On the Metaverse: Counterpoints and Arguments

I have had one of the more interesting and exciting things in a while happen on my recent post, The Metaverse is the Future: The Office is Dead. Long Live the Office. A couple of readers left lengthy comments disagreeing with my take, and criticizing it besides.

I love it.

It isn’t through polite agreement that we make progress; it is through vigorous debate that we do. As long as we are debating ideas and topics, rather than launching personal attacks, I’m all for it.

In that vein, I’d like to reproduce the comments in full here and make them a part of this post, then try to answer and address them.

From “Peter”

By far the most impressive comment, broken into three parts, comes from “Peter.” Here is his lengthy comment in full. I have edited only to remove references to “my next comment” and for spelling:

Rob,

Longtime reader, first time commenter. I work in this industry and have made a habit of regularly reading your articles. Although you and I don’t agree on much, I find your writing helpful in understanding broad trends and what real estate veterans like to fight about.

I’m compelled to comment for the first time because your recent growing interest in Web3 and Metaverses is, to put it as politely as possible, horrible and stupid. (Now is a good time to state that these words are mine alone and don’t represent any company past, present, or future.) This isn’t unique to you; plenty of enormous companies are pouring money into exploring these things. I’m writing here because, for better or worse, plenty of real estate movers and shakers read this blog, and the very last thing I want is for this industry to waste its valuable time entertaining such pointless, wasteful, and destructive ideas.

(A little background on me: I spent much of my teens in online worlds, I’ve worked office, remote, and hybrid jobs for the past decade, and I haven’t set foot in a “cubicle farm” in over two years.)

The Metaverse is a solution in search of a problem. The virtual office is a particularly awful permutation of this. At their very best, Metaverse-based workplaces are pointless and invasive; at their worst, they are a catastrophic waste of resources that could be better used by almost anything else.

From your article:

“The challenge for companies and organizations then is to keep the good — the spontaneous interactions and communications that unlock creativity and productivity — while getting rid of the bad: the expense, the soul-crushing environment, the commute, the annoying coworkers and bosses.”

That makes sense. I think you overvalue spontaneous interactions — depending on the office, I’ve found that in-person conversations (no matter how enjoyable they may be) are usually far more likely to accomplish nothing than to lead to a “light-bulb moment” — but that may be a matter of opinion. More convincing is this survey of nearly 800 employers, 94% of whom stated productivity has stayed the same or improved since transitioning to remote work: https://www.mercer.us/our-thinking/career/global-flexible-working-survey-us-results-infographic.html

Remote work solves all of the “bad” and arguably doesn’t do enough to keep the “good” of the old in-person model. What’s your solution to this marginal problem?

“The answer, it seems to me, is the virtual office in the Metaverse on a super realistic graphics engine. Maybe Unreal Engine 5. More likely, the Unreal Engine 6 or 7 that will be coming in 5 to 10 years, taking advantage of the hardware and bandwidth of 5 to 10 years from today.”

I’ll list the advantages and disadvantages of this approach in comparison to remote work as it exists now.

Advantages:

• The Metaverse might allow remote workplaces to simulate the spontaneity of in-person ones.
• You can make your avatar wear a cool hat.

Disadvantages:

• Even your most optimistic estimate for adopting this technology is 5-10 years out, meaning that lots of smart and talented people will have to work on implementing it for at least 5-10 years at the expense of other advances.

 

• The idea of a worker having a “metahuman avatar” that exists as “a unique NFT in the blockchain-powered Metaverse” relies on wildly unrealistic assumptions. The idea of everyone having a persistent virtual avatar sounds nice, but even now there are many competing blockchain ledgers and metaverses. If you have an NFT avatar in Decentraland, you’ve married yourself to a proprietary cryptocurrency (MANA) in a proprietary metaverse (Decentraland). Why on earth would someone like Mark Zuckerberg spend time and money bringing that avatar into Meta’s proprietary blockchain and metaverse? He could much more easily charge you to mint a separate NFT avatar. That way, he doesn’t have to import all the cool hats you bought for your avatar and make sure they show up in his trillion-dollar Businessman MMO. (Before you suggest “universal metadata standards” for NFT avatars, let me remind you that, despite decades of work and strong incentives, real estate still doesn’t have those. Web3 people won’t commit to standards unless they benefit; the way things look now, they’re dramatically disincentivized from doing this.) The only realistic path for persistent NFT avatars is widespread adoption of a single blockchain algorithm and a single metaverse environment, which creates countless new problems (like, “who controls all this and how can we place that kind of trust in them?”).

