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Poster by Rajan Mithra@VCBay

The metaverse is the latest idea that has captured the imagination of Silicon Valley bigwigs. Mark wants Facebook to be seen as a metaverse company and even created a separate division for it in the Reality Labs. Satya Nadella wants to build an enterprise metaverse and described it as a new layer of the infrastructure stack where the digital and physical worlds converge. Facebook and Microsoft aren’t the only ones that have jumped on the metaverse bandwagon. The CEO of Epic Games- Tim Sweeney, has been promoting the idea for years; NVIDIA’s founder Jenson Huang envisions “a virtual world that is a digital twin of ours”, and venture capitalist Matthew Ball has written an in-depth nine-part series about the metaverse. So what is the metaverse? What is Facebook’s vision for it? Is the metaverse grounded in reality? 

Grab your VR headset and wear your haptic gloves as we are diving into the metaverse!

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Decoding the Metaverse

Google search trends (worldwide) for the term metaverse in the past one year
Google search trends (worldwide) for the term metaverse in the past one year

The term metaverse was coined by writer Neal Stephenson in his 1992 sci-fi dystopian novel Snow Crash. The novel is set in a dystopian future where corporations rule the country and the U.S. government has abandoned most of its duties. The metaverse is portrayed as a massively multiplayer virtual world that users can enter via goggles. Ready Player One by Ernest Cline, is a 2011 novel that follows a similar plot and is set in the nearish dystopian future where people are forced to escape their unpleasant lives into the virtual utopia known as the OASIS. 

The term has existed for close to three decades, so what made it popular now?

Rapid technological advances in AI and VR in the past few years have resulted in virtual worlds that are more immersive and layered. The pandemic which continues to rear its ugly head has accelerated our escapist tendencies, and the idea of an immersive digital world is now more appealing than ever. 

The metaverse is a concept that is in its very early stages and can be interpreted in many ways, but Matthew Ball’s definition is the most comprehensive yet:  

“The Metaverse is an expansive network of persistent, real-time rendered 3D worlds and simulations that support continuity of identity, objects, data, and entitlements, and can be experienced synchronously by an effectively unlimited number of users, each with an individual sense of presence.”

To better understand the definition, the metaverse can be understood as having the following qualities

  1. Persistence: It continues indefinitely and never pauses, resets or ends.
  2. Synchronous and live: The metaverse will be a living experience that exists consistently in real-time for everyone. 
  3. Presence: There won’t be any cap on concurrent users, and each user will have an individual sense of “presence”. The metaverse places everyone in an embodied or 3D version of the internet that is constant, meaning that we’ll be within the internet instead of just merely having access to it. 
  4. Economy: Like in real life, individuals and businesses will be able to transact, invest, own, create and be rewarded for a wide range of work. 
  5. Experience: The experience will span both private and public networks, open and closed platforms and digital and physical worlds. 
  6. Interoperability: The metaverse will offer unimaginable interoperability of data, content, digital assets across various experiences. Your customised Z93 from Far Cry 3 can be used in Fortnite. 
  7. Content: The metaverse will have content and experiences generated by millions of independent creators and corporations. 

In short, the metaverse can be best described as a quasi-successor to the mobile internet as it will build upon and iteratively transform the internet instead of outrightly replacing it. 

Metaverse Stack

The state of the metaverse can be tracked by following the eight categories mentioned below, which can together be thought of as a stack. Each of these categories is crucial to the development of the metaverse:

  • Hardware: The sale and support of physical technologies and devices that are used to develop, interact or access the metaverse. Examples include haptic gloves and VR headsets on the consumer side and industrial cameras and scanning sensors on the enterprise side. 
  • Networking: Involves the supply of high bandwidth, persistent, real-time connections, and decentralized data transmission by backbone providers and those involved in managing the last mile data to consumers. 
  • Compute: The facilitation and supply of computing power to support the metaverse. The computing power would be needed for functions such as motion capture and translation, rendering and projection. 
  • Immersive Virtual Platforms: The creation and operation of immersive virtual platforms and environments where users can indulge in a wide variety of experiences and engage in economic activity. 
  • Interoperability: The tools, engines and formats which are crucial in ensuring interoperability and support the ongoing improvements to the metaverse. 
  • Payments: Facilitating digital payment processes, operations, and platforms.
  • Content, Services, and Assets: This category comprises the creation, sale, resale, storage, and financial management of digital assets. 
  • User Behavior: Identifiable changes in user behaviour that are connected with the metaverse. 

