Metanomics Transcript Feb 3 2010

METANOMICS:
THINKBALM - IMMERSIVE TECHNOLOGY IN THE WORKPLACE
FEBRUARY 3, 2010

ANNOUNCER: Metanomics is brought to you by Remedy Communications 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 and Immersive Workspaces. Welcome. This is
Metanomics.

ROBERT BLOOMFIELD: Welcome to Metanomics. Today we're joined by Sam Driver, cofounder and
principal of ThinkBalm, which bills itself as, quoting from their website, "a boutique analyst firm focused on
work-related use of the immersive internet." ThinkBalm has recently issued a report The Enterprise
Immersive Software Decision-Making Guide, which is issue four in ThinkBalm's Immersive Internet
Analyst Report Series. So we'll be talking about that report and a number of related topics over the course
of the hour. Sam, welcome to Metanomics.

SAM DRIVER: Thank you. It's an honor to be here.

ROBERT BLOOMFIELD: Yes, it's great to have you. I'd like to start, if we could, just by providing a little
context about ThinkBalm. We've had your partner and wife, Erica Driver, on the show before. She seems
to have a pretty traditional background for getting into this type of analyst firm. She was an analyst for
Forrester's Information Workplace, and it isn't too much of a jump. But your background makes the move,
to me, seem a little more surprising. So can you talk a little bit about what you did before you got to
ThinkBalm and how that background flavors your approach to Virtual Worlds?

SAM DRIVER: Sure. So it's definitely true that I have a nontraditional background, in terms of becoming
a software industry analyst. My original training is actually in biology, and eventually I went to medical
school, at the University of Massachusetts Medical School, worked with Craig Mello on a project which
was kind of an oddball project in the beginning, looking at why certain experiments didn't work the way we
expect them to in genetics. And that has steamrolled into a very powerful technology which won them the
Nobel Prize in 2006. I didn't actually complete--

ROBERT BLOOMFIELD: It's RNA interference?

SAM DRIVER: That's correct, RNA interference, RNAi. And I didn't actually complete my work there
because I was recruited out of school to go work in the biotech private sector where I worked with several
others to found a biotech company, capitalizing on some of the technology that we were able to use. And
what I found was that, interestingly, genetics is now information technology. There is lab work to be done.
There are solutions to mixing chemicals to analyze, but, in general, the data is really much more

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approaching what we tend to think of in terms of large economic indicators and huge databases of
information. And so I learned a lot about how information is processed.

And what I found was, the bug that really caught me was not necessarily the lab work, but startup
businesses. I loved startup. So I spent a lot of time really, just in my twenties and approaching 30,
working on my own little baby. And I developed a great relationship with venture capital, with academic
research institutions. What I found was, I couldn't go back. I couldn't go back to school and finish that
doctorate and then plug myself into the system that really is what modern biology is today, which is an
academic research lab where you sort of hyper-specialize in one thing.

So what I did from there is really continue to refine my company, Qik Technology, into a bio-informatics
tool patent portfolio, which allowed me then to sort of branch out from there and try my hand at other
small businesses. And when Erica, who was really getting enamored of the trends in Virtual Worlds
several years ago, decided that she didn't want to work for a large traditional analyst firm, it seemed an
obvious choice. My background in startups and getting businesses off the ground would be a great asset
to her traditional background as an analyst because not only could I help our own startup grow, but I had
a lot of experience that would be helpful for a lot of companies that, in effect, even if they're large
companies, were operating startup-like programs using this untried, untested new technology.
ROBERT BLOOMFIELD: This technology, just to get this out of the way, most people call it the Virtual
World industry. You prefer the term immersive internet or immersive software.

SAM DRIVER: Correct.

ROBERT BLOOMFIELD: Why is that?

SAM DRIVER: Well, we've been refining out thoughts in this area. So the Virtual World name, I think, is a
really specific name for something that many people have defined as the idea that Second Life and
OpenSim and other technologies really embody, which is a nonphysical place for people to get together
and meet and do all the things that you would do in a physical world. And so, in many ways, it is very
similar to and classifies as a world. There's commerce. There's social interaction. There are a lot of things
that are going on. When we put together ThinkBalm, we really wanted to take a laser focus in on
work-related use. So we didn't want to look at Kids' Worlds. We didn't want to look at games outside of
the context of learning so-called serious games or educational games.

And we really wanted to say, "How is this technology, how is this Virtual World-like technology, going to
apply to the average, everyday information worker? So that is a theoretical office job. What we found was
that then the expansive concept of a Virtual World or multiple Virtual Worlds in a Multiverse itself was
actually limiting because the context of an entire World often didn't match what the use was for a
business. There wasn't a need for the social interaction. There wasn’t a need for the internal commerce.
There was a need for a very specific tailored task within the organization.

So what we found was that when we started looking at the software solutions that businesses were using,
they weren't all Virtual Worlds, virtual event platforms, for example, which many people often consider not
really part of the same category as Virtual Worlds, for good reason. They don't have 3D avatars. The feel
is very different. But from a work context, they really are a part of the portfolio. So when we talk about the
immersive internet and enterprise-immersive software, we include Virtual Worlds as a major component
of that, but recognize that, as this space evolves, there are going to be more than just Virtual Worlds for
work.

ROBERT BLOOMFIELD: Okay. So your most recent report, the Enterprise Immersive Software
Decision-Making Guide, it's to help these large enterprises that are thinking of starting up a project, using
this new technology. I guess, before we jump into the context, can you tell us what your method was for
the study?

