Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. There's been a lot of talk lately about the Metaverse, ever since Facebook founder Mark Zuckerberg announced the social media platform's parent company would be renamed Meta. I've had plenty of conversations about it and I still feel as if I've only got a very limited understanding of how it all works. Today I'm going to get to the bottom of it. What the Metaverse is? Why it's so important in the digital world? And what it means for business? I've enlisted the help of Australian tech entrepreneur Stephen Phillips, the founder and CEO of Splash. Splash is among the world's most advanced music technology companies and this month raised $ 27 million in funding. Stephen, welcome to Fear and Greed and congratulations on the funding.

Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. There's been a lot of talk lately about the Metaverse, ever since Facebook founder Mark Zuckerberg announced the social media platform's parent company would be renamed Meta. I've had plenty of conversations about it and I still feel as if I've only got a very limited understanding of how it all works. Today I'm going to get to the bottom of it. What the Metaverse is? Why it's so important in the digital world? And what it means for business? I've enlisted the help of Australian tech entrepreneur Stephen Phillips, the founder and CEO of Splash. Splash is among the world's most advanced music technology companies and this month raised $ 27 million in funding. Stephen, welcome to Fear and Greed and congratulations on the funding.

Hi, Sean. Thank you very much.

Hi, Sean. Thank you very much.

Well, please let's start with the basics for my sake. What exactly is the Metaverse?

Well, please let's start with the basics for my sake. What exactly is the Metaverse?

Right. So the easiest way I think to explain it is that it's the convergence of two of the biggest trends in tech for the last decade or so. The intersection of social media and gaming. So the way to think about those two things converging. We're all familiar with 3D games like Fortnite and GTA and things like that. Now imagine instead of shooting people or stealing cars and stuff you are running around a jungle or you are dancing on a planet or you are hanging out with your friends at a nightclub. The Metaverse is that... Is this collection of persistent worlds, 3D worlds each with their own purpose and activities. That could be games, it could be just socializing and hanging out with friends or performing or shopping or eventually politics and everything else that was in social media making its way into this game world. Your avatar, how you look in that space, persists as you move between these spaces and your currency persists but everything else is fluid. I can go in and out of those worlds. Second Life is probably the first example and Roblox where we've been for about 18 months is the clearest representation of the Metaverse today and we consider it the Myspace of the Metaverse.

Right. So the easiest way I think to explain it is that it's the convergence of two of the biggest trends in tech for the last decade or so. The intersection of social media and gaming. So the way to think about those two things converging. We're all familiar with 3D games like Fortnite and GTA and things like that. Now imagine instead of shooting people or stealing cars and stuff you are running around a jungle or you are dancing on a planet or you are hanging out with your friends at a nightclub. The Metaverse is that... Is this collection of persistent worlds, 3D worlds each with their own purpose and activities. That could be games, it could be just socializing and hanging out with friends or performing or shopping or eventually politics and everything else that was in social media making its way into this game world. Your avatar, how you look in that space, persists as you move between these spaces and your currency persists but everything else is fluid. I can go in and out of those worlds. Second Life is probably the first example and Roblox where we've been for about 18 months is the clearest representation of the Metaverse today and we consider it the Myspace of the Metaverse.

Okay. So what you just said there which really clicked for me in a sense is that you can have a persona which can actually go across genres.

Okay. So what you just said there which really clicked for me in a sense is that you can have a persona which can actually go across genres.

Yeah, that's right. So your avatar or your account, your profile, just like it does on social media, it exists at the platform level but instead of everybody just living on a timeline or being in groups, you're going into other experiences that third parties have developed. So it's a bit like having an account on a Mac and then being able to play different Mac games. But instead of having to register on all those games they immediately pass your credentials and your wallets and all your cash and stuff so you don't have to keep signing up for everything. You can go in and out of these experiences which makes it a really interesting thing for developers to build on. Because all that stuff's really hard in getting. But that stuff causes friction to acquire users and keep them is you have to get them to sign up and you have to get them to give you their wallet. The Metaverse makes that easy for developers.

Yeah, that's right. So your avatar or your account, your profile, just like it does on social media, it exists at the platform level but instead of everybody just living on a timeline or being in groups, you're going into other experiences that third parties have developed. So it's a bit like having an account on a Mac and then being able to play different Mac games. But instead of having to register on all those games they immediately pass your credentials and your wallets and all your cash and stuff so you don't have to keep signing up for everything. You can go in and out of these experiences which makes it a really interesting thing for developers to build on. Because all that stuff's really hard in getting. But that stuff causes friction to acquire users and keep them is you have to get them to sign up and you have to get them to give you their wallet. The Metaverse makes that easy for developers.

