In this episode, Tim is accompanied by Sam Huber, the Founder and CEO at LandVault, a metaverse real estate company focused on helping brands establish a presence in blockchain-based platforms such as Sandbox and Decentraland.
Over the course of the episode, Tim and Sam discuss what drives land value in the metaverse, the fundamental differences between Web2 and Web3, and the race for the Alpha Generation’s attention. Plus, Sam also tries to explain to a 10-year-old why he should care about the metaverse.
To find out how Grindery is building a Swiss army knife for existing DAO frameworks, head to grindery.io.
Tim - 00:00:01: This is Tim Delhaes and you are listening to DAO Talks Podcast. Over the last couple of years, we’ve seen DAOs go through a roller coaster ride from being nowhere to everywhere. But what exactly are DAOs, or decentralized autonomous organizations? And how can we use them as a lens to view the wider world? What is happening to them now in the bear market? Is at the end of it, or are we just in a normal hype cycle? All of that and much more is what we want to find out together. Joining me today is Sam Huber, a serial entrepreneur originally from Switzerland that turned his gaming company into the largest virtual real estate company in the emerging metaverse. Meet LandVault. We’ll talk about Minecraft, Roblox, Microsoft and Facebook, and how Alpha, the next generation of kids will use the next generation of the Internet. And last not least, how can virtual land that is of infinite supply be of any value at all? Let’s get right into it. All right, Sam, how are you?
Sam - 00:01:09: Great. Doing great. How are you doing? Thank you for having me.
Tim - 00:01:12: No, it’s a pleasure. Where are you? I’m not judging by your background.
Sam - 00:01:17: In the Metaverse. No, I mean, I’m actually in Miami right now. Went to Art Basel last week, which was, as you know, as much crypto and Web3 as it is art. Amazing week, catching up with a lot of our partners, making new connections. And I’m staying here for a few more days.
Tim - 00:01:32: And I think you’re relocating, most of the time in the UK, but you’re relocating to…?
Sam - 00:01:39: To Dubai. Yes, that’s the plan for next year, obviously we are in the Metaverse space with the largest construction company in the space, and we spent a few weeks in Dubai this year. And it was quite amazing, actually, to see the drive from the government coming from the top to make this place the Silicon Valley of Web3. That’s basically what they want to do. So they need companies like us. And, of course, I’m always trying to see where are the good opportunities for us to be. So the company we still operate internationally is just myself and a few people moving there. We’re working with a few of their government projects as well. So it’s exciting. And I think in the Metaverse, they’re going to take a lead over the next couple of years, so I’m excited to be a part of it.
Tim - 00:02:19: Shouldn’t we all be just moving virtually instead of in the real world? Isn’t that the entire idea behind it?
Sam - 00:02:27: I think as we build the Metaverse and we enable that to happen, the face-to-face interaction and being there and generating value for the local ecosystem is still important. So I know this was a joke, but I think the Metaverse is not meant to replace the real world. To me, it’s a way to enhance the digital world so there will always be a space for real and physical meets.
Tim - 00:02:50: Yeah, having a real beer still tastes better than having a virtual beer, doesn’t it?
Sam - 00:02:55: It does, yeah. Although Heineken won a bunch of award in can for their virtual brewery, so it’s still valuable. Just has a different taste.
Tim - 00:03:04: Before we go deeper into it, and I think this is one of the interesting questions, especially what we just touched on. What’s the Metaverse versus the real world and what’s going to stay in the real world and what’s going to move into this virtual world? And I’m just curious, how much time do you yourself spend in the Metaverse? A day or a week?
