The Ultimate Guide to the Metaverse | Matthew Ball

Transcript

it is so easy to overestimate the fit of today's leaders to tomorrow's opportunity you take a look at microsoft you take a look at facebook you take a look at amazon and you sit and you say hundreds of millions often billions of daily users tens of billions of cash flow many of the most talented engineers in the world incredible stickiness sometimes protected by government regulations and it's impossible to say how doesn't that fit tomorrow but we've been here before this episode is brought to you by pair swap the leading aggregator to find best prices across various dexes you'll hear more about them later in the show all right everyone welcome back to

another episode of empire i'm going mano e mano with matthew ball uh i was trying to think of the way to introduce uh matthew ball and uh this one saying came to mind it's like you know you know how there's this saying about the the smartest person in the room that is matthew ball he is known through the tech the gaming the media community as a brilliant writer a strategist a technologist an investor and these are my words not his a master of the metaverse more specifically he is a managing partner at apellion co which is an early stage vc fund and advisory firm a venture partner at makers fund an advisor to kkr co-founder of the ball metaverse research partners which creates the index behind the round hill ball metaverse etf uh resume keeps going

he's got top positions at amazon studios uh churning group if i remember correctly accenture was once a full-time forest firefighter our producer told me so you do it all matthew ball welcome to the show my friend well thank you for the incredibly kind introduction it's a real pleasure to be here forest firefighter is that a true story it is a true story i'm canadian and i did that for two years we were initial attack the first people on the ground fought fires from 0.2 acres to 3 500 hectares we'd hello helicopter in sleep in a tent in a wet sleeping bag in wet clothes four weeks very different than today

it's no it's no wonder that you are so into the metaverse i if i had that experience i'd be like i'm going full digital i'm doing nothing physical for the rest of my life i'm going all in on digital so um matthew i i want to get into um really deep into just like your vision for the future and i want to pull as much out of your head as possible um but i think a good starting point would be i think when you talk about the metaverse maybe two or three years ago the term was quite helpful and now it actually doesn't really feel like a helpful term um i think everyone has a different idea of what the metaverse is so actually just as a starting point for this conversation i would love to just hear you introduce the concept of the metaverse as you see it today

that's a really great place to start i think anyone listening to this podcast is doubtlessly familiar with the fact that the metaverse comes from 1992 in snow crash but of course the ideas of a virtual plane of existence effectively parallel to the real world that spans back nearly a century into the 1930s where we have the first science fiction novels to discuss vr ai environments and nurseries actually building and living out life in simulated worlds i define the metaverse as follows a massively scaled and interoperable network of real-time rendered 3d virtual worlds which can be experienced persistently

and synchronously by an effectively unlimited number of users each with an individual sense of presence while supporting continuity of data such as identity communications payments objects and history what i'm effectively doing is describing where i started which is a parallel plane of existence we've thought about the metaverse in some way shape or form or name for a century but it's only recently that we have the requisite mix of technologies to pull it off you're certainly right that in recent months and certainly the past year we've had a lot of narrative shift what the metaverse means ultimately the term is not that

important i talk about the metaverse as in a single unified experience akin to the internet we don't say an internet we don't say the facebook internet but whether or not we use the term the metaverse or metaverse whether or not we talk about the internet the decentralized internet virtual existence in china they use the term hyper-digital reality it doesn't matter we're ultimately just talking about an observation that an ever-growing share of our time labor leisure spend happiness wealth life is going to be inside virtual environments hmm that's a it's a really interesting way to frame it and i've heard you use this analogy on almost defining the

metaverses as being comparable to asking someone to explain the mobile internet right uh people struggle with this they're then inclined to define it really just on their personal experience right so your average person like i might explain mobile as like well it's my iphone right like i've got uber and snapchat and things like that a developer might talk about the standards and the protocols and if you ask that to someone in the 1990s like good luck getting a smooth answer out of them um so when i hear you explain it like that it feels like your comparison is uh i almost started to think about like where the metaverse lives on the tech stack right so you would compare the metaverse to the internet rather than like uh like facebook or microsoft um so so that's kind of the analogy right is is

comparing it to there's one internet there is one metaverse yeah that that's quite right i mean we're thinking about it from the protocol stack perspective the technologies and experiences which create a field of other things mostly at the application layer right that analogy that you're referring to i really like because the internet does mean different things to different people or at least it's described differently and that is partly a reflection of how many things make up the internet and are required for the internet and partly a reflection of the enormous impact that it has had it is extraordinarily relevant to a healthcare professional as an investment banker as a teacher as a network engineer but in very different

