The metaverse is capturing the world’s imagination. Facebook recently joined influential brands such as Epic Games and Microsoft by making a public commitment to investing into the metaverse – which raises a question among many people: what exactly is the metaverse?

The News

Facebook CEO Mark Zuckerberg recently told investors and journalists that the world’s largest social network will evolve into the metaverse — a virtual world in which people interact through digital twins in immersive environments. In addition, on July 26, Facebook announced a product group tasked with building out Zuckerberg’s vision. As Zuckerberg told investors, “. . . in addition to being the next generation of the Internet, the metaverse is also going to be the next chapter for us as a company.”

Why the News Matters

Facebook’s prominence and influence has helped elevate the metaverse into the mainstream. In fact, the concept of an interconnected virtual world has existed since before the internet. Neal Stephenson’s 1992 science fiction novel Snow Crash coined the term to describe a world in which humans use avatars to interact with each other in three-dimensional environments. The concept has resurfaced many times in popular culture, an example being Ernest Cline’s 2011 science fiction novel Ready Player One, which Steven Spielberg adapted into a film in 2018.

The metaverse is more than fiction. Real businesses are creating elements of a virtual world for real people, a point underscored by venture capitalist Matthew Ball in an oft-quoted 2020 essay. One of the more notable efforts to create a virtual world where people would play and work through digital twins is Second Life, the virtual community launched in 2003. Fortnite, the popular gaming platform developed by Epic Games, might be the closest expression of the metaverse operating today. In Fortnite’s world, people use avatars to play games, buy virtual goods, and experience events such as hip-hop star Travis Scott’s well publicized 2020 concert. In fact, Epic Games recently said that it has secured $1 billion in funding to build out a metaverse beyond Fortnite.

The metaverse has become more newsworthy in recent months for a few reasons:

  • The rise of crypto currencies and nonfungible tokens (NFTs) has made it clear that people can make real money creating and selling goods virtually. Even if those transactions are technically not occurring in the metaverse, crypto currencies and NFTs are essential building blocks to conducting commerce in virtual worlds.
  • The Covid-19 pandemic has given rise to a stay-at-home economy where people more comfortably interact with each other virtually. At the same time, the technical limitations of remote communications platforms such as Zoom have inspired questions about how and whether people might break through limitations of time and space in more immersive ways without having to purchase expensive VR headsets.

In fact, many businesses are already engaged in metaverse-like environments. For example:

  • Microsoft helps businesses use digital twins in virtual environments to manage operations such as supply chains. As discussed in a recent Microsoft blog post, Anheuser-Busch InBev has used Azure Digital Twins to create a comprehensive digital model of their breweries and supply chain. Per Microsoft, “Synchronized with their physical environments, the digital model is live, up to date — reflecting the complex relationships between the natural ingredients and brewing process — and enables AB InBev’s brewmasters to adjust based on active conditions.”
  • Fashion brands such as Gucci and are creating virtual products for sale in metaverse environments such as gaming platform Roblox. In May 2021, Gucci and Roblox collaborated to create a virtual Gucci Garden, where Gucci sold virtual goods via Roblox currency (Robux). Gucci limited edition bags sold for the equivalent of $4,115. Meanwhile, gaming platform Minecraft has collaborated with brands such as Disney to offer virtual experiences available for a fee to Minecraft players.

These are but a few examples of brands figuring how to create a presence, sell goods and services, and conduct business in virtual worlds. (Read about more examples here.) Mark Zuckerberg spoke for many metaverse proponents when he waxed poetically about the concept in a call with investors. Here is one expert from his comments:

So what is the metaverse? It’s a virtual environment. We can be present with people in digital spaces. And you can kind of think about this is an embodied Internet that you’re inside of rather than just looking at. And we believe that this is going to be the successor to the mobile Internet. You’re going to be able to access the metaverse from all different devices and different levels of fidelity from apps on phones and PCs to immersive virtual and augmented reality devices.

Within the metaverse, you can build a hang out, play games with friends, work, create and more. You’re basically going to be able to do everything that you can on the Internet today, as well as some things that don’t make sense on the Internet today like dancing. The defining quality of the metaverse is presence, which is this feeling that you’re really there with another person or in another place. Creation, avatars and digital objects are going to be central to how we express ourselves and this is going to lead to entirely new experiences and economic opportunities. I think that, overall, this is one of the most exciting projects that we’re going to get to work on in our lifetime. But it could take a lot of work and no one company is going to be able to build this all by themselves. Part of what I’ve learned over the last five years is that we can’t just focus on building great experiences. We also need to make sure that we’re helping to build ecosystem so millions of other people can participate in the upside and opportunity of what we’re all creating. They’re going to need to be new protocols and standards, new devices, new chips, new software from rendering engines to payment systems and everything in between.

Vlad Panchenko, CEO and Founder of DMarket, a marketplace and technology for building virtual worlds, recently told author Cathy Hacki that the metaverse will eventually expand into a virtual economy (a view shared by many others, including Mark Zuckerberg.) He said, “Many brands intuitively or on purpose are moving towards the metaverse which is creating a global economy on track to exceed the current one many times over. There will be no other option but to join it. Otherwise, you will not survive as a company.”

What Businesses Should Do

An all-encompassing metaverse with a virtual economy is in early stages of development, but it’s clear the many businesses are figuring out how to build lovable products and offer services in virtual worlds, and Microsoft is helping them manage their operations. We suggest that businesses use test-and-learn tools such as design sprints to imagine how they might operate more extensively in virtual environments. The beauty of the design sprint it is engineered to help product development teams tackle questions for which there are no obvious answers, which is ideal for the metaverse. For instance, a business might ask:

  • How might we develop lovable products virtually beyond what we’re doing today?
  • How might we create experiences that make it possible for people to more easily and securely make purchases virtually?
  • How might we help employees break through limitations of time and space to operate more effectively in virtual environments?

These types of specific questions lend themselves to more focused experimentation than, say, a broader, far-reaching question such as, “How might we build a metaverse?” (unless you’re Facebook, and you know your future will be in the metaverse).

At Moonshot, we help businesses figure out how to innovate with product development cost-effectively through our own FUEL methodology, which combines tools such as design sprints with product development approaches such as lean innovation. 

Contact Moonshot to get started.

For More Insight

The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite,” MatthewBall.VC

WTF Is the Metaverse?” PCMag.

More Than A Trend: Entering The Metaverse Will Become A Necessity For Brands,” Forbes.

Say Hello to Your Digital Twin,” Pactera EDGE.

Mark in the Metaverse,” The Verge.

Zuckerberg Says Facebook’s Future Lies in Virtual ‘Metaverse’,” Bloomberg.

Facebook, Inc. (FB) CEO Mark Zuckerberg on Q2 2021 Results – Earnings Call Transcript,” Seeking Alpha.

CEO Satya Nadella’s 12 Boldest Remarks at Microsoft Build 2021,” CRN.

Converging the physical and digital with digital twins, mixed reality, and metaverse apps,” Microsoft.

What Is Epic Games’ Metaverse, and Why Is It Worth Billions?” IGN.

Are NFTs the New Crypto? A Guide to Understanding Non-Fungible Tokens,” Forbes.