“$10 Billion In R&D, And All I Got Was This Stupid Surfing Lesson.”
When you’re learning to surf, you start small. You start with the tiny waves - learn how to get up on your knees, learn how to get up on your feet. Learn how to swim past the breaks, start over again on slightly bigger waves, rinse and repeat. Eventually you become comfortable enough with the environment, develop the muscle memory necessary to take advantage of opportunities, and soon conquer the single overhead waves.
What you don’t do is build your own beach with riptides and rocky shores, grab your board, swim out until your feet don’t touch, spend $10 billion pushing your board against the tide until you make a wave, outswim it to get in front of it, ride on it, shout about how great it is all the while wondering why no one else is at your beach.
"Eroding Cliffside Views In Abandoned Zones - Tech's Hottest Trends 2022"
You don't have to be a monolithic empire to burn mountains of cash buying land along a quickly eroding scape. Thankfully, this is Web3, which means everyone has (near) equal opportunities to throw money away. Earlier this year (2022), the newest craze was buying real estate in the Metaverse. Create finite limits (in an infinite world), drive scarcity and demand, profit. Singular plots of digital land were flying off the shelves, some going for over $100k (location, location, location). Those of us in the Web3 industry - whether we publicly admitted it or not - thought this was brilliant at the time. The tides of the future were coming, and those who purchased their plots secured their places on Boardwalk.
Only catch is - what we thought was the ocean, was really a lake. There are no tides here.
Of the multitudes of Metaverses either active or in development, many would argue Decentraland is one of the best and most utilized Metaverses - ourselves included. When in the Web3 space, we tend to focus in on the specifics of what we're building, and thats a good thing! L1 blockchain engineers don't split focus on Metaverses. NFT infrastructure teams don't try to figure out how to incorporate liquidity pools. Staying militantly focused on what we're building, I thought things were all well in the Metaverse, until I saw a tweet today illuminating just how much of a graveyard has been built.
There was a lot of back and forth in the thread about what qualifies as DAUs, what information DappRadar could and could not accurately provide, et cetera.
Since Amazon cut service to Alexa (the web traffic analyzer, not the Orwellian home assistant), I've had to use alternate resources to independently assess the veracity of such claims. That being said, I can't believe I've never bothered to take a look.
These two, low-effort Excel charts demonstrate the severity of the situation for Decentraland. Over the past 2 weeks, Decentraland has managed to attract <10K daily unique visitors, and over the past week, this number drops to <8K. Even worse are the numbers of the users that leave their spawn parcel (land). Without perfect insight into minutes active per user, total visitors, et cetera - this is the best KPI we're left with to estimate engagement rates. Unless all of the excitement of the Metaverse is limited to seeing/engaging with exactly what's at your spawn point, then something is rotten in the state of Denmark. With a total market cap of $1.2B for Decentraland's native cryptocurrency, MANA, we're looking at an applied value of $150K per unique daily visitor. Even worse, if we look at the truly active users, the ones exploring around and engaging with the wider environment, their applied value becomes $2.42M per user.
"Will This Industry Have a Second Life?"
Metaverses are hailed as new and innovative technology. The Oculus Quest, the HTC Vive, the HP Reverb - all continuing to unlock immersive experiences. As a matter of fact, several months ago I had an early morning meeting with a friend in a Metaverse I was incredibly impressed by: Proximity chat, 3D audio, smooth and seamless feel to 'mouse and keyboard' movement, clearly the developers had immense talent and had built out the right experience. But these modern Metaverse experiences aren't the only kind to have. Obviously we're ignoring Minecraft, Roblox; thinks we don't even think of as Metaverses that really are. But here's the question I kept coming back to, and where all of this gets real interesting:
"When did brands start putting money into Metaverse strategies?"
In July of this year, Coca-Cola's Head of Global Creative Strategy announced a special digital collectible drop for International Friendship Day to commemorate the 1-year anniversary of Coke launching their Metaverse journey. Congratulations, Coca-Cola! One quick amendment I would make to that statement, however, would be the anniversary they're celebrating. Not your 1st anniversary. Try... 20th.
In 2002, Coca-Cola launched Coke Studios - a 'virtual world' as it was called back then, with 8 million registered users 5 years after its launch. Sounds like a resounding success, right? I'd like to meet someone who remembers spending time in that metaverse and pick their brain, for 8 million registered users, I'm sure they're hard to come by anymore. Furthermore, you would think 8 million registered users can provide program viability, but again, wrong.
