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Is Business Ready for Second Life IS BUSINESS READY FOR LIFE? BY DAVID F. CARR ILLUSTRATION BY JAMES GARY Companies such as Toyota and American Apparel are setting up shop in the virtual world, but the site’s operator, Linden Lab, must now scale its infrastructure to meet demand. THEY STARTED GATHERING hours before the Town Hall meeting on Jan. 9 was scheduled to begin, anxious to grab a seat in the virtual auditorium: a lizard man, an armor-plated robot, a floating ball of energy, several dragons, and members of the Alliance armed forces in their best dress uniforms, along with many dozens of curvaceous women and preter- naturally buff men. Some paced in front of the stage, while others hovered in mid-air or sat typing text chat at each other on invisible keyboards. These Town Hall meetings are a tradition in Second Life, the virtual world operated by Linden Lab, a San Francisco startup, where users dress their avatars in clothes (or dragon getups) bought in virtual boutiques, participate in social dramas of their own making, and set up virtual businesses4 BASELINE MARCH 2007 31 WWW.BASELINEMAG.COM CASE DISSECTION: SECOND LIFE where they buy and sell virtual real estate adapted to serve real business purposes, using it as part of a program for keeping or hawk virtual clothes, houses, vehicles similar to the way the Web evolved from employees connected with each other and furniture. a medium for academics and hobbyists to and with IBM alumni, and as a virtual With more and more avatars filling one that supports corporate commerce meeting place to talk with customers, the same virtual space, the simulation and marketing. Already, your avatar can IBM has built a Circuit City and a Sears software that tracks the movements test-drive a Toyota Scion or buy clothes appliance store in Second Life as dem- and position of individuals and executes in a virtual American Apparel store. So onstration projects (which means IBM animation scripts starts to fall behind. far, however, it’s not clear how much didn’t charge them for the work). Time seems to slow down, with avatars these efforts are doing to sell real-world “Based on the history of the Internet, moving as if through molasses. Some cars, clothes or any other merchandise. we think this is a stabilizing period for people blink out of existence as the But Chris Holdren, vice president of the 3D Web,” Kearney says. A true 3D viewer software on their own desktops Web services at Starwood Hotels, who Web would have to be based on open crashes. Others find themselves in odd oversaw the construction of a hotel in technologies, with some means of predicaments as the laws of physics Second Life—a prototype of the new passing between virtual worlds hosted seemingly break down; while trying to Aloft brand hotels scheduled to appear by different organizations. And just as grab a spot in the standing-room area in the real world in 2008—says Second new types of businesses were born on at the back of the auditorium, they find Life presents enough opportunities that the Web, new businesses will be created themselves sinking through the floor corporate technology leaders should pay around the 3D Web, she says. “But right up to their necks and getting stuck attention to it. “I definitely think they now it’s very early, and the technology is there—disembodied heads, unable to should learn about it and understand it,” very, very young.” see what’s happening onstage. he says. “Whether they invest in it is a Yet the entry of businesses has cre- It’s not the first time for such prob- more complicated question.” ated opportunities for experienced lems, but audience members grumble And if this really is the start of some- residents to set themselves up as consul- that this time the whole system may thing big, those companies that explore tants who help newcomers create their crash before the event even gets started. the technology now may be in a better own Second Life experiences. Alyssa In fact, one of the four simulators that position later, much like the first com- LaRoche entered Second Life as Aimee have been clustered together to support panies to grasp the importance of the Weber while she was laid up with a torn a bigger audience does go down, ejecting Web in the early 1990s—back when it knee ligament and couldn’t do much everyone within it. was an immature technology trickling other socializing. She became a regular These types of problems, however, out of academia. at Second Life nightclubs, decked out in don’t seem to be deterring people—and Sandy Kearney, director of the virtual clubwear of her own design and a pair of businesses—from entering Second Life. worlds program at IBM, says the transi- butterfly wings. Indeed, real-world companies such tion is coming, and “you may not have A former computer consultant to as Toyota and