Sam - 00:03:24: Not many. That’s what we’re working on, right? At LandVault, we are basically building experiences on top of platforms that already exist. And one of the main reason is because there’s just not enough things to do in the Metaverse. It’s mainly empty. There are a few experiences. We just launched an experience for Hershey’s, which is a chocolate brand, which is doing really well. And so that’s the kind of project that we’re doing. But when people say there’s not enough people in the Metaverse or ask how many people are in the Metaverse, the answer is not many, because there is not enough reasons for people to live there the whole time. So my view of the Metaverse right now, it’s pretty much like a stadium where most of the time it’s empty. No one lives in a stadium when there is an event. People come, they go, they spend money there, they have fun, but then they leave when the event is gone and they go back to other platforms or other areas. So that’s the state of the Metaverse today. Maybe at some point we’ll make it look like more like a city where there’s always something happening, which is basically a collection of different experiences. But right now it’s very much centered around events. However, we have proven that with the right incentive, the right events, people are coming there in a big way and they spend a lot of time there. So I think this is just a way to frame the way that things are at the moment.
Tim - 00:04:38: It’s great. Hold that thought on the events. I would love to talk a bit more about this now before going into it. As you said it, people come to the Metaverse for events and they come out again. And it is very early, obviously, so there’s not many people there. Do you know what stereograms are?
Sam - 00:04:57: Stereograms? I’m not sure.
Tim - 00:04:59: They were like big in the 90s. It’s just pictures. Usually they would sell them. You can put them up on the wall. There’s a lot of colored dots on it. And if you stare at it right, and then you see a dinosaur, right, or a horse or whatever. And the Metaverse for me personally has in many ways been a bit of a stereogram. Like, I’ve stared at it for a long time, and I’ve tried to see the dinosaur in it and go like, oh, I see the dinosaur. Now I get it. Wow. And I had a really hard time seeing the dinosaur. Okay. And I’ve got two kids. They’re now nine and ten. And at one moment, it struck me, obviously, I just had to look across the table, literally, from where I work, and if you don’t take the devices away from them, the kids can spend 16 hours a day in Roblox and Minecraft. And it has, somewhat, in my perspective, has opened the eyes for me on what this future is and what I think you believe is about what’s the next generation of users of the Internet and how they will use it. It also thrown up the question for me. Are we actually looking at the Metaverse and the ideas of the Metaverse in the right way? Are we maybe just adults looking at it from a specific mindset for a generation of people we don’t really understand yet? So if you’re up for it, I wanted to do the following. I want I want to bring Chris on my son for just five minutes. Okay. Can talk to him. And I would love you to explain to a ten year old what the Metaverse is, what it makes it different or not from what they’re already playing in Roblox and Minecraft and why they should care. Want to do that?
Sam - 00:06:38: Let’s do it.
Tim - 00:06:40: Let’s do it. All right, Chris, come on over.
Chris - 00:06:42: Hi.
Sam - 00:06:42: Hello, Chris. Hey. How are you?
Chris - 00:06:44: Good, and you?
Sam - 00:06:45: Very good. I like your glasses.
Chris - 00:06:48: Thank you.
Sam - 00:06:49: So you want to know what the Metaverse is?
Chris - 00:06:51: Yeah.
Sam - 00:06:52: I think the version that you are already consuming, whether it’s Roblox or other platforms, is an early version of that. So the Metaverse is just a way to interact in three dimensions, just like your father and I used to browse the Internet in 2D, in the future, you will browse the Internet in three dimensions. You’ll be able to see your friends around you, go on adventures together, buy things, play games. And the beauty of the Metaverse that we are passionate about at LandVault is that it uses the blockchain as well, which means that you get to actually own the items that you build. So if you create something with your friends, like a car or a sword, you can actually own those items and resell them. So there is a way for you to generate revenue from that Metaverse, which is going to be a little bit easier than what’s happening right now in Roblox. So that’s how we see it. Does that make sense?
Chris - 00:07:42: Yeah. In Roblox, you can actually also create your own things and create your own games and then meet other people in them and have other people visit them. And, yeah, it’s pretty much like a Metaverse, but I just joined the Sandbox, like, an hour ago, and I really couldn’t get it. I didn’t know where I was, and I just saw cubes and a lot of futuristic designs.
