Rumors about a massive valuation of Second Life have been floating around Silicon Valley for months. The original rumors said the company raised a new round of financing at a valuation of somewhere between $500 million and $1 billion. When I asked the company about it over the summer they said, on the record, that they had not raised new money, but declined to comment further.
Another rumor speculated that one of the shareholders of Second Life had sold part of their stake in the company to a hedge fund or other private equity investor. This rumor had legs - and we were able to confirm that Catamount Ventures, one of the first investors in Second Life (their original investment was in 2000) did in fact sell part of their stake.
Jed Smith, the Catamount Managing Director who sits on the board of Second Life’s parent company, Linden Labs, confirmed today that they did sell part of their holdings - 10% - to a third party eight months ago. But he would not comment on the price of the sale. A source with knowledge of the company has said it was well above half a billion, but declined to name a specific price.
See all
Post
I’m still wondering how much my first life is worth.
It’s worth as much as anyone is willing to pay, and I would pay $1,000 max no joke.
I’d gladly pay that much for them - in my second life.
Second life is definitely worth more than that..for these resons:
1) Unique business model
2) First runner advantage
3) Eco-system built around second life
4) Concept of real-estate in second life
5) Concept of stocks and companies and exchagnes in second life
They are the future or rather web 10.0
http://www.meetinflex.com
Social Network + Video
How about one $1 Trillion Linden dollars? (Insert Dr. Evil laugh here)
Join my OpenSocial SIG:
http:// http://www.opensocializr.com - Everything OpenSocial: News, Reviews & Code
hey, web 10.0!
I want Google to buy them. So then I can use Google Maps and Street View to walk around my neighborhood with my Second Life avatard living out my Third-Person-Perspective life. The whole thing will be pretty web 20.0 and stuff.
About $5 million - display ad monetization for the users. Other than that, no business model - dumb venture funded business.
Ok, lets say I pay hald a billion dollars and buy some stake in this company.
in how many years will I earn my money back?
Have in a history there been an internet company with advertisement-based revenue model that made 1 billion dollars in profit?
other thank Google, Yahoo.
Ok, lets say I pay hald a billion dollars and buy some stake in this company.
in how many years will I earn my money back?
Have in a history there been an internet company with advertisement-based revenue model that made 1 billion dollars in profit?
other than Google.
If facebook is valued at $15 billion, then this isn’t *that* surprising, with Second Life having 6 million or so users, some of whom are spending an absurd amount of time on the site.
And ghok, you’re irrational.
I think this right here makes Second Life worth a good billion or two: http://www.youtube.com/watch?v=jh_28EI4sME
It’s Linden Lab, singular.
I have a better idea than Second Life, but I have no clue how to execute it. Anyone care to help?
EmpireOfLight - re-evaluate your idea, if you cannot see how to execute it, then you have nothing.
Don’t waste your time on it.
If you have an idea, and can clearly see how to execute it, write it up and start banging on the doors of the people who hold the cash. Rinse. Repeat.
If you expect to get rich quick, then again, Don’t waste your time on it, but if you have about 2 years of time to put towards it, by all means, try to make it happen.
Not sure where to post this, but Michael Arriington - since you wrote such a great article on Mitt Romney, you should seriously look at Ron Paul…he raised over $2.5M TODAY from grass roots supporters…the least you can do is give equal time and post this http://www.ronpaulgraphs.com/nov_5_total.html
Thanks for giving equal time
GV
“But he would not comment on the price of the sale. A source with knowledge of the company has said it was well above half a billion,”
Michael - by this you do mean the valuation was put at over half a billion and not that the 10% was purchased for half a billion, right?
Second Life 500M-1B, Facebook-15B, I am simply amazed at what hype can do for valuation.
@ 17 - Zemode, you are ze idiot. Yes, Michael meant that 10% was purchased at half a billion giving them a 5B valuation though the entire post says they are trying to get up to a valuation of 1b.
Has the quality of the commentors on this blog really gone down that far?
Michael Bailey,
Thanks for the solid advice. I should have worded it better–I actually have a clear idea of how to execute it, I just possess few of the skills required. But I plan to spend some major time working on it; I’m bursting to tell people about it but I am scared of disclosure and idea stealing, so I probably need to start with a lawyer. Then again, my idea is most likely already out there and I’ll end up like many other roadkill victims on the internet superhighway!
