Liveblogging MIT: Keynote with Mitch Kapor, Chair Linden Lab

Mitch Kapor, Chair Linden Lab, welcomed us back after lunch to talk about the state of the virtual world industry. Virtual worlds, he said, are in the same position right now that personal computers were in the 1970s.

"I grew up in the 60s. And the thing that [experiencing Second Life] reminded me of was a drug experience, back in the days that we didn’t know how dangerous recreational chemicals could be. But all the early adopters had some sort of mystical experience. The form it took was different, but all felt like they had been in the future. It had nothing to do with capital and profits. We’ll get back to that, but what’s driving it is the shared sense by a few hundred thousand crazy people that this is really important. We can’t articulate it or say where it’s going, but people will drop everything and do it. When we look at enterprise, we have to take into account that narrative."

Disruptive Technology: From the PC to Virtual Worlds

I want to look at some big patterns. It was my fortune to be involved in the early days of the PC industry, and I think the disruption that brought can provide some connections to what’s going on.

Most of us, even in the middle of it, had no idea what was going to happen. When I wrote the original business plan for Lotus, we tried to size the market. At that point, Visicalc, which was the dominat spreadsheet program, had only had limited sales. So I took a stab in the dark and said we might do 3-4 million in sales in the first year. Instead we did 53 million in sales. It is true that Lotus 123 ushered in the era when PCs first became ubiquitous, but we had no idea of the size or rapidity with which it was going to happen.

My summary is that the PC era marked a radical disruption in the computing world. What settled down was a different industry architecture. There was initially a great deal of vertical integration, and it flipped to horizontal integration, where Microsoft owned a system layer regardless of what machine it was on.

Virtual Worlds are the New PC
-Disruptive platforms with largely unforeseen and basically unknowable impact.

-Swift movement from margin to mainstream which sweeps skepticism aside. It’s still a largely marginal phenomenon. When I get out of my neighborhood, it amazes me how many people haven’t heard of Second Life. And I mean swift in human terms, over the course of a human generation, things will change dramatically. Just as the PC launched in 1978 and got to its mature form with Windows 95. But the changes with the PC were very, very deep. It empowered people to do a whole new class of things.

-Deep Changes in what people can do with information technology and how they do it.

-Widespread creative disruption in the economy.

Technology Adoption Curve
New technologies, especially those that are radically different, start out by attracting early adopters who have very different requirements. The phase is always quite chaotic. And if the technology platform has merit, what will come out of that period are a number of pragmatic applications, and that leads to a larger pragmatic phase. In the PC, that came with Visicalc and Lotus, and the justification wasn’t that this is fascinating, people could use it. And then the conservatives might get dragged in by working in the enterprise. Finally there are the laggards.

We’re in the late stage of the early adopter period. There’s a great deal of interest in virtual worlds, but it is not clear yet that there are the highly pragmatic payoffs. If there are, they’re still well kept secrets.

The interesting thing in being early, and this relates to my early experiences in life being outside the mainstream, is that there’s always a great deal of skepticism that exists about these products. My experience, that includes not only the PC, but the Internet and streaming media, is that you can count on dismissal from those people in power.

When I was here at the business school, everyone who talked about it said “personal computers are useless toys.” The issues was whether one imagined they might be outside the scope of what was already being done with computers. This isn’t to point the finger at MIT at all. In 1992, I was interested in the commercial Internet. There was no Web, but you could purchase a connection. I went to a friend of mine who was a very famous venture capitalist, and I could not get him to take a meeting because he said “The Internet has no commercial potential.” And everyone later said “I will never put my credit ard on the Internet.”

Skepticism is a part of the landscape. I’ve been involved with Second Life since it was started in 2000, so it took 5 or 6 years to become an overnight success. And it was turned down by dozens of investors and scoffed at by pundits. People said “There’s no market for online games” or “The information superhighway is littered with the corpses of failed startups in this space.” And after we had it up and running, the conventional view was that you needed a huge team of artists to populate the world and make it interesting.

Philip was the person with the vision of this. My value add was that I said, “ You seem like  a very talented entrepreneur. If you start a company, I’d like to get involved with it.”  [He puts up a picture of a runway]. The image of a long runway was important for the company because we said we do not know how long it will take to be a self-sustaining venture. We need to have a very long runway because we don’t want to get to the end without picking up speed. We spent 1/10 the money of another company that at the same time went in and out of the space because we didn’t know how long it would take to gather critical mass.