ways and this is where we get into this question of decentralization centralization what is in the stack versus what is at the application layer those are all different questions right how do we operate the internet and how concentrated is engagement on the internet are both separate questions but also codependent when you talk about or i guess when you ask people when the metaverse comes you hear maybe three or four answers right so if you talk to uh if you talk to maybe tim sweeney right you tim sweeney is gonna say the metaverse is emerging over decades long right multi-decade time horizon uh zuckerberg might say okay the metaverse is not here yet but it's here in five to

ten years if you talk to maybe the folks at microsoft and satya nadella they're gonna say the metaverse is here um already right we're already living in the metaverse i'm on zoom eight hours a day we're recording this virtually why are there so many different interpretations of this so i think that there's really two different elements here one is the social elements and i'm not going to use this to litigate against any one perspective because i'll get to exactly why there are varying answers in a second but we always have compression of timing of urgency you know you're talking about satya nadella microsoft bill gates has this famous adage where he says that we overestimate what we can do in three to five years but dramatically

underestimate what we can do beyond that and yet ultimately narratives shift to the time horizon the now tomorrow over morrow not years from now and so i do think that as we went through the rush in 2021 which coincided with such a rapid j curve in nfts that there was a tendency to talk about the transformation as if not present certainly imminent and so he had the people who said decades get drowned out by those who talk about coming decade get drowned out by those who are saying tomorrow get drowned out by those saying today but ultimately all of these perspectives are valid because there's no individual answer

i like to talk about the mobile internet if you ask someone when was mobile here we generally believe somewhere in the late 2000s but there's no literal answer 1973 we have the first mobile network call 1991 we have the first wireless digital network that was 2g in norway but only in norway 1992 we have the first smartphone from ibm if you can believe it 1999 we have wap wireless application protocol that's what made primitive versions of the web accessible on a mobile device older listeners will remember when the mobile internet was a white background with red purple and blue text when you clicked a link

by the early 2000s we hit the first mobile centric content median services companies primarily in japan then we have the iphone in 2007 the iphone 3g which had 3g and the app store and somewhere after that we said mobile was here but there's no literal answer there was no before and after we can't specifically say mobile arrived on this day but we can point to individual markers and we can say that by sometime in the early 2000s that era had arrived we lived in it the more relevant question is when was it too late

when did you have to start investing okay let me here i'll give you my i'll give you my version of when of when mobile really started and i think there are three there are three time periods to look at and and two of them are what you said so the first is 2007 when the iphone launched the second is 2008 when the app store launched but i would say that mobile really was here to stay when in early 2012 zuckerberg redirected all of facebook if you remember that uh redirected all of facebook to focus on mobile he basically abandoned his laptop started working primarily from from from his phone made he forced pms to disable all their own desktop versions of facebook forced them to instead use the mobile versions so that felt like the

that felt like the the turning point for mobile and and maybe maybe you might argue that was a little late i'm curious i mean zuckerberg interviewed you actually you didn't interview zuckerberg if i remember correctly zuckerberg interviewed you at the launch of meta um and i'm just curious if you think that was the turning point for the metaverse i think that's that's a funny point in reference certainly facebook changing its name to meta platforms is as much of a mic drop declaration as we've seen in decades past it was at the time the seventh largest company on earth i actually like to use this to highlight how it's different from buzzwords past we're all familiar with words being hyped up long before

they're possible or practical drone internet or autonomous vehicles buzz words that came and went and weren't what we expected them to be 3d tvs not disruptive no one wanted them and yet those comps don't actually fit here no one renamed themselves 3d tv not least of all the seventh largest company on earth the other day mckinsey published a report saying and this is not speculative it's based on their math that 30 billion will be spent by the big five companies on the metaverse this year they estimated that private equity vc and big tech at large would spend 130 billion this year

in 2021 we saw before mark ever uttered the word publicly tencent unveil its metaverse initiative hyper digital reality we saw microsoft in may of 2021 unveil their metaverse stack we saw this absolute rush unity and roblox both wrapped themselves around the theme of the metaverse at the end of 2020 in early 2021 the biggest gaming ipos of the past decade and by the end of 21 they were the two largest companies except for tencent and conglomerate such as microsoft and sony in that field and so i absolutely agree with you that that mic drop singular moment was so

