Full Essay: M-word is coming

The rhetorical floodgates have flung open and the virtual worldbuilders are off to the races. The m-word is coming, we’ve been told ad nauseum.

From Delaware C-Corps to DAOs (decentralized autonomous organizations), plenty of organizations can credibly lay claim to some aspect of m-word worldbuilding. But beware of the narrative bandwagoners; They are legion and they are loud.

The m-word broke the sound barrier over the summer, bouncing between corporate strategy docs, earnings calls, technical whitepapers, Jim Cramer soliloquies, Discord servers, Twitter feeds, and NFT project roadmaps. If you squint hard enough, you can already see a cottage industry of m-word consultants spontaneously assembling on LinkedIn. Per this professional expert's technical analysis, the m-word has experienced a hype correction. It’s due to hit buzzword bottom soon:

With m-word hype eventually poised to recover to a productive equilibrium, a word of entrepreneurial advice from my former boss:

I know it when I see it

If you haven't become acquainted with the m-word, congrats for not being Very Online. Seriously. For the uninitiated, the portmanteau combines “meta” (beyond) and “verse” (universe). Neal Stephenson, who coined the term in Snow Crash, described it as a “computer-generated universe.” More context from contemporary architects of m-word precursors:

• “A phenomenon that transcends gaming...a real-time, computer-powered 3D entertainment and social medium in which real people would go into a 3D simulation together and have experiences of all sorts.”—Tim Sweeney, Epic Games CEO/founder

• “A digital place where people seamlessly get together and interact in millions of 3D virtual experiences.”—David Baszucki, Roblox CEO/founder

No quick explanation does the full definition justice. Below is a handy list of qualities to be expected in a true m-word, from the m-word prophet Matthew Ball himself:

• An interlinked network of worlds and simulations, spanning digital and IRL worlds

• Always-on, persistent (can’t be paused), and real-time (not played back).

• Objects, positional and orientation data, characters, and environmental information are synchronous and shared. The modern web, by contrast, is mostly experienced asynchronously and discretely.

• Immersive (3D content via augmented or virtual reality). Modern media, by contrast, is mostly experienced through glass rectangles.

• Cross-platform and interoperable (ie, using non-proprietary currencies, owning your skins/goods/assets, and taking them from one place to another)

• Massively ‘multiplayer’: All users can participate in the same instance. If I was writing an S-1 prospectus for the m-word, I’d list this as the biggest risk factor. The “concurrency infrastructure” required for ubiquitous co-location in a shared version, rather than being divided into sharded servers, is far, far beyond anything we can do today.

• Not just a game or third place. The m-word has its own fully functioning economy, where users can make a living, invest, buy goods/services, execute short squeezes against AI-controlled hedge funds, etc.

Recently, Ball updated his seminal m-word opus with a pithy definition:

The coming free-for-all

Though it’s still a bit definitionally muddled, what constitutes the m-word is getting directionally clearer. But who should build it and how it should operate are still open questions.

Different schools of thought exist. Two currently rule the take sphere.

In one camp, we have who we’ll call Web 3.0 punks. This term is used endearingly FWIW. Paramount priorities in the punkverse include irrevocable property rights, self-sovereignty, and a fully interoperable, decentralized network of networks. No single point of failure or corporate kill-switch should exist.

If this vision sounds familiar...that’s because it’s already proliferating widely. NFT marketplaces, decentralized game makers, dapp devs, ethereum builders, and the bitcoin OGs are animated by these principles. Axie Infinity and Decentraland are a virtual game and world, respectively, imbued with the punkverse principles. And they already have viable, functioning economies.

Where the punks are going, there won’t be centralized intermediaries, gate-keepers, or rent-seeking ‘megacorps’ that sit atop critical m-word infrastructure. Megacorp is the term that many punks and allies have taken to calling the internet giants. As the punks see it, these companies lord over walled gardens, proprietary services, and otherwise closed ecosystems that are anathema to Web 3.0. They’re innovative leaders, sure, but anticompetitive at best and monopolists at worst.

Concerning the internet giants: They’re victors of Web 1.0 and 2.0 and the world’s most successful, well-run firms to boot. The GAFAM companies are $1+ trillion market cap megacorps (thus, they’ll henceforth be referred to as the 1T club). Having made their names in consumer electronics/mobile, search, e-commerce, and social, the 1T club brought genuine value and innovation to billions.

Now, they find themselves on the receiving end of the revolutionary disruptor narratives they once propagated.

The 1T club hasn’t felt the need to dignify the punk’s slights with a direct response. If and when the 1T discusses tenets of Web 3.0, such as interoperability or data portability, true believers aren’t taking it as anything beyond lip service.

What can’t be doubted is that the m-word has high C-Suite mindshare in Palo Alto, Menlo Park, Redmond, Seattle, LA, Santa Clara, etc. In the 1T Club, there’s an obvious mandate to play to win in whatever comes next.

In search of ever-more growth, the 1T club’s members are seeking to expand their spheres of influence. And since their fiefdoms are increasingly overlapping, frequently pitting these companies head-to-head against each other, they have no love lost for one other.

