Second Life: How a Virtual World Became a Reality

I asked Philip Rosedale to summarize his lessons learned from creating Second Life. If you were advising an entrepreneur who wanted to do something as big and bold as Second Life, what are your top five pieces of advice -- what to do and what not to do?
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In this blog, I'm introducing you to the work of Philip Rosedale, who set out on a very bold mission to create a virtual world accessible to the masses. How does one even think about doing something on this scale? What are the lessons learned? Enjoy!

I caught up with Philip Rosedale, the creator of Second Life, a brilliant entrepreneur and a close friend, at Singularity University. Philip is one of the most expansive thinkers I know, with a passion for creating communities and motivating people to be effective and powerful entrepreneurs.

As a reader of this blog you already know my passion for "origin stories" for people's companies, so finding out how and why Rosedale started one of the most ambitious Internet companies of the last decade was a real treat for me.

"I started doing electronics when I was a little kid, in the 5th or 6th grade, buying computer parts at a swap meet and writing my first programs," Philip told me. "Simple things just blew my mind with respect to the sort of infinite simulation or combinatorial possibility inside the computer. My personal obsession from my childhood was that I just wanted to recreate reality inside the computer and then go in there," Rosedale said.

Rosedale had studied physics at college and after graduation set out as an entrepreneur. "I had started a small company doing database inventory control, and decided to move the business up to San Francisco," he said. "My timing for landing in Silicon Valley, at the center of the Internet, was perfect."

"At that time I told my friends that I was eventually going to build a virtual world, but the systems weren't up to speed," continued Rosedale. "There was insufficient bandwidth and no 3D, even on desktop computers," Rosedale said. "So I decided that I was going to have to lay low and work on something else entrepreneurial with this Internet 'thing' while I waited for the future to catch up," Rosedale said.

Like anyone inspired by a bold idea, Rosedale had the confidence that he could eventually make it happen: "I was just so insanely motivated to build that place that I could see in my head." He remained on high alert waiting for the signal that would allow him to take action and move ahead.

That signal came while Rosedale was working at Real Networks in Seattle -- the Internet software company behind such companies as RealAudio, RealVideo, RealPlayer and RealDownloader. (Rosedale actually created Real Video.) While there he met Mitch Kapor, the founder of Lotus 1-2-3 and Lotus Notes who later went on to become kind of a benefactor behind Second Life.

"It was the availability of broadband over DSL that re-launched my quest for creating my 3D virtual world," said Rosedale. "When that bandwidth became available to the home, I was like, 'Oh my God, I can do it -- I can build Second Life!' You get that moment when you just feel like it can be done or, at least, it's not too crazy to try and do it. In the next couple of weeks I packed up from Seattle and came back to San Francisco and started Second Life," Rosedale said.

I asked Rosedale how he had raised money for such a crazy idea. His answer: "I didn't." Rosedale had made enough money when Real Networks went public that he was able to invest about $1 million of his own money in getting Second Life started.

"Unfortunately, even with my $1 million it wasn't fundable," he said. "If you have an idea as crazy and bold as Second Life I can guarantee you one thing: those traditional venture capitalists that are loaded with billions of dollars are not waiting to fund ideas like this," he said.

Still, he convinced a few forward-thinkers (Mitch Kapor among them) to help fund Second Life, and now, some dozen years later, Second Life has more than 20 million registered users and remains a success. "The company's about 175 employees in size today," Philip said, "and it's very profitable because those users on Second Life are able to do really cool things with it and they're able to get value out of it. In turn, Second Life as a company is able to share in some of that as revenue. The GDP of Second Life today is somewhere between $600 million and $700 million a year in transactions between people. Most of those transactions are things like users building and selling clothing, furniture design, to other users -- essentially people building a virtual world and then selling that virtual world to themselves."

I asked Rosedale to summarize his lessons learned from creating Second Life. If you were advising an entrepreneur who wanted to do something as big and bold as Second Life, what are your top five pieces of advice -- what to do and what not to do? Here are his answers:

1. Have real passion. "If a crystal ball told you that this was going to be huge and have a big impact on the world, but that in the end you would not make much money, would you still want to work on it? If no, stop," said Rosedale.

2. Don't raise very much money. "If your idea is really big, too much money will probably increase the risk of failure," continued Rosedale. "Because there are many more ways to spend money to fail than win."

3. Encourage people other than yourself to take genuine risk by your side. "Don't shoulder the burden of proof alone."

4. If the idea is really new and unique and big, other people will all think it is bad and is going to fail. "You will have to do it against the best advice of others -- see point #1."

5. Be good to people, both inside and outside the company. "Being bad is stressful and will occupy your mind. If you are working on something really amazing," Rosedale reflected, "you will need that focus for the product and the company, not for worrying about people you've screwed."

In my next blog, I'm going to continue my talk with Philip Rosedale, and detail his beliefs regarding the future of entrepreneurship and the workforce.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

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