Okay. Three minutes in here Stephen and I am substantially in front of where I was. So thank you. Good start. Let's use Splash as an example, your company. I described it as among the world's most advanced music technology companies. Tell us first, how does it work? How does Splash work?

Okay. Three minutes in here Stephen and I am substantially in front of where I was. So thank you. Good start. Let's use Splash as an example, your company. I described it as among the world's most advanced music technology companies. Tell us first, how does it work? How does Splash work?

I've been in the music industry for 15 years. I've been in the music tech for that whole time. I've been working on how do you use AI or machine learning to help everyone make music and for the last four or five years, we've worked on that problem. And it turns out that people who need that most are kids. The way that kids consume music... I'm talking 15 and under. The way that they interact with the world now is through gaming so our technology is built into a game. So Splash is a game on Roblox that kids make music. They go into these virtual clubs, they sign up to perform on stage, they go on stage, they play a live set, 60 seconds, 90 seconds, there's a live audience watching them, depending on how they perform they get given fame and earn coins from their performance. That's the game. And the purpose of the game is to be the most famous musician on Roblox. And we've had about 130 million plays. We've got 7 million active players. Our top players have performed over 10,000 times on stage. It's super addictive. They go on stage and perform and they get the thrill of performing live to each other.

I've been in the music industry for 15 years. I've been in the music tech for that whole time. I've been working on how do you use AI or machine learning to help everyone make music and for the last four or five years, we've worked on that problem. And it turns out that people who need that most are kids. The way that kids consume music... I'm talking 15 and under. The way that they interact with the world now is through gaming so our technology is built into a game. So Splash is a game on Roblox that kids make music. They go into these virtual clubs, they sign up to perform on stage, they go on stage, they play a live set, 60 seconds, 90 seconds, there's a live audience watching them, depending on how they perform they get given fame and earn coins from their performance. That's the game. And the purpose of the game is to be the most famous musician on Roblox. And we've had about 130 million plays. We've got 7 million active players. Our top players have performed over 10,000 times on stage. It's super addictive. They go on stage and perform and they get the thrill of performing live to each other.

When you say live, it is literally live in as much as they are creating music and presenting it in a virtual world to people who are listening to that music?

When you say live, it is literally live in as much as they are creating music and presenting it in a virtual world to people who are listening to that music?

Yes, for sure. It's completely live. They're not only presenting music, they put on a whole show. Right? We sell them merchandise speakers, light shows, smoke machines and a whole lot of DJ effects like gravity bombs. So halfway through the set, they can set off a bomb where everyone in the audience gets thrown up into the air or light shows go off. So they practice to put on the best performance they can because they're trying to win the adulation and fame of the audience. And we've got players who are legitimate celebrities in the game.

Yes, for sure. It's completely live. They're not only presenting music, they put on a whole show. Right? We sell them merchandise speakers, light shows, smoke machines and a whole lot of DJ effects like gravity bombs. So halfway through the set, they can set off a bomb where everyone in the audience gets thrown up into the air or light shows go off. So they practice to put on the best performance they can because they're trying to win the adulation and fame of the audience. And we've got players who are legitimate celebrities in the game.

Okay. Do you need musical ability to play the game?

Okay. Do you need musical ability to play the game?

Yes. So they play this thing we call a Splash Pad which is this virtual instrument we've designed. There's been a trend in music creation over the last 15, 20 years where most of the modern music you hear nowadays are combinations of loops that are set well samples that are played and put together by music producers using software they call DAWs (Digital Audio Workstations). One of the most popular ways they play that live is a beat pad, a launch pad style thing where essentially you turn loops on and off. And the skill is arrangement and also choosing which samples go best together and in what sequence. So there's a definite musical skill there but also it's more about performance and triggering dance moves and special effects and light shows while they're turning samples on and off. If you ask the players and you say to them, " Did you make that song?" They'd say, " I totally made that song." So yes, there's a lot of musical skill amongst the best players.

Yes. So they play this thing we call a Splash Pad which is this virtual instrument we've designed. There's been a trend in music creation over the last 15, 20 years where most of the modern music you hear nowadays are combinations of loops that are set well samples that are played and put together by music producers using software they call DAWs (Digital Audio Workstations). One of the most popular ways they play that live is a beat pad, a launch pad style thing where essentially you turn loops on and off. And the skill is arrangement and also choosing which samples go best together and in what sequence. So there's a definite musical skill there but also it's more about performance and triggering dance moves and special effects and light shows while they're turning samples on and off. If you ask the players and you say to them, " Did you make that song?" They'd say, " I totally made that song." So yes, there's a lot of musical skill amongst the best players.