much around the i think october 27th name change but it was a culmination of many many reinforcing trends which frankly probably gave mark the confidence to make that name change in the first place let me play this out a little more because i think so so in when when crypto native folks talk about the metaverse they say we don't want to live in mark zuckerberg's metaphors we don't want to live in microsoft's metaverse let's build the metaverse on these open rails on these open crypto native web 3 rails does that even argument make sense in your framework of what the metaverse looks like where we'll have these like closed the microsoft metaverse the facebook

metaverse uh maybe maybe it's even better to call them worlds the facebook world the met the microsoft world and then you'll have these the the open metaverse built on crypto rails is that does that logically make sense in what your view of the future looks like so i think it does i would just frame it a little bit differently first and foremost i want to stress that my opinion would be that we shouldn't think about centralization versus decentralization you never get just one or the other and a good version of that is the first web 1.0 which we love and in many ways we want to get closer back to that was mostly built on effectively public goods tcpip and we still had pretty significant

centralization of sorts we still mostly spent time on the google platforms or increasingly on the amazon web yahoo aol certainly when you take a look at facebook that's another good example and that was just a natural feedback loop of habit of brand of building more products and services there are lots of natural centralizing efforts a good example of that is actually just how much better technically would bing have to be for us to try bing how much better would its data collection need to be for us to try it most people don't even think about making that decision why

because first and foremost google's probably better they're specialists they have a much larger training set of users and time but we have immense habit and that's likely to endure when you take a look at the metaverse irrespective of the underlying openness of protocols there are forms of centralization we see this with openc right now it charges more than other marketplaces but of course most people still use openc because they like it it works well they trust it now they're getting into verification services as well but the more important point is that even if centralization de facto or technical is often positive even if we want part of it or it's often necessary

to pull off the technology experiences we want we generally believe that we went way too centralized over the past 15 years way too much and the argument for blockchain and crypto one that i deeply believe comes to the fat versus thin protocol theory which fred wilson has really advocated for union square ventures chris dixon talks about and they say that the fundamental problem is not that application layer companies like instagram became very successful because they built great products that people loved it's that tcpip was too thin the protocol layer was too thin you have ip address you have dns and others really crucial parts of how

the internet works but too much sat at the application your account sat at the application layer and that meant someone owned your account you own your ip address or the internet quote unquote owns the ip address icann administers it but what really mattered was your account then you have the social graph where does that sit at the application layer where do your files sit at the application layer and so the result of that was extraordinary lock-in combinatorial lock-in and what that meant is that even if the internet was quote unquote open even if you and i could go make our own instagram we really couldn't you couldn't move a

network there was too much loss to the consumer and so what i find enriching about this current movement is this idea that if we're having a reset point and that's important because intra cycle changes are hard cycle to cycle changes provide a lot of opportunity if we can reset so that more of the quote-unquote internet's underlying operations are open they are not corporate owned the lock-in to the extent it exists is based on the user's choice then we have at worse it's a world that's far less controlled than today and at best we have a version of the world we have in the real world which is you own your things you want to move out of state to

a state that offers better taxes better legal protections a community that you prefer rather than the community that you grew up with you can do that and that's hard today um i mean i think the reason it's hard and you talk about the the fat protocol thesis which is a great piece from i think it's 2015 joel monegro and chris burniske at placeholder wrote that i think what it really comes down to is like http is a so-called stateless protocol right there is there's no memory built directly into the protocol it doesn't have a notion of a database and so if you wanted to build uh databases right if you look at all the big powerful internet companies today the facebooks the microsoft's of the world they're really just database providers

even the big games right like like epic for example or like fortnite there's no such thing as an in-game asset there's just there's just data moving around in databases and so when i think i think when people talk about a lot of things in the metaverse being built on crypto rails uh it becomes interesting because i think what a lot of crypto folks would point back to is the interoperability maybe and the ability to port not in-game assets because that's not a there's no such thing as an in-game asset it's just in-game data really data on databases and so you have data inside of a uh an open database maybe on crypto rails or data inside of a company run database like by epic or apple or facebook or microsoft so i'm curious how you think

about the pros and cons and almost the trade-offs of of building these worlds on on private databases versus in public databases so i think you've hit on a really fun point and that is kind of this idea of what is the appropriate return from operating a database or put another way what is the appropriate ongoing return from data stored today in your database for activities that happened a decade ago and that is actually frankly a much broader problem it's not just about instagram but let's say steam probably the most powerful pure standalone software distribution

