he said was that, hey the big problem is that when it comes to a normal sport like football or hockey, the games, or the rules are pretty set, you know, there's not much change that's going to happen, but with the game, there's always change dynamic because the game publisher wants the economic stake and to some extent you're in a subsidiary or secondary role, because in a football league, you have normally 20 or 30 teams that agree to work together, build a coalition together but in this case, everybody's under the mothership of the game publisher. I'm just kind of curious what your reaction or thought is on that statement in terms of industry structure?

(20:45) Justin Banusing:

I don't think that statement's unfounded, but at the same time, I don't think it's as big of a problem as they think, because if you look at the history of sports, people say that, oh, basketball hasn't changed. That's why NBA can have a sustainable business model, but that's false, because the NBA actually keeps changing the rules. The free court shot, right? Whatever that is, right? That was added sometime later into the league. The three point line was moved multiple times. The rules on dribbling were changed multiple times. So, So, you know, in a sense, changing the state of the game is like the NBA changing the rules of the game. There's different formats too, right? There's 3v3 basketball, there's 5v5 basketball, there's Olympic basketball. So, to be honest, I think the developers in this case, developers being like the game developers, or the developers in this case being the NBA on the side of basketball, having a say in changing the rules, I don't think that's, I think it's an issue, but I don't think it's that big of an issue to the growth of the industry.

I actually think the reason why it was hard to create this like long term buy in was the reason why the industry grew so fast in the first place, right? I call it the self fulfilling poison of the industry in that the reason why gaming and eSports grew really fast because it was all free, right? Free to watch, free to play, free to own, free to subscribe, everything was free. And as you know, right, as we talk a lot about this in the startup world, If your SKUs start as something free, then your audience will always think it's always supposed to be free. And they'll always compare any supposed kind of paid value or any kind of paid SKU to what you offered in there for free. And it kind of creates a self fulfilling or self destructive loop, right? Where if you ever tried like, it's kind of like startups in a sense where You spend so much time subsidizing your economics with VC slush money that when it's time to pay, people can't actually pay it because they're so used to it being free.

I think eSports is an exacerbation of that. I think eSports is a magnified version of that. That because the game publishers had no incentive to really charge, right? Because if I'm the NBA, I can't really charge people to play basketball, right? If people play basketball on the streets, right? I can't charge them. I'm the NBA. I can still change the rules of my game. But if I, I can't charge people on the street playing basketball, I can't charge people in schools playing basketball, But because for the game publishers, even if they can take massive losses on their eSports side, they know that eSports growing will always add more MAU and DAU to their game anyway, which in turn leads to more microtransactions.

So game developers always had this, like the, in a sense, right, you could think of the game developers and publishers as the VCs in our space, right, in eSports, right? So, in a sense, if you're a game publisher, why would I really care if my eSports side turns a profit or not, right? Because if my eSports side grows, I'm just gonna get more microtransactions. So, I think that's the biggest thing that kind of hurt eSports. eSports grew so much because game developers subsidized the growth, but because the growth was so subsidized, it was a growth that was built on the expectation that everything should be free, And everything should be high value, which, as a fan, you know what? That's great! I love everything being free as a fan. But as someone who works on the back end, suddenly you have to deal with consumers who compare every single little thing to things that were given for free, right? So now, for example, Riot Games used to make almost all their eSports stuff free. Their events were really cheap to attend. They used to run events all the time. They used to give stuff away all for free. And now that people are starting to try to monetize these different eSports things, people are like, oh, but they used to give this out for free. So that's kind of like the self fulfilling prophecy of eSports.

It grew so fast because it was so accessible, but it's so hard to monetize because it was so accessible for third parties, right? For third parties, not the game developers.

(24:02) Jeremy Au:

So what's interesting is that you started talking about the publishers are the ones benefiting the most on eSports because they have the ability to monetize the sale of the games, slash, the microtransactions to monetize the whole stream of it. So I need to look at eSports as either lead generation or a standalone business arm, but wither way, they both make money. And what's interesting is that there's a lot of people in the ecosystem who are trying to make money as a result, so you mentioned organizers, you mentioned VCs and standalone eSports ventures I guess it's also creators as well. How do you think the ecosystem is going to develop further around the eSports category?

(24:35) Justin Banusing:

So I'll answer it from multiple perspectives, right? So when it comes to the eSports side of things, I think people realize that the competitive side of gaming is a little bit inflated from where it should be. I have no doubt that eSports can be like the sport of tomorrow, like I've always believed in that, but a lot of the growth that it's had over the last five, six years was heavily inflated by VC subsidy as well as game developer subsidies, right? So the eSports industry has to take a step back and realize, hey, not only should these VC backed startups have more realistic targets. But the fans in general should have more tempered expectations, right? So that's one angle there. It's like kind of like a reset or I guess a realignment of expectations on the industry's growth as we head towards sustainability.