SAM DRIVER: Sure. And to actually take it a step back even further, we hope that this works for every
size organization. We didn't try to gear this toward the big, monolithic so-called large-business market.

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We hope that this guide can actually help small businesses--one, two, five, ten, fifty people as well. But
our methodology was--it's actually a funny story. We'd been trying to write this report for about 18 months,
and what we did was, we sat down, we tried to find all the different vendors that offered a technology that
might conceivably fit into this classification of enterprise-immersive software. That is, we call it a collection
of collaboration, communication and productivity tools that are in a 3D space or a pseudo-3D space that
let people get work done. And that's a long list of companies actually, and they're very different.

So our methodology really centered around doing it ourselves, rolling up our sleeves, launching each of
these different programs, getting in there and trying to work. One of the great assets that we were able to
develop, that helped in this work, was the ThinkBalm Innovation Community which I'm sure we'll talk
about later. But it is an important element of the methodology for this report because we then were able to
utilize the help of all of those active evangelists and advocates, to try out, to get some work done in these
spaces. And what we found was that there were certain common themes, and I think the most significant
theme that really drove the way we wrote this decision-maker selection guide was that the nature of the
faces showing up to meetings in Virtual Worlds and other immersive spaces was changing, and it was
changing quickly.

No longer were these technologists who loved technology for technology's sake. No longer were these
avid MMO game-players who wanted to find a way to bring that to work. We were starting to see more
and more people show up, who said, "I know nothing about this, other than what I've read on the blogs or
the internet or attended a conference, but I can see the value of this, and I'm hearing these ROI numbers
come out. Help me." The business decision-makers were really the central focus of our report. We
wanted to try and distill down all of the different experiences we had, with all these different technologies,
as analysts sort of breaking down the pros the cons and the variables of each of these different software
solutions and make it consumable to the average business decision-maker who probably has never
played a video game, who probably doesn't know how to drive an avatar around and whose exposure to
the concept of an avatar comes from the movie _____.

So it's an interesting story to sort of now be able to say, "Okay, you saw the movie. Now imagine that you
could do that without a physical body, but with a virtual one." And then they understand. You realize that
all the people here sitting in this audience do not represent the bulk of business users. They have a lot of
experience. They have a lot of skill. And when we go out and try to talk to businesses about this, we
realize we have to take a step back away from the sort of specialized terminology and really speak to
them in their own business lingo. So our method was really to talk to business decision-makers and to talk
to the vendors, amass all the different information, sift it through all of our filters and then try to quantify it
and characterize it and put it into this report.

ROBERT BLOOMFIELD: You mentioned the ThinkBalm Innovation Community. Tell us what that is.

SAM DRIVER: ThinkBalm, as an analyst firm, is Erica and myself. And early on we had the opportunity
through an interesting conversation with an innovation company called Spigot, to try out their software,
and we thought, "All right. This sounds like an interesting idea. Here's a web-based software that's really
geared around innovation," which, of course, is the key word for immersive technology at work. It's all
innovation for now. There's nothing that sort of run of the mill or standard yet. And we wanted to attract
people in a safe place.

So it's a marketing-free environment where people can be online, have discussions and talk about how
they want to bring this technology to work. They may have done something already, they may not. And
we've been slowly growing this community, which now is a handful over 400 different people, advocates
who represent an exploratory committee, if you will, of people who want to understand how this
technology will impact work. Many of the participants are senior level. About 20 percent of the population
are technology marketers from companies that sell to this space. And what we find is that it's a great safe
haven for people to share ideas and collaborate. And what you really see right off the bat is that this is a
time-limited community. Right now it's the Wild West.

In business there are a tremendous number of people who are starting to explore this technology, but

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usually they're doing it alone, within the organization. So they need to reach outside the borders of their
organization to find people who can help them along the way, bounce ideas off of, learn from. And so
what we've discovered is, ThinkBalm Innovation Community is exactly that. However, it didn't really
evolve the way we expected it to evolve. We eventually moved it away from that innovation management
software because it was too closed, because it was originally designed to have a single intellectual
property management control system, which, of course, was not our goal.

We moved it to LinkedIn, and then we saw a big growth. And what we found is the discussion thread
model is great, that news-sharing is great, but where people find real value is attending ThinkBalm
Innovation Community events, where we just hit up a vendor of the software or find ideas from within the
community for problems they want to solve, real business problems they want to solve. And then we
threw out an invitation to the community at large, and we had people show up to a meeting, during normal
work hours, depending on time zone of course, and try to solve a problem across company lines. And
we've had a numbers of very successful brainstorming sessions, role-playing sessions. I think one of the
most humorous was the Convince the Curmudgeon series, of which we've done two.

ROBERT BLOOMFIELD: "Convince the Curmudgeon"?

SAM DRIVER: Yeah.

ROBERT BLOOMFIELD: I like it.

SAM DRIVER: So we volunteer someone to be the curmudgeon, who is the theoretical boss who wants
nothing to do with this fancy newfangled hardware, and "How much is this going to cost me?" And we
have everyone else show up with their elevator pitch for how they would try to pitch their boss, to look at
using this technology, maybe bring in a pilot, maybe do a small-scale licensing deal or even a full-blown
one for that matter. And then we have everyone sort of [self-efface?]. We go through the process. We let
the curmudgeon shoot holes in everybody's ideas, and then we talk about it afterwards. It's a kind of
brainstorming session that many advocates for this technology need, but they simply don't have the
resources within their organization to do it because they don't have enough people in their teams, who
have enough of a context to be able to make the persuasive argument.