business on earth and that's because if you use steam today like i do it has 25 years of games or 19 years of games that i've purchased there i bought them the services were rendered steam played an important role there but absolutely none of that entitlement is actually an entitlement to me i can't take it elsewhere i'm forever chained to steam if i want to open a game that i bought in 2004 from potentially even a game publisher that doesn't exist anymore but even if it does and i want to spend anything everything has to go through steam

and so we come up with this fundamental question of what is the appropriate compensation there i would disagree with you a little bit to say that say fortnite is primarily about the assets that are stored in the database because this is a specific example of a title that is updated week to week experiences very significant changes i believe they have 15 000 develop or 1500 developers or more fine-tuning that it is a good example of where the primary utility today of all in-game things are their application within said game but you do come up to this question of over time how does that change but more importantly what is the argument for me someone who's had fortnite for four

years who's probably spent several hundred dollars of continuing to maintain custody of those things that are argued to have been purchased by me and then the practical consequence is if i ever want to go elsewhere i face another version of the instagram problem which is okay block works launches a game i love the game you actually go out and you pay disney for all of the ip rights for marvel now i is the user need to go spend hundreds of dollars again to buy the same outfit in another environment because the thing that i previously purchased actually wasn't a purchase it was actually a rental and worse still it was a rental whose utility was exclusively tied to whether

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trading app on apple pretty crazy thing in the ios ecosystem imagine not using a platform that could literally save you thousands on gas that's paraswap go check out the app go check out the native wallet to store all of your crypto assets in one place go get your gas refunded go check them out go download the new pair swap nft trading app dot io forward slash beta paraswap dot io forward slash beta now let's get back to the show uh i i think i've heard you use the term the idealism of of interoperability and i think a lot of crypto folks say one of the best parts about building on crypto rails is that you can just move your assets from one game to another i want to just i want to get your take on i

think it's you who said the idealism of interoperability i want to go deeper into like is this a realistic future where you can just you can buy that you can buy that jersey and or you can buy the sword in fortnight you can move it over to to halo where it becomes a gun you can take it into madden where it becomes a trick play like is that a realistic future or is that almost too optimistic because there are no incentives to actually build that kind of a world if you're a game developer so if you believe that the experience you just described has utility to the user that is to say i value it you value it that perhaps the developer who creates game b values it because they don't need to generate all of the items in and of themselves and they want to tap into extant investments

by you in my case i just mentioned all of the spider-man stuff i bought on fortnite then i do believe that there will be value there now that's a total logical argument but my point is if people want it there will be value if people don't want it then there's no value and there's no point discussing it i'm optimistic that there is value there and i think that you can easily identify it obviously in roblox their 70 million worlds are interoperable i don't think kids would be buying as many avatars and skins in roblox if they had to use them on a one by one by one basis would you are you a sports fan what was the last jersey you bought i bought a uh i think it was a teddy brewski patriots jersey so there's this question of would you have bought that jersey if you could

only wear it in a stadium probably but what would you have spent on it right ten dollars maybe what if you could only wear it five times or what if it only had utility as long as you your favorite player was on the team i'm gonna i'm too canadian to tell you much about the nfl let alone the paths but you get the point and so i'm optimistic that there is utility here and i think the crypto community has made clear how much they value it but the technology problems are really hard and i think this is one area where i really get excited by many of the conversations but we get really really deep and so for example i've often made the point and i often hear criticisms back

from the web 3 and blockchain community and developers where i make the point of we haven't really figured out how to have the full end to end system for interoperable assets be decentralized and one of the fundamental problems here is that the instance of the game let's say the multiplayer services or the actual run execution on your device are still being centrally managed we haven't really figured out how to run peer-to-peer gaming networks and so what that means is we still have to have in some way shape or form it doesn't matter if you use ipfs which is great for decentralized storage of the good but doesn't solve for decentralized

operation of the environment we still have centralization that gives us multiple multiple different choke points and so that is to say we have some standards certainly that we're seeing in blockchain and ipfs has ported from before that we clearly have culture that wants it we have many games that are embracing it but we don't yet have an end-to-end system for it and what that means is we still have tech problems that we need to solve there's still middleware needed to quote-unquote interoperate and we still face fundamental choke holds that for those who fear the arc of centralization from initially decentralized participants there's still reason for concern matt matthew i just had a light bulb

