Feature: Industry Reacts to Linden Lab CEO Shuffle with Cautious Optimism

Earlier today we reported that Linden Lab CEO Philip Rosedale was looking for a replacement with more experience in management and operations. It’s certainly not uncommon to see software start-ups helmed by visionaries with big ideas morph into robust companies led by experienced executives, and it seems that’s how most industry observers are taking this change. "I think it's a great change for Second Life," said Metaversatility Co-Founder and CEO Peter Haik. "I don't think Philip ever was really too thrilled about being CEO. He was the ideas guy. He was passionate about the idea and not as much the management."

"I personally welcome this news," explained Giff Constable, COO of The Electric Sheep Company. "Philip will remain Linden Lab's visionary and lead evangelist for Second Life, which he has poured his heart and soul into. However, he has long talked about the need to make Second Life run like a utility, and [that] requires a whole other level of operational and technical discipline.  Linden Lab's business is doing fine right now, but they have some hard choices ahead as they figure out how they want to grow, and how much of a community/MMO company they want to be versus a global, open metaverse-like platform. The latter will require some steps that could upset the community and cannibalize some existing revenue streams.  It will be very interesting to watch."

Challenges

Similar questions were echoed throughout the industry. While Linden Lab insists that the decision wasn’t precipitated by a crisis, it’s hard to ignore the ongoing backlash against Second Life from the mainstream media. Linden has been working hard to make Second Life more stable and accessible for its current users, there hasn’t been many obvious moves to make it ready for a broader group—a problem other platforms and providers are aiming to solve.

“The baton pass is critical here,” said Christian Renaud, Chief Architect, Networked Virtual Environments, for Cisco. “They need someone who can work with Philip so they don’t lose momentum. They need to maintain that in the face of this coming competition so they don’t trip up and fall down. The danger is if they bring somebody in who takes the company in a direction other than it’s currently going—and you’ve seen this happen with Tribe.net or Sims Online, where they had this vibrant community that made it what it was and lost it when they tried to go mainstream. There’s that necessary balance.”

There’s the question of mainstreaming the platform for consumer use, but also the issue of satisfying the many developers and companies looking to build on Second Life. In the last few months of traveling to conferences, I’ve heard a rising backlash from workers within the virtual worlds industry as well as those without. A new CEO and a new direction offers a chance for change.

“Since 2005 I have been saying that Linden Lab is two companies – a hosting and community management company and a Metaverse platform company,” said Constable, who has helped bring mainstream properties like CSI to Second Life. “I'm not convinced that they can do both simultaneously. Their decision has huge implications on their future and how ESC works with Second Life.  We have pushed the boundaries of Second Life and done some amazing things, but have also run into serious limitations. Much of our thinking has shifted towards the intersection of virtual worlds and the Web, where there are fewer barriers to usage, where we can scale more cost effectively, and where we have more control over the user experience and underlying technologies.  However, that does not mean that our interest in Second Life is over.  Much will depend on Linden Lab's choices. They have multiple ways to be successful and it will be interesting to see how they choose.”

That’s also an issue for the internal corporate environment. There’s a Tao of Linden that gets thrown around from its early days—working on fun projects, operating in a loosely organized structure, etc.—that seems similar to early Dot Com attitudes. There’s already been a big push from the Lab to increase stability over new features, but some developers want more.

"We'd like to see more structure at the Lab,” said Haik, who noted that Metaversatility is still very involved in work inside of Second Life. “I think their whole idea of everyone working on what they want is great and novel and all, but at the end of the day, you want someone to make sure the work that needs to get done is getting done. I think the key thing I'd like to see from the new management is someone who makes sure that things that may not be as fun still get done."

Were There Problems?

Corey Bridges, Executive Producer and Co-Founder of Multiverse, a competing virtual worlds platform, has been outspoken in his criticism of Second Life and the perception that the problems of Second Life are the problems of the virtual worlds industry.

He said today, though, that he’s a fan of Second Life—and a user with ten or twelve accounts—but the things he likes about Second Life, it’s freedom and experimental nature, are also its problems.

“They made the right technology choices for what they were building, essentially a giant Petri dish for user-generated content,” Bridges explained. “And they made a lot of choices for efficiency of letting people create wild new stuff, but the choices they made to support that means it’s tougher to make that technology work for a wider audience. People have tried to stretch it into something more than that platform, and it just doesn’t fit, but I have a lot of respect for what they did.”

Part of the problem for Bridges is simply the hype that surrounds Second Life. It made the world into something more than he thinks Linden Lab intended it for. The Kool-Aid drinkers insisted that Second Life was the future of everything. While Linden Lab didn’t raise all of those expectations, he believes the company could have done more to set them appropriately.

