Metanomics Transcript May 06 09

METANOMICS: IN CONVERSATION WITH MARK KINGDON
(M. LINDEN), CEO OF LINDEN LAB
MAY 6, 2009
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. Each
week I have the honor of hosting a discussion with the most
insightful and the most influential people who are taking
Virtual Worlds seriously. We talk with the developers who are
creating these fascinating new platforms, the executives,
entrepreneurs, educators, artists, government officials who are
putting these platforms to use. We talk with the researchers who
are watching the whole process unfold, and we talk with the
government officials and policymakers who are taking a very
close look on how what happens in a Virtual World can affect our
Real World society.
Now naturally, we hold our discussions about Virtual Worlds in a
Virtual World. How else could we find a very real place where a
global community can convene, collaborate and connect with one
another? So, our discussion is about to start. You can join us
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in any of our live Virtual World studio audiences. You can join
us live on the web. Welcome, because this is Metanomics.
ANNOUNCER: Metanomics is filmed today in front of a live
audience at our studios in Second Life.
ROBERT BLOOMFIELD: Hi. And welcome again to Metanomics. We have
a great show to kick off our season. Mark Kingdon, CEO of Linden
Lab, will be joining us to answer my questions and yours. We’ll
start out the interview with a close look at Linden Lab’s
strategic plans. I’m hoping to get some insight into the
motivation behind the nearly 100 percent turnover of top
management over the last year at Linden Lab and learn about
Mark’s plans to provide enterprise solutions while
simultaneously driving rapid growth in the active resident
population. Then we’ll move on to matters directly affecting
Second Life residents, from the economy, to the interface, to
policies on user content and behavior.
Thanks to all of you who are attending Metanomics today,
including those who are viewing live on the web. Please do join
in with your comments and questions.
ANNOUNCER: We are pleased to broadcast weekly, to our event
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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: Before we get to our main guest, I’m
delighted to welcome Tony O’Driscoll back to Metanomics and also
introduce him as our new corporate learning correspondent, which
we’re hoping to make a regular feature of the show. With degrees
in both engineering and education, Tony has spent years at the
intersection where traditional training and learning activities
meet untraditional technologies. And he’s been studying Virtual
Worlds for some time. He’s studied how playing World of Warcraft
and similar games has affected the leadership skills of IBM
employees. And, most recently, he organized last month’s 3D
Training, Learning and Collaboration Conference in
Washington, D.C. Today Tony is here to talk about two challenges
in corporate learning: the expectations gap and the
routinization trap. So join us now as we put Tony O’Driscoll in
the spotlight.
ROBERT BLOOMFIELD: Yeah, Tony, it’s great to have you back on
Metanomics.
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TONY O’DRISCOLL: Yeah. A pleasure to be here. I love the new
digs. They look wonderful.
ROBERT BLOOMFIELD: I apologize that my voice can’t be its usual
welcoming sound, but these things happen, and I’m glad I’m not
infecting anyone. One of the advantages of Virtual Worlds.
So, Tony, let’s start with this idea of the expectations gap.
You conducted interviews with a number of chief executives,
CEOs, CFOs, COOs, and you asked them what they wanted from their
companies’ learning and training operations. And you asked the
same of the CLOs, the chief learning officers who actually ran
the programs. So how did their answers differ?
TONY O’DRISCOLL: It was very interesting, Beyers. They
different significantly in that we went out to the CXOs and then
the CLOs and asked them, “Why do you write the check?” We asked
the senior executives, “Why do you write the check?” they came
up with nine reasons: to build leadership capability, to build
skills and knowledge of the workforce, to enable their business
units to succeed, to improve the performance of the
organization, to manage talent. And then they started talking
about bigger challenges, like transformation, strategy
enablement, globalization and innovations. So those were the
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nine core value propositions of learning.
And the interesting thing, Beyers, in the expectation gap, was
that the learning leaders were focused on leadership development
and capability building, while the senior executives were
expecting training, the function to help them with the larger
strategic issues of transformation, strategy enablement,
globalization and innovation.
ROBERT BLOOMFIELD: So it’s like the learning officers think
they’re being asked to teach employees to tie their shoes
faster, and the CEOs want their employees to be taught how to
invent Velcro?
TONY O’DRISCOLL: Exactly. And therein lies the expectation gap.
And the issue now is, there’s kind of this perfect storm in the
learning arena coming out of 3D TLC and others. The financial
crisis led to travel bans, but we still need to train people.
And now with the arrival of the swine flu, I was just in a
meeting this morning where we were discussing what is our backup
plan for delivering training at a distance, should we not be
able to bring people together. But I know many corporations are
doing the same thing. And the problem with that, Beyers, is, we
tend to then see virtual avatars and virtual classrooms looking
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at virtual PowerPoints, where we are automating the classroom
paradigm rather than really leveraging this platform to create
truly meaningful contextual learning experiences of the likes we
saw at 3D TLC.
ROBERT BLOOMFIELD: Now is that the routinization trap?
TONY O’DRISCOLL: That’s right. So routinization, Peter Drucker
I think popularized it at least where the printing press was
used first to print Bibles, and then somebody had the bright
idea to use it to print other books too. Or, the moving picture
camera was used to film plays for about eight years before The
Great Train Robbery movie came along. So we tend to take a new
technology and use it to automate the past, bad assumptions and
all. And my sincere hope is that, with this platform that we
have here, we can really leverage it in new and different ways
to enhance learning and training and collaboration.
ROBERT BLOOMFIELD: We have a question from Ricken Flow, “With
all of the universities coming into Second Life, do you see an
increase in opportunities for virtual interns?”
TONY O’DRISCOLL: In fact, I’ve had a couple of people request
that of me. And more so than even virtual interns could be
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virtualized work. One of the things that I’m studying at the
moment is the notion of virtual organizations where these type
of platforms can essentially virtualize the enterprise, but
still have the high fidelity personal interaction that we know
and crave from the office, so to speak. So I think that’s
entirely legitimate.
ROBERT BLOOMFIELD: So you just got through this conference,
3D TLC, which I was at. It was great. No doubt that’s where I
caught this bug. I should have just gone there virtually. But
what would you say if you had one or two big takeaways from
that? What were the surprises?
TONY O’DRISCOLL: I think the surprises were the thoughtful
application of these technologies. The two that kind of come to
mind is the Holocaust Museum example. That was very
