Second Life is an online virtual world launched in 2003 by 📝Linden Lab, the San Francisco company 📝Philip Rosedale founded in 1999. Its world is created almost entirely by its users, who build, buy, and sell virtual goods and land using the Linden Dollar, an in-world currency exchangeable for US dollars on the LindeX.
Second Life drew wide press attention in the mid-2000s as an early example of a real economy inside a virtual world, including a BusinessWeek cover in 2006 and coverage of its currency crisis. Linden Lab framed its mission as connecting everyone to an online world that improved the human condition. In July 2020, Linden Lab announced it would be acquired by an investment group led by Randy Waterfield and Brad Oberwager (Wikipedia).
Second Life was ahead of its time when I joined as CFO in 2006 — a fully user-created world with a $100M economy. As 📝Lindens working from offices and homes all over the world, we believed we were on a mission; I stayed until 2009. Press from that run: CNN on how money works in Second Life (2006), MIT Technology Review (2007), CFO Magazine (2007), and Accountancy Age (2008).
Stories
- Bill Gurley from Benchmark Capital cold-called me — "Hi John, this is Bill Gurley" — to talk about joining Second Life.
- Meeting Philip: we compared programs we had written on computers in 8th grade.
- The credit card database was hacked on my first day, which was also a board meeting day.
- Raising prices the day before my second board meeting generated $30M in cash over the next 12 months.
- Publishing data as a way to market and grow.
- 📝Ginsu Yoon's permit-and-proceed letter (Fox News, Poynter).
- $1M in credit card fraud.
- Shutting down in-world gambling, and a blog post to stabilize the economy afterward.
- Getting pre-qualified by the SEC for an IPO on our revenue recognition methodology for the sale of an 📝infinitely transferable good. "I've never fist bumped an accounting decision before."
- A formulaic path to profitability: we hired one person for every 130 islands sold, reaching profitability in 18 months.
Key Metrics
- I wrote about the key metrics in December 2006 (PDF).
- User hours and concurrent users correlated with every other metric in the business.
- 60% of Linden Lab's revenue came from profitable in-world businesses.
- The LindeX exchanged about $7M USD worth of Linden Dollars per month.
- Linden Lab stabilized the exchange rate by selling $300K to $700K USD worth of Linden Dollars.