 

• Blockchains do not exist in a vacuum. Most cryptocurrencies use “proof of work” schemes to verify transactions (see https://en.wikipedia.org/wiki/Proof_of_work#Bitcoin-type_proof_of_work). These schemes require enormous computing power, which in turn requires enormous energy expenditure — Bitcoin alone currently consumes about 0.5% of the world’s electricity, more than the entirety of Finland and about seven times more than the global operations of Google (source: https://www.businessinsider.com/bitcoin-mining-electricity-usage-more-than-google-2021-9). Even in a potential future where cryptocurrencies use less energy-intensive “proof of stake” schemes and are powered entirely by renewable energy, what benefit do they offer? They may eventually use less, but there’s still an opportunity cost. If the choice ends up being between “giving my avatar a cool hat” and “leaving my laptop plugged in for a couple hours,” ceteris paribus, I’d take my laptop 100 times out of 100. Again, though, the act of completing a single Bitcoin transaction today requires nearly 1,200 kWh of electricity, around the amount that powers a typical American house for six weeks (source: https://fortune.com/2021/10/26/bitcoin-electricity-consumption-carbon-footprin/).

 

• Hardware doesn’t exist in a vacuum, either. As a previous commenter noted, Intel estimates we’d need 1,000 times more computing capacity as the entire world has right now to power “the metaverse.” If we somehow obtain the physical and electrical resources necessary to give us that capacity, would you rather spend those resources on running the universe’s biggest World of Warcraft server or literally anything else?

 

• Most of these Metaverse concepts sell themselves based on the potential of immersive VR with barely a whiff of the implications on the client side. If I’m a remote worker, I’m going to need a damn good reason to strap a VR headset to my face every time I clock in. I’m getting by just fine with the tools I have now, so there had better be a solid benefit for me, the individual worker, to accept the drawbacks of putting a screen inches from my eyes for eight hours a day. (By the way, who’s making and buying all these enterprise VR headsets? 2020 saw 6.4 million VR headsets sell. If even half of the 160 million people in the American workforce need one to join the Metaverse, we’re going to need a hell of a lot more headsets, not to mention orthopedic surgeons for everyone who ruins their necks wearing them.)

I understand the appeal, in theory, for an enterprise employer to drag its remote workers kicking and screaming into the Metaverse. After all, remote workers on Zoom can turn their cameras off! A Metaverse that can “constantly pick up your facial expressions and physical gestures and have your metahuman avatar reflect them” makes it much easier to micromanage them and police their behavior.

Unfortunately, we’re not talking about theory. We’re talking about what’s being put in practice now to prepare for a broader rollout later. We agree that the old paradigm of fluorescent lighting, cubicles, and plywood desks no longer makes sense. I argue that the remote solutions we have now work pretty well. You’re free to argue that “the Metaverse is the future of the workplace” all you want, as long as you’re willing to explain why its benefits outweigh its costs.

TL;DR: I think spending most of the world’s resources on cool virtual hats and the occasional virtual water cooler conversation isn’t worth it.

I said I would turn his comment into a post, but I think this is better. So you don’t have to read multiple posts to dive into the debate.

I will put out there as an open offer that if anyone would like to pen a full post criticizing my opinions or takes, or debate any of these issues, that I will look at publishing it. Just contact me, or send me the post.

Let me start by admiring Peter’s comment for its thoroughness, arguments backed up with evidence, and getting after it. This is how you debate. Kudos and thank you.

Now, let me delve in.

