Has the metaverse lost its shine?

For Meta, the metaverse has been a veritable money pit. The Meta Reality Lab, MRL, reported losses of $13.7 billion and $10.2 billion in 2022 and 2021, respectively. Pundits call their dive head-first into the metaverse “an ill-timed passion project” and their rebranding a vanity project. Meta lost 70% of its value in 2022, one of the worst performers in the S&P 500.

Glad Facebook rebranded to Meta so they could focus on AI… For the moment, the metaverse is not so shiny, with investment shifting into AI at the “metaverse company.” The shiny new object is the Generative AI, and as Zuck made clear in Meta’s fourth-quarter earnings call, it is the new priority.  

This shift in focus mirrors global funding. AI is the new darling. Through March 16 of last year, companies that played in the metaverse or web3 space had raised nearly $2B in funding. So far this year, metaverse and web3 companies have raised $586.7M. When you look at fundraising for generative AI companies, they’ve inverted: Through March 16, 2022, that space saw $612.8M in funding. This year, it’s up to $2.3B. A complete reversal in investment priority.

With so many resources now focused on AI, the company is positioning itself to become even more of a leader in the space. And if Zuckerberg wants to increase the focus on generative AI, he has the resources to do it.  

And while on the back burner, the metaverse is not dead. There are many use cases where AI can and will impact Meta’s platforms and solutions, and eventually both VR and AR. In the words of Zuck, “Our leading work building the metaverse and shaping the next generation of computing platforms also remains central to defining the future of social connection.”

So we’ll see. From a branding perspective, there are arguments for and against the decision to rebrand to Meta. Chasing shiny objects without long-term balance and perspective sometimes invites dubious decisions. 

How will this shake out? What do you think?

The banking crisis of 2008 took a while to unfold.

In Washington Mutual’s case, customers withdrew $16.7B over ten days. It took only hours, fueled by an instantaneous and real-time Twitter panic that spread among SVB’s customers.

To get a sense of the scale of this run, the bank failures that just hit the U.S. financial system of about $319B are on a very similar scale to those recorded in 2008, of about $373B. The most significant difference was that the run resulted from only two bank failures: Silicon Valley Bank and Signature Bank. This compares to 2008’s run when 25 commercial banks failed.

The government’s bailout is generating much debate. While depositors are being insured, investors aren’t. Shareholders of the banks will take a serious hit. And the government has said there will be no bailouts like in 2008. But it begs the question if there is a run on more banks, what about the 15 major US banks that hold well over $1 trillion in uninsured deposits? 

It’s good to remember that both SVB and Signature had fewer customers with considerable balances putting them in a precarious position that many traditional banks do not have. Between the two banks, around 90% of their deposits were uninsured.

My grandmother, who lived through the depression, put savings in three or four banks in case of a run and kept cash in books, under that mattress, and in peanut butter jars. That generation always felt a complete lack of trust in the banking system.

What about these days? Is trust eroding again?

Tech’s shiny objects.

The metaverse, self-driving cars, Web3, and crypto & NFTs have all had their moment in the sun. And each has seen its winters (the metaverse is entering one now). But generative AI is different. It’s here to stay, and its power and fallibility are seeding fears. 

“Humanity does not have anything to protect it from the potential risks of artificial intelligence,” said Jaan Tallinn, co-founder of Skype. And Elon Musk put it this way, “For an AI, there would be no death. It would live forever. And then you’d have an immortal dictator from which we can never escape.”  

AI has stirred discussion around evolution, not biological evolution, evolution where survival of the fittest is a battle between humans and AI. I think I saw that movie, but the real thing might actually be coming.

What’s common among the tech elite that talk about human evolution and the birth of our robot AI replacements is a sense of inevitability. The notion that humanity is on a path of self-destruction regardless, and the development of a “species” that can outlast humans is inevitable and, some argue, necessary.

There is no agreed-upon timeline for when humanity might fall. What’s clear is this shiny new object has the power and potential for chaos like no tech we’ve seen before. 

Yes, there are significant opportunities for positive use cases, but do they outweigh the potential for maleficence? 

The core issue here is that AI, specifically ChatGPT, is currently wildly inaccurate, extremely vulnerable to manipulation, and prone to misinformation seamlessly blending truth and fiction and, in some cases, providing false source links. Still, companies, governments, and people are adopting AI solutions every day, assuming the content generated to be the truth. 

