[Applause] [Music] [Applause] [Music] conversations with Tyler is produced by the mercada center at George Mason University Bridging the Gap between academic ideas and real world problems learn more at marcus.org for a full transcript of every conversation enhanced with helpful links visit conversations withth tyler.com hello everyone and welcome back to conversations with Tyler today I am extremely honored to be chatting with
Matthew ball Matthew is the leading thinker on the metaverse and gaming one of the leading thinkers on media he started as a firefighter I believe he's the CEO of ailion a metaverse focused holding company and his most impressive achievement above all is that he somehow managed to convince The Economist the magazine to let him review Star Wars movies for them Matt welcome thank you for the introduction nice to be here a
very simple question so I was born into a 3D World and then starting about the early 1990s I spent a lot of my time trying to get into a 2d world because it was better for me to work with online right so why is reintroducing a third dimension so crucial to building out Tech so I think there are a few different ways to unpack that first and foremost I need to emphasize that there's a misconception that the metaverse means that everything we do
will shift to 3D it's quite likely that many of the tasks we perform today with devices that are decades old that are primarily based on 2D interaction typing and text will'll continue to do so much like we would recognize we're deep into the mobile and Cloud era and yet we still use personal computers local storage most data originates and terminates on a mobile device and yet it's transmitted through fixed line
networks and so don't think of 3D as a replacement overall the second point that I'd say is from a design perspective an intuitive inter action model we didn't evolve for thousands of years to tap 2D glass to stare at a camera through a zoom screen not making eye contact with the recipient and grids of apps are not an intuitive way to interact with information and so many believe that shifting into 3D is a more
natural and better way to express some information in some use cases the third thing that I would say is if you take a look at the Arc of what you just mentioned the 2D internet it began as synchronous with static files text no colors even it evolved into limited imagery colors sound files today in 2022 we Embrace synchronous media such as you and I right now with Rich interactive content younger demographics engage in
constant streams of near live or live content being shared and when you take a look at the youngest demographics today gen Alpha and gen Z they're already embracing 3D based platforms for socializing increasingly for education at large and so when you observe that history many myself included come to that conclusion okay so you have a new book out this July the metaverse and how it will revolutionize everything in my
opinion the very best book on its topic how exactly for us do you define the metaverse tell us what that means so I actually try to describe the metaverse you'll find that a technical definition doesn't illuminate much if you look up the definition of the internet it says the Internet Protocol Suite a description is more productive I describe it as a massively scaled and interoperable network of 3D rendered realtime Virtual Worlds which can be
experienced persistently and synchronously by an effectively unlimited number of users each with an individual sense of presence what I'm effectively describing is a virtual plane parallel to the physical world which in addition to being able to do many things that we can't do in the real world replicates it we all participate at the same time time with no cap to what we can do and why we can do it and
how many people can participate what's the biggest disruptive innovation that we need on the interface side if any for the metaverse to become truly mainstream not just suck with the head thing on but you know my aunt does the metaverse and calls me up and talks to me about it what is missing so this is a great question Neil Stevenson who of course coined the term metaverse in 1992 had a tweet storm on this the other day and he
remarks that it was a reasonable hypo hypthesis as a technologist a Sci-Fi writer in the late 80s early 90s to assume that 3D existence required XR extended reality mixed reality virtual reality AR headsets but we actually have woken up in 2022 to find out hundreds of millions of people per day billions of people per month are interacting in Virtual space using keyboards WD forward back right left or a touchcreen and so
he makes the point that you would never have bet that but path dependency is is a thing humans have trained into these devices and so we can look at extended reality devices and assume that they're required to extend the metaverse or 3D space to enrich some of what we do but it's not a technical requirement instead it's more likely that bringing your parents or grandparents is much like the internet which is they come because of
who is there my parents joined Facebook not to talk to their friends originally but to see who my sister and I were friends with to see our lives that's likely here as well so I have an Oculus device the future version of that how do we stop it from getting really hot right it's doing a lot energy creaty basic laws of physics how do we solve that problem so this is fun we've seen three times this decade as in over the past two and a half years
that Facebook has kicked out its first consumer release of its augmented reality glasses in 2015 Mark Zuckerberg said that by the end of that decade we would replace the portable super computer in our pocket with wearables this technology problem is extraordinary you're right melting your face is a problem battery life is a problem snap spectacles their augmented reality devices last 30 minutes they augment
less than 10% of your view at one quarter of the resolution we think is needed and one quarter of the frame rate just solving for Optics and Battery currently far exceeds our grasp also layering in Wireless chips having be lightweight enough to not break your neck and be comfortable also putting in complex computer processors we're far from that there are many who believe that until we achieve extraordinary
advances in battery life that we're not currently on a trajectory for and or solve for Quantum Computing the vision of AR glasses won't happen size of device versus field of view which is more important it depends on the function if you take a look at industrial AR the weight of the device how formfitting it is less important versus the functionality in the fall of last year John's Hopkins performed its first ever live patient surgery using an
