Making the most of the metaverse moment with tech futurist Cathy Hackl - video transcript

Joe Kornik: Welcome to the VISION by Protiviti interview, where we look at how big topics will impact global business over the next decade and beyond, and today we’re talking about the metaverse future. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, and I’m thrilled to welcome globally recognized metaverse expert, tech futurist, and top business executive Cathy Hackl. She’s an author, speaker, and media personality who has been featured on 60 Minutes, CNBC, and in GQ, Vogue, and The Wall Street Journal; and she is the host of Adweek’s Metaverse Marketing podcast. BigThink named Cathy one of the top 10 most influential women in tech, and she’s on Thinkers50 Radar list of management thinkers most likely to shape the future. It’s no wonder she is commonly referred to as the Godmother of the Metaverse.

Cathy, thank you so much for joining me today.

Cathy Hackl: I’m excited to be here.

Kornik: Cathy, I talk to people on both sides of the aisle and when it comes to the metaverse future, many say it will be sort of a revolutionary game changer. Others are not so sure, so we’ve been in this sort of wave of positive and negative news cycles now for the last year-and-a-half or so. Where would you say we are right now in the metaverse moment and how should we feel about this?

Hackl: Yes, I definitely agree with what you’ve seen, as well. I feel like we’re in this moment we’re coming off of a hype cycle, right, a lot of hype around the term metaverse, a lot of confusion around the term metaverse, a lot of hype, but now we’re at this moment where people are like, well, taking a step back. Yes, I think we’re coming off of a hype cycle for many different reasons or many issues right now with the market.

I feel like we’re at this moment of disillusionment. People are a little bit skeptical, thinking, “Well, what is this really?” You know, what I find funny though is whenever I read an article that says “the metaverse failed” or “the metaverse didn’t happen,” so to your question where are we, we’re still building towards that future so we’re not there yet. Something that hasn’t been created fully can’t fail, at least yet. But yes, I think we’re in a moment of confusion. We’re in a moment of skepticism and rightfully so, but also I think for the people that are in the space, that are building, it is an exciting moment, to be what I call in the trenches, right? To me, personally, these types of market downturns coming off of a hype cycle are the best moments to build and create new things, and that’s going to give us the innovation that’s, in my perspective, the tech jargonauts of the future.

Where are we in this moment? Really, despite the downturn, despite the hype cycle, the end of the hype cycle, we’re at this moment for me of creativity being unleashed with new technologies, new opportunities, and with all the layoffs and all the people leaving, being laid off from these tech giants, some of them are ready to take a chance and create something new, so I’m excited. As crazy as things are right now, it’s a really exciting moment I think for anyone in metaverse, Web 3, and emerging tech.

Kornik: Yes, that’s interesting, Cathy, and that disruption, those layoffs you talked about could create sort of a cascading effect of innovation, which I hadn’t thought of, so that’s interesting.

Cathy, I do think business leaders and executives are confused about the metaverse. I think they’re maybe a bit skeptical, maybe a little bit cautious. I think they’re being asked a lot about strategies and timelines. Are we too early? Are we too late? How should business leaders approach the metaverse? What would be your advice to them?

Hackl: My advice to them is, I feel like a lot of the marketing machine already did what it needed to do, that hype cycle where all the marketing people wanted to do something, to launch something. I always say, scratch that metaverse itch. They did something to get the PR. We’re seeing a little less than that because the more metaverse marketing activations happen, they’re getting less coverage, so their initial idea of ROI is changing. That’s actually a really exciting moment because it’s when companies can be like, “Okay, we did this. We did the marketing activation, but what does really mean for us and what is the long-term strategy?”

I think that has to do with the fact that there’s this skepticism, this lack of clarity because if you have 10 metaverse people at the table and you ask them what the metaverse is, you’re going to get 10 different definitions, in reality. But most people do agree it is the successor state in some ways of the internet. Many people have different opinions on how that happens, but I think that’s kind of the agreement. If you take that as the basis of what this is potentially, then, the marketing has been done, now, it’s time to really think about, what does this mean for us as a company, as a brand in the long term?

My advice to any company is, if you’ve already done something public, great for you. Take a step back to really reassess what your strategy is and if you still haven’t done something and you don’t feel compelled to do something public, there are ways to experiment in private as well. There’s always though room for education. I think educating everything, everyone within your org is a really important moment for people to understand metaverse, gen AI, all the different things that are happening in this space.

Kornik: Right. Let’s talk a little bit about how some businesses are using the metaverse because some are already there, right? As you mentioned, some have already had some success. Maybe you could walk us through a few of those, if you don’t mind. I know you work a lot with fashion and luxury brands, and you spend a lot of time on marketing in the metaverse. Is that where the early innovation is happening? Is that where you’re seeing the most traction?

Hackl: Yes, so there are early test cases, use cases that are successful. I’ll give you an example. I work very closely with Walmart, a pretty giant company and brand, to advise them as a metaverse advisor and then help them launch their first steps into the metaverse, which was two giant world builds inside Roblox. I’ll speak specifically about WalmartLand which is in Roblox, like I mentioned. It has got over—I think it’s over 13 million visits, that’s in September, so that’s very, very, very good numbers. It has got more than a 50% approval rating. It has got constant traffic, people coming in and out, great sentiment. That was a case where you take a brand like Walmart and you don’t necessarily want to bring the same concept of the Walmart store into the metaverse. That’s not what people want to see. The idea was, how do we create a Walmart in a totally different way? This is not your grandma’s Walmart. It is the Gen Z, Gen Alpha, future of, a new way to see Walmart. We brought it into a gaming platform like Roblox, into the metaverse, let’s say, and it has been very successful for the company to engage with Gen Z, so yes. To me, it’s a case of bring in a brand that normally wouldn’t be mentioned in the same space as Gucci or something as Nike, Vans, but now it’s being mentioned in the same sentences in a lot of these brands and causing brand awareness and affinity, so that’s a good use case.

One of the brands that I did some early work with was Nike as well, and I think Nike has really been leading the forefront of things, both from an acquisition standpoint, acquiring a company like RTFKT a while back, and recently launching their new Web 3 loyalty program called SWOOSH and the things that they plan to do with that, so keep your eyes on those sorts of things. Yes, I think there are some leaders out there that you can look at, both from tons of things in luxury but also brands like Walmart.

Kornik: As you look out a little further, maybe even to the decade’s end, what are the ways and in what other industries do you think the metaverse will have some of its bigger impacts?

Hackl: I do a lot of work in the fashion space. I’m really excited about how that vertical is leading. They’re really pushing the limits and they have the appetite for it, but where I think we’re going to see really huge change, one of those areas is education. I think education is due for some disruption and I think the metaverse and those technologies are going to be part of disrupting the current way we do education. So I’m very thrilled about potential democratization of education and learning from the best and how that might change, so very thrilled about that.

With that obviously comes the training elements in whichever company, in the L&D departments and everything that’s happening, already seeing that with Accenture, everything, so education. I’m really interested as well, and while it’s not as exciting, I think the healthcare side is what I think we’re going to see a lot of change there in not only how doctors and nurses and medical professionals are trained, which we’ve already been seeing for a couple years in medical schools, but also I think for patient education, being able to go inside your body in a virtual way and trying to understand, if you’re going to have a brain surgery, what are they really going to do and those sorts of things. I think we’re going to start to see that from the healthcare side, and mental health as well, using these technologies to help with PTSD, trauma, just very powerful ways. Education and health I think are two of the parts that I think we’re going to see transcendental change beyond the retail and fun fashion side.