experiential. There was no avatar talking to PowerPoints in
there. You actually were taken through the Kristallnacht
experience. And I think, even in David Klevan telling us the
story in that room, the room got really quiet. It’s almost like
we had that experience without even physically going through
Second Life. And then following the Twitter stream, a lot of
people did actually go and visit that particular place and found
it to be very moving.
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The second was actually something that I think is really cool,
which was, we kind of cut Twitter loose in the conference, and I
know you spent a lot of time on there. And the reason we did
that, or the reason I chose to go for it was, number one, you
couldn’t stop people anyway. But, number two, it’s an affordance
that we’ve come to use in the Virtual World, and, for those of
us in the Virtual World, it’s almost like our arm is chopped off
in the physical world if we don’t have that back channel. So we
did hash-tag 3D TLC, and I’m happy to report we had over a
hundred pages. And we also trended at 3:00 P.M. on Tuesday
afternoon, a small conference of 300 or so people.
ROBERT BLOOMFIELD: So I have to say, for me, that was a total
surprise. I signed up for Twitter a year ago, did it for three
days, and it didn’t seem to fit. I didn’t have a use for it. But
I got to the conference, I saw, you know, you asked people to
Twitter. And Christian Renaud is always asking this question,
“Why make a virtual conference almost as good as a real
conference when you can make it so much better?” And we’ve been
working on Metanomics for, what, a year and a half now, and I
have to say that it really felt like Metanomics with that very
rich back channel of communication going on so that you had
people sitting in the audience communicating with one another,
as well as, of course, with the people who couldn’t be there.
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And I just have to say it was a coincidence that basically the
same week of the conference, a couple mainstream publications
that I read a lot, The New Republic, The Atlantic, a bunch of
these types of blogs were really hammering on Twitter as a total
waste of time. So anyone who wants to, you can look at The New
Republic. I’ve got a couple comments in there, talking about the
3D Training, Learning and Collaboration Conference, saying,
“Look. Maybe no one wants to know what type of coffee you’re
having at Starbucks, but it does have real enterprise uses, and
I think we saw one at the conference.”
TONY O’DRISCOLL: Yeah. I think the interesting thing, Beyers,
you mentioned the research that we did looking at games, when I
was at IBM. One of the things we found was that the affordances
inside those environments could be very helpful for the
enterprise, and I think that was just one proof point there,
where the back channel really helped the physical-meet-space
conference have more value.
ROBERT BLOOMFIELD: So I apologize. This opening spotlight
segment is always very brief, and I’m sure there’s a lot more we
could talk about, but I’m hoping we’ll have you back. Actually,
I’ve been talking with a number of the people who presented at
the conference. It was a great opportunity for me to identify
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people who could be guests, and I hope I’ll have you on in the
spotlight again, in advance of those guests.
TONY O’DRISCOLL: Look forward to it, Beyers. Thanks so much for
having me.
ROBERT BLOOMFIELD: Thanks for coming on, and I look forward to
seeing you again.
Our main guest today is Mark Kingdon, CEO of Linden Lab. Before
coming to Linden Lab, Mark was CEO of Organic, an advertising
and communications agency specializing in online interaction and
web design. So, Mark, welcome to Metanomics.
MARK KINGDON: Thank you very much, Robert. It’s a huge pleasure
to be here. And the new facility is fantastic, and it’s great to
see such a great audience turnout. Thanks for having me.
ROBERT BLOOMFIELD: Well, Remedy has been fantastic to work
with. They really pulled together not just, of course, the
financial resources it takes, but amazing people like
Keystone Bouchard, who made this build. And I guess now I can
call him award winning architect twice over because he got a
real life award and just recently a Linden Lab award. So a
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shout-out to Keystone on that.
MARK KINGDON: Absolutely beautiful work. I bumped into Keystone
yesterday when I was taking a sneak peak at the venue.
ROBERT BLOOMFIELD: It’s great stuff. Now you became CEO of
Organic in 2001, just in time to rebuild after the dot-com
crash. And now you come to Linden Lab, and there’s I would say
even broader economic turmoil. How would you compare those two
experiences?
MARK KINGDON: Well, I guess the best point of comparison is the
fact that, when I joined Organic, our revenue was dropping in an
alarming rate, and so it was very much a turnaround situation.
And, at Linden Lab, it’s quite the opposite. We’re growing as a
company. Our revenue is growing, and it’s more about renovation
of the platform and user experience than it is a business
turnaround. So those are the two probably most marked
differences.
ROBERT BLOOMFIELD: Okay. Now this has been a real year of
change for Linden Lab, especially among top management. We’ve
just recently seen the departure of Gene Yoon, of Robin Harper
and John Zdanowski. And then you’ve brought in a number of new
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people over the last year: Judy Wade, Frank Ambrose, Tom Hale,
Howard Look, Brian Michon. I’m not sure if I’m pronouncing that
last one correctly. And then you’ve promoted a number of other
people up into top management. And so I’m just wondering: How
should observers be interpreting this fairly comprehensive
overhaul in Linden Lab’s leadership?
MARK KINGDON: Well, I think I characterized as a natural
evolution. The company’s ten years old. Second Life will
celebrate its sixth birthday very shortly, and we’ve had pretty
extraordinary continuity in our staff, very low turnover, and,
really for the history of the company, also the management team
level. And as we’re growing, we’ve needed to add new skills to
the management team. In each of the cases of folks that you
mentioned, those were really all additions to the leadership
team and are separate and apart from the three folks who left.
And certainly for Robin and Gene, I think those were natural
graduations for both of them. Gene’s role we’re not going to be
filling, certainly in the short term. Tom Hale’s going to pick
up some of that corporate business development work. Judy Wade
will pick up the rest. But, by the end of the year, we will need
to find a head of marketing because that’s an important vacancy
that Robin left.
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ROBERT BLOOMFIELD: And now I’m an accountant so I have to ask.
You lost John Zdanowski, your CFO. That’s on the list too for
replacement?
MARK KINGDON: Most definitely. We’re in the midst of a search
for that role now.
ROBERT BLOOMFIELD: Okay. Great. Actually, we have a question
from Tizzy Teardrop, “The idea [AUDIO GLITCH] comes up anytime
you see major management changes. Does Linden Lab have future
plans for an IPO?”
MARK KINGDON: Well, we don’t have an IPO planned, as I sit
here. At some point in the future, because we have investors in
the company, they’ll look for a return in their investment. But
right now, in this year, our focus is very much on renovating
the platform and the user experience.
ROBERT BLOOMFIELD: And with all of these changes--and additions
as you mentioned--how has that affected the culture of Linden
Lab management and employees. I mean you had the Tao of Linden
