Welcome to my world
By Greg Fulton
Even virtual worlds need brick and mortar, for now anyway.
For Christopher Klaus and his burgeoning online 3D community Kaneva - as it as grown to some 800,000 members - that meant recently moving the office space to a 28,000-square-foot floor of an office building near the heart of Buckhead.
As construction crews customize the space, housing just 50 staffers for now, the finishing touches are also underway in the virtual space, and growth is anticipated for both.
Kaneva means canvas in Latin, and Klaus means it as a digital canvas, where members are free to create their own alter ego, their avatar, and ditto their environment. Create as in there are 400,000 options in creating one’s avatar, though all must take on human form.
Similar to SIMS or Second Life, but with a counterintuitive theme of reality, Kaneva surely has a business model, which partnerships with Turner New Products and YouTube can attest. He describes Kaneva as more Facebook than fantasyland. There’s currency and transactions, competitions and multi-player activities. There’s profiles and friends, and there are rules.
But mostly there’s entertainment, the fun side of the ‘Net Klaus is enjoying after his well-documented rise through Internet Security Systems, which in 1994 led the rise of, well, Internet security systems, via the development of a scanning software which traced vulnerabilities to the then-burgeoning commercial uses of the Web.
Its high-profile sale to IBM in 2006 for more than a billion dollars laid the groundwork for Kaneva’s seed money, and lead to his multimillion-dollar gift to his alma mater Georgia Teach for the brick and mortar that is the Christopher W. Klaus College of Computing building on campus.
Can you have an alma mater if you didn’t graduate? Klaus didn’t, having started ISS while a student, completing a cycle that began in Sarasota, Florida where Klaus was fascinated by video games and solving problems, and was planning an engineering education at Tech, the same school his uncle had attended.
Now a father of two sons ages 4 and 7, Klaus, at 34, pauses and admits he’s conflicted about how to answer the question of how much time he allows his kids to venture online.
On the other hand, or at the end of the day, as he likes to say, he’s sure of where Kaneva can go.
AB: In October you attended the Virtual Worlds Conference and Expo in San Jose. What was that like or did you learn anything there?
CK: It was my first virtual world expo. The audience has grown from less than 500 people six months ago to over a thousand people at this one, so the interest level and the word is growing in this industry. There’s a lot of excitement and the buzz that was happening out there. It felt like the beginning stages, very much like where the web was back in 1995. We’re in a similar stage today where the whole 3D virtual world is preparing to be on an explosive path. There’s a lot of good questions and consensus that the books are still being written about how things should be done in the virtual world, everything from advertising – how do you qualify and quantify the value of an advertisement is. It’s no longer a 30-second spot or a page in a magazine. What happens if it’s an entire experience? Is that apples to apples versus being engaged inside a brand’s entire environment having fun and extending the brand? So there’s a plethora of different angles of how people are trying to add value to the space and solve problems.
AB: Is this a congenial world right now or is it highly competitive and secretive? Your world versus my world?
CK: I found that overall, since it’s such a big opportunity and so many different directions and markets can be taken, no way am I competing with Club Penguin or a kid’s site so most of the conversations are open and about learning. The mentality that I’m going to keep everything secret is hard to maintain. The only way to create awareness is to tell others, and secrecy goes against the concept of having a virtual world. If you’re not going to tell anyone about your world, how’s anyone going to find it?
We’re still learning how to make the technology simpler and easier. We want to make sure that when you come into a virtual world, we want to make sure the learning curve is minimized as much as possible. For anybody who’s dealing with technology, a good design can be a positive advantage.
If you look at what Apple did with the iPod and iTunes, the concept of the MP3 player wasn’t new, it was the value proposition which was really two things: one was a very sleek and cool design, but why I think it really became powerful was the simplicity of saying, “How do I get music I like off the Internet and onto a little device I can take anywhere?” The steps to go through that process were significantly reduced. So can we take the entire virtual world process so the overall audience can get in there and be successful without a huge learning curve.
AB: About 50 percent of Kaneva users are female. Do we know why or does it matter? Should we get past the idea that online is a boy world, or are those numbers unique to Kaneva or trending overall?
CK: I think the fact that we have a good mixture of gender signifies that this is more than just a hardcore gamer community. If you compare the traditional game sites they have been more male than female, but there’s a big growth in the gaming industry around casual games.
With the console market, Sony Playstation 3 and XBox 360 were betting on huge technology leaps, hard core games, hard core content, very cutting edge and that’s your traditional hardcore gamer. And then you saw the Wii come out and say we’re not about the bleeding graphics and the blue ray DVD to the extreme, we’re about having fun and family and a great experience for everybody. The numbers speak for themselves. The Wii has trumped the entire console industry. It was being discounted prior to the last conversation of whether it was going to be PS3 or Xbox, and the Wii was just some little kids’ console box and now it’s like, “Holy cow,” they’ve tapped into something that’s much bigger than cutting edge, and it’s all around the casual market, and I think what we’re benefiting from is we have done what Wii has done in the sense of focusing on fun, casual entertainment. In fact much of our community had not been into video games before.
