Yoick - Hightechwire

Venture guy, serial entrepreneur and chairman of Second Life, Mitch Kapor said in an interview at the World Economic Forum in Davos that he sees virtual worlds as being a $100 billion opportunity.

When the PC was invented, nobody anticipated the spreadsheet, which I was very involved with, when the Internet became commercial nobody anticipated Amazon.com or eBay, and I have the same conviction that these virtual worlds are going to have killer applications that will just make it a huge industry.

Right on, Mitch.

It doesn’t take a rocket scientist to note that Second Life is vastly different from World of Warcraft. But Clay Shirky has stated the obvious — the one is a platform with fascinating in-world effects, the other is a multi-player game.

Clay believes that we shouldn’t be comparing the two. With this point I agree. Games are games, they involve quests, levelling, the magic circle metaphor and in some instances, the thing that has given rise to their popularity - guilds (the ability to work as a team). They also include a range of negatives - shards and lag.

Second Life is a 3D persistent environment - it does not per se have games or quests and is more focused on allowing its residents to achieve status through the acquisition of status symbols — land being the primary one, but stuff in general. It is very individualistic, but contains social elements - residents can communicate amongst each other, albeit currently on a rudimentary level, and they can collaborate on building items, again at a rudimentary level.

Similarly to games, Second Life has downsides such as lag and severe limitations on the number of residents that can visit an inworld place at any one time.

In terms of comparitors, Second Life should be compared to other forms of online social media such as MySpace and Cyworld. These social media plays have had massive adoption - why: they pander to our innate desire for CICS (Connect, Interact, Create and Share), they are easy to use, are extremely viral and, in particular in the case of MySpace, have an open architecture - I can visit your MySpace page and watch a YouTube video.

Second Life doesn’t rate as a social media play. Linden Labs may have open sourced the SL viewer, but their product is far from open or viral. It is not intuitive to navigate inworld and creating and sharing are hard things to do. Just as a newb user gets comfortable she starts to experience massive client/server induced lag and SL crashes. Oh well, she sighs, I tried that…now back to social networking.

I agree with Clay that games are not going away any time soon, in fact as a form of pure entertainment…they rock. 3D persistent spaces, however, are categorised in the virtual world arena for now, but should be compared to other forms of social media.

In fact, at Yoick we strongly believe that as social media the right combination will lead to massive Skype-like adoption. Stay tuned for our persistent 3D environment - we are on the cusp of emerging from stealth…

In venture news this week, professional networking site, LinkedIn, has raised $12.8 million from Bessemer Venture Partners and the European Founders Fund. The post money valuation placed on the Palo Alto company was a cool $250 million.

The funding will be used to allow them to experiment with new products. They’ve recently been trialling LinkedIn Answers - a user gets to ask her contacts business questions - and launched LinkedIn Experts earlier this month - users can submit requests to experts for advice.

Seattle-based kids online learning company, Headsprout, has raised $8 million from Kaplan, an educational company, to focus on putting an end to illiteracy. The company was set up in 1999 and initially raised funding from Sofinnova Ventures, the Raisin Fund and Roser Ventures.

On the acquisitive front, News Corp. is reported to be making a $12 million investment into ROO Networks, a listed company that provides digital video solutions. Michael Arrington has picked up on the fact that this is not through Fox Interactive - who, he says, have been having separate conversations with Brightcove, a competitor to ROO.

Former Fox Interactive head, Ross Levinsohn must be shaking with laughter.

Fox is also said to be in talks to acquire ad optimisation company, Strategic Data Corporation.

If the Global Peace Index were to apply not only to countries, but also to companies, Google would be joining China at the very bottom ranking.

No-one should’ve felt comfortable with Google’s decision to entertain the censorship demon that is China back in 2005, but Sergey Brin’s recent comments at Davos just scored them a big fat zero.

In answer to a question whether he regretted Google’s decision to modify its search engine when they launched in China, Sergey said, “On a business level, that decision to censor…was a net negative.”

Hang your head in shame, Sergey. From a business point of view, Google.cn has been a disaster - get over it. Correct your status as a brand that stands above evil or be done — you are already on a slippery slope.

