The following is a rough transcript which has not been revised by The Jim Rutt Show or by Robert Tercek. Please check with us before using any quotations from this transcript. Thank you.
Jim: I’m not going to belabor our listeners this week with a full ad for my new game Network Wars, but just a quick reminder, you can find it on the Apple app store, deceptively simple, but profoundly deep. 10 seconds to learn, but weeks to master and just 99 cents with no ads, no in-game purchases, and no time limits. Check it out. Network Wars, two words on the Apple app store or @networkwars.com.
Jim: Today’s guest is Rob Turcek. Rob is an award-winning author and one of the world’s leading authorities on dematerialization and the virtual economy. He has supervised the launch of new digital services that are used by hundreds of millions of people every day, including amazingly the first streaming video on mobile phones, the largest live educational program on the web, and some of the earliest games on a variety of platforms, including PCs, the web and mobile. Welcome, Rob.
Robert: Hi, Jim. It’s nice to be back.
Jim: Yeah, it’s great to have you back. We’ve had Rob on twice previously. In EP 133, we talked about his book, Vaporized: Solid Strategies for Success in a Dematerialized World. We went through a whole bunch of interesting businesses that are being vaporized. Some of them know it and some of them don’t right. And then on EP 139, we focused just on his ideas of vaporization in education. That’s a classic episode, EP 139. If you want to get an idea about the future of particularly college education, check it out. Today. We’re going to talk about the metaverse, maybe the next big thing in technology. So let’s start with, Rob, what in the hell is the metaverse?
Robert: Great starting point. Well it’s, at the moment, a very, very over-hyped concept. We’re at the earliest stages, but there’s a couple different ideas. So simply put, the metaverse would be a very high fidelity digital representation of a world. It might be a version of this world. It might be a completely fictional entertainment world. It might be a replication of an industrial setting. But the basic idea is it’s a digital model that you could immerse yourself in and you can do everything that you might do in the real world. And so we’ll have to have digital replicas of all those behaviors and digital replicas of ourselves.
Robert: There are a bunch of different envisions for what the metaverse could be. So we can talk about that, because in my view, there’s at least a half dozen ways to think about the metaverse and they’re not all the same as what you may have heard from big companies like Facebook that are touting this idea.
Jim: Yeah. It’s been obviously thought about and talked about since a long time. The first time I remember, and I believe it’s where the term was coined, was in Neal Stephenson’s 1993 book, Snow Crash.
Robert: That’s right.
Jim: That was really quite interesting, and then of course, more recently Ready Player One, the very excellent book that’s well worth reading. It’s actually better than the movie and the movie wasn’t terrible. Right?
Robert: And the movie, the Spielberg movie, popularized the notion to millions and millions of people who could see it. Right? So books don’t help. Some people can’t visualize what they read about. So I think the film actually helped make it very concrete for people, or visualized for people.
Robert: So those are examples of what we should call the dystopian metaverse. Okay? And by that, what I mean is in the sci-fi will world, this concept of an alternative world, a digitally defined universe that you can go into, in Stephenson’s book, in Ready Player One and in other science fiction stories, typically you’re escaping from a dysfunctional world. Like the real world has gotten to a point where it’s degraded, environmentally polluted. It’s dangerous, it’s full of crime and people live in squalor. And so they escape to this digital world as a kind of escape mechanism.
Robert: And again, Ernest Cline’s book, Ready Player One, really makes that clear where people are living in containers that are stacked up and their lives are pretty miserable. By the way, that resonates for an awful lot of folks these days, so you can see why the concept gets some traction.
Robert: And now the question is what kind of world are they escaping into? And so in the Stephenson’s book, the metaverse is not a fun place. The metaverse is quite a dangerous place where individual humans are trying to do battle, or combat or struggle against all powerful AIs and gigantic evil mega- corporations, if you will. Whereas in Cline’s world, the metaverse is an Oasis.
Robert: That’s what it’s called. And it’s meant to be this super fun playground where you can do all sorts of different things. There’s a whole bunch of different worlds that you, you can explore. So it’s kind of like a universe and there’s a game aspect to it. There’s skill aspects to it. Also all kinds of social aspects and civic aspects as well.
Robert: Now it’s also worth noting, the concept of governance is missing, or not missing but it’s assumed to be benevolent in the Oasis. That there’s a benevolent creator, benevolent dictator, if you will. In Stephenson’s book, it’s more of a free for all. It’s not controlled or governed by anybody. So you might think of it as more like the web in the sense that there’s open protocols and anybody can build it on top of it.
Robert: This sets out the fundamental distinction that we should talk about today because there are really two gigantic concepts of the metaverse. One is where it’s kind of a Disneyland style theme park that you can go to that’s totally controlled by a single corporation. And that corporation is going to try to make it look great and appealing, but they’re also going to try to make it sticky and try to extract as much value. The alternative vision is one that’s totally decentralized. It’s not controlled by anybody. So at some point in this conversation, it’d be great for us to delve deeper into that topic of centralized versus decentralized.
Jim: Yeah. Let’s do it right now in fact.
Robert: Okay.
Jim: When I was doing the research on the metaverse prior to this call. You know, I knew a little bit about it, but as always, I dug in a little bit. And I thought back and recalled some of these earlier ideas of it, you know, call it wild, dark and dangerous, right? Kind of like what the internet was in places back in the day. And now our big platforms are trying to be bright, clean places. Right? In fact, I actually wrote the words, “Disneyland, eek!”
Jim: And there’s certainly two possibilities. Let’s take social media, as an example, I’ve talked to many people about the idea of a distributed social media platform. And I pointed out to them again and again, it’s fucking hard, right? Getting things like search across a distributed social media platform is very, very difficult, and a lot of other things that are difficult.
Jim: And it will turn out, I believe that having a distributed metaverse is going to be a real challenge. We can talk specifically about some of those technical challenges later if we want to. Yeah. And so unfortunately the walled garden is going to have some competitive advantages, particularly early. And the unfortunate thing is because of increasing returns to scale first movers get big advantages.
Jim: So even if a really great distributed metaverse might be possible in 15 years, if Facebook and the other faceless men of big Silicon Valley tech get good enough in five years, it may forestall the opportunity for the critical mass to occur in a distributed open and uncensored metaverse.
Robert: Jim, it’s an excellent point. And it brings to mind something that you’ll appreciate, I know we’ve talked about in the past, which is in the very early days of commercialized internet, not the early days of the internet itself, but you know, mass appeal internet you had kind of a preemptive strike by organizations like Compuserve, Prodigy and AOL. And the idea was to keep people so entertained and make it so doggone easy that just out of sheer lassitude and inertia, you would stay inside the closed garden and you wouldn’t go explore the web.
Robert: And for a number of years that held fast. Actually I would say AOL was surprising for how long it was able to contain a massive number of people who were paying for the service and they just didn’t have any interest. And of course at that time also AOL and other companies popularized the notion that the internet was a lawless, dangerous place where something bad could happen, which added some appeal, some sex appeal, for people who were interested in that. And then it also deterred the mass number of people and kept them safely ensconced inside the walled garden.
Robert: You can see almost the exact same thing unfolding now in Mark Zuckerberg’s announcements in his Verge interview a couple of months ago, I think in July, 2021, where he set forth a vision of the metaverse that sounded very much to me like AOL in 3D.
Jim: Yep. That was actually a good interview with Casey Newton, who’s a very smart guy who follows what’s going on in the online world in considerable detail. I also had that same reaction. This sounds like the AOL garden recreated or, frankly, Facebook as well. Right?
Robert: Yeah, that’s right. It’s a 3D Facebook. So let’s build on that analogy a little bit further then. So I would say the Zuckerberg interview was impressive in the level of detail. I mean, clearly, this is a smart guy who’s been thinking about this topic in a great, great detail and great depth and has been experiencing it himself and has a huge team. And he’s invested tens of billions of dollars of Facebook’s money into this process. He has to, because he’s got Oculus.
Robert: So clearly he’s been thinking about it and he can speak about it in great detail. But when he speaks about it, if you peel back the surface, if you look past kind of the hype, what you see is kind of an incomplete vision. And so I wouldn’t describe Facebook’s vision as the metaverse. I would describe it as a proto-metaverse. And in that way, the analogy to AOL is complete, because AOL was not the internet. AOL was a kind of stripped down contained controlled version of the internet. It didn’t have all the features.
Robert: It certainly didn’t have all the creative possibilities of the internet. And as soon as that barrier broke down and people started to roam the internet, and as soon as the internet developed better capabilities and we had better broadband, we saw a world of possibilities emerge very quickly, like in a span of five years.
Robert: My hunch is something similar will happen here. Facebook’s going to try to do a preemptive strike. They’d like that to occur time in the next five years. They already have the Oculus device. They just announced a bundle deal where you can get one for half price. If you buy two, you get the second one for half price.
Robert: It’s really smart. And they have the best hardware. And again, they’ve invested billions in Oculus, so the Oculus Quest 2 is an awesome place to go for VR. It’s a great device for VR. So clearly Facebook’s trying to make a preemptive strike to kind of determine what the mass of people think is the metaverse, define the concept, control the concept, and limit people’s imagination to their realization of that concept.
Robert: But at the same time, there’s a whole bunch of other folks who see this coming and they’re working on a completely different strategy, a divergent strategy to enable millions of people to go build own version of the metaverse. And to me, this is going to be clearly a lot more interesting and full of a lot more creative potential.
Jim: Yeah. It’d be very interesting how this plays out. It may end up as multiples. The other analogy we should bring in, and in fact I wish I’d written it, but I kind of outlined an essay back around 2009 called The Empire Strikes Back. And I was talking about apps as the empire striking back. Right? Because the wild web, you know, if you get tired of something for five seconds, off you go somewhere else. Right? And once they got you in an app you’re kind of stuck, and each app is some proprietor’s view of reality. And the web’s not like that at all. You know, a Facebook version of the metaverse will definitely be like that on steroids.
Robert: That’s right. And so the internet version you’re describing is that concept of small pieces loosely joined where nobody tries to build the whole thing, but they try to make pieces that are valuable and interoperable.
Robert: This concept of interoperability is going to be fundamental to how the metaverse plays out. And the simple idea there is, are you going to be locked into a world where your identity and your currency and your possessions and your friends are bound up in one company’s proprietary software system, or will there be open APIs and a way for us to migrate our personalities, our personas, our avatars, our connections, our friendships, the things we own, our digital objects, and so forth. Can we migrate those from one word old to another? I think it’s inevitable to say that there’ll be multiple metaverses. That seems inevitable, just because of the fact that Facebook has competition already.
