In this episode, we discuss the United States military building its own metaverse, Andreessen Horowitz creating a $600 million fund to invest in gaming, Kevin Lin's Metatheory raising $24 million, DappRadar releasing another Blockchain Gaming report, and so much more!

Episode 26 Keywords: United States, military, metaverse, Andreessen Horowitz, a16z, $600 million fund, investing, gaming, Kevin Lin, Metatheory, $24 million fundraise, DappRadar, Blockchain Gaming report

Welcome to the metaphysics podcast. The

Metaverse and web three are bringing about the biggest

revolution since the internet itself. With your hosts Paul the

prophet Dawalibi And Jeff the juice Cohen. We will be bringing

you the latest Metaverse, business news and insight into

what it all means. The meta business podcast starts now.

From the boardroom to the metaverse. This

is the meta business podcast. I am Paul the profit that will

lead me I'm joined today by my friend and co host, Jeff, the

juice Cohen. For those of you who are new here, welcome to the

official podcast of the metaverse. What we do is we

cover the most pressing, Metaverse, topics and news of

the week, we look at all of it through a business and C suite

lens, we dissect, we analyze the business implications of

everything happening in this amazing industry. For our

regular listeners. Thank you guys for tuning in every week.

Thank you for all the love the five star ratings and reviews.

If you haven't yet, go leave a review on the podcast. But more

importantly, Go share it, send it to a colleague send it to a

friend. We really appreciate it. This is how we grow or maybe

post it on your LinkedIn or on your socials, an episode that

you particularly liked. That always helps. And we appreciate

it. Jeff, how you doing this week?

Dude? Good. Doing good. Good. As always, it's nice

when the lights still light out when we record which as we get

later into the year it gets, you know, it's nicer out. So that's

positive. How about you?

It's been crazy. I think you and I have

commiserated. But I feel like this is maybe the busiest time

of year and like the conferences are back. And so there's a lot

of people going to conferences and a lot of like networking

that's happening. And I just feel like it's extra busy, like

the business world is sort of getting back to normal is what

it feels like. And obviously that has an impact, right? Like,

it's just means more opportunity to see that. Plus, this industry

is crazy. Because every week the numbers get bigger, the stories

get bigger. So let's jump in. Jeff, because we've got we've

got some really good ones here this weekend. As always, let's

start with something a little while and what I don't know if

I'd call this light, but it's you know, maybe less businesses

just open. Maybe that's it. But the headline here I really liked

this headline. It's the US military building its own

metaverse. Defense tech companies have latched on to the

metaverse hype, but what they're building will be a far cry from

metas virtual world. Now, it goes on to tell the story about

you know, fighter pilots basically strapping on to AR

headsets and doing missions like refueling missions and things

like that, on like this mix of augmented reality AI, video game

graphics, or fighter pilots to practice dogfighting against

virtual opponents, for example. So they're using Metaverse

related ideas to augment military systems, right, whether

that's AR or VR, or AI, or some mix of all of the above, which

is sort of what the the article dives into here. I mean, we

don't necessarily need to touch on the specifics here. But I'm

curious. What do you make of a military Metaverse, right? A

Metaverse created purely for either like WarGames practice

call it or to augment the capabilities of an actual

military.

Yeah, well, technologically, I mean, the

military has a long kind of history of being pretty early

and building stuff. I mean, they, you know, the early

internet, I believe, was developed by the military. You

know, there's many other things that ended up being consumer

technology that actually started in the military. So maybe

there's some element of that here, although, I feel like

they've basically taken something that's already been

going on for a while, which is kind of like using gaming as a

as almost like a practice for, for military activities, and

just really transformed it with the word metaverse. Like, you

know, everything that we described there, like not

practicing dogfighting, stuff like that is all stuff that is

really already happening. And to me, it doesn't really rise to

the level of being called a Metaverse because I think one of

the big areas for something to be a Metaverse at least in my

mind, is the social, which I don't this doesn't really seem

to have that. And also having an economy where it's like, people

will have a sense of self and a sense of actual you know,

there's actual commerce going on with goods and services and

money. Trent transfer hands, like in this example, I don't

really see any of those things happening. So to me at least,

this is just then putting a different coat of paint on

something that maybe is already happening. But yeah, I'm curious

how you how you interpreted? Yeah.

