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The Metaverse Was A Pandemic Pipe Dream
The Metaverse Was A Pandemic Pipe Dream
Submitted by Jack Raines via Young Money,
In the opening chapter of The Reality Bug, the fourth novel…
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Submitted by Jack Raines via Young Money,
In the opening chapter of The Reality Bug, the fourth novel in the Pendragon fantasy series, protagonist Bobby Pendragon finds himself walking through Rubic City, a metropolis in the foreign world of Veelox. Rubic City is similar to the cities in Bobby’s native Earth, with paved streets and towering skyscrapers, but there is one striking difference: there aren’t any people. Rubic City resembles a post-apocalyptic Manhattan where society has disappeared but its constructs remain.
Bobby eventually crosses paths with a local, Aja, who explains that the planet isn’t empty, but most of its population have opted to spend their time in a digital world called Lifelight, which is housed in a large metallic pyramid overlooking the city.
Lifelight is an immersive virtual reality program that brings one’s deepest desires to life, and the experience is so enthralling that few of its users wanted to return to the physical world after their first taste of this new euphoria.
When Bobby arrived, 99% of Veelox’s citizens were spending every waking hour in Lifelight, and the remaining outsiders all worked as computer engineers maintaining the virtual world and physical caretakers looking after participants’ bodies.
While millions of people were lost in their own digital wonderlands, the real world around them was slowly rotting away.
As the pandemic raged two years ago, the term “Metaverse” went mainstream, conjuring dystopian images of Lifelight and various Black Mirror episodes in my mind.
The hype exploded in October 2021 when one of the world’s tech giants, the company formerly known as “Facebook,” opted to change its name to “Meta,” signaling the entry of a new digital age.
Suddenly, every company faced a decision: launch a Metaverse division or risk being left behind. Mark Zuckerberg invested billions into his company’s “Horizon Worlds,” a virtual reality designed for communal meet-ups. Nike built Nikeland on Roblox’s platform to let fans meet, socialize, and take part in a wide array of brand experiences. And of course, the “Metaverse” became intertwined with “Web3” when platforms like Decentraland launched, allowing users to buy digital plots of land as NFTs on the Ethereum blockchain.
Respected banks like JPMorgan Chase published 17-page research memos breaking down “Metanomics” for curious investors, athletes changed their profile pictures to $100k JPEGs of monkeys, venture capital firms launched $600M funds to invest in the Metaverse, and corporate brand Twitter accounts began communicating in the cringe-heavy jargon of Web3:
it seemed inevitable that the future of the world would be spent playing virtual reality tennis in the Wii Sports Resorts with our eight billion closest friends... until one day, the funniest thing happened: no one cared about the Metaverse anymore.
Daily active users on Sandbox and Decentraland, two Metaverse platforms both valued at $1B+, peaked at 4,503 and 675 individuals respectively before declining to 522 and 38 in October 2022.
Meta’s Horizon Worlds boasted 300,000 monthly users in February 2022, and company management projected 500,000+ users by the end of the year. Just eight months later, monthly usage fell below 200,000 users as most visitors didn’t return after their first month.
Of course, it’s hard to blame users for not returning when Meta’s own VP of Metaverse had to beg his own employees to spend more time in Horizon Worlds, saying in an internal memo, “For many of us, we don’t spend that much time in Horizon and our dogfooding dashboards show this pretty clearly. Why is that? Why don’t we love the product we’ve built so much that we use it all the time? The simple truth is, if we don’t love it, how can we expect our users to love it?”
And now, as company after company shuts down their Metaverse divisions, I believe this digital experiment is on its last legs.
I, for one, am glad that the dystopian Metaverse from Bobby Pendragon’s adventures failed to become a reality, but this whole experiment raises an important question: How did “the Metaverse” become such a large phenomenon in the first place?
I have some thoughts:
1) Extrapolating one-off scenarios is a dangerous game.
Much of the world spent the greater part of two years locked in the confines of their homes, so it’s no surprise that web activity saw a significant uptick during the pandemic.
However, this Metaverse-centric environment wasn’t some permanent evolution of the human condition, it was the response to a once-in-a-century tail risk, Covid-19. And sooner or later, that risk was going to be mitigated.
The Lindy Effect states that the future life expectancy of some non-perishable thing, such as a technology or idea, is proportional to its current age. Basically, stuff that has been around for a while will continue to be around for a while.