Kornik: Cathy, you’re not the first metaverse expert to tell me that, actually. We’ve had quite a few who would echo those same sentiments, so I think we’re really onto something there which could be exciting, right? I know you’ve teamed up with the World Economic Forum recently. Would you mind telling us a little bit about some of the work that you’re doing with them?

Hackl: Yes, so I am part of their metaverse initiative, part of the value creation group within the World Economic Forum. There are lots of different organizations and companies that are part of the initiative. We recently launched some white papers, some studies. One was on interoperability, the other one on value creation in the metaverse. They were launched during the World Economic Forum annual meeting in Davos where I actually got to speak, but yes, I think the idea is to bring together different stakeholders to really think deeply about what this means. If this is the future state of the internet, what are the implications for society? What are the implications for a lot of different countries, for companies, for professionals? Yes, there’s definitely really interesting work being done there.

The World Economic Forum as an organization is also diving deep into the metaverse and creating their own virtual spaces. Yes, I think we’ll continue to see that but, it’s exciting. For me, coming from the tech sector and what I’ve been doing, I never thought I would get invited to Davos but this year, I did get invited. I spoke there. I had never gone because I didn’t have a reason to go but I feel like now that tech is at the forefront, we’re having these conversations, it’s important to have a seat at the table. So yes, I think it’s important for both industry but also professionals that might be in the community to have a seat at the table to discuss what does this mean for the future of society and the future of everything.

Kornik: I want to ask you about the positive and negative, and I’ll start with the negative and I’ll end with the positive. What are some of the things that potentially worry you? What could hurt adoption rates or limit some of what you think could be the most positive impacts of the metaverse?

Hackl: I think there are three things. One of them is that people tend to equate adoption with how many VR headsets there are, and that’s if you take the premise that the metaverse equals VR, which I don’t. Most people agree it’s not just virtual reality. When you read a headline like, oh, metaverse adoption is down or not enough headsets, you’re missing the mark. That kind of misconception worries me because then people think it failed, which it hasn’t, so that’s one.

I also think there is this moment of a bit of a talent war that’s slowly happening where there’s not enough people that are skilled in, let’s say, how to develop on Unity, how to develop on Unreal, how to do Solidity if you’re on the Web 3 space. There is that moment as well where companies are going to have to look and say, who internally has those skills? Yes, or who do we need to hire to come and help us lead in this space and understand these technologies? I think that’s one of the things we’re going to see, continue to see a talent war.

Then there’s something—this is a little bit more futuristic, right, but you did ask me to go a little bit into the future. Another thing that worries me is the concept of virtual air rights. Who owns the air around me? Who owns what I can see? Because eventually, if the premise is that we do move from our phones into some type of wearable, potentially glasses, then who controls what’s within eyesight and earshot of me? That is extremely valuable and I worry about that. I worry about who’s going to control that, like who’s going to control what I can see and what I can hear because those are the things I’m going to believe. I think from a societal standpoint, that worries me quite a bit as a mother of three kids. Yes, that’s what keeps me up at night, right?

Kornik: Right, who or what controls that information and how it gets in front of our eyeballs and into our brains is certainly something to think about going forward.<>All right, so I’ll end with this one. I promise to end with a positive, so what if we get this right? Take me out to, say, 2035. What is Cathy Hackl’s best-case scenario for the metaverse and what does it look like?

Hackl: I hope that my vision for then is, hopefully, we’ll have something that replaces the mobile phone, potentially glasses, so we might go back to seeing each other in the eyes. There’s going to be data overlaid over you, over your eyesight, but I think eventually going from here to here and looking back at each other as humans I think is very positive.

I think we’ll get access to information a lot faster. One of the things that, as scared as people are about generative AI and everything that’s happening in that space, to me, AI is the electricity that’s going to make the metaverse work. I give people this example, when you open your refrigerator, you’re not thinking about the electricity that’s cooling all your food. You’re not thinking about that. I feel like eventually… right now we’re at this moment where everyone’s like AI, AI, right? Eventually, AI is what’s going to run all the systems and optimize things and we’re going to have virtual assistants, all those sorts of things. They’re going to help run the back end of the metaverse. And I see this electricity. I think we’re in this moment where AI is as revolutionary as electricity was in its moment.

To that point, I’ll give you a really fun example. I learned during Davos that the first time the term CEO was used was for Chief Electricity Officer. It wasn’t for Chief Executive Officer because electricity was new. No one knew what to do. They needed people to figure it out. I think that that’s where we are right now with, I’ll say, Chief Metaverse Officer or chief whatever it is. We’re in this moment where we’re trying to figure out what all these technologies are and what they mean, what the future of the internet means, and we’re at that moment right now again, of trying to figure out what all these revolutionary technologies that are converging mean for our future.

Kornik: Cathy, thank you for the time. What a fascinating conversation.

Hackl: Thank you so much. It was a thrill to be here.

Kornik: Thank you for watching the VISION by Protiviti interview. For Cathy Hackl, I’m Joe Kornik, and we’ll see you next time.

Tech expert Wayne Sadin on how the C-suite and board can prepare for the metaverse – Audio transcript

Joe Kornik: Welcome to the VISION by Protiviti interview where we look at how big topics will impact global business over the next decade and beyond. Today, we're talking about the metaverse future. I'm Joe Kornik, Editor-in-Chief of VISION by Protiviti and I'm joined by renowned tech strategist Wayne Sadin. Who has had a 30-year IT career where he's been a CTO, CDO, CIO and advisor to CEOs and boards. Currently, he's the lead analyst covering C-suites and boards, IT governance, cyber and metaverse for Acceleration Economy. Wayne, thanks so much for joining me today on the program.

Wayne Sadin: Hey, Joe. It's a pleasure to be here. Thank you for having me.

Kornik: Wayne, you focused on board strategy at Acceleration Economy, and I think there's some skepticism actually out there. Certainly, some uncertainty about Web 3 and the metaverse among that group, right, the board and the C-suite. Maybe there's some hesitation about perhaps being one of the first in the pool, especially if the water is a little too cold. What advice would you give them as they think about their metaverse future?

Sadin: Well, I think the first thing, Joe, is the board at that level needs to understand what do we mean when we say metaverse? That definition is so hazy and so all encompassing. Let's maybe start with that. So, when people think of the metaverse what they think of is the virtual reality headset. So, here is a state-of-the-art VR headset right now. I mean, this new one just got announced. This is what I wear when I want to play. Can you imagine your board director wearing this five-pound thing on their head for a board meeting? I can't. So, first of all, it's VR, it’s AR, augmented reality or XR, extended reality. So, all of these things that involve taking visual and audio and maybe one day, touch, your tactile sensation, and making them available to people at a distance. So, that's one view of it. Another one is cryptocurrency, which is a whole another discussion. Then the third part of it is the Web 3, the underlying technology of the metaverse. Now can you do metaverse without Web3? Yes. Can you do Web 3 without metaverse? Yes. What happens when you put them together is you get something bigger than either.

So, if you're a board, you want to be educating yourself on what is your business strategy relate to in AR and VR, XR all those R things? Are you a game company? Are you a consumer products company where the gamification of your interaction really matters, or do you make industrial widgets and maybe you need something to help train your people or guide the technicians when they're doing the repair. Or maybe you're just a company that wants to get more nimble and be able to react as the economy goes ever, ever faster and faster? Acceleration Economy, where I do a lot of work, is about the rate of change of the world. If the world is speeding up and your technology isn't, you're going to be left behind. So, the first thing you got to do as a board is understand what you mean by metaverse. So, get somebody, your CIO, your CDO, Chief Digital Officer, an outside person, read and learn what it means.