In 2007, Coca-Cola partnered with Crayon, a then-digital agency, to launch an exciting new initiative: Coke inside of Second Life - the Metaverse to end all Metaverses. In 2007.
The then-Director of Global Interactive Marketing announced this new partnership in... get this... a virtual press conference. New - And - Novel . There's a terrific writeup from 2007 covering the announcement I highly advise all people seeking Metaverse strategies to read, keeping in mind that this article is (now) 15 years old. There are three takeaways I want to highlight from this campaign, and if Coca-Cola couldn't get value from it, hopefully we all can:
First, no one remembers this. Not even Coca-Cola.
Second, at the time, Second Life had 5.6M registered users, but <1/5th of them were monthly active users.
Third - and most importantly - the person behind his campaign at Coca-Cola had the exactly correct intentions when launching this initiative. The only misfortunate parts were the over-emphasis into the potential of this technology, the 'hockey-stick growth,' and the "fulfillment of [non-existent] virtual wishes." In sage-like sapience, in regards to the launch, the Director of Global Interactive Marketing said "We did not want to create yet another branded island and assume people will come."
Prognostication at its finest.
"OK, Say This IS a Graveyard. Tell Me More of the Tombstones."
We often talk about how consumer behavior is almost impossible to change. To achieve this, there are two fundamental components:
You have to provide consumers with an experience that is far better than what they have access to today, and
You have to slowly introduce these new experiences, allowing them to gain familiarity.
To bring it back to the surfing lesson, if you want to get your company surfing, you have to start small.
Too often, we have meetings with orgs (from SMBs to Fortune 100s) who think its critical to create a Metaverse strategy. They want to let consumers buy digital assets they can bring into Metaverses and have experiences with the brands that actively compete with in-person experiences, all while wearing clunky headwear operating on clunky software as they sit in their living room. In hearing this over and over, I'm always reminded of perhaps my all time favorite scene from Silicon Valley:
Consumers aren't asking for Metaverse experiences. Those that ARE asking for Metaverse experiences aren't even enjoying using it. In all probability, if you bet the farm and spend $10B on building out that Metaverse, you'll have built the modern Mausoleum at Halicarnassus. No companies have gone down by pursuing integrating Metaverse strategies into their org - but I can assume you - none have profited. For a long, long, long time. And in an era where attention spans last for seconds, memory lasts for hours, and generational changes happen every 7-8 years, now is anything but the right time to start investing in / integrating the Metaverse into your core business.
"So You're Saying We Should Just Roll Over and Embrace the Sears Catalogue?"
Web3 tech is here to stay - there's no doubt about that. People are building in the space, creating those enhanced consumer experiences in simplified ways that will end up driving the adoption of new consumer behavior. Brands need to begin the process of learning how to surf the Web3, but don't conflate that with watching ReadyPlayerOne three times and forcing your business to adopt a robust Metaverse strategy.
I don't want to be a Metaverse Minimalist here. The industry gained widespread attention at the intersection of a global pandemic keeping everyone at home, and the boom of the NFT market. In no uncertain terms - I believe there is value in the Metaverse. What I don't believe is the rapid pursuit of the metaverse, the major incumbent investments, and the panic in Brands to urgently figure out a Metaverse strategy and go-to-market. There was an era when we were all locked down, and the idea of virtual bars and virtual offices began to sound pleasant. But just as pleasant as they sounded then, they sound miserable now. Zoom's stock averaged somewhere around $300 during the Covid-19 pandemic, because that was the world we had. Today, it sits at $80, because that world was left behind. A good friend of mine once said "VR tech has been 5 years away from being great.... for the past 20 years." I don't expect that to change any time soon.
For many businesses, the most important things they can be doing today is thinking "how do we begin to offer Web3 experiences in super-simplified ways that add to our core value proposition - not distract from it?"
At Niftmint, we stay radically focused on creating the tooling to allow Brands to offer NFTs to their customers in a way where neither the Brand nor the Consumer have to adopt any new behaviors - all engagements taking place inside of well known experiences. We think of it as a new and enhanced product line for the Consumers, not as an asset to be brought into a 'Metaverse' and to have radical functionality.
Brands need to be focused on staying on top of the innovation wave, but don't let your eyes (or worse, your dreams) get too big for your stomachs, or else you'll find yourself wondering how could so much money disappear so quickly. Start small, start looking to add Web3 components to your business without changing your business, and radically focus on upholding your brand to your customers before going out to boil the ocean. If you do, the water will be just that much hotter when you crash.