Howdy from Durham,

Welcome to the 6 new subscribers from this past week.

Today, we’re breaking down AI’s ascent and the metaverse’s absence.

The metaverse - a 3-D virtual reality where we work and hang out with friends.

We were told it’s arrival was imminent - that this would be the metaverse’s time to shine.

Yet, if we’re judging success by widespread market adoption, it still hasn’t arrived. Meanwhile, AI is all the rage.

So, what the heck happened?

Let’s start with the most notorious company to pedal the metaverse’s promises. Facebook (or should I say, Meta).

Mark Zuckerburg & co. acquired Oculus, did a full company rebrand, and promoted his 3-D avatar (see below) to encourage us to come hang out with him.

The result of their efforts? A $24 billion loss ($13 billion loss in 2022 alone).

Not all is lost at Faceb-…I mean Meta. They’ll be just fine, but Zuck doesn’t typically miss these shots.

So, how did we get here? And what’s the state of the metaverse in May 2023?

Bottom line up front: no one anticipated AI’s rapid ascent, not even OpenAI (creator of ChatGPT). Zuck wasn’t wrong about the metaverse. He was just early. The metaverse is still coming, and the groundwork is being built now (in places close to my home).

We weren’t paying attention, but AI was advancing.

Most researchers are not impressed by today’s AI capabilities. They’ve been staring at LLMs with ChatGPT-like functionality for a few years now.

The public, on the other hand? Eh - we couldn’t be bothered up until recently.

It’s the old “seeing is believing” adage. AI access had been limited the past few years, and there wasn’t an easy-to-use interface for folks to engage with models like GPT.

Enter ChatGPT: OpenAI threw a familiar chatbot interface on top of their existing GPT-3 model so folks could test it for themselves. The underlying tech didn’t change. OpenAI just made it a bit more user friendly and WHAM.

When folks got to experience ChatGPT’s capabilities, they couldn’t help but tell their friends. Word of mouth marketing ensued.

Existing AI companies, including OpenAI and their competitors, got more notoriety. New AI companies began popping up too. Investors went into a craze.

Now you can’t scroll a news feed without seeing “AI” everywhere.

The craziest part? Not even OpenAI’s execs anticipated it’s rapid ascent.

Here’s the proof in the pudding: ChatGPT got to 1 million users quicker than any other software product before it (by a mile).

The metaverse quickly became AI’s little brother, but don’t count it out quite yet.

Meta is pivoting to AI but remains committed to the metaverse cause. Despite three recent rounds of layoffs across their business, they’re continuing to hire for their Virtuality Reality Labs division (right here in good ol’ Durham, North Carolina too).

Apple is making a move into the metaverse as well. It’s rumored that they will release a long-awaited AR/VR headset in June. Apple doesn’t typically miss on hardware launches (even when consumers are initially skeptical).

Consider the launch of the iPad. Folks initially deemed it useless. “Why would I need anything more than my laptop or my phone?” they said. Then, iPad became the dominant tablet.

Apple knows the market better than the market knows itself. If they’re ready to launch a metaverse device, then that means we may very well be on our way to the next big thing.

Microsoft and Google are both busy squaring off in the great AI race, but they’ll be keeping a close eye on the aforementioned competitors in what I anticipate will be fast-follows from both of them.

Who else can we expect to be a major player in the metaverse?

One answer is headquartered in the Research Triangle in North Carolina.

Let’s rewind to Meta coming to NC. Why does Meta want to come to Durham?

The amicable answer: to recruit folks from the Triangle’s top research universities (Duke, UNC, NC State) in an area of the country with a high quality of life paired with a low cost of living.

The business answer: Epic Games (creator of Fortnite) is based in Cary, NC which is a mere 20min away from Durham. A massive amount of video game talent is located here. If I were Meta, I’d want a few folks from Epic on my team (hence the NC move).

Why that matters: whereas government entities and large enterprises such as IBM ushered in the internet, it is likely that video game companies (Epic, Roblox, etc.) will usher in the metaverse. They are the ones who have innovated in 3-D graphics over the last 2 decades, and they are best positioned to bring captive audiences into a new era of entertainment.

The State of the Metaverse in May 2023

Let’s wrap with a quick-hit overview of where things stand as of today.

• Epic Games and Roblox are fantastically positioned with young user demographics of digital natives who can easily serve as early adopters (plus Epic has licensing deals out the wazoo with major brands like Marvel, Star Wars, NBA, NFL, etc.).

• Microsoft, Amazon, and Sony each have video games studios. They’ll be able to compete. (Most notably, Microsoft owns Minecraft).

• Apple will likely launch their own hardware, make it incredibly interoperable with existing iOS devices, and usher in entrepreneurs to launch new games on the App Store.

• Meta has the hardware with Oculus. They’re working towards developing their own games. Plus, they own your social graph (your Facebook friends & Instagram followers lists) which they can use to encourage folks onto their platform.

• Google’s primary responsibility is to respond to the existential business threat that GPT + other AI companies pose to it’s golden goose - search (I mean “Google it” is tech’s version of “Can I grab a Kleenex?” If the company becomes synonymous with the product, you’ve gotta defend that free marketing at all costs).

  
  Here’s where things get interesting for Google: they shutdown their cloud gaming platform, Stadia, this past January. OpenAI and Microsoft caught them on their heels in the AI race. The race is far from over (in fact, I suspect Google will storm back by integrating AI into their suite of cloud apps such as Sheets, Docs, Gmail, + more). Surely, Google has the talent, data, and infrastructure to be a major player in the metaverse, but these two recent events beg the question…
  
  If it’s all hands on deck for AI and cloud gaming was shut down, then who is underneath the ship at Google building for the metaverse?

What I’m paying attention to:

The most interesting person you’ve never heard of

Thanks for reading

What excites/concerns you about the metaverse?

Reply and let me know!

Josh

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