Episode 21

full
Published on:

18th Apr 2022

21. Meta Sales Cut, Sony Lego Epic Investment, Sonic In Roblox, Genies $150M Raise

In this episode, we discuss Meta taking an almost 50% cut of digital asset sales in Horizon Worlds, Sony and Lego investing $2 billion into Epic Games, Sonic the Hedgehog coming to Roblox, Genies raising $150 million for a $1 billion valuation, and so much more!

Episode 21 Keywords: Meta, digital asset sales, Horizon Worlds, Sony, Lego, investing, Epic Games, Sonic the Hedgehog, Roblox, Genies, $1 billion valuation

Transcript
Unknown:

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

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

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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 official podcast of the metaverse, what we do is we cover the most

Paul Dawalibi:

pressing, Metaverse, 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 industry. For those of you who are new here, welcome. If you're a regular listener, thank

Paul Dawalibi:

you guys for tuning in every week, thank you for leaving a review on the podcast or for hitting

Paul Dawalibi:

that subscribe button. If you haven't done either of those things. Please do those things, or share

Paul Dawalibi:

the podcast with a friend or family member or colleague. That's how more people discover the

Paul Dawalibi:

show. Jeff, how you doing this week?

Jeff Cohen:

Do Good. Good. Well say it's funny. Every time you asked me I feel like the most

Jeff Cohen:

nervous I am doing this podcast when you ask. I feel like I need like a and I never like I

Jeff Cohen:

literally for like 30 seconds while you do that little spiel, I think like what am I going to say?

Jeff Cohen:

And I never know what to say because I'm always like, Well, I'm just gonna sit near my apartment

Jeff Cohen:

like video games

Paul Dawalibi:

a week to prep for it. You do a whole bunch of other prep. Why not prep that

Paul Dawalibi:

piece.

Jeff Cohen:

But that stuff's easy, because it's like, hey, the news stories. It's interesting. I

Jeff Cohen:

got like some meat on the bone. This is boring old life. News,

Paul Dawalibi:

or people kill for that the kill for the personal touch. You know that we're not

Paul Dawalibi:

robots for human beings,

Jeff Cohen:

the business and esports podcast and you have Jimmy along with Steve Aaron seven, five

Jeff Cohen:

minutes. Back and forth and banter and this thing. Definitely don't do that on our podcast. Which is

Jeff Cohen:

because we're actually friends. We talk a lot, but we do. Yeah, yeah.

Paul Dawalibi:

You know what was interesting, I had someone come visit the office this week. And

Paul Dawalibi:

if you're listening, you know who you are. And they were asking me about my opinion on like

Paul Dawalibi:

fortnight's latest valuation. And they were asking my opinion on Play to earn and obviously their

Paul Dawalibi:

listeners of the podcast, so they wanted a bit of a color behind, you know, my comments on that. And

Paul Dawalibi:

it's so funny, because people always think, and I think we've discussed this, even people always

Paul Dawalibi:

think that I play some sort of character on the podcast, right? Like, I'm just purposely

Paul Dawalibi:

opinionated on the mind cast. And then when they hear it in real life, they realize, oh, wait, no,

Paul Dawalibi:

that's just who he is. This is just, this is just Paul, this is you know, they felt like they were

Paul Dawalibi:

getting the profit for real in person. And so if you're, if you meet me in person, and frankly, if

Paul Dawalibi:

you meet Jeff in person, you're gonna get the same human beings, you're gonna get the same exact

Paul Dawalibi:

opinions. It's not going to change. We don't do this fake for the show. This is this is the way we

Paul Dawalibi:

see things. So let's talk about meta. We mentioned I mentioned meta. Let's talk about the big story

Paul Dawalibi:

this week. Let's open with this, Jeff and the headline here is meta plans to take a nearly 50%

Paul Dawalibi:

cut on virtual asset sales in its metaverse. This, it's actually not 50. It's 47.5%, which feels

