Tag: Tilia News

Summary of Tilia acquisition Lab Gab + SL Round Table News

Posted on by Inara Pey
via Linden Lab

On Friday, April 26th, 2024, Linden Lab issued a pre-recorded Lab Gab session featuring the company’s Executive Chairman, Brad Oberwager (Oberwolf Linden) discussing the recent news concerning the acquisition of Tilia.io, the all-in-one payments platform established by Linden Lab in 2019 and which manages payment processing and cashing out for Second Life, by Singapore-based business-2-business (B2B) payments infrastructure firm Thunes, and which I reported on here on the acquisition.

At the same time, the blog post promoting the Lab Gab session provided further information on the upcoming Community Round Table event, first informally announced on April 19th, 2024.

The following is a brief summary of the Lab Gab session, offered as a quick reference summary for those interested. In addition, a brief summary of the Round Table event news is at the end of this article.

Lab Gab – Thunes and Tilia

General Points

[Video: 1:00-4:00]

  • The news of the acquisition has been the subject of considerable commentary on the official forums and elsewhere, and the concerns voice are seen as “understandable”.
  • Summary of Tilia (as clarification):
    • A payments company which (for Second Life) allows users to use credit and debit cards and PayPal to buy Linden dollars;  tracks the use of those Linden dollars and support the sale of those Linden Dollars, and allows users to cash-out the USD value of those Linden Dollars [after fees] to their bank accounts.
    • However, Tilia is not the LindeX itself – that is separate technology specific to Second Life.
    • In order to function under US regulatory law, Tilia requires money transmitter licenses (MTLs) [and is classified a Money Service Business or MSB]
    • Running Tilia costs “millions and millions” of dollars to run, so the decision was taken to spin it out as a business in its own right so that it could support other customers / platforms, and thus alleviate some of the costs faced by LL.
    • However, this has not worked out as well as had been hoped. While Tilia has a modest client list, it still relied heavily on Linden Lab to meet its costs, thus detracting for finances which could be used within Second Life.
    • The decision was therefore made to seek an organisation which might – “under guidelines” acquire Tilia and make it profitable.

Tilia and LindeX Demarcation

[Video 21:00-23:24]

  • The LindeX is a core part of the Second Life services, operated and maintained by Linden Lab.
  • Tilia is a regulated entity / financial institution which:
    • allows Second Life residents to hold US dollar amounts in an account;
    • is allowed to run a credit card;
    • is allowed to make pay-outs.
  • As such, Tilia has no influence upon the LindeX, and has nothing to do with pricing, exchange rates, etc., that are the remit of the LindeX.

Requirements for Acquisition

[Video: 4:41-5:28]

  • First criteria: any company acquiring Tilia must to commit to continuing to support Second Life, and the relationship between Second Life and Tilia is continued.
  • Second criteria: what could any company acquiring Tilia bring to Tilia and thus to Second Life?
  • Additional criteria included: how much were companies willing to pay; what would happen to Tilia staff, how fast could a buyer commit to completing the deal, etc.

Thunes – Who and Why

[Video: 5:35-8:18 and 11:00-12:30]

  • Thunes is an international money movement company “missing one piece of a very interesting jigsaw puzzle” – the United States.
  • In short, Thunes does not have MTLs to operate in the United States, although they had begun the process of applying for them.
  • Brad Oberwager was introduced to the CEO of Thunes right at the time thought was being given to selling Tilia, and Thunes were starting on the road of  applying for MTLs in the US.
  • As both parties recognised the value in reaching an agreement, they were able to rapidly enter into an exclusive agreement for the sale of Tilia.
    • Tilia gives Thunes the ability to operate in the United States in a more cost-effective manner than Thunes could otherwise achieve.
    • Tilia (rebranded as Thunes) will effectively become Thunes’ centre of operations for expanding its business into the US.
  • [As noted in my article] Thunes allows for a range of payment methods direct to customers in multiple currencies and to bank accounts, to virtual wallets, etc., with payment made in real-time. These are abilities Linden Lab has not been able to build-in to Tilia, as they are both complex and expensive.
  • As Thunes integrates Tilia into its business model, Second Life will be able to access Thunes’ global network and services.
  • [From 11:00] While there were other suitors for the deal, Thunes was the company with which Brad Oberwager felt most comfortable.
  • Thunes also demonstrated they really want to invest into Tilia and grow it as a business.
    • They weren’t simply looking at Tilia as a means to gain the MTLs.
    • They didn’t see Tilia as a one-stop solution; rather it is a merging of capabilities neither Thunes nor Tilia have individually.