The military doing anything in this space, I

think is interesting. Your insight. In the beginning there

was spot on it was almost the take I was gonna make, which

was, you know, DARPA and the military created web 1.0 Why

should we not assume that they may be the creators or the you

know, the one have the biggest drivers of web three. So that

this to me makes sense. Obviously, your point also,

we've seen a lot of existing technologies just being

leveraged in military, sort of in military circles or in

military scenarios. I've I always try and take it to the

extreme here. Right. And I think the conversations most fun at

the extreme. And one argument I've made, I don't think I've

made it on this podcast. I definitely made it on the

business of esports podcast is that I believe at some point,

soldiers, especially call it Air Force, but I think all soldiers

eventually will be operating in some kind of metaverse. In other

words, their existence will be in a virtual world, they will

pilot craft in a virtual world, they will run around in a

virtual world, there will be a real life sort of robotic

unmanned version of whatever they're doing in the real world,

but in their minds in the soldiers. Perception, they're

operating in a metaverse. Right. And that, and that soldiers will

be could end up being part time right where I could come home.

And instead of driving for Uber, I log into the military

metaverse. Right? I fly a couple of missions, which just so

happened to be the there has to just so happens to be a real

world drone equivalent, right? Some kind of UAV equivalent that

I'm piloting. But for me, I'm coming in I'm playing a game.

I'm operating in a Metaverse and and the real the messiness of

the real world is sort of obfuscated, for me. I think

this is military, military to earn military term.

It's true. It's a great, it's actually great. A

great if we're fighter earn or something like that, right. But

yeah, but if we take this even to a larger extreme, eventually,

maybe there's a universe there's some outcome here some future

where the real world piece of it doesn't even exist. Were wars

are fought entirely meta versus, with some agreed upon rules. And

there's no loss of actual life, or or equipment at all. Right,

that it's all it's all happening in virtual worlds, where there's

some agreement in terms of, you know, here are the here are the

ground rules.

Yeah, I mean, I think if we take things to the

logical extreme, where people are spending a lot of their time

or much of their time in these virtual worlds, and come to, you

know, value their self in that world and their possessions in

that world as much as they do their their physical self. Yeah,

I think it does sort of stand to reason that maybe there will be

factions, fights wars, then you come to more of like an

existential question. Like, what happens if you die in the

metaverse like, do you? Do you? Are you dead from that Metaverse

forever? Like, can you just relog in like, what what exactly

happened there? You know, that's an interesting one question.

So yeah, I'm sure stuff we'll touch on, over and

over, as, you know, people start thinking through these things

and building these things. But I this is one to watch. Right? The

the military always at the cutting edge, always one of the

biggest drivers of new tech. So anytime they're doing something

I think people need to sort of take notice. Let's talk about

another big driver of tech and innovation. And that's

Andreessen Horowitz, the fabled VC firm. I believe that either

the biggest or second biggest in the world at this point, like

early stage VC, maybe only second to Sequoia but Andreessen

Horowitz launching a $600 million gaming fund, this

announcement being made today, in fact that they were recording

and what they're saying it's the they're calling the fun games

fund one very creative name. It will focus on a mix of game

studios, gaming infrastructure companies, and consumer gaming

software providers similar to discord and Twitch that support

gaming ecosystems and communities. Now, the fund has

like a ton of investments in gaming stuff already. They've

invested in x infinity le X infinities maker sky, Mavis,

they've invested in Roblox they've invested in Oculus,

they've invested in Zynga. Right, they have a huge number

of existing investments in in gaming companies, but now they

have a dedicated fund for this. And And what's interesting about

this, I think, at least, Jeff, but I want your thoughts. I'm

sure it was somewhere in the announcement. I had didn't read

the official announcement from Andreessen Horowitz, but it's

most definitely not blockchain gaming focused, right? It's not.

