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00:00One of my favorite things about the metaverse is the fact that it can mean anything right. And the definition for the metaverse is often what is most convenient for the people talking about it. It's like when my boyfriend says the sink is clean like what do you mean by clean. What is clean to you. Yeah. You know to companies that sell virtual reality equipment the metaverse is accessible to virtual reality for companies that own video game companies. And that offers is something that will be a platform for that IP. You know for companies that have so-called metal verses that exist on the block chain the metaverse lives on the block chain. So the definition right now is so malleable. And I'd love to hear from you Brad. Don't don't define the multiverse but tell me how long have we really been talking about it. Well probably since the first time I clean the sink him so well certainly you know everyone knows the book that came out says No Crash but probably when The Sims kind of came out or castle. You know when when you could start doing something where two people were in a world or a game or anything at the same time. That's probably when we started doing it. So probably The Sims and of course Second Life when Second Life came out was probably at that point probably when the first gaming engine was created that allowed creators to do things and to have person to person transactions probably then that would be that. So 15 years ago. Yeah. 2004. 2003. You know it's interesting. You don't say second last. A second life is the virtual world. Notably not a videogame that Linden Lab Brad's company produces. Secondly it's been around since 2000 2003. Later in really 2003 2004. It was a it was a idea before. That is Second Life the metaverse. No I think I think second life a virtual world. We don't use the term metaverse inside the company. I'm trying to get into you know Bloomberg or something like that. I'd say we were a metaverse for sure. But you can know the metaverse says as a next version of the Internet or what Mark Zuckerberg is calling it or all these things then we're part of that. But I really think of us as a virtual world and I think it's an important distinction. Yeah. Yeah. We would use that. We use the term a lot of open world platforms or gaming platforms. We primarily work with Minecraft and roadblocks. Again you know Minecraft been around for over a decade and we're really focused on that. And you don't need a VR headset for those experiences right. Those are those are open world games that have existed for some time and they're highly accessible. I think that's a really great point. I mean you work with gamers so much and immersion means something so different to every person. To some people it's virtual reality to other people. You can be immersed in 16 that pixel video games. Right to you. What does immersion mean and how does that impact the way that people do interact with videogames. Yeah I mean I think the thing that you know for me having worked now in this space for about seven years that I find so fascinating is it to me it's about community and the collective. Right. So when you talk about games like Minecraft and roadblocks are putting the tools they're democratising game design effectively. They're putting the tools in the hands of passionate gamers and they're allowing them to create their own experiences. They're speaking to the widest segment of gamers out there because some are more focused on creation than competition. But then it's all the community that's happening. It's the chat. It's finding your own like minded people. It's consuming additional content around those game experiences online. So it's really it's just really a preferred form of entertainment and activity. And I often say to brands that we're trying to bring into these gaming platforms that you know you need to think of it as the kind of the digital cul de sac. This is the hangout zone after school. And this is where again creation the collective and that community is happening when people in the tech industry today talk about the next Internet the successor to the mobile lab the metaverse. They talk a lot about it as a social as a social hub just like you the cul de sac. But to what extent is the games industry already creating a vision for the future. Yeah. I mean in my opinion that all the seeds are there right now with those games. And so and I think the fact that you can now have commerce you can see how digital inside digital games is driving physical commerce. I think a lot of those seeds are there. And how that can apply to education and other categories I think is is significant. The thing that that I find and look I'm not I'm not a Minecraft or roadblocks player. Right or developer. But what I do think is so inspired as we work with a lot of the top developers with those games and understand more about the communities they reach is the fact that you can really truly be anything and those worlds. So like that notice of that notion that that right now the seeds are happening in gaming of that feeling of limitless SNES and being anything or traveling anywhere I think is is pretty inspired. The connection you're making between commerce and self actualizing in these virtual worlds I think is very interesting. And I'd love to hear from you. Do you do you see any sort of relationship there with your experience. And secondly. Yeah so. So first the social aspect is primary. Right. So much like in the real world the virtual worlds share a lot with the real