Robert Bloomfield's blog

Starting October 15th, Professors Robert Bloomfield (Cornell University) and Ray Pfeiffer (University of Massachusetts, Amherst) will be holding office hours in the virtual world Second Life® to discuss opportunities for research on standard setting for the Financial Accounting Standards Board . Office hours will take place every Wednesday, from 8am-9am Pacific Time (11am-noon Eastern Time).

Professor Bloomfield is the Director of FASB’s Financial Accounting Standards Research Initiative, which is conducting experimental and survey research to assess the likely effect of standards that have not yet been implemented. Professor Pfeiffer is the FASB Research Fellow, and works with staff and Board members to summarize the findings and implications of empirical research. Rob and Ray share a mission to foster communication between researchers and the FASB, and office hours in Second Life are intended to help reach that goal.

Office hours will allow researchers to learn about research opportunities with FASB. As the weeks progress we expect to have a variety of staff members, Board members and researchers join us for more focused discussions on specific topics. For now, however, we will focus on introducing researchers to Second Life and to the FASRI/research fellow programs.

Second Life® is a virtual world that allow people to meet in a setting that shares many of the advantages of face-to-face contact, without the expense and hassle of travel. Anyone who wishes to attend FASB office hours can find information on how to do so at the Metanomics FASB Research Office Hours page .

You will need a reasonably recent computer, a broadband internet connection, and a headset with microphone.

This is the text of my "Connecting the Dots" editorial from the Sept 22nd edition of Metanomics. Sure, it oversimplifies a complex issue, but sometimes that is a useful thing to do.

My guess is that you have all heard about the global credit crisis. Many of you have probably also heard of the book ‘ Everything I needed to know I learned in kindergarten.’ Let me be the first to draw the two together, and add in a dose of Second Life.

Author Robert Fulghum makes the point that the most fundamental rules that help us navigate life are taught to us when we are very young. His list includes: Don’t be greedy. Play fair. Look both ways before crossing the street. Clean up your own mess. And nap every afternoon.

Kindergarten is a pretty simple place. So when the kids start crying, it’s pretty easy to trace how violations of these basic lessons caused any problems you see in the classroom. Well, grownups are crying in the real world today because of the global credit crisis. But it’s hard for most people to see why, because even though people violated simple rules, but they did it in a very complicated setting. My hope to shed a little light on the issue by looking at a similar crisis, but in a much simpler world: the financial markets of second life.

I had the honor of giving a keynote address at the SLEDcc this September. The link to the complete transcript is here . But here are a few key quotes that will give you a sense of my focus:

I think we are approaching a critical point in the adoption of virtual worlds for education, and enterprise use in general. Most people who come into Second Life for professional reasons start by acting on their own. So all of this enthusiasm, experimentation and community-building is very much a grass-roots effort, usually with top administrators looking on, often with a puzzled look, sometimes with some kind words, but rarely with the support that educational projects need to succeed. And by support, I mean money. Money for hardware and software, for hiring staff and virtual assistants, for buying and building virtual products and services.

Over the next two years, I see large numbers of educators going to their deans, to their principals and superintendants; to their vice presidents of human resources or customer outreach. And they are going to be asking their enterprises for the money they need to get their students inworld, or as long-time Second Life residents say, to get them to rez. Right now, there aren’t many students in virtual worlds. So, to play on the title of Rudolf Flesch’s 1955 book ‘Why Johnny Can’t Read,’ I am calling this talk ‘Why Johnny Can’t Rez.’

Flesch argued that that Johnny has tremendous potential, but that he can’t read if teachers aren’t finding the right methods of reaching him. Well, I’m sure Philip Rosedale in his talk yesterday morning convinced you that virtual worlds have tremendous potential, just like young Johnny. And Barry Joseph in his keynote yesterday made it pretty clear that the responsibility falls on us to push virtual worlds past the tipping point, to widespread adoption. Well, the purpose of my talk is to sketch out how we can reach, not Johnny, but the people who hold the purse-strings, so that those of us with virtual world projects can get them funded, and help Johnny rez.

Enjoy!

Second Life® may be a global phenomena, but its residents are still largely wealthy. At his breakfast address at Second Life Community Convention, Philip Rosedale expressed his interest in changing that, and in particular, getting Second Life into the hands of people in developing countries, so that they could integrate into the global economy as knowledge workers. Given my school’s interest in Sustainable Global Enterprise, I pursued the topic with him, and went to Tish Shute of ugotrade.com for some insights.

ROBERT BLOOMFIELD: You mentioned the global nature of this, and, in the talk today, you talked about, well, I guess I think of it as at the bottom of the pyramid model. I don’t know if that’s where you were going with this, but that you want to

PHILIP ROSEDALE: Empowering people.

ROBERT BLOOMFIELD: Yeah, and going intoI don’t know if you’re talking about Africa or what, but I don’t know if that’s something you’ve talked about before publicly.

PHILIP ROSEDALE: I haven’t [talk publicly about this] a lot, and it’s something that I’m very early in my thinking about, but, look, if the future of human productivity is mostly in the creation of intellectual capital, that is to say, if, as human beings, we create value in a society – I mean we each as individuals create value in a society in some manner – historically that value has often been created by physical production of one type or another. Lifting. Mining. Local resources. We are definitely moving toward a future, in which we are in an age of creativity, in which the majority of production is intellectual work of some kind or another. Well, I’m just struck by the vast inequity between that imagined future and the fact that today there are so many people around the world, who have the ability to deliver that kind of intellectual production, but do not have the access to do it or are restricted by their local community or conditions in such a way that they can’t participate in that information economy. And I think that Second Life is a really compelling way to bridge that gap because all you’ve got to do – what we’ve already seen is that the value of Second Life to an individual who’s educating themselves, getting a job, is thousands and thousands of dollars – which is greatly in excess of the cost of a computer.

So what that means is that, if you can come up with the right bootstrap model. You should be able to get computers to people in developing environments where they didn’t have access to them, and then there should be a good profitable model where they’re easily able to kind of earn back and provide for themselves and buy those computers or whatever.

If you look at microfinance in general, which Dr. Yunus just won the Nobel Prize for – was something I was following and getting Second Life more closely – you see that these models where small investments in people, made in the right way, with the right trust model, do cause people to rapidly move forward. And I think that Second Life is just a phenomenal example of how you could take somebody, and you could put them on a level playing field, let them participate in what is today a milliondollaraday economy, and I believe that what we’ll see is that somebody from a developing nation performs absolutely no differently from somebody in a developed nation when it comes down many of the different kinds of jobs that you can do in Second Life.

ROBERT BLOOMFIELD: They just need a graphics card.

PHILIP ROSEDALE: They just need the computer, a graphics card and the broadband. And so I really believe that there’s got to be a bootstrap model, given that the computer, the graphics card and the broadband can be less than a thousand bucks. There’s got to be some sort of a bootstrap model where that starts to happen. I love the idea of trying to demonstrate that. I mentioned in the talk today that I kind of love the idea –
I have this vision of an individual, an entrepreneur in a developing country, who serves as a point of currency exchange and a point of facilitation. Maybe a teacher that teaches people in their local community how to use Second Life to educate themselves, make money, whatever, and then facilitates things like currency exchange, which are more complicated, and does that at a profit. So it’s really a perpetuating system.

PHILIP ROSEDALE: I tell you, I think, from your perspective and like you said, you guys should look atI think this whole idea of getting people in other countries, that are not in your typical sort of technology environment into Second Life and making money, I tell you, if I had more time and more people, I’d say, “Go seek out the use cases.” I bet some of that stuff has already happened in a real interesting way, and it just needs to be amplified. [CROSSTALK]

ROBERT BLOOMFIELD: Well, there is Alanaugh Recreant who’s doing some stuff. I think that’s a nonprofit.

LYNN CULLENS: Absolutely. And I actually think the Virtual Worlds roadmap thing that they’re bringing back. They’re really starting to try to bring that back up, and I’m going, and they’re going to be focusing on new studies. And they’re really asking the communities across the metaverse, not just SL, but obviously they’ll be mostly from Second Life, to actually write those case studies and get them up and online. I think that the meshing of those, the fact that we not only have actual situations that you make the case for, but we’re asking for people to write those cases. That’s the mesh.

