Philip Rosedale (Ep. 52)
BY Future of StoryTelling — December 8, 2021

Founder of Second Life and High Fidelity Philip Rosedale discusses how online and virtual worlds have changed since Second Life's inception and shares his insights about the metaverse. 


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Additional Links:

• Experience Second Life for yourself

Learn more about High Fidelity 



Episode Transcript 



Charlie Melcher:

Hi, I'm Charlie Melcher, Founder and Director of the Future of Storytelling. I'd like to welcome you back to the FoST Podcast. My guest today is serial entrepreneur and visionary virtual world guru, Philip Rosedale. Philip is the founder of Linden Labs, the company that in 2003, launched Second Life, the original and incredibly successful, internet scale virtual world.

 

In Second Life, users create their own avatars, and are able to interact with each other and explore the world. There's a thriving economy, where people create, build, shop, and trade services and virtual property using Linden dollars; their own virtual token, which is exchangeable for real world currency. At its high point in 2013, Second Life had a million regular users. Today, it still has hundreds of thousands of monthly users, who are generating tens of millions of dollars of economic activity in the world. Cryptocurrencies, non-fungible tokens, and the metaverse can all be said to have their origins in Second Life. 

 

I had the pleasure of getting to know Philip when he came to speak at the FoST Summit, back in 2016. At that time, he was running High Fidelity, a company he co-founded in 2013, with a vision to build the first virtual reality enabled virtual world. Unfortunately, the growth of VR headset adoption that he and many others predicted has yet to materialize. So today, High Fidelity has pivoted to become a provider of high quality, immersive 3D audio.

 

With Facebook renaming itself Meta, and so much of the tech industry obsessed with the metaverse, I thought it would be a good time to hear from the one person who's pursued his vision of virtual world since the 1990s, and who has actually already built a version of it. I'm proud to have with me on the podcast today, the metaverse OG, Philip Rosedale.

 

Philip Rosedale, it's such an honor to have you on the Future of Storytelling Podcast. Welcome.

 

Philip Rosedale:

Thanks for having me. Good to see you.

 

Charlie Melcher:

Yeah. It's really nice to see you. It's been a little while since we were together in real life, at the Future of Storytelling Conference, what was that? Five years ago or something?

 

Philip Rosedale:

Oh, it seems like 50 years, right? Yeah. Amazing to think, yeah, that it was... It was New York, some years ago.

 

Charlie Melcher:

Well, listen, I want to start by asking you about your initial vision for Second Life. And when you were just getting going, like imagine we're 20 years ago, and you are coming to see me to pitch it; I'm maybe an investor. What would you have said to me? What was the pitch that you gave back then?

 

Philip Rosedale:

Well, it was something like, "A place online, where people could go, and communicate with each other, and do and make and build whatever they wanted to." And you're right; it was an unusual idea. And it was even more unusual then, although there were certainly visionaries that had thought about things like virtual reality, which itself had kind of started with Jaron Lanier, say 10 years earlier.

 

So it wasn't entirely crazy, that you could want to build an online world of some kind. But the idea of an online world that was open and was designed to be more constructive, more of a kind of a Canvas or a Lego kit, was a very unusual idea at the time; and one that I had a particular passion for, but that honestly, many of the people who I presented it to at that time, didn't understand.

 

Charlie Melcher:

What was your vision of what would happen there, and why people would want to come to it?

 

Philip Rosedale:

I think I was struck by the thought that people would be artistic and creative; that they might re-imagine or rebuild things from the real world, kind of dream, architecturally at least. I imagined that people would build buildings, because that would be so interesting, kind of explorations of how to use space.

 

I also imagined that some people might try to make a living there, or do something there, design-wise, or participation-wise, that they could make money from; which is why from almost the very beginning with Second Life, we had an economy, and we had a currency, almost a cryptocurrency, that you could use to buy and sell things with.

 

Charlie Melcher:

Okay. So then, let's jump forward to when Second Life is sort of at its peak, which is what? Maybe 2013, somewhere around there. And describe what that world is like, in case anyone has been living under a rock, and hasn't been to Second Life.

