Week in Review - Meta without the metaverse

Saturday, March 19, 2022 • By Lucas Matney

Hello readers, and welcome back!

Last week, I talked about augmented reality’s half-decade of stagnation. This week, I’m focused on Meta’s crypto problems, which will undoubtedly lead to issues in realizing its metaverse vision.

As I’ve noted the past couple weeks, I’ll soon be taking my hot takes to a brand new newsletter at TechCrunch exclusively focused on crypto; if you’d like to join me, subscribe to Chain Reaction on the newsletter page!

the big thing

If you’ve been following this newsletter for the past year or two, you may have noticed that 1) I’ve spent an awful lot of time talking about NFTs (perhaps too much), and 2) I’m still very bullish on AR/VR despite also believing that the current industry is in a rough patch. These two topics have always been fairly distinct, but have found themselves oddly intertwined in recent months, largely as a result of conversation around the so-called “metaverse.” While VR certainly evokes a heavy metaverse aesthetic, I do think the crypto element is probably more important to getting the ball rolling than some type of immersive hardware.

This could spell trouble for the company that Zuckerberg built. Meta has lately been broadcasting itself as a champion of this “metaverse” space despite the fact that its footprint here is basically non-existent.

Meta has generally been pretty heavily focused on the VR element of the metaverse. Facebook’s 2014 purchase of Oculus set the wheels in motion for the company to upend its business with a focus on bringing users into 3D spaces. But the company’s VR platform has generally stumbled on social — it’s actually never not struggled there. All of its apps have failed despite the fact that the Quest’s software has been improving at a fairly rapid clip, something that I think has given the company faith that it’s only a matter of time before they make a great VR social app.

But a convincing social app is not the same thing as a metaverse, which I think is viewed as a spatial internet-like platform that users live a lot of their lives in. Today, users live their lives in a number of virtual spaces, and there aren’t that many incentives to choose just one. Incentivizing adoption and overcoming the hurdles of kickstarting early network effects are a couple of the things crypto has shown a lot of early promise in.

Sure, you’re basically bribing users, but you’re doing so with a currency that’s tied into the fiber of the network and should bring value back into the network. I think people generally assume that the marriage of the metaverse and crypto is just some buzzword soup, but there’s something much deeper there. Crypto is bad for many things, but building miniature economies that function in a closed loop sounds very much essential to building an online world that users spend much of their time in.

Which brings me to the issue: Meta has already showcased that an ambitious crypto revamp of the company is out of the cards. Facebook’s general regulatory toxicity over the past year has ensured this.

The company’s effort with its crypto payments blockchain Diem was as catastrophic a failure as Meta has had since its founding, which is saying something. Keep in mind, that’s not because they particularly bungled the product but because their broader reputation stopped them from capitalizing on something that they were so particularly well-positioned to capitalize on.

The company sold off their Diem assets a couple months ago and Meta has seemed to be losing a lot of their top crypto talent, who are leaving to start companies that actually have a chance of seeing their products get approved (or ignored) by regulators. Facebook hasn’t given up on crypto. At SXSW, Zuckerberg announced that NFTs were on their way to Instagram, but Facebook will not get the benefit of the doubt that every other crypto company has seemed to earn from regulators, so it’s unclear how sophisticated of a crypto strategy they can actually realize.

Meta can undoubtedly build out a great MMO by spending a few billion dollars; what’s less clear is if they are positioned to build out something more than that — something like the metaverse they’re describing.

Image Credits: Meta / Facebook

Connect like you're there!

other things

Here are a few stories this week I think you should take a closer look at:

Amazon wraps $8.5B MGM acquisition
After a very busy 2020 and 2021, the internet streaming giants are seeming to move from rapid expansion into a more strategic mode. That said, Amazon Prime’s aggressive move to buy out MGM for $8.5 billion just wrapped, so expect to see that offering get thousands of new TV shows and movies as a result.

TikTok wants to do Stories now too?
While it feels like the trend of the past couple years was every social media app trying to be more like TIkTok, it seems that TikTok actually has ambitions to absorb some of the functionality of Instagram so it can become a one-stop shop for social media users looking to share life updates.

Review: Mac Studio
The Mac Studio is a big moment for Apple, debuting what it calls one of the most powerful consumer desktop computers ever. My colleague Brian Heater waxed poetic on the device and its strong suits while voicing some hefty complaints about the new monitor’s camera.

Image Credits: Brian Heater

added things

Some of my favorite reads from our TechCrunch+ subscription service this week:

When should an early-stage startup hire a full-time lawyer?
“It’s better to hire your first in-house lawyer when it hurts a bit — when you start to feel stretched thin — rather than too early in your business’ lifecycle. Unlike with some other roles that may need filling, you can find highly competent outside lawyers to bridge the gap as you grow into needing full-time support. But don’t wait too long – legal issues can impact an organization’s efficiency, with the burden being felt most acutely by the founder and key executives…”

New data shows where startup valuations are sinking the most
“…According to data collected by Carta, a unicorn startup that provides equity management and other services to private companies, round sizes from the Series A to C stages in the United States are in decline, while valuations attached to those deals are also falling. For investors hunting for a deal, the pricing reprieve may be welcome. For founders hunting up their next capital tranche, the news could prove less desirable…“

How to hire engineers when you lack technical chops
“…You are targeting the top 25% of engineers, which puts you in direct competition with the best recruiters in the industry. Because engineers are approached by recruiters all the time, they have become wary of them. This gives you an immediate advantage as a founder or startup manager…”