“I was speaking to Philip at Harvard a few months ago,” Bridges said. “One of the things I believe he said was that ‘When people ask me whether they should set up a retail shop in Second Life, I tell them no. It makes as much sense as dropping a Gap shop in the desert. ‘ I believe he told people that, but I don’t remember he and the other Lindens going out and managing expectations.”

For others, change is welcome, but also a while in coming. Renaud has worked extensively in Second Life with Cisco, but without much support from Linden Lab. When he formed a council for business interests in Second Life with members from major companies—users creating content to draw more business audiences in to the virtual world—they came up with a list of requests to make Second Life more business-friendly. They weren’t answered.

“Pretty much what happened is that all the corporates since Novemeber 2006 have been fighting and scraping to make it successful with very little support from [Linden Lab],” Renaud said. “They’ve already had their opportunity with corporates, and they’ve lost some because they weren’t dealing with corporations differently than individuals. We created that council and got no response.”

Renaud is hesitant to suggest sweeping changes that would alienate the base users of Second Life. Instead, he’s looking for more options to make the virtual world an effective place of business. Regardless, he’s still happy to work in Second Life and says it would take major changes to make the experience untenable, but that’s not true for other business users.

“It may be that they’ve missed their window, at least for that audience,” he said. “If you want to get the corporates in there to bring content that’s at least not self-referential—Second Life users just talking about Second Life—they do need to re-vector.”

Why Now?

All of the current press from Linden has stuck to the message that Rosedale is ready to hand over the reins. He understands that his insight might be better suited as chairman of the board instead of the hands-on CEO.

“I think it’s a really smart move of him to say, ‘I love my child so much I’m going to give it to someone who can treat it right,’” explained Renaud.

Linden Lab says that there’s no immediate plans for a sale or IPO, though the latter was acknowledged as a future option, that would require a new face for company management, but speculation from many industry observers is that it’s just that.

“I think it’s fair to say that it’s a pretty poorly kept secret that they’re doing some pretty public shopping for either an IPO or a major venture round because the ideas haven’t lived up to scale,” said Renaud.

The sentiment was repeated by various other parties throughout the day, though none wanted to speak about it on the record.

“They’ve been making a lot of organizational changes and changes to their business model in preparation for that, and that’s where a lot of the gambling and age play bans came from--objections they heard when they went on the funding road show,” said Renaud. “One of the things they can do to polish up the apple is bring on a CEO with more experience and the skill set to grow to the company.”

Optimism for the Future

The tone of everyone I spoke to today was optimistic.  Some are more cautious than others, thinking the change might be too late to be significant, but all think it’s the right move. 

"Second Life could never have risen to prominence and excited the imaginations of so many people without Philip's vision and technical brilliance, which remain central to Linden Lab's future as he assumes his new role as board Chairman," said Reuben Steiger, a former Linden Lab employee and current CEO of Millions of Us. “Injecting additional operational expertise through a new CEO is a natural step in the company's growth, and we are confident that Second Life will be the world's dominant user-created 3D environment."

Comments

[Prokofy Neva]

This is a great article that sums up the issues very well, good job!

Re: "the latter will require some steps that could upset the community and cannibalize some existing revenue streams. It will be very interesting to watch."

Yes. *Looks down*. Cannibalize *people,* too, who *make those revenue streams for them*. I see my left arm is already chewed off up to the elbow, despite everything.

What I would like to hear from Giff is a very clear articulation of which direction *he* thinks Linden Lab should go, not just that he thinks they have to chose.

We all know the distinctions of platform/world, platform/world and have been discussing them for years. We get it. The Lindens can dump all the "blingtards" off the sims and move to a grid-level enterprise-services sort of profile, and either end blingtard services or leave it as an outsourced option.

Giff says "we have more control over the user experience and underlying technologies" elsewhere. Is that because "elsewhere," no one campaigns against data scrapes by forced opt-out Grid Shepherd bots? Is that going to last forever as a climate?

Here's how I put the current unhappy situation in my blog today, where basically, the Linden Lab board has put up a Facebook sign that says they are "looking" and even have to "marry" the new CEO with the new board chair:

I, as a share-cropper or quit-renter (a small business paying tier like thousands of other small businesses paying tier or end users) wish I had a more normal company like IBM as a landlord, you know, people who come to work wearing button-down Oxford blue shirts instead of t-shirts that say "I'm a F**king Genius".

Meanwhile, Mitch Kapor, aspiring to open-sourcing, a "liquidation event" and a grid-level services enterprise, no doubt wishes *he* had IBM as a share-cropper, not all kinds of complaining individuals who screech about VAT tax or bans on casinos.