Sam - 00:08:14: Yeah. So you like Roblox better?
Chris - 00:08:17: Yeah, Roblox better. Like, the graphics are a little better, and you can still create stuff like T-shirt to sell on the market or anything, literally.
Sam - 00:08:28: I think the main difference between the two platforms, aside from the fact that they obviously look different, is really the business model. So if you’re just a normal user, you might not actually see a huge difference in the experience. But if you’re trying to build a business on that platform by creating assets, selling them, you’ll see that Roblox takes a large commission. I think it’s 72%. So for every $10 that you are selling, you only keep less than three on the Sandbox, and other decentralized platforms, you keep everything. So the business model is different, and there’s more opportunities for you to sell things because there is a market for it if your items are NFTs, which is a way to create a certificate for ownership of digital items. So that’s the main difference, is the business model. And as you dig deeper into the platform and maybe you want to generate revenue from it to make extra money, then you’ll find that platforms like the Sandbox are actually way better in that regard. So I would say just keep looking into it and figure out how you can dive a bit deeper into the Sandbox.
Chris - 00:09:33: You’re right. The Sandbox, that is the good thing about it. You can sell and keep everything, because on Roblox, you have to, like, give away something to sell something. Like, if you want to put on the Roblox market, like, something for 20 Robux, that’s how the coins are called in Roblox, you will have to give out 10 Robux, that’s like 50 cents or 10 cents, and then you can sell it and then get more. But it’s not real money. It’s just another Roblox coins.
Sam - 00:10:09: Yeah, exactly. So the business models are a little bit different, and again, there’s also markets on top of the experience. So in Roblox, you can only sell your items within the Roblox platform. With Sandbox, if your items are NFTs, you can sell them completely outside. There could be dozens of marketplaces with a lot more liquidity, a lot more ways to generate revenue. So as LandVault, my company, we found it a lot easier. The platforms are a lot more open and just create a lot more ways for people to make money. So I think they all have their different characteristics, and both platforms are interesting for different reasons.
Chris - 00:10:50: Yeah, you’re right. Like, in Sandbox, you could buy somebody else’s blocks or something like that, and you could create your own NFT and NFT, you can sell anywhere, like either on Google Shopping or on Shopee or on Amazon, anywhere.
Sam - 00:11:06: All the platforms.
Chris - 00:11:08: Well, do you know Ender, like, you know Ender?
Sam - 00:11:11: Ender? What’s that? No.
Chris - 00:11:08: It’s like a website, you can have your own account, like your own username and all that and you don’t even lose anything, you just make competitions that are like from the easy to the medium, like never extreme. You do competitions in Minecraft and you have to do builds for Minecraft.
Sam - 00:11:37: Right. So you can make money from that as well?
Chris - 00:11:40: They offer you money for that like maximum $100 or something like that. That’s the maximum you can get. There’s also this thing in Ender called now we’re in the 10th edition and you have to tell 10th edition stories like what you love to create and what you love to do. And it doesn’t only have to be Minecraft that you have to put in something you can also do. It what you like in real life. Like drawing, building.
Sam - 00:12:08: Yeah well, I think another part that is interesting about platforms like the Sandbox and other decentralized platforms is whatever you create in one platform, you’ll be able to take it to another platform. The notion of interoperability, right? This is not something you will be able to do in Roblox because the platform is closed but with Sandbox you could build something there, you take it with you somewhere else, you sell it somewhere else, you bring something else. So it’s really that concept of more open platforms and I think the future of the Internet is going to be more leaning towards that.
Chris - 00:12:38: Your background really looks like yeah, it is the Metaverse but if you don’t know the Metaverse it would look like Minecraft, like that’s a lot of cubes and the cubes just look like stack a lot of cubes make a block. That’s how it is Minecraft.