On Those Disadvantages

Peter lists a number of disadvantages of the Metaverse as the future of the office. Let’s address them in order.

1. Lots of smart and talented people will have to work on implementing the Metaverse for at least 5-10 years at the expense of other advances.

The same could be said for any technology in the history of technology. The internet circa 1993 when I discovered it was asinine — newsgroups, IRC, Gopher….

If tons of smart and talented people had not worked on implementing and improving the internet, at the expense of other advances, none of us would be here right now. This blog exists only because of that “waste of time and energy.”

When Alexander Bell offered the patent for the telephone to Western Union for $100,000, its president William Orton called it a toy:

An internal Western Union memo reportedly said: “The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?”

Good thing that smart and talented people kept working on implementing the telephone for the next several years at the expense of advances in telegraphs.

Every new technology is terrible at first. People have to work on it at the expense of other advances in order to bring the promise of the technology to flower. Thank God that so many hundreds of thousands have throughout history.

2. Metahuman avatars as NFTs is wildly unrealistic, because incentives are to create proprietary worlds with proprietary native cryptocurrencies.

It’s important to look at incentives from both sides. Zuck might want to own the Metaverse; but what’s the incentive for the rest of us to go mint NFTs in his Metaverse? Web3 people might want to have a monopoly, but the users have no incentive to be so monopolized. Seems to me the incentives are such that granting openness and interoperability is precisely how a Web3 company attracts as many users as possible.

My take is that a world that lacks interoperability is inferior to a world that offers interoperability. So if Zuck wants to keep Meta a self-contained universe on a proprietary Meta blockchain, then open worlds based on an open blockchain will be more attractive to users. That doesn’t mean existing Metaverse solutions like Decentraland, by the way. It simply means open systems beat closed systems.

One more thing. Peter writes:

The only realistic path for persistent NFT avatars is widespread adoption of a single blockchain algorithm and a single metaverse environment, which creates countless new problems (like, “who controls all this and how can we place that kind of trust in them?”).

I will note that what he describes is what happened to TCP/IP, which makes the internet possible. I don’t know that envisioning a single Metaverse blockchain (perhaps with multiple worlds, just like how there are multiple websites on the same World Wide Web) is wildly unrealistic, seeing as how it already happened at least once.

3. Blockchains are energy intensive.

Here, I’ll simply disagree. Only two major blockchains, Bitcoin and Ethereum, are using Proof of Work — and Ethereum is about to transition into Ethereum 2.0 which will be Proof of Stake, a far more energy-efficient system. The handwaving over energy usage is just that: handwaving.

It also happens to ignore the rapid development of Layer 2 scaling chains like Polygon and Avalanche, as well as Zero Knowledge proof technology, and energy-efficient layer 1’s like Solana:

A transaction on the Solana network takes less energy than two Google searches and 24 times less energy than charging your phone, according to a Thursday report by the Solana Foundation.

FWIW, I don’t believe the Metaverse will come to be on the Ethereum chain either because of gas fees and low transaction speeds. I think we’ll see either side chains or new layer 1 chains that offer the kind of speed, low cost, and low energy consumption before the Metaverse becomes fully realized.

4. Hardware and More Opportunity Cost Argument

It’s just easier to quote Peter here:

Hardware doesn’t exist in a vacuum, either. As a previous commenter noted, Intel estimates we’d need 1,000 times more computing capacity as the entire world has right now to power “the Metaverse.” If we somehow obtain the physical and electrical resources necessary to give us that capacity, would you rather spend those resources on running the universe’s biggest World of Warcraft server or literally anything else?

I would simply point to “exponential growth of technology.” Teenagers would not be making TikTok videos if bandwidth, graphics chips, and CPUs in 2021 cost what they did in 2001. Of course not.

This is simply a case of not being able to wrap one’s head around exponential technology growth, which is completely understandable. It’s still hard for me too.