PHILIP ROSEDALE: I just feel like we’re so close to a business model like Starbucks or something, where a company could be built, not ours, doesn’t need to be us, that is basically just building cafes or something. Those cafes are these learning and work centers for people, and people are coming and signing up, and they’re paying in the manner that Starbucks makes money. I mean they’re paying something for the time or whatever. And if you look at the PC bhangs in Korea, the big model there, which is what drove Korea into its place of highly connectedness. It was PC bhangs, which are these PC rooms that you pay a thousand Won an hour, which is about a dollar an hour, to use. And I just look at that, and I’m like, “Man! Somebody should just be doing that and just with Second Life, where they just say, ‘We’re going to immerse you in this environment, and it’s not a game. It’s not a bibliography. It’s a learning and work environment. You can go in here.’ I mean just think about like working retail in Second Life. How many retail jobs are there in Second Life? I think a lot now, right? I mean a lot, a lot, a lot.

LYNN CULLENS: That would be a cool project for The Tech’s in inworld presence too because they just did the UCan2 thing, and they’re doing all that kind of outreach as well, so that’d be interesting.

PHILIP ROSEDALE: That is so neat! Just so many weird things people ought to be able to do though to make money.

Click here to see what Tish Shute of ugotrade.com has to say.

Return to Rosedale Interview article and list of bloggers.

I have always been fascinated by Linden Lab®’s approach to setting policies on user behavior. This is obviously a touchy topic, and it is virtually impossible to get a Linden Lab exec to elaborate on the company’s public statements about their policies on gambling, banking, and now advertising. But Philip was willing to talk more generally about Linden Lab’s philosophy on the matter.

Take a look, and then see what the author of Virtual Law, Ben Duranske, has to say.

PHILIP ROSEDALE: I would say our overall philosophy remains that, given that the system is global, so we have users from many countries, it’s likely to become more open and less locally regulated. That is to say, as people are running servers in their own countries, you’re going to have different regulatory regimes, and therefore, treatment of different content or experiences, whatever. What this suggests is that we need to really redouble our efforts to regulate and create central policies as little as possible, recognize that those policies will probably be fractured at international boundaries and by people who are running servers. Today we own and operate all the servers. We don’t believe that, longterm, that’ll be the case. So as people are operating their own servers, they’re likely to have different policy and regulatory decisions. So I think our basic goal is what it’s always been. I think we’re staying pretty true to it. As the world gets bigger, there are things that we’ll do. It’s just to reasonably promote stability and the growth of the overall world while imposing as little policy or regulation as possible to do that. Every time we impose a policy of some kind, everybody’s going to say, “You’re taking away our freedom.” But—

ROBERT BLOOMFIELD: Except for the people who are saying, “Finally!”

PHILIP ROSEDALE: Yeah, or, “Thank you.” And, of course, everybody else is saying, “You’re too slow.” Sometimes, especially as it relates to governance and policymaking, I know what it’s like to be the President or something of a country. It’s been an intriguing experience because you really can’t please everybody on these global policy issues. And I think the only way you can please everybody is to simply have as little policy as possible. I really do think that is generally a maximizer. And so we try to pick our battles very, very carefully.

There are types of content where, if you do it, we will go after you. We don’t want the economy or the general quality of people’s experience to be impaired, and we’ll fight a little bit to protect that, but we really do recognize that, especially again with the use cases growing and the business models and the server models and stuff, open grids, all this stuff growing, it means that we probably need to be even smarter about moving toward... We’ll have less opportunities to set policy in the future even than we do today.

I will let Ben Duranske provide the primary commentary, but I would like to make a couple of points about Linden Lab's banking policy. I am on the record in my Technology Review opinion piece encouraging Linden Lab to let Second Life's banks and stock exchanges continue to be unregulated. Well, they didn't listen to me...almost immediately after the piece was published, Linden Lab announced that they would be requiring any resident promising interest on deposits to provide proof of real-world regulatory oversight.

I now think this was probably the right call...the libertarian experiment that was inworld banking simply didn't have the ability to succeed.

I eat my words --here--, while drawing lessons from last year's Second Life financial market fiascos, and applying them to the fiascoes we are seeing in the real world today.

Return to Rosedale Interview article and list of bloggers.

Just about every Linden Lab® employee who has appeared on Metanomics has had to field a question on how to balance the needs of the different types of users in Second Life®: enterprise users who want to use a virtual world to connect with customers or telecommuters, prototype products or buildings, or achieve some other corporate goal; educational users who want to teach in schools or the workplace; and personal users who just want to entertain themselves or others.

My discussion with Philip Rosedale covered two key facets of this balance: technical and public relations. I’ve asked Bettina Tizzy of the acclaimed group Not Possible In Real Life to comment on this segment of the interview, because in real life she is a professional in public relations, and in Second Life she is a very public face of Not Possible in Real Life--a community of builders and artists that lies pretty close to the interface of these user types. (Bettina has also spoken quite articulately on Linden Lab’s PR work, as you can see in her appearance on Metanomics. So take a look at Philip’s comments, and then go to see what Bettina has to say.

PHILIP ROSEDALE: … what’s interesting is that it’s kind of like us sharing our DNA with chimpanzees or whatever. There’s a 90 percent overlap in usage requirements between those three segments, and then there’s a ten percent diversity where they’re each looking for different things. So I think, as a company, what we have to do and keep doing is, we have to make small bets, five or ten percent bets where we push new capabilities into the platform, or we simplify some piece of it, or we create some new pricing model or some new operating model, with the hope that it will satisfy the need of an emerging market segment.

So if you look at business use today, what do business users need from Second Life? Well, they need a better control of the naming and registration process. Right? Because it’s just a very personally directed process right now. It’s not perfect for business. They have concerns about firewalls and security and stability. Like, in some cases, they’d like to see five nines of uptime. The very large public grid, which is subject to all kinds of different vagaries and internet providers being up and down – and our colo spaces being up and down – doesn’t afford five nines of uptime right now. Those use cases, solving problems like security, firewall and naming, we can do that as a small initiative within the company, where we can try and solve some of those problems and then see if that takes off, see if that accelerates usage within the business, within, say, the enterprise community. We can try and do the same thing with education, look at enterprise and education to share some of the same needs: account origination, sometimes security, probably a little bit more privacy on the education side, a little more formal security on the corporate side. These are similar needs. So I think that we are really following the same model. And I think [new Linden Lab CEO] Mark [Kingdon]’s focus on usercentered leadership will help us there.

...

ROBERT BLOOMFIELD: [T]he Wall Street Journal had that big article about the guy cheating on his wife in Second …. Is that something you guys are trying to manage so that it doesn’t stigmatize Second Life for the enterprise community?

PHILIP ROSEDALE: Well, again, I mean I think the answer there is yes. Certainly, when I talked about security being a requirement for the enterprise community. And I think that content restriction and separation and insulation is a part of, is kind of a close cousin to that part of the problem. So I think that we’re doing the right things, thinking about how to better support the enterprise in looking at how to move Second Life more behind the firewall if we can, add security features, add controls for those users. That said, http, the web protocol, moves around a lot of different types of data, some of it certainly objectionable to enterprise users, and enterprises still use it. So I think that there is a future where, again, there’s a single standard; maybe the branding is a little different, but there’s still a single standard for how you use virtual worlds and how you interconnect them. I think that’s going to work out because, again, I remember the early days of the web. There was, of course, a real concern that corporations were being stigmatized by building websites because there were so many other websites that they thought were objectionable or adult content or whatever. So I guess I’m not kind of giving you a clear answer because I don’t think there is one.

I think that you’ve got to let people broadly create content in as open a way as possible. There’s a meeting in the middle. I think enterprises will recognize that the utility gains that they can get from taking advantage of virtual worlds are very high, and they’ll be willing to tolerate the fact that, yeah, if they wanted to kind of brandapprove their neighborhood, the fact that they’re in a virtual world, and, yeah, there’s content they don’t like in a virtual world, they’re just going to have to live with that.

