Measuring the Metaverse
As an inhabitant of the internet, I need metrics and a framework by which I can pragmatically quantify the Metaverse so that I can call BS where needed
Epic: Metaverse & the Future of Technology
“Metaverse” is the marketing zeitgeist blah blah blah BS buzzword of the moment - and it drives me nuts. The source of my antipathy is not in that it exists, but that people who use it largely ignore the underlying societal evolution that’s underway.
In the spirit of being the change I wish to see in the world, my metaverse shade planted a question deep in my psyche.
How should I define the concept of a “metaverse”?
As a product manager, I very much live the Peter Drucker quote - What gets measured gets managed. For every project I put up for the roadmap1, I’m obligated to create success criteria and the metrics by which to measure them. It’s an essential (though often infuriating) part of the job. I get why - I’m regularly asking for upwards of millions of dollars of company investment to pursue what I think is best for the business. The oversight on the investment is the metrics I put forward to be measured. My bonus - and job security - go hand and hand with these numbers. Add the fact that I’m a data product manager, my literal every day revolves around how numbers can tell an actionable story.
Imperative to defining the metaverse then are the metrics by which we can measure it.
A tweet in response to the question below by none other than Internet daddy Marc Andreesen himself inspired my discovery:
The question: “What does computing look like if we end up with the financialization of data? Tokenized APIs, data models, neural nets, etc where clients can build with the data of other clients -- in real-time?”
The answer:
This tweet brought me to the first principle thinking2 on the metaverse.
We have fully entered the Metaverse when the digital economy exceeds that of the physical world.
This implies the metaverse is a scaled economy, where no one actor reigns ubiquitous in its governance. Continuing down this line of thought, I looked to the physical world for inspiration.
How do we measure the economic scales of actors in the physical realm? For the past quarter millennium, it's been the Nation-State.
The scoreboard? Gross Domestic Product
According to Investopedia the Gross Domestic Product (GDP) of a nation is an estimate of the total value of all the goods and services it produced during a specific period, usually a quarter or a year calculated as total of consumer spending + plus business investment + and government spending + plus net exports
It’s meant to show if a nation's economy grew or contracted compared to the previous period measured.
Ranks of top GDPs in the world today using 2020 data ( China Annual Growth % 👀)
With skeuomorphic physical world equivalent value established, we can begin to put together the framework for measuring our blossoming digital reality. Let’s define some metrics.
Base Currency: First, being that it's not programmable, and its corruption literally spawned the original programmable successor, we’re kicking the US dollar to the curve. In Satoshi we trust - Bitcoin will be our base currency
Segmentation: Nation-states are defined by physical borders, with domestic entities that act within to create monetary value. Land in the digital realm are Bytes on a Server. Seemingly every day there is a new Platform that claims to be the “Metaverse”. This is a misnomer in my framework, as the Metaverse is an aggregation of all digital platforms that participate in the digital economy. Therefore, we’ll refer to these each platform as Meta World defined by the codebase on servers operated by a developing entity, and act as hierarchal children of the Metaverse itself. Examples of these Meta Worlds? Meta Quest, Fortnite, Minecraft, Roblox, Twitter.
Platform Spending: Pretty straightforward - this is the amount of capital a company invests in building and operating a Meta World platform.
Native token currency: Clearly ApeCoin($APE) will be the currency for whatever metaverse platform Yugalabs attempts to create. Meta Worlds will need 3rd party subsidiaries who operate in their native currencies. Already today, we see massive infrastructure in the DeFi space in how different crypto tokens can be exchanged/bridged/integrated in various ways. L1s such as ETH and SOL are great examples - and crypto will be omnipotent in these Meta Worlds. Likely we will see hot wallet developers will build native Meta World /platform integrated wallets for the big winners in the space.
3rd Party(Business) Investment: To be a digitally domestic entity in this frame is to operate on the servers of any given platform. The spending of 3rd party entities in these Meta Worlds is a digital business investment (like the aforementioned hot wallet integrations). Other obvious examples are the indie game developers. This starts to get funky with the introduction DAOs. LinksDAO could create its own VR golf courses, using their NFT as membership for access. The model for what constitutes a company/business is evolving, and we’re barely scratching the surface of how this will net out in the coming decades.
