Mitch Lasky & Blake Robbins
Ben and David sit down Benchmark’s legendary gaming investors Mitch Lasky and Blake Robbins to discuss the history and future of the gaming business.
Editors Note: Acquired just released an episode on Ferrari. I didn’t have time to get it done by Thursday, but you’ll see it next week.
Mitch Lasky and Blake Robbins
Mitch Lasky and Blake Robbins are legendary gaming investors at Benchmark, with Mitch as a former partner renowned for generating billions in returns through early investments in Riot Games, Discord, and Thatgamecompany, alongside his executive roles at EA and Activision and founding JAMDAT, which went public in 2004. Blake is a principal at Benchmark and a leading analyst of the contemporary gaming landscape. Their significance lies in bridging the evolution of gaming from niche geek culture to a mainstream $180 billion industry, influencing both creative and business strategies. The interview centers on their reflections on gaming’s business model transformations, from Periscope quarter-drop arcades to forever games and platform-based publishers, weaving in personal career pivots, investment theses, and anecdotes about growth hacks, emotional game design, and the interplay between creators and commerce.
Timeline
Early 1990s: Mitch joins Disney Interactive during its formation and witnesses Bobby Kotick’s Steve Wynn-financed acquisition of Activision out of bankruptcy, renegotiating debt into equity.
1996: Casual gaming emerges with titles like Barbie’s Fashion Designer and Hasbro’s digital Yahtzee, marking the start of broader audience penetration beyond core gamers.
Late 1990s–Early 2000s: Mitch runs studios at Activision amid Hasbro’s failed acquisition attempt, viewing games as part of the toy business.
2003–2004: JAMDAT, Mitch’s mobile gaming startup, goes public, capitalizing on ubiquity as hotel clerks and travelers recognize its bowling game.
2006: Riot Games launches League of Legends, evolving from Defense of the Ancients mod with growth hacks like acquiring fan websites.
2009: Thatgamecompany releases Flower, followed by Journey in 2012, exploring emotions beyond violence.
2012: Sky launches as Thatgamecompany’s forever game, achieving number four grossing status in China with hundreds of millions in revenue on a tiny team.
2015: Discord pivots from a failed game studio to a gamer-centric communication platform, attempting but failing a game store launch.
2017: Fortnite catalyzes cross-platform play, with Nintendo and Microsoft embracing openness against Sony’s exclusivity.
2023: Gamecraft podcast launches, retelling gaming history through eight topical lenses from 1990 to present, inspiring deeper business analysis.
Notable Facts
Gaming has always encompassed casual play, with over 50% of today’s $180 billion market considered casual by 1990 standards, including Candy Crush sessions on airplanes.
Steam evolved from a disk-included updater for Half-Life to an $8 billion annual business by incrementally adding community features, app store, and mods, now essential even for Microsoft titles.
Cross-play players in Fortnite monetize at multiples of non-cross-play users, turning console launches into adjunct revenue for established hits like Sky on Switch.
FIFA Ultimate Team generates over $1 billion annually at 99% gross margins by selling virtual card packs to a pre-committed $500 console + $60 game audience.
Evans & Sutherland, the Fairchild of computer graphics, trained pioneers like Ed Catmull and John Warnock, powering early flight simulators and influencing Ridge Racer’s advanced visuals.
Gamecraft Episodes
Episode 1: Steal This Game (Free-to-Play): Hosts Mitch Lasky and Blake Robbins discuss the rise of free-to-play as a dominant business model for video game marketing and distribution, tracing its roots to the shareware business where companies like id Software and Apogee built independent successes.
Episode 2: Platform-Based Publishing: Mitch and Blake explore the shift from packaged goods at retail to online distribution platforms, using the rise of Steam as a prime example of aggregating demand to collapse supply and disrupt incumbents.
Episode 3: Casual & Mobile Gaming: The hosts examine the pivotal developments in casual and mobile gaming since the 1990s, highlighting how it expanded the audience to include non-self-identified gamers and dominated over half the industry.
