Are you excited for what the future holds?
I find myself pondering this question more and more, my middle-aged self stuck between older generations mourning their crumbling paper mache dreams and newer, glossy-eyed generations that envision the coming times as a gleaming, singular portal of light. I would categorize myself as someone stuck squarely in the present. I am not old enough to dive into past decisions and those great, drowning pools of regret, not young enough to retain that bright, societal optimism that once glowed from my pores like a sheen. I think deeply about the paradoxical points of life. How technology and its millions of crackling, transistor derivatives can simultaneously represent progression and regression, how visionaries and false prophets are merely determined by time, place, and circumstance—how those in position to do the most for many tend to do what’s best for them. I have come to understand and accept that the future is more ambiguous than I ever imagined.
Humans have been predicting the future for as long as they have lived. Authors and poets have warned of test tube babies weeping soundlessly in vats, of societies that burn books and punish unique thought, of flying cars that zip and dodge until the blue, endless sky is just another polluted roadway. Those with rosier views will point at the bright streak of time and mouth the word “possibility” over and over and over. Transformational technologies have flickered then clicked like Edison’s lightbulb, inventors remembered and praised forever because of a solitary, electric idea. As the rise of the internet (and infinite invisible networks) spurs the majority of modern innovation, we once again find ourselves in the never-ending pursuit of what is next. Many believe at the top of that list is the metaverse.
Comprehending the metaverse is difficult because the definition varies depending on who you talk to. Some see it as a lone virtual world, broad in its limitless applications, blurring the lines between flesh, blood, and code through augmented reality, virtual reality, and many other things that exist only as dreams. Some see it as a conglomerate of virtual worlds, each unique and independent, where crossover exists the same way I can live in the United States and vacation in Europe. Others still define the metaverse by paradoxically choosing not to define it, an open-ended belief (shared by CEOs like Mark Zuckerberg and Satya Nadella) that it is the future of the internet, worthy of immense speculation, and impossible to contain inside the box of a singular idea. In essence, if you believe technology and internet technology will continue to be foundational bedrocks of society, the metaverse is the future.
The metaverse is also seen as the new frontier for capitalization: where there is interest, money will flow. According to the research firm Strategy Analytics, metaverse transactions are expected to exceed $6 billion by the end of 2022 and $42 billion by 2026. The oldest and easiest to understand examples of this include games like Second Life, Minecraft, and Fortnite, self-contained universes where users can buy virtual items within the game and if they so choose, live a literal second life within a virtual world. The explosion of blockchain ledgers is now paving the way for a plethora of new virtual worlds, with digital property deeds secured, traced, and verified by non-fungible tokens (NFTs). If you purchase a digital item in this new world, an NFT certifies that you are the owner.
Companies are rushing to explore the commercial possibilities. Many (including Twitter, Facebook, Warner Bros, and Dolce & Gabbana) are attempting to integrate NFTs into their flow of commerce, while others (including Tommy Hilfiger and Gucci) have created their own, self-branded metaverses to tap into the digital spigot. Businesses dedicated to buying virtual real estate are popping up. Coca-Cola launched a soda flavor that was born online, touting the “first-ever Coca-Cola flavor born in the metaverse. Coca-Cola Zero Sugar Byte will bring the flavor of pixels to life in a limited-edition beverage that transcends the digital and physical worlds.” If you have ever wanted to taste a pixel, and who amongst us hasn’t, the metaverse has birthed the opportunity.
We are at the point where the metaverse (or metaverses) sounds appealing, intoxicating, intimidating, and sometimes just batshit crazy. This is the constant push and pull of technology, especially when its application is so open-ended. The early days of the internet were amazing (I could look at Pamela Anderson nudes AND college football box scores!), unsettling (why was everybody so mean in chat rooms?), expansive (I have unlimited information at my fingertips?!), and sometimes just batshit crazy. Over the ensuing years the vision of what the internet could and should be crystallized, leaving us with those celebrated as visionaries of the future and the rest swept away in the debris. Now we return to the beginning of a technological cycle with the metaverse, where brilliance and insanity are matters of opinion, colossal ideas are both lauded and mocked, and the trajectory of innovation is decided by vision, execution, and luck. As Phil Knight said in his memoir Shoe Dog, “History is one long processional of crazy ideas.”
Nike was founded in 1964 as “Blue Ribbon Sports” by Knight and Bill Bowerman and officially became Nike, Inc. in 1971. The brand has risen into the most recognizable sportswear company in the world, with Knight famously giving a hat tip to the mixture that propelled them to the top: “Hard work is critical, a good team is essential, brains and determination are invaluable, but luck may decide the outcome.” Nike is celebrated as a model of forward thinking, expert marketing, and creating an emotional bond with the consumer. I am one of those consumers.
It is strange trying to describe my connection to the Swoosh. As a simple image without context, the Swoosh could be anything: a scythe used to slice through golden wheat, a soul rising from a body and disintegrating to nothingness, a lone sperm hanging out with friends until ejection into the great beyond. And strangely enough, I have worn Nikes while harvesting vegetation, attending a funeral, and yes, having sex. The Swoosh presented with context, however, becomes something deeper, a delicate film superimposed over my own memories and experiences until they become something more: Jordan’s tongue dangling mid-flight, Tiger’s ball pausing then tipping into the 16th hole at Augusta National, the dependable daily snugness of my Air Force 1’s in their Bulls-inspired shades of black, white, and red. Knight said, “When sports are at their best, the spirit of the fan merges with the spirit of the athlete.” I would argue Nike follows a similar approach—athletic wear and shoes are one thing, the connection that comes with shared experience is something else altogether.