So what we found was that, within these innovation community events, people forged great relationships.
We don't let them sell to each other. We don't let the technology marketers market to the population. Of
course, they're chomping at the bit to do so because they'd love to be able to sell people who are already
interested. But, what we found is, everyone respects that very well, that rule, and it creates this area
where people feel comfortable enough to communicate and collaborate.

So people have, outside of the purview of the innovation community, gone on to work with each other,
find jobs and other kinds of things like that. But, really, that happens outside this sort of collaborative,
imagination-based community. So I encourage anyone who has an interest in exploring how to use this
technology for work to join because you will inevitably meet people, like yourself, and be able to learn
and, hopefully, teach others from your experiences.

ROBERT BLOOMFIELD: So this is available at no charge to the people who join. Right?

SAM DRIVER: Correct. Absolutely.

ROBERT BLOOMFIELD: Can you talk a little bit about your funding and business model? When we start
talking about your report, I guess I would frame it in terms of any conflict of interest. But I'm just more
curious generally: Where does the money come in to support what ThinkBalm is doing?
SAM DRIVER: It's a great question, and it's one that we actually struggle a lot with in answering. So the
short answer is, we serve in the role as industry analysts, much like you'd expect to see from a large
industry analyst firm, like Forrester and Gartner, where Erica used to work at Forrester. So we sit in the
middle, sort of on the fence between the vendor population and the decision-maker population that they're
trying to sell to. And we try to, as objectively as we can, assess all of the different available options on the

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vendors' side, provide counsel to the vendors in terms of their strategy, in terms of their pricing, in terms
of their messaging, all of the traditional business consulting that we, as industry analysts would provide to
a vendor population, we can do. And as specialists in this area, I think we've got a fair amount of
influence because we chose such an emerging market.

Normally, from a vendor perspective for people like us, you would be met at the door by marketing
specialists or analyst relation specialists, who would very carefully craft a message that their company
want to put out to the population. We actually benefit from a tremendous resource in that many of these
companies are very small, and we have personal relationships with senior management, up to and
including the CEOs of many of these companies, and, in fact, insight into the developers as well. So most
of these companies are small, 20 to 50 people working on these projects, and we're able to really get an
eyeball in on what's going on, on the vendor's side there, very clearly.

Then the flip side of the coin is, with that level of depth of knowledge of all of these different vendors
across the landscape targeting the enterprise, we then are sought out by people who want to adopt this
technology and say, "Listen. Help us identify which is the most appropriate technology for our particular
use case." And, as we go into our report, you'll see that we really heavily advocate for a use-case-based
decision process. Because, as you well know and I'm sure everyone here in the audience knows, in a
Virtual World, pretty much the sky is the limit; you can do anything.

So being able to understand and refine that choice down to something that's intelligible and graspable
and deployable within a work environment is critical. From a business model perspective, we derive some
of our business from the vendors of these software tools and services, and we derive some of our
revenue from the business decision-makers who are adopting these technologies. And so we have to
walk a very careful line between the two. For example, we do not sell any of the solutions that we study,
at all. We don't make public recommendations of one technology over another, in a general way. We
disclose all of our dealings with the vendor-sponsored research, for example, of which we're talking. And
we provide all of our research for review to the people prior to publication, which is sort of a nontraditional
way of doing things, from an industry analyst perspective.

And I think the other major divergence is, we don't charge for our written research. That was a very early
decision we made for our business, which is to say normally you'd have to pay hundreds if not thousands
of dollars for these analyst reports, like you often see from these other organizations. We felt that, in this
information age, information ages so quickly that limiting the number of people, who can consume this
information and have it help their business decision-making process, hurts everyone. It slows down the
adoption at work. It makes it more difficult for people who adopt, and therefore, they might turn their back
on this new technology. It makes it harder for the vendors to communicate out to the population because
they themselves are fairly small and oftentimes don't have very effective PR marketing efforts yet. So
putting out this information and disseminating it as broadly as possible we think is a win for the entire
industry. And so we go out of our way to really clarify that and let people know and have it be transparent.

ROBERT BLOOMFIELD: `Okay, thanks. You talked about use cases, and actually I was very happy to
see that, like right up front in this most recent report, you say, "The key question is what business
problems are you trying to solve," because I guess I'm in that group you described. I'm not a technologist,
nor did I enjoy World of Warcraft. Let's just talk a little bit about the use cases that you find most
compelling and most exciting. I know you're a fan of Cisco's global sales experience. Can you talk a little
about that?

SAM DRIVER: Sure. So when we talk about the use case, what we find is that the three use cases that
we, through our ROI study in May and through this study, we found were the most popular. And that's
meetings, conferences and learning and training. And so this Cisco example, that's a conference
example, and it actually takes place in one of these non-full-3D environments. And the real reason is
scale. So when we think about how we define the difference between a meeting and a conference,
oftentimes really it's centered around just huge numbers of people. And, for many of the full-3D
technology solutions, really getting above a couple hundred at best is a stretch. So when you want to get
thousands, if not tens of thousands of people all over the world to participate in an event at the same

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time, you really have to think about what sacrifices you want to make.

