Metaversum, metaversum, metaversum! You hear it everywhere. It's mainstream, it's a trendy buzzword, it's even the business strategy du jour.
But that wasn't the case in early 2018. That's when Matthew Ball, former head of strategy at Amazon Studios, began writing a series of essays on the metaverse - long, clear, influential essays that are almost uncanny in their prescience.
This article is part of Road to Consensus, a series that features speakers and the big ideas they'll be discussing at Consensus 2022, CoinDesk's festival of the year, June 9-12 in Austin, Texas. Learn more.
"Even if the metaverse doesn't live up to the fantastical visions of science fiction writers, it will likely create trillions in value as a new computing platform or content medium," Ball wrote in January 2020.
He had been grappling with this issue for years.
"I've been familiar with the concept of metaverse for decades," Ball said by phone. "The literature on this subject goes back to the 1930s.
Ball's metaverse formation? Video games. He's been an avid gamer for years, and he's been paying close attention.
"Tim Sweeney, the founder and CEO of Epic, talked about how they built in metaverse-like functionality for 'unstructured, non-game socialization and world creation' in the first Unreal Tournament in the late '90s," Ball says.
So the idea of the metaverse wasn't new. But in 2018, Ball noticed something different. He sensed a shift.
"There was an exponential increase in the number of engaged users," he says in his precise and crystal-clear voice, noting that Second Life had only a few million users in its heyday, while Fortnite grew to 100 million per month.
"This behavior of unstructured coming together and creating - and not just playing - has gone from a fringe to a central part of the experience," Ball says.
Now the venture capitalist (he's a managing partner at Epyllionco) has updated and expanded those essays in a new book, "The Metaverse: And How It Will Change Everything."
In a wide-ranging conversation, Ball talks about his personal research habits ("I play a lot of video games"), his investment principles for the Metaverse (think differently, not the same), what he looks for in a founder, and why the Metaverse may not be exactly what you think.
The interview has been shortened and lightly edited for clarity.
Let's start with your habits. You are known for thinking a lot about technology. What kind of habits or structures do you maintain to keep such a broad perspective and not get overwhelmed by all the constant news and noise?
Matthew Ball: I don't know the answer to that question. My days are very unstructured. But what I can tell you is this pattern of behavior: I read a lot on Twitter and in the newspaper. I don't really subscribe to newsletters.
That's probably the most important thing: I spend an enormous amount of my time - and I'm very privileged - participating in Slacks or Telegrams or Signal Messengers from portfolio companies. The smartest people in this space tend to be early-stage entrepreneurs. Reading their rants and having them explain what they think is being misunderstood is really hard to replicate. I probably spend two or three hours of my day having relatively unstructured conversations with founders, entrepreneurs and business partners where that understanding develops and crystallizes.
I also play a lot of video games.
How much is "a lot?"
On average, probably one to two hours a day. I really think that one of the biggest challenges for those who invest in this space is that they don't actually play video games. I think the industry is so sophisticated, so nuanced, and changes so quickly that it's hard to really understand it unless you're involved with it all the time. The best part is that [playing video games] has become such a social medium that I often play with founders and business partners, and part of that running/discussing/investigating news happens in Fortnite or Call of Duty, not just during work hours.
With that advice, you just made thousands of gamers - maybe even millions of gamers - very, very happy. All gaming is "investment research!" What titles are you playing the most right now?
I just finished Horizon Forbidden West. I'm playing Fortnite right now, but then I'm cranking through Elden Ring.
Very nice. On personal habits: You mentioned that your life is very unstructured. But is there anything you do to put yourself in a state where you can think clearly? For example, meditation or naps or whatever?
Yes, of course. Not actively, but I think that's an inevitable byproduct. I run five to 10 kilometers a day. I'm usually watching TV or catching up on something during that time, but sometimes I'm working or thinking. And then I usually go hiking with my dog for 60 to 90 minutes a day. And then I'm all alone in the woods. There I'm usually having a conversation, passively writing in my head, sometimes jotting things down, but often thinking about my work.
I'm glad you mentioned writing. You put so much energy into writing long, thoughtful essays and then publishing them for all to read. It almost feels like a step backwards from simply sharing your thoughts on Twitter. What drew you to this particular medium?
That's a good question. I've just always been drawn to it. I mean, I never wrote for an audience, and I don't think I still do. I wrote because I had something to say. I found the process enlightening. And I was lucky enough to find an audience.