ROBERT BLOOMFIELD: But you do have some control over the perception. I know, for example, there were controversies over the Second Life fifth birthday celebration where certain groups were in, and then they were out, and then they were in, and they were out. It appeared at least to be Linden Lab attempting to manage then and reduce the perception of not safe for work behavior.

PHILIP ROSEDALE: Inevitably, this is such an exciting new space that there is a lot of media hype, so I think we do sometimes try to tone things down a little bit. I think we need to do more of that as time goes by, to just say, “Hey. Wait, wait, wait, wait, wait.” Reasonably speaking, here’s what the picture looks like. It’s not all one type of content. It’s not all business use. It’s not all marketing. It’s not all any one particular type of thing. It’s funny, mostly our PR strategy has simply been to help connect and embellish the stories that kind of come from the community anyway. I mean, for every stressed-out story about people’s love lives or infidelities or whatever in Second Life, there’s a story that’s equally good about people meeting in Second Life, or some people learning in Second Life, or whatever.

ROBERT BLOOMFIELD: Someone with Asperger’s Syndrome. Right. [There are lots of great stories about people with Asperger’s, social phobias, drug dependencies and the like who have found Second Life incredibly helpful.]

PHILIP ROSEDALE: So it’s kind of like do you suppress one and then suppress all the others? We’ve really taken a pretty handsoff approach. Fundamentally, our media cycle, at least historically, has been driven more by people coming to us and saying, ”Hey, can you tell me more about this person or this activity or this content that I heard about?” And then, as a company, we try and facilitate that access. So sometimes we’ll take somebody from the media and we’ll introduce them to the best example of that content or whatever, something like that. So we’re sort of running around trying to make those connections inworld. But it’s such a big category, it’s such a big space, I almost don’t know. This happens a lot with Second Life. It’s almost like we wouldn’t have the manpower to police or monitor or control or even come up with a strategy that was much more.

ROBERT BLOOMFIELD: Now Mark [Kingdon, the new CEO of Linden Lab] is more from communications and marketing, right? In his prior jobs, he was pretty active on that so maybe do you expect him

PHILIP ROSEDALE: His degree is in economics. Did you know that?

ROBERT BLOOMFIELD: No, I didn’t know that. But I was thinking of some of his prior work and the things I’ve heard. People speak very highly about his [work in marketing and communication.]

PHILIP ROSEDALE: I think the biggest thing that Mark does internally, and I think that that’s of course more of what I’ve seen thus far and what we’ve all seen, is how Mark works with everybody internally. He actually drives more internal communication and crosscommunication about what’s going on, and I think that’s great. I mean that’s something that you see people complain about in the community, that the Lindens aren’t talking to each other enough. Mark really pushes us to do more of that, which is great. He’s created more internal forms for communication than I did, and I think that’s really a good step, especially given our size now. So I think it’ll be a good trend. And I think that you will start to see it in the community as well. There have already been signs of that. You’ll see how I think he’ll lead us to communicate in richer and different, yeah, probably more varied ways with the community, with everybody that’s using it. Forward looking with our intentions on product.

ROBERT BLOOMFIELD: I’m sure the community would appreciate that.

PHILIP ROSEDALE: It’s funny. It’s always been a frustration because I always feel like, “Man! We’ve done our best. It’s such a huge project.” But I think that he’s going to have ideas and fresh ideas that I wouldn’t have had that’ll really help us.

If I were any good at public relations, this blog would have a lot more readers! Bettina , what do you think?

Naturally, a major topic of my interview with Philip Rosedale was on the implications of OpenSim and the open grid project, which both involve creating open source server-side implementations of virtual worlds that can replicate Second Life® funcationality. As a relative newcomer to this corner of the tech industry, I still find myself asking what a company would essentially create its own competitor. Here is what Philip had to say; I have asked Tish Shute of ugotrade.com to comment, as one of the people who has covered the OpenSim/OpenGrid movement with more detail and passion than just about anyone.

PHILIP ROSEDALE: … I just really hold true to the strategic belief that there’s going to be a tremendous amount of consolidation and interconnection between these worlds because the content development process is so challenging that the content developers are going to push us all together. They’re going to say, “Give me a file format. Give me an interchange format. And let me move that chair from this grid to that grid. I’ve got to be able to do that because I’ve got a customer here who wants to buy it.” And so I think that that consolidation is going to happen, and it’s going to happen earlier than people would have thought.

ROBERT BLOOMFIELD: And this is looking at the success, the energy around OpenSim, open grid.

PHILIP ROSEDALE: The energy, yeah. I think, at this point, we’ve got an appropriate level of energy – I think that’s exactly the right word – around exploring how quickly we can generalize all this stuff and open and interconnect everything together. I really think that’s going to continue.

ROBERT BLOOMFIELD: [D]o you feel like you might have opened Pandora’s box and that it’s not really under your control now?

PHILIP ROSEDALE: I think that Second Life has, in many ways, not been under our control from the beginning and that it’s been a basic operating assumption that to create the kind of incredible place and business opportunity, and social opportunity more broadly, that Second Life would require a certain lack of control. And that was true with the content from day one.

So for us, oh, we open-sourced the client a while ago, and now we’re trying to do the same thing with respect to operating standards to interconnect grids. This is a pretty logical progression, using worlds that we’re pretty familiar with. I mean we’ve always felt that, if you have a compelling use proposition, which certainly Second Life does, in other words, if there’s real utility, real fun or real business or real whatever in what people are doing, then there should be a way, as a company, to be open, global and still make money on an hour-to-hour or a user-to-user basis or whatever on what we’re doing. And the economic aspects of the business have been fantastic from the very early days, and we don’t really even worry about them.

Our ability as a company to find a way to make a reasonable amount of money per hour that people spend in Second Life, it’s really never been that much of a problem. It’s actually been fascinating as we’ve changed pricing and as we’ve changed the ways that we make money. Introducing new ways of making money – like selling currency on the LindEX – it’s been amazing how stable our revenues have been as a function of usage hours. It’s one of the things that we sometimes marvel at. It’s almost an emergent effect, if you will, that the company’s business, its operating revenues are really very stable.

ROBERT BLOOMFIELD: Even though they’re coming from different streams.

PHILIP ROSEDALE: Even though they’re coming from different streams. And sometimes the requirements of the platform and decisions that we make will really substantially change the nature of those streams, but when you put them all together and you divide them by the number of usage hours, it’s like a constant. It’s almost a magic number. And it’s a magic number that allows us to be profitable, and therefore, is certainly adequate to make a business in the future. I don’t think that continuing to open Second Life up as we have been is going to impact that. Again, I just think there are so many opportunities to make money that we shouldn’t have to worry about that too much in the company. And, again, I think that’s a lot like the early internet. I mean if you step back and look holistically at the internet – you look at PayPal, the payment systems, auction systems, transaction systems, posting, naming – you look at all the businesses that comprise the internet, well, those are all the kinds of businesses that we as a company can be in, in this emerging market. There’s no business that’s denied us. We are in the hosting business. We can continue to be in the hosting business longterm, putting servers up and providing access to them.

We can certainly be in the naming business. We’re in the currency and transaction support business. It’s funny, it’s something that’s often discussed. We worry much more about improving the scalability, stability and the usability of the system: reducing that initial user experience, reducing the time associated with it, making it easier. That’s got to be the lever that drives more growth in the overall industry, more revenues for us. So it’s really all we worry about. But I don’t think that the open grid will impact our revenues any more than open sourcing the client did.

I think a number of people don't share Philip's optimism on this. After all, simple hosting is not that expensive, and what is Linden Lab's competitive advantage in things like fostering microtransactions (why can't Paypal or FatFooGoo do that better?) or providing naming conventions or any of the other streams. But I do think those who are skeptical should be questioning some of their own assumptions? Do you really think any of the groups that are building their own server technologies now are really going to do a better job, given Linden Lab's 200+ employees? And why would Google or Microsoft or some other tech giant try to start this themselves, rather than simply buying a company that has already made this much progress?

Of course, Tish Shute will have a more informed take, here at ugotrade.com.

Return to Rosedale Interview article and list of bloggers.

A large segment of my interview with Philip Rosedale focused on what it will take for virtual worlds to break into the mainstream, and on how Linden Lab® is positioned, relative to its competitors, to take advantage once that happens. I rely on Nic Mitham at KZero, whose graphs of the virtual worlds competitive landscape are now ubiquitous, to provide some context and analysis of Philip’s comments.

