If you’re looking to get started in the Metaverse, it might seem like a daunting task at first. With a handful of prominent players and hundreds of other options, it can be hard to know where to focus your time and energy for long term success. But don’t worry! We’re here to help! In our series on “How to Buy Digital Land in the Metaverse,” we’ll cover all the basics you need to know to become the next Donald Trump of the Metaverse (or Ryan Serhant, your pick!)
Basic Ground Rules
Before we get into the details on the metaverses and marketplaces you’ll need to know, let’s discuss a few basic ground rules that we think will help you make the right decision.
So, every major “investor” on Twitter or TikTok will tell you to “do your own research” (DYOR). But what does that mean when it comes to the Metaverse? While there’s no magic formula for analyzing a metaverse, there are some key characteristics you can look out for to better determine the potential for long term success. This list won’t be all-encompassing, and we recommend you come up with your own criteria based on what you’re looking for, but we think this is a great place to start.
Step 1. Review the Team
Metaverse teams come in all different shapes and sizes. Maybe they’re a game studio, or maybe it’s an NFT creator who wants to do something more with their collection. Understanding the background of the team and their ability to execute on their goals is a critical component of success.
Unforunately a lot of projects in the Metaverse still have anonymous teams. While this might work for a small NFT collection, a DAO, or a token, we don’t think it works for a metaverse. For a metaverse to be successful, it needs widespread adoption from users, brands, and even celebrities. Getting this kind of adoption is an uphill battle with an anonymous team. In fact, it’s almost impossible.
When a brand jumps into the Metaverse, they’re taking a huge risk. Any form of partnership not only puts their brand name on the line, but it also comes with potential liability if the project turns out to be a scam or fails completely. For a brand to jump into a metaverse, they need to know that they aren’t blindly supporting someone with a nefarious agenda or shady background. Nike can’t jump into a metaverse where the founders might turn out to be racists or Nazis. It would be nothing short of a PR nightmare!
What Are We Looking For?
- Look for major red flags like previous projects that were abandoned or that seem like “rugs”
- Look for a background in gaming. The founders don’t have to be experienced game devs, but they should have members on their team from major studios. This stuff is hard, and experience matters
- Look for a team that is doxxed and are proud to be. If they’re tweeting about their project from their personal Twitter and really owning it, then they’re more likely to do what it takes to win
Step 2. Review Their Funding
Building a metaverse takes a lot of work and a whole lot of money. If you think about current triple-A games, they can have production budgets in the tens to hundreds of millions. The Metaverse isn’t really any different. At the end of the day, a metaverse is really just a form of video game. It’s going to take a lot more than a $2 million NFT sale to fund a proper project. Make sure that the project you’re jumping into has strong financial backing. Whether that comes from VCs, private investors, or because the developers are a major game studio doesn’t matter. What does matter is that they are in it for the long haul and can afford a proper team and the lengthy development time required to achieve such a lofty goal.
What Are We Looking For?
- Look for investments from large firms and look at total raised. You can use a site like Crunchbase to research investments on some projects. For example, Crunchbase lists Animoca Brands as having raised $675 Million from a wide range of investors. That’s a good sign!
- Look for a wide range of investor types. If the only funding is an NFT sale, odds are it won’t be enough to build a proper metaverse (unless it’s BAYC). Creators drastically underestimate the cost of building and often sell pipe dreams. It’s not that they mean to, but they just don’t know it
- Look for details on current financials. Some companies will release financial reports or updates on their burn rate. If they raised $12 million in 2021 and have been spending $1 million a month, that’s probably a concern
Step 3. Review Their “Hustle”
There are a lot of companies out there that say they are “buidling” but are simply burning through cash like a raging inferno. You can tell a lot about a project by how hard their team works. We don’t mean the Gary Vee type of solo entrepreneur hustle, but we do want to see constant activity and engagement from the team. If they aren’t active on social media or Discord and they rarely post updates, then they’re going to have a very hard time attracting investors, partners, and even users. You want to go with a project that not only seems passionate, but seems like they never sleep. Not because they’re running a sweat shop of course, but because they just love what they do.
What Are We Looking For?
- Look for an active social presence. Companies should be tweeting multiple times a day and engage with replies . Engagement helps attract users and shows interest
- Look for a wide presence. Do they have a YouTube channel? What about TikTok? Do they engage with their community on Discord? The answer should be “yes” to all of the above
- Look for frequent updates. A company that is building something awesome should be excited to talk about it. If they aren’t providing updates, they might not have any. That’s bad for your long term prospects
Step 4. Review the ACTUAL Product
This may seem like a no-brainer, but you would be surprised how many people invest in products without ever trying them. A lot of the existing metaverses that are selling land have demos, public tests, gameplay videos, and other ways you can see what the actual product looks like. It’s important that you understand the state of the product before you dive in. If they’re on year 1 of a 5 year development cycle before release, that might not be the timeframe you’re looking for. At the end of the day, the product is what matters, so you need to ensure it’s actually fun.
What Are We Looking For?
- Look for a demo, public test, or live game. If they won’t let you play it or see it in action, why? Probably because it sucks
- Look for an actual fun experience. If the game is just a walking simulator, no one is going to want to play that. Look for what is going to make the product exciting for players, something to get them hooked
- Look for constant updates and releases. The team should be active and regularly releasing updates. If they aren’t, they may never finish, and you might just get slow rugged
Join the Metaverse!
OK, so now you know the basics! Let these ground rules guide your research, and you’ll at least have a head start on the rest of the crowd. These are by no means all-encompassing and you should definitely add your own flavor to your analysis of any project before putting your hard-earned money on the line. Now that you know the basics, keep an eye out for our next article in our series on How to Buy Land in the Metaverse where we’ll talk about “The Top 5 Metaverses of 2022!”