Episode 11

full
Published on:

7th Feb 2022

11. Snoop Dogg Metaverse, EA NFT Reversal, Meta Q4, Metaverse Mortgage

In this episode, we discuss a person paying $450,000 to be Snoop Dogg's virtual neighbor, the CEO of Electronic Arts saying NFTs are "not something that we’re driving hard on," Facebook's parent company Meta falling short of analysts' Q4 expectations, TerraZero Technologies facilitating one of the world's first metaverse mortgages, and so much more!

Episode 11 Keywords: Snoop Dogg, Snoopverse, Electronic Arts, Andrew Wilson, NFT, Facebook, Meta Q4 Earnings Report, TerraZero Technologies, metaverse mortgages

Transcript
Unknown:

Welcome to the metaphysics podcast. The Metaverse and web three are bringing about the

Unknown:

biggest revolution since the internet itself. With your hosts Paul the prophet Dawalibi And Jeff the

Unknown:

juice Cohen. We will be bringing you the latest Metaverse, business news and insight into what it

Unknown:

all means. The meta business podcast starts now.

Paul Dawalibi:

From the boardroom to the metaverse. This is the meta business podcast. I am

Paul Dawalibi:

Paul Dawalibi. I'm joined today by my friend and co host, Jeff, the juice Cohen. For those of you

Paul Dawalibi:

who are new here, welcome to the metal business podcast. What we do is we cover all the biggest

Paul Dawalibi:

Metaverse stories and topics and news of the week. But we look at all of it through a business and C

Paul Dawalibi:

suite lens, we dissect, we analyze the business implications of everything happening in this

Paul Dawalibi:

amazing Metaverse space. Jeff, how you doing this week?

Jeff Cohen:

I'm doing good. This is a the second of three podcasts we're taping tonight. So I get

Jeff Cohen:

to spend the whole night you know, that's all inside baseball for those of you so we take

Jeff Cohen:

business of esports prior to this now we got this one then we do the live stream after so it's just

Jeff Cohen:

a full Wednesday night of content I get to spend on time, you know the whole time with the Prophet.

Jeff Cohen:

So what are we gonna do that?

Paul Dawalibi:

This is episode 11. So congratulations. I will say we're almost at the

Paul Dawalibi:

point now where I can say you know start telling people Hey, for our regular listeners, thank you

Paul Dawalibi:

guys for tuning in every week because we now have enough weeks that you know people have been tuning

Paul Dawalibi:

in and if you haven't heard

Jeff Cohen:

from people please keep keep it common. We love the feedback. Tell us what you

Jeff Cohen:

want to hear more of what you want to hear less of. It's a it's great and we get that honestly

Jeff Cohen:

means a lot to me.

Paul Dawalibi:

And and definitely hit subscribe, right? Like whatever service you use to get the

Paul Dawalibi:

podcast. Follow subscribe, whether it's Apple podcast, Google Play Spotify, wherever you get it.

Paul Dawalibi:

Really appreciate that because then you get you guys get notified. Right when the podcasts the new

Paul Dawalibi:

episodes drop. And and tell others about it. If you're if you're working in and around the

Paul Dawalibi:

metaverse, space and crypto and blockchain based gaming and gaming or something like that.

Paul Dawalibi:

Definitely tell your colleagues tell your friends tell your family about the podcast. This is how we

Paul Dawalibi:

continue to grow this. Jeff, we have a really big story. I want to kick off this week with hugely

Paul Dawalibi:

important story, I think in the in the grand scheme of the of the metaverse here. And it's

Paul Dawalibi:

interesting because it's a it's it's a Metaverse story. It's a real estate story. And it's a

Paul Dawalibi:

celebrity story all in one, which I think is fascinating. And the headline here is someone just

Paul Dawalibi:

paid $450,000 to be Snoop Dogg's neighbor in the metaverse. Here's how you can live by celebrity

Paul Dawalibi:

too. So obviously a great clickbait kind of headline from Fortune Magazine. But what has

Paul Dawalibi:

happened here is Snoop Dogg had bought, you know, a piece of land in the sandbox platform, where he

Paul Dawalibi:

plans to host events. He has a virtual virtual replica of his house. And he actually sold a

Paul Dawalibi:

parcel of land that was next to his, you know, next to his place next to the land that he has

Paul Dawalibi:

built on and that he owns. And what it's saying is that in this article, which I thought was