Schmidt adds, “Bad actors can use generative AI tools to create and target misinformation, leading to violence. My industry has taken the position that this stuff is good, so we'll just give it to everyone. I don't think that's true anymore -- it's too powerful.”

Some say it should be destroyed... what do you think?

She’s only an average gymnast but excels at what the boys want.

And thus, what brands want: eyeballs. And she’s in the money with the NCAA’s new rules on Name, Image, and Likeness (NLI). But there is something that feels fundamentally in conflict, but it’s the way of the world now in amateur college athletics.

Meet Olivia Dunne, who has more followers than Derek Jeter on Instagram and more than Beyonce on TikTok. Dunne has worked with Vuori, American Eagle Outfitters, and a plant-based supplement company called PlantFuel. An autographed trading card with her likeness retails for $89.

Beginning in July 2021, new rules allow college athletes to sign name, image, and likeness deals. This turned on a generation of stars who grew up on social media to cultivate online personas that can be bigger than their profiles as athletes.  

Not everyone likes it. “This is a step back,” Tara VanDerveer, the Stanford women’s basketball coach, told the New York Times about some of the sexy social media content being created by female college athletes. 

But hey, if brands can exploit it, they will exploit it. 

According to data from Opendorse, College athletes earned an estimated $917 million in the first year of Name Image and Likeness (NIL) payments, which began in July 2021.

Three-quarters of NCAA athletes have interacted in some NIL activity since NIL deals began. By May 31, 2022, the average NCAA Division 1 athlete had received $3,711 through NIL, while some big-name players scored high six-figure deals.

Football and men’s basketball account for nearly 67% of NIL compensation (Opendorse), while male athletes lead NIL activities (62.7%) and receive 93% of donor compensation. When eliminating football, the biggest revenue driver in the market, women lead NIL activities by a slim margin.

The whole concept is a polarizing issue. Are the NIL rules for student-athletes right or wrong? Or just a sign of the times?

You tell me.

This shit scares me.

You must read the full Bing A.I. chat published in the NYT a few days ago. It’s beyond crazy.

Bing has always been second-rate, but things just might be changing. With its $10B investment in OpenAI and its ChatGPT, and Musk’s disowning of the Company, its mind-blowing technology is now in the hands of Microsoft.

The chat (link: https://www.nytimes.com/2023/02/16/technology/bing-chatbot-transcript.html?) begins to unwrap just how impactful this tech can be. The first question, of course, is sentience, its ability to come across as feeling and human. The illusion is powerful.

The overwhelming part of this is the sheer scope of use cases, both for good and evil, that becomes blatantly obvious.

When you consider a tech industry that has grown out of the art of calculated behavioral addiction and manipulation, the algorithmic spreading of untruths, the complete loss of discovery, and the inability to determine real from not real, this new unregulated tech feels more than ominous. Yes, the positive use cases are huge as well, no doubt, but it just doesn’t feel like the positive will dominate. Maybe it’s just the world we live in today.

Check out the Times article linked above, read the exchange with the Chatbot, and tell me it doesn’t make the hairs on the back of your neck stand. 

Especially considering we are at the earliest stages of this technology.

Man…

It’s been a blood bath.

FTX, BlockFI, Three Arrows, Voyager Digital, and Celsius all collapsed in 2022. In addition, the crypto exchange, Coinbase, the largest direct listing in history, took an 86.31% market cap hit in 2022. Mainly due to low signups and a crash in trading volume, the stock was also impacted by the terraUSD/luna crash in May and the spectacular FTX implosion in November. Even golden boy Tom Brady got sucked in and took a serious hit.

And it wasn’t just Coinbase taking a hit. MicroStrategy, the world’s largest corporate holder of bitcoin, is down 70.61%, and Marathon Digital Holdings, one of the largest publicly traded crypto mining firms, fell 89%. Silvergate Capital, a California-based bank that caters almost exclusively to crypto companies, is also down 89%. Coingecko reported that 951 cryptocurrencies were declared dead or failed coins in 2022. With 8000 coins listed in 2021, 40% have failed or were deactivated.

While those who are deep into crypto believe it will bounce back (they speak of a 4-year cycle). But for the general population, it’s a different story. For many, crypto is seen as a scam that got exposed. Confidence and trust have taken a beating, negatively haloing every crypto-related brand. And that’s part of the problem. To build back momentum, it needs the masses to believe and play.  

Crypto needs oversight and regulation to earn back confidence, and it needs it soon. 