Now traditionally, Cisco would fly people from all over the world for their annual meet, and, of course, the
cost associated with that was prohibitive. And, in 2008, John Chambers had announced that they had to
reduce their budget by a billion dollars in 2009. So global economy crashes. We got the belt-tightening
going on, and what that meant was for the people responsible for an extremely popular internal
event--this global sales meeting--they couldn't do it. They had no travel budget. So they scrambled to, just
in a very short period of time, figure out an alternative solution. What they found was that they could use
one of these psuedo-3D technologies to achieve the same level of scale, that is, they could get the
19,000 people they wanted to attend, and it actually ended up costing them only about ten percent of the
cost of the physical event.

And what they found, above and beyond that, was that attendee satisfaction was in line with previous
physical events. Were they bummed they couldn't go to Vegas? Sure. But when you asked the question a
little bit differently, that is, "Would you rather five of you go to Vegas and one of you gets laid off?" Then
everybody sort of shrugs their shoulders and says, "We're happy to participate online." And what they
found was, attendance was up and that they actually were able to incorporate other engagement-driving
events through challenges within the community. So we see that getting people engaged, getting people
to get the job done can be achieved, and it can be achieved on a scale of tens of thousands of people,
with technology that's available today. So just imagine what it's going to look like in three or four years.

ROBERT BLOOMFIELD: So that's primarily an alternative to meetings and conferences. How about if we
move on to more unusual use cases. I know you also have been looking at what Chevron is doing with
their refinery assets virtual environment. Can you tell us a little bit about what they're doing?

SAM DRIVER: Absolutely. I don't know how many of the audience has been to one of the events where
Kevyn Renner, of Chevron, has spoken, but he's, I think, one of the best and most articulate speakers in
this area, talking about how this technology can be used in the workplace. And what is fascinating is when
you listen to a lot of his stories, you realize that he speaks the lingo of people working in a refinery and
not just in the back office. He can talk to the people who are out in the field doing a lot of the construction
work, what we normally classify as non-information group of workers. And he's able to communicate that
effectively and get them to buy into these projects.

And so he's responsible for this project called RAVE, which is Refinery Assets Virtual Environment. Now
that's another specialist technology so it's not Second Life. It's a company called Innovox, who produces
a virtualization and visualization tool for things like refineries. So it's a very narrowly-focused business.
But, of course, there's big business in oil. Then they have basically several other technologies that they
use in parallel with this virtual environment for visualizing these refineries, that allow them to do
collaboration and communication across multiple time zones and many languages. And so they really
represent a big company making a decision to say, "This technology can solve a lot of different problems
for us. We'll license in this Innovox technology for a few of our workers, but we're licensing other
technologies for our other workers. And we're going to be able to dovetail those things together."

So this really reinforces one of the recommendations that we put in our report, which is that nearly
everyone we spoke with, who's actively using this technology at work, maintains a portfolio of
technologies. They don't pick one technology and expect it to do everything. And our research really
bears that out. There is no technology that can honor everything that the average organization would
need. Smaller organizations may have more limited requirements. They may not need 19,000 people in
one place at one time. And scale, in fact, is one of the bigger drivers of these kinds of decisions. But even
beyond that, when we start to dig into some of the other requirements that we've identified as sort of
separating out the difference. So let me put it in a form of a question, for example: What's the difference
between a meeting and a lecture in a school environment when I'm teaching something?

ROBERT BLOOMFIELD: And do you want me to answer that?

SAM DRIVER: Well, in principle, not much. Right? If a boss is communicating something to his

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employees, it's not much different than a professor communicating something to his students. So when
you look at the requirements for a technology that can serve both of those purposes, a small meeting, sort
of presentation-style meeting, and a lecture [style?] education event, well, they're largely the same thing.
So you may be able to get away with a single technology for both.

So we try to break down some of these requirements and really identify for the meetings what are the
essential components that you would want. Then when you get your list of use cases, when you look at
your business problems, as a business decision maker, you can go down that list and say, "All right. How
many of these things are critical? Which ones can I get away with?" And that's going to very quickly help
you create a short list of vendors that have the capabilities that you need.

ROBERT BLOOMFIELD: I know you've got a number of vendors on here. It's what, a dozen and a half or
almost two dozen that you look at. Rather than going through them all, I'm wondering, since most of our
viewers are pretty familiar with Second Life, and, at a minimum, they're looking at it right now. I'm
wondering if you can identify for us the technology that is particularly different from Second Life, in some
way, and why someone would want to choose that because Second Life would not satisfy them.

SAM DRIVER: Sure. So Second Life, for many people, is sort of the gold standard. It's what most people
have heard of, if they've heard of this technology at all. And, in the workplace, it's fairly uncommon. So if
we assume we've got a basic working knowledge of Second Life and we want to look at the divergent
species in this group, really, the pseudo-3D vendors--so the InXpo's, the ON24's, and the Unisfairs of the
world. They are very different in that they run in a web browser, and there are no avatars, no 3D avatars.
They're silhouettes in some cases. So they really are more of a personal experience where you have chat
and sometimes voice, but there isn't an avatar that can be designed to have the level of expression you'd
expect out of Second Life. So there's one great example.