Paul Dawalibi:

interesting, in January alone, sales of Metaverse real estate topped $85 million, and that between

Paul Dawalibi:

2022 and 2028, the metaverse real estate market is expected to see a compound annual growth rate of

Paul Dawalibi:

31%,

Jeff Cohen:

which I would I would love to see the assumptions behind. I mean, I'm a big fan of any

Jeff Cohen:

one of these great, you know, prognostications and top down analysis. But like, Please, someone send

Jeff Cohen:

me that report. I would just love to see like how they came up with that number. Because if you're

Jeff Cohen:

telling me you can predict anything that what's going to happen with any true reality about 2028,

Jeff Cohen:

and the metaverse, I mean, we don't even know what's gonna happen three months from now in the

Jeff Cohen:

metaverse, this, this landscape is changing and shape shifting so much daily. 2028, you know, just

Jeff Cohen:

feels like, forever.

Paul Dawalibi:

I love that you're not attacking the number. You're attacking the prediction, just

Paul Dawalibi:

at its face, right, like

Jeff Cohen:

5 million in the Yeah, the fact that it was 85 million in January shows that there's

Jeff Cohen:

something here, you know, this isn't some pie in the sky, you know, fantasy that we're talking

Jeff Cohen:

about, like people are putting real money into this. But to try to extrapolate it out that that

Jeff Cohen:

part, you know, anyone's guesses as good as anyone else's.

Paul Dawalibi:

I mean, that's that. I don't know what the predictions are for the broader like, in

Paul Dawalibi:

real life real estate market. My guess is real estate, in the same period is not going To grow

Paul Dawalibi:

at, you know, compounded annual growth rate of 31%. So maybe you know, there's yours today. Maybe

Paul Dawalibi:

but there's a there's a an underlying statement in here, which says Metaverse, real estate will grow

Paul Dawalibi:

in value faster than traditional real estate. And I'm curious if you at least buy that? Or even

Jeff Cohen:

do you think we're gonna see some sort of massive? Like, right now it's a gold rush,

Jeff Cohen:

right? Like, yeah, you know, the fact that we're reading this article in and of itself, there is

Jeff Cohen:

clearly a rush to buy land in these various different meta verses. Do we see some sort of

Jeff Cohen:

crash? Same way we saw with crypto and we've had multiple crypto winters? Like do we see in the

Jeff Cohen:

next two, three years? A lot of this land go to zero before maybe it shoots back up and other land

Jeff Cohen:

maybe takes the place of land that isn't actually utilized?

Paul Dawalibi:

It's good question. I mean, this is a much bigger discussion. In general, like tech,

Paul Dawalibi:

there's this classic, you know, saying in tech, you have the innovators come first, then the

Paul Dawalibi:

imitators. And then the idiots. The question is with Metaverse, real estate, are we still in the

Paul Dawalibi:

innovators sort of portion of this? Are we in the imitators portion of this? It still feels early.

Paul Dawalibi:

Right. So I still think there's a lot of potential here. I, I by the 31% number, you're right, like I

Paul Dawalibi:

don't know, I'd love to see the assumptions behind it and how they've modeled this out. I at least by

Paul Dawalibi:

the general principle that virtual real estate is going to seem seems to be will grow in value

Paul Dawalibi:

faster than traditional real estate. I always questioned the scarcity issue here, right. But the

Paul Dawalibi:

Snoop Dogg thing adds that sort of extra wrinkle, right? Because while well, sandbox could go and

Paul Dawalibi:

create more land, or any platform could really if they wanted to, in many of them choose not to they

Paul Dawalibi:

set it limit, but many of them could break that at some point and go make more land, right, go create

Paul Dawalibi:

new land. There's still only a certain number of spots next to Snoop Dogg. Right? Yeah. So do do

Paul Dawalibi:

celebrity purchases, become some of the draw here and drive some of the real scarcity because only

Paul Dawalibi:

12 People can have plots next to Snoop Dogg's or whatever the number is.

Jeff Cohen:

Well, I mean, the name of the game of real estate is always Location, location,

Jeff Cohen:

location. So I do buy that I do buy that a little bit. One thing I'm always interested to see when

Jeff Cohen:

we hear about people buying plots of land in the metaverse is sort of like what they're going to do

Jeff Cohen:

with them. Are they going to be just the landowner that's gonna then rent it out? Are they going to