Nike, as any successful business, is continually pursuing what is next. That pursuit is the genesis of innovation, the ephemeral search for what the consumer currently wants and the infinite search for what they will want. Nike has established that consumers want cool shoes and built an empire upon that desire, with annual revenue approaching $50 billion and doubling that of their nearest competitor, Adidas. But what will they want? At the end of 2021, we got our first glimpse into Nike’s vision: a plunge into the metaverse with the creation of Nikeland, a virtual world where users can explore a place modeled after Nike’s headquarters and compete in mini-games, purchase virtual goods, and dress their avatars in Nike gear.
The unveiling of Nikeland also revealed Nike had been securing various trademarks for virtual goods, including one for CryptoKicks, aka virtual sneakers. One month after the opening of Nikeland, Nike announced their second major metaverse play: the acquisition of RTFKT (pronounced “artifact”) to serve as their in-house metaverse creators, a move, in the words of Nike CEO John Donahoe, “that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming, and culture.” The metaverse, once viewed as the world where users went when they were tired of porn, suddenly had Nike’s blessing (and investment) as the next frontier of the business world.
The founding story of RTFKT is both convoluted and simple—convoluted in the way all things metaverse are, simple in the creation of consumer desire. Chris Le was working as a designer of video game skins, digital items that players buy and use to customize their character. He also had a passion for designing digital sneakers. He combined those two components into a viral combination: Counter-Strike skins applied to digital sneakers, which exploded online and caught the eye of Benoit Pagotto, the brand manager of the Fnatic e-sports team. When the Fnatic League of Legends squad was invited to the world championships in 2018, Le and Pagotto collaborated on an idea: the pop of online digital sneaker design brought to life as physical sneakers that could be worn by Fnatic team members. This led them to the doorstep of Steven Zaptio, who created the sneakers that then took the event by storm. The gathering momentum was channeled into the formation of RTFKT.
The ensuing years have been a whirlwind of evolution and experimentation. RTFKT utilized a mechanism called forging, where sneakerheads could redeem an NFT for a physical copy of the shoes. This blend of digital and physical was used as both a revenue generator and educational tool, providing a greater understanding of NFTs (and blockchain technology) for many who would otherwise be uninterested. One such project (a collaboration with the artist FEWOCiOUS) sold 600 pairs in seven minutes for a tidy $3.1M. However, the Covid pandemic and the resulting shutdown pushed RTFKT more strongly into the digital space. Digital sneakers were dropped with regularity and RTFKT expanded beyond the sneaker space with the launch of the Clone X avatar project, the creation and sale of 20,000 3-D avatars, with features pre-designed by world-renowned artist Takashi Murakami and randomly assigned to each avatar. Interested parties (including Justin Bieber) bought in for $50K, speaking to frenzied interest on the consumer side and evidence of RTFKT’s vision, stated by Zaptio: “We believe in the future digital will be more important than physical.”
Traditional brands saw what was happening in the metaverse and began drooling. Untapped market. Limitless potential. Possible highway to the future. Rather than creating an in-house team and throwing them into the deep end of the metaverse, Nike began searching for a company that was already experienced in the fast-moving, hard-to-comprehend world that seemingly changes by the nanosecond. In December 2021, Nike announced the acquisition of a company that had these words inscribed in their first pitch deck: “We’re doing Nike’s roadmap in 2050 today.” Nike was ready to weaponize their interest in the metaverse and RTFKT would be the tip of the spear.
It is early but Nike’s foray into the digital space has raised eyebrows. Dune Analytics reported in August 2022 that Nike was dwarfing traditional brands in NFT revenue: $185.2M and lapping the next closest competitor (Dolce & Gabbana at $25.6M). RTFKT’s first launch with Nike was one of the drivers, the release of 20,000 Nike Dunk Genesis CryptoKicks that could be customized via “skin vials” that change the Swoosh, heel, straps, and tongue. People are paying between $4500-$9000 with some pairs (including one designed by Murakami) fetching six figures. Zaptio and Le have trumpeted having Nike’s resources at their back while also being allowed to maintain independence as (what amounts to) Nike’s arm in the metaverse. Said Zaptio, “The only way to learn this space is by experimenting and actually getting your feet on the ground.”
There is no certainty in the future.
In an individual sense, this can be either debilitating or enthralling—a reason to live out your days fearing the unknown, or a reason to embrace what currently exists and accept you have little say in what is to come. In a business sense, an uncertain future represents opportunity—cast your lot, trust your vision, and hope you stumble into that potent blend of execution and luck.
If you follow technology, you have an opinion on the metaverse. Some view it as a farce, a bum star shedding light from a deadened core. Others view it as a sparkling galaxy that will change the way we live. At the very least, powerhouse brands have identified the metaverse as worthy of exploration, with Nike and RTFKT poking through the crust of this dazzling new atmosphere. An understanding of the true earning potential (and the social ramifications) of the metaverse is still years away, maybe decades, similar to the way-of-life transformation brought on by the smartphone that in many ways, we are still struggling to grasp. There is no certainty in the future but for the time being, the metaverse has become part of the present.