AR and VR device those devices cost several thousand doll they often require a physical link to a local computer they're not particularly sightly and of course they're cumbersome overall that function doesn't matter the price point doesn't matter frankly the fact that it can't sustain its own battery doesn't matter either because it's industrial it's not mobile but when you're taking a look at consumer wearables certainly we
assume that Aesthetics are going to matter a lot smart watches existed for a long time before the Apple watch and the Apple watch wasn't just a better interface it was Aesthetics as well now you don't know me personally but you've read marginal Revolution for quite some time so you must know something about me and that blog is a reflection of what I actually do believe it or not so if you had to make a bet the metaverse gets
truly excellent what am I most likely to be enjoying doing in the metaverse and if you pick right you get a million dollars what's your pick what's your guess I'm a weirdo right I'm not typical I'm it's not going to be gaming per se I'm a big believer having experienced it personally that the fields of research and education that one struggles with for the reasons that I mentioned earlier about 3D being a Better Learning environment will be one
of those places I'm a terrible chemist I'm good at math I'm good at modeling I could never gr chemistry in high school I firmly believe that if you're trying to learn about astrophysics physics at A Primitive level frankly language that finding these created environments for those who are curious will be like nothing we've ever experienced before that may be too broad so I'm interested to hear your answer well I don't know I
would consider a trip to Mars or Antarctica or for that matter North Korea if they would allow it using the metaverse places I can't get to in the normal ways maybe there aren't many of them but there are some of them that
would be my bet if it can be done well so this is a fun example I'm often asked which categories do you think are most likely to be disrupted and or which are you personally most excited about education is easily that answer and I
spoke about that in a moment and there are three reasons why first and foremost it's of critical importance not just societally but of course to the individual second we have long expected fundamental disruption in education like healthcare but third it hasn't happened you'd know this there's no actual measurable improvements in productivity in education since the internet came out in fact it's the single highest cost
category growth in the United States 12 to 1400% at the high school and then the secondary level and why is that that's because we haven't figured out how to teach students with fewer resources we haven't figured out how to teach students better with the same resources we haven't figured out how to teach faster And yet when you talk about 3D and I'll get to your moon point in a second that Things become interesting I
learned about physics with the textbook I watched a NASA Commander drop a feather and a hammer on the moon and then watched my teacher do the same thing to start to understand how gravity works and what the differences are the ability to build especially with others a sophisticated rubbe Goldberg machine on Earth then on Mars in the Clouds of Venus and Beyond and then to modulate gravity is fascinating to me dissecting
a fural cat was something I got to do that was hard for many that most people can't afford to do but that you can do at no marginal cost in Virtual environments and in fact you can shrink down into the Magic School Bus travel the circulatory system and so I think we often think about this linear question of I'll go to a place that I can't today but you think of it as you Tyler a human roughly 6 feet tall not what would I do
if I were Atomic what if I could be in a place that if I were there for half a second I would be crushed instantaneously and what that means for Education can be a lot let's consider dating let's say nothing's going to happen not even a good night kiss what percentage value is a metaverse date compared to a real world date in Meats space 70% 10% 120% I don't know about the numbers what we can say is certainly I think we've
been surprised over the past 20 years years by the degree of connection that's achievable just through text on Tinder or hinge the idea that extending that into games which most platforms already have the new CEO of match Group which owns Tinder and hinge is the former COO of and president of Zinga the idea that you can extend that to games into virtual environments which bring a sense of safety especially to those who don't
feel safe going on dates with those they don't know use that to explore exactly what you just mentioned a shared belief opportunity whether that's religious or educational that all make sense to me do I think it's going to supplant physical contact certainly not but of course extended reality especially as relates to sex and other wearables and haptics is going to be a big opportunity for these companies and that may actually be
the answer of it's not replacing meat space in a bar it might be replacing it elsewhere as I read your book The metaverse which again I'll recommend highly I have the impression you're pretty optimistic about interoperability within the metaverse and an ultimate lack of Market power now if I look around the internet I mean most obviously the Apple store but also a lot of gaming platforms you see 30% fees or
something in that neighborhood all over the place so will the metaverse have the equivalent of a 30% fee or is it a truly competitive market where everything gets competed down to marginal cost I think neither nor I wouldn't say that market power diffuses there's currently this ethos especially in the web 3 community that decentralization needs to win and the decentralization can win it's a question of where on the Spectrum are we
the early internet was obviously held back by heavy decentralization this is one of the reasons why AOL was for so many people the primary onboarding experience it was easy cohesive visual vertically integrated down to the software the browser experience and so forth but we believe that the last 15 years has been too centralized but at the end of the day no matter how decentralized the underlying Protocols
of the metaverse are no matter how popular blockchains are there are multiple forms of centralization habit is powerful brand is powerful the associated trust intellectual property the fundamental feedback loops of Revenue and scale that drive better product investment from more engineers and so I struggle to imagine the future isn't some form of today a handful of varyingly horizontal vertical software and Hardware based platforms that have
