Real Estate in the Metaverse
Real estate investors are starting to buy up property in Metaverse and plan to rent or sell it in the near future. This episode will discuss How Real Estate in Metaverse will create new opportunities for businesses and entrepreneurs in the real estate industry. It will also discuss the emerging issues and challenges.
ARSOME Technology designs custom software, AR/VR/XR, and the Metaverse with a human touch and expert programming for the best companies and organizations. Founded by a student and his professor in 2016, ARSOME Technology exceeds expectations, inspires the uninventive, and tirelessly outperforms for clients and partners.
ARSOME Technology has emerged as a leader in augmented, virtual, and mixed reality product development.
Learn More About ARSOME https://www.arsome.com/
Real Estate In The Metaverse
Real estate is very much focused on dollar backed currency. US dollar is a global currency standard now, but if we take the real world, it helped me get my head around how do we value real estate in the virtual world. You, moments ago, alluded to the fact that a house may stay fixed at $50,000, but the irony is you can’t necessarily go in and buy a home at $50,000. You need to convert those us dollars into Ethereum or even a token, which is basically like a currency that is native to that land. If we take the central language as a very large platform, one of the biggest right now, they have a token called MANA, and you can buy virtual land or experiences using these tokens of Ethereum and MANA.
These tokens, you can trade in and out to US dollar to Ethereum or whatever. As the tokens become rarer or because of something native to that ecosystem, they eventually are not going to correlate to the US dollar. What do you think, in the current scene or the future, is this going to be still the real-world US dollar and cryptos that are tagged or tethered to the US dollar, or are we going to be dealing with an entirely new form of currency, like MANA or Ethereum, where sometimes we will have no theory or a lot less correlation than other assets would have? Talk to us about that.
We might need to bring a third party for this question. When we talk about crypto and demonetization, real estate itself will increase in cost, price, or market value based on the environment around. That is important to keep in mind. Your community also could have its own coin that does not need the community. It is only bought and sold here in the community. Your big question is, how do I translate that into returns? I’m assuming you can do 1 of 2 ways. The first is that you can buy other assets with your coins like art, paint and other types of assets that could be physical or digital, thenyou could of course translate that into a cash sale. That is one way.
Another way, which could be interesting, is looking at this as a renter’s model, where you are able to collect a fee per month based on the house for not only using the house but also the amenities of the environment. You might be able to look at a different type of monetization model for that. The third aspect is patience. We all need to be patient. Obviously, everybody in this industry needs to cash out. That is up to regulators to figure out. They are going along with that ride and already have made certain regulations for certain cryptos, but there will most definitely be either, A) Way to cash out your earnings or your wallet, or B) There will be a way to easily transfer it to buy something that can then either be digital or tangible and cashed in.
This notion of community is what helps to understand the power of owning an NFT, a non-fungible token that could represent anything. It could represent a movie and image or, in this case, a virtualized avatars online. Twitter has even created this special way for you to verify that you are the true owner of this avatar. There are digital avatars now that are selling for millions and millions of dollars, and the crypto promises you the Bored Ape Yacht Club.
A big utility here is that if you buy a Bored Ape, you are signaling to the world, A) “I’m part of this forward-thinking community,” and B) “It is expensive and I’m the true owner of this.” Aside from being part of a members club, it is an exclusive members club too, and a lot of innovations happening now in the Metaverse revolve around creating community. As an investor and as a venture capitalist myself, I see a lot of pitches around.
Here is a way for us to create community. When you have this NFT, not only have we verified and authenticated you are that you say you are, you are part of this exclusive club. By owning this NFT, it acts like a key to where you can have access. Even in the Metaverse, you can have a door that can only be opened if you are the sole unique owner of this type of token, and maybe there are only 1,000 tokens like this.
This is one example of how the sense of community, our desire to belong to a group, especially when you are in an environment like we felt with COVID when you were in lockdown, you don’t get that physical, real interaction with social creatures we need to interact with others. Here we are seeing this craze where people spend so much money. Millions of dollars are buying virtual avatars and NFTs, which the value is either an eye on the holder because it genuinely puts you in a group of people. Hermes bag or a Rolls Royce hold their value because of what is perceived to be that.