moment as you were saying that talking about the uh about the jersey in the stadium uh uh man i'm trying to almost form uh formulate this students as it's coming into my head which is uh the physical world is default open right so there's no when you buy that jersey i can i can walk anywhere in the world with that jersey so so therefore like the physical world um is default open the digital world is actually default closed because of the way that code is written right so if like i buy if i buy the if i buy the jersey in fortnite you you have to actually the other game developers have have to consciously add that into their game i've never thought about it like that uh

that the physical world is default open the digital world is default closed um yeah huh that's interesting i don't even have a question there but what you're formulating on the fly is is precisely right and in my book i go into my favorite way of thinking about this you also correctly analyze that there's no such thing as an interoperable asset because what we're talking about data is data and data isn't an atom right atoms are essentially right ones run everywhere that's actually why you're talking about them being open and so what that means is data is only interoperable if you have systems which accept the data systems which read the data and systems that then apply said red data in the appropriate context

and so i'll break down to how you would describe interoperability openness in the real world if you purchase a pair of nike shoes and you want to go into an adidas store what has to happen for your shoes to not be interoperable you effectively need to hire a security guard pass a policy and then adidas needs to say no you can't bring these shoes in there but even that's a bit of a hack right because the shoes do work there we're just choosing to reject them that's expensive it requires a policy a person and enforcement so what you have is default open you have to make a choice to exclude but in a virtual environment the reverse is true you are not likely to have the

same way of designing code for an asset and so fundamentally of this question of do nike and adidas agree on the fundamental principles of a shoe not necessarily so they would have to agree or make an active choice to build to a convention for one another then on top of that the aforementioned policies are reverse you need to say let's have a policy to accept foreign data then let's have code i.e the security guard to incorporate it then let's make sure that it works within our environment and this is where we get into one of the separate issues which is we do have lots of interoperable standards and formats and systems

in crypto to facilitate a lot of that exchange right you have permissionless access to assets that are stored on a public ledger so store a and store b can say let's both use that shoe right that's great it's actually an open form of communication that doesn't require any intermediary and legal contracts to say let's do it the challenge is when we're talking about 3d or even 2d in a game the image itself doesn't come with say the metadata for how it's going to be used and if it does which it does in some instances it may not be exhaustive let me give you a good example if air jordan wants to issue nfts based on their sneaker line those

can be read by any independent game developer and they can be incorporated as entitlements that have functions in their virtual worlds but those nfts can have some principles right they can say here are the 10 different varietals and here's the speed differential between all of them but it might be that the games want to apply them differently so for example we're going to customize the soul some of them are going to shimmer some are going to have matte effects some of them are going to have customizations on the sole versus the lace versus the lace cap it's unlikely that all of those nfts have the requisite information least of all stored in a decentralized fashion for those applications and instances

another thing that's important is different games have different fundamental dimensions in one game a shoe might be 10 pixels and another game it might be 1371 pixels and it might need to have a certain degree of motion right how does it move you know you can have blocky sneakers again it's actually easier to talk about shirts right tight fit shirts versus loose fits uh breathable versus non-breathable we're talking about all of this metadata that is invite that is required for environment a to incorporate object b from one to another and so when you talk about just the nike versus adidas example that's relatively easy but it's the code that actually contextualizes the object that's the

tricky part it's difficult to think of a system that fully decentralizes that and so that does mean at the end of the day the individual expressions and usage much like you would do in axi or frankly sandbox comes down to the local developer that local developer is accessing a trustless database but you have to trust that it will appropriately manage your entitlement the nice thing about the web3 movement philosophically is it doesn't or it doesn't in practice require full decentralization because we know what the community expects if you're not respecting the philosophy the culture the users then we're at least hopeful they'll be

rejected so in that sense actually interoperability of in-game data and game assets is actually probably going to be more prominent within specific ecosystems like let's say all of epic's games will have interoperability maybe one day or all of microsoft's games that they've been acquiring might have interoperability or all of facebook's games but if you go to a if you go to seven different games on top of solana right it might be quite tough to build an interoperable world amongst them if you have seven different companies running so i would put it this way the way that you should think about it is kind of like the real world which is to say

