Metaverse, metaverse, metaverse! You hear it everywhere. It’s mainstream, it’s a trendy buzzword, it’s even corporate strategy du jour.
But that wasn’t the case in early 2018. And this is when Matthew Ball, a former head of strategy at Amazon Studios, began writing a series of metaverse-themed essays – long, lucid, influential essays – that are almost uncanny in their prescience.
“Even if the metaverse falls short of the fantastical visions captured by science fiction authors, it is likely to produce trillions in value as a new computing platform or content medium,” Ball wrote in January 2020.
It’s a topic he had been chewing on for years.
“I’ve been familiar with the concept of the metaverse for decades,” Ball told me over the phone. “The literature surrounding that topic spans as far back as the 1930s.”
Ball’s metaverse education? 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, has talked about the fact that they built metaverse-style functionality in the first Unreal Tournament in the late '90s for ‘unstructured non-game socializing and world creation,’” Ball says.
So the idea of the metaverse was not new. But in 2018, Ball noticed something different. He felt a shift.
“You saw an exponential increase in the number of engaged users,” he says in his precise and crystal-clear voice, noting that whereas Second Life had a few million users in its heyday, Fortnite swelled to 100 million each month.
“This behavior of unstructured socializing and creation – rather than playing a game – had gone from fringe and incidental to central to the experiences,” Ball says.
Now the venture capitalist (he's managing partner at Epyllionco) has updated and expanded these essays into a new book, “The Metaverse: And How it Will Change Everything.”
In a wide-ranging conversation, Ball opens up about his personal research habits (“I play a lot of video games”), his metaverse investment principles (think different, not the same), what he looks for in a founder and why the metaverse might not be exactly what you think.
Interview has been condensed and lightly edited for clarity.
Let’s start with your habits. You’re known for having very “Big Picture” thoughts on tech. What types of habits, or structure, do you maintain to keep such a wide 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. What I can tell you from a pattern behavior is the following: I read a ton on Twitter and in the papers. I actually don't subscribe to any newsletters.
This is probably the most important thing: I spend a tremendous amount of my time – and I'm very privileged – participating in portfolio company Slacks or Telegrams or Signal Messengers. The wisest people in this space tend to be early-stage entrepreneurs. Reading their rants and having them explain what they think are the misunderstood narratives is really hard to replicate. There's probably two, three hours of my day that are relatively unstructured conversations with founders, entrepreneurs and business partners that develop and crystallize that understanding.
The other thing is, I play a lot of video games.
How much is a lot?
On average, probably between an hour and two every day. I really think that one of the biggest challenges for those investing in the space is that they actually don't play video games. I think that the space is so sophisticated, so nuanced and so quickly changing, that without having pretty constant exposure to it, it's hard to really have a grasp. The best part is that [playing video games] has become such a social medium that often I'm playing with founders and business partners, and so part of that rant/discussion/investigation discovery of news happens inside Fortnite or Call of Duty, rather than just during working hours.
You’ve just made thousands of gamers – maybe millions of gamers – very, very happy with this piece of advice. All of the gaming is “investment research”! What titles are you playing most these days?
I just finished Horizon Forbidden West. I'm in Fortnite, but then I'm cranking out Elden Ring.
Nice. On an adjacent question of personal habits, you mentioned that your life is very unstructured. But is there anything you do to put yourself in a space to think clearly? Such as meditation or naps or whatever?
Yeah. Not actively, but I think it's an inevitable byproduct. I run five to 10 kilometers a day. I'm usually watching or catching up on television during that time, but sometimes doing work or thinking. And then I'll usually hike for 60 to 90 minutes a day with my dog. And that's just fully off in the woods. So that's usually where I'm having a conversation, passively writing in my head, sometimes jotting things down, but often reflecting on work.
I’m glad you mentioned writing. You’ve spent so much energy writing long, thoughtful essays and then posting them for all to read. It almost feels like a throwback, as opposed to just sharing thoughts on Twitter. What drew you to that particular medium?
It's a good question. I've always just been drawn to it. I mean, I never wrote originally for an audience; I like to think I still don't. I wrote because I had something to say. I found the process illuminating. And I was fortunate to find an audience.
In general, and sometimes at the cost of my sanity, I feel a real compulsion to write, to get a piece out. It's actually very distracting to have it half-written, or 80% written or even 10% written. And so I'm just drawn to do that, to release it to get the feedback.
You’re known for your thoughtful essays, but also, of course, for your investments. At a high level, do you have any investment principles, or key questions you ask, when you consider an investment in the metaverse space? An investing prism or framework?