Kornik: Right. They're in a tough position certainly. I know you talk to them frequently and a lot about readiness and where they are in this process. In your opinion, are they ready? If not, what steps should the board be taking to get themselves ready?

Sadin: Boards are generally not ready for the metaverse. Now there are exceptions. Again, there were these digitally enabled companies. There's a whole lot of startups. But I tend to work with what I would call flyover companies or companies making things, whether it's financial services, or shipping, or manufacturing, or healthcare. They're not in the technology business per se, they just use technology. In most cases, companies are woefully behind in technology. The quick example from a couple of weeks ago was Southwest Airlines—technical debt sunk them. They were however many releases behind on a major piece of software, and that crippled them during a time of great stress.

So, my first message to boards—and Joe, it's a message I give boards no matter what we're talking about—is technical debt is an unfunded, generally unknown, off-balance-sheet liability. In many companies, it's bigger than what sunk Enron and WorldCom 25 years ago. If you are a board member, or a CEO, CFO, and you don't know what your company's technical debt is—I'll define it in the minute—you really are in for a world of disappointment. If you've got to respond to a competitive initiative, if you've got to do something around your M&A strategy, growth strategy, whatever it may be.

So, quickly the definition is, technical debt is the sum total of all the technology changes since you put the stuff in that you didn't apply. It's the 15-year-old server, running a piece of software that's 12 releases behind. It's the old mainframe system that is at the end of its life and nobody knows how to program it anymore because they all retired or died. It's the collection of things you bought because you've done 42 M&A acquisitions, and now you have 23 data centers, and you haven't rationalized it. All of those things are millstones around your neck, preventing you from moving into the future. Metaverse is the top-level thing that needs a lot of modern components but just about everything else you want to do, IT gets to say, “Hmmm, I need a couple of years to do that,” or they rush it through and quite frankly, screw it up. So, if you're a board, you should be focused, if you're looking at the metaverse, Web3, on where are we today, versus where we need to be to compete.

Kornik: How should executives be thinking about ROI? I mean, it strikes me that investments in the metaverse may be a long way away about seeing any return on that investment. Will they need to shift their typical timetable or their traditional thinking or metric around ROI for the metaverse?

Sadin: Well, no, I don't think so. Again, if you're a company that needs to be on the cutting edge of some game technology or something like that, you have an R&D budget, and that doesn't have an ROI typically. R&D is what you invest in the hope that you'll get something back out of it, just like the venture capital investments. So, if you're making speculative investments, keep making them. For most of us, if I'm investing in technology—let's talk about a particular thing, augmented reality. So, I'm in a business where I make something and have to fix it. What can I be doing to make my techs better at fixing things? How can I give them the power of visual representation? I've got a camera pointing at something. I've got an AI system behind it, or you know what? Maybe I have a 50-year experienced tech who doesn't want to go out in the field, looking at that camera. Then I take my junior tech and I whisper in their ear with a headset. Go look here first. Go look there second. I once was involved with a system, Joe, where we were inspecting an oil rig kind of thing. Very dirty, very dangerous for people, you have to have a lot of training to go do it. Instead of having to fly senior techs in helicopters, just didn't want to get the helicopter. Have you ever taken the training where you go to an offshore platform in helicopter where they’d throw you in the water upside down? You'll know why you don't want to do that. We could take a junior tech and give them, it was an iPad with a camera, and they could point it at the oil rig pieces and it would tell them what to inspect first, because it was a digital twin although they didn't call it that in those days. It was a digital twin of the platform. So, we made the techs smarter by giving them the ability to visualize the physical environment around them. Then when they got to the component that it said inspect, you could scrape the oil off and read the barcode and it would give you a schematic, “Inspect it this way.” So, there's an investment that creates a tremendous ROI. It also builds a capability because now you can do that, what do you do in your manufacturing lines? What do you do to enable your customers maybe to do that?

So, I want to say, Joe, for a lot of these investments in metaverse—if it's augmented reality, if it's taking data, visual, and audio and superimposing them—there is a tremendous payoff if you have the right infrastructure.

The other thing I'll say is Web 3. Web 3 is about better communication. That's lower latency, higher bandwidth and better connectivity. How do I connect to my techs in the field? How do I connect to my construction sites, my factories, my ships, my trucks, my airplanes, and my drones? If I've got better connectivity, I can do all sorts of things—from telemetry, monitoring the performance, to control, to adding more data capabilities to these products. So, if I'm in making thoughtful investments, let me describe it this way. I call it a brick-in-the-wall strategy. If I want to build the Taj Mahal, I could draw the blueprint and say, 14 years from now, I’m going to have it built. I'd rather draw the blueprint, and then ask my business units to pay for the bricks. So, this brick has to be built before this brick before this brick before this brick, but I may not want to buy any bricks over there, because I don't need them yet. So, I'll say to the board, what is the architecture? What is the business architecture? What is the technical architecture that you're shooting for? And now, how do you invest brick by brick with ROI for the most part, or R&D spending on the other part, to get you where you want to be in a timely manner with manageable risk and decent-to-great ROI?

Kornik: Wayne, let's talk a little bit about those technologies that you mentioned earlier that will enable all of this, whether it's that headset that you showed us a few minutes ago or even generative AI which is getting a lot of press these days. Where do you think we are in sort of the maturity of these technologies, which ones are you most excited about, and when do you think they all come together to deliver what a lot of us think the metaverse could be?

Sadin: Well, until about two months ago, I wouldn't have told you AI was as close to being useful every day as it appears to be now. These multibillion-dollar investments made by the arms merchants, Microsoft and Google and I'm sure others are really changing the landscape on AI now. There's a lot of risk to this. We had the great excitement about generative AI and look all the things that it can do and then we discovered that ChatGPT can't do math. 200 plus 200 is 500. No, it makes mistakes on facts. It was trained weirdly. So, if you are a board or C-suite, and you're using AI, you've got to look at the risk of bias, or have you not fed it direct dataset. Have you fed it a slanted dataset? Have you not included your own information? Or maybe—here's another risk that I thought about—what if your information is leaking out inadvertently, inadvertent disclosure and winding up in some AI model that's letting other people know more about you than you want them to know? So, AI is clearly moving very, very fast. Dare I say maybe a little too fast? Because we don't want to be seduced by the hype.

Back to the solid technologies, it's communications connectivity. It’s Starlink, it’s 5G. It's building software-defined networks. Again, I hate to talk technical to boards and C-suites. Ask your IT department, “ Do we have a software-defined network?” which just means that I can pivot the network very, very quickly. In the old days we bought a thing, we put it into the forklift. When we needed a better thing, we got another forklift. With a software-defined network, if we do an acquisition in another country, we can build the rules into the network very quickly and go live very quickly, whether it's by satellite, 5G, or a hotspot in your hand. So, invest in your communications technology. Again, technical thing. Bandwidth is great, how fast I can push data down the pipe, but latency, how long it takes the message to go back and forth is even more important in the metaverse. If you and I are talking and our latency is very quick, you see my hands move, you seen my mouth move, you see the sensor reading. If latency is long, there's that lag and your drone flies into the wall. Your blade cuts the wrong angle, and your car drives into the pole. So, we got to be fixing latency. Again, a little bit geeky, but it's important to be building the right networks because everything sits on the network.