Sam - 00:12:56: That’s actually NFT World which was built on top of Minecraft and that was our biggest build. There is I think 9 million cubes in there, so good spot.
Chris - 00:13:04: I will pass you to my dad again.
Sam - 00:13:06: Thanks Chris, great to meet you.
Tim - 00:13:08: Yeah, that was good just to connect there. If you haven’t seen it, one of our investors is Dharmesh Shah from HubSpot and I went through his investors investments and one of them is this company Ender that organizes competitions in Minecraft for kids only to build stuff. And I thought maybe you know anything like that in one of the Metaverses and stuff, because you’re in the building and real estate space. So I thought, I love that when I told the kids that play a lot of Minecraft, and, hey, you can make 10, 20, 30 bucks participating in, like, Minecraft competitions, you build an army.
Sam - 00:13:45: Well, no. So that’s funny, because in Minecraft you have to create competitions on top of the platform to generate revenue. Whereas in decentralized platform, not just the Sandbox, the business model is natively integrated. So why we’ve been able to scale so quickly landfall from zero to now 130 builders, architect, designers, is that mainly we tap into Minecraft communities. A lot of our builders are 20 or even younger than that, late teenagers. And basically they used to build stuff for fun on Minecraft and then maybe making $100 here and there by winning a competition and now they’re working full time for a full-time salary because in Web3 the business model is integrated, brands are more interested to build things. So that’s the way to me, the difference between Web2 and Web3. It’s almost like one is like a playground. There’s a lot of users in Web2 but the business models are still very much geared toward the platform and the other is like a professional arena where the whole thing is geared so much more towards the creators with more monetization model, more opportunities to do that and to turn your passion into an actual business. So that’s how I see it. And I think as kids grow up a little bit and they understand the financial element better, it’s going to make so much more sense to start building in a Web3 platform where what you build is yours. You can bring it anywhere, you can actually generate revenue instantly as opposed to help make the platform bigger. So that’s I think the main difference. And once people realize that it’s kind of a no-brainer. It’s like you can either keep doing what you do for free or you can get paid to do the same somewhere else.
Tim - 00:15:21: Makes sense. So let’s step a bit back and then I want to go back into this comparison again. But you really said there’s like things that work and it seems like you said what works in the Metaverse is events. People go for something. God, what have you seen working in the last 6, 12, 18 months where you would say, hey, if there is a use case for the Metaverse today, this is the stuff that works. What works today?
Sam - 00:15:49: Yeah, I think that’s basically what event-driven activations. Having something that is always open. You basically need to refresh the content regularly to get people to come back. Right. That’s not new. It’s like if you create an Instagram page and have two pictures, people are not going to come back to it. You need content, you need a strategy. And it’s the same with Netflix who is constantly pushing your content. You need to give people a reason to go somewhere. So if you want to do a long-term Metaverse activation, you have to build a base, but you have to constantly refresh the content, bringing live events or whatever it may be, right. Something to do. So what we find is if you do a shorter time activation around the specific things, that’s going to be a strong reason for people to actually come and visit it. And then the way you attract people, we find that IP really works well. So if you are a big name like a musician or a brand like Adidas or Nike or some brand that people relate to and are fans of, then that’s the hook for them to get in because they want to follow the IP. They want to see what their favorite musician has done. But then what retains them in the experience is the quality of the game mechanics, how exciting the game is, what you can win, what are the incentives? The IP is just a hook, but the gaming mechanics is really what drives the retention and the long-term engagement within the space. So that’s basically the recipe, right? You create an event around a brand that people know, and you create great game mechanics, great experiences. That’s what we do to retain people. And then generally, if you do that, then you are able to drive significant revenue from the experience as well.
Tim - 00:17:28: And that is the thing that I think you just put your finger up on. And that’s one of the things that I’m really wondering about, right? Like, when you’re talking about events, right in the Metaverse, you’re likely talking what kind of age group?