Michael Arrington sums up the feeling out there…Google isn’t saying they regret the decision because it was the wrong thing to do, and helps prop up a government that continues to violate the human rights of its own people…Google needs to say they regret working with the Chinese government because that government is evil, not because it turned out to be a ‘net negative’ business decision.

Benchmark Capital Partner, Michael Eisenberg, has blogged that Google is (rumored to be) working on turning Google Earth into a virtual world a la Second Life.

Benchmark is an investor in Second Life, so one wonders at Michael’s motivation for raising such a rumor into the blogosphere — godzilla just walked past my 24th floor office window heading north?

Michael notes the language on the Google Earth website - one more step to creating a life-like 3-D model of the whole planet….message to the Googleplex - we’ve already got one earth, so why do we need yet another virtual earth… what we need are better ways to connect, interact, create and share and doing so in 3-D is uber-cool.

Matt Marshall sees such a move by Google as an opportunity for them to act as virtual central bankers. A bit of a stretch, but an interesting one nevertheless.

UPDATE: The GigaOM has more to say on this, pointing to the possibility that Google is working with a company in China to build the avatars.

It’s shaping up to be another busy week in venture land:

* Kiptronic, a podcasting ad network company which has a marketplace of 47 million available downloads, has raised $4m in Series A funding from Blueprint Ventures and Prism VentureWorks. The existing angel investors who tipped in the seed round of  $400k, also contributed.

* Wikio has raised $5.3m in Series A funding from Lightspeed Venture Partners and Gemini Israel Funds. Wikio is best decribed as a mashup of Technorati, Digg and Google News and is based in Luxembourg.

* Private equity firm, Kohlberg Kravis Robert is reported to be investing $700m into Sun.

San Mateo start up, Wize, assists people find the best products in less time than if they were searching for them on generic search engines like Google.

How do they do this you may ask? They compile expert and user reviews and insert them into a scoring algorithm that outputs a Wize Rank - a single numerical score from 0 - 100 - that essentially uses the wisdom of crowds to alert consumers to products worthy of their attention.

Wize has raised $4million in  Series A financing from the Mayfield Fund and Bessemer Venture Partners. Michael Arrington covered this news recently in a post that was headed “Four Month Old Wize Gets $4m” - a number of folk have reacted to this heading with the WOTF knee jerker that the world of venture has gone all crazy again. I mean, how could a company that’s only been going for four months get $4 million in funding. So we yoicked around a bit and soon placated ourselves that Mayfield and Bessemer hadn’t gone nuts.

Wize’s CEO, Tom Patterson, had been an Entrepreneur in Residence at Mayfield, so this start up has been cooking for a while - it’s only been on the plate for 4 months, but the recipe is a tried and tested one. I’m a big fan of EiR’s and have been successfully running such a program over at NICTA for a few years now.

According to Raj Kapoor, managing director at Mayfield, “We started working with Tom as our Entrepreneur in Residence a year ago to revolutionize the product research space and zeroed in on Wize, as they have the most compelling proposition - giving the mass market consumer the simple answer on what product to buy when confronted with dozens of reviews and guides on the Net. By bringing together a breadth of data in an intuitive interface and simplifying the decision process, Wize will funamentally change the way users research products on the Web.”

Talking with the folk at Wize, I agree with their premise that while expert reviews are ideal for letting you know how a product compares to others in its category, user reviews are better at letting you know how a product performs over the long term in the real world.

Competition includes ViewScore, Nextag, Thefind and Shopping. Nothing wrong with a bit of healthy competition. It will be interesting to see how the space pans out as consumers oscillate between the comfort zone of a generic search and honing in on the right products based on collective knowledge of what works in various product categories. More power to the consumer!

The New York Times has a piece regarding the rise and rise of widgets and points to what we’re calling Widgblogging - blogs that are predominantly made up of widgets and for which the posted content is relatively peripheral. Widgblogs are, like any mashup, the sum of their parts, and - like any mashup, it’s the mix that determines if the sum resonates with the blog’s readers or not.

 Jeremy Liew, over at Lightspeed Venture Partners, has a great post on the NY Times article. We’ve also Techcraunched Jeremy.