But the second thing, and something that's been an interesting observation of mine is that the creator space is actually decoupling from the eSports and gaming space, right? I would even say that the creator space and genre gaming creator space While it started as a subset of the eSports industry, it's almost entirely decoupled at this point. All the big gaming creators don't really do eSports content anymore, they just do variety gaming, casual gaming content, because they get to move up the value chain, right? Why cater to a subset of a hyper-competitive audience, when you can cater to the average gaming fan, the average person, or even, not even just gamers, right? You're even seeing a lot of these I guess traditional gaming content creators venture into lifestyle brands. So for example, Pokemane started doing a lot of beauty stuff. Lillipetri started doing a lot of music stuff. Creators are starting to realize that gaming and eSports is not enough of a wedge to kind of sustain a lifelong brand for themselves. So they're starting to venture out into either non gaming fields or the general gaming space. So really, it's the terms we use in VCs and SARPs, right? It's like TAM, SOM, SAM. Everyone realized that there's a much larger TAM to be had catering to the average gamer or the average pop-culture enthusiast, especially because gaming and pop culture have become so intertwined than catering for the SOM, which is like the eSports space, which is an ultimately relatively tiny SOM at the moment.

(26:24) Jeremy Au:

And I think it's it's great for you to share about the Total Addressable Market (TAM) vs. the Serviceable Obtainable Market (SOM) and I understand right now that you're taking a different tact, right? Cause you're building Clout Kitchen. Could you share a little bit more about that?

(26:35) Justin Banusing:

Yeah. so, I think one of the things that we've been, like, thinking of in building at Cloud Kitchen is our thesis where when it comes to creators infinitely scaling, because creators, at the end of the day, we believe are the IP primitive for, I guess, the IP of tomorrow. They're the building blocks towards the Mickey Mouses or the Bugs Bunnies of tomorrow. Kids nowadays don't really grow up with Mickey Mouse. They don't really grow up with Tarzan or Snow White. They grew up with PewDiePie. They grew up with Pokemane. It's these individual online creators that kids grow up with nowadays, but the difference between them and traditional IP is that creators are mostly stuck towards the content that they make. So their growth and their fandom and their monetization is incredibly coupled with the content that they make. And the content that they make is incredibly reliant on them finding the time to do it and the effort to do so, right? So it's very, I would say linearly, it's a very linear space at the moment because you're limited by the amount of vlogs you can make. You're limited by the amount of streaming hours you can do. And for a lot of these creators, especially as they get older, they have very different life priorities.

(27:32) Justin Banusing:

One of the creators we're working with, one of the largest League of Legends creators in the world, he is, he's becoming a dad soon, so he was really famous for being able to stream 10 hours a day, 12 hours a day, but now he doesn't because he's about to be a dad. He's got to take care of his kid. He's a family man now, but he has a massive fandom that's hungry to interact with him for over 12 hours a day. So what does he do about that,? That's the thesis we're building at Cloud Kitchen, because we believe that creators have three barriers for them to scale, which is time, borders, and language. Language, because not everyone in the world speaks English. Everyone prefers to consume content in a new language, borders, and creators obviously can't be everywhere, and time, as we said before, and creators have very finite time. So we're kind of an AI studio right now building on these three tenets of basically building out products and ways for fans to engage with their creators anytime, anywhere, in any way. So the first app that we're building right now, because one of the biggest things that people wanted to do with their favorite content creators is to play games with their favorite content creators. So that's what we're building right now. We're building AI agents that allow people to basically play with their favorite creators in their favorite games. Kind of like a real time golf coach or like caddy, or real time like a commentator on your favorite game, featuring the voices of your favorite creators.

It's a very rudimentary, I guess execution of where we want the end state to be, because we want it to be super interactive, where you can take your favorite creator anywhere, through no matter what context. But overall, it's kind of like, how we choose to tackle our thesis from the get go, which is, how do we break past these borders and turn these creators from, I guess, one time or seasonal online experiences to evergreen brands?

(29:01) Jeremy Au:

Awesome. On that note, could you share a little bit about what has been a personal time of bravery for you?

(29:06) Justin Banusing:

Yeah. I think personal time of bravery for me was really and I think Jeremy, we've talked a lot about this before, too. It's, like, I had a good life going for me when I was living in the US. Before I was supposed to graduate, I had a good job lined up for me at a fan company. I was I was about to get my O1 visa. It was always my life dream to you know, live in the US and learn from the scene there. But then I realized, there was so much opportunity here in Southeast Asia. So I took a leap of faith and I decided to quit my job at the time and go all in on my startup, my last startup before we even had funding, because I told myself, if I'm not going to take the leap, who else will?