It doesn’t take much to get Philip talking on this topic, and my questions are pretty obvious from context, so for the most part I have just deleted them, to let Philip have his say.

PRE-INSTALLATION

By the way, I think the requirement for a software download, a standalone executable, which is true with every product that’s out there right now other than the most simplistic like 2D virtual worlds, like Habbo Hotel or something like that, the requirement that you install and run a piece of standalone software, that requirement probably has a greater impact on the acquisition rate of new users than any other factor. And, unfortunately, until we’re bundled with the operating system in some way, it’s really hard.

When the browser came out, you had to download the browser. Ultimately it got bundled initially into Windows 95. No, I’m sorry it wasn’t even Windows 95. It would have been Windows 2000 that had it. IE came out when you first got a browser in the operating system. But the requirement for the browser was a hard requirement. You had to get a new five megabyte or so application onto your computer, and that slowed down the adoption. But there are these changes in technology that I think are required to create the kind of experience that is, like Steve Jobs said, good enough to criticize. And you got to download an application to do that, and that slows things down right now, and I think it’ll continue to slow things down for a while.

GRAPHICS HARDWARE

You know, there’s an adoption cycle around graphics hardware. PC adoption cycles are pretty fast. It depends on what part of the world you’re talking about, but they’re typically less than two years, a year to two years. And I think that we’re still waiting through laptops being powerful enough to really put you into an immersive graphical environment.

Again, you can argue that you don’t need 3D graphics to create this kind of experience, but I actually think that’s not true. I think that there is a fundamental need for the 3D environment because it’s the one that matches our mental framing of things so well and makes this all so both engaging and easy once you’re in. So basically I think we still have to wait, particularly on laptops and lowend laptops, we have to wait probably a couple years more to be in that situation where you absolutely know that everybody, whatever laptop is in their backpack, it’ll run Second Life just fine.

And, again, I don’t think there’s a magic solution in that interim timeframe that says, “Oh, well, we don’t need 3D graphics,” or, “Here’s a really neat way to do 3D graphics in the browser,” or something like that. I tell you, those solutions that they’re just not going to work. Look at modern video games. You have to have the full power of the graphics hardware there, and I don’t think there’s a way around that, and I don’t think we’ll need to wait too long for that to happen.

WI-FI: A DOUBLE-EDGED SWORD

But I remember in the early days of the company, the rise of WiFi, which was actually a fascinating phenomenon to watch. In about 2001, it just really took off. It was problematic for me because it encouraged the use of laptops. And when I started the company in ’99, it was based on the prediction that desktop computers would by, say, 2002 or 2003, which is when we formally launched, that they would have the graphics hardware that you needed to run Second Life. A fact which turned out to be true, but I didn’t think about WiFi. You do your best as a futurist. But everybody started using these laptops, and many laptops still don’t adequately run Second Life.

LIVELY AND MULTIVERSE

Regarding Lively and other sort of entrants broadly into the virtual world space, like you said, I think there are a lot of different use cases for virtual worlds, but the most generalized form of virtual world, and I’m certain this is the case, that has real meaning for the future is the one in which there is a general capability presented to the end user to create complex content. And then I think there’s a secondary requirement which is that there’s some way for everyone in the environment to get access to and exchange that content, potentially for money. So I think that the general ability to create scripted, interactive, complex objects and the presence of an economy and a permission system in which people can exchange that content is absolutely the bright line that divides Second Life and a very few other systems from everything else. I think that you absolutely have to have those capabilities to be building something that is the sort of future that I’m concerned with and that I talk about.

...

I think that if you look at something like Multiverse, Mycosm I’m not as familiar with yet – those are environments that have taken on the broader problem of arbitrary content creation. I mean I think there are all kinds of nuanced questions about which particular feature choices, or which use cases, or which types of content capabilities are likely to grow fastest and satisfy people most, you know, create the most interest. But our approach to that, as you know, has been to believe that there are likely to be very uniform, globally open standards for moving this content around.

Click here for Nic Mitham's takeat KZero, a leader in understanding the big picture of virtual worlds. And those who follow virtual worlds closely won't be surprised to hear that I followed up Philip's mention of open standards with some questions on OpenSim and the open grid project.

Return to Rosedale Interview article and list of bloggers.

Several themes from my interview with Philip Rosedale focused on the future of Second Life® and the larger virtual world industry. One theme that Philip pushed pretty hard is that people are using Second Life in so many different ways—in techspeak, “use cases” are broadening—and that this is a necessary path for success.

This perspective is somewhat at odds with comments from some industry observers, Christian Renaud, Steve Prentice and Mitch Wagner, but I will let Philip make his case first. At the end of this post, you can see what Christian, Steve and Mitch have had to say on the matter. Then, go here to get Christian’s reactions.

ROBERT BLOOMFIELD: Where do you see the industry going in the next two, three, maybe five years, if you can look that far? And what’s Linden Lab®’s role going to be?

PHILIP ROSEDALE: Well, so if you look at Second Life and you go back two years, and you look at the number of distinct welldefined things that people were doing, and you look at the number of things people are doing today, it seems to me at least that the use cases are broadening. This is interesting. Sometimes you have a product that starts out kind of diffuse, and then it focuses itself on one use case so that would be like if Second Life was all live music; something like MySpace or something now where everything that was going on in Second Life was basically around live music. And if you just did the numbers, it was all there. Well, that’s not true. What it seems to me has happened is, we’ve seen a significant broadening in the large use cases, so education and business are now something that people are actually doing in Second Life, where two or three years ago, they really weren’t. It was playful. People talked about it maybe being useful for education and business, but there was certainly no actual pragmatic use.

So why I say that is, I think where the industry is going in the next few years is a gradual broadening of the capabilities and the use cases of virtual worlds, to support a lot of different stuff that people are doing in the virtual worlds. I do believe, as I said today, that it’s difficult for me to see why it won’t be the case in a few years’ time that virtual worlds are not used for a very broad set of utilities and use cases and that that will bring them into a place of probably dominant use in the computing environment, meaning that more network traffic and more computers are basically deployed to enter and interact in virtual worlds than we are, for example, using them for the web today.

So I think you can explore certain use cases, and you can explore some of the UI problems in these other very purposeful worlds, but until you get into allowing people to create their own content, fundamentally create their own complex content, you haven’t even begun solving the big problems that are going to be daunting.

I mean it’s a little bit like the difference between the chat rooms in AOL and a web page. Chat rooms in AOL were highly structured. They were purposeful. They were highly utilitarian. AOL built a great business around those chat rooms, but they were a very simple and controlled incarnation of a broader phenomenon, which was people’s ability to arbitrarily create content and deploy it to each other. And that happened in the midnineties with the emergence of web pages. And the set of technologies and policies and practices and economies that were built around those web pages, that was the real robust solution that was complicated, and that we all kind of gradually moved over to there in the midnineties.

So I think that chat rooms and these more controlled environments, the CompuServes and the Prodigies and the predecessors to the internet as we know it today, they provided very valuable learning and use cases and, in some cases, businesses and business models. But there was this transition that happened to the more generalized environment, and I think that we represent the same sort of thing, the more generalized environment which is just letting people be able to create anything they want, but now in a 3D environment rather than a 2D web environment.

I hear people say all the time, and I think there’s a common thought that there are these very narrow use cases that will dominate the early stages of virtual worlds and that those use cases will be very robust and that you’ll have a very, very isolated and specific virtual world that’s just for teenagers. And then you’ll have another completely different isolated virtual world that’s just for business collaboration. And I actually think what we learned from looking at the internet is that that’s very unlikely to be true. That because there’s some efficiency that can be gained, say, from building the content the same way in both those cases, largescale economies tend to really take advantage of those efficiencies.