Virtual worlds are at the tipping point. There’s significant media attention now. I’m on a subcriber program that tracks articles, and the other day there were 243 articles that came in on Second Life. There’s clearly a critical mass of passionate early adopters. There are hundreds of thousands of people spending time in virtual worlds. And there’s  critical mass of economic activity. In Second Life, the average of money changing hand is $1.6MM/day. There are perhaps thousands of people now making a living off of Second Life. If you want to find the historic parallel, it’s the power sellers from the early days of eBay. It’s a different set. The economy today in SL is not an enterprise-driven economy. It’s small, marginal entrepreneurs who are doing that. And enterprises are intrigued and experiementing.

Why is it at a tipping point? I think that’s really important to understand, because none of these things are inevitable. I had a moment of insight when I got just how big virtual worlds were going to be. [Puts up pictures from SL] These are stills that I got froma video on YouTube of a concert that Suzanne Vega did in SL. I was watching this and enjoying it, and there was Vega playing the guitar, and the audience was there listening. And I go “Wait a minute. What is this?” First of all this was a video of an event. It was a video of a concert. A concert is a group of people sitting there listening. But the performer was somewhere else in a radio studio, but simultaneously, she was there on the set and a virtual audience was watching her. But those were real people anywhere in the world, and they could walk into the studio and watch her. The resolution, as it were, is a lower fidelity resolution of reality than the physical world, but the virtual reality is just as real in character and kind, if not degree. And I thought, “This is an infinite space. These virtual worlds become what we imagine them to be.” 

I grew up in the 60s. And the thing that it reminded me of was a drug experience, back in the days that we didn’t know how dangerous recreational chemicals could be. But all the early adopters had some sort of mystical experience. The form it took was different, but all felt like they had been in the future. It had nothing to do with capital and profits. We’ll get back to that, but what’s driving it is the shared sense by a few hundred thousand crazy people that this is really important. We can’t articulate it or say where it’s going, but people will drop everything and do it. When we look at enterprise, we have to take into account that narrative.

There’s a term coined, Macromyopia, that describes this. His observation was that short-term effects of new platforms are less than predicted, but long-term impact is far greataer than expected. Crossing the chasm is hard and making these things work in the preexisting in the existing frameworks. As it happens, the hardcore skeptics cheer. On the other hand, when that backlash happens and deflates long-term expectations, people write it off and others work harder. When it makes it, skeptics develop amnesia. I feel like that’s the point we’re at now.

I’m not going to make predictions, but I’m going to talk about some of the things to watch. [Puts up a picture of Jaron Lanier]. This is Jaron Lanier. He invented the term virtual world, and his company VPL Systems built some of the first systems. I love his dreadlocks, and I put him in every presentation, no matter whether there’s a reason or not. [Screen of Habitat]. This was an actual commercial service from 1985 that was described as an intelligent online world with multiple participants. This even had ecommerce in it. That’s a vending machine right there. Why didn’t this take off?

Why no? We have fast PCs with big memories and powerful GPUs. We have broadband the global Internet. There’s a structure to use. And there’s an ethic of participation that has become a mass phenomenon (open source/free culture) that believes there is something to be done by groups working together with the Internet. It’s a powerful cultural phenomenon that has been recently invented.

There are a couple of things in Second Life that I believe are radical.
-in-world tools for object creation and scripting.
-all user-generated content. This was a radical idea at a time when there were massive teams of artists creating other virtual worlds. And when residents could change the world, there were in-world strictures and no user control over them.
-free service, not subscription
-residents own and control content
-open economy with economic incentives for entrepreneurs.

I didn’t understand it when Philip back then said the users were going to create all the content, but it’s powerful when there is that possibility available with tools and the incentive to do so with economic prompting and control.

Even with that, though, there’s still a lot of skepticism. If you talk to people who are not here in this theatre and ask them about it, there are a lot of things in 2007 you hear over and over again.
-The first is that these things are just too weird. Which is true when you have flying penises all over.
-They’re too hard, which is true and we talk about it.
-No reason for most people to use.
-There’s not enough control for business.

I heard this about computers in the 80s. People would sneak in an Apple IIe  on their expenses, and couldn’t tell them, but they did it and created these beachheads, and a lot of problems. There’s now a whole IT ego system that then there was no centralized control over. It was messy, and it mostly got sorted out over a period of time. I suspect the same type of messiness as the forces of openness and those who want to lock it down struggle with each other. And I wouldn’t even venture a guess as to how that will sort itself out in a satisfactory way.

There are things to watch for. There’s going to be new hardware and software categories, new collaboration, and I have a hopeful vision for where things are going to go overall.

[puts up picture of glove and goggles VR]. Even though this is not a consumer friendly design, having a more immersive environment, and having one with more modality, the vision is still there. With VWs at the tipping point, I think the value and investment of people to find more immersive experiences are going to come. We’re not even in the DOS era. We’re in the Terminal era of virtual worlds. And we don’t know until someone invents something cool and significant that we can use. I do think sound is going to be incredibly important because I’ve been using it on the grid.

