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The Problem With Real Estate Rushing To The Metaverse

There's been a lot of talks recently about the Metaverse. The idea is that our physical world will become the virtual world, and vice versa. This episode will discuss The Problem with Real Estate Rushing to the Metaverse.
 
The real estate industry is loud and clear: they're rushing head-first into the Metaverse. And while this isn't necessarily bad, it can be dangerous if we don't take the time to consider the consequences.
 
Darabase is the AR Outdoor Media Company, a turnkey platform and solution for brands, advertisers, and retailers wanting to run immersive Augmented Reality Outdoor Media layered on the real world.
 
They augment existing outdoor media screens and billboards, deliver permission-based AR campaigns in iconic locations and provide scale geographic coverage through our "Run of World" AR inventory network. 
 
They help retailers use AR to drive footfall and sales and enable property companies to monetize their estate.
 
 
Know more about Darabase: https://darabase.com/
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The Problem With Real Estate Rushing To The Metaverse 

We have this tendency to take what we know in one area and apply it to another and that's somewhat linked to how we work as humans. We like to connect the dots. Creativity happens when you take one area, mix it with another area and come up with unique insights but there's a lot of hype and buzz around the metaverse.

 

I feel some of the analogy is being used to describe metaverse are somewhat misleading. You're in the middle of this and I feel like you've got a legitimate use case. I wrote an article on this on Entrepreneur.com. It was published and tens of thousands of people engaged. It was very interesting and a little bit controversial but my argument is that people are rushing into these virtual metaverses primarily due to speculation and FOMO.

 

A lot of people missed out on cryptocurrencies and NFTs like Bored Ape Yacht Club and CryptoPunks that are trading for hundreds of thousands to millions of dollars. When the media starts using terms like, "Major brand establishes an online headquarter in one of the metaverses. Develop a broke ground on a project. People buying up land because it is scarce and it's like Manhattan was years ago," people are rushing into the metaverse for the wrong reason.

 

That's dangerous and destructive. Smart real estate folks are doing this because some people aren't even going and seeing what they're buying. They're like, "There's land. I get how the land works. I want a buy a location so let me go buy this." Some of these folks don't realize the risk they're exposing themselves to.

 

There are a lot of layers to that. One, you have to hope that a lot of stuff comes true and that particular metaverse or virtual world on the metaverse is the one that is going to take off that everyone's going to go used. You have to then believe that they will create a false scarcity because virtual lands are infinite. It's not Manhattan. There are many Manhattans they want to make and sell.

 

Also, I can teleport to anywhere I want at any point in time. It's not like, "I'm on Fifth Avenue, the Apple Store is going to be super valuable." It's not relevant to me because if I want to go see something else, I'll teleport over there. There's an opportunity for metaverses to control elements of that, create false scarcity and a false sense of location context but it's something that has to be engineered into the experience rather than being physically real. You don't have to believe that people are going to go there. I also have been into a lot of these metaverses and normally, it's you wandering about. These places are not full of people.

 

If they are, some of those, you don't know if they're active or not. It's like zombie avatars standing still.

 

It could be bots. Someone went in there and then they're gone to get a coffee and toss or they're AI bots that are wandering around to make it look cool. You don't know. They certainly have way fewer people than there are in Manhattan. Our premise is if you're a brand and you want to reach people in a cool and immersive way, especially as they increasingly interact with the world through their phones and glasses. There are over 1 billion people globally so 1/3 of all smartphone users are using AR every month. It is already a massive medium that is way better to do the thousands of people that are already in Times Square than the 1 or 2 and the fake version of Times Square that you've got in the virtual metaverse.

 

I don't want to dis virtual metaverse. There's a space for them and they will be very cool. We're in the foothills of it. We will find, as an industry, ways of being able to turn these into incredibly compelling and engaging places. That's not that different from second life where brands also made Nike stores and nebulizers in the past. It's a longer-term thing. It's very different from how we can put digital content in the physical world.

 

Interestingly, to your point, the vast majority of people in the virtual metaverse are doing it on their desktops. They're not in headsets, which isn't quite the same experience. In the same way to a degree that a lot of people play Pokemon Go in an AR mode city that they're using on a flat-screen mode too. We have to think about how is this going to work, what's the human experience and the best way of building this future such that it's responsible, better than what we have, enjoyable and sustainable. That's what we as a company have been setting out to do.

 

The metaverse has a lot of promise and I'm a big fan. There are 10,000 extra turn possibilities for sure but don't go into this thinking this is digital real estate and take your learnings from physical real estate. The risk-return profile is radically different and that's the issue I have with how people are thinking about it. There's very little in common between the real world of physical real estate and virtual real estate.

 

If anything, the business models of the virtual metaverses are commerce and advertising. Advertising, in particular, I feel makes a lot of sense. You are also dealing with use cases that are entertainment and gaming-focused primarily and some education too. I couldn't get my head around the fact that people are selling these residential communities in the metaverse where you can buy these mansions of homes. That's nonsense because that digital avatar doesn't need a roof under their head the way a real person does. How can you ascribe value to that?

 

 

People are rushing into the metaverse for the wrong reasons, and it’s dangerous and destructive.

 

 

A lot of this is about being social. It's like pimping your house. Why do you want a pimped house? "Come and hang out at my house in the metaverse." "You've got some cool things."

 

With what you're saying, it's like having a Zoom meeting and they send you a unique URL. "Why don't you come over to my house that I've pimped up?" Do you think that's why people are buying houses in the metaverse so they have meeting space?

 

It will be a community. The way I think about it is also partners and property companies, the AR versus VR. You can say the same with physical versus virtual metaverse. AR is a little bit like mobile gaming. You have to go back to your very successful activities. It's always on you're doing it multiple times a day but in way too much than you should. It fits into whether you're waiting at the bus stop or going to the loo. It's something that's always on. AR is like that. You're going to be walking down the street and stuff is going to be there all the time. It's linked to the real world.