Stephen I come from a different world where basically you went to the pub to listen to rock bands. The great fantasy of mine used to be Bono. To stand there in front of a huge audience and be able to sing. That is the ultimate and in movies a star is born when the woman goes out, Lady Gaga goes out and starts performing in front of a live audience. To me that's the ultimate. This in a sense will allow me to do it in my own virtual world if I'm good enough.

Stephen I come from a different world where basically you went to the pub to listen to rock bands. The great fantasy of mine used to be Bono. To stand there in front of a huge audience and be able to sing. That is the ultimate and in movies a star is born when the woman goes out, Lady Gaga goes out and starts performing in front of a live audience. To me that's the ultimate. This in a sense will allow me to do it in my own virtual world if I'm good enough.

Yes, that's right. It's still going to be good enough to get there. The kids don't have to sit and watch you. The audience don't need to be there. At any point there's 400 or 500 venues happening and they can move freely between venues and go to the bigger club, smaller club. We have a ranking system where you progress from rookie all the way through to superstar and legend and the top players have people watch them more than the rookies who no one really watches, only other rookies and stuff. So yes, it's a chance to have that obsession. And the Metaverse, let's call it a virtual world, whatever it is, the Roblox platform allows... I'm in the clubs with kids from Korea and a bunch of players from France and a bunch of Americans and there are just people from all around the world who are in that club. There's kids who hang around rock clubs, there's hiphop clubs, there's all types of things. The clubs themselves are now actually designed and created by the players. So we don't create those venues any anyway.

Yes, that's right. It's still going to be good enough to get there. The kids don't have to sit and watch you. The audience don't need to be there. At any point there's 400 or 500 venues happening and they can move freely between venues and go to the bigger club, smaller club. We have a ranking system where you progress from rookie all the way through to superstar and legend and the top players have people watch them more than the rookies who no one really watches, only other rookies and stuff. So yes, it's a chance to have that obsession. And the Metaverse, let's call it a virtual world, whatever it is, the Roblox platform allows... I'm in the clubs with kids from Korea and a bunch of players from France and a bunch of Americans and there are just people from all around the world who are in that club. There's kids who hang around rock clubs, there's hiphop clubs, there's all types of things. The clubs themselves are now actually designed and created by the players. So we don't create those venues any anyway.

Okay. I'm getting a good picture. I think I'm going to miss trying to get the taxi home late at night. I'm going to miss the idiot next to be elbowing me as he or she dancing and things like that. But in a sense for many people, they're literally sitting at home but experiencing a lot of that sort. I mean, they're not experiencing those physical things but the sensations in a sense they're experiencing.

Okay. I'm getting a good picture. I think I'm going to miss trying to get the taxi home late at night. I'm going to miss the idiot next to be elbowing me as he or she dancing and things like that. But in a sense for many people, they're literally sitting at home but experiencing a lot of that sort. I mean, they're not experiencing those physical things but the sensations in a sense they're experiencing.

Yes, for sure. It doesn't replace festivals, it doesn't replace going to clubs, it augments that. And it appeals to a generation who enjoy that stuff. People go to music festivals not to see the band, that's a big part of it, but they go there for the social aspect and the fun and the games and all of that. So it's not wild to us that that would translate pretty well into the virtual space as well.

Yes, for sure. It doesn't replace festivals, it doesn't replace going to clubs, it augments that. And it appeals to a generation who enjoy that stuff. People go to music festivals not to see the band, that's a big part of it, but they go there for the social aspect and the fun and the games and all of that. So it's not wild to us that that would translate pretty well into the virtual space as well.

Stay with me Stephen and we'll be back in a minute.

Stay with me Stephen and we'll be back in a minute.

I'm speaking to Stephen Phillips, founder and CEO of Splash. Okay. Now this has been a long time coming and you've been in this music tech industry as you said for 15 years or so, how much of it has been propelled by COVID- 19 though? Has it accelerated this Metaverse world?

I'm speaking to Stephen Phillips, founder and CEO of Splash. Okay. Now this has been a long time coming and you've been in this music tech industry as you said for 15 years or so, how much of it has been propelled by COVID- 19 though? Has it accelerated this Metaverse world?

For sure. I think the platform Roblox, it went on a tear. I think they did their IPO sometime earlier this year. They've grown, we've grown, all the game developers we've seen. When kids are stuck at home, they love it. And they're able to stay, play games as long as they can and we're seeing in that first couple of months when COVID hit the engagement numbers were massive. Our top players are spending five to six hours a day in the game. The elite ones are spending longer than that. It's been a bit different since Americans went back to school but the feeling has been all the games companies have seen a big spike in engagement.