disproportionate share and even more influence but that doesn't mean that they're going to be as powerful as today the 30% fee is definitely going to come by the wayside we see this in the EU whose legislation dropped yesterday I have absolute certainty that that is going to go away the question is the timeline a lawyer joked yesterday apple is going to fight the EU until the heat death of the universe and that's
probably likely but Apple will find other ways to control and extract as is their profit motive and where's the most likely place for that partial Market power or centralization to show up is it in the IP rights in the payment system the hardware provider crossplatform engine somewhere else what's the most likely choke point there seem to be two different answers to that number one software distribution this is your
classic Discovery and distribution of virtual experiences steam does that Roblox does that Google does that frankly the search engine that gateway to Virtual experiences typically affords you the opportunity to be the dominant identity system the dominant payment system and so on and so forth the other option is Hardware we can think of the metaverse as a persistent network of experiences but as with the internet it
may exist literally and in abstraction but you can only access it through a device and those device operators have an Ever growing network of apis experiences Technologies Tech technical requirements and controls through which
they can shape it now you mentioned the EU if everything or most things are truly interoperable in that world is there meaning to the right to be forgotten the right to have data deleted because your data your actions bleed out
into all these different places along the metaverse and how do you then control it or call it back wouldn't the metaverse as you and perhaps I Envision it run counter to current EU regulation not inherently but you are getting into some of the tech technical challenges here Matthew Prince who's the founder and CEO of cloud flare believes that the primary role of edge Computing in the metaverse is going to be data
custody that governments are going to require important data be forever maintained and held within National borders and that instead what you'll have is anonymized tokens that are basically I mean I'm simplifying here be exposed when and where required opted in by the user with the likely instant obligation by the end platform to then forget delete disconnect now we all know things aren't that simple just like
deleting a file off a hard drive it's there until you essentially rewrite it 10 times but we certainly see increased scrutiny and frankly a lot more investment in this let me give you a good example most Oculus devices right now have two or four external facing cameras the Apple device if you pay attention to Rum R says that there will be 12 across multiple spectral bands they're going to run constantly they will see what your eyes don't because
your eyes are going to be obscured your vision's obscured that means and my apologies for the example but I think it's helpful if your young son or daughter was running through naked in the living room it will capture that information and you might never know and so the amount of investment and I mean this sincerely that is happening about what is instantly discarded what is only available local is actually pretty
significant here and I do think that governments are paying a lot more attention than I expected but certainly as much as I hoped but take email email is fairly interoperable right you can send all sorts of people emails if you shouted to the the clouds you know delete all the emails I've sent nothing's really going to happen maybe the EU would delete the emails you sent to the EU but it's out there so why
won't most of a fairly interoperable metaverse be like email where there is no right to be forgotten which by the way I'm fine with but the law the law in the EU and aren't they now hindering attempts to build a workable metaverse I wouldn't say that they're hindering I think we're coming up against the challenges of what's a desired outcome and what's a technically realizable outcome so for example the EU is mandating interoperability of
messaging services so they're saying IM message in WhatsApp you have to interoperate that's actually good the government's doing exactly what they're doing with electrical ports right standardizing Outlets they're now forcing apple and others to use USBC instead of lightning same thing right good common languages for exchange of information the flip side of that is the EU is also requiring it to meet the same
level of encryption and security as your own self-managed system and most technologist come to the strict answer which is these two things are not compatible you fundamentally can't exchange information least of all to multiple other parties whose servers You Don't Own own with the same level of security and so we're seeing some of these tensions right now now I've known a few people who don't have email and don't have any plausible social media
substitute but it's really very few people at this point especially in wealthier countries what do you think is the most likely year where the same will be true for the metaverse like yeah some people aren't in it but you more or less have to be in it to be doing things what's your point estimate well I think the more important thing to observe is that they are on the internet they're just not actively on it when you walk
into most buildings today of course closed circuit camera television is not working that way anymore it's actually on IP when you badge into a building your passcode authentication is over IP the point of sale terminal is on the internet and of course most things that you do now require some form of digital identity whether you manage it or not this is important because there are many who believe that a they're never going
to want to play a game B they're never going to be interested in a VR headset C they can't see the Practical applications of the metaverse but most of it's going to be behind the scenes the Hong Kong International Airport is now a realtime 3D simulation that is used to shape where you are in the airport it's tracking you in real time so that answer is actually 2020 if you went through that airport but most people don't go through that airport
sort of the world as a whole the median like Suburban housewife in Southern Ohio who was once the median voter when will she just clearly be in the metaverse in a self-conscious way if you asked her do you have email she would say yes are you in the metaverse she would say yes is that 2080 is that 2040 the median person I would kick this out more than 15 years but I will say one of the easy indicators that we can
