Christian Renaud's Blog

Crosspost from TIG Blog- Current Economy and Virtual Worlds

Originally posted at blog.techintelgroup.com

These are indeed interesting times for businesses, most particularly startups.  I always seem to be in a virtual world presentation or at a virtual world conference as the macro-economic situation worsens and worsens.  In stepping back, this downturn should have some surprising impacts on this stage of development of the virtual worlds industry.

By way of context, in my humble opinion, the virtual world industry is still relatively nascent. There have been companies doing virtual world platforms for fun and profit for decades, however as a technology sector overall, they are just now coming into mainstream adoption numbers.  There is the standard first/second/third technology generation tensions between early entrants (many of which are making money) and new market entrants (who are not) looking to disrupt and capitalize.

The virtual world companies that are in the middle of (or about to seek) fund raising will find their valuations pushed down as a best-case-scenario, with 'no capital availability' as a worst-case scenario.  Typical sources of capital like friends/family/angel investors are all feeling the pain of watching their personal portfolios shrinking on a daily basis, and are therefore less likely to invest in a speculative venture in an increasingly-crowded sector.  The venture community is suffering from a combination of gripping fear, lack of self confidence, and overall paralysis.....but only at a certain altitude.  Large VCs are most impacted, as they have so much more capital to put in to play that they need certain (absurdly large) valuations of the startups they are injecting capital into.  Smaller funds, which invest in smaller denominations/valuations, are going to clean up during this time. 

Bad news for VW startups wanting large valuations about now, good news for smaller VCs with capital on hand and VW startups looking for early smaller rounds.

What about the impact of the economy on the broader value proposition of the industry?  Lets break it down a step at a time....

Metanomics Monday

For those of you who are interested in such things, I’m appearing on Metanomics tomorrow at 12:00 Noon PDT on a panel discussing Robert Bloomfield’s recent interview with Second Life founder Philip Rosedale. Other panelists include TIG Contributor Benjamin Duranske, Wagner James Au, ‘Dusan Writer,’ Nic Mitham, Tish Shute, ‘Betinna Tizzy,’ and Roland Legrand.  You can catch Metanomics “live” in Second Life or via the web.

90 Days Later

When I originally announced that I was leaving Cisco 90 days or so ago, the reactions I received from friends and colleagues ranged from overwhelming support to stunned silence.  After all, Cisco is a behemoth in the technology industry, and the job I held was practically an intellectual and technology fun-park for grown-ups....why change?

The answer is never simple, ranging from the standard dysfunctional organizational politics to 'if you do the same thing every day for seven years, you get REALLY BORED', regardless of how entertaining and challenging the job is.  If I had stayed on at Cisco, it would have meant moving to a different group and probably continuing to do a role very similar to those I did in 1998, running product lines and product development teams. Same old same old.  Professional stagnation = slow mental death.

Fast forward 90 days......