What does the Metaverse hold in terms of Known Losers and Unknown Winners?

Blain’s Morning Porridge Oct 21st 2022 – What does the Metaverse hold in terms of Known Losers and Unknown Winners?

“Well, a drop of Nelson’s Blood wouldn’t do us any harm…”

This Morning:. Many firms are heavily invested into the “Metaverse” seeking to monetise it. Their expectations are based on very conventional understandings of what the Metaverse could offer as a “venue”. Yet we really have few clues about its real potential, and how it may evolve in completely different directions spawning completely new forms of m-commerce..

This morning I will be asking my bookie for a price on the Boris / Trump double.

It’s Trafalgar Day here in Blighty. I’ve already done one Yacht Club dinner – the conversation early this week was all about either the Conservative Party stabilising around Liz Truss or a General Election. This morning the front page of the Torygraph is the likelihood of Boris returning to lead the MPs who threw him out 3 months ago. If it goes to the party membership – he will win.

If it happens….

Enough is enough. It’s Friday and I really, really can’t write anything more about UK politics, or, for that matter, the upcoming US mid-terms, or what the enthronement of Emperor Xi might mean for China…. I will try again next week when I’m less frazzled by frenetic political dumbf*ckery.

Instead, this morning, I am going to distract myself with a dive into the murky waters of whatever it is the Metaverse might be…

I am variously told the Metaverse is the next gold rush, and it’s a dodgy place full of perverts and wierdos looking for prey… no matter.. so is the City!

What I can guarantee the Metaverse will not be what you expect it to be, and it will generate fortunes for companies none of us have heard of today. I am sure I will be told I know slightly less than absolutely nothing about it… And to be fair the only time I’ve enjoyed wearing VR Googles was to fly a historical bombing raid on Berlin.. (Not because it was Berlin, but because it was a Lancaster!)

Now I know what you are thinking – what do I know about the multiple gazillion dollar opportunity that is the Metaverse? If I’m so smart, why am I not as rich as Mark Zuckenberg…? (Because I’m not so lucky, and wasn’t in the right place at the right time with the right roommates? Perhaps…)

Where did the Metaverse come from?

It sprang from the fertile mind of one my favourite Sci-fi Authors, Neal Stephenson in his 1992 novel Snow Crash. (I am a Sci-fi addict. Spaceships, Aliens, New Worlds.. can’t resist them. I like everything from Hitchhikers to Foundation, but Joe Haldeman’s The Forever War is pretty much the DBs, while John Scalzi’s Redshirts was done cover-to-cover in a single sitting. The Kaiju Preservation Society is a fascinating romp. I am currently reading Stephenson’s latest novel, on Climate Change; Termination Shock.)

Stephenson is back in the Metaverse frame – proposing to create an open-source, blockchain based platform to stop the likes of Meta and Microsoft building themselves monopolies to dominate the creation of Metaverse virtual worlds. It’s an exciting idea – open-source creation of virtual worlds free of tech giants…

Personally, I’m not so worried about whatever Meta/Facebook is thinking. Meta is one step worse than a “mature company”. I’ve given up on Facebook and its stream of targeted advertising. It has become an “autocratic bureaucracy”, where meeting the whims of the boss is the prime staff concern – read Mark Zuckerberg Isn’t Saying Much About Facebook These Days.

I doubt Mark’s vision of what the Metaverse opportunity is will bear any resemblance to what it could become. The future always looks nothing like we imagine it!

My inherent scepticism of a metaverse gold rush is founded in experience. I have been repeatedly told the Metaverse is the next New, New Thing.. the next massive tech leap forward that is going to transform absolutely everything in much the same way as the internet, digitisation, smartphones and er… whatever else has so completely revolutionised the way everything works…

When someone bets me a single named card is going to jump out the deck and spit cider in my ear, I do not take that bet and become naturally suspicious. I have seen a lot of New, New Things not become Old, Old Things. Where’s my Crackberry now? What happened to my Filofax? What was Friends Re-united? What was a bus-pass…? I think I might be entitled to one?

More to the point, the guys telling me what a fantastic, transformational opportunity the Metaverse is, are exactly the same types who have been spinning me tales of fantabulous wealth and opportunities around new tech for decades. Most of them never get past monetisation – as Ark and Softbank are discovering.