And so our belief as a company and our strategic direction has and will continue to be that we think it’s really likely that these different solutions will be rapidly compressed together and unified into some sort of a standard. I think that, if you look at a use case like the historical uses of Second Life experientially in its first years, the ways people have used it to create content, to create homes and experiences and community experiences together, and then you look at education and business collaboration as two new spaces, you can ask the question: Well, is there going to be reuse of content to enable these two applications? Are the people that built great content in Second Life two years ago going to be highly advanced in their ability to build education content in Second Life or collaborative workspaces? The answer is yes. They’re highly empowered now to do that. And so that really suggests that there’s going to be some sort of a unified environment.

Philip’s comments made think of previous discussions I have had on Metanomics. One discussion was with Christian Renaud, formerly of Cisco and now of the Technology Innovation Group, who emphasized different tools for different uses:

CHRISTIAN RENAUD: I owned a Porsche before my kids were born, and I never tried to use it as a truck because that wasn’t the type of tool that it was. I think there’s a logical fallacy in saying this is beautiful, and it is. Second Life is great, and it’s a great tool for a few things. It’s not a great tool for everything. And I think where the flaw comes in, in talking with analysts like Peter and John especially because they’ve been through a lot of these cycles, and they’re very insightful and cutting. Every time I’d say, “Well, look at this opportunity for a spatial audio,” and they’d say, “Well, you can bolt that onto Skype. You can bolt that onto a number of things. There’s Codex out there to do that. Look at web conferencing.” Every time I’d bring up a use case, they’d bring up a counteruse case. And quite frankly, if you have a particular thing that you want to do--I participated in a customer meeting first thing this morning, and the best tool for that was not a Virtual World; it was the Adobe application, the WebEx competitor.

A second discussion was with Steve Prentice of Gartner, Inc. and Mitch Wagner of Information Week. Both apparently would agree with Christian that virtual worlds are not the single tool for all uses, but seems to think that Linden Lab disagrees:

STEVE PRENTICE: If you want a Virtual World to be successful, I think you’ve got to know who you're targeting at, where the focus is. And the question, and I always hesitate to give it out in this sort of forum is: Where is the focus for Linden? Who is the audience, the community, if you like, that Second Life is focused at and targeted to? Sure, there’s a community of users and residents today, but, as Mitch has said, that’s kind of flattened off a little bit, and what’s the next stage of development there.

ROBERT BLOOMFIELD: Mitch, you want to take a stab on behalf of Linden Lab answering that question Steve just asked. Who is the target demographic for Second Life?

MITCH WAGNER: People who live on planet Earth. And this is only until extraterrestrial life is discovered, then it’s going to be everybody in the universe. Linden Lab has a very messianic vision of the future of virtual worlds and Second Life’s role in that. I don’t think they’ve really--I don't like speaking for Linden Lab, but I’m pretty sure they haven’t got any kind of vision of constraint at this point.

So, everyone seems to agree that Philip’s vision is broad. The question is whether that breadth is an essential element of success (as Philip believes) or a troubling lack of focus (Steve and Mitch’s take). For some insight, here is what Christian Renaud has to say.

Return to Rosedale Interview article and list of bloggers.

Perhaps no aspect of Second Life® is more contentious than the state of the “viewer,” the software we download on our own machines and governs interact with Second Life. And perhaps no one outside Linden Lab® and its competitors has thought about the viewer more than Dusan Writer. So here are Philip’s thoughts on the viewer; you can see Dusan’s analysis at his wonderful virtual worlds blog, Dusan Writer's Metaverse.

A Tough Nut to Crack

PHILIP ROSEDALE: [A] couple of years ago everybody was sort of saying, “Well, Second Life, the interface just needs to be made better, and it’s very easy to make the interface better and, well, those Second Life guys are a bit more infrastructure than they are UI and people are going to come out and then really innovate on this UI.” Well, you look at the UIs today, they’re not significantly better. It’s a very hard problem. You can look at any generalized virtual environment product, and it’s got the same challenges in usability that Second Life has. Everybody’s got the same problems. So it’s a hard problem, but once you get over the hump, once you actually figure out how to use a virtual world, I believe that the ease with which you can do new and different things in the world that are of utility to you is much better than the web.

But Good Enough for Grandma

I often ask the stock question, which is: If you had a grandparent or parent that was intelligent and interested in engaging with a new community, getting an extra job, finding something interesting to do in their older years, and they really weren’t that familiar with the internet at all, would you sort of teach them how to use Second Life, or would you teach them how to more generally just use the web? And I think the answer, interestingly if you think about it, is you’d actually be better off showing them how to use Second Life. Because even though the learning curve at the beginning would be brutal, you’d have to literally sit with them for that five or six hours of getting online, creating an avatar, getting dressed, finding some friends, finding something initially to do.

Once you got them to that point, then subsequent to that, everything’s relatively easy. How do you get a job in Second Life? Ask someone. You’ll find your way. How do you get a job on the web? Very hard problem. What do you do, you go to Google and type “get a job”? That’s going to be harder. You’re not going to find your way to LinkedIn or Monster.com or Craig’s List. I mean it’s hard. So I think that it’s very likely that the general application of virtual worlds will cover use cases so substantial and so diffuse that we’re ultimately going to see here a situation where Second Life and, more generally, virtual worlds and however we connect all these companies together spanning an amount of use that is greater than the web today.

I have some sympathy for this basic point, but I would suggest Philip refine this in a couple of ways. First, I think people who are familiar with the Second Life economy will not say it is the easiest way to get a paying job. But there is an incredibly active community of volunteers who are finding ways to better the real world, not just the virtual world. So emphasizing grandma’s ability to be a volunteer is probably going to be far more convincing than emphasizing her ability to get a job.

Perhaps more importantly, I would suggest that Philip emphasize community and friendship even more than he does. Sure, he mentions it first, but if this is going to be one of Philip’s stock questions, and a sales pitch for virtual worlds, I think community needs to be the only item on the list. A website is not a village; a virtual world can be. Someone who is your friend only on Facebook is not much of a friend; someone who is your friend only in Second Life really can be.

I move on in the interview to talk about some specific competitors: namely, Lively and Multiverse.

ROBERT BLOOMFIELD: So if we look at the specific worlds that are coming out, thinking about the notion of different tools for different purposes, so I just wanted to talk about some that are quite different. One is Lively, which has just come out. One of the things people have said about that is: Much easier to get into immediately, easier onboarding process, minimal download.

PHILIP ROSEDALE: Well, the Lively client is about the same size as the Second Life client. There’s a nice step there where there’s a little downloader (and I think that’s something we should probably do as well) that downloads the actual client in the background. But if you actually watch that process, it’s about the same size. You’re on broadband so you probably don’t notice, but you’re actually downloading about the same amount of software. It’s a comparably sized client.

ROBERT BLOOMFIELD: Yeah. So just say it’s a presentation issue.

PHILIP ROSEDALE: There’s a very small download initially that’s about a half megabyte, but then there’s a tens of megabytes download that happens immediately thereafter.

ROBERT BLOOMFIELD: Some people say, “Oh, well, Lively’s so much easier to use. It’s going to blow Second Life out of the water.” The other thing I’ve heard people say is, “This is like an entryway. People are going to go into Lively. It’s going to get them more comfortable with virtual worlds, and then they’re going to look for the richer content and capabilities of Second Life.” Would you agree with either of those?

PHILIP ROSEDALE: I think every experiment, like a Lively, every new product that tries to do anything in this category is going to teach us all something. I mean I think there are going to be UI innovations that will be discovered by Lively having taken a different development path, done this all with a different set of intentions that we’re all going to benefit from. Paradigms for navigation or whatever. I’ve seen rich discussion around how you walk around in Lively versus how you walk around in Second Life.

PHILIP ROSEDALE: I don’t believe that Lively or any other virtual world product is onboarding people particularly faster than Second Life. In some sense, I wish it were true because I think it would again give us all more grist for the mill. But I think when you examine the actual statistics of use you’ll see that there’s still a daunting challenge in getting people into these worlds.

The following segment of the interview actually came from a discussion on Philip’s strategy of making many “small bets” in development, rather than big ones that could be disastrous failures. When I asked him what bets had had made that didn’t work, he gave examples from the viewer. So I figured I would include them here as well.

