Metanomics is a weekly Web-based show on the serious uses of virtual worlds. This transcript is from a past show. For this and other videos, visit us at http://metanomics.net.

1. INTERVIEW: PHILIP ROSEDALE
PHILIP ROSEDALE: [BEGINS MID-SENTENCE] ... because we didn’t really have the time.
We didn’t want to focus too much on graphics, high-end graphics. I mean we did, but we
were busy, and so we said to those guys, “Hey, you guys, how about if we pay you a
contract to just demonstrate what you can do in our Open Source software?” Because we
had just started that program. And that, in the end, is why we acquired them because they
did all the work. They showed us a pretty darn good prototype of their stuff running on
[code?]. And then we told them, we said, “Well, we’ll just pay for that, without any
expectation. That doesn’t mean we’ll use it. We’ll just pay you for your time, and then based
on the quality of that work, we’ll decide whether maybe we want to join forces.” And so it
was so much better than the conventional business process of acquisition, which is one
which is kind of flawed because you don’t really know. You don’t know what you’re getting.
In this case, we had all worked together for a while because we were like--
ROBERT BLOOMFIELD: And there are like 20 now? Is that right?
PHILIP ROSEDALE: Yeah. Boston’s like 20-some. I think. I’ll have to check {with my
staff?]. Yeah, there’s a bunch more people there in Boston because they were like six.
ROBERT BLOOMFIELD: Okay. That’s what I was wondering.
PHILIP ROSEDALE: So they were at four [that have it?], but then they’ve been integral to
the hiring process and everything out there so it’s great. Every office has a little bit of

2. different culture. And Seattle has a different culture.
ROBERT BLOOMFIELD: I’m hoping that they’ll get bigger in Boston because that’s a hell of
a lot closer to me.
PHILIP ROSEDALE: Yeah. Well, that is the biggest. Boston’s the biggest? Yeah, I think
Boston’s the biggest other office [center?].
ROBERT BLOOMFIELD: So is this all--this is on?
LYNN CULLENS: I got you all set up.
ROBERT BLOOMFIELD: I hope you don’t mind. I mean we’re just recording this, and then
we’ll have it transcribed, and we can send it back to you or Catherine or whatever and check
for accuracy and all that. So anyway, I really thank you for taking the time to talk with me. I
guess the big caveat I have is, I’m an accounting professor. I’m not a tech guy.
PHILIP ROSEDALE: How did you get into all this?
ROBERT BLOOMFIELD: I got into it through my research so, actually since the late ’80s
I’ve been basically developing network games, Serious Games, financial markets and things
like that. And I started working with the Financial Accounting Standards Board. They wanted
me to get outside the lab, do things that are bigger, look at more complex economies. This
was in late ’06, and I thought, “Well, how am I going to do that?” and came across

3. Castronova’s work and other things like that. So I started exploring Virtual Worlds and spent
a little bit of time in World of Warcraft, to see if that would work, and spent a little time in
Second Life, and that seemed like it had legs. And how I ended up doing Metanomics, I am
not even sure, frankly. It just--
PHILIP ROSEDALE: You went from studying accounting to kind of more broadly just
following what’s going on.
ROBERT BLOOMFIELD: Yeah, well, a lot of what I’ve been trying to do--really, I’m working
pretty actively with a research group now developing some large scale financial market
experiments that we can do in an integrated Second Life web environment. So we’ll be
looking at international accounting standard issues and having, hopefully, hundreds or
thousands of investors coming into Second Life to trade securities of synthetic firms we
create.
PHILIP ROSEDALE: One of the things that you must have found fascinating or that you
might not know all the history of is really interesting. When we first launched the LindeX, it
really made me think--my background is physics and computer engineering in math. Not
economics, but, of course, physics and economics are kind of cousins so you always tend
tend [CROSSTALK]
ROBERT BLOOMFIELD: We get a lot of physicists coming into econ now because of the
math skills.