In our environment there’s competition, but it’s not blood and gore competitions. It’s like dance-offs but it is competing. People want to see their name on the high score. There is status; how many friends do you have; how big is your community; who’s the biggest party promoter. There are lots of different reasons people are in Kaneva. People want to build. They spend months building amazing environments like the Pyramids or they build out baseball fields or entire new cities, and that’s great for someone who wants to create art and express concepts. I think the reason that’s so powerful is they have all their friends come over and say, “Wow, this is amazing.” If only they could see it, they’d lose interest.
Our whole goal strategically is to go after entertainment as a whole. In comparison to other virtual worlds we’ve gone more in depth into the entertainment field, meaning we’re partnering with companies like Turner, and bringing in their great brands like TBS, TNT and premium content there. We’re partnering with YouTube in that their entire library can now be played on any of our 700,000-plus TVs. We’re actually coming out with an update to our TVs where we’re actually embedding thousands of channels that are already available on the Internet, but now with a remote control you can select channels from all over the world, whether it’s Asian martial arts channels or sporting channels to news from around the world. You find great content on the Internet people aren’t aware of and we’re packaging it into the virtual world.
What’s powerful about having this all in one world is it’s not just me watching the Discovery Channel or the TBS channel, it’s that all of my friends are there watching with me and we’re watching a sporting event together. That’s why people like going to the local sports bar and having a drink and watching together. It’s a big emotional difference watching together around live entertainment.
AB: Live entertainment? Fed into Kaneva?
CK: Yes that’s one thing we’re going to see a lot more of, these channels can be live streaming events, and where this goes is into concerts; it redefines what’s a concert. It used to be a place you would go physically but now they’re showing more and more on TV or through pay per view and other distribution models, and I do think that concerts will be ultimately common within a virtual world.
AB: Sticking with business models, you’ve also talked about pre-paid Kaneva cards at Target, for example. Right now it’s free to enter Kaneva. What are other aspects of your business model?
CK: I think ultimately we want to create value for the community. How we capture that value is based on the real world. We’ve adopted a micro transactions system so our community can buy credits. It’s optional but when we make available new fashion or provide more real estate and unique real estate deeds, there are many different models of how to monetize this. We’ve kind of abstracted it to start with credits, that’s what we’re selling you now. You have a bucket of credits and our model is you’re in a whole fun world, so how do you spend those credits? It’s similar to going to Dave & Buster’s where once you get your tokens on a card, if you enjoy that you’re going to buy more and that is ultimately what keeps us in business. Not everybody in our community needs to buy, but some subset that is enjoying it will buy. We know they’ll buy. We’re seeing that.
AB: Are you also taking on brands, such as if I wanted to pay you to put Greg’s Food Store on the site, or are gamers coming to you offering to pay you to put their game on the site?
CK: Well, the micro transactions are probably our main, long-term source of how Kaneva is making money. It’s one of several models. The second big model is sponsorships, bringing in brands into the world. The third model is around subscriptions. We’re looking at layering in VIP access. Maybe there’s some red carpet events. Maybe there’s a hot concert. Maybe we only make that available to Kaneva members who are signed up to a subscription model. It’s similar to the cable networks, the basic cable lineup, pay per view, sports packages, music packages. Ultimately we’re going to be looking at what markets do we go after and how do we package it up. In fact probably a fourth business model is specials. And what I mean is we’re doing collector’s items in our world. For example in February we’re rolling out snow globes of selected cities. We can make a limited number or make these snow globes available for one month only. And we believe there’s a community that will trade those items.
AB: Facebook is again being criticized for ways it’s using member information in relation to advertising and marketing. Do you have to tread lightly with today’s social networker so you don’t cross any lines?
CK: There’s a balance between bringing in sponsors and having sponsors provide a value add to the community. We know a lot of our community likes having branded items in the world. People will create branded soda machines. Not to name names but there’s branded soda machines in our world. We know there’s a desire for brands to be in the world. I think when you see some of the criticisms and you dig underneath the core of it it’s that you don’t give them the option to control their own privacy. If the community can’t say, “I want to opt out,” at a minimum that’s a huge issue. Privacy is an issue you have to get feedback about. We’ve heard what’s right and what’s wrong.
AB: How do you police the site so my avatar doesn’t’ do anything wrong or weird?
CK: We’ve built in some self-policing mechanisms to report abuse and we’ve enabled the owners of their own places or homes or hangouts. It was interesting, we’ve added in functionality around kicking people out of your home, and functionality of who’s allowed in, who’s not allowed in, and at first thought kicking sounds very anti-social. But as long as you’re the owner and enabled, it actually is the reverse of antisocial because it enforces a social norm. Prior to having kicking anybody could go into someone’s home and they wouldn’t leave, and if you’re the homeowner, how frustrating is that? Now social norms have emerged.