We recently caught up with fellow hyper entrepreneur, Evan Williams…and asked him some questions regarding multi-product, sustainable companies (we’ve riffed on this here and here), life, stuff and the future. 

Rand: You’ve done some classic serial entrepreneur stuff, you co-founded Pyra Labs (Blogger) and sold the company to Google, started Odeo, bought your VCs out and founded Obvious - what do you view as your key takeout from your experiences to date?

Ev: Trust your gut. Work hard. Screw up. Get over it. March on.

Rand: Obvious is, from my perspective, an attempt at building a sustainable, multi-product company rather than a single product/app quick flip, or as Ben Barren coins it - a product factory. Tell us a bit about your thought process in deciding to do Obvious, your strategies for success and the landscape you are journeying through.

Ev: Several things led to the thinking behind Obvious. One is that there is now an opportunity to create useful, fun, interesting sites and services that can make money but don’t necessarily require (or, in some cases, deserve) the overhead of a whole company (especially with the expectations of funding and cash-out events).

By building things cheaply and quickly — and sharing overhead, technology, and knowledge where it makes sense — a company that owns many of these sites could be both fun and viable.

Secondly, the web is so crowded these days, some really cool stuff doesn’t get serious attention, because it’s hard to distinguish from other sites and services — or people just don’t know about it. So we hope to create a network of properties, that can both serve as a launchpad for new products and as a way to lower the barrier for new users ( for example, by having their data already available to it, if they so choose).

And third, we wanted to create an environment where wacky ideas could be tried without having to justify or explain them to a board, or investors, or anyone else. Some of them won’t go anywhere. Once in a while, the wacky idea will be just what the people didn’t know they were missing in their lives.

Rand: If we use the film studio analogy, each of your products would presumably have an executive producer. How do you ensure that these folk are imbued with sufficient entrepreneurial fervor so that they embody the best attributes of a startup CEO? 

Ev: I’m not sure yet. I do think the “executive producer” role, as you call it, is key. A lot of people want to pursue lots of ideas, because they can’t constrain themselves to one. The easiest way for us to screw up is to go in too many directions at once and, even if we have good ideas, not be focused enough on them.

Your first assumptions about anything are usually wrong, so you have to find the right balance between throwing things at the wall and seeing if they stick and iterating diligently ’til you get it right. So we want to make sure that the individuals in Obvious, who are leading projects, are able to focus, at least for a significant period of time.

I don’t think a project lead has to have all the same attributes at a startup CEO — they don’t have to worry, for instance, about raising money or many operations issues. But they need to be self-organized, an organizer of others and have excellent product sense.

Rand: How do you see the space playing out over the next 18 months and what will Obvious look like by then? 

Ev: Part of the philosophy behind Obvious is that we have no idea how things are going to play out. No one ever does, really, the difference is we don’t pretend we do.
Rand: Shoot the arrow forward - what’s your view of the future 5 years out? 

Ev: Jet packs and telepathic blogging. Those things are a given. Other than that, I dunno. What seems to stay true is that everything gets more complex and opportunity breeds opportunity. And the things that drive humans to do things don’t change that much: self-expression, convenience, personal gain, human connection (or the approximation thereof) etc. will continue to drive the online world.

There will just be new and more fascinating ways to do everything.

Second Life sees voice as an important tool for its residents. According to the virtual world’s creator, Linden Labs, their development path is focused onhaving both voice-enabled avatars so you can simply walk up to someone and engage in a conversation and allow for spatially aware multiple voices so that you can walk through an area and hear people speaking with their voices emanating from where they are in that space.

In an interview with IDG News, Joe Miller, Linden Lab’s VP of platform and technology development also noted that they have a significant initiative under way to make inworld search more natural and visual.

Joe also mentioned they have created an API which will allow their business customers to create their own front porches into SL. Not my favorite analogy, but this is an important development. In fact all three initiatives are important as SL has copped a lot of flack for its clunkiness. Marketing and hype is one thing, but happy users is a whole other ball game.

Let’s end with a great quote, which we strongly agree with…We believe that multiple-user virtual environments are just in the beginning stages of their existence…to create communities, commerce and a permanent place for ourselves.