Philip is the creator of Second Life and Bill is a general partner at Benchmark. We cover their key learnings from building Second Life's virtual world, their views on the current metaverse opportunity, and what excites them most about today's focus on virtual realities.
Principles & Lessons:
1) Metaverse success is blocked by real-world utility gaps: Philip points out, “We actually all knew what the Internet was for” in the ‘90s, but for metaverse experiences, “we don’t yet have a stable currency with low fees” or an essential must-have use case. He sees a mismatch between people’s fantasy of “everyone logging into a 3D world” versus a real need that might not yet exist.
2) Full 3D immersion is less important than effective group communication: Bill references Discord and says it’s “their starting point” for his son’s friends, demonstrating that “a simpler heuristic” for group connectivity often scales better. Both emphasize that real-time collaboration sometimes doesn’t need complex graphics or avatar realism. Bill calls the “top-down avatar-driven thing” a questionable path, whereas audio-first communication, e.g., Twitter Spaces, can have immediate utility.
3) Adults rarely engage in identity role-play at large scale: Bill explains that in Second Life, the adults who truly flourished often had a specific motivation—disability, authoritarian regime, or unique creative spark. Philip adds, “Kids want to play with their identity,” but many adults do not, meaning a frictionless mainstream uptake for avatar-based VR might be limited.
4) A single “world of worlds” for games is unlikely: Philip believes game designers don’t want their IP or gameplay invaded by assets from other games. “I don’t think any of us want that,” he remarks, highlighting that a universal “drive your Ferrari from Grand Theft Auto into Among Us” scenario is not in line with how most games are built or how players behave.
5) Simpler building blocks can spark huge emergent creativity: Minecraft and Roblox both derived success from “simpler primitives,” with Bill noting that this fosters “a higher participation rate.” Philip agrees that “the outcome is spectacularly unknowable,” letting millions freely build with minimal friction. By contrast, sophisticated “Lego-like” tools in Second Life carried a higher learning curve, limiting broad adoption.
6) Stable digital currency relies on everyday utility rather than speculation: Second Life’s “Linden dollar” was kept stable through user demand and managed supply. Philip stresses that “the value…was entirely or almost entirely…driven by real utility,” citing a typical transaction of only a few dollars. He contrasts this with today’s NFT climate, where items can cost millions in what he views as speculation without direct utility.
7) Decentralization can bring hidden costs in performance and design: Both note that “there’s a fundamental basic cost” to letting no single party have final control. This is “the price of distrust.” Bill points out that “everything that can be arbitraged will be instantly,” forcing carefully designed systems. Second Life succeeded with a partially centralized currency because, as Bill observes, “technical performance” and frictionless user experience ultimately mattered most.
8) Combining simpler social tools with workable governance is the real opportunity: Philip says, “What is the simplest form of broad-scale communication…that we all start to be able to communicate while doing the Internet?” Bill imagines “an adult version” of Discord, where people in a persistent audio meeting place might do quick games or professional tasks. Both see potential if governance (e.g., voting rights or moderation) and technology barriers (e.g., low-latency 3D audio) are addressed without fixating on hyper-realistic graphics.
Transcript