But they do have common ground. This is the 1T club, after all, where user bases are counted with three commas and R&D budgets tower above (almost) anyone else’s...and nation-states’ GDP. The 1T club is off to a running start with crucial m-word building blocks: cloud computing, AR and VR hardware, wearables, smart home devices, edge/ambient computing, voice assistants, AI/ML, data, etc.

It's unclear how all the various building blocks cohesively fit together to form the successor to today's internet. It's also not a sure bet they will fit together. But there's a strategic imperative, or maybe even a fiduciary duty, for the 1Ts to form a unified framework for how all the expensive R&D could somehow fit together.

It's all narratives?

Narratives are powerful but they don't tell the full story here. While “Punk good, megacorp bad” is a good rallying cry for the former and an even better storytelling device for sci-fi authors, the Manichean framing does no favors to a more textured reality. This probably isn’t a story with a binary ending, but rather one with a vast spectrum of possible outcomes. Some observations to that effect:

1. A true, full-feature m-word is a longggg ways away (see: concurrency infrastructure). We don’t know what tech philosophies, products, and power structures will look like a decade or two from now.

2. The m-word is a hell of an expensive undertaking. Presumably, build-out costs will be shouldered by megacorps. Big Tech, but also big telco, big submarine cable layer, big ISP, big satellite constellation provider, big chipmaker, so on and so forth...

3. Early adopters may have stronger feelings on these quite real philosophical differences. But! The impasse won’t necessarily be a dealbreaker for the m-word’s “next billion” users, ie, everyone else in the adoption curve.

4. 1B users assumes the m-word will even exist, or that people will want it. These are assumptions, not predestined outcomes.  

5. Each camp is not a unified front with a perfectly homogeneous set of interests. There are corporate technologists genuinely driven by pushing the boundaries in, say, holographic rendering or wave optic displays, not a north star of maximizing shareholder returns. On the flipside, there are NFT traders out there who aren’t decentralization maximalists, per se, but high priests of ‘number go up.’

6. Neither group will develop the m-word alone or determine its fate by themselves. A vast array of key players don’t fall neatly into the dueling set of camps. There is a big ole messy middle.

The big 'ole messy middle

Back in the day, following another type of holy war, the Treaty of Westphalia established nation-states, the atomic unit of international relations. This is a wild digression from what you were likely expecting, but bear with me.

Punks and tech megacorps challenge the Westphalian system in different ways.

Most digital world-building takes place outside the realm of governments, but not necessarily beyond their reach. This year, China has brought its entire consumer internet sector to heel. Among other things, this crackdown has imposed new compliance costs, reshaped tech companies' relationships with their users, and constrained their ability to ship whatever they want. The free-wheeling days are over. In the West, specifically the US, the specter of more stringent regulation looms large over the tech sector.

And that's the point: Virtual worlds aren’t impervious to the geographical boundaries of our meatspace world. Governments may not be the driving force of the m-word, but they can still throw a monkey wrench into its development.

Beyond domestic policy, consider the balkanization of the web, tech stock exchange listings, telco infrastructure, smartphone OSes, and app stores. Why wouldn’t the splinternet extend into the m-word? Definitionally, does that make it dead on arrival? If not, does a set of fragmented, nationally controlled m-words that don’t “talk to” each other really count? What would authoritarian vs. democratic versions look like? Would the US and EU use the same version, given their divergent digital regulation and data governance postures?

Next up in the messy middle...

A new breed of challengers: the m-word natives.

Having made their names in gaming, these companies are led by technologists who have strong feelings about the m-word and distinct philosophies on what it should look like. Long before it was fashionable, the m-word natives have been building in public toward their vision. Two m-word natives have, in fact, gone public. Across the board, their valuations have soared for two reasons:

1. The Covid-19 panini pulled forward future trends, including the displacement of analog by digital.

2. Markets are slowly pricing in the fact that these companies’ self-serve creation tools, graphic engines, and 3D/AR/VR platforms have TAMs far beyond just gaming.

The canonical example is Epic Games, which could be described as the developer of a blockbuster, battle-royale shoot-em-up game. But, if anything, Fortnite was a proof of concept that helped Epic cash-flow its investment in other m-word tooling, such as the Unreal Engine. In words and deeds, CEO Tim Sweeney has positioned Epic as an ‘arm the rebels’ company. Epic has fought what it would call the mobile OS megacorp duopoly in Web 0.0 format (US courts), which has conveniently doubled as a crusade for hearts and minds.

Also in this club: Unity, which offers a cross-platform game engine and real-time 3D rendering/development tools. The company, which primarily serves mobile game devs and Fortune 500s, has meaningfully helped pushed the envelope with AR/VR adoption by making it easier to create in these mediums. One fascinating benchmark that Unity CEO John Riccitiello has highlighted is the ratio of artists to developers in an organization. “In gaming, it used to be 1:1. Today, artists outnumber technologists at least 2:1, and it's quickly heading to 5:1 or more,” Riccitiello said. This sort of leverage and increased productivity will be essential building out a vast network of worlds and simulations.