Paul Dawalibi:

oddly specific. I wouldn't want to ask you about that. But the 47.5% figure includes a hardware

Paul Dawalibi:

platform fee of 30% for sales made through the meta quest store, where it sells apps and games

Paul Dawalibi:

for its virtual reality headsets. On top of that horizon, worlds will charge a 17.5% fee. And Metis

Paul Dawalibi:

fees for the sale of virtual assets and horizon worlds are significantly more than the 30%. Apple

Paul Dawalibi:

charges developers on its app store. So it's funny because Facebook was part of the group going after

Paul Dawalibi:

Apple, right? Correct me if I'm wrong, Facebook slash meta was part of the group going after Apple

Paul Dawalibi:

for their 30% You know, fee taking a cut from developers. And here we have a situation where

Paul Dawalibi:

meta has now publicly stated they announced it in a blog post and confirmed with CNBC who wrote this

Paul Dawalibi:

article that they're going to take an overall cut of up to 47.5% on each transaction. So that's the

Paul Dawalibi:

30% for sales made through the medic quest store. And then 17 and a half percent for Horizon worlds.

Paul Dawalibi:

I'm curious your thoughts on this, Jeff? Is this okay? Is everyone up in arms for no reason? Is

Paul Dawalibi:

this total hypocrisy like what do you what do you make of it?

Jeff Cohen:

Well, it's definitely I'm not surprised and strong. I are given at Facebook and

Jeff Cohen:

sort of anything they do. Recently, the last couple of years sort of draw, draw negative

Jeff Cohen:

backlash. It is significantly higher. I've been noticing the article as you're scrolling, then,

Jeff Cohen:

you know, what you see from other NFT trading platforms like open see it is to add percent

Jeff Cohen:

silver looks were 2% Open Air is 2%. So significantly significantly higher. Having said

Jeff Cohen:

that, when you compare it to an app store, you know, 47, verse 30, it's higher, but not crazy,

Jeff Cohen:

crazy higher. And then the one that I really want to point out actually is Roblox, which, you know,

Jeff Cohen:

I don't think a lot of people know but robotics takes 75% or 70%. You know, from developers. So

Jeff Cohen:

numbers that 30% Roblox get 70%. So it's funny, you don't see that much backlash on that. I mean,

Jeff Cohen:

it's surprising because it's Facebook, right? Like Facebook has a core business that makes a ton of

Jeff Cohen:

money. This is obviously something where Mark Zuckerberg is investing a ton of money and sort of

Jeff Cohen:

sees this as the future of the company. I'm a little surprised, particularly because Facebook

Jeff Cohen:

has been. So they've under monetized other assets, famously, like they bought WhatsApp for 20

Jeff Cohen:

billion, like seven, eight years ago. And they have not monetized that as far as I know, that

Jeff Cohen:

died, you know, and they've been willing to do that. They famously under monetize Instagram for a

Jeff Cohen:

long time for really starting to ramp that up. So it's weird that given they clearly have a 1015 50

Jeff Cohen:

year vision for this Metaverse play, why are the gouging customers so early on? Like, why wouldn't

Jeff Cohen:

they just make this? Even just give it away for free and then slowly monetize ads or other stuff?

Jeff Cohen:

Like it? Just it's very odd?

Paul Dawalibi:

I mean, you're right, there is a strategy that would say, charge nothing like I'm

Paul Dawalibi:

giving I'm painting the extreme that I think you're taking this to right, charge nothing and

Paul Dawalibi:

have it be a total land grab. Every developer will flock to meta because they get to keep 100% of the

Paul Dawalibi:

profits. Like why not do that? I guess the limit the push back to two things. One, how many

Paul Dawalibi:

developers do you think will no longer decide to build anything for meta, and meta as Metaverse as

Paul Dawalibi:

a consequence of this split? First question? And second of all, I think part of the it's not so

Paul Dawalibi:

much a question but a statement. If I'm defending Mehta here, the reality is What's it costing them

Paul Dawalibi:

to build? This metaverse? They've said like 10 billion he's dedicating to this right here. Yeah,

Paul Dawalibi:

a year, a year. And it's the same argument I've made with Apple and epic, right? Okay. If you're

Paul Dawalibi:

unhappy with the split, go build your own platform, like go sell 5 billion iPhones, right?

