The Metaverse Explained: What Is It And How Do I Invest In It?
One advisor breaks down the metaverse and explains how he came to embrace it.
The word “Meta” for many of us over the age of 40 first became recognized with the announcement of Facebook changing their name to Meta. Many thought it was to escape the bad publicity it was receiving at the time. That might be true from a timing aspect, however, the name change is a lot more reflective of where the world is going or where their focus is. Over the last five months, if you’ve turned on any financial news show, you might have heard someone mention “the metaverse.” For the last couple of years prior to Facebook changing its name, I have been reading up on this concept and basically dismissing it—not really looking at the practical use of it, just basically pondering, “How could people live their lives in an alternative reality?” However, in the last five months, I have done a lot of reading on this subject and spoken with many that understand the applications of it a lot better than I do and how it could be used in the “real world.” I no longer dismiss it; rather, I now embrace it!
What Is the Metaverse?
First of all, this is not a new concept. A 1992 book by Neal Stephenson called Snow Crash coined the term “metaverse,” and the 2011 book by Ernest Cline called Ready Player One brought it to the forefront as technology started to catch up. But in the last three years, companies such as Google, Apple, Facebook, Microsoft, and Amazon have spent billions on the creation of this metaverse. The metaverse is a network of 3D virtual worlds focused on social connection. Basically, the concept today is you would put on a pair of goggles that have earpieces connected to them. With your phone or computer connected to them, you are all set! The usages are endless. Let me give you a couple of examples.
Let’s say I was choosing between two cruise ships. Both go to two different destinations. I would put on this headset, and I could walk the decks of the ship, see the different floors, look at what activities they had and see my room. Then, I could go outside and see the different ports and get off the ship to see what there was to do. I can even sit down and enjoy the sunset. Obviously, the smell and the wind wouldn’t be there, so it’s not the same as the real thing. However, imagine being able to choose between two cruises by virtually being on the ships! Would that help aid in your decision?
How about going to a staff meeting with seven other employees. We all are working from home, and we put on our goggles. I can look around the table and see all the other people. I can see their arms, their facial expressions and it literally feels like we are in the room together. When I speak in meetings now using meeting software, I have to look at separate boxes. How about I can see everyone as if they were in the room with me. However, we do miss out on the free donuts and coffee. But we could all have our own coffee and donuts, couldn’t we?
The opportunities are endless. Banking, travel, parties, gatherings, and so on are all in the works. You could grab a drink with some of your friends and watch the football game in the metaverse. You’ll be able to go to the store online and try on an outfit while looking in the mirror. What about no longer having to use the chat option on a website; instead, what if someone you can actually see is ready to help you out on the website? Boundless opportunities are to be had.
If you have a child between the ages of 8 years old and 17 years old, you probably have heard of the online platform Roblox. The kids are already getting this concept and are buying in. My two young girls go and hang out with their friends in that metaverse. They open burger stands, play tennis, do their hair, and visit each other’s 3D houses. I do monitor this and see where they are going, though; better to be safe than sorry. Our children are already growing up using this technology that powers the metaverse.
How Do I and Where Do I Invest in the Metaverse?
Although I wonder when and how quickly some of this will catch on, many of the people I spoke to that are knowledgeable in this arena say it’s happening now or within the next couple of years. It will quickly improve yearly, and in three to five years, it will start becoming the norm. So how do I Invest?
The massive computer power needed in creation and speed makes microchips and processors extremely valuable. These sectors have done phenomenally over the last two years, and in my opinion, should continue to do so if the metaverse is here to stay. Cloud companies are also really getting into this business on the commercial end investing billions into their infrastructure. These companies are focused on the business world.
On the personal use side, many companies are pouring billions into the metaverse. Rumor has it Apple will be bringing out its headset later this year. Facebook gave us what they believe the meta-universe will look like when they announced their name change a few months back. Roblox has been getting the kids involved in creating their own games and allowing other youngsters to play others’ games as mentioned earlier.
There are many small companies popping up, too, and some of these could eventually be acquired by the bigger companies. The infrastructure is what takes time to build and which is why these larger companies might be way ahead today compared to the smaller companies.
When I was a younger advisor, I used to say that it takes a younger advisor to think outside the box and see what is coming. Now in my 40s, and over 20 years in the business, I have seen fads come and go and technology not be where it needed to be to make certain things work. I have gotten in on some “new ideas” and made some great timely decisions. I have also been late to the party, like in blockchain and what it can do regardless of cryptocurrencies. While the older, wiser advisor in me still says we will not be “living” in the metaverse, the new school advisor in me sees this as an added benefit to the real world as well as an alternative. Younger people are growing up with this, and it is becoming a part of their lives, for better or worse. What I do know is regardless of how big this gets, it is coming.
Credit: Evan J. Mayer