Jeff Cohen:

build a game or an experience on there? Um, I'm only boys should if you're going to build

Jeff Cohen:

something that people actually care about, right? Like, if you're just going to buy this land and

Jeff Cohen:

think that it's cool to own it's going to have value because Snoop Dogg has some digital thing

Jeff Cohen:

next, like, odds are two years from now. Nobody's probably gonna care at all about Snoop Dogg,

Jeff Cohen:

digital, whatever he snoopers that's Apple, maybe we don't know these headlines are very, like,

Jeff Cohen:

these are the kinds of things you get early in the in the mania, where then it becomes more

Jeff Cohen:

interesting. Couple years now. Okay, what's practical, like is, is the Snoop verse really, if

Jeff Cohen:

we get to this, you know, utopian vision vision of capital T capital M, the metaverse like, is Snoop

Jeff Cohen:

first really going to be a part of it to me, I doubt. Right. Like it's a cool attraction, it

Jeff Cohen:

Garner's eyeballs, but like, you can't tell me that a big part of the metaverse in the future is

Jeff Cohen:

going to be Snoop Dogg's house.

Paul Dawalibi:

Well, I mean, even if we assume that it is, right, there's an interesting business

Paul Dawalibi:

and real estate question here. And I come back to your location, location, location argument, right?

Paul Dawalibi:

Because if you if you live in a very wealthy city, right, or you decide to buy a house next to Snoop

Paul Dawalibi:

Dogg in Beverly Hills. I don't know if Snoop Dogg has a home in Beverly Hills, right. But if I'm

Paul Dawalibi:

buying a home next to Snoop Dogg in Beverly Hills, I would think part of the draw there is, well,

Paul Dawalibi:

there's a chance that when I you know, go for a jog in the morning, I'll bump into Snoop Dogg and

Paul Dawalibi:

you know, maybe we'll become friends. And maybe he'll invite me to his parties, or I don't know if

Paul Dawalibi:

you get the same equivalent, right in a digital or virtual world. Because even if he's having a party

Paul Dawalibi:

on his plot of land, owning the plot next to his doesn't grant you any kind of automatic access,

Paul Dawalibi:

right, like, so even if you buy that Snoop versus the big draw will be a huge thing will be a big

Paul Dawalibi:

part of the metaverse entertainment ecosystem. Right, having the plot of land next to that in a

Paul Dawalibi:

in a in a digital construct where distance really loses all meaning also Right. It takes no extra

Paul Dawalibi:

time to go to snoop verse from a plot of land much further away than one right next to it.

Jeff Cohen:

That's one of the big problems with Metaverse real estate where it's like there is no

Jeff Cohen:

cost to travel. Right. So it's to your exact point, does it matter? I think this is I'm sorry

Jeff Cohen:

to steal the words in your mouth. This is what you're getting at? Does it matter that you're next

Jeff Cohen:

to Snoop Dogg? If you know, you can just enter the metaverse right into Snoop Dogg. You don't have

Jeff Cohen:

to, like drive there or pay money to travel there. So I think that's a big a big question, Mark, in

Jeff Cohen:

terms of Doug, do these plots of land Hold, hold their value longer term? But I keep coming back to

Jeff Cohen:

like, what do you build on your individual land is the most important thing. Because if people want

Jeff Cohen:

to go there, then it has a chance to have value, I don't think you can count on the things around

Jeff Cohen:

your land, kind of giving you value.

Paul Dawalibi:

But there may be a bigger takeaway here. Jephunneh, you know, please feel free to

Paul Dawalibi:

disagree. When when esports were very early, right, a lot of the thinking and maybe still even

Paul Dawalibi:

to this day, to a certain extent. Everyone took a construct and a context that they know and

Paul Dawalibi:

understand traditional sports, right? And you try and overlay it on this new thing. So that so that

Paul Dawalibi:

you can sort of grasp the new thing, and make it understandable for people. And the reality is,

Paul Dawalibi:

that has always been a mistake, right? Like trying to make esports, like traditional sports has

Paul Dawalibi:

always pretty much consistently ended in failure. Because the reality is a lot of constructs that

Paul Dawalibi:

apply to the physical world don't apply to the digital world. And I'm seeing similar kinds of

Paul Dawalibi:

mistakes happen in the metaverse where people just make assumptions, because our brains are wired to

Paul Dawalibi:

appreciate patterns, right? They make assumptions that, wow, the plot in Sandbox next to Snoop Dogg.

