Philip Rosedale has stepped down from his position as interim CEO of Linden Lab effective immediately, In one of the more bizarre turn of events in what has already been a bizarre year for Linden Lab.
The announcement comes with a relatively terse post to the Second Life blog:
After about four months as interim CEO, working closely with Bob Komin, the management team, and the board, we’ve decided we are ready to start the search for a new CEO. I’ll be leaving day-to-day management of the company and continuing in my role on the board, including helping in the search to find a great CEO. I will also be continuing my work with my new company, LoveMachine. Bob will lead Linden Lab while we conduct the search. It’s been an intense few months of transition, and we all feel like we are in a better place now, with a clearer sense of direction and more focus, and are ready to bring someone new into the mix as a leader.
Will we see the “new Philip” on the Grid? Or is it all about the Love Machine now? (At least the glitter crotch will work)
There is clearly a backdrop to this story. What it is we might never know. Whether board pressure, the pressure of the job, or truly feeling that he put the Lab on the right course – any one of these reasons are currently speculative.
The executive suite has been a bit of a revolving door, however, and while he did this once (leaving as CEO before a new CEO was found) it strikes me as unusual to do it a second time.
Have they ever Googled “succession planning” over at the Lab? Read more…
The Teen Grid, while technically on the same ‘map’ as the Main Second Life Grid, was always partitioned off with a set of technologies that were difficult to maintain. Any time you made a change to the server code, you’d need to double check to make sure the Teen Grid was still, well, separate – an odd thing to understand, but there were all kinds of protocols built in to the server code to maintain separate access streams and accounts and inventories and whatever else.
When Linden Lab announced that it was ‘merging’ the Teen and Main Grid what it was actually doing was pushing out the separation of the two communities to estate-level controls. It would no longer have to check through the server code all the time to make sure that the kids didn’t have access to Main Grid content. Estate-level controls basically mean that you can ‘pin’ a user to an estate (the Teen sims) and not let them out.
Through this, you can set up a separate registration system for schools and kids and at the end of that process they end up with an account that’s “pinned”.
But with the announcement it’s clear that there will also be some viewer-side functionality as well. Because the Lab will also prevent the teen accounts from accessing the Second Life Marketplace:
The 13- to 15-year-old students affiliated with these organizations will be unable to visit any regions except those of their hosting organization, and those accounts will not have the ability to search the Grid or to purchase items from the Marketplace. Unlike on Teen Second Life, adults that work with these students will now be a part of the broader Second Life experience, allowing them to bring rich educational content to their students. The ability to invite organization-approved guest speakers and other approved members of the community to safely interact these students will further enhance their learning experience. For more details, see the Teen Second Life transition wiki page.
What’s left unstated is that I assume this means that the 13-15 year olds also won’t be able to sell anything. Which strikes me as, well, stupid. Read more…
The virtual goods industry has broken out of games and Silicon Valley and increasingly has the interest of mainstream companies and Wall Street. Michael Bobroff, who cut his teeth on the emerging markets in Russia in the 90s has brought his talents to assessing the virtual goods industry, and will be discussing his take with Robert Bloomfield on Metanomics this coming Monday.
I’m particularly interested in his opinion that the virtual goods industry is ready for larger companies to get a foothold into the market through acquisitions.
It’s worth noting the day – Metanomics has moved to Mondays, although we made an exception for Noam Chomsky.
Allowing mesh imports into Second Life is on-strategy for Linden Lab and part of their broader ‘Fast, Easy, Fun’ mantra, according to Jack Linden with whom I appeared on last night’s Designing Worlds. (Video after the break).
I actually thought it was a good discussion, although I’m not sure I personally made a lot of sense, but that’s par for the course. It was only in the latter minutes of the show that Jack said something which felt like something more than ‘tech talk’.
One of the things that the Lab does astonishingly poorly is putting platform changes into a broader context. It’s one thing to understand the technicalities of LOD or whatever, and it’s another to understand how something like mesh imports fits into whatever broader strategy the Lab is pursuing. (Others have argued that the Lab doesn’t HAVE a strategy, something with which I disagree).
Jack got as close to I’ve heard from the Lab to something that aligns a technical change (mesh import) with a broader sense of where the Lab sees things heading (jump to the 50:00 mark).
“We understand how we want it to change both the in-world building behavior and quality of content….defining quality is incredibly difficult. In terms of our business goals, we have goals on the Marketplace and how we see people adopting things like mesh. We also have overall goals around everything from new user acquisition to retention to all the things you’d expect us to care about deeply.
