Matterport: It Came From The Metaverse
Sell Your Home Without a Realtor
Five years ago, Mark Zuckerberg had the whole tech world talking about the “metaverse,” a combination of augmented reality and artificial environments that was going to be the next big thing.
A lot of bad software emerged from that. So did software that lacked a viable business model, like Matterport.
I’ve seen this time-after-time in my career, but you can learn to make lemonade when the market gives you lemons. Matterport finally found a buyer, and it’s coming for your home!
This is being pitched as big news. Matterport has been acquired by CoStar, owner of Homes.Com and Apartments.Com.
Sounds great for its investors. But the Internet has a long memory. I wrote about Matterport in early 2022. I told readers it was losing money hand over fist, and they should avoid it. At the time its market cap was $2 billion, after a shuddering fall from $8 billion a few months earlier.
CoStar paid $1.6 billion.
The Matterport Story
Why the discount? Like many companies, Matterport got caught up in the SPAC boom. You remember SPACs, don’t you? Skip the line at the investment bank. Do a road show, get your sponsor on CNBC, and the suckers will buy anything. Good times.
I saw through this right away and was amazed at how few others did. As I wrote, “Matterport came public in July 2021 through a SPAC, Gores Holdings VI. At one point in November 2021, it was trading at over $32 per share. After the latest tech wreck, it opened February 15 at about $8. We’re talking $2 billion in market cap for a company that’s doing $100 million in business each year, and losing twice as much money as it takes in.”
Things may not have been that good. A former sales executive sued the company last summer, claiming it was cooking the books. Specifically, the suit said the company booked sales at a loss while executives handed out stock bonuses to keep everyone sweet. When the numbers did come out, they showed sales grew slightly, but losses tripled.
There’s another lesson. Don’t expect conclusions on the Internet. There’s a Seeking Alpha analyst telling readers to avoid CoStar stock because of this deal. There is also one saying the opposite.
How Matterport Works
Matterport combines a scanner and GPS software to create a 3-D image of a space you can then manipulate. This lets you show a house remotely, and lets the client remotely control the image, changing the furnishings, moving things around. Put on your 3-D glasses and walk right in.
Matterport’s big problem has been cost. It bragged that a recently announced scanner cost “just” $6,000. It tried partnering with companies like Leica to cut costs, and with Autodesk to make its models practical.
The sales pitch was to realtors. Now a realtor owns it. You can now download a Matterport app to your phone, take 360- degree scans of any space, and see the result. I did just that yesterday, creating a walkthrough of my front garden in about an hour. It was cute. I could swipe up-and-down, left-and-right, to see where new plantings might have an impact.
Who is Matterport Now?
Matterport is now the big bet of Andy Florence. He has spent nearly 40 years building CoStar from the ground up. He claims Matterport has penetrated just 5% of the market, but getting it onto Homes.Com and Apartments.com can move merchandise. In a market where supply is now outstripping demand, where there are more homeowners trying to get out than qualified buyers fighting to get in, there’s an opportunity.
Of course, Florence doesn’t say metaverse or augmented reality. Now it’s AI. “Matterport is a real implementation of AI. If I can take this room, for example, and ask Matterport to remove this table, remove these chairs, and just show me the carpet, that is real Artificial Intelligence. And as Matterport grows, it becomes more intelligent.” Matterport is also helped by the AI revolution because AI is creating tons of new data center capacity for its models to play in.
A new version of the software dropped just as the CoStar deal became final. Maybe there’s a happy ending here after all. We’ll see what happens when Jeff Goldblum and the Levy kids start pitching it.
