Virtual Worlds 2007, Report #5: Venture Capital and The New School of Athens

by Alphaville Herald on 31/03/07 at 2:25 am

by Urizenus Sklar


As I reported Wednesday, much of the Virtual Worlds 2007 conference reeked of the anxiety of marketing guys and gals trying to catch up with the next wave. The fear was palpable. Why else would those people be sitting in that auditorium taking notes like they were Gorean slaves pressed into service as scribes? And all they seem to want to know – at least all they wanted to ask – is this: What is the return on investment? How many eyeballs do we get? How long do we keep them? Are they the kind of eyeballs that spend money?

Thursday I lasted for about 30 seconds of that. I walked into the auditorium – steaming hot and stacked to the rafters with suits — and the first thing I heard was the interesting factoid that when you create NPC salespeople you want them to mimic the animations of the customer. Psychological studies show that mimicking gestures is more likely to make the customer trust and like the salesperson whether an NPC or a human. And it only takes a simple script to do this! Joy. What a brave new virtual world we live in. Would someone please penis this event?

When it became clear that no one was going to be launching flesh colored dildos at the stage, I grabbed my bag and made for the exit. On the way out I ran into Linden Lab PR babe Catherine Linden texting on her phone. I told her I was on the way out and she gave me a hug goodbye.

Catherine: “Now I don’t want to read about this in the Herald”
Uri: “Hmmm, that gives me an idea.”
Catherine: “Uri, seriously….
Uri: “Actually I think I’ll spice it up a little.”
Catherine: “No seriously, you’re kidding, right?”

She was following me out the door, begging me not to follow this diabolical course of action. I had the sense that she was going to grab me by the ankles and keep me pinned to the conference venue floor – a fate worse than death. I sprinted away before she could catch me. Free at last!

Philip Rosedale, of course, had left the building 24 hours earlier. Indeed, he left after the very first talk – which is to say after *his* talk.

When Philip left it must have been a cue for the competition to gank Second Life. Maybe they planned it, or maybe it was one of those newfangled twitter flash mob gankings. Whatever it was, as Prokofy Neva reported, panelist after panelist decided to deliver the obligatory smackdown on Second Life. The marketeers in the audience had only heard about Second Life, and goddamn it that was going to change in a big way if the other virtual world builders had their way. “Pay attention to us!”

Meanwhile in the coffee room people whispered this and that about how Second Life was doomed and how it really wasn’t making money and it could’t be the next wave because of all the Goreans and yiffing little furries and event penisings and in the demo rooms they are more or less told “listen, if you come to There we guarantee a nice wholesome family atmosphere – and think about it, Betsy Book is even more wholesome looking the Mary Ann from Gilligan’s Island.” Indeed, I’m not sure, but I think she made a conscious effort to look like Show White this week.

But I had the sense that Philip could have cared less about getting ganked. He had moved on to the next thing. He had won. You see, and this was something that became more and more clear to me over the course of the conference, he was never in it for the money, and I’m not even sure he was in it to open the Pandora’s Box of Universal Linden Consciousness. I think he was in the game to meet cool people and talk about cool stuff. It was all a complicated way to do as Timothy Leary once advised when asked what you do after you turn on: “find the others.”

Philip was turned on and tuned in and had dropped out of the conference and was somewhere on Hilton Head Island schmoozing with Bill Clinton and lord knows who else. Did he really want to be sitting around glad-handing a bunch of scared and sweaty middle aged marketeers and talking about ROI? Well, would *you* want to do that?

None of this is to say that the only remaining people at the conference were stumbling fumbling bumbling marketeers trying to catch the wave. Not at all. For you see, “the others” were there too. And I was lucky enough to find them.

Tony Walsh (aka Rat Boy, aka Zero Grace) hooked me up with an invite to a little “get together” Redpoint Venutures was having at Megu in Tribeca. In this sea of panicking middle level managers Redpoint stood out as a beacon of megabuck chill.

You see, Redpoint didn’t miss the web 2.0 wave. They fucking nailed it. They had a big stake in MySpace (probably the only VC firm that did) and more recently they were heavily invested in Gaia Online (another score) and had stakes in dozens of other winners. They had already made tens (hundreds?) of millions of dollars and probably had tens (hundreds?) of millions still to invest, but what to invest it in?