How much of this rush that we see in the Metaverse is down to the exclusivity versus genuinely being part of a community where you find like-minded people? Right now, it feels to me that to own one of these exclusive avatars is exclusive because it is exclusive, it is expensive, and so few people have it. That is not the inclusive feeling one would expect from a community. What is going on, and what is your take on the notion of community in exclusivity and inclusivity?
When we talk about the top NFTs and those communities, like the Bored Apes, there was a conference down in Miami where if you were a part of this NFT community, you hopped on a yacht and hung out on a yacht for three days with all your community members at no cost. There are benefits, of course, of being in a community. Now, if we look at the returns and yields of certain NFT communities, there are not too many. There might be 4 or 5, or you named 2 or 3, but they are trailblazers in this space. That is very important to understand. We have to figure out a way to build a strategy and a community that learns based on these trailblazers.
If we take a step back and look at what a community does, it is very simple. What it does is it increases the engagement, retention, and ultimately sales of your customer base. That is a definition of a community for many businesses and retailers. It is the goal of having them continuously come back again and again with gamification, rewards, and connectivity. That is the key to this NFT buy and sell trade. It is increasing the sale of these NFTs and building a community where you are special and that you feel you are worth this community and should be in it because it could be in this case. If you are purchasing power but you are working with a local aquarium that wants to build a community where people are interested in the wild, preserving animals and the environment.
Community is critical to put an umbrella on how you engage with existing and future customers. A great example is trading cards. That is one industry that is 150% community-driven. If you look at some of the customer retention rates and customer purchasing rates, it is 4 or 5 times a year, which is based on our feeling that they are one of the community. As we move forward in the next several years, we will see a lot of different communities. Of course, there is a monetization aspect to the communities. There are many nonprofits that we have spoken to, and they want to build their own coin or NFTs. A portion of those sales will go back to the environment or some of their missions and engagement.
Community building is critical on how you engage on existing and future customers.
They are using this utility as a way to increase donations or increase awareness. In the community, you see a line of pitch decks, and we are too. It is critical now more than ever because people want to feel they belong. They are left out these past years whenever COVID has been. They want to be connected, be like-minded, and solve problems and challenges together.
Companies and brands are starting to see that, but they are even seeing it more effectively by saying, “If I put a little bit of money in a community-building strategy, then I might get an extra sale or two from this customer this year.” It is a huge strategy, especially with the Metaverse building that community. As I said, you build that ecosystem. The community is an ecosystem. Every one compliment feeds off, and buys and sells off one another. If you own that infrastructure, whether you are a real estate VC or your construction, whatever it is, you will be able to get transactions based on all those community engagements.
Friends struggled to reach consumers. They live and die by their ability to reach consumers and engage them. Personally, I saw this collapse of an entire category of retailers who didn’t embrace mobile. They had a web-focused experience and didn’t bother creating a mobile-first experience. We are very late to the game.
In that timeframe, you saw mobile-first companies come out, and you surf or disrupt the flow. They made it very easy. One-click checkout on your mobile phone, integrated with Apple Pay or whatever, is much more superior than a mobile web interface on your phone. A native app is very powerful. It feels to me that a lot of people now have experienced this. We have seen entire companies emerge.
We have seen billionaires come out, building companies in the space, and competitors emerge. I somewhat feel that because in the last 1 or 2 generations have experienced this, the current and the new generation realize when a new technology comes out, you have to move faster. I actually think the adoption curve now for technologies is very different than it used to be.
Things will go amass much faster, and that is not just a function of a huge, massive global population and amazing connectivity. It is also a function of knowing if we don’t move or where we are going to get disrupted. Every company now needs a digital strategy and CIO. I’m talking about traditional big brands here. In the past, it was a provocative role, a CIO. Even the role of a CIO, CMO, CTO or CRO, everything has been touched by technology. A lot of this is FOMO-driven but in a good way. Do you agree with that?