see without conflating Roblox to the internet because that would be like saying AOL is the internet three quars of kids in the United States UK Canada New Zealand Australia three quarters between the ages of 9 and 12 use Roblox a single metaverse style platform only organized around consumer Leisure regularly that is actually just succession generationally a few questions about gaming you must know plenty of Gamers
just as observationally how happy do you think professional gamers are professional gamers are relatively few the average income is not particularly High the number of employees is not very high but I'll tell you most of them treat it like a job it's hard Ninja for example used to stream 8 to 10 hours per day six days a week on Twitch and if he stopped streaming for 48 hours he'd lose tens of thousands of subscribers he'd
see essentially minute-by-minute income drops Counterstrike players I've seen will sit in a room for 5 hours doing drills not unlike Ronaldo on a soccer pitch they will constant turn virtual corners and then in milliseconds shoot with a mouse a specific brick on a wall 12T high and they will just do drills over and over incredibly intensive are they Happy Well if they can make ends meet and they're pleased with their
performance and they're happy they're doing what they're doing yes but it's a toll like any professional athlete holding real income constant what's the number of hours a day say for five six days a week that you feel maximized is
the happiness part of being part of gaming metaverse internet whatever is going on at the moment so like Nakamura the chess player he streams an incredible number of hours probably more than he wants to but yes the income is
important but again holding his income constant at what number of streaming hours are these people most happy is it like three or four or they love it at the ninth hour yeah most of them will say that ideally they would do two to three hours four to five days a week I think the big hope and we're seeing this with a lot of new Technologies is that it's still a broadcast model and it's still on time delay which is to say your
audience is responding to what you did 5 to 30 seconds ago and they have no real interaction Beyond sending an emote and cheering you on perhaps voting on the next game that you play there's some hope that when you start to engage the audience more directly that that mixes up the variety also creates more fun for the individual streamer who is otherwise essentially alone talking to themselves reading a scroll so a lot of people do a
lot of gaming as you've stressed gaming means stories often wonderful compelling stories and the most successful games sort of politically how do you feel gaming shapes people's attitude so they're competing a lot more they're in environments that are at least in a micro sense quite meritocratic how does it shape their overall worldview well so I would start by saying that the fundamental Innovation
slis discovery of the past 10 years is that the Tam for what we call games with game likee objectives was low what's a game likee objective win kill shoot defeat score beat what's a non-game likee objective create explore collaborate identify Express design if you ask most people what's the bestselling exclusive title on the Nintendo switch Nintendo's most successful console in 30 years they would probably Guess The Legend of Delta
Super Mario the answer is Animal Crossing buy about 50% in sales it's nearly 50% % penetrated in their 90 million user base it's virtual gardening it's virtual arts and crafts Roblox alone exceeds the entire D duplicated size of the Playstation Xbox and switch Universe just that platform these games that are focused on socializing and creation are much much bigger in hindsight that seems obvious how many people want to come home from a long day
at work and play a zero sum game of killing one another of shooting but it turns out most game developers didn't bet that and they were wrong that focus seems more positive so it brings out homo ludin you know the play in human beings which attitudes in the real world does that shape and how so you play a lot more time than you used to because you can do it through the metaverse and then you step into your normal life and
you're different in which way because of that so Toby lutke who's the founder of Shopify talks about his time in Starcraft being one of the most important lessons in being a founder and he actually says it's more important than anything he learned in school because you have to learn how to make rapid decisions this is StarCraft it's a specific game you have to play strategically you have to know how your
teammates are likely to operate and what they're likely to need before you have time to ask and you also need to understand that some of the things that you do are not for you but they're to distract your competitors these are pretty good forms of education and learning if you believe your kids need to become better at listening at collaborating at having shared objectives at perhaps doing not what they prefer to do nor even what they're
best at but a secondary role to support their broader teams objectives they're essentially spending hours a day doing that in lie of what they used to do which was just watch TV alone passively disengaged so some forms of Education we've gamified for quite a while like learning chess online it's completely gamified it's not new it works extremely well not everyone does it but it's there completely as pasted a market test the
fact that it's possible in some areas does that imply it's already maxed out other areas where you might hope it works like oh we're going to gamify learning in astronomy maybe that has only modest potential because it's already succeeded where it can work so this is a fun and complex question I think part of the answer is of course we have gamified astronomy educations we have gamified education to some extent
that's what letter grades are in school systems where your grades don't really matter or at younger grades where that's not actually how you're scored at the end of the year what do we think a gold star or triple gold star or a bronze star is that's gamification the idea that we have new forums to do so perhaps new things to award especially things that have more durability right a gold star I don't have my gold stars I can't
wear my gold stars now but the idea that that has a little bit more continuity and lifespan to a younger consumer helps John rello the founder and CEO of unity makes the point that gamifying education in a 3D space has all of the benefits of today's custom AI based tutorials which is to say Tyler you're Advanced you're learning very quickly let's change the course but on another dimension with a lot more richer detail if we take young