The key differentiator for why someone would choose a technology like that is (a) it runs in a web
browser, and (b) you can have 20,000 people there. Now, of course, do you feel like you're one of 20,000
people while you're attending an event in one of those tools? No, probably not. But, on the other hand, if
you attend a physical conference, are you personally interacting with the 20,000 other attendees of the
Consumer Electronic show last month, for example? No. So it gives you exactly what you'd expect out of
that use case, and it's something that a technology like Second Life couldn't really achieve because of
scale. Certainly, there are conferences in Second Life, but they tend to be in the small hundreds of
participants. So there's one good example of a difference in technology.
ProtoSphere, Proton Media's ProtoSphere is another great example of a trend that we're starting to see
among a lot of the other technologies, including Second Life, which is responding to a pressure from
business users to really start addressing this concept of interoperability. So not having to upload an image
and put it on a prim, but to actually directly tie into their office SharePoint Server. To offer SharePoint
accessibility within their virtual environment is really, you know, cutting their teeth and planting their flag
as the first to do it.

But we see a lot of the vendors really moving in the direction of being able to be interoperable with other
existing office technology. So the ability to drag and drop office documents in Teleplace and embedded
open office within Teleplace is another great example of that. The AmphiSocial integration with Google
docs directly built into their space is another great example of that. So for large and small businesses that
use either Office or Open Office, the ability to not have to worry about futzing with converting file formats
back and forth and to actually have true collaboration on spreadsheets and written documents or
PowerPoints is a really powerful draw for a lot of business decision-makers.

And then finally, I think the last one is 3D assets. So for many businesses, particularly businesses that
work developing products, the ability to use a 3D asset from an existing AutoCAD or Diso systems or
other computer-assisted design software is a really strong pressure as well. So in Second Life, they've
got their own scripting language, and they've got their own building tools, and they're not inherently
compatible with these other industry-standard 3D-asset components. So if you have a really strong need
for reusing a database of, and potentially in some cases hundreds of millions if not billions of dollars that
have been invested over the years in developing 3D assets, that might be a pressure then for them to

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choose a technology that's more compatible with those 3D models.

ROBERT BLOOMFIELD: Now I don't believe that you mentioned WebEx in your report.

SAM DRIVER: No, no.

ROBERT BLOOMFIELD: What is it that just puts that outside the boundary that you've drawn for the
industry as you see it?

SAM DRIVER: I think one word really captures where we draw that line, which is "immersive." It's too bad
that I don't have the prim on me or otherwise I'd rez it right in front of the audience. But we've got this
chart that we've generated, that really breaks down the sort of asynchronous and synchronous single-
and multi-channel communication. And when we break it down and look at it along those two axes, that is:
How many senses are engaged? And am I doing it at the same time as other people? When we sort of
look in that far top right quadrant of lots of senses engaged, lots of interactivity, lots of engagement, full
immersion, we see sophisticated telepresence, physical meetings and immersive meetings just really
filling that line.

ROBERT BLOOMFIELD: But not document-sharing and conference calls.

SAM DRIVER: Correct. We look at the text chat, and I think people are really backing me up here. They
say WebEx is boring. They say that teleconference is boring. And it's true, and, in fact, there's data out
there that shows that, when survey companies go through and actually try to assess the effectiveness of
the investment in teleconferencing, they do these little ping-backs, which say, "Are you paying attention to
this WebEx?" And they've found 30 to 40 percent of people aren't. It's too easy to Alt-tab out. It's too easy
to check your emails. It's too easy to pick up your cell phone when you're doing that. Whereas, in these
immersive environments, if you construct your event correctly, you can really force people to stay
engaged.

And what's funny about that is, we actually got a lot of pushback in the early days of the ThinkBalm
Innovation Community, and some of our early ThinkBalm events, because we didn't set up a chair and a
presentation viewer and just show slides. If that's all I wanted to do, I'm happy to use WebEx. This
technology is not a replacement for teleconferences. It's not a replacement for web conferences. It's
another layer on top. And, if all I need to do is communicate, broadcast 2D content to people, I'm happy to
use WebEx to do it.

So we started to do tours as opposed to presentations, and people got angry. We got a lot of feedback
saying, "Hey, wait a minute. If I don't keep up with you, I stand out."

ROBERT BLOOMFIELD: Yeah, right. Actually I believe that there have been some tours I have not
attended, not yours, but other people's in Second Life, exactly for that reason, that I wasn't able to
multitask.

SAM DRIVER: Right. And I think that, from a boss's perspective, right, so we always have to come back
to the person who's signing [the check?] to license this technology into their workplace. They want their
workers to be engaged. They don't want them necessarily to be multitasking, particularly when they
themselves are the speaker. Giving people the ability to Alt-tab out or just sort of stare out the window
really, as soon as you pitch that to a business decision-maker, they're like, "Oh. Tell me more. Immersion:
I like this idea."

ROBERT BLOOMFIELD: Yeah. Interesting.

SAM DRIVER: And that really is the line, that immersive nature.

ROBERT BLOOMFIELD: I just want to take a moment; it's a bit of an aside. Last night Digital Nation was
on Frontline, and I see some people have been talking about this in the chat.

8

SAM DRIVER: Loved it. It was great.

ROBERT BLOOMFIELD: Okay. I'm going to talk about this a little bit at the end of the show. I was unable
to finish it for reasons I'll explain later, but I am curious if those in chat would be willing just to give their
indications of what they thought about it. The part that I was interested in is, what does this mean for the
future of work. And so I guess while the backchat fires up, because I imagine a lot of our listeners saw
last night's Digital Nation. Sam, what did you think of it? I mean you liked it. What lessons do you draw for
what you're doing and for the advice you're giving enterprises?