Paul Dawalibi:

Like, go do the thing that you think is so easy, that you should have access to it free of charge,

Paul Dawalibi:

or a very low fee. Like my mind, if you own the platform, you charge what you want. If you're not

Paul Dawalibi:

happy, go build your own platform or go to another platform. And maybe meta recognizes that right

Paul Dawalibi:

now. They're one of the only games in town that matters. And they're looking at the massive cost

Paul Dawalibi:

of building this. And they're saying, why wouldn't we?

Jeff Cohen:

Like it's a fair argument. I actually don't necessarily disagree with you. But when

Jeff Cohen:

you're dealing with this, like two sided platform, you said, hey, well, what developers aren't going

Jeff Cohen:

to build, you know, for our horizon worlds, well, probably a decent amount with that, if the fees

Jeff Cohen:

that I and there's alternatives. And the reason I say that is because it's not like Verizon worlds

Jeff Cohen:

is like Facebook, where Facebook blew up where there's billions of users, and it's like, well, if

Jeff Cohen:

you're not on Instagram, if you're an advertiser, and you're not on Instagram, like you're not

Jeff Cohen:

getting a whole generation of people. Facebook's Metaverse, there's, there are no users now. So

Jeff Cohen:

it's like, you almost need the developers to track the users. So when you put up this fee, I could

Jeff Cohen:

see that pushing people for more Roblox or an epic, which, you know, we're going to talk about.

Jeff Cohen:

So I do think it's a strategic mistake,

Paul Dawalibi:

to not attract the maximum number of developers they want. I mean, maybe they also

Paul Dawalibi:

think that the metaverse things like this interoperability between meta versus may be so

Paul Dawalibi:

great that they don't need to attract zillions of developers day one, that eventually they can bring

Paul Dawalibi:

sort of the might of the Facebook users, and then attract developers, but the early adopters, they

Paul Dawalibi:

can sort of gouge them if you want to even call it gouging, but meaning they can charge whatever they

Paul Dawalibi:

want to early adopters. With the knowledge that eventually if they really want to make a land

Paul Dawalibi:

grab, it may be won't be that hard for them.

Jeff Cohen:

It's definitely possible. It just seems so in Congress with what they've done, you

Jeff Cohen:

know, in approaching other other industries. So it'll be interesting to see. I mean, like, do you

Jeff Cohen:

think this will get reversed? Because there's obviously negative bad I mean, we're reading this

Jeff Cohen:

on CNBC. So that's pretty mainstream. This isn't like games beat or some, you know, very industry

Jeff Cohen:

rag. This is, you know, hitting the business press.

Paul Dawalibi:

Yeah. I mean, that's a great question. Do you think they'll backtrack? I have a

Paul Dawalibi:

funny feeling they end up at 30%. I think Apple has sort of send Yeah. All right. I think Apple

Paul Dawalibi:

has sort of set this benchmark. And if they backtrack at all, it'll be okay. Okay, we'll take

Paul Dawalibi:

away the extra fee. It's 30%. So that no one can sort of make the case that meta is extra greedy or

Paul Dawalibi:

right, because then they can just go all apples the same. I don't know. What do you think, will

Paul Dawalibi:

they battle?

Jeff Cohen:

I think that's I think that's actually probably fairly likely now. Now the next question

Jeff Cohen:

is when do you think it'll be in the next next three days? That's

Paul Dawalibi:

that's a good question. I don't know like it's almost within like a week Right?

Paul Dawalibi:

Like they never wait much. They test it out. I feel like they did on purpose.