5. Virtual Reality is Annoying and Impractical

Again, the argument here is evaluating the future based on present technology. It assumes that things like VR headsets of today will be the VR headsets of tomorrow. It’s akin to wondering who in the world would carry a portable computer everywhere when they weigh 25 pounds and costs $1,800:

I don’t know that VR is necessary for the Metaverse-based office of the future. I know only that I spent hours upon hours and days upon days lost and immersed in a virtual world on a tube monitor with a max of 800×600 resolution with shitty graphics that looked nothing like what Unreal Engine 5 does. I know only that I built real relationships with real human beings in those worlds, many of them the result of chance encounters in town.

But if the Metaverse requires VR, then I imagine that the VR devices of the future will be more like lightweight sunglasses than heavy neck-breaking machines. In fact, I figure that I can’t even imagine what the VR devices of the future will actually be since I have so much trouble picturing exponential growth of technology. Maybe it’s low powered lasers “painting” directly onto our corneas from the webcam. Maybe it’s the Holodeck. Who knows?

Exponential Growth Versus Human Beings

So any argument based on present-day technology is, I think, simply invalid. I did not say, nor do I believe, that the Metaverse represents the office of 2022. What I wrote was that the Metaverse is the future of the workplace, perhaps 5 to 10 years out. Given exponential growth, I do not doubt that we will look back on 2021 from the year 2030 and wonder how backward we all were.

Just think about the technology of 2011 and what was possible by the standards of 2011.

What doesn’t change as fast is human nature. What won’t change between 2021 and 2030 is how we human beings interact, collaborate, debate, argue, and think and believe.

Value of Informal Spontaneous Interactions

Far more important to Peter’s point than the today’s technology based arguments is this one:

I think you overvalue spontaneous interactions — depending on the office, I’ve found that in-person conversations (no matter how enjoyable they may be) are usually far more likely to accomplish nothing than to lead to a “light-bulb moment” — but that may be a matter of opinion. More convincing is this survey of nearly 800 employers, 94% of whom stated productivity has stayed the same or improved since transitioning to remote work: https://www.mercer.us/our-thinking/career/global-flexible-working-survey-us-results-infographic.html

If he’s correct, and spontaneous interactions do not lead to increased creativity and productivity, then spending a lot of time and money to create a persistent world with avatars gathered together in a virtual space (to put proximity into play) is indeed a waste of resources.

However, I don’t think it’s merely a matter of opinion. If anything, it seems to me that the weight of evidence is rather on my side than on Peter’s.

For example, here’s a short list of articles including one scholarly academic study of Microsoft workers showing that in fact, spontaneous interactions and chance meetings (the term is “Spontaneous Encounter Theory”) are important for the workplace:

• Remote Workers Need Small Talk, Too (Harvard Business Review)

Small talk is important to us in other ways, putting us at ease and helping us transition to more serious topics like negotiations, job interviews, sales pitches, and performance evaluations. The tidbits we learn about our colleagues — for instance, that they play guitar or love dogs — build rapport and deepen trust. Research even suggests that chance encounters and spontaneous conversations with our coworkers can spark collaboration, improving our creativity, innovation, and performance.  

• What a Year of WFH Has Done to Our Relationships at Work (Harvard Business Review)

Strong workplace relationships matter for many reasons, and the Work Trend Index identifies several of them. The survey shows that strong workplace networks impact two things critical to the bottom line: productivity and innovation. On productivity, people who said they feel more productive also reported stronger workplace relationships than those who don’t. They also feel included on a typical workday. On the contrary, those who said their interactions with colleagues have decreased this year were less likely to be thriving at things that lead to innovation, like thinking strategically, collaborating or brainstorming with others, and proposing innovative ideas.

• The effects of remote work on collaboration among information workers (Nature Human Behavior)

We expect that the effects we observe on workers’ collaboration and communication patterns will impact productivity and, in the long-term, innovation. Yet, across many sectors, firms are making decisions to adopt permanent remote work policies based only on short-term data. Importantly, the causal estimates that we report are substantially different compared with the effects suggested by the observational trends shown in Figs. 2 and 4. Thus, firms making decisions on the basis of non-causal analyses may set suboptimal policies. For example, some firms that choose a permanent remote work policy may put themselves at a disadvantage by making it more difficult for workers to collaborate and exchange information.