Episode 4: Forever Games: Focusing on games-as-a-service, Mitch and Blake analyze durable long-duration play patterns, from 1990s MMORPGs and competitive online titles evolving into multi-billion-dollar persistent games lasting decades.
Episode 5: User-Generated Content: Mitch and Blake delve into the power of user-generated content in driving innovation, from mods spawning new genres like battle royales to platforms like Roblox fostering creator economies and viral feedback loops.
Episode 6: Consoles: The episode traces console evolution from arcade quarter-drops to modern cross-platform dynamics, contrasting openness strategies of Nintendo and Microsoft against Sony’s exclusivity in the ongoing hardware wars.
Episode 7: Virtual Reality: Hosts discuss VR’s journey through technological hurdles and business models, assessing its potential for immersive experiences amid cycles of hype and realism in gaming hardware.
Episode 8: In-Game Economies: Mitch and Blake chart the progression of game economies from rudimentary designs to sophisticated Web3-enabled systems, including virtual goods trading and peer-to-peer marketplaces like those in Counter-Strike skins.
Evans & Sutherland
Founded in 1968 by University of Utah professors David Evans and Ivan Sutherland, the company pioneered commercial computer graphics hardware, starting with the LDS-1 line-scan display system for 3D workstations and quickly advancing to frame buffers in the early 1970s that enabled raster graphics for research and simulation.
Deeply tied to Utah’s computer science program, it attracted luminaries like Ed Catmull (Pixar co-founder), Alan Kay (Apple interface pioneer and Atari VR inventor), and John Warnock (Adobe co-founder), whose alumni spawned graphics firms and influenced Silicon Valley’s visual computing ecosystem.
Specialized in high-fidelity flight simulators using proprietary silicon in the late 1970s–1980s, evolving into supercomputers and digital planetariums; by the 1990s, it contributed to arcade gaming with advanced rendering for Namco’s Ridge Racer, bridging military sims to entertainment.
As a seminal force, former employees launched numerous game studios, underscoring its “Fairchild of computer graphics” legacy in democratizing 3D visuals from DARPA-funded labs to consumer arcades and consoles.
Key Decisions
Investing in Riot Games by acquiring Defense of the Ancients fan sites: Facing a fragmented modding scene requiring out-of-print Warcraft 3 copies, Mitch leveraged Benchmark’s capital to buy top fan websites and redirect editorial to League of Legends, slashing customer acquisition costs to near zero. This yielded a standalone IP with pent-up demand from millions of mod players, birthing a billion-dollar eSports ecosystem and enabling Riot’s decade-long build to platform-based publishing with Valorant and Teamfight Tactics. The decision’s success stemmed from Mitch’s distribution-first thesis, outpacing Steam junk-pile launches by reinvesting profits into global expansion, though it delayed Riot’s multi-game pivot by seven years, highlighting patient leadership in competitive MOBAs where social lock-in trumps rapid iteration.
Pushing Discord toward a platform-based publisher model: Post-pivot from a failed game studio, Mitch urged founders to exploit their gamer audience for a game store, mirroring Steam’s demand aggregation. The attempt faltered amid broadening user bases into crypto and AI, but it underscored Discord’s enduring voice chat dominance. This reflected Mitch’s jiu-jitsu-like internet disruption strategy against packaged goods, yet revealed risks in over-reliance on self-identified gamers; competitively, it positioned Discord as a neutral launcher hub, influencing AI chat bots but forgoing Tencent-scale gaming revenue, a leadership lesson in adapting theses to audience evolution.
