February 19, 2007 3:00 PM PST

A winning business plan for 'Second Life'

The winner of a business plan contest in Second Life is a company that's likely to help others come up with business plans for Second Life.

The honors, announced Monday, went to Minnesota-based Market Truths, which devised a market research and analysis system to help real-world companies figure out what works and what doesn't in the burgeoning virtual world.

The contest's judges rewarded the Market Truths submission because the team has conducted similar market research in the real world for years, and because it appeared to have the best profit potential of the four finalists.

"I was really impressed by the quality of (all) the ideas we received," said Susan Wu, a contest judge and a venture capitalist from Charles River Ventures. "Each one of these businesses could turn into a viable ongoing enterprise, not only in terms of Second Life, but as a service that stands across multiple virtual worlds."

The other finalists in the first-ever business plan contest in Second Life submitted proposals--in order of finish in the contest--for a suite of in-world communications and collaborations tools, an in-world music distribution system and a reputation-based search engine.

Wu said she voted for the Market Truths team--led by its managing director, Mary Ellen Gordon--because of its real-life market research experience and the likelihood that the team would be able to extend that experience into the virtual arena.

"I personally favored Market Truths because they had the best execution," said Wu. "It seemed most likely that they would be able to execute on their idea (and) the fact that (Gordon) already has experience doing this."

The contest, which launched in November, sought creative business plans with real profit potential. It was sponsored by The Electric Sheep Company, the largest third-party creator of projects and services in Second Life, and global public relations firm Edelman.

The Market Truths team will receive free access to a private Second Life island for six months, as well as a prize of 350,000 Linden dollars, the in-world currency--about $1,308 in U.S. dollars.

The proposal was for a system in which Market Truths would conduct regular focus groups, as well as surveys and other market research to determine the kinds of things that members of the Second Life community like and don't like about brands, products and services from third-party companies.

The research and surveys will provide analysis based on Second Life users' real-life gender, in-world gender, real-world age, time in Second Life, and other factors. That will give Market Truths' clients the opportunity to gauge users' attitudes based on a number of demographic factors, including the unusual ones that come up in a virtual world where a participant can take on any personality, gender, race, age or size they wish.

Gordon said her team will conduct focus groups inside Second Life and has already been doing so. Market Truths, she said, has been signing up Second Life users to participate in the studies who are being paid a nominal fee--in Linden dollars--and are required to have been in Second Life for at least 30 days in order to ensure that they have some investment in it.

For Market Truths' customers--potentially large corporations considering whether to set up shop in-world, following in the footsteps of companies including Toyota, General Motors, American Apparel and Starwood Hotels--Gordon said the idea is to provide information about how Second Life users will react to their brands, products and services.

Further, Market Truths' services will allow companies to market-test prototype products and to assess how Second Life users will react to them.

To the judges, the fact that Market Truths can help its clients evaluate how the Second Life community will respond to products, brands and services is an invaluable and potentially lucrative business.

"People will pay them a lot of money, so...it's a really good business," said Jon Goldstein, a contest judge and partner at Catamount Ventures, an early investor in Second Life publisher Linden Lab. "Another thing we considered in this contest is the effect on Second Life and its community...What (Market Truths is) going to be doing is working with big companies and helping immerse them in Second Life, and that's a great for getting more people involved and educated about Second Life."

See more CNET content tagged:
Second Life, business plan, market research, virtual worlds, focus group

24 comments

Join the conversation!
Add your comment
Metaverse Technology placed second!
This article is inaccurate. The winner of the contest was indeed Market Truth, followed by Metaverse Technology, creator of the business tool suite, which placed second. Metaverse Technology was followed by the media player team. The search engine team came in fourth, received an honorable mention, but did not win a prize.
Posted by gusanocomemuerto (5 comments )
Reply Link Flag
Metaverse Technology placed second!
This article is inaccurate. The winner of the contest was indeed Market Truth, followed by Metaverse Technology, creator of the business tool suite, which placed second. Metaverse Technology was followed by the media player team. The search engine team came in fourth, received an honorable mention, but did not win a prize.
Posted by gusanocomemuerto (5 comments )
Reply Link Flag
Second life
= get a life.

I can kind of see wasting hours on games...as a way to get away from it all...especially when the weather is bad. But to come home from work...and work again but only with bad graphics....and to pay for it monthly....NO THANKS.
Posted by Lindy01 (443 comments )
Reply Link Flag
Second life
= get a life.