• Expert Tips on Channeling the Spontaneity of the Water Cooler for Remote Teams (Sococo)

Ranking high on that list is the element of spontaneous collaboration that comes from random personal interactions and chance encounters at the workplace.

The water cooler best exemplifies this vital dynamic. It represents a well-trafficked central location in the office where team members pass by one another, engage in off-the-cuff conversations, and occasionally stumble upon unexpected breakthroughs.

While CEO at Pixar, Steve Jobs so recognized the importance of unplanned meetings that he proposed altering the layout of the company’s headquarters to facilitate them, suggesting the only bathrooms be placed in a central atrium to increase the frequency of employees from different units running into one another.

On the other hand, I did find this NY Times article: “Do Chance Meetings at the Office Boost Innovation? There’s No Evidence of It.” It cites Zillow at some length:

Yet people who study the issue say there is no evidence that working in person is essential for creativity and collaboration. It may even hurt innovation, they say, because the demand for doing office work at a prescribed time and place is a big reason the American workplace has been inhospitable for many people.

“That’s led to a lot of the outcomes we see in the modern office environment — long hours, burnout, the lack of representation — because that office culture is set up for the advantage of the few, not the many,” said Dan Spaulding, chief people officer at Zillow, the real estate marketplace.

But even that article ends with this:

That’s why some experts have suggested a new idea for the office: not as a headquarters people go to daily or weekly, but as a place people go sometimes, for group hangouts. Companies like Ford, Salesforce and Zillow are doing versions of this, and reconfiguring their offices with more hangout spaces and fewer rows of desks.

One of the most important findings of the academic study of Microsoft above is that in a remote work situation, people tend to “spend less time collaborating with “weak ties” (those not in their typical network) and with those in other functional units.” That is, people spend far more time in Zoom and Slack with their teams, and less time with people in other teams. It isn’t as if you’re going to setup a Zoom just to catch up with some friend in Accounting, and you’re certainly not going to run into her in the elevator.

Since we are in the real estate industry, and since Zillow was heavily cited as an example in the NY Times article, I have to wonder if Project Ketchup would have gone as far as it did, ultimately destroying Zillow Offers and wiping out over 2/3rds of Zillow’s market cap, without the remote work policy. If Zillow employees were working together as they did pre-pandemic, could chance encounters in the hallway, or some quick conversation in the break room have alerted somebody somewhere as to what was going on in the Offers division? Could Zillow senior management have found out about the problems earlier?

We’ll never know.

But I believe there is real value in chance encounters, in the random conversation at the water cooler. Unlike Peter’s experience, my life and career are filled with them turning into so much more — including a chance encounter with this gal in a Vegas nightclub the last night of her conference and the first night of mine.

False Dichotomy

There is also a fairly strong sense of the false dichotomy in Peter’s criticism of the Metaverse. He consistently positions it as Remote Work versus Metaverse. As he puts it:

Unfortunately, we’re not talking about theory. We’re talking about what’s being put in practice now to prepare for a broader rollout later. We agree that the old paradigm of fluorescent lighting, cubicles, and plywood desks no longer makes sense. I argue that the remote solutions we have now work pretty well. You’re free to argue that “the Metaverse is the future of the workplace” all you want, as long as you’re willing to explain why its benefits outweigh its costs.

Again, while I think the core problem here is evaluating tomorrow by today’s technology, the point is a fair one. Individual workers and companies that employ them would deploy the virtual office in the Metaverse in lieu of continuing with Zoom and Slack and email only if the benefits outweigh the costs.

Much of Peter’s objections are based on the costs, but as I have already argued, he’s stuck in the technology of today and the cost of that technology today. I don’t believe that is a valid argument against the Metaverse 5 to 10 years out.

I believe that the benefits of the Metaverse are increased productivity, creativity and company culture that comes from creating virtual proximity. I have tried to make the case above already regarding the value of chance encounters and spontaneous conversations.