Jim: And there’s technical reasons as well. Right? It turns out that at least today, maybe you can get a thousand people into one metaverse simultaneously, at least in terms of having some causal interaction with each other. Right? This is where it almost gets philosophical. What does causality mean? What does interaction mean? But you really can’t have, say, two billion people in one metaverse today. No way, right? At least not actively engaging with each other. And so there will at least be many sharded implementations of metaverses for a long time to come.
Jim: And this issue of interoperability of our digital assets, currencies even, et cetera. And of course, one of the things that’s really quite interesting now, even though in some ways it’s a God-forsaken scam, crypto has created a whole bunch of concepts that could be actually very useful. For instance, a trustless ledger where we can store our assets that nobody can fuck with. This new emergence of NFTs, in some ways it’s kind of silly, but when it comes to being able to transfer our assets, say, from one game domain to the other, something like NFTs may well be the mechanisms.
Jim: So there’s some things going on around the edges, which are really, really interesting in the same way that the earliest things on the internet. The presentation, I used to do it fairly often, is how did TCP/IP beat the OSI stack from IBM, which was the alternative networking standard. In 1989 or ’90, it was not clear who the winner would be. In fact, I quote from a textbook written in 1990 for master’s degree students in networking, and it basically encouraged them to deemphasize legacy networks, like TCP/IP and to get ready for OSI. Right?
Jim: And as it turned out the reason it won, I believe, was the Berkeley free TCP/IP stack. It was written in C, very clean, understandable code. Anyone who wanted to include networking in their computer or even in their operating system, could get the Berkeley code for free and incorporate it in their stack. And PCP/IP locked in remarkably rapidly in the ’89 and ’91 timeframe. Game over.
Jim: And one could see something like that happening here in the metaverse. Someone comes up with a interoperability standard for assets, tokens, identity, et cetera. That might be the magic, at least for a while, enables the open rather than the walled garden version of the metaverse. It’s very interesting to watch the evolution. Is there sufficiency, simplicity, and inexpensiveness of this middleware to defeat the various people, and it probably won’t be just Facebook who try to build the walled garden.
Robert: That’s exactly right. So you brought up a couple really powerful concepts that are interconnected, and I think we should circle back and kind of underscore those. This first one is the idea of sharding into multiple versions of the same universe. I see that as very, very possible, right? Just based on time zones and the fact that there are different people with different languages that are going to be having different sets of experiences. Even if they’re in different versions of the exact same metaverse, you’re going to start to see those shards evolve differently, socially, the way people conduct themselves, the history of what happens there, how groups are formed and what they talk about. And so you’ll see sort of divergence in human behavior, even within a world.
Robert: But then the second one is divergence between the worlds themselves and divergence of the tech stacks and the tech platforms. So today, right now, as far as I can tell, there is no metaverse concept that’s fully interoperable where you can migrate freely from one, let’s say, world to another world. There are companies that are working on that of course. They haven’t gained huge amounts of traction.
Robert: But you can look at NFT games like Decentraland and Axie Infinity, and platforms like Engine in Japan, and Sandbox in South Korea. These are examples of early attempts to use the decentralized infrastructure that’s being used today for DeFi and also for NFTs and cryptocurrency. They’re trying to replicate that or use that as infrastructure for decentralized worlds and decentralized games.
Robert: That may be a prototype for a fully decentralized version of the metaverse. Right? And so the big battle there, and you touched on this as well. I mean, this is a constant in the history of computing since 1970, which is, the struggle between a completely vertical integrated stack controlled by a corporation and then a completely non-integrated, build it yourself, roll your own, open protocol version. And the struggle goes back and forth. It goes all the way back to like mainframes and sessions on client computers and so forth.
Robert: So I don’t see that that battle ceasing anytime soon. And frankly, today there’s just too much at stake, and particularly for Facebook. The metaverse, if it’s fully realized in the way that we’re describing is the opposite of Facebook. It’s going to be the death sentence for Facebook in the sense that Facebook is trying to centralize you and all your relationships under one corporate umbrella. A full implementation of the metaverse, where you can roam from world to world and create your own… That’s a key point… is the exact opposite of what Facebook has in mind.
Robert: So they’re trying to do a preemptive strike. Part of the reason they’re doing this is because their current business is under a lot of threat. You know, Facebook has no path to the ocean. They have no direct path to the ocean. They don’t own a device. So that makes them different from Apple, Google, Amazon, Microsoft. All these companies make consumer devices and they have reasonably sized audiences. So they have direct access to the sea, if you will, of humanity.
Robert: Facebook doesn’t. They have to go through somebody else’s device. And then they run into a company like Apple that says, “Hey, privacy is important, and we’re going to change the way our ad identifiers work,” and “Oh, tough luck, Facebook, we just busted your business and you’re going to lose $5 billion of revenue next quarter. That’s tough for you, but we think privacy’s more important for our customers.” Facebook doesn’t want that to happen. They don’t want a dependency on other vices so they’re investing heavily in the hardware to make a VR version, or an AR version, of the metaverse possible.
Jim: Yep. And in fact, I was digging around, it becomes clear that this is a gigantic bet for Facebook. Right? To this point, yours, that they do not have a platform. You know, they dabbled with this little video thingy they have where you can, I don’t even know what hell it’s called, not that they’ve sold too many of them, where you can do video chat with some kind of Facebooky piece of hardware. But generally have not been a player.
Jim: But they have, as you said, spent billions and billions on Oculus. You know, two billion to buy the damn thing, and what, 10 billion, at least since then. Maybe more. And so far I read they’ve sold maybe eight million copies of Oculus the most recent year at couple hundred, few hundred bucks. So it’s a billion dollars maybe. Probably losing money on each one. It’s certainly not yet a return on the hardware.
Jim: But it gives them a chance to win in the next role of the dice. And each time there’s a new generation, a new high concept in computing, fairly often a new winner wins. I mean, consider iPhone. I mean, go back and read the speculation about the iPhone when it was first introduced. People said, “Eh, how’s that ever going to put the little one that you type with your thumbs?”
Robert: Yeah. The Nokia Communicator was like-
Jim: Yeah. Research in motion. That thing.
Robert: Yeah. The RIM pager. Sure. Those were like the dominant smartphone.
Jim: Yeah. All that. “Oh, it doesn’t even have a keyboard, how can it possibly?”
Robert: Yeah. RIM was entrenched. Right? Everyone was like, “They’ll never be dislodged because they control email in the corporate environment.” It only took a couple years and RIM was ancient history on the junk heap.
Jim: They’re done. They cooked. Put a fork in them. And so it’s possible Facebook could do that. And you know, I do have an Oculus 2. I play with a little bit. In fact, I did one of the world’s first podcasts on Oculus. Not on my show, because I don’t do video. My dad said, “Boy, you got a face made for radio.” So I do mine just voice only. But I did on Vance Crowe, C R O W E, on his pod. Do a search, Jim Rutt, Vance Crowe. We did a kind of fun podcast in a VR room where both of us were in our Oculus headsets and you know, it ain’t bad.
Robert: Okay. So let’s without making this an ad for Facebook, let’s give Facebook their due. So first of all, you’re right. You know, Zuckerberg was the first to really see the great potential for VR, and he jumped on Oculus at the early stage and paid an outrageous amount of money, a couple of billion dollars. And now, the better part of a decade has passed without a huge result. But what he has managed to do is, by investing heavily in hardware, they built the first really acceptable VR platform, I think. Oculus Quest 2.
Jim: Barely. I would call it barely acceptable.
Robert: Yeah. Okay. Fair enough.
Jim: At least it doesn’t make you nauseous, which is improvement over all the earlier ones.
Robert: And you can kind of see through it so you don’t crash into stuff in your house. Right? That’s important. It doesn’t have a tether. It doesn’t have a cable. That’s important, you know, a standalone device. All of that is good.
Robert: And bear in mind, the important thing to look at here, this is a little different from computers. I’d liken it more to it game console. And I think of when Sony introduced the PlayStation in that timeframe around 1993, 1994, where Sony was a new entrant and they were trying to dislodge Sega and Nintendo who were the dominant console providers at the time. Those companies had all the big game publishers tied up, and what Sony did was a brilliant job of rounding up developers. And they gave them tremendous support. They made that like kind of the centerpiece of the PlayStation launch strategy. So if you needed any support whatsoever from Sony, they would let you go. Very different to Nintendo who was very selective about who they would partner with and they had only a few select partners. It was like a couple dozen companies.
Robert: So Facebook is taking kind of a game console approach. If you’re looking at the Oculus Quest 2 as a kind of game console, then you can see that what’s important there is the tie rate, not so much the revenue from the device sales, but how many games are they actually selling. The tie rate’s incredibly high compared to any other head mounted display for VR.
Robert: So what they’re really showing is if you give people a decent device with a decent experience, you can get them to buy an awful a lot. What they’re buying is games, let’s be really clear. It’s most of what people are doing. That’s like in the 90 plus percent of what people are doing with the Oculus Quest. But I don’t want to take away too much from them. That’s a real achievement. And in a way they get credit for like making the massive bet to build out this VR world.
Robert: My bigger issue is this. I’m not sure people want to do VR and there’s no evidence to say that VR is any good for anything besides a game. I happen to have a lot of faith that VR could be awesome for education, for journalism, and for business collaboration. But let’s bear in mind, you got to put your head in a bucket, right? You’re putting a bucket over your head. You’re blinding yourself to the real world. I don’t think people want to spend eight hours a day doing that. And today we do spend eight hours a day in front of a computer, in front of an iPhone, in front of a digital TV of some sort. And so we spend tons of time in front of digital devices. We’re consuming digital content all day long. We don’t think about it that way, but you know, you’re basically in front of a screen, or on a screen, for most of your waking day, especially if you work in kind of an office or a white collar environment.
Robert: Now think about putting a bucket on your head where you can’t see the world around you. You’re immersed in a new world. That’s cool. But let’s suppose you’re actually working in an environment with other people around you. You need to also be able to interact with them. And this is where 3D TV was a gigantic disaster. What the 3D TV people missed back in, what, around 2011, 2010, there was this push for 3D TV. And what they missed is that people are multitasking when they’re watching TV. You know, they’re looking at their phone, they’re talking to people in the room, they’re picking up some snacks or whatever.
