Case Study – Part 1: Blaze a New Trail and Clean Up Financially

What do you get when you cross a trail-blazing business idea with a trail-blazing cultural ideology? Linden Lab of course. But in keeping with their ‘break all the rules’ philosophy, this is not your average lab. And intriguingly, their concoction has a life of its own. A Second Life actually.

The more I read about this innovative company and their outta-the-park venture, the more I realise they have zero respect for the status quo. Which earns them bucketloads of respect from me. Now, don’t get me wrong, it’s not like I feel at home with a concept like Second Life. On the contrary. In fact, I was chuckling with understanding when I read Michael Fitzgerald’s amusing article, My Second Life Life, over at Inc.com about his initial adventures in Second Life. It’s the ahead-of-his-time thinking of its founder and CEO, Philip Rosedale, that flicks my switch.

I first wrote about Second Life in December last year, and found myself yet again captivated with this concept and phenomenon after reading Fitzgerald’s recent article. Now I would like to pose two questions to you:

Could your business use a Second Life?
(…or, if you work in the field of marketing, could your clients’ businesses use a Second Life?)
…and,
Will you adopt 2007 as the ‘Year of the Idea’?
(More on Q2 in a minute.)

From Oblivion to Explosion

As Fitzgerald outlines in his “How I Did It…” article, Rosedale has taken Second Life from being an “unfundable idea” that nobody got to an “overnight sensation”. The site drew almost a million new residents in the last two months of 2006. But not before “six very quiet” years.

Rosedale explains some of the barriers they faced:

Second Life was just unfundable. It was just the dumbest idea ever. Mitch Kapor [the founder of Lotus Development] was the only person who got it. Mitch invested in 2001 after I had invested about a million dollars of my own money. I think some of the early angel investors were largely investing in me. They thought I seemed to be a capable, balanced, good-engineering-background entrepreneur, so I could figure out something.

But we could convince absolutely no one that what we were doing made any sense. People said the technology can’t possibly be made to work smoothly because there are too many problems with building a simulation combined with broadband, combined with streaming, combined with rendering, talking to many computers at once, the whole idea is just completely impossible.

The second thing they said was, This is not for ordinary people. Even if it is compelling, there will only be a few crazy people that want to do it. And then you guys will be dead.

Oh, and user-created content had never been a fundable idea. Now, everybody’s doing it. But in the beginning the idea that random people were going to build a three-dimensional world was just impossible for people to understand. A lot of applications, and all 3-D applications, were top-down designs, where some master designer built all the content and you just wandered around in it. And we were saying, You [the world’s residents] are going to build everything. You are going to build these walls. And everybody was like, That’s terribly stupid. Nobody got it.

They wanted us to make it like something that had come before it so that they could value it. (my italics added)

Today 3 million user accounts have been issued in this virtual community. On an average day, between 12,000 and 25,000 users are logged on at any one time. Residents are represented by a customisable graphical image (known as an avatar), most of which are human in appearance (you can be an animal if you wish…). Residents create most of the content using the Linden Lab’s 3-D modeling tool, including virtual buildings, landscapes, vehicles, furniture, and accessories.

But Second Life is no game. And this is what I find compelling about it. You retain the intellectual property rights to anything you create in Second Life. Which translates to the same meaning as in the real world – you can give away, sell, or trade that item. And guess what? Business is booming. You can also buy and sell real estate, and not surprisingly it’s currently a hot commodity. So, while Second Life is a 3-D virtual world in which people interact with one another in an Internet-based environment, avatars play for real.

What’s real is that Second Life is a haven for entrepreneurs, with thousands of businesses selling things ranging from clothes to office buildings to body parts. Business is conducted in Linden dollars, but those can be cashed for cold, hard credit card credits.

The in-world economy is now clipping along at $10 million–those are U.S. dollars–a month. Big companies are popping up, too, experimenting with what might be a look at tomorrow’s three-dimensional Web.

Does Your Business Need a Second Life?

What’s intriguing is that while the businesses created within Second Life are booming, as Fitzgerald points out in his follow-up article, Does Your Business Need a Second Life?, real-world businesses are now setting up shop here. And, unlike the real world, cost is not a barrier.

American Apparel was the first major real-world company to formally enter Second Life when it opened a virtual store in June 2006. Now denizens of Second Life can buy American Apparel clothing there for their avatars (and pick up free virtual tacos and Tecate beer).

American Apparel is still feeling its way along in this world, but Second Life has been great for Wes Keltner’s business. Keltner is president and CEO of the Ad Option, a year-old Lexington, Kentucky, agency. It was Keltner’s idea to get American Apparel into Second Life, and the buzz from that has meant a swarm of clients and prospects. He says he has another five or six clients ready to launch Second Life presences. Keltner is even developing what he calls Second Life’s equivalent of Times Square and has a commitment from Lego for advertising.

Rob Seaver, Vivox’s CEO, says he has every intention of making real money in Second Life. But mostly, he thinks Second Life lets him explore the future of the Internet and think about what that might mean for his business. “A lot of what Second Life portrays is the future,” Seaver says. “This 3-D virtual realm is a significant part of the evolution of the Internet and more and more activities will be presented in the virtual world.”

For a good snapshot of what Second Life is and isn’t – and what possibilities may be awaiting you – check out Inc.com’s slide show 12 Things You Need to Know About Second Life.

Risk more than others think is safe.
Care more than others think is wise.
Dream more than others think is practical.
Expect more than others think is possible.
~ Cadet Maxim

It’s not hard to see that as “big ideas” go, Second Life makes the cut. And, after doing the hard yards, it’s also not difficult to spot their success story. Not only has Rosedale seen his crazy, “unfundable” idea come to life before his eyes, I’d say it’s a fair bet that his pockets are bulging right about now. As well, apart from creating new markets, the beauty of ground-breaking ideas is that you don’t need to worry about the competition – there isn’t any. At least not for a while.

Okay, so you may not have the next Second Life (or then again, you may!), but it doesn’t take a genius to have a progressive mindset. Too often we dismiss our ideas – often for invalid reasons – so that what could potentially be a gold mine evaporates into the ether. This is a tragedy for the idea generator and for society. Soooo….

Why not adopt 2007 as the ‘Year of the Idea’?!

In his plea to Australians to adopt 2007 as the “Year of the Idea”, Australian Institute for Commercialisation Chief Executive Dr Rowan Gilmore argues that increasing globalisation demands more and more new ideas to compete; especially with expanding giants China and India.

“Everybody has at least one idea every day, but how many people actually do something with them? Ideas have the capacity to transform our lifestyles, our businesses and our economies and yet many of these ideas are hidden or even discarded. Now is the time to harvest more ideas and reap the rewards.”

Let’s face it, western economies can’t compete on price, so to survive we’re going to have to create more and more new stuff. New concepts. New paradigms. New ways of doing old things.

So, what say you?

Next time I’ll take a look at the ground-breaking ideology at work within the Linden Lab culture. Unlike your average HR model, Linden Lab has developed innovative, quirky and downright smart ideas to drive their company culture.

Until then,

Danielle
Ideas Nut