I agree 100%. It is one of those technologies that companies need to dabble in. They don’t necessarily need to know where they are going, but they need to get started. That is important. That is what we are seeing with these brands who are building this infrastructure in this space. They understand the importance of testing and experiencing. That is like CIO or CTO.
If they don’t have most of their day looking at tomorrow, next quarter, or next year, you are in trouble. You have to have a team which most corporations we are seeing are bringing in and assessing technology. That is the first step. You assess it. You understand the capabilities, and then they say, “I understand the tech and its capabilities. Let’s find a division in my 30,000, 40,000, 50,000-person enterprise where this technology best fits.”
They work with that division. They build a proposal and a pilot, and it fits. They do an efficacy study, and it works out. The team then says, “We worked in this division. Now, which division can we go to next?” They work as a liaison. It is important to know this as somebody who is looking to get into the enterprise space, but also who necessarily talked to within the enterprise space. It is usually an innovation team or an experiential team that tests these technologies in these different divisions.
You are going to see a lot more openness. As you said, it is a fear of missing out. It is also the fear of being yelled at. Let’s be real here. These are public companies. A lot of these executives have a lot of pressure and stress. In a year from now, If they miss the boat of this Metaverse, in these virtual worlds, virtual shopping, the virtual training, or whatever it is, this is not a boat to miss.
If you put yourself in the shoes of the executives at larger companies, they are seeing fellow companies devote some of that treasury and transfer some of the treasury into cryptocurrencies. Now it is becoming a legitimate way of managing your treasury. It is to allocate some of your cash reserves to alternative cryptocurrencies. It is a Bitcoin currently, but there are even discussions now about large major banks providing services to their institutional clients and institutions themselves and high net worth individuals allocating.
I have heard numbers of 1% to 5% into cryptocurrency. Of course, there are some Bitcoin maximalists and others who have entirely 100% of their net worth in cryptocurrency. I’m sure there are many of our audience who have 100% of their net worth in things like real estate or startup founders in startups. It is becoming recognized. This is something I don’t think governments are able to stop as much as help. By helping, regulation is good and needed for the space.
People feel left out. They want to be connected, like-minded, and solve problems together. And many brands a seeing that as they implement community-building strategies.
I think the industry is going to do what it wants. The regulators are either going to catch up or not. The technology has gotten to this point, especially with decentralized applications and opportunities, where somebody out there will find a really clever way to cash out certain coins that people are worried about. It is being patient and not rushing into anything. It is slow and steady in this world.
It has been fantastic having you on the show. Could you let our audience understand what type of companies and partners you are looking for? If anyone fits the bill, can you spell out how they can contact you, including your email address?
Thank you once again for your time and all the participants. We are primarily looking for early-stage companies. I would say $100,000 in revenue to $700,000 or $800,000 in revenue that is looking for early-stage funding, it could be seed or Series A. We would be open to talking about certain investments. Also, if there are any software development needs, it could be for ed-tech, fintech, or any Metaverse-based needs, we would be happy to have those discussions. My job and my role in this industry as a trailblazer is to build an ecosystem where everything compounds, and that is going to be critical moving forward, especially for the Metaverse.
How do they reach you?
You can reach me Williams@Arsome.com.
Thank you so much for coming to the show.
Thank you for your time.
Subscribe to Zain Jaffer: https://bit.ly/2SWhYW5
Follow the PropTech VC Podcast:
Listen on Apple - https://apple.co/2Izoznu
Listen on Spotify - https://spoti.fi/2STWDwq
Listen on Google Play - https://bit.ly/2H7s6c0
Why a Lack of Data Impacts Real Estate Asset Decisions https://youtu.be/IFmYE8wNBbo
Top Tech Changes in Property Management https://youtu.be/2yz-ycVQnzQ
How Technology and Interactive Maps Changed the Real Estate Market https://youtu.be/wdk4rO541EI
About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.
His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30”, “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.
- Bored Ape Yacht Club