we have pretty universal interoperability globally usd the metric system the intermodal shipping container english we often have competing standards you can think of you know english versus german versus french that could be just eat versus polygon versus flow what have you right but then the fundamental interoperability of goods is often dependent upon bilateral agreements those agreements are easiest within national boundaries think of this as state to state right florida to north carolina they're easier on a regional basis this could be the eu and their hardest when you get extra nationally right i'm canadian and

there's more friction to quote-unquote interoperability of my everything in the united states than it is domestically but it's harder still to go from canada to vietnam i can't go to russia and south korea is totally off limits and so the way that you want to think about it is that way we have technology problems certainly we solve those technology problems but most technology problems are actually masquerading as such they're human problems they're interpersonal problems and so what we're more likely to see is a lot of underlying shared interoperable protocols but for which the application and the experiences are more about loose federations

of people working together that can be a collective on the solana ecosystem of gains that say look let's not concern ourselves with the data conventions for metadata of virtual objects that you know party z is doing but we're a collective of 20. let's all code with similar conventions let's build with each other in mind and that's how it works and that's how if you scale any interoperable system or community in the real world things work your local neighborhood is more tightly integrated than your riding then your city then your state then your country then your continent and so forth um i have one more question on uh just

different worlds and then i want to get into some of the uh the technical side of things then i want to get into some of the societal impacts of of all of this um will so so it's very obvious like who will build some of the big med what what quote-unquote web 2 companies will will build the metaverse uh the facebooks the disney's the epic games the roblox they will all have their own worlds within this metaverse at what point does that stop like at what will every company in the world have that will maybe that maybe the second layer is like nike will have their own metaverse tiktok will have their own metaphors is there then there's a tier three of companies uh like mcdonald's and wendy like at what point do

they stop do brands stop building their metaverses their own mini worlds and then uh and do they all build their own worlds or do they plug into other people's worlds maybe what is your picture of like how how the big brands of today uh plug into the metaverse of tomorrow so there's this quote that comes from tim sweeney the founder and ceo of epic games where he says just as nearly every person and every company saw fit to build at maximum their own website but at minimum their own facebook profile or social profile that every person and company will want some presence in the metaverse for the individual that might just be an avatar or

a metamask for the company that might be their own virtual world platform or they might do the equivalent of a subway page on facebook which is to say a miniaturized world on fortnite creative or roblox or perhaps a plot of land on sandbox that's the most likely arrangement right similar to the internet today we usually want some form of aggregation in discovery and access especially for the brands that don't really make sense of standalones right like yeah you might go to brand a on their own website you might download a certain app for a retailer you love but often you'll just buy it from amazon right aggregated often you'll just read

within twitter or new york times coverage and so forth and so that's the likely arrangement i'm far more interested in two things number one is how many of what i call integrated virtual world platforms will we see that will be your roblox your sandbox decentraland these vast networks of interconnected experiences we have a few of them today i expect that we'll see far more and i'm optimistic that we're still kind of at the icq aol phase these companies like roblox or fortnite creative seem incredibly powerful but icq at its peak had 68 million monthly active users facebook in 2005 had fewer than 75 million users that's kind of where we

are with these platforms right we know sandbox has about 200 000 monthly active users roblox is 250 a lot but not billions and so we're likely to see many many more emerge the other key lesson is of course that we can overestimate how early the race is over let's assume i'm wrong and that is to say we're not at the icq aol stage we're at the late 2000s facebook has already been established in the virtual world as an analogy and it's not going to be supplanted well what happened after that right twitch comes out in 2011 we have snapchat come out in 2011.

tick tock emerges depending on your definition 2014 2016 you have discord i think comes out in 2015. they're all smaller to be sure but they're extraordinarily large in their own rights and they much better serve certain customers certain use cases and over time they do whittle away at the giants um i think that's a really good framework to look at to look at this through right if you look back in the late 1990s the biggest websites aol and msn right then yahoo comes soaring past them everyone thinks all right yahoo is the winner and then basically yahoo dominated for the next several years 2006 comes along and google overtakes by far yahoo goes back overtakes google

google comes back and overtakes then yahoo and facebook comes soaring past them and i i i yeah i think that's a great way to look at it matthew um what are the technical limitations to all of this right are we at the you mentioned we're maybe at the aol phase i've heard you talk about in the 1990s it wasn't even clear what protocol we were going to use tcp the department of defense put their weight behind uh osi is what the department of commerce and eu supported then the protocols kind of converged are we at that phase of things uh and and and maybe just extending that question out like what are the technical limitations to all of this both on the software side but also the hardware side yeah we're very early and of course that depends on what degree you believe the underlying internet stack is going to be

