There’s hype galore, for sure — but is there money in the metaverse?
Luke Alvarez, general partner and founder of Hiro Capital and chairman and cofounder of digital fashion platform Sknups, said yes and big time.
Alvarez went as far as predicting that virtual fashion and luxury sales would rival the size of the physical market by 2030.
For scale, Daniela Ott, who is general secretary of The Aura Blockchain Consortium and interviewed Alvarez at the WWD Metaverse Symposium, noted that Bain & Company placed the virtual number closer to 5 percent to 10 percent of the total $350 billion market by 2030.
Alvarez, who in his role as a venture capitalist at Hiro looks at an eye popping 5,000 to 6,000 meta-centric companies annually, said, “When a new technology comes along, people tend to be overly optimistic in the short term and under optimistic in the long term.”
And the world right now seems to be in the midst of shifting down from that initial burst of excitement to the longer build up.
Alvarez said some $150 billion has been invested in the metaverse over the past year.
“Some of that was ill spent,” he said. “Clearly, there’s been a lot of hype around some of the NFT projects and so on. Some of that is now coming off, the froth is coming off the market.”
He compared the metaverse of 2022 with the web 20 years ago when the application of some of the big online dreams was still “a bit rubbish.”
“Then in the next 20 years, we got Facebook, Meta, we got Google, Amazon, Alibaba, Tencent,” said Alavrez, pointing to the trillions of dollars of value created.
Even though Hiro takes its name from the protagonist in the novel “Snow Crash,” which offered the world dystopian introduction to the idea of the metaverse, Alvarez said, “We see a lot of stuff and we invest because we think the metaverse is going to be a good thing.”
Even so, exactly what the metaverse will be is still an open question.
“It’s hard to define because it doesn’t exist yet,” Alvarez said. “The truth is, nobody knows because we are all building it. It’s very early days. We’re probably 20 years from the mature, scaled version of the metaverse.”
He said the metaverse will be centered on, “the seamless fusion of digital and physical, immersion and ownership of digital assets and data.”
So, how does a brand start?
Alvarez said the metaverse will require some risk taking, experimentation, caution, thoughtfulness and curation — a little bit of everything.
“It is a generally difficult balance,” he acknowledged. “You have to be in the game, you’ve got to go out and learn.”
But learn while being mindful of luxury’s past mistakes, namely the rush of licensing that diluted some brands in the ’80s.
“The danger is you do that in the metaverse,” Alvarez said. “Be ready to make mistakes, but move and stay clear on the long-term goal, which is clearly about building a revenue stream whilst maintaining premium” positioning.
While luxury brands charge toward that goal there will be lots of moving pieces in the virtual world.
Alvarez said the larger forces, such as Meta, Sony, Epic and Microsoft, are working to find some common ground so digital assets can move from one platform for another.
“Interoperability is really hard,” he said.
And while that comes together in some form or another, the more metaverse savvy brands will be evolving from one-off excursions into the virtual world to a steadier approach.
“What we’re going to see is people who have been doing it for a while beginning to get into more organized, repeated strategies,” Alvarez said.
The froth might be coming out of the metaverse, but fashion clearly senses something new and doesn’t want to be left behind.
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