Is this an existential problem for crypto? Will this crypto winter see a Spring thaw?

Maybe so, maybe not. 

Just don’t bet the ranch.

Virtual shopping and the metaverse are reshaping the retail experience.

The retail marketplace has never been so fragmented, and the focus is shifting to AI and Web3. Accenture reports that 30% of consumers plan to shop in the metaverse this holiday. And more than 67% of retail executives are experimenting with the metaverse and virtual worlds to accelerate their businesses and engage with consumers where they want to be. What was once “brick-and-mortar or e-tail” is now brick-and-mortar and e-tail and virtual shopping and the metaverse. Be everywhere all the time.  

Bloomingdales has been dabbling for some time now. For their 150th anniversary, they launched their virtual store designed by Emporia that went live during Fashion Week this year. The next step is dropping it into the metaverse, or metaverses, since it’s not yet one place. Bloomingdales doesn’t see it as a change but rather an extension of the retail experience they have thrived at for decades. Regardless, they are still throwing tons of money at something that is far from showing a positive ROI. Good for the brand, though. 

As Standish put it, the hope is that “consumers move freely and seamlessly across both digital and non-digital channels at every point in the buying journey.” She goes on to say, “Ambitious retail enterprises will shape new physical and digital experiences, virtual and physical worlds co-populated by people and AI, industries made possible by new computing capabilities.”

The truth is that brands are still experimenting. The spend needs to be considered an investment in future engagement given that the metaverse is still in its infancy and yet to be widely adopted. But it’s coming.

In a short time, the metaverse and Web3 have assumed a prominent role in many brands’ strategic thinking. Goldman Sachs predicts the whole virtual e-tail, web3, metaverse shopping thing is an $8 trillion opportunity, though only indicated by the heavy investment pouring into the space. The jury is still out.

It’s probably only a matter of time. We’ll see.

Elon just seems to invite controversy.

And as a result, cash flow and hope for profitability are flying out the window. 

Fifty brands reportedly spent nearly $2 billion in advertising on the platform since 2020 and more than $750 million in 2022 as of Nov. 21. Seven other brands have significantly slowed advertising to almost nothing, representing another $255 million of ad spend since 2020. 

Charging a subscription for a blue checkmark isn’t going to fix all that.

General Motors, Chevrolet, Chipotle Mexican Grill, Inc., Ford, Jeep, Kyndryl, Merck & Co., and Novartis AG, among others, all halted Twitter ads or were confirmed as doing so. The others stopped advertising on the platform for a "significant period of time following direct outreach, controversies, and warnings from media buyers."

The issue seems to be a lack of controls, arguments over free speech, and a reported rise in hate speech since controversial accounts were reinstated. Ad placement against disparaging or controversial content is also an issue. 

Content moderation and other control that give advertisers confidence have been fundamentally eliminated. No surprise there, given the layoff of 3700 of its 7500 employees and another reported 1200 resignations. Entire departments have been wiped out. 

Let’s welcome Chris Riedy, a 10-year vet at Twitter, who has ascended to head of ad sales. The guy’s gotta have the hardest job on the planet.

Best of luck.

This Bud’s not for you.

Budweiser spends about $75 million every four years to be the official beer sponsor of the World Cup. In a stunning, last-second reversal ahead of Sunday’s kickoff, host country Qatar—the first nation in the Arab world to host the event—has banned alcohol sales within stadiums, something it had initially agreed to. The ban ignores a previous agreement allowing the sale of beer to fans in specific areas and at specific times in a country where alcohol is heavily controlled and off-limits to most of the population.

Bummer.

And there is a bigger advertising issue at play.

It’s estimated the Qatar World Cup will attract 5 billion viewers, almost two-thirds of the world’s population. With reach like that, how can you walk away from that kind of scale in a marketing opportunity because of a few human rights violations…? (sarcasm here).

Bloomberg News reported they contacted 76 companies sponsoring the tournament or teams, including the likes of Adidas AG, Coca-Cola Co., Volkswagen AG, and Microsoft Inc.’s XBox, all from countries where human rights criticism is widespread. None of the seven key FIFA sponsors said they would make any changes to their global advertising plans to reflect concerns for human rights.

Money talks, okay, eyeballs. 

While the Qatar World Cup is the most scrutinized World Cup in history, few are walking away from the staggering marketing reach available. There are so few events left with that kind of live audience, actually none with that kind of reach.