 

Philip Rosedale:

Yeah. Well, we launched Second Life in its kind of alpha form in 2002. And then, we launched the thing, kind of officially opened Second Life in 2003. And then, it became very famous in 2006; and it was a very sudden thing. It went from being an unusual thing that everybody was scratching their heads about, to being this thing that everybody in the world knew about. And in 2006, there were 500 articles a day that were being written about Second Life.

 

Charlie Melcher:

Wow.

 

Philip Rosedale:

And then it leveled off, at the population size that it still has today. So, it leveled off at about a million people using it monthly, and probably half of that or something, really using it a lot. But yeah, what it looks like today; it's a space about the size of Los Angeles. Second Life is a rolling terrain, that you can build on and live in. And that terrain, all told, many parts of it which are connected to themselves, is about the size of Los Angeles.

 

And the economy of it, the total amount of goods that people are buying and selling; so things like clothing, furniture, cars, houses, all virtual of course, totals up to more than a half a billion dollars a year in these transactions, which on average are a couple of dollars a piece. So, Second Life has been a study of a lot of the things that we are now, 2021, post-COVID, or in COVID, talking about in much greater detail. Second Life has been a kind of a time machine for looking at some of those things for a while.

 

Charlie Melcher:

Yeah. No question. This is the original metaverse, right? And also, the original cryptocurrency. And you had a early version of NFTs, in that people could create digital objects and sell them. And so, let me ask, what is at the heart of the economy of Second Life? Why is there that much money changing hands? And what is it that people are buying and selling?

 

Philip Rosedale:

Well, the first fundamental reason was that it was a live editing environment. A lot of the technical work that was difficult, and that I was somewhat interested in, being a technical networking and simulation, computing person, my background. The thing that was hard was that we built something where you could start from these little Lego building blocks that we called primitives, and you could twist them and paint them, and put pictures in on them, and glue them together, in any way you cared to. And that enabled people to be creative.

 

So, the general idea there, is that if you give people a rich enough medium in which they can actively, and in real time, make things, you're inevitably going to have an economy on that. So I think the reason that the economy came into existence was simply because we gave people the ability to do things like make a pair of glasses that they could attach to their avatar. And of course, once you start that ball rolling, somebody else wants to build a slightly cooler looking pair of glasses. And there you have it; you wait a couple of years, and you've got a pretty big economy.

 

Charlie Melcher:

That's amazing. So, I'm curious to dig a little deeper into why you think people want to spend time in virtual worlds, and what the benefits to them are.

 

Philip Rosedale:

You want to have a different identity. You want to change how you present yourself to other people. And of course, there can be a lot of different reasons for that. But if you want to be somebody else, maybe you're a celebrity, and you want to be a little anonymous; or you want to create a pseudonym that nobody knows you by. Maybe you want to make money; whether it's building and selling digital assets, as we see with NFTs today, or some sort of an experience economy, where you're a performer, getting paid for your time in a virtual world.

 

Another one is just kind of bringing us all together. And I think this is something where Facebook, sadly, has provided a kind of a counter example. Some online systems have not brought us together the way that we optimistically thought they would. But I do think that there's an opportunity for virtual worlds, and particularly if they're designed the right way, to bring people together; so that I might go in there and hang out with people from halfway around the world that I might otherwise have had distrust of, and get to like them better. Personally, for me, that's been one of the things that I want to continue to work on, and that I think is one of the big opportunities for virtual worlds; but we've got to do it right.

 

Charlie Melcher:

You and I are both of an old enough age to have lived through sort of the initial utopian idea of the internet, and the belief that it was going to create greater connectivity, empathy, I would go so far as to say, harmony, that could come about because the ability to know people from around the world better. And yet, where we are at the moment, seems to be almost more the opposite. Right? It's certainly, some of the largest social media platforms seem to be accelerating our differences, not our commonalities. I guess, at the end of the day, would you agree that that these are still ultimately tools, and it's really about how people choose to use them? Is there... There isn't good or bad baked into the internet or into virtual worlds or into NFTs; it's really just what we do with it all.

