Metanomics Transcript Mar 31 2010

METANOMICS: LINDEN LAB WITH TOM HALE - MARCH 31, 2010 ANNOUNCER: Metanomics is owned and operated by Remedy and Dusan Writer's Metaverse. ROBERT BLOOMFIELD: Hi. I'm Robert Bloomfield, professor at Cornell University's Johnson Graduate School of Management. Today we continue exploring Virtual Worlds in the larger sphere of social media, culture, enterprise and policy. Naturally, our discussion about Virtual Worlds takes place in a Virtual World. So join us. This is Metanomics. ANNOUNCER: Metanomics is filmed today in front of a live audience at our studios in Second Life. We are pleased to broadcast weekly to our event partners and to welcome discussion. We use ChatBridge technology to allow Viewers to comment during the show. Metanomics is sponsored by the Johnson Graduate School of Management at Cornell University. Welcome. This is Metanomics. ROBERT BLOOMFIELD: Welcome, everybody, to Metanomics. If you've been following the news, today is a very interesting day because there is so much news coming out of Linden Lab. And, if you're here live joining us, you're probably aware of that so I won't tarry too much with my introduction. We'll be talking today with Tom Hale, chief product officer of Linden Lab, and finding out his role in this process and Linden Lab's overall strategy. But before I introduce Tom, I would very quickly like to welcome our newest event partner, actually an old and dear friend of Metanomics, the Chilbo Community, which is dedicated to education in Second Life. In addition to their Second Life location, they also have a Reaction Grid location, and today we're pleased to welcome both of these locations connected with our ChatBridge technology so that means that people in Reaction Grid, which just emphasized this, is outside Second Life. They are able to use their in-world chat, and it is transmitted into Second Life and vice versa, and everyone in-world onto the web and back. So congratulations to Fleep Tuque, goddess of Chilbo--I don't know if that's her official title--and to Robin and Kyle Gomboy of Reaction Grid. Way to go. This is very exciting stuff. So without further ado, let me welcome Tom Hale of Linden Lab. Tom, welcome to Metanomics. TOM HALE: Thank you very much for having me. ROBERT BLOOMFIELD: Before we get into the announcement today, can you just tell us what it means to be chief product officer at Linden Lab? TOM HALE: Yeah, sure. The chief product officer, at least at Linden Lab, has the responsibility for about four different buckets of Linden Lab operations. One is the business line so the revenue lines for the company. Two is the overall cohesion and design, look and feel, what you might sort of call the experience, management of our partners, business development and mergers and acquisitions. And maybe the most important parts: I manage a team of people who responsible and are the main interfaces into our engineering teams, what we call product managers. And that's my role, but more importantly, I think what I've had to do and have done over the last couple of months and now almost up to two years has been driving the evolution of Linden Lab as a company as well. I think interestingly enough today's announcements are as much about Linden Lab as they are about Second Life. ROBERT BLOOMFIELD: Oh, okay. That's a very important distinction that we'll explore. We already have comments on your avatar. So I realize I am talking to a giant, green frog. Is there a story behind that? 1

TOM HALE: Yeah, there's a couple of stories. One is that I wanted something that was extremely low-resource demand on Second Life, so I settled for something that's basically a set of attachments and not very decorative. Two-- ROBERT BLOOMFIELD: So you're really going green, huh? TOM HALE: Trying to go as green as possible and not demand resources from Second Life or from Second Life residents. Two, as a child I had a nickname which was Frog, and it stuck with me into adulthood, and so it seemed to make sense. And the third is--and you may have to assess the truthfulness of this--but some people have said that my sweat is poisonous, and you can distill it and put it on a dart and use it to hunt small animals in the forest. ROBERT BLOOMFIELD: We'll see if I survive the hour. Let's see. Let's move on to the announcement. The announcement packages up a lot of new dimensions to Second Life. So first and probably the biggest change for people who are already in Second Life is the rollout of the new Viewer, which has been in Beta since I think it was February. And now, as I understand it, you are no longer supporting the original Viewer, and Viewer 2 becomes the standard product. You're also announcing new orientation processes, new terms of service, new clarifications on the maturity ratings, some changes to the registration process as well. So why package all of these together? TOM HALE: Well, first off, I think it's important for us to recognize that with the launch of the Viewer into the official download flow, which is to say for new registrations people go through, complete their registration, and they get promoted to download a client. That's really what's changed here, and, in many regards, that and the orientation island and welcome express are really the kind of culmination and delivery on a project that M started on about maybe 15 or 18 months ago, which was to rethink that first-hour experience for new residents. And, in many cases, the other parts of the announcements that we made are really tied to that. By putting the Second Life Viewer into the registration flow, you actually have to do some of these other things because the new Viewer has different maturity rates represented in the UI. You have to announce that. So many things are just tied to the simple fact of the Viewer. I'll make one comment, and I think you said something which is not actually accurate, and that is the lack of support for Viewer 1.23. We actually expect that both third-party viewers and 1.23 will continue to be in operation, for 1.23 a significant period of time and for third-party viewers: forever, as long as the future of Second Life continues to roll forward. And so it's not like we're not supporting those things. They are there and continue to be part of the supportive mix for Linden Lab. So I want to make sure that was clear. Some people have commented, "Oh, I'm being forced to use Viewer 2. That's not true. You have choice. You can use whatever Viewer you want, as long as it complies with the terms of service and the good standards and good ethics and morals of Second Life. ROBERT BLOOMFIELD: And so I guess that leads to a discussion of third-party viewers. They will be permitted, as long as they're consistent with the policies? TOM HALE: Absolutely. I think our position on this is that the third-party viewer community are an important part of the mix for Second Life, and we welcome them, and we welcome the users of third-party viewers, and we think that's great. ROBERT BLOOMFIELD: Okay. Before we talk too much about the specifics--and then let me say I see already comments and questions are rolling in the chat, and I want to encourage that. And I'm sure there are many questions about specific aspects of the policies. So those of you who are listening go ahead, type in your comments and questions, and we'll be responding to as many of them as we can. But before we get into the details, just a little more about the overall strategy. I'm wondering what do these announcements reflect as far as Linden Lab's strategic perspective on your target audience, the population? I'm wondering, for starters, how you segment the population in your mind. Do you think of it as the personal users versus enterprise or consumers versus producers or current users versus future 2

