Sam Englebardt produced zombie films, founded Gold Class Cinemas in Australia and pioneered crypto in the early years. Now he is investing half a billion dollars to create a metaverse.

Sam Englebardt, managing partner of Galaxy Interactive, met billionaire and former hedge fund manager Mike Novogratz during a tumultuous trip to Haiti in 2016. Englebard’s fiancée, Megan, invited him at the last minute to a party organized by Artists for Peace and Justice.

It was a fun weekend, Englebardt said. This is Paul Haggis’ organisation. Susan Sarandon and Ben Stiller were there. It was a big celebration of the great school they built.

Mike and I got along really well. We realized we had a lot of overlapping interests in technology: in bitcoin and crypto, and especially in VR and AR, he says. Nine months later, after their friendship had grown, Novogratz told Englebard to join him in New York to help institutionalize his family office.

He loves Megan, my fiancée. I remember we were sitting at breakfast one morning and he said: ‘You know, Sam, if you don’t come to New York to work for me in the family office I’m building, Megan will leave you! – he said, smiling.

Galaxy Digital’s original plan was to make money in a more traditional way, through venture capital funding, debt and late-stage private equity, but it was swallowed up by the events surrounding the incredible crypto bull of 2016-17.

The plan went out the window when we realized, wow, we’re in a better position than anyone to really build Galaxy Digital and pursue this mission of institutionalizing crypto and blockchain, says Englebardt, official co-founder. And the rest is our crazy adventure.

Interactivity

Galaxy Interactive is investing in breakthrough technologies in virtual and augmented reality (including Polyarc), artificial intelligence (Hour One) and blockchain-based games (Playable Worlds). To date, they have invested approximately $200 million in interactive studios and social platforms, as well as the infrastructure and technology that powers this space.

Remember Block.one’s initial coin issuance of $4.1 billion for EOS in 2018? Some of that money went into a $325 million fund originally intended for general EOS development, but it was converted into a $256 million fund under the name Galaxy Interactive after Englebardt and his partner Richard Kim developed more enthusiasm for the field. They will raise an additional $300 million by refocusing on interactive content.

There is a lot of money at stake in the gaming industry. Newzoo predicts that by 2013, the industry will attract 3 billion players and bring in $217.9 billion, three times more than the film and music industries combined. Englebardt believes that games have prepared the world for the explosion of non-fiction tokens and ownership of virtual digital objects that we have seen this year.

Over the past 20 years, people have become incredibly accustomed to the idea that digital objects have value, he says. The sword could be worth something in the form of real money in the game, and people would want to buy, sell and trade it.

And by the way, these are the same people who created the systems that enabled the creation, trading and monetization of digital objects and games, and then created much of the same technology that is behind the whole blockchain and crypto explosion.

Philosophy on the subject

I was born in Ohio in 1977 – which makes me the dinosaur you think of in cryptoland – and studied law at Harvard and philosophy, political science and economics at the University of Colorado and Oxford. He was so fascinated by Plato, Descartes, David Chalmers and the philosophy of mind that he considered becoming a teacher of philosophy. This may explain why he is more interested in the virtual worlds in which the games are embedded than in the games themselves.

I think all this prepares you to accept the possibility that we are currently living in a simulation, and certainly to understand why people can and do spend so much time building their alter egos in these digital worlds, and even the possibility that the alter egos they build are as important as the physical bodies they inhabit.

What I like about philosophy is that you just have to study the thought process and practice being open-minded, exploring ideas and having fun exploring them. Not only is it great fun and intellectually stimulating, but it’s also a great way to become a venture capitalist, he says.

He also took a course in film history, which fueled a lifelong obsession with film and filmmaking and led him to found a film finance company. When I was in law school, I started funding a company that produced and financed an independent film, he says. That was the beginning of my professional life.

Movie years

During his career, Englebardt has produced or directed zombie films for George A. Romero (Diary of the Dead, Surviving the Dead), the Sin City sequel (Lady to Kill For) and the more recent AMC series, Night Manager.

He also created the concept of Gold Class Cinemas in Australia – premium cinemas with big seats and overpriced food and drink – and co-founded the fourth largest cinema chain in the US called Rave Cinemas with Michael Lambert of Lambert Media Group, which they sold to Cinemark in 2013.

From about 2003 to 2013, I managed or invested in all sorts of old media companies that were declining secularly, Englebardt says with a wink. The winds of change are beginning to blow.

It was impossible not to notice what was happening with digital media and digital content. As I delved into this, I came across some people who are now the real pioneers of cryptocurrencies and who created the gambling industry.