Sam - 00:17:42: Well, it depends on the actual event. We did Fashion Week, that was very much mid-twenty’s to mid-30s. So it was very much like grown adults that like fashion. They actually followed the actual fashion show and 70% of people ended up buying an item, which is incredible conversion rate. So people came here with an intent to buy. And so that’s very different from Roblox, where only a fraction of users actually spend money. So the right events attract the right audience. We had an event for Mastercard. We built the Pride Plaza, which was to generate awareness for LGBTQ. And so there was an audience that was tailored to that, that came to see talks from influencers and from people that are in the space that are raising awareness. So it was very much an audience that was passionate about the topic and felt connected to the topic. Very different from an activation that we just released today, which was the Hershey’s chocolate brand, which would attract different people that can redeem value add. So it really depends, most of the time the brand or the IP drives their own audience to the activation. And so that’s the way we look at it.
Tim - 00:18:48: And that’s one of the things I would love to hear your thoughts on it, right. Because you clearly understand both sides. So on the one side, to find a unifying term, you have a virtual event. You have a virtual world that drives participation, that’s very event driven and always with a somewhat specific commercial interest behind it, right. That drives it. It’s one dynamic and on the other dynamic, you have these kids, again, going back to it. That play Roblox and Minecraft, if they could, they would play 24 hours. They don’t need any event. Like, if I count the hours, you would almost say they already live in that stuff. They already live in Minecraft more than they live in the real world if you let them. If you let them. Right. And as a parent, you’re obviously they’re limiting that, but they would be living in it. And it’s a completely different behavior from the behavior that you’re describing in the Metaverse. And it always brings up this question not always, but it brings up this fundamental question for me, is that are we thinking about the Metaverse in the right way? Are we trying to gear a technology and a way of communication to an audience that will maybe likely never be a native audience to the space? And it becomes absurd when you look at like I thought about it when I saw the demo of Meta virtual meeting rooms. I don’t think my kids will ever set a foot into a real meeting room. And if they have never been in a real meeting room, they wouldn’t take a virtual meeting room. If they need to hook up, they will hook up in whatever in some Minecraft castle, I don’t know. But they’re not going to set up virtual meeting rooms. And if you sell them a virtual meeting room, they don’t even know what you’re talking about. It’s a different communication dynamics. How do you make sense of this? This is a generational thing. And what does it mean for the Metaverse that we are trying to build here?
Sam - 00:20:42: Yeah, I think you’re right. The Metaverse is the next generation of the Internet, and it’s the Internet that our kids will consume. So the generation of the Metaverse is what we call the Generation Alpha kids born in 2010 or above. So they are still pretty young, but by 2025, when they, you know, start making income, and by 2030, when they probably have their first jobs, they’re going to be the biggest customer segment on the planet with over 2 billion of them. So brands are today trying to start to be relevant to your kid and other kids so that by the time those kids consume the Internet, they know how to speak the language because kids, that generation has been raised with games more than TV, so they consume nontraditional media forms. And so brands have to try to figure out how to speak the language. And the language generally involves the third dimension as well. So that is definitely the mid to long tail. This is where we want to be and that’s what we’re building. But in the meantime, we are building technology. And the companies that are funding content in the Metaverse today are mainly brands. Now, brands is not going to be the only content creators in the Metaverse. Hopefully, no one wants to see a world where you just see brand after brand after brand. We also need creators and so on. But today they are the ones with the capital. They are the one investing millions of dollars for us and other builders to actually build something. So this is the kind of early customer of the Metaverse in a way. And so, of course, as a business, we gravitate towards them and we build experiences for them. We try to make it relevant to their audience and we can see who bites, who doesn’t. Of course, a lot of the audience are not necessarily the right demographic, but they might still try the experience. So you get a lot of data points about what works, what doesn’t, and over time, as the generations evolve, I think the idea is clearly that this is going to be a parallel version of the Internet that for everything experiential from shopping to digital tourism, will be a much better version than the traditional Internet.