The 5-Year Partnership and Payment Options to Second Life Users

[Video: 8:23-10:59]

  • The Thunes press release on the acquisition references a 5-year partnership with Linden Lab.
  • This is in reference to the business agreement between Linden Lab and Thunes, which is “so good” for both, the two companies wanted for formalise it beyond just the acquisition of Tilia, thus meeting the first criteria within the Lab’s requirements for any Tilia acquisition.
    • Any offer made for Tilia which had not provided the ability to meet the first criteria set by Brad Oberwager would not have been accepted.
  • There will be “a lot of things offered” to Second Life users, but what cannot be committed to as this point in time is when these things might be offered, simply because Linden Lab will not be involved in the day-to-day management and development of Tilia, post-sale. However:
    • “First on the roadmap” is better pay-outs and more pay-outs.
    • There will also [likely] be more options for purchasing L$.

Regulatory Approval and When Will SL Users Notice the Transition

[Video 12:32-15:33]

  • The acquisition is being handled as a reverse triangular merger [in essence, Tilia is both the subsidiary and the post-acquisition entity].
  • The company will be rebranded, but all the technology and data will “remain Tilia”. As such, Second Life users may never know that the transition has happened; all the things that are important in terms of data are staying the same; all of the things in terms of the technology are “only going to get better”.
  • What will change in Tilia’s owner, and this is where the regulatory approval comes in.
    • MTLs cannot simply be handed over to a new owner when a company operating them is sold; the new owner has to be approved by the state (/territorial) regulator(s) responsible for issuing the MTLs.
    • While regulators work at different speeds [and Tilia is licensed in 48 US states and territories), the process of gaining all the required approvals could take “from 5 to 9 months”.
    • Confidence in a buyer being able to gain all this regulatory approval was another criterion for any sale of Tilia. Thunes give him that level of confidence, because it has gone through similar processes elsewhere in the world.

Benefits, User Data and Fees

[Video: 15:33-21:00]

  • Proceeds of the sale will [obviously] go to the owners of Linden Lab. They will then determine how much of those funds are invested back into Second Life.
  • The better Second Life (or aspects thereof) do, then the greater the amount of money put into Second Life. Cited examples:
    • If SL Mobile sees high adoption and use, if it becomes successful on the Apple / Google app stores, etc., then more money could well be put towards further development / enhancement of the mobile product.
    • If SL sees increases in retained new users as a result of initiatives, with the daily average usage of the platform increasing, then more money will go into further improvements in that area.
  • A key point with the acquisition of Linden Lab [by Oberwager and Waterfield in 2020] is the company spending has increased, which has “proven to be a good thing” for the platform.
  • User Data Security: An important point to note with the acquisition of Tilia is that Second Life user data is not changing hands.
    • Tilia will have new owners and will be renamed, but the lock-down of Second Life user data resides in two places: Tilia (for financial information) and Second Life (actual user data).
    • As a financial services company, Thunes is required to keep financial data as secure as it currently is with Tilia, and the data will not be removed from the current Tilia systems and moved elsewhere.
  • User fees for payment processing, cashing out, etc.: Brad Oberwager has “no intention” to change fees “any which way” as a result of the deal with Thunes.
    • Pointed out that LL does revise fees, but tends to do so in a manner intended to reflect the value of the services they provide. So, while fees for payment processing, etc., have increased in the past – they have generally been as a result of lowering fees elsewhere (e.g. in reducing land tier).
    • Also made clear that while there are no plans to increase payment process / cashing out fees as a result of this deal, the LindeX is expensive to run and maintain – and so he is not saying there will “never” be any fee increases; changes will be made on a business benefit basis.

