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KEY HIGHLIGHTS

🔑 The development of Highrise as a virtual world platform was driven by the desire to connect users through immersive social experiences.

📊 User-generated content (UGC) plays a central role in the growth and engagement of the Highrise community, enabling users to create and monetize their own content.

💵 Highrise Studio, a tool for creators, allows users to build games and experiences within the platform, providing monetization opportunities through creator-driven economies.

🔮 The platform’s monetization strategy primarily focuses on cosmetic items, which users purchase to express their identity and enhance their social presence.

🎁 Weekly events and mini-games are run on Highrise to offer top-tier cosmetic rewards, incentivizing user participation and driving engagement.

🧨 A key challenge for the platform has been balancing early monetization with fostering long-term social connections among users.

💈 Virtual worlds and social platforms are evolving to include more cooperative gameplay elements to facilitate social connections between users.

📍The platform is working to reduce the barriers for users to become creators by offering accessible tools and running regular game jams.

🕹 The transition from speculative NFT-driven models to a focus on creating virtual goods and communities that hold real, sustained value within the platform has been a significant learning point.

📟 The creative flywheel at Highrise revolves around attracting users, converting them into creators, and having those creators build experiences that attract more users, thereby reinforcing growth.

FULL TRANSCRIPT BELOW

Shamanth Rao: 

 I’m excited to welcome Anton Bernstein to the Mobile User Acquisition Show. Anton, I’ve followed your work and admired your work for a very long time. I’m very thrilled and excited to have you on the show. Welcome to the show.

Anton Bernstein:

Thank you, Shamanth. Excited to be here.

Shamanth Rao: 

Excellent. Let’s share a bit about your background and what inspired you to explore the concept of virtual worlds and create driven platforms.

Anton Bernstein: 

It goes back to when I moved from Russia to the United States when I was five. My family did. The Soviet Union had just collapsed, and the wall came down, so we moved as soon as possible. I grew up without much because when you move from the Soviet Union, you literally own nothing.

But my dad was really into computers, and we always had a computer at home. So, I was always on the computer, playing around, especially playing games, socializing, connecting with other people, and building games, like modding things such as StarCraft. A lot of my childhood was spent connecting with people through building and playing games.

Then, when I graduated high school, I thought I wanted to start a business, so I went to business school, which is not where you start businesses—apparently. It’s the place where you learn to do finance or consulting. So, I took a detour and went into venture capital for a while, where I still focused on gaming. I worked on the Kabam deal at Redpoint and some other gaming-related deals at Insight, both on the growth equity side.

Then, I took a further detour and started an e-commerce company in Australia and France. LuxuryEscapes.com is one of the largest e-commerce companies in Australia. We sell travel packages to people traveling from Australia to Southeast Asia. I learned a lot about consumer behavior, direct-to-consumer selling, and marketing there. But it was still detached from what I was really excited about, which was virtual worlds, game environments, and how people can connect.

When we sold that French satellite, I moved to San Francisco and got together with another friend who also loves gaming—Jimmy, who’s my co-founder and CTO. We started to explore what was at the intersection of social networking and gaming, and we had the luxury of doing this because of the prior exit.

We spent about five years bootstrapped, experimenting, and iterating, seeing what products or games make sense to connect people. This was in 2013 when we got started. You had this identity device, mobile, which was increasingly becoming a dominant gaming platform. So, what kind of products or games could connect people through this?

We built very social gameplay—what some might traditionally call MMOs, massively multiplayer online worlds. We built one called “Pockets.” We also built a farming MMO called “Harvest Crossing.” We learned a lot and failed a lot—neither of those products worked very well. But then we launched Highrise in 2016.

When we first launched Highrise, it was essentially a shell where people could express their identity, connect, and hang out in virtual spaces. We kept iterating on that shell for many years. Especially in the first two to three years, we were still a tiny team of four or five people shipping every week, testing how to connect people. What social features make sense in Highrise? What gameplay elements help people connect and are also engaging and fun?

As we continued over time, we realized that our community knows better than we do what experiences and content really resonate. So, we built more user-generated content tooling and creator tools. This year, in public beta, we launched Highrise Studio, which is our full development environment where someone can build any game or experience. They use a Unity-like shell and our APIs and plugins, and they can deploy it with one click into Highrise. They get data—retention data, engagement data—and they can monetize through our payments API as well as through subscriber engagement payouts.

So, we’ve taken this idea to the extreme: our community knows best what our community wants, and we provide feature-rich creator tools. Today, we have over 45 million registered users on the platform. It’s growing well, and people really connect with each other. I do two to three user interviews every week, and I always ask, “Why do you stay with Highrise?” Literally, every single person says it’s because of the friends or people they met on Highrise. It’s deeply social while also being interactive. That’s the long background.