Tim - 00:22:49: Great. So would it be right to say that your vision about the current Metaverse is for brands of a way of really just experimenting? Or would you go in there and say, hey, this is a really smart marketing, or other investment for you as a chocolate manufacturer there? Or is it purely to say, look, nothing is guaranteed here. What you’re doing today is likely not what you’re going to do two years, two months from now, but is an opportunity to get started. How do you see it? Or do you see that there’s actual real opportunities? There’s always going to be one or the other opportunity, but how do you look at it?
Sam - 00:23:29: So I think there’s a long term and short term opportunity and some brands are receptive to one or the other or sometimes both. So the long term is your brand is well, it’s more like the Internet is shifting. There’s a new version of the Internet. Just like there was web one and then web two as Web3. And as part of that new generation, the Generation Alpha is going to become the citizens of this Metaverse. And if you’re not able to speak to them in the right language, on the right platforms, then you’re going to lose out on 2 billion customers. So that’s the long-term pitch. You need to be there to be relevant to that audience, just like you needed to be there to be relevant to an audience using social media. So that is something that some brands understand. Some brands are willing to make a bet on that future. Some brands think that it’s too early, that they have time. Some brands don’t even understand it, so that doesn’t convince everybody. And then you have the short-term pitch, which is more tactical. It’s just looking at the results that we have, even if you don’t believe that the Metaverse is the future of the Internet, we are able to create experiences, marketing experiences, where you can literally have a one on one conversation with your customers for sometimes 30 minutes at a time. We work with Tyson, which is a food processing company, so not the kind of company you would expect to have a huge affinity with their customers, necessarily, because it’s a bit of a commoditized product. And we built an experience that was describing how sustainable it is, how they take care of the animals and the whole process of how the food gets basically delivered. And that experience had only nine-minute average session time. It wasn’t millions of users who consumed it, obviously it was kind of a niche audience, but these were really super fans and it was mind blowing for this brand who realized that there are people that were interested for 30 minutes to spend time and understand this. So that brand had very little opportunities to spend 30 minutes of undivided attention with their customers. So that is very valuable. It’s very valuable compared to a Twitter ad or an ad on Facebook that you might see for a fraction of a second. Now we’re talking 29 minutes of raw, uninterrupted customer attention. So during that time, you can educate them about your brand, you can potentially sell them product subscription at least they will be fine for life. They will become an ambassador for your brand. And that in itself is valuable today, regardless of your belief of the blockchain or if the Metaverse is going to be the next generation of the Internet. Gaming, which is what it is, right? Creating a gaming experience is the most engaging form of media that there is. We have text, we have images, we have videos. What’s more immersive than that? It’s being inside the content in three dimensions where you have agency and you can actually move and you can move in a dynamic way. It doesn’t get better than that from an engagement standpoint. And so that’s what to me, the Metaverse is that moment in time where gaming technologies become mainstream, are used for non-gaming purposes. Unity, Unreal, those great platforms to power content have been built for games, but they are now starting to be used for manufacturing, for cinema, for marketing. And that’s really what the Metaverse is. We are using gaming technologies which enable us to create those amazing, immersively rich 3D environments and we decide to use that power not just to play games, but to create awareness, talk about important issues or to sell products or whatever it is. So to me, that’s the power of the Metaverse today, regardless of what you believe the future is going to be.
