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Thursday, June 02, 2005

BUSINESS MODEL PROTOTYPE

Behold the latest in Second Life user-created content: the high-tech startup business plan.

With a community so large and competition so potentially fierce, it isn’t enough anymore to create a cool thing and hope it catches on through mere word of mouth. No, you also want to do some advance consumer research, and when you’re about ready to launch your product, create a solid distribution and marketing strategy.

At least that’s the lesson I gleaned from a demo of Timeless Prototype’s Multi Gadget, a kind of nuclear-powered PDA utility that clips onto your ear, and comes with over 60 unique commands-- sort of an in-world Swiss army knife for just about every experiential aspect of Second Life. For futuristic combat roleplay, say, there’s a tear gas canister that knocks everyone in the vicinity in all directions, and an instant jail that materializes around the owner; for builders, there's several varieties of insta-bridge which appear at your feet, at a single-word request; for scripters, an “I’m busy scripting” thought bubble that appears above your head, so you can work in peace; for general fun, a giant lightshow that materializes in a single-word command. And so on. Pretty cool, all told.

But what really impressed me was Timeless’ business plan for the Multi Gadget, the end result of a year researching the market, and what worked within it.

“Basically I've been exploring various business models in SL since I joined,” he explains. In the beginning, “I actually paid people to bring knowledge to me… it was a general request for information. When it came back to me, I would assess the usefulness of it and tip accordingly.” So when someone clued him in on a new club, for example, he spotted them with an L$ kicker.

With enough of this informal research, he continues, “it did give me a feel for the community and the big players in it. When it comes to human networking it's important, because each person is a potential partner or facilitator.” In the process, he realized this was a monetizable activity on its own. “Information gathering in itself can be useful as a business,” he says. “[F]or examples, take a look at private investigation and market research,” Prototype observes.

After some veteran Residents helped Timeless hone his scripting skills, he continues, “I moved into the next business model: a scripting service. This model is flexible and requires no prior investment or setup. Skills, experience and the ability to solve problems are all you need to get into a scripting service.” He didn’t originally script as a commercial enterprise, though. “At first,” he says, “I was giving things away freely, until people started asking how much for the products. I considered the effort invested and reduced the price by how many I thought I might sell. This is when I entered the direct sales business model.”

His next move was informed by a larger social observation.

“I know that a healthy community circulates the wealth within itself and exports wealth to neighboring communities (in this case, the real world),” Prototype Timeless tells me. “My first idea to get the circulation moving was to bring quality scripters' [vendor machines] into my shop space.” But because he was also selling his own products there, “I felt it would be unhealthy to compete with my fellow scripters by creating better products of the same kind… [that] would have killed their success and subsequently my own.”

What he wanted was true retail. He even proposed a royalty feature in the Linden Lab feature voting system, but for various reasons, couldn’t build up enough support to convince the company to add that into a future version. “[I]t almost killed me to realize that we'd never see true retail in Second Life, and potentially it would stop the circulation of wealth and parts of the community would fade as users would inevitably leave,” he says. “I became despondent.”

Some time away led to new thinking, and a new strategy.

“It takes a killer product for a start," he reasons. "Killer products are typically a must-have and in the best cases, people will buy them over and over again (like toilet paper).” Another Resident had recently built a successful multi gadget, but subsequently left Second Life; Timeless was sad to see him go, “but it left a gaping hole in the market for another product in the same niche. So I invented Multi Gadget with automated free updates. This product was going to be my way of exploring more retail options in Second Life.”

Because the retail system is about as important as the product itself. Timeless sells the Multi Gadget at an incremental discount (the larger the unit buy, the lower the wholesale cost), so prospective retailers can purchase and resell at a decent mark-up.

“The pricing allows the retailer to sell the product for much less than I sell via direct sales, and yet still take a profit. This immediately empowers the retailers,” Timeless tells me. (The wholesale units even comes with a helpful retail plan, and a sample ad, for use in billboards and such.) “In fact, the retail model would still work even if they sold it right next to the direct sales that I provide in my shop. In a virtual world where teleportation is possible, location must not determine whether a sales model will succeed or fail.” With a month on the market, he’s sold far in excess of a hundred units.

“This is my best business process so far in Second Life,” Prototype tells me. “Market research, idea, develop, test, human networking, freebies and public beta testing, sales channels (word of mouth, New Products in Forums, SLExchange.com, SLBoutique.com, SecondServer, MetaAdverse.com), exhibitions, retail, support, promoting retailer growth by assisting with marketing.”

But his plan is informed by his real life background and business experience. “I owe it all to my father who used to own a group of companies, and of course my exposure to creating software and web solutions for businesses,” he says. And his ultimate goal goes way beyond the success of his own product; it’s a plan, he says, for Second Life’s improvement as a society: “Community circulation of wealth through the ability to work in groups (employment even) and through the use of retail. Exports, including but not limited to: entertainment; enhanced real life; game prototyping; business prototyping; real world collaboration.”