Funding Thatgamecompany on an emotional spectrum pitch: Jenova Chen’s USC prototype Flow inspired Mitch, but the term sheet followed a partnership pitch framing games as stunted in evoking emotions like those in poetry or film, beyond violence and accumulation. Sky emerged as a forever game with 30%+ net margins on hundreds of millions in revenue from a small team, expanding to Switch for cross-play whales. Analysis shows Mitch’s rare studio bet succeeded via emotional differentiation in a hits-driven market, linking to casual ubiquity trends; leadership here balanced creative autonomy with business durability, countering competitive pay-to-win pitfalls by fostering social persistence over grind.
Launching Steam as an incremental updater: Valve’s Gabe Newell and Mike Harrington built it for Half-Life patches and anti-piracy after Microsoft declined, auto-installing via disk. It ballooned to $8 billion by adding features like community and mods, forcing rivals like Epic and Activision into multi-launcher strategies. This embodied platform-based publishing’s supply collapse via demand aggregation, per Mitch’s thesis; Newell’s engineering focus enabled Valve’s private dominance, but ossification risks loom as Microsoft aggregates supply via Game Pass, shifting dynamics from disruption to subscription exclusivity battles.
Embracing free-to-play with forever games: Post-packaged goods, Mitch’s JAMDAT succeeded on mobile ubiquity, but Riot’s League of Legends pioneered F2P revolutions akin to TV disrupting film tickets. Outcomes include 30-year play patterns like FIFA’s annual repurchases evolving to persistent economies, with Sky’s China dominance. The shift constrained designers to planned obsolescence but unlocked casual scale; competitively, it favored patient reinvestment in live ops over hits, with Mitch’s organic expansion (e.g., cross-platform) yielding higher LTV than paid acquisition addiction, though Web3 enhancements risk pay-to-win dilution.
Key Quotes
“The thing you know about, you don’t apply that same logic to the second thing.” (Mitch Lasky)
Context: Mitch compliments the hosts’ accuracy on episodes he influenced, like Benchmark and Nintendo, contrasting outsider misconceptions with insider truths.
Analysis: This captures Mitch’s investor skepticism toward superficial narratives, tying to his career pivot from law to gaming via depositions revealing “cool” engineers; it underscores distribution leverage in decisions like Riot’s site acquisitions, where insider knowledge of mod demand fueled billions, influencing trends like cross-play by challenging console silos and empowering platform publishers over toy-like hardware cycles.
“They are constrained quite a bit by the business models in which they operate.” (Mitch Lasky)
Context: Discussing Miyamoto’s genius amid packaged goods’ planned obsolescence, where discs demand annual repurchases like FIFA sequels.
Analysis: Highlights business guiding creativity, not vice versa, linking to Mitch’s JAMDAT ubiquity anecdotes and forever games like Sky evoking uncharted emotions; strategically, it drove investments favoring F2P persistence over hits, mitigating competitive risks from arcade-to-console shifts while amplifying casual trends, as casual now dominates 50%+ of revenue without self-identification as “gamers.”
“Content is a means to an end, but the end can’t be, oh, then we’re going to go make another game and put it on Steam.” (Mitch Lasky)
Context: From Mitch’s 2011 blog on investing in businesses, not studios, reiterated in rejecting siloed pitches.
Analysis: Encapsulates his playbook of durable strategies transcending single titles, evident in Riot’s delayed multi-game evolution and Thatgamecompany’s digital theme park; it ties to platform trends like Tencent’s 49% Epic stake, where embracing third-party aggregation built kill-shot advantages, countering Facebook’s half-hearted gaming forays and enabling Web3’s organic integrations over scams.
“If you don’t have distribution leverage of some sort, I’ll invest against any credible distribution leverage.” (Mitch Lasky)
Context: Explaining venture discipline, contrasting Riot’s DOTA fan redirect with Steam junk-pile failures.
Analysis: Reveals Mitch’s power thesis prioritizing arbitrage profits for organic reinvestment, as in Sky’s Switch expansion monetizing cross-play whales at multiples; it links to eSports as marketing engines boosting live ops ROI, shaping casual ubiquity by outflanking pay-to-win mobile while navigating cloud gaming’s demand-driven revival, where audience expansion finally aligns tech viability.
