The metaverse is having a moment. In the first half of 2022, the word metaverse appeared more than 1,100 times in the U.S. Securities and Exchange Commission’s regulatory filings. A record high when compared to the 260 mentions in 2021, and the less than one-dozen mentions in the past two earlier decades.
On the surface, this points to a larger trend in the market — one where brands and investors are clamoring to find their footing, and carve out a unique space in the metaverse. Global market valuations tell a similar story. In the first five months of 2022, companies, VCs, and private equity firms invested a whopping $120 billion into immersive Web3 experiences — more than double the $57 billion invested in all of 2021.
But dig a bit deeper, and one thing becomes clear: most brands are flying blind with each frenzied launch into the metaverse.
Everyone from Gordon Ramsey to Snoop Dogg, and brands like Microsoft and Netflix, are rolling up their sleeves to create their space in the metaverse. Business leaders looking ahead are asking how to make their foray into the arena, and many questions loom large.
As a studio that designs Web3 experiences alongside brands, we encounter many questions and misconceptions when it comes to the metaverse. After watching brands enter with varying levels of success, here are a few common pitfalls to be aware of as you chart your course.
Assuming the old rules apply in the metaverse? Don’t.
Web3 is the next iteration of the internet. It’s where all transactions and experiences are tracked on the blockchain, and frontline technologies like VR, AR, and virtual events will eventually intersect to provide a 3D, fully immersive, digital world. Today, most brands and projects are operating somewhere around “Web 2.5.” We’re on the move toward Web3, but things have just begun.
The metaverse is like nothing we’ve ever experienced, which is why old paradigms won’t work. Namely, information gatekeeping by large corporations, the steady stream of interruption marketing pointed at consumers, and predictable ROI on brand campaigns.
On the contrary, the bedrock of the metaverse rests on decentralization. Where ownership and user-generated content reign supreme.
This means legacy brands or personalities who have had success in a Web2 environment cannot assume their success will translate to Web3 — at least in the same way. Sure, your market cap or number of TikTok followers may be impressive, but these won’t give you a leg up in the metaverse ecosystem. Rather, the currency of Web3 is about creating engaging experiences that add value and meet your target audience where they’re at — not pushing your brand agenda, or using your virtual space as a billboard.
To illustrate this point, one can’t help but reflect on Meta’s latest flop in unveiling its long-awaited metaverse contribution: Horizon Worlds. After two years of building in a vacuum and spending an exorbitant $10 billion, the company released its VR sandbox, only to face industry-wide scorn. With dated designs and a lack of strong community involvement, the launch left much of the community wondering how the eponymous Meta could be so out of touch with the metaverse user expectations, and culture.
The takeaway? Do your due diligence. Get a firm grasp on where your community hangs out, and what kind of experience they want, and focus on building that. Assume that whatever brand equity you’ve built until now will need to be translated into an agile, interactive experience that puts their needs first, not your aspirational brand objectives.
Going alone will only take you so far
The old axiom of “if you want to go fast, go alone, but if you want to go far, go together” could not be more true here. Trying to enter the metaverse without tapping into existing knowledge of the culture and technologies is a recipe for disaster. Case in point: the litany of celebrity-driven NFT launches that, like clockwork, deplete in value shortly after launch, and get labeled as money grabs.
On the flip side, by partnering with a trusted guide, you’re getting support while navigating the many decisions you’ll have to make as you begin — from which tech stack to build on, to the types of experiences you’ll test, and how you’ll monetize down the road. Your “guide” could look like an external agency you partner with. Or, hiring experts who have deep knowledge of the space to work in-house on your team.
A great example of this approach is Nike. The company wanted to offer unique virtual products and experiences to bring its community together and establish a brand presence in the metaverse. Rather than trying to build everything from scratch, Nike acquired RTFKT, a leading digital fashion design studio specializing in creating virtual sneaker collectibles.
Together, the pair created a line of virtual sneakers called Cryptokicks, in addition to virtual spaces where people could interact and hang art and NFTs on their walls. This highly successful partnership helped Nike quickly find its feet in the metaverse, with 7 million people interacting with its metaverse creations in just six months.
If you want to experience long-term success, consider building out a metaverse team function in your organization. There’s a reason why Microsoft and other legacy brands are restructuring their teams, writing new job descriptions, and acquiring talent steeped in all things metaverse — they’re in it for the long haul.
Overlooking your community is not smart
Your community is the foundation of your success in the metaverse.
It’s easy to get caught up in new immersive technologies that dazzle. But the metaverse is about so much more than just digital spaces. At the core, it’s about creating a sense of belonging, identity, and community.
NFTs like the Bored Ape Yacht Club or DeadFellaz for example provide a mechanism for people to uniquely express themselves and connect with other like-minded people. This creates a common theme of acceptance and ownership to rally around. As a brand, you can harness this force as fertile ground to foster strong brand affinity by providing thoughtful interactions.
Of note, the recent move by soda brand Jarritos to enter the Web3 space demonstrates that any brand can find a sweet spot with a community-led strategy. Jarritos was founded in 1950, in Mexico. As a 70-plus-year-old brand, the company wanted a way to connect to new customers and refresh its brand image.
Jarritos decided to partner with a popular NFT brand called Gutter Cat Gang, which is an NFT collection with a community deeply rooted in the brand (owning different NFTs from Gutter Labs unlocks unique levels of membership and community perks). Jarritos purchased a Gutter Cat NFT for their marketing campaigns, and used the collaboration as a jumping-off point to connect with the already thriving Web3 community.
Taking this community-first approach helps you hedge against Meta-like flops, since you’re building onto an existing community that’s already united by preferences, values, and a keen appetite in engaging with you.
As the world navigates its early steps in the metaverse, keeping these elements in mind will have you moving quickly beyond the ones diving in with major excitement but an undercooked plan. Focus on investing in a community, rather than asking a community to invest in you. Find the right people and partnerships to help you serve them. And know that all the rules are evolving in real-time — so get ready to experiment, adapt, and settle in for the long haul.
Neil Stevenson-Moore is an entrepreneur and Chief Product Officer at Looking Glass Labs and House of Kibaa. Neil began his career as a professional hockey player before founding StylePixi, SportNinja, and RISExSHINE with Jay DeMerit and EA Sports. Neil recently developed and executive produced GenZeroes, the first live-action NFT series.