The Compound and Friends - The Metaverse w/ Matthew Ball

Episode Date: July 18, 2022

On this special episode of Live from the Compound, Matthew Ball joins Josh Brown and Ben Carlson to discuss his new book, The Metaverse: And How it Will Revolutionize Everything. Matthew Ball is the Managing Partner of EpyllionCo and a Venture Partner at Makers Fund. The Metaverse: And How it Will Revolutionize Everything: https://www.amazon.com/Metaverse-How-Will-Revolutionize-Everything/dp/1324092033/ref=sr_1_1?crid=QN58X3UF7FRH&keywords=matthew+ball&qid=1658184190&sprefix=matthew+ball%2Caps%2C60&sr=8-1 Check out The Compound shop: https://idontshop.com Follow The Compound on Instagram: https://instagram.com/thecompoundnews Follow The Compound on Twitter: https://twitter.com/thecompoundnews Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

You see what we did there guys? That was kind of cool, right? Shout out to Big John who created some graphics just for tonight. We're in the metaverse now. I don't know if you could tell. Ben is six inches shorter. I am 20 pounds lighter.

I'm taller. Taller? Well, I can shrink you too. Matthew Ball is with us tonight, and Matthew has a crazy CV, which I'm not going to read all of his many accomplishments and affiliations. Please don't. No, no, no. But let me get to a few just to set this up because you're very well known in corporate

America and amongst venture capitalists. My audience is like individual investors, professional investors, financial advisors, and I don't think that they have had as much exposure to you as maybe a lot of the groups that you've been talking to about your new book. So let me set you up nicely. Matthew Ball is the managing partner of Epillion Co., which operates an early stage venture fund as well as corporate and venture advisory arm. You're also a venture partner at Makers Fund, which is the world's largest gaming venture by AUM. You advise KKR.

I know you've done a ton of corporate consulting, and a lot of the Fortune 500 CEOs have you on speed dial. Very famously, you wrote about Disney as a service, and Bob Iger called you up and said, how could you be giving this away? We would have paid you tens of millions of dollars for this. So you've got like a really great career associated with with churning. And you've written for the New York Times, The Economist, Bloomberg, we're going to talk about your piece of Time magazine. But your new book coming out now is focused on the metaverse, which, interestingly, is on the tip of everyone's tongue. And this is from your recent piece, which I think is adapted from your book. You mentioned that the Securities and Exchange Commission reports that in the first six months of 2022, the metaverse appeared in regulatory filings more than 1100 times. The previous year saw 260 mentions,

and in the preceding two decades, fewer than a dozen in total. So every corporate executive now feels the need to mention the metaverse. And I would say the other side of that is every investor, I think, is trying to figure out whether or not they want to take this seriously. Are there opportunities here for investors or is this just really a venture capital thing or is it a fad?

And I think you are trying to really lay out the opportunity from a multitude of dimensions in the way that you've written about this. So I guess my first question would be, why now? And how challenging was it to write about the future, knowing that in six months, a lot of what you've said may turn out not to be the way things end up going, kind of the nature of the beast? Well, so first of all, thank you for the generous introduction. It's such a pleasure to be here. You talk about the average listener being an individual investor. I was doing that in B-School with barely a penny. You were in my RSS feed. So it's super fun to be here today. Awesome. Awesome. Look, when you're talking about what might deprecate within the first six months, I try to do my best to talk about what one can't predict, what one can, and what someone should be certain they

can't predict. And that is often unsatisfying on a soundbite when you're talking to a skeptic, because everyone just wants to understand in 2032, what is life in the metaverse like? What do I do when I wake up? What do I do right before I go to bed? And if you take a look at any history, 1995, when the internet tidal wave memo comes out of Microsoft, there was no coherent way to answer that exactly, right? That's why Microsoft misses. They have thousands of engineers, tens of billions in revenue. They have all the conviction and a founder deeply in control. You can see the parallel to Mark Zuckerberg as he starts to shift. But nothing about the internet protocol suite of early mobile telephony really unveiled

