In an era when digital capabilities broadly define the effectiveness of consumer interactions, businesses, in particular, are wary of falling behind the technological curve. Consequently, when Mark Zuckerberg announced that Facebook’s parent company would change its name to Meta (Meta Platforms Inc.,) in an effort to plant a flag in the future of the internet, it may have caused as much anxiety as it did curiosity in the family business world.
Even for the most digitally-adept family businesses — those who are comfortable with remote working solutions, big data and AI — the metaverse might seem too forward-looking, theoretical, and expensive to influence their strategy now. And although industry heavyweights such as Microsoft and Nvidia signalled their intention to develop metaverse platforms even before Facebook’s rebranding, that in itself might reveal one of the metaverse’s biggest challenges — cooperation and collaboration among tech giants to deliver the standardisation that a seamlessly functioning metaverse will require.
But perhaps one of the tallest barriers that family businesses — and all businesses for that matter — face in embracing ‘the next big thing’ in technology is that those in the know have been toying around with metaverse concepts for almost two decades now. Bridging the resultant knowledge will be no small feat.
A Meta Voyage
In his 1992 novel Snow Crash, science fiction writer Neal Stephenson first coined the term metaverse to describe his vision of the internet’s successor. Stephenson predicted a digital, online world that people would explore using avatars to represent themselves as a means to escape their grim realities. This space where humans connect as avatars describes the metaverse in its simplest form and also serves as the springboard for its potential — a real-time, digital landscape of seamlessly connected, 3D worlds synchronously experienced by an unlimited number of users who feel fully present in the digital version of themselves.
Those investing in the internet of tomorrow hope that individuals will live a virtual life in the metaverse alongside their physical life. And if that sounds familiar, it’s because movies such as Ready Player One and even The Matrix have popularised the concept, while applications such as Second Life have provided that very experience for its users as far back as 2003. Second Life’s first-person virtual world simulation innovated many of the features advocates of an expansive metaverse espouse. Second Life users can already buy digital versions of clothing, furniture, real estate, and even businesses inside its pixel-generated space.
Sparking New Interest
It’s speculated that the current enthusiasm for the metaverse, and specifically its next iteration, has been driven by three separate developments: precipitous advances in graphics and VR capable of providing an immersive digital experience; the increased online commerce and social interaction brought about by the physical isolation of COVID-19 lockdowns; and today’s NFT (non-fungible tokens) and blockchain technologies making transactions reliable and secure.
The recent shift to a more digitised existence felt the world over has made the possibilities of a fully realised metaverse enticing to both businesses and consumers. In the metaverse era, shoppers will be able to try out a new coffee maker, or test-drive a new automobile without leaving home, at least in the conventional sense. A completely new market in virtual goods, such as NFT artwork or collectables whose value is reflected entirely by their symbolic status online, might come to define the future of consumerism and perhaps even hold the key to a less physically consumptive world.
Virtual Experiences, Tangible Profits
The metaverse doesn’t just suggest a new income stream for brands; it creates entirely new categories for consumers who inhabit its digital domain, and in some cases could effectively double the size of entire markets. Virtual world shoppers have already signalled their willingness to spend large sums for the digital versions of things they want. Recently, a Gucci Dionysus bag sold for $4,115 in real currency during the brand’s two-week virtual Gucci Garden Experience. The virtual version of Gucci’s contemporary bag was purchased for over $700 more than what the physical version of the item retails for.1
And not unlike in the physical world, businesses getting in on the ground floor of something as potentially impactful as the metaverse might expect to find significant opportunity. Visionary online game platform and game creation system, Roblox, pursued the possibilities of virtual space in its infancy, parlaying its ecosystem of user-created games and purchasable items into a public offering and valuation of $45 billion just 15 years later in 20212, and ultimately, providing the virtual landscape for Gucci and others to engage with their digital public.
Timing the Internet 2.0
That said, how businesses who haven’t invested early in the metaverse’s infrastructure or don’t have the name recognition of Gucci will take advantage of this new, pervasive marketplace is anyone’s guess. It’s becoming clearer that the metaverse will largely reflect the same market dynamics that exist in the real world, but what is less clear is how smaller businesses will carve out a piece of the metaverse’s digital landscape.
But it’s entirely possible that the internet 1.0 will offer the best guidance for family businesses hoping to navigate the ‘next internet’ that the metaverse promises to become. With the internet’s rise came the early pioneers, like Google, Amazon, and Paypal — who either established new models of revenue generation or leveraged the power of e-commerce to profit off traditional transactions. But for the vast majority of businesses, it was the shopping habits of their customers that necessitated an online presence and not the other way around. Family businesses have always shared a unique and powerful relationship with their customers — when the metaverse presents an opportunity to strengthen that relationship, family firms will just have to make the meta-leap.