Sam Englebardt has produced zombie films, helped build the fourth largest cinema chain in America and hobnobbed with crypto pioneers in the early days. Now he and his partners are investing hundreds of millions of dollars into the creation of the metaverse.<\/b><\/p>\n
Galaxy Interactive managing partner Sam Englebardt first met billionaire and former hedge fund manager Mike Novogratz during a whirlwind, celebrity-studded trip to Haiti in 2016. Englebardt\u2019s fianc\u00e9e, Dr Megan McGill, had invited him down at the last minute for a shindig put on by <\/span>Artists For Peace and Justice<\/span><\/a>.<\/span><\/p>\n \u201cIt was a fun weekend,\u201d Englebardt explains. \u201cIt\u2019s [<\/span>Crash<\/span><\/i> director] Paul Haggis\u2019 organization. Susan Sarandon was there and Ben Stiller. It was a great celebration of this really terrific school that they built.\u201d<\/span><\/p>\n \u201cMike and I really hit it off. We realized we had a ton of overlapping interest in technology: in Bitcoin and crypto specifically, in VR and AR,\u201d he says. Nine months later, after their friendship had developed, Novogratz told Englebardt he needed him to join the small team in New York building up his family office, Galaxy Investment Partners \u2014 then intended to be a “small private operation”.<\/span><\/p>\n \u201cHe loves Megan, my fianc\u00e9e. I remember we were having breakfast one morning, and he says, \u2018You know, Sam, if you don\u2019t come to New York and work for me in my family office that I\u2019m starting, Megan\u2019s gonna dump you!\u2019\u201d he says, laughing. <\/span> \u201cThe plan went out the window when we realized, wow, we\u2019re in a better position than anybody to really build Galaxy Digital and pursue this mission of institutionalizing crypto and blockchain,\u201d says Englebardt, officially a co-founder, along with Chris Ferraro and Kim Pillemer. \u201cAnd the rest is this wild journey we\u2019re on.\u201d<\/span><\/p>\n Galaxy Interactive invests in cutting-edge tech around things such as virtual reality and augmented reality (including Polyarc), artificial intelligence (Hour One), as well as blockchain-based games (Playable Worlds). So far, they\u2019ve deployed around $200 million into interactive content studios and social platforms and the infrastructure and tech that powers the space.<\/span><\/p>\n Remember Block.one\u2019s $4.1-billion initial coin offering for EOS back in 2018? Part of that money went into a $325-million generalist fund supporting companies in a wide range of sectors, but which transformed into a $256-million fund under the auspices of Galaxy Interactive after Englebardt and partner Richard Kim grew more convinced about the huge potential for the space. There\u2019s huge money involved in the gaming industry, with Newzoo <\/span>forecasting<\/span><\/a> the sector will have attracted 3 billion gamers and will have generated $217.9 billion by 2013, making it three times the size of the film and music industries combined. Englebardt believes that gaming primed the world for the explosion in nonfungible tokens and the <\/span>ownership of virtual digital objects we\u2019ve seen this year<\/span><\/a>.<\/span><\/p>\n \u201cPeople over the last 20 years have become incredibly comfortable with the idea that digital objects have value,\u201d he says. \u201cThat a sword in a game can be worth something in terms of real money, and that people would want to buy, sell and trade it.\u201d<\/span><\/p>\n \u201cAnd, by the way, it was a lot of the same people that built the systems that allowed you to create and trade and monetize digital objects and games, then came out and built a lot of the same technology that\u2019s powering the whole blockchain and crypto explosion.\u201d<\/span><\/p><\/blockquote>\n Born in Ohio in 1977 \u2014 \u201cwhich makes me a dinosaur I think in crypto land\u201d \u2014 he studied law at Harvard, as well as philosophy, political science and economics at both the University of Colorado and Oxford. He grew so fascinated with Plato, Descartes and David Chalmers and the philosophy of mind that for a while, he planned on becoming a professor of philosophy. It may explain why he\u2019s more interested in the virtual worlds that games are built in than the games themselves.<\/span><\/p>\n \u201cI think it all prepares you to accept the possibility that we\u2019re living in a simulation now and certainly to understand why people could 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 much them as the physical bodies that they inhabit.\u201d<\/span><\/p><\/blockquote>\n \u201cWhat I love about philosophy is you just study the process of thinking and train yourself to have an open mind and explore ideas and to love the exploration of ideas. Not only is it just really fun and intellectually stimulating but it\u2019s a great way to be a venture investor, too,\u201d he says.<\/span><\/p>\n He also took a class on the history of cinema, which sparked a lifelong \u201cobsessive passion for film and filmmaking\u201d and led him to create a film financing business. \u201cWhile I was still in law school, I started a company financing, producing and financing independent film,\u201d he says. \u201cThat was the start of my business life.\u201d<\/span><\/p>\n Over the course of his <\/span>career<\/span><\/a>, Englebardt produced or executive produced zombie films for George A. Romero (<\/span>Diary of the Dead<\/span><\/i>, <\/span>Survival of the Dead<\/span><\/i>), the <\/span>Sin City<\/span><\/i> sequel (<\/span>A Dame to Kill For<\/span><\/i>) along with the more recent AMC show <\/span>The Night Manager<\/span><\/i>.\u00a0<\/span><\/p>\n Working with Lambert Media Group\u2019s Michael Lambert<\/a> he helped bring the concept of <\/span>Gold Class Cinemas<\/span><\/a> to the US \u2014 premium cinema experiences with big recliners and overpriced food and drink \u2014 and helped<\/span> put together the fourth-largest cinema chain in the United States called <\/span>Rave Cinemas<\/span><\/a>, which they sold in 2013 to Cinemark.<\/span><\/p>\n \u201cFrom 2003 or so to 2013, I was involved in operating or investing in every type of old media business that you could get that was in secular decline,\u201d says Englebardt wryly. The winds of change were beginning to blow.