Then the other one is going to be cloud. Look, I don't want to say cloud’s the answer to all problems. The investments being made by the cloud companies, Joe, and the $50 billion a year and more range means for most of us, we can piggyback on what they're spending and buy a tiny little slice of AI or augmented reality or Internet of Things instead of having to build our own infrastructure ourselves. So, it gives you a tremendous amount of optionality and helps you remove a tremendous amount of technical debt. Because if Microsoft spends $10 billion on AI, which they just announced, guess what? We all get to use it for $1.98 a month per user or whatever the price is going to be. You can't do that if you have to build it yourself.

Then the technology, this thing I showed you here. Until we get away from this kind of stuff, and we start thinking about a projector on your desk that's holographic, or I envision something that maybe you’ll take your eyeglasses and put a thing on your chest with a battery pack that's not sitting on your head and then shine a light up into your glasses and use an interference pattern or do a face mask if you're in an industrial environment. When we can change the physical experience, I think that stuff will take off dramatically. Again, that's not where I'd be making my investment other than in the ability to use whatever technology comes out later.

Kornik: Sure. That teed me up for my last question, Wayne, which is, I'd like you as a visionary, a futurist, and a tech expert to take me out a decade or more. Take me out to 2035 or even 2040 and dream a bit and tell me what's the metaverse’s role and how will it impact our daily lives, our working lives. What do you see when you look out to 2035, 2040?

Sadin: What I see out there 10, 15 years out, is our interaction is going to be very different. Very natural. There'll be a lot of language recognition. There'll be gesture recognition. We won't be wearing these headsets because a little thing we wear stuck in our ear and the frames of our glasses will pick up sound perfectly, will do bone conduction. So, the user interface is going to become much more natural. We won't be getting carpal tunnel syndrome by typing all day. We'll be gesturing, talking, and moving, all the stuff you see in Minority Report is not that far away. The things that move when you move your hands and all that, it's there in some applications already. The communication networks. Again, I keep coming back to that, it's fundamental. If I can't connect, wherever I am, wherever I am, with low latency and high bandwidth, a lot of what I want to do doesn't work well. If I've got five million cars on the road, they have to be able to talk to each other. They have to be able to talk back to the infrastructure. So, we've got to be enabling individually, we've got to be enabling as companies, we got to be enabling quite frankly, as nation states good, effective communication, so that all this stuff can happen. I think it's going to be a life where we have intelligent agents that do a lot more, the Siris and the other products that make your life easier in many cases, and it's going to change the world. One thing we do know is we never know how it's going to change the world but it's going to make us probably faster, smarter, stronger, and more productive, even maybe at the expense of some other things.

Kornik: Thanks for your time today, Wayne. I really enjoyed this.

Sadin: It was a pleasure. Happy to have the conversation. I look forward to follow-ups. If people have questions, engage with me on LinkedIn and Twitter, please.

Kornik: Sounds great. Thank you so much. Thank you for watching the VISION by Protiviti interview for Wayne Sadin, I'm Joe Kornik. We'll see you next time.

Matthew Ball on how the metaverse will reshape the future of everything – Video transcript

Joe Kornik: Welcome to the VISION by Protiviti interview where we look at how current megatrends will impact global business over the next decade and beyond. Today, we’re talking about the metaverse future.

I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, and I’m joined by Matthew Ball, managing partner of Epyllion which operates an early-stage venture fund as well as an advisory arm. He is a leading global authority on the metaverse and you may have seen him interviewed on CNN, CNBC, VICE, the BBC, or in the New York Times, Washington Post, Wall Street Journal, The Economist, and many more. He’s the author of the important and very influential book, The Metaverse And How It Will Revolutionize Everything.

Matthew, thank you so much for joining me today.

Matthew Ball: I’m excited to chat.

Kornik: Matthew, let’s start with the title of your book, The Metaverse And How It Will Revolutionize Everything. You don’t see this as just a Web 3 but rather sort of a watershed moment with almost immeasurable impact.

Ball: That’s quite right. I understand the degree to which the title can seem bombastic. Certainly, it is backed by a number of different third-party perspectives. Jensen Huang, the founder and CEO of Nvidia, estimates that roughly 50% of world GDP will eventually sit within the metaverse. Various estimates from Citi bank, Morgan Stanley, KPMG run from between $2.5 trillion to $16-trillion-plus dollars by the end of this decade as it relates to the world economy, in contrast to about $102 trillion as of 2022-2023.

Behind this is a fundamental distinction between how we often envision the metaverse—a giant video game, a virtual reality headset—and how the technologists who were pioneering it understand it. That is to understand it as a successor state to today’s internet, not fully replacing the internet as we know it today but much like the cloud and mobile computing era, it builds upon that foundation, TCP/IP forged in the late 70s-early 80s to produce new experiences, that leads to new devices, that leads to new software, that leads to new applications.

When we’re talking about the metaverse, to build it, we are therefore talking about fundamentally overhauling, re-architecting, transforming one of the world’s most important consequential technologies, one that itself has transformed almost every individual market, country, political culture, climate, and the individual—and that’s the internet.

Kornik: Right. For those trying to wrap our heads around its impact, you mentioned some of those forecasts and some of those various estimates. Some of them value the global metaverse economy could be as much as $15 trillion by the end of the decade, by 2030. Is that realistic?

Ball: The fun thing about these forecasts is that they’re really a question of allocation. You realize that we often talk about the digital economy, digital businesses, the internet economy, but no one really says this is the precise value. Why? Because it’s a question of allocation. The UN generally embraces an estimate and says 20% of world GDP is digital but, of course, allocation is the name of the game there. How much of AT&T’s revenues are digital? We know what percentage comes from mobile smartphone subscriptions but, of course, part of that is for voice communications.

When you purchase something from Amazon.com, is that a digital purchase? Is that an internet purchase? The internet is certainly the channel for the purchase but if you purchased my book, it’s a physical book that was manufactured physically. It’s distributed and fulfilled physically. It’s consumed physically. You might say, well, 90% of that is physical revenue, but what happens when it’s an e-book? Certainly, the allocation should change but what is it? What happens when you discover it through social media as opposed to an outdoor billboard?

What really matters about this is not whether or not the metaverse is $2.5 trillion or $10 trillion. It’s recognizing that almost all of the world economy runs on the internet. We may say 20% is digital but the remaining 80%—agriculture, energy, transportation—that certainly runs on the internet. That is certainly digitally powered and to the extent you’re an investor, digital is the growth engine, the opportunity for displacement-replacement. We’re looking at the metaverse as a game of allocation but more important is the transformation of value, both on the increase and the substitution replacement side.

Kornik: Interesting. How far away are we right now from the metaverse being mainstream?

Ball: I want to start by disabusing one of the challenges with the metaverse narrative today. This is an idea that has had a name for about 30 years. It has been varyingly described for close to a century. What’s new, of course, is that we’re talking about it all the time, most obviously because Meta changed its name from Facebook. When most people were building the metaverse a few years ago, they talked about it as a multi-decade transformation. That is my frame of reference. There’s a second cohort that talked about five to 10 years. In fact, Mark Zuckerberg and John Carmack, the CTO of Oculus, talked about it as a five-to-10-year transformation.

