Mr. Beast, Tesla AI Day, and the Future of Game Development: Small Vector Creation is Coming!

I was 3 hours in when I realized what was becoming painfully obvious:

I’m talking about Mr. Beast.

Lessons Learned from Mr. Beast

I’ve casually followed Mr. Beast for many years as a fan of his content, and I would watch interviews with him, including those with Joe Rogan and others. However, this interview was different. The lessons learned from this video were numerous and profound: the importance of obsession for mastery, hard work ethic, need for focus, attention to detail, the concept of tribes, the infinite game, optimizing content around retention, storytelling, product validation, the increasing power of influencers and brand, optimism + manifestation, and many more.

These are lessons from the world’s greatest master (aka “Kensei”) of YouTube content creation. Hence, you should be paying attention.

The interview hosted by edgy comedians Andrew Schulz and Aakash Gupta is linked below:

After watching the interview, I began to think very deeply about the implications of cost reduction to zero. Zero cost is a secular trend that started in the 1990s with the Internet (e.g., Hotmail, YouTube, Google docs, etc.) and has been progressing in starts and stops since then.

Mr. Beast has incredible business acumen. I would put him ahead of many/most/all of my former business school classmates or colleagues with MBAs. This young savant learned through free YouTube content and through doing. I’m sure he’s likely surrounded himself with good mentors and advisors. Still, I’d likely go to Mr. Beast for business strategy advice before any of the MBAs I know, and he has little formal education and only a fraction of their age and business experience.

Essentially, the cost of business education has gone to zero.

Access to the information is now all there; the missing ingredient is passion and obsession to learn.

What happens when costs for a good or service go to zero?

Implications from Tesla AI Day

As a die-hard Elon Musk fanboy and Tesla investor, I watched Tesla AI Day 2022 live and forced my two sons to watch with me.

I told them:

Interestingly, most of the market was disappointed by AI Day. They focused on the hardware progress rather than the incredible accomplishment of taking Tesla Vision software to the robot Optimus. Further, many people thinking linearly rather than exponentially can’t imagine the potential impact of AI on the world and commercially.

Unlike the broader market, I was incredibly impressed and even more confident that Tesla is the most significant company ever created.

To some degree, this could be the end game for all companies. If you take AI to the limit, Tesla creates a technology that can create technologies and products. You have the *potential* to stack another 5, 10, 100, or 1,000 future s-curves on top of Tesla.

Ok, after this last paragraph, many of you, especially Elon haters (of whom I’ve recently discovered there are many), are about to check out. Let me get to the more relevant game development point before you write me off.

Tesla AI Day made clear the potential to take costs to zero in many new areas. We’re already seeing cost to zero in many industries today: with Mr. Beast and business education, with the greatest educational resource ever created, Kahn Academy, and it became clear that the Tesla AI roadmap intends to take the marginal cost of labor to zero.

My objective here isn’t to pump Tesla, but to highlight the potential implications of a vast emerging wave in AI innovation. AI has the potential to take more and more expensive tasks and take the costs of those tasks to zero.

What potential applications and industries will be disrupted by AI dropping costs to zero?

Large Vector to Small Vector

In 2011, one of the last presentations I wrote for the tech consulting firm I worked for spoke to a dramatic shift in venture opportunities in Silicon Valley.

I called the phenomenon at the time “small vector” opportunity expansion. This concept proved to be prescient then, and I believe it applies to what we’re seeing today with AI enabling cost reduction to zero.

Below I lay out the thesis behind the move to “small vector” opportunities before tying it back to game development.

Small Vector Concept

In 2010-2011, we saw a massive wave of new and diverse startup companies. These startups required dramatically lower capital formation costs than in prior periods:

Many key technology advancements dramatically drove down costs that enabled innovation and new opportunities in many diverse industries:

A new pattern of funding emerged at that time, reflecting the trend of lower start-up costs:

In essence, the total resource cost at that time (~2010) to start companies was dramatically lower relative to the costs for those opportunities just 5-10 years prior:

Dropbox (launched in 2008) vs. Xdrive (launched in 2005) is an excellent example of this phenomenon. For anyone who remembers, Xdrive was Dropbox almost exactly but launched too early.

Imagine if specific venture opportunities existed in a cloud of opportunities and the cost to reach those opportunities required a certain amount of resources to unlock. In this scenario, what we are seeing is that the resource cost or vector to achieve those opportunities began to compress dramatically:

We also saw a divergence in opportunity sets between software vs. hardware opportunities at that time:

This phenomenon led to the trend we’ve been seeing in the ensuing ten years since: “software is eating the world.”

Small Vector Game Creation

I increasingly see AI-generated art in mood and reference boards at our game studio. I had dinner last week with an entrepreneur attempting to apply AI to level design, and a friend recently mentioned that he is attempting to apply AI to ad creatives (although Bidalgo tried doing this first years ago). It’s becoming clear that new capabilities are now at the very onset of broader development across many more applications, including game development.

The potential for AI is tremendous and especially for content creation. Check out this AI-generated podcast between an emulated Joe Rogan and Steve Jobs:

https://podcast.ai/

Potential Applications

To understand the implications for the gaming industry, we need to think about the specific areas in which costs can go to zero. What are the potential new applications in which we can see AI make an impact?

Just as a basic start, here are a few obvious ideas:

Game Team Implications

A very interesting game development team dynamic we’ve seen on Roblox, for the most successful games, has been ad-hoc team structures that dynamically form for new game creation.

What is a company?

In 1937 Ronald Coase wrote the famous essay The Nature of the Firm, in which he theorized that companies exist because of economic transaction costs. Companies make sense when external costs can be conducted internally for lower costs.

On Roblox, the most successful teams don’t have typical corporate structures.

As Berezza suggests in the video below:

On Roblox, the dramatic reduction of infrastructure costs makes the development “vector” (cost and complexity of development) between a creator’s idea and game launch dramatically lower.

Do game companies need to exist if creation becomes dramatically easier and lower cost?

With AI, we will experience a dramatic reduction in game development costs.

Hence, we may see the same team and corporate dynamics play out in the future when AI impacts game development.

Conclusion

In summary, we’ve got exciting times ahead.

There is no chance that AI will not dramatically impact game development in some way.

Even further, I believe we will see a Mr. Beast of game development emerge that rides this next wave of accelerated game development creation as we see game development become a small vector opportunity landscape.

Looking forward to a bright future; let me know what you think in the comments!