Reality Acquisition Devices. [Google Street view shot.] This is a picture from my neighborhood. It’s now possible to acquire on a massive scale lots of information about the world. There will be a huge demand for all types of reality acquisition devices, things that make it possible to recreate faithfully aspects of the world. In addition to the fantastical uses of virtual worlds, the mundane are going to become very important. There was a time when email and the Web browser were incredibly exotic. This is where we are with virtual worlds. As we can use these devices to make the environment comfortable and familiar, things will become easier.

The one thing that I feel comfortable saying is that there will be a bunch of surprises. I can remember that low cost laser printers with PCs and GUIs made it possible to do desktop publishing. And it passed all expectations about what people thought they could do.  [picture of a paperweight-size nest of polyhedra made of metal.] It would be difficult to manufacture, but it was printed with a 3D printer. The idea that you could lay down very thin slices of powder that is bound together to create objects is a hardware technology that is going down the same path that laser printers went down years ago. I guarantee there will be incredibly disruptive and inventive businesses relying on this combined with virtual worlds, but I have no idea what they will look like.

Social Applications for Businesses

All I really want to say is ditto to a lot of thing s I’ve heard today. Today when I go explain to people why meetings in VWs are going to be important for meetings, people ask why it’s going to be better than teleconferencing. I have a set speech about how you can go off and have a private conversation and bump into people in the lobby. People say this is nothing like teleconferencing. And I say, “Right.” But we’re at the “Why shouldn’t I just use video conferencing” phase.

When I hear people talking about extracting business value for this, there’s still a lot of talk about advertising and whether it will be advertising or customer interaction that brings value.

Finally, the desirable outcome, from a social and functional point of view, is a fully connected, decentralized grid, intermixed with public and private spaces that is open in its protocols and standards. This is apple pie, but I’m the chair of Linden, so I have some sway, and this is all in the company model and in a plan for the future.

Audience Question: The big question I have is that you talked about this is where the PC was, and there’s this thing called the Internet, and SL is a bit to the side. How do you see it playing nice with the Internet. SL has a particular set of metaphors and the internet has another. How do you see it coming together?

Kapor: There are a series of steps. One of which being taken was to open source the client. And others are to open the grid and allow people to put up their own servers and writer their own TOS. The longer term is that there shouldn’t be a singular proprietary protocol written into the thing. My view is that this is prudent. If the company doesn’t do this it will be crushed. This is such a powerful, inevitable idea that forces will align to make it there. We have to get there and use it.

Audience: Why did you pick PC instead of Internet for comparison.

Kapor: Poetic license. And I came of age with the PC, and it’s lessons are the most deeply implanted in me, so I can talk about it. I don’t mean to privilege the PC as unique historically. I just want to talk about it as an example. It’s also far enough in the past and issues have been settled, but if we were to talk about the Internet, that wouldn’t work as well.

Joey Seiler
www.VirtualWorldsNews.com
joey (at) showinitiative.com
(512) 535-8650
skype: joey.seiler.vwnews

Comments

[Trevor F. Smith]

"Finally, the desirable outcome... is a fully connected, decentralized grid, intermixed with public and private spaces that is open in its protocols and standards."

Amen to that! When I can walk an avatar from an Ogoglio space to a Second Life sim we'll know we've matured as a species.

[Joey Seiler]

There seemed to be a theme through the conference that eventually we're going to be driven to at least relatively open platforms with a way to unite them on top. I particularly like Mark explanation in the Virtual Worlds and System Design panel. Check that one out for an interesting read. Unfortunately, everyone was speaking fairly quickly and excitedly, so my notes are a little worse.

[Alan Edelman]

When is the technology advance too much? We have to advance, but sometimes we lose the benefits of what we had, and they're significant. Example - voice destroys the SL culture. This was a move obviously intended to respond to worlds like Sony Home and to cater to business and commercial. Remember the stats? Almost 40% of SL avatars are cross-gender from time to time. What does voice do for that? It destroys it. What does voice do for older people wanting to recapture younger times? Destroyed again. What about people who's computers are in the family room and they don't want people listening in to what you're saying (assuming you now have to use headphones). What about all the people who can't speak a common language very well but can sort of hack their way through typing? You sound like a complete idiot. I know - that's how I sound with German. But I can type slowly and sort of get my message out in an acceptable way. What about now having three message delivery systems to worry about - IM, chat and voice? I want to enjoy my time in SL, rather than getting stressed out about all the different inbound channels.

Everybody was on a level playing field with only having IM and chat. We've now just put substantial walls up between people rather than breaking them down. Sometimes the "next greatest thing" shouldn't be done in the name of progress.