Zuck and Nadella in the Metaverse

The media first caught on with Nadella’s enterprise metaverse during Microsoft’s latest earnings call. The second-largest company in terms of market cap views the metaverse as a strategic goal as there is a real business opportunity in building private metaverses for companies. The enterprise metaverse is a culmination of existing technologies such as IoT, digital twin infrastructure and mixed reality. Given that there’ll be 29.3 billion networked devices by 2023, up from 18.4 billion in 2018, computing will become more ubiquitous and ambient. The constant stream of data emanating from these devices is already enabling us to create virtual representations of buildings and developing digital twins of our physical infrastructure. Using Microsoft’s augmented reality glasses- HoloLens, we can inhabit these virtual worlds and interact with others in unimaginable ways. 

Compared to the enterprise metaverse, Facebook’s vision of turning into a metaverse company is much more audacious, and the company already serves a staggering 3.5 billion users indicating that a shared reality for over half of the world is a plausible goal. The metaverse vision comes at a time when the social media giant is being hounded by the U.S. government, whose aim is to break up the company and potentially force it to spin out its crown jewels Instagram and WhatsApp. 

In his interview for The Verge, Mark talked a lot about how he envisions the metaverse. His ideas roughly boil down to these three areas- infinite office (sounds scary, doesn’t it?), VR and the creator economy.  

Virtual Reality 

Facebook’s first major move in the virtual reality space was the acquisition of Oculus for a whopping US$ 2 billion in 2014. And ever since the acquisition, Facebook has been working on improving the Oculus and expanding its VR offerings. The company launched its multiplayer virtual reality social space- Horizon, in 2019, which is currently in the invite-only public beta stage. In the interview, Zuckerberg admitted that the clunky VR headsets limit entry into the metaverse and fitting a supercomputer into 5mm-thick glasses is a better way to encourage mass adoption

Infinite Office

The infinite office is built on the idea of working from anywhere, users can be seated anywhere, and with just a wave of the hands, they can assemble as many monitors as they wish, configure their size, and seamlessly connect with co-workers who can teleport in to see what they’re working on. So, in essence, the infinite office, as described by Zuckerberg, allows one to pull up the perfect workstation with a snap of the fingers. Facebook also recently launched Horizon Workrooms which offers a work-centric VR experience.  

Creator Economy

Zuckerberg feels that the creator economy will have a huge role to play in the metaverse. He envisions creators working on designing the places where people hang out, building out different experiences like games, artists performing in live shows etc. 


Hype Cycle: Silicon Valley companies love to unite and embrace a nebulous futuristic concept that is seemingly the next big thing and tout its imminent arrival while investors happily gobble up such ideas. The media companies play a crucial role in perpetuating the hype cycle, as evidenced by multiple stories about how the metaverse is coming by major publications ranging from TIME magazine and the Economist to WIRED and, of course, Forbes. The explosion of interest caused by the hype cycle allows tech firms, consultants and investors to cash in on the metaverse madness. The NYT’s Erin Griffith accurately describes the hype cycle on Twitter:

Not Facebook: Reading the headlines that Facebook intends to be seen as a metaverse company must have sent shivers down the spine for many. And that seems to be the reaction to anything that Facebook builds nowadays (Libra). That’s a totally justifiable reaction given the company’s record on privacy, misinformation, and anti-competitive practices. In the metaverse, Facebook can monitor much more than clicks and likes. It can track what you’re looking at, the subtle ways you move your body, your reaction to stimuli and in essence, it’s a surveillance capitalist’s goldmine. Zuckerberg hopping on the metaverse bandwagon has also temporarily helped him earn good press before the attention swings back to what a terrible company Facebook is. 

Interoperability: Interoperability, which gets frequently mentioned whenever the topic of the metaverse comes up, is basically non-existent in the current scenario. Companies across the board, especially social media companies, act like walled gardens with extremely limited information sharing between them. 

VR Rebrand: The metaverse in its current description sounds an awful lot like a rebrand of virtual reality, which has consistently lagged behind the ambitions of its corporate enthusiasts.


The metaverse as it’s currently envisioned will take decades and billions of dollars before it comes to fruition. While the concept has the potential to revolutionize almost every industry and unlock trillions in value, there are a lot of questions that remain unanswered, such as who will govern the metaverse? How will its contents be moderated? What will its existence do to our shared sense of reality? 

Succeeding in the metaverse space is critical to Facebook’s future. The ongoing privacy wars have laid bare the social media giant’s risk of relying on Apple’s and Google’s app stores and smartphone operating systems. 

There’s also a very real possibility that the metaverse never picks up steam, and the experience won’t be adopted by a majority of users. There are many examples of predictions gone wrong; remember when Nadella said chatbots would fundamentally revolutionize computing?

Ultimately no one knows how this will pan out. In the future will we laugh about how idiosyncratic the idea of a metaverse was, or will we meet in the OASIS? 

For more extensive analysis and Market Intelligence reports feel free to approach us or visit our website: Venture Capital Market Intelligence Reports | VCBay.

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