AB: What video games did you play or like the most when you were growing up in Florida. What was your era?
CK: The Commodore 64 was my first home computer, and it came with Zork, which was a text-based adventure. You started outside of a virtual home and you go in this house and you find out that if you move the rug, there’s a trapdoor into a dungeon, which had an adventure until you met some thieves who would beat you up. But it was a lot of fun meeting all the different characters in the world, solving riddles, solving puzzles and getting help from my parents trying to get to the next level. It was a pretty deep adventure. Overall in that time frame Pac Man was going crazy. Every one of my friends at the time spent way to many quarters trying to get to the keys. Normally you get fruit but if you got high enough you found that you could actually get keys within Pac Man. That was the era of arcade machines.
AB: My nephew is very much into World of Warcraft. The online multi-player game.
CK: Most games honestly haven’t really truly taken advantage of the Internet. If you go down to GameStop and you look on the shelf, most of the games have been designed for single players. They may have multi-player if you have friends over, but very few of them have adopted mass Internet playability, where there are thousands or millions of people playing, and that’s the difference between Club Penguin and World of Warcraft compared to what the video game industry has been. Why are these two games so popular? It’s because they are really leveraging what the Internet really means; there’s millions of people and how do we have a more fun environment.
And I think this is really why the power of Kaneva is ripe for leveraging that because our entire world is built on the basis of being an Internet environment truly designed from the ground up with that one goal in mind, versus saying this is a single player game and we hope a handful of other friends of yours make it there.
AB: Better to go into Kaneva as a far-flung avatar or as yourself?
CK: I think a lot of that is going to be based on the world itself. We’re much more aligned with being a 3D Facebook, where we want you to be yourself. We want your avatar to be you. We really want to know what are your real interests. What movies do you like. What music do you like. What games do you like. Where do you really live. Just so that when you’re meeting others and you say you’re from Atlanta, we really want you to be in Atlanta and not Alaska. We want people to meet over shared interests. That’s one of the things that’s a unique quality around Kaneva compared to any other world you find today.
If you look at Club Penguin or World of Warcraft and other worlds it’s being something you’re not, you’re either an Orc or a penguin and the reality is we’re not really any of those. But it’s not that you have to expose everything about yourself. As we explore this we find everybody exposes something a little bit different about themselves. You’re a different person when you’re hanging out with your family, with friends, or you’re a different person when you show up a work. And within that I think social networks really expose what personality do you want to represent.
In one social network that’s around business it’s a totally different set of acquaintances. People compartmentalize who they are, and with Kaneva, since we’re focused on entertainment, we’re really focusing on what’s really fun about you and what do you want to know about others that is fun, and what shared interests do you have that is fun, and if that’s the cornerstone of that relationship that’s a good place to go to have fun.
AB: It’s well documented how your former company Internet Security Systems began as an idea and how it grew, the success of that. Kaneva began as an idea. Is there ever a time when you’re not thinking about Kaneva or the next idea or working things through your mind? Is that the key to your success to date? Are light bulbs always going off or can you walk away from that?
CK: Well Kaneva is a big part of my life now but an even bigger part is my family, that’s the umber one priority. I think the other areas of interest are friends outside or work…
AB: But are people always asking you about Kaneva or the next idea? What are you working on?
CK: Yes that’s a pretty normal discussion but other interests I have are around philanthropic giving, working closely with Georgia Tech is a high interest along with involvement with the Savannah College of Arts and Design and other schools in the area. I’m also working with CARE, which is one of the largest international nonprofits. CARE has been a blessing to have in our own backyard and most people don’t even know we have CARE, but I think the awareness level is growing though. We also have been involved with Michele Nunn with the Hands On Network and Hands On Atlanta, I think beyond business it’s good to think about how to give back to the community.
AB: I ask because I wonder if the perception of you is like Dexter’s Laboratory, you’re spending all your time in that setting, but I’m sensing it’s not that way.
CK: I’ve been very fortunate that security and entertainment have been a passion of mine, and one thing I’ve been blessed with is opportunities within those two areas. There was definitely timing, which is a factor in any business, and pursuing the stuff that gets you excited in the morning, that’s kind of logical.
Ultimately it’s about focus, and not to get ahead of where you’re at and today’s current challenges and the reality you’ll find is success doesn’t happen overnight. You can put down big goals but in order to achieve them you put them into a million little goals and you knock them down. I guess every once in a while you hit the lotto ticket and that’s great but at the end of the day that’s short and fleeting. The reality is if you find something you can really get passionate about and find a good cause to get behind it can be a life changing experience. ABM
