Side Door? Try Butterfly Effect!

Side Door Economics? Try Butterfly Effect Economics.

How does Google make a 30% increase this quarter in the middle of an economic downturn when they give everything away for free?

Selling advertising? Bums in seats?

Sorry, Charlie, its not that simple. In fact, as the social networking neural pathways develop, they create vastly more complex paths between you and financial success. Fortunatley, there are theoretically infinitely more of them.

To determine the intelligence of an animal, they are often tested to see if they can establish an abstract relationship between them and their food and thus achieve the goal. For example, if a lever is pressed, it opens a gate which allows poor rat 23756 to get his cheese. The more steps the rat is able to use his hunger to motivate him to learn, the more "intelligent" the rat is. Say the lever is on the opposite wall of the cage, thus away from the food. The relationship becomes more abstract as the rat then needs to figure out the relationship of the lever and the door without necessarily seeing them both and their mutual effect at the same time.

Add to that complexities, perhaps the lever needs to be held down while the door is open, but its too far away for the rat to rush from the lever to the door before it closes, so the rat needs to find something else (another rat perhaps?) to hold the lever while they go for the door, and mabey even figure out that sharing the cheese will result in this partnership working out in the future.

Welcome to a social networking business model. Those who manage to solve the puzzles currently being generated by the massive abstract neural network of people... connected across geography, time, and modes of communication...win the cheese. Those who give up on the puzzle early starve.

Sometimes it may be as simple as this. I have an island in Second Life. That island costs me $295 a month to maintain as my own. Many people just rent their islands to other people and get a direct A-B business out of it. Not me, no revenue, it largely just sits there, mostly vacant, with some nice free areas for people to roam and reflect in a lovely virtual forest with beautiful ambient music. What a waste of money, people might say. Wow, you must be rich, others say. Nope, neither. Im quite poor, and have significant debt at the moment (but the relationship to the island is again, abstract)
Because I have it, I take my time in second life and think about it quite often. I think about how it works, the significance of it. Because I have an island, when I do speak to other secondlife people, I get instant rapport and am not dismissed as another freeloader. It is a massive, interactive calling card that immediately demonstrates to all who visit my skills and taste in asthetic design, environment, and for those who like it, it begins a conversation without words.

What has all this brought me personally? Well, over the past year, I have had many things happen that I can trace back to my island ownership in one way or another. Amazing things. I was hired to do a job that paid me $15,000 over 3 months part time that I would not have gotten had I not set up this virtual, conversational context for myself. I met a composer who liked my island so much, he composed an album of ambient music specifically for it. This person also represented "Gibson Guitars" in second life and now my island is positioned next door to theirs.

I met an engineer/producer named Gary who flew me and my wife to L.A. for a visit thanks, in part, to my context. I was flown to SanFrancisco and met the CEO and staff of Linden Lab, makers of Second Life, again because of the context I established. In SF, I met others who were working to establish their own "contexts" and were making, in some cases, upwards of 10,000 a month with theirs. I couldnt begin to describe the convaluted paths money and opportunity takes to flow to all these people, but it does, and they were all happy, intelligent, and excited about their lives.

If you arent in Second Life, you are missing out. I dont think you necessarily have to own an island to derive value there, but it could be relative to the level of success.

Ive often thought to myself, how does Coke, Pizza Hut, and what not REALLY make money from an ad on television? Its hard to trace and probably benefits their competition just as much.

Thats THE KEY. Social networking is about you doing some action that benefits everyone. You dont get paid in money right away though, instead, like Coke, Pizza Hut, etc, you need to think about your actions creating ripples that tell two friends who tell two friends, they buy the other guy's product but are still encouraging support for your market vertical, your locale, your community (online or off).

If Dell advertises a mini laptop, Sony actually indirectly benefits in some ways because the person who saw it buys the even smaller sony...and then someone who saw these two computers at the airport makes the buying decision to get an acer aspire one. While at the mall to buy the dell, they all buy a coffee and some thumbdrives, and a lovely wicker stand. The ad dropped the stone in the pond, and many benefitted from the waves.

Of course, in TV advertising, none of those pathways can be traced by the vendor, they just assume it will happen when they pay 1,000,000 for a 30 second spot on tv for the super bowl.

In the new social networking economy, those pathways can be traced and turned into hard data that can influence the next "stone dropping" position, force, or size. For the first time, social networking enables the public to benefit from this en masse advertising for "brand awareness" that rivals or even trumps the capabilities of the big corporate juggernaut.

