Meta AI Ray-Ban Display Glasses | The Brainstorm EP 102

Key Concepts

• Meta Ray-Ban Smart Glasses: Augmented reality (AR) glasses with a 20-degree field of view, waveguide technology for display, and a new input method.
• Control Labs Wristband: A device that detects electrical impulses from the brain to the hand, enabling gesture-based input for digital devices.
• Waveguide Technology: A method of etching into lenses to create a frame for light to display video and images.
• Field of View (FOV): The extent of the observable world that is seen at any given moment. For the Meta Ray-Ban Smart Glasses, it's 20 degrees, significantly smaller than the human eye's 180-210 degrees.
• Nits: A unit of luminance used to measure display brightness. The Meta Ray-Ban Smart Glasses boast 5,000 nits.
• Snap Spectacles: Snapchat's AR glasses, described as having a less refined aesthetic compared to Meta's offering.
• Coinbase Yield: The interest rates offered by Coinbase on holding USDC, with options for around 4% and up to 11% through collateralized lending.
• US Treasury Yields: A benchmark for safe investment returns, often used as a comparison for other yield-generating opportunities.
• Digital Wallets: Applications that store digital currency and facilitate transactions, increasingly overlapping with traditional banking functions.
• AI Synthesis: The use of artificial intelligence to create summaries or generate content.

Meta Ray-Ban Smart Glasses and Input Revolution

The discussion begins with Meta's recent announcement of their updated Ray-Ban smart glasses lineup, focusing on the Meta Ray-Ban Smart Glasses Display. These are presented as the first affordable and potentially useful AR glasses from a major tech company.

Key Features and Technologies:

• Augmented Reality (AR) Display: The glasses feature a 20-degree field of view AR lens.
• Waveguide Technology: This technology is used to etch into the lens itself, creating a frame where light can sit to display video and pictures.
• New Input Device (Control Labs Wristband): Meta showcased a wristband, acquired from Control Labs, that detects electrical impulses from the brain to the hand. This allows for gesture-based input, such as twitching fingers to control volume or type. The band is described as similar in appearance to a Whoop band.
• Price Point: The glasses, along with the wristband, are priced at $800, which is considered a significant reduction from the $10,000 prototype shown previously. This is seen as a "meaningful performance per cost inflection."
• Focus on Smartphone Use Cases: Meta's strategy is to make the glasses usable by focusing on the 10 most common smartphone features: texting, video, and photo, among others.

Perspectives and Arguments:

• Early Adopter Product: There's a consensus that these glasses are likely to be an early adopter product, potentially underpowered initially and may end up on shelves like other smart glasses.
• Future Iterations: The expectation is for iterative improvements in subsequent years, potentially making the product category more mainstream.
• Ancillary, Not Primary: For the next few years, the glasses are expected to be ancillary devices, not replacing smartphones. However, with third-party developer support and an app store, they could evolve into primary compute devices.
• Brightness and Usability: The display boasts an impressive 5,000 nits of brightness, significantly higher than typical outdoor TVs (2,000-3,000 nits), allowing for visibility in direct sunlight.
• Miniaturization Efforts: Meta has invested heavily in miniaturizing the technology to make the glasses comfortable for all-day wear, with Zuckerberg mentioning countless hours spent shaving off milligrams.
• Competitive Landscape: Meta is seen as significantly ahead of competitors like Google and Snapchat (whose Spectacles are described as aesthetically unappealing). Meta has invested $70 billion in Reality Labs over five to six years, covering both VR and AR.
• Snapchat's Position: While Snapchat's Spectacles are considered a "disaster" relative to Meta, the argument is made that AR glasses are crucial for serving consumers, and acquiring Snap could offer a shortcut for competitors. However, it's also argued that Snap's tech doesn't necessarily advance hardware innovation and lacks Meta's broader ecosystem.
• Developer Ecosystem: Snapchat is attempting to build a developer community by offering beta versions of their glasses to developers for around $1,500, aiming to have a third-party ecosystem ready at launch. Meta, conversely, is launching with 10 specific use cases.