Robert: … looking at their phone, they’re talking to the people in the room, they’re picking up some snacks or whatever, and you have these goggles on. And so, you have to actually take the goggles off to look at the real world, then you put the goggles back on. That’s why the 3D TV was a huge failure in 2011, even though the consumer electronics industry was pushing it like mad, and there were TV channels set up for 3D TV, and so forth. It didn’t really fly very well at home. It should have, but it didn’t.
Jim: Yeah. I spent a pile of bucks and bought a 3D TV in 2012. I think I paid an extra two grand for the damn thing. I think I’ve never watched a 3D show on it ever.
Robert: Well, that’s also too, the content was lacking. The biggest problem is that it didn’t really fit well with your use habit in your house. I think that’s also going to be the case for VR. If you’ve got to put on this headset and then take it off to deal with the real world, going back and forth, that’s going to get tough.
Robert: And then think about people with the hairstyle. You notice it’s always bald guys that they show using the VR because those people don’t have a hairstyle. What they don’t show is a woman who’s got elegantly, quaffed hair, a perm or whatever, because candidly, it’s a giant hassle to put that strap over your head and it ruins your … Not an insignificant thing. If somebody’s got makeup on their face, you don’t want to get that all …
Jim: Yeah, this is perfect transition to my next topic, which is one of the things I find interesting, potentially exciting about this, is that we may be in a period like a Cambrian explosion, where lots of very different things are being tried. Today, the difference between an Android phone, an iPhone, ain’t no difference between them. The difference between Windows and Mac OS, not very big anymore. But back in the ’80s, there was all kinds of crazy shit going on in desktop PCs. I mean, remember the Commodore 64, the TRS-80, the IBM’s, the Apple’s, then the Mac’s. Atari had a computer. There was somebody else, one that competed with Atari. Sinclair. All these very different form factors, different whole theories of operations.
Robert: And in the mid-2000s similarly with Prodo smartphones.
Jim: Yeah. RIM and Nokia.
Robert: Yeah.
Jim: I had a couple of weird ass ones that had slide out keyboards and stuff. They all sucked more or less, but-
Robert: But they were trying a new idea.
Jim: Yeah, so anyway, I think when we think about the head and the bucket, yes that’s one thing, but there are going to be other entirely different approaches. This gets us to the potential fork in the road. It’s kind of simplistic, because it’s probably a continuum, but the difference between AR and VR. For the audience … I’ll let you do it. Why don’t you give the difference between AR and VR? And then, we’ll come back to talk about ways that this Cambrian explosion could explore the whole space around that distinction.
Robert: That’s great. This topic is great because it’s going to get us into the different definitions of the metaverse, beyond the simplistic dualistic vision I’ve given you, which is the centralized versus decentralized. This is really about how do we render a 3D world?
Robert: Virtual reality, I think everybody understands, is immersive in the sense that you put on a head-mounted display. It’s like putting two smartphones in front of your face and you can’t see the world around you. And now, all you can see is an immersive space. It’s a full 360 space. For the people who do it the very first time, when they realize they can actually look up and look down, that’s always an aha moment for people. Some of the great VR experiences really exploit that because you can’t do that on a game console, a TV, or a computer, where you’re locked into this paradigm of a rectangle. We have this screen, the tyranny of the rectangular screen. It really dictates a lot of design choices. For instance, for game developers who are designing for PCs or consoles. The VR world gives you this 360 degrees of freedom. That’s amazing and it’s liberating, but the downside is you got to put a bucket over your head.
Robert: The flip side there is, well, what if we were to do that digital immersive reality on the world around us? That’s augmented reality and that’s where you take the world around us, walking around on the street, and we have some sort of rig on our heads that is able to sample the world around us, and gather all the vertices of that world, and then map on top of that, and render on top of that, perfectly matched to the X,Y,Z coordinates of that world, new things, new features, which could be fantasy things. It could be overlays of information. It could be maps and directions.
Robert: There’s lots of ways to use AR. For this reason, a lot of people are thinking AR is going to end up being a much bigger business and much broader application than VR because VR requires you to step out of the real world and immerse yourself in a specific world, whereas AR is a lot of different overlays on top of the existing world. We can see a lot of utility there. You can just imagine like Yelp, driving directions, things for messengers and delivery people, how to find the place. You can leave virtual post-it notes, so if you’re traveling somewhere, you could follow somebody else’s guided tour. The list goes on and on. I mean, there’s immense imaginative scope.
Robert: I should point out Facebook is one of the leaders in AR as well and they just announced a partnership with Ray-Ban. And just this week they got in trouble with the Irish privacy regulator because those new fancy Ray-Ban goggles that they built for augmented reality can record video, but they only have a little tiny white dot that lets you know they’re on record mode and the privacy regulators in Ireland are concerned that’s not enough indication to other people that they’re going to be recorded. We’re going to start to have, basically what we used to call Google glassholes, the people who wear the Google glass devices, who were unwelcome in certain bars, where they didn’t want people to be recorded and so forth. People wanted their privacy. You’re going to have that whole battle fought again, and again, and again.
Robert: The reality is, every major hardware company is focused on building AR goggles of some sort. They’re pretty secretive about these plans. We know that Apple, for instance, has invested billions of dollars in developing AR. We know that all the new Apple phones have ultra wide band chips built into them and that would be for transferring data at a very high speed to some local device in your proximity. You can imagine there, what Apple has in mind, is that they’ll have a very lightweight device, like these glasses, that can just do the refresh and drawing, but the actual huge amounts of data are going to be coming from your phone, and the heavy duty processing will happen on your phone, and in the cloud, probably using intelligence at the edge.
Robert: You can see there’s the strategic diversity here. Different companies have different approaches, but it’s safe to assume that every major tech company now that builds hardware is developing something for AR.
Robert: Now I’ve made a new distinction. Previously, we talked about centralized versus decentralized. Now we’re talking about AR versus VR. But Jim, if I can talk for another couple minutes. Let me share with you even more ideas about what the metaverse might be because these simple binary distinctions aren’t actually going to reflect the full complexity what’s out there. It goes even further.
Robert: What we’ve talked about so far, is an immersive world. You can think of a game world, like Fortnite or Roblox, where you go into this destination with a VR rig and you’re in the world. It might be multiple worlds inside of that world. That’s idea number one.
Robert: Idea number two is what we’ve just described, which is a virtual overlay on the real world, technically extraordinarily challenging because if you don’t have perfect verisimilitude, if you don’t have all of the X,Y,Z coordinates register exactly right, it’s going to bust the illusion because the overlays will be a little bit off, and that’s just enough to break the illusion and make it not fun. This is one of the reasons why we need 5G, interestingly, because 5G has ultra-low latency. Not the way it’s being deployed right now, but in the future, 5G should have ultra-low latency, which means they’ll be able to refresh that screen very, very rapidly. They’ll probably push the compute right down to the edge. And so, you can sort of imagine a full reconfiguration of the network to support AR.
Robert: Those are only just two of the ideas. Another idea is this concept of digital twins. And we should spend a second talking about digital twins, if that’s cool with you?
Jim: Yeah, absolutely. In fact, that’s where Microsoft is putting vast amounts of its efforts with its HoloLens, and its partnership with Boeing, and some others. Why don’t you lay out what a digital twin is? I know the industrial applications. If there are non-industrial applications, let’s hear about it.
Robert: This is exactly it. The industrial applications are where we should start the discussion. The concept of a digital twin is a very straightforward idea. It’s a digital replica, a high fidelity digital replica of a real world thing. That could be a product, it could be an installation, it could be something that’s far away that you can’t get to easily. The idea is not new. Digital twins have been around for many years, a couple of decades. NASA was one of the early pioneers, of course, because NASA has robotic spacecraft that are doing exploration way out in the fringe of the solar system and they need a way to monitor those things. What you tend to do is you load up a device with a lot of sensor data and that sensor data is constantly giving you updates, such that you can populate a high fidelity replica. That model, that high-fidelity replica, allows you to actually manage, not just monitor, but also manage that robotic device that’s way out in space.
Robert: Another example of an early implementation of a digital twin, is the Large Hadron Collider at CERN in Switzerland. Here we have an installation that’s 14 kilometers, gigantic space. You can’t possibly see it as a human being at once. And so, they built a high-fidelity model so that they could see how it would perform under different stress conditions. And bear in mind, here we’re talking about doing particle collisions at super high speed that potentially could rip apart the time-space fabric or something crazy like that. It’s a very good idea to do models and simulations before you actually put that into practice. And so, CERN built a high-fidelity replica there.
Robert: Other companies, industrial giants like General Electric and Siemens have been at the forefront of digital twins and they do digital twins for large industrial plants. Things like power systems, like generators. You can imagine if they’re installing new hydro-plants or gas turbines to generate electricity, here we’ll load up those devices with sensors and we can track what’s happening. Here we’re looking for stress, performance factors, any potential signs of weakness or decay, so that the part could be fixed, metal fatigue, and so on. Boeing was a pioneer in loading up jet engines with sensors, so that they could track the performance of jet engines, and that revolutionized their business model. This is really where to think of it. They don’t sell jet engines anymore. Now what they do is they sell guaranteed uptime. It’s just like an ISP.
Jim: Hours. They just basically sell you hours of flight time.
Robert: They sell you flight hours, that’s right. They’re tracking … Yeah, you’re flying from Los Angeles to Singapore, the whole time you’re in flight, data is flowing off of those jet engines. It turns out each jet engine wears differently. There’s different atmospheric conditions, different moisture, different wear and tear, runs for different rates, and so forth. As a result, they wear differently. And so, the sensors actually start to create a unique model for each engine. They can track that and they can actually start to do predictive maintenance, where they can see parts are going to wear out. And so, what happens when that flight lands in Singapore, is there’s a crew from Boeing that shows up. They already have the parts. They pop the parts out, replace them, and in 15 or 20 minutes, that jet engine is ready to fly off to London or someplace else. And so, they’re guaranteeing the airline operator uptime that they can keep the planes in the air. They won’t be disabled. And you’ve probably noticed this if you fly, there’s very infrequent that you have mechanical problems.
Robert: We can do this now for an entire industrial plant. You can actually model out not just the building itself, there’s a whole thing called BIM, the building information systems, and you can do that for environmental as well, where they can put sensors in the networks there. But increasingly, these systems are going to be not just to monitor, but also to govern, and manage, and make decisions about how the real world implementation or the real world plant or facility should be operated. And increasingly, that’s going to be done by artificial intelligence.
