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Used at top MBA programs including
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Kellogg School of Management at Northwestern University
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1. Facebook wants to be a “metaverse company” and the outlook on virtual worlds
  • This week, Facebook announced the launch of its new Metaverse product group, days after the Q2 2021 earnings call where Mark Zuckerberg declared Facebook’s ambitions to become a “metaverse company.” The Metaverse product group – which will be led by Instagram’s VP of product Vishal Shah and sit under Facebook Reality Labs – combines the teams working on AR/VR content, recently acquired Unit 2 Games (maker of the Roblox-like Crayta gaming platform), and the Facebook Horizon social VR world.
  • The Metaverse product group is drawing heavily from Facebook Gaming, and reportedly hiring for hundreds of roles in addition to the thousands already at Facebook Reality Labs. It aims to build the “connective tissue” needed for a functioning metaverse. The move draws upon Zuckerberg’s view that the metaverse is the “successor to the mobile internet – and a market shift that Facebook wants to get ahead of. Industry observers have pointed to Facebook’s late transition to mobile as possible impetus in trying to avoid the same mistake. (Facebook’s marked success with its Oculus VR platform probably has something to do with these lofty ambitions as well.)
  • The success of Roblox with its tens of millions of user-generated games has breathed new life into the idea of the metaverse – a single shared virtual world akin to “Ready Player One” – and its precursor, the multiverse of separate virtual worlds. Nvidia CEO Jensen Huang believes that virtual worlds will be photorealistic 3D simulations inhabited by avatars and AI beings, with their own economies. Zuckerberg describes the metaverse as a “persistent, synchronous environment” or an embodied internet with the “defining quality of presence.”
  • Open-world games will be the entry point to the metaverse, and already companies like Roblox, Mojang (Minecraft), Epic Games (Fortnite), Manticore Games, and Rec Room (not to mention a wave of startups) are staking out territory. Platforms like Roblox (which has 42M daily users) and Fortnite are already evolving into social platforms where users can attend concerts, hang out at the mall, and buy millions of dollars (collectively) in digital goods.
  • Virtual worlds will reach well beyond games into everyday activities – including education (e.g. Kahoot), live events (e.g. Wave), digital-currency transactions (e.g. Razer), collaboration (e.g. Nvidia’s Omniverse, Microsoft Mesh), and brands (e.g. Gucci x Roblox). Microsoft, for instance, referred to an enterprise metaverseon its own earnings call, viewing it as a new layer of the infrastructure stack where digital and physical worlds converge.
  • Control and ownership of 3D asset libraries also stand to be enormously valuable. If a multiverse of virtual worlds replaces the social networks of today, the virtual-world platforms with the deepest ecosystems of digital assets will have an edge. Epic Games – which already owns the Unreal Engine marketplace – just acquired Sketchfab, possibly the largest 3D model repository and marketplace out there. It’s the latest in a series of digital asset-related acquisitions by Epic Games over the past few years – which have included art portfolio site ArtStation, object/area recreation tool Reality Capture, photoscanned asset library Quixel, and many more.
  • The metaverse still has a long way to go – according to Zuckerberg, it needs “new protocols and standards, new devices, new chips, new software from rendering engines to payment systems, and everything in between.” This includes more sophisticated VR/XR hardware and software, graphics chips, immersive spatial audio, libraries of 3D assets, interoperable standards, and of course, more “killer” use cases.
  • While Facebook believes the metaverse will not be built or run by just one company, the potential to be a driver of this ecosystem has enormous upside for the social media giant. Its “billions” in investment in the metaverse is rooted in a plan to bring hundreds of millions” of users into its virtual world alongside its advertising and commerce business models. Translating its social and messaging apps, content/services ecosystem, and payments system to a more immersive metaverse has the potential to multiply, deepen and enrich touchpoints with its users and business customers.
  • There’s a whole lot of imagining that we have ahead of us before the metaverse takes full shape. While some may wonder whether the scale of Facebook's investment is too early, its commitment will likely jumpstart the next phase. For Facebook, the metaverse holds the promise of being less reliant on hardware and operating systems controlled by its rivals (e.g. Apple). It does, however, beg the question – who will implicitly govern the metaverse? Because even in an open metaverse, we will likely see control points.
Related Content:
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  • Mar 12 2021 (3 Shifts): Big Tech’s XR race is picking up steam
2. Can iron-based batteries unlock affordable, multi-day energy storage?
  • Batteries are on everyone’s minds these days, and iron-based batteries have picked up momentum in energy storage and electric vehicles (EVs). Last week, grid-scale storage startup Form Energy revealed its first commercial product under development – a rechargeable iron-air battery that can deliver electricity for 100 hours at a systems cost comparable to traditional power plants. The startup – led by ex–Tesla Energy execs – also announced a $200M round of funding led by its iron supplier ArcelorMittal’s XCarb innovation fund. Tesla is also making a “long-term shift” towards iron, which is cheaper and more abundant than commonly used battery materials like nickel and cobalt.
  • The materials in Form Energy’s large-scale battery systems (each cell is the size of a washing machine) will cost less than $20 per kilowatt-hour (kWh) of storage – a threshold, with renewables, regarded as competitive with traditional fossil fuels. In comparison, the materials in lithium-ion battery cells – widely used in other grid solutions and EVs – cost $50-$80 per kWh of storage. (Despite their advantages, Form’s iron-air battery systems are too heavy for cars and more suited for stationary storage.)