Over the years I’ve been told many many disruptive pipe-dreams are the future:

• Cryptocurrencies will change everything about finance,
• Fin-tech will revolutionise finance,
• Blockchains are the critical element to global financial liberation,
• Letting office space is a disruptive tech
• Autonomous Driving is arriving tomorrow
• Star-Trek Replicators are real (now that would be good..)
• Junk Food Deliveries are transformational
• Taxis are high-tech
• Yada, yada, yada…
• Etc, etc, etc…

And the same guys investing in the Metaverse are all the ones with vested interests to do so. Microsoft wants to make sure its “Office” suite of products dominates virtual business. Meta/Facebook is trying to find new purpose as Facebook fades into irrelevancy, and a whole bunch of techtrepenuers/charlatans looking for the next get rich quick scheme..

So… what makes the Metaverse so special?

Because it’s a virtual reality space where you can do anything you want? Actually, where you can do whatever someone else has prepared to sell you. I can go to Mars? Er no. I can pay to go to a virtual Mars where my legless avatar can wander a semi-constructed landscape? I don’t need to go (literally legless) into a Metaverse Virtual Bank to do what I can do on the internet, and I bet the service will be just as crap.

What I don’t understand about the virtual metaverse is the incredible value firms, including otherwise very smart banks,  have been prepared to pay for virtual real estate, or the value of galleries sprung up to display virtual art, or Non Fungible Tokens NFTs. When one speculative nonsensical bubble – like NFTs is driving related speculative bubbles… like metaverse property markets… Well, you have to laugh!

The thing about Real Land is they ain’t making any more of it. Actually, that’s never been quite true – volcanoes in Hawaii and Iceland makes lots of land, and every year Holland gets a little bit larger. But generally, land to build offices, shops and event centres is scarce, and it’s that scarcity that drives up demand..

Therefore, the metaverse should be a brilliant and utterly free thing. Creating as much instantly-ready, planning permission free, land/venue space as will ever be needed into perpetuity has been seize upon as the ultimate perpetual sausage machine… by people who seem to have forgotten if something is in infinite supply… it tends towards being free..

Who wouldn’t want to spend their life as an avatar in the digital universe…? At least that’s what Mark Zuckerberg has pinned his hopes on – that instead of working from home, we will work in virtual offices. Even Facebook Meta employees are being urged to visit Mark’s Horizon Worlds virtual reality and do so under the MMH strategy: Make Mark Happy. (It’s an incredibly cheesey not-a-place by the way.)

The recent Businessweek article I cited earlier laid out Zuck’s vison of the future: “in the future, you will be able to watch Powerpoint Presentations from the phone in your hand, and the one strapped to your face.. Even if there were demand for a $1,500 office headset, Zuck is promoting it by taking everyone’s least favourite parts of white collar work – whiteboarding, productivity softwars, management consultants, and making them central to his sales pitch.”

So, what is the future of the Metaverse?  No idea.. except that it wont be as easy for Meta to monetise as Facebook turned FB into a cash-cow. That is not a repeating trick. Which means Meta is the hope of a future business which looks unlikely, while its flagship brand fades into irrelevancy. Sell.

I am not a paid-up member of the High Church of Disruptive Technology.

I am a believer in incremental evolutionary innovation. The most valuable real business to be innovated from the possibilities of the Internet has been global gaming franchises and commerce around them. It’s worth trillions, is expanding by the day, and frankly already does what we’re told the Metaverse will do… allowing gamers to go slaughter each other daily in virtual worlds before tea-time and doing their homework.

What I expect is the Metaverse will evolve new, surprising and unexpected ways of doing things – new Meta-commerce in ways we simply don’t yet envisage. That’s what I’m looking to invest in. 100 years ago, when the BBC was launched (Happy Birthday BEEB), nobody envisaged TV, and certainly not streaming, digital downloads, social media or You-Tube. 25 years ago no one had heard of Blogging or Podcasts.

What might evolve in the Metaverse?

Maybe the Morning Porridge will move in? I might build a virtual planet in the form of an enormous bowl of Porridge. (There might be a Meta-developer called Slartibartfast to design if for me.) We might have a daily event Planet Porridge Emporium, where AI finally gets charts and graphs in a daily presentation, and host interactive discussions/forums on markets – and trade? Or maybe it will just be a speakeasy for the great, the good, the bad and myself to shoot the breeze over virtual pan-Galactic Gargleblasters.

Who knows.. the above all feels a bit orthodox…..

Out of time, and have a great weekend..

Bill Blain

Strategist – Shard Capital