Business Communicators of Second Life®

Kiva’s New SL Office, Microlending and Reputation

Kiva is celebrating the opening of new offices in Second Life on Saturday, Jan. 5th.  Join in at 10:30 a.m. to 12:00 p.m. SLT, get a Kiva  wristband – and don’t forget to pick up a Kiva certificate or two.  You can turn “Lindens into Loans” with them.

Kiva is perhaps the most widely known micro lending site, and happily it is getting more and more mainstream attention (when its Oprah’d its “real”).  Kiva is just one disruptive force within the current financial world.

If you are not familiar with Kiva, the organization acts as a “middleman” allowing you and me to make interest-free micro-loans  - as little as $25 - to individual entrepreneurs in a developing economy.  Loans are aggregated among several lenders to supply a borrower with the funds amount the entrepreneur is requesting for financing their business.  When your loan is repaid to you, you may re-loan or withdraw your money.  World wide micro lending has a 98% repayment rate.

Kiva has been operating in SL for quite a while, but the announcement of its new offices brings me back to a subject I’ve discussed here before – identity versus reputation.

Christmas night, (in my part of the world) the BBC’s Peter Day interviewed representatives from several micro finance institutions.  I'm pretty sure it was the gentleman from Fair Finance (it may have been Grameen Bank - the radio broadcast is no longer available for me to verify and I was oh-so-drowsy), who said something profound by virtuality (and conventional finance) standards...

micro lending allows people who have essentially no identity to gain the benefits of loans through reputation.

Micro lenders typically make loans to individuals with no collateral – only by way of reputation.  In some cases a close group surrounding the individual will jointly be accountable.  Grameen Bank looks at the individual’s potential – by way of the “social collateral” of reputation.  Kiva’s repayment philosophy rests on the indivdual’s desire to maintain his/her reputation, believing Kiva mirrors the village and that an individual will work very hard not to sour one’s reputation in either the village or online.

We’re already seeing companies using Google searches, MySpace, Bebo, LinkIn, Facebook and other “virtual reputation” devices to assess (or find) an employee candidate.  If you’ve been in Second Life or other virtual worlds for even just a short time, the first thing you do is look at a person’s virtual profile – and maybe their groups – to get a sense of “who” you are talking to or standing next to (one wish for 2008 – LL strengths reputation systems in SL).

We’re sharing more and more of ourselves in virtual spaces like these – far more than we may share on our loan application, that’s for sure.  Is it really such a stretch that reputation becomes at least as important as a credit score – or that eventually credit scorers find a way to “quantify” our social graph?    Is it such a stretch as we “live” more in "virtual" places that who we are actually hangs on reputation and a bit less on “identity?”

Now, I don’t see conventional lenders dumping their business models any time soon, but disruption is the place to peak into the future.  Go take a look - in Kiva’s new offices. 

Hat tip to Fleep.

January 1, 2008

Sometimes You See It Coming: The FirstMeta Credit Card

It was exactly a year ago that I wrote here on this blog about a study by the global consulting and research firm, TowerGroup who was urging financial institutions to consider reallocating funds from existing marketing, advertising and R&D budgets to put themselves on the forefront of the “emerging MMORPH/VSW market."

Months before that, Phillip Torrone of Make Magazine wrote a prescient article about the future of credit cards.  In fact, he writes he pitched a major financial institution in 2001 on the opportunities around in-worlds spending and the "affinity groups" found in MMORPG.  He concluded that it was just way too early for them to get it.

So, kudos to entrepreneurial innovator and first mover, FirstMeta who brings the MetaCard to market.

There is a FirstMeta ATM and there are plenty of merchants in Second Life who accept the credit card - which is tied to a RL credit card or debit card.

Despite my latest Twitter post that we never see "it" coming, some people are attuned to Black Swans and recognize that it is in the realm of the improbable where business innovation thrives.  It almost always requires "looking sideways", however.

September 5, 2007

Edelman’s Second Life Presence is Missing Edelman

During a week in which there have been some truly interesting Second Life business happenings, I’ve been holed up finishing an article for an industry publication about business happenings in Second Life.  It’s really difficult to write for a long-lead print pub when things are happening in the hyper-lifetime of SLT (Second Life Time).  I’ve therefore been a bit delayed in my typically more timely commentary.  There are many good sources for the breaking SL news so I’m sure you have missed nothing.  I prefer to spend time looking beyond the headline, anyway.

Which brings me to the announcement this past Monday that independent uber-PR firm, Edelman has officially entered Second Life.  In case you are not in the PR industry know, Edelman Public Relations’ Me2Revolution division and their partner in this venture, The Electric Sheep Company, announced the opening of Edelman Island around a business plan competition for Second Life entrepreneurs.  The grand prize is $350,000 in Linden dollars, 6 months' use of an SL island and both PR and technical assistance from the partners Edelman and Electric Sheep Company – totaling about $3500 in U.S. dollar value.  They will also be debuting a machinima news blog sometime soon called The Grid Review to promote resident journalism.  Mark Wallace over at 3pointD is acting as a key advisor on the projects.

I attended yesterday's in-world event at Edelman Island to hear the panel of venture capitalists, who were there to discuss business plan best practices and designing business models for those interested in joining in on the competition. Susan Wu and Jon Goldstein of Charles River Ventures and Catamount Ventures respectively, were the VC panelists.  Rick Murray, President of Edelman’s Me2Revolution, and Sibley Verbeck CEO and founder of The Electric Sheep were also on the panel.  I’ve been since searching for the promised podcast of the audio conference call that was piped into the virtual event, and as soon as I find it I’ll link to it here.