American Apparel are as much time as you had with the Web” financial services companies who was exploring whether this 3D world can be to adjust to its impact. In addition to then working as a Web programmer, the founder and CEO of Lotus Development. grammer for Pacific Coast Power and Light He was also an early investor in UUNet and for Acclaim, but has also programmed Technology and RealNetworks, and was a electronic warfare systems. A former lieu- partner in Accel Partners when Rosedale tenant commander in the Navy, he earned 3 PHILIP ROSEDALE was there. In an interview with Reuters, he degrees in computer science and weapons Founder & CEO characterized the market Linden Lab is and systems engineering at the U.S. Naval Rosedale is a pioneer pursuing as a $100 billion opportunity— Academy, graduated from the Navy Nuclear in the development of but only in the long run, once the technology Power School, and worked at the National streaming media tech- has a chance to mature. Security Agency. nology. After developing a low-bandwidth vid- CORY ONDREJKA6 JOE MILLER eoconferencing system Chief Technology Officer Vice President, Platform & Technology Development called FreeVue in 1995, Ondrejka leads the team developing the Since joining the company in April 2006, he sold his company to Second Life platform, including simulation of the virtual world on distributed servers, Miller has concentrated on extending the RealNetworks in 1996 AB Second Life platform L and became its chief 3D streaming media, to reliably support technology officer, overseeing the develop- and the in-world tools very large member ment of RealVideo and other products. that allow avatars to communities. His In 1999, he joined venture capital firm customize their own resume includes 30 Accel Partners as an entrepreneur-in- appearance and collab- years of experience residence, and began researching ideas oratively create objects. at gaming companies that led to the creation of Second Life. He championed the decision to allow users such as Atari and MITCH KAPOR to retain intellectual Sega of America. Chairman property rights to their In the computer A computer industry leader for the past creations. He has been learning field, he was two decades, Kapor rose to prominence as a computer game pro- a founder and CEO of AVATARS COURTESY OF LINDEN WWW.BASELINEMAG.COM LaRoche became proficient at designing items for sale to other avatars and soon LINDEN LAB BASE CASE established a clothing store called HEADQUARTERS: 1100 Sansome St., San Francisco, CA 94111 Preen. Other users bought her clothes PHONE: (415) 243-9000 with Linden dollars, or Lindens, the BUSINESS: Develops and operates the software simulation system behind the “in-world” currency, which trade on Second Life virtual world. exchanges operated by Linden Lab and CHIEF TECHNOLOGY OFFICER: Cory Ondrejka others at a rate of about 250 to 300 FINANCIALS IN 2006: The privately held company expects to record revenue of Lindens to $1US. $10 million to $12 million for 2006, up from $4 million in 2005. The company said it When American Apparel, a real- posted its first profitable month in December, but did not release figures. world clothing store, decided to create a CHALLENGE: While continuing to grow and improve its own virtual world platform, parallel boutique in Second Life, Aimee Linden Lab is pursuing an open-source initiative that it hopes will set the standard was hired to design it. Her company, for the 3D Web, which it sees as “a $100 billion opportunity” (only part of which Linden will be able to capture for itself). Aimee Weber Studios, a Second Life BASELINE GOALS: development company, now employs 11 full-time employees and another 10 4 Support a peak load of 150,000 concurrent users by the end of 2007, according to an unofficial prediction from Cory Ondrejka’s blog. The peak number of part-timers. But she also continues to concurrent users surpassed 33,000 in mid-February. operate in-world businesses such as her 4 Achieve profitability for full-year 2007. clothing stores, and to develop her own 4 Grow the number of Second Life residents. The 2006 goal was 1 million. Although real estate in areas such as Midnight no specific target has been set for 2007, the company surpassed its 2006 goal City, where she rents out storefront of having 1 million residents by more than a million; in the first quarter of 2007, locations and lofts. the virtual world had surpassed 3 million residents (although the number includes The Second Life system runs on 1,800 inactive accounts, as well as multiple avatars controlled by a single user). Debian Linux servers dedicated to simu- lating activities in the virtual world, with multiple copies of the simulation soft- of technology Joe Miller, who notes that the images used to provide them with ware on each server.
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