So mesh is part of a much broader strategy around addressing the basics that we know have to be addressed. Philip’s talked about this, we talked about it at SLCC. Fast/Easy/Fun is very much at the heart of many of the projects that we have on our plate now. We recognize that there are core pieces of the Second Life experience that are not quite good enough and we have to resolve those things.
Mesh takes content to the next level. It takes us up to the point where there will be scenes created with mesh that are almost equivalent to anything you’ll see in other platforms. It does that in a way which I believe will be simple enough that it will still be within the reach of most people who really want to do that stuff.”
OK, seriously – I think I’ve gone off the deep end.
I seem to be the only person associated with virtual worlds who doesn’t think the Lab is having a liquidity crisis, who thinks that they’re going to announce a massive technology change when there’s actually no real hint that they have it in their plans (other than some comments Philip made off-hand at SLCC), or that they’re up for sale.
And now, in keeping with my delusional streak, I’m going to propose something else: Linden Lab needs to increase the fees for enterprise use of Second Life, and align this to a service package tailored to this audience. In other words, much like the price increase for education and non-profits (about which they’ve sort of, vaguely back-tracked on, but not very effectively, and not really), I think the Lab should increase the price for businesses on the Grid.
Here’s my rationale:
- Second Life Enterprise (SLE) wasn’t given the time to sell. As a result, it was sold in the dozens rather than the hundreds
- The price point for SLE was close to 6 figures, which was in line with platforms like Protosphere or Olive, but wasn’t the kind of thing you could sell in the first 6 months on the market (especially not without ANY advertising or promotion other than Mark Kingdon standing up in a workshop at Enterprise 2.0)
- The advantage of SLE was that it used the same technology as Second Life. But aside from that, it really only had a few advantages which were, to most companies, nominal:
> You could deploy it behind a firewall
> You could keep an ‘inventory’ of sims and bring them up or down as you wanted
> You could integrate it with internal identity systems using the LDAP protocol.
But other than that, SLE had significant disadvantages:
> There was no content. There was the promise of a new SLE Marketplace, but it never materialized. (They should have launched it at the same time, but whatever, they don’t usually do things in a meaningful sequence anyways)
> You were limited to, um, I think it was 8 sims active at a time. Hardly what a multi-national company with 100,000 employees would need if it was a true enterprise-grade application.
> It came out before Second Life Shared Media
But there is a market for enterprise use of virtual worlds. I’ve said this before: the tipping point came but no one really noticed.
I have no issue convincing enterprise that there’s a value to virtual worlds. The challenge is matching that value to a specific corporate need.
My own belief is that for enterprise, virtual worlds are best suited to agendas related to radical collaboration, innovation, change management and team-based learning. If you want a simulation or you want to save money on travel, there are other, more suitable alternatives than Second Life. Read more…
While OnLive and Otoy are the tip-of-the tongue names when it comes to server-side rendering approaches to delivering games, Gaikai promises something else: a business model in which affiliate Web sites can host games (or virtual worlds) and earn money by doing so. Develop a Steampunk game, embed it in your Steampunk site, and make money from the users who access it.
Now, I’ve been thinking about this because I’ve been thinking about Second Life in the browser, about whether Linden Lab is truly for sale, and all the rest of the speculation from the past few weeks. I set myself up with some Google alerts for things like ‘streaming games’ or ‘games + cloud’ just to see what I’d see.
And in an article earlier today from the Game Developer’s Conference alerted me to Gaikai, a server-side/cloud-based way to deliver games without a download, and their imminent launch:
OnLive’s been going through some growing pains, but awkward teenager or not, it’s still available for all to try. Its main competitor Gaikai, however, has definitely subscribed to the mantra of “slow and steady wins the race.” When, though, will it finally cross the finish line? Speaking with VG247 during an interview at GDC Online in Austin, David Perry said that the cloud gaming service is on track to go live in mid-December.
“We said we’d be done by the end of September, and we are. We’re feature complete. You see it running from Dallas. That’s the experience that people are gonna have. So the problem is we have not had the mass market real gamers come and play this. We’ve had publishers playing, but we haven’t had real gamers,” Perry explained.
“The minute that announcement comes out of who we’re gonna partner with, we’ll start sending out invites immediately. And we’re gonna do that for 60 days. So we are 60 days from the start of those invites to launch,” he added.“So that’s means, at some point in December – probably mid-December – we will be live. There will be no ‘you’re in a beta.’ It’ll just be ‘go ahead and play.’”
