The Mission of Linden Lab – by Philip Linden

Given the recent tremendous growth of Second Life, I thought it might be of benefit to describe, as best I can, the mission of Linden Lab.

Few Second Life residents today will remember the early days of the Second Life environment and community, or know that Linden Lab is a 7 year old company with a rich and interesting history. While such rapid growth is, in the words of investors, a “high-quality problem”, it is a problem nonetheless. New residents entering Second Life are choosing to commit their time, aspirations, creativity, and dreams to the creation of a shared virtual world. And very unlike the physical world, this virtual world is a place which, at least for the present, has an architecture and business model controlled by a small private company.

The power that Linden Lab has to influence the fabric of Second Life is very great, and so I feel we have the responsibility to communicate, as clearly as possible, which way we are headed. Ultimately, I believe that the clearest possible way in which we do this is in our actions, not our words. But I also think that an attempt to provide a statement of intention which can serve as a guidepost by which to measure our efforts is both useful and ultimately part of the value that I, as founder and CEO, should be delivering in my job. Moreover, if I can communicate a clear vision, then perhaps you, as readers, residents, or employees (and in some cases all of the above) will more easily forgive us when we make the mistakes that in our best efforts we will still sometimes make in following this mission.

It is certainly the goal of Linden Lab to operate profitably, and by doing so create returns for the shareholder-owners of the company. The financial history of Linden Lab is the same as that of many other companies: A set of initial investors purchased portions of the company with the expectation that future financial returns would justify the capital they committed. As managers of the company, we are therefore expected to create attractive returns on those investments, or risk being replaced by others who will. But within the broad confines of expected return on investment, there are many different types of investors. Probably the biggest difference is in time horizon: over what period does the investor plan to own their portion of the company? This time horizon can make a big difference in the sort of pressures that owners put on the managers of the company, and therefore a big difference in the way managers make decisions.

My own perspective is that many companies today have investors with too short a time horizon, and that technology companies with big projects are particularly liable to this risk, since they may be working on projects that take many years or even decades to fully return value to investors. Within Linden Lab we have a mix of investors with an unusually long time horizon. Looking back I would say we were at first simply very lucky to have such investors (Mitch Kapor being the best and first example), since I knew very little about how to raise investment to finance a company. With learning and the sound counsel of those first investors, we later were able to be more intentional in finding the sort of investors that we believed would have a long time horizon.

There are also some investors who have specific principles that they are willing to stick to independent of the impact that these principles may have on the value of their investments. Examples of such principles would include Pierre Omidyar’s (one of Linden Lab’s owners) desire to invest through his foundation in companies that use technology to improve society, or Warren Buffet’s (not a Linden Lab investor) stated intention to not sell companies once he has acquired them even if they are underperforming expectations. These kinds of investors pursue companies that they believe share their principles. Linden Lab is fortunate to have a number of such strongly principled investors, with their intentions loosely grouped around the above-mentioned idea of using technology to advance people. Moreover, I believe that the principles of the investors in Linden Lab are very well aligned with creating great financial returns.

The investor owners of Linden Lab therefore have a mission which is the product of both a longer than average investment timeline, and a set of principles that are shared by a substantial number of the investors. Linden Lab is a company that has required a considerable investment of capital (about $20M will likely have been spent between inception and profitability), and like many other companies of a similar nature is therefore majority-owned by its investors. In my opinion this is a great thing, because we get as a result a diverse set of highly engaged owners with a fairly well shared sense of what they want the company to become.

Though I would certainly describe my own vision, management style, and principles as being very well aligned with this diverse set of owners, I think that the company is more likely to succeed and profit long term with such a team rather than a single person in a position of complete control, however smart that one person may be. This basic belief is echoed by the very structure of Second Life – a world created and controlled by many, not few.

Summarizing the exact mission of Linden Lab cannot, given this broad set of owners, ever be done with perfect accuracy – not all of us will agree on the same set of words. But here I believe that our balance of uncertainly and agreement is close to ideal – we have not chosen an uninteresting goal that fails to attract great people and returns, nor have we set our sights so broadly that we will wander and be unlikely to succeed.

Given this prelude, my best definition of our mission is that we are working to create an online world having the exceptional property that it advances the capabilities of the many people that use it, and by doing so affects and transforms them in a positive way. More specifically, since there are so many possible definitions of ‘online world’, we are trying to create a close reproduction of the actual physical world we live in – one that will be easily comprehensible and useful to us because it will so closely resemble ours.

The ability to simulate our world on computers means that we can make it different in ways that empower us, allowing us to do things that in the physical world we can imagine but are incapable of. Largest among the new capabilities we seek to create through this simulation are: Improvements to our ability to communicate quickly and accurately with each other, and the ability to rapidly express our thoughts or intentions as shared artifacts within this new world.

This mission is both a great business and a great cause. If we empower people by our efforts, we can expect a fraction of the value of those improvements in return for having built the infrastructure to enable them. Improvement to the capabilities, intelligence, or well being of a broad group of people has great value. Indeed, I would argue that the greatest technology-driven business success stories have been those like the personal computer or the telephone, in which technology has directly and broadly improved the capabilities of individuals. Second Life and Linden Lab are on their way to becoming one of those stories.

Beyond the details of financial performance, we will have been successful in this mission if we, in the smallest amount of time and capital, make Second Life work as well as possible given the limits of the underlying computer technology, and reach the largest number of people. You should expect to see the great majority of our efforts directed toward a balance of those two goals. Thus far, I think we have done well. We have certainly made our share of mistakes, but we have managed with a small team to create a very complex software system, scale it under heavy growth, and support the emerging community. As our market space matures and competitors create offerings that are similar to Second Life, I think we will see further validation of the quality of our work.

As a final thought, this mission also suggests things that we will not do. For example, we will not move in a direction that will restrict Second Life as to the number of people it can conceivably reach. This means that we will struggle to have Second Life work in any country, be available to anyone wanting to use it, and work well on a wide range of computing devices. As another example, we will not restrict Second Life by adding constraints which might make it more compelling to a specific subset of people but have the effect of reducing the broadest capabilities it offers to everyone for communication and expression. Both Linden Lab and the community of Second Life residents will likely be tempted with short term opportunities that are compelling, but inconsistent with this longer term mission. I hope that we have built the right company and chosen the right investors to continue to wisely avoid those mistakes. I believe that we have. I thank those who have already joined us in this mission, and invite the rest to join us in the project of a lifetime.

The mission of linden lab 2006-11-07

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