4. PHILIP ROSEDALE: Yeah, and there’s just so much related like that.
ROBERT BLOOMFIELD: Some with close ties.
PHILIP ROSEDALE: But anyways, when we first launched the LindeX, it was very
interesting because, in its early first year or so or maybe first couple years, we weren’t
selling any currency, so we didn’t do anything but change the money supply.
ROBERT BLOOMFIELD: Okay.
PHILIP ROSEDALE: So you just had a relatively small number of buyers and sellers that
were trading the Linden dollar for the U.S. dollar basically. And what I found totally
fascinating was that, even back then--this was in 2005--that Second Life was a lot smaller,
and, believe it or not, even relative today, the volatility around significant news was very
high. We’d have a problem with the grid or something, and it would be the whole grid was
out or something. I mean this was a different era, as compared to where we are today in
terms of stability. Second Life was a lot smaller. And when I looked at, in the early days, the
LindeX, there’d be a hundred or so active traders of currency. So from a classic sort of an
economic theory perspective, you then ask the question, “Well, how stable is the price?” on
the basis of those interactions. And the thing that was so astonishing was, the answer was,
“Very stable.” Even stable--and you know how excitable, understandably, the Second Life
community is, broadly. Right? But there would be these really high impact announcements,
like around land, releasing new land or whatever.
ROBERT BLOOMFIELD: Okay. Yeah.

5. PHILIP ROSEDALE: And everybody would be talking about an issue, and you would think,
“Oh, wow! The price of the Linden dollar is going to really fluctuate a lot based on this
news.” And then you’d go look at the data; didn’t move at all.
And what I conclude from that, which I think is really interesting, is that traditionally when we
look at things like U.S. equities market, we presume that those markets are highly efficient
relative to classic sort of macroeconomic terms. And I believe that they’re really not, that
they’re covariant, and they’re impaired in some really interesting ways that, when you see
Second Life, because Second Life--so what I surmised happened in Second Life was that all
of the people trading currency in Second Life really are kind of disconnected in a classic
desirable way. They’re all from all over the world. They have enormously different reasons
for being there. They have different fields of interest, and what you get as a result is, you get
this very stable market behavior, which you wouldn’t expect. And even today, where today I
think, if you look at the LindeX and you look at the number of distinct traders per day, it’s
now in the thousands of people that are trading currency every day.
ROBERT BLOOMFIELD: Yeah. Mm-hmm.
PHILIP ROSEDALE: And it’s incredible stable now. I mean now we sell--
ROBERT BLOOMFIELD: But, of course, now you have a policy.
PHILIP ROSEDALE: --we sell to hold steady. But, again, if you look at the first month that
we did that, that we sold currency, and you look at the timeline before, it was quite stable

6. then too. It’s just that, with gradual appreciation, we now have this opportunity to sell
currency into the market to hold the pricing stable. But the more interesting phenomena is
that the intra-day stability is incredibly high. And we’re [CROSSTALK]
ROBERT BLOOMFIELD: Yeah. With that many people.
PHILIP ROSEDALE: It’s really fascinating. But the U.S. markets don’t exhibit; I would say
that like the NASDAQ doesn’t exhibit the same level of stability that Second Life’s currency
does, and it’s weird. You look at the instability of the equities market, and it’s pretty
sensitive.
ROBERT BLOOMFIELD: Yeah. Well, one possibility--I guess if people don’t really know
how the value of the Linden is changing in response to the event. I mean it may be a good
event for Linden Lab or for in-world business, but what does it mean for the value, you
know, buying power of my Linden.
PHILIP ROSEDALE: Assuming if people don’t know, then there’s less correlation, and so
you get more stability. I guess so. I think it’s because it’s also young. Everything’s young.
ROBERT BLOOMFIELD: Yes. Well, that is--
PHILIP ROSEDALE: Good thing we’re doing this very early.
ROBERT BLOOMFIELD: So we have actually have been working with a few people.

7. Tateru Nino and Eloise Pasteur have been collecting data for a long time, which I’ve gotten
from them, and I’m working with a couple economists, and we’re going to come out with a
study, hopefully, later this fall, that focuses--
PHILIP ROSEDALE: So many interesting things to study in Second Life.
ROBERT BLOOMFIELD: Basically we’re going to do, as far as I know, what is the first
serious macroeconomic study, where we’re looking at the prices of various in-world goods
and services, the supply of Lindens. And also just describing the economy in a way that the
academic economics are going to understand and buy and say, “Yes, it actually is a real
economy that's meaningful.”
PHILIP ROSEDALE: Well, this is probably what you’re doing: putting together a basket of
goods?
ROBERT BLOOMFIELD: Yeah.
PHILIP ROSEDALE: And then watching how pricing varies on them over time?
ROBERT BLOOMFIELD: Yeah.
PHILIP ROSEDALE: Really, I would love to see the results of that.
ROBERT BLOOMFIELD: It’s incredibly difficult actually because you have to find