On The Future of Second Life

[Video 23:25-26:11]

  • Views Second Life as a “moral imperative” – it is so good for so many in the world for so many reasons, that there is a moral need that goes beyond a financial reason to have Second Life continue.
  • The only connection between selling Tilia and Second Life is that, under Linden Lab’s ownership was not “financially good” for Linden Lab, but is a potential financial powerhouse for Thunes.
  • The Thunes deal has gone ahead purely because it is good for Linden Lab, for Second Life and for Tilia and its employees; therefore there is “nothing negative” about the deal.
  • He remains fully supportive of Second Life, and – per the earlier examples – willing to put the money raised from the sale back into Second Life.

Round Table Update

  • As per the original April 19th informal announcement, the Round Table event will take place on Monday, May 20th, 2024, commencing at 09:30 SLT, and will be the first in a series of such events, which are defined as:
An opportunity to connect directly with our top executives, share your input, and discuss ideas on enhancing Second Life. This initiative represents another step in our efforts to improve our community interactions, ensuring that your voice is more directly heard and valued. 
  • The location for the event has not (at the time of writing) been stated, but will be announced “closer to the date”.
  • This first Round Table will feature Linden Lab Executive Chairman Oberwolf Linden and Senior VP of Product & Engineering Grumpity Linden. Plus:
    • The session will include further discussion of the above Tilia acquisition, and on upcoming Linden Lab / Second Life Policy updates.
    • There will be an open Q&A portion of the event (which is not for airing individual support issues or personal grievances and subject to the SL Community Standards.
    • In addition, questions and  / or feedback can be provided to the Leadership in advance of the event using this anonymous form.
  •  Future Round Table events will feature other Lab executives participating on a variety of topics, and the scheduling of these events will likely vary to be more accessible to other time zones.
  • Please see the official blog post for more.

Linden Lab to sell payments platform Tilia to Thunes

Posted on by Inara Pey
via Tilia.io

It has been announced that Tilia.io, the all-in-one payments platform established by Linden Lab in 2019 and which manages payment processing and cashing out for Second Life (as well as supporting a number of other platforms and virtual environments), is to be acquired by Singapore-based business-2-business (B2B) payments infrastructure firm Thunes.

The acquisition of Tilia will be for an undisclosed sum, and follows an agreement being reached between Thunes and Tilia majority owner Linden Research (the formal name of Linden Lab). However, it is still currently awaiting regulatory approval, so has not  – as of the time of writing – being finalised.

News of the acquisition was made public via a press release widely circulated by Thunes on Tuesday, April 23rd, 2024 (see links below for some of the reporting on the announcement), and has sparked comments, discussions and questions on a number of Second Life related forums.

Who Are Thunes?

Thunes is regarded as a start-up company, although it has been operating for some eight years. As a B2B payments company, Thunes powers payments for major brands such as Uber and Deliveroo, and also to global Fintech companies such as PayPal and Remitly.

They boast that with a single connection, businesses and their customers can both send payments to, and receive payments from 133 countries around the world, with support for 84 currencies and some 550 alternative payment methods (ATMs), including 129 recognised mobile wallets. Whilst headquartered in Singapore, the company has regional offices in London where communications on the deal with Linden Lab are being handled), Paris, Shanghai, New York, Dubai, and Nairobi. In addition to providing a B2B payments infrastructure direct to businesses across the world, Thunes also provides payment services to the banking industry, a service it is aggressively growing in order to more fully compete with SWIFT, the world’s dominant international financial network.

In December 2023 Thunes achieved a market valuation of some $900 million, with its series C funding round bringing the company some US $202 million investment – including from the likes of Visa, the global payment giant, Singaporean government investment vehicle EDBI, and US-based Endeavor Catalyst.

Why Would They be Interested In Tilia†?

Tilia is particularly attractive to Thunes as it is already a fully licensed Money Service Business (MSB) across 48 US states and territories, thus allowing Thunes to readily extend its services to business owners and customers across the United States – including Tilia’s current customer base, which obviously includes Second Life, as well as VRChat, Upland, Avatus and Unity. In addition, through brand recognition within the content creation market and its expertise in managing token-based virtual economies such as the Linden Dollar, Tilia provides Thunes with a ready-made means of expanding its presence in these markets both in the United States and globally.