In general, and sometimes at the expense of my sanity, I feel a real compulsion to write, to publish a piece. It's actually very disturbing when it's only half written, or 80% written, or even only 10% written. And so I just feel drawn to publish it to get feedback.
You're known for your thoughtful essays, but of course you're also known for your investments. At a high level, do you have any investing principles or key questions that you ask yourself when you're considering investing in the Metaverse space? A prism or framework for investing?
No, but I would say this. In general, my bet is that more things will change than stay the same. That is, we often see versions of "Uber for this" or "Airbnb for that" for the Metaverse, right? It will be "dating, but for the metaverse." Or "banking, but for the metaverse."
I don't find that super interesting. I'm usually looking for people who say, "Actually, we want to date very differently. It's not Tinder in 3D, it's something completely different." And you'll find that's actually pretty well established.
What's an example?
Look at eHarmony or Match.com. The mobile versions of those sites are completely different. Match or eHarmony say, "Spend two hours filling out 300 questions." And Tinder says, "Look at a photo for three to seven seconds and swipe." So I generally pay attention to pitches that basically say what we're going to do in 3D is going to be very different than what we did in 2D.
Interesting. What do you look for in a founder?
Personally, I've had the most success with founders who often spent five to 10 years in today's [tech] giants and were frustrated, not because the companies were wrong, but because the technology wasn't ready or the priorities were elsewhere.
And so now, a decade later, they're facing the same problems, relatively unbridled with resources, with a ton of insights and, frankly, with some exasperation, right? Because they've spent a decade trying to do this, and they really want it to bear fruit. That's by far my favorite founder.
Now let's move on to the Metaverse itself. How do you define the metaverse these days?
I try to describe it rather than define it. The reason is that if you wanted to "define" the Internet, you would basically say that it is TCP/IP or the Internet Protocol. For some, that's a very helpful definition, but it doesn't describe the Internet very well.
But more importantly, even describing the Internet as "a network of networks that enables the seamless, secure, coherent, and comprehensive transmission of data across networks, supporting images and email" is not very helpful.
That's right. So how does one describe the metaverse?
As a massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by a virtually unlimited number of users.
You will find that there are different definitions for the metaverse. There is even disagreement about whether or not the metaverse even exists. John Carmack (Chief Technology Officer at Oculus VR) and Mark Zuckerberg (CEO of Meta Platforms, the parent company of Facebook) talk about the Metaverse coming in the next five to ten years. Bill Gates, Satya Nadella (CEO of Microsoft) and Reid Hoffman (partner at Greylock, a venture capital firm) believe the technology is already here or will come in the next few years.
Tim Sweeney (CEO of Epic Games) and Jensen Wong (CEO of Nvidia) talk about how it will evolve over the next few decades. They don't think it has started yet. I disagree with the use of the term metaverse in the singular, meaning "a metaverse" or "metaverse." I think that's like saying the Facebook Internet or the Google Internet or the Microsoft Internet.
And finally, I think a lot of people lump it in with Web 3, but I would say they are related but different terms. And of course, there are still a number of people who think it's virtual reality.
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You mentioned 3D in your description. Does that mean that 3D is almost a necessary part of the metaverse for you?
I would say so, yes. I think it's important to differentiate it from the Internet that we've seen over the last 40 years. It's also critical to a lot of the capabilities that we need that are currently lacking.
Give us a prediction for the Metaverse. How might our lives change when the metaverse matures?
Well, I would say a couple of things. First, we can definitely predict some kind of trough-to-metaverse pipe. I think one of the challenges that the issue has brought in the last year is that our lives have not changed appreciably. And there's going to be a time when a lot of people say, "We keep hearing about the Metaverse, some people tell us it's already here, companies are investing billions. One company changed its name. Where's the connection there?"
And that will lead to the traditional low point of disillusionment. We may go through that twice before we realize that a version of the metaverse, as we imagine it, is actually being realized.
That's a good reality check. What else?
We may also find an outcome where the term is different. Tencent, for example, talks about "hyperdigital reality" rather than the metaverse. It could be that the term metaverse, defined as singular, will prevail. So maybe we'll end up using the term "a metaverse," so "Roblox metaverse," "Microsoft metaverse," the "Epic metaverse," and in that case we'll invent a new term for this enveloping experience.