users? How do you clarify that in your corporate hat? TOM HALE: Let me start with the first part of the question, and then we'll move to the segmentation question next. I said earlier before, which is that today's announcements are really the culmination of a project that was taken underway 15 to 18 months ago, as we started thinking about how do we make Second Life more welcoming for new residents. And the reason why we do that is because more new residents means more opportunity for merchants, for landowners, for creators, for the ecosystem. Now we don't think Viewer 2 is just for new residents. We think it's, in some cases, it’s a better experience for navigating Second Life or managing your Second Life. Because of web-based media, it enables new kinds of experiences. But the point is that is really about delivering on the promise of bringing new users into Second Life and making Second Life more welcome. That's really what we were all about. I did mention too that I think this is also about the evolution of Linden Lab. You made a point that is a big release, and it is. It's not often in the Lab's history that we've kind of made big leaps. You can see the version number of the Viewer. The last version number is 1.23, and this is quite clearly demarcated at Viewer 2. I think this evolution is about a couple of things. Permit me to sort of lay out a couple of ideas here. One idea is that we have dedicated teams to various parts of the product or parts of the experience, who are committed to the domain, and work against that particular domain. So for example, in this case we had a Viewer team for the period of the release that was really, really deeply involved in making the Viewer. Another part of that is about having a really clear idea of what we want to do before we go and do it so there's sort of an ambition or a goal. Another element of this is having a cross-functional group working on it and involving both our target customers and our existing customers in the process of developing it, but in a pretty--scalable in a way, in a way that contemplates the global nature of Second Life and the very, very broad diversity of users that we have in Second Life today. So in some sense, and I don't know if this is going too far, but I think this kind of announcement represents us a little bit taking Linden Lab out of Beta. We've really evolved our process for developing software, our approach to doing it. We've evolved the tools and techniques that we use, and I think we feel like this is a big leap forward for Linden Lab and not just for Second Life. ROBERT BLOOMFIELD: Could you elaborate on that a little bit, and give us sort of a look inside the Lab and what processes specifically have you changed? TOM HALE: Well, I think a first one is the long stride that we took here. I think the last release of the Viewer was, I guess it was probably June of last year so that was 1.23. And so this is a long stride in development, and I think we felt that that was important to do because we felt like that was something that, in order to make a big, material impact on the experience, we had to take a long stride. I'll be happy to say that we're moving now towards a quarterly release cycle for the Viewer, which I think will be shorter sides and more iterative, and that's because we've made the investment in the long stride. That's one. Another is the use of iterative rapid development processes like SCRUM. Another is dedicated teams I think, as I mentioned. Another is using a user testing based on the knowledge of the users that we wanted to test and bringing them in and observing them and watching their usage patterns. Another one is having a true Beta. If you think about the Beta process that we used, we had a very, very early on kind of what you might consider an Alpha. We had a broader Beta; then we had an even broad public Beta. In each one of those cases, the process had a particular goal or a particular design, and I would say that the last piece, and this is likely to be controversial, but we brought in what you might consider a design firm to come and help us evolve the visual design and the interaction design of the Viewer. So those are some things. I'd say one other important thing, and, again, I know this will be controversial so I think I'll preface it by saying that we believe in choice, and users and residents should have a choice. But one of the things that we wanted to do was to bring web content forward into the Viewer, not because we feel like web content is somehow really important. It's because there's a lot of interesting applications 3

