VBT Newsletter

September 28th

Good morning!

A quick programming note - I am off the next few days so I will see you all back here for next week’s Monday edition on October 4th 👋.

Welcome to the final VBT Newsletter of Q3 (What!) featuring:

  • Orlando is gearing up to rival Silicon Valley

  • The father of electronic gaming is venturing into NFTs

  • Everyone wants to be an influencer

  • Google lowers its take from its cloud marketplace

  • And Facebook creates a metaverse fund

It’s Tuesday, September 28, 2021.

1. Florida Tech

Orlando is gearing up to rival Silicon Valley by becoming a hub for tech, defense, and finance (Insider)

Defense and technology startup Red 6 is opening a hub in Orlando to develop its airborne tactical AR system. It's one in a long line of companies, including Lockheed Martin, Oracle, Verizon, and Deloitte, with offices in the central Florida city.

It’s well known that NASA started performing launch operations in Cape Canaveral more than 70 years ago. And the city is also home to the Kennedy Space Center and US Army, Air Force, and Navy simulation command centers, which has led to an influx of other technology, defense, and training companies.

Execs from Electronic Arts, Luminar, and Stax told Insider that Orlando's big talent pool made it easier for them to recruit in the area - last year there were half a million college students within a hundred-mile radius of downtown Orlando. Migration to the state has also boomed throughout the pandemic because of its typical Florida traits - warm climate, low living costs, and lack of income tax.

Orlando is a well-connected city. As well as an international airport, Brightline is due to launch a rail line connecting Orlando to Miami, Fort Lauderdale, and West Palm Beach in 2022. Obviously, Silicon Valley is not going to die, there’s just going to be more for everybody else and Orlando seems to be reaping the benefits.

2. NFTs

Nolan Bushnell, the man behind Atari and Chuck E. Cheese, is releasing an NFT (Bloomberg)

Nolan Bushnell, the co-founder of Atari and, perhaps importantly, the man who brought the world Chuck E. Cheese restaurants, is venturing into a new space. Since the burst of innovations in the 1970s that brought the world Pong and earned him the moniker “the father of electronic gaming,” Bushnell has founded more than 20 companies. Now he’s applying his mind to NFTs.

Bushnell and his longtime collaborator Zai Ortiz, who’d done visual effects for movies including Iron Man 2 and Mission: Impossible—Ghost Protocol, together recently began to conceive an NFT that would be an extension of Bushnell’s biography. The result, Bushnell’s “genesis” collection, will be available for bidding on MakersPlace starting on Oct. 12.

In keeping with the desire to create something unique, the NFTs Bushnell is releasing won’t be tied just to digital images or videos; they’ll include augmented reality. “It’s beyond what anyone else has done,” he said, “and it satisfied my requirement that it be something that blows your socks off.”

When conceiving of the works, Bushnell quickly settled on Pong and his first arcade game machine, which he called Computer Space. With Ortiz, Bushnell created 15-second videos of the arcade games playing on colorful consoles. These arcade games will also be rendered through AR, so the objects can come with people wherever they go.

3. Creator Economy

Everyone wants to be an influencer (Axios)

The number of people looking to become online influencers has exploded during the pandemic. Almost anyone can find themselves in a position to become an influencer, and brands are throwing billions of dollars at online content creators.

The pandemic expedited the shift to e-commerce and digital marketing. That's helped to lead businesses to invest in more influencer relationships. Experts in the industry also argue that the number of influencers continues to grow dramatically. Advertisers don't want to use the same influencer again and again, which keeps new opportunities flowing.

Brands are expected to spend more than $3 billion on influencer campaigns in 2021, and over $4 billion in 2022, according to eMarketer. While eMarketer doesn't publish breakouts of spend by platform, it estimates that Instagram is the market leader with roughly half the market, while YouTube and Facebook see a significant amount of spending as well.

SignalFire, a VC firm that invests in many creator-led businesses, estimates that more than 50 million people globally consider themselves online creators. The next platform to sprout a new crop of influencers will likely be Pinterest, Keane-Dawson said, the CEO of the premier influencer marketing agency, Takumi.

4. Big Tech

Google is slashing the amount it keeps from sales on its cloud marketplace as pressure mounts on app stores (CNBC)

Google is reducing the amount of revenue it keeps when customers buy software from other vendors on its cloud marketplace, as the top tech companies face increasing pressure to lower their so-called take rates. It’s cutting its percentage revenue share to 3% from 20%.

Big Tech companies in recent months have been decreasing the amount of money they retain on their platforms, whether it’s for consumer apps or business products. Some of the pressure is related to competition, while regulatory and legal concerns are also mounting.

  • In July Google decreased the percentage it keeps from purchases through its Play Store to 15% from 30% for the first $1 million in revenue a developer earns each year. Apple also provided the same reduction for app developers with under $1 million in annual sales.

  • Meanwhile, in August, Microsoft lowered the percentage of sales it keeps from game purchases from its Windows app store to 12% from 30%. And in July it cut its cloud rate from 20% to 3%.

  • AWS, the market leader, charges a listing fee of about 5%, according to an estimate earlier this year from analysts at UBS. The AWS marketplace generates about $1 billion to $2 billion in annual revenue.

Google has yet to turn its cloud platform into a profit engine for parent company Alphabet. In Q2, Google reported a $591 million operating loss from its cloud segment on $4.6 billion in revenue. Alphabet still counts on advertising for about 82% of revenue and substantially all of its profit.

5. The Metaverse

Facebook is spending $50 million to ‘responsibly’ build the metaverse (The Verge)

Facebook has announced a $50 million fund that it says will help it develop the metaverse more responsibly. It’s officially called the XR Programs and Research Fund, and the company says it’ll be invested into “programs and external research” over the course of two years.

Facebook has previously funded academic research into the social impact of AR wearables and solicited VR hardware proposals. Facebook’s announcement calls the metaverse the “next computing platform” and says that the company will be working with policymakers, researchers, and industry partners while building it.

The announcement also gives us Facebook’s definition of the sometimes nebulous word “metaverse.” The company describes it as “virtual spaces where you can create and explore with other people” that you’re not physically with, spread out over a variety of products and services.

Facebook says the fund’s goal is to make sure it builds its part of the metaverse with an eye towards compatibility with other services, as well as inclusivity, privacy, safety, and “economic opportunity.” Right now, Facebook’s biggest metaverse program is a platform called Horizon, which exists as a beta Oculus app that lets people have VR meetings.

6. Funding, IPOs, M&As

As always, please feel free to share questions, feedback, or requests for future newsletters.