Tim - 00:27:04: Yeah, and I think I agree, many points of view and vision of the future and the better future in many ways it’s at least what drives me into the Web3 space. And I just sometimes wonder if these kind of projects, as you said, the company engaging with their audience with an average nine minutes session time. I always think about the opposite side of the same coin of trying to talk to an airline and staying 40 minutes in a call loop or trying to talk to your bank and not being connected and the system dropping you and then the Metaverse. And as part of this. Web3 and blockchain future with all its potential, I do distrust a lot of the large brands because they’re creating simply, in my opinion, a lot of alibi projects. If they wanted to listen, they could start in customer support. Right. They don’t have to build a 3D world to make a meaningful difference. It’s not judging this specific case or the specific company on it, but it’s clear, it’s crypto, it’s blockchain Web3, it’s the Metaverse, there’s a lot of hype on it and someone want to be involved with that. And there’s a lot of gaining image there. And you know this better than I do. Two more things, and I want to talk also about LandVault in a second. One of the other questions I always had in my mind is we talked about this difference between you explained it to my son between Roblox and Minecraft and you now look at what Meta is doing with the Metaverse. And considering that the size and scale of Minecraft and that the company behind that is Microsoft is why is Microsoft not in the Metaverse technically already owning the largest Metaverse with the relevant generation?
Sam - 00:28:49: Right.
Tim - 00:28:50: And they just seem to be ultra quiet about it. Because for me, Microsoft in this scenario is a player in a much better position in many ways than Facebook, although they have a smaller audience, but they have the right audience and they already have the proven tools in place rather than going now creating avatars without legs. Right?
Sam - 00:29:11: Yeah. No, I mean, I think Minecraft is a platform that belongs into the Metaverse for sure. I think the limitation is, as I was saying to Chris, is Minecraft is not on-chain. And for us, yes, you can consider Roblox as a Metaverse platform, but to me, if there’s no blockchain, then your Metaverse is a game. What’s the difference? Right? It is a game. It’s a game that is user generated. The reason why LandVault has been so successful in our first year is because we have built business models that couldn’t be built in those platforms. And our belief is that the Metaverse is the next phase of the Internet. So every company that is building right now or that is making money on the Internet will need to have a presence in the Metaverse to sell to that new audience. And you’ll only be able to successfully do that if you have the right tools, the right infrastructure, the right monetization frameworks to be able to win. And that’s what the blockchain enables.
Tim - 00:30:07: I want to do a few more questions on LandVault, and can you describe and then I’m going to go into a few things that you’ve said in other interviews. Quickly. Where did LandVault start and where is it now and where is it going? So what did you imagine was the core business of LandVault from the beginning, even before merging with LandVault? To speak yeah, but what was it and how has this evolved? How is your personal vision about your own business evolved over the time of existence in the last few years?
Sam - 00:30:37: Yeah, so the story started in 2016. I had a gaming studio, so we were just creating mobile games. It was a small team, and I was very frustrated by the lack of tools available for us creators to generate revenue from our games. And so we had the idea of creating a model where it was an advertising model, but instead of having those terrible, annoying ads that take over the screen and are just impossible to close and they’re spending more time watching ads than playing the game, we had the idea to create product placement technology. So within the game, brands would be able to sponsor the shirt of an avatar or place billboards around the stadium, for example. So much more native way for brands to become a part of the gameplay. So that’s what we built. We wanted to build a platform to do that, not an agency. So the whole idea was that you had technology for game creators where they could identify areas they wanted to sell, and on the other side, brands could bid on the most valuable locations and so on. So that’s what we did. And the company became quite successful. We raised about $40 million. We built a team of 100 people, and we started working with some of the largest brands, largest advertisers from Disney to McDonald’s and Coca Cola. And then last year, a lot of these brands on the height of a bull market and following Meta’s rebrand, all of these brands started to ask about the Metaverse. Can you help us get into Metaverse? They trusted us to help them with gaming, and now they wanted to go to the next level. So we decided to take a leap. We decided to make a big bet. And my reasoning was really based on the fact that building a creator tool in Web3 would give us a lot more freedom, a lot more opportunity, a lot more flexibility, because it’s a new market and because the new creator economy that the blockchain enables would just create better opportunity for tools like this. So we basically deprecated the web2 side of the business, and we decided to go all in in Web3, which was a huge bet, a huge risk that we made earlier this year. As part of that, we acquired a studio that gives us the creative capabilities to build in the Metaverse, which we recognize as being a big part of the economic activity in the early years. And that’s how we effectively merged with LandVault and became LandVault. I always say that I don’t think the vision has changed. It was very much to create new business models to help creators monetize in new ways. And on the other side, it was always about helping brands enter a new environment, which I think is a fascinating thing to do. And it started with simple billboards in games and now we have full experiences like this that are completely branded, where a brand can actually sell their own products and host events and so on.
