How PlaySpan was founded
Helium - August 20, 2010
Those who have recently purchased a tractor or fence or even a cute little avatar for their social network games have helped virtual goods marketplace platform Playspan become a red-hot startup in Silicon Valley. Recently, the company announced it has raised $18 million in Series C funding led by Vodafone Ventures and Softbank Bodhi Fund who joined existing investors Menlo Ventures, Novel TMT Ventures and STIC. This brings the startup?s total funding to a whopping $42 million.
This magnetic ability to attract investment funding is impressive on it own merits, but the fact that the company was founded in 2006 by then 12-year old Arjun Mehta makes it even more phenomenal. The CEO of Playspan is young Arjun?s father and co-founder, Karl Mehta.
Playspan?s Playground
There is little doubt that Playspan was at the right place at exactly the right time when the company launched its virtual goods marketplace platform. Technology newsletter, ?Tech Cruch? notes that?PlaySpan powers virtual goods marketplaces across 1,000 video games and virtual world publishers and PlaySpan-powered marketplaces lets users sell, exchange and purchase online game items, virtual goods, and game currencies for online games and applications. The platforms also allow publishers to manage global micropayments, ecommerce, and micro-transactions across 180 countries. And the company operates virtual goods storefronts on Facebook, MySpace, within games and on its stand-alone site.
Virtual goods have become the Holy Grail for media companies that are trying to monetize the huge increase in traffic to online and social network games such as FarmVille and Mafia Wars. In a short amount of time, Playspan has inked several high-profile deals to power micropayments for social games, game developers, media companies and gaming platforms. Tech Crunch notes that Playspan boasts a blue-ribbon group of customers including Adobe, Disney, Sanrio, Viacom/Nickelodeon and Warner Brothers.
Playspan is using all of that venture capital to expand. It recently acquired micro-transaction application developer, Spare Change. This allows the company's marketplace to power transactions.
The Kid That Started it All
If Bill Gates learned his craft by spending 10,000 hours (or so) writing code after hours from a ASR-33 Teletype terminal connected to a mainframe computer in downtown Seattle when he was a teenager, as Malcolm Gladwell suggested in ?Outliers,? what kind
of high-tech dynasty is likely to be built by Arjun Mehta? He started a little younger than Gates and with the help of his dad and some talented colleagues, has raised a lot more money than the richest man in the world did when he first started.
In 2007, Venture capital publication, ?Venture Beat? reported that ?Arjun Mehta, a 6th grader, said on his website that he is passionate about software that can make the game experience more ?rewarding,? and that he started the company last year in his garage. He paid for it from earnings made from selling online game items he won from quests he fought.? Needless to say, this was a very astute investment on Mehta?s part!
The article went on to add a note from Arjun?s dad, Karl, ?"Arjun does not work full-time on PlaySpan business. As a gamer, he has a great deal of input in PlaySpan's product and technology, but his primary focus is on his academics and his mom doesn't want much media attention for him. I am the Co-Founder and CEO and I run the company"
Virtual Goods Sell for Real Money
The first virtual goods were reported to have been in the form of swords, coins, potions and characters from Multi-User Dungeon (MUD) games. Players would informally sell these virtual items without the game operator/developer acting as a middleman.
All of this changed in 1998 when Iron Realms Entertainment (formerly ?Achaea?) began auctioning items to players of its game ?Achaea, Dreams of Devine Lands.? This would mark the beginning of an extremely profitable market niche ? virtual goods.
Online resource, Wikipedia notes that virtual goods are ?non physical objects that are purchased for use in online communities or online games.? They can be birthday gifts, such as flowers, or items such as equipment or weapons for gameplay.
Wikipedia also notes that ?in 2009, games played on social networks such as Facebook, primarily derive revenue from the sale of virtual goods. (These games) brought in $1 billion and that is expected to increase to $1.6 billion in 2010.? Playspan hopes to encourage as much of that revenue as possible to find its way into the coffers of its partners.
What?s Next for PlaySpan?
Where there?s money, there will be competition and where there?s lots of money there will be lots of competition. Such is the case in the business that Playspan has chosen to pursue. The company conceived by the entrepreneurial mind of a 12-year old will be dealing with several formidable competitors in the immediate future.
Live Gamer is one up-and-comer that venture capitalists have placed bets on. Plus, the biggest planet in the online universe ? Google ? will be entering the space with Google Games and it has acquired Slide and Jambool. These companies will certainly affect the prospects of Playspan but they might also increase the market size, exponentially increasing the growth for all companies involved in the delivery of virtual goods.
Under any circumstances, it will be interesting to watch the progress of Playspan and its young founder Arjun. With any luck, Karl Mehta will let his son keep playing and having fun so that he doesn?t have to deal with the bane of many young prodigies ? burnout and then boredom. Who knows, while he?s messing around on the computer, Arjun might have a few more million dollar ideas.