Further reported in Bloomberg News, “Of the 69 sponsors of national teams, 20 responded to express their commitment to human rights, though declined to disclose if or how their marketing might change. Thirteen companies did say they would make adjustments, though few have significant business ties to Qatar.”

There is a dark cloud over this event.

Tech companies sucked up talent during the pandemic with the fury of the latest Dyson.

Everyone thought the pandemic’s bull run would last forever. Not so. Talent is hitting the street in unprecedented numbers. Meta dropped 11,000 employees. Getir laid off 4,480 people accounting for 14% of their staff. Booking knocked off 25% of its workforce or 4,375 people. And Elon just axed 50% of Twitter’s staff, or around 3,700. Uber, Better.com, Groupon, Peloton, Carvana, Zillow, Stripe, Lyft, Salesforce, and the list goes on. 23,000 tech workers in November alone. Financial firms are set to follow suit.

Sited are all the macroeconomic factors. Inflation, rising interest rates, and the risk of recession pile together to produce smaller corporate profits and agitated investors. But in truth, firms went crazy hoarding talent during the pandemic and over-hiring. Something Mark Zuckerberg apologized for after laying 13% of its workforce. “I made the decision to significantly increase our investments. “Unfortunately, this did not play out the way I expected.”

The truth is, much of the damage was self-inflicted. Soaring profits and the belief that the pandemic’s revenue effect would last forever spelled doom and sparked a drive to find, hire, and hoard the best and most talented. Google and Meta scaled employees at a breathtaking rate. Meta doubled its staff during the pandemic. Along with that came all the incentives, perks, and free meals, all incented with stock options, many of which never even had time to vest.  

And now, we return to reality and the need to manage the P&L. And a significant opportunity for smaller firms to grab tech talent. 

Keep an eye out, Amazon layoffs are next.

Y’all remember the Cambridge Analytica scandal back in 2018, yeah?

Y’all remember the Cambridge Analytica scandal back in 2018, yeah? The political data analytics firm was implicated in a massive data breach, improperly harvesting personal data from over 87 million Facebook users. 

Recently uncovered by NBC, apparently, Cambridge Analytics was harvesting data as far back as 2015, and Meta knew what was going on. And Facebook was slapped with a $5B fine by the FTC. In March 2018, Cambridge Analytica employee Christopher Wylie revealed the extent of CA's activities in interviews with The Guardian and The New York Times.

According to Wylie, Cambridge Analytica harvested personal information on where users lived and what pages they liked, which helped CA build psychological profiles that analyzed characteristics and personality traits. This data was then deployed in political campaigns to shape opinion and choice. Wylie said: "We exploited Facebook to harvest millions of people's profiles. And built models to exploit what we knew about them and target their inner demons.”

And the Russia connection? That remains of great speculation but a lot points to that distinct possibility. But that’s a story for another day.

This March, two longtime Meta engineers were questioned about how Facebook keeps track of user data. The engineers were questioned during a court hearing as part of a consumer privacy lawsuit centered around the Cambridge Analytica scandal. The transcript of the hearing was only recently unsealed.

One of the engineers, Eugene Zarashaw was asked where the data was, and replied with the quote above, basically “No one knows.” Scary. And as reported in Business Insider, a spokesperson for Meta told Insider it was unsurprising that individual engineers couldn't identify where all the data for a single user was stored across the company's systems. 

What? 

So, where is your data?

For some, it's still a widely contested issue.

Some (like Reed Hastings, Netflix CEO, no surprise there) believe linear TV is in a long and protracted death spiral that’s expected to go on for another 5-10 years. As the recent Nielsen data suggests, the tipping point has already happened. While Netflix has lost subscribers as of late, they are still the dominant player owning 8% of that 34.8%. YouTube is close behind with 7.3%. The rest is spread across hulu, Disney, and all others.

VOD is going to be king, but that does not mean that linear TV is dead. It is still the highest quality medium that just works when you turn it on. And while the classic linear TV channels may be losing to VOD, the brands are here to stay with their own VOD offerings. Brands like FX and NAT Geo have successfully transitioned to the new reality, partnering with hulu and Disney Plus, respectively. 

And for sure, COVID distorted viewability statistics, making it even more difficult to answer if TV is dead. Between the years 2019 and 2020, according to a report by a reported by UK regulatory and competition authority Ofcom, there was a 32% increase in the time people spent daily watching content 2019-2020. Most of that was through the likes of Netflix, Amazon Prime, and Disney+. Interestingly, linear TV also increased’ likely attributed to people defaulting to linear TV for news and updates on the pandemic.