8. something, like in the U.S. We’ll talk about something like a gallon of milk because a gallon
of milk is the same now as it was ten years ago. So one of the things we’re looking at--
PHILIP ROSEDALE: A T-shirt.
ROBERT BLOOMFIELD: Yeah, a T-shirt. The other thing that’s great is looking at labor,
like looking at concierge services or, frankly, escort services because--
PHILIP ROSEDALE: Yeah, or retailers.
ROBERT BLOOMFIELD: --that really isn’t changing that much as an hour of someone’s
time. So anyway. But I’d love to go on to some other stuff. So again, I’m an accounting
professor. I’m in business school, and that’s sort of my orientation. I don’t know how much
of a chance you’ve had to look at what we’ve done in Metanomics, but I tend to look at the
issues that are really like what if I were teaching this as a case at a business school or
something, what are the things I would look at. One of the things I wanted to start with is just
your role. 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

9. 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 interview people, I’ve been a pretty good CEO for an innovative technology founder.
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 mid-scale to
large-scale 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

10. 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 in-world mentoring and walking around and going through every piece of the
process. Like he mentioned onstage, he’s intensely acclimated to and passionate about
user-centered 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 user-led iteration. And so I think Mark will take us a little bit more in that
user-led 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.
As Mark was saying, he made a good expression there, he said, “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 step-wise, and we need to have something

11. 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.
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: Mm-hmm.
ROBERT BLOOMFIELD: And so that means, I assume, standard corporate governance.
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.

12. 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. But, you know, it’s 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. 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’s 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 over-investing 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. What’s nice about that is, it’s just fortunate to be involved in a project where
the cost to reach profitability, or 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

13. 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: Mm-hmm. You talked about some of the wish list of things you’re
working on and things that the company needs to do. Do you see a need for a lot of new
capital to accomplish those?
PHILIP ROSEDALE: No. I don’t anticipate--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. One question I have is,
there’s been a lot written on the sort of the nontraditional working environment of Linden
Lab, with the Love Machine and Tao--actually I assume it’s called the Tao of Linden.

14. PHILIP ROSEDALE: The Tao of Linden.
ROBERT BLOOMFIELD: And I’m just wondering whether, as you switched to the board
and presumably you’re now dealing much more with the investor community as well, I’m
wondering if that is now putting you in a somewhat more traditional role, whether the culture
at the board level is different.
PHILIP ROSEDALE: I think that I may--in the past as a young entrepreneur and as a--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 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, 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

15. 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 risk-taking, 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 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.
And I think, as we’re growing, we’re certainly building centralized solutions and systems
where we need to. So it’s a balancing act, but I think what we’ve done right is, we

16. 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. 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.
ROBERT BLOOMFIELD: This is going to be bigger than Linden Lab, and I just came back
from the Virtual Worlds Conference and Expo in L.A. Dozens, if not hundreds of Virtual
Worlds out there and all sorts of different possibilities. The industry is obviously still really
young and hasn’t gotten serious traction outside probably KidzWorld, which seems to be the
one place that’s really taking off.
PHILIP ROSEDALE: Right. Right.
ROBERT BLOOMFIELD: So I guess just from your perspective, 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 well-defined 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

17. 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 utilizes 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 _____?]. Because even though the
learning curve is steep for Virtual Worlds today, as we shorten that learning curve and once
you’re over the top--
ROBERT BLOOMFIELD: You’re talking about the learning curve for an individual coming
in?
PHILIP ROSEDALE: Yeah. A person coming in today and trying to get into a Virtual World
is confronted by a difficult environment. And, as I said today, the competitive landscape

18. really demonstrates that. I mean 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. People are going to come out and then really innovate on this UI.” Well, you look at the
UI’s 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 as utility to you is
much better than the web.
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

19. 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.
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--
ROBERT BLOOMFIELD: Okay. Is that right? Okay.
PHILIP ROSEDALE: --process, it’s about the same size. Yeah. You’re on broadband so
you probably don’t notice?
ROBERT BLOOMFIELD: Yeah.
PHILIP ROSEDALE: But you’re actually downloading about the same amount of software.

20. It’s a comparably sized client.
ROBERT BLOOMFIELD: Yeah. So they just say it’s a presentation issue.
PHILIP ROSEDALE: Yeah, that there’s a very small download initially that’s about a half
megabyte, but then there’s tens of megabytes download that happens immediately
thereafter.
ROBERT BLOOMFIELD: One of the things I’ve heard people say is, well, 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. And that said though--
ROBERT BLOOMFIELD: It took me a little while to get used to.
PHILIP ROSEDALE: To Lively?