the answer. And so in my book, I try hard to talk about what new things, what new problems we can answer, what some of the early applications are, what we've learned from 30 years of trying to build this, and what we know won't be possible, and then try to let investors and business operators try to fill in the gaps from there. When we get to a stage like this, it seems like everyone these days wants to go to the extremes. And on the one extreme, you have people who say, this is a dumb idea. It'll never work. It's going to go away like a segue or whatever. Then the other side of it is like this innovation is going to change our lives forever. And after that, it's

going to be before this and after this. Why is it so hard to have nuance in the tech space these days? Because it seems like everyone wants to go to one of those extremes. There's not much room for middle ground. I don't have a good answer for that, but I'll tell you my personal experience with that, especially as Josh is talking about my experience writing. I started writing before Mark said in July of last year his intentions to transform the company into a metaverse company,

and then four months later he says that the company is going to be renamed Meta. What I experienced while I was writing was these three time horizons. Do you think you influenced that decision? What I would say is, and I had never spoken to Zuckerberg before October of last year, was if you take a look at the language in that original announcement, so much of it clearly adheres to the copy that I had written, which had successfully gained favor with investors and other corporate parties, that at minimum, I would say that corp comms recognized that what I was saying was resonating and that that's a good frame to relay. You had an ETF based on an index that you co-created. And we've had Will Hershey on our show.

But that ETF was the Metaverse ETF, which predated Meta name change from Facebook. So you had to have factored into the conversation somewhere. Like, I don't know specifically, but you had to have been a factor, I guess, is what I should say. Yeah, and that's my point is there was nothing direct, but I see too much commonality in the language.

Okay. But to answer your question, Ben, when you're talking about what I experience is, there's a few different parties, Jensen Huang at NVIDIA, Tim Sweeney at Epic Games. They talk about the metaverse in multi-decades, which I think is the right frame. You look at mobile, it began in 1973, the first wireless digital network, 91, first smartphone, 92, first wireless mobile protocols at the end of the 90s, BlackBerry's, iPhone, takes until the mid-2010s that you get the actual smartphone and cloud revolution. But then you have this other group, which is kind of the Mark Zuckerberg, the metaverse emerges in the next five to ten years.

And then you have this last cohort. Those are those who say the metaverse is here now. And Bill Gates did that. Satya Nadella said that. Reid Hoffman said that. So you can see a very focused opinion from Microsoft. And that compressed the narrative because there was no desire to hear 20 years out. There was no desire to hear six years out. They wanted to hear now. And then naturally, everyone starts to say, OK, it's been now for six months.

Where's the metaverse revenue? Where's the metaverse product? Right. My life is not any different. Where's the metaverse revenue? Where's the metaverse product? My life is not any different. And so I think that changed a little bit of this, because all of a sudden you could disabuse the potential of the metaverse by disabusing the narrative of it. And that was concomitant with the rise and then sudden fall of crypto, which even if you believe in it, was so clearly ahead of its evidence of product market fit that you could make the argument that the metaverse was hyped beyond practical possibility. And part of what I do in the book is try to separate all of those elements. You go to great lengths to explain that Fortnite is not the metaverse.

It's a piece of what could ultimately become the metaverse. Roblox is not the metaverse. It's a piece of what could ultimately become the metaverse. Roblox is not the metaverse. My working model for Roblox is that it's like the closest we have to being what the whole metaverse could look and feel like, obviously with better graphics and more global participation, more people, but like just kind of like an ecosystem where people are creating things for each other and interoperability and being able to move your currency from one thing to another thing to another thing. So that's my mental model for it. It's like my shortcut. But you go to great lengths to explain that the real metaverse is going to incorporate everybody and everything. It's not going to be centrally controlled by one entity. Is there a risk that it is, though? Or is that something where we really shouldn't be focused on

that particular risk or outcome? So let me walk this back a little bit. Roblox is a helpful example because it is showing you a platform with access to 80, 90 million different virtual worlds that can be accessed essentially irrespective of the country device operating system used, and which supports continuity of almost all virtual objects, identity, communications, and so forth. That's pretty close to how we think of the metaverse. The flaw of that, of course, is it's consumer, it's leisure, it doesn't have any particularly serious use cases. And that makes it a little bit like looking at the Yahoo portal in the late 90s, right? Consumer oriented, not for industry. Its job is essentially to catalog the entirety of the web, not unlike AOL. And it feels pretty