people who do not game and I mean do not game at all really thinking of yourself as like a product Market consultant what what is most typically the relevant obstacle at the margin for them not gaming historically and we just hit on this a bit it was that games weren't designed for them but if you take a look right now as I mentioned if you have 75% of children 9 to 12 in most western markets are playing a single title the
answer is it was what was available to some extent it was the tools that were available again Roblox is not just non-game likee but it's also organized around both playing things but also creating your own things to play that additionally diversifies what's available the other thing that's important here is it's often a question of who not just what not just which technology Network effects or meta's law supposes that you
have nonlinear improvements to a product as the number of people who engage with it or use it grows that might mean that a product on itself is not appealing enough to the average 8-year-old or 14-year-old but if three or four of their friends are now using it which is the degree of saturation we're now getting to the products technically unchanged but its relevance and appeal to you might be multiples higher that
seems to be the critical point is the internet on that good for 12 to 14 year- old American girls right now or a bad thing on net on net I think it's a good thing but that doesn't mean that we aren't falling terribly short in many different areas this is actually one of the reasons why I'm optimistic about the changes that might come into play as to which consumer services platforms brands are likely to lead in the future rather
than the past let's take for example the fact that Microsoft's most expensive acquisition ever indeed their most expensive acquisition in big Tech History is of a gaming company Activision Blizzard 75 billion in Enterprise Value when they made that acquisition at the final line of the first graph CEO Satia nadela said it's to provide the building blocks for the metaverse so we know these companies are are important but how are they different
consider the issues of Happiness toxicity and the role of algorithms in social media today versus video games the rule sets are usually very binary around laws abuse toxicity and harassment I swore at you I encourage self harm I used a racial term that's a banable offense on a social media platform the perspective for gaming companies is very different why because you're only going to play a game if you
are having fun you might scroll a Newsfeed out of a sense of sick addiction or compulsion but you're not going to play a game for hours that makes you feel bad and so they have a different approach to moderation they call it griefing and the ethos of griefing is whether or not you're adversely affecting someone else's sense of fun I might reply to every one of your tweets Tyler within toss or terms of service just a nitpick just to bother
you I know that I can quibble over and over point to an old tweet of yours and say look you were wrong that's going to make you feel bad over time but it's not a banable offense this is the world of course it's not you doing it but yet it happens yes yes but in a video game they moderate that that's a banable offense I'm not going to say that moving into a social Forum into politics into greater economic concerns doesn't make
moderation easier of course it's going to be harder fortnite and Roblox have a relatively easy time because this premise is Leisure not much more but their philosophy what a game designer is trained for culturally for decades what they optimize for is actually very distinct from how a relatively you know static impersonal algorithm and platform does and that gives me some hope that if the internet's a Force for good on net
that the philosophies of the companies that seem to be at the Forefront of the metaverse will be marginally better are you up for a round of overrated versus underrated let's do it I'll toss it out okay RSS feeds overrated or underrated Mark andrees loves RSS he still does it we learned this in a previous podcast what do you think I know I listened to it interesting question I would say they're overrated because as much as I
like them as an open source technologist I discovered marginal Revolution back in the Google Reader days through its social feeds no one uses them and consumers seem pretty clear that they don't want them that makes them overrated among those who talk about them the Nick Bostrom argument that probably we are living in a simulation we're already part of a game or someone's metaverse true or false you know I'd say false but every day we get
more confirmatory evidence that someone has fallen asleep at the keyboard and the simulation has gone quite quite wrong the new Disney Plus show Obi-Wan Kenobi if you've seen it terrible why terrible it shouldn't exist and it never justifies its existence and actually seems relatively indifferent in trying to answer that question so in terms of re and Star Wars Creations what's the one you would recommend if any the
Mandalorian gets the closest and what do you like about that it tells or told the most Standalone character and that's freeing it's a mid Quil yes but it's not really in service of any narrative that we've seen before nor of course the same old soap opera of the Skywalkers there's a guy on Twitter I think his name is carnivore aelius he recommends sunning your genitals overrated or under ated probably underrated if just because of
American stigmas as towards genitalia I'll tell you something funny as a producer in TV and film if you've watched most new scripted drama series you'll note that the tolerance of violence at a PG level has become quite quite High I think stranger things for example have you seen the most recent season of stranger things no I haven't but I know what it is yeah a bunch of high schoolers are possessed and quite
visibly all four of their limbs are broken multiple times their eyes are shattered or they explode and they bleed it's a PG or PG-13 ranking there's actually very very little you can do in Hollywood violence wise to get above a PG-13 rating but you get anywhere close to genitals and it does not matter you're going up in rating Second Life the older version of a kind of metaverse better or worse than we used to think do
we look back it's like wow they were so far ahead of their time whether we look back and it's like they really didn't do very much with that one I would say underrated because the number of strange emergent behaviors on that platform are undercovered why because not enough of us used it and in fact if you compare it to most metaverse do platforms today there was a very L aair approach the government quote unquote
