Abstract

The case discusses how World Labs, a specialized Artificial Intelligence (AI) start-up co-founded by Li Fei Fei (Li) and a team of leading researchers in AI and computer vision, pioneered spatial intelligence in AI. This involved building Large World Models (LWMs) that enabled users to generate 3D virtual worlds from text or image prompts. The case describes the set of products launched by World Labs built around its core idea of spatial intelligence, primarily through its Marble world model, World API, and supporting technologies like Real-Time Frame Model (RTFM), Spark, and ‘3D as code’. These products were expected to revolutionize storytelling, creativity, simulation, gaming, VFX, design, robotics, scientific discovery, and machine learning. The case also touches upon the evolving AI landscape and how the spatial intelligence technology has the potential to create significant impact on various sectors such as healthcare, space research, education, and building digital infrastructure. While the company had secured a US$1 billion investment from various firms including tech-giants like AMD, Nvidia, and Autodesk in February 2026 and its flagship product Marble world model had 3,000+ users as of December 2025, there were still questions about the right product-market fit. Besides, these technologies remained computationally intensive involving massive costs and technical complexity. A significant challenge was whether industries would adopt these tools at scale and integrate them effectively into their existing product pipelines.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Compare and contrast LLMs and LWMs
• Analyze the uses and business applications of Spatial Intelligence in AI
• Evaluate the importance of product-market fit in a competitive and evolving AI product landscape

Keywords

Artificial Intelligence; Spatial Intelligence; Product-market fit; AI applications; New Product Development; Product gap; Spatial AI; LLMs, LWMs; 3D worlds; Simulation ,AI Landscape; World models; 3D space; Augmented Reality; Virtual Reality; 3D spatial mapping; Marble; Li Fei Fei; AI tools; Spatial Computing; World Labs