powerful. But of course, it's nowhere near the rest of the applications. When we're talking about the metaverse in its truth, let's start with the internet. The internet spans nearly 200 countries, 40,000 different autonomous networks, millions of different servers, tens of billions different devices, and billions of different users that allows us to support what the UN estimates to be 20% of the world economy much of the remaining 80% runs on it as well but that runs on a common protocol and stack the limitation is it doesn't support synchronous experiences or 3d experiences And so we're talking about what needs to be built for that. No one's going to own the internet protocol suite. But what we're

seeing is an effort to own many of the standards for 3D, own the hardware for 3D, own the platforms for experience, and then bolt on payments and identity and all other services. There's a good chance someone owns it. And Tim Sweeney said in 2016, this is years before anyone cared about the term, myself included, that if one company should gain control over the metaverse, they will be more powerful than any corporation or government. They will be like a god on earth.

And we can find that hyperbolic, but Jensen Huang says he believes that the world economy will be half metaverse in the decades to come. Citi, Morgan Stanley, Goldman Sachs, McKinsey, JP Morgan, KPMG, they put their estimates by the end of the decade at between $5 and $16 trillion. As a percentage of growth in the next eight years, that's huge. I mean, it's huge overall. You mentioned Jensen Huang, and next eight years, that's huge. I mean, it's huge overall. You mentioned Jensen Wang, and I want to just ask a quick follow-up, and we'll go back to Ben. But Jensen Wang is the CEO of NVIDIA, and arguably,

none of this stuff can be built without parallel processing, which NVIDIA is probably the exemplar of. So all of the stuff that we talk about, it's video game-like graphics. And so graphical processing units become more important than anything being churned out, for example, by Intel or Qualcomm. This is really NVIDIA's business. Could they become the most powerful player just on a picks and shovels basis? Like, is NVIDIA, like one of the names that you would say is going to be one of the building blocks of the metaverse as it develops? Certainly. I mean, they are, I think, the third or fourth largest holding in the ETF right now, which is a passive rules-based and thematic index. But look, the company was founded a year after Snow Crash, which is where

Metaverse comes from. No correlation, but Jensen has been clear that the company was not built to be a video game company. It was built for the era of graphics-based computing to solve problems that general-purpose computing could not. They are the world leader because they were 30 years heads down on that. They're now at prime time. And to your question, look, picks and shovels, a good business and enterprise, obviously, not as much of a good business in gaming. We see this with Unity. Unreal is an unprofitable business. All of the money comes from Fortnite and its distribution platform. But they are pretty aggressive shifting into more value-add services in AI and ML. They have the Omniverse platform for real-time collaboration. They have the world's

second largest game streaming service. And so Jensen's ambitions aren't picks and shovels. He said the metaverse could have a higher GDP than the real world. Should we take comments like that seriously? Or is that just like designed to get attention and get people excited, but like not a serious analysis? So I read a little bit in my book because everyone asks, you know, one of those questions is what's life in 2032? And then the other question is what's the dollar value? And the problem here is we don't talk about what is the dollar value of the digital economy because it's an allocation game. If one of your readers or listeners buys my book on Amazon,

what's the internet allocation to that? Does it vary if it's an e-book versus a physical book? Of course, but how? Does it matter if they saw it in a Barnes & Noble and then bought it off Amazon versus if they saw it in a social ad Noble and then bought it off Amazon versus if they saw it in a social ad? We have no definitive methodologies for this. It's allocation.

When a farmer, you know, sows a field using an IoT device, what's the internet allocation? What Jensen is really talking about in, I think, vague terms is really the idea that almost everything that we do, much like it runs on the internet today, will run on the metaverse in 3D real time. Okay. You mentioned the crypto parallels. Do you think, if we're trying to figure out what the better option is, does crypto need the metaverse more or does the metaverse need crypto more? Which one is going to be more reliant on the other?