 

Philip Rosedale:

I do. I think it is how we use these tools. I would also distinguish between tools that we use for communication with each other, and then tools that we use for broadcasting information. And so, I think one of the things that's kind of weird about all this, is that we've got the tool that is broadcasting information to people; and then there's the tool that is enabling communication and connection between people.

 

And the tool sets are pretty different there, and the internet is both of them together. And I think sometimes we can dangerously overlap them; like broadcasting and making new friends shouldn't go together, or something like that. We have to be thoughtful about the risks, and how we're using all this stuff.

 

Charlie Melcher:

I wonder, obviously, we suffer now from information overload, and from echo chambers, right, where we are only hearing what we want to hear. Do you still believe that having infinite information is the right way to go? Or is it better that there be some organizing, filtering system, so that we have some shared facts, some shared information? I think that's one of the problems, is if there's too much information there, everybody has facts to support their various ideas.

 

Philip Rosedale:

As you say, I think that we... I didn't think enough about it, and I don't think many other people did. It was a hard problem about what being deluged with way too much information, what would happen. The idea that negative news... In a sea of information, negative news travels faster. Right? We didn't think about that. Or at least I didn't think about that back then. But I think it is true. And so, that's an example of too much information can be bad.

 

And I think, as you said, the highlight, I think for me, of the internet, what we've learned so far is, "Hey, too much information can be problematic for human beings. We only have a limited ability to take in information." I think about things like the Dunbar number; the famous Robin Dunbar, scientist's observation that we can know 150 people really well. We can't, as much as we might like to, we can't know 1500 people very well, because our brains aren't big enough. We get to know about 150.

 

And so, the question with the internet is, the internet lets you switch, I guess, which 150 you pick; but doesn't let you go over 150. And so, I think that is an example of the challenge we face. We can choose a new family, but we can't make that family enormously larger.

 

Charlie Melcher:

Or if we do, we do it at the risk of the quality of the connections, which is why we... Which leads to all of the sense of loneliness and isolation and mental depression and other things. I'm curious if you think that commerce, there seems to me there's a few things that people might point to that made Second Life very successful. One, certainly commerce. The scale of the amount of money happening there is really impressive; and it's a good reason why people wouldn't give up on it. Right? They're making money there. Another one, sex; there's a sort of a natural need or interest.

 

Philip Rosedale:

Sure. Right. Intimacy.

 

Charlie Melcher:

Intimacy. But often, new technologies are adopted first and made popular because of that urge of people.

 

Philip Rosedale:

Yeah.

 

Charlie Melcher:

Addressing those two, are those sort of fundamental, do you think, for success of virtual worlds or metaverse?

 

Philip Rosedale:

Well, I do think that authenticity, allowing us to communicate with each other in an authentic way, and to be intimate, to be close, is a requirement of a medium to be something that's really useful for us as humans. And as you say, sex, sexuality, and deep, intimate relationships are inevitably a part of that. They're where new communication between people may ultimately lead. And I think that if you block that from a system, then yeah, you walk back its value for people at large. So, yeah. It feels like new communication systems are invariably experimented with, for example, with sex. And I think that's okay.

 

And I think that as we look at all these proposals about what is the metaverse, and what happens next; if we do become more social online, yeah, the systems have to support a full range of human interaction. And if they don't; well, if they don't, they'll be siloed. And then, that gets back to what you said about echo chambers; that there's the danger that we don't want to... We don't silo our human experience. New York doesn't separate different behaviors into different areas; and there's a good reason for that.


Charlie Melcher:

I'm also sort of curious about the role of business in virtual realities. I know for example, Microsoft is thinking about the metaverse, in regards to it providing places for people to meet, for professional purposes. Is this also sort of an essential piece, do you think, of the growth of virtual worlds or metaverses?