Arriving at the event I initially felt like a total outsider – like Thomas Wolfe crashing the party that Irving Berlin threw for the Black Panthers. Just like that, except without Irving Berlin, the Black Panthers, or Thomas Wolfe for that matter.

It was an impressive mix of people. I was happy to see that Reuben Steiger from Millions of Us had not slit his throat after all and was there. There were a couple guys from MTV, and there was representation from There, Kaneva, Areae, Habbo Hotel, MindArk and the Electric Sheep. Herald buddies Ren Reynolds and Jerry Paffendorf were there too. (Paffendorf! The guy is farckin’ omnipresent here. I go in the auditorium he is there. I go outside and he is there smoking a cigarette. I go to the coffee shop and he is there. I go to the bathroom to gag myself after a panel discussion and he is there. I escape to Tribeca and he is there. Did copybot clone this mutherfucker?)

The soriee: The party is being hosted by Redpoint’s Fuad ElNaggar and Geoff Yang. You immediately see that these are not Brooks Brother’s suits in a panic. They are VC cool. Fuad is wearing a simple checked shirt, but when I accidentally brush against it my inner metrosexual skeets; this is some sweet blend of silk and Egyptian cotton I’d guess. The leather in his loafers looks to be buttery soft. He isn’t dressed to impress us. He’s dressed to make his epidermis happy.

Somewhere near Battery Park the marketing guys are eating steaks and drinking martinis and talking ROI, but this is a different world altogether. The meal begins with edamame and sashimi. Sashimi is followed by green aparagus in a tempura made from a batter made from spicy Japanese rice crackers. This is followed by a lovely grilled lobster which has been marinated in miso sauce. Then comes the shrimp. It is sautéed in a cream sauce spiked with Japanese kanzuri and chili-garlic. Thank god they figured out a way to get foie gras on the menu. Here little morsels of foie gras are steamed in sake and mixed with Kobe beef to make croquettes, dusted with panko and flash fried. This is followed by strips of Kobe beef served on a hot river rock (no lake bed rocks for this crowd!). The beef is sprinkled with milky white slivers of Aomori garlic, and then flambéed in Hennessey. As the flames go out some of the garlic slivers continue to burn, I grab one of them with my chopsticks and attempt to blow it out, but instead blow the flaming garlic off my chopsticks and onto my lap, burning a hole through the linen napkin, but fortunately no further. Fuad looks at me and shakes his head, but Megu is saved a lawsuit. Now comes the sushi, including Kobe beef sushi. This might be Reuben’s fault, as he keeps calling out for “more meat.” Did I mishear, or is he really asking for beef gelato?

The interesting thing here is not the food, but the conversation. Party crashing is an art, and I’ve done my share of it (I really don’t have a choice) and I’ve learned how to fake it with the best of them. But it was soon clear that I could set ‘fake it’ to off and just be Uri.

You see, Fuad and Geoff definitely had ideas about where the conversation should go, and it was clear that they didn’t want it to be about ROI, or ad revenues, or eyeball retention inside virtual spaces. Instead they were interested in philosophical questions about personal identity in virtual spaces, about the fleeting nature of most user created content and about the nature of virtual economies and governance and about the flow of knowledge in distributed networks – indeed about the nature of knowledge in general.

And then it dawned on me. These guys were just like Philip. During State of Play II I partied at a chichi downtown place with Philip and Cory and Pathfinder and Hamlet and Beth Noveck and others and the thing is, Philip was fascinated by abstract questions about time and space and knowledge and complex systems and artificial life, and he didn’t measure his success in terms of how much money he was making and how many fluffers he had in his entourage. No, Philip posed us a question: if you could be alive at any time in history, when would it be? Someone said they wanted to hang with the Algonquin Circle. Philip chose Vienna, at the end of the 19th century. Everyone at the table had a different time and place, but each answer had this in common: they wanted to be at some crucial point in history in the company of thinkers who “got it.”

