December 20, 2006 4:00 AM PST
Newsmaker: Virtual magnate shares secrets of successSee all Newsmakers
Since its public launch in 2003, the virtual world Second Life has become a haven for entrepreneurs. And while the number of people making a considerable profit is still relatively small, it is growing rapidly.
Originally, the two ran the company from Germany, but at the beginning of this year, they set up shop in Wuhan, a large city in China, and are now employing more than 30 people full-time at, she says, better than local average wages.
Last month, Ailin Graef issued a press release announcing that the company's total holdings, comprised mainly of virtual land in Second Life, were worth more than a million real-life dollars. For those who aren't familiar with the complex economies of virtual worlds, such a claim may seem incomprehensible.
But for anyone who has spent significant time in Second Life, the number seems all too possible, given Chung's dominance of the land market there.
On Monday, Graef visited CNET's Second Life bureau for a discussion about her business, how best to set up businesses in Second Life and the nature of competition there.
Unfortunately, as the interview was commencing, the event was attacked by a "griefer," someone intent on disrupting the proceedings. The griefer managed to assault the CNET theater for 15 minutes with--well, there's no way to say this delicately--animated flying penises.
It's not clear why the griefer attacked, but Anshe Chung is controversial to some Second Life residents for reasons such as inflexibility on land pricing, the signs she has placed in many areas of the virtual world that are visible to anyone flying overhead, and her ability to get many residents to sell their land to her.
Chung refused to continue the interview in the CNET theater but agreed to go on in her own space.
Once restarted, the interview was attacked again, and the protester even managed to crash the entire server on which Chung's theater is held.
But after restarting and bringing back the audience, Chung talked with CNET News.com for nearly three hours. This is the first of two parts of that interview.
Q: How did you first get started with Second Life?
Ailin Graef: I used to be in another virtual world called Shadowbane. Then I decided try out this weird new thing that was only for adults and supposed to be "user created." This was in March 2004, I think shortly after Second Life first allowed registration from outside the United States and the U.K.
Did you have a business right away?
Graef: No. I was mostly exploring the social and emotional side of virtual worlds, not the money side. I was in virtual worlds a long time before having the goal to start a business.
So what made you decide to start your business, and what was it like at first?
Graef: I've been role-playing in virtual worlds for a long time, and my time always ended up being valuable. In Asheron's Call, I used to be quite popular, creating magic weapons for people, and I always ended up helping people the whole day and still couldn't help everybody. That's what originally led me to charge (game) money for doing things, long before the idea of actually turning it into real money.
How do you describe your business today?
Graef: We are, by revenue and customers, the largest virtual-world (land) developer and service provider--if you do not count platform creators like (Second Life publisher) Linden Lab, of course. We develop various kinds of content, such as land and landscapes, buildings, objects and whole communities.
We don't rely on outside investment capital, and business with residents exceeds the amount of our business for corporations. We are also proud that we train new talent for Second Life and don't just harvest on existing talent in the community.
What were some challenges you had to overcome to get your business started?
Graef: The biggest challenge was the established elite that existed in Second Life before I joined. Many people were around more than a year before me. But from when I signed up in March 2004 to when I showed up at the top of the leaderboard was only four months.
This, not surprisingly, created some funny reactions from the existing power elite. Others in similar situations--such as one well-known casino operator--who were also latecomers and successful, ended up being griefed so badly that they gave up and left Second Life. Luckily, I was prepared when it happened.