Shamanth Rao:

Very cool. Very interesting. Life is long and winding, and hearing the backstory behind something that may look obvious to everybody is always interesting. Highrise takes a very unique approach to user-generated content. Can you elaborate and describe this for those who may not be familiar with it?

Anton Bernstein: 

Sure. There are two main tracks to user-generated content. One track is virtual content, like skins, clothing, and environment assets—any 2D or 3D asset you can release inside of Highrise. Then the other track is experiences and games, often built using code.

On the first track, virtual goods and content, I would say we’re probably the most unique compared to our peers like Roblox or Epic. We have two different modes. One is Highrise Concepts, a contest held frequently where people submit ideas on the back of a napkin. Our community votes, and depending on the winner, our artists produce that concept into a finished product. The creator earns a commission. Another way is Highrise Ideas, which is essentially a Kickstarter for sketches. If an idea gets enough pre-orders, our artists produce the item, and the creator earns a commission.

On the game and experiences side, we have Highrise Studio. It’s a combination of Unity UI plus Lua scripting, along with our bots API, which is similar to Discord bots. You can host your bot on your server, and it can communicate with rooms and environments inside Highrise. It’s a robust system for creating experiences.

Shamanth Rao:

Very cool. And I imagine it’s pretty satisfying for them to see what they’ve made reflected in the game experience. As you mentioned, that’s one of the draws of Highrise for many users.

Anton Bernstein: 

In terms of designers, we have north of 10,000, and in terms of experienced developers, we have over 3,000. So, it’s a growing number. For me, it’s so exciting to see people get their items realized or build games and experiences. A lot of our users, this is their first time coding, and they’re learning it while building something for themselves and their friends.

Shamanth Rao: 

I can imagine that. From my own experience as a non-coder who started coding after using GPT, I can sense what that feels like. I can imagine what that’s like for them.

Anton Bernstein: 

Yes. It’s incredible.

Shamanth Rao:

You mentioned that one of the things you’ve heard from user interviews is that users want to use Highrise for their social connections. What, if any, product decisions have helped facilitate or accelerate these social connections, making them more likely?

Anton Bernstein: 

The way I think about the evolution of virtual worlds is that first, you had Minecraft, which basically had no social layer built into the game. Increasingly, it does now that Microsoft owns it, but originally, you had to host your own private server. The social aspect of Minecraft was essentially outsourced to YouTube and Discord.

Then, Roblox came along and built a social layer, but it’s still somewhat thin, partly because it’s for very young children and also because it’s focused on physics-based gameplay. They’ve added a light social layer around it.

We always started with the social aspect first. So, that’s deeply embedded. We have a full-featured messenger, like Facebook Messenger, a full-featured news feed, like Instagram, and we offer voice calls inside the app. We also have proximity chat and broadcasting chat, allowing for different ways to socialize.

In terms of gameplay or interactivity, a lot of it is hangout spaces, which are heavily UGC. A lot of our users create hangout spaces to interact with each other.

We’re increasingly thinking about how to introduce gameplay that facilitates social connections. Think cooperative gameplay, where you must work together to accomplish something or party games like Jackbox or Werewolf. These games facilitate connection, as seen with games like Among Us, which blew up during COVID-19. This kind of gameplay helps people make connections because most friendships occur through shared context and goals. You make friends through work, college, or hobbies like sports—maybe pickleball, which everyone plays these days. It’s similar in virtual space; we’re working on that.

Shamanth Rao: 

Certainly, it can be surprising, especially for those of us who spent part of our childhood in the analog and digital worlds. It’s fascinating to see these social connections form in virtual spaces.

Can you discuss Highrise’s monetization strategy, particularly cosmetics and in-game purchases?

Anton Bernstein:
Historically, our monetization has been mostly cosmetic. You establish yourself in this world. You care about how you present yourself, and as a result, you care about your cosmetics—the way you look, the things you own. It matters, just like in real life.

In real life, you care about the clothing you wear, the brands you buy, and how you present yourself. It’s the same in Highrise. Cosmetics become important once you’re invested in the world, have friends, and care about your relationships. We sell cosmetics through a combination of UGC via Highrise Concepts and Highrise Ideas. We also create our content to sell and release.

Additionally, we run weekly events where people can play mini-games to win top-tier cosmetics. That’s where the vast majority of our revenue comes from. However, as UGC and Studio become bigger, we will see more revenue from experiences and games.

There, it’s more about consumables—power-ups, level-ups, feature unlocks. Our creators make these, not us, and they monetize them through our payments API. Roblox, for example, earns 15% of its revenue from cosmetics and 85% from in-experience purchases. While we’re still early in that split, I imagine it will change dramatically over time.

Shamanth Rao:

That’s crazy. As the community and the world mature, I can imagine there will be more of a shift. Speaking of monetization, Highrise has relied on paid acquisition, which tends to skew many games and apps towards early monetization, like D1 and D7. Have there been product decisions to balance D1/D7 monetization versus enabling social connections? Do you feel those forces are necessarily at odds with each other, or not so much?