Taking a stroll through the city with friends and family on a nice summer day is Lindy.
Attending concerts and live sporting events is Lindy.
Crushing cold ones with the boys is Lindy.
Seriously, the ancient Sumerians created a hymn to their goddess of beer in the 18th century BC (!!!), giving us this all-time line: “He who does not know beer does not know what is good.” Crushing cold ones with the boys is a 4,000-year-old tradition.
Do you know what isn’t Lindy? Watching a digital Travis Scott concert in Fortnite. It really shouldn’t be a surprise that real-life socialization quickly rebounded once pandemic measures were lifted.
The thing is, when a temporary shift in consumer trends provides tailwinds for your business or idea, it is natural to hope that this aberration becomes a permanent change. But we live in a mean-reverting world, and bold projections that ignore mean-reversion rarely work out.
2) You can spend a lot of money on really dumb stuff when cash reserves are sitting at all-time highs and interest rates have collapsed to all-time lows.
Burning $36B to remake a worse version of The Sims sounds stupid until you realize that the alternative is throwing your cash at T-Bills that pay nothing while inflation is 8%.
When fixed-income assets don’t generate yield and investors have trillions of dollars that need to be deployed, they are going to deploy somewhere, and insane valuations for ridiculous long-shot bets begin to look a lot more rational.
At different times, I have jokingly said that several things were low-interest rate phenomena, but there is some truth to that idea. It’s not that low-interest rates somehow create outlandish ideas, but the pursuit of yield in the face of few investment options can send a lot of capital to the outer realms of rationality.
The problem, of course, was the assumption that T-Bills would always pay nothing and cash reserves would always be abundant. Snap back to reality, ope, there goes gravity.
3) Institutions are susceptible to FOMO too.
Would JPMorgan have published a research memo on the economics of the Metaverse and the value propositions offered by tokenized digital real estate in 2019? Of course not. Half of the words in the previous sentence didn’t even exist in 2019.
But 2022 was a different story.
Whether you’re an insecure college freshman considering a pair of New Balances to fit in on Greek Row or a billion-dollar institution considering adding bitcoin to its balance sheet as an “inflation hedge,” the temptation to follow the crowd grows damn-near irresistible as more and more of your peers adopt a trend.
Self-doubt increases and logic goes out the window as you think, “Well, I don’t understand this idea, but if everyone else must see something I don’t. Maybe we should get involved too.”
And that’s how a $377B bank ends up sponsoring a lounge in a Metaverse world that resembles Minecraft if you played it on your toaster oven.
Rest in pieces to the Metaverse, it was fun while it lasted. I guess.
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One city held a mass passport-getting event
A New Orleans congressman organized a way for people to apply for their passports en masse.
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While the number of Americans who do not have a passport has dropped steadily from more than 80% in 1990 to just over 50% now, a lack of knowledge around passport requirements still keeps a significant portion of the population away from international travel.
Over the four years that passed since the start of covid-19, passport offices have also been dealing with significant backlog due to the high numbers of people who were looking to get a passport post-pandemic.
Related: Here is why it is (still) taking forever to get a passport
To deal with these concurrent issues, the U.S. State Department recently held a mass passport-getting event in the city of New Orleans. Called the "Passport Acceptance Event," the gathering was held at a local auditorium and invited residents of Louisiana’s 2nd Congressional District to complete a passport application on-site with the help of staff and government workers.
'Come apply for your passport, no appointment is required'
"Hey #LA02," Rep. Troy A. Carter Sr. (D-LA), whose office co-hosted the event alongside the city of New Orleans, wrote to his followers on Instagram (META) . "My office is providing passport services at our #PassportAcceptance event. Come apply for your passport, no appointment is required."
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The event was held on March 14 from 10 a.m. to 1 p.m. While it was designed for those who are already eligible for U.S. citizenship rather than as a way to help non-citizens with immigration questions, it helped those completing the application for the first time fill out forms and make sure they have the photographs and identity documents they need. The passport offices in New Orleans where one would normally have to bring already-completed forms have also been dealing with lines and would require one to book spots weeks in advance.
These are the countries with the highest-ranking passports in 2024
According to Carter Sr.'s communications team, those who submitted their passport application at the event also received expedited processing of two to three weeks (according to the State Department's website, times for regular processing are currently six to eight weeks).
