'Pandemic platforms' offered a new vision of the internet

Two years into the pandemic, the meteoric growth of platforms that connect people online is petering out.

Not long ago, the appetite for spending time in new digital spaces seemed limitless. Tech companies that offered ways to gather virtually found that users were willing to try almost anything. That's no longer the case. From Zoom to Roblox, Clubhouse to Peloton, new users are increasingly hard to come by.

For our purposes, let's call these pandemic platforms. Since March 2020, these popular services have ushered in a wave of game-changing experimentation that has laid the groundwork for tomorrow's digital society. Along the way, entrepreneurs and tech executives have learned what people love–and hate–about living online.

"Crisis does catalyze change," New York University professor Arun Sundararajan told me.

The gig economy was born in part out of necessity following the financial crisis. That shock gave companies like Uber and Airbnb a supply of crowd-sourced labor and capital at a time when consumers were willing to try new kinds of experiences that saved them money, explained Sundararajan, an expert on the gig economy.
 

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Other factors were at play. Peer-to-peer services wouldn't have been possible without smartphones to connect us and social media to bolster trust between strangers. It also took time. Over several years, users adjusted to the idea of sleeping in another person's house or riding in their car. 

Likewise, the shock of the coronavirus brought changes to digital society. People have embraced new ways of connecting with colleagues, classmates and loved ones virtually. The range of goods and services we buy online quickly ballooned.

Gaming platforms, arguably best-positioned for the transition, showed that it was possible to create compelling live experiences like concerts in a virtual realm. Fitness platforms like Peloton and wearables such as Whoop turned bedroom workouts into a social experience.

Across the board, social media platforms embraced creators by giving them new ways of earning money. Dating apps added new ways of interacting like video and audio calls. The experience of live events has drastically improved, elevating companies like Hopin, an event tech startup that investors valued at $7.75 billion last year. 

More recently, decentralized autonomous organizations like creator club Friends With Benefits are experimenting with hosting social groups on the blockchain.

But the growth of platforms we have relied on is slowing down. 

The return of kids to in-person schooling threatens platforms like Roblox, which has seen the growth of daily active users and their hours slow substantially. The uncertain outlook spurred a selloff that erased two-thirds of the company's stock value since it peaked last November.

"Now that kids are largely coming back, is that usage going to fall off? School is back. Homework is back," said Neil Macker, an analyst at Morningstar who covers Roblox.

Clubhouse, the audio-only app that Andreessen Horowitz and other VCs valued at a reported $4 billion last year, has seen downloads drop and flatten out after a spike when it was released publicly last year, according to app analytics provider Data.ai.
 
Pandemic stocks have faced a broad sell-off. Ask someone what word comes to mind when they think of Zoom, and they're likely to say "fatigue." The message seems clear: Our collective embrace of digital-first platforms was one of necessity, not desire. 

Don't blame the platforms for users being turned off. Both the nature of the pandemic shock and technological limitations can explain the change of attitude.

Unlike the financial crisis, the economic recovery from the pandemic's low point has been surprisingly short-lived—although as inflation data shows, not fully played out. The quick recovery has implications for how consumers behave, and whether they stick to new habits or revert to old ones.

"People underestimate the importance of slow behavior change," said Sundararajan.

It's also glaringly clear that interactions through today's technologies aren't ready to replace the ones we have real life. Virtual and augmented reality, the technologies best-suited to fill this gap, are still a long way from delivering the "killer app" that will attract broad users. VR headset maker Magic Leap recorded one of the largest valuation haircuts of the last two years, shedding more than $4 billion in value in an October funding round.

For nearly two years, people were willing to take a big step into virtual life. And they may have kept on going, if only technology was up to the task. 

Here's the silver lining: This recent era of experimentation has set a new standard for what users demand from immersive experiences. That feedback is invaluable data for technologists now building everything from Web3 protocols to VR games.

In the long run, the pandemic's most useful contribution to innovation may not be engaging more people with today's internet, but setting the expectation for tomorrow's.

Featured image by Design Cells/Getty Images and edited by Drew Sanders/PitchBook News