Traditionally TV continues to thrive with live events and sports, and while expensive, advertising on linear TV is still very relevant.

A significant driver for change has been the art phone. Content consumption is no longer centered on the TV. Phones and tablets drive the younger, more desirable demographics, and content providers are adjusting accordingly. 

So in the near term, everything will co-exist. And yes, linear TV may be past its glory days, but it’s not going anywhere for a while.

The Rise of the Surveillance Complex

There used to be surveillance states, and now, as Hurst suggests, there are surveillance complexes. There are aerial surveillance technologies, apps, and smart home solutions sucking up your personal data. And, of course, the video doorbell. That ubiquitous little device that brings the civilian infrastructure to the world of state surveillance.  

With this integration of data, video and audio capture, and cloud storage in perpetuity, we are engaged in a frightening aggregation of civilian, corporate, and state surveillance into one alarming complex. And one of the biggest drivers? That little Amazon Ring. Here are some numbers. Amazon sold more than 1.7 million video doorbells in 2021. Throw in Google's Nest, Vivint, and ADT, and that number balloons to 3.5 million. The video doorbell market grew 63% in 2021 alone. Ring is effectively building the largest corporate-owned, civilian-installed surveillance network that the US has ever seen.

It gets scarier. Since Amazon brought Ring in 2018, it has established relationships with over 1800 law enforcement agencies that can request video content without a warrant. Ring cameras are owned by civilians giving law enforcement access to private video recordings of people in residential and public spaces that would otherwise be protected under the fourth amendment, allowing law enforcement to get around these constitutional and statutory protections. The line between police work and civilian surveillance is no longer clear. And the folks next door? They are your potential informant. And they are always watching. And scarier still, Amazon’s moratorium on integrating facial recognition into Ring expired in June.

And your data? Well, when you sign up, you agree to give Ring permission to control the “content” you share—both audio and video. Sure, they say you own the video as intellectual property, but Amazon’s terms of service say you give it an “unlimited, irrevocable, fee-free and royalty-free, perpetual, worldwide right” to store, use, copy, or modify your content. To boot, Rings’ terms of service say that the company may “access, use, preserve and/or disclose” videos and audio to “law enforcement authorities, government officials, and/or third parties” if it is legally required to do so or needs to in order to enforce its terms of service or address security issues.

Being off the grid has a nice ring to it…

Where are brands in all this?

What responsibility do brands have in supporting environmentally sustainable recycling efforts? We live in a disposable society trashing technology that is not actually disposable. What did you do with your old iPhone? Many brands have recycling programs, but few, if any, push them.

In some cases, you have to dig to even find mention of them. Is this another case of brands greenwashing with a recycling message without really making an appreciable effort? Is this just another cheap way of satisfying ESG needs driven by shareholders and vacuously trying to satisfy consumer perceptions?  

Maybe so. What we do know for sure is that millions of tons of e-waste are sent to India every year, where men, women, and children risk their health to rip apart old phones, keyboards, TVs, and computers for a screen or a scrap of precious metals. Many more tons go to Hong Kong, Ghana, and West Africa. It is a dangerous calling for people to scavenge for recyclable e-waste, but there is money in it. Recycling 1 million cellphones can recover 20,000 lbs. of copper, 550 lbs. of silver, 50 lbs. of gold, and 20 lbs. of palladium, reducing the damage and pollution done by mining these metals

E-waste must be recycled professionally and carefully discarded in a proper environment with proper safety protocols. Unqualified laborers poison themselves, develop cancer, and damage their nervous systems by digging through mounds of e-waste just to find a screen or a scrap of precious metal. On a global scale, the human and environmental toll of the work is impossible to calculate, but make no mistake, it is significant. And given the unrelenting advancement of technology, not likely to lessen any time soon.

It would seem that a cooperative approach between all electronic manufacturers in a unified and committed recycling effort would make the world a better place. Brands have to take more tangible roles in addressing this crisis, like building on Basel Action Network’s responsible recycling e-waste pledge 

It’s being called the Crypto Winter, and it’s cold out, freezing even.