Paul Dawalibi:

That's a great investment because it's next to Snoop Dogg without thinking through Wait a second,

Paul Dawalibi:

like the plot 10 plots over from Snoop Dogg doesn't really have any doubt, like, has no less

Paul Dawalibi:

fewer benefits than the one right next to it, because no one really stops this go. Wait a

Paul Dawalibi:

second, what are the actual differences in real benefits here? I'm worried that a lot of this

Paul Dawalibi:

rides hype built on taking things without the proper context.

Jeff Cohen:

So I think you're absolutely right. And I would go as far as to say that I think I

Jeff Cohen:

agree with that even more like I think real sports are more analogous to esports that virtual and is

Jeff Cohen:

to digital.

Paul Dawalibi:

So that's an interesting take in and of itself. That what you're saying we're even

Paul Dawalibi:

further off the mark here. Exactly. Well, that's actually a great segue, I think into the second

Paul Dawalibi:

story because this is one of those like, interesting flip flop kind of situations. And I

Paul Dawalibi:

would love to hear your take on this Jeff. And the headline here. This is from protocol. The headline

Paul Dawalibi:

here is EA CEO said NF T's were the future of the industry. Now he's not so sure. So EAS CEO Andrew

Paul Dawalibi:

Wilson appear to back away from crypto in an earnings call this week. Basically, what he said

Paul Dawalibi:

was the company was currently driving on when it comes to you know, crypto and blockchain, but

Paul Dawalibi:

three months ago, he had called NF T's in the broader, broader blockchain gaming market, the

Paul Dawalibi:

future of our industry. So now he says, I believe that collectability will continue to be important

Paul Dawalibi:

part of our industry, and the games and experiences that we offer our players, whether

Paul Dawalibi:

that's as part of the NFT blockchain, well, that remains to be seen. I think the way we think about

Paul Dawalibi:

it is we want to deliver the best plot possible player experience we can. And so we're going to

Paul Dawalibi:

evaluate that over time. But right now, it's not something we're driving hard on. So right now

Paul Dawalibi:

we're not driving hard on it. But three months ago, he said it's the future of our industry.

Paul Dawalibi:

Could you explain to me this radical change in in philosophy and thinking and focus as a business?

Jeff Cohen:

It's funny because this is almost our our third episodes, I think we literally may have

Jeff Cohen:

covered or sorry, our 12 episodes, we may have literally covered. Andrew Wilson's comments is the

Jeff Cohen:

first earnings call three months ago. And and we've sort of seen this shift take place. I mean,

Jeff Cohen:

when we I remember when we were first talking about when Ubisoft introduced NF Ts and the courts

Jeff Cohen:

platform to your coach and your con. We were we were pretty bullish at first. And we kind of I

Jeff Cohen:

think my initial take was I was happy that they were putting that mechanic into a game that

Jeff Cohen:

already had a player base. Because I thought it would be easier to do that with a game that

Jeff Cohen:

already had a player base than to build a whole new game new IP with the mechanic. And it turned

Jeff Cohen:

out it only took us about a week to realize that that was probably the wrong take. Because there's

Jeff Cohen:

this this rife right now you know where hardcore core even hardcore I would say the The General

Jeff Cohen:

gamer is not that interested in web three crypto gaming. Right now it is a different customer base.

Jeff Cohen:

So I do, I think what you're seeing here is, is Andrew Wilson and EA recognizing that and I have

Jeff Cohen:

to give them a modicum of credit for a pre recognizing their customer base and sort of

Jeff Cohen:

listening to what they are saying currently, having said that, the massive caveat is this is

Jeff Cohen:

why you don't see big companies innovate very often, it's hard to do to disrupt yourself, right?