world. So the real world world world has infrastructure and roads and things like that. They have legal systems and governments good or bad. They have social. Right. And that's that's the reason we exist in San Francisco or metaverse of San Francisco or New York. And they have money and commerce. And so similarly in the virtual world we have gaming engines we have rules. You can't create a house and have a party. And then you know you walk into my party I don't want you there. I want you there. I'll take both. And so that's and that's really critical. You have your avatar you have your stuff but you're and you also have commerce. And so since that's what you asked. But I want to be clear that social is the primary driver. Games are like a gateway drug into the social aspect. And that's what's movie theater. When we talk about commerce there's different types. There's person to person commerce. Right. So I'm in the world. I've done something. I receive money for it. I can then spend that money in world or I can take it out. There's player to owner commerce. Right. I'm I actually am giving the money to. Blocks road blocks is doing something with it or Minecraft or or a fortnight. And then there's external commerce that comes in. So ethical advertising building building experiences and things like that and paying money into the system that's a different type of commerce. And then there's the unethical advertising which is a completely different type of commerce that that we all have to be very careful about. One thing I would though build on your point about social as you said self actualization. And I do think it's a it's a small little anecdote. But when I first joined the company we were running an experience for you. The gaming based experience around Minecraft and a kid came in to the to the location where we're holding the event. And I said well what's your Minecraft I.D. name. And he said well it's it's Monkey Man 0 8. All right. I'm like how did you come up with that. And he's like I don't know. I just came up with it. And he was so fascinated with himself. And and again about the time I'd say is pretty about nine or 10. But he said he picked it out at four or five years old. And I thought to myself gosh like what was that time when we all started to have the world start to put some some conditions on us. Like was it second third grade where you were figuring out like am I gonna be athletic. Am I gonna get good grades. Am I gonna be popular. Like and instantly like we started to get put in a box. And and you think about then how my generation starts to try to express their aspirational self now through their Instagram you know and it's a sad you know kind of state way only. And this there was something beautiful about the reversal of that that if we could break you know again I'm not trying to get too sappy with everybody but it changed my relationship to to these games because of the way that it could change. And in kind of the aspirational view your digital self could be unleashed and therefore changed the way that you manifest yourself physically as well. Over time the one thing we've seen is companies more seeking to kind of collapse. These two identities are real identities in our virtual lives as you can think about you know the naming policy on Facebook. Yeah. For example where do you think we're gonna be headed. Do you think we'll be we'll be able to maintain these sort of separate identities online. Well gosh I don't know if we'll be able to but I do think that it's true that the consumers that we deal with we reach about 70 million monthly players in the metaverse and these open world games. And certainly they do want the convergence on a more emotional level. They they want their digital selves to identify and enjoy the same things that they their physical identities have. And so they want the experience. They don't see it as separate lives. They see it as one life as far as the ability to keep them separate if you choose not sure. The great segment to Second Life. That's why. Yes. So the way the challenge that I would give to all the all the seas and entrepreneurs and things like that is how do we create a system an identity that is at the exact same time completely anonymous and absolutely known. Right. So Sean Burges cat right. You know that the cat in the box and it's alive and dead at the same time. The same thing has to happen with your identity. You're going to have to have a wallet. You're going to want your money. You're gonna want your stuff. You're going to want total anonymity total anonymity. But you're also going to want to transact. You're gonna want to be trusted. And that requires complete known. So the closest company out there that kind of has done a good job that is like eBay right. I buy something from someone on eBay and I know they're rating. I actually have no idea who they are. Right. We have our eBay handles. But I've done 7000 transactions and I have a five star rating. I'm both anonymous and known at the same time. Now the challenge with that is that that works really really well in a centralized own system. Right. So we do a great job at it because we know everything. We make sure that even we can't touch the data right at all. It's all been anonymized and we don't even have access to it. And yet if you want to take money out of the system I have to know exactly who you are. There's there's none. I go to jail if I don't know who you are. And so how do I create that. That's going to be that'll be the future when we can when we can do that because I'll have an avatar