Are they worth a billion dollars? Maybe a billion Zimbabwean dollars (about 33,000 USD).
I like the idea of a virtual world, which has been around for ages, but this is not the company that’s going to make it happen on a mass scale. And more importantly, the structure of something like this should be much more open and not controlled by a single company. Could you imagine if the entire internet were controlled by a single company?
I have read diferrent articles saying many corporates have stopped advertising on SecondLife. DeadPool is not too far away if they burn their cash the way they do now. DeadPool err Second Heaven err SecondHell.
I prefer getting me a real woman (and some real action) for much less than any of that.
Hey No Surprise - maybe Linden Lab has trouble with their business model, but from within Second Life my virtual business is doing just fine. Linden will do fine as long as the in-world businesses thrive - and that requires imagination and persistence on the part of the virtual business owners, just like any real-world business. Second Life’s valuation should be based on the “Gross Virtual Product” and not on advertising, which simply does not work in Second Life.
It’ll be worth nothing when Google launches OpenVirtual.
20 bucks, tops
just like they say in wallstreet…valuation is objective, and a whole lot subjective
To me SL is the most overrated website around. I’m not saying it doesn’t have any value, for the 20,000 or so people that actually use the service, but the value is very small.
What I think SL should do is create some kind of Virtual reality device that meshes with their system.
Until that time it is just a lame video game.
Linden Lab really does not make money on advertising. If you think they do, then I can see why you’re struggling to understand their business model. LL’s main revenue source is virtual real estate. It’s a very simple model to understand. If you’re a techie, then they’re an ISP. If you’re not, then they’re a real estate company with one unique attribute: they create the land they sell.
So, the issue isn’t whether or no they have a viable business model; it’s whether or not you think the price has some realistic link to their value.
SL can sell for something simply because there’s so many “idiots” out there. Using the quotes for idiots because if they manage to see value in it and since their opinion also counts, give a point or two to them for that, so, not exactly idiots.
Lets be honest, second life is a huge fraud and a huge scam. The only people that go there are 99.99% Furries, hipsters and journalists and 0.00000001 % who try to do something with this shitty buggy app.
Its funny how only journalists say SL is great, and when i tried it or all the people i know who tried it left after 10 minutes.
Money and manpower would be better on other projects…
Wonder what that 10% represents:
1) 10% of their Catamount’s holdings (i.e. if they own 2m shares that is 200k shares which could be 2% of the company)
0r
2) 10% of the Company (i.e. if they own 2M shares which is represented in 20% of the company and now have sold 10% of the company equals 1M shares sold for a 10% stake which really is 50% sales of their holdings)
–assuming there is 10M fully diluted shares for easy math—-
Also, ah, I believe that Catamount closed a new round earlier this year. So, it may makes sense why they sold…. boost the IRR (internal rate of return) to show the limited partners…..could it be that they are very sly?
btw - quite surprised that TechCrunch has not picked up on the story about LightSpeed Ventures and their limited partners regarding the distribution of Riverbed stock. Quite fascinating!!!!!
Second Life certainly does not have 6 million users as one commenter said above. They have a few hundred thousand active users. Someone who downloaded the client once and never came back (the vast majority of that touted ‘8 million residents’) is no different from someone who used a website once and never returned. That’s not a user. That’s a drive-by.
SL’s business model is almost entirely around land rentals which makes it, as someone else noted, fundamentally an ISP since land rentals explicitly = CPU power.
–matt
These people should get A LIFE not this crap!
http://fakesteveballmer.blogspot.com
Matt: Yes, the 10.5 (not
million figure is misleading as it masks people who registered but never took part, and people with dual avatars. But for the 1.5 million who came in over the past two months and the 600,000 odd who come in pretty much every day, it’s much more than a “drive by.”
In fact, the daily users spend around 90 minutes a day there and Nielsen stats here in the UK showed that SL has the highest levels of stickiness of any social networking site or app.
To me as a marketer, that’s time spent away from the TV and I have to engage these consumers in their medium (sadly, a lot of brands still see SL as free advertising and get it catastrophically wrong).
I agree that SL underperforms given the acres of free publicity its received over the past year. Orientation is cumbersome and the system is not as scaleable or stable as it should be.