and experiences that are enabled by bringing web content forward. And, for us, it also allows us to iterate the experience on a much more rapid time cycle than even a quarterly release cycle for a Viewer. So for example, in the new Viewer, Search is presented entirely as Web UI so changes to Search can happen on a four-week cycle as opposed to a quarterly 13-week cycle. The content in the home panel, which was in that right-hand tab, to sort of slide open that panel, and you get sort of a listing of things you can do: destination guide, world map, my appearance. That's web content so we can iterate and change that. Other elements of the product--media on a prim, also known as shared media--brings web content including Flash into the in-world experience. And so, for us, making those leaps they weren't the kinds of things that you could do on a short cycle, and we felt it was important to invest in the long stride. ROBERT BLOOMFIELD: Great! This chat is--usually I'm able to keep up with it, but there's just a tremendous amount of chat going on. I see that a couple people are suggesting that they didn't hear an answer to a question. Riven Homewood. So verify what question that is. TOM HALE: Well, you asked the question about how we think about the audience and the segmentation. ROBERT BLOOMFIELD: Oh, yeah, okay. Segmentation. TOM HALE: And then you're right. Yeah. And you're right, I said I would get back to that, and it took me longer than I thought. So this is actually really interesting. When Philip and I were first talking, he asked me what I thought would be the first thing that I would do when I got to Linden Lab; it's one of his sort of typical interview questions, and I said, the first thing I would try and do is to try and segment and understand our audience abusers today. And he looked at me a little bit crossways, but I think ultimately that is a lot of what we focused on in the last year is trying to understand exactly this incredibly rich and diverse and complex and global phenomenon that is Second Life. And, as we think about the segmentation, we think about it in a bunch of different ways. We can talk about this for a minute. One of the ways we think about segmentation is the kinds of things that people do, based on their behaviors in Second Life, that are tracked intrinsically by our system. So things like: Did they spend Linden dollars this month? Where did they go? Wow, do they own land? Are they a premium subscriber? How many regions do they own? How many parcels do they own? All these sort of elements that are kind of intrinsic to the interactions in Second Life. And so that's one segmentation. Another segmentation is kind of broadly speaking kind of the use case that they have so this might be personal versus enterprise or they're really a creator versus a consumer. As we looked at those kinds of categories, we started being able to put people into it. I think that the net of all of this is that Second Life is really truly an ecosystem. It's an ecosystem with various contingencies, multiple different points of participation in the ecosystem and, in some cases, competing or conflicting interests. And part of our challenge and role is to sort of figure out how to adjudicate across these conflicting interests. Now one thing that's probably important for me to get out on the table, and I think this is one apprehension or misapprehension that I would like to kind of help people feel good about today is that I think many people have felt like we were highly focused on the enterprise business or on the kind of business use of Second Life, and that was causing us to be less focused on evolving the platform for consumer usage. And I'd say that, first of all, it's important to recognize that the enterprise and business usage, while an important segment of Second Life, is the de minimus part of it. The majority, the vast majority of both our business and our focus is on the consumer side. If you measure it by revenue, if you measure it by people, that's where our energy is. And so if anybody thinks that we don't focus on the consumer part of the sort of classic use of Second Life as an expressive platform, as a platform for people to connect with each other, as a platform for people to live a "second life," that really is the focus. The second is this relationship between consumer and producer, and I want to hit this as well. 4

ROBERT BLOOMFIELD: Mm-hmm. Sure. TOM HALE: For Viewer 2, we optimized, if you will. As you do in any design, you have to make some choices. You have to make some tradeoffs, and we really did optimize for what we considered to be, at least in this first revision, the consumer versus the producer. So for example, the build tools, while brought forward to look like the rest of the look of Viewer 2, didn't really see a tremendous advance. I think we made that choice on the general premise that, if we're successful at bringing more consumers in to the Second Life ecosystem that will benefit the producers. And so to the landowners, to the creators, to the people who build things and create experiences in Second Life, we felt like bringing more consumers was probably a priority for us, and that's where we directed our energy in Viewer 2. But we also wanted to make a foundational investment that would allow us to continue to evolve forward. And as we think about the next slough of releases of Viewer, we want to be able to kind of continue down that path. Go ahead. I've talked for a long time. It's now your turn. ROBERT BLOOMFIELD: No, no. That's great. And there are a lot of different questions coming in. We were talking about the consumer versus enterprise distinction earlier this week, and you told the story of the introduction of instant messaging, which is now widely used as a consumer product. But you were saying that started out actually as an enterprise product? TOM HALE: No. You got it backwards. ROBERT BLOOMFIELD: Sorry. I got it backwards. Did I say that backwards? TOM HALE: Yeah, you got it totally backwards. So for purpose of recapitulating, what's interesting is Yahoo came out with instant messaging as a consumer experience. It was called the Yahoo Buddy, and there was a variety of things that it was called as it first came out, before it really became the Yahoo messenger. It got adopted by consumers so they could keep in touch with their friends or hang out online or kind of an extension of chat rooms, and that was a really interesting phenomenon. As it gained critical mass and you saw things like the ICQ acquisition by AOL, which was one of the big multi $100 million acquisitions of an instant messaging company in the late '90s, businesses started to say, "Oh, wow! This is happening. People are using instant messaging to communicate. We should have a theory about how we want to do it inside of the enterprise." Many companies went at the idea of taking instant messaging for the enterprise and selling systems and platforms to enable that. What was really interesting is that, with the exception of a few notable examples, most of the solutions in that area ended up being things like perimeter security, authentication and logging solutions, and that really the vast majority of the usage, even inside the enterprise, continues to be on systems like Yahoo Instant Messenger and MSN Messenger. And the reason for that, as a user, if you're using instant messaging inside the firewall, you really actually do want to be able to reach your wife or your best friend and to do that easily and quickly during the day in a text modality turned out to be a pretty useful application. So the Instant Messenger clients that people kept open on their desktop in the early 2000s, the last decade, were the Yahoo's and the MSN's and the AOA messengers because that's were the people were. And I think I'm not making a big leap here in saying that the enterprise adoption of Second Life, such as it is, over time will probably be proceeded by broader consumer [inclusion?] because the consumers will carry it. Every consumer has a job, and, if they're sitting in front of a computer, they want to be in touch with their friends or their family or their extended community or what have you. ROBERT BLOOMFIELD: Okay, thanks. Turning to some of these questions that are coming in, one is really I guess more of an observation, and the chat's gone by so quickly. Oh, let's see. It's from DJ Earnshaw, who actually says that some long-term builders and scripters are concerned about the new Viewer and calling it New Coke. So anyone in marketing will probably know what that is a reference to. Obviously you already talked about policies and procedures, that you're planning on rolling out regular 5