 

Philip Rosedale:

Yeah. Certainly, we had always hoped... And Second Life didn't become used for business meetings, but it did become used, and continues to be used a lot, for academic experiences; so it's like part way there. But I think as you say, the metaverse potential, the potential for getting people face-to-face online, definitely includes learning and business: business interactions, business meetings, business teams working together. I think that's a key opportunity.

 

That said, it's a hard problem, because most people are still not ready to be a 3D avatar. They still want to use video to communicate, especially when they're meeting somebody for the first time. Because video, especially when you meet somebody for the first time, is giving you important information that you need to kind of establish trust, get a feel for the person.

 

Charlie Melcher:

So after Second Life, or a certain point, you left, and you started High Fidelity. In fact, I think we met sort of originally, when you were working on that. And the focus there seemed to be a virtual world, but now, in virtual reality. Right? You could have a multi-player or multi-person VR experiences. How did you feel that ended up working?

 

Philip Rosedale:

Well, yeah, as you said, High Fidelity was a huge bet on the VR head-mounted display, best seen today by the Oculus Quest, is probably the best example of that. We jumped into trying to build kind of a whole new Second Life, a whole new virtual world, designed entirely for the head-mounted display. And we worked on that for six years. And in about 2019, we realized, as a company, that although VR was starting to happen, the use of it for social engagement, for business meetings, for things like that, was not going to happen within the next five years.

 

And I stand by that; I stand by that number, even though we've seen exciting demonstrations of new Facebook products, and people have been playing with all kinds of stuff. There's been a lot of excitement. I still believe that the use of VR headsets as a means of going into virtual worlds, we still have a few years to go. They're too heavy, they're uncomfortable, you can't type; they're very stress-inducing. They can be very divisive, in terms of who is willing to wear them, et cetera, et cetera.

 

Charlie Melcher:

Hmm. Well, that's a really interesting perspective. At Future of Storytelling, we tend to look for the people who are doing cutting edge, innovative storytelling, and using tech in new ways. And so, you're literally the first person I think we've had on, who has not been... Who had had some experience with VR, and has not been somebody who is like, "It's here. It works. It's great." Who has not been an evangelist for it. And I guess you're saying you just think it's a little further off, in terms of the technological innovation: it's too heavy, it blocks everything out. I know you mentioned when we spoke the other day, that it only sort of works for certain types of people. Explain what you meant by that.

 

Philip Rosedale:

The practical problems with VR headsets are kind of easy to list. Like you said, they're too heavy on your nose, you can't type. Now these are things that can get practically fixed. The other big one, especially for business, is typing. You can't type to communicate while you're wearing a VR headset. There's lots of good work going on to fix this, but as a person with an engineering background, and a tremendous passion for this stuff; and being one of its biggest advocates in a larger sense, I think these are still problems that are pretty hard.

 

You mentioned, yeah, that the divisiveness between people; that's the one that I think is both a subtle, but really important observation, that is also very timely, in terms of what we as a society are talking about right now. And that is, "Are you comfortable blindfolding yourself in a room where there may be other people? Are you comfortable doing that?" And I think the answer varies, person to person. And if you're a big, tall, white guy, you're going to be pretty comfortable putting a blindfold on, and walking around like an idiot, potentially tripping over your coffee table. Right?

 

But if you're not a big, tall white guy, your sensitivity to that risk and that vulnerability is a lot higher. So I think there's a really serious gender gap, and just general kind of demographic, psychographic division that happens with who is using these devices. And if we're expecting to have social environments like live music experiences, for example, that we're going to in VR headsets, we need to get those headsets to be completely equal opportunity, in terms of who wants to put them on.

 

Charlie Melcher:

I'm curious about your take on the metaverse frenzy that's happening right now. It seems like every company wants to read, not just Microsoft and Facebook; but everybody seems to want to position themselves as a metaverse company.

 

Philip Rosedale:

Yeah.

 

Charlie Melcher:

Is that wise? Are we still too far away, technologically, from that really being viable? Second part of this question, which is probably the longer one is, since you've been doing this longer than anybody, what kind of lessons or advice would you have to share?