No, but I'll say the following. Generally, I like to bet that more things are going to be different than stay the same. Which is to say, we often see versions of “Uber for this” or “Airbnb for that” for the metaverse, right? It's going to be “dating, but for the metaverse.” Or “banking, but for the metaverse.”
I don't find that super-interesting. I usually look for people who say, "Actually, we're going to date entirely different. It's not Tinder in 3D, it's something altogether dissimilar." And you'll find that that's actually pretty well-established.
What’s an example?
Take a look at eHarmony or Match.com. The mobile versions of those are entirely different. Match or eHarmony said, “Spend two hours filling out 300 questions.” And Tinder says, “Spend three to seven seconds looking at a photo and swipe.” So I generally look for pitches that basically say that what we're going to do in 3D is gonna be very different than what we did in 2D.
Interesting. What do you look for in a founder?
I've personally found the most success with founders who often spend five to 10 years in today's [tech] giants being frustrated, not because the companies were wrong, but that the technology wasn't ready or the priorities were elsewhere.
And therefore, now they’re looking at the same problems a decade later, relatively unbridled with resources, and with a ton of learnings and frankly, a little bit of a chip on their shoulder, right? Because they've been trying to do this for a decade, and they really want it to come to fruition. That is by far my favorite founder.
Let’s get into the metaverse itself. How do you define the metaverse these days?
I try to describe it rather than to define it. The reason is that if you were to “define” the internet, you would basically say it's TCP/IP or the internet protocol. A very helpful definition to some, but it's not very good at describing the internet.
But more importantly, you'll find that even a description of the internet, “a network of networks that allows for the seamless, safe, secure, coherent, comprehensive transmission of data across networks, supporting images and emails,” isn't that helpful, either.
Right. So how do you describe the metaverse?
As a massively scaled and interoperable network of real-time rendered 3D virtual worlds, which can be experienced synchronously and persistently by an effectively unlimited number of users.
What you'll find is, definitions for the metaverse vary. In fact, there are disagreements as to whether or not the metaverse is here. John Carmack (chief technology officer at Oculus VR) and Mark Zuckerberg (CEO of Meta Platforms, Facebook's parent company) talk about how it's over the next five to 10 years. You'll find that Bill Gates, Satya Nadella (CEO of Microsoft) and Reid Hoffman (partner at Greylock, a venture capital firm) say that it's already here or it will be here within the next few years.
Tim Sweeney (CEO of Epic Games) and Jensen Wong (CEO of Nvidia) talk about how it's emerging over the next coming decades. They don't think it's started. I disagree with the use of the term metaverse as in singular, which is to say, “a metaverse” or “metaverses.” I think that that's akin to saying the Facebook internet, or the Google internet or the Microsoft internet.
And then lastly, I think you'll find a lot of people who conflate it with Web 3, I would say that those are related but distinct. And certainly, there are still a number of people who think that it's virtual reality.
More from 'Road to Consensus'
You mentioned 3D in your description. Does that mean that for you, 3D is almost a necessary component of the metaverse?
I would say so, yeah. I think it's essential to differentiating it from the internet we've experienced for the past 40 years. It's also critical to many of the capabilities that we need and currently lack.
Give us a metaverse prediction. How could our lives be different once the metaverse matures?
Well, I'd say a few things. Firstly, we can absolutely predict some sort of “trough-to-metaverse” pipe. I think one of the challenges with how hot the theme has become over the past year is that our lives are not remarkably different. And there's going to be a period of time in which so many 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 fit?"
And that's going to lead to the traditional trough of disillusionment. We may go through that twice before we actually find that some version of the metaverse, as we envision, is actually realized.
That’s a good reality check. What else?
We'll also potentially find an outcome where the term is different. Tencent, for example, talks about “hyper-digital reality” rather than the metaverse. It may be that the term metaverse, defined as in singular, does [end up catching on]. So maybe we will end up using the phrase “a metaverse,” so “Roblox metaverse,” “Microsoft metaverse,” the “Epic metaverse,” in which case we'll devise a new term for that wrapping experience.
How about the experience of the metaverse itself?
I think there are a few different things that we can understand. First, the metaverse does not mean that all of the devices, and all of the interfaces, and all of the behaviors and practices of today go away. Consider the mobile era. Fifty-five percent of [internet] data starts and ends on a mobile device. And yet by that same token, nearly half isn't using a mobile device. And when you use a mobile device, as I'm using right now, almost all of the data transmission is happening on fixed-line infrastructure, even though we use the term mobile.