I can kind of see wasting hours on games...as a way to get away from it all...especially when the weather is bad. But to come home from work...and work again but only with bad graphics....and to pay for it monthly....NO THANKS.
Posted by Lindy01 (443 comments )
Reply Link Flag
Second Life = Second Scam
Guess 'second life' is a second chance for the scammers that
missed the first internet boom -- this time combining the worst
measures of globalism, marketing hype, and gaming in one nifty
package. I sat through a long ugly demo of this great new
marketing ploy by a serious faced gent from GSD&M in Austin
Texas recently. As his PC bogged to a craw, the 'server' crashed,
and he was reduced to alternately explaning and aopologizing
how Second Life would revolutionize people's lives.... I
remembered PT Barnum's sage observation...

There's a sucker born every minute.

For Second Life's business plan, they're counting on it.
Posted by avfolk--2008 (37 comments )
Reply Link Flag
Second Life = Second Scam
Guess 'second life' is a second chance for the scammers that
missed the first internet boom -- this time combining the worst
measures of globalism, marketing hype, and gaming in one nifty
package. I sat through a long ugly demo of this great new
marketing ploy by a serious faced gent from GSD&M in Austin
Texas recently. As his PC bogged to a craw, the 'server' crashed,
and he was reduced to alternately explaning and aopologizing
how Second Life would revolutionize people's lives.... I
remembered PT Barnum's sage observation...

There's a sucker born every minute.

For Second Life's business plan, they're counting on it.
Posted by avfolk--2008 (37 comments )
Reply Link Flag
Disappointed
I'm disappointed in the outcome of this contest. Frankly, the others who came in second or third sound so much more interesting and sound like they'd do a lot more to develop the world of SL itself. I'd love to have a jukebox on my land venues that people could buy songs and play them. I hope this business will still try to get off the ground in SL.

I find this statement vapid:

"a contest judge and partner at Catamount Ventures, an early investor in Second Life publisher Linden Lab. "Another thing we considered in this contest is the effect on Second Life and its community...What (Market Truths is) going to be doing is working with big companies and helping immerse them in Second Life, and that's a great for getting more people involved and educated about Second Life.""

I don't see how "the community" is helped, i.e. the bulk of those actually using, living, working in SL. It sounds merely like a glorified focus group method, taken right out of first life.

It works from the outside in, i.e. "helping Big Companies immerse themselves" and not from the inside out, developing the world and making it more navigable, coherent, understandable, and useable.

I can't help wondering if a sort of cohort of focus group goers and survey filler-outers will develop who will be like camp chair sitters.

Once they have all these market surveys based on 36 part-time Wal-Mart clerks who happen to be able to sit on SL all day before the second shift, what will they have? 36 Wal-Mart clerks who like to turn tricks and shop in SL. Then what? Those same RL companies who wish to sell to them can do so in RL without all the bother.

The company that had the idea for improving the search sounds more useful if they get people figuring out how to shop and rate better, it could be a kind of consumer index. I'm not sure it would work at first given the gamed, vindictive climate of SL, but in time with enough participants, it could.
Posted by Prokofy Neva (15 comments )
Reply Link Flag
good business vs interesting products
Well, if I might disagree a bit; the premise of Second Life is that the community as it exists now is just the first adopter tip of the general user iceberg. If the current Second Life population is all there is going to be, there isn't going to be much profit in it for businesses. The bulk of those actually using, living, and working in SL are not anyone's ultimate target market. So trying to perfect the platform for the first adopters at the expense of serving the more conservative and cautious is a huge mistake. This may sound like a betrayal, but it's a fact; none of the companies in this competition will be profitable if Second Life does not expand massively, which will drive demand for all sorts of products, interesting and otherwise.

I'd also note that this was a business plan competition, not an interesting product competition. There are lots of interesting products that will never make anyone any money. If you put a jukebox on your land, and tried to sell songs . . . how many people would buy them? Where is your content coming from, and how much are you paying to play it? Solving the content ownership problem- and I have no idea whether the jokebox team solved it or not- isn't "interesting," but it's the difference between whether the plan works or not. That doesn't get exposed in articles like this, because it's boring. But it's crucial. It's impossible to judge whether the judging was good or not based on product descriptions in a news article.

For example, while a marketing focus group might not sound as interesting as other products, the fact is that marketing is the first wave of business operating in SL, and it makes business sense to attack the part of the market that has money and is spending it, now. What's wrong with a glorified focus group method, from a business perspective? They build a slightly better mouse trap. They don't have to rent out space in a mall and pester people with clipboards. They've got paying customers and a more affordable solution. Sounds pretty damn viable to me.