21. ROBERT BLOOMFIELD: Yeah. Yeah. That particular aspect of it.
PHILIP ROSEDALE: I don’t believe that Lively or any other virtual 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.
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 on 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 a hard--when the browser came out, you
had to download the browser. I mean 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, 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.
Regarding Lively and other sort of entrants broadly into the Virtual World space, like you

22. 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.
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 phenomena, which was people’s ability to arbitrarily create content and deploy it to
each other. And that happened in the mid-’90s 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 mid-’90s.

23. 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.
ROBERT BLOOMFIELD: So I guess another class of Worlds--I don’t even know if I’d call
them Worlds. You have Multiverse and Mycosm that are really sort of like “make your own
World” packages. How do you see those playing in the industry?
PHILIP ROSEDALE: Well, yeah. I mean 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’s all kind 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.
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

24. 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, large-scale 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 abused 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 can build 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.
And so I really hold true to the strategic belief that there’s going to be a tremendous amount
of consolidation and inner connection 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.

25. 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: When you think about the industry as a whole and you’re asked
what does it take for the industry to break out into the mainstream. It sounds like just
listening to what you’ve been saying, it sounds like one is getting the right technology into
operating systems. Is that right?
PHILIP ROSEDALE: Yeah. I think shortening that download or getting it pre-delivered,
making it smoother from a software installation perspective, to put this thing on people’s
machines. There’s an adopting 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 wading 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

26. on laptops and low-end 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.
But I remember in the early days of the company, the rise of WiFi, which was actually a
fascinating phenomena to watch. In about 2001, it really 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.
ROBERT BLOOMFIELD: So in search for interoperability and all that and gone the Open
Grid route, do 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

27. from the beginning and that it’s been a basic operating assumption that to create the kind of
incredible place and business opportunity, 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. 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 very stable.
ROBERT BLOOMFIELD: Even though they’re coming from different streams.
PHILIP ROSEDALE: Even though they’re coming from different streams. And sometimes

28. the requirements of the platform and decisions that we make and stuff 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’s 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 long-term, putting servers up and providing access to
them.
We can certainly be in the naming business. We’re in the currency transaction support
business so--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.
ROBERT BLOOMFIELD: Okay. Let’s look inside Second Life a little more because we’ve

29. been kind of at the industry level. You’re talking about the use cases, and I’m going to
dramatically oversimplify and say you’ve got basically the enterprise uses and the personal
uses. Do you find it a challenge to balance those and keep everyone happy, and what do
you see coming down the road?
PHILIP ROSEDALE: We’ve talked about this a lot lately. I think that broadly saying that, as
a company, we have to serve the enterprise users. Or I would sort of say, if I was giving a
very rough taxonomy of uses, well, I would just add education. I would say that there’s kind
of--
ROBERT BLOOMFIELD: Separate from enterprise.
PHILIP ROSEDALE: Yeah, I think there’s enterprise, there’s education, and then there’s
personal. Something like that. That’s a reasonable tree of uses. 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

30. 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 and 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 Mark’s focus on
user-centered leadership will help us there.
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. 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 an 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 [CROSSTALK]

31. 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,
but 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.
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, I think, 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, and so we just backed out of
that because it simplifies the experience a bit to not have that system there.

32. 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 and [Lookout 20?],
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’s be less stuff in the UI.
ROBERT BLOOMFIELD: When we talk about these different communities, you’ve been
viewing it from a sort of feature, “Let’s provide the features for the use cases perspective.”
PHILIP ROSEDALE: Right. Right.
ROBERT BLOOMFIELD: But another perspective is more the public impression
perspective, and I know although I am a personal user, spend a lot of time, have a lot of
friends in Second Life, I’m primarily representing the educational enterprise community.
Every story, what was it, the Wall Street Journal had the big article about the guy cheating
on his wife in Second Life or whatever. Everything that comes out like that. 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, we’re certainly--

33. 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 website 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 brand-approve 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

34. 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: Yeah, well, and the other thing is that, 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.
PHILIP ROSEDALE: So it’s kind of like do you suppress one and then suppress all the
others. We’ve really taken a pretty hands-off 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 in-world. But it’s
such a big category, it’s such a big space, I almost don’t know--this happens a lot with

35. 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 is more from the communications 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 [CROSSTALK]
PHILIP ROSEDALE: I think that he--yeah, 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 cross-communication 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. And Mark he 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.