I saw this in Fuad and Geoff and I had already seen it in Philip. It was clear as Baccarat crystal. These guys were the new philosophers, and they had discovered a way to be involved in the latest technologies of the day, and not just from an engineering perspective, but from the perspective of how that technology would change our lives and possibly even the nature of humanity. Having that sort of knowledge, being in a position to see and grasp something like that is heady stuff, and in my heart of hearts I really think that all the money – the hundreds of millions of dollars – is just game currency to these guys. It keeps them in the game and if you are winning the game you get to be intimately involved in the companies that are rewiring our minds and our communities and changing the nature of humanity itself. You buy understanding. Sure, the hundreds of millions of dollars will get you all the Kobe beef you can eat, but what it really does is buy you access to the new School of Athens.

The original “School of Athens” is of course the 1509 painting by Rafael, featuring Plato and Aristotle in the center, surrounded by break-out groups of other thinkers and scientists ranging from Ptolemy and Euclid to Heraclitus and Pythagoras. For Rafael it was a kind of fantasy: what if you could bring all of those people together in one place? Well, what if we could do something like that today? The secret behind the most successful venture capital firms is just this: they are trying reconstruct Rafael’s painting with the thinkers and scientists alive today.

Zoroaster and Ptolomy compare their virtual worlds.

It’s not just the Redpoint guys and Philip who think this way. A few months ago, Susan Wu from Charles River Ventures (another VC firm that is scoring big) called me up on Skype to talk about a post on the Herald. Really she just wanted to talk – talk some about the early days of the MUDs and MOOs and the Mindvox BBS, but also about the nature of virtual communities and the emergence of virtual institutions. It didn’t surprise me to learn that she had been a philosophy major at Tufts.

Euclid shows the Linden web monkeys how the playah’s build networks.

By the time desert rolled around all of these thoughts had come crashing in on me, and it suddenly all made sense. The people down in Battery Park wringing their hands over ROI and flying penises just weren’t going to get it. They were always going to be bobbing in the prop churn of people like Philip and Fuad and Geoff and Susan. They were going about it all wrong; they weren’t looking for understanding, they were looking for quick answers. They were the kids that ask you if it’s going to be on the exam and put down their pens if it isn’t. Fuad and Geoff were the guys that looked you up after class and pressed you with more questions.

Pythagoras blogging

As the evening wound down, the excellent wine appeared to be taking hold. I stopped drinking a year ago after that incident with the Ukranian twins at the furry convention, but everyone else seemed to be enjoying the spirits. Reuben came over and sat next to me.

Reuben: Who is that tall attractive well-spoken woman with the beard?
Uri: That’s Jerry Paffendorf
Reuben: She’s hawt!

As I was struggling to purge my mind of the mental imagery that this entailed I received a text message from Catherine Linden:

“Uri Baby, I’m waiting for you in my suite. The Jacuzzi is hot, and the Veuve Clicquot is cold!

I thanked Fuad and Geoff for the terrific evening, and stepped out onto the mean streets of Tribeca.

For some reason I felt like Robert De Niro.

Plato argues that Second Life is the place to hang, while Aristotle makes the case for First Life.

18 Responses to “Virtual Worlds 2007, Report #5: Venture Capital and The New School of Athens”

  1. dildo baggins

    Mar 30th, 2007

    Ty for a most insightful article.
    And here I was thinking VC’s were a bunch of felching bloodsuckers when all they are interested in is the nature of knowledge and the advancement of their own, er , I mean Man(and woman!)kinds interests!

    But you lost me with the reference to De Niro’s sell out ad though – AMEX are a complete cunt of a company.

  2. Tenshi Vielle

    Mar 30th, 2007

    *Squee* I so stopped reading this article after reading “…and Jerry Paffendorf were there too.”

    *fangirl giggle*

    As for Phillip, he DID win the second he left. The fact that he didn’t care to stay to defend his position or his company speaks volumes – that he can, indeed, AFFORD to ignore the little peons that start bullshit behind his back. Yay for the Hair; boo for us.

  3. Pathfinder Linden

    Mar 31st, 2007

    Stick with women who prefer the Yellow Label. Avoid the Moet ones at all cost.