SAM DRIVER: Well, I liked it for probably reasons that most people wouldn't normally think about. It was
scary, right? There were a lot of naysayers. And, in fact, I think that you guys last week talked about the
fact that there was just as much positive as there was negative, but people, humans, tend to focus on the
negative. And so I actually felt that. I felt that, whoa, there are people saying, "Ah, this is crazy. Our kids
are going bad because we're giving them too much access to the internet." But what I really found most
compelling about the story is this idea that the world truly is changing, right, and, as we get access to new
technology and the pace of technology adoption increases, we need to be ready.

So for today's show, I think everybody here in the audience is far more ready than the average citizen of
the world, for this kind of technology. And while our children may be sort of picking up the tools as quickly
as possible and actually outpacing their parents in each successive generation in terms of adoption, the
creation of appropriateness, the creation of standards, the creation of how you expect people to use these
tools I think is lagging far behind the possibility of these tools. And I think that's inevitable for every new
technology.

But it's particularly interesting here because it's being disseminated so broadly throughout our modern,
first of all, culture, the idea that we're starting to now see Machinima in TV broadcasts. We're starting to
see the creation of animation replacing physical actors in movies. The idea that we have avatars and you
look at some of the efforts of the Lindens and the futurists really looking toward augmented reality. And so
looking at the context of all of what the implications of this technology are going to be is something that I
think we're not spending enough time on, and it's something that I think that people like you have to really
sort of help lead us, with our hands covering our eyes, through the field because education is going to be
the key.

ROBERT BLOOMFIELD: Okay. I see the backchat has been fired up, talking about some of these issues
as well. Keep going with that, and we'll pick that up right at the end of the show.

Sam, one of the things that you talk about in your report, let's say we buy the use case and we buy the
idea that this is a brave new world we're willing to go into. Now I'm going to put myself in the shoes of a
potential buyer. I've got a budget. I've got a business goal. I need to find an immersive software provider.
And you describe the market as still emerging, and, in particular, you say that it is small, volatile,
fragmented and fast changing. So to me, those set off a lot of alarm bells for me. Do you have people
who are saying, "Yeah, someday this might be okay, but, until the industry of solution providers solidifies,
I'm just going to stay away. I'm going to wait for them to develop a standard and so on"? What would you
advise?

SAM DRIVER: Well, it's interesting because that brings up a number of different observations that have
come through. I think the first one is, in fact, yes. So when we looked at and assembled our estimate for
the size of the market for software licenses, it was $50 million in 2009. Right? That’s a tiny, tiny market.
Now that doesn't account, you know, a lot of the professionals services, which, of course, are much
larger. But, as a software market, this is really small. In a $50 million market, there are 20-some-odd
vendors in it. You can see that the pieces of the pie are pretty meager. And with the announcements of
what happened to Wonderland and Forterra, many people started quaking in their boots and asking, "Oh,
oh. Is this the beginning of the end?" And my response is, "Absolutely not. This is the beginning. Right?"
That we often hear people who we count on as sort of the leaders, in the charge, in the corporate
environment, and we always hear them. They always come back to us and say, "Oh, I feel like I'm so far

9

behind." And these are the people we put at the front.

So there's this perception that there isn't a lot of information about how far people have taken these
programs because, as businesses started to realize the value of this technology, they started to clamp
down on their corporate communications. So 18 months ago, you'd find people from large organizations
showing up at conferences and talking about all the great successes that they've been having. Show up
to this year's conferences, you won't find that because they've been told to clam up because they don't
want to give away any competitive intelligence. So it's sounds scary to a person attending these
conferences, saying, "Wow! Why are the numbers down? Why are people not talking about their
successes anymore?" And, if they don't have the context to realize that it's because they've been ordered
to keep quiet because it's too valuable, that can scare people.

Another factor is what we need to see: consolidation in the market. There are a lot of vendors, and, even
as we were putting this report together through November and December, we had three new vendors
emerge, one of which didn't even make it into the report because they emerged so late. And so we're
seeing more and more businesses really come up, that are focused on this work side, and we know that
there isn't enough room in the market for all of them. They're not all going to survive.

But, on the flip side, you look at Forterra and how quickly their technology was acquired. Right? And by
someone who's a big player in the space. Right? So it didn't lie fallow. It didn't die. It didn't go away. I've
got a meeting on the calendar with them, I think, tomorrow, to find out the sort of direction things are
going from there. But, even without that meeting, the fact that it was picked up so quickly, to me, suggests
that they know the value of the software that they've got. And this level of consolidation into an
organization that has the ability to use that very good technology really is a boon for the market at large.

ROBERT BLOOMFIELD: So as I understand it, and let me know if I'm either just guessing or misled, but,
in the case of Forterra that there was a decline in revenue, and they had a lot of layoffs before Christmas.
And then they recently were bought. Is that your understanding?
SAM DRIVER: I don't know the gory details of the internal workings. And, for a small private organization,
I don't think that anybody really would. But it is my understanding that sort of time was running out, right,
so that when you look at the development of a small startup, when you look at the amount of private
funding that goes into--and I'm talking generally now--but when you look at many of these companies in
this space, they operate, they burn. It's not as bad as a biotech, for example, which can burn for ten or
fifteen years before it actually generates money. But they burn for a while developing their software, and
we say tremendous leaps forward in the software. But it's my understanding that they were doing well, in
terms of some lines of their business--Forterra now--and that other factors came into play. And I think that
that's just the nature of small business.