Robert: And so, when we think about digital twins, it’s really important to introduce the concept of artificial intelligence. This idea of digital twins, where we’re building high-fidelity replicas of real world implementations, that’s a third, whole great big concept for the metaverse. And it’s very, very possible that’s where it’s going to gain traction first because every industry wants to be more efficient and have less downtime. And so, there’s a huge economic incentive to invest heavily in this kind of metaverse.
Robert: Now you might think, well, how do those things pertain? Because we’ve got these immersive worlds. They’re games over here, they’re fun, they’re social. We’ve got these overlays, those might be informational, or they might be entertaining, or they may be for travel. And then, you’ve got these digital twins. Is there an overlap and do they integrate? Well, we’re right back to that topic of interoperability. Are we going to be bifurcated? Are we going to have not just shards inside of a world, but completely fragmented experiences between one metaverse and another? I can think of lots of use cases where we’d want to be able to transport easily from one to another. You can easily imagine in industry, that’s going to be important.
Robert: And so, it seems to me that just a matter of time before there’s a demand for standardization and some protocols for the transfer of certain things. And so, when we talk about the metaverse and we think of multiple versions of the metaverses, millions of digital twins simulating even entire cities, and airports, and traffic systems, and so forth, you can start to imagine that you’re going to need to have a way to transfer certain things.
Robert: One will be identity. And so, we’re going to need decentralized identity. This is where blockchain actually is going to make a good deal of sense. Decentralize the data that allows us to import identity attributes from one world to another. Whether that’s my representation for myself, my avatar, or attributes about me, the things that I’ve done, where I come from, who I am, interactions I’ve had, my friend’s network and, so forth. Can I import that from one world to another easily? Is there going to be some sort of digital passport system that allows me easy entrance from one world to another? That’s not just for me, it’s also for items and it’s also for locations. And so, we’re going to need an identity system that spans all three things: People, places, and things.
Robert: Now that identity system, there’s a lot to be said about decentralized identity. I’m certainly no expert in the subject, although I’m keenly interested in it, but I have been helping the GS1 Organization, GS1 United States, and this is one of the world’s largest standards bodies, that are focused on product identity. They’re keenly interested in this topic; and they’re keenly interested in everything we’ve just described. The reason they’re so interested in it, is because the global supply chain today has been disrupted by COVID-19. Disrupted partly because first it was the demand shock when everything’s shut down, but then also, as factories came on board, there was a second wave, where now there was suddenly new demand and things were sold out. And even today, we’re starting to see shortages as the Delta variant moves around the world. Ports are shut down, factories are shut down. And so, there’s these spikes in the supply chain.
Robert: There has been a trend, over the past five or six years, towards digitizing the supply chain with a view to automating it. And again, I’m to come back to artificial intelligence. There are now robotic shipping ports, and robotic container ships, and robotic factories, and robotic trucks. It’s quite possible to envision all those things inter-operating, but in order to transfer a shipment of goods from a robot factory, to a robot truck, to a robot port, and a robot ship, and then to another robot truck on the other end at the container port, and then eventually to some sort of automated store, or some automated distribution system, in order to do that, you’re going to need blockchain because you’re going to need to know that the robots are transferring the right goods. And they’re going to need to be able to trace back the providence, where the goods come from, how long were they in transit, how were they handled, where were they stored, were they tampered with? And so forth.
Robert: And so, you can start to see another set of needs arising here for standards. The notion, to me, that one company is going to develop all of this stuff and it’s all going to be contained inside one company’s world, and that they’re going to get it right on all these particulars, that’s such an absurd notion. It’s such an outrageously, outlandish notion, that it’s pretty laughable. I mean, that’s why I call Facebook’s attempt a Prodo metaverse because it can’t possibly encompass all the use cases that I just described. Those are extremely difficult problems. And bear in mind, trillions of dollars of value in the supply chain depends on those things getting done right, so I don’t think it’s likely that one company will solve it. Moreover, I think it’s going to emerge that industries, full-on industries, not just one company or a set of companies, but entire industries are going to demand interoperability. They’re going to demand standards. They’re not going to succumb to one company dominating them all.
Jim: And of course the other thing is, once someone develops a technology, let’s say a good interoperability standard for let’s say aerospace, if it turns out that technology is open source or inexpensive enough, it can then be repurposed into the consumer space, just as our web remember was originally designed by the defense department for military networks to survive nuclear war. Well, it turned out it was also good for other stuff, so it turned into the web. It may well be that the demand to drive interoperability in the short term is higher in industry.
Robert: Yeah.
Jim: But if those solutions are general, and inexpensive enough, and good enough, they could easily come into the consumer world, and smart entrepreneurs may combine these technologies. The interesting thing about being a tech entrepreneur, and I was one for quite a while, is you don’t want to have to invent too much. My rule of thumb was you needed to create one miracle and the rest you had to use things that already existed, plus one miracle equals success. If you have to do four miracles, forget it. In fact, when I look at business plans, maximum miracles two and it better be a damn big opportunity if you want two. Optimal number of miracles is one. Zero miracle is not good because there’s no barrier to entry. And so, as the various parts of this ecosystem create interesting things, then that provides room for entrepreneurs to combine the pieces, add one piece of magic, and win some part of the business.
Jim: If Facebook has their walled garden, where everything has to be in Facebook tooling, and Facebook representation, Facebook identity, some smart startup takes, “Ah, let’s use this interoperability modeling of computation and objects from the aerospace industry and let’s combine that with Apple’s new hardware.” They’re probably not going to be any good at all, at the content side. Apple not really a content company, though they’re getting a little bit of chops in their Apple TV. And I’m going to use the Epic tool kit for creation and for the ecosystem. One can imagine building something that’s way cooler than what Facebook could possibly lift on their own, no matter how many billions of dollars they put into it.
Robert: That’s exactly it. I mean, Facebook has a lot of smart people on a lot of money, but they don’t have all the smart people in the world, and it’s an awfully big world. There’s eight billion people out there who are looking for things to do. Many of them are focused on developing the next big thing in digital media. You can’t out-compete the internet, I think. I think that’s a fallacy.
Robert: Hey you know, Jim, on the topic of government and the military, it is true. The history of Silicon Valley, the secret history of Silicon Valley is it’s government contracts, all the way through the early days of radar, and figuring out trajectories for missiles, and so forth back in the ’50s. Much of what we know of as Silicon Valley today was funded by government contracts. That’s not all. The entire internet, mobile phones and satellite telecommunications, those are all inventions that were created at DARPA in the 1960s. And so, many of the building blocks, the basic building blocks, were developed as part of the defense department’s initiatives. But what’s cool about DARPA and initiatives like that, is that they don’t own, or they don’t control. They may provoke, or instigate, or start. They say they like to spark and start, but then they relinquish that to private industry. And they know that if it gets out to the consumer world, it’s going to innovate much faster and that’s good for the government as well. They start, spark and start.
Robert: Here’s an interesting fact. The Pentagon is now asking for every defense contractor to submit a digital twin as their first deliverable for every defense system, so that they can simulate it, and test it, and see how it works, which makes a good deal of sense. Sure, it makes sense. And to put that in contrast, if you were to look at the blueprints for a fighter jet, you’re talking about volumes of books. It would be tens of thousands of pages to print that out, not that anyone does. And so, they had these unwieldy first deliverables that a human couldn’t really manage through the blueprints to understand them or evaluate them in any comprehensible or meaningful way. Now with the digital twin, the defense department will actually be able to simulate, and test, and see how it performs in certain circumstances, and give prompt feedback before they proceed to the next step. What we might see, is that the government is actually going to spur the development and propagate the widespread take-up or the democratization of digital twins.
Jim: Yeah, that’d be very cool. Let’s move on to another topic, which is really interesting, which is let’s go back and assume this really open-ended metaverse world with all kinds of creations, someone’s got to create all that shit. Right? I read, how much does it cost to create the Fortnite world or the World of Warcraft world? It turns out it’s a lot. Those worlds are only so big. In fact, in Zuckerberg’s recent chat with Casey Newton, he was saying, “I think we’ll employ millions of people in our metaverse just building shit.” I got, “I hope not.” It’s certainly interesting. And then, I stumbled across. I said, “Aha!” Which sounds like it’s probably the answer, which is AI enabled creation of artificial worlds and artificial artifacts, where you set a few parameters, you give it some guidance. Oh, I want it to look like a Rembrandt. I want it dark, and a lot of browns, and stuff. Oh, yeah I want it to be blah, blah. Off it creates a million square miles of new world on a new planet some place. Talk a little bit about the ecosystem of world creation, and artifact creation, and how there’s going to be all kinds of interesting arm races going on in that.
Robert: That’s a great topic. And actually to me, this goes more towards the idea of decentralization and democratization. There are three big trends at work here. The first one that we’ve talked about is dematerialization, which is a topic that’s near and dear to my heart, because that’s what I wrote my book about. When we talk about building digital worlds, or digital twins, or virtual worlds, we’re talking about virtual worlds, we’re talking about dematerialized places that we can put ourselves in, and dematerialized people, like digital representation of people.
Robert: The second concept is democratization of tools, the idea that you make these tools available to anyone that wants to create.
Robert: And the third part is decentralization, and decentralization of infrastructure means that it’s owned by no one, it’s controlled by no one, and it’s accessible to anyone. That is the core ethos of the people who are working on cryptocurrency today. And so, we can make the note, observation on the side there, that all software is speech, and almost all software is political speech, and everything that’s happening in crypto is a political statement right now about decentralization.
Robert: If you have a software protocols that are open to everybody, and you have now got permissionless innovation, and you’ve democratized the tools, well, then Jim, you’re exactly right. What we can envision isn’t one, or two, or 10 metaverses, but millions of metaverses. Now, your point is good. Most people don’t have the skills to build 3D worlds. This is substantially more difficult than building a webpage, or making a GIF, or something. There’s a lot of effort and a lot of skill required. For sure, we’re going to see AI enabled tools that make it possible for non-experts, non-coders to develop 3D worlds. Whether that’s the version you just described, where you text in a description and the thing generates it for you, or whether you’re using building blocks to do this.
Robert: The company I find most interesting in the space and in full disclosure is a company that I’m in advising …
Robert: … interesting in this space and in full disclosure, is a company that I’m advising, is Unity. Unity has taken a rather different approach. Unity Software is a company that was started in Denmark, but now it’s based in San Francisco. And they went public last year and in their S-1 filing, they talked about the metaverse. But the key point there is they’re not the ones building the metaverse, they’re building the tools and the systems and the ways to manage different worlds. Most of what they do today is games. Their biggest part of their business is games.