  4. urizenus

    Mar 31st, 2007

    Funny you should say that Path, because “Yellow Label” is my pet name for Catherine. She ain’t no cheap ass Moet girl.

  5. Hiro Pendragon

    Mar 31st, 2007

    Unfortunately, the school of Athens is currently still in the mindset that you have to be a speaker/donor at VW07 to be important.

    The real philosophers were at the meetup event Friday announcing how they are going to reform Patent Law. They were just as cool, but instead of being invite-only, it was an effort to engage the community of talented thinkers as a whole.

    And no VCs were there.

  6. Ordinal Malaprop

    Mar 31st, 2007

    I have to say that all the reports of this conference that I’ve seen seem to come to the same conclusion – lots of stuff about how the whole VW concept can be neatened up and sold to advertisers as nice safe penis-free mall space, where you can get spreadsheets on exactly how long everyone looked at your billboard and what they were saying.

    Once that really starts we will have to wait for the next interesting bit, which is when people out there whose first exposure to this VW stuff is through these carefully-managed avenues starts hacking them about to do what they want with them. I imagine that will be a good period, assuming that the companies involved aren’t completely successful in banning all user-screwing-about-with elements from their worlds, in which case, well, the services will die, because lord knows that people around the world are not exactly crying out for a chance to go out and micropay for Sony-approved virtual furniture.

  7. FlipperPA Peregrine

    Mar 31st, 2007

    I’m bummed you didn’t make it Friday, Uri. I had scotch with your name on it, and one of your best friends in tow. :) Did anyone find the Lit Lounge to be one of the crazier contrasts in a single venue ever? The whole front was a total dirty, dank dive bar, and then in the back, it was a white-walled, perfectly clean art venue with polished wood floors. It was like teleporting from one sim to another when walking through those glass doors!

  8. Ares Artizar

    Mar 31st, 2007

    Hahaha, Athens school? Athens was like the Alliance Navy: ignorant.

  9. urizenus

    Mar 31st, 2007

    >one of your best friends in tow

    Flip, I find out you were there with my yellow label baby I’m gonna open a can of whoopass on you.

    Hiro, I think the interesting thing about the Redpoint meeting was not so much the people that were there, but the questions that were asked. Yeah it was the same people as on the program, but Redpoint cut them from the herd to ask them their own questions, and they weren’t asking about ROI.

    Could they have learned more at the Friday meetup? Probably.

  10. Lordfly Digeridoo

    Mar 31st, 2007

    Nice take on the night. I suppose every emergent societal shift has the people shrieking like cheerleaders trying to get a return on their investment, and the people who just want to see how things work.

    I wish I weren’t stuck in SE Michigan.

    Very interesting writeup.

  11. Prokofy Neva

    Mar 31st, 2007

    In every age, in every era, in every human enterprise, there are always groups of people who want you to know that they are the cool people, and you are not. They are full of fear too, even if they mock the others whose fear is more palpably at the surface — the suffer from the fear common to all mortals that they may not be loved or may not even be able to make a living to support themselves and their families.

    I believe it was Heraclitus in fact who famously said “Although reason is common to all men, most men behave as if they have their own understanding.” And they do — most people who are smart and doing something creative often really do have a special understanding that is superior and not accessible to all but then…they don’t realize they are multiplying because of the factors of their age, and other equally great minds in fact reached that in fact not-so-special understanding, too — so it happens that the particularly bright really suffer from the complex, “we’re the smart ones surrounded by idiots”.

    Of course, often they are right. I can certify that there are some real mediocrities hanging around the Metaverse, especially the types that try to force you first to shake their hand, then tell you their avatar’s name to grief you, when you find out they are notorious griefers and stalkers and assholes.

    The people sweating in the poplin suits, however, aren’t so stupid, Uri. Some from Columbus, Ohio may be sweating — or may be not. It’s the nature of the Metaverse that it may be happening in Columbus, Ohio and not in Austin or Ann Arbor or New Yori. Some of them sweating are merely working out — fear will drive them to amazing heights of performance, and they’ll be the ones making the money and you won’t.

    And…they’ll be the ones paying for it. Somebody always has to pay.