“We’re in business to fund people like that.” (Kevin Harvey, on behalf of Benchmark, regarding Mitch Lasky)
Context: Benchmark’s Kevin Harvey on Jenova Chen’s emotional spectrum pitch, chasing him for a term sheet post-meeting.
Analysis: Exemplifies leadership in backing visionaries expanding human experiences, fueling Thatgamecompany’s 30% margins via forever mechanics; it connects to trends like UGC modding birthing genres (PUBG to Fortnite), where emotional breadth counters violence stigma, competitively positioning against incumbents’ capital intensity and unlocking AI’s narrative aids for live DMing in D&D-like persistence.
Industry Trends
Free-to-play revolution: Equivalent to TV disrupting theater tickets, shifting from $60-for-60-hours to persistent mechanics requiring social susceptibility, as in League of Legends’ two-week updates; it shaped Mitch’s investments by enabling forever games like Sky, lowering acquisition via organic virality but risking paid addiction, with competitive edges in eSports-driven $150 million skin spikes post-Worlds wins.
Platform-based publishing: Aggregating demand to collapse supply, perfected by Tencent’s QQ leveraging and Steam’s feature creep from updater to $8 billion store; influenced Blake’s 100 Thieves eSports as brand legitimation, linking to powers like network effects in Riot’s launcher, posing risks to exclusives like Sony’s but opportunities in Nintendo’s app store pivot for $25-to-hundreds user revenue gaps.
Cloud gaming maturity: Demand-driven by casual-hardcore hybrids avoiding PC builds, viable post-Moore’s law unlike 2010s mismatches; ties to leadership in cross-play (Fortnite catalyst), enhancing forever durability via xCloud streaming, with Microsoft aggregating supply via $69 billion Activision for Game Pass subscriptions, challenging Steam ossification amid bandwidth gains.
Leadership Playbook
Embrace distribution as king: Prioritize leverage like fan site redirects or cross-platform expansions to slash acquisition costs, reinvesting organic profits into live ops over paid slopes; this shaped Mitch’s theses, implying industry implications for venture-backed studios assuming top-tier games suffice, as UGC platforms like Roblox accrue AI asset value amid innovator dilemmas.
Fund emotional breadth beyond violence: Back visions expanding human spectra, as in Chen’s poetry-inspired pitch, fostering durable theme parks over annual hits; links to casual trends, urging leaders to counter stigma via social persistence, with eSports selling achievable pro dreams to boost retention in competitive integrity-focused MOBAs.
Resist tourism, adopt the tribe: Protect core while inviting committed outsiders like Riot’s mod-hardcore founders, avoiding crypto slummers; this disciplined Blake’s eSports pillars (content, apparel, teams as marketing), signaling implications for Web3’s organic evolutions like EVE’s token pipes, balancing speculation via Bitcoin pizza solves for dynamic economies.
Additional Notes
Episode metadata:
Title: Benchmark’s Mitch Lasky and Blake Robbins on The Art of Business in Gaming
Duration: 2 hours 15 minutes;
Release date April 25, 2023
Related episodes:
Benchmark Part II: The Dinner (Season 11, Episode 5, October 17, 2022)
Nintendo’s Origins (Season 12, Episode 3, March 15, 2023)
Activision Blizzard (Season 1, Episode 40, July 12, 2017)
Links:
As fascinating as this gaming history is, there is also telling of the monetization and killing of the industry. There is beauty in a creative's passion projects getting big on Steam. Where small Indy teams can continue to do it "for the love of the game". But Valve's approach is becoming niche. Companies like EA or Ubisoft keep chopping games into bite size chunks (DLC's, packs, etc) and forcing users to spend more and more. Those corporations are ushering in the death of the gaming industry. Where every facet of it is monetized. Take Bungie's Destiny 2 as a warning of what can happen with men like these two get greedy. Or Nintendo's anti consumer practices. Leave gaming alone.