A virtual cycling experience called Zwift is gaining popularity among pro cyclists—and this columnist.
Courtesy of ZwiftI confess that I’ve been skeptical about Facebook, sorry, Meta Platforms ’ vision of the metaverse, with virtual meetings, virtual concerts, and Ready Player One-style virtual worlds.
But I had a revelation recently while pedaling away at home on my road bike. Yes, at home. My rear wheel was removed and my bike was affixed to a smart trainer made by a company called Wahoo. I was staring at the MacBook screen in front of my bike, riding through a land called Watopia in a cycling application called Zwift. That’s when it hit me that I had been experiencing the metaverse for months without quite realizing it.
My colleague Alex Eule, another virtual reality skeptic, wrote about Zwift a few years back as an example of VR that was actually making a difference in his life. Zwift and the experience have come a long way since.
For one, the company has attained unicorn status, after raising more than $600 million in venture capital. Zwift now has close to four million registered users spread across some 200 countries. They’re paying $15 a month to ride more than 200 miles of digital highways, some copies of real places like Paris and Tokyo, and others imaginary, with routes through volcanoes and under oceans.
While it’s not Meta (ticker: FB) and Mark Zuckerberg’s headset-wearing vision of the metaverse, Zwift is an all-encompassing experience, one with meetups, communication features, and a virtual currency. You need a road bike, a smart trainer, and a laptop or tablet with a decent internet connection.
Zwift founder and CEO Eric Min sees room to grow his budding alternative world, and plans to raise more capital to make it happen. One of Min’s ideas is to provide developers access to the same tools Zwift uses to create its virtual environments. That’s Zwift meets Roblox (RBLX), which is poised to generate $2.7 billion in sales this year, by making tools that let its users create games and virtual worlds.
If anyone doubts the reality part of this virtual world, Min says Zwift cycling is under consideration as a potential Olympic sport. He’s hoping for a debut at the 2028 games in Los Angeles. Says Min: “It’s not just for training and social riding.”
One takeaway here is that the metaverse isn’t something that Zuckerberg dreamed up while hydrofoiling his way through the pandemic—the idea has been around for decades. In January 2008, a junior IBM (IBM) marketing executive created a deck called “IBM and the Metaverse,” which lays out how one could use virtual worlds to work, learn, and play. IBM even has metaverse-related intellectual property, like a 2010 patent for a method of “promoting products in a virtual world,” although CEO Arvind Krishna says the company has no plans to go big in the metaverse.
The old IBM deck contains images from Second Life, a general purpose virtual world that has been around for nearly two decades. While you probably stopped thinking about Second Life years ago, the company lives on. Its parent Linden Lab was sold last year to an investor group for an undisclosed (but no doubt modest) amount.
Linden Executive Chairman Brad Oberwager, who led the buyout, remains wildly enthusiastic about virtual worlds. He notes that 73 million Second Life accounts have been created since the inception of the service in 2003, although most of those have gone dark. (I’m pretty sure I once had one.) Monthly average users range from 650,000 to 900,000, the company says.
It’s worth nothing that Second Life never matched the hype surrounding the company years ago—and that’s one reason to remain skeptical of all the latest metaverse buzz.
For now, investors are still scrambling to find—and buy—metaverse stocks. There are a few obvious ones, including gaming plays Roblox and Unity Software (U) and chip makers, like Nvidia (NVDA) and Qualcomm (QCOM), but they are hardly metaverse pure plays.
That helps explain why investors have gone crazy over Matterport (MTTR), a Sunnyvale, Calif. company that builds cameras and software used to take virtual and 3-D images.
Matterport, which has roughly doubled since it came public via a SPAC merger in July, primarily targets the commercial and residential real estate market, where Matterport’s software is used to produce virtual walk-throughs of offices and homes. Originally dependent on proprietary cameras, Matterport now offers smartphone apps that let you create digital copies of real places using an Apple or Android smartphone.
Wedbush analyst Dan Ives has been recommending Matterport shares, though he concedes the stock looks pricey on near-term metrics—it’s trading at more than 40 times estimated 2022 sales. As Ives concedes, this is a highly speculative story stock.
But CEO R.J. Pittman, who joined Matterport in 2018 after a five-year run as chief product officer at eBay (EBAY), tells an intriguing story. Pittman says the company’s secret is turning buildings into data—producing digital copies of physical locations. It is, he says, “the datafication of the real world.” The company now has digital copies of more than six million spaces.
Last week, the company unveiled a partnership with Amazon Web Services to make it easier to create “digital twins” of real-world sites. Like Zwift, it’s one more emerging link between the real and virtual worlds.
I wouldn’t bet the rent on this one, but if you have a few extra dollars to spare, Matterport is an interesting speculation on the future of the metaverse.
Write to Eric J. Savitz at eric.savitz@barrons.com
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December 04, 2021 at 06:48AM
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