For sure. I think the platform Roblox, it went on a tear. I think they did their IPO sometime earlier this year. They've grown, we've grown, all the game developers we've seen. When kids are stuck at home, they love it. And they're able to stay, play games as long as they can and we're seeing in that first couple of months when COVID hit the engagement numbers were massive. Our top players are spending five to six hours a day in the game. The elite ones are spending longer than that. It's been a bit different since Americans went back to school but the feeling has been all the games companies have seen a big spike in engagement.

Okay. Do you think that there'll be some backlash around privacy, around just what it's doing with kids, all those usual things?

Okay. Do you think that there'll be some backlash around privacy, around just what it's doing with kids, all those usual things?

Yes, I think so. I don't know about the privacy stuff. Maybe now Zuckerberg's got involved. They seem to bring that with them. There hasn't been a lot of complaints about that. It's a weird one about privacy because no one is themselves in these places. That's the purpose of it. Everyone's role playing, right? They're pretending to be somebody else. So what does privacy mean when I'm a hot dog? Or I'm an old lady in a wheelchair? There are literally people dressed as old ladies in wheelchairs. So what does privacy mean? Now, the obsession that kids have with it, that's a different thing. And it's up to parents I think to understand what these things are and find a balanced life too. They should understand that... I noticed there was an outage over the weekend on Roblox and we watched closely to see how the community responded and it wasn't, I want to play my game it was I can't see my friends. This is not a gaming platform. This is their version of social media. So it's like for us Facebook or our email going offline or our text messages and now we can't communicate with our family and friends. This is their family and friends. A lot of kids are closer to kids there than they are at their own school. So cutting them off from that I think is a dangerous thing.

Yes, I think so. I don't know about the privacy stuff. Maybe now Zuckerberg's got involved. They seem to bring that with them. There hasn't been a lot of complaints about that. It's a weird one about privacy because no one is themselves in these places. That's the purpose of it. Everyone's role playing, right? They're pretending to be somebody else. So what does privacy mean when I'm a hot dog? Or I'm an old lady in a wheelchair? There are literally people dressed as old ladies in wheelchairs. So what does privacy mean? Now, the obsession that kids have with it, that's a different thing. And it's up to parents I think to understand what these things are and find a balanced life too. They should understand that... I noticed there was an outage over the weekend on Roblox and we watched closely to see how the community responded and it wasn't, I want to play my game it was I can't see my friends. This is not a gaming platform. This is their version of social media. So it's like for us Facebook or our email going offline or our text messages and now we can't communicate with our family and friends. This is their family and friends. A lot of kids are closer to kids there than they are at their own school. So cutting them off from that I think is a dangerous thing.

So looking ahead five, ten years, what do you think this world will look like?

So looking ahead five, ten years, what do you think this world will look like?

I think it's going to get a lot bigger. The venues are going to get a lot bigger. You're going to see a lot more varied experiences. All this money that's about to flow in from the big tech companies have been looking at it. Zuckerberg and those guys, they invested in Oculus in 2014. They've been investing in this tech around VR (Virtual Reality) and AR (Augmented Reality) and all that stuff for a long time. They're trying to get brands in there. If they can bring companies who haven't really joined the game, if they start to really come into game in big numbers just not sponsoring a few players or running some ads but actually start to set up meaningful experiences then that'll be a huge shift. You're bringing the world's economy inside of these game lands and eventually it's going to happen, right? The gaming industry's going to eat the software industry. That's been a meme for 15 years and it's gradually coming true.

I think it's going to get a lot bigger. The venues are going to get a lot bigger. You're going to see a lot more varied experiences. All this money that's about to flow in from the big tech companies have been looking at it. Zuckerberg and those guys, they invested in Oculus in 2014. They've been investing in this tech around VR (Virtual Reality) and AR (Augmented Reality) and all that stuff for a long time. They're trying to get brands in there. If they can bring companies who haven't really joined the game, if they start to really come into game in big numbers just not sponsoring a few players or running some ads but actually start to set up meaningful experiences then that'll be a huge shift. You're bringing the world's economy inside of these game lands and eventually it's going to happen, right? The gaming industry's going to eat the software industry. That's been a meme for 15 years and it's gradually coming true.

Yes. The Wall Street Journal was running a story recently about Nike taking out digital trademarks to introduce into that virtual world, which I think is exactly what you are saying there. Once those huge players get involved, I mean, it might be virtual but it is actually reality when you're selling all your products in a virtual world.

Yes. The Wall Street Journal was running a story recently about Nike taking out digital trademarks to introduce into that virtual world, which I think is exactly what you are saying there. Once those huge players get involved, I mean, it might be virtual but it is actually reality when you're selling all your products in a virtual world.