and the Love Machine and all of these things that have been
described in Hamlet Au’s book is the one people know now. And
actually Thomas Malaby is coming out with another book sort of
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behind the scenes of Linden Lab. They give us a very good look
at what it’s like to work there. Has the company become more
traditional or more hierarchical?
MARK KINGDON: One of the amazing gifts that Philip gave me, and
believe me, he gave me many when I started at Linden Lab, one of
the amazing gifts he gave me was the culture. The company has an
extraordinarily strong culture and a highly devoted staff. When
I started, it was very clear to me I was being hired because the
company needed to go through its next stage of evolution, and
that’s one that Philip didn’t want to, as CEO, take the company
through. So I think everybody was very, very primed for a new
CEO. And my approach has been very much to evolve the culture
rather than to use an extraordinarily heavy hand to get change.
So I think the changes that we’re going through, within the
culture, are natural, they’re organic and their evolutionary.
And the same is true with the Tao of Linden.
Each year we look at the Tao--the company did before I
joined--and think about how to re-express it. And we’ve been
doing those same things since I joined. I would say most of the
changes that we’re making as a company are to add probably more
connective process than we had in the past. But we’ve added more
than a hundred people in the last 12 months, and that’s all part
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of growing the business.
ROBERT BLOOMFIELD: And now, as you grow the business and you
have all these--actually how many people does that give you
total?
MARK KINGDON: I think we have about 308 or 310 now, and we’re
in the process of hiring another 25.
ROBERT BLOOMFIELD: And that includes the satellite offices?
MARK KINGDON: Yes. That’s all our offices, as well as our
remote employees.
ROBERT BLOOMFIELD: Okay. So now I understand that, with all
these new people you have around, you are also engaging in some
high-level strategic planning. And, before we get into the
substance, I’m just interested in the planning process. We
actually just went through one of these here at the Johnson
School at Cornell, so I’m more interested than I normally am.
How do you go about it, given your culture?
MARK KINGDON: Well, the strategy planning process actually
started before I joined. The company hired Judy Wade, who has
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subsequently joined us full time, to lead the management team
through a strategy exercise to think about business focus. I
think that was a fairly traditional process, a lot of market
data, talk to people inside of the company, talk to folks
outside of the company, looked at each of our major markets, and
asked us some hard questions about focus and capability. And
that strategy exercise was ongoing through the end of last year,
and it really produced the roadmap that we’re working on this
year in 2009.
Now we’ve just started another planning exercise, which is to
develop a three-year plan for 2010, ’11 and ’12. And I have to
tell you it sounds bizarre to be saying 2010 because, obviously,
time has flown. But that’s the next stage of planning. That’s
very much, again, about looking at our markets, looking at how
they’re changing and looking at how the experience, the platform
and our portfolio of businesses needs to change and also our
orientation to our international markets.
ROBERT BLOOMFIELD: Yeah, I definitely want to explore all of
those in sort of where you’re looking ahead with your strategic
plan, but we’ve gotten a whole bunch of questions about where
you are now and where you’ve been that I’d like to take. One of
them is from Mitch Wagner, “Is Second Life profitable? Can you
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quantify the revenue and the profits?” And then a follow-up from
Ordinal Malaprop, which just refining that a little, “Which
parts of the business are profitable, and which are not? And
what might we expect to see close down?”
MARK KINGDON: That’s an excellent question. We don’t release
our revenue, and we don’t release our profitability because
we’re a private company. But I will tell you this: Our revenue
is growing, and we are comfortably profitable. And we have a
very sound balance sheet. We don’t break out profits internally
or different business lines because we’ve never really thought
of them as different business lines. Meaning it would be hard to
think of our land business as separate from the Second Life
economy. So we don’t really look at it on the basis of
profitability by business line. We may evolve toward something
like that in the future, but today we look at the business more
holistically.
ROBERT BLOOMFIELD: Thank you for not saying you take an organic
view of the business. But, on that point actually,
Grace McDunnough has a question for you. She notes that, “There
was once an Organic build, your company, on a Millions of Us
Island. Were you the sponsor? What happened to that build? Can
you tell us what the intent was?”
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MARK KINGDON: Sure. We started at my old company a couple of
years ago in Second Life, and that was really my introduction to
Second Life before I met Philip and well before I considered
coming onboard. And it was in the midst of the cycle where a lot
of marketers were looking at Second Life as a place to share
their brands and as a place where companies might recruit new
employees. And so we did a build with Millions of Us so that we
could see firsthand what Second Life offered. We had a lot of
fun with it. We did some recruiting events in Second Life, and
it was a great kind of orientation to the Virtual World for our
people.
ROBERT BLOOMFIELD: Although it was in the early days, I mean
that was really during the time that there was so much hype
followed by disappointment, you feel that that was a success?
MARK KINGDON: I do. It’s really interesting because a lot of
the companies that went into Second Life, looking at it as a
marketing channel, there were some that had great successes and
there were some that didn’t. The amusing thing is that there’s
been a huge amount of press about how there were abject
failures. Well, I ran an interactive agency and a web
development firm for seven years, and I can tell you the Second
Life budgets, on the marketing budgets of large companies, were
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a rounding error, and there were probably far more 30-second
spots that failed, with huge production budgets that would dwarf
whatever was done in Second Life. So Second Life didn’t put any
marketers out of business and probably didn’t cause any to lose
their jobs, unlike other more traditional marketing campaigns
might. So just a bit of perspective from a marketer.
ROBERT BLOOMFIELD: Well, I suppose the difference is, you
rarely see an article in the New York Times or the Wall Street
Journal saying, “This big Fortune 500 Company is going to have a
30-second spot.” Unless, of course, it’s in the Superbowl, when
it’s no longer a rounding error. So yeah, the press certainly
played a big part in that.
MARK KINGDON: Well, I think also companies’ perspectives on the
possibilities for Second Life have matured a lot, and we see a
great deal of activity around collaboration and learning now,
which is obviously very powerful.
ROBERT BLOOMFIELD: Yeah. Actually I wanted to talk with you
about that because it’s kind of an irony that, you know, here
Linden Lab brings in a CEO with experience in brand promotion
and online environments, with your work with Organic, but then
last month in an interview with the Guardian in the UK, you