    There wins the advertising accounts — which is why I awarded them the half-time score, but I’m not awarding them the win on the conference (stay tuned for my blog). But you don’t know that some kid awakening today in Columbus, Ohio who obtained his ticket to the Metaverse by Virtual Laguna Beach isn’t the next community leader who leverages the content and forces even the game company to change its ways. I pick Columbus, Ohio simply because it’s in flyover territory for the bi-coastal set and my mother’s side of the family were settled there for a time.

    It’s often the case, Uri, as you know, that the mediocrities and the not-so-brilliant but just stupidly persistent or egotistical or feted are the ones who write and get their books published, and you don’t, for all kinds of reasons, even being the smarter and by far the preferred read.

    You may have decided that the smart set of the Metaverse are now all collected by Redpoint Ventures at Megu via Tony Walsh. Ok, but not the only smart people and only for today. That’s how it is in the Metaverse unlike any other place we’ve been in before. Like *you* said about Hilton Head where Philip was headed, “it must not be interesting if I’m not there” any one of us smart people could say about Megu.

    And what the job of the intellectual is in this environment is just not to get bought. Just to keep thinking independently and creatively. Just to keep creating, and not get bought by any man in any suit or woman in non-suit, for that matter.

    That’s why someone like me has to keep smashing at each feted circle, because thought stops taking place, and people don’t think or try to prevent others from thinking and speaking on something like the Lindens’ forums — even though they imagine themselves to be having “the best” conversation about space, time, and the human condition ther.

    Ignoring the exigencies of ROI is something two kinds of people can ignore: the very rich and the very poor.

    >Nice take on the night. I suppose every emergent societal shift has the people shrieking like cheerleaders trying to get a return on their investment, and the people who just want to see how things work.

    People shrieking like cheerleaders trying to get an ROI are in fact the people *paying for* the next societal shift. They make it happen at one level or another. And the people who think it’s better to “just want to see how things work” and it depends on them only have their heads up their asses if they think everyone will let them just be cool and groovy and sandbox for ever and destroy other people’s possibilities or destroy their freedoms. And the “people who just want to see how things work,” while they may pride themselves on being more clever than others are stupid if they don’t realize the truth already long ago discovered by the Whole Earth Catalogue people: “We can’t put it together; it *is* together” — if they substitute that with “We can’t put it together; but we can take it apart.”

    >I wish I weren’t stuck in SE Michigan.

    If you are truly the smart and groovy fellow you imagine yourself to be, you will make the Metaverse and all the cool stuff happen even in SE Michigan or in the Metaversal places themselves. It shouldn’t have to wait for the party to get to your town. And it won’t.

    >Redpoint cut them from the herd to ask them their own questions, and they weren’t asking about ROI.

    Uri, it’s amazing how people *can* depart from their quotidienne concerns about ROI when invited to dinner paid for by others. Good! But then what? Who pays next? And…what, Redpoint, a *venture capital company* is NOT asking about ROI *at some point*? Hello??? That’s simply foolish.

    Sure, the salon needs to happen. And we need leading salons. We need 18th century salons for this new thing, which isn’t so new. I found quite a few people experiencing disappointment and annoyance with Terra Nova’s obsession with ludology and gaming and hatred of virtual worlds and even social media; people into social media and virtual worlds are hating on games in stupid ways, too.

    We need new academic “schools” and “salons” everywhere, it’s that big a project, nothing short of the next stage of human evolution. And you have to stay independent and thinking, because it could be happening anywhere and should happen in many places at once.

    And ultimately, yes, these people with the VC just want to control humanity and shape the next phase of mass media, mass consciousness, politics. So in its way, Uri, it’s *just as much* about control as the control of the users that the uncool game companies want to increase so as to be able to place products. It’s just more subtle.

    Just don’t get bought.

    >Unfortunately, the school of Athens is currently still in the mindset that you have to be a speaker/donor at VW07 to be important.

    Well, they missed some key people like Raph Koster and even they know they can’t do something without Raph Koster. Raph Koster was at some more important tekkie conference that was probably the real place to be anyway *shrugs*.