Jeff Cohen:

Because most of your customers are currently happy with the service you're giving them right now,

Jeff Cohen:

they don't want this new thing. But I generally think he's wrong. I think his first quote was

Jeff Cohen:

correct. And ft and blockchain gaming probably does represent the future of the industry. But now

Jeff Cohen:

it seems like EA is gonna be on the backfoot there, because they're listening to their existing

Jeff Cohen:

customers. And that you see this time and time again, with industries where the incumbents don't

Jeff Cohen:

disrupt themselves, because they're focused on rather than the niche audience, they're focused on

Jeff Cohen:

kind of their core customer. And you have smaller companies that are more nimble and able to take

Jeff Cohen:

risks that come in to eat their lunch over time. And you can almost predict it today like this,

Jeff Cohen:

that's what's going to happen here, you know, might not take six months, it might take six

Jeff Cohen:

years. But you know, you're you are going to see this kind of attitude be very detrimental long

Jeff Cohen:

term, I think for EA and they will eventually have to go make an acquisition or do something to catch

Jeff Cohen:

up. You just have to look at Free to Play mobile. I mean, we saw this exact story play out a decade

Jeff Cohen:

ago, where every console company, a gaming company, kind of poo pooed Free to Play mobile and

Jeff Cohen:

said, well, that's just Candy Crush and Flappy Birds, and nobody cares about that. And our

Jeff Cohen:

customers want to, you know, experience that they go pay $60. And it's a great experience built by,

Jeff Cohen:

you know, with great graphics.

Paul Dawalibi:

I meant they didn't poopoo it. He didn't pursue it. Well, I personally. Yeah, but so

Paul Dawalibi:

but take me behind the scenes at EA, right? What what went down in the last three months? Because

Paul Dawalibi:

he comes on a conference call on an earnings call, right? Shareholders analysts, right. This is the

Paul Dawalibi:

big show for CEOs of public companies. And he says, this is the future of our industry. Big

Paul Dawalibi:

statement, right. Three months later, he's going well, we're not really focused on it.

Jeff Cohen:

I was looking at I mean, look at exactly what

Paul Dawalibi:

take me behind the scenes. Did he change his mind? Because of something he saw? Is

Paul Dawalibi:

it from internally you think management at EA telling him, hey, these things can't be done? Or

Paul Dawalibi:

maybe we shouldn't do it? Is it analysts that, you know, shareholders that punished him for that

Paul Dawalibi:

statement? Like, give me some of the Give me some of the tinfoil hat theories on why a CEO of such a

Paul Dawalibi:

big gaming company would change? Course. So like this is 180 degree change? without any

Paul Dawalibi:

explanation. To be clear, he didn't say, hey, he didn't even acknowledge the three months ago, that

Paul Dawalibi:

he was saying, this is the future of our industry. Like, if he had come out and said, Hey, guys, I

Paul Dawalibi:

know I said three months ago that NF T's were the future of our industry, we've looked at it we real

Paul Dawalibi:

we've talked to a lot of our players, you know, they don't want it. We're gonna delay it, we're

Paul Dawalibi:

still thinking about it. But it's, you know, on the roadmap for 2025. Because, you know, we're

Paul Dawalibi:

just not there yet. I want to do

Jeff Cohen:

Okay, with that would be that would be a cleaner statement, I guess you have to remember,

Jeff Cohen:

you know, these are questions that are asked, you know, off the cuff by analysts, so it's granted,

Jeff Cohen:

that's a big topic. So you would think you would have his mind pretty made up on that. It's not

Jeff Cohen:

like he just made that up on the spot. But these aren't prepared remarks. So you're not always

Jeff Cohen:

getting the cleanest, possible explanation. It's, you know, he's on a conference call with hundreds

Jeff Cohen:

of people listening and some analysts is asking him a question. He could ask him, hey, Andrew,

Jeff Cohen:

what's your favorite? Color? You know what I mean? Orchid ask him that. So it's like, there there is

Jeff Cohen:

there is some variability to these things, in terms of he's not exactly prepared for that exact

Jeff Cohen:

question. And I would say he calmed me out a little bit like I think he did say, you know, when

Jeff Cohen:

you can pull it back up like he's bullish on collectability. He's just not entirely sure that

Jeff Cohen:

it has to be on the on the blockchain. And I actually don't think that's a crazy statement.

Jeff Cohen:

Right. If you had articulated a little better, like, I think if you asked Strauss Zelnick, Yes,

Jeff Cohen:

Bobby Kotick, and maybe I'm just listing people who are the old dinosaurs in the industry, and if

Jeff Cohen:

I were a web three, Super Bowl, I'd be like, well, obviously those people are going to answer that.

