Building a Virtual World from Berlin: Smeet CEO Sebastian Funke (Part 5)

Sramana: What are the most common gifts people tend to give each other?

Sebastian Funke: They give rings, necklaces, furniture for virtual houses, and a lot of other items. We have a separate catalogue for gifts. People cannot buy them for their own use. There are two reasons for this. First, people really desire the items in the gift catalogue because they can’t just buy them on their own. Second, we don’t allow people to buy their own gifts to help prevent fraud. People would just create fake accounts and give themselves gifts.

Sramana: Let’s talk a bit more about users who purchase points to level up. Why do they need to level up?

Sebastian Funke: When you enter Smeet you get a welcome notification which essentially says ‘welcome to Smeet, now the work begins.’ You need to build up your social status, your levels, and your house. Each user has a house with up to 100 rooms that they can decorate. The second room is a garden which really looks crappy and must be taken care of. When you click on those items, it requests energy. To get the energy you have to have generators or pumps, which you have to click on and then wait a specific amount of time, such as 1 minute or 10 minutes, for the energy to generate. You have to come back and harvest the energy, which can then be invested in flowers and other items. Some people do not want to wait 20 minutes for energy to build up, so they will just buy it so they can get the flowers in their garden looking beautiful.

Sramana: What percentage of your active users and paying customers, and what are they purchasing?

Sebastian Funke: Around 10% are paying users, which is good compared to social games which have a rate of 1%-2%. We monetize on the gift-giving, self-display as well as the gaming itself, so that is likely a reason we are higher. Our monetization distribution is around 70% from self-display, 20% from gaming and level up, and 10% from gift-giving. In the beginning of 2009, we started with 150,000 users. Today we have more than 11 million registered users.

Sramana: What percentage of those are active users?

Sebastian Funke: It depends on the demographic or market, but the range is 15% to 20%. We find that 50% to 60% of our registrations become active users and at some point they churn away. Our churn rate averages 25% per month.

Sramana: Do they leave because they are getting tired of the game?

Sebastian Funke: No, we have found that we have a big drop in the beginning but the users who stay remain with us for around two years. If users decide to stay inside of Smeet, then they really stay a long time.

Sramana: Is the Smeet virtual world the only product you offer, or do you have multiple titles?

Sebastian Funke: We currently offer only one product. It is not so much a virtual world as much as it is an interactive chat and social game.

Sramana: How much revenue are you generating a month?

Sebastian Funke: Around $1.2 million.

Sramana: Did you raise any additional funds after you revamped the corporate strategy?

Sebastian Funke: We raised another 2.6 million euros in early 2010. Our investors are Hasson Plattner Ventures and Partech.

This segment is part 5 in the series : Building a Virtual World from Berlin: Smeet CEO Sebastian Funke
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