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said, and this is a quote, “What has changed in my perception
between 2006 and ’07 and now is that I see Second Life more as a
tool for collaboration and virtual meeting and less of a
large-scale branding tool.” So coming from an expert in
large-scale branding, that view carries quite a bit of weight.
Are you just looking at the market and the demand, in concluding
this, or is this something that you’re concluding from your own
observations, having gone through it?
MARK KINGDON: Well, I think it’s more the stage of development
of the platform and the size of the audience. So a lot of big
brands look at a social media property or a place where they can
engage with their consumers through the lens of traditional
media, where they’re looking for reach, enormous reach. And,
today, Second Life is not really a reach medium. It’s much more
of an engagement medium. And, as a company, and there are
companies in Second Life that do a lot to engage with their
customer base in a very powerful way. If you’re coming to engage
in a much more intimate way with your customer, you’re going to
be successful here. And there are plenty of companies that are
doing that in Second Life, as well as what I talk about from a
learning and collaboration perspective. As our user base grows,
and we have great plans for growing our user base, then I think
brands will take a second look when they’re looking to move
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beyond engagement or broaden their definition of engagement and
reach. So I think it’s more just a question of evolution and
change, rather than kind of a “black and white” perspective,
that it’s good for this and not good for that.
ROBERT BLOOMFIELD: I guess this goes to some of the key points
in your strategic plan. You’ve mentioned before moving from
600,000 or so active users up to about 6,000,000. How do you do
that?
MARK KINGDON: Well, you do it by breaking the problem down. So
rather than going from 600,000 to 6,000,000 overnight, our next
stage is to go from 600,000 to 1,000,000. And I know you’re
going to ask me in a moment for a date projection, which, of
course, I’m not going to give you. But what we’re doing is first
looking at the platform very, very closely and working on
scalability of the platform. And I think one thing that our
residents have seen in the last year is that we’ve substantially
improved the reliability of the platform. It’s actually been
quite remarkable. Our hours lost to downtime in the first
quarter were lower than they were in any of the last five
quarters. And the second half of last year was particularly
fruitful for us. We reduced hours lost to downtime by 50 percent
over the first half of the year.
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The first thing we’re looking at is let’s make sure that the
platform can scale with the growth that we’ve planned. And, if
you look at the executives that I brought in, they’re very, very
experienced with scaling platforms. We have a first-class
technical leadership team, very capable of addressing that side.
The other side is the user experience. Second Life will scale
much further when we simplify the first-hour experience,
starting from the first web-touch point and going through the
full first hour in-world. And it’ll also grow faster when we add
more social tools to the Second Life experience. So far I’ve
only found one kind of viral component inside the viewer,
really, and that is your ability to email a postcard to a
friend.
So as we amplify our efforts on the web and our redesign of the
viewer, you’ll see a lot more social tools that can help us
expand. The conversation opened with a dialogue about Twitter
and look how quickly Twitter has managed to grow, as has
Facebook, in very viral ways. All of our growth has been
achieved through no marketing because we haven’t historically
spent money on marketing, and it has been achieved without
working the social graph in a way that other social media
companies do. Interesting.
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ROBERT BLOOMFIELD: The other thing is just that, with Twitter
or Facebook, the hurdle to entry is very low for a user.
MARK KINGDON: Exactly.
ROBERT BLOOMFIELD: Whereas, in Second Life, it’s quite high.
And we’ve got a couple questions just regarding, I guess, let’s
just talk about the client as opposed to the user. Mitch Wagner
is asking, “Are we going to see this ever as a web plug-in or
something like that?” And Valiant Westland asks, “Are we ever
going to see this in Best Buy, like the Sims?” Do you see
anything like that?
MARK KINGDON: Well, I think you’re more likely to see it in
Best Buy as a package piece of software maybe with a headset
included in a really, really good how-to book, before you see it
as a web plug-in because that’s much easier. We’ve had
conversations, certainly, about packaging up and making it
available.
As for making it a web plug-in, our strategy is somewhat
different. With respect to the viewer, we’re really trying to
create a 2.0 experience that’s much more intuitive, much more
natural and much more easy for the new user to adopt, and that
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will be a downloadable client in the short term.
ROBERT BLOOMFIELD: Let me ask. When you say 2.0, you just mean
a complete overhaul. You’re not using a Web 2.0 buzzword. Is
that right?
MARK KINGDON: Yes. I’m talking about it in terms of an overhaul
or renovation of the current viewer. But, there are a lot of
Web 2.0 tools and approaches that we want to introduce to the
Second Life experiences. Those will be very much web-based. Next
month we’re going to launch kind of the first rev of our new
website which starts to move in that direction or build a
platform for further extensions, later in the year, out to the
web. Social tools are really, really powerful, and we want to be
able to extend the Second Life experience out to social media
properties that people enjoy today. You can find a lot of
photographs on Flickr. Plurk has a lot of activity. Second
Lifers are definitely tweeting because I see them on TweetDeck
every morning, but there’s a lot more opportunity for us there
that we haven’t developed. So we have the viewer, but, in
parallel, we’ve started quite a lot of work on the web side of
the business.
ROBERT BLOOMFIELD: So the web side, it sounds like the viewer,
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you have to get them in with a simpler viewer, and then you have
to keep them. And actually Prokofy Neva has a question first
about the current stats, the retention rate of newbies, new
users, since you changed the website and info hubs and the
gateways. And I guess I’m also interested in hearing you expand
on that and talk about how you see these changes affecting not
just the draw to get people in, but the ability to keep them.
MARK KINGDON: Yes. They go hand in hand. When we look at it, we
don’t separate sort of customer acquisition from retention. And
that’s why I talked about it as the first-hour experience, which
is a euphemism really for probably the first three hours upwards
over the first three months, but it spans--the first touchpoint
on the web it goes through the viewer and orientation with the
viewer. It goes through the first landing experience, and then
it goes through people’s discovery process of communities,
people and friends.
We’ve done a lot of research, and we know why new users leave
Second Life, and it’s because they can’t find the people, places
and things that are relevant to them. And, believe me, a good
number do. That’s why we’re able to grow our active user base.
But there’s huge potential there because it’s very hard to find
the content and the experiences, the groups, the people, that
25