This does, however, imply there’ll be a Crypto Spring. For many, though, this will never happen; companies will just disappear, and others will be eaten. Consider that Bitcoin is only 13 years old, Ether only 7. They may be bottoming out, but they are young. They will be back. Many won’t. As of July 2022, there were 20,268 cryptocurrencies. Sam Bankman-Fried, chief executive of FTX, believes that only about 50-100 tokens have value. “The remaining thousands...do not have value.”

Tech expansion has been explosive for the last decade, and given the early stage of the category, there hasn’t been a ton of deals. That’s changing. As with most tech sectors, rapid expansion and fragmentation invariably lead to contraction and consolidation. Given the bloodbath the crypto market has seen – from the collapse of stablecoins, declining currency values, radical drop in venture funding, the collapse of some crypto coins, and bankruptcies of some service players, it’s time for the strong to eat the weak.  

Consolidation is the inevitable outcome. With funding hard to come by and debt expensive, mergers look to be the trend for 2022. Much more could be on the way for the industry on pace to have a record M&A year. According to Crunchbase, “Total acquisitions of companies in the crypto sector through the first two quarters of the year stood at 39—a pace that would easily beat last year’s 66.” Half those deals this year involved venture-backed companies, compared to 22 deals for VC-backed startups for all of last year. So it’s happening. 

A cycle like this, quite typical in tech cycles, often pulls out the weeds and leaves a sector leaner and stronger for future growth. Much of this will happen in anticipation of an effective regulatory system, which is not far off for the crypto-world. So hold on to your hat.

So is a Crypto Spring coming? My crypto wallet hopes so.

Not a bad return on investment, given the song has not been recorded since 1962

But what’s interesting about this, and not just the iconic longevity of the Dylan brand, is the groundbreaking new ‘Ionic Original’ recording format developed but award-winning record producer and musician T Bone Burnett. The format combines some of the materials used in both vinyl and CDs to create durable, one-of-a-kind analog discs.

As described by WHAT HIFI?, “Unlike traditional vinyl LPs made of PVC, and CDs, which contain plastic with a layer of metal, Ionic Originals will consist of lacquer painted onto an aluminum disc, with a spiral etched into it by music...which can be heard by putting a stylus into the spiral and spinning it.” I think I need a turntable.

Burnett describes the sonically-excellent analog audio output as “the perfect sound.” Burnett’s new company, NeoFidelity, Inc., will handle production and distribution of the new format and hopes to reset the value of recorded music.

If the Christie auction hammer price of Blowin’ In The Wind is any indication, T Bone may be on to something.

Chatbots coming to life.

Blake Lemoine was put on leave when he told the Washington Post that Google’s chatbot had “come to life.” The engineer in Google’s Responsible Artificial Intelligence Organization was referencing its Language Model for Dialogue Applications and believed the chatbot had become sentient or able to feel and express emotion like a human.

If you ever watched the movie Her, you can understand how humans crave sentience from inanimate objects. But as Sandra Wachter, a professor at the University of Oxford who focuses on the ethics of AI, told Business Insider. "We are far away from creating a machine that is akin to humans and the capacity for thought.”

With AI and machine learning, language processors can learn by scanning billions of conversions across the web and sequence language to appear to give emotional responses. And we want to believe. Assigning human properties to inanimate objects, or anthropomorphism is a well-documented phenomenon. But bots trying to fool people are all simply about sequencing language to sound sentient, and they are easily found out.

Note to brands: Trying to pretend to be a real human can result in a very negative brand experience. Ever hear a bot in a call center use an audio track of the sound of typing? Do we really think someone is typing? This is just a bad idea.

Give me a human over a bot, any day.

Some people just want to be able to hold it.

At a time when the world is hyper-focused on NFTs, collectibles you can’t touch, here comes the reboot of the passion for physical stuff. It’s a return to what people love about collectibles, the ability to have the actual physical object supported by a secure backend. The merging of the physical and digital.

Welcome to the eBay Vault and its digital trading marketplace. The Vault has all the authentication ability and the security of managed transaction history and ownership path, similar to NFTs. But you have an actual thing. The trading platform allows for transactions more akin to NFT trading marketplaces, where investors can track real-time valuation movement and flip a card in what is fundamentally an instant sale. No re-authentication or shipping is required. It’s all in the Vault. eBay provides authenticity guarantees at no cost. Suddenly, trading cards fall into a managed investment category.

From Weiss Schwarts to Harry Potter and Game of Thrones, and of course, every conceivable sport, trading cards are hot. In 2021, Trading Cards merchandise volume (GMV) more than doubled from pre-pandemic levels. In Q1 2022, an average of 2 trading cards were purchased every second on eBay. To date, over 10 million cards purchased on and off eBay were added to customer collections. 

