VIDEO TRANSCRIPT:

Welcome. So what we're seeing out here is really the beginning of what's happening. And let's start with the question. First question we ask is, are we in the matrix? And it's a very legitimate question. We're saying, hey, what's happening? How are you doing this? And of course, is it happening today? But of course, we're beyond that. When we go to the next slide, you're going to see something different. It's really the question of, is it more than 3D worlds? Have we advanced past those 3D worlds? We started with AR, VR, mixed reality. And the question is, how is that going to change? And so is that 3D experience just something we're taking on? Is it more from gaming? And of course, as you'll see in the next slide, it's really a question that's bigger than that. Can we do something in the enterprise? Does the enterprise have the opportunity to use the metaverse to actually create use cases and connect? And the answer is yes. The answer is definitely yes that we're seeing that. But let's take a step back quickly and say, how did we get here? If we look at the next slide, it started a little bit earlier. We had notions of where this metaverse economy was. You'll see, and if you see in the next slide, it's really about things like Snow Crash. It got us thinking to what these virtual worlds were going to look like, how we would participate. We got excited. We started seeing these things come to life for folks. Many, it was Ready Player One. And if you look at Ready Player One, you got the concept of what that physical world was going to look like, how we went from a physical world to a digital world and back. What happened when we went from 2D to 3D? What happens when we take Web 2 technologies and take those into Web 3 technologies? And that's what brought us into this kind of connection. So let's go to the next slide. We'll skip these next two slides, but we'll see the Snow Crash out. And we'll also see in the next slide what actually happens when we're talking about Ready Player One. But there's more. On the next slide, you'll see that there are real-world examples. We see things like in health care. What would it look like to be in an open-heart surgery? Can you bring that to life? Can you actually see how it's being done? Can we record that, capture that, train? Can we bring other people into it, new medical students to see how procedures are being done? Use it for training so that in a real-life example, in terms of in the physical world, you're not going to make as many mistakes. You're going to be able to anticipate things, and you're going to learn from each other. And that's where we see a lot of that, the teamwork, the collaboration, those capabilities that are coming into the metaverse. If we go to the next slide, there's other use cases, what we'll see in terms of digital twins. These digital twins are representations of the physical world. We're going to be doing simulations. We're going to have the ability to actually model situations. And so when companies start looking at, hey, how do we actually extend the life of a building, improve sustainability in terms of a plant, improve our ability to actually model flows in terms of how people interact with each other, build new experiences, that's where the metaverse is going to play a role. Now let's go to the next slide and talk about where it is and what's going on in this marketplace. So it's more than what we're seeing beyond virtual worlds. It has a much bigger set of things that actually bring together the metaverse economy. Let's go to the next slide, and what we'll see here is really that model of where the market's going to be. I'm going to tell you, this is a big market. And the numbers I'm going to throw out here, 20.7 trillion. If you look at the entire market cap of all the publicly traded tech companies today, it's almost 22 trillion. So this market, by the time we get to 2030, will be as big as the entire publicly traded tech market today. And that's because it's going to encompass every aspect of our lives. Every industry is going to be impacted, and we're going to see that shift in terms of how we actually manage that 2D to 3D transition. So what does that look like? Let's go to the next slide, and we can talk more about the components of what is in the metaverse. When we look at the metaverse economy, there are a bunch of components. The five main ones are really the interfaces, right? That's what we're doing right now with our goggles, with our connection points. And let's start there. Let's go to the next slide. Today, it's hardware, right? We physically have hardware that we're looking at. That hardware we put on. There'll be a glass in the future. Some major manufacturers are going to be announcing new kinds of capabilities, new devices. So that's going to be like that for a while. But we're going to get to the next level. If we go to the next slide, that's the minority report experience, our ability to use gestures, our ability to actually use motions, ability to track eye movements, the ability to bring your hand. I mean, you might not have to have five fingers to be able to move. You're going to see all that capability come together. Now, that's just the beginning. In the next slide, there are other folks trying to create what we call human APIs, a plug into the back of your head. Hmm, that doesn't sound scary or what? But human APIs will be there, and you'll just be able to move based on your brainwaves, your thoughts, and what's going on. And so that's the interface part of the market. If we go to the next slide, you can see that the second area is really the worlds. And the worlds just take us to the beginning. The worlds are basically our rendition of how we're experiencing things. And today, here we are in Santorini. Beautiful. It's a gorgeous day. You can see the water. Can't complain, right? So let's go to the worlds. Now let's go to the next slide. And what we'll see is, you know, the beginning of that. Second life got a second life. How many people remember second life? Raise your hands. Right? That was kind of fun, right? Have you been back lately? If you have, it's actually improved. That was the beginning for many people who were starting with this in terms of the first major world that people actually engaged in. But there's