Debate: AirPods vs. Smart Glasses Business

A hypothetical scenario is presented: choosing between Apple's AirPods business or Meta's smart glasses business as a strategic foundation for building an AI "castle."

• Argument for AirPods: One perspective favors AirPods due to their unobtrusive nature and wider adoption potential compared to requiring everyone to wear glasses. The suggestion is to add a small video camera to AirPods for at-sight video capture.
• Argument for Smart Glasses: The counter-argument emphasizes the expansion vector of glasses being "up against somebody's eye," offering capabilities not available with ear-worn devices. The potential for advanced AR features like filtering out distractions or enhancing perceived attractiveness is highlighted.
• Synthesis: The Need for Both: The prevailing view is that both types of wearables will be necessary as part of a seamlessly connected ecosystem of devices (glasses, AirPods, smartwatches, smartphones) powered by personalized AI assistants.

Niche Use Cases for Smart Glasses:

• Hearing Impaired: Providing real-time subtitles in noisy environments like restaurants.
• Moviegoers: Offering personal subtitles, especially for films with mixed dialogue.
• Personal Perspective Recording: Capturing events like birthday celebrations from the individual's point of view.

Coinbase's Aggressive Move into Banking

The discussion shifts to Coinbase's offering of an 11% yield on USDC through collateralized lending, directly challenging traditional banking functions.

Coinbase's Strategy:

• Direct Banking Competition: Coinbase is actively pursuing the functions of checking, savings, and yield generation typically offered by banks.
• Yield Generation: They offer around 4% yield on USDC holdings and up to 11% through collateralized lending.
• Transparency Argument: A key argument for Coinbase's offerings is the potential for greater transparency into where the yield is generated, unlike traditional banks where this information is often opaque.
• Over-collateralized Auto-Liquidation: The 11% yield is supported by lending against collateralized assets with an auto-liquidation mechanism to protect depositors if the collateral value drops. This is presented as a difference from traditional banks.
• Incentivizing Stickiness: Similar to past strategies of bankrupt companies, Coinbase is incentivizing users to hold assets on their platform through rewards like 4% back on Bitcoin purchases tied to holding significant USDC.
• Publicly Traded Advantage: Coinbase's status as a publicly traded company with audited financials and legal oversight is seen as a differentiator from past crypto failures.

Arguments and Concerns:

• Hunt for Yield: The 11% yield is acknowledged as a sign of the "hunt for yield" and the start of a "risk on, hidden leverage cycle."
• Risk of Crypto Assets: It's noted that 11% yield doesn't come for free and is relatively high compared to the "true risk of crypto assets."
• Comparison to Traditional Banks: The offerings are seen as a competitive threat to traditional banks, which offer minimal interest on deposits. The argument is made that customers are essentially paying a "subscription fee" to banks by letting their money be devalued by inflation.
• Potential for Systemic Risk: There's a concern that increased competition could either force banks to offer better rates to consumers or lead them to take on more risk, potentially causing a systemic blow-up.

Impact on the Banking Industry:

• Threat to Legacy Institutions: Companies like Robinhood (brokerage) and Coinbase (core banking) are seen as taking market share from traditional financial institutions.
• Digital Native Consumers: The wealth transfer from older generations to digitally native individuals who have never visited a bank branch is a significant factor. These individuals are more receptive to modern digital wallet companies.
• Digital Wallets Evolving: Digital wallets are increasingly occupying categories that traditional banking overlooked, such as peer-to-peer transfers, creating sticky customer bases that can be cross-sold into more profitable products.
• "Checking Account" Functionality: Coinbase's offering of an effective checking account with a 4% yield, alongside the 11% option, is seen as a compelling alternative to traditional zero-interest checking accounts.

Conclusion on Coinbase:

Coinbase's product offering is considered compelling, and their willingness to provide services directly competitive with banks is a significant shift. While the 11% yield might not last if capital flows in and compresses spreads, the overall trend indicates a strong competitive threat to traditional banking. The discussion concludes that competition is generally good for consumers, but the ultimate outcome could be either better consumer returns or increased systemic risk.