Server-Side Rendering and Second Life
Now, I won’t get into the technical background about server-side rendering of games. The truth is, I know nothing about how it works technically, and by some accounts it doesn’t always work as advertised.
But the idea is simple: when you download a game you do so because you need to ‘render’ the game on your computer. How else could you wander around a 3D game environment if it didn’t ‘build’ that environment as you interact with it? With PC processing power, graphic and video cards making significant advances over the years, your home PC can render out rich and immersive environments, but at a cost: you still need to install what is often a massive multi-GB program, because you need all of the game assets (3D environments) on your machine to render them.
Even MMOs like World of Warcraft install the content on your machine. When you access the server, what you’re accessing is the position data of other users and ‘asset’ data (like where a monster is or where a herb is that’s ready to farm). But the visuals are still rendered from your machine.
The breakthrough with Second Life is also, to a degree, its challenge: Second Life is a virtual world that doesn’t require you to install the ‘assets’ (buildings, avatars, clothes, etc) and because of this, it can support dynamic building within the world. A chair is created by another user, and you see the chair at the moment of creation.
But by not downloading the assets to your machine, it downloads them dynamically. What this means visually to a user is that the objects slowly “rez” – you might stand in a store for 5 minutes in the virtual world while the signs slowly come into view. The speed at which they do so is based on a bunch of factors, among them the processing power of your machine and the bandwidth of your Internet connection.
Second Life thus faces two challenges: one, similar to games, is that not everyone will download something before trying it, and in Second Life’s case you need to download a ‘viewer’, which is the software that allows it to ‘render’ the world which is delivered dynamically (as you experience it); and the second is the ‘lag time’ by which the assets arrive into view.
Games don’t face the latter problem, because the assets are stored on your hard drive, but they do face the former problem, especially since the asset files that are stored on your hard drive count in the Gigabytes (World of Warcraft, for example, can take hours to download – and that’s just the patches which are additional to the DVDs you buy in the store).
And then comes server-side rendering. And I think of it like this:
- All of the assets are stored on a cloud-based server, so you don’t need to download any assets (Second Life already stores assets in a ‘cloud’)
- And the ‘rendering’ of those assets is handled by the cloud as well, so your computer doesn’t need to do any heavy-lifting when it comes to rendering the content. Read more…
There’s a pretty simple rule for investing: buy low and sell high. Now, there’s another set of rules, and they’re a lot more complicated: how much something is worth will depend on who you ask.
In Silicon Valley, for example, something can be worth a lot even though you can’t seem to find any money changing hands. In the rest of the world, there are formulas for valuation, they’re often well known (a services company in Industry X might be worth 1.5 times earnings, for example), and they’re often adjusted based on intangibles like “synergy” and “goodwill” but you’ll usually still float around a predictable price point.
With recent changes and announcements at Linden Lab, speculation is running high that a sell-off is imminent. Tateru has read the tea leaves (and spoken to ‘a lot of people’ with ‘wide variety of business backgrounds’) and has come to the conclusion that its bikini season:
Swimsuit weather is fast approaching, and the old girl wants very much to lose about an inch off her hips so she can get into that bikini and have someone pick her up.
I do not find myself in any doubt now that Linden Lab has been positioning itself for a sale. Either that, or the Lab has some serious problems that it has not divulged. A suitor is not looking for something with too much weight on its hips, or much in the way of special needs. Prospective suitors are either looking for a trophy wife… or for a source of valuable organs.
A Lab, Irrelevant
Now, maybe I like to buck convention. Maybe I have inner angst and turmoil over a change at the Lab: I mean, who would I write about, be astounded by, and shake my head at? I mean, I do business in Second Life, but it’s just another tool in our tool kit.
I don’t deny that people can be deeply impacted by the changes at the Lab. I don’t deny that they make monumental mistakes, they don’t always finish what they say they will, they break things that weren’t broken and all the rest of it. But for me, at least, I’ve come to realize that when I look back the actual impact of their decisions (on my life at least) has been, well, negligible.
I can even think back to the days I was making and selling houses. It was exhilarating, fun, I made some money – but it was also maddening and frustrating. The Lab would change something and I’d need to check my parcel listings, or re-script the doors or whatever. But taking a slightly broader view, it wasn’t really that much different than needing to tweak a Web site to take advantage of HTML-5, or keeping an eye on Google to make sure that the keywords were still returning a high enough search result.