So it's not necessarily about the technology. It's not necessarily about the pipeline. There are many other
factors that are going on there, and one of the things that we really tried to hammer home, both in this
research report and in our predictions article that we wrote at the start of the year, is, we expect 2010 to
be the year of cash. Companies need cash because they've been burning for a while. There are a lot of
pilots in play, but converting those pilots into paying customers is difficult. And we honestly don't expect
everyone to get the cash they need this year. There are a lot of companies that are sitting in that situation.
So I would not be surprised if we saw more consolidation and more new entrants. I think that's just a
function of the state of the market we're in today.

ROBERT BLOOMFIELD: You referred to what has happened with Project Wonderland. What has
happened with that?

SAM DRIVER: Again, I haven't yet had the conversation, but it's on the calendar. So I don't know the
official word from the Oracle side. But the nice thing about Project Wonderland is, unlike many of the
other technologies, it's much more like OpenSim than anything else, so it's an open platform built on
Java, and it was never a product. It was always just an experiment operating out of their labs. And so we
don't know much more than some people, at the close of the deal, had their jobs let go. But, as for the
fate of the project itself, that remains to be seen. However, the open community, the community that really

10

builds a lot of the content for Project Wonderland still exists. And they're actively sort of securing it and
migrating it to other servers, to make sure that it's going to continue to exist. There are developers for it.
There are customers that are using it. So I would be surprised if it went away immediately. I think that we
just need to sort of wait and see how this goes.

You look at the success of OpenSim, and you realize an open source project in this market does actually
work pretty well. It has a great appeal to education and to anyone who doesn't necessarily have a huge
budget at the beginning.

ROBERT BLOOMFIELD: Care to make any specific predictions about the future of Second Life over
what you're saying will be a difficult year and maybe a year after that?

SAM DRIVER: Yeah. I think that the Linden Lab is positioned well. I think that they've got a great
advantage in terms of the sort of so-called first mover. That they've got name recognition. They've got a
solid product. They've got a solid population. They've got other lines of business, frankly. Right? Many of
the other competitors to Second Life don't have other lines of business. If they can't get a corporate client
to pay the bills, their electricity gets turned off. So having the public Virtual World of Second Life is a great
asset. We're expecting big announcements and releases in 2010 from Linden.

So the potential worry that the technology base for Second Life was aging, I think, is being addressed
aggressively by Linden Lab, and so it will be able to compete effectively with a lot of the younger, sort of
second mover advantage class of technologies that are able to capitalize on success of the early players
like Active Worlds and Second Life, to provide really robust enterprise-focus capabilities. I think that
Linden's going to be able to compete. So my prediction is that, with the size of the organization and with
the spirit of the people behind their programs here, particularly on the enterprise side, that Second Life is
going to continue to do well. And it'll be interesting to see how Second Life enterprise does.

ROBERT BLOOMFIELD: And what's next on the agenda for ThinkBalm?

SAM DRIVER: Well, we are in the midst of building the Distillery, which we've, I guess, started a
repeating trend now. The Distillery is a Second Life and ultimately eventually OpenSim, three-dimension
display and tour setting that's a sister to our report. So we basically identified a process that we
recommend businesses to take, and we wanted to create that in a 3D format so that people could actually
experience it on a tour as opposed to having to read our report. We'd like that they did both, of course.
But what we found from our last ROI study in May of 2009 that when we created the ThinkBalm Data
Garden was that people loved the idea of being able to walk through and see what we were talking about,
feel what we were talking about, experience the kinds of things that we were talking about. And for many
businesses who don't have a lot of experience in immersive technologies, being able to have a tangible
example in front of them really drove home and really accelerated adopting, in terms of starting new pilots
and these kinds of things.

So the next thing for us is the Distillery. We'll be doing some presentations for virtual events and the
Department of Defense, and so look for us in some of those shows. As always, continuing to work with
clients, continuing to work with vendors to try and really push adoption of this in the marketplace.

ROBERT BLOOMFIELD: Okay. Interesting. Well, thank you very much for sharing your thoughts with us
today. And I wish you and the industry the best of luck.

SAM DRIVER: Well, thank you.

ROBERT BLOOMFIELD: That was Sam Driver, cofounder and principle of ThinkBalm. And we've got a
few minutes left, which I am going to use to make some closing comments on Digital Nation in the
segment, that we call Connecting The Dots. My Connecting The Dots is actually primarily on multitasking.
I saw Digital Nation last night, the PBS Frontline episode that claimed to be about life on the virtual
frontier. And actually I have to admit I only saw the first part of it, and I simply couldn't take it anymore.
The emotional thrust of the piece is clearly that life on the virtual frontier, while there are some exciting

11

possibilities, is frightening and dysfunctional and, for those inclined to read it this way, spells the end of all
that's good and wholesome in our lives. Maybe it ends on a more hopeful note, but I didn't stick around to
find out.

Part of the issue here is that broadcast television tends to traffic in two emotions: hope and fear. And the
emphasis of this show seemed to be pretty heavy on fear: hell, hand-baskets, you know the drill. But, as a
business professor, I traffic in very different ideas, in goals and tactics, in opportunities and challenges.
You could see this in the language ThinkBalm's Sam Driver used today, to discuss enterprise applications
of Virtual Worlds or, as ThinkBalm prefers, immersive software platforms.