Robert: Something like 70% of mobile games are built on Unity today. So if you’re building a 3D game or even a 2D game, it’s very likely, if you’re with a small team that wants to compete against a big game publisher, you’re probably going to be building your game in Unity.
Robert: But as we’ve already talked about, a lot of these concepts for the metaverse require 3D. And so if you can build a game world, you can probably build a metaverse right? The skill set’s similar.
Robert: What we’re starting to see now, is companies like Unity are going to enable millions of people to build the world that’s in their imagination. So, this is a great force for democratization of tools.
Robert: One of the reasons I like working with Unity is that they monetize, but they don’t over-monetize.
Robert: One of the big issues right now, one of the things that people are griping about today, in the world of mobile games in particular, is that the game platforms take too much.
Robert: Apple’s App Store, Google’s Play Store, these game distribution systems, these storefronts that allow people to discover and purchase and download or access game worlds, they’re taking too big of a cut. It makes it hard for the game creator to make money.
Robert: And broadly speaking, in the creator economy, we hear so much hype about these days. Whether it’s people making YouTube videos or influencers on Instagram or kids on TikTok who are making funny videos, there are systems there for sharing the wealth with all those people who are creating all that. But candidly, people don’t make much money on that.
Robert: This is a classic long tale. There’s a small number of people who are making millions of dollars, and then there’s zillions of people who are making six cents or less.
Robert: Some of the platforms have a cutoff, where if you don’t generate above certain amount, they don’t even pay you.
Robert: This is also true for Spotify. Spotify has millions of songs available, but it turns out that they’re only paying a few thousand people substantial amounts of money. And most of the creators on Spotify are earning something like a thousand dollars or less. So it’s very, very small amounts of money. You can’t sustain them.
Robert: So, that’s where a company like Unity is actually quite interesting. They provide the tools and all the systems for launching and managing the business, but they don’t over-monetize.
Robert: They allow the creator to keep the lion’s share of it. And their vision is quite simple, is that, if they equip millions of people with tools, you’re going to see millions of worlds.
Robert: Of course, their business will continue to grow, but that’s a fully democratized vision of the tool set.
Robert: All the other companies we spoke to, they’re going to have proprietary tools and you’ll have to build within their world. In other words, you’ll be captive to their world if you’re building. That’s a huge distinction. And that’s true for just about every company we’ve described, with the exception of Unity.
Jim: Epic also seems to be providing a large suite of tools.
Robert: Yeah, that’s true, although, I would make the distinction that Epic’s tools are principally aimed at high resolution game worlds.
Robert: That is true. They’re trying to get into film production and some other aspects, shopping and so forth. So we’ll see. There’s always competition in these fields.
Jim: And of course, Unity and Epic, they don’t quite go head to head. They kind of punch like this. Epic is for the really high-end games. It’s a real pain in the ass to develop an Unreal Engine, which is their engine.
Jim: Unity, which I’ve used for years, mostly for scientific visualizations, is real easy. You can get a 3D space up and running in 15 minutes and even in VR.
Robert: They give away millions of copies for free, to students. The whole point is to get people into the habit.
Robert: I should also point out one other thing, which is this. When we talk about these technologies, we tend to have a very North American viewpoint or a very Californian viewpoint, or a very Northern hemisphere viewpoint when we talk about digital technologies.
Robert: But I think it’s very important for people who are listening to understand where demographic is going to come from, because we know that there’ll be another billion people over the next 30 years.
Robert: What’s important to understand, is that the United States is basically flat in terms of population growth. The only reason we’re flat and not declining is because of immigration, as much as that’s a controversial subject in the US.
Robert: The only reason our population is growing [inaudible 00:50:18] even stays stable and doesn’t decline, is because we have immigration.In Europe, they’re already in stages of decline, in terms of number population.
Robert: China actually hit peak population. It’s now in decline. They’re going to have an upside down economy fairly soon, where more people are over the age of 65 than under the age of 15. That’s a gigantic long-term problem for China. Japan’s already in that space.
Robert: So in the Northern hemisphere, you see stable or declining populations. The places where the world’s going to grow fastest in population is in the Southern hemisphere and in particular, in Sub-Saharan Africa.
Jim: Almost all the world’s growth will be in Sub-Saharan Africa-
Robert: That’s right.
Jim: … after another 10 or 15 years. South Asia’s still growing a bit. But otherwise, nobody’s growing except Sub-Saharan Africa. And it’s going to continue to boom for another 50 years, at least.
Robert: So if you’re interested in building a business, whether it’s a metaverse or a set of tools, or anything else, frankly, in digital media, you sort of want to grow it where the audience is going to grow quite naturally. Because if you get the formula correct, you’re going to get a hundred million users, overnight.
Robert: It will be like riding an elevator. You’re just riding that demographic curve. So, that could be a great force for growth for a company. And so I think that now is a good time.
Robert: In fact, just last week I was speaking to a company that is focusing their development on Sub-Saharan Africa for this very reason.
Robert: They’re building a new tool. Of course, the way they’re developing it in Africa is completely different from the way you’d organize a business in California. But that’s cool, right? I think that’s a neat approach.
Robert: They’re optimizing for the smartphone. They’re not even going to worry about the computer, because that’s probably not going to be something that people are using to access. So the smartphone becomes an important device for access to these tools for creation.
Robert: That’s a rather different workflow than what we have today in the Northern hemisphere. And so I think we make a bunch of assumptions about how software is developed and how these worlds will be built. I think demographics are going to challenge those assumptions and they’re going to cause smart companies to recalibrate towards the Global South.
Jim: I think that makes a lot of sense. Now let’s turn towards one of my pet hobby horses, which is sort of the intersection of business models and potential for social harm.
Jim: Let’s start out with the social harm. Or put it this way, I would call it social harm, at least.
Jim: My old friend, Marc Andreessen, not that long ago, had his venture capital firm, az16 has been pretty much a player in the metaverse and virtual reality, et cetera. He had a really haughty series of statements, I thought.
Jim: He says, “Well, we got to think about the metaverse as getting around reality privilege,” was the word he used.
Jim: I wanted to vomit. It was basically, “Well, most people aren’t going to be able to live like me, in my fucking castle out here in Silicon Valley. So that the 35-year-old Uber Eats driver, who’s still living with three roommates in a student dive apartment, doesn’t come and cut my throat. Metaverse will be great.”
Jim: He didn’t, of course say this, but this is my interpretation of what he was getting at. “Let us have the metaverse, so Mr. 35-year-old, angry male doesn’t come and kill all of us rich fucks. Instead, he can have a Lambo and fancy threads and a AI girlfriend in the metaverse.” Right?
Robert: Mm-hmm (affirmative).
Jim: I think about that as leading to something like digital feudalism, where the lords own the manor and they give the serf celebrations and ale, et cetera.
Jim: I think that’s really going to be an issue. And it may be a way though, for the elites to manage, essentially, the exploitation and degradation that so many people are putting up with today in society.
Robert: Okay. Once again, you dropped a mind bomb there. So there’s a lot to respond to. Let me go backwards.
Robert: The first point, about feudalism, we already live in digital feudalism. Right? Today, you pick your master, who you’re going to be a feudal serf to, whether that’s Amazon or Apple or Google, Android, I should say.
Robert: You pick your master and then you buy into their fiefdom. You become a serf on their plantation and your data is harvested. You’re locked in, in various ways.
Robert: You have absolutely no rights. You’re given what they call a contract of adhesion, in the terms of use, so that you have absolutely no ability to dispute the contract that they give you-
Jim: And they can change it whenever they want.
Robert: They have the ability to change it, however they want. Yeah. It’s like sticky tape on one side for you and completely non-sticky for them, on the other side.
Robert: Of course, companies like Facebook, routinely abuse that by changing the terms of use, pushing new ones down. They’re 50-page contracts that nobody has time to read. And anyway, you can’t even distinguish what the new changes are. So, we live in digital feudalism already.
Robert: One way to think about the metaverse is a hyper extension of this, extending digital feudalism to encompass the whole world. Now, that should give people some cause for alarm.
Robert: Now, for some of the reasons we talked about, I think that’s preposterous. I don’t think it’s likely to succeed, but that doesn’t mean they’re not going to try.
Robert: These companies have great franchises. And bear in mind, the mobile revolution that we’ve lived through since the advent of the iPhone and really the advent of the App Store in 2008, since that time in the last 13 years, we’ve seen tech companies go from being highly valued to the most highly valued companies ever in the history of humanity, breaking the two trillion dollar threshold. Right?
Robert: This is a pretty big deal. These companies have a lot to defend. They have shareholders to answer to. So, they have to reassure those shareholders that they’re going to be viable and that they’re going to extend their feudal fiefdom into these new digital domains. That’s a strategy that’s almost required by the investors.
Robert: The other things that you spoke about, though, also require a little bit of unpacking.
Robert: This idea of the gig economy versus the creator economy, there’s been a lot said about this. It’s really worth exploring, for people who are listening.
Robert: The gig economy is the Uber driver you talked about. Right? This is a person who’s working for less than minimum wage, schlepping around town, burning up gas in their car, delivering packages and people from point A to point B.
Robert: It’s a neat concept. It was innovative at the time, but really what we’re talking about, is breaking a hundred years of labor law and reversing the gains that labor has made.
Robert: There is no effective labor movement in any Northern country, that I’m aware of right now. Workers’ rights have been rolled back wherever they can be.
Robert: The digital technology companies, in this regard, look like the most villainous captains of industry or robber barons since the 1870s. Maybe even more than in the 1870s, with absolute careless disregard for the humanity of the people that work for them.
Robert: There’s a really great bit, a blog post that was written, that was called Under the API where you’re employed by a robot or you’re employed by an app.
Robert: I quoted about that in my book. I’ll send you the link, so you can share it with people here. But the question is, what’s it like to work for a robot? If you’re an Uber driver, you already do work for a robot.
Robert: I talk to Uber drivers. Whenever I get an Uber, I’m like, “Hey, how do you like doing this?” They’re always like, “I love it, because I’m my own boss, and I can set my own hours.”
Robert: I’m like, “That’s cool. You’re your own boss, but how do you get paid?” “Well, I get paid by the app.”
Robert: “Oh, okay. Who tracks what you’re doing?” “Oh, the app.” “Who tells you where to pick up a passenger?” “Oh, the app.” So I’m like, “Well you’re not your own boss, then. The app is your boss.”
Robert: And then the conversation kind of comes to a halt because they don’t like to be reminded of that. Right? We like to delude ourselves into thinking that we have the illusion of being self-employed.