improvements. I'm wondering if you can I guess, first of all, tell us how you'll be assessing success. What will you be looking at to figure out whether the Viewer is being successful meeting your goals? Well, let's just stick with that one. TOM HALE: Yeah. What's actually interesting and important to note is that it's not just the Viewer; it's actually the whole experience. It's the orientation experience. It's the web experience that precedes going through the orientation experience. It's the experience in the Viewer. It's the connections that people make. It's the content that they encounter. It's how successful are they at deepening their relationship with other residents in Second Life and deepening their investment in Second Life. So to look at it simply through the lens of the Viewer, although the Viewer is a very important part of it, I think that's limiting, in terms of determining what we're trying to do and whether or not it's successful or not. But you did ask the question of what will we be measuring, to see whether or not it's successful. I think the primary things that we're looking at will probably fall into three big buckets. The first is conversion of new users, and we have instrumented this process pretty extensively over the course of the last couple years so we have a good baseline to see whether or not this change in the experience will make a difference and make Second Life more welcoming for new users. The second, and we have some interesting early data, although it's hard to measure in such a short period of time, is retention and engagement. Because obviously it's not just enough to simply convert new users; you actually have to engage them, engage them in the economy and engage them in Second Life and connect them to other users. The third is, of course for us, it's the pace at which we're able to evolve the experience. And so as we looked at [the release?], I think those are the things that we'll be watching closely. ROBERT BLOOMFIELD: Okay. We have a couple questions on the economic side of Second Life and on value-added re-sellers. You referred to an ecosystem earlier. How important is it to Linden Lab's overall strategy that you have a healthy business community of in-world content producers? How do you foster that? TOM HALE: From my perspective, that is the gem. If you call it the Second Life ecosystem, that is the gem of Second Life. Without the complicated system of incentives and content that are the result of the Second Life ecosystem and the producer side of the economy, if you will, without that I don't think actually we're a very interesting phenomenon at all. So from my perspective, it's maybe "the" most important, and I'll go about the motivation for bringing new users. It's to enrich the diversity and the richness and the depth of the Second Life economy. ROBERT BLOOMFIELD: Looking inside the Lab, Dusan Writer has a question. You had talked about big changes in the way that Linden Lab is approaching the technology and the business. So the question that he asks is, "What do you see being retained from the days of Philip Rosedale, the founder?" TOM HALE: That's such a broad and vague question, I'm not even sure how to answer it, but I'll take a stab. I'm certainly familiar with some of what Dusan has written and said about the culture of Second Life. I'll start by saying I actually think to say that there is "a" culture of Second Life is, forgive me, Dusan, specious. And that's because there are as many cultures in Second Life as there are groups, and there are many hundreds of thousands of groups in Second Life. There are as many cultures as there are groups of people. You can, even at a high level, say something like there is a culture around architecture. There's a culture around fashion. There's a culture around dancing and music. And there's a culture around role-play. There's a culture around furry and gore. And there's a culture around being an entrepreneur. There's a culture around creation. All these cultures are actually, I think, central to Second Life, and I think are critical for us to carry forward. ROBERT BLOOMFIELD: How about the internal culture of the Lab? TOM HALE: Yeah. I commented on that at the beginning a little bit. As I said, I think we had been going through a transition and, in some sense, the Viewer as a project I think is an outward facing emblem of 6