Oh, you're trying to get me shot with this one. Well, yeah. Yeah, the crypto people, they aren't sensitive, are they? Good luck. Good luck answering this in a satisfactory way. You're either going to piss off the maxis, the no coiners, you name it. It's going to be tough. Let's hear it. But it seems to me that crypto would probably be more reliant on a healthy metaverse to make sense as a digital payment system, right? So let me give you the three dominant perspectives here. Number one is the belief that to technically pull off the metaverse, we need distributed computing and architectures. This is just because the computational requirements are so great that we should think of it like

we can either make more powerful GPUs, we can make more of them, or we can make better use of the ones that are sitting idle. Harness the world's computing power to contribute to this rather than rely on a single source or entity to produce it. Correct. Now, that doesn't require the blockchain, but it is proving itself to be pretty adept. The fact that no one owns it is good, that there's a robust bid-ask marketplace is helpful. The second argument says that we may not need it technically, but at least to produce a metaverse we want, which is less power to the aggregator, more control over our individual XYZ data, we want the blockchain. And there are very few people in

the metaverse community, Tim Sweeney included, who have been definitive on either of those, but seem plausibly interested in both. Then there's the part that will get me shot. I believe this, and I hear it a lot as well, and I'm not trying to do a Trumpian workaround, which is there are definitely a number of crypto startups that don't have a clear product market fit, don't have a clear path raison d'etre, for which the metaverse ill-defined multi-trillion dollar decades out into the future is the perfect answer, right? What's the use case for this? The metaverse. It's unfalsifiable. And that may be true. It may be not. But again, my point is not to litigate the validity of a given startup or technology. It is to talk about the gap between appropriate valuation for speculative technology, not speculative assets, but technology,

in excess of what it's actually delivering today. So are Robux or VBucks on Fortnite a good model for that concept where a crypto startup could say, look at these ecosystems, which are mini versions of the metaverse. They have their own currencies. Everybody uses them and everybody believes in them. Is that like a legitimate thing that they can point to? They can, but it starts to ask this question of if it becomes a multi-trillion dollar part of our existence, then these questions of custody and rights do matter, right? You're building a virtual or a digital business right now, but almost everything that you've built exists on your computer. But when you're talking about building it in a virtual space, you don't even have quasi

possession of everything. And so the question would be, Josh, if you spent millions of dollars and years building a virtual space, I'm not talking about crypto real estate, but virtual space. What are your rights to that? What are your rights to the treasury? The interesting counterpoint to that is we see Epic in particular trying to solve this by handing control back to traditional legal systems. So for example, Epic changed its Unreal license, this is for the Unreal Engine, that says that if they ever have a dispute with a licensee, even if that licensee is using it for terrorism purposes or refusing to pay the bill, they have to go to the court and get an injunction

to lock them down. Because their perspective is it's akin to a landlord who just walks by and says, you didn't pay me, and so I'm going to lock you out and burn your stuff. And so there are other answers to just having decentralized technology no one owns, one of which is to give it back to the decentralized democratic system. You make a pretty good case that one of the better use cases could be something like education, right? That could make a much better remote experience. You could talk about these in 3D things where I could show people how something like gravity works and make that way more immersive.

Isn't the other one that could, you know, you talk about how the education is at such high inflation, isn't healthcare and like telemedicine another option here that could just be totally improved if we had a better sort of 3D experience and more immersive technology? Totally. So let me talk about holography a little bit. Holography is a field that most people think is purely the denizen of Jetsons, but is starting to become real. Google came out with their Starline model. It does volumetric 3D-based video, really complicated, expensive hardware. But they show

that when you're presenting in holography, there's roughly a 50% increase in memory retention, a 30% increase in non-verbal forms of communication, that's hand movement, eyebrows, and something like a 25% increase in eye contact. That is clearly beneficial for anyone who finds this sort of experience tough. And so that's where you start to see education in healthcare. But those same technologies are now also being used for diagnostics. When you go into an Amazon Go retail store, one of the reasons they are able to determine who does what is through 3D gate analysis. Ben, you and I are probably similar as height build. We walk by one another and it's gate before and after. Then you can take a look at this company, Control Labs. This is an acquisition from Microsoft by Facebook.