Roblox, meanwhile, weds world-building with user-generated content. Massively popular and sticky with younger users, Roblox has been able to evolve beyond game-like mechanics (shoot, collect, pass level) to third-place, proto-m-word dynamics (create, explore, socialize). The results are impressive, with 43 million daily active user and millions of items/skins/cosmetic upgrades created.

Another must-mention is Niantic, the AR developer behind Pokémon GO. Niantic CEO John Hanke has observed that the m-word term is derived from dystopian sci-fi novels. He advocates not for fully immersive VR, but what his company is building: “data, information, services, and interactive creations” overlayed on our real world via AR.

Clearly, the m-word-native companies don’t see eye to eye on everything. And they bring different strengths to the table. But they are picks-and-shovel companies (also, Nvidia!) to watch in this brave new world.

Beyond governments or m-word natives, the messy middle has a long tail. These are the companies, brands, developers, online communities, and everyday users who will create/build toward an m-word or otherwise participate in its incipient sub-economies. These groups can vote with their feet. Dominant tech topics du jour—platform take-rates, creator monetization opportunities, distribution chokepoints—will shape how they vote. Take it to the bank (of Nook).

The synthesis

Set aside the heady question of whether a m-word is technologically doable or socially desirable. While that isn't to be taken for granted, for our purposes, we'll assume the m-word is doable and desirable. Where, then, will it land on the spectrum of to

The punks have a lot of whitespace in front of them. Crypto, distributed databases, shared ledgers, digital wallets, and NFTs can and should remake marketplaces, virtual economies, and digital ownership models. Yes, there are a lot of shady, rugpully elements to certain parts of this world, but to reduce Web 3.0 to 'number go up' or 'tulip mania' or 'scam' is missing the forest for the trees. In particular, the non-fungible speculative mania we see today seems destined to eventually give way to genuine utility and value. Two examples form music: Steve Aoki giving free Lollapalooza tickets to his NFT holders. And 3LAU's new company, Royal, which could let artists' true believers share in their upside.

In the vibrant punk ecosystem, the pace of innovation and iteration is unmatched. Technological complexity is steadily being abstracted away, usability is improving, and tens of millions are being onboarded.

If we extrapolate the trend to critical-mass adoption, it’s difficult to imagine a future archetype m-word user settling for ownership models that resemble the status quo. The accessible example is digital avatars: Today, you can’t take them across apps or bring them from game to another.

Imagine if you could. From that vantage point, why would anyone opt for assets that can be programmatically confiscated, usable only in one enclosed game/experience, or not eligible to be traded/exchanged/sold? You earned or bought those avatars, cosmetic skins, emotes, spaceships, and pet doges. They should be truly yours!

For virtual economies, arguably the m-word’s important component, today’s biggest virtual game/world economies don’t have many selling points over the punk paradigm. V Bucks, Cod Points, Robux, and Bezos Bucks would take a back seat to currencies that can be freely traded. That’s not to say corporate digital currencies won’t exist—They just wouldn't be the only medium of exchange. The punks should be saying: your illiquidity and trapped assets are my opportunity.

So, there’s a strong case to be made that a new ownership layer of the internet/m-word will be distributed and decentralized, as the Punks are pushing for.

On a more meta level, an m-word would by definition require the 1T Club to accede to higher levels of interoperability. That’d impact take rates across the toll booths they set up in whatever successor to our current internet.

But the 1T Club will still be capable of standing up and scaling lucrative m-word divisions, barring an outlier event (eg, sweeping trust-busting). In the general public’s eyes, the 1T Club members are still relatively popular institutions. From an execution perspective, the 1T Club has clear hardware, software, user base, and data beachheads in whatever comes next. Not only can they stake a claim, they can heavily allocate toward improving their odds of success.

If the m-word bulls are to be believed, it will be a multi-multi-trillion dollar market. Even with less market share, that big of a pie could still mean the 1T Club gets bigger.

But they’ll face competition at every level and layer. There’s the m-word natives and Punks. But plenty of other examples immediately come to mind: Snap and social identity. The House of Mouse and IP. Copyright lawyers and litigation. Etc etc....

The m-word may very well be cobbled together by a vast multitude of players, eclipsed in complexity perhaps only by our digital advertising ecosystem. Speaking of ads: Some of the driving forces of today’s web are likely to survive into whatever comes next. Closed ecosystems, sandboxed systems, proprietary technology, megacorps...and ads...aren’t going away.

While the feature-complete m-word is still a distant goal, it’s very plausible we’re already living in the early, formative stage of the precursor. We’re on V1. Let’s say that V-N equals the full thing. It’s a fool’s errand to try predicting what V3, V4, so on and so forth will look like.

In any event, here's this fool’s 10¢ on what V-N looks like: The punks make direct contributions with some ideological compromises along the way. The 1T club loses power and control, relatively speaking, but most of the members remain forces to be reckoned with. New megacorps emerge. Not a total revolution of today’s tech ecosystem, but a sizable shake-up.

But who’s to say? Let’s check back in 2031 and 2041 to see how this fared.

A special note of thanks to Matthew B., Donnie D., and Katie D., who read an earlier version of this essay and provided substantive, thoughtful feedback.