Mitch Kapor on the Power of Second Life

The Second Life Community Convention, the second annual gathering of residents of the virtual world of Second Life, kicked off on Saturday with a fascinating speech by Mitch Kapor, creator of Lotus spreadsheet application (often credited with helping make PCs ubiquitous), founder of the Electronic Frontier Foundation and chairman of the Mozilla Foundation. Kapor also serves as chairman of the board of Linden Lab, the company behind Second Life, and gave an engaging account of the process of getting SL off the ground, and his vision for where it might be headed in the future. His talk interweaved parts of his own story as a technology entrepreneur with the trajectory of Second Life, and speculated about “some of the larger meaning of it all and where we might be going.”

Kapor gave great insights into Second Life’s early history, and a nice vision of what the future might hold. 3pointD took as many notes as we could, which we’ll present here essentially unalloyed. The upshot, however, was this: to Mitch, Second Life is a disruptive technology on the level of the personal computer or the Internet. “Everything we can imagine and things that we can’t imagine from the real world will have their in-world counterparts, and it’s a wonderful thing because there are many fewer constraints in Second Life than in real life, and it is, potentially at least, extraordinarily empowering.”

“You are the pioneers and the founders of this new world, and you have unbelievably great opportunities to put your stamp, to leave a legacy, to create things which will endure and have value. The opportunity to participate in the creation of a new world is really a rare one and so I hope you cherish it.”

Kapor’s talk began with some personal background:

“I’m a child of the 60s. The first job I had after college was as a disc jockey. Making $115 a week and all the records I could eat, in Hartford. During the 70s, as preparation for my career as a technology entrepreneur, I did several things. I was a meditation teacher for several years. The last job I had was as a mental health worker in a psychiatric hospital. I realized I could make a tremendous contribution to the field of human services — by getting out of it.”

“So I bought an Apple II Computer in 1978. The day I bought it they still didn’t have a disk drive for it. The only means of mass storage was an audio tape casette.”

“The thing that transformed PCs in my view . . . was an application called Visicalc, which was the first electronic spreadsheet. Lotus 1-2-3 [which Mitch developed, to great success] was indeed the application that really drove the PC to be ubiquitous in the early 1980s on the IBM PC. I designed the product and was CEO of the company during a period of hyper growth. But I’m more than a business guy, I’m really an enthusiast and a geek because I love playing with this stuff, and that’s how my career started.”

“In the same way that it has been possible for many people to join in and become a resident in Second Life — it doesn’t cost any money, you don’t have to have anybody’s permission, the barriers to entry are extraodrinarily low — that was also the case with the PC. It was the first time that it was possible for an ordinary individual who did not have an institutional connection of any kind to get their hands on computing technology.”

“It is very difficult to remember a time, even if you were alive then, when people did not have huge amounts of computing power at their fingertips, but I can assure you that that was an extraodinarily radical idea. The same thing now goes for virtual worlds. It’s still a very radical idea that these are somehow going to be important and mainstream, and it’s still only a very small fraction of the world’s population that understands and appreciates that, and we here are in that number, and we are very early, we are the early, early adopters.”

“If there was a single figure that you had to pick out as an inventor and a technologist, the person who deserves credit would probably be Jaron Lanier. He coined the term virtual reality. He had an early company, VPL, back in the late 80s, that had virtual reality systems, and he introduced me to virtual reality. I was fortunate back then to be able to put the goggles on and the gloves. It for me was a transformative experince. I levitated, I flew around and I landed on a lily pad. I got it that there was something incedibly important going on and that reality was not ultimately defined by bricks and mortars and atoms, but that anything convincing enough could be real.”

Enter Philip
“I met Philip [Rosedale] in the mid-1990s. I had been involved in a company called Real Networks, which was the first company to succesfully do streaming media. I was the first outside investor in that company, and sat on the board, and Philip had a very small two-person company doing interesting early stuff with video-conferencing over the Internet, and that company was bought by Real Networks, I think mainly to get access to Philip’s talents.”

“Where I got to know him was a few years later, in 1999 for a brief period of time our trajectories both brought us to an organization called XL Partners, a Silicon Valley venture capital firm. I had been doing angel investing for many years. Philip was an entrepreneur in residence there, hatching new ideas, and we bonded. Despite the fact that our roles were different, we were both the new guys and both outsiders in this very strange world, so we would sit next to each other and whisper disrespectful things about whatever was going on in the meeting we were in.”