Consumer Spending: It's been a good year. I’m traveling to my favorite Meta World via my topline VR rig with the crypto wallet open & ready to make it rain. What to spend on? Let’s revisit the NFT space - it’s only natural that there will be a maturation of 3D NFTs enabled by VR. Place these works in a digital museum, and I then dynamically pay to view said art for X Meta World tokens per Y period of time spent viewing. In this way, all consumption could be “Streamed” - a concept actively in development today.
Now I’m feeling lucky - and the local Meta World the MarineVerse VR Sailing Regatta is in town. I can go full degenerate gambler in buying a ticket to attend and wager on the winners via the digital sportsbook hosting the event.
Metaverse consumer spending will get more and more creative as technology evolves.Net Exports: Imports and exports in the metaverse will be fascinating as technology can transport in milliseconds, as opposed to days/weeks in the physical realm. An example that comes to mind stems from a conversation Mark Zuckerberg had on Lex Fridman’s podcast. Zuck spoke of how we could develop AI code that can superimpose a design on whatever shape your avatar takes, wherever it may go. Package that code in an NFT, and it could then be applied to Avatars in multiple Meta World platforms. If the developer of that code is using the infrastructure of any given Meta World, the sale and application of that code in other platforms I’d consider an “Export”.
More concrete would be the data captured in any Meta World. Build a 🔥 enough app, and platform/Meta World who built that game can isolate the data mined from that app’s use, then sell that data to other entities outside their platform for an extra revenue stream. I bet car companies would pay a pretty penny to see what digital vehicles users were gravitating towards.
Taken a step further, they could build an API to make critical data available to any given platform, enabling critical infrastructure for all the Metaverse to use IE. VR Performance data. The raw data that can be “manufactured” into insights or predictive algorithms are the “Natural Resouces” of the Metaverse.
The simplest export we could quantify today? An app developed by a Meta World / platform that can be bought and utilized on other platforms. Think Microsoft Office on Macbook Pro - there will be winners for the basic tools. Eventually, all the big platforms will relent and converge on the best of such tools.
(Somewhere out there a VR spreadsheet will reign supreme, and the autists of the world will rejoice)
With these metrics now defined I’d like to introduce…
…<Drumroll Noises>…
Gross Block Rate (GBR) - The estimated total value of digital goods and services, typically measured in a quarter or a year timeframe. Calculated as
Platform invesment + 3rd party development investment + In-platform spending + plus net technologies exports value.
Represented in terms of the flow of bitcoin (hence, blocks)
I put together this visual to show the metric in comparison to GDP. Feel free to share this image far and wide.
To give a domenstration of our new metric in action, let’s calculate Meta Quest Gross Block Rate. As I’m lazy and it being a massive publicly traded company, I went with this obvious example as I can find numbers with relative ease.
*Disclaimer: The following numbers are meant to be directional to demonstrate how we could potentially quantify Gross Block Rate. I’ve taken sweeping liberties with them, so you can go ahead and skip the audit of my numbers.
For Platform Investment Meta Spent $10 billion on “Reality Labs” in 2021- their future-facing technology arm. (This includes products beyond Meta Quest but again…directional…)
For In-Platform Spending on the below chart, it appears App Spend 350 million - 1 billion in 2021. Let’s call it a cool $650 million
https://www.roadtovr.com/oculus-quest-app-lab-100-apps-best-rated-most-popular/
For 3rd party development, I'm going real SWAG3-y on it. On the Main Quest store and the newer App Lab, the below chart from roadtovr.com indicates a gain of roughly 950 new apps (To make my life a little easier, I’m assuming all of these are 3rd party apps, which is not the case in reality).
To estimate the cost of each app, I went with the following data
“All in all, the simplest VR apps, such as games that require users to overcome simple obstacles, will cost between $3,000 and $9,000. More complex apps, such as online stores that allow you to display products in a three-dimensional fashion, will cost between $10,000 and $30,000. More complex games or apps that are more specialized will likely be between $30,000 and $85,000. The most complex apps can take up to a year to make—we’re talking about apps such as MMORPGs or real estate apps that offer virtual property tours—and can cost anywhere from $90,000 to $150,000.”