Jeff Cohen:

But I think a lot of them would probably agree with that in the sense of it's not it's not a

Jeff Cohen:

requisite that we use the blockchain to achieve the things that web three gaming is trying to

Jeff Cohen:

achieve in terms of player ownership and all that Yeah,

Paul Dawalibi:

I'm just, I'm searching in my mind for, I guess maybe the the question I asked is the

Paul Dawalibi:

wrong one. And it should be more about what was the impetus for the first statement? Right? Why

Paul Dawalibi:

take such Why make such a, a, if you're gonna make a statement like that, and you're gonna say and

Paul Dawalibi:

Elon, interesting sort of side story, right, Elon Musk on the on the Tesla earning call, I don't

Paul Dawalibi:

know, if you listen to it, basically, in some way, shot himself in the foot. They had a great

Paul Dawalibi:

quarter, but he spent the whole call talking about how autonomous and AI robots are the future of

Paul Dawalibi:

their business, basically. And it's like, if you're gonna make such a, a big statement, right,

Paul Dawalibi:

that in some ways, says my current business is a little bit outdated? Because that's the

Paul Dawalibi:

implication, right? There must be some reason behind that, because you're planning on moving

Paul Dawalibi:

into that space, because I don't know. Right? But you want to seem like a leader, you want to you

Paul Dawalibi:

want to, you know, you don't want to be seen as as a follower, whatever the the reasoning is.

Jeff Cohen:

So you tinfoil hat in saying like, you think EA had a planned blockchain gaming

Jeff Cohen:

initiative, something they were going to announce and then have subsequently pulled it back? Yeah.

Jeff Cohen:

Yeah.

Paul Dawalibi:

But like, part of me wants, wants to believe that they made a big statement, because

Paul Dawalibi:

they were ready to announce something right, then they looked at the Ubisoft stuff that did not get

Paul Dawalibi:

a good reaction at all. Right. And in some ways, whatever they were going to announce was going to

Paul Dawalibi:

be overshadowed by the Activision Blizzard. Right acquisition. So I didn't listen to that earnings

Paul Dawalibi:

call. But I guarantee the analysts are thinking about that, and not about whatever, you know, EA

Paul Dawalibi:

was going to announce. And so they have to backpedal a little bit. And, and maybe they've

Paul Dawalibi:

changed their minds. But I, you know, I was struggle when you make such a big statement, and

Paul Dawalibi:

then there was nothing there to actually back it up nothing to

Jeff Cohen:

I guess, the bigger question in my mind, do you think he's right? Like, is this a

Jeff Cohen:

smart move by EA listening to their customers? Or is this blockbuster saying, hey, nobody wants

Jeff Cohen:

streaming, they want to, you know, people want to come to the store on Friday night, like they

Jeff Cohen:

always have.

Paul Dawalibi:

I think I've used this analogy, even on this podcast before, it's like the Steve

Paul Dawalibi:

Jobs approach. Or maybe I've talked about it on the business of esports, where, you know, part of

Paul Dawalibi:

the greatness that people ascribe to Steve Jobs is, he didn't listen to what the customer wanted.

Paul Dawalibi:

He gave them what he believed was the best product or the right product. Right. And, you know, it was

Paul Dawalibi:

like the classic, I think it's like a Henry Ford line or whatever. Like, if you'd ask people in the

Paul Dawalibi:

1800s, you know, they would have asked for a faster horse not for, you know, a motorized like a

Paul Dawalibi:

combustion engine based car. And so I think if EA had like, amazing visionary leadership, I would

Paul Dawalibi:

say this, you know, they should be thinking about how to play their, my view, though, is that he has

Paul Dawalibi:

always been kind of a follower, right? Like, they're not, they were never the biggest they were

Paul Dawalibi:

never the best. I feel like the world of NF T's and blockchain based gaming for EA would be a

Paul Dawalibi:

landmine. And if anyone would get it wrong, it's probably them, right? They have this history of

Paul Dawalibi:

just awful decisions around microtransactions. And fundamentally, NF T's aren't vastly different. And

Paul Dawalibi:

so, you know, I just don't think EA set up to succeed in that realm. Maybe they buy another

Paul Dawalibi:

business, right, get bigger by by high flying, you know, Blockchain base game developer right now or

Paul Dawalibi:

something like that, and build a strategy around that. But I think as it stands, I don't think EA

Paul Dawalibi:

should be playing there. And I think this this sort of backing off is probably the right thing

Paul Dawalibi:

for them to do and you set it as a big company that's playing defense, but some big COMM A lot of

Paul Dawalibi:

big companies are just not set up to play offense, right, like encouraging them to play offense when

