WIM Q&A: Conduit Labs' Hyatt On Its $5.5m Social World Investment

Charles River Ventures (CRV), who's previously invested in Twitter and Raph Koster's Areae, along with Prism VentureWorks, investors in user product rating sites ExpoTV and RatePoint, have co-led a round of Series A funding raising $5.5 million for a brand-new project. It's the brainchild of Conduit Labs and its founder, Nabeel Hyatt (we read his blog, Brinking) who asks the question, "Why can't we do more together online?" Hyatt is a veteran web entrepreneur previously of MIT Media Lab spin-off Ambient Devices, and was nominated in 2004 as one of the top 100 Innovators Under 30 by MIT Technology Review. He began Conduit as an entrepreneur-in-residence at Prism's Westwood, MA offices, and in an interview with Worlds in Motion, enthusiastically shared a few details on his top-secret social gaming world in development. Conduit's project is aimed squarely at what Hyatt sees as a "gap" between MMOs and social virtual worlds. "Right now, virtual worlds and MMOs really fall into two categories. There’s what I call 3D social chat, like Habbo Hotel and Club Penguin -- these wonderful worlds that I spend time in -- but the primary interaction between you and others in worlds like these is really just chat," he explains. "All the games are actually single-player games; the social interaction is only chat. On the other end of the spectrum, MMOs have a lot of complex interactions -- intellectual, social, combat, raiding, and things that you can do with other people.They're built for a fairly hardcore audience, and there's a bunch of barriers to entry for producing and playing in that marketplace." Hyatt's not ready to offer too many specific details, but did elaborate on how Conduit aims to bridge that gap: "We're trying to do something halfway in between that’s accessible on the web, that feels more like a website than having to enter into a game world, but it is still about social entertainment and playing games; it's very much a game that were building." Conduit should have plenty of help there; the Conduit team has some gaming industry vets on board. Dan Ogles, Michael Sheidow and Daniel O'Brien, all served leading roles in the building of Guitar Hero, Rock Band, Asheron's Call and Lord of the Rings Online. "My favorite story about Guitar Hero is that it's still the only video game that's sold in Barnes and Noble," Hyatt says. "They don't even sell [PlayStation 2] in Barnes and Noble, but they sell Guitar Hero!" He continues: "I think the team’s absolutely critical. I think probably every other day now over the last couple months, I see a new casual MMO or virtual world startup; it's been constant. And before I did it, I was at a VC firm and looked at this industry and what I saw was the same kind of dichotomy -- two types of startups. There're hardcore MMO gaming guys trying to make that experience more accessible, sort of like World of Warcraft meets the web. And the other side of the coin is a bunch of web guys who want to build a web site with virtual gifting and more gaming." While Hyatt recognizes the value in both of those approaches, he adds, "I think they're missing the larger point – which is that there is no interaction on the web that is like a social game. I don’t mean a single-player game, which is based on a legacy of, really, only video games; it doesn't last hundreds of years. There're actually thousands of years of games that are primarily social activities like dancing, or bowling. And those are about you bonding with your friends, and there's nothing like that online right now. And I think the web and social networks provide a whole new medium to create something that’s never been seen before." "In an offline world, we do all kinds of complex interactions aside from talking to one another. We play pool together, we bowl, we play tennis together -- all kinds of different stuff, and none of those normal social interactions like chatting and posting on bulletins and sending snail-mail has been transcribed into social networks, email and IM. All of that’s moved online, but what hasn't is the ability to do something with someone. To get a bunch of friends together on a Friday night, and go 'out' and do something." So does that mean Conduit's project will not be a virtual world at all? On the contrary; "It is an immersive world," Hyatt explains. "The reason I made that distinction is mostly because when people think about game worlds, they think of something that feels like—typically, to play WoW or Club Penguin, you separate yourself from the rest of your online identity; suddenly you are a penguin, or an elf. The fact that you happen to be using a broadband connection is the only reason its similar with your other online experiences." "We spend a lot of time building up our online identity," Hyatt acknowledges. "There’s something to be said for roleplaying – I ran [roleplaying group] One World By Night, which ended up launching in 15 countries with 8 chapters in Brazil alone -- so I certainly think there’s a place for roleplaying and assuming other identities, but whats really missing from that is what Facebook does for non-realtime interactions; it’s me and my friends, and I can see what they’ve been up to lately. What’s really missing is a Facebook that’s all about not asynchronous interactions, but synchronous interactions. Online games are all about you and a friend doing something right now. We think that a game is the way to build that next kind of social network." What about revenues? "I think in the long-term vision of people who are gonna compete in this industry – the broad answer is that its always going to be a hybrid approach [of ad revenues and microtransactions]," Hyatt says. "For us, we're starting this company trying to reduce barriers between you and your friends having a good time online. And so to put a subscription fee, or a download, or a huge avatar creation process all seems the opposite of what we want to do. So it will be free, in the browser, seconds away from friends online playing together, but from there we’ll end up charging mostly through virtual goods, and some portions might be ad-based, but vitual goods and microtransations will be the core – it's people paying for the value they see in the game. Daniel James from Three Rings said something about subcriptions: 'If you're charging a subscription fee, you're either overcharging or undercharging every single one of your users.'" And who is Conduit's project for? "In the long-term picture this is really about everyone that uses the web. But to try and make a product for everybody is to make a terrible product," Hyatt says. "If you look at the people who are really active online in social networks, that overlaps with their game playing, you're looking at late teens and early twenties -- basically, the Facebook crowd is where we'll be starting to focus." It's a place to start, but Hyatt's aim is eventually to build the community from there. "The same way Facebook started with Harvard -- both geographically and socially distinct -- they focused on a small group, and built out from there. And we'll be focusing somewhat similarly on a small group of people; we feel like it will be fun for them to grab their friends and play online and then expand that way." To that end, Hyatt is making the building process entirely transparent -- there'll be an ongoing blog at http://blog.conduitlabs.com, with regular updates and even podcasts available. And despite all the mystery shrouding Conduit's project now, it won't be long before we hear more details -- more team members will be announced, and Hyatt promises a product in less than six months. [This story was originally posted on Gamasutra's sister online worlds weblog WorldsInMotion.biz.]