Let’s split the middle, and settle on a rough app cost $40K a pop. Thus, we calc 3rd party development as 40,000 * 950 = $38,000,000
Lastly, for net technologies exports, I highlight a partnership deal Meta made with Accenture for 60,000 Quest Units
The Dublin-based IT[Accenture] firm is using XR technology to reduce management costs and improve customer experiences for clients.
Accenture recently partnered with Kellogg’s and Qualcomm to develop an VR solution for brands that uses eye tracking to provide accurate and unique market research.
Working with IHG, InterContinental Los Angeles Downtown, and Qualcomm, the Irish firm is set to launch an XR event planning tool that could potentially increase enterprise revenues up to 8 percent
Plain as day, Accenture is using the Meta Quest “tech” to forward their own digital-based ecosystem. To keep life easy, I’m only going to include this partnership for the value of our exports. This come sout to 60,000 X $299.00 (Price of a Meta Quest) = $17,940,000
Using our simplifications, this brings our Global Block Rate calculation to
$10,000,000,000 + $650,000,000 + $38,000,000 + 17,940,000 = $10,705,940,000 or
231634.36 ₿
= Meta Quest Gross Block Rate
Meta’s relentless investment here skews the number, but as vibrant ecosystems emerge I expect the in-platform consumer spending & 3rd party development investment become far more prominent.
Consider that the United States consumer spending today is roughly $13 trillion every quarter.
US Population = 329,500,000
Meta Quest Horizons MAU4 = 300,000
Facebook MAU = 2,910,000,000
Meta Quest Horizons currently stands at a .01% of OG Facebook population numbers. If roughly 10% of Facebook Users onboard to Meta Quest, weve equaled the US population. Now get them spending and, oh boy. (Meta Quest PMs reading this line, feel free to steal this for your investor decks 😝)
So you just did all this math in dollars - why convert it to bitcoin?
I’m glad you asked! The dollar is representative of the old physical model as a reserve currency. Not even getting into the schenigans of the Fed and the scam that is Modern Monetary Theory, Bitcoin proves more apt due to what backs it. The US dollar is backed by guns, tanks, and nukes. These physical arms cannot directly interface with the digital world. You know what does?
Energy.
Enery is required to run blocks on the chain. Energy is required to power the servers that delivery computing needs of a digital-first society. Where the world is heading today, energy will be an essential resource by which all power entites wll compete.
Energy consumption of Bitcoin was literally baked into it’s whitepaper design to prevent individuals from overtaking the network by making the energy needed to do so costs prohibative. We can even quantify a Bitcoin Energy-Value Equivalence to quantitaviely ascribe bitcoin values to energy cosumption. This implies we can also quantify Gross Block Rate by measuring the energy consumption of each Meta World platform. Perhaps I’ll go HAM on this idea in a future post.
Bitcoin’s fair value is a function of energy input, supply growth rate and a constant representing the fiat dollar value of energy. - Charles Edwards
I’m putting forth Gross Block Rate as a metric to compare future-facing platforms aspiring to build thriving communities with native economies. To claim “Metaversee” requires the economic activity to back it up. Today, it seams like the benchmark of being a “Metaverse” is paying the right marketer to push company propoganda stating such to investors and the media at large.
That don’t cut it for. You want your company to “enter the Metaverse?” Well, show me your numbers, and let’s talk.
Do you want to help actually help build the Metaverse? Well, the role of product management pays you handsomely to do so, while working fully remote, without having to type a single line of code.
Some examples of the jobs you could have:
Metaverse Product Manager at Club Rare - $115k – $160k AngelList Est.
Product Manager, Platform (Facebook Reality Labs) - $124,000/yr - $243,000/yr LinkedIn est.) ·
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Roadmap: A document that highlights what each development team in a technology company is committing to working on in a given quarter. Done right, it highlights cross-team dependencies, and hopefully when deliverables will hit production.
First Principle Thinking: The most foundational assumption one can make that dictates all other approaches to solving a particular problem
SWAG: Scientific Wild Ass Guess - A method of using expertise and experience to give a high level estimate for a measurement. Very subject to change, but useful for directional insight. Typically when putting together a roadmap we’ll “SWAG” all candidates to see if we’re in the ball park of what we can realistically commit to.
MAU: Monthly Active Users - How many unique users are on your product in a given month. Investors love this metric.
Measuring the Metaverse
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They recently raised the prices, not aware of the exact price point though since I don't use their service.