They didn't say this is a blockchain gaming fund. And

we're only going to do blockchain games. This is very

much games in general, which I would argue is sort of out of

fashion these days, right? Like, we do the business of esports

podcast and we do this podcast. And there's a lot more news

about blockchain gaming blockchain game developers

raising money than there are traditional studios raising

money. But what do you make of the focus? And what do you make

of Andreessen sort of carving this out as its own fun?

It's interesting. Like, I don't know, when it's

important, it's important to note, and I think we did talk

about this last week that, you know, it is a watershed moment

for the industry that we're seeing venerable funds like

Andreessen Horowitz creating this large of gaming dedicated

funds. So we shouldn't really gloss over that, because that is

a massive milestone. I mean, you and I can still remember the

time, the times back when, you know, VCs wouldn't even touch

gaming, because they just viewed it as too hit driven. And it was

really viewed as a content industry and something that

didn't have much value or much long term value for VCs. So I

think that is pretty interesting to note. On the blockchain

piece, I have two theories. I mean, one, I was reading another

article where they were sort of asked about it, and they did

say, like, don't go look at it. So maybe, you know, it isn't

that they didn't break it out and note it. So maybe there's

one element where they're just lumping that in because the

article that I'm looking at here, which I think was from

games, B it says they're investing in kind of the

following themes, and they list game studios, games, and

consumer and then infrastructure. So it's possible

that they're just kind of lumping web three in with Game

Studios, then obviously, if it's an infrastructure thing, the

infrastructure, which I actually almost kind of like because it's

like, at the end of the day, I don't think we should

necessarily be looking at web three is this strange other

bucket, the best successful web three gaming studios are, at the

end of the day going to be game studios. So you know, I think if

you're looking at them as something different, you're

probably already looking through the wrong lens. However, I will

put on my tinfoil hat and say it. So that's one explanation.

That's probably the one that I think is the right one. But if I

put my tinfoil hat on, maybe it's possible that they didn't

mention it, because they're going to raise another fund

specific for blockchain. That's just my little tinfoil hat

theory. You know, I don't know what what you make that.

But let me just throw this other story up,

because in the same breath, they announced there was an

announcement for Kevin lander, who was one of the cofounders of

Twitch, his blockchain game studio meta theory, raising 24

million and the rounds being led by Andreessen Horowitz right. So

I think we can agree that Andreessen Horowitz as a fund,

whether it's this games fund one or Andreessen as a whole, it's

not like they're getting out of blockchain gaming as some as

some kind of focus area. Clearly, they're still investing

a ton of money in that area. What is what what I am curious

about going forward? So definitely curious about your

your tinfoil hat theory there, because that would be

interesting, right, a second $600 million fund just for

blockchain games? would probably be a mistake, I think, but

we've seen it. We've seen it with multiple other

funds. But I agree with your point of view mistake, but like

we have seen other funds do that. I think what I

love from this is I'm curious how many existing

funds that have said we're blockchain gaming funds, will

all of a sudden pay bid back or to being just gaming funds,

right. Like at some point, I think this separation between

gaming and blockchain gaming has to your point has to go away

because the most successful blockchain game studios will be

game studios. So this differentiation has been always

a little bit artificial. In some ways, it may even have held back

blockchain games, because you're not thinking about the gaming

first. And, and I wonder how many will pivot back and sort of

copy Andreessen should Andreessen not come out with a

separate blockchain gaming fund?

And I think the reason why there was so much

emphasis on the separation that you know, at first is because it

helped these VCs a raise more money from, from their LPs. And

then also the game companies were incentivized to do it,

because they were getting higher valuations. So I'm sure it's

probably similar to, you know, when Free to Play mobile first

became popular, I'm sure if you were a mobile game company, and

you were going to raise your like for a free to play mobile

gaming developer now, like, you would never say you're just a

mobile game company. Right? You wouldn't you wouldn't

necessarily say what kind of what type of in your building.