Paul Dawalibi:

you know they're going to lose. Also not a not a winning strategy. So let's move on. Jeff, let's

Paul Dawalibi:

talk about you know, this is this I think is more of a quick story but it's it's meta also had their

Paul Dawalibi:

earnings call meta, aka, you know, previously known as Facebook. And I'll just pick out the one

Paul Dawalibi:

thing I thought was interesting here, which is q4 was the first quarter in which Mehta released

Paul Dawalibi:

revenue numbers for their reality labs segment. They had losses of 3.3 billion in that reality lab

Paul Dawalibi:

segment, and Zuckerberg previously announced that the company spent 10 billion on its Metaverse

Paul Dawalibi:

effort in 2018. 21 So, you know, if you were a shareholder of metal, I don't know if you actually

Paul Dawalibi:

are actually smashed. But, you know, what do you make of if anything of the losses? You know they

Paul Dawalibi:

had an earnings miss but it was because of Apple's privacy changes like it wasn't related to the

Paul Dawalibi:

metaverse stuff at all. Yeah, just for clarity sake. But what do you like? Is the conclusion that

Paul Dawalibi:

they're not investing fast enough, innovating fast enough not launching products fast enough? Like

Paul Dawalibi:

what what is your conclusion from this?

Jeff Cohen:

No. I mean, there's and they're certainly putting their money where their mouth

Jeff Cohen:

is, in terms of the spend, I mean, the fact that they're spending 10 billion, kind of on this

Jeff Cohen:

reality labs kind of Metaverse piece is a staggering, staggering number. Obviously, you

Jeff Cohen:

know, the stock is getting getting beat up tonight. And like you said, I don't think they've

Jeff Cohen:

telegraphed all the metaverse stuff. So I think it's much more about user growth slowing, you

Jeff Cohen:

know, that competition with tick tock IDFA, stuff like that stuff that really has nothing to do with

Jeff Cohen:

this podcast. And we aren't the experts in but in terms of them spend, I mean, $10 billion, is so

Jeff Cohen:

much on to spend on on, you know, the metaverse efforts. Problem is, if you're a shareholder,

Jeff Cohen:

they're spending all that and you really have to buy into Zuckerberg vision of all this. And it's a

Jeff Cohen:

big near term drag on earnings. And when that was all well and good when the core business was

Jeff Cohen:

chugging along, and just doing really well. Now, when you start to see issues with the core

Jeff Cohen:

business, it gets a lot harder. And actually, it's very similar argument to what we had with Netflix,

Jeff Cohen:

where, you know, net, we had a lot of talks about Netflix getting into gaming, and then they sort of

Jeff Cohen:

last quarter had a slowing subscriber group within kind of, for the first time, you know, it looked

Jeff Cohen:

like the core business is really now challenged it, the question becomes, is it now? Are they more

Jeff Cohen:

likely to get into gaming make that big move? And with Facebook, it's the same thing like, does this

Jeff Cohen:

in any way change their commitment to spending 10s of billions of dollars a year to get to this

Jeff Cohen:

Metaverse vision, which, again is probably five to 10 years out of really being in our main driver

Jeff Cohen:

for them, given Zuckerberg and he said so much control of the company has been such a visionary.

Jeff Cohen:

I doubt things change. But if you're a shareholder, you do have to start to question

Jeff Cohen:

like, if the core is deteriorating, how much are you willing to put up with and kind of these other

Jeff Cohen:

best business?

Paul Dawalibi:

How much do you think they are willing to put up with because I'm gonna make the

Paul Dawalibi:

case that that they should put up with a lot. And here's my here's my simple case for Microsoft just

Paul Dawalibi:

paid how much for Activision Blizzard 70 billion 70 billion. And all the messaging is this is this

Paul Dawalibi:

is our Metaverse play. Right? This is Microsoft's Metaverse playing. Now, we know that's probably

Paul Dawalibi:

not really true. But that's what they're all coming out and saying, right? And if we're talking

Paul Dawalibi:

about what should shareholders put up with what should analysts sort of accept or believe? If you

Paul Dawalibi:

believe that 70 billion is the right amount for Microsoft to spend on a Metaverse play? Why is it

Paul Dawalibi:

crazy? For meta fate slash Facebook to sink 10 billion a year for the next five to 10 years.