But there was another cohort, including Sachi and Adello or Bill Gates, many in the Web 3 community who talked about it as imminent, if not here now. The challenge of that last perspective is, it raised expectations, even though such as Mark Zuckerberg started to lose that battle where people started to say, “If the metaverse is here, why isn’t my life more different? Where are the revenues? What’s the product I can buy and how is it different?” I think of this as a transformation, but what’s most important here, and certainly relates to investors and entrepreneurs, is to recognize that the question of “when is a technology mainstream?” is a bit elusive. It’s actually not that practical a question. Certainly, the timeline matters, but all technologies about when is what available for whom, when, how, and why.

The mobile era began in some regard in 1973 with the first cellular call. In 1991, we had the first 2G network. That was the first digital wireless network. The first smartphone came in 1992. That was IBM, by the way. We had the Apple Newton in ’94, BlackBerrys in the late 90s, the first direct-to-consumer media services in the early 2000s in Japan, but we would really say that for the average person the smartphone and mobile cloud era felt present until 2007, 2008. We have the coincident launches of the iPhone, then Android, then the iPhone App Store.

But even if you say it began in 2007, 2008, the average American did not have a smartphone until 2014. The average human didn’t have a smartphone until 2020, and so for them, it would be wrong to say that the mobile era had arrived prior to, truthfully, 36 months ago. For you and I, Joe, I imagine the answer to the question when was mobile here was probably 1998, 1999, and so that’s how we think about it. There’s a technology question. There’s a demographic question. There’s an application question, and there’s a sector question.

Kornik: Right, and I think some of those, maybe those early predictions around timing and how long before the metaverse became mainstream, might have led to some of the skepticism right now that we’re seeing around the metaverse, some of the stops and starts, particularly among business leaders, I think, you have a challenge. They’re probably not engaged with the metaverse very much at all. How would you suggest they started to begin to map out a strategy around the metaverse?

Ball: I think that’s quite right. The immediacy to which the metaverse emerged as a buzzword, plus the learnings of internet and mobile disruption, led many to start asking themselves the question, “What is our metaverse strategy?”—if not demand outright that they establish one, that they start testing one. The challenges here are the intent is right, but often I found the business leaders didn’t have a good sense of what it was they were trying to establish. What were they trying to solve? What were they trying to answer? What was the problem that, what I would define as real-time 3D simulation technology, could answer? If the question is you want to start a think-tank, that’s a legitimate objective. If you wanted to make a signal to the market, to your peers, to shareholders, to perspective employees about the seriousness through which you are taking this transformation, about your willingness to experiment, that’s all valid. But the broader question is, if you go back to the question, the metaverse is not a when, it’s a when is what here, why, how, and to what end? Business leaders need to start from, what’s the problem we’re trying to solve for?

Often, it’s as simple as establishing a digital twin that aids industrial design and then potentially supplements live operation. That doesn’t require you to imagine a future state that’s that different. It doesn’t imagine or require you to deploy VR headsets. It just requires a focused exemplar and business case.

Kornik: You talked about Web 2.0 and mobile earlier. We saw some legacy companies, well-established brands disrupted to the point of extinction because of it, and we say we saw new companies emerge in that space. Do you expect a similar sort of fate for companies in Web 3 in the metaverse? Do you expect new players to emerge and old, more established brands to maybe go by the wayside?

Ball: Certainly. If you imagine that the metaverse is as transformative as I imagine it to be and the forecasts of third-party agencies are to be realized, then you almost have to imagine that there’s going to be widespread disruption in displacement because the technological platforms and software and services that we use today will change. I imagine this change in five buckets that we’ve seen throughout history. The first of those companies which will perish, they’ll be so significantly disrupted that their business model and going concern evaporate. Blockbuster is a famous example of that. You can think of web crawler as another, and the search engine space replaced by PageRank and Google.

The second or companies which actually do endure but they languish because they’re so far surpassed by another company in that space. Skype and ICQ exist but, of course, the leading instant messaging services of this era are tens if not hundreds of times larger than those services were even at their peak, and that’s partly because they reimagined fundamental premises. Skype was designed to speak to traditional telephony systems. WhatsApp does that, but Snapchat does not. Slack has no interest. In fact, it’s organized around enterprise APIs. Of course, Instagram reimagines it as a picture-centric medium.

The third category or companies which do port over and indeed grow because the TAM (technology acceptance model) in the digital economy has grown, Disney is not of the digital era but it’s larger and reaches more customers because of it. Apple was reinvented in mobile and is larger because of it. Facebook was threatened by mobile and, of course, predated it, but it reached 2 billion daily active users last quarter because of the lack of constraints that mobile offers in contrast to PC.

The last two categories, however, are my favorite. The first are those companies which are displaced in their core business but grow because of growth in what used to be their side arms. Microsoft is the classic example. Microsoft has never had a smaller share of computing operating systems than it does in 2023. At one point, market share was as high as 96%, including mobile. Today, it’s less than 10% in the Western world and 5% global. Yet Microsoft reached new highs because of its horizontal services which no longer reached just 100 million Windows users, but potentially billions of mobile users across multiple different operating systems. IBM is more valuable than ever, even though it has been decades since it held the dominant position in computing devices for the average person.

The last category are the new entrants who take advantage of this new platform and the new generational shift to displace some of the aforementioned companies. Right now, we see that most classically is Google in the PC era, Facebook, and, to a lesser extent, TikTok in the social and mobile and cloud era. Right now, we’re making hypotheses as to what the new metaverse services and platforms will be.

Kornik: Matthew, if I could ask you a best-case scenario and a worst-case scenario for the metaverse future, I guess what I’m asking is what could go right and what could go wrong?

Ball: When we talk about what could go wrong, there are really two different questions. One is to talk about the impediments to actually constructing the metaverse. The internet was commercialized after it was established and indeed, it was established around the premise of exchange. That is what the internet is. The term comes from internetworking. Really, we had a fleet of standards and protocols which supported myriad different use cases. The idea that AT&T, Telefonica, IBM, Verizon, Comcast, China Mobile can all exchange an email with the same structure, none of them actually managing the global system for email, is remarkable. Of course, many of these companies try to have their own de facto networking standard.

One of the things that can go wrong is not that the metaverse doesn’t happen, but the various for-profit initiatives and endeavors mean that where it is established, it’s limited and therefore, while we talk about the internet and the software layer on top of it, it’s perhaps possible that there’s very little commonality for the metaverse. This pollyannish ideal of an interconnected 3D simulation is not possible, just the limited exchange of information with highly siloed and comprehensive but for-profit kind of islands within it. You’ll see that from the 70s through the 90s, there was an expectation that’s what the internet would be, we’re very fortunate the internet was not, but that doesn’t mean that history will repeat.

The second thing that could go wrong is to understand that there are many downsides with the internet as it exists today and the metaverse will challenge many of them. Most of us are dissatisfied with the role of algorithms, the contribution of the larger social platforms to our state of mind or well-being or happiness. I would certainly say that data rights and data security aren’t what they need to be. More broadly, we still contend with harassment toxicity, mis- and disinformation, and radicalization on the internet. Going to a live shared, more global, 3D-immersive experience will not make those problems easier. It will make them harder, and it will also deprecate some of the best practices that we’ve established over the last decade.

In addition, some of the virtual reality and extended reality devices and technologies that we envision will produce very severe challenges. Right now, many of us contend with the fact that Siri listens to everything that we say, but Siri doesn’t see inside your home. It doesn’t see your tax returns. It doesn’t see your children running through the home. Trying to figure out how we progress, how we regulate, how we figure out what the requirements should and shouldn’t be, that’s going to be a real challenge, and I do think that there’s a way in which we can fear that outcome.