So you would think there would be a natural solution. Find a company that can either buy Second Life, or buy the sims with the socializing blingtards and small businesses and serve them outside of Linden Lab, and put them on one grid, and put the educators or businesses on separate grids. This frees up Linden Lab to go on developing software and making a world-wide grid where maybe not everybody hooks up, but they have a certain kind of basic set of services or familiar software features and perhaps some lighter client or web sites linking them.

Except...people like Corey Bridges make sense when they say that Linden Lab can't really pretend, with their current software, to be "building the Metaverse" on that platform. There are now other competing platforms, and the fierce competition outlined by Christian Renaud is very real and palpable.

In a way, LL is cornered, because they can't likely boldly move foward to be this incredible gigantic worldwide grid services industry (unless something very big that did something like that already bought them -- Google?).

And they can't move backwards and be only a giant MMO services provider on the planet because millions of people will stream over to easier-to-use, less expensive, less laggy and griefy options like even just a Facebook or a Twitter. Growing the MMO only to a few million users probably isn't a viable business model -- again, unless something very special, and not so big bought them (EA.com?)

When animals are in a trap, they will chew their own legs off. We have to make sure that Lindens chew off some of their own paws, and not just ours. The new CEO cannot be making changes on our backs, raising tier, glutting land, destroying the inworld economy, abruptly closing the world or selling us off to indifferent slumlords. They should conceive of us as an asset, and not a liability, as they do now. My God, we pay 80 percent of their revenue. Our content and events are what draw new people, not corporate silos.

But...there aren't that many of us. 300,000 logging on? 7,000 paying more than $125 a month for land regularly logging on? It's hard to say, even with the over-saturation with statistical data everywhere.

The solution I've always suggested for this very difficult impasse is as follows (so that everybody keeps their paws intact):

1. Make Linden Lab a non-profit research institute (or make Linden Research, Inc. the 501-c-3) or make it a kind of Associated Press (the AP) of worlds, a services non-profit that pays for its own staff and expenses with subscription and service fees but isn't a commercial profit-making entity. This body will continue to maintain the Mainland the private island continents, but stop trying to grow them at breakneck speed to generate fake MMORPG-like numbers to impress investors. If it can't do customer service, it outsources orientation to inworld and outworld businesses and non-profits.

Perhaps the understanding may even be that living here is the rough equivalent of being in EA-land's Test City (former The Sims Online) or Beta city while the software is tested and run through various iterations.

2. Make Second Life Grid (secondlifegrid.net) the enterprise level business and be willing to create separate, non-linked grids, a system of host-your-own servers linking up as well, i.e. a mixture of Linden-hosted and own-hosted that don't always have to link up to LL or to each other or to some gigantic grid out there (a big ideological hobble to the whole LL enterprise is the idea that everything has to run from a central asset server -- why can't there be 10 central asset servers with different assets?).

3. This forking enables the virtual world to "do both," and it also creates more coherent choices for corporations. Philip's advice is silly. Of course a company should set up a retail shop in Second Life, if they have something coherent to sell. But just as they wouldn't set up a shop in a mall in Peoria with no staff in it, they have to staff up. It's not a web page. It's a world. It has people in it, interacting. Or rather, sure, it *is* a webpage, and you hire people to keep refreshing your web page content, don't you? Why would *this* web page be different?

But if corporations are not willing to engage with the world (make constantly refreshed webb pages), with the staff and outreach and such, they could go over to the other grids where they meet peers in conferences, prototype ideas, etc.

4.This leaves the problem of a Metaverse of castes and gated communities, an "archipelago of egos" hiding behind open-source rhetoric by using ban lines, mute, and symmetrical no-draw, and that goes against Philip Rosedale's vision of making this "for everybody". But it already exists anyway, with internal corporate virtual worlds -- and there will only be more of those.

So the solution then is not to try to move the worlds and grids, but only move the avatars -- maybe not even move their stuff.

Interoperability has too big an appetite trying to make worlds and stuff moveable along with avatars. This appetite is fed by extremist copylefters promoting it, and actually has far too little support from the actual user base in VWs. Keep the worlds fixed, but make the avatars move -- with the understanding that they can't move everywhere. In real-life, you don't get to go to the 7th floor of the State Dept. or 37th Floor of the UN just like that, either, or just drive through everyone's private ranch or right up to the shore line past the oil companies at Prudhoe Bay.

5. Linden Lab, since it was earliest in the space, more or less, could excel at welcome-area services helping people find their way, the portal of worlds, the Woods Between the Worlds. For this, there's a LOT they'll have to change, from their UI to their over-reliance on game-master/volunteer types instead of professionals. This is really a magical leap across the abyss, because welcome areas and usability and the newbie experience is what LL does least well, but what those small businesses that have survived on its platform have done best.

