No matter what ‘verse one might be working in, the laws of economics hold. And in the Metaverse, the entrepreneur remains the driver of creativity and growth.
It was nice to see this recognized in Cathy Hackl’s new book Into the Metaverse: The Essential Guide to the Business Opportunities of the Web3 Era.
Here are a few points from Hackl worth keeping in mind as the Metaverse continues to develop and grow:
Hackl serves up some basic economics:
“Traditionally, the factors of production include land, labor, entrepreneurship, and capital. These are the inputs needed to produce goods or services and make an economic profit… This applies to the Metaverse as well. If goods and services in the Metaverse don’t provide utility, then people will lose interest. Consequently, one of the biggest questions for companies and brands who want to enter the Metaverse is how they will provide utility from Metaverse offerings. Digital dresses, virtual real estate, NFT art—without careful thought and planning, these items may not have much utility for consumers. But paired with the right strategy, utility can be provided for consumers of digital goods. This will require understanding and using the factors of production that move the Metaverse economy—land, labor, capital, and entrepreneurship.”
Under a section titled “Entrepreneurs make it happen,” Hackl observes:
“Entrepreneurship is one of the key factors of production in the Metaverse, particularly at this early stage. Creators are the original Metaverse entrepreneurs. An entrepreneur is different from a laborer because entrepreneurs provide their own labor. More importantly, they identify a new market opportunity and hire others to provide labor for that opportunity as a factor of production.”
On innovation, Hackl offers the following insights for entrepreneurs considering the metaverse:
“Market innovation is rapidly driving the evolution of asset classes, such as avatars, 3D models, mixed reality, and spatial environments. Asset classes work together with metadata to comprise content packages that populate the varying platforms of the Metaverse. These market innovations make it so that brands must rethink how they engage with consumers—especially in virtual spaces. In the Metaverse, community is key, marketing becomes an experience, and creators rule. Brands both big and small can capitalize on new trends and technologies to help them to redefine the relationship between themselves and their customers.”
Finally, Hackl touches on a term that many entrepreneurs are familiar with, that is, uncertainty.
When looking at entrepreneurship, we often refer to these people who start, operate and own businesses as risk takers. And they most certainly are. But there’s more. There’s uncertainty, which is not the same as risk. In his 1921 book Risk, Uncertainty, and Profit, economist Frank Knight basically explained that a “risk” is a situation whereby the odds of an outcome are measurable, as opposed to “uncertainty,” which is not measurable. Entrepreneurs face risk and uncertainty. And when we’re talking about uncharted waters in a developing market, such as the Metaverse, uncertainty looms large.
Hackl writes, “Bringing your organization into the Metaverse will come with a great deal of uncertainty. Even industry experts feel uncertain as we move into the midst of this largely undiscovered ‘country’ that is the Metaverse.” Shakespeare’s phrase the “undiscovered country” is apt.
So what do entrepreneurs do? Hackl points out, “However, we are beginning to be exposed to information that is helping us to understand the Metaverse. We are learning to position ourselves for the future—no matter how uncertain it may seem.”
That is, entrepreneurs, along with investors, gather information and learn; they explore and test; and they create and innovate.