The Vault is a natural. And the beauty? Cards remain secure in the eBay vault, never seeing the light of day. Unless, of course, you want to bring one home. Buying and selling can happen in a digital marketplace that previously was not available for these kinds of collectibles. Anticipating Brady playing another season and his rookie card going up in value? Get one now before he retires.

eBay plans to expand the offering to other collectibles and luxury goods by 2023 and anticipates it will hold $3 billion in assets by 2025 

The digital authentication, ownership, and secure transaction capability alone have massive potential across a huge range of collectibles. 

Hey, got a Zion rookie card? I’d store it here. It’s gonna be worth something.

If a collectible is worth what someone will pay, then what are NFTs worth?

If a collectible is worth what someone will pay, then what are NFTs worth? Now? In the future? The space is sending many conflicting messages. Are NFTs thriving or crashing? There are strong arguments both ways.

Twitter founder Jack Dorsey’s first tweet was purchased for $2.9M by Sina Estavi. When Estate attempted to resell it at auction, no one offered more than $280K. NFT sales fell to 19,000 this week, according to NonFungible, the world’s largest NFT data resource. In September, that number was 225,000. 

NFT wallet activity is also sinking fast. There were 119,000 active wallets in November, whereas there were about 14,000 last week, adding up to an 88% decline. ApeCoin, the Bored Ape Yacht Club NFT, dropped in March from a high of $39.40 to a low of $7.75 on March 17. The Wall Street Journal points out that search activity for NFTs has also dramatically dropped from its high point in late 2021, showing a drop of roughly 80% since that time. Ethereum sidechain Flow has also seen its biggest NFT product, NBA Top Shot, fall from grace in recent months, with secondary market sales volume dropping over 80% since February 2021.

On the other side of the coin, as reported in Cyptobriefing, Bored Ape Yacht Club creator Yuga Labs conducted the largest NFT sale in history. The drop, consisting of over 55,000 land plots for its upcoming Metaverse game Otherside, brought in over $310M in initial sales. Less than a week since launch, the collection has exceeded $700M in trading volume across more than 27,000 sales.

Throughout the first four months of 2022, several new collections such as Azuki, Okay Bears, Moonbirds, and VeeFriends Series 2 have sold out after hugely anticipated launches. Trading on secondary marketplaces like OpenSea has boomed (it saw $3.4 billion worth of trading volume last month), returning handsome profits for keen flippers.

Since January 2022, CryptoPunks are rockin’. Total transactions have grown substantially, leading to a $2B sales volume. It also saw a surge in unique monthly users, reaching 501 transactions in January. Meanwhile, the total transactions increased 187% in March, reaching around 1,400. It left CryptoPunks with a sales volume of $98.5M compared to January’s $6.1M. Moreover, in August 2021, the project reached a new milestone of $679M, with over 2,500 transactions. 

So are NFT on the rise or on the decline? Idk. Are NFT’s a good investment or a fad? Idk that either. Maybe it’s a question of hold period… get in early and get out fast before interest wanes? 

NFT’s long-term viability and stability as an investment? Your guess is as good as anybody's. But keep an eye on DeGods…

Unicorns are so 2020.

Today we are talking about decacorns, $10B+ and even hectocorns, at $100B+, the largest of which is Beijing-based Bytedance valued at $140B. Innovation is a global thing and growing, and the numbers are off the charts. Beyond the US and China, which make up 90% of unicorn valuations worldwide, unicorns or bigger can be found in Sweden, Australia, the UK, the Bahamas, India, Indonesia, Turkey, Hong Kong, Germany, Canada, South Korea, Netherlands, France, and Israel to name a few.

While births of new unicorns fell by 15% QoQ to 113, in Q1 of 2022, three were 1070 unicorns, a 62% increase YoY. M&A exits increased for the 7th straight quarter, though IPOs and SPACs we down.

Interestingly, 734 of those unicorns have reached that status in 2021 alone. In the first nine months of 2021, there were 23 early-stage transactions conducted at unicorn valuations, beating 2020's total of 13 deals and 2019's total of 12 financings, according to PitchBook data. 

2021 was a record year with startups raising more capital than any time in history. This year, valuations are expected to come back to earth and based on that, risk allocations will not change. For the venture community, life is good. We’ll see how 2022 fares.