What about the experience of the metaverse itself?
I think there are a couple of different things we can understand. First, the metaverse doesn't mean that all the devices, all the interfaces, and all the behaviors and practices of today are going away. Let's take the mobile age. Fifty-five percent of [Internet] data starts and ends on a mobile device. And yet, almost half don't use a mobile device. And if you're using a mobile device, as I am right now, almost all of the data transfer is over a fixed network infrastructure, even though we use the term mobile.
We still use mostly TCP/IP, largely unchanged. That's the traditional Internet from the 1980s. In the future, in many cases, we will still use the devices we use today. We'll even still be using PCs. We'll still be using 2D interfaces. I find it hard to believe that we will always or mostly need 3D to write an email. And in many cases, we will only need audio for a phone call, much less augmented reality projection.
So how should we think about the metaverse in this context?
As a complement to some use cases, such as holography for a phone call. Or as a replacement for other use cases. There may be cases where training that used to be done via digital PowerPoint presentations is now done in 3D, which is a whole new experience.
A lot of these new experiences are really interesting. I tend to be intellectually curious about two categories that are unique. They are extraordinarily large. They are extraordinarily inefficient by most standards. And they have largely resisted upheaval over the last four years.
These are education and health care.
Why do they have so much potential?
If you look at the cost of education since 1983, when the Internet was introduced, it's gone up 1,400%. We have long expected the Internet to disrupt these traditional service categories. You can go back any number of years and find futurists or media strategists talking about how college is going to change forever ... Harvard will start issuing an online-only degree ... Employers will see it as just as valid as in-person experience. And all of a sudden, tuition will go down!"
None of this has really come true. If you look at what happened during the pandemic, it's a repeat of how terrible the Zoom school is.
So I'm really interested in how immersive VR (virtual reality) or AR (augmented reality) and how 3D real-time rendering and event simulation allow us to break through those categories. Can you actually feel like you're in the classroom? Can you actually participate in a science experiment in 3D instead of watching a YouTube stream or clicking on a multiple choice question? Can you dissect a virtual cat? All of these things I find fascinating. And we'll see them in the coming decade.
What do you think is the biggest risk or obstacle to the metaverse becoming mainstream and mature?
That's a good question. I firmly believe that in the long run, we will spend an increasing amount of our time - work, leisure, wealth and happiness - in virtual worlds. And that, over time, will lead to the creation and formulation of the interoperability that the metaverse brings about.
It's important to recognize how many enormous technical constraints we face. Network infrastructure is already a challenge to the ability to view high-quality or high-definition video. More than 75% of broadband households in the Middle East cannot reliably play a video game in high definition. Most devices around the world still lack the processing power required for full 3D virtualization.
And to the extent that people believe in AR and VR as major device form factors, it's really hard to express how extraordinarily limited these devices are and are likely to be. I know many people in the field who firmly believe that without the advent of quantum computing or unprecedented innovations in battery performance, we simply can't have the VR or AR wearables we envision.
When the dust settles on the metaverse, do you think things will move toward centralization or decentralization?
I think it's important to recognize that centralization is, in some ways, the inevitable outcome. The question is not whether there will be decentralization or centralization, but to what extent on the spectrum.
Most of us are aware that the last 15 years have been overly centralized. But we should also remember that the growth of the Internet came from centralized services like AOL and Yahoo. And the growth of the mobile ecosystem was undoubtedly fueled by the iPhone and its extensive vertical integration.
We see many forms of centralization. Some of them are walled gardens. In other cases, it's a disproportionate accumulation of data, revenue, R&D budgets and talent evaluations. Another is that it is purely a habit and a brand. Very few of us ever think to try Bing or any other search engine. And our habit is really powerful. Imagine how much better Bing would have to be for you to even try it.
I literally haven't thought about Bing in years.
If you look at OpenSea, the OpenSea brand - and now some of the fraud enforcement - makes the marketplace more reliable, even though it runs purely on decentralized blockchain networks. This, by the way, is one of the reasons that these companies are still backed by venture capitalists and valued at over $12 billion to $15 billion.
Because even if there is no technical centralization - meaning they don't include developers, users, or data - there is some form of habits, brands, intellectual property, R&D, technical, machine learning, and feedback loops that tend to centralize. I am confident that we will see much less centralization and healthier competition in the next year.
Thank you very much for your time. See you in the metaverse.