 

Philip Rosedale:

Yeah. What a great conversation; we could talk about it all day. Well, the first thing was, I'd say that when you say metaverse, I think people are talking about two different things; just two. One is, the idea of a three-dimensional world, like what a video game looks like; 3D. The idea of going from 2D to 3D.

 

The other thing is, "There are other people there, and I'm communicating with them." Right? "I'm not alone in this space." So, this idea of the metaverse really has two big components. And I think that when we talk about this transformation, we get excited about it. We're sort of mixing and matching that; and some people are kind of farther over on one side or the other. I'm more on the side that it's about communication.

 

And then, the reason that we're all talking about it right now, is COVID. We all suddenly got the idea in our heads, and I think for a lot of us, it's a frustrating one, right? That maybe we're going to have to start doing a lot of things that we historically did face-to-face, or in a physical location, we might have start doing them online. And I think a lot big companies are sort of circling in the sky, hoping that they can get a piece of that. "If we're all going to have to go to entertainment experiences, or hang out in bars, or go to shows, or something like that online, hey, who is going to get a piece of that money?"

 

Charlie Melcher:

So, it's important that you brought up COVID; and it makes me think of Jane McGonigal's book, right, reality is Broken. And her thesis, which was that the explosion of hours that humans were putting into gaming was a response to how their real lives were not as rewarding, they were not as fulfilling as the experiences they could have in the gaming world. And I wonder if you think that there's a direct relationship between time spent in virtual worlds, and the quality of life available in the real world.

 

Philip Rosedale:

The idea that the size of the virtual world population is proportional to the crappiness of the human experience outside the virtual world is a depressing, and I think somewhat true thing. And you're right. Yeah. COVID is kind of the big punch right now. But we've got other things, like political unrest, and wealth inequality, I think is probably, along with climate change, is the... Climate change and wealth inequality, I think are the two things that we, as a human species, need to deal with right now.

 

We can use technology to fix the world that we really do live in. I think that we can... Maybe we can use things like cryptocurrency. I say that with a big star, maybe, because it's not going that way right now. But maybe we could use cryptocurrencies to help with wealth inequality, for example.

 

If you look at the metaverse or virtual worlds as an escape from a failing world, I think you've already failed. If we're all going to go abandon the real world, why would we do that? We're human. We're here. It's part of the deal. This is... We should be using technology to enhance the experience we have while we're alive as humans, not leaving our bodies, not leaving the world behind.

 

Charlie Melcher:

I personally have been thinking a lot about how do we use technology to get people reconnected with the real nature? Is there room for those two things to work together? I think that's one of our big challenges these days, is that so many people feel that they are not part of nature; they feel completely disconnected from nature. All the more reason then, to go into virtual worlds full time. But perhaps if we could reconnect to our place in the world, we might feel more committed to saving it.

 

Philip Rosedale:

I want to dwell on what you just said, Charlie; because I think that you just put it really well. And it's something that philosophically, I've been kind of pondering a lot. I always thought of Second Life as being nature. I always of this idea that Second Life would be like this growing ecosystem, with grass and trees and animals and stuff; and the animals would be maybe AI or something. And that you would go out into the forest in Second Life, and you would really be in nature, in the way that it feels to be in nature, in the real world.

 

And I think that there is an opportunity there. And I think you put it really well, that we lose this ability to kind of commune with nature. And what is that? I think it's something to do about embodiment; that our bodies are there, and we're physically part of the forest. We're physically forced to interact with the animals and the forest and the trees. And there are limits set on what we can do, how fast we can walk, whether we can climb something, that are imposed by nature. And I think I have gained a new recognition here during COVID, of how cool that is, of how wonderful it is, that we can't just do anything all the time.

 

The beautiful thing about nature is that you're one place in it. You're all alone. You can't do everything all at once. You don't have satellite connection. You are there with your body and the place that you're in. And I think that there's maybe an opportunity to do that with future virtual worlds.

 

What if there was a world in which the rules were really quite strict? Or, what if there was a virtual world, where there were AI things that were evolving, and kind of coming to live there, and living there all on their own? And maybe they're stronger than us. Maybe when you go hang out with the Ais, they'll eat you if they don't like you. And maybe that could be as an avatar or whatever. That could be a wonderful thing. So I've been thinking about that. So I like that you brought that up. I think there is a place for nature.