But let me try to illustrate the idea like this: Metaverse is to Slack as Slack is to email.

Email works. It worked just fine for decades. You can send documents, have lengthy discussions, talk to large numbers of people at once, and so on. We all still use email.

But if you have ever used Slack in a business context, you know that there are certain things that are far easier to do on Slack. I know I use it for quick questions to team members or to provide quick answers, because it’s more of a chat than it is an email. You can be less formal on Slack, more off the cuff. Slack allows for more spontaneous communications. “Hey, did you get that doc?” is somehow great for Slack, but not great for an email.

I think the Metaverse will be the next level of instant spontaneous communication. Because if Slack is more like chat, or a private Twitter, the Metaverse will be more like face to face conversation. That is the point of having avatars and virtual spaces and proximity, after all. To Slack someone to ask, “Hey, did you get that doc?” requires that you remember to ask that question. With the Metaverse, the idea is that while you’re walking past that person in the hallway, you’ll remember and ask right there and then, “Hey, by the way, did you get that doc?” That is precisely what happens in physical offices; I expect it to happen in virtual ones.

Plus, as I said in my original post, I think the value of facial expressions and physical gestures in communication simply cannot be overestimated.  Even something as simple as waving to catch someone’s attention is impossible in current Remote Work environments (because you’d have to set up a Zoom meeting first to wave at anybody), but it is an everyday thing in online worlds.

So as I see it, there’s a false dichotomy here. Remote solutions we have now aren’t necessarily going away; the Metaverse just adds another layer to them. Just like Slack did not eliminate the need for email, the Metaverse won’t eliminate the need for asynchronous messaging, or company-wide broadcasts, or Slack.

Bring on the Debates

Let me wrap up here.

I appreciate the pushback and the arguments — truly, I do. Because I have strong opinions, weakly held. My opinions are subject to change in an instant if I learn new facts or see a blindspot in my thinking. Only pushback, debate and argument can reveal those.

In this case, I think Peter raises several excellent points. I believe many, if not most, of his objections are rooted in the human inability to visualize or even conceptualize exponential technology growth. The fact that the tech growth is happening faster and faster, and going more and more parabolic, makes it even harder. I don’t know that we as a species have yet gotten comfortable with 2D social media platforms, and people are talking about 3D virtual worlds with haptic feedback. It’s a bit much. I get it.

Which is why it is important to keep our eyes on the things that don’t change when engaging in futurism. In this case, that thing that doesn’t change is human nature. What doesn’t change is how we interact with one another, and what chance encounters, small talk, and informal socialization do for us and our relationships. What doesn’t change is how so much communication is not vocalized, but picked up (sometimes subconsciously) from body language, facial expressions, and perhaps even pheromones and smell and taste.

I don’t believe that the Metaverse replaces the real world. There is a real difference in meeting a friend in the real world and giving him a hug, and breaking bread together, and meeting a friend in a virtual world and giving him a virtual “hug” and pretending to “eat” virtual food. Sunny and I have had numerous discussions on this, how modern technology and social media and video is harming young people today who don’t know how to connect with people in the real world. So yeah, I get it. Reality is superior to anything virtual.

On the other hand, if physical in-person meeting is not an option, then I believe that a virtual experience that is as close to the real world is superior to one that is less close to the real world. Something that approximates 70% of a real world in-person meeting is superior to one that approximates only 20% of a real world in-person meeting. So I think Metaverse > Zoom > Telephone and what graphics technology combined with Metaverse implies is a virtual world that will at least visually mirror the real world. That’s huge.

I also don’t believe that the Metaverse replaces remote working technology, no more than email replaced paper documents or Slack replaced email. I think it ends up adding a layer on top of what already exists and each tool will find its own niche. There are people who still hand write letters from time to time, because that is the best tool for certain kinds of communication. Thank You notes, anybody?

So bring on the debates and the objections. I love ’em, and I appreciate you, Peter, for bringing the fire.

-rsh

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