Linden Lab, the company behind this “revolutionary new form of shared 3-D entertainment,” is a modestly run post-bubble start-up with a familiar Silicon Valley ambition: it wants to change the world. Thirteen employees occupy small offices in a back alley of San Francisco’s Hayes Valley neighborhood. Founder Philip Rosedale, the 33-year-old former chief technology officer at Real Networks, says he’s keeping the outfit small and quiet while his engineers perfect their innovative streaming technology, which allows users to navigate the imaginary world from their desktops. When the service rolls out next year, Rosedale explains, players will be able to log on to LindenWorld and do anything they like–from building a home to creating a tattoo parlor to designing their own LindenWorld version of Quake. “It’s completely up to the users,” Rosedale says, likening his product to the Metaverse in Neal Stephenson’s seminal novel “Snow Crash.” “People can basically live in this environment.”

He’s invading some crowded turf. Sony’s fantasy-themed EverQuest, Electronic Arts’ Ultima Online and Microsoft’s Asheron’s Call each boasts hundreds of thousands of paying customers who cast themselves as elves or princes, fighting battles and even earning money in their graphical online worlds. But Rosedale and his adviser, Lotus founder Mitch Kapor, who are funding the company along with San Francisco-based Catamount Ventures, call those “niche products” that appeal only to hard-core gamers. The allure of LindenWorld, they say, is that it’s completely open-ended. Users will have access to palettes of geometric shapes called “primitives,” enabling them to contribute to the shared world however they like. The experience will be tailored for those with high-speed connections, and–typical of the new Silicon Valley thinking–it won’t be free. “We think people will pay for this kind of entertainment,” says Kapor.

For now, the Linden crew is concentrating on solving tech problems like reducing latency–the lag time in streaming graphics between computers–and stitching together enough servers to support hundreds of users at once. Some veterans of the gaming world say this focus on technology is exactly why Linden Lab faces an uphill battle. Users, they say, are attracted to games with specified goals (i.e., shoot the enemy), not those that render the waves better on a make-believe ocean. “You can’t launch a gaming platform without showing people how to use it,” says one longtime developer. But Rosedale and Kapor say their careers have always been about “swimming against the tide.” It seems that the old Silicon Valley bravado still lives after all.