PHILIP ROSEDALE: I think back on some of my own goofiest feature ideas. Well, I think, for example, this problem of improving the orientation experience; we’ve had a lot of blind alleys on that. There have been a lot of experiments where we’ve tried to improve the new user experience, and we’ve just backed out of it. We had a more sophisticated orientation island that we’ve taken mostly or completely out of circulation now. We put a bunch of time into developing the content experience in the HUD and the different elements of that sort of new user island experience. In retrospect, with the statistics at hand, it doesn’t seem to have helped people very much get started in Second Life. So we just backed out of that because it simplifies the experience a bit to not have that system there.

So I think of trying to improve the conversion behavior, the usability, the UI. We went back to allowing people to use the old UI as the default, with the Dazzle UI (as an option?), although in that case we didn’t lose work because all the foundational work and the option of using that new scheme is there, so we didn’t actually back up and lose anything. That’s a case where we just try different experiments, and some things resolve and are harder hitting than others. What else? There have been lots of smaller features. I remember there was a feature called ‘Talk To’ that was kind of a substitute for Instant Messaging. It was actually my design. I loved it. It just didn’t work. We actually took it out; it was so unused that we ultimately just shut it off so there would be less ‘stuff’ in the UI.

PHILIP ROSEDALE: I think that if you look at something like Multiverse – Mycosm I’m not as familiar with yet – those are environments that have taken on the broader problem of arbitrary content creation. I mean I think there are all kinds of nuanced questions about which particular feature choices, or which use cases, or which types of content capabilities are likely to grow fastest and satisfy people most, you know, create the most interest. But our approach to that, as you know, has been to believe that there are likely to be very uniform, globally open standards for moving this content around.

Click here to see Dusan Writer's take on Philip's comments.

Return to Rosedale Interview article and list of bloggers.

Many people have written about the rather unusual counter-culture feel inside Linden Lab®. Perhaps most famous are the “love machine” (a way for employees to praise one another) and the “Tao of Linden” (“transparency and openness”). I have heard Robin Harper, VP of Marketing and Community, called “the only grownup in the room.” That’s consistent with my one visit to the San Francisco office, in which I walked by the meeting room filled with low bean-bag-like chairs and half a dozen coders playing with a Wii, in order to have a detailed discussion with Robin about inworld regulatory policy.

But there is more to managing the development of such a sweeping product as Second Life® than unusual names and bean-bag chairs. After all, organizational structure ultimately has to come down to the nature of the product the firm is building.

What I didn’t expect to hear was an analogy to General Motors (vs. Ford). And, by the way, not the GM that is struggling so much these days, but the one that was a creative powerhouse in the early years of the auto industry.

PHILIP ROSEDALE: I would say that I’m a very innovative, ‘think different’ kind of person. I think that we’ve certainly put a spotlight on the organizational things that we’ve done differently. From the very beginning I was convinced, and I’m still very convinced, that we are faced with a technology problem that’s really substantial. In other words, on operating system Second Life, there are only a few technology projects in the world that have the kind of modular complexity that we have. So as a CEO, as a board member, as an engineering manager, somebody looking at the problem of how you are going to build something like this, you, I think, are faced with the problem that this is an extremely complicated machine with a lot of parts. And this has been encountered with the auto industry, for example, that has dealt with this question over history. You say then, “Well, what’s the right way to manage it? Do you take a really centralized approach? Do you take a really decentralized approach?”

And, in fact, if you look at the auto industry, in the first part of the 20th Century, you saw Ford taking a centralized approach and General Motors taking a decentralized approach. It turned out that the decentralized approach proved to be more efficient from a competitive perspective, because you got more competitive economies, and you got more rapid evolution happening in a decentralized framework. So I always took a very decentralized approach to how we were going to solve problems and how we were going to design and set direction for our product. But I guess what I’m saying is, I think that that really was not that radical. Maybe I was so proud of it that I made it feel more radical than it really was. Certainly the Tao of Linden and the Love Machine are kind of unusual names.

But if you actually look at what we’re doing internally, you see something that is, I think, evolving as a best practice in a lot of these complex technology areas, which is, you don’t know the future that well. You got a lot of people with a lot of different passions and ideas working on a rich set of problems. So what you want to do is, you want to build systems that reward risktaking—that result in good decentralized leadership where you are amortizing your strategy-setting and guidance in real leadership amongst a larger group of people than you normally might be able to get away with. And I think the systems that we built are consistent with that. But, if you’re sitting inside the walls of Linden Lab, I don’t think that you would really be that surprised by the ways that you saw us doing things. I think you’d probably be pleasantly, as an investor or something, you’d probably be happy to see that we have a relatively high level of agility for the size team that we have, about 300 people now. That is, if we identify an opportunity or a technology change that needs to happen or a problem or something like that, we move on it pretty quickly. And I think that the speed with which we’re able to do that is fundamentally given to us by this decentralized approach.

So far, Philip has stuck pretty close to what economists typically emphasize as the benefits of decentralization: the ability to give people power over the areas where they truly do have the best information, as opposed to letting a higher=up make a decision about something that they might well misunderstand.

But at this point, Philip moves on to another benefit of decentralization: the benefit of having lots of little decisions being made, rather than a few big ones.

PHILIP ROSEDALE: And I think, as we’re growing, we’re certainly building centralized solutions and systems where we need to. So, you know, it’s a balancing act, but I think what we’ve done right is, we fundamentally adhere to the idea that it’s a really big hard problem, and you don’t want to weigh--centralize your decision making or put all your eggs in one basket or put all your bullets behind one idea that might fail. I think, as Mark said this morning, we have a responsibility to the community. You know, we’re kind of the first movers in something that’s really big and will be bigger than us, and so we feel this responsibility. And I think the best, most responsible way to approach this stuff is to be decentralized in a way that we solve more problems.

As I said when I published the first post about this interview, I am not a Linden Lab insider, and I would love to get more of an inside take on this. For that, I turn to Wagner James Au, who has spent a great deal of time inside the Halls of Linden. to give his reaction. Au's responses to Rosedale will appear on his blog at New World Notes.

Here is a sample of what to expect from Mr. Au:

There's no doubt that Philip's vision of a decentralized company was
a valuable thing, especially in Linden's early years. At the same
time, I wonder if he's aware of the many downsides that involved, too.
In my observation, much of Second Life's limitations are directly
attributable to a lack of a central and unifying vision. It's why you
see tremendous innovations and features added to the software, while
other important areas have lain dormant, even while it hurt the
world's long term growth. Exhibit A: the confusing user interface
which hasn't been significantly changed in five years, even though
it's the chief culprit to SL's poor retention rate. Why? Because
until very recently, most of Linden's developers weren't interested
enough to work on it."

And Roland Legrand of MixedRealities.com has provided his predictably cogent view on Rosedale's vision.

Return to Rosedale Interview article and list of bloggers.

Every startup needs to watch the rate at which it burns through capital. Not being that familiar with the financial side of Linden Lab, I thought this description of financing was quite interesting:

PHILIP ROSEDALE: …for all the excitement around Second Life, this has been a company that’s been well financed. Everything’s been done in a simple straightforward way. Interests have been well aligned all the way along. In other words, all the investors have had a very similar view of what we were doing, what the longevity of the project was, what kind of metrics and outcomes we were looking for. You know, it’s been a pretty comfortable process. As a technology entrepreneur, actually I hadn’t been on any other technology company boards in a startup sense. But I think the process we’ve gone through over the last... Well, we raised our first round of venture investment in March of 2001, and I think from then to now it has really been a pretty friendly environment. We’ve had our ups and down, but...

ROBERT BLOOMFIELD: You obviously have had access to capital given what you’ve been able to do—

PHILIP ROSEDALE: Well, the other great thing was that this was always a project where we took careful little steps and tried to see what we could achieve at each point, in my opinion, rather than overinvesting and then being wrong in a costly way. So the capital cost of bringing this company to profitability, in terms of investment, was in the neighborhood of like 20 million dollars. What’s nice about that is, it’s just fortunate to be involved in a project where the cost to reach profitability, more or less, was 20 million bucks. That’s appealing because you don’t have the highest levels of tension in that environment. That’s not a huge amount of money, in the technology world, to invest in a company. I’m really proud that we got from inception to basically to operational profitability without spending more money than that. I think it’s a delight now. And basically the same group of investors. I mean we had some great angels in the beginning, and we added a couple of venture capital firms, and basically that’s it. Benchmark and Globespan.