rewritten right if you take a look at the injuries in horowitz perspective chris dixon believes that a lot more is going to be not literally struck out but that we're going to revamp far more of the underlying technologies this is where you get into the fundamental web 3 movement right the idea that the future of the internet is going to run on blockchains if so we are much earlier we have multiple competing chains you just use the example of osi versus tcpip it's unclear whether or not the steady state of a crypto future is going to be multi-chain or not and if so we certainly need better bridges we need more bridges

and there's a lot of other intermediary work that's going to be required to onboard hundreds of millions and billions of people and so that's where you would say we don't know what the standard is going to be we don't know what the supporting infrastructure is going to be and we haven't discovered the onboard experience for the average person if you're taking a look at a more centralized future or perhaps not centralized but traditionally architected future we're farther along right tcpip is mostly in place and we're supplementing it with blockchain-based technology into that framework and as a result we still face the aforementioned problems of which chain how and what's a bridge and wormhole going to look like but because they're more plug and play

they're not as much of an impediment right you don't have to solve first principles to build the second floor of the building you just start renovating if you get my perhaps inelegant analogy but beyond that we see fundamental requirements for expanded broadband and network capacity and availability expanded computing power if this gets to the area that i'm most excited about as it relates to blockchain technology we face extraordinary constraints in networking and computing power that is to say the broadband we have available the reach of that broadband especially globally as well as the amount of computing power we have to sustain and render a parallel

plane of existence there are multiple schools of thoughts on how to solve that one is let's just wait computing power improves broadband improves i find that a discouraging if valid argument another is let's just make more things more processors more powerful let's deploy more fiber the other answer is to tap into the vast network of unused or underutilized resources globally and frankly that's about more than just spare broadband capacity or spare devices it's actually tapping into collective resources time labor energy capital intellectual property and

more than just literal energy but enthusiasm blockchains have proven themselves to me through dow structures smart contracts through things like render token and more to be very adept at doing that putting aside just whether or not it's easier than through traditional contractual models we see millions of people being corralled in days to extraordinary outcomes and so i get excited that actually pulling off the metaverse that we want from a decentralization perspective but also pulling off the metaverse that we imagine technically we require fundamental decentralization there are those who believe for example

that until we can solve the aforementioned issue of peer-to-peer multiplayer services which would be a decentralized way of operating online multiplayer we simply can't pull off the metaverse and if that's true you need a way to respectfully compensate every contributor both active and passive as well as a way for them to feel safe in doing so and a way to do that easily right frictionlessly that's what gets me really excited and frankly that was my primary onboarding to web3 at large to blockchain and crypto if as we start to wrap this up matthew you have this

amazing book that's coming out uh i think the release date is july 19th and it's it's kind of broken up into these three sections as i understand it uh just defining what the metaverse is looking at lessons from the past 50 years of building the internet getting into some of the technological challenges um in the second part and really what is needed in the stack to build this and then third the societal impacts as i understand it and correct me if i'm wrong there but one i want to wrap this up with just talking about if if you are correct about all of this you're predicting at this grand world that has some big changes from what the world looks like today if you are correct about all of your predictions what does the world look like that is different and you know look like in five to ten years

and how is it different than today it's a fun question look i i actually don't think that the world is going to be that different in 2027 i think there are fundamental things that one can bet on i'm use this line earlier more of our life labor leisure spend wealth happiness will be in 3d rendered virtual environments we'll be in virtual goods at large we will transition an ever-growing share of the activities that we do digitally into said environments as an investor both in public equities at the venture level and in crypto i get excited about what we've learned from eraships i talk about the metaverse in context of three prior computing waves

the mainframe era from the 1950s to 1970s the personal computing era which was co-incident with the rise of tcp from the 1980s essentially to as you and i discussed the late 2000s early 2010s and then the mobile europe now we're on the advent of the metaverse a fourth era where we start to talk about web 3 in real time 3d rendering when those platform shifts occur we see fundamental shifts in who leads under which technologies business models and crucially philosophies that last one ends up having the most societal impact but i described in my book in that third section you encapsulated it well five different types of outcomes