I also wonder if I mean, I'm sure that folks at

Andreessen Horowitz, listen and consume our podcasts

voraciously. But I think I said at one point that I believe

there is a contrarian strategy here, because everyone is is

like the the blockchain gaming space is so red hot. The deals

are so ready to hot the valuations are so high, they're

so competitive to get into. There's some like VC contrarian

strategy that says, we're only going to invest in traditional

games. And so maybe this is Andreessen just being really

clever a year and going back to that, I don't know I have a

funny feeling. This is just boarding more than anything and

none of this was purposeful in any way. But you know, for them,

they can cast a wide net because there are massive fun, right and

not like they have no issues raising money. They don't need

like some clever new strategy that I mean, they just hit up

their LPs and the LPS will write whatever check they want. So I

think we may be giving them a little bit too much credit here.

It may just be,

this is what we do here. We dissect, we analyze.

Let's dissect this next one. Jeff, this one,

you flag this I thought it was super interesting blockchain

games report from DAP radar. And I mean, we could probably spend

an entire hour just on what's in here, but let me let me just

read some of the take key takeaways that they had listed

in the article. And then I know there's specific things you

wanted to point out which which we'll talk about but some of the

key takeaways it said. Despite the negative trend in the

markets, Blockchain games continued to perform well, all

time high in daily activity with 1.2 3 million

active wallets unique active, active wallets,

yes,

interacting with Blockchain games in April. So

that's that's monthly. splinterlands remains the

leading blockchain game with an average of 350,000 daily, Unique

Active wallets in April, and other sides, which is from UVA

labs became the most traded virtual world project to date,

with 723 million in sales. The UVA labs Metaverse projects

surpassed decentraland and the sandbox all time trading volume

in just two weeks. Investments keep pouring into the space four

and a half billion raised by blockchain games and

infrastructure projects in 2022, surpassing the 4.1 billion

raised last year. So already by April, more money has been

raised than the entirety of blast here, which is insane that

the last point they make is the popularity of move to earn daps

is on the rise. The number of GST, which is steppings utility

token unique holders grew 350% from the end of March. We all

know steppin had sort of a great launch and a lot of hype around

it. But I don't know if you want to dig into any of these. Jeff,

if there's other

things. There's, you know, one or two other things, I

guess, well, maybe one of the things I wanted to point out at

the end, but all of those are super interesting. I mean, the

first one on or if you want to scroll back up to them, I mean,

the I'm just I'm always interested when I hear you know,

kind of the daily active numbers in terms of Unique Active

wallets, because it's still so small and and it feels like

every time we say this, and I I apologize if we repeat ourselves

sometimes, but it's like 1.2 3 million is the entire total

world addressable market for blockchain gamers currently,

that is so so small compared to, you know, what's the number we

always throw out there 3 billion gamers, you know, severe or like

100 million people playing pub, G mobile or

Yeah, like,

I mean, we are orders of magnitude, you know,

kind of away from from that. And then the next one, your

splinterlands, the number one blockchain game currently

350,000 daily players like that. That is like not even a blip on

the radar. You know,

what's funny about that one, when you

remember when new world came out on the business of esports. And

when it was on the decline, it was like hitting about 303, like

400,000. And we're saying this game is Dead games totally dead,

right, like 303 400,000 players, we were basically calling the

game Dead.