“Philip had the idea for what became Second Life and pitched it to XL Partners multiple times, and was turned down every time. I said to Philip, So when you go off and start your thing, when you’re ready, come see me, I’d like to be involved. Part of the satisfaction I get is helping entrepreneurs start their companies and sharing what I know — I think in part because I wish there had been more mentoring available when I started my company. Plus it’s fun.”

“Philip went off and a few months later came back and had been wkg with one other guy on the first few elements of what eventually became Second Life, and I put some money in and went on the board. I think it was six years ago, at the very, very, very beginning, and we’ve been working together ever since. I’m an enthusiast and a fan and supporter and believer and advocate. I think that there’s something extraordinarily important going on here, and it’s not just about the ocmpany, it’s what’s being created: the community and the innovation and the ways this will be transformrative. It’s a fabulous thing.”

The Early Days
“As a startup, Linden Lab has been very interesting, because at the outset it was just not clear what it was going to take to make it be successful. Technically, it was extraordinarily ambitious. Nobody had done anything like this before in many respects, and we agreed that what we needed was a long runway. If a business like an airplane and you need to be able to be in the air at the end of the runway, and you don’t know how long it’s going to take to take off, you’d better have a long runway.”

“What that meant, that had very strong implications, because we needed to be able to have enough money to last until the business looked real enough that it could attract more conventional investors, and we did not know how long that would take. There were other angel investors, and we did several small rounds of investment, small relative to other things that were going on. And we formed the base philosophy, which fortunately was consistent with Philip’s approach, which was to be quite frugal if not outright cheap, and to see how few people it would take.”

“By contrast, at the same time we were raising and spending I think $7 million, which was how much was spent prior to first big capital investment, was burning through $70 million. I say this not to be critical, but as many or more startups wind up choking to death on too much money as starve for a lack of it.”

“Part of what start-ups are supposed to be about in Silicon Valley, personally speaking, the financial side of this is actually a by-product of doing the right thing, and doing it well and adding value. And that’s true whether it’s the case of the company itself or the case of the many companies who are in process of starting or will start who are building on the SL platform.”

“There are many more ways to fail than there are to succeed. A lot of managing this as an organization is really understanding how to avoid failure.”

Disruptive Technologies
Kapor showed a slide listing a number of technologies he considered disruptive when they appeared, including Lotus 1-2-3, UUNet, Real Networks, Wikipedia and Second Life.

“Any time you’re involved with something radically new and distruptive, one of the major characteristics is going to be skepticism, or maybe, say, a struggle between faith and skepticism about this new thing, and the earlier it is, the more intense the struggle and more pitched the battle. The skepticism about the future of the PC was intense: ‘These are useless toys that will never amount to anything.'”

“That skepticism turned out to be a blessing in disguise, because it enabled a first generation of hobbyists and entrepreneurs to do things without any adult supervision, and that was where the key innovations happened in the early days. The spreadsheet did not come out of anybody’s R&D lab, it was the inspiriation of a single individual. And I know the same thing is true of Second Life. It is a recurring pattern. You can see the same pattern of skepticism with respect to the Internet.”

“I was spending a lot of time in Washington DC in the early 1990s. I cofounded the Electronic Frontier Foundation, doing civil liberties work trying to educate people and policy-makers on the fact that the Bill of Rights extends to cyberspace. As I was doing that, these things intersected a transition in the Internet. It had been this Defense Department-funded ARPAnet, but it was in the process of being take out of the Defense Department, and was being administered in a transitional period by the National Science Foundation, in order to one day allow for commercialization.”

“In same way it was difficult to imagine a world without the net, back then the idea that there would be a common information facility that you could plug into, that was just absurd. Nobody serious thought that that was going to happen, not a single person.”

“I wound up getting involved with and investing in a company called UUNet, which was one of the first Internet service providers. I knew the big Silicon Valley venture capitalists from my Lotus days, and I called John Doerr from Kleiner Perkins. It was 1993 and it was too soon and it was not interesting enough for him to even take a meeting. The mindset wasn’t there to understand the opportunty, the midset was still about walled gardens, private networks, propietary controls, private services that the phone companies were going to bring to us.”

“So in the history of Second Life, I’ve been through multiple waves of skepticism about it. ‘It will never work.’ Philip had this radical idea that hadn’t been done before about having am infinitely scalable virtual world by centralizing the back-end storage of the objects and terrain and then streaming the geometry down to clients. It had just not been done that way. Technical people said, well this isn’t going to work. But that hurdle was overcome, and an existence proof was built in six months.”