 

Charlie Melcher:

I've given this a lot of thought, where I do think we're moving towards an age where we're expecting to have 3D experiences more and more. And ultimately, the reason I think we're moving there, is because technology, and again, this is me as an optimist, is moving towards something that's going to be more fundamentally human. That's more designed for us, for the way we normally... Or evolved to engage with the world. Would you agree with that? Do you think we're on that trajectory?

 

Philip Rosedale:

I would, yeah. I don't think that every webpage makes sense in 3D; but as you said, I think the experiences that mean the most to us are the ones in which we're embodied; and that requires a three-dimensional presentation. And so, I think that that is the most human way that we can experience, learn, remember. You know there's the whole memory palace thing, about how a space remembered is the most solid way to remember anything. So I think there's a lot of merit there; and that, I haven't come away from all. I'm just practical, as we think, for example, about these VR headsets, about how do we get a full 3D presentation, and even AR. That's even just a worse problem, because now you need lighter weight things you can often see through. And so, it's tricky.

 

Charlie Melcher:

If anybody is going to figure out how to do that, and be sort of ahead of the curve, I'm afraid it might have to be you, Philip. You've just constantly been that person pushing the boundaries ahead of where everyone else is. Do you... Are you working on anything like that? Can we follow you down this path?

 

Philip Rosedale:

I'm trying. At this moment of COVID, and looking back on technology, and seeing these problems; and then seeing the unrest and the instability we have as an economy and as a society. Yeah. I'm kind of looking at that all right now, and trying to say, and maybe this is a generative moment. I just turned 53, so it's probably right at that moment, where you kind of take stock. And right now, I'm just thinking, "How can I apply all the things I've learned about virtual worlds, and indirectly about people and about embodiment and about communication, to making it a better world?"

 

And I do like to continue to work on things that are pretty early, or are maybe technically difficult; I think that's probably the place where I can add value. I've enjoyed doing those things in the past, and I think I can do them again. I'm an optimist. But yeah, we'll have to see. But I do think... This is another point, right? And I'm sure you've had this thought, too. The world is becoming less and less predictable, because as expected, we're sort of stacking exponential technology changes on top of each other. And so, the uncertainty for me, at least, as kind of a futurist, the uncertainty of the present moment is profound, and sometimes debilitating and depressing. I feel like it is really difficult to say what's going to happen next right now.

 

If you had said to me in 2000 or 1996, when I was working at Real Networks, or 2003, when we were launching Second Life, if you asked me to tell you what the world was going to look like in the next couple years, I think I could do a better job then by a good bit, than I can do right now. So, right now, I'm kind of almost shocked by the present moment into a state of trying to listen more, and sit back a little bit and think carefully, try to get my head around what's going to happen next. And then, act in as best a way as I can.

 

Charlie Melcher:

Well, Philip, I want to thank you for spending the time with me today. I really enjoy our conversations, and just have always been a huge fan of not just the creativity, but the deep thinking that goes into everything that you make. So thank you, and look forward to many more adventures together in the real life, in the real world, in this life.

 

Philip Rosedale:

Thank you so much for having me. This has been great. Thank you.

 

Charlie Melcher:

My sincere thanks to Philip Rosedale for joining me on the show today. You can learn more about Philip and High Fidelity, and find a full transcript of our conversation by visiting the link in this episode's description.

 

Thank you for listening to the FoST Podcast. I hope you enjoyed it. And if you did, we'd really appreciate it if you'd take a moment to give us a review. FoST also produces a monthly newsletter that's informative and well worth the read. It's free, so check it out along with a wealth of other great content, by visiting our website at fost.org. The FoST podcast is produced by Melcher Media, in collaboration with our talented production partner, Charts & Leisure. I hope we'll see you again in a couple of weeks for another deep dive into the world of storytelling. Until then, please be safe, stay strong, and story on.