The Verge called it potentially their greatest acquisition, say, for Instagram. It's a small band. You can see these demos, CTRL Labs, that scans. It's called electromyography. They look for electrical signals on skeletal muscles. And it allows you to basically do the Darth Vader hand replacement in virtual space. It doesn't track my digits. It knows how my digits must be moving based on the electrical signal. And so you start to say we have 3D tapestries for holography,

better, richer understanding. We have 3D projection and mapping, which is catching me down to the skeletal movement, and then you're using electrical signals. Is that going to replace for in-person surgery? Of course not. But can it significantly help telemedicine with additional diagnostics, what you have in your Apple Watch? Of course it can. I wanted to ask about haptics. I think you have a company in your metaverse index ETF that is in some way involved with haptics for people that aren't familiar. This is how the Apple Watch, if let's say you're driving and you have directions from Apple Maps, it will buzz on your wrist when it's time to glance at the screen and know to make a left or a right. Obviously, it's in a very primitive form now. But if we're going to be doing, what did you call it? Holographic?

Holography or holographics. Holography. So we're going to be doing that and we're going to try to make this as real of a situation as possible. How important will things like haptics be for a true metaverse experience? So I'm not sure which company you're referring to, but putting that aside, I think one of the interesting things that we're facing, especially with extended reality devices, this is mixed reality, extended reality, AR, VR,

is actually the quasi-rejection that some people have when they go into these experiences. Nausea is one, but nausea is partly about resolution. It's partly about latency. It's partly about inner ear. It's actually one of the interesting things that studies are starting to show is that vibration and haptics in the headset are actually proving to be key to that immersion more than just the optics, which is to say, if you jerk your head really quickly, one of the areas for rejection is you don't feel what you would need to feel for that

sudden movement. And so putting very, very light pushback or rumble basically actually isn't about augmenting as it might be in Mario Kart with a rumble pack. It's about maintaining that brain to illusion connection. So there's a lot of Hollywood in there. There's a lot of like Disney and Universal, I guess, magic at work to really immerse people in this stuff. Totally. And that's what a lot of this field is trying to do is figure out, you know, like let me give you a good example. what a lot of this field is trying to do is figure out, you know, like, let me give you a good example. A lot of people like to laugh at the meta avatars because they have no legs. And yet the legs are a weird thing that everyone in VR gets, which is legs with today's VR headsets. They don't

know whether you're sitting or whether you're standing. If you're sitting, my legs right now are perpendicular, but I could lay them out, but the device doesn't know that. And so what happens is, have you ever seen those examples where people put their hand behind a mirror and then move it and your brain thinks the fake one? You have that and your brain looks and it sees the legs in the wrong place and just disconnects. And so the meta solution seems to be until we can solve that, let's just remove them all together. And so this is where we come into the weirdness of magic and UIX. Okay. Ben, what else do you have for Matt? Well, I think especially for our audience, understanding you mentioned that your ETF

that you work with Roundhill on is a passive index. I'm just kind of curious. I think maybe one of the better investments you ever made was getting that meta ETF symbol, right, that Facebook then wanted to take off of you guys. We tried to ask Will Hershey about that, and he stonewalled us. But how do you guys go about picking stocks in that? And I'm also curious how big the pool is of stocks that actually kind of fit your criteria, And then is that pool growing? And do you think there's going to be enough growth there to make it so you can have a bigger holding set, basically? Sure. So the Roundhill Ball Metaverse ETF launched in June of 2021. It holds right now, I think, 42 or 45 different tickers. It rebalances every quarter to a max individual allocation of 8%.

We score things by taking a look at thousands of companies. I think it's 3.8 thousand. And then we score each of them against seven different primary value pools in the metaverse. Computing, networking, hardware, payment services, content, virtual platforms, interchange. These are the APIs and systems and tools and standards that people are fighting for control over. And we rank their relevance to each company based on a rule set that we developed. The council that does it is experts from NVIDIA, from AWS, from Tinder, Spotify, Andreessen Horowitz, Rockstar, Take Two, Coinbase, New York Times. And so we built the council to have the expertise to allocate it.