    >The real philosophers were at the meetup event Friday announcing how they are going to reform Patent Law. They were just as cool, but instead of being invite-only, it was an effort to engage the community of talented thinkers as a whole.

    I’d tend to have to agree with Hiro here — but not because “patent lawyers” are the Next Big Thing — they aren’t — but it’s just one of the many simulaneously interesting conversations that the Metaverse is producing and it needs to produce now. Many minds have to be thrown at it.

    I personally am not at my best conversing about space, time, and the human condition when I have to be at a hot, stuffy, noisy bar.

    To the extent that any gathering can be OPEN rather than CLOSED it will be better as long as it doesn’t become so open as to be overcrowded or abusive. People make select little Moet-drinking clubs because they don’t want abusiveness or boring or uncool but then it closes down on itself and grows stale.

    The conversation we started as a group in the Thai restaurant and kept going through the stupid bars Flipper likes to pick that were hot and noisy back to my house was about whether or not open source will work as a movement to move all the projects forward, and the mix of proprietary and open source that must be found, something of course heatedly debated. I was glad to have a chance to talk to the LibSL guy and the IBM guy and many others, I’ll try to write more about this.

  12. Prokofy Neva

    Mar 31st, 2007

    >Reuben: Who is that tall attractive well-spoken woman with the beard?
    Uri: That’s Jerry Paffendorf
    Reuben: She’s hawt!

    I’ve always thought that people have different genders inside them than are in their physical manifest, and that’s why they pick the opposite in the Metaverse.

  13. Cocoanut Koala

    Apr 1st, 2007

    Re: Philip leaving after his talk and heading off to hobnob with Clinton – remember when Will Wright kinda lost interest in TSO? I get the same feeling about Philip vis-a-vis SL.

    It happens to all of us; we lose interest in our shiny new thing, and move on to something else. I think Philip is kind of there.

    Regarding his speeches, they are pretty much predictable now: 1/3 part childhood memories, 2/3rds part “I’m a visionary.” Honed to an art, even. It’s good for getting investors, but I think maybe even there it gets old after a while.

    Wonder what he might be interested in doing next?


  14. reuben steiger

    Apr 1st, 2007

    Hysterical Uri.

    Exact quote was:

    I don’t know who the tall chick with the beard is but she sure is smart.

  15. urizenus

    Apr 1st, 2007

    Prok, I knew you would pick up on the elitism implicit in this story, and yeah there is more than an element of elitism to it. I’m not saying these elite VC folks are good or bad or anything; I’m just observing something about their interests, and I’m also speculating that their interests are not unrelated to their success.

    There are other ways and places to join the conversation. You can participate by going to metaverse meetups, or by being a metaverse blog hound, and possibly even by being an academic. I’m just pointing out that most of the other participants in VW 2007 seemed indifferent to the conversation in any form other than talk about ROI. An elitist thing to say? Well, if you can take an elitist stance towards the Country Club/Smith and Wollensky crowd, then hell yeah I’m an elitist and I’m not going to apologize for it.

  16. Prokofy Neva

    Apr 1st, 2007


    Are you looking over your shoulder at me when you write?! Hope not!

    Hey, I used to go to Smith and Wollensky’s all the time, to be sure, in the grill room in the back. The fried onion strings are great. If you need to pick the one place in New York that actually does the “New York Strip Steak” right, that’s the place. But it’s overpriced. You could get nearly the same thing at Tad’s, without the fabulous onions of course, and for a fraction of the price.

    You know, a mutual friend of ours had the really final mot on this thing, and I won’t embarass him in case he needs to keep his bridges unburned. He said, basically: “You’ve heard of the smart money? This is the dumb money”. The smart money is on X, on virtual worlds, on the most cutting edge blah blah thing that can be defined by people in buttery-soft loafers. The dumb money is still money though. And there’s still a lot of it to blow.

    Next stop: take over or overthrow Terra Nova. Or make a parallel academic site to it.

  17. ren reynolds

    Apr 2nd, 2007

    Uri > “Would someone please penis this event?”

    I butt pluged it :)


  18. urizenus

    Apr 2nd, 2007

    Actually Ren, that explains quite a lot. :-)

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