What Does This Mean for Second Life‡?

This is perhaps harder to quantify from the side-lines. However, there are some points which may be worthy of note:

  • Following regulatory approval, Tilia will be re-branded Thunes, but will continue to be based in San Francisco.
  • The agreement is subject to an exclusive 5-year collaboration, Thunes will provide payment processing and payouts to Linden Lab across Thunes’ global network.
    • This should allow Second Life users and creators to enjoy more options for buying Linden Dollars and for cashing-out “in a more cost-efficient manner and with increased transparency”, with the Lab adding via a comment on a Reddit thread, “without additional costs”.
  • In support of the above, the Thunes press release includes the following statement from Brad Oberwager, Linden Lab’s co-owner and Executive Chairman:
Thunes is an exceptional company that directly connects nearly every payment method and market worldwide. The combination of Tilia and Thunes will give Linden Lab’s customers more payment choices, and the ability to receive pay-outs in real-time, anywhere, into the wallet or bank account of their choice. It will be business as usual for our people and our customers as we bring Tilia and Thunes together.

I reached out to Linden Lab on hearing the news, and was informed that although the company has nothing further to add to the Thunes press release at this time, those from the company who will be attending the forthcoming Community Round Table (informally announced during the April 19th Lab Gab session, and featured in my summary of that event) will be prepared to discuss the acquisition. I’ll have a post on the Round Table as soon as all information relating to it (where, time, how to attend / watch) is publicly released.

With thanks to Coffee Pancake for the alert.

Related Links

† Please note I am not an financial services expert, this section is therefore a subjective best guess.
‡ Again, please note this is a subjective best guess, even given the supporting quotes.

Note: updated to better reflect Tilia’s relationship with Second Life.

VRChat uses Tilia LLC to Power Its Creator Economy

Posted on by Inara Pey
via Tilia LLC.

Tilia LLC the digital payments platform created by Linden Lab, the makers of Second Life, is to power VRChat’s new Creator Economy, the first phase of which was launched on Tuesday, December 5th, 2023. In doing so, VRChat becomes the latest in a growing list of platforms and games utilising Tilia’s capabilities, including Second Life, Unity and Avatus.

The announcement came via a press release issued by VRChat and published by numerous outlets including Business Wire, which revealed the first phase of VRChat’s new Creator Economy is called Paid Subscriptions. It allows VRChat users to subscribe directly to their favourite creators and support them financially. In return those creators are able to craft unique, custom experiences for their supporters to enjoy. Eventually, the new Creator Economy is intended to allow the half-a-million creators using the platform to receive compensation for their work.

In particular, the Paid Subscriptions system is closely linked to the VRChat’s Udon custom scripting language, allowing creators to more easily build custom experiences for those supporting them through the service. IT has also been developed to work with many of VRChat’s other systems with the aim of enabling pre-existing communities on the platform to monetize their offerings as the Creator Economy is built-out and enhanced.

We’re thrilled to finally launch the first piece of the VRChat Creator Economy, Paid Subscriptions! Our community is responsible for everything magical in VRChat, and the Creator Economy enables us all to financially support our incredible creators. Our hope is that with more support, our creators can bring even more magical content to the platform.

– Graham Gaylor, Co-founder and CEO of VRChat

As an all-in-one platform and service, fully registered across the United Stats as a  licensed money transmitter, together with decades of expertise in dealing with digital currencies and token systems which can be transferred to and from fiat currency, Tilia occupies a unique business space. It is both able to provide platforms like VRChat with unique insight into operating and managing digital economies, and it can supply the core systems and services necessary to do so, whilst meeting all the various compliance and regulatory requirements for digital transactions and money transfers, relieving customers of the need to do so themselves.

Since it inception, Tilia LLC has been gradually building its client base and working to establish strategic partnerships, such as with J.P. Morgan Payments as announced in October 2022, and which saw an expansion of Tilia’s board (read more here). However, within the sector of immersive 3D social  / creative environments, VRChat is a name that is probably as instantly as recognisable as Second Life, and represents a major new partnership for Tilia LLC going forward.