Sibley of ESC added the few real insights about Second Life or SL business to yesterday’s panel discussion, either through the audio conference call or through the always more-interesting in-world chat back channel.  The VCs on the panel were seemingly talking more among themselves  than engaging the real audience represented by all those attentive avatars.

The business plan competition is an experiment according to The Electric Sheep Company.  And although there are some potential logistical issues surrounding intellectual property protection for the entrepreneurs who enter, I think the idea has merit and I applaud Electric Sheep for bringing it to the table behind Edelman.  It did strike me during the panel discussions, however, that the VC judges don’t really understand the social network and virtual world “environment” except on the "analyst level" (to be expected), but if this project can help an entrepreneur get his or her idea into the virtual or real marketplace, there is value in it and to the VC attention.

But most surprisingly, even during this live event, Me2Revolution's Rick Murray offered almost nothing about Edelman’s Second Life presence or the project.  And its absence - from a communications company/new media division that is supposedly doing this to connect with the SL residents, explore SL as a medium, and add value to the community - was deafening.

It is obvious that the virtual world developers, The Electric Sheep Company, is the true investor in this venture, even if it is funded by Edelman.  The ESC stamp is all over it – and I don’t mean just the inviting virtual space of Edelman Island.  Other than a blog post by Edelman’s Steve Rubel,  I’ve been hard-pressed to find any official statement or press release by Edelman PR (please point me to it if you know of it).   

The Electric Sheep appears to be doing all the PR heavy lifting and communicating about the venture via their blogs, including joining in on the conversation and commentary in the rest of blogosphere.  And, ESC is doing an admirable job in spite of the absence of PR support from their partner.

For Edelman, they would have better served themselves as communicators by framing their involvement as “sponsors”  because right now from them this just feels a lot more like “Me2” than “Revolution.”

See Edelman Island at: secondlife/Edelman/198/114/26/.

Get more information on the business plan competition here.

November 18, 2006

U.S. Congress Studies Public Policy Around Virtual Economies

As Second Life reaches 1 million residents today, the Joint Economic Committee of the United States Congress announced they are studying public tax policies related to virtual worlds.

It is no wonder.  Spending in Lindens, the Second Life currency, reached over 92 million dollars for September of this year, and October is already on track to outstrip that figure by 20%.  Linden Lab today announced that largely due to heavy media coverage, it expects to add 50,000 new resident accounts today alone.  In recent months Second Life has been growing by 38% per month in a sector that generates between $1 billion and $3 billion USD a year.

According to Representative Jim Saxton, chairman of the JEC, the committee is concerned that the Internal Revenue Service, the U.S. taxing body, may step in and begin imposing taxes on virtual transactions before appropriate public policies have been set.  “This I believe would be a mistake,” says chairman Saxton.

The present explosive growth of virtual worlds has civic leaders sitting up and taking note far earlier than they did when the World Wide Web began to change and challenge the flow of information and commerce. These virtual environments are rapidly creeping into our real world business and public social and economic structures.   It seems that the U.S. Congress wants to lead the public policy debate about how these economies will be regulated.  But the impact of these virtual spaces on public places has been more quietly advancing for quite a while.

See the full Joint Economic Committee press release here (pdf).

Photo credit:  Linden Lab Market Data

October 18, 2006

Wall Street Journal Reports on Fashion in Second Life

Raz Schionning, American Apparel's director of Web services, tells the WSJ that they have sold 4,000 virtual items since opening their Second Life store in late June 2006.  But, that is actually subtext to the fact that WSJ Marketplace (free) is featuring Second Life’s fashion scene in the first place.  Pretty legitimizing.

The story’s essence however, is the growing competitive fashion scene in Second Life – and the importance of Second Life media to driving sales.  Designers gain attention using advertising, websites and blogs – and Second Life style magazines are a key PR tool, as well.  The story cites the Second Man and Fashionista blogs which are now part of Second Style magazine as key media.  (If you haven’t yet checked out Second Style – wow seriously beautiful – you forget you are looking at virtual fashion.)   The Second Life newspapers such as The Herald and the Metaverse Messenger also frequently feature style-related stories, as does the excellent SLATENight Magazine.

Of course “word-of-wearing” is also just as important in-world as in RL.

But what should perk up the ears/eyes of anyone paying attention is the age of the “consumers” quoted in the story, the amount per month in real dollars they spend per month on virtual fashion and the buying motivations that peak through. 

Be sure to take a browse through the WSJ’s fashion slide show that accompanies the story.

Photo credit:  Dow Jones & Company Wall Street Journal Online

Financial Companies Urged to Reallocate Marketing Funds to Virtual Worlds

A report released in July by the global consulting and research firm, TowerGroup urges financial institutions to consider reallocating funds from existing marketing, advertising and R&D budgets to  put themselves on the forefront of the “emerging MMORPH/VSW market.” MMORPG (pronounced More Pig) stands for Massively Multiplayer Online Role Playing Games; VSW is the acronym for “Virtual Social Worlds.”  Second Life falls into the VSW category, but many also consider it a MMORPG.  But I split hairs.

The point is TowerGroup analyst Rodney Nelsestuen reports there is opportunity – to the tune of $2.5 billion in 2006 in this arena.  He predicts that by 2010 the market will grow to 40 million people spending $9 billion annually.   

In examining the opportunities for financial institutions, TowerGroup notes these environments have “characteristics of complete economic and social systems, replete with virtual currencies.”

Nelsestuen admonishes the industry saying that most financial services institutions “have either ignored these thriving marketplaces, or have relegated marketing efforts to banner advertising or online links."

The full report is available to TowerGroup clients only, but Insurance Networking News has a short article about the report here.