corporate the first of the companies that are essentially destroyed by ear shifts blockbuster doesn't exist the second category are those that languish they're so far surpassed we forget about them yahoo is one such example skype another skype still exists like icq but no one thinks about skype not even microsoft which owns it and launched teams a few years ago the third are the companies which adapt and grow facebook grew in the mobile era but it isn't of the mobile uri it predates it the fourth and the fifth categories are the most interesting to me the fourth are those companies which are displaced in their core market and grow as a result of changes

microsoft more valuable than ever but it has never had a smaller share of personal computing devices note the philosophical implication there microsoft which many believe to be a malcontent in the early 2000s is more valuable after losing share because it philosophically shifted to a horizontal unbundled strategy most of us would say that's a positive change and one that was financially remunerative brad smith their vice chairman has said they were on the wrong side of open source and that it has cost them dearly and then the fifth and final category of companies are the new ones those who emerge in that era tick tock in the social era google in the pc era

microsoft in the pc era as well that's what i think the future is actually going to look like i think we see iterative change in the years to come we've had a huge boost over the past two with the rise of social gaming the real cultural tipping point in my mind in this last cycle for crypto but in the years to come we're mostly going to see the powers that be shipped matthew maybe the last question here will the metaverse be built by the incumbents or the new folks will it be built by the facebooks and apples of the world will it be built by the games the epic games and the roblox and fortnite and minecraft or will will it be built by crypto native folks building on top of things like ethereum

the answer is going to be a mix this is always how it plays out there's too much infrastructure for example that is already deployed by unity and unreal when it comes to real-time rendering and so if you describe the metaverse as i do about real-time rendering services we actually have nothing close to substituted in the crypto realm and so that can start to emerge but game engines are so extraordinarily difficult and frankly they're still predominantly local installs not network-based experiences because the challenges of latency precluded for context to render a virtual environment you basically need to process the entire simulation 60 to 120 times per second

doing that on ethereum or polygon or solana is just not practical right especially as the network becomes more decentralized you just can't the speed of light precludes it and so it's likely that we have a mixture but again the real question to me is how does that mixture change over time and how does that shift the polar center between centralization and decentralization because that has extraordinary consequences on the margin that sounds like a bad thing i mean it on a good thing a really small shift has extraordinary implications but at the end of the day the thing i find most inspiring is that it is so easy to overestimate

the fit of today's leaders to tomorrow's opportunity you take a look at microsoft you take a look at facebook you take a look at amazon and you sit and you say hundreds of millions often billions of daily users tens of billions of cash flow many of the most talented engineers in the world incredible stickiness sometimes protected by government regulations and it's impossible to say how doesn't that fit tomorrow but we've been here before there was no real way to look at microsoft in the early 2000s 95 share of personal computing devices nearly 100 percent share of enterprise software

they were first to mobile they had 85 share in mobile they had the internet title wave memo corralling the entire company to mobile services they had extraordinary bundling of their services the fundamental lesson that i reiterate in my book is all of these companies look ideally suited for tomorrow even if tomorrow's different but cash conviction resources and talent have never proven to be sufficient and so the hardest thing to identify the biggest thing that i focus on as an investor we'll see if i'm good at it is the guys in the garage the six people who just fundamentally bet so differently but go to market so differently

that they displace untold billions of wasted spend the big thing about crypto is that we see this faster bootstrapping yes but we've never seen more people actually able to tap into more resources with limited funding than ever before that produces the prerequisite on steroids for change matthew i think we could talk for hours about this uh you have a book that is coming out you've mentioned it a couple times here at the metaverse how it will revolutionize everything uh it was selected as one of apple's apple's most anticipated books of the summer i pulled up the website as we

were talking here the testimonials are insane tim sweeney of epic games the ceo of sony uh ceo of unity former ceo of ea uh reid hastings of netflix the sea of microsoft gaming the list goes on and on uh i'm assuming the best place to buy this is matthewball.vc yeah so there are matthewball.vc will list all of the retailers it's available on every outlet apple amazon barnes and noble at norton which is my publisher they'll list all of them but i would strongly recommend for those that are interested to buy it bookshop.org bookshop is not particularly well known but it's an e-commerce solution

that supports indie book sellers 75 percent of their gross profit goes to independent bookstores so that is both a non-web 2 supporting and effectively decentralized but indie focused sales channel and i love to direct as much business there as possible i love that that's great matthew you've been a resource for all of us for years uh really excited about your book uh and just really appreciate your time i uh i hope you enjoyed the conversation as much as i did i really did and i look forward to continuing to read amazing [Music] you