Paul Dawalibi:

They probably have the second press release already ready to go. The good the irony of it all.

Paul Dawalibi:

Now let's let's move on. Let's talk about other meta verses here. And this one, this one. I mean,

Paul Dawalibi:

I love the headline. This is from PC gamer. And we're talking about epic here and the headline is,

Paul Dawalibi:

Sony and Lego invest 2 billion into epic to help help build the metaverse. The Sinbad sub headline

Paul Dawalibi:

here is interesting. We're still not perfectly clear on what the metaverse is, but it sure

Paul Dawalibi:

attracts money. So Sony invested a billion dollars into Epic Games. A separate billion was made by

Paul Dawalibi:

lego parent company Kirkby. Did you even know Lego was a parent company called Kirkby? Because I did

Paul Dawalibi:

not. And what they're saying is, this is I'll read the quote here directly because I think it's

Paul Dawalibi:

interesting. The quote says, As a creative entertainment company, we're thrilled to invest in

Paul Dawalibi:

epic to deepen our relationship in the metaverse field a space where creators and users share their

Paul Dawalibi:

time. This is from Sony Group Chairman president and CEO Kenichiro Yoshida. Now this is Sony second

Paul Dawalibi:

investment epic. So they did make a 250 million investment about two years ago. But it's first for

Paul Dawalibi:

Lego now not mentioned in this art. Oh, no, they did mention in this article is that after this

Paul Dawalibi:

cash, epics post money valuation is 31 point 5 billion. So the 29 and a half pre money valuation.

Paul Dawalibi:

And the company is still controlled by Sweeney. So they mentioned that that hasn't changed as well.

Paul Dawalibi:

Curious what you think the the if you had taken Metaverse out of this conversation this would have

Paul Dawalibi:

seen like this seemed to me like a very straightforward kind of deal. Right. Epics all

Paul Dawalibi:

over the place. They're building, you know, engines and game the whole bit. They've got a

Paul Dawalibi:

little hand in a lot of gaming things. Sony is already a partner. They want more cash. They bring

Paul Dawalibi:

in Lego interesting partner just from a cosmetics and fortnight perspective, right? And a creative

Paul Dawalibi:

mode and fortnight perspective. What do you think like if we had taken the metaverse out? Does it

Paul Dawalibi:

change your thoughts on this investment at all? And this putting Metaverse in the language and the

Paul Dawalibi:

the release here? Do you think differently about it? I guess is my question.

Jeff Cohen:

There's a lot to unpack there. The one I think it is interesting that they intentionally

Jeff Cohen:

talked about Metaverse piece. You know, Tim Sweeney is obviously clearly talked about

Jeff Cohen:

Metaverse in the past he made other earlier people in the gaming space to start that word. But it got

Jeff Cohen:

me thinking you're using that buzzword maybe they're sort of this might be the last round

Jeff Cohen:

before they go IPO, right? Investors Metaverse once buzzy. You know, maybe maybe that was one of

Jeff Cohen:

it is interesting because it also clearly means this is deeper than, you know, this isn't just

Jeff Cohen:

paying, we're gonna put Lego into a fortnight scan, and hey, we're just going to do a

Jeff Cohen:

collaboration they've done with so many other celebrities brands does feel like they're going to

Jeff Cohen:

be building, you know, a separate, maybe even a separate world where it's like Lego world. And I

Jeff Cohen:

think that's a good idea. I mean, they, you know, this is actually something I think I we did. This

Jeff Cohen:

first came out it was kind of like one of the big things that I'm thinking about and I don't

Jeff Cohen:

necessarily know if I have a strong opinion yet. As we think about these sort of Metaverse wars,

Jeff Cohen:

it's easier for epic to kind of age down to that, like, call it eight to 12 year old or will be

Jeff Cohen:

easier for Roblox to age up to kind of 15 to 18. And I kind of think with this, you know, epic