ROBERT BLOOMFIELD: Mmhmm. You talked about some of the wish list of things you’re working on and things that the company wants to do. Do you see a need for a lot of new capital to accomplish those?

PHILIP ROSEDALE: No. I don’t anticipate [that], really. We have been fortunate enough to be able to put money in the bank. Again, I think that we’re still in the early stages of this category, this industry. I don’t see a place where we would need to make massive investments way ahead of our operating capabilities or ahead of our cash reserves. So we’re not out looking for additional opportunities to raise money.

ROBERT BLOOMFIELD: I’ve heard this before, that the company is profitable on an operating basis, but I assume that the investors, that doesn’t mean they’ve gotten their return and them some yet. I assume they’re still

PHILIP ROSEDALE: Oh, yeah, more recently profitable.

ROBERT BLOOMFIELD: Yeah. So it’s more like a year by year thing, and you haven’t yet eaten away at the tens of millions of dollars you’ve brought in. Okay.

What we need to do as a company and what I think we’re doing and will continue to do is make small bets: introduce new products, new pricing, new features, small changes that serve one of those three constituents and then just see how that influences incremental use, see if people are really getting utility out of it. You know, if you go back to a feature like voice, same kind of thing. I mean there was a bunch of different uses going on. There was an interest in voice. There was inevitability to voice. I mean you’re going to have voice in some sense as an option in virtual worlds.

ROBERT BLOOMFIELD: Yeah. A lot of people were cobbling it together by [including other technologies]

PHILIP ROSEDALE: Yeah, that’s right. That’s right. People were doing some really cool things with like TeamSpeak. And so what did we do? Well, we had a small team of people build voice, and it turned out to be probably a good investment. I mean it’s certainly a great investment in terms of cumulative use, there’s a tremendous amount of use of voice now. I think it was a reasonable thing to do at the time that we did it, but it was experiment. If it had been a total failure and no one had used it, it wouldn’t have put us out of business. The number of people involved in it wouldn’t have put us out of business.

This perspective is pretty interesting in light of a pre-interview I had with Zero Linden before he appeared on Metanomics to discuss the OpenGrid Beta. We were talking about the unreliability of group chat in Second Life (and the limit of 25 groups), and he went on a fascinating riff about how Second Life seems to the user like a single product, but it actually has a large number of totally unrelated subsystems—groups being one of them. So that certainly makes the “small bets” approach a natural one. (It also makes a decentralized management still natural, which we discuss .

Of course, Philip also opens himself up to a pretty obvious follow-up:

ROBERT BLOOMFIELD: So you talk about these small bets. What small bets have lost?

PHILIP ROSEDALE: Oh, my gosh! So many.

ROBERT BLOOMFIELD: Mostly in the last whatever, 18 months or something like that.

PHILIP ROSEDALE: I think back on some of my own goofiest feature ideas. Well, I think, for example, this problem of improving the orientation experience; we’ve had a lot of blind alleys on that. There have been a lot of experiments where we’ve tried to improve the new user experience, and we’ve just backed out of it. We had a more sophisticated orientation island that we’ve taken mostly or completely out of circulation now. We put a bunch of time into developing the content experience in the HUD and the different elements of that sort of new user island experience. In retrospect, with the statistics at hand, it doesn’t seem to have helped people very much get started in Second Life. So we just backed out of that because it simplifies the experience a bit to not have that system there.

So I think of trying to improve the conversion behavior, the usability, the UI. We went back to allowing people to use the old UI as the default, with the Dazzle UI (as an option?), although in that case we didn’t lose work because all the foundational work and the option of using that new scheme is there, so we didn’t actually back up and lose anything. That’s a case where we just try different experiments, and some things resolve and are harder hitting than others. What else? There have been lots of smaller features. I remember there was a feature called ‘Talk To’ that was kind of a substitute for Instant Messaging. It was actually my design. I loved it. It just didn’t work. We actually took it out; it was so unused that we ultimately just shut it off so there would be less ‘stuff’ in the UI.

Christian Renaud, who has been immersed in the entrepreneurial side of the metaverse, provides his expert commentary on his Weblog. And be sure to check out Renaud's new venture at Technology Intelligence Group.

It has only been a few months since Philip Rosedale passed the role of CEO of Linden Lab®on to Mark Kingdon, in turn taking the role of Chairman of the Board from Mitch Kapor. This transition was a natural place to start the interview.

ROBERT BLOOMFIELD: You talked today about handing the CEO position over to Mark. So I’m just wondering if you could talk a little more about what that has meant to your job and your position.

PHILIP ROSEDALE: Yeah. Well, I have always had a product background and a technology background so my contributions have been always sort of R&D and innovation around Second Life as a product, the core technology. In the very beginning, I worked on, designed and wrote some of the early code in Second Life®. And, as the company has grown, I think I’ve been able to contribute enormously around things like organizational process, but more at a design level. I am fundamentally a designer. I’m a builder of things. And so I think the good call that I made primarily, with the board’s support, was to hire a ‘new me’ last year because I just felt that I’d be of more use to the company if I had the majority of my time working on design, product, innovation, problem solving, at the edge of where we’ve got challenges like usability, interface, those things. I wasn’t getting any more time. I mean with the company being 300 people – if you look back six months ago at my calendar – I wasn’t able to spend any time on design. I was spending all my time on leadership management, growing the company, organizational process. And I think that, if you go back and interview people, I’ve been a pretty good CEO for an innovative technology founder.

For me, this story holds more than a hint of the “tech firm as garage band” meme. I am not the only one who has a vision of the startup tech firm squatting in a garage, surrounded by disemboweled computers, wire clippers and soldering irons. And Philip wanted to get back into the garage. Not too surprising, but he then goes a bit further to confess what many in the blogosphere have suggested: that Linden Lab has matured enough that it needs someone who is not just a good CEO, but a great one:

PHILIP ROSEDALE: You know, I think I’ve grown into a good CEO, and I said this at the time that we made this announcement in transition, if you put a group of people together and you said, “I want to have a little convention, and I want to have the hundred smartest people in the world that like design and innovation around technology, I think I might get invited.” If you had a conference to talk about the people that are the hundred greatest leaders of midscale to largescale organizations, I wouldn’t be on the invite list. I’ve read those people’s books, but I wouldn’t be there.

ROBERT BLOOMFIELD: And Mark would.

PHILIP ROSEDALE: And I think Mark is a guy who’s on his way to being on that list. If you look at his background and his skills, he’s an extraordinary guy. Wonderfully, he’s kind of a quiet guy so you have to look through his background carefully, but he’s just revered by the people that he’s worked with, in his ability to lead, provide adequate but not excessive structure, to just figure things out. He has a tremendous grasp of the technology, the feature set. He’s inworld mentoring and walking around and going through every piece of the process. Like he mentioned onstage, he’s intensely acclimated to and passionate about usercentered design to a greater extent than me, frankly. And then most of the founding team around Second Life, he has this very practical, “Let’s get in there and talk to people. Figure out what the problems are. Iteratively solve those problems.” And I think he’s going to do that better than we’ve historically done. I think the company, really, with my leadership, has had a sort of a technology first approach, where we’re a little bit more focused on R&D than we are on userled iteration. And so I think Mark will take us a little bit more in that userled direction, while still having the brains and the firepower to understand the technology and the product.

So my job will hopefully change, and it is changing, and the last couple of months have been just a total delight for me. The first time in almost ten years I’ve been able to relax a little bit and watch somebody else do a fantastic job just leading the company. So I’ve been able to go back and say, “Well, what, from a design perspective, am I going to work on next?” And I mentioned a couple of those things today. I’m generally interested in this broad problem, not just like 3D interfaces, but I’m interested in the general problem of how to connect oneself to the virtual world.

What exactly calls to Philip from the garage? The user interface:

As Mark was saying, he made a good expression there; he said that “it’s too mechanical today.” How we reach into the virtual world through the keyboard and the mouse, it’s really mechanical. It feels really clumsy and sort of stepwise and we need to have something that’s more fluid and natural in the way that we come to use two dimensional windows on computers in a fairly fluid way.