I used to play a game called "Myst URU", kind of the realtime 3d first person puzzle solving version of the original myst. Eventually I played a game which I believe to be one of the most brilliant puzzle games to date, called "Portal". Both of these games require the player to be observant of their surroundings, acknowledge that the answers are all there, just not quite grokked, and with time, experience, and a dash of cleverness, can all be solved with relatively simple tools. Sometimes the steps proved quite irritating and over convaluted, but the reward of solving the puzzle in both of those games were well worth the chase to me.

Another important thing to realize is that rewards will be delayed, or non monitary, but sometimes the non monitary rewards end up being the most treasured, the most valueable. If you are able to pay your rent with the income you make, you are in a position to use whatever other time and opportunity you have to build wealth in relationships, asthetics, social wealth etc. Fortunately you dont (yet) have to pay tax on those things.

I'll end with this example. Ning.com is a social network platform. Ive been setting up ning networks for clients who either 1. cant afford a big CMS / UMS but need one, or 2. are new to Social Networking but hesitant to invest the big money.

In both cases, the personal wealth I have derived from doing this work has been incalculable. No money per - se, yet, but I have established several life long friendships, gotten respect at work and among my peers, and even have an 8 ton granite inukshuk in my backyard all as a direct result of my efforts with Ning. The effort of a few hours here and there have made me more skilled, got me blogging, and helped me help dozens if not hundreds of people discover their own new pathways. I'll keep you posted. Oh and check out my virtual self's blog...he owes his existence to my virtual island!

Why Second Life is Largely Irrelevant, (and how we can fix that).

My SL alter ego would kill me for saying this, but Second Life is largely irrelevant. Why? Because it doesnt integrate into my life.

I have an island in Second life called "Tree Estates IV". I pay $299 every month to keep it there, but I'm only there 1-2 times a week for up to an hour for the past 6 months.

Its important to me and my business, and it still pays for itself in ways I cant begin to calculate, but those are intangible things as yet, and dont currently translate into cash. So for me, that is the first way SL is irrelevant. Only a slim minority of participants can do business with it.

Its not like Im off the computer much. I spend most of my online time either doing work or in facebook, various ning.com sites, googling things, digging things, checking CNN.com and more.

Second life doesnt integrate with any of those things, at least not in useful ways. In fact, my SL character's blogger page and facebook page gets more attention than his actual SL avatar gets.

I bet, seriously, im not alone in this situation. Even when I actually hang out in second life, my window fills with chats, popups, messages, notices so I cant really even see the virtual 3dness of the world. Last night I was in a televised in world gameshow called "the second question" and I found the 3dness almost irritating as I tried to get the audio all set up. I could have easily participated without even having a 3d world as it operated mostly like a big conference call. (we all "phoned it in" as it were)

Its not all bad though. I will say that in spite of all this, the true value is by looking like I do in second life, and by having my island, I can "tell a thousand words" about my skills, my asthetic, my personality. As a calling card, it beats everything else combined, and that is easily the primary reason I keep the island going.

But that still isnt relevant, and while it works for me as a 3d modeller / enthusiast, it doesnt work for most people who just have the default avatar or buy everything they wear, beyond showing their taste.

That still means that Sl is only relevant for the first 1-2 seconds of first impression you have with someone. What about the ongoing, continued relationships? Well, they quickly evolve past the look you established, and become simple chat sessions.

How do we make it relevant then?

Well one way is this. I used the windlight simulator technology to enhance a logo on my website. Now average joes who dont care about 3d technology or virtual whatsits can experience some of the benefit without having to sign on, get an avatar etc.

One could argue that Machinima movies do the same thing, but lets be honest, unless you are already a gamer those generally do look creepy and silly, the sheer magnitude of belief suspension required to view those make them practically unwatchable by the mass audiences. No question it will improve but for now, not practical.

Another way would be making SL content viewable without having to log in. People could see part of the world, say, as the background of a website, or have an in world camera that could see a little spinning logo inside SL and thats just the header. A widget that allowed people to replace all the blogger, facebook, and other profile pics with their current in world face, preferably as an interactive 3d model instead of just a static photo.

You could build simulations of various things and allow non logged in people to interact with them from web pages, like a car, or a ball on a stick. Basically opening up the simulator technology to be embeddable anywhere and everywhere. The simulator is the key value of SL, and it just needs to get more portable.

Conversely, users need to be able to "digg" things in SL, or have their facebook status update their SL status, or even have their avatar pull data from facebook, linkedin or whatever.

Join me in this conversation by posting your comments!