Tilia was built to support the unique and complex requirements for creator-based economies. We are proud to partner with such a recognised innovator like VRChat as they seek to further encourage, empower and enable their creators.

– Brad Oberwager, Tilia LLC CEO

Read more via the press release.

Additional Links

Tilia LLC gains strategic investment from J.P. Morgan

Posted on by Inara Pey

Tilia LLC, founded by Linden Research Inc., as a wholly-owned subsidiary specialising in virtual currencies and providing money services business solution to virtual platforms, has announced it has gained strategic investment from J.P. Morgan Payments, a part of the world’s largest bank (by market capitalisation), JPMorgan Chase.

Tilia has been running Second Life’s US $650 million dollar economy for the past seven years, handling over US $86 million is payments to users in the last 12 months alone. Tilia’s services have also been used by the likes of Sansar, Upland and Avatus, and leverages in partnerships with Unity (allowing Tilia’s API and services to be made available to Unity developers as an integrated end-to-end payment solution) and Applovin.

E. Drew Soinski, Senior Payments Executive, Managing Director at J.P. Morgan Payments joins the Board of Tilia LLC

While an (unspecified in dollar terms) minority investment, J.P. Morgan Payment’s involvement is liable to allow Tilia to increase pay-out methods and the number of currencies it can support, thus allowing it to provide a pay-out in local fiat currency for creators to pretty much anywhere credit cards work.

The deal has been in motion for almost a year, with effort being put into ensuring Tilia’s services are interoperable with those of J.P. Morgan Payments as well as structuring the overall financial elements of the deal. With its completion, E. Drew Soinski, Senior Payments Executive, Managing Director at J.P. Morgan Payments, has  joined Tilia’s board of directors, serving alongside Brad Oberwager, Raj Date and Aston Waldman, who is also the company’s CEO.

From Tilia’s perspective, the partnership means the company will be even better placed to serve the emerging stream of “metaverse”-related companies, providing a wide range of currency services.

Tilia is money into the metaverse. It’s money moved into the metaverse and money moved out of the metaverse. And why this is so important is because you cannot have this concept of the metaverse without a social economy. It is both the social aspect and the financial aspect. Those two things must work in harmony. To do money, you need some virtual token to make money work. Money has to be rock solid. That is JP Morgan. That’s the partnership. What’s the value of Tilia? You can’t build a metaverse without user-generated content. You can’t build a metaverse without social interaction. You can’t build a metaverse without some sort of financial token that allows people to build a world.

– Tilia Director (and Linden Lab Executive Chairman) Brad Oberwager to Dean Takahashi in Gamesbeat

He further noted that in strengthening Tilia’s ability to provide these services to platforms, J.P. Morgan Payments are helping to both fuel new economies that directly benefit creators participating in them, allowing such economies to step away from the route of revenue generation through the invasive use of data farming and advertising.

“This is a good thing when creators can make money. There are people around the world who make their living by building things in Second Life …  Here’s why I think it’s so important: these universes are social economies. If you don’t allow people to make money, if you don’t allow this economy to happen, if you don’t support creators, you’re going to have to rely on an advertising model to make your world work. That is a disaster. That would be the worst thing that could hit our society — an advertising-based metaverse.

– Tilia Director Brad Oberwager to Dean Takahashi in Gamesbeat

A great strength with Tilia is that it utilises virtual tokens rather than blockchain-powered crypto-currencies. This means that it is better placed to offer day-to-day virtual currency stability. Crypto-currencies are all too often treated as a speculative securities; they are therefore vulnerable to market volatility, going up and down in value by the day. Such volatility can potentially damage the foundations of any social economy using them.

Add to this Tilia now having such a well-regarded name within the financial markets / payments environment as a strategic partner further enhances Tilia’s standing and reputation – with Oberwager noting that new clients are already “lining up”. At the the same time, the partnership provides J.P. Morgan Payments with access to a market sector that might otherwise prove difficult to access.

More on the partnership can be found in the links below:

Linden Lab adds CMO + CISO roles “to support rapid growth”

Posted on by Inara Pey
Courtesy of Linden Lab

On Monday, May 2nd, 2022, Linden Lab announced it has added two new leadership roles: those of Chief Marketing Officer (CMO) and Chief Information Security Officer (CISO) – the first time that either role has been embodied within the company.