So I’m interested in those problems. I’m interested in working on the interface. I’m interested in somewhat more advanced, forward looking interface technologies. I’m still participating in lots of different design issues. And whenever we’re contemplating a big change in the product, I’m certainly in the loop. I’m certainly working on those things. But, yeah, I just hope I’ll have a lot more time for R&D, a lot more time for product innovation.

Now, one aspect of the garage story puzzles me. Philip didn’t take just any role, when he stepped down as CEO. He became Chairman of the Board. That role has its own requirements, which rarely involve coding or soldering.

ROBERT BLOOMFIELD: So the other change that happened at that time is that you took over Mitch Kapor’s role as chairman of the board.

PHILIP ROSEDALE: Mmmm.

ROBERT BLOOMFIELD: And so that means, I assume, standard corporate governance, and you’re setting the agenda for board meetings, you’re responsible for looking out for investors’ interests, overseeing the management.

PHILIP ROSEDALE: Right. But I’ve been on the board, and, as is the case with many great startups, I’ve been on the board from the beginning. I’ve always been on the board of the company. Mitch is our, well; he’s so many things to the company. He’s our founding investor. I was thinking Mitch is kind of the grandfather of the company in so many ways. The distinction of chairman, I think, happily, doesn’t usually kind of come into practice. We’re a very good board in terms of how we all work together.

So a lot of things will change, but, yeah, I’ll spend a little bit more of my time in that leadership and guidance role there on the board.

My outsider’s take on all of this is that bringing in Mark Kingdon as CEO was a smart move, and a natural one for a company that is maturing. But moving Philip to Chairman of the Board is less a matter of giving him a role he actually wants, and more a matter of giving him a role that sounds good. After all, isn’t “Rosedale steps down as CEO, Becomes Chairman of Linden Board” a better headline than “Rosedale steps down as CEO, Moves into Mom’s Garage”?

But let’s get a reaction from someone who has a much better inside view: the man who quite literally wrote the book on Linden Lab, The Making of Second Life, Wagner James Au. His responses to Rosedale will appear on his blog at New World Notes.

A sample of what to expect from Mr. Au:

I'm looking forward to the innovations Philip will cook up from his
new role. I am a bit concerned he didn't mention anything about
exploring and participating in Second Life more, because I think
that's where he'd be most valuable, for the community and for the
company.

Roland Legrand of MixedRealities.com provides not only comment on this interview, but the results of his own lengthy interview of Rosedale at PICNIC 2008.

Return to Rosedale Interview article and list of bloggers.

VIDEO & TRANSCRIPT now posted!

Over the last year, Metanomics has featured much of the upper management of Linden Lab® on Metanomics: Gene Yoon, Robin Harper, John Zdanowski, Cory Ondrejka, Zero Linden, Pathfinder Linden…even Mitch Kapor, Linden Lab’s first Chairman and a key fount of Linden’s capital. But try as I might, I couldn’t get founder and current Chairman Philip Rosedale to appear live on the show.

After a number of different approaches, I finally got a reasonable approximation of what I was looking for: a face-to-face interview with Rosedale, conducted in a small office behind the registration desk of the Second Life® Community Convention. (It was also the office with the passes for the Linden employees—sorry for keeping you from them, but thanks for being so patient while the interview went about 20 minutes longer than expected.)

We covered a lot of ground: Philip's transition from CEO to Chairman of the Board; balancing the interests of enterprise and personal users; managing the press; what it will take for virtual worlds to become mainstream; bringing Second Life to developing nations; and Linden Lab's competitive position in the industry, with specific focus a possible competitor of it's own making--Open Sim.

Since we can't bring you Philip's voice (I have permission only to publish the text of the interview, not the audio), we've had to be creative on how to make this more than just dumping a transcript into a blog post.

You would think a face-to-face interview with Philip Rosedale would be far better than one mediated by a virtual world (as we do for the weekly Metanomics series). Certainly it was nice to make the personal connection, especially someone justifiably renowned for his charisma and good looks. But a virtual world interview would have let me and my guest exploit one of the signature advantages of virtual worlds, which I call constructive cacophony. Had this interview taken place during a live Metanomics show, a simple voice interview would have been supplemented with no end of text chat: people reacting to my questions and Philip’s answers, suggesting follow-up topics, pasting links to past news stories and quotes, debating among themselves.

It’s not a free-for-all, of course. After all, the goal is constructive cacophony. We have made a lot of progress harnessing the wisdom of our crowds, while still allowing a thoughtful discussion that stays on track, and as Metanomics progresses over its second year, I hope we can create even more cacophony, while making it more constructive.

Well, now that the interview is over, and I have subjected myself to Benjamin Duranske's questions and the unpredictability of the virtual worlds chat during this first show of our new year, I still have a chance to harness the wisdom of crowds. Well, a small crowd. I have segmented the 75-minute interview into various themes, and found someone who is expert on each theme to explore Philip’s remarks more thoroughly (and point out, hopefully gently, what questions I might have asked).

For each theme, I provide the complete transcript on our site, along with a few comments of my own and a link to the expert analysis. Here’s what we have:

• Excerpts from the Original Interview, Roland Legrand's thoughts at MixedRealities.com, as well as Wagner James Au at New World Notes on Philip’s transition from CEO to Chairman. (Posts active!)
  
  

• Excerpts from the Original Interview, Roland Legrand's thoughts at MixedRealities.com, as well as Wagner James Au at New World Notes on the management style at Linden Lab. (Posts active!)
  
  

• Excerpts from the Original Interview and Bettina Tizzy at Not Possible in Real Life (NPIRL) on Linden Lab’s strategy of dealing with the press. (Post active!)
  
  

• Excerpts from the Original Interview and Nic Mitham's take at KZero on mainstreaming virtual worlds and positioning Linden Lab. (Post active!)
  
  

• Excerpts from the Original Interview on broadening the use cases of virtual worlds and original excerpts regarding capital investment with Christian Renaud's comments at Christian Renaud's Weblog. (Post active!)
  
  

• As well as Nic Mitham's take at KZero on the the same original interview topic of investor strategies and profitability that Christian covered. (Post active!)
  
  

• Excerpts from the Original Interview and Dusan Writer's Metaverse on the Second Life viewer and interface, and features blocking mainstream adoption of virtual worlds. (Post active!)
  
  

• Excerpts from the Original Interview and Tish Shute at ugotrade.com on the implications of the open grid. (Post active!)
  
  

• Excerpts from the Original Interview and Tish Shute on bringing Second Life to developing nations. (Post coming soon)
  
  

• Excerpts from the Original Interview and Ben Duranske, author of Virtual Law and blogger at his own virtuallyblind.com, on Linden Lab’s philosophy for regulating behavior in Second Life®. (Post active!)
  
  

Thanks to this panel of experts for bringing insights I couldn’t have on my own!

Over the last year, Metanomics has featured much of the upper management of Linden Lab® on Metanomics: Gene Yoon, Robin Harper, John Zdanowski, Cory Ondrejka, Zero Linden, Pathfinder Linden…even Mitch Kapor, Linden Lab’s first Chairman and a key fount of Linden’s capital. But try as I might, I couldn’t get founder and current Chairman Philip Rosedale to appear live on the show.

After a number of different approaches, I finally got a reasonable approximation of what I was looking for: a face-to-face interview with Rosedale, conducted in a small office behind the registration desk of the Second Life® Community Convention. (It was also the office with the passes for the Linden employees—sorry for keeping you from them, but thanks for being so patient while the interview went about 20 minutes longer than expected.)

We covered a lot of ground: Philip's transition from CEO to Chairman of the Board; balancing the interests of enterprise and personal users; managing the press; what it will take for virtual worlds to become mainstream; bringing Second Life to developing nations; and Linden Lab's competitive position in the industry, with specific focus a possible competitor of it's own making--Open Sim.

Since we can't bring you Philip's voice (I have permission only to publish the text of the interview, not the audio), we've had to be creative on how to make this more than just dumping a transcript into a blog post. But creativity requires some time, so you'll have to be patient. Tune in for our upcoming show, live from Denmark on Monday, Sept. 22nd, noon PT, to hear what we'll be doing with it.

This is going to be an interesting year.....