We expect this list to evolve quite significantly. Some of the companies will go down, new ones will go public, Epic not public, Niantic not public, OpenSea not public, not saying how they'd be allocated, but they're relevant for scoring. So the metaverse names collectively are part of this tech wreck that we've been experiencing market-wide since it probably picked up speed, let's say, late last summer. And I think the average name that would be in a fund like this one would be down more than in half. I think that would be fair to say. No, they're not down more than half. Last I checked, I think Triple Q's is down 29. I think we're down 43. But we peaked at the end of November.

Okay. So the question is, how much does the tech stock crash and the retrenchment in venture capital and all of the related ripple effects, how much does this push the metaverse back or has enough money been raised that the players are just going to kind of put their heads down and they're not worried about the economic cycle

as much as they otherwise would have been if capital were scarce. What's your opinion on that from an investing standpoint? There's not much evidence that anything's slowing down. I think there's the odd reevaluation. We see this on the SKUs at Meta. They're shutting down the portal consumer device. They're kicking out the consumer release of their AR glasses. But McKinsey and Company put out a report last month that shows $120 billion invested by PE, VC, and big tech year to date in the metaverse. That's up 200% from all of last year. We have the largest big tech acquisition ever

in Activision Blizzard. The press release from Satya Nadella announcing that, the last line of the first paragraph is to provide the building blocks for the metaverse. Even when you take a look at tech VC in the applicable areas, it's only down 16% year to date. Crypto is down 26%. The general enthusiasm remains pretty powerful. remains pretty powerful.

Obviously, 20% hurts, but when you're taking a look at the quantum of capital going in, 300 billion overall in the VC ecosystem and 120 from large institutions, the enthusiasm remains high. So it's very lazy to look at the share price of Meta and say, since it was Facebook and changed its name to Meta,

they've lost about $500 billion in market cap. Therefore, the Metaverse is a flop. That would be a take that probably won't age well if that's how we're judging the entirety of what this could be. Well, it's simpler than that. We know that the ATT shifts from Apple cost Meta $10 billion in OCF in 2022 alone. That happens to be the entirety of the Metaverse budget for Facebook. And so you can look at that as both incredibly punitive, but it basically means that all of the money you were putting at risk is now being double-funded based on your plan of record. We also know that the primary antagonist for Meta right now is TikTok.

And neither of those have anything to do with the metaverse theme. Different from whether or not the OCF would be more favorable to investors. That would definitely be the case if they weren't investing elsewhere. So I know when you have a book that comes out, you go on the podcast tour. That's why you're doing this with us, the media stuff. I got two related questions here. One, are you sick of answering questions about Ready Player One? And two, do you think the fact that so much of the sci-fi stuff that people read and watch is dystopian,

does that really impact the way people think about this stuff for the future? Does that, like, psychologically implant something that people think, well, this is going to be terrible because I saw a movie about it once? If you can believe it, I've never been asked Ready Player One. Usually people focus on The Matrix or Snow Crash. Ah, okay, yeah. Two, does it affect people's perceptions? Absolutely. Partly because, and I write this in my book,

the metaverse is a 30-year-old term popularized a year ago, but it's based on century-old ideas. And yet almost all of the expressions of those ideas are in dystopic science fiction. Isaac Asimov, Philip K. Dick, and on to the 30s. That puts

people off, especially if you fear techno-feudalist capitalists building another plane of existence through which they can enslave us, which of course some do, and not entirely absurdly. I tend to highlight that drama is the root of most fiction, and human drama tends to be the most potent form of drama, and utopias tend not to make for any of that. And so there's a good reason why science fiction does not, you know, focus on happy people in happy societies.

You need conflict for drama. This goes back to the playwrights of ancient Greece. Is there a danger? I have a teenage daughter and just became a teenage son. We know that there are very harmful psychological effects on Generation Z, probably the millennials too, even with our own parents, with the boomers. We know that prolonged exposure to social networks, misinformation on the internet, there's body image issues for young girls. There's bullying. There's harassment. There's cyber image issues for young girls. There's bullying. There's harassment. There's cybercrime. You wouldn't blame technology for these things, but you would have to point out that technology is enabling them and also human behavior. And there's crime and there are all these horrible things in every era.