 

Whereas virtual metaverse is much more like PS4 gaming or Xbox gaming. There's friction attached to it. You have to make sure that your mates are going to be there at the same time. You're going to choose to meet up and play that particular game. You're going to do it 2 or 3 times a week and it's more like an appointment-to-view type of experience.

 

A very successful pass of the virtual metaverse is the community element of it. It's allowing you to manifest yourself as an alternate being. Your avatar doesn't need to look like you. You can be whatever you want in the metaverse and also it allows you to wear whatever you want and be in an environment wherever you want, whether it'd be your environment or somebody else's. That's about how you project yourself in the community within which you're interacting virtually. In that way, it makes sense.

 

That's the key thing. You're not buying a home that someone is going to rent to live in and cook in but you're potentially buying a meeting space. That's what it is. It's important to know what you're getting into when you invest in this. I encourage everyone to invest but you have to study it and know what you're investing in.

 

That's the important point. What's great about property companies that are doing it is that they're learning but they shouldn't be doing it to make a fast buck because they probably won't. If you haven't bought cryptocurrency yet, get yourself one. What are the markets? Go into Decentraland. You don't need to buy the land. You want to understand how it works. Go to OpenSea, look at the NFTs that are there and immerse yourself in the ecology of this new world.

 

Maybe buy a piece of land because then you go through a different process and got learning from that. You can go into the creator tool and decide what you're going to put on there. You get an understanding of what this is going to be about and what the opportunities are. That's all very good but don’t buy some land because you think you should, you're taking your box and it's going to be worth millions.

 

When that happens, everyone buys land, sits in there and then the metaverse relies on the idea that it's community-generated. If it's decentralized, everyone owns a piece of it, builds on it and adds utility and value but if people are sitting on it and speculating, it's a real shame because there's a network effect. The more interesting things there are, the more people will come. You're relying on the users owning a piece of that virtual realm to develop it and make it pretty. If everyone's speculating, then the value goes down and eventually, this is how the volatility is so high and wild.

 

It would be like getting a load of people to play Minecraft but no one builds on it. That's not a very fun gun. It's an experience of the economy and you have to create experiences.

 

A pretty bad real estate analogy is like there's a shopping mall and people are going to go and buy things. The shopping mall is surrounded by all of this land that is zoned for development but no one's developing, they're just buying the land, holding and flipping constantly but no one's developing anything of substance. That shopping mall doesn't have any customers to go and transact in. That's a little bit what the metaverse does feel like when I visited.

 

There are a lot of vacant lands or undeveloped lands. It's being bought, listed and traded like a cryptocurrency is being traded. I don't like that part of it. You need to have an economic incentive. This is why we're talking about it because it's a get-rich-quick scheme potentially, where there are 10,000 extra potentials. All of us have heard of some lucky person who bought some cryptocurrency in 2013. That small amount of cryptocurrency that someone bought a pizza with is now worth hundreds of millions of dollars.

 

 

There are many ways to use a bunch of augmented reality as a proxy. You can see it as a new revenue stream and understand how this device might work and how you might be able to harness it for the future.

 

 

That's the bad story or the guy that lost his hard drive.

 

I’ll tell a quick funny story at my last company. When Dogecoin came out, which is this dog in a coin and it's just that, there was no real utility at the time, one of our engineers set up an account and a wallet and gifted some amount of Dogecoin to another engineer as a joke and forgot about it. Years later, it was worth millions of dollars and we couldn't find the actual keys to it. It's lost.

 

There's a lot of friction around the crypto and blockchain space generally. There are companies out there who will make a lot of money by making it easier but there are a lot of jeopardies still in that space. It will become increasingly easy to navigate but that is one of the reasons why virtual metaverses have a longer timeframe in terms of growth.

 

In any industry, companies like Dominic's company Darabase, when there's a gold rush and you're selling the shovels and focused on infrastructure, critical things in the ecosystem mean you're bound to do very well. That's the plan. I respect that. Dominic, to round up, are there any things you're looking for from any of our readers? How can they contact you if they'd like to?

 

Thank you, Zain. Firstly, thanks for the conversation. It's been enjoyable. We work with lots of different companies all over the world. If you're one of the property companies that we're not already working with, we'd love to have a conversation with you. The fact that maybe you're reading and I've got this far into the show means that you've got an innovative mind and thinking about the future and how you can harness what's going on in people's digital lives for the benefit of your business.

 

It's augmented reality and metaverse generally, especially the physical metaverse thinking about how the concept might apply either in your way so you're one of the property companies, for example, who are using AR in their spaces in sales, marketing and tools. They're using it for placemaking and Chris Harrison’s tools around parts of London. We did start with the Christmas lights. There are lots of ways that you can use augmented reality as a property owner.

 

We've touched on some ways in the conversation. Also to see it as a new revenue stream and understand how this device might work and how you might be able to harness those for the future. We'd love to have a conversation. My email is Dominic@Darabase.com. Feel free to reach out and we'd love to have a conversation. We're based in the UK and Australia. We work all over the world. That's one of the benefits of our company. If you're somewhere else in the world, you can speak to me.

 

Thank you so much for coming to the show.

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Real Estate in the Metaverse https://youtu.be/NeuouWh6Xgs
How the Metaverse Could Offer Marked Changes in Workflows and Utilization https://youtu.be/uol2i8S-CgE
How to Improve Accessibility and Socialization in the Metaverse https://youtu.be/2fGYtnpYrZA
 
About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.  
 
His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30”, “Inc. Magazine’s 35 Under 35” and the “SF Business Times Tech & Innovation Award”. He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.

 

 

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