Finally, a Funding I Like

Amazon founder Jeff Bezos and Lotus founder Mitch Kapor joined Globespan Capital Partners and others in an $11M funding of Second Life. This funding follows an $8M funding in October, 2004.

Unlike most of the funding reports I read about, I get this one. It makes sense.

Second Life is in the process of winning the race for virtual reality mindshare. It’s cool. It’s popular. And it has an almost infinite list of potential revenue sources.

You can join Second Life and participate for free. But to own land and build things on that land, you have to have a premium membership. That creates revenue. Plus, there is a property tax equivalent that requires a user to pay a greater fee the more land he or she owns. For example, I own around 6,000 square meters of land in Second Life (this is a medium amount) and my “tax” is $40 per month. That creates revenue.

In addition to creating revenue, the property tax provides incentive not to let land lie vacant. You want to build something to make some money to offset the cost. It’s a perfectly accurate economic and land use policy.

You can build, rent or sell almost anything in Second Life. I can imagine well placed ads and billboards being sold in Second Life at some point (the narrow strips of land next to roads are “protected” and owned by the “government”). More revenue.

I can imagine deals with all sorts of real world vendors to open shops in Second Life. Music, movies, you name it. Even more revenue.

The developer is working on a program to allow people to buy the exclusive right to last names (presently, you have a limited list of last names to choose from). I picked Snickerdoodle, which it turns out is the name of a cookie. Selling names will generate more revenue.

And these are just the potential revenue sources that jump out at me. I bet the Second Life team has hundreds of other ideas.

I’m sold on Second Life as a compelling way to interact on the net. I was talking to a guy in Second Life the other night and it turns out we read each others’ blogs. Small world inside a small world.

I’m equally sold on Second Life as a business.

And that’s an all too rare combination these days.