that transition. If I had to comment on it broadly, I think we're moving towards both being a larger organization, period. Just there are changes that happen with becoming a large organization with many hundreds of employees, you can't all sit in a room and look at each other and say, "This is what we want to do." You have challenges and opportunities that emerge from there. I would say that this concept of dedicated teams is a big evolution. I think one of the reasons why--and forgive me for not having been here--but I think one of the reasons why it has been challenging for the Lab to sometimes commit to things and then deliver on them is because there wasn't a clear roadmap of resources against any given project, and those things could be changed at any given time. Now that we have dedicated resource allocations to dedicated projects, you have some degree of predictability, both in schedule and scope for the things that you're planning to do. Other elements of course: We have a new CEO. That's a massive change. You have somebody who comes from a very different both experience background and point of view, and I think all of those things are part of the transformation. And maybe one way of framing it is that we're on the process of taking Linden Lab out of Beta. And so taking Linden Lab out of Beta is probably a precursor for having to really take Second Life out of Beta. I know that's hard to believe when you look at the scope and scale of Second Life and of Linden Lab, but I think that's actually a good high-level metaphor for it. ROBERT BLOOMFIELD: You spent, what, about a decade and a half or so at places like Adobe and Macromedia. What do you take in from those large companies into Linden Lab? What do you think your role has been in changing the culture and making it do what you want to see? TOM HALE: I don't think it is what I want to see. That's not important. It's actually what's important for the business and for the product and for the community of users. That's far more important than what I want. I'm merely an observer and subject of that. But I will say something about my experiences that might be relevant. One is, I joined Macromedia when it was 200, in terms of employees. And when we were acquired by Adobe in 2005 or 2006--the dates are escaping me--we were probably close to 3,000 employees. The transformation, the complexity in our business, the evolution of the way we built software, all of those things I think are patterns and models that we can learn from, good and bad, at Linden Lab. So that's one thing is that kind of what happens when an organization grows and scales. I think the other important thing is that, during that period at Macromedia, it was the period that we established Flash as a multimedia standard on the web and one that, by some lights, made the web a richer, more interesting place to be, with things like Hulu and YouTube or any number of interactive games. And on the other side maybe, in some cases, made it filled with more advertising and pop-ups. So in some sense, we have that scope of opportunity is one that I think we potentially have here at Linden Lab with Second Life. I think it's pretty interesting to see what patterns and lessons we might take from some experience like that. ROBERT BLOOMFIELD: Let's turn for a little bit to that first hour. You're describing a rather seamless process that involves streamlined registration and then people will be landing at a new orientation location. I know you've made a number of changes to that. I had a chance to tour it this morning, and we also have some photos. If you can sort of walk us through Welcome Island and what you were trying to achieve with that and we can show our audience a little bit of the visuals while you talk. TOM HALE: Sure. I'll also mention in this connection that there are public versions of Welcome Island and Discovery Island accessible. You can find them on the map. I think we'll put them into the Destination Guide by the end of today, and I believe that the blog post that the person who worked on that, Petra Linden, who's done a great job on this, along with her partners at ILL Clan, who, by the way, did a fantastic job. So congratulations to them as well. You can experience it for yourself. What we were trying to accomplish was really two things. One was to teach new users basic Second Life skills in less than ten minutes and then also make sure that they had a sense of the richness of Second Life. This is in my blog post so I won't belabor it too much. We did a lot of user studies on new users, people who literally landed in Second Life for the first time, and we looked at the metrics which were 7

pretty bad. The abandon rate was extremely high, and so we tried to understand that. Here are a couple of points that we heard from talking to and surveying users. One was, it took too long to figure out. I think the open-ended nature of Second Life is a key part to what has made Second Life successful and special and wonderful. In those critical few minutes we were losing people just because it took too long for them to figure out they were trying to do or should be doing. In our new design, we really wanted to focus on a linear flow with some clear tasks, simple behavioral rewards around those tasks and a simple set of interactions to learn the skills of Second Life. The second thing that we heard was, "I got to Second Life. I walked around what is today called Orientation Island, which is a nonlinear kind of space, and you walk around, and you explore things." And they walked around, "And I left because that's all there was." And, of course, we all know that that's not all that there is. There are 30,000 regions on the grid. There are endless wealth of opportunities to have different experiences in Second Life. But a significant portion of the new residents just didn't realize that there's more to Second Life than that island. So for them, we wanted to make the last step of our linear flow on what we call Welcome Island today, about educating new users on the depth and breadth of Second Life. The third was a set of points about relating to the experience of being in-world for the first time. It was such an overwhelming experience. It was so intense. I think we all have had varieties of this kind of experience that could be both, you know, it's delightful and intriguing and surprising and all the things that make Second Life compelling at a visceral level. But some people were really kind of taken aback and felt like it wasn't safe. That was a word that we heard a lot, a lot, a lot, a lot. So we really tried to create an experience, not just a place, but an experience that was friendly and simple and consistent and in line with what we hoped would be the expectations of a mainstream kind of audience. For example, one of the things that we tested very early on was this notion of an enclosed space, and that made them feel much more comfortable, and so we put that right into the new orientation design. So those are some of the elements. Broadly speaking, that's the welcome experience, being linear and a kind of a task-based flow. We've designed it to be modular so that we can adjust it because our intent is to iterate and to look at the data that's coming out of it and optimize it. The second part of the experience, once you teleport away from there, is what we call Discovery Island, and that's intended to be more of a social space where people learn about the breadth and depth of what's in Second Life. We had this notion that it would be a much more open space. There would be more social interaction. One comment to make about the welcome experiences that we're limiting the people going through the welcome experience to five people per simulator so there's a degree of spacing for people as they start to become oriented in Second Life. When you get to Discovery Island, it's more of a, "Well, you've got the basics. You can walk or maybe crawl, and now you can start to interact and fee a bit more comfortable." Both of these you can't visit them if you're not a new resident. So the idea that people could come in and grief or do anything else to these folks is, we're trying to mitigate against that. The concept of the two working in tandem, we know that some users are not going to go to Discovery Island because they already know what they want or they're very directed or they see something they're interested in, and they're going to go off and have an adventure. And some people might want to go into Discovery Island and have more of a starter experience. One of the things that we did was, we looked at the metrics for the existing setup and set that as our baseline for what we wanted to measure. And one of the baseline things is, we want it to be global because one of the fantastic truths of Second Life, [60?] percent of our usage and users is outside the United States, again, going back to the kind of monoculture. It's not a monoculture. Sorry. It's a global culture, and there are degrees where those cultures interact, but it's not. Welcome Island is shipping in seven languages. The billboards that you arrive at, even if you don't get the right language right off, you can click on the billboards, and they're localized into those seven languages 8