Anton Bernstein:

Yes. To be honest, that’s always been tricky for us. We were bootstrapped for five years, so we always needed to drive return on ad spend and LTV. We couldn’t just rely on venture capital funding. We eventually raised $10 million in funding but haven’t spent any of it because we’ve been profitable. It’s the bootstrap mentality.

As a result, there’s always been a bit of tension between monetization and thinking long-term about connections. But I’d say we’re now in a place where we’re much more focused on early retention and building connections between people. At the same time, there’s a massive correlation between someone seeing enough value to spend a dollar and retaining that user. If someone doesn’t spend anything, it likely means they haven’t seen enough value.

So, while monetization and retention can be at odds if done poorly, where it feels painful or burns out the user, they can also reinforce each other. Today, we’re trying to balance the two, but historically, we leaned more heavily into monetization because we had to survive.

Shamanth Rao:

For sure. I’ve seen that with other apps—bootstrapped apps tend to monetize more aggressively because it’s an existential question. But once you establish some directions, monetization, and engagement don’t have to be in conflict. Your most engaged users are happy to pay for premium stuff. That’s very instructive.

Anton Bernstein:

Exactly. It’s a reflection of value. Are you delivering enough value if someone won’t part with a dollar?

Shamanth Rao: 

You mentioned the creative flywheel earlier. Can you explain that concept and how it influences the user experience and the metrics you look at day-to-day within Highrise?

Anton Bernstein:

The creative flywheel is a mantra inside Pocket Worlds. It’s essentially a wheel where users enter Highrise and become community members. Some users become creators who build games and experiences that engage other users, who then become creators themselves. It’s a network effect flywheel, and we’re focused on reinforcing it.

There are many points in that wheel where we can influence its speed. For example, user acquisition brings users into Highrise. Game jams, documentation, YouTube tutorials, and payments help turn users into creators. Our tooling, like Highrise Studio, helps creators build sophisticated experiences. Finally, we focus on how users discover and interact with these experiences.

The whole goal of our company is to influence that circle.

Shamanth Rao:

Reducing friction for creators coming in is key.

You also talked about cosmetics and in-game purchases. I’m reminded of what you guys did with NFTs a few years ago. Could you share any learnings from NFTs and how they’ve impacted what you’re doing with cosmetics now?

Anton Bernstein:

I still like the concept of NFTs—the idea of decentralized ownership where your stuff can’t be deleted. I think the core idea is good, but the technology is challenging from a UX and regulatory perspective. The speculative nature of NFTs took them to great heights, but it also led to darker outcomes.

We built our own subnet on Avalanche, a blockchain, and were considering launching our currency there. We worked on it for about nine months before realizing the UX just wasn’t there for the mass market. So, we decided to punt on it.

However, we still have an NFT community with collections like Highrise Creature Club and Highrise Land. Initially, we got a bunch of speculators who didn’t care about Highrise, but over time, those NFTs changed hands to actual community members. Now, our users mostly own those NFTs, and we give them perks and items in the game. That’s been strong.

The biggest learning is that virtual goods and assets can create communities and subcultures worldwide. It’s similar to what we’ve done with our off-chain items. If you have a rare pet, you’re part of a community with privileges and perks. NFTs are interesting, but the UX challenges remain. If Apple introduced a wallet built into the phone, that could be a game-changer, but I don’t know if or when that will happen.

Shamanth Rao: 

Interesting. What you described with Creature Club was the original vision for NFTs until the speculative mania took over. I was just reading a history of crypto, and NFTs were supposed to build communities like you described, but speculation caused everything to crash. It seems the original promise of NFTs remains, and it sounds like your users still see the value in community-based NFTs.

Anton Bernstein: 

Yes, but at the same time, it doesn’t matter if they’re NFTs or not. They could just as easily be items in our database. It’s more about the community-building aspect than the technology. The problem with a lot of NFT communities was that there was no universe for them to exist in. The Board Apes are trying to build their world, but starting from scratch is tough.

Shamanth Rao: 

This has been incredibly in-depth and instructive. It’s fascinating to go behind the scenes and see everything you’ve been building at Highrise. This is a good place for us to wrap up because I want to respect your time and schedule. But before we do, can you tell folks how they can learn more about you and everything you’re doing?

Anton Bernstein: 

They can find out more about our company at www.pocketworlds.com. Highrise is available at Highrise Game on desktop and mobile. Most of our users are on mobile, but desktop is becoming more important. If you want to check out Highrise Studio, go to create.highrise.game, where you can see all our tools. You can also find me on Twitter at @antonber. Feel free to reach out if you want to create anything in Highrise or if you’re curious about anything.

Shamanth Rao: 

We’ll link to all the resources you mentioned in the show notes. Thank you again, Anton. It was a pleasure and an honor to have you on the show.

Anton Bernstein:

Likewise. Thank you.