Jeff Cohen:

maybe edging ahead in that question. Just because Lego is a strong brand, I think, you know, there's

Jeff Cohen:

been standalone LEGO games, LEGO Star Wars Lego this and that, that have done really well with

Jeff Cohen:

kids. So this could be You know, an interesting little arrow in their quiver to attract that

Jeff Cohen:

younger demographic. What do you think

Paul Dawalibi:

it's an interesting thought. And it's a big check right from LEGO from Sony. It's

Paul Dawalibi:

sort of it's pretty cut and dry. Right? They've already put 250 million. Another billion. They're

Paul Dawalibi:

a gaming company, right Sony? Like if you would call this an investment in fortnight I would have

Paul Dawalibi:

I would have said, Okay, looks normal. Like let's then nothing to talk about here. Nothing to see

Paul Dawalibi:

here. The Lego billion dollars is interesting, right? Because Lego is not like their company that

Paul Dawalibi:

this is a like a strategic investment. This is not a financial investment for them, I would think.

Paul Dawalibi:

And so what's the strategy here? Maybe a Lego Metaverse built inside of fortnight I just don't

Paul Dawalibi:

think that puts them anywhere near Roblox still read like it's it's one activation, you can build

Paul Dawalibi:

Lego world. That's it. Like what else can you build? And I don't know if Lego world is like the

Paul Dawalibi:

it may be one of the metal verses that we see evolve. But it's definitely not the metaverse

Paul Dawalibi:

right. And it doesn't convince me that fortnight is the platform to do this on. Especially if the

Paul Dawalibi:

requirement is a billion dollar investment. Right. This is kind of a high bar to set. I suspect this

Paul Dawalibi:

Metaverse talk here. This is one of those situations where and I think you alluded to it,

Paul Dawalibi:

Jeff, and I think it was really insightful. This is a cover for something else, right? This, this

Paul Dawalibi:

feels like what they call a pipe, right? It's a it's a private place in here right before they go

Paul Dawalibi:

public. It's the last money in before they go public. And we got to make it sound like there's a

Paul Dawalibi:

grand vision, because they're they've got you know, big dollar signs at the IPO in mind, right?

Paul Dawalibi:

I'm assuming, I don't know, an IPO is within the next six months, you got to think? Well, we'll see

Jeff Cohen:

how the market kind of opens. It's been a basment IPOs in the last like couple months

Jeff Cohen:

just because the markets been getting so volatile, but I bet it's the market opens up like by the

Jeff Cohen:

fall, I would think that they'll be public. The other thing I was gonna mention as we're on this

Jeff Cohen:

topic, the valuation was flat, versus a year ago, April 2021. Round, which, you know, on the surface

Jeff Cohen:

might not sound great, but you actually when you put it in context, you know, versus the

Jeff Cohen:

performance of the public gaming stocks over the last year. It's actually like all of never down

Jeff Cohen:

between 15 and like 30% And I think Roblox is down like 44% Over the last year. So I just think

Jeff Cohen:

that's notable, particularly with you know, we've been hard on Epic and hard on fortnight a lot, you

Jeff Cohen:

know, on this podcast, kind of our other podcast is esports but you're on them we're kind of

Jeff Cohen:

keeping that valuation flat and then also net they're not worth more than then then Roblox which

Jeff Cohen:

I don't know, what you think about that. I think that's, you know, pretty noteworthy because

Jeff Cohen:

they're, you know, Roblox at one point was worth like 70 billion, they were worth 29. And now,

Jeff Cohen:

there were 29 I think probox. That's pretty interesting.

Paul Dawalibi:

I mean, if I could own either stock, I'd rather own Roblox. But it's mostly has

Paul Dawalibi:

to do with Tim Sweeney, I think an epic without Tim Sweeney, I'd probably rather own epic. So my

Paul Dawalibi:

issues with leadership and where leadership has been focused, or at least not focused because

Paul Dawalibi:

fortnight was is the company that only has the metaverse to lose, right? Like they're the ones.