And I think that's the moment where I kind of told myself I had to be brave. Well, I kind of told myself, right. Growing up. I always asked myself the question that like, why don't more people stay here in the Philippines to build here? There's so much opportunity to be had here in Southeast Asia to build and contribute to the economy and scene here, but people don't, people leave. And that's been attributed to the giant brain drain, right? I'm sure Singapore has it a little bit better, but here in the Philippines, the brain drain is really, really bad. All our best people leave. And I always told myself, why is that the case? And how can we make it so that other people stay and build here? Because if we can help make the local scene better here in the Philippines through entrepreneurship, then more people won't have to leave or the people who don't even have the opportunities to leave will suddenly get the opportunities they wanted to. And I told myself, I can't complain about this if I'm not making a change myself. So I told myself I'll do it myself and hopefully, my move is the first of many people who come back home to try to do things here.

(30:31) Jeremy Au:

Wow, that's a big responsibility and duty you chose to make. I mean it's interesting because people can move both of their feet, right? You know, brain drain is not, it's a national side but you know, is everybody on a individual making decision like yourself to return to the Philippines or go to the US or whatever it is, how do you think about advising somebody who's thinking about you know, moving their feet.

(30:52) Justin Banusing:

Well, I would, I would tell them it's an incredibly risky move and you stand to lose pretty much everything. But hey, if you have the bravery, if you have I guess, personal mission to do so, then by all means, do it because it's all accumulative, it's all compound. It's if one person does it, then more people do it, then when more people do it, more even more people do it, right? So all it takes is a tiny spark to move forward, and if you even have a small inkling in you towards doing so, then by all means, do it, because I, I, I like to believe in the PayPal mafia effect, right?

It's like after, after the PayPal Mafia, like all eight of those co founder guys exited, suddenly so many people wanted to start their own startup. And then all those people who came from the PayPal Mafia who built their own startups, spawned other startups. It's like a giant family tree, right? So if our generation, like the current Gen Z here in the Philippines, are able to kickstart that, then who knows what we can achieve in the coming years. Of course, like what I advise fellow like Gen Z who are planning on doing that, I do tell them that yo, it's like, it's incredibly risky. So assess your options and make sure that of course, even after this happens, you have your own safety net or kind of like backups. Because one thing I always like to remind people is that as much as we like to say the startup scene is a meritocracy. It is a privilege in a sense to be able to pursue a startup. So check your privilege too.

(32:02) Jeremy Au:

Could you share more about why being able to build a startup is a privilege?

(32:05) Justin Banusing:

I think it's a privilege in multiple levels. I'll tackle it from top down. The first one is a financial privilege, right? The ability to be able to go all in on a startup, to be able to think about going all in on a startup and putting all your time and effort in that usually gravitates towards people who come from either a highly educated or relatively well off background, right? Because you're not one of those people who has to think of, how do I get food on my table every day? Even all those people in SF, or even all those people in Singapore who say, Oh, I had to eat packed ramen every day while I was building my startup. They came from well off families. That's the reality. If you look at them, they probably came from decent private schools. They went to magnet schools. It's unfortunately a privilege because the ability to think big is something that can only really be afforded towards people who, I guess, have been blessed by it, right? So, in a sense, The reason why I highly encourage people to do more entrepreneurship and do more startups is so we can provide, we can give that privilege to more people because everyone deserves the right to be an entrepreneur if they want to.

(33:01) Jeremy Au:

Great. Thank you so much for sharing. On that note, I'd like to summarize the three big takeaways I got from this. First of all, thank you so much for sharing about your personal journey about how you were like growing up, about how you were fascinated about online culture and how you set up your own conferences and how you worked your way up to make that not just for yourself but for your community and now organize in corporate level. Secondly, thank you so much for sharing your own point of view of the Philippines as a market in terms of gaming, in terms of entertainment, but more importantly, I think breaking down the differences between the developers vs. mobile gaming and the impact of the commute the loading screen of commute time in the Philippines. but also talking about the industry structures as well that embedded or inherent in the eSports category, between the publishers and the fans, and the third parties and the creators that are trying to monetize or create a viable niche. Lastly, thank you for sharing your perspective on entrepreneurship throughout this time, Fascinating to hear about, at all times in the podcast, sharing your unique perspective on how you approach building how you approach risk and why you decided to volt your feet and stay in the Philippines and return and to build a company and dream big. On that note, thank you so much Justin for sharing your story.

(34:09) Justin Banusing:

Thanks, Jeremy.