Tuesday morning, 10am. I am a fat man wearing nothing but Y-fronts and green socks, dancing my wobbly bits off in a techno club. By the look of it I’m pole-dancing, although I seem to have lost the pole. I have a mullet and a moustache. Nobody seems to want to talk to me. Maybe that’s not true – I keep getting messages. To be honest, I have no idea what is going on. All I can do is swivel my hips, bump and grind. Worse still, I don’t know how to stop. To my left a man (or is it a woman?) with a wolf’s head is dancing with someone who looks like a high-class Russian hooker. They seem happy; maybe what I need is company. I decide to try my luck with the club’s owner; she’s from Amsterdam. It’s time for the fat man to make his move. I sidle up, gyrating. “Cool music,” I say. “Cliché,” she replies. Ouch. Shot down in flames and I have no idea how to leave, let alone back off. Welcome to Second Life, the online virtual-reality world that is taking the planet by storm. And believe me, you are welcome.

Second Life is a 3-D online world set up by the tech company Linden Lab of San Francisco. More than 1.5m people have now registered to create new lives in its universe. They’re buying virtual land, building virtual homes, shops, clubs, palaces, temples, undersea grottoes, re-creations of Amsterdam and ancient Rome – you name it. It is not, as one might expect, the preserve of single male teen geeks. Today there are as many women using Second Life; the average age is 32.

The residents, as Second Lifers like to be known, have made their own brave new world. Each creates their own “avatar” – a virtual self – in any shape they like. Unsurprisingly, 90% of them seem to have chosen young and sexy as their signature look. And why not? Don’t like how you look in your first life? Buy a second.

Critics have called it Sadville, but there is nothing sad about the money. Second Lifers are spending over $500,000 a day on virtual property, T-shirts, shoes and stuff that exist only in their fantasy world. A private company – for now – Second Life’s backers include the Amazon founder Jeff Bezos and eBay founder Pierre Omidyar.

A stream of old-world corporations has followed the virtual money. Reuters has a news bureau in Second Life; Adidas and American Apparel are selling virtual footwear and clothing; Toyota has an island where you can test-drive its Scion xB cars. IBM and Dell have held global meetings in Second Life. Hardly a day goes by without a new company joining the residents.

Tom Glocer, the chief executive officer of Reuters, was an early fan. His avatar looks similar to himself – with an afro. “You have to be seen to be hip, open and into new things,” he says. Nobody wants to be seen as a Luddite.” He says he isn’t entirely sure that Second Life is the future but it is important for Reuters to explore all possibilities. “Innovation doesn’t just happen in a garage. We have to innovate too,” he says.

My initial attempt at building a second life obviously wasn’t working. Even online it seems that nobody likes fat people. Time for a (sex) change. As a leggy blonde in jeans and a very small top, I really am a cliché, but suddenly I have a lot more friends. As I sashay through the welcome zone, three guys offer to help me out. I bet! I go clubbing and chat to an equally hot-looking girl while we wait for her friends to arrive. I move on (via teleporting) and find myself lost. I seem to be playing bingo. A lot of people are playing, and they seem to be having fun. What is wrong with these people? Suddenly someone is playing Time Warp from The Rocky Horror Picture Show. What fresh hell is this?

New worlds can be confusing. What I need is a guide. I make an avatar that looks a little like myself and set off for a real (and virtual) world encounter with Philip Rosedale, the founder and chief executive officer of Linden Lab, the reigning deity of Second Life.

Philip Rosedale has a couple of business cards. On the back of one is an image of his avatar, Philip Linden. A spiky-haired, moustached man in rainbow trousers and leather chaps, the leading Linden looks like a 1980s German rock star. On the back of his other card is a picture of God. It’s Monty Python’s idea of God, but there is no doubting the scale of the man’s ambition.

In a meeting I attend, he compares Linden Lab to Microsoft and Google – the two most powerful technology companies on the planet. Rosedale’s pretension may be far
greater than either. So far, Google and Microsoft have been happy conquering the known universe; Rosedale wants to create a new one.

In the past he has said he’s not building a game but “a new country”. Guess who is president?

“We are in competition with the real world,” confides Rosedale. “We are competing to create a better place for your mind to live.”

In his real life (RL in Second Life lingo), Rosedale is a handsome 38-year-old with a wife, two children and artfully gelled hair. Silicon Valley born and bred, Rosedale was raised in San Diego, the eldest son of a navy pilot; he built his first computer at the age of 10 and studied physics at the University of California.