  • Uneven renewable-energy supply and need for long-duration storage are perhaps the most significant barriers to retiring thermal power plants and achieving a reliable carbon-free power grid by 2035 (Biden’s target). Experts believe short-duration lithium-ion batteries (which typically can discharge for 4 hours) combined with emission-free sources like wind, solar and nuclear can generate 80% of US electricity at a cost-competitive rate – but the other 20% requires multi-day storage. Form Energy’s iron-air battery – which it views as complementary to lithium-ion – is capable of discharging for 100 hours (4+ days).
  • Form Energy is not the only player interested in iron-based batteries. ESS, which recently announced it would go public via SPAC acquisition at a $1B valuation, has an iron-based, long-duration “flow battery” that can deliver 4-12 hours of energy capacity and is already in production.
  • Tesla is also moving towards lithium-iron-phosphate (LFP) batteries in its energy storage solutions and entry-level EVs. (The chemistry has been around since the late 90s but hadn’t gained traction against nickel-based chemistries that have higher energy density.) The key LFP patents held by Chinese suppliers are set to expire next year, opening the door to Western firms. Cost efficiency is particularly important for Tesla – which is targeting a $25K vehicle by 2023 and has rival automakers like GM and VW working to make EVs more affordable for mass-market consumers.
  • Battery technology has long been resistant to performance-cost breakthroughs. There is often a chasm between “working in the lab” and commercialized/deployed at scale with a viable business model. Companies have to place bets, and making tradeoffs among materials cost, energy density/range, storage duration, durability/lifespan, and safety can be a moving target.
  • With battery chemistry a major area of R&D going on right now with thousands of potential compounds, how this plays out is anyone’s guess. But since advances in battery tech will likely ride on investments by EV players and their battery suppliers, they’re the ones to watch.
Related Content:
  • Jan 7 2021 (Brief #40): Breaking down the EV barriers – Vehicle range, price, charging infrastructure
  • Sep 25 2020 (3 Shifts): Tesla’s plan to cut battery costs by 56% within 3 years
3. Alphabet launches Intrinsic to tackle the persistent challenges in industrial robotics
  • Last week, Google parent Alphabet launched a new independent company called Intrinsic spun out of its X “moonshot factory” after 5.5 years of development. Intrinsic will build AI-powered software for industrial robots, aiming to make them “easier to use, less costly and more flexible.” The company points to the persistent challenges in teaching robots to do things – a time-intensive process that is “surprisingly manual and bespoke” today.
  • While details are sparse, Intrinsic is using AI-based “techniques like automated perception, deep learning, reinforcement learning, motion planning, simulation, and force control” to help robots sense, learn, and be more versatile across settings and applications. This has the potential to dramatically cut down on programming time – in one example, a robot was trained to complete a USB connection in 2 hours vs. hundreds of hours.
  • According to one estimate, just 15-20% of automatable tasks in the supply chain have been automated so far. Industrial robots have issues with inflexibility (difficulty re-training or updating for new activities), lack of standard communication protocols (hampering interactions with people and systems), complicated programming interfaces (creating friction for the humans training them), complex integration into production lines (e.g. involving legacy equipment), and dexterity (ability to pick and place a diverse assortment of objects).
  • Industrial robotics picked up steam during the pandemic and orders for robots were up 20% in Q1 2021 vs. the prior year. Startups are raising money to tackle specific challenges and use cases. Covariant, which deploys pick-and-place robots in sectors like pharmaceuticals, grocery, and fashion, just raised $80M this week to expand globally. Warehouse automation startup InVia Robotics also raised $30M this week, while robotic welding firm Path Robotics raised $100M last week. Other notable players include enterprise robots-as-a-service firm Vicarious (which has an AI layer that lets it build multi-robot workflow apps quickly), Veo Robotics (safe human-robot interactions), Symbio (adaptive automation for automotive assembly), and Ambi Robotics (“grasping” robots for sorting/kitting). Automated fulfillment centers have also been in the spotlight, with Instacart announcing its partnership with automation/robotics vendor Fabric.
  • Many companies, however, are still dealing with growing pains and the challenges of implementing robotics in real-world applications at scale. Grocery tech vendor Ocado, for instance, recently had a fire and 800-person evacuation resulting from a 3-robot crash in one of its grid-based automated warehouses. Walmart has had uneven results from its robot experiments, recently cancelling a 5-year deal for Bossa Nova’s inventory-scanning robots and replacing them with humans. Even OpenAI recently announced it had shut down its robotics research team, concluding it could make more commercial progress in other areas that were more data-rich.
  • We clearly haven’t yet reached the “plateau of productivity” for the more generalized (less specialized) use cases. Despite the challenges, however, industrial robotics are showing tremendous promise for making manufacturing and logistics processes more efficient, accurate and safe. Alphabet hopes that access to Intrinsic’s tools will also “support a shift towards a more equitable way of making things.” (Today 10 countries make 70% of global goods.) The long-range implication, however, is that every country will eventually need industrial robotics just to keep up.
Related Content:
  • Jun 4 2021 (3 Shifts): Instacart considers a massive pivot to automated fulfillment centers
  • May 22 2020 (3 Shifts): Rising demand for robots across the supply chain
Disclosure: Contributors have investment interests in Microsoft and Apple. Google is a vendor of 6Pages.
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