“Then there’s the business argument, that people have tried these virtual worlds and they’ve failed. And it was true that at that point the roadside of the information highway was littered with the corpses of failed start-ups in this sapce, but people were not taking into account that the technology was not right, the preconditions of success were not there.”

“The next thing we heard was that there’s no market for online games. There’s two things wrong with this: people had and still have enormous category trouble understanding that this is a world, that’s the right metaphor, it’s not a game. But in the earlier years, people would look at it [as a game].” [The other problem, which Kapor didn’t mention presumably because it’s so obvious, is that there’s a huge market for online games.]

“It was true believers in beginning that were backing this, and I remember Philip coming in and saying it’s the users who are going to create all the content. We had no users then. They’re going to create the content. Even I didn’t understand what he was saying, but I believes him. One of the things I’ve learned is that when you back an entrepreneur, you trust them and give them the benefit of the doubt, and try to create conditions favorable to a successful experiment. Boy, was he right.”

“Today’s skepticism about Second Life, and I hear this not in this room or in the 40,000 people a day who are logging on, but in the next concentric circle of people reading Business Week, is that this is not for regular people. ‘I’d never use this.’ It reminds me of other things I’ve heard people say. In 1995 I was showing people Amazon, and they would say I will never put my credit card information on the Internet. Well, we got over that one.”

“It’s all about imagination. When people say, I just don’t know what I’d use it for, the gap between their imagination about what they might do and their perception of what goes on isn’t sufficiently close.”

“Two things are happening. There’s an enormous explosion of new stuff going on in Second Life. The number of possibilities becoming real on a daily basis is exploding and expanding, and the kind of knowledge and understanding people have of it is also growing dramatically. So, ‘this is not for regular people,’ that’s going to go away. It only looks like it’s not going to go away to some people. So my experience says, in the battle between faith and skepticism on these kinds of things, you don’t have to take on faith that faith is going to win. There’s lots of good empirical evidence from past waves to give you confidence that the early stage that we’re in now is in fact an early stage and we’re going to see maturation, growth and further change.”

“One thing that’s very important to keep in mind is something called Macromyopia. For people who are inside a new phenomenon like Second Life, we tend to overestimate the short-term effects. We think more great things are going to happen sooner than they typically do. Conversely, we underestimate the long-term impact. People are not especially good at forecasting this. What I would say is, certain situations that may be problematic in the short term may well take longer than anyone would like to fully resolve. On the other hand, it’s very diffcult to fully grasp and imagine what the long-term impact of Second Life and things like it are going to be. We have to stretch to think about that.”

“In particular, in the short term, right now there’s still a chasm between the power users and the clueless newbies. Those are slightly provcative terms, they’re not the best, it is just a fact, there’s still a significant number of people who come in, try it and leave. It’s not ready for prime time. I don’t believe it’s going to change overnight. It’s going to change in stages. It’s hard to know how long it’s going to take, and how long before it’s mainstream. It’s not tomorrow, it’s not next year, but it’s coming.”

“There are a variety of short-term issues, whether the stability of grid, or other infrastructure issues. Part of what I do as a director, Philip and I get together periodically, and I try to emphasize a focus about operationally keeping everything going. It’s hard to do when you have hypergrowth, when you’re doubling every three months or four months it strains every single system. It requires a real dedication and focus operationally to build and grow the system so that there is the stability you need.”

“When a company is in the hypergrowth stage, which Lindan Lab is in, there are going to continue to be rough edges and various issues, and I don’t think they’re going to go away [by themselves], they need to be managed and you need to make overall progress. On the other hand, in the long term, everybody’s going to be in Second Life, if Second Life succeeds. And if the company doesn’t succeed, it will be in a technological succcessor to it: Snow Crash made real.”

An Expanded Sense of the Real
“I had an unexpected spiritual experience two days ago about this very thing. I was watching on YouTube the video of the Suzanne Vega performance [in Second Life] she was doing with John Hockenberry on Infinite Mind, the NPR show. I’m watching them and what I’m seeing is her avatar, she’s playing guitar and there’s a live performance going on, I’m hearing it on my headphones because the audio is being streamed, but I’m watching a director cutting between multiple camera angles of a live concert. I udenrstand this is likely assembled in post-production, but there’s no technical reasaon it can’t be done live.”