Retail as a way to build a better world, in other words.

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Comments

Hahaha... OMG... I know Timeless's cool gadget, and heck, every Batman (or at least every avatar who WANTS to be Batman) should have one, but I had nooo idea he had such a freakin' elaborate businessplan!

Posted by: Torley at Jun 2, 2005 6:32:06 PM

>>Retail as a way to build a better world

I think there is a fundemental flaw in this, as with a lot of SL that just translates RL concepts into SL.

The real potential value of SL is in creating paradigms of social value/"wealth" creation that would be immpossible to do in the RL because of time/space constraints. I think I read somewhere that this was one of Philip Linden's key drivers for creating SL (apart from fulfilling the VC exit strategy).

Perhaps we need to think about the role of money and what role it actually plays in creating a so-called "better world".

An interesting read in this regard:

"What is money? And how well does it work to solve society’s ills? Bernard Lietaer, author of the upcoming book Access to Human Wealth: Money beyond Greed and Scarcity (Access Books, 2003), has made a life’s work of exploring these questions. Lietaer has been involved in the world of money systems for more than 25 years, and his experience in monetary matters ranges from multinational corporations to developing countries. He co-designed and implemented the convergence mechanism to the single European currency system (the Euro), and served as president of the Electronic Payment System in his native Belgium. He also co-founded one of the largest and most successful currency funds."

http://www.nexuspub.com/articles/2003/july2003/interview.htm

Posted by: komuso tokugawa at Jun 2, 2005 6:46:51 PM

Timeless told me about his gadget and his biz plan a couple weeks ago, and it was the freshest biz idea I've heard in a long time in SL. Great topic, Hamlet - I love reading not only about social issues, but some behind-the-scenes developer issues.

Posted by: HiroPendragon at Jun 3, 2005 12:01:53 AM

I have known Timeless for quite some time now, and time and time again he impresses me with his scripting ability and business knowledge.

He sets out ideas and implements good business strategies that the rest of Second Life could follow and improve their sales and products.

Timeless always creats good quality products and trys to give the 'Average' Second Life player a helping hand in achieving what he has achieved..Greatness.

Posted by: David Jacobs at Jun 3, 2005 4:15:44 AM

How do I get one?

Posted by: Echinacea Wallaby at Jun 3, 2005 8:05:29 AM

Let me cut through yet another one of Hamlet's breathless celebrations of SL FIC celebrities to the chase. Timeless tried out some of his marketing hype on me. He landed on my boardwalk to mildly exoriate me for my critique of the vaunted scripterati. He promptly handed me a Timeless gadget and a Timeless Graffiti board. We had a fascinating debate which I'll blog some day and then he left to his time zone, I to mine, to wrestle pointlessly with his gadget which was too hard, then I pulled up his Graffiti which was hella cool. Excited about all the advertising possibilities I could have with this item -- type copy in chat and have it instantly caption under a picture ad on a billboard -- I began to play with it but then something snagged. I sent him a query..finally 2 days later he replied imperiously that he was busy then a little later that he was "doing IMs". I said oh, l8tr then dude and he sez "no, this *is* an IM and I'm doing it" (read: you feeb and choad). "Could you explain something that isn't working and make it work differently?" sez I. Actually expecting him to come and serve his product that I *purchased* by now (I bought a copy of the expensive item rather than just use the freebie) (usually creators TP to you in SL), I waited. He then wanted *me* to TP to him. Annoyed, whatever, I TP to him and find him talking to somebody showing off their robot av. "Can it do that or this," I ask. He withers me with some comment about notecards, but his notecard, like a lot of tekkie notecards, wasn't clear in answering my question. When he finally realized what I wanted, he said "That's a lot of programmning, Prok. And I'm busy until 2006." So I think other customers might want to know that Timeless Prototype, whatever his genius, is "busy until 2006" and is just not customer-service oriented. Honestly, I continue to think that the two oldest adages in the book "The Customer is Always Right" and "We Aim to Please" that always served business in the meat-world really could use some revival in SL, where arrogance about fancy product development and now even "business development" has been allowed to overtaken just plain old common customer *service.*

Let me tell you then a bit more "business development" information. When somebody does this, you don't come back and buy more, you move on. When another scripter IM'd me about his product, and TP'd me to his shop, I said, "Can it to this or that?" "Let me work on it and get it to you in 24 hours," he said. I just paid him $15,000 for the products. Money talks, bullshit walks.

Posted by: Prokofy Neva at Jun 7, 2005 3:32:49 PM

The Demon customer. Some business are beginning to realize some clients aren't worth it, and not always right.