didn't actually intermediate transactions you and I could make a direct purchase you could create a business and much like the US government they don't really know it exists they just know that you're paying tax so to speak and that led to all of these strange outcomes there was a point in time in which most of the citizens actually rebelled claiming that the tax rate was too high and so because of how open it was and because of the early
adopters to Virtual Worlds in 2003 to 2006 you had a very strange Collective of users there are a lot of odd lessons that today's platforms seem actually devolved not evolved from Sex in the metaverse are we expecting too much or too little from it too little too little what's the thing we're most likely to do that most people haven't thought of yet I don't mean act you don't have to describe it graphically but conceptually
how would you explain it you're really putting me in a tough spot here Tyler let's start from the following I talk a lot about in my book about the way in which the hegemony of Apple and Google adversely affects the digital economy at Large the 30% tax or fee is a really clear example of that but separate is how they legislate the Technologies you can and cannot use the business models you can and cannot deploy and frankly a
degree of puritanism we know that basically the five most popular pornography sites including only fans are among the 50 most visited websites globally in nearly every Market none of them are allowed in application not one because we know that Steve Jobs did not believe in it of course if you've read Walter isaacson's book on Steve you know that his personal views are not particularly in line with his sense of
custody over children on the platform but of course that's fine pornography videos images play fine in the web browser but if you want to do something in haptics in sensors with Bluetooth devices or you want to do something in 3D you need an app why because you need to access local API eyes notice how you hate watching Netflix in a web browser on your iPhone you'd rather do it in an app that's because apps perform better
well you basically can't run sophisticated XR Hardware or 3D in the browser by Design and so actually what we might or might not want to do in the metaverse when it comes to sex is essentially all blocked right now it's not an option can't do it won't be allowed and it's partly to be fair because the platforms don't want to take a fee on sex work as you can understand but of course they also don't want to provide exceptions to more and more
business cases and so they just block it outright so Most states county City governments they outlaw prostitution escort services will that still hold for the metaverse do you think just as a a legal prediction not how well they'll enforce it will there be an actual attempt to stop people from Trading some kind of haptic sex for money through internet metaverse whatever it is we have set up will there be an attempt unest but it's
a pretty successful attempt like oh 48 or 50 states have passed this law and they at least try to enforce it a bit very unlikely why is that well partly because you come into the fundamental question of what exactly are you blocking so again and Tyler you're putting me in a weird spot here but of course there are applications right now that you can use an adult toy that allows you to press a button on your
iPhone that sends a sensation to a partner who may be using device a thousand miles away that actually doesn't require a sex act by the person pressing the button and so these fundamental questions like it kind of requires a classification of sex act that is very hard to describe despite prior Supreme Court efforts to do so by you know abstraction extending that into specific instantiations of people thousands of miles apart using devices
that aren't connected to one another where the actual motion need not at all correspond to the receiving sensation I think is going to be challenging what's the most underrated city in Canada most underrated I'll say it's Ottawa which I love people forget about Montreal's wonderful but everyone knows it's wonderful right Toronto is still underrated but I'll I'll say Ottawa Vancouver is too beautiful to be
underrated it deserves to be highly rated I think you're right what I would do is I would say Atlantic Canada every American thinks of bamp because obviously bamp is incredible and beautiful and then they think of New England also beautiful Atlantic Canada is its own peculiar different esoteric culture but absolutely worth visiting Halifax is a lot of fun and there's excellen Seafood there I can attest to quite will crypto be the money of the
metaverse the money no a money of significance probably why because failing absolute bands it's likely that there is a meaningful contingent now we might just be talking about several million people who are using it and as we've seen over the past year and a half that several million people can drive a very large amount of trading volume now we can talk about if that Tam doesn't grow then the speculation effect eases
and therefore the interest that is there Steeps aside but if you were to say that we're actually talking about tokenomics as opposed to just Bitcoin which I'm not personally a believer in then some form of that is likely to be popular and injure so there'll be tokens for games and the tokens will be liquid and they'll be money like even if they're maybe not monies in every single way is that the right model yes but I would
modify to say that I'm not yet convinced that it's going to have a relevant role within games per se I think you know the Mark andreon or Chris Dixon perspective of saying that it can be a construct for a new form of LLC which of course many states most notably Wyoming which was the first LLC state is legalizing that seems more important that abstraction to say we're actually talking about a smarter digital system for the rapid
accumulation of resources financial and otherwise which exists in Virtual space predominantly for virtual means that is likely to endure whether or not frankly it's using blockchain or not now you've been Global head of strategy for Amazon Studios why in your opinion are Hollywood movies at a kind of nadier today or would you challenge the premise to me they're mostly boring I think that they have become more boring at least
when it comes to the theatrical box office but I would say that we only have more and more evidence that this is indeed what the people want I think it's funny especially on the coast there's this perspective that Hollywood won't make what we want anymore what's interesting is if you go back to the end of the last decade and I'm not talking about 2010 I'm talking about 2018 2017 there were 700 800 movies coming out per