so you can get your instructions on how to use Second Life in German, French, Italian, Spanish, etcetera. It's integrated with that right-hand panel to help people see the kinds of things that are available to them in a 2D UI if they're not fully yet immersed in the 3D UI. We looked at the numbers because these sorts of things, as most people who have worked on the web know, when you're trying to measure what tens of thousands of people are going to do at any given time, surveys are inadequate. They're directional, and the only thing you could do is put it out there and do an A/B test and see how things go. In doing that, we found that there was, with the new orientation and discovery experience, and we tested this through February and March, an 11 percent improvement in the number of people who bought Linden dollars. If you think that's interesting for new users, I think it's even more interesting for the producer side of our economy. We found that the people who made it from a second location was seven percent better, and that means it roughly went from about 75 percent to about 84 to 85 percent. A good number of people were just simply not making it to a second location because they couldn't figure it out or find it out so we've improved that. And then the third, although we don't have as much data on this, was that we improved the number of people who returned after seven days, by two percent. And while these numbers are interesting, I think, for you, you have to understand that at the scale that Second Life's operating, which is tens of thousands of registrations per day or per week, that those numbers actually do add up into more active users and more users, etcetera, to revitalize and continue to grow the Second Life economy. ROBERT BLOOMFIELD: We have some questions on the Discovery Island aspect of this. First, let me say I think it's a great idea that you're making it easier for people to find content. I remember my first day in Second Life. I opened the map and just clicked where I saw lots of green dots, and that turns out to be a strategy fraught with risk in early 2007. I won't go into it beyond that. But you're giving people a little more direction, and so we have a question on what that direction is likely to look like. How will you be deciding which venues in Second Life end up getting promoted on Discovery Island? TOM HALE: That's a great question. The preface to that is that, with all of these things, with the Viewer, with Discovery Island and the Orientation Island experience, all this, this is more of a beginning than an end. I think one of the motivations for us to push this stuff into deployment was so that we could start to iterate on this new pattern and this new foundation. So with that in mind, one of the things that we want to do is, we want to enable Discovery Island to serve as a venue to promote residents and their creations and their businesses and the experiences that they deliver. And we do see that as a path we want to follow. In fact, you’ll see a follow-up blog post about the process for that, Petra Linden and Jessica Linden are two folks who are going to be instrumental in that. We do think that it's important to rotate people through and make sure that the breadth and depth of experience that's available in Second Life does get adequately represented on Discovery Island. ROBERT BLOOMFIELD: Devon Alderton asks, well, she begins by mentioning that the latest user survey asks a lot of questions about social media use. What do you hope to do with that? And are you going to have more explicit connection with Avatars United or other social media sites? TOM HALE: That's a great question. One of the surprises in that survey, Rob, was really interesting to me that, if you looked at the users who were arriving in Second Life, the number one social media property, and this should not be surprising to anybody, was Facebook. And, in fact, they were six percent of the people who landed on new user experience in the last year are users of Facebook. Now that's really more of a testament to the success of Facebook more than anything else. I think that, for us, one of the core things that people enjoy doing in Second Life is socializing, and I don't mean that in any way other than meeting other people and talking to them and learning about them and the fundamental interactions that help people form relationships with other people. That is a phenomenon that I think is core and central to Second Life. The nature of Second Life is synchronous, which is that we're in the same space, and we have a representation of ourselves to interact with, and we have all of these millions of years of evolution where we can read and interpret and have emotional responses to the things that we're seeing, and that's why Second Life is such a compelling and visceral experience. 9

But at the heart of that, it's a social experience. I think, for us, it's undeniable to look at the evolution of the internet in the last ten years and not see the phenomenon of asynchronous social networking, being an important part of what people, humans, are doing online. They use it to communicate, to express themselves, to connect with groups and to connect with experiences that are interesting to them, and, in many ways, it's a filter for the mass of information that is the internet. Your social network tells you what's interesting. That's why people follow people on Twitter because they're interested in what that person has to say, and that makes it more interesting than just stuff they might stumble upon. I think that we have the opportunity to think about how the asynchronous and the synchronous social interactions can interact and create an experience that's compelling. So I think one of the things that--and we'll be blogging about this and talking about this more--obviously with the acquisition of Avatars United, we have a platform for asynchronous social networking that, oh, by the way, is optimized for the avatar-centric existence that people lead in Second Life. I think that we have a very interesting opportunity to see how those experiences play together. ROBERT BLOOMFIELD: Ran Hienrichs asks, "What do you estimate, Tom, the population to be in Second Life, in one year?" TOM HALE: Well, I think we've set an internal goal, and Dusan knows this as well, we're currently roughly 700,000 active users, and those are people who spend more than one hour in Second Life in a given month. I think our goal, by the end of this year, is a million active users. That may be, by some lights, not ambitious enough and, by other lights, way too ambitious. But that's certainly the goal that we've set for ourselves. ROBERT BLOOMFIELD: Do you have concurrency goals? It looks like you've been plateauing around the high sixties, low seventies for quite some time. TOM HALE: Yeah. Concurrency is interesting. It's a measure of how many people are online at any given time, any single time. One of the rules of communication systems, if you've studied your computer sciences, is that the relationship between concurrency and overall usage is roughly eight to one or ten to one. So if you were to use that for a million active users, you might say that the concurrency goal is a hundred thousand, give or take; it's something like that. As I said, I think, by some lights, that's ambitious, and by some lights, not ambitious enough, but I think we want to see active usage. Concurrency is generally something you use to measure the scalability of a system because it's the capacity, the peak capacity of a system at scale. ROBERT BLOOMFIELD: I guess turning more to the business side, do you then have targets for the economy? I guess I can think of two or three fairly obvious economic measures: how many Linden dollars are in circulation, how many times they change hands among the community, how much revenue you guys are getting per user or per user hours. Do you have strategies focusing on those numbers in particular? TOM HALE: Absolutely. I write the quarterly blog post on the economy and release a fair amount of information. In fact, we're on the brink of announcing the results from this quarter since today is the last day of Q1. In the next three or four weeks you'll see that post come out. I would say this actually goes straight back to the evolution of Linden Lab because, as I said, we have dedicated teams that are working on articulated projects with goals and metrics on the other side, and that's a little bit about coming out of Beta. You're sort of going to the point of saying, "We want to reach a million active users. How do we do that?" Or, "We want to get our economy which grew from $300-and-some-million in 2008 to $550 million in 2009. We want to get that to 'pick your number.'" We know that driving those numbers, if you do that, a rising tide lifts all boats. So we obviously do have those numbers, and we are focused on them. ROBERT BLOOMFIELD: Here's a question from way back earlier in the session, but I think it's a very important one, from Talvin Muircastle, "How do you intend to attract education and enterprise customers without including accessibility for people with disabilities in the Viewer?" The Kindle lost a market that way. The universities were sued, I assume for breaching. Now I've forgotten the number of the rule that 10

