When it comes to the metaverse, there is no shortage of opinions. On one side of the aisle, you have maximalists like Mark Zuckerberg, who sincerely believes we’ll eventually work and socialize within immersive 3D worlds, and is spending billions to make Meta the cornerstone of this new Internet.
Their counterparts are the metaverse bulls—people like Xbox chief Phil Spencer, who’s decried existing metaverse products as a “poorly-built video game.” Oculus VR founder Palmer Luckey was even blunter. Of Meta’s Horizon Worlds product, he said: “I don’t think it’s a good product. It’s not. It’s not fun, it’s not good.”
But look beyond the hot takes, and you’ll find a more nuanced view. Admittedly, ours. One that recognizes the potential of the metaverse, but recognizes that any success is contingent upon a handful of important (albeit elusive) business fundamentals—execution, market fit, usefulness, and timing.
You know, like every other tech product.
I use the word “fundamentals” for a simple reason. Because they’re fundamental. Walk through the graveyard of the tech industry and you’ll find the tombstones of any number of well-financed companies, many with industry-leading founding teams. They failed because they lacked those essential elements.
And soon, they’ll have company. The next few years will bring hundreds of new metaverse companies, hoping to land the first-mover advantage in what they hope will be the biggest change to the Internet since the Web 2.0 revolution. Many, if not most, will fail.
Failure is an accepted (and unavoidable) risk of entrepreneurship. When you enter a space that’s not merely ill-defined, but also yet to develop any meaningful level of market penetration, that risk is only heightened. But there is something metaverse founders can do to improve the odds in their favor.
BUILD FOR UTILITY
Let’s talk about uncertainty—the all-encompassing, intractable ambiguity that defines the metaverse at this most nascent of moments. We don’t know what it’ll become. We don’t know what the tech stack will look like. We don’t even know who the customers will be.
By the end of the decade (assuming the metaverse is still an area of interest for the tech industry), will the primary users be individuals or businesses? Will the sector run on Meta’s technology, or another company’s?
There’s an undeniable element of uncertainty. But that shouldn’t matter. The metaverse isn’t immune from the basic product design fundamentals that apply in other sectors of the tech world. Does this solve a problem, and is it nice to use?
Metaverse founders face any number of yet-unknowable questions. These are the dilemmas that will only be resolved through time. And, to put it bluntly, there’s nothing they can do about it. But they can build well-designed and useful products.
As they start laying the foundations of their metaverse offerings, or start searching for opportunities in what may prove to be a highly-lucrative sector, they shouldn’t shy away from the difficult, probing questions about what they actually want to achieve.
What is the problem their potential customers face? How will this product solve it? And how is it better than existing legacy products?
This cautious approach is shared by AutoDesk, an industry leader in the CAD/CAM space. In an eye-opening interview with ZDNet, company CEO Andrew Anagnost was under no illusions that the metaverse presented unique challenges to entrants.
These include uncertainty about the trajectory of ecosystem players, to the cooling of enthusiasm that follows whenever a highly-hyped technology enters the mainstream. It’s a terrifying list of variables. But Autodesk isn’t worried. As Anagnost explains it, it’s taking a platform-agnostic and value-driven approach.
“We’ll take technology from partners like Epic Games, we’ll probably take technology from companies like Meta, if they’ve got a better avatar than we have. Our goal is to build the vertical value on top of these things that allows people to solve real-world design problems in virtual and augmented spaces,” he said.
And then—like any content-driven business—you have to ask hard questions about long-term sustainability.
If you build it, they might come. But once you’ve coaxed your customer through the door, how will you keep them around? What are your plans for long-term programming and content creation? How will you promote your product amidst the deafening roar of other metaverse early adopters?
EXECUTION MATTERS, A LOT
It’s worth repeating: most metaverse businesses will fail. It’s a painful truth.
And now allow me to throw some salt in the wound. Most of those failures will be completely avoidable. They won’t be the product of a lack of funding, or a dearth of technical talent. These businesses will be victims of something more pernicious, and much more difficult to remedy: a lack of vision.
I write this because I genuinely believe it. And because I also think the metaverse does offer a lot of promise. Will it radically reshape the Internet, much like the rise of user-generated content did during the heady days of the mid-2000s? Maybe not. But I do think there’s genuine cause for optimism.
There’s an undeniable desire, within enterprises and consumers alike, for immersive 3D experiences.
This bullishness is most keenly evident within the corporate world. According to the 2022 PwC 2022 U.S. Metaverse Survey, more than two-thirds of corporate leaders are already working on their metaverse offerings.
These leaders range from the CEOs of midsize (sub-unicorn) tech companies to the CTOs of large utility providers. It’s a diverse collection of people, and it illustrates an interest that extends beyond the technology bubble. Emphasising this point further, nearly two-thirds of business leaders reported having a “good” or “detailed” understanding of the metaverse.
Consumer sentiment isn’t nearly as robust, but that will likely change over time, as VR hardware becomes cheaper and more capable, and the range available of virtual experiences grows. We’re already seeing moves to bring the worlds of live musical entertainment and sports to the metaverse.
The PWC survey highlights an appetite for more formal consumer metaverse services, like the ability to meet with a healthcare professional or speak to a customer service representative. If a company can meet these demands, they stand to thrive.
THE BUMPY ROAD AHEAD
It won’t be easy. There are some massive roadblocks ahead. The lack of a capable, affordable VR headset will be a major barrier to adoption. And the metaverse must overcome the stigma of the space’s earliest stumbles—like the dead-faced, ethereal faces of the avatars in Horizon World, which attracted scorn and parody in equal levels.
And, at the risk of sounding repetitive, the metaverse space is yet to show real utility. The successful metaverse businesses will be those that address an actual need. Timing and talent are no substitutes for actual utility. The best-designed white elephant is still a white elephant.
The recent turmoil within Meta proves that even the largest players aren’t immune from the need to show actual purpose. Although Zuckerberg makes a compelling case for the metaverse, it’s by no means a sure thing, and early efforts within Meta to build momentum have largely spluttered.
To be clear, Meta’s new direction isn’t solely responsible for its current malaise, which has culminated in the company losing over two-thirds of its value this year alone, and the lay-offs of nearly 11,000 employees. It faces stiff competition from TikTok and Snap, and is wrestling with Apple’s new App Tracking Transparency (ATT), which will cost the company nearly $13bn this year alone. But the lack of market confidence in the metaverse, driven by no short-term results or even a positive upward trajectory, hasn’t helped.
As the hype surrounding the metaverse reaches a fever pitch, there’s a real temptation for companies to pursue the shiny. To say “I have a metaverse product” for the sake of saying it. While that might earn them a few glowing articles in the tech press and keep newly minted Chief Metaverse Officers in full-time employment, it’s hardly the basis of a successful, long-term business.
Metaverse pioneers should instead take a disciplined outlook. They should build for sustainability and utility. Rather than pursuing novelty, build applications that align to their brand and your prospective audience. And, when the metaverse eventually reaches its apex of mainstream acceptance, they’ll be in a position to grow and dominate.
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