Technology changes, you roll with it (or you don’t), and you’re often at the whim of things outside your control – Apple either supports Flash or it doesn’t, Google either changes its search algorithm or it doesn’t, and you need to know what the latest social media gadget is so that you’re still talking in the places that your audience will listen.
So I say all this to make the point that for the most part the Lab might be idiotic, they might be tone deaf when it comes to messaging or how they implement change, but generally a few months passes and you can’t entirely remember what the drama was all about. Remembering all of this, I don’t have a particular stake in what the Lab does, and my preference would be that they sit in the background as much as possible, they do a better job providing the basics (like customer support and fixing bugs) but that they otherwise just sort of leave us alone. Read more…
On the most recent episode of Metanomics I interviewed none other than Robert Bloomfield himself for an in-depth discussion of economic theory, virtual economies and why people sometimes make stupid economic decisions. (OK, I’m not sure we actually talked about that, but if you listen hard enough I’m sure you’ll hear it).
In the very last minute of the show, news filtered in about the raise in prices for non-profits and educational users of Second Life and we briefly touched on it.
As a side note, this is a “like clockwork” thing for Metanomics – invariably in the middle of a show there’s some new post from the Lab and we lose our audience to a separate discussion. Maybe the Lab thinks that with everyone at Metanomics no one will notice the news?
Please remember that this coming TUESDAY, we’re pleased to host Noam Chomsky as our guest. With his high profile, we should expect another announcement from the Lab in the last 15 minutes of the show, so keep your Twitter feed open!
This morning I proposed that you could read the tea leaves of Linden Lab’s announcement of a price increase for the education and non-profit community and, if you tried really hard, see the outlines of a master plan in which Linden Lab would eventually split into multiple companies:
- Linden Lab, a software services company focused primarily on making money from virtual currency, markets, identity systems, server rental and infrastructure and other systems
- Second Life, a virtual world which makes money from fees earned from its users, and which “buys” services from Linden Lab to support that world
- The Linden Foundation, an open source initiative building and maintaining virtual world viewers and server code.
Under this plan, Linden Lab could provide “grid services” to third-parties, whether educational, non-profit, military or entertainment. The ability to move between these grids (one of which would be Second Life) would allow the metaverse to scale while pushing management of individual “sub grids” to, well, to anyone who wanted to run one (including those who simply use the open source Linden Foundation code without subscribing to the Linden Lab services.
But my hypothetical strategy isn’t complete without adding in the probability of server-side rendering, which would be an additional “product” that could live as a service under Linden Lab, and a revenue generator for Second Life.
I imagine a blog post, probably before Christmas, and it goes something like the following (the “special server class” idea is a total wild card, I’m more confident about the beginning of the act of imagination which follows):
Since my return as CEO of Linden Lab, I’ve been focused on our core strategy: to make Second Life fast, easy and fun. Today I’m pleased to announce that we have made significant progress in making this happen and will shortly be launching a new product: Second Life Stream (SLS).
For the new user downloading a client, learning how to navigate, and accessing great content can all be barriers to an experience that is fast, easy and fun. But what if they could enter Second Life without needing to download anything? What if we could bring them directly to great content and events? What if we had the option of making the sign-up process as easy as entering a URL in your browser? Read more…
Philip Rosedale returned as CEO of Linden Lab and all I could remember was this running tally I used to keep at the side of the blog: the number of days since Philip had last blogged.
With the debacle of Viewer 2.0, Mark Kingdon had capped two years of transformative change with a flare-out (or was it a fizzle out?) but you had to admire that he had set out some clear goals and had ruthlessly pursued them. He had brought in the adults, set strategies and goals, and had a vision for improving the first hour, snazzing up the platform, and creating the infrastructure for a ‘social media-ish’ virtual world.
While we were left with broken search, a Marketplace that doesn’t quite function, a Viewer that new users didn’t mind but old users hated, a sexy looking new Web site, Avatars United, and an Enterprise product that wasn’t given the time or resources to gather steam – at least it always felt like there was a methodology, a plan.
With Philip back at the helm, he begged for patience at first, and then revealed his own version of a strategy: fast, easy and fun; a more focused open source development project (Snowstorm); and….well, and then silence (other than a post about third-party viewers).
Sure, we have mesh imports and display names. But both projects were well underway before Philip returned, with the former announced well over a year ago by Tom Hale, and the latter tested in focus groups and NDA marketing focus groups in the spring.