requires accessibility. TOM HALE: I think it's Section 508 is what you're referring to. ROBERT BLOOMFIELD: So, 508. Yeah. TOM HALE: That's a great question, and thank you for asking it. Again, I'll just refer back to the notion of choice, which is that we recognize that not every user is going to access Second Life with the Second Life official Viewer, and there are lots of choices out there. In fact, there are many that are particularly optimized for accessibility or for Section 508 compliance, and we think that's great. We think that's awesome, and we are happy that there are third parties that are willing to take our Open Source Viewer and extend it in that way. So from that perspective, I would say we have probably, as I said, made tradeoffs to focus on adding new users to the economy. But I don't think that's because we don't think 508 accessibility is important. It's just that it's something that we'll likely have to get to as we roll forward with our quarter releases on the Viewer. ROBERT BLOOMFIELD: Okay. Boy! A lot of questions here, and, of course, the chat is moving. Let's see. I saw a couple here. Here's an interesting one. We've been talking about your goals for the user base. Do you have goals for the number of value-added re-sellers, content providers, scripters and so on that you think you need to reach your content goals? TOM HALE: We do have goals, and I guess I would say they're probably less refined than maybe some of our other goals, and part of that is because it's been hard to know if any given resident really is more a scripter or a {bar?] because many of them fill multiple roles. That being said, I think we feel like our ecosystem is something that, over the course of this year, is going to receive a fair amount of investment from us in terms of some of the features that are on the roadmap. I think we'll see some lovely things that should delight content creators and scripters and builders as we roll forward. It goes without saying that, as a platform for content creation and expression, Second Life is one of the most interesting and compelling that I've ever come across in my life. And one of the ways to think about that is that it would be very interesting to see how we can advance that part of the experience in this coming year. I know we haven't said a whole lot about it, but the ability to import meshes from other environments and tools is something that will carry this forward, I think, in a pretty significant way over the course of this year. ROBERT BLOOMFIELD: Okay. Rig On The Web actually has some questions about meshes and languages and so on, so you're saying we can expect to see some announcements there during the year? TOM HALE: Yes, I think that's right. We've already stated publicly that mesh import is an important kind of step for us to take. We recognize that it's not one that we undertake lightly. We understand that it's one that we want to be very careful and cautious about. And, by the way, it also is something that we think can be pretty transformative for Second Life, and so we're pretty excited about that. Again, I go back to the evolution of Linden Lab. One of the things that I think Linden Lab has a tremendous passion and strength for is innovation. We're a company of innovators. You cannot debate that. What we're experiencing right now is an output of that innovation. I think one of the things that we want to see is, if 2009, which is to say last year, was really about renovation and building the foundation of the experience, we think that 2010, in terms of our investments and how we're allocating people, should be about innovation and helping push that forward. ROBERT BLOOMFIELD: We've a question from Cooper Macbeth on the Linden dollar exchange rate, "Do you anticipate any changes in that exchange rate?" TOM HALE: We actually said this in a blog post earlier this year, that pricing stability--and this was in reference to the land market--is really critical to stability in the economy. And a stable economy is a good 11