year to more than 25 screens and most of those screens are in the coastal cities we had more indie film films widely distributed than ever the screen availability was higher than ever no one really went to those films one of the funny things that's happening with the Marvel movies right now we have Thor coming out this weekend with Tao y we had Khloe xia's eternals last fall we had Sam ry's Doctor Strange Marvel seems
to be now hiring directors to bring their own Visual and creative flare as opposed to saying just makeing the house style and audiences are actually rejecting it they seem least interested in seeing artistic takes on their famous properties and so boring or not more anod than ever it does seem to be the audience speaking was top gun Maverick any good I haven't seen it yet I didn't love it it's okay but it did not feel
creative and vital to me given the whack to the share price of Netflix recently should we still think they can succeed at gaming Netflix went through what many would argue to be the best EX uted disruptive strategy of its scale over a 12 13e history than we've essentially ever seen and yet if you take a look at what may be their single biggest mistake it was not spending their Equity like a drunken sailor over the past year right
they could have gone out and bought Viacom CBS or Paramount Global for effectively half of what the current value of Netflix is but at the time it would have been on10th dilutive they could have rolled up two or or three of
the largest video game Publishers on Earth all of those options are gone and so the reason why I say this is Netflix's opportunity and gaming is hard they don't have any of the technology systems for social play they don't have
microtransactions which are essentially all of the upside in gaming they have to do a big technical transformation that will take a decade or more I'm not as concerned about the temporary or even inuring share price compression as the primary problem it's that they're a late entrant and and they're used to being an early entrance but the only flip side is were the share price much higher even half of what it was last year they would
be able to do pretty aggressive m&a to ensure relevance and that's gone if I think about the HBO Library there's a number of shows in it that I haven't seen but I could imagine this year next year going back and trying to watch them like Deadwood maybe I love it I don't know but it's there if I think of the Netflix Library I couldn't name a single show of that kind is that a mistake Netflix has made or have they pursued an
optimal strategy to just toss a lot of content out there get people watching keep on watching subscribe to Netflix and not really care that it depreciates at such a rapid rate in value it's not a mistake but it is a problem I mean that because it's not an active choice I wrote a piece back in 2020 this is actually when I last held Netflix stock I missed most of the coid runup called content cars in comparisons and I was
making this esoteric argument that accounting principles did a disservice why because we don't have Gap rules to really say how do you depreciate what's the useful life of content and therefore the average series whether it was canceled 30 days after its Premiere whether it was outstanding whether it was IP or not was effectively amortised the same way and yet we all know that if HBO were to create a Space Opera or
Disney plus were to create a new spin-off Space Opera from Star Wars or Netflix were to create a spin-off at the same budget we could probably accurately guess different popularity different relevance in the years to come and so we had an industry problem where all of the content spend was being capitalized equivalently and yet the actual Capital assets on a service by service basis as your teen to were quite different when
you're in a period of hyper growth as we were it's easy to overlook that because humans Love video we were excited to have all of it but over time we are seeing those returns start to play out HBO would think famously make the point that everyone should watch their library but no one did but we know that Sopranos blew up last year we know that sex in the cities catalog blew up we know that True Blood blew up and so we're starting
to see that actual Gap failure being proven out in new Revenue growth But to answer your question yes Deadwood you'll love extraordinary now if I think of the cow household we subscribe to Disney to Hulu to Apple HBO other things I can't even name them all and I feel that last forever maybe we subscribe to them all because it's a pain to cancel them other households are willing to go through the pain of cancelling to save some money
maybe more than we are what does the equilibrium look like there like how many streaming services are there going to be is there a stable market equilibrium or is it like the airlines but they always just keep on going bankrupt or how do you view the economics of that sector well the economics are an interesting question if you go from 2005 to 2015 let's say the Heyday of Television financially it was
was in the top desile of ebah margins nationally the median was around 12 to 15% TV's ebit margin was 40 45% what was beside it in that stack rank Renewables oil and gas right heavy fixed cost businesses that had really really high marginal cost and therefore IA looks pretty good that was never sustainable there's no good argument for why television was going to have margins 3x the median and so we're seeing that
right now if had them because there was almost a communitarian approach everyone fought together you and I would compete in the time slot Tyler but you could never fail out and we'd have different Cascades of renewals with different providers at different times for different channels it was a perfect system when you're talking about what the future looks like it's likely that those margins stay much much lower most people are thinking 20%
right now but I want to stress that it's easy to underestimate the Tam in video there are three 00 million Americans who watch video every day the average American watches 5 and a half hours of Television streaming or otherwise but excluding Tik Tok and YouTube that is so so much and so we think about this I subscribe to five services but you really should be thinking my family watches 250 hours of TV a month your
earlier career as a firefighter how is it shaped how you analyze media gaming and the metaverse there's a Unity to it all right I suppose the best and closest answer would be I did firefighting because I believed that I was going to spend most of my life in an office I've been fortunate that that isn't true but I loved the outdoors and I was excited to preserve that time and at the same time despite that real shared interest