more. If we go to the next slide, you'll see Roblox. And Roblox has done a great job capturing the imagination of the youth. It's actually built out a big ecosystem. And we'll talk more about it. I guess Hilding and Angie will talk more about it and how it kind of plays a role. Let's go again to the next slide. And you're also going to see what's happening in terms of, you know, Unity, right? These guys have gone out and created more worlds, gaming engines that people are taking to use for all types of use cases. Anything from sports, anything from entertainment to education to training to, of course, gaming. But they've brought that together. And, of course, if we go to the next slide, you're going to see how digital twins play a role. That's actually how Matterport, how other organizations are actually modeling buildings, simulating environments. If you've bought real estate any time in the last 12 months, you'll see a lot of this. You know, the renditions are there. Your ability to walk through 3D worlds on a 2D device. And that's just the beginning of many advancements like that. And on the next slide, you're going to see what happens when we actually have, you know, the ability to actually move across different worlds, right? Right now, we have the ability to go into each world on its own. There are so many people working on how to actually move cross-world. Take your profile. Take your data. And I'm going to be in Unity. I'm going to be in Roblox. I'm going to take this avatar back into Oculus. And I can do all those kind of things. That's the idea. That's really where the spirit of where the metaverse economy is. It's really about getting to the decentralized web, the ability for us to take our profiles, our information, our insights, our connections with us. And, of course, let's go to the next slide. And you'll also see the cornerstone of actually what's happening in the metaverse economy is a concept we call DAOs. Those are decentralized economist organizations. It's basically a mini model of how an organization should be run. And it's usually done in an automated fashion. There are places where you actually make manual decisions. People participate in them. So a couple things that create the DAO that are components for what a DAO is. Let's go to the next slide. And we can see what's important here is really the beginning of, on this next slide, you'll see the beginning of what membership rules, like the governance models. Why is it important, right? And this is where we actually see these economies, creator economies, meet data-driven digital networks, right? The creators are trying to connect to marketplaces in these worlds. And how does that become an important aspect of how we conduct not just commerce, how we engage, how we share, how we actually, you know, enjoy things together? Let's go to the next slide. And what we will see is really this notion of how membership and governance rules are created. When do you get to vote? Who gets to vote? Do you earn the right to vote? What do you vote on? How do you make decisions? That's one of the functions of what a DAO does.retail, but a good foundational view and kind of the first step towards some of the opportunities for Web3. The second big sphere that we see is really around networks of worlds. And this is the Robloxes. This is the, you know, if you think about Decentraland, Second Life has been around for a while, but as Ray noted, has really seen a little bit of a resurgence recently. Roblox is really the only example here that is seeing significant traffic. They see about 50 million monthly active users. Decentraland, much smaller, on the order of 50,000 to 100,000. I think they peaked about 200,000 monthly active users. So, you know, one tenth or one one hundredth of the size of a Fortnite type of experience. But those worlds are going to create more opportunities in the future. And they also allow a lot more flexibility when you think about different retail use cases, whether it's interactions around digital stores or much more customization around some of these platforms. The third area is really around VR and the world that we're in now. Still very much exploration. Not many commerce experiences that exist within that world to date, but more to come there. And then finally, I think ultimately where you get into is the augmented reality world, where you really see a collapse of the physical space and the digital. And that, I think, is evolving and will be really interesting to watch, but it's still probably five years out. Go to the next slide. And so I think what you see here is that if you just plot number of users and kind of size against the future growth potential. I'll actually walk over here so you guys can see this. The future growth potential. You see that, you know, if you want to get immediate scale, the gaming world is a good choice. If you want to get really set yourself up for the future and start to think about the opportunities within the metaverse and start to explore a little bit. I'll talk about some examples of how you can monetize these worlds. Really, this network of worlds start to be pretty interesting. And I would argue that AR in a couple of years is going to be very interesting. We're already seeing retail examples from Ikea and others. Maybe some of you have already implemented basic AR on a mobile device. That's, of course, a first step when we've evolved. We haven't seen great numbers. You know, financially, I don't think they've seen a huge lift from that. But I think that as the technology evolves there, we're going to see more opportunity. And then finally, VR, I think, is a really big unknown right now. This is an interesting experience. I think what's going to happen is these two are going to collapse in the end. So you won't need the goggles. You won't have as much friction in that. And so that's kind of how I think about the landscape. I think for retail, you start with networks of worlds and the gaming as kind of first platforms, depending on what your timeline looks like. So then if you think about what are some of the range of opportunities from a monetization standpoint, we see kind of four distinctive layers here. If you go to the next slide. And three of them actually are already in flight. And there are kind of retail examples that