Yes. That's right. Well, all the biggest companies in the world are virtual now so it'll make sense for them to become tech companies. Right?

Yes. That's right. Well, all the biggest companies in the world are virtual now so it'll make sense for them to become tech companies. Right?

Yes. Yes. Now look Splash itself, you've just raised $ 27 million in funding. What's that mean? What are the plans?

Yes. Yes. Now look Splash itself, you've just raised $ 27 million in funding. What's that mean? What are the plans?

Well, investors were Amazon and a company out of Germany called BITKRAFT.

Well, investors were Amazon and a company out of Germany called BITKRAFT.

Yes. Great names.

Yes. Great names.

BITKRAFT is the biggest VC in the gaming industry now and they think what we are doing with entertainment is a glimpse of what entertainment will look like in here. Our competitors have been... They work with the elite superstars of the world and they go and capture a mocap (motion capture) video performance of them outside and they bring it in and they present it inside these games. And the kids are, " If I wanted to watch a video, I'd go to YouTube. Why am I watching this?" They want to perform. And they want to play. And they want to play live. So we think and our investors think that we've seen something and our plan is to seize the moment there and see if we can dominate entertainment in this space. So we want to heavily invest in improving the music we make right now. We really only have DJs. But as our biggest release in the next six months is we're bringing band so that whole groups of kids can go on stage together and play a range of different instruments and perform. Maybe one day you can be on stage yourself and be a singer in one of these bands.

BITKRAFT is the biggest VC in the gaming industry now and they think what we are doing with entertainment is a glimpse of what entertainment will look like in here. Our competitors have been... They work with the elite superstars of the world and they go and capture a mocap (motion capture) video performance of them outside and they bring it in and they present it inside these games. And the kids are, " If I wanted to watch a video, I'd go to YouTube. Why am I watching this?" They want to perform. And they want to play. And they want to play live. So we think and our investors think that we've seen something and our plan is to seize the moment there and see if we can dominate entertainment in this space. So we want to heavily invest in improving the music we make right now. We really only have DJs. But as our biggest release in the next six months is we're bringing band so that whole groups of kids can go on stage together and play a range of different instruments and perform. Maybe one day you can be on stage yourself and be a singer in one of these bands.

I'm not sure I like the tone of that particular comment, Stephen. After this interview, I'm actually going to go and have a look because I might have a hidden talent.

I'm not sure I like the tone of that particular comment, Stephen. After this interview, I'm actually going to go and have a look because I might have a hidden talent.

You might have a hidden talent. You obviously have a flair for the superlatives there. So I'm sure you'll do well.

You might have a hidden talent. You obviously have a flair for the superlatives there. So I'm sure you'll do well.

Maybe I'm the lyricist rather than the musician perhaps.

Maybe I'm the lyricist rather than the musician perhaps.

Yes. So we are doubling on the entertainment side but there's a real chance for us to... Our players who spend a lot of time there. It's funny how the like people in the music industry say, how are you going to try and help them become real musicians? And that's not how they think. They have no interest in becoming musicians outside. They want us to help them build a career in the virtual space. So we're going to double down on building new tools that help them develop their fan bases in the game and help them monetise their talent in the game. So the players who were the legitimate stars, it seems a bit weird now to think but at some point YouTubers, wasn't a thing and TikTokers wasn't a thing until it was a thing. And now it's a career. And we think if not us someone is going to turn what we do into a legitimate musical career.

Yes. So we are doubling on the entertainment side but there's a real chance for us to... Our players who spend a lot of time there. It's funny how the like people in the music industry say, how are you going to try and help them become real musicians? And that's not how they think. They have no interest in becoming musicians outside. They want us to help them build a career in the virtual space. So we're going to double down on building new tools that help them develop their fan bases in the game and help them monetise their talent in the game. So the players who were the legitimate stars, it seems a bit weird now to think but at some point YouTubers, wasn't a thing and TikTokers wasn't a thing until it was a thing. And now it's a career. And we think if not us someone is going to turn what we do into a legitimate musical career.

Yes. I mean as you said before it augments live music. It doesn't replace it.

Yes. I mean as you said before it augments live music. It doesn't replace it.

Yes. That's right.

Yes. That's right.

Stephen. Thank you very much for talking to Fear and Greed.

Stephen. Thank you very much for talking to Fear and Greed.

Thank you, Sean.

Thank you, Sean.

That was Stephen Phillips, founder and CEO of Splash. This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer, enjoy your day.

That was Stephen Phillips, founder and CEO of Splash. This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer, enjoy your day.