Robert: Now in the metaverse, this illusion’s going to be extended. Of course, companies will have tremendous ability to impose that illusion on people.
Robert: So, you’ll have the illusion of running a store. You’ll have the illusion of creating digital objects. You’ll have the illusion of trading those for illusionary digital currency. You can start to see where this is like, weird dream world. We’re going to start to program people.
Robert: How does that play out in the real world? Well, I’ve been thinking about this for a long time. Since I wrote my book, I didn’t have a theory for what de-materialized politics looks like.
Robert: But last January, we had an example of what happens when a group of people who spend more of their time in fantasy worlds, who’ve been programmed by people with an agenda to believe stuff that simply isn’t true.
Robert: We saw what happened on January 6th. They stormed the Capitol. They were successful. They stormed the Capitol. They occupied the Capitol, and then what did they do?
Robert: They walked around taking selfies and pictures and posting. They didn’t do anything. They didn’t burn the place down.
Jim: LARPing revolution, I call it. Right?
Robert: It was like the selfie revolution.
Jim: Yeah, live action role playing. It wasn’t actually a revolution. It was role playing. Oh, idiots committing burglary and then taking a picture and posting it on Facebook. That’s real smart. Right?
Robert: So, it was like extending a game into the real world. And when you say LARP, that’s what you’re talking about. Live Action Role Play is just a game in the real world. Right?
Jim: Yeah, exactly.
Robert: You have people who were playing a game. That’s why they were all like, “Wait, what? We’re going to get in trouble for…” It didn’t even cross their mind that, there was a major transgression that occurred or that they broke the law, federal laws and so forth.
Robert: They’re like, “Hey, well, what did I do? I was just going with the flow here, man. We were having fun. American flag, right on America.”
Robert: Freedom, liberty, all that nonsense that’s been hammered into their heads. So, there’s a real danger here that these platforms can program our mentality in such a way, that we start making very poor decisions in the real world.
Robert: Maybe that analogy I gave isn’t perfect. I’m not trying to claim that it is. But we do know from recent reports, that Facebook has done lots of internal research, that shows that their platforms are not good for people’s mentality. They can actually harm people. They can harm young girls, the way they have a self-image.
Robert: This is a real problem. It’s not policed. There are no workplace safety rules for people in social media right now. We don’t have an OSHA for people who are in social media. Should we have an OSHA for digital worlds?
Jim: Or an FDA. Now, I’ve recently come up with a new concept, which is pretty scary. I think you’re referring to the recent Wall Street Journal articles, which showed that a surprising number of young women have ended up feeling much worse about themselves, 13% contemplating suicide, based on something that happened on Instagram.
Jim: Can’t say I’ve ever looked at Instagram, other than look at my wife’s photography, but apparently it’s quite toxic son of a bitch, particularly for young females.
Jim: But anyway, when I think about some of the exploits of modern capitalism, we often talk about externalities. In fact, if one wants to be cynical about capitalism, the way you make a big fortune quickly, as opposed to grinding out a nice business with a 10% profit margin, is you either find a monopoly choke point and fuck everybody with monopoly rents…
Jim: That was actually my theory, when I built businesses. We found some nice monopoly choke points and commanded really outrageous margins, or you exploit externalities, i.e. do pollution. Damage the natural world, coal mining, things of that sort, dumping pollution, et cetera.
Jim: I realized that damage to people’s neuro systems is a form of externality.
Robert: Yeah.
Jim: So, we could actually say that Facebook, especially Instagram, is playing the old, old game-a-game of externalities, dumping pollution.
Jim: In this case, they’re literally suboptimally programming our neural systems. That ought to be illegal or heavily taxed, or at least regulated.
Robert: You’re a hundred percent right.
Jim: I have to admit, as a person who was at the internet from the very beginning, yes I was a techno libertarian, et cetera and keep the fucking government out of this shit.
Jim: But now, when we see how far it’s gone and how powerful the little Homo sapien is against computers more powerful than the ones that beat Kasparov at chess, the time has come to put the fist down and say no to bad shit.
Jim: I just happened to try some of the worst bad shit, in this last week. This is the fentanyl of online, this thing called TikTok. Right? You keep hearing about TikTok.
Jim: Well, as an almost 70 year old, I’m not supposed to be using TikTok, supposedly the Zoomer. Well, I say, “Well, fuck, I’ll try anything once.”
Jim: Voltaire said, “Once for experience. More is perversion.” Right? So anyway, I tried TikTok last week. I go, “God damn, this is interesting and addictive as hell.”
Jim: You make little changes in your behavior. You search on something and you see it changing. It figures you out real quick, what you like.
Jim: Yesterday, I tried it again. For my second time, I was going to kill 10 minutes before a Zoom call I had scheduled.
Jim: Next thing I know, I look up and 25 minutes have gone by, and I was 15 minutes late for my Zoom call.
Jim: I’m never late for a Zoom call. I consider punctuality one of the high virtues.
Jim: This God damn thing sucked me in, in an incredible way.
Jim: I’ve done a little bit of research since and talked to a guy yesterday about this. He said, “Oh yeah, everybody knows TikTok is the fentanyl of social media. Any sane society would just fucking ban it.”
Jim: It’s clearly way worse for us as a society than not having TikTok and provides no actual value whatsoever.
Jim: It seems to me that when we are building these way more powerful technologies, which would be able to program us much more deeply and subtly even than TikTok, we’re nuts if we deploy the metaverse without some clearance on whether they’re net positives for humanity,
Robert: I think you’re right. I think we are going to embark on that journey because I think government’s ill-equipped. Our government moves so slowly, relative to technological innovation, that they’re unable to respond.
Robert: Plus, look at the geriatrics that are in Congress right now. They have such a faint grasp of how these technologies work or even what the business model-
Jim: Geriatrics, stupid and corrupt, there’s the trifecta. Right?
Jim: Look at China, on the other hand. They recently required the game companies to limit video games for kids under a certain age to three hours a week and only on weekends.
Jim: I go, “Shit.” Try to get that done in the United States. Never happen. Right?
Jim: Now, a lot of things I don’t like about China. I’m not an advocate of China. I think they are one of the bad attractors for society, but a broken clock is right twice a day.
Jim: It may be that the willingness to be socially decisive about, when does the application of information technology… when is it good for society and when is it bad for society and making the call and doing something about it, may be just really important in preserving our society.
Jim: I mean, I think one of the ends of society modes here, that’s now starting to look fairly realistic, is maybe we’re just driving ourselves crazy.
Jim: You talked about January 6th. There was an example of serious craziness.
Jim: Another one is QAnon. Who the hell would believe something as absolutely idiotic as QAnon, could be believed by millions of people in 2021? And yet it is.
Robert: Yeah. Yeah. By the way, QAnon was designed like a game. It was another role play game. So, very similar concept. Those game mechanics can work to lure us in and disarm us.
Robert: So Jim, it’s an important point you make. To underscore what you just said, when we engage with Facebook or with TikTok or really any social platform, what is it that we’re engaging with? Who’s on the other side of that? Who’s showing us these things?
Robert: For instance, to contrast, in the old days, when you watched broadcast television, what you were engaging with was a programming team. There were a group of human beings, as I said, who made informed decisions about what the next show should be. That’s what say, Thursday night must-watch TV on NBC used to be about.
Robert: The idea is that, we’ve got these programming geniuses here, who know what you’re going to want to watch. So, don’t change the channel. Just stay on NBC all night long. Okay. That was then.
Robert: Now, you’re engaging with an AI. You’re not just engaging with any old AI. With Facebook and TikTok, you’re engaging with some of the most sophisticated artificial intelligence systems in the world.
Robert: They’re far more capable of you because they’re equipped with far more information, not just about you, but everybody like you.
Robert: They’re able to cater to you, your whims. They’re able to please you, delight you, delude you, deceive you, fool you, trick you keep you entranced, keep you engaged, keep you watching. Because the idea is, just keep them on the platform for a little long.
Robert: It’s the ultimate zero sum game. What they don’t want you to do is switch away. It’s exactly what NBC programs we’re trying to do back in the 1980s, with Must See TV. Don’t change the channel.
Robert: Here, it’s don’t change the social network. Right? So, now you can certainly imagine an immersive world, that is so credible and so believable, but also optimized to garner your attention, to lock in your attention for the longest possible time. You can imagine that, that is borderline addictive.
Jim: Borderline? It’s going to be more than borderline. If TikTok can suck a cynical old fool like me in, imagine what a really well done, 3D immersive world could do.
Robert: The Zuckerberg family’s going to be like the Sackler family, eventually disgraced. The names will be taken off all the hospitals and university buildings and so forth, as they try to separate themselves.
Jim: When the clanking of the guillotine rolls down Camino Real, in Palo Alto and the heads pile up in the gutter.
Robert: Well, let me take the opposite argument for just a second. Back to Marc Andreessen and his concept that this is the digital cake. Let the digital peasants eat the digital cake. We’ll keep them occupied with these digital playthings, so that they don’t create an insurrection and come for us with pitch forks, in the real world.
Robert: Okay. Let’s explore that concept. I’m a big fan of Yuval Noah Harari and his books. In Homo Deus, he mentions this concept, which I thought was very brave for him to say, because this is a radical notion that’s on everybody’s mind, but nobody wants to say it too much. The notion of useless humans. That is to say that, in our society today, we value humans by their economic output.
Robert: That is true. Right? That’s what we value people on. I think that’s incontrovertible.
Robert: There’s other ways to value people and certain societies do that. But generally speaking, when we look at the world through the statistics, we value people on their economic output.
Robert: There appears to be an increasing number of people, including people of working age, who generate zero economic output. This is a weird historical anomaly.
Robert: Now, one of the things I noticed when I wrote my book, Vaporized, is that the way you measure economic inputs and outputs in the digital economy is very different from the way it’s measured in the real world.
Robert: An example of that, a paradox of that, is a smartphone. Because in any other part of the economy, if you were adding more and more value to a device, it would get more and more expensive. The smartphone does do that, but what the smartphone does, is it extracts value from other things that it’s vaporizing. Right?
Robert: So as your smartphone becomes a digital camera, a voice recorder, a navigation system, a new kind of a map, a new kind of book, a new kind of movie player, a new kind of television set and so forth, as it absorbs the functionality of those other devices, it’s actually destroying demand for those other devices. So, it has a net negative effect on GDP.