Paul Dawalibi:

They had everything they needed to build the metaverse their own Metaverse and have ignored it

Paul Dawalibi:

basically, for the last two years, it feels like at least because of distracted management. And so

Paul Dawalibi:

that doesn't give me very much confidence. How much do you want to bet that epic raise this

Paul Dawalibi:

round? Because the IPO markets were not an IPO window was not open to them. Because here's my

Paul Dawalibi:

theory and my misses call it my, you know, my tinfoil hat theory. It's epic was planning on

Paul Dawalibi:

going public this year, maybe even around this time. And when they started to see market sour,

Paul Dawalibi:

and, you know, not being a great environment to go public, they said, You know what, we'll pause.

Paul Dawalibi:

We'll raise, you know, a quick private round couple billion dollars, and we'll revisit the

Paul Dawalibi:

public thing in six months or 12 months. I have a funny feeling this was not planned that this was a

Paul Dawalibi:

reaction to what's happening in the public markets.

Jeff Cohen:

Which is also why the valuations flat. That's yeah, that's entirely possible.

Paul Dawalibi:

We don't know but so theory, I want to put this story next to obviously, we just as we

Paul Dawalibi:

mentioned Roblox and Roblox also in the news from a Metaverse perspective here. And this one's

Paul Dawalibi:

interesting. It's a Sonic the Hedgehog is coming to a new platform Roblox and so what's happening

Paul Dawalibi:

here is, Sega is teaming up with Roblox Developer game fam to release a licensed Sonic the Hedgehog

Paul Dawalibi:

game on the Roblox platform, so you'll be able to play this sonic speed simulator on Roblox for

Paul Dawalibi:

free. Now the reason I think we bring it up here and the reason you flag this story, Jeff is that

Paul Dawalibi:

starts to make Roblox feel a little bit like its own Metaverse, right? where developers can create

Paul Dawalibi:

experiences not that different from what we hear from sandbox or decentraland or any of these

Paul Dawalibi:

things and not that different from what we're assuming Lego is going to do with fortnight How do

Paul Dawalibi:

you feel about this story versus the last one? Are you more bullish here? Do you like this move by

Paul Dawalibi:

Roblox by Sega Is there a winner or loser here?

Jeff Cohen:

I think this is well this is one great for game fans. So they seem to be you know, they

Jeff Cohen:

got around they seem to be kind of putting themselves in the lead in terms of professional

Jeff Cohen:

kind of developers on Roblox so so good on them for that. I'm definitely more bullish on the Lego

Jeff Cohen:

story in terms of the size of the investment and the potential and I could see Lego world being a

Jeff Cohen:

very popular Metaverse for you know that eight to 12 You know, maybe even like six to 10 year old

Jeff Cohen:

kid the Sonic game I see this as more of like a little one off game mode type experience. Why I

Jeff Cohen:

think this one is notable most me is that it's kind of one of the first examples of like a call a

Jeff Cohen:

triple A I II coming to Roblox you know, I don't know Sonic called Triple A or not, but you know,

Jeff Cohen:

obviously Sonic. Sonic is a gaming royalty type IP and the fact that that's coming to Roblox I

Jeff Cohen:

actually thought was the most interesting part you know Will it makes you wonder like what we see in

Jeff Cohen:

Madden and robots who we see Call of Duty on Roblox my guess is not for some time, but it opens

Jeff Cohen:

the door to like maybe it's another platform that AAA developers start to develop on probably won't

Jeff Cohen:

when we talked about earlier their take rates you know 7% But I think that's what Epic is trying or

Jeff Cohen:

sorry Roblox is trying to do is get more professional developers kind of aged up IP. Do you

Jeff Cohen:

think we'll ever see that?