While Carter Sr.'s office has not released the numbers of people who applied for a passport on March 14, photos from the event show that many took advantage of the opportunity to apply for a passport in a group setting and get expedited processing.
Every couple of months, a new ranking agency puts together a list of the most and least powerful passports in the world based on factors such as visa-free travel and opportunities for cross-border business.
In January, global citizenship and financial advisory firm Arton Capital identified United Arab Emirates as having the most powerful passport in 2024. While the United States topped the list of one such ranking in 2014, worsening relations with a number of countries as well as stricter immigration rules even as other countries have taken strides to create opportunities for investors and digital nomads caused the American passport to slip in recent years.
A UAE passport grants holders visa-free or visa-on-arrival access to 180 of the world’s 198 countries (this calculation includes disputed territories such as Kosovo and Western Sahara) while Americans currently have the same access to 151 countries.
stocks pandemic covid-19 grantsUncategorized
Fast-food chain closes restaurants after Chapter 11 bankruptcy
Several major fast-food chains recently have struggled to keep restaurants open.
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Competition in the fast-food space has been brutal as operators deal with inflation, consumers who are worried about the economy and their jobs and, in recent months, the falling cost of eating at home.
Add in that many fast-food chains took on more debt during the covid pandemic and that labor costs are rising, and you have a perfect storm of problems.
It's a situation where Restaurant Brands International (QSR) has suffered as much as any company.
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Three major Burger King franchise operators filed for bankruptcy in 2023, and the chain saw hundreds of stores close. It also saw multiple Popeyes franchisees move into bankruptcy, with dozens of locations closing.
RBI also stepped in and purchased one of its key franchisees.
"Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023," RBI said in a news release. Carrols also owns and operates 60 Popeyes restaurants in six states."
The multichain company made the move after two of its large franchisees, Premier Kings and Meridian, saw multiple locations not purchased when they reached auction after Chapter 11 bankruptcy filings. In that case, RBI bought select locations but allowed others to close.
Image source: Chen Jianli/Xinhua via Getty
Another fast-food chain faces bankruptcy problems
Bojangles may not be as big a name as Burger King or Popeye's, but it's a popular chain with more than 800 restaurants in eight states.
"Bojangles is a Carolina-born restaurant chain specializing in craveable Southern chicken, biscuits and tea made fresh daily from real recipes, and with a friendly smile," the chain says on its website. "Founded in 1977 as a single location in Charlotte, our beloved brand continues to grow nationwide."
Like RBI, Bojangles uses a franchise model, which makes it dependent on the financial health of its operators. The company ultimately saw all its Maryland locations close due to the financial situation of one of its franchisees.
Unlike. RBI, Bojangles is not public — it was taken private by Durational Capital Management LP and Jordan Co. in 2018 — which means the company does not disclose its financial information to the public.
That makes it hard to know whether overall softness for the brand contributed to the chain seeing its five Maryland locations after a Chapter 11 bankruptcy filing.
Bojangles has a messy bankruptcy situation
Even though the locations still appear on the Bojangles website, they have been shuttered since late 2023. The locations were operated by Salim Kakakhail and Yavir Akbar Durranni. The partners operated under a variety of LLCs, including ABS Network, according to local news channel WUSA9.
The station reported that the owners face a state investigation over complaints of wage theft and fraudulent W2s. In November Durranni and ABS Network filed for bankruptcy in New Jersey, WUSA9 reported.
"Not only do former employees say these men owe them money, WUSA9 learned the former owners owe the state, too, and have over $69,000 in back property taxes."
Former employees also say that the restaurant would regularly purchase fried chicken from Popeyes and Safeway when it ran out in their stores, the station reported.
Bojangles sent the station a comment on the situation.
"The franchisee is no longer in the Bojangles system," the company said. "However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."
Kakakhail and Durranni did not respond to multiple requests for comment from WUSA9.
bankruptcy pandemicUncategorized
Industrial Production Increased 0.1% in February
From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 p…
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Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.Click on graph for larger image.
emphasis added
This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).
Capacity utilization at 78.3% is 1.3% below the average from 1972 to 2022. This was below consensus expectations.
Note: y-axis doesn't start at zero to better show the change.
The second graph shows industrial production since 1967.Industrial production increased to 102.3. This is above the pre-pandemic level.
Industrial production was above consensus expectations.
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