But if you ask me what can go right, look, the internet has been not perfect—far from it—but I would certainly argue it has done far more good than ill. It has certainly given voice to billions who lacked one before. It has made the global economy more competitive and fostered greater openness. But we discussed earlier that many companies may be displaced by the metaverse. That means their business models, their philosophies, and their leaders will as well. It’s very hard to affect change midcycle because of the entrenched leadership, but to the extent in which we’re dissatisfied with the metaverse as it exists today, I actually think that the swap to a next platform, plus the learnings we have as consumers, developers, users, governments, affords us a rare opportunity to reset the internet as we know it today to be a better one in the future.

Kornik: So interesting. Matthew, last one for me. Envision, if you could, 2035. Let’s go out more than a decade. Can you give me an example of something that perhaps I haven’t thought of that will just blow my mind?

Ball: Well, I can’t speak to what you haven’t thought of, but I can tell you that the category that I am most hopeful about is education. Education is a really important category for a few different reasons. Firstly, its value is self-evident but it’s worth highlighting that not only is it a substantial portion of the U.S. economy. You’ll note that it is actually the single sector of the U.S. economy which has seen the greatest cost increase since the internet was formalized in the early 1980s. Costs are up about 1,400% to 1,500%. In contrast, healthcare, which many consider to be an albatross on the economies, up half as much. It’s still crippling 600% or 700%, but education is twice as bad. That’s because, for all of the benefits of the internet, it hasn’t meant that we can actually teach cheaper than ever before. We don’t teach faster than ever before, and we don’t teach more effectively a larger number of students than ever before. If we want to solve for cost creep, we also need to find a way to change that dynamic. I’m further hopeful that we can finally start to address some of the longstanding hopes for what the internet might bring, which is not just better cost. It’s greater quality and broader reach.

Today, your access to education is primarily limited to the wealth of the school board, the geographic availability of that school board, and the teachers which happen to live there, and that we’re talking about a primarily American concern. Certainly, if you will live abroad in developing markets, really none of those three things are even questions, and we know that just on-demand video on YouTube or digital multiple choice does not really close that gap.

When I think about the metaverse, the idea of virtual classrooms with nearly infinite zero-to-no-cost marginal goods and experiences that have a sense of presence—you can see your teachers’ eyes; you can look to your right and see your peer; you can dissect a feral cat or a dog or an elephant while also going Magic School Bus and traveling in circulatory system. Test physics on the moon and Mars. Go into a volcano as it erupts into the atmosphere, and then be dispersed as particles to understand its impact on the climate. We’re talking about some things that we don’t want to do. Dissections, certainly of some animals we don’t want to dissect, ethics around that, but more importantly, just the availability of these resources. I think idea of making more personal, lower cost, immersive experiences that untether us to resources and geography, that’s what matters to me the most, certainly.

Kornik: Yes, fascinating. Matthew, you’ve given us a lot of think about here today. Thank you so much for the conversation. I really appreciate the time.

Ball: My pleasure. This is a lot of fun.

Kornik: Thank you for watching the VISION by Protiviti interview. For Matthew Ball, I’m Joe Kornik. We’ll see you next time.

It's a brave, new, immersive world, with media and metaverse expert, Luke Franks – audio transcript

Joe Kornik: Welcome to the VISION by Protiviti podcast. I'm Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource looking to the future to examine big themes that will impact the C-suite and executive boardrooms worldwide. Today we're exploring the metaverse and its impact, and I'm excited to be joined by Luke Franks. Luke is an advisor, speaker and presenter who has fronted shows for ITV, BBC Radio One and Sky, as well as branded content for the likes of Netflix, Amazon and Spotify. He hosts the hugely successful and I might add outstanding “Welcome to the Metaverse” podcast where he interviews some of the brightest metaverse minds each week. Recently named one of the top metaverse thought leaders and content creators worth following, Luke's insights have been featured on Vice, the BBC, Talk Radio, and in The Athletic. I'm so happy to have him here with us today. Luke, thanks so much for joining the VISION by Protiviti podcast.

Luke Franks: Thank you, Joe. Thanks for having me. Good to be here.

Joe Kornik: Luke, I’m turning the tables a bit on you here as I know you're usually the one asking the questions. Let me just start by saying I absolutely love your podcasts and your takes on the future of internet culture, Web 3.0, and the metaverse. I've spent a lot of time listening over the last several months to your “Welcome to the Metaverse” podcasts. I've learned a ton by listening and you're obviously a big believer in the metaverse and its almost unlimited potential it seems. It’s impacting nearly everything we do so let me ask you why. Why do you believe in the metaverse? Why do you think it's sort of a can’t miss?

Luke Franks: Yeah. Thanks for the kind words. I appreciate it. Yeah, we’re at a really interesting time I think. What's really happening here is a combination of trends that are all colliding at the same time or about to and we're also at a point where I think there's enough evidence, enough kind of network effects to sort of confirm this fundamental shift, and that's happening in a couple of ways. I think the first is a move towards a more immersive experience of the internet. So from primarily kind of a 2D experience that we're all familiar with on websites and scrolling on our phone and that kind of thing to a more 3D experience in immersive worlds, probably as avatars as we go explore these new places and spend more time there and socialize there. We'll talk about more of that in a second. So there's the experience kind of shift that's happening, and then there's also this native kind of digital ownership layer, which is really crucial to what's happening as well, and that's kind of the Web 3, the blockchain, this sort of NFT component that's in its early days really as well.

So we’re certainly not there in that full vision yet, there’s plenty of work to do and there will be still and there has been obviously lots of failures along the way, plenty of volatility, skepticism. All very normal with kind of big technology technological shift like this. I see it really is as not dissimilar to the adoption of the internet the first time around. A new kind of fundamentally game-changing technology that went through these cycles, these human cycles of fear and greed, boom and bust, but ultimately sort of completely changed all of our lives in varying degrees. So I think that's where we are now. We can kind of dive into that a bit more detail as we go.

Joe Kornik: I'm curious though when it comes to its overall sort of global economic impact, the forecasts are sort of all over the map, right? They range from somewhere around $1 trillion US all the way up to like $15 trillion by the decade’s end. Where do you see the metaverse in terms of its global economic impact by let's say 2030?

Luke Franks: These huge numbers get thrown around obviously a lot. It's kind of hard to quantify, but it's to do really with the scale of what's happening here. So if we look at some evidence, what's happening in a new sort of parallel digital economy and what the next generation is growing up with as well, they're native to it. So Roblox is a good example. Roblox, for anyone who doesn't know but I'm sure plenty of people do, is a virtual world. You go in, you choose an avatar, and you go and explore various kind of mini worlds and mini games and kids are going there to kind of socialize and hang out, all the things that—when I grew up with the internet, I would wait on MSN over an evening waiting for my friends to come online and sort of chat to me. Now kids are avatars and hanging out and socializing and playing in these virtual worlds. If you're a parent, you'll probably know because your kids will be asking you to buy Roblox vouchers so that they can go and buy digital fashion items for their avatars in these worlds. Things that they care about. They care what they wear and look like there.