<\/span><\/p>\n \u201cIt was impossible not to see what was happening with digital media and digital content. As I looked at that, I kind of stumbled into some of the same people that are now some of the real pioneers of crypto, building gaming businesses.\u201d<\/span><\/p><\/blockquote>\n He made his first investment in a gaming studio called Seismic in 2010 while remaining focused on film but became more and more interested in interactive and emerging technology over the next five years. He invested in VR in 2013 with an eye-tracking technology company called EyeFluence, which was later sold to Google, and also backed a VR arcade concept called The Void.<\/span><\/p>\n \u201cAt the time, gaming was considered un-investable by venture capital; it was deemed another form of content, not really technology,\u201d he says. \u201cI just saw it and thought, \u2018Oh, my God, I mean, this is so obvious. This is where people are headed.\u2019\u201d<\/span><\/p>\n \u201cThe writing was on the wall in terms of the passionate diehard interest from these younger demos, the opportunity for people that have so much more agency in the content that they\u2019re consuming, and to really actively participate and lean into their content experience.\u201d<\/span><\/p>\n As with so many others, it was Blockchain Capital, Tether and Block.one founder Brock Pierce who introduced Englebardt to the world of crypto in 2013.<\/span><\/p>\n \u201cBrock was the first person to say the word Bitcoin to me for sure,\u201d he says. \u201cHe was really the person who took the time to educate me on why it was important, why it mattered. He has been more than anybody I know, one of the most important evangelists for decentralized technology in the world.\u201d<\/span><\/p>\n Living in Venice at the time, Pierce and Englebardt held regular crypto dinner parties with WAX co-founder William Quigley, Scott Walker from Casper Labs and Johnny Steindoor, managing partner of Distributed Global.<\/span><\/p>\n \u201cThere was a whole gang of LA people who went on to be pioneers in one way or another in their sphere of influence in the crypto world. And we would get together once a week or once every couple of weeks and have a dinner party, talking about what was going on.\u201d<\/span><\/p><\/blockquote>\n While the world is currently gripped in a full-blown NFT mania, and most trace its lineage to CryptoPunks and CryptoKitties in 2017, Englebardt says that digital ownership has been an inevitable development for longer than that.<\/span><\/p>\n \u201cThere were a million reasons to look at CryptoKitties and say, \u2018Oh, yeah, this whole thing is crazy and it\u2019s not going to work.\u2019 But if you understood the enormous world of in-game objects which were, even three or four years ago, such an enormous part of the overall business of games, especially if you understood blockchain technology, I think it was impossible not to recognize that this was an opportunity for a whole new industry.\u201d<\/span><\/p>\n \u201cWe saw millions of people consuming and spending tens of billions of dollars on digital objects,\u201d he says. \u201cPeople are bringing the game objects, but also just game behavior and gamification, out into all these other areas of their lives.\u201d<\/span><\/p>\n \u201cThe deeper I went into games, the more that I felt certain that we were going to see this behavior play out in other aspects of our lives and with objects outside of games.\u201d<\/span><\/p><\/blockquote>\n With a 10-year horizon for his VC investments, Englebardt is used to living in the future in his mind, and he sees the metaverse fast approaching. Popularized by Neal Stephenson\u2019s 1992 novel <\/span>Snow Crash<\/span><\/i>, the concept refers to a virtual world that connects all the other virtual worlds and that players spend most of their time living in.\u00a0<\/span><\/p>\n Essentially, it\u2019s an immersive version of the internet, and Englebardt believes that digital ownership via NFTs will be the foundational pillar. That\u2019s because people are more likely to invest time and effort to create something if they know they\u2019ll own it forever and that it\u2019s not subject to the whims of a virtual world\u2019s owner, as is the case with something like Fortnite or World of Warcraft. <\/span> \u201cOnce you empower people to create and enable them to monetize the things that they make, it really changes everything in terms of how they talk about; how they engage with it; how they market a particular place for you.\u201d<\/span><\/p><\/blockquote>\n He cited Andreessen Horowitz general partner Chris Dixon\u2019s observation that a key reason Bitcoin and Ether have accrued so much value is that they have tens of millions of super passionate users building on or around them and spreading the word. <\/span> <\/p>\n
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\n<\/span>The original plan for Galaxy was built around more traditional ways to make money with venture capital funding, debt and late-stage private equity, but it was overtaken by events around the incredible crypto bull run across 2016\u201317.<\/span><\/p>\nInteractivity<\/h4>\n
\n<\/span><\/p>\nPhilosophical about it<\/h4>\n
The film years<\/h4>\n
Bitten by Brock\u2019s crypto bug<\/h4>\n
Snow Crash and the metaverse<\/h4>\n
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\n<\/span>\u201cWe\u2019re a species that wants to make stuff and the more incentivized we are to make things and monetize them (the better),\u201d he says. \u201c[Building the metaverse] <\/span>requires people being incentivized<\/span><\/a>. The content itself can\u2019t be created from a top-down perspective; it\u2019s gonna need to be utilizing the incentive systems and tools that are being built now to encourage people to build and contribute content.\u201d<\/span><\/p>\nUsers create more value<\/h4>\n
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\n<\/span>\u201cThere hasn\u2019t been $1 of marketing spent, and that\u2019s because you\u2019re taking users and you\u2019re turning them into creator owners. And that\u2019s what\u2019s happening in game economies and why it\u2019s so exciting.\u201d<\/span><\/p>\n