So you know, it's wild. And obviously, the growth

trajectory is there. There's a reason why we're talking about

it. And again, I think the fourth bullet point here, where

we talked about the investment pouring into the space, we've

said it many, many times, you know, the games are coming when

there's that much investment, clearly, you know, clearly the

games will follow the, you know, the next thing I wanted to dig

into and get your opinion a little bit on is this other side

one? Yeah. Because I think it's a story that I don't know that

we actually covered that much, even though it was a massive

news announcement just around Hugo labs and and this launch of

the other side. You know, Metaverse platform. We talk a

lot on this podcast about sandbox at the central end. And

they've almost really established themselves as I

would say the really most mainstream blockchain specific

meta versus I think if we talk about meta versus more, more

broadly, I would put roadblocks, we would definitely put

fortnight maybe even like Grand Theft Auto called like there's

other quote unquote, meta verses that we would probably put ahead

of them certainly in terms of adoption. But in when we're

thinking about web three, Blockchain meta versus sandbox

decentraland are usually the first ones we talk about. So the

other side is as already exceeded them in terms of land

sales value, so does this put them into the driver's seat?

They clearly have a massive brand with with the board apes

like are they the the new, hot Metaverse, we're going to be

talking about on this show.

I mean, why does this metric even that Enter

though, right? That's the final part to me. I'd like, again, no

one more bullish on Metaverse than I am. The question is, I

don't really get this. I don't get the land sales being any

kind of metrics of metric of success. Other than it's a it's

a hype metric, right? It's, it's a, it's a reach metric. In other

words, how many people knew about this? How hype were they?

And how much and therefore, how much money they spend, but they

haven't bought anything that does anything. And as far as I

know, other side doesn't do anything yet. Right? Like,

there's no, there's no reason to go to the other side.

And I'm not even aware of it exists, like, is it

a game, you could even go to? concept. It's an I take a pitch

deck, far as we could be totally

wrong. I mean, and so you're generating all

these trades and trading volume and like millions and millions

changing hands. But you have nothing has been created here.

Right. Like there's, there's no reason to do any of this other

than? I don't know, again, it's other than sort of speculation

on an asset that may in the future have value for an unknown

reason to me, because it's not clear why any of these land

parcels will have future value. You know, I think it's Warren

Buffett, who said, you know, doesn't can't farm them. You

can't, like they can't rent them out as though there's no like,

yes, there's doesn't generate, it doesn't create anything new.

It's just money changing hands. And so I'm bothered by this one,

because who cares? Who cares what the land sales are? Right?

If tomorrow decentraland creates some killer reason why millions

of people need to go to decentraland to hang out there

to do something there to whatever, right. All the land

sale stuff doesn't matter anymore. Right? What's the

brother project? The bottom of this one world wide web land?

I've never even heard of these guys, right? Like, if tomorrow

they figure out. You go there to browse the web in the metaverse.

But it's kind of like, who cares? I mean, these are these

are fake metrics. All they represent his hype,

player base numbers would obviously clear that

matters more relevant study. Yes. Yeah.

The other the other piece that I think you

brought up was this one, which I think is worth spending a minute

or two on and for those of you are listening to this, which is

most of you. This is a pie chart. And the headline of the

pie chart says, Where are blockchain game investments

going? So that 4 billion plus number, where's that all being

directed towards? Where's it being focused the four and a

half billion. And the way this pie charts broken out, I'll go

from sort of most to least here, infrastructure number one 1.5 7

billion, and that's 37% 37.3% of all the investment guild or

incubator number two at 19%. Or point 8 billion investment firms

18.1% or point seven, 6 billion game slash Metaverse projects.

Ironically, in fourth place, 16.7%. Point 7 billion NF T's

eight and a half percent point three, 6 billion. And then in in

last last place here and pretty far away. Last place. Media

point 2%. And point oh, 1,000,000,005.

Some? Well, so you sort of stole my take a little

bit with your you're just kind of your reaction there. Because

actually, it's something that what I brought this up at first,

I didn't even contemplate now that I'm thinking about it, it

sort of sticks out very clearly. Why, how is game number one?