that you know without actually knowing it. Now there's the danger of that. Of course if we move into a system where I can be both anonymous and known but I do bad things. Right. So then you're gonna have a really interesting situation. And I know it sounds absolutely awful but it might be the government that CAC that keeps this list. I mean no one wants that. Everyone wants it on Web 3. But. But that. Actually can lead to really bad things happening. So this is gonna be super interesting. A construct that we look at in the future. It really seems like we're kind of talking around block chain right now. So maybe let's let's just kind of dive into it. Do you feel that the blockade would be an asset or a detriment to any sort of metaverse built on the principles that you've been exploring through Second Life at toll roads. So so the funny thing about the way we look at it when the virtual reality is so blocked and people want it to be anonymous it's actually the total opposite. Right. The whole point of block chain is that everybody knows everything. It's a huge word document. So if you if you talk about an NFTE and you put that by definition an empty is on the blocks and we've got two point two billion items we transact. We can transact in a one two hundred and fifty eighth of a penny. That does not work on the block chain. So. And the other thing about block chain is it is it dovetails with crypto which we've talked in the past which as you know I'll use the word because I asked permission is the apocalypse. And so. So when I start thinking about metaverse block chain crypto I see that as a future. But I think it's as much of a risk as it is a positive. If we get into a point where you have seventy thousand dollars in your account and that gets hacked we have a big problem. If you have seventy thousand dollars and I go under and I own it we all have an equally big problem. So so the block chain could be good. But I think crypto in virtual worlds and metaverse is does not work. And I'm whole you know we've looked at it for a long time and we cannot figure out how a currency that trades outside these example is. If you have crypto and you have your world and I want to buy that jacket and every day the crypto is going up 10 percent. I don't spend my crypto I hold onto it. And if every day it's going down 10 percent you don't accept it. It really destroys the ability to transact inside. And what makes it even worse is if you have a different world and a different crypto in virtual worlds there's no market clearing price. You think you can do it. The economics don't work because wings are really valuable to you. Swords are really valuable to you. They're ten to one each. There's no crossing mechanism. So that's why I see the risk of that. What are your thoughts on that. Well I think he said it well but I think it's the regulation and the interoperability that that makes me concerned as well. You know when we're talking about kind of Facebook Metta. I just I think that's we're a long way away from really understanding what it would take for all these walled gardens. And then again the regulation between them. So you know for us right now we focused mostly on I mean do I think that that in game currency and how that will further fuel and maybe convert into physical dollars that flat conversion. I think that is powerful. But you know the regulation between currencies concerns me. It's interesting though because a lot of the games companies that are making metaverse plays talk a lot about digital ownership and that of course is sort of a blocking concept the idea of owning the cosmetics that you purchased in League of Legends and then maybe being able to play with those and want to work Rafter or at night or another game. Do you feel like gamers actually want that. You know it's hard for me to imagine. I mean first of all the gaming segment is so fragmented. You know I don't think there's a lot of League of Legends players who are hopping into Minecraft right now their avatars. So. So maybe it's just hard to kind of imagine that. But I do think you know there's a place for your digital goods to move in and out of of inside gaming platforms. I think there's a point about ownership but I'm not sure that we'll see a day when EA and Riot merge their their in-game currency platform soon. Yeah and that's the that's the thing is we've conflate digital ownership with block chain. You can have digital ownership where people really mean is the ability to move things from one to the next. That create that. The technical challenge on that is pretty staggering. Someone will figure that out. The emotional part. You know if I moved from New York to San Francisco and I can't bring my stuff that's irritating. Yeah right. But bringing my money is critical. So. So it's really a lot of issues wrapped up into one. And then because of these and all the goodness out there sponsoring great ideas we've decided that to have the ownership that has to be on the block chain because that's immutable people that ownership. And Arwa I can only speak about our when people have total ownership of their goods. We programmed it in. You can't steal someone's jacket. So the ownership is there. You can't take it to the central land because there's no concept. But even if it is on. But you still can't take it to the central bank. So we're a long way away from that. But conceptually it's incredibly important. To those that are going to reside in virtual worlds and metamorphosis. Let's talk about ownership inside of the virtual world and specifically digital