Robert: This is a real paradox, that economists haven’t gotten their heads wrapped around just yet. So many things have been displaced by smartphones and apps and digital software, during the smartphone revolution, it’s actually had a deflationary effect on the economy.
Robert: I think it’s not accounted for when we look at… Everybody’s fretting about inflation right now, because the governments are pumping so much stimulus into the economy, but we haven’t seen inflation show up.
Robert: That’s partly because so much economic activity has migrated to digital platforms, where we have this great deflationary effect happening. So much stuff is available for free.
Robert: Part of the reason that happens, is that an entirely new economy has-
Robert: … For free. Part of the reason that happens is that an entirely new economy has arisen around data. And so when you’re interacting with these digital systems that we’ve been talking about, you are making an exchange, you might not be paying cash, but you’re paying attention and you’re paying in data. And in some respects, those are more valuable than the cash because the companies that run the platforms can monetize someplace else. And when you control the devices and you control the way people get into them and you control the tools for creation of content, you control the monetization systems, whether those are ads or subscriptions or any other kind of monetization, or now a new cryptocurrency of some sort, and you control discovery. Well, you can choose where to take your profit margin and you can make other parts of it free, as long as people are fueling your system with something that’s even more valuable than cash.
Robert: And that could be data, user behavior, huge loyalty, and so forth. So these are things that are happening right now that aren’t properly measured. We don’t have a proper understanding of them and in some respects it might be that Marc Andreessen is right. That what we’re trying to do is create a new system to keep people busy, happy, and productive, even as they’re not generating any economic output in the real world, but they are generating great value in digital worlds.
Robert: So does that mean our future is that we’re all going to be stuck in a hovel inside of some sort of container with broadband connection and an AR rig slapped over our heads or a VR rig slapped over our heads and faces, and that we’re all participating in these intense experiences in a digital world and they’re extracting some sort of value and then what we’re fed is sort of just basic life support, is that miserable existence? Have we gone full circle? Are we coming all the way back around to Neal Stephenson and Snow Crash with hero protagonist, living in a shipping container and delivering pizzas in the real world, just so you can spend his best hours in a virtual environment? Maybe that’s where we’re heading. Maybe this is a way to keep the useless humans occupied and productive in a digital domain.
Jim: That’s a horrible nightmare. And it’s what we work against in our whole Game B movement is to find a humane use for humans, right? In a way that’s compatible with the carrying capacity of the earth. I hope humans don’t go down this road, but they could well. And there’s lots of signs of it. And a lot of it comes to the business model because you talk about your attention and your data, but that’s only useful if they can cash it out, right? And the way the platforms today cash it out, let’s take Facebook, right? You know the famous saying about Facebook, you’re not paying for it. Well, if you’re not paying for it, you’re not the customer, you’re the product, right? And sure enough on Facebook, well, what does it mean to be the product? Advertising. I believe the ruination of the web is when advertising became the dominant business model around 2006. Before that stuff was a lot of good stuff, at least you had to pay for it.
Jim: And back in the old days, you had to pay for everything because it used to be the technical infrastructure was sufficiently expensive. You couldn’t cash it out sufficiently advertising. Now you do. And of course in a metaverse you will also have lots of transactions built in, right? You see the fancy shoes that some characters wearing, oh, by the way, you can click on that and have custom bespoke, fancy shoes delivered for 150 bucks or something. Nauseating, disgusting. I read something that made me want to get my flame thrower out when I was doing the research this morning. Epic has done some deal in their Fortnite world with some company called Balenciaga or something, fairly some kind of,
Robert: Balenciaga.
Jim: Some kind of fancy clothing company where they’re going to let people in fortnight buy Balenciaga clothes and then have links to be able to buy the stuff. Right. And I go, I would not allow that. Right? We don’t want to turn us all into trained Guinea pigs, looking at all this virtual crap, buying stuff and being programmed by ads. If we got rid of advertising and transactions from online, it would be a way different ecosystem. I think that is the one key change we should make but it would totally change everything. And so you have to disempower the powers that be to make that change.
Robert: Let me respond by again, just taking up the opposite point of view. If you don’t mind, I’m going to try to articulate the opposite point of view.
Jim: Absolutely.
Robert: So it is a fact that every major fashion label now is looking at NFTs, non fungible tokens as a way to create value around digital versions of their fashion items. And it seems to me very logical that the next step will be every time someone purchases a high-end bag, like say a designer purse, or a pair of shoes, or some other fashion accessory or item, that they’re going to also get a digital item, a digital version and NFT that goes along with that. And there all sorts of interesting questions arise. Like what’s the wallet for that? Well, how can you transact those separately? Can you split the ownership away and so forth? I spoke to somebody who’s developing this and I’m super interested in the idea because of course, anytime it’s about a deemed material, that’s my bread and butter.
Robert: I love that. So I’m super interested in the concept. And I said, so who’s your customer? Who is the person that wants a digital Hermes bag or a digital version of a Gucci shoe or something? He said, oh, he said, very clear. He goes, I understand my customers extraordinarily well. Let me tell you who they are. The heavy users of my systems and he’s talking about people who populate digital worlds in particular who want to buy and trade digital items. He said the heavy users of my systems are people who work in jobs where they get no respect. I said what do you mean? He said, my users, my heaviest users are people that work at a Kinko’s, they are UPS truck drivers, they work in some sort of service job, they work at a Best Buy or something like that.
Robert: And they do that in order to earn the money to get food and to pay for their miserable apartments. And when they get back to those apartments they jack into this world, they get jack into these game worlds typically. And in the game world, they’re absolute experts. He said, in fact, they’re gods in these game worlds. So where they get no respect in the real world, their job, the thing that produces their income, gives them no self-esteem whatsoever. It’s a degrading job where people treat them poorly the whole time, they’re barely paid minimum wage, it’s not a satisfactory or intellectually stimulating job at all. But when they come home at night, they enter a digital world and in this world they get all the social respect that they crave and they’re treated like gods. And he said, bear in mind, they’re largely men. And many of these men are so economically inadequate in the real world that they can’t even get a date because they’re not, [crosstalk 01:15:05]
Jim: Exactly. This is the 35 year old head lopper that I was talking about. So instead you sedate them with fentanyl for the masses.
Robert: Well, so in that digital world, where do they get the respect?That they crave, that every human craves, everybody wants some sense that they’re significant in some way that they’re meaningful in some way. Well, these digital worlds can give them then. Well, then you’ve got to adorn yourself appropriately so that you look the right way to the people who expect it, right? This is just like a rockstar. You know, when you take off as a rockstar, you got to shed that Indy look. If you’re going to fill a stadium you’ve got to start to look the part so that you’re fulfilling their expectations. And in this sense, this is computers as theater, right? This is where presentation actually matters. Not just for the person. When you put on that adornment or that garment or the fashion accessory, you become that person.
Robert: But it’s also for the rest of the people, the rest of their users. They have an expectation that has to be fulfilled. And so he said that those folks are willing to spend enormous amounts of their income, all their spare money is being spent on digital items, which today are NFTs, they’re tradable digital items. They’re scarce, they’re limited edition, or maybe unique, and they can be collected, it can also be traded or sold or given away. The economics of that are just emerging right now in games and outside of games. And there’s a whole bunch of game systems that are being developed right now to facilitate this because it’s such a big trend. So on one hand it looks evil, looks like exploitation, it looks like you’re being programmed by mass advertising to consume crap that you don’t need. On the other hand that has always happened and that has always been part of the consumer economy for the last 125 years. In this instance, it’s happening in the digital world. And what it’s giving people is an outlet that they crave and need to get some social status in some respect. So what they’re buying with their money is status.
Jim: We have useless humans and this is the way to keep them from cutting the throats of the oligarchs. But isn’t it better to build a society where we don’t have useless humans, where everybody has a role with dignity in it that has a life well lived in the real world and interacting with other people. This is our technology sucking us into a very bad place. I would suggest.
Robert: Okay this conversation has a tendency to go dystopian but let me offer a little sign of hope here. So one of the things we’ve talked about off and on in this conversation, particularly when we talked about companies like Unity and to some respect, Epic and others, is that they’re providing tools that allow people to create. And I want to talk about creation for a little bit. You know we talked about the Uber economy, the gig economy, where people are exploited. Is the creator economy the same? Is it just the Uber economy without the car? Or is it just the Uber economy for people who create digital items and so forth? In some respect that’s a criticism that people will make. They will say that all the money they earn as a YouTube influencer or an Instagram influencer you have to spend on marketing and branding and other stuff.
Robert: And so it’s a treadmill that you’re on. That’s one way to look at it, but bear in mind in these 3D worlds you’re not just generating a JPEG or a GIF or a post or something simple like that. You’re actually building something useful. If you’re building a 3D world it’s a fairly complex proposition that you’re making, but even if you’re building objects that can be traded, and these will have be objects of beautiful design or highly desirable by some group or another. Here, I think there actually is a meaningful role for the masses of humanity to play where they can actually, it’s sort of like digital craftsmanship or digital culture where people can express themselves, create a beautiful object, create an object that has some meaning, trade it, exchange it. And so you start to see the idea then that in these digital worlds there’s hope that people will have a meaningful role to play.
Robert: The big question is who owns it? Is this going to be the intellectual property of the platform publisher? That’s the scary game kind of concept or the scary Facebook concept where you created that object in our world but we own that object and we have all the rights to it. That seems unfair. In my sense in enlightened publisher will say, no, you own it, you created it, that’s yours and you can take it with you and you can go to another world with it. Of course this battle is going to be played out, right? And this is a battle of standards and interoperability that we’re talking about a moment ago. Where I fall on the equation is that if you make it possible for people to build things in one world and transport them and transact them outside of that world, you’re going to grow a bigger world for everybody and that’s probably in the longterm the best approach. But in the short term, we can be certain that everyone’s going to try that old AOL playbook, where they try to lock you into a closed ecosystem and keep it a very small game.
Jim: Yeah. And let’s get back into the business model. You’ve talked about this treadmill, right? And sure enough, if you want to be a YouTube influencer, the most straightforward ways to pay for advertising, but the one that’s really the totally pernicious is Amazon. Right. I had great respect for Bezos and what he accomplished and his ability to execute again and again and again. To take risks, fail, and get up and keep going. But I think he betrayed the whole Amazon vision and tradition when he started putting ads on Amazon, right? I don’t go to Amazon to be advertised to. I go to Amazon to find the best products. And he had a great solution for that which was the rating system. Anything 4.5 or better on Amazon is almost always a good product.