you might want to participate in as a new user. Those things
we’re hard at work on making much easier. The find-and-discovery
process is a whole work effort in its own right and I think will
be one of the biggest drivers to retention thus far.
ROBERT BLOOMFIELD: Well, I know many more people need to hear
about Metanomics.
MARK KINGDON: Exactly. And then we’re doing just some business
basics. Interestingly, when you are a new user and you sign up
for Second Life, you get one email for activation, and then you
don’t hear from us again. That’s been kind of the historic
practice. We just launched something very simple, which is a
welcome email that follows the activation email, at a very high
click-through rate. And the things that people click on showed
us that they want tools and tutorials to guide them through
their first experiences in Second Life. So as we build kind of
that what I would call activation and retention infrastructure,
I think that’ll be a further boost to our growth. We add the
social tools that I talked a little bit about. We improve find
and discover. We continue to make the platform more stable and
more reliable. And I think you will see a big uptick in growth.
ROBERT BLOOMFIELD: When we talked, whenever it was, a week or
26

so ago, you mentioned that there were going to be some changes
to support live music more effectively in Second Life. Can you
talk a little about that?
MARK KINGDON: Yeah. One of the things that we’re hard at work
scoping out is--and you can see the beginning of it, the very
beginning of it on the home page that we launched in December
and that we’re refining in our next evolution. If you look at
kind of the verbs on the home page, like learn and teach, might
be listen to live music, those are use cases or experiences that
are very compelling to users. We’re using those as a lens to
look at our product features and the technology behind them, to
make sure that they’re highly supportive of those really
attractive use cases, those compelling use cases for people.
Live music is an area that we think is really, really vibrant.
We’re not going to be making any major changes in the remainder
of this year, but live music is one of the first things that
we’re going to pick up and develop as one of those use cases.
ROBERT BLOOMFIELD: Okay. Now how about international growth? I
understand you get about half of your revenue is already from
outside the U.S. How do you see that proportion changing over
the next year or three?
27