real estate. I saw a headline the other day about a piece of virtual land selling for like five million dollars. Right. Can you tell me how does real. Second Life and in any end did it in any way sort of predict what we're seeing today in the sandbox or central land especially in Second Life. Because we have not sold land for five million dollars yet. So. So here is the way we look at it. And it's and it's. This is critical. I actually think this land. So they're running a metaverse cost money. You run on NWS. You have your own servers. It costs money. You must pay for that. So there's only a few ways that I can pay for that. I can make money on transactions. I can charge people to be there. I can sell land or I can bring in advertising. Let's put that aside. Obviously you're hearing that's not my favorite way of doing it. If you your modification the metaverse is really really intense and really risky which is not the type of advertising that you do. To be clear. So when we say land what we do is we charge rent. Just like in the real world we the the analog between virtual and physical is much tighter than people think. So we charge rent. Why does that work. Well if you're renting land from me at two hundred and fifty dollars a month you either have to enjoy that for just that or you really rent it to other people. And why would they do it. Because they enjoy it and they can put a store on it and they can make money. So there's a there's a very so. So we believe that land is a business model that drives the moral compass of the metaverse. Right. So we think business model drives all that. And so we believe in that. What we don't have is an opportunity to sell land because we didn't build it into the system outside of a thousand dollars or 250 dollars. And that has kept us back. And that's when you ask the second part of your question. Did that did that precursor the the sandbox. Yeah. Because actually land is really valuable at times. We know I know exactly how much it's worth. I can present value. And it's really valuable. We missed that because of our commitment and because we didn't put it on the block chain. Is it. You can't trade land. You can buy land in our world but you can't put it on open sea. That takes away the five million dollars. And as the owner. That was bigness. I mean I would say is I mean in many ways inside like our owned and now. Proper bodies like mine were stealing land too. Yeah. You know come in built. Create your own private server. To your point there's an infrastructure cost to that. You know for certain minimum offer you can create that private server for free. That means you can invite anybody into your land you want. You can build anything on your land when you go back to your land. You don't have to be worried that it got torn down. It's really no different. If you want to get more land though if you want more server space you to invite more friends than you have to pay for that. And so it's really not that different. And the way that we partner with game developers is very similar. They go out and neighbors get their lawn. Their way of making money off of that is that they are working off the backbone of the e-commerce site that drives the engines of Minecraft and roadblocks. So they're getting a cut of the micro transactions in the game. But then we have a way to introduce and bring brands into those games. So maybe SpongeBob takes you on a wild adventure in the game or and that becomes an additional revenue stream for him. So you know this this new. These open moral platforms have created these massive creator economies I think is another important thread to why it has become such a dominant form of preferred gaming entertainment. It's we've seen evidence recently about sort of the revenue split between creators who are making content inside of virtual worlds and video games and companies that are sort of profiting off of that and thinking about some of the controversies around roadblocks and the percentage that developers child developers sometimes earn off of their creations. People feel can be unfair. Is that something that you've been thinking about with your property. Well certainly our technology is really meant to empower those roadblocks developers and Minecraft developers having a second revenue stream. Right. So they're getting a cut of the brand revenue that we're bringing in. They're getting access to our analytics suite that helps them understand more about the game who's playing the game how are they engaging. That helps them keep their game robust. And certainly I think that you know the kind of the epic Apple kind of debate you know as well when it came to mobile gaming you know the notion of is it fair that they're taking so much of that mobile gaming revenue. And look you know at the end of the day you need that phone as well to make that transaction. So you know there is a a legitimate kind of conflict on both sides. But we really focus we know that so much on these gaming engines are about democratization of gameplay. And so and having great positive game experiences. And so you know we focus a lot on Copa compliance or kids safe certified and making sure that everything we're doing is helping the livelihood of that everyday player and developer. And that keeps our interests aligned well with the mind crafts and road blocks of the world. I hope that if it ever does come that will be based on sort of the ethics that you just described. That's it for our panel. Thank you guys so much for joining us.

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