However, I agree that certainly the world needs to be developed, be improved, become more coherent, understandeable, and usable. But that's a job for Linden Lab, not the competitors in this plan, who must assume the world is going to get fixed up if anything is ever going to be profitable there. If the world remains as Prokofy Neva describes it, SL will not survive, nor will any of these companies, and the existing community will have to take their quirky avatars somewhere else. If, on the other hand, it gets out of its adolescent phase into adulthood, it is going to run like the internet boom did. The interesting products with the weak business models may get VC money that is looking for some angle on SL, but they won't make profits. The ones who survive will be the ones with the solid business models. It is doing a service to everyone, including anyone considering investing their own money in this technology, to promote profitability. I think this competition did that.
Posted by gusanocomemuerto (5 comments )
Link Flag
Disappointed
I'm disappointed in the outcome of this contest. Frankly, the others who came in second or third sound so much more interesting and sound like they'd do a lot more to develop the world of SL itself. I'd love to have a jukebox on my land venues that people could buy songs and play them. I hope this business will still try to get off the ground in SL.

I find this statement vapid:

"a contest judge and partner at Catamount Ventures, an early investor in Second Life publisher Linden Lab. "Another thing we considered in this contest is the effect on Second Life and its community...What (Market Truths is) going to be doing is working with big companies and helping immerse them in Second Life, and that's a great for getting more people involved and educated about Second Life.""

I don't see how "the community" is helped, i.e. the bulk of those actually using, living, working in SL. It sounds merely like a glorified focus group method, taken right out of first life.

It works from the outside in, i.e. "helping Big Companies immerse themselves" and not from the inside out, developing the world and making it more navigable, coherent, understandable, and useable.

I can't help wondering if a sort of cohort of focus group goers and survey filler-outers will develop who will be like camp chair sitters.

Once they have all these market surveys based on 36 part-time Wal-Mart clerks who happen to be able to sit on SL all day before the second shift, what will they have? 36 Wal-Mart clerks who like to turn tricks and shop in SL. Then what? Those same RL companies who wish to sell to them can do so in RL without all the bother.

The company that had the idea for improving the search sounds more useful if they get people figuring out how to shop and rate better, it could be a kind of consumer index. I'm not sure it would work at first given the gamed, vindictive climate of SL, but in time with enough participants, it could.
Posted by Prokofy Neva (15 comments )
Reply Link Flag
good business vs interesting products
Well, if I might disagree a bit; the premise of Second Life is that the community as it exists now is just the first adopter tip of the general user iceberg. If the current Second Life population is all there is going to be, there isn't going to be much profit in it for businesses. The bulk of those actually using, living, and working in SL are not anyone's ultimate target market. So trying to perfect the platform for the first adopters at the expense of serving the more conservative and cautious is a huge mistake. This may sound like a betrayal, but it's a fact; none of the companies in this competition will be profitable if Second Life does not expand massively, which will drive demand for all sorts of products, interesting and otherwise.

I'd also note that this was a business plan competition, not an interesting product competition. There are lots of interesting products that will never make anyone any money. If you put a jukebox on your land, and tried to sell songs . . . how many people would buy them? Where is your content coming from, and how much are you paying to play it? Solving the content ownership problem- and I have no idea whether the jokebox team solved it or not- isn't "interesting," but it's the difference between whether the plan works or not. That doesn't get exposed in articles like this, because it's boring. But it's crucial. It's impossible to judge whether the judging was good or not based on product descriptions in a news article.

For example, while a marketing focus group might not sound as interesting as other products, the fact is that marketing is the first wave of business operating in SL, and it makes business sense to attack the part of the market that has money and is spending it, now. What's wrong with a glorified focus group method, from a business perspective? They build a slightly better mouse trap. They don't have to rent out space in a mall and pester people with clipboards. They've got paying customers and a more affordable solution. Sounds pretty damn viable to me.

