So it turns out, #10: Some VCs just got around to reading Snow Crash this year
Wherein we attempt to figure out the future of all human interaction
Hi,
So here are some things I’ve been thinking about over the past few days. And I’d in particular ask for your feedback on the main piece of this issue, directly below — did you find it useful, or just confusing as heck?
I’m trying to figure out how to boil down the complexity of the video game value chain, talk about its intellectual grounding, and explain what may or may not happen next, all in not that many words. Think of it a beta test for a key theme I want this newsletter to be about: That our collective visions of what the future should be affect what gets built, but not always in the ways we expect. So, here goes:
Apparently, some VCs got around to reading Snow Crash by Neal Stephenson
In recent weeks, people on the Internet have been talking again about the idea of the “Metaverse.” The idea originally stems from Neal Stephenson’s Snow Crash. If for some reason I haven’t forced you to read this classic 1992 cyberpunk thriller/political satire/treatise on quality management in pizza delivery, here’s how the book presents the concept of the Metaverse:
The people are pieces of software called avatars. They are the audiovisual bodies that people use to communicate with each other in the Metaverse. Hiro's avatar is now on the Street, too, and if the couples coming off the monorail look over in his direction, they can see him, just as he's seeing them. They could strike up a conversation: Hiro in the U-Stor-It in L.A. and the four teenagers probably on a couch in a suburb of Chicago, each with their own laptop. But they probably won't talk to each other, any more than they would in Reality. These are nice kids, and they don't want to talk to a solitary crossbreed with a slick custom avatar who's packing a couple of swords.
Your avatar can look any way you want it to, up to the limitations of your equipment. If you're ugly, you can make your avatar beautiful. If you've just
gotten out of bed, your avatar can still be wearing beautiful clothes and professionally applied makeup. You can look like a gorilla or a dragon or a
giant talking penis in the Metaverse. Spend five minutes walking down the Street and you will see all of these.
Hiro's avatar just looks like Hiro, with the difference that no matter what Hiro is wearing in Reality, his avatar always wears a black leather kimono. Most hacker types don't go in for garish avatars, because they know that it takes a
lot more sophistication to render a realistic human face than a talking penis. Kind of the way people who really know clothing can appreciate the fine details that separate a cheap gray wool suit from an expensive hand-tailored gray wool
suit.
You can't just materialize anywhere in the Metaverse, like Captain Kirk beaming down from on high. This would be confusing and irritating to the people around you. It would break the metaphor. Materializing out of nowhere (or vanishing back into Reality) is considered to be a private function best done in the confines of your own House. Most avatars nowadays are anatomically correct, and naked as a babe when they are first created, so in any case, you have to make yourself decent before you emerge onto the Street. Unless you're something intrinsically indecent and you don't care.”
It’s perhaps therefore unsurprising that a bunch of smart folks have recently looked at Fortnite, the base-building-and-hitting-people-with-shovels-and-bullets-while-wearing-trendy-superhero-designs-game, and said, “ah, this can be the Metaverse!”
(Or maybe they just want to hang out with Drake. Not sure.)
I’ve been thinking about this for weeks. Heck, I’ve been thinking about immersive virtual worlds on and off for years professionally, including when I worked at Activision Blizzard for a few years.
So, cards on the table, I’m still trying to figure out if I think the Metaverse thesis is wrong or not. Let me explain why.
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So what is the Metaverse, and what isn’t it, in the modern VC sense?
Three answers:
Short:
Medium:
Long, but worth it:
The longer, VC treatise version by Matthew Ball, highlights some key features:
The Metaverse, we think, will...
Be persistent – which is to say, it never “resets” or “pauses” or “ends”, it just continues indefinitely
Be synchronous and live – even though pre-scheduled and self-contained events will happen, just as they do in “real life”, the Metaverse will be a living experience that exists consistently for everyone and in real time
Have no real cap to concurrent participations with an individual sense of “presence” – everyone can be a part of the Metaverse and participate in a specific event/place/activity together, at the same time and with individual agency
Be a fully functioning economy – individuals and businesses will be able to create, own, invest, sell, and be rewarded for an incredibly wide range of “work” that produces “value” that is recognized by others
Be an experience that spans both the digital and physical worlds, private and public networks/experiences, and open and closed platforms
Offer unprecedented interoperability of data, digital items/assets, content, and so on across each of these experiences – your “Counter-Strike” gun skin, for example, could also be used to decorate a gun in Fortnite, or be gifted to a friend on/through Facebook. Similarly, a car designed for Rocket League (or even for Porsche’s website) could be brought over to work in Roblox. Today, the digital world basically acts as though it were a mall where though every store used its own currency, required proprietary ID cards, had proprietary units of measurement for things like shoes or calories, and different dress codes
major ecosystem has a proprietary ID, its own currencies,
Be populated by “content” and “experiences” created and operated by an incredibly wide range of contributors, some of whom are independent individuals, while others might be informally organized groups or commercially-focused enterprises
In other words, the Metaverse is the next Amazon, Steam, Facebook, Twitch, YouTube, and more, all in one — the launch platform for everything else you do online, which is essentially everything you do as a human being. And there’s money in those hills.
********
Using the Metaverse as a metaphor for this modern internet thing is extremely, well, traditional. Snow Crash came out in 1992, and so predates almost every major technological and cultural assumption that Your Internet Experience is founded on (except for email).