Although he made his first investment in a game studio called Seismic in 2010, it wasn’t until 2013, when Occulus was acquired by Facebook, that he began to realize that interactive content was the future. He made his first investment in VR that year, in an eye-tracking technology called EyeFluence, which was later sold to Google.

At the time, venture capitalists didn’t consider games investment-worthy; they were seen as just another form of content, not a real technology, he says. I just saw it and thought: Oh, my God, it’s so obvious. That’s what people are getting at.

The passion for these young demos, the opportunity for people to have much more autonomy in the content they consume, and to actively engage and build on their experiences with the content.

Stung by the Broca Crypto Bug

Like many others, it was the founder of Blockchain Capital, Tether and Block.one, Brock Pierce, who introduced Englebard to the world of cryptocurrencies.

Brock was the first person to tell me the word bitcoin with certainty, he says. She is really the person who took the time to teach me why it was important, why it mattered. More than any other person I know, he has been one of the leading evangelists of decentralized technology in the world.

At the time, Pierce and Englebardt were living in Venice and hosting regular cryptocurrency dinners with William Quigley, co-founder of WAX, Scott Walker of Casper Labs and Johnny Steindor, managing partner of Distributed Global.

There was a whole group of people from Los Angeles who became pioneers in their sphere of influence in the crypto world. And we got together once a week or every two weeks to eat and talk about what was happening.

While the world is currently immersed in NFT mania, much of which dates back to the CryptoPunks and CryptoKitties of 2017, Englebardt says digital ownership has been an inevitable development for some time.

There were a million reasons to look at CryptoKitties and say: Oh, yeah, this is all crazy and won’t work. But if you understood the huge world of in-game properties that were such a huge part of the overall game business three or four years ago, and especially if you understood blockchain technology, I think it was impossible not to see that this was an opportunity for a whole new industry.

We’ve seen millions of people consume digital objects and spend tens of billions of dollars on them, he says. People aren’t just bringing game articles, but just game behavior and gamification into all other areas of their lives.

The more I delved into the games, the more certain I was that this behavior would be reflected in other areas of our lives and in things other than the games.

Snow Crash and Metaverse

With a 10-year horizon for his venture capital investments, Englebardt is used to living mentally in the future, and he sees the Metaverse fast approaching. The term was made popular by Neal Stephenson’s 1992 novel Snow Crash and refers to the virtual world that connects all other virtual worlds and where players spend most of their time.

It’s essentially an immersive version of the Internet, and Englebardt believes digital ownership through NFT will become a mainstay. That’s because people are more willing to put time and effort into a project if they know it’s theirs forever and not subject to the whims of the owner of the virtual world, as is the case with games like Fortnite or World of Warcraft.

We are a species that wants to do things, and the more incentives we have to do things and monetize them, (the better), he says. To build a methaverse, people need to be encouraged. Content itself cannot be created from the top down; it must use the incentive systems and tools created today to encourage people to create and distribute content.

Once you give people the ability to create and make money, it really changes everything in terms of what they talk about, how they participate, how they sell you a certain place.

Users create more value

He cited a comment by Chris Dixon, general partner at Andreessen Horowitz, that the main reason Bitcoin and Ether have become so valuable is that they have tens of millions of super-passionate users building on or around them and spreading the word.

Not a single dollar was spent on marketing, and that’s because you take the users and make them creators. And that’s what’s happening in the game industry, and why it’s so exciting.

In a post on NFTs in February, Dixon expanded on this theme, arguing that NFTs can free users from centralized platforms that take their content and keep the revenue, and instead build on the original ideals of the Internet: Users and creators are globally connected, not constrained by intermediaries, share ideas and have economic potential.

The first manifestations of the metaverse can be seen in blockchain-based virtual worlds like The Sandbox and Decentraland, where users can already buy and own goods, as well as create and exchange content and digital objects with each other.

But before we get to the future Ready Player in one style, a few things need to happen.

No one and no company will build the entire metaverse. His tool is under construction, but it takes so many different parts to reach the level of Snow Crash, he says. You need the power of the GPU to support all this; there are a million things that need to happen. So we have a long way to go.

But we’re clearly past the point where people are spending much of their time in digital worlds, making a living out of it, creating jobs, etc. It’s happening.

Keeping digital objects in the digital and physical world, being able to share the objects we own in a decentralized, peer-to-peer way, buying a digital object and transferring it from one environment to a physical environment and passing it on to someone else, all of these things are now being created. It’s not that far.

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