Tim - 00:33:15: Where is your main revenue coming from today and where do you project it to be in the future?
Sam - 00:33:23: Yeah, we have different revenue stream. One of them is renting land, the other one is creating experiences, another one is more monetization of experiences. So advertising and ecommerce, the creation right now is by far the largest revenue stream. We however estimate that over time it’s the monetization that will take over because you only create once and then you update, of course, but once you have a lot of users, then you make more money by selling products on your website than by actually building the website.
Tim - 00:33:51: I’ve kind of around this in circles multiple times in my head because I’ve heard different arguments and I heard you saying this in a different interview, how all of this monetization somehow is built on, in my mind, being somewhat ignorant and a non-user, right, around value of an asset that is land. Right? Like it’s virtual land. And there have been people saying like, how can virtual land that is unlimited, how can that be of any value? Because it’s not a finite asset. And you’ve said in an interview, I think, that it’s not about if that is finite, but there’s a finite amount of audience. Just how it works with websites. Right? And while I found that argument good, it raised for me somewhat the question to say, well, yes, when you look at websites, then to be accurate, you’re looking either at domains and or what kind of traffic do they receive mostly on organic, which is mostly Google. Right? So what is the equivalent then to the domain or traffic in the Metaverse that drives land value?
Sam - 00:35:01: It’s the location of that land in the middle verse which basically confers the same value as the domain. Right? Yes, a three-letter domain name is better than six letters, but you still need to type it. It’s not just there in front of your eyes. It’s kind of the same in the Metaverse. The maps are basically those big rectangles where brands and different IP can decide where they want to be. And yes, it’s true that you can teleport from one side to another. So location is not super important like in the real world, but proximity to other project is. We already start to see neighborhoods with Soup Dogg and Steve Aoki and all the celebrities. They are all in the same area and that attracts users because they have a big following in the real world as well. And so being in that region just gives your brand, gives your experience more credibility because you can afford to pay more for rent.
Tim - 00:35:53: So land value in the Metaverse, in your opinion, is somewhat tied to prestige?
Sam - 00:36:02: Yeah, I mean, of course, there’s multiple things that drive value to things. There is obviously utility, what you can do with it. At the moment, that component is not the most prominent. And then there is an element of speculation, which is basically related to how much other people want to pay for it. And that’s related to prestige as well. Reputation is a part of it as well. So who owns the NFT first? Who created that NFT? Right. We’ve seen Elon Musk once created an NFT, and immediately people were buying it for millions. If I built the same NFT, it wouldn’t go for the same price. The utility is the same, but there is an element of reputation. Who created it? And this is the same with diamonds, jewelers as well. There was that great example. I don’t know if he was in South Africa, maybe, where there was a time where you couldn’t find diamonds, but actually the company that was mining them had a whole stock of them. They were just not putting them on the market. They just wanted to create scarcity. So maybe it’s artificial, but it still drives prices. It still drives up the prices. So artificial scarcity does create legitimate value.
Tim - 00:37:08: Sam, thank you so much.
Sam - 00:37:10: Learned a lot. Thanks for having me.
Tim - 00:37:12: It’s been an absolute pleasure.
Sam - 00:37:14: Thank you so much.
Tim - 00:37:16: DAO Talks is brought to you by Grindery. If you enjoyed this podcast, consider subscribing to DAO Talks on Apple Podcasts, Spotify, Google, or any other platform you fancy. To find out more about Grindery, visit grindery.io. Thanks for joining me. Tim out.