Pretty important to build. I mean, infrastructure, yeah,

again, that could include, you know, various blockchains like

that's sort of important, like the pipes, what's actually being

built on that matters. But then you have guild I was shocked

that number two is guilds. I mean, that is effectively just

the financing structure a way to finance players into your game,

right? It's we talked about it as like, like banks entered

servitude. It's basically like FinTech for this game fi which I

think eventually gets, you know, if blockchain gaming is to

survive in any form, or fashion, this guild system probably is

going to have to go away. Because if I have to take out a

bank loan to start playing a game, like it's just a bad user

experience, like that is not a good strategy for user

acquisition for your game, like, hey, go take out a loan so you

could buy assets in my game. No, that's bad. And then the third

being investment firm. Kind of makes sense because of the way

these things have sparked up. It's basically just speculation

Then trading but like, come on investment firm like this is

about blockchain gaming, why isn't investments into

investment firms? That doesn't make sense. And then NF T's was

surprisingly, though, for some reason, I actually thought that

would have been higher just because of all the hype. But

yeah, that's

just to date in 2022. Right. This is just

literally in the first four months of the year.

Yeah. And then yeah, which I know you probably have

some thoughts on, given your

thoughts. But look, I draw a couple of

conclusions from this one, media massively overlooked

opportunity. Why were the leaders in the space why we're

doing what we're doing, why we're building what we're

building? It's because almost no one's looking there. And they're

missing the opportunity. They're missing the boat, because what

are people going to do in these places is consume media of some

sort. This means people want to talk about it. People want to

know about it. People want to learn about it. Right? Like it

feeds the rest, and it's massively. There's a massive

amount of underinvestment. I don't even know if that's a word

right. In that category. I think so. Definitely. Where I see

opportunity is where a lot of people are not looking. I think

this confirms my thesis in many ways. Same comment you had

though, like the guild or incubator, being number two, is

crazy. And this is, in my mind, the stupid money chasing short

term profit without any concept of how do you build a

sustainable long term business, right? It's like, easy money,

plenty of people in the third world playing played our own

games, let's exploit them with these guilds and incubated these

guilds, we can make a quick buck. And then, you know, as

these as the margins, essentially, as the Earn piece

gets smaller and smaller, the more players you get in there,

eventually it goes away, but you've made a quick buck in the

meantime. So it's like typical short term investor thinking

doesn't surprise me that it's number two. I do think games

slash Metaverse, projects probably be number one. But I

just the overall the other than the media piece being way too

small. And that being a missed opportunity, I think most

investors are just not seeing. It's that. It's like the gaming

space. There's a lot of dumb money sloshing around going

after either short term bucks, or not looking at the right

things, right, just not not looking at the space in the

right way. And maybe investment firm gives me some comfort, but

a lot of the money coming in admits they have no clue. So

let's try and give it to people who may have a clue. But there's

a lot of like, have no clue which, which is what I saw at

the beginning of the gaming space three, four years ago,

when money started pouring into esports and gaming, huge amounts

of investments. What was missing was the brains to actually

invest it in the knowledge to actually invest it wisely. Were

going through a similar cycle in my mind.

That's a fun charter. I'll be interesting to

watch. I think this report comes out monthly. So it'll be

interesting to track that. That was a fun one. I actually,

definitely and I think the perfect to end on

Jeff. As always, these fly by. Thank you guys. For everyone who

tunes in every week. Don't forget, subscribe to the

podcast, go subscribe to our brother and sister podcasts you

want to call it that met a woman and the business of esports. If

you love this kind of content, there's so much more content

that we do every week. Go follow Jeff, on Twitter at Jeff Cohen

23. He's got all kinds of great takes during the week that you

know you crave from the podcast. You can get it on his Twitter

feed every single day. And make sure to share it with a friend.

Don't forget, send this podcast put it on your socials. Share it

with a friend. We really appreciate it. Don't forget the

future is fun, guys. We'll see you next week.

Thanks for joining us here on meta business. Make sure

to subscribe to this podcast everywhere you get your

podcasts, leave a five star review and tell your friends,

family and colleagues all about us. Also, make sure to follow

metta TV on all socials to get more of the best Metaverse

content anywhere. Tune in every week for another episode of meta