Paul Dawalibi:

Yeah, I definitely do and I think that's that's the great promise of Roblox right

Paul Dawalibi:

and this is where at face value just comparing one on like one v one here. The Lego. The potential

Paul Dawalibi:

for a Lego world within fortnight is a greater Metaverse play than Sonic on Roblox, right? That's

Paul Dawalibi:

a very limited Metaverse play if if barely that, I don't even think we can call it that. I mean, they

Paul Dawalibi:

didn't even really call it that in the story. Now, what's interesting obviously to me and to you, I

Paul Dawalibi:

think is what happens if Sonic is just the first of you know 50 other game developers that all

Paul Dawalibi:

start decide to move to Roblox and they're all building stuff within Roblox. Well, now you have

Paul Dawalibi:

something of a world that people can spend time in interacting. That is that is more permanent beyond

Paul Dawalibi:

just one little, you know, Sonic mini game. And so I think that that'll be it's interesting that

Paul Dawalibi:

they're taking very different approaches to their own Metaverse plays. Right. ROBLOX seems to be all

Paul Dawalibi:

about, I think quantity, and and how do we attract as many developers as possible to come build stuff

Paul Dawalibi:

here? And we'll see if AAA developers move, but I suspect they will. And I suspect that that cut

Paul Dawalibi:

will change over time. Whereas fortnight I think their strategy has always been big name big brand

Paul Dawalibi:

activation, right? And I doubt they would ever go and try and build a platform based just on UGC,

Paul Dawalibi:

right but fortnight has where they've been dominant is let's get the Marvel's let's get the

Paul Dawalibi:

Legos let's get the you know the giant names and and that's a draw if I'm trying to build a

Paul Dawalibi:

Metaverse but I think it's a more limited draw because it's only as good as the fan base of that

Paul Dawalibi:

brand activation right if I don't care about LEGO I'm not gonna go into fortnight and even if I care

Paul Dawalibi:

about LEGO once I've made my rant my way around Lego Land like what's next right for the for that

Paul Dawalibi:

10 year old who needs their quick their next quick fix. ROBLOX I think has more of an answer for

Paul Dawalibi:

that. So it's interesting to put them side by side. My money on a long term sort of Metaverse

Paul Dawalibi:

play still on Roblox versus fortnight and I think your valuation point look they're pretty close now

Paul Dawalibi:

right and that to me feels fair I think the you know the interesting part of epics businesses

Paul Dawalibi:

Unreal Engine five, their new launch which also you know, that's more gaming news so we don't

Paul Dawalibi:

cover here but Unreal Engine five could be a very big game changer. Drew if it lives up to what

Paul Dawalibi:

they're saying it could be. You know that that's where that could be the thing that swings the

Paul Dawalibi:

favor towards towards fortnight and epic. So let's, let's do one last story here, Jeff Let's do

Paul Dawalibi:

one less story because this is a quick story because we touched on this before genies raises

Paul Dawalibi:

150 million at over $1 billion valuation for Metaverse avatars. So big raise, huge valuation,

Paul Dawalibi:

they're now a unicorn, right over a billion dollars, la based. And basically, they're an

Paul Dawalibi:

avatar creator. So the idea even though I don't think any of this is really implemented today,

Paul Dawalibi:

right like it is you can create one avatar and it's portable, to a bunch of different places. I

Paul Dawalibi:

don't know of anywhere where these avatars are portable, they don't really mention it in the

Paul Dawalibi:

article, I've never used their tool. But all of the creations from genies are minted on dapper

Paul Dawalibi:

labs, blockchain network flow, and you can create and sell like, or you could become a creator of

Paul Dawalibi:

avatars and resell them. So there's a marketplace there also. billion dollars 100 $50 million raise,

Paul Dawalibi:

what do you think?

Jeff Cohen:

It's yeah, evaluation to me is is a bit over over its skis. But having said that, this

Jeff Cohen:

is just what we're seeing kind of in this space. And I think it even said somewhere in the article.

