Archive for the ‘Linden Research’ Tag

Philip Rosedale Returns to Linden Lab CEO Position

Philip Rosedale. (Photo by James Duncan Davidson/O'Reilly Media, Inc., CC Generic 2.0 license)

We’ve had about a day to mull over the news that Mark Kingdon has been given the axe as CEO of Linden Lab, and that Philip Rosedale has resumed the direct control of his brainchild, at least for the interim.  (New World Notes article; Rosedale statement)  As of publishing time, a New World Notes open poll suggests strongly that Residents are in favor of this move — even if we will have to put up with Philip’s spiky hair, Rocky Horror T-shirt and codpiece again:

Poll results as of 6:15 SLT, June 25, 2010. Poll courtesy of New World Notes

I’m one of the more optimistic, for the record.  I’m uncertain how much acceptance Mark has had from the Resident community over his tenure; and many of the Lab’s moves during that time have been controversial, to say the least.  Of course, for all we know, things could have smoothed out at the Lab with his continued presence.  Only the future knows this, and the future has just been rewritten.

The thing that Rosedale has going for him, besides a (presumably) intimate nuts-and-bolts knowledge of how Second Life works, is that his is the vision that created this real incarnation of a concept only in books for the most part, until his company was formed.  Anyone who was brought in from outside to take over would not be part of the Linden Lab culture — an admittedly kooky one at times, but they would not have the same “heart” for it that Philip has.  Many of us felt that way when Kingdon was named CEO in May 2008.  Philip was the creator; Mark was a businessman first and foremost, and I wonder if he tended to see Second Life mainly in that model, as a place for facilitating business.  There were speculations, of course, that Kingdon was brought in to help pave the way for an initial public offering of stock in Linden Lab; a more business-0riented CEO would be considered essential for such a move, and Mark’s tenure as CEO of Organic, a digital-advertising agency.

But a virtual-world business is a hairier operation to run.  You not only have the business aspect to manage; you must also deal with the client base that is the raison d’être for the business’s existence.  Second Life had business presences before, though more of an attempt to advertise their Real Life products in world.  Many of these left during the Great Hype Meltdown of 2008-09, and Kingdon attempted to bring in more business for meeting-type situations with his Second Life Enterprise initiative over the past six months.  Many feel that focus was given to this move, at the expense of Grid stability and Resident satisfaction, as well as other decisions that, according to Gwyneth Llewelyn, intended to pave the way for increased business activity.  (Read her thorough analysis of the situation from June 10.)  The failure of many of these business moves are what led to Kingdon’s dismissal.

The thing is that Mark was right in his broad vision, if not necessarily in his execution.  Second Life — and Linden Lab — cannot survive forever on Residential accounts alone, and definitely not on free accounts.  While some may disagree with the Linden Homes move (Gwyneth believes that this put the Guvnah in direct competition with existing landowners), Linden Lab should encourage conversion of free to Premium accounts.  Additionally, business needs wooing, focusing on the core advantages that Second Life has already offered to huge corporations such as IBM — the hosting and abetment of meetings without the expense and waste of travel for substantial numbers of people.  As much as many of us may not like it, Big Business must be courted in, and must become part of the Grid.

The key will be to find a new CEO that can balance both sides, and deliver continued and improved performance of the virtual platforms.  Rosedale possesses the vision, but he doesn’t seem to possess the business chops, which is why he handed off to Kingdon two years ago.  Philip’s return (dare we call it a resurrection? [grin]) will help restore the balance.  Now we need someone to push the dream forward — on all fronts.  Second Life cannot survive, let alone thrive, without both the yin and yang of the equation.

State of Linden Lab — Critical, Serious, or Healthy?

This discussion is based upon reports from Hamlet Au at New World Notes.

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I haven’t touched the recent news from Linden Lab until now, mainly because I haven’t been sure what to think about the entire thing.  I’m still not sure yet, even after the passage of a week of time.  But it’s part of the mission of this blog to report on the news affecting the Grid, and offer my own opinions on it, and it’s time I weighed in.  We’ll see which way my thoughts move as I write….

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How is Linden Lab actually doing right now?  That is the very thing that is hard to determine unless — perhaps — you’re one of the 30% of Lab employees that were laid off last week.  That group includes many long-term veterans and beloved Lindens, such as T (Tom Hale).  Concern for these folks has been so high among residents that SLeleb CodeBastard Redgrave built a “graveyard” of headstones for the now avocationally-challenged, which has been frequented by Residents leaving flowers, occasionally dancing on the “graves” (a tasteless thing, even for the terminally dissatisfied among the SL population), or simply contemplating whether this event is an omen auguring the future of the Lab.

The Linden Memorial at Rouge, http://slurl.com/secondlife/Rouge/165/72/22

That’s somewhere in the neighborhood of 90 people, based on employment figures mentioned elsewhere.  Not the same as, say, a plant closing somewhere; but to these folks it still means they’re learning the difference between “recession” and “depression.”

But is this an omen that Linden Lab is in financial trouble?  Mark Kingdon insists no, in the original press release, the Big Blog announcement, and in a talk with Hamlet Au.  According to M, the Lab’s in fine shape, and this isn’t a retrenchment dictated by falling revenues.  The problem with this:  especially as a Michigan girl, living in areas where plant layoffs were all too common in bad economic times, I find it hard to believe entirely.  Labor is always among the top 3 or 5 items in company costs, if not the prime item.  This makes it very easy to target employees when you need to balance the books in hard times.  What I would love is to see the actual balance sheet of Linden Research, Inc.  Being a privately-held company, of course, this won’t happen any time soon.

Hamlet’s (admittedly unscientific) poll suggests that readers of New World Notes are overwhelmingly pessimistic about Second Life’s future following the layoff announcement.  Part of this could be from actual fear of the company having revenue problems.  And, with a free-to-join customer base, this can be understood.  Actual revenue, as I understand the Lab’s business model, comes from Premium memberships (which they’ve been pushing on recently, as you’ll note from their frequent message encouraging upgrading to Premium as you log in); sales of land and regions (including tier payments); and, hypothetically, investment return from sales of Linden dollars purchased by Residents or spent as fees (such as upload fees) — in other words, they take the money paid to them and invest for collection of interest.

The following is speculation on my part, but consider it. Based on charts at Tateru Nino’s Dwell On It, user concurrency has been trending downward throughout 2010, although the decline may be leveling off based on early indications, which suggests to me that regular user numbers are going down due to the economy; in other words, a declining pool of potential or current Premium customers, and (extrapolating from this), fewer people interested in purchasing land or paying corresponding tier for it.  The in-world economy itself has proved resilient, suggested by the user-to-user transaction numbers; but how much of this is coming from existing bank accounts, and how much from purchased lindens, such as I normally do to buy my goodies?  Mark, if you’re reading this, how close am I to the mark, and would you be willing to share your actual financial statements to help back up your position?

Once again, these are speculations on my part.  Kingdon may be giving us the straight dope on Linden Lab’s financial conditions.  The thing that makes me wonder is that businessmen tend to paint the rosiest picture possible in their press statements and annual reports.  Warren Buffet, the master of Berkshire Hathaway, is one of the few people who will admit flat out to his investors when his company is stinking, instead of trying to put a positive spin on the numbers.  While I choose to reserve my worries for now, I would like more provable information as to how things are, and whether the largest and (still to me) the best virtual world offering will still be around in 2011.

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