Interestingly, the news came not from the Lab (at the time of writing, the press release had yet to be officially posted) but via prnewswire.com. Both roles will embrace Second Life and Tilia, the Lab’s virtual economy payment processing platform.

Both roles will span across Linden’s full portfolio of businesses to support growth driven by the rapidly expanding consumer interest in metaverses and the technology platforms necessary to support them as well as other virtual worlds and marketplaces.

– Linden Research Inc.

Steven Feuling – Linden Lab’s new CMO

Taking on the role of CMO is Steven Feuling, a 30-year marketing veteran and former CEO. He has worked with and for some of the world’s best known brands including Microsoft, Bloomberg LLC, The Walt Disney Company, 20th Century Fox, E*Trade and General Motors, as well as several successful start-ups.

Having held senior roles with clients, agencies and media partners, most recently as President of MDC Partners’ Assembly, he offers a unique perspective to support both Second Life and Tilia. In his role as CMO, Feuling will oversee all marketing and communications efforts across the Lab’s portfolio.

Peter Capraro, joining the Lab as the new CISO, has spent nearly half of his career focused on financial services cybersecurity. Most recently, he was the deputy CISO at fintech start-up, Akoya, a spin-off from Fidelity Investments, and held security roles at Bank of America for 10 years.

Capraro’s wealth of experience within the cyber security space is seen as “instrumental” to the Lab’s information security and compliance initiatives, which span both Tilia and Second Life. In his role as CISO, he will serve as the strategic leader responsible for maintaining a corporate-wide information security programme to protect information assets, and ensure security for the company and it users.

Steven and Peter are filling critical roles for Linden Lab, as the virtual world landscape takes front stage again. Each of their respective expertise at both successful start-ups and world-renowned companies will have a tremendous impact on our leadership teams for both Second Life and Tilia.

– Brad Oberwager, Executive Chairman of Linden Research Inc

With thanks to Cube Republic for the link.

Linden Lab announces Tilia partners with Unity “to power virtual economies”

Posted on by Inara Pey
Linden Lab’s Tilia services are now available for Unity developers via the Unity Asset Store

On Wednesday, January 26th, 2022, Linden Lab announced that its subsidiary company, Tilia Inc., the licensed money transmitter and end-to-end payments platform, has reached an agreement with Unity for Tilia’s API and services to be made available to Unity developers as an integrated end-to-end payment solution.

Referring to the agreement as a partnership, the announcement from Linden Lab notes that Unity has vetted the Tilia API to ensure it is suitable and optimised for the latest version of the Unity Editor, and developers building in Unity can now access Tilia’s API through the Unity Asset Store to enable in-game and in-world economies, allowing their users to make and receive payments, and even exchange in-game tokens for real money.

This is potentially the biggest partnership deal Tilia has thus far made (customers until now being reported as Second Life, Sansar and Upland – although ” NFT marketplaces” are also listed as being partners), potentially opening Tilia’s three services – TiliaDirect (in-world payment processing), TiliaWallet (capabilities for “stored value” for assets & enables user-to-user transactions) and TiliaPay (enables the redemption of tokens for fiat (real) money, allowing players to cash out) – to Unity’s entire community of developers.

Many of today’s top games and virtual worlds are built using the powerful Unity real-time 3D development platform and increasingly developers want to incorporate significant virtual economy elements that allow for in-game or in-world user transactions. We are proud to bring an end-to-end payment solution available to the Unity Asset Store, and we look forward to seeing how Unity developers will incorporate Tilia.

Brad Oberwager, Executive Chairman of Linden Research, Inc.

It is perhaps worthwhile noting that this announcement does not in any way mean that Unity is buying or otherwise investing in Linden Lab / Second Life or that they are about to do so (a question I have already been asked). This is about leveraging the power of Tilia Inc., and the services it provides to deliver them to Unity developers who wish to utilise them and, in doing so, provide further revenue streams back to Tilia / Linden Lab.

For further context, please refer to the Press Release from Linden Lab in full.