you can actually go look at and touch and play with. And the fourth is actually one that AJ maybe can talk about, but it's one that we're actually working on developing. And there are a few other kind of prototype level activities happening. So, you know, brand activation and partnership is level one. So if you're familiar with Wendy's examples in Fortnite, you know, you hunt around and destroy freezers, you know, as part of the game of Fortnite to represent, you know, Wendy's. None of their meat is actually frozen. Of course, that's true with most quick serve restaurants now. But interesting example. Coca-Cola is doing some really interesting brand activation. I'll talk about in a minute. That's the base case. You can do that in the gaming world. You can do that in some of these networks of worlds, whether it's Roblox or others. The second level is around digital badges and valuable giveaways and proof of attendance. And so we're actually seeing some activity in this area as well with proof of attendance. And, you know, Gucci set up a really interesting experience. Louis Vuitton set one up as well in actually on an iOS device, interestingly, not in one of the traditional world of worlds. But it allowed you to go in and actually buy elements. This is where you start to get into the NFT piece and as a significant opportunity, especially for luxury brands, because NFTs allow the use of this concept of residuals. And so when you sell it once, you can actually get a piece of for every transaction, a piece of the revenue going forward. And that's obviously very attractive for luxury brands. And then finally, you start to see this. So the third level is around functional value, which is around power up. So Marvel, for example, in Fortnite allowed you to put on a Marvel suit and the Iron Man suit and actually get a kind of improvement in the gameplay because you paid for that. And it's also a brand value for them. You also see examples with Forever 21, which I'll talk about. And then Burberry as well is actually one that started to actually blend these two levels where you can go in and they've actually created a scarf that you can buy in China that has some of their brands in the digital world and then actually allowed you to buy that same scarf in a limited edition. I think they're making about 100 of them in the physical world where you can actually buy. So one of the very few examples of enabling commerce in the digital realm and bringing it into the physical. And I think that's kind of gets to be pretty interesting as well for retailers as they look to expand. But really, we're not seeing a lot of activity yet in this final transactional and marketplace environment. And I think that's one thing to look for over the next three years. I do think you're going to see more of that and you're going to see an opportunity to stand up an omni-channel type of experience where you can buy and equip your avatar. You can sell NFTs really on a standalone basis. And then you could also transact where you buy and pick it up in the store itself. But there are very few examples of that today. But with the examples we do have, I'll start with talking a little bit about Coca-Cola. So if you go to the next slide, two examples that I'll talk about. First, Coca-Cola in Decentraland launched a major brand activation. They built a five-story high bottle that you could walk into and explore and had a dance club in it. And it was part of a broader campaign. It was only up for a couple weeks, but they did a lot of promotion around it. Again, very much about brand activation. If you go to the next slide, the other thing they tied in, you can see on the top right of this slide, what it actually looks like upstairs in the dance club. And you could interact with avatars and you could interact with non-player characters as well. They also launched several NFTs, some of which were wearable. So you could get this jacket, for example, that actually has phys animated coming off of it, kind of linked to that sharing happiness concept that they've focused on for the last decade or so. They also have this concept of a loot box using an old Coca-Cola machine, which you could access and get NFTs and other unique enablers within that loot box. So kind of building a world in Decentraland, inviting, creating a marketing event in that world, and then activating on top of it. Really, we're seeing a bunch of examples of this. I thought the Coca-Cola one is very well executed. The second example I'll talk about is Forever 21. So Forever 21 actually built an entire game and world within Roblox and launched it second half of last year. And this game has a couple key components. And you can just go, this is kind of what it looks like when it comes in. First of all, you're allowed to, you're encouraged, the key part of the gameplay is to create your own store and to be able to actually choose what products you want to sell in it. And it's basically a gamified experience. And you can create, they've got four different models, depending on kind of the themes that you want for that store. You can set up what apparel and other items you want to sell. So that's kind of the first core experience. They also have some fun things as part of Roblox's gaming sort of gameplay to actually be able to go through and do an obstacle course and to go through and shop at other people's stores. And then finally, you can actually dress your own avatar using Roblox, actually real world, essentially using real dollars, you buy Roblox, and then you can actually buy and wear Forever 21 clothes in and throughout the Roblox platform. Yeah, throughout the platform. And so some really interesting examples of digital currency enabling customization and kind of the notion of digital goods. And they saw, you know, at its peak, they saw close to 200,000 users in this experience. So they actually saw some significant value from it. It's interesting, you know, Roblox is one of the interesting platforms because they are one of the few networks of worlds with sufficient scale to invite and keep kind of this core group of people active. So I think you're going to see more with that. And this is what it looks like. They actually had user generated outfits from some of the key influencers in this world. And, you know, you can go up to