But yeah, if we look at some evidence, Roblox has about 50 million users a day which is pretty wild. That's a big number. The most visited experience has been played 30 billion times now just recently, which is very well when you think that the most watched YouTube video has been watched 11 billion times, so the next generation are already in this virtual world hanging out there and going back to play with their friends there. As I said, kids massively value their digital identity there. $1 billion plus is spent per year on this for kids buying kind of fashion items and this sort of thing. Over half of all US kids play Roblox every week. So that's what one example of what's happening. Fortnite is another kind of a blend of game play and social virtual worlds. A good example there when we’re thinking about like the scale of this digital economy, is virtual events that happen there. So there was a geek, a rapper called Travis Scott did a virtual show as an avatar there. Twelve million people attended because it was rolled out across the globe at various different times and he reportedly netted about $20 million from those performances, which was the equivalent of doing about 10 back-to-back physical arena shows for him as an artist, so you can begin to understand this kind of scale of digital assets and experiences around the world in these virtual worlds.

So next generation are growing up natively to all of that. They understand that straight away. If we're thinking about the sort of transition of these stages of the internet and where we're going, people talk about Web 1 as to sort of read-only layer of the internet, the kind of you'd hit a website and get back information. People talk about Web 2 as the sort of read-and-write layer where we were able to edit and send information and have things like social media and Wikipedia. This kind of group knowledge on the internet that we could edit. Now we're going towards what people are calling Web 3, this sort of ownership layer in these digital assets at scale. So yeah, that's the key thing, it’s the scale of where these valuations are coming from because it's a pretty big shift.

Joe Kornik: Right. You talked a lot about gaming there. Clearly I think gaming has been the big winner so far on the metaverse or the big entry point for most especially from a generational standpoint, right? The metaverse has really grown. Obviously with VISION by Protiviti we're focused on how business leaders and people much older than those people essentially playing games, or at least most of them, will be using the metaverse. So I'm just curious, are there business lessons to be learned from the success that gaming’s had in the metaverse? How do you sort of see that from a business leader’s perspective? What can they glean from the success of some of those companies you just mentioned?

Luke Franks: Yeah, 100%. I think a lot of this does come from gaming roots, right? Gaming is the biggest entertainment industry on the planet. Bigger than music and film put together. Interestingly as well, the average age of gamers is around 31, so there is this younger Gen Z generation growing up native to it, but there's also a slightly older generation who spend a lot of time playing games as well. When we look at the metaverse, now your brands can fit in there. I think there's also an interesting distinction between gaming and gamification as well, right? We can take some of the things that work in gaming and kind of bring them into this new more immersive world. I'll use Roblox again because there’s a lot of evidence there, but a company brand that has done really well—Nike has built Nike Land in Roblox and it's really interesting because you can go and experience a whole world. They've brought their brand in. It's kind of a sports-themed universe, sort of Nike Disneyland, if you like, where you can go and play, socialize, you can go and collect coins, and there's little gamification mechanics inside that world that keep people coming back, that's why the stats are so big in that world. People want to come back and they want to unlock these things and kind of level up and stuff like that.

So for a brand that’s looking to sell their product, whether it's natively digital or whether it's something that starts digital that they can then also link to a physical item as well or whether it's a marketing play or whatever it is, think about these gamification kind of loops and hooks, and customers spending more time in a brand world is a really attractive thing. It’s a way to kind of really engage people in a new way. There’s lots of kind of interesting examples there. H&M have done it well recently, allowing users to go and co-create with some of their items, digital fashion items in this world. Chipotle did kind of a maze in Roblox as well, so people had to kind of unlock things. Even kind of legacy artists as well, people like Elton John are beginning to reinvent themselves in this new explorable world for a new generation and a new audience. So yeah, it's a big opportunity thinking about it in that way.

Joe Kornik: Yeah. So interesting. I think one of the most exciting aspects of the metaverse is sort of the emerging technologies that enable it and all the new things happening. You mentioned some of them there. When you look at it, what are you most excited about?

Luke Franks: At the minute, a lot of the experiences are on devices that that we know, right? So on a desktop computer or on a mobile. That's where people are. Everybody obviously has a mobile in their pocket, so being able to kind of interact with these worlds in a familiar way is where we are now. We're seeing more consumer VR headsets begin to roll out. So Meta’s Quest 2 has been the one that's been there that’s sort of triumphed where it's been actually making its way into homes. It outsold Xbox in 2021 for the first time ever, so we're beginning to see that finally VR sort of have a piece of the pie in a consumer way.

There's rumors around Apple releasing their mixed reality headset, so the kind of augmented reality layer of stuff I think will get really interesting next year where it’ll be a headset, but you'll be able to see the physical world as normal. It kind of adds layers of reality on top of that, which I think is interesting, so they're kind of happening slowly and that's growing as well. AI has really come into the public consciousness recently with things like ChatGPT because it's so tangible. You can go and use it and that’s a whole separate conversation on its own, but yeah, we're at sort of 0.001% of what AI can do and how it's revolutionizing sort of workflows. If you've not played with ChatGPT, just Google it and go on it and you can ask it anything. It's like having an assistant that has a hive mind of all the knowledge in the world and you can begin to get it to think about SEO for you or come up with a business plan and then you have the art tools where you can create these incredible art pieces and things like that.

I think that all plays into this bigger trend of more immersive worlds that we're shifting to. If we think about going into these worlds, we're going to need the content there and users will build some of that and AI tools will help build that. We're going to need a lot of content. It’s going to need to be immersive and fun and constantly kind of updated and AI has a role to play there as well. So that's all happening. I think it'll be interesting if Apple do drop their headset soon. That may be the next inflection point. If Facebook changing their name to Meta was the first one, perhaps the Apple headset is the next one.

Joe Kornik: Well Luke, you certainly spend more time in the metaverse and these virtual spaces than I do and probably more than most people I know. I know you own digital real estate and NFT horse racing stable and lots of sort of rare digital sneakers so I'm fascinated by this. So for the skeptics among us, including I think plenty of business leaders, and there's a lot of skepticism out there in the business community, help us make sense of that. Are those just sort of cool things to own? Are they investments? Are they just for show? Should businesses be buying digital assets? Should I be buying digital assets?

Luke Franks: Yeah, understandably a lot of skepticism and for good reason as well. Even when there was a big technological shift as I say, greed comes in as it always does for these kind of cycles and we get way ahead of ourselves and things need to correct and go back to a phase of building actually good things with good utility that people want to use, and that's kind of the phase we're in now after kind of the massive hype. In terms of the investment and the NFT side of stuff, where there’s understandably a lot of skepticism, I think it's like any investment really. You have to spend a lot of time doing deep research sorting out the wheat from the chaff of which there is a lot of but understandably and totally agreeable, 95% of it is probably nonsense at this point, but understanding what assets have significance and potential value, why the creator or company’s story is important and relevant and might have an asymmetric return in a digital-first economy if that's the way that we are seeing this trend go. So some of my bets. Yes. Some are for fun, like the horse racing stable thing is, I think it was run where you can own and breed your horse and go race it online. It's kind of ridiculous but kind of interesting and the DNA of each of the horses gets passed down to the child one. It’s mad, but it's fun and interesting and cool. There’s a whole art scene as well, so I have something called a Chromie Squiggle, which if you Google and you look at you'll think, “What is that?” but has a place in the history of generative art on the blockchain proving the uniqueness and using a certain technique. It was one of the earliest ones. So like lots of art, it’s disruptive and weird and people criticize it at the beginning, especially in a big art move, but if it has relevance and historical significance, well maybe that's a bet. Then we talked about the sneakers and stuff like that and that’s kind of a bet on the culture.