But the potential is absolutely huge. Someone here asked why Google doesn’t buy them and integrate the system with the Google maps techology. Once a major internet or media corp buys them up
Matt: Yes, the 10.5 (not
million figure is misleading as it masks people who registered but never took part, as well as people with a second avatar. But for the 1.5 million who came in over the past two months and the 600,000 regular users, it’s much more than a “drive by.”
In fact, Nielsen stats showed that SL has the highest levels of stickiness of any social networking site or app.
To me as a marketer, these are consumers who spend less time watching TV and I have to think of new ways of engaging them as a result.
I do agree that SL underperforms given the acres of free publicity it has received over the past year. Orientation is cumbersome and the system is not as scaleable or stable as it should be.
But the potential is absolutely huge. Just to give one example, the corporate market is largely untapped. Cisco and IBM use it partially as a replacement for the video conference and there’s a lot more scope in that direction. Recruiters are also starting to host job fairs on SL - a lot cheaper than setting up in an exhibition hall and potentially a better way to sift out candidates at first stage.
So SL is ripe for purchase. The $5 billion valuation takes into account that if a major internet or media giant were to take over and to iron out some of the problems that exist, this thing could really take off and meet some of the expectations that have been raised around it.
I think SL will be the Friendster of virtual worlds… there first, helped create and educate the market, but then passed by. -chrisco
Second Life should be renamed “Still Live” - there’s nobody there but advertisers.
Second(ly), didn’t open chat forums die in web 0.8…?
I wonder if NBC Office has pumped up 2nd life value
Why waste your First Life playing with your Second Life.
Anyway loved the comments about Web 10.0 & Web 20.0.
Jesus where did time fly. I will take any Web Number Point, just as long as it is not Web Google.0
SL seems like complete BS to me. I work in the video game industry. I know THOUSANDS of people that play games. Not ONE of them plays second life. In my entire experience in the video game industry I have never met anyone that plays second life.
I’m sure some SL player or SL rep will come here and tell me otherwise like how maybe SL doesn’ t attact video game players or whatever but I don’t buy it. It serious seems like a giant lie perpetrated by some amazing PR. Given the size of my contacts and there should be some overlap between people to play video games, people to play online video games and people who player SL. There is plenty of overlap between people that play offline video games and people that play online video games and so there should be some SL overlap as well and yet there is NONE, ZERO, NADA, ZILCH. That means something is seriously fishy
Heh well someone mentioned Zimbabwean dollars, my area of expertise. Also if you are offering A US buck for a mere 30,000 ZWD let me know, I can get you all you want (since the real exchange rate today is 1.3 million Zimbabwean dollars per US).
As for Second Life worth, I have no idea. It could be profitable, someday, maybe. The Havok 4 beta test seems to be going smoothly, but like voice it is anyone’s guess if that will work when released into the main world.
Second Life of course has many problems, (robotic players who make up 10% of online people, places with Jim Crow laws and racism such as Gossip Girls, too complicated interface, minimal tech support, absurdly high system requirements which are going up all the time, huge empty land masses, little moderation of activities).
Was it to IBM?
Also, Lindens have been visiting the Googleplex lately and Google has a last name in the People list now.
serious investors, including current shareholders, should pay attention to the secondlife blog (blog.secondlife.com) where the truth about the falsely elevated concurrency is coming out pretty strong in response to an incredibly bad job of an attempt to introduce improved search functionality in secondlife. we can now expect to see an explosion in registered accounts that never log on after the first time when the “inbound links” are set up on the bogus account to falsely inflate what Linden research calls “inbound links” and even more false concurrency via the use of “bots” to park zombies on parcels to increase traffic in an effort to falsely boost “traffic” (popularity). Tech savvy investors can see right through this veil. existing shareholders should move to put in place serious business leadership with real ethics and common sense and relegate the geeks to the back room to code where they belong.
Umm greggman, it’s funny how someone who works in a video game industy doesn’t know it’s not supposed to be ’such’ kind of a game ‘which’ you are talking about.
I myself haven’t ‘played’ it yet & I already know it’s not a usual game? Since… it’s a virtual world? It’s just one of a thousand society places over the world, wait no.. a million!? People just hang around on here, many even earn loads of money trough this ‘game’.
P.s: I’m sorry for my bad english, but since it’s my 4th language overall learned I don’t really care about my grammar or sentence formation! If you are smart touh you will have understood what I meant to explain to you! THANK YOU
With Regards
Lucifer