“So what am I seeing here? There’s a studio audience for this radio broadcast. The studio, though, is a virtual one, not a real one. The camera is panning around, looking at residents, so I’m watching a kind of television broadcast of an event that is simulatneously real and virtual. And all of a sudden my sense of what was real expanded a million-fold. A fundamental shift of my awareness happened. Where this is going is in the full interpenetration of the terrestrial reality made up out of atoms, and virtual realities made up out of bits. It’s not a seperate thing, it’s not a cartoon, it’s not a game, it’s a much, much, much, much unimaginably larger reality, and that is powerful.”

“I came in today and already learned a few things. The American Cancer Society is setting up an office in SL. Why is there an office, because there are residents? Because there are people there who care about this. There was $40,000 raised for the American Cancer Society in Second Life. At first I thought, well, that was a one-time thing, but now I’m thinking, No, if you have a real-world organization then you want to have a presence there.”

“Everything we can imagine and things that we can’t imagine from the real world will have their in-world countrparts, and it’s a wonderful thing because there are many fewer constraints in Second Life than in real life, and it is, potentially at least, extraordinarily empowering.”

“Innovation in this world is going to be driven by the residents, not by the company. We know that, but it is worth repeating because this is a radical idea. The Wikipedia is driven by the same dynamic, and it sort of stands everything on it heads, because the company can’t be in charge of what happens next. That does not leave room for the innovation of the community to think up new things and try thing and take risks and succeed and fail. The company’s job has to be to facilitate the conditions of that innovation, in my view.”

“Some of that is infrastructural. The grid has to be up, the performance needs to be reliable. That’s no small undertaking. The core capabilities of that system also have to continue to expand, especially to take advantage of Moore’s Law and improve performance in underlying computing technology, but also to create the base capabilities to invent the new services and new kinds of things.”

“There’s also a role in the overall management of the economy. Economies don’t manage themselves, and some of the most interesting parts of our board meetings is when we talk about the money supply and what policy do you set, how transparent are you, how do you control the money supply to support growth and not have too much inflation, all the things you need to do to create conditions for economic prosperity.”

“The final thing the company has to do, there needs to be a kind of civil society, the equivalent of rule of law conditions, so that people can come and do whatever their thing is without unwarranted interference. My vision is that over time the governance of Second Life passes much more to residents and structures run and managed by residents and groups of residents. That’s a large challenge to figure out how to do that, nobody has ever done anything remotely like that that I’m aware of, but the future is going to be in a kind of world which is of, by, and for the residents of it, and it will become increasingly indistinguishable from terrestrial reality. There will be a huge number of issues about what that means. There will be problems that will consume everybody’s energy and attention that we cannot even articulate today.”

New Pioneers, New Responsibilities
“I think you are in a blessed position. You are the pioneers and the founders of this new world, and you have unbelievably great opportunities to put your stamp, to leave a legacy, to create things which will endure and have value. The opportunity to participate in the creation of a new world is really a rare one, and so I hope you cherish it. And you’ll face challenges. In every disruptive technology I’ve seen, there has always been a dynamic in which the early adopters begin to be pushed aside as the whatever it is begins to become mainstream. There will be tensions as the frontier is civilized, on all sides, of people who like it the way it is, and people who want it to be what it might become.”

“But the most important thing I want to say and leave you with is that with the privilege of creating a new world or new worlds, I believe, comes responsibility. And really the responsibility is to make that new world a better place. There is no one vision or value of what that better place will be, it will be slightly different or maybe very different to different people. But in a new world free of a lot of the constraints we’re used to, which empowers individuals, my hope is that Second Life will continue to be a world that is more inclusive than the terrestrial world, and will enable groups of people that are marginalized in the real world to be first-class citizens and resindents.”

“It’s still very early. I’m hoping that inclusiveness and Second Life being a level playing field for everyone remains and increases as a core value. And finally I would just say to each of you, I hope you would think carefully about what a better world means to you, and as you go about Second Life you do things, build things, and interact in ways that further your own vision of that better world.”


  1. hunter

    Mark – thanks for this great transcription. One note, the venture firm where Philip and Mitch met is called Accel Partners (not XL partners as suggested here).

  2. cube3

    nice recap// sorry i didnt make the speech. going to be a very interesting 12 months for linden labs…

    Depending on the actions of those investors and financial benefactors of the current “golden calf”, will the attitudes toward the entire immersed media, by that concentric circle of people reading about it, be determined:)


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  4. Shaun Osborne

    Thanks for transcript Mark

    Lets hope the videos turn up soon, I think the ‘early early adopters’, as Mitch puts it, have a need to see/hear this sort of stuff (what the vision is) at this stage..