This isn't new. But do you worry that immersing us even deeper in the internet could have the effect of amplifying some of these negative externalities of the existing internet? Like, are we doubling down on some of the things that are making us miserable and hate each other? And is there any responsibility on the part of the people building this shit to not let it go in that direction if they can? I know it's a very complex topic,

but it's what I worry about. This is a great point. Look, the metaverse means an ever-growing share of our time, labor, leisure, spend, happiness, relationships, life will exist online and in virtual worlds. That necessarily means that more societal problems will exist online and we will exacerbate many of the problems we already encounter. Radicalization was bad in the

web 2.0 era with ISIL using social media. It's going to be much worse when you can radicalize in a decentralized 3D simulation where you never have to stamp your passport. Data rights, data security, data literacy, platform power, platform regulation, abuse, toxicity, and harassment, those are all going to become harder, but they are not necessarily going to become worse. And this is part of the reason why I wrote the book, which is to recognize that intra-cycle change is hard. We're not getting rid of Apple or Google or Meta or Amazon or whomever you prefer in cycle. It's too hard. But change is a feature of cycle change. And so if we are going to shift from mobile and the cloud to the metaverse, persistent, ubiquitous computing, like we shifted from PC to mobile,

it's likely we change who leads how with which business models and philosophies. And my hope would be that we can use that to reset many of the things that 15 years ago we underestimated, and today we're working hard to clean up. Is the first iteration of this the easiest one just that Facebook or Microsoft is going to make it easier for some sort of remote work to happen?

Is that the thing that is going to – like the light bulb moment for people just – we're going to make it easier for you to do your job somehow in the metaverse. And your company is going to make you do this. They're going to make you have this hardware, whatever it is. And that's going to be how you're indoctrinated to this. The enterprise multiverse, metaverse, if you will. So I think you can really see it on two different ends, maybe three. Number one is just the consumer leisure side. 75% of kids in the United States, UK, Canada, New Zealand, 9 to 12 use Roblox alone. Most of them are fully immersed. Their share of time in virtual worlds far exceeds any other form of communication to their friends or leisure at large. That's a generational lag. And I like to point out to

people that the very time Roblox started to take off was six years after the iPad was created, just when the people who were one or two or zero when the iPad came out were able to use Roblox. You see responsive generational change like many who grew up millennials or YouTubers. The second application is when you're talking about industrial simulation. You go into the Hong Kong International Airport, you are in the 3D digital twin or metaverse, if you so choose, passively. You don't know it, but you're in it. And then the third is when you talk about specific enterprise use cases, not a persistent virtual twin. Johns Hopkins is now performing live patient surgery using XR devices. Schools are now

using educational courses in Roblox and Fortnite. Your cars are now running on 3D real-time virtual simulation. You can get a Land Rover, use the LiDAR scanners to actually simulate the environment around, then pre-drive it like a video game. All of these individual use cases, much like a heads-up display in a facility, start to coalesce, and it's that that builds to where we started, which is kind of updating or evolving the internet protocol suite to support 3D real-time. Will that Land Rover thing make my wife stop backing into stuff in the bed, bath, and beyond parking lot? Because I'm sick of her having to get new bumpers on her car.

Well, you know how this goes. It's the same as Josh's question, just more comical. It's not about the technology. It's about the users and what we choose to do or not to do. You got to test it in order to not do it. Not to get like not safe. Before we wrap up here, not to get like not safe for work, but I have like a very – I don't think it's cynical. I don't know the best way to phrase it but I have an opinion that there are a lot of lonely men who would immediately open up their wallets or their digital wallets if they could have a virtual girlfriend in the metaverse and go on virtual dates.

And I don't mean this to put anyone down or whatever, but we know that this is a huge issue in society and that these are the most extremely online people. They're lonely. They're looking for some kind of a connection. And if they can find it in the metaverse, these might be the first customers. These might be the first customers. And even like adult content, if you look at like previous versions of the internet, I think AOL was saved by pornography. And it's not something that they brag about or that anyone was particularly proud of, but there was money. There were credit cards being exchanged over the internet and things being paid for by lonely men. Is that like something that's being actively recognized, that that's like a very obvious near-term opportunity?