MARK KINGDON: Well, the international population is a really,
really big part of the Second Life resident base, as you’ve
said. And the remarkable thing is that many of those
international users have come when our website client and our
support materials are in English. So those are people who have
had to work extra hard to be part of the Second Life community,
and that’s incredibly impressive. But, around the time I joined,
we started working really hard to internationalize the
technology and also to localize the content. Through the hard
work of hundreds of resident volunteers, we’ve been localizing
our viewer in the major languages and also website and the
support materials you find in Knowledge Base and on the Wiki. So
we’ve been doing a lot to make it easier for our international
residents.
I want to point out one thing about international, which is
really, really a wonderful thing. If you’re a big social media
property, particularly one that’s reliant on advertising for its
primary revenue stream, and that’s not Linden Lab or Second
Life, but, if you’re one of those properties and you start
rolling out servers to serve people in far-off markets, the only
way you’re going to monetize those users in a traditional sense
is by hiring an ad sales forces, which means it’s very hard for
social media properties to monetize international users and to
28

make a business of it. The beauty of Second Life, and it was a
stroke of genius, not a stroke of genius for me, but from Philip
and the leadership team, was to make the Second Life economy an
integral part of the user experience. And because of that, we’ve
been able to grow our international revenues very, very
substantially, without having to make an investment in staff.
Now one thing that’s going to change next year is that the
lion’s share of our hiring will be outside the United States,
and we will begin to move our infrastructure so that it’s closer
to our end user. The first place that’ll happen probably is
Europe.
ROBERT BLOOMFIELD: When you say infrastructure, you’re talking
about servers, satellite offices? Both?
MARK KINGDON: That’s right. We already have an office in
Brighton, England, with a really, really terrific team, but we
see continued expansion internationally. We also have an office
in Singapore, a really great group of folks. I was in-world with
them night before last. They’re very smart, very passionate,
high committed Second Life folks. So we’ll amplify our focus on
our international markets next year, and the same is true for
infrastructure. Right now our servers are in the United States,
29

yet 50 percent of our user base, or more, actually is outside
the United States.
The last thing I’ll say about international is, we’ve asked
Judy Wade, who joined us permanently, to focus on international,
work with the team that’s localizing content and experience, but
also really work on international market development. I’m really
excited about the things that that team has on their roadmap.
ROBERT BLOOMFIELD: I have a question on another aspect of the
international. You said it was the last thing you’d say, but I
hope you’ll answer this from Dorette Steenkamp
(Alanagh Recreant), who says, “Philip Rosedale has referred many
times to the possibilities of using Second Life in developing
countries for enterprise development. Does Linden Lab have any
plans to include Africa specifically and other developing
economies in their strategy?”
MARK KINGDON: Well, the interesting thing about Second Life and
our international expansion is that developing countries are
adopting Second Life at an extraordinary clip. Just the other
day, we saw a pickup in Thailand, in Second Life usage. And I
saw a great website somebody had put up and asked our team. We
didn’t do anything to promote Second Life there, but because of
30