Posted by: Doctor Ludd at Jun 24, 2005 11:51:44 AM

Prokofy how can you possibly say that about timeless. From what I had percieved about your bussines pratices when I tried to rent land from you and you did not respond for 2 weeks. Your asking timeless to make a custom product for you and then you bitch when he says he is busy. You should work on your own bussiness pratices before you talk about other people.

Posted by: Chad Statosky at Jun 24, 2005 6:17:50 PM

funny, I heard of Timeless since the first week he was in Second Life ... never heard of you Prokofy until today , strange....
/jail Prokofy

Posted by: LadyBunny Hare at Jun 24, 2005 7:22:16 PM

Prok..I have known Timeless Prototype for..Over a year now.

In that year he has never failed to help me if I needed it..Have you ever thought, like the rest of Second Life..HE JUST MIGHT NOT LIKE YOU? :)

Or maybe it is because he realised that he is too busy, and just didn't want to lead you on saying he'll do it when he doesn't have the time?

Posted by: David Jacobs at Jun 25, 2005 1:02:30 PM

Prokofy, bringing your personal issues in to try and tarnish Timeless's moment in the sun says a hell of a lot more about you than it does about him. It makes it clear that he treated you exactly the way you deserved. Bullshit walks indeed. You're all class Prok.

Posted by: Chip Midnight at Jun 25, 2005 9:55:29 PM

It is ironic how so many people respect Timeless and he has left Second Life..Yet so many people have lost respect for Prok and he stays!

Posted by: David Jacobs at Jun 26, 2005 6:26:42 AM

I have received a most cryptic message from Timeless about how he is leaving SL and I am utterly baffled. He blaims it on me, but that's just plain ridiculous.

David, um, an interesting world you predicate here -- one where you decide to provide your high-end tekkie services -- or not -- deciding on whether you "like" a person. Um, that sounds awfully, uh, *modern* -- like as modern as the Middle Ages.

Can you remember the time you and a partner promised a job to my alt Random, and was paid a down payment, and didn't deliver, and then didn't return your half of the down payment? I guess you've forgotten that? Can you remember the time you griefed an entire mainland of people with a gigantic build, threatening to make it even bigger and more obstructive? It would be good if we had a Better Business Bureau or some other disputes mechanism other than Hamlet's blog to file complaints like that -- boy they sure do need work, and often don't fit precisely under the TOS.

I didn't ask Timeless to make a custom job, I asked him why, on his vaunted graffiti board that claimed to take landmarks connected to each picture, it only took ONE landmark to one picture, then nothing moved and everything froze. Just a plain, ordinary, customer service question about why something wasn't working the way it *seemed* that it was supposed to. This can be user error, or bugs, or whatever, but the good product developer provides customer service for ordinary questions like that, doesn't say "that's a custom scripting job" to try to bilk money out of someone or blow them off, and doesn't say "I'm busy until 2006". Of course, he said that just to me, because he didn't like my critique of the scripterati on forums. Of course, I realized that he was busy until 2006 just to me. I'm trying to counter this silly medieval-guild type behavior, however.

chad, um, no one has tried to rent land from me and not have me get back to them in over 24 hours. I don't know what you're talking about, sounds like something fake. BTW, on your alt, you threatened me with officer recall, and then made good on that threat and paralyzed my group with officer recall. That's happened twice again since, in increasingly sophisticated ways, causing inconvenience to hundreds of tenants, keeping out dozens of new tenants, and losing me business. So sure, chad, I'd have every reason in the world not to rent land to someone who griefed my group with a bogus officer recall (nothing legitimate about it) however, in fact I didn't do that. Please state the specifics of your land rental issue, which I suspect are a mere distraction here to the real issue of your power-griefing. BTW, chad, I didn't give you permission to use a quote of mine from the forums in your ad copy on your profile, would you please remove it?

Each person on here is someone who has done something wrong, or to grief, in the game. I have not done that. I have no reason to leave Second Life.

Posted by: Prokofy Neva at Jun 26, 2005 7:05:58 PM

"Can you remember the time you griefed an entire mainland of people with a gigantic build, threatening to make it even bigger and more obstructive?"

Unfortunatly I can't remember this time, however my business has changed..Like many people in SL..Shame your still the same. :)

Posted by: David Jacobs at Jun 27, 2005 2:42:58 AM

Let me refresh your memory, David: you were renting a lot and either custom-building, or prototyping, not sure what it was. You pancaked an island and made an ENORMOUS building and I mean ENORMOUS filling up the pancaked island and the water all around this island. Of course, in RL, we don't "own the view". We just look at the view. So all the people in Ravenglass and Carlisle um...looked at this view which you made. When we complained to both you and your landlord, you got even more belligerent and said you'd make it even bigger. I find that often happens in SL, with the "I can do WTF I want on my property" attitude. Whatever. Pretty soon your landlord got tired of you and you got tired of trying to annoy people, or perhaps he booted you? NOW are you remembering? Honestly, the antics that people get up to in SL is largely a function of *no one ever calling them on it*.

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