There’s a company called RTFKT as it’s stylized, which got acquired by Nike at the end of 2021. They are really pushing the forefront of all these trends that we talked about, this kind of gaming culture, people valuing digital assets, and sneaker culture in this kind of new breed of internet culture there, so there’s some historical releases there. Nike, we're going to move in this space. They had a plan to release something called crypto kicks sneaker. This was all part of what they wanted to do, but kind of RTFKT, this company came along, did it first, and so Nike acquired them in the end. We’re starting to see kind of digital sneakers linked to physical ones as well, so you can kind of connect them and see your physical sneakers story through the digital side of stuff as well. So it's these two things coming together, so that's kind of why where my bets are. They’re few and they're concentrated.

Yeah, that’s my view, is that there's some asymmetric returns here but as always, all the standards are things apply of not financial advice and all the rest of it, but that's kind of my approach from that.

Joe Kornik: it's so interesting. So shifting back to business leaders because I really think they are confused about where they sort of are in this point in time. They're being asked about the metaverse, they're probably making decisions about investments in the metaverse, both capital and resources, time, infrastructure. Clearly the metaverse was hot, then it was not. There were some layoffs. There's been some investment, probably not a ton of return so far. So what advice would you give an executive trying to figure this all out?

Luke Franks: I think if you really want to get ahead, spending some time if you can to understand the technology and how it works at a basic level is really important because once you understand what's happening here and—I can give the very quick example of how I explain NFTs to people—is generally, if you think about a physical item that we all agree is valuable. So if you take the Mona Lisa for example as an art piece and you ask why that is, “Why is that valuable?” It’s kind of valuable for three reasons. The first is that we know who the creator was. Leonardo da Vinci, one of the most famous creators or artists of all time. That story is important there. We also know that that piece is scarce, right? There's only one Mona Lisa that was ever created in the world. We also know who owns that now—the Louvre in Paris, right? We have kind of three criteria therefore what we agree on has physical value. Blockchain, on a technological level, is for the first time ever enabled that same criteria in the digital world so we can now prove who created something, the fact that it's unique and scarce, and track the ownership now, so that's kind of the revolution.

The reason why people got so excited about this was like, “Okay. We can prove value in the digital world.” That doesn't mean everything is going to have value because if your story is not important, then so what? But understanding a technical level is helpful I think because it kind of clicks the pieces together.

I think then go and experience the culture with an open mind if you can. Talk to your kids or young relatives about what they value and why. Why do they want Roblox vouchers for their avatar, and through different generations it might be hard to understand. It’s hard with music moving maybe from physical CDs or cassettes into digital music. Feels like you're not holding anything tangible but those shifts happened, right? It's happening again here as well. So spending a bit of time in the culture and understanding what people value in the space with an open mind I think is important.

hen think about what your product or your service might look like in a more digital and immersive setting. How can you offer that in a way that doesn't alienate your current customers but might be exciting and new and open new avenues in the digital world? Once you've done all of that, then I think you're kind of positioned to make a smart decision about where you fit. I'd say move quickly but thoughtfully and get educated first I think it is the way, especially in this phase now. The hype is kind of moved on a little bit, so it’s a good time to just get educated now and begin to research and plan.

Joe Kornik: Yeah. I think that the danger is thinking, perhaps on some level, too far ahead, right? There are things that could be happening in the short term. Are there short-term business/short-term gains that could be had in the next 18 months or so rather than thinking about the metaverse is something that's a decade or a decade before we see the full impact of 3D and all this sort of various things that come along with that?

Luke Franks: Yeah. I think we've been through some of the evidence that's there. If your product or service fits in that and you maybe don't want to go fully deep into the whole blockchain space of releasing your own NFTs and you need to understand why you would do that, you need to understand that you'd be building a community around this stuff that's tradable. If you're not ready to kind of go there, maybe you dip a toe in the centralized options that are there. These virtual worlds, maybe do an activation and experiment with it for a few weeks and see, “Do I get that engagement back? Has it been helpful? Has it sold products?”—whatever it is, and maybe try it there temporarily without going to spend millions by buying land in one of these worlds that's in a very early phase. So I think going to the place where the evidence is to experiment is probably a good thing. If it was me and I'd be hiring somebody into, or getting somebody in to go through this, and through the education, and through what's happening, and through the culture of the space just to make sure it's not running away from you, but you don't have to put all your eggs in your basket and make some outsized bet if you don't fully understand why I think is the key thing here.

Joe Kornik: Last one for me. Now I am going to ask you to sort of think a little further out if you could. Give me your vision of this space whether we call it Web 4 or Web 5, I don't know what's going to be called a decade or more from now. Let's go out 10 years. What do you see in this space or in the metaverse in 2033?

Luke Franks: Yeah. Huge question. I think anyone who says they know is lying because nobody for sure does know. I think we'll probably see the metaverse adopt, in a similar way to how we saw the internet adopt the kind of first time rounds, except much faster because when the internet was adopting, we didn't have the information rails of the internet, right? So we're moving faster and all the technological shifts are happening in a short amount of time and AI is going to supersize all of that and make everything faster than before. It doesn’t mean there won’t be volatility and we won’t get things wrong along the way, but I think it adopts this experience of a more immersive internet and digital assets and people caring about adapts more is going to adopt, first with the younger generation and the early adopters who are already here and that's already happening, and then gradually through the older generations to a lesser extent exactly like the internet did.

But I do think the dawn of AI can't be overstated really. I think my big predictions is that it's not really going to fit into the models of society that we have now. It's probably going to reorganize it in ways that we can't fully imagine yet. I think it'll be a lot of controversy, a lot of misinformation, a lot of volatility, but also loads of positive outcomes that humans are bad at predicting as well. We always jump to the kind of the fear and crave safety with any shift as well, but I think there is lot of good will come from all of this. That is happening now as well.

Those that learn about it and—adapt now have the most upside potential for sure—but in time I think the digital economy will become more valuable than the physical economy because of that scale that we talked about at the beginning. It’s just unrivalled, right? You can't possibly recreate that in a physical way, so the scale of digital assets being sent around the world with no physical product that's needed to ship them and it's tradable on an open marketplace all the time, I think that will happen in time. But ultimately yeah, I hope that our digital lives will be will be richer, more social, and immersive. There'll be better experiences. It's not about replacing physical reality, it's about replacing the hours on end of scrolling on the screen on Facebook or Instagram or LinkedIn or whatever you do, replacing that with a with a richer, more social experience, right? We’ve seen the trend towards less unnecessary work travel and less physical goods. That can be a good thing. Hopefully we’ll have richer digital lives and hopefully richer physical lives in a more sort of sustainable way as well. Or I think AI will destroy us all, so time will tell. We’ll see. [Laughter]

Joe Kornik: Well on that note, Luke, yeah, I think we'll wrap it up there. Thank you so much. This was fun. So enlightening. Thank you so much for the conversation.

Luke Franks: Thank you very much for having me. Appreciate it for having me on and it's been really fun.

Joe Kornik: Thank you for listening to the VISION by Protiviti podcast. Please rate and subscribe wherever you listen to podcasts and be sure to check out all the metaverse content we have at vision.protiviti.com. Also you should certainly look in on Luke's podcast, Welcome to the Metaverse. We have a link to it in his intro and bio and in the show notes as well. Thanks for listening. We'll see you next time.