five stories in this store. So it's worth exploring, certainly. So I guess the question then is, why should you be in the metaverse? And what are the key moves to make if you want to operate in this environment? And I thinkWell, we shouldn't be doing that. We'll fix it. We'll correct it. But you've got pressures from France suing Google on the way they store data in France. And then you've got a lot of companies trying to deprecate cookies, etc., etc. One of the big decentralized identifiers out there right now is MetaMask. I don't know if you guys have ever played with it. If you haven't, download it. The only warning I would ever say about MetaMask is don't log into it on any type of public Wi-Fi. Very similar if you go do any online banking, don't log in at Starbucks because with brute force, hackers could figure out a way to get in and take some of your stuff. So as you proceed, explaining fungible tokens and non-fungible tokens, I kept this simple and clean. To me, a fungible token is divisible. So if I have $10 and Ray has $10 but in $2 to $5 bills, we can exchange it and we're fine with it. It's divisible and that's okay. A non-fungible token, and let's not talk around NFT like JPEGs or images or GIFs or anything like that. Let's talk about real NFTs in terms of I buy a house, I get a deed for that house, but that deed of the house is minted as an NFT. You can't divide that. Or I buy a ticket for a flight and instead of getting a ticket or all that stuff, I get issued an NFT. And that's not divisible. I can't share that with Liz. She'd probably just push me away and take my ticket anyways. As we proceed, let's apply this to the metaverse. And I'm going to go a bit quick on this part. To me, I think right now in terms of the social interactions, we're seeing it today in terms of where we are today, Microsoft Mesh, etc. But the piece I think that is a really quick win right now that we've explored and I've seen close partners of ours explores and be quite successful are digital wearables. I think that to me is such a low risk, high reward opportunity for organizations to just come in and create something fun. And if you're a real estate company or a bank, you can come in and create skateboard wearables or shoes and stuff and just sell them just to test how does the community react? How do I get approved? How do I sell it? What can I sell it for? And it's not going to be something that you're going to want to do for a long period of time, but it definitely teaches you a lot. As we advance to the next slide, gaming, Hilding touched upon it. Follow gaming. It is obviously the leading horse right now in Web 3. We've seen a lot of the news come out with Unreal Engine and a lot of the stuff that they're getting aggressive in. So follow gaming in terms of the way that they're restructuring gaming. Number one being interoperable. Number two is pay for play. So instead of having to pay for the game, I get paid to play the game. Number three as an investor, I know personally I own a couple of NFTs in a game where I've given those NFTs to the game and they pay me as people use them, which I find fantastic. So keep an eye on that because I think it's going to definitely lead the space. In the real world, I talked about the real estate in terms of you buy a house, you get an NFT for that deed. There was a DAO that was released for golf courses, issued NFTs. You could own pieces of the golf course as well as membership, as well as the wearables. There's big brands out there, whether it's Nike, Adidas, even Philip Klein, who's like a European designer, just launched a bunch of NFTs with digital wearables, which you could redeem for physical. You could also burn them for another type of physical that was a bit more exclusive. So a lot of variability in the type of stuff you can do. And that's five minutes. I thought you were high-fiving. Okay, I will go faster. As we go to the next slide, there's risks and concerns. On the next slide, the risk concerns are fraud. With low barriers of entry, with a new economy, there's unfortunately a lot of fraud that's out there. So just be careful. There was environmental risk around how much gas fees do people pay? Is this draining our environment? The consumption power, et cetera. That's being addressed, in my opinion. Plus the fluctuations of this new digital currency. You see Bitcoin, Ethereum jump up 15%, down 50%. So how do brands think about that? As we accelerate, I really want to get to the takeaway. Keep going. Key takeaways, keep going. Actually, it's okay. Go back one slide. And we'll keep, let's do this like every 10 seconds. So number one, don't mistake your audience. Your audience is not us. It's your 16 to 27-year-olds. Share your roadmap, be transparent, and be specific and offer value to whatever you're doing into the marketplace. On the next slide, there's a couple of ideas here. Number one, around offering a unique NFT or uniqueness of an ownership of a physical good. You have an opportunity to redefine your loyalty program, which I think is the big opportunity, as well as ticketing. And just think of ticketing as, imagine you're going to a concert and you have the NFT of the ticket on your phone. You keep your phone in your wallet, security guard puts on glasses, looks at Todd, sees a checkmark on Todd, says, yeah, Todd, just come on in. He already knows that you have the ticket for the concert instead of saying, show me your ticket, fraud, et cetera. Keep going to the next one. This is the final slide. So two big takeaways. Number one is I truly believe websites will be very similar to the metaverse. Every brand will own their own version of the metaverse in the next few years. Might be five, might be six, might be seven years from now. And then brands will then advertise in other metaverses, such as Meta, such as Decentraland, et cetera. Very similar to the internet today. You own your website and you buy advertisement on other websites. So I think that is very big. And lastly is control your most valuable assets. I'm seeing brands out there allowing Web3 companies to mint or control the smart contract. That smart contract should stay with the brand and do not compromise on that. No ifs, ands, or buts, get your lawyers involved. And with that, I believe that's everything. AJ, thank you so much.