Now, it’s not that Philip didn’t set out a strategy. He highlighted two main efforts: fixing the Viewer, and the system by which it is developed; and improving the Marketplace. But his big call to action was fast, easy and fun and his theory was that if you can do that, and do it as a sort of Grid-wide thing, the sub-markets and communities would follow:
As a final note, I would note that we are not planning to change Second Life to exclude any categories of users. Our restructuring messaging around ‘consumers’ and ‘web’ versions of Second Life seemed to mistakenly suggest to some that we plan to more narrowly focus the experience on a specific demographic or use model. We aren’t. We are reducing efforts across the board that in our opinion are being done in the wrong order, but those resources will re-focus on creating a single effective system that is better for all categories of user. We believe we first need to improve and complete the core experiences that drive Second Life, before we dive into how to customize it for different markets.
Strategy Obscura
So, back in the day my running tally of days since Philip last blogged was a sort of proxy call for better communication of strategy.
We’d hear general sort of pronouncements and then we’d go months without hearing from senior management (and Philip himself) and we’d end up trying to decode more granular changes to see if we could figure out the strategy behind them.
Hindsight is everything, I suppose, but these days I can’t help thinking that I made a mistake: it wasn’t that the strategy was obscured, it’s that there wasn’t one, there was just a sort of draft set of principles, vaguely worded, and the folks working at the Lab had as much trouble as I did making sense of it all.
I can’t help wondering – if you’re on the Snowstorm team, do you have anything more to go on than fast, easy, fun? I mean, maybe that’s the entirety of the strategy and you have to decode it yourself.
But yesterday’s announcement that the Lab was raising prices on education and non-profits has kicked in a sort of reflex instinct: maybe there is a strategy, and I’m simply too mortal to get it.
I have no idea why I’m doing this to myself again. I went through this for, hmmm, a few years I guess and it turned out that there wasn’t any sort of secret answer, there wasn’t much more than the Love Machine, and Mark Kingdon was brought in to answer the same question I had pounded my own head over: where are you trying to go, and how are you going to get there?
So maybe I’m feeling nostalgic. Maybe the Lab is charting a specific course and just can’t tell us about it.
The Way Ahead
So with all that in mind, knowing that this is a fool’s errand and that when sacrifice chickens (or pigs) at the Oracle of Linden Lab you’re more likely to get vague, cryptic and spluttering replies, I’ll take a crack at it anyway.
I mean, maybe there is a strategy, after all, and our view of the world is just too narrow to see it.
Money Well Spent
On yesterday’s Metanomics, we closed the show with a quick discussion of the Lab’s move, and Robert made the point that it’s possible that the decision was calculated based on known data and that it could be related to profitability.
If this is the case, it’s possible that the Lab has factored in the size of the education and non-profit markets, has taken a survey, has assessed the attrition through some sort of mathematical model based on customer insight and come away with a conclusion: a price increase will see some attrition, but the losses will be mitigated by the gain in revenue.
With 800 education institutions in Second Life, and countless non-profits, let’s just take a guess and say that there are, hmmm, 500 islands say which will be affected by the price increase. That’s roughly $75,000 in revenue each month. You would need to lose less than half of your customers to be making more money at the end of this.
Do the math:
- If you lose 25% of your customer base, you still come out ahead $37,500 per month (based on there being 500 sims, if there are more, it’s more, if less, it’s still a profit)
- That equals $450,000 in new revenue per year, even though you’ve lost 25% of your customer base. Even if you think you’ll eventually lose 50% of your customers, you’ve still netted out a big chunk of change
So the logic might be really simple: “What could we do with roughly $500k in new revenue. Even if we assume that we can hang on to 75% of our customers in the first half of 2011, that’s still $250k – and we can lose another 25% of them before year end and still come out even. What can we do with all that cash?”
The benefit, to the Lab, isn’t just the gained revenue, it’s that the revenue gained can be spent on something else – and theoretically, the something else includes increasing the number of users, the number of islands being rented, or the amount of revenue to be gained.
The problem, of course, is that the math is one thing, but the calculation of goodwill is another. And there’s an implicit gamble: that the loss of goodwill will have a neutral effect. For myself, the loss of goodwill is, decidedly, NOT neutral but then I’m not Linden Lab.
New Product Offering
The Lab has a history of making announcements, waiting for the fallout, and then announcing something new with a post that begins: “We’ve heard your feedback and we’re pleased to announce….”
I’ve often wondered whether this is a refined form of back-peddling or is something more devious. But whatever. Read more…