the power of the brand and this incredibly vibrant and powerful
community, people in Thailand were starting to take an interest.
And that’s true in pretty much every country in the world,
except for a small handful. I think we have users who are even
in Antarctica. Although they’ve registered as though they’re in
Antarctica, who knows whether they’re really there.
ROBERT BLOOMFIELD: That’s our topic for next week, when we hear
all about security and trust. Let’s see, I’d like to, if we
could, I’m conscious that we only have about 15 minutes left, I
would like to move on to some of the resident issues that are so
important to, of course, the many people who I’m seeing
chatting, in the audience. And let’s start with the economy. You
recently provided a fairly detailed report on the first quarter
in-world economy. What do you see as being the most important
statistics from a strategic perspective for Linden Lab?
MARK KINGDON: That’s a great question. We have incredibly rich
data inside the company. As a matter of fact, we have a
company-wide dashboard that’s accessible to everybody in the
company, and it has 371 different metrics that are updated by
the minute, by the week, by the month and by the quarter. There
are a couple that I have my eye on literally all the time
because there are screens about 20 feet away that I can see,
31

that Philip can see, that anyone in the Lab can see. And those
screens have a couple of really important metrics. One is
concurrency. Another is resident satisfaction because, as you
know, for every endth customer, we pop up a simple survey and
ask them whether their experience is better or worse. And we can
immediately tell when something is amiss because we’ll see a
change in the [satisfaction?] curve, and it’s absolutely
astounding how quickly that happens, and it can be a leading
indicator for us if there are other problems. So we watch those
two carefully. They’re less about the economy, and they’re more
about platform stability and resident satisfaction.
But the ones that I regularly look at are monthly active users,
returning active users. Both of those we’ve been sharing. New
registrations. Monthly unique repeat logins, which I talked a
lot about on Hamlet’s blog. It’s a really important statistic if
you’re trying to look at our ongoing growth. We also look at Sim
crash rate, and I want to come back to that in just a second.
Viewer crash rate. User-user transactions. LindeX volume. Land
sales. Average price per land in the secondary market. Those are
some of the ones that I make sue that I look at on my dashboard
all the time.
When you look at the Second Life economy, it’s been wonderfully
32

resilient to some of the Real World economic challenges that
we’re seeing around the world, which is why our revenue is
growing and why we’ve been able to hire and invest our profits
back in the business.
ROBERT BLOOMFIELD: Fleep Tuque has a question, which is, well,
actually, it’s more of a comment, “How do I get a job in Second
Life?” is still the top question she gets from newbies. So let
me put that in the form of a question: Are there things that you
think you could do and that you plan to do, to make it easier
for people to come in to Second Life and actually find it an
economically productive experience for them?
MARK KINGDON: Well, that’s a great question. One of the things
that we’re trying to do in the business, in a major way, we’ve
started to introduce product management to the business. We’ve
hired Tom Hale, who was a senior executive at Adobe and before
that Macromedia, and he has been bringing in a team of people so
that we have folks devoted to each aspect of the business,
whether it’s the commerce part of our business, whether it’s
land. And, in the future, it will be very much around content
developers, scripters, coders, in-world businesses. It’s
definitely on the roadmap. It’s probably something we’re going
to develop more next year, but our intent is very much to put a
33

focus on each of those things.
Just as we need to clear the path for new users, we also need to
clear the path for new businesses to form in Second Life. In our
next rev of our website, we’re starting, just starting, and what
you’ll see is just a beginning of improvements to the land
store, to make it easier for people who are first-time land
buyers to buy land in Second Life and understand the product
more easily.
ROBERT BLOOMFIELD: Let’s see. Let’s move on to adult content,
another in-world issue. So you recently announced a policy of
essentially sequestering adult content, and I’m wondering can
you talk about how that fits in, again, to the overall Linden
Lab strategy?
MARK KINGDON: Sure. Well, we have 650,000 active users, and
they’re all looking for different kinds of experiences in Second
Life. We’re not prohibiting adult content in Second Life, by any
stretch of the imagination. What we’re doing instead is, we’re
trying to create a more predictable experience by improving and
changing our search tools in a way that content is surfaced so
that, if there are people who don’t want to access that content,
they’re not required to access it because it’s fully visable to
34

them. At the same time, if there are people who want to access
that content, we’re making it certainly possible for them to do
so as well.
The thing about Second Life that’s really, really important,
because it’s been something I’ve spent a fair amount of time
learning about this past year, and that is that it’s an
incredibly diverse user base. That 650,000 active user count has
very different needs and very different desires, and it’s
evolving over time. All we’re trying to do is make the platform
accessible to people who want to access it in a certain way, and
we’re simply calibrating our tools and experience paths to fit
that.
ROBERT BLOOMFIELD: Dusan Writer asked a question at the recent
PR Conference on adult content, and the gist of his question was
really that you can view Second Life as a World with a real
geography, or you can view it as any other type of web
application, use terms like “use-case, in-filtering” and so on.
And so, just to paraphrase his question, when you make policies
like this, do you view Second Life as a World and try to think
like an urban planner, or do you view it as a web application
and think like a programmer?
35