However, I agree that certainly the world needs to be developed, be improved, become more coherent, understandeable, and usable. But that's a job for Linden Lab, not the competitors in this plan, who must assume the world is going to get fixed up if anything is ever going to be profitable there. If the world remains as Prokofy Neva describes it, SL will not survive, nor will any of these companies, and the existing community will have to take their quirky avatars somewhere else. If, on the other hand, it gets out of its adolescent phase into adulthood, it is going to run like the internet boom did. The interesting products with the weak business models may get VC money that is looking for some angle on SL, but they won't make profits. The ones who survive will be the ones with the solid business models. It is doing a service to everyone, including anyone considering investing their own money in this technology, to promote profitability. I think this competition did that.
Posted by gusanocomemuerto (5 comments )
Link Flag
Secound life to escape REAL life
AKKK sick to my stomach. Marketing! GO AWAY!!!! SPOILERS!
Posted by bradyme (43 comments )
Reply Link Flag
Secound life to escape REAL life
AKKK sick to my stomach. Marketing! GO AWAY!!!! SPOILERS!
Posted by bradyme (43 comments )
Reply Link Flag
Yet another SL article
I don't know why CNET seems so obsessed with Second Life and Anshe Chung. We're constantly seeing articles about one or the other up on the top of the front, and I really have a hard time believing that the majority of CNET News readers give a damn about the latest happenings in SL.
Posted by goalcam (16 comments )
Reply Link Flag
Seriously, why the constant Second Life hype?
I hear about it ONLY on cnet.

Is it REALLY that popular?

Or, is there some financial transaction involved here?
Posted by Mark Greene (163 comments )
Link Flag
Yet another SL article
I don't know why CNET seems so obsessed with Second Life and Anshe Chung. We're constantly seeing articles about one or the other up on the top of the front, and I really have a hard time believing that the majority of CNET News readers give a damn about the latest happenings in SL.
Posted by goalcam (16 comments )
Reply Link Flag
Seriously, why the constant Second Life hype?
I hear about it ONLY on cnet.

Is it REALLY that popular?

Or, is there some financial transaction involved here?
Posted by Mark Greene (163 comments )
Link Flag
Second Life Sells out its Customer Database
I read this article and they are saying they will be working with focus groups to target their marketing / advertising to Second Life customers based upon their Real Life player information. Can spam be that far behind? Will we start seeing in game advertisements more than user created content? How long before we have popup ads in the browser itself?

I call this just another commercial nail in SL's coffin. It was a good realm to mess around in until they started courting corporate customers and ignoring the end user.

And yes, I'm still out $130,000 Lindens due to a system error. Since it's virtual, they say they aren't liable for any of it so all my money I had in the game is gone. Poof. Sorry. Now if I was a corporate customer and that had happened, I don't think they would use the same argument. Imagine Linden Labs telling Sony that- sorry, a game glitch lost all your inventory and online funds. Please start over from scratch- no backups or help from Linden Labs will be made available.

Somehow I don't think that would happen. To end users? Sure, we don't count for anything. Corporate customers? Those are the ones LL wants, not you.
Posted by Vegaman_Dan (6683 comments )
Reply Link Flag
Second Life Sells out its Customer Database
I read this article and they are saying they will be working with focus groups to target their marketing / advertising to Second Life customers based upon their Real Life player information. Can spam be that far behind? Will we start seeing in game advertisements more than user created content? How long before we have popup ads in the browser itself?

I call this just another commercial nail in SL's coffin. It was a good realm to mess around in until they started courting corporate customers and ignoring the end user.

And yes, I'm still out $130,000 Lindens due to a system error. Since it's virtual, they say they aren't liable for any of it so all my money I had in the game is gone. Poof. Sorry. Now if I was a corporate customer and that had happened, I don't think they would use the same argument. Imagine Linden Labs telling Sony that- sorry, a game glitch lost all your inventory and online funds. Please start over from scratch- no backups or help from Linden Labs will be made available.

Somehow I don't think that would happen. To end users? Sure, we don't count for anything. Corporate customers? Those are the ones LL wants, not you.
Posted by Vegaman_Dan (6683 comments )
Reply Link Flag
PLEASE!!! Enough SL articles already. Nobody cares.
eom
Posted by fcekuahd (244 comments )
Reply Link Flag
PLEASE!!! Enough SL articles already. Nobody cares.
eom
Posted by fcekuahd (244 comments )
Reply Link Flag
Running out of news cnet?
Second life is in the news every other week, however they have yet to make real money or prove online vendors can really make money setting up virtual shops.

KieranMullen
Posted by kieranmullen (1070 comments )
Reply Link Flag
Running out of news cnet?
Second life is in the news every other week, however they have yet to make real money or prove online vendors can really make money setting up virtual shops.

KieranMullen
Posted by kieranmullen (1070 comments )
Reply Link Flag
 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.