36. 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.
ROBERT BLOOMFIELD: So the other part of managing sort of these use cases and
everything is that you actually set policies. We’ve seen these roll out. There’s the age-play
policies, and then we have gambling and then banking. Most recently, advertising. What’s
your sort of overall philosophy on formulating and defining these?
PHILIP ROSEDALE: Yeah. 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,
long-term, 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 too 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

37. 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.
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.

38. ROBERT BLOOMFIELD: Yeah, and going into--I 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 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.

39. 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 million-dollar-a-day 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.
ROBERT BLOOMFIELD: So this may be something we should talk about at another time

40. because Stu Hart maybe is a name you know, but he’s the director--Cornell’s Johnson
School as a Center for Sustainable Global Enterprise and has worked with the people in
microfinancing.
PHILIP ROSEDALE: Oh, that’s interesting.
ROBERT BLOOMFIELD: He’s one of the people really involved in this, and I think that he
would love, at some point, to hear your thoughts on this. He would be able--
PHILIP ROSEDALE: Yeah, that would be a good connection. That would be great.
ROBERT BLOOMFIELD: --to figure out how to make that happen so I’ll follow up on that.
PHILIP ROSEDALE: Yeah. I’ve just been sort of starting, with my last couple of months and
more time. I’ve just been starting to look at this and think about it, but I personally would like
to help with that.
ROBERT BLOOMFIELD: I mean I’ve talked with these guys. They know I’m the wacko who
does the Second Life stuff, and I think they’re fascinated.
PHILIP ROSEDALE: That’s cool.
ROBERT BLOOMFIELD: We must be close to our time.

41. PHILIP ROSEDALE: Yeah, I need to wrap up.
ROBERT BLOOMFIELD: Are there questions we did not get to or anything? Any points
you’d like to make?
PHILIP ROSEDALE: I don’t think so. I think that was good. It was great.
ROBERT BLOOMFIELD: Yeah, that was great for me. This is wonderful.
PHILIP ROSEDALE: Yeah, it was helpful.
ROBERT BLOOMFIELD: Okay.
LYNN CULLENS: Thank you for letting me listen in.
PHILIP ROSEDALE: I tell you, I think, from your perspective and like you said, you guys
should look at--I 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 a [Long Island?] recreant who’s doing some stuff. I
think that’s a nonprofit.

42. 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 as _____, 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 case studies now--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 bongs in Korea, the big model there, which is what drove Korea into its
place of highly connectedness. It was PC bongs, 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.

43. LYNN CULLENS: That would be a cool project for the techs in in-world 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.
ROBERT BLOOMFIELD: Yeah. Thanks so much for your time. I really appreciate it.
PHILIP ROSEDALE: Yeah, it’s good to hang out.
ROBERT BLOOMFIELD: We’re trying to pull together, I don’t know, our organization,
nonprofit, has really taken off. If there’s stuff we can do to help with you guys. There might
be some opportunities.
PHILIP ROSEDALE: Look at that. That’s an economic event. Look at that, man.
ROBERT BLOOMFIELD: Now you can see that’s today’s paper.
PHILIP ROSEDALE: Fannie Mae and Freddy Mac will go to receivership.
ROBERT BLOOMFIELD: Oh, jeez! Oh, that is!
PHILIP ROSEDALE: I hadn’t seen that. That was like, “Yssh!”

44. LYNN CULLENS: Oh, my goodness!
ROBERT BLOOMFIELD: One of the things actually that I’ve been working on is bringing
the Federal Reserve Bank of Atlanta and the Financial Accounting Standards Board into
Second Life, to interact with--basically to bring the policymakers, the practitioners and the
academics together to talk about things like this. It’s just not cost effective to do it any other
way since now it’s so international.
PHILIP ROSEDALE: I met a guy who was the Greenspan--Roger something, a famous
economics guy. Yeah, it’s going to be very interesting how much of this stuff can we agree
with.
LYNN CULLENS: That’s credibility too, I think, for Second Life, when you get that level of
economists in.
PHILIP ROSEDALE: All right, you guys.
LYNN CULLENS: Thank you very much.
ROBERT BLOOMFIELD: Thank you very much.
PHILIP ROSEDALE: This was great.
ROBERT BLOOMFIELD: Bye bye.

45. Document: cor1032.doc
Transcribed by: http://www.hiredhand.com
Second Life Avatar: Transcriptionist Writer