We're still mostly using TCP/IP, largely unchanged. That's the traditional internet from the 1980s. In the future, you'll find that in many instances, we'll still use the devices we use today. We'll still even use PCs. We'll still be using 2D interfaces. I struggle to believe that we’ll always, or we'll mostly want 3D to write an email. And in many instances, all we will want for a phone call is audio, least of all an augmented reality projection.
So how should we think about the metaverse, in that context?
Complementing some use cases, such as holography for a phone call. Or substituting for other use cases. There may be instances in which training, which used to be via digital PowerPoint, is now done in 3D, and that creates a new experience altogether.
A lot of that new experience is really interesting. I tend to be intellectually curious about two categories that are unique. They're extraordinarily large. They’re extraordinarily inefficient by most measures. And they’ve largely resisted disruption for the past four years.
These would be education and health care.
Why do they have so much potential?
If you take a look at the cost of education since 1983 when the internet began, it's up 1,400%. We have long been expecting the internet to disrupt those traditional services categories. You can go back any number of years and find futurists or media strategists talking about, "College will forever change … Harvard will start issuing an online-only degree … Employers will consider it as valid as the in-person experience. And all of a sudden college tuition will drop!”
None of those things have really manifested. If you take a look at anything that's happened over the pandemic, it's reiteration of how awful Zoom school is.
So I'm really interested in the question of, how does immersive VR (virtual reality) or AR (augmented reality), and how does 3D real-time rendering and event simulation actually allow us to disrupt those categories? Can you actually feel like you're in the classroom? Rather than watching the YouTube stream or clicking the multiple-choice question, can you actually be in a science experiment in 3D? Can you dissect a virtual cat? All those things are fascinating to me. And we'll see those over the coming decade.
In your mind, what’s the biggest risk, or constraint, for the metaverse achieving mainstream adoption and maturation?
That's a good question. I have absolute faith that essentially, in perpetuity, an ever-growing share of our time – labor, leisure, wealth and happiness time – will be spent inside virtual worlds. And that, over time, will see the establishment and formulation of interoperability that produces the metaverse.
What's important to recognize is how many enormous technical constraints we have in front of us. Networking infrastructure is already a challenge to the ability to watch high quality or high-definition video. More than 75% of broadband homes in the Middle East can't reliably play a high-fidelity video game. Most devices globally, still don't have the requisite computing power for rich 3D virtualization.
And to the extent in which one believes in AR and VR as important device form factors, it's really difficult to express how extraordinarily limited those devices are and likely will be. I know many people deep in the field who believe staunchly that failing the establishment of quantum computing, or unprecedented innovations in battery power, we simply cannot have the VR or AR wearables that we envision.
See also: 'Crypto-States' Will Compete With Corporates in the Metaverse | Opinion
When the metaverse dust settles, do you think that things will tilt toward centralization or decentralization?
I think one thing that's important is to recognize that centralization is, in some regard, the inevitable outcome. The question is not decentralization or centralization, but to what degree on the spectrum?
Most of us recognize that the past 15 years was excessively centralized. But let's also note that the growth in the internet came from centralized services such as AOL and Yahoo. And the growth in the mobile ecosystem was doubtlessly boosted by the iPhone and its rich vertical integration.
We see many forms of centralization. Some of that is walled gardens. But other times it's a disproportionate accumulation of data, of revenue, of R&D budgets, of talent evaluations. Another reason is that it’s purely habit and brand. Very few of us ever think to try Bing or any substitute search engine. And our habit is really powerful. Think of how much better Bing would have to be for you to choose to even try it.
I literally haven’t thought of Bing in years.
When you take a look at OpenSea, OpenSea's brand – and now some of its enforcement of fraud – makes it a more reliable marketplace, even though it's running purely on decentralized blockchain networks. This, incidentally, is one of the reasons why you'll see that these companies are still venture-backed and worth in excess of $12 billion to $15 billion.
Because even though there's no technical centralization – that is to say they're not locking in developers, users or data – some form of habits, brand, IP (intellectual property), R&D, technical, machine learning, feedback loops occur that tends to centralize. I'm hopeful that we'll see significantly less centralization and healthier competition forward in this next year.
Thanks for your time. See you in the metaverse.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
The most valuable crypto stories for Thursday, May 20, 2022.
The crypto mogul also said LUNA and UST might make good "meme coins," he said on CoinDesk TV’s “First Mover.”
Hayes pleaded guilty to one count of violating the Bank Secrecy Act (BSA) in February, and faced a sentence of up to 12 months in prison.
Aversion to risk remains as volatility returns to stocks and cryptos.