Jeff Cohen:

This was the article that I remember that basically, there, this technology is not yet in

Jeff Cohen:

any games. So it's like the use case, the number one use case, it isn't even there yet is built,

Jeff Cohen:

and yet, it's already got a billion dollar valuation. So to me, like, we've talked a bunch of

Jeff Cohen:

times about this, we're bullish on this concept. But to have a product where you don't even have a

Jeff Cohen:

product yet, it's basically a private beta. That that really is he hasn't even really proved itself

Jeff Cohen:

out yet. And to already have a billion dollar valuation, to me, seems aggressive, particularly,

Jeff Cohen:

you know, they already raised 65 million now. Last year. Now less than a year later, they're raising

Jeff Cohen:

another 100 and 50 million. So, you know, you're talking over 200 million raised for a company that

Jeff Cohen:

doesn't even have a product yet. I don't see how that necessarily ends. Well, having said that,

Jeff Cohen:

you've gotten incredibly smart investors, silver like leading in those. There's some of the

Jeff Cohen:

smartest people out there. So maybe the private beta really looks great.

Paul Dawalibi:

Yeah, the problem is like the risk here is, what if no one opens up to your

Paul Dawalibi:

technology, right, like, and so I'm hoping I'm guessing they've seen, like, there's traction in

Paul Dawalibi:

the, sort of behind the scenes, and they, they're talking to a bunch of platforms now, to make these

Paul Dawalibi:

avatars portable, because they're not portable. You're just buying and selling again, like images,

Paul Dawalibi:

really, that are not worth anything. There's a market for that. There's the market for that.

Paul Dawalibi:

That's true. But the one another big red flag for me and why I'm calling bullshit on this is this

Paul Dawalibi:

quote from the article it says, since its last $65 million funding round in May 2021 genies which

Paul Dawalibi:

said it has a 99% celebrity avatar market share. Let's stop right there. Anyone claiming to have a

Paul Dawalibi:

99% celebrity avatar market share? I would I would stay so far away from as an investor. I mean,

Paul Dawalibi:

literally would not touch this with a 10 foot pole. Like, what a bullshit statement. How big is

Paul Dawalibi:

the celebrity avatar market? I mean, is it three people? Is it a big? No, I don't even know what

Paul Dawalibi:

the statistic means. And who cares? Like there's 3 billion gamers, right? That's the interesting

Paul Dawalibi:

market. You want to go after? Not? Celebrities, okay? You have 20 celebrities who made avatars?

Paul Dawalibi:

Because you sent this to them? Like, what does that tell me about the validity? Or this? You

Paul Dawalibi:

know, long term viability of your business? It's one of those things. It's a head scratcher. I

Paul Dawalibi:

don't know. Maybe maybe the the investors are smarter than I am. But I just don't see it then.

Paul Dawalibi:

And those things are huge, huge red flags. So far genies

Jeff Cohen:

isn't being used in games.

Paul Dawalibi:

That's the whole point, right? So we'll see. I mean, maybe we're wrong on this one,

Paul Dawalibi:

but I doubt it. We'll see where it ends up. And there'll be one to watch guys. That wraps up this

Paul Dawalibi:

week's episode flew by so fast. Make sure to go follow the juice guys at Jeff Cohen 23 He's always

Paul Dawalibi:

got interesting takes. He's always got interesting things to say. Make sure you go follow him. Make

Paul Dawalibi:

sure you hit subscribe on this podcast don't or follow wherever you get it on Spotify, Google Play

Paul Dawalibi:

or or Apple podcast. So I know so many of you listen on Apple podcasts for example, make sure

Paul Dawalibi:

you hit that follow button or subscribe button on there. Share it with a friend. We really

Paul Dawalibi:

appreciate it any review you leave any love you leave any feedback you give us always appreciated.

Paul Dawalibi:

Don't forget guys, the future is fun. We'll see you next 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.

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Paul Dawalibi