economy. What we like is consistent, stable growth, and that's something that a stable price for the Linden dollar is extremely valuable for. ROBERT BLOOMFIELD: Okay. We're just about out of time. I will make a couple closing comments, but I want to give you a chance first. Any message you want to leave us for--leave us with? TOM HALE: I certainly want to leave you for. I would like to say that I think we had very big ambitions for Viewer 2, and I think we achieved many of our goals. We did not achieve some of our other goals, and I think the comments from users have helped us help see that, and I would highlight the fact that we're continuing to roll forward with our investment in the Viewer 2, to both improve and take feedback from and advance the cause. Places that I'll call out are the search experience, and because that is a web capability, it's actually easier for us to advance that very quickly. So we definitely have heard you on many fronts, and that's one where we want to focus, and it's important because discovery is something that we optimized for, and I think there's an important function in Second Life, which is about looking up and finding things that you want to find, that you already know about, and that's different from discovery so we're going to take that path. And the other is to say there's been many things behind the scenes that may not be obvious to people about Viewer 2, that are going to make a big difference in the experience, and I'll highlight some things. For example, there's background multithreading. It's actually one of the things that makes modern computing more capable than computing of even five or six years ago, which is that multithreading is something that increases performance. So that's something that we'll continue to be rolling forward in the course of the year. Another is caching for textures. If you notice you have to have the first hit of downloading all the content and having it cached, but, as you return to places, you'll see the experience of how things load in being faster and a better experience. Some people are involved in testing script limits on a DD, and that increases performance because you need to be able to understand how scripts are using memory to understand how Second Life can perform, and having script limits gives us at least some mechanism to understand how to optimize that. And we continue to push forward on fixing bugs and fixing the issues that people raise to us. So in all of those things, I feel like Viewer 2 is a leap forward and a good foundation for us as we look forward to the year. ROBERT BLOOMFIELD: Great! Well, thanks for joining us. One last real quick question: I understand, if people want to hear more from you, you are talking with Mitch Wagner later today on Copper Robot. Do you have the details on that, the time of that event? TOM HALE: I'm certain that we can find them. ROBERT BLOOMFIELD: Well, we can probably just have someone type that into chat. TOM HALE: You probably could put them up. ROBERT BLOOMFIELD: In fact, here: 6:00 P.M. Second Life Time. So 9:00 P.M. Eastern Time, for my neighbors. TOM HALE: Yeah. One thing to hit on is that, first of all, thanks to everybody for coming here. And thanks for being so passionate and so committed to Second Life. It really is part of what makes Second Life a very special and wonderful thing to be a part of. So thank you for that. If some people think that Linden bathing is the only full-contact sport in Second Life, let me just say I think we're here to participate and to interact and to make this thing that we're working on be great. So again, thank you for helping us, and thank you for being a part of it. ROBERT BLOOMFIELD: Yeah. Thank you. Fascinating conversation. Best of luck with everything you're trying to do. 12

TOM HALE: Thank you, and thanks for having me. ROBERT BLOOMFIELD: That's Tom Hale, chief product officer for Linden Lab. I'm going to use the last minute or so of today's show just to pick up on one theme that Tom spoke about, which is that the heart of Second Life and really any Virtual World and so much content on the web is really about people. It's about people meeting people. I think I'm about to break into a Barbra Streisand song. But seriously, Virtual Worlds, so much of the web content these days is really about people as much as about their content. So people meeting people is going to be the theme of our next two shows of Metanomics. Next week on April 7th, we're going to be joined by Barry Joseph, of Global Kids, and Mark Weiss, who is the producer of an upcoming HBO documentary called Meeting Online. Just a little bit of their promo material, let me read this to you: "Has meeting someone online dramatically affected your life? We want to hear your story for a new HBO documentary. It could be anything from internet dating to making a significant personal or professional connection. In sort, we want good stories that revolve around connections made on the internet. If you've met someone online and the relationship deeply affected you positively or negatively, then we want to hear from you." So those of you who have been watching Metanomics this season know that earlier in I think it was late January, we had Douglas Rushkoff, who was associated with Frontline's Digital Nation, and I have to admit I wasn't really too pleased with their take on what was going on online. Boy! I wish that we had been able to have some interaction with PBS Frontline and the producers of that show earlier on. So we are getting some interaction with these producers from HBO early on. So please do join us for next week's show, April 7th, same time, and let's have a little more influence on this than we did on Digital Nation. Now the following week, on the 14th, we're joined by Sam Yagan, who is cofounder of the online dating site OkCupid, and so we will, of course, be following up with the theme of people meeting people. You may or may not know there's research by Dan Ariely, author of Predictably Irrational, that shows that online dates in Virtual Worlds are much more helpful in allowing people to assess compatibility than simply online synchronous text chat. And so it seems like there are some natural links between dating sites and Virtual Worlds, as well as Facebook and other social networking sites. So anyway, that should be a very interesting session. And I see Fleep Tuque mentions they have very interesting research, and that is absolutely true. We'll be talking about that as well. Last point I'd like to make is that April 14th, when we are joined by the cofounder of OkCupid, that also will be our one-hundredth episode of Metanomics. We started off in mid September of 2007 and have been going strong since, thanks to your help, our Metanomics audience. So I really do want to thank you for being so engaged and providing me with so many helpful questions since I wouldn't come up with half of these, of course. So do come to the show on the 14th. Right afterwards we'll be having a party over at Muse Isle, and we'll have live music. Actually it'll be Beyers and the Reztones. So I'll be singing, backed up by a swing band. I've written a couple songs specially for the occasion, and so please do join us short after Metanomics concludes on April 14th, for what should be a real kick and a big thank you to you, our Metanomics community, for supporting us for a hundred shows. Thanks a lot. Goodbye, all. See you next week. Bye bye. Document: cor1082.doc Transcribed by: http://www.hiredhand.com http://www.hiredhandtranscription.org 13

Metanomics Transcript Mar 31 2010

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Metanomics Transcript Mar 31 2010 — Document Transcript