Paul Dawalibi:

We're talking about basically the same amount of investment. And I would, I would probably argue

Paul Dawalibi:

that if unless Facebook slash Mehta really mess this up, if they sink 10 billion a year into

Paul Dawalibi:

reality labs in five or 10 years from now we should there. There should be a very tangible and

Paul Dawalibi:

exciting product stack there. That could be quite game changing, right? Like this is not a trivial

Paul Dawalibi:

amount of money. But they know how to do development in general, right? They know how to

Paul Dawalibi:

build good product felt like they don't. I mean, they're building it without limitations.

Jeff Cohen:

I certainly didn't disagree. It's just, you know, when the average investor or

Jeff Cohen:

probably holds a stock less than six months, it becomes very hard to even think a year or two out,

Jeff Cohen:

let alone you're talking about underwriting stuff that's five or six years out. It's just hard. It's

Jeff Cohen:

hard. It's hard to do. But I do agree. I think for people who are long term investors, you probably

Jeff Cohen:

end up being rewarded.

Paul Dawalibi:

I have one last quick quick story here. Jeff before we before we wrap up this week's

Paul Dawalibi:

podcast. And this one. I want to tie in nicely with our first story, also a real estate story.

Paul Dawalibi:

And here the headline is Metaverse, mortgages are being issued to buy virtual land. And one of the

Paul Dawalibi:

first ever was just signed for a property in decentraland. So first story about sandbox now

Paul Dawalibi:

we've got a decentraland story here. It's a company called Terra zero technologies. They

Paul Dawalibi:

facilitated one of the first ever Metaverse, mortgages sets Some experts this is the the

Paul Dawalibi:

article does not mean the the article here says some experts remain skeptical about Metaverse real

Paul Dawalibi:

estate, liking it, likening it more to a crypto asset than physical property.

Jeff Cohen:

Did they listen to the podcast that we're currently recording?

Paul Dawalibi:

It's fascinating, right? Because it's such a, I mean, we maybe should have done

Paul Dawalibi:

this right after the first story. But like, it's, it's one of these situations where again, a

Paul Dawalibi:

mortgage sounds good, right? You you want to go buy that plot next to Snoop Dogg for 450 grand,

Paul Dawalibi:

but I don't have 450 grand. So let me go get a mortgage. Does this all fall apart? Because for

Paul Dawalibi:

the

Jeff Cohen:

entire economy to get blown up, because subprime mortgages in the metaverse,

Jeff Cohen:

that's gonna be fun. I mean, there's there's

Paul Dawalibi:

a long giveaway all our best ideas here, Jeff.

Jeff Cohen:

There's, there's a lot of different ways we can take this story. Given we're short on

Jeff Cohen:

time, I'll say the interesting thing for me is just to see how so many businesses that happen in

Jeff Cohen:

the real world are now moving into the metaverse. You know, mortgages. We're gonna have insurance,

Jeff Cohen:

we're gonna have, you know, daycare, and the metaverse potentially, like all of these things

Jeff Cohen:

maybe sound absurd when you say them, but a lot of these industries are going to move into the

Jeff Cohen:

virtual world. You're already kind of seeing it with banks. I mean, guilts, right. We talked about

Jeff Cohen:

this last episode, these these guilds really are just banks that are lending you assets. And you

Jeff Cohen:

you you pay them back and you pay a return, they get a return. So you're going to see all sorts of

Jeff Cohen:

different industries move to the metaverse, and there's going to be massive companies that are

Jeff Cohen:

built on the back of that. And that's something that I'm pretty interested in kind of being

Jeff Cohen:

involved in that ecosystem.

Paul Dawalibi:

I love anything on that thought, Jeff. For our listeners, guys, make sure you

Paul Dawalibi:

subscribe, share the podcast with your friends, send it to people really helps grow the show. If

Paul Dawalibi:

you have feedback. Feel free, reach out to me to Jeff, you can find us basically on every platform

Paul Dawalibi:

or go follow the juice at Jeff Cohen 23. And, and we really love to hear from you guys. So make sure

Paul Dawalibi:

to reach out to us. Let us know how you're liking the show. And as always guys, we will see you next

Paul Dawalibi:

week.

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About the Podcast

META Business
From the metaverse to the boardroom...
Meta Business tackles the most important Metaverse industry news. Business experts dissect and discuss all of the hottest topics and happenings, from a unique C-suite perspective.

About your host

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Paul Dawalibi