I know no corporation wants to be sitting in the middle of that, but somebody's going to, right? So this is such a fun line of inquiry, specifically because if you take a look at the 50 most popular websites globally in almost any market, basically half of 35 to 50 are pornography sites. And yet you'll note that, and by the way, the others are like Google, right? A domain system. Yeah. And so they're actually a lot closer. But if you take a look at the top apps, none of them are. And that's because applications aren't permitted in most of the stores. There's no

OnlyFans application. And so, for example, they do that revenue, even though you have to use it in a web browser. The challenge to your point, Josh, is if you want to do anything in 3D real time, you need a native app, basically. It's the same reason why most crypto games are low fidelity or not on mobile. It's because you can't have an app that runs on crypto and NFTs. Oh, a web browser could not support that kind of activity yet or maybe ever, you're saying? No, it's a mixed case because people fairly argue that Apple also cripples what's possible in the browser so that you don't do browser-based gaming so that you use apps. But the strict reality is you kind of can't do the quote-unquote fun stuff without an application. And Apple doesn't want to let it in, in part because they don't want an exception to their App Store rules.

And, of course, they don't want to be taking 30% of an OnlyFans receipt. That's not a good look for anyone. And so actually, you could do a lot today using a PlayStation 5, an Xbox, or an iPad. The challenge is you're not allowed to. Metaverse is going to kill the porn industry. I wouldn't bet on that one.

Yeah, nothing will. All right, I don't know why we ended with that that was a little weird did you have did you have fun chatting with us today can we talk about the book real quick well first of all i'll tell you ben you asked me how many times i've been asked about ready player one i get asked the pornography and virtual sex question a lot okay okay so yeah we can talk about the josh niel ben was in bat ben was embarrassed to ask so i asked it for him actually that was from batnik i should say all right uh i want to ask about the I asked it for him. Actually, that was from Batnick, I should say. All right.

I want to ask about the book and where people could buy it and what you think they're going to get out of it besides like a very well-rounded introduction to the metaverse and why it matters. Like what are some of the things that people will learn or what were some of the things that you learned in the course of researching and writing it that people should look forward to? So the middle 40 or 50% of the book is all about building. It's technical. It gets into the nature of compute, what problems we are trying to solve, why we do the things that we do and what the implications are. That has applicability to the timeline of the metaverse, the opportunities for the metaverse, but also many of the businesses that are currently affected. And I run through how payment rails work, digital payment rails, hardware, networking infrastructure, game engines, and why they're being applied elsewhere, and try to answer the question of why gaming companies, a relatively small part of the leisure economy, are suddenly becoming $75

billion acquisition to build the next generation into that. You actually don't need to buy into the metaverse and you don't need to believe that it is an immediately actionable investment opportunity. I would hope to really understand, I'm describing the foundations of our economy because you need to understand why we do what we do and what we need to do to pull off what we hope to do. Okay. And people can buy it now on Amazon. They can buy it at Barnes & Noble, probably airport bookstores. It's going to be everywhere if it's not already. Are you excited? This is a big moment for you? I'm excited, but I'm also

very much looking forward to just going fully off grid. Yeah, not yet. That's probably two weeks out. You got to wait till the international sales ramp up. So you got a little while before you could do that. Some of those are actually day and date. UK, I think Germany's in seven days. So we'll see.

But thank you guys. Well, listen, we want to wish you the best of luck with the book. We're very excited about it. We think that all of the Compound fans should pick up a copy. I think there's a link right below us on YouTube where we're currently talking about it. Go ahead and click that. Buy Matthew's

book. Learn about the metaverse now before it takes over your entire life. Just kidding. Matthew, thank you so much for joining us. We appreciate it. Ben, great job tonight. Duncan, John, Nicole in the background, well done. And we will see you guys later tomorrow, actually, for an all-new episode of What Are Your Thoughts? Tonight was presented by Liftoff.

That's liftoffinvest.com. Thanks again to Matthew. All right. Take us out. See you guys.