Jim: Now with ads and I’ve talked to people who have Amazon stores and they’re now caught on this ridiculous treadmill that because the attention is being hijacked by those who advertise, if you have a decent little niche store, you’re going to disappear, unless you advertise. And just like being a supplier to Walmart means you’re never going to make a nickel. All you’re going to do is get some scale economies. So you can make a little profit selling to target. Now, if you’re going to play on the Amazon stores, you’re going to, if you’re serious, any more than a really niche player, you’re going to have to put most all of your gross profit back into buying more Amazon ads to get more attention. And I guarantee it, the people that create, especially the walled garden versions of this, are going to be running that playbook because it’s so obvious and so corrupt, right? This is strategy number one, use network effects to find a monopoly choke point and then extract monopoly rents. And that’s the game these guys are going to try to play.
Robert: So you can imagine the discovery problem. If there are truly millions of digital worlds or virtual worlds or metaversus whatever we want to call them, the discovery problem is going to be immense. Right now we don’t have 3D search. You know, it’s actually quite interesting if you look at how we find stuff, it’s all 2D right. That’s such as Google or YouTube when you’re searching for a video, but it’s also Amazon, right? Amazon’s UI hasn’t changed significantly in 20 years. It’s still just a grid. It’s a two dimensional flat grid with thumbnail images, right? What does 3D search look like? What does 3D discovery look like? How will we find things? And by the way, there’ll be a huge role for the people who find cool things, curators and a new kind of influencer, you know, who can guide you, let’s say knowledge navigators, people who can teach you how to navigate through these worlds and so forth.
Robert: So as much as it’s a dystopian view and we can see all the very obvious pitfalls, I want to encourage people who are listening to this podcast to consider that there are also possibilities here for creativity. There are going to be possibilities for people to carve out new niches and new jobs will emerge. But this idea that there’ll be millions of people making millions of worlds, I think that’s a given. I think that’s likely to happen whether it occurs in a closed system or open. And then once you’re in those worlds, what are you doing? And if all you’re doing is hanging out or playing a game or consuming media, that’s not going to keep people, they’ve got to be able to do something meaningful, create something meaningful. And now that creates a gigantic discovery problem, which of course is a gigantic opportunity for whoever wants to undertake it and be a knowledge navigator.
Jim: Though of course, the way to corrupt that would be to turn into an advertising play. And it would be much nicer if somehow advertising could be banned from these worlds and that curation is person to person and word of mouth and organic networking. As opposed to the platforms themselves putting everybody into a race to the bottom, a war around buying more and more advertising to it to increase their attention gradient. But you know, that’s what they’re going to try to do.
Robert: Well, I think the advertising problem that you’re describing actually degrades the platform and I’ve experienced it myself on Amazon lately in a bunch of different ways. So I do a lot of shopping on Amazon who doesn’t, of course during the pandemic we all do. And I’ve noticed some of the changes that you’ve mentioned, the idea that you have to advertise. I’ve noticed that some unscrupulous vendors will take a product that had a lot of good reviews and they’ll swap out the products and they still have all the five star reviews, but now they’ve got some different cheaper product. You see complaints about that popping up. You also see people gaming reviews. So there’s clearly a huge industry of people getting fake reviews for crappy products that happens a lot. And then here’s a new thing, I got a fryer the other day and I was like, as soon as I bought it, I’m like, what the heck did I get this for?
Robert: I don’t want to eat French fries, but I got it. And I was like, there’s got to be healthy recipes. So I was searching Amazon for a cookbook and well, wouldn’t you know, there’s like 600 cookbooks, but there’s a new industry and just taking the same cookbook and repackaging it again and again and again, and dominating the search results with basically the same terrible cookbook repackage again and again and again. And then they eventually you get, you can drill down and find the one good cookbook out of the 600 terrible clones, but this is degrading the experience it’s actually causing me to use Amazon differently. And I certainly don’t trust Amazon anymore. So in the long run, is that a good thing for Amazon? I don’t think so. I think we’ve all changed our attitude toward Amazon, same is true with Google, the way we look at Google search and all those free apps that Google gives us.
Robert: Now, we look at them and we’re a little bit cautious, right? Of course, everybody should feel that way about Facebook because Facebook has notoriously broken their contract with you dozens and dozens of times when it comes to your privacy and your data.
Robert: I’m even starting to wonder about Apple because all of Apple’s claims to be serving the customer in protecting their customer’s privacy, they’re starting to smell to me an awful lot like they’re building a wall, the ecosystem, a closed garden, a lock-in systems, of course they have their own advertising platform. So ultimately the heavily reliance on advertising and this idea of sharing the sheep that come into your marketplace and make an offer and taking all the profit that they make and forcing you to spend it on discovery, ultimately that degrades the marketplace and it creates an opportunity for someone to offer something different. I can’t wait for the first 3D Etsy to arise. An open marketplace, maybe something like a 3D version of OpenSea, the NFT marketplace, but for 3D objects. And I know for sure that’s being developed because there’s like a hundred companies trying to figure it out right now and good luck to them. I hope they all succeed.
Jim: Those are nice alternative visions. The 3D Etsy, I actually haven’t been on Etsy in a while, but it used to be pretty righteous. I wouldn’t be surprised that there’s some network effect forces trying to corrupt Etsy, but it used to be fairly clean. What would be interesting if we can learn to prefer clean products as opposed to filthy products, right? That would be a very interesting cultural innovation where if you see the Facebook play or the Amazon play, you just go, these people are bad, right? Why the would I do business with them? Right. And if we established the social aesthetic that we don’t do business with people who are playing that game, what a better world it would be.
Robert: It would be, but you have to educate people. And this is a tough one, right? Because it’s really hard to pass up a free offer. I mean, this is
Jim: Free, free, free. Chris Anderson’s book.
Robert: Terrible book.
Jim: Free explanation point, right? He was absolutely right. And he ruined the world. The world would have been ruined. Anyway.
Robert: It goes all the way back to Edward Bernays. I mean, this is like the origin of advertising, right? The words that get people’s attention are free and new.
Jim: New and approved and free and blow job. Right. Those are barely legal girls. Right. Those are the winners, right.
Robert: You had to go there.
Jim: Why not? Right. It’s a [inaudible 01:26:36] .
Robert: Okay. So you have to compete against free and in the world that we’re in, I think really important for people that understand what you said a moment ago, if you’re not paying for the product, you’re probably the product yourself. That’s always been true of ad supported media. That’s also been true of broadcast television and broadcast radio as well. So it’s not unique to the internet. Bear in mind there’s no such thing as free. You’re always going to pay, right? And so the ways you pay you could, in the past, the choice was you paid for media through subscription or fee, or you paid through attention, and then you were sold to an advertiser. And the new way you pay someone unconscious to most of us, which is you’re paying with your data. And what’s important to take away there is that these systems are so intelligent and so smart that they track every single thing.
Robert: And they’re actually more aware of your habits than you are yourself. They know how often you come, how frequently you stay, how long you stay, how frequently you return. I should say who you share stuff with, how often you do that, what kinds of things appeal to you? What kinds of things don’t where you spend more time, where you hovered over a screen and thought twice about clicking or not clicking, and then passed on or something like that. They see how far on how long you watch a video. When you jump out of it and so forth. This is the stuff that we don’t pay attention to ourselves. So we’re not tracking our own behavior that way, but they are. And so when you give up data, you’re giving up an awful lot. Now, most people don’t place a very high value on their data. And I think that’s increasingly true with every new user that comes to the web.
Robert: The new users place even less value on their data, and they’re willing to give it up and trade it away for something free. So we live in a world now where this is almost an irresistible lure and the proposition of pay us and we’ll keep your data private, pay us and we’re not going to sell off your stuff. It’s an uphill battle and there are places that do that. You don’t even have to pay like Duck Duck Go is an alternative to Google search that will not track you. It will not create a behavioral profile of their users. That’s impressive. The Firefox browser doesn’t track you the way the Google browser does the Chrome browser. It’s important for people to understand that, but this is an education project and I guess we’re doing our part right now by bringing up the topic. Hopefully people listening to this who aren’t aware of it will start to consider maybe there’s ways to protect my data, my privacy, starve these platforms of the data so that they can’t monetize me in other ways and force feed me more videos and stuff that I don’t want to buy.
Jim: Yep. And of course data. Yes. But they have to cash the data out in advertising and or transactions, right? Because the data by itself isn’t worth anything, unless it can be used to program your behavior. And that’s where the movie social dilemma, that my friend Tristan Harris was instrumental in creating, does a really interesting job of showing how the data is actually used to turn you into an economically useful asset to somebody else. And you’re auctioned off and your value fluctuates by the second in these auctions. And it’s really scary if you haven’t seen the social dilemma, definitely look at it. Well, Rob, we didn’t get to everything on my list, but before I go, I want to call out one amazingly good resource, which I found just the best for understanding many of the issues around the metaverse, which is Matthew Ball, Matthew ball.vc is primmer on the metaverse like 10 articles on various topics of the metaverse just remarkable. Well-worth reading for anybody. Do you have any other good sources? Like you mentioned somebody earlier, John, somebody or other
Robert: Named John Radoff who has a website on medium. He posts a blog. It’s John Radoff in building the metaverse. And he’s written a number of very thoughtful blog posts about the building blocks of the metaverse and the elements that’ll go into it. But honestly, these days, if you search metaverse, you’re going to get inundated with stuff because there has been a ton of press about it.
Jim: A lot of it just shallow stuff, right? Where somebody repurposes somebody else’s shallow stuff and tell it becomes extra shallow stuff. I follow a bunch of those links. Type metaverse and restrict the search to the last week. It’s like obvious content, factory crap.
Robert: That’s right. For those who are interested in, in industrial applications of these technologies, particularly blockchain for supply chain, I’d urge you to check out GS1.org. That’s the letter G the letter S and the number one U s.org. And you’ll find an enormous amount of educational content that is free. That’s more for industrial people, but it’s important if you’re touching the supply chain, which most of the companies in the world do touch the global supply chain, but that’ll give you more of the nuts and bolts approach to applying these ideas and concepts to industrial settings.
Jim: Well, thank you, Rob again for another wonderful, interesting, energizing, controversial conversation about a topic that’s going to be probably of increasing importance. And of course the whole thing could fizzle out. VR itself has been a pretty much the disappointment that most people in it, but, sooner or later, they’re going to figure this one out it’d be my guess. And we’re going to have to deal with all this. So people keep your Pitchfork sharp
Robert: Right on. Jim it’s always a pleasure to talk to you. Our conversations are very fun and also enlightening.