MARK KINGDON: That’s a really wonderful way to frame the issue,
in the form of a question. That’s a wonderful way of thinking
about it, and I’m going to use that when I talk about adult
content in the future because I think it’s a combination of
both. I mean we have some really powerful Real World metaphors
in Second Life. Land is one. We have a sense of geography and
presence here. The map is getting better as a tool to navigate
Second Life, and you haven’t even seen what we have up our
sleeve for maps. So geography is important.
So I would say it’s very much kind of the set of concerns that
an urban planner might have, but with tools that are web-based.
It’s a combination of both. There’s no doubt though that we are
participating more than we have in the past, in the experience,
which is why we have a Department of Public Works that’s been
working on making improvements to the mainland. We take those
things seriously.
ROBERT BLOOMFIELD: Well, we’re almost out of time. The last
couple questions I’d like to ask are really to ask essentially
for elevator pitches. I’m just wondering, if you look ahead to
where you’ll be in a year or so when you’ve made these changes,
and let’s just assume they all work out, what’s the elevator
pitch? Let’s start for the residents. What is it you’re going to
36

say to get the residents to come in, as opposed to doing other
things that they could do with their time, whether it’s watching
TV or going outside? What’s the pitch?
MARK KINGDON: Well, Second Life is really like no other
experience. It’s rich. It’s immersive. It’s very social. It’s
highly creative. It’s an enormous element of surprise because
the content is user-generated. So I think the elevator pitch is
really, really, simple. This is a phenomenal World, and it’s
only limited by your imagination. The promise behind the scenes
that we’ll be delivering on--it’s not part of the elevator
pitch--it’s just going to be a heck of a lot easier, and it’s
going to be enabled by tools, like social tools that people are
accustomed to in other web properties.
ROBERT BLOOMFIELD: And how about the pitch that you would give
to enterprise adopters, who are looking to use something like in
immersive workspaces or some other Second Life product for
serious “behind the firewall” collaboration?
MARK KINGDON: Sure. One thing I do is, I point them--and this
isn’t said as a pitch--but I’d point them to the case studies
that we’re starting to develop and put up on Secondlife.com,
that very much speak to all of the use cases for enterprise. I’m
37

surprised and excited by enterprise interest in the Second Life
platform as a place for collaboration and learning because there
are a lot of budget cutbacks that companies are making in the
enterprise software space and in technology spending, and we had
no problem filling up our alpha release of our “behind the
firewall” solution. The interest is staggering for both the
Second Life grid, which is where we are today, and for a “behind
the firewall” solution.
ROBERT BLOOMFIELD: I guess the last question I’ve got is,
actually I’m surprised we didn’t see in the audience chat
anything about OpenSim. So you now have what seems to me to be a
very close competitor with other people creating products that
are very similar to Second Life, but they’re adding lots of
different features, ability to have their own customizable
physics engines. They’re doing all sorts of things. How do these
sort of Open Source solutions play in your strategy for Linden
Lab?
MARK KINGDON: First on the point of competition, if that’s what
you’re suggesting, there are dozens, if not hundreds, of
competitors for people’s time out there. Half a billion dollars
in a short period of time poured into Virtual Worlds, partially
because of Second Life’s success, but also things like Club
38

Penguin. So there are many, many alternatives out there, and we
monitor those. With respect to Open Source, Open Source has been
a part of the Second Life ecosystem for some time, and
Philip Rosedale, our founder, recently took over responsibility
for that initiative. I’m really, really excited to see how we’re
going to further develop the great base of Open Source
developers that are working on Second Life today. I think that’s
going to be a really exciting new area of innovation or renewed
area of innovation for us.
ROBERT BLOOMFIELD: Great. Well, thank you, Mark Kingdon, for
joining us for this opening session of Metanomics for the
season. It’s really been a fascinating conversation. We’ve had a
lot of good audience backchat. I apologize for not having been
able to keep up with all of that and get to all of your
questions. I do hope that those of you who are out there
listening will post your questions and comments on the brand new
metanomics.net website, which also reflects a lot of the
sensibilities you see in Keystone’s build. So, again, Mark,
thanks for joining us, and I hope I’ll see you back on
Metanomics sometime soon.
MARK KINGDON: Thank you very much for having me. It’s been a
great pleasure. And thanks to everyone here who attended and
39

folks who followed along on the web. It’s been a pleasure. Thank
you.
ROBERT BLOOMFIELD: Okay. Well, that’s all we have for this
week. Join us next week when we take a look at some policy
issues surrounding Virtual Worlds. We will be hearing from two
representatives from National Defense University: Assistant dean
Paulette Robinson and security expert Rocky Young. Paulette
directs the Federal Consortium of Virtual Worlds, which has been
helping countless federal agencies explore this new technology,
and she led a conference that took place at Fort McNair in
Washington, D.C. late last month. And Rocky has loads of
fascinating and honestly frightening stories about the security
challenges, not only of Virtual Worlds, but of the many other
technologies that we all rely on.
So thanks to all of our staff members and volunteers who help
pull this off every week. And thanks to you our audience for
joining us and participating in a very active chat session. This
is Robert Bloomfield signing off. Take care. And I’ll see you
next Wednesday.
Document: cor1057.doc
Transcribed by: http://www.hiredhand.com
Second Life Avatar: Transcriptionist Writer
40

Metanomics Transcript May 06 09

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Metanomics Transcript May 06 09