in the outdoors I had very little in common with my colleagues there I have watched so many episodes of Cops and an old MTV show called yo mama where people met on rooftops in New York City and did rap battles that were really yo mama jokes and that was legitimately horr to fit in and so I would say you know when you're spending 16 20 hours in a forward operating base sitting out in the woods sleeping in a tent we didn't have cell
phones and you're just there for two weeks learning how to work get along with and trust those you have very little in common with is an enduring skill universally applicable now that you're doing so much Venture Capital what are you learning about talent you have discussions with people making pitches to you obviously you want them to be smart hardworking know their areas but what about Talent is underrated what
do you look for that's maybe different than everyone else what they look for my favorite type of entrepreneur by far are those who were essentially paid to try and solve a problem that matters to the future but their company was never going to see through because they're coming out 10 years with so much learning that doesn't sit on the cap table you're coming out with so so much pent up energy you're coming up with a little bit of
dissatisfaction over what they've achieved over the past 5 years and they're usually coming at the future with a network of people with that shared experience their ability to go out and change the world is incredible I learn a ton from that I don't think that I'm the best at spotting a 22-year-old who doesn't have much work experience but sees clearly but that crop of firsttime entrepreneur long executive who just deeply needs to pull something
off that they haven't great incredible and what's your favorite unusual interview question to get it those or other qualities my favorite unusual interview question I don't know Tyler let me ask you if there's any common threat around the interviews that you've done what type of question usually has the least satisfying answer to you the two questions I find most useful are how ambitious are you this is for people who
are trying to be leaders not for for ordinary workers and everyone is thrown off base by that but it's hard for them to fake ambition if they don't have it and then I like to ask something like what are the open browser tabs on your computer right now it gives you a sense of how they spend their time and what they really care about often people are flustered by that as well so someone not doing well on a question to me is them
doing well because there's a lot of variation and thus a lot of information the questions that everyone does well on like tell us about a mistake you made at your previous workplace everyone's prepped for that everyone has a decent answer but it's nothing you just learn whether or not they've prepared something that's like not bad enough to be self-critical but not too negative firstly thank you for that out I don't
know what the weirdest question I've been asked for the number of tabs I have open are in the hundreds I have hundreds of open articles on my phone and then I use a tab extension on my PC so that I can collapse all the open tabs without destroying the RAM on my computer I can read you that that that list is in the thousands but ambitious not that you directly ask that the book is a good example I didn't have an ambition to be
a writer to ever make a book I deeply love writing my ambition is to do the best of what was possible I really blitzed myself in the fall and early spring writing this book I deeply underestimated how much time it was going to take how much time marketing how many interviews I do the ambition is a desire to not feel like I fell short of something I could pull off and that has continuously kind of shifted you seem to me very much like a
hundreds of open browser tab sort of guy so I would in fact hire you for the the jobs you've had or have now right so you're doing polyic types of things with a lot of references a lot of learning but a lot of practical experience across a number of different areas metaverse gaming film internet marketing Venture Capital right all of that it's definitely a lot of browser tabs well thank you I don't know that could do my
job without Twitter but half the time Twitter ends up distracting me for days from said job last question and really I'm asking for a sincere answer here how do you think about why it is that you wrote this book again it's the metaverse how it will revolutionize everything there's so many things you could have done you have an extensive audience online where you can write it's ungated not always but typically everyone can
read it and now you've written a book why did you write the book and why should we read the book it is easy to think that the metaverse is a buzzword we've been here before 3D TVs autonomous driving messaging Bots drone internet we're familiar with terms that are hyped long before they're possible or turn out to have been little more than a name change and yet I would argue that what we're seeing here is unprecedented no
one renamed themselves 3D TV platforms not least of all the seventh largest company on Earth this year McKenzie estimates that the big five tech companies will spend 30 billion on metaverse investments that Venture Capital private equity and big Tech will spend 130 billion I believe deeply that this transition is real I also believe that we're coming out of 15 years in the mobile and Cloud era dissatisfied with
many things dis and misinformation radicalization harassment toxicity happiness the role of algorithms in our lives regulation platform power data rights data security data literacy and I believe that most of those challenges will become harder in the Met but I also believe that when these platform shifts occur we have an unprecedented or rather very rare opportunity as users as voters consumers developers to affect that
outcome we have agency we pick who leads when why and how with which philosophies I wrote this book because I've spent five years thinking about the theme what matters what doesn't what we need what we want what will happen automatically and what won't and releasing a book nationally that is in bookstores that reaches those I don't interact with daily that hits those who believe it's a thing but don't know exactly how was the
best way to have that outcome Matthew ball thank you very much thank you thanks for listening to conversations with Tyler you can subscribe to the show on Apple podcasts Spotify or your favorite podcast app if you like this podcast please consider giving us a rating and leaving a review this helps other listeners find the show on Twitter I'm @ Tyler Cowan and the show is at Cowen convos until next time please keep listening and learning