So I'd like to close the show by emphasizing the shortcomings of the hope and fear perspective, and I'm
going to do this by talking about a topic that comes up very early in Digital Nation, which is multitasking.
So toward the beginning of the show, Stanford professor Clifford Nass tells us that young people who
were obsessive multitaskers thought they were great at it, but, in fact, they really weren't. And
multitasking had other harmful effects on their cognition. These self-proclaimed multitasking experts took
more time to switch from one task to another than less dedicated multitaskers. And despite their
confidence in their abilities, paying attention to an additional task dramatically reduced multitaskers'
performance on other tasks. For example, students were presented with a test of their recollections after
a lecture, and the questions were easy. They should have been able to get 100 percent of the questions
right, but the multitaskers scored only 75 percent.

So Digital Nation presented this information, to my eyes anyway, as a package of doom and gloom, "How
will our kids compete in a global workplace if they get sucked into multitasking?" I don't think the
researchers are asking quite the right question, and, for starters, I think most people would agree that
multitasking is hard. And, as a teacher, I can guarantee that people who are paying attention to me and
something else will recall less of what I say than people are paying attention only to me, and, "Hey, I
mean you. Listen up. Thank you." Now back to my point.

I thought the show did a nice job of showing that young people, who are overly confident about just about
all aspects of their lives, are also overconfident about their ability to multitask. And it was also effective in
showing that people who are multitasking for no good reason aren't doing themselves much good. But, if
we switch to a perspective of goals and tactics and challenges and opportunities, I think a slightly different
story emerges.

First, before even talking about the research, we need to focus on the goals of multitasking. Does it ever
have a valid purpose in the workplace? And, in many places, the answer is yes. I don't believe that
anyone can be a successful caterer or an NFL quarterback or an elementary school teacher or a
talk-show host, for that matter, if they're not able to attend to many different things at the same time. So
Digital Nation focuses on settings in which we don't believe multitasking serves a useful goal. I don't see a
compelling business or educational case for texting with your friends while in a lecture hall or while
driving. But let's ask this question: What if your job demands that you attend to multiple media channels at
once? In this case, not multitasking is simply not an option.
And so now we're saying multitasking is a way we need to achieve our goals, what are the challenges?
And the first challenge is simply that multitasking is very hard. I don't see much reason to think that kids,
who simply multitask because it's fun, have identified the most efficient ways to handle multiple inputs.
Clearly we have a lot to learn.

The second challenge is a bit more pernicious, and here I draw from the source for much of Digital
Nation's discussion of multitasking: a paper called Cognitive Control Media Multitaskers. It's an article
published in the proceedings of the National Academy of Sciences, by Clifford Nass, along with two
co-authors Eyal Ophir and Anthony Wagner. And to just quote a little bit from their paper, they summarize
their findings by saying, "High media multitaskers have greater difficulty filtering out irrelevant stimuli from
their environment. They're less likely to ignore irrelevant representations in memory.

Low multitaskers, people who don't multitask that much, have a greater tendency for top-down attentional
control, and thus they may find it easier to attentionally focus on a single task in the face of distractions.

12

By contrast, high multitaskers are more likely to respond to stimuli outside the realm of their immediate
task and thus may have a greater tendency for bottom-up attentional control and a bias toward
exploratory rather than exploitative information processing. If so, they may be sacrificing performance on
the primary task, to let in other sources of information.

So I'd like to make two points on this. The first is that this is not uniformly a bad outcome. There are
cases, and the authors recognize this in the paper, where, in fact, when it's hard to figure out what is
relevant and what is not relevant, we may be willing to sacrifice performance on a primary task to let in
other sources of information because, in fact, they may be quite important.

The second thing I'd like to point out is that what Nass and his co-authors are describing is what you
might call a form of cognitive leakage. As a professor, I face a similar challenge. In my day job, I tend to
do a lot of lecturing, and sometimes that tendency leaks into my home life. Oops. It's something I need to
watch out for, but it isn't the end of the world. At home, we can come up with ways to let my family remind
me I'm not on campus. In the case of multitasking, we might need to search for ways to redefine job
requirements to deal with this type of leakage. We might want to concentrate multitasking duties with
certain employees so that the cognitive style that's forced upon them is useful across a broader range of
tasks throughout the day rather than detrimental. We might also want to find ways to ease the transition
from multitasking to more focused cognition. So these are challenges, but they needn't be frightening.

My big point today is, as we look ahead to the virtual workplace, which I promise you will involve more
multitasking than we have today, we are going to have a number of challenges to overcome. But they're
challenges. They're not bogeymen. So let's roll up our sleeves and get to work on solutions. But no matter
how it might improve television ratings, let's try not to get the vapors. Okay?

Okay. Well, there. I got that off my chest so this is Rob Bloomfield signing off. I guess before I do that I
would like to make a quick announcement that tonight, if you want to hear more discussion of Digital
Nation, there's a post-airing panel discussion 6:00 P.M. Pacific, 9:00 P.M. Eastern Time in Second Life.
And let's see, I imagine some people will put the details on that in chat, how to get there, but it will have
Hiro Pendragon who I think is in our audience now, Rita King, Joshua Fouts and Treet's own
Pooky Amsterdam. So do please tune into that. It should be interesting.
Next week on Metanomics, we have Tony O'Driscoll talking about learning in 3D. So thanks a lot for
listening. And I look forward to seeing you all next week. Bye bye.

Document: cor1077.doc
Transcribed by: http://www.hiredhand.com
http://www.hiredhandtranscription.org

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Metanomics Transcript Feb 3 2010

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