  5. Torley Linden

    Wowza! That was totally enlightening and inspirational.

    Thanx indeed for the transcript, Mark! I love the closing sentence and paragraphs leading up to it.

    I also like the word “macromyopia”–I should use that more!!!

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  7. The Insider

    Thanks for the transcript Mark. I was bummed I couldn’t make it to the SLCC, but you pulled through and brought to us…:-)

  8. Prokofy Neva

    Glad you did this, Walker, we finally got something sensible out of what was occurring at SLCC.

    I’m struck by reading this text that if the problem is recognized at this high level of the board chairman of the gap between power users and clueless newbs, that the decision to kick out the struts of developer incentives or dwell payments or other kinds of more care-taking efforts by LL to nurture a middle class of inworld business/entertainment/non-profit was premature. It’s this sector that could be absorbing and integrating newbies, and this sector is the very one hobbled by all the decisions of the last year.

    Perhaps they thought that RL non-profits like American Cancer or RL media like Infinite Minds or RL business like American Apparel would both pump media coverage and island purchase money into LL, and that they would just rely on their cumbersome volunteers system to pick up the slack of how newbies are to adapt. I think this was a short-sighted and unimaginative policy on their part. If they felt that the incentives were being gamed, they could have stepped up and said, “no awards to those who use camp chairs,” or “we’re going to run a credible judge’s panel to make these awards” and not hidden behind the endless lament that this “doesn’t scale” — because it’s understood that it’s a year-long effort to jumpstart the world and fill the gap.

    It’s still not too late for LL to return to something like that, nurturing more beyond just the old elite of the larger group of power users instead of endlessly kicking them in the teeth with nasty moves like closing the forums down — particularly the classifieds — to spike and spite people they view as too competitive with, or too critical of their early adapters and their RL and SL businesses(note what Mitch said about how such people are not going to be appreciated). There shouldn’t be 20 people giving their SL Views; there should be 200 or 2000.

    More thoughts here:

  9. dildo baggins

    mmm..the silence is sort of deafening on the whole slcc. Was it such a letdown and circle jerk that no one is willing to write about what really went on? or maybe it was such a tupendous party that people have to take a holiday to get over it? Do tell…thos M&A’s bewteen all the big cheese players making squintillion L$ etc etc etc zzzzzzzzzzz

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  11. blaze

    Way to inspire confidence, Mitch!

    “On the other hand, in the long term, everybody’s going to be in Second Life, if Second Life succeeds. And if the company doesn’t succeed, it will be in a technological succcessor to it: Snow Crash made real.””

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  15. Joi

    I agree- ot’s pretty sad to watch an old guy like Mitch ramble on like this.

    In more civilized and caring societies, he’d be taken to one side and given some bread and water.

    What Mitch is describing is a simulacra of life – stripped of all the good bits that make life interesting. If Mitch ever gets out of therapy, maybe he’ll begin to describe what it feels like to uh, taste food … get laid, etc.

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  18. Gwyneth Llewelyn

    Ah, Mitch Kapor is sadly in that so uncomfortable position of knowing about the feature and preaching about it to both believers and unbelievers :)

    Still, it’s refreshing to hear he saying things like: “[…]in the battle between faith and skepticism on these kinds of things, you don’t have to take on faith that faith is going to win. There’s lots of good empirical evidence from past waves to give you confidence that the early stage that we’re in now is in fact an early stage and we’re going to see maturation, growth and further change”.

    For me personally, this means quite a lot: people (and capital!) are firmly behind Philip and his vision. They’re not in it because they have “blind faith”; rather, they have seen the future and just aren’t sure on how to travel the road that leads there. But finding the road is what is important; not turning back if they don’t find the end to it.

    Being tired of repeating the mantra of “we all were skeptical about the Web in 1993; we were skeptical of Amazon in 1995; look at what we’re doing now — collaborative, social Web!”, it’s really refreshing to listen in to such good arguments from the mouth of one of the “founding fathers” of the personal computing age…

    Luddites — get lost. Innovation and progress, here we go!

    Thanks for posting this transcript, Mark!

  19. TJ

    Maybe a 2nd world can help us to simulate something that’ll clearly transcend the constant BS happnin in the first world.

    Like: what happens when everybody just SHUTS UP for a while?

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