Which means, in turn, that lots of folks building the modern Internet looked at it as a metaphor, product roadmap, and cocktail party conversation. Heck, one of the creators of Google Earth even claims that Snow Crash was an inspiration for the tech. The book’s even been optioned by HBO.
It’s also true that Fortnite isn’t the first game that people have claimed could be the Metaverse. Lots of games have been described as having Metaverse-like aspects.
One such contender was Second Life, a virtual world launched in 2003 where folks could build almost anything they wanted, was also a candidate at one point. (Its current Google answer box results include “Is Second Life still a thing,” which should give you some sense of its current relevance). Other games, such as Roblox, Minecraft, or even open-world games like Grand Theft Auto V, have also been described as having aspects of the Metaverse. And of course, when companies like Facebook have announced various VR plays, the comparisons to the Metaverse have flowed freely and quickly.
********
So what’s different now?
Well, Epic, who makes Fortnite, has pulled off a series of extremely impressive feats over the past few years that I would have bet cash were impossible for any game developer, including:
Creating a game engine, Unreal, that is very popular for game developers, and enables easy reuse of assets between games
Pivoting a failed game in beta, Fortnite, into a kid-friendly, optimized version of the “battle royale” genre and scaling it incredibly quickly with massive financial success and cultural impact
Scaling that game across different platforms, and for the first real time ever, getting Sony and Microsoft to let gamers have “crossplay” between Playstation and Xbox (and for that matter, mobile and PC) — reducing the power of their moats substantially
Getting significant installs on Android phones through a duct-taped, 3rd party tool to enable giving the Google Play Store a 30% cut (but see below)
Becoming arguably the default afterschool hangout for a generation of tweens and teens
Getting rival IP owners to license their IP to Fortnite for use as cosmetic “skins” in game
Turning Fortnite into a place where cultural events are launched (like a special promo for Star Wars Episode 9)
Launching a new PC gaming platform/store, the Epic Store, with better economics than reportedly any other platform, creating a real challenger to the Steam platform for the first time in years (though this newsletter still misses the analytics that you could do with SteamSpy’s API in the old days…)
Even their side investments that seem like experiments in other ways of connecting folks online, like the app Houseparty, are now scaling rapidly due to The Thing
In other words, they’re gradually building all the things you’d need to have a Metaverse-like experience, from the assets to the user base to the technology to the store.
Oh, and by the way, if you happen to have a few spare million, they’re reportedly raising at a $15B valuation (Disclosure: I am aware of at least one company I’ve worked for before that shares existing investors with Epic).
But why do they need all that investment, then?
Well, it’s possible it’s just long-tenured insiders taking money off the table; Epic has been around forever. But it’s also possible that an ambition of building the metaverse takes rather a lot of investment, especially while you’re having to keep a massive game with probably tens of millions of Monthly Active Users up and running to keep the cash spigot flowing.
The challenge of building the metaverse is that, well, no one likes the toll collector, and existing toll collectors are powerful. Even fans hate the notion of Epic launching a game store, because they’re so attached to their existing communities and use cases in other platforms. There are other competitors in other parts of the value chain, ranging from Roblox to Discord to Unity to others.
And we’re already starting to see incumbents swing back; in fact, just today, Epic released a note where they basically gave in to Google, so that they could get Fortnite officially onto the Google App Store:
(There’s at least one plausible surmise you could read between the lines about what Epic’s trying to do here. But I couldn’t possibly comment.)
So, in order to succeed, Epic has to essentially convince all the existing platforms, intermediaries, moats, etc. that they don’t want to become a true competitor, while at the same time building all the prerequisites to be a competitor. In some ways, they’re most likely to succeed if the incumbents don’t realize what’s happening and think that Epic is competing at the same game, not trying to do an end run to build the real Metaverse.
So…stay tuned, as their CEO says:
What happens when you become too well-known for reverse-engineering apps and posting their secrets on Twitter:
Whatever else you do, have the courage of the Icelandic translator of Dracula:
Invite a goat to your next Zoom:
A farm in Silicon Valley is offering remote workers around the world a way to break up the monotony of endless Zoom calls and video chats.
For less than $100, you can request a cameo appearance in your video chat from Sweet Farm's llamas, goats, and other farm animals. The project, called Goat 2 Meeting after the popular conferencing software, allows people to bring farm animals into their work happy hours and corporate conference calls, Sweet Farm cofounder Anna Sweet told Business Insider.
Bodega cats are socially distancing, too:
When in doubt, apprenticeship is a great way to learn:
And don’t forget the power of love:
Other news:
I want to be a master of Pokemon, and their wireless headphones
A FOIA request to DHS can help provide you with photos for all future “me at age 20” social media challenges
As good of a description of Bitcoin as any
“Now I understand why almost no one uses encrypted email” (This newsletter’s official position is that email, whether with encryption or not, is a protocol not designed for optimum security in transit or at rest. Wherever you have personal needs* that would suggest using encrypted email, you should use Signal or other modern tools.)
*My opinion on your needs for business is too detailed to fit into the margins of this newsletter.
Next time, on Dave Kasten:
Probably, I attempt to explain who Ninja is, and why his personal values are weirdly like a Millenial version of Mike Pence.
Disclosures:
Views are my own and do not represent those of current or former clients, employers, friends, or my cat.
I may on occasion use Amazon Affiliate or similar links when referencing things I’d tell you about anyways. As an Amazon Associate I earn from qualifying purchases; I donate the proceeds to charity. While Substack has a paid subscription option, I don’t have any plans to use it at this time and anyone who gets this newsletter now surely won’t be ever paying for their subscription.