[Zha Ewry]

One very focused comment on interoperability. on your point four Prok. Interoperability doesn't assume you can go to all the other places in the world promiscuously, any more than you can do that in the real world, or visit people's intranet web pages, without having the right security credentials. But, just like RL, and just like the web, by making it possible to visit all these spaces, interoperability aspires to permit people to move between various public and private space in a natural, way.

It is also important to distinguish the technical ability to do things, from the social policies various players will put in place. Its easy to say "The technology permits this, therefore it will happen." In fact, there tends to be a complex tension between what we can do, and what we chose to do.

- Zha

[Prokofy Neva]

Zha, you know full well that every discussion about "interoperability" begins with an affirmation "I want to walk between worlds" -- but without a recognition that this is just an affirmation of some geeks. You know full well that not even all geeks want this, let alone all users. There has been a robust debate on this subject, and that has to be owned.

Eacn time it is affirmed, there isn't at all the caveat you're saying about "non-promiscuity". Instead, there is an exhuberant enthusiasm, a claim to "go anywhere in all my games and worlds". The wish list isn't to walk into a corporate intranet, which would be boring anyway to most people, but to walk from this game to that game or that social media's web-based flash VW to this other VW that is a download, etc. etc.

People already have a "natural way" to move between worlds: a) click on bookmark or destop icon and b) type log-in. It already feels very natural. I'm already integrated and all my circuits are wired and I'm already intelligent, and not artificially, I can decide to log in to this...or that...and the people behind the log-in screen can let me or not.

You are claiming to make a distinction between technical capacity and social policy. But you know full well, Zha, that each time this debate is had, those who are gung-ho about interoperability don't ever reflect on social policy and are absolutely unwilling to entertain a coding of social policy, or even a *participation in* creation of social policy *while the code is being drafted* so that the tech doesn't drive away the social policy with lots of "cans" when it need not.

Tech that is made by people who are gung-ho for interoperability and heedless of social policy will be tech that won't admit any complex decisions later, that's all there is to it. That's why the only rational thing to do with interop extremists is just block participation -- they leave you no choice. The big risk of interop as you well know is that in the name of moving the avatar/person and making their stuff "have back-up copies" they risk sucking all the copyrighted content out of the worlds and pouring them into others for free. There are quite a few in these interop discussions in SL that think that's more than fine.

You're thinking perhaps about big-picture corporate interoperability with big macro issues. But I'm pointing out to you the persistent problems that the user-end of this story can constantly find: unwillingness to weave the social policy in at the beginning, unwillingness to find ways to protect IP, Instead, we are to recite the 8 generatives while genuflecting copiously.

[Rip]

I am so sick of people belly aching about IP rights i could puke! When did IP rights ever survive technogloy advances in the early stages? the answer to that is never! The artist and creators in secondlife need to stop all the whinning and get out of the way. We have worlds to build here, not art displays with pink and yellow ribbons. Once the worlds are finished, we can then worry about these silly IP rights.

[Giff]

Prok, I can see pros and cons to both approaches (UGC MMO vs platform), and if it was me I would split the company and do both, but not let the requirements of one dilute the success and focus of the other.

It is all a matter of perspective. Linden Lab has tended to put the SL community first in my opinion, even if the community doesn't always see it that way. That's not necessarily a good or bad thing, it just depends on what you want to be, and what kind of ecosystem you want to build around your technology.

When I talk about more control over user experience and underlying technologies, it isn't about being evul data 0v3rlRd11111 (you brought up that short-lived R&D SL search experiment ESC did). It is about usability and the power to create a fun, light, immediate user experience. SL is open and flexible in many ways, but also very very closed and inflexible in others.

[Prokofy Neva]

Rip, that sort of copyleftist extremism which wishes to exploit and destroy everybody's intellectual property (while you get to keep yours as a coder) is what gives the open-source movement a bad name. It's good for Zha to see it squarely in view here, and understand what's at stake here, that behind the meaning of the words he is embracing so enthusiastically is in fact the Rip viewpoint in a hidden agenda: it's a visceral hatred of everybody paying Linden Lab tier now for businesses, or creating content for Second Life, and a belief that they are "in the way".

It's not surprising that when we encounter anonymous people hiding behind no-payment-on-file avatars like this, we fight back. But here, we don't even have a Second Life name, just the appropriate name "Rip". Yet...they get to decide -- THEY get to decide what "interoperability" *is*. Without *paying for it*.

The idea that you can use Bolshevik methods, and have the ends justify the means -- crash and burn, destructiveness, killing people who get in the way -- to make something that is better, to which you can convince people later to move to -- well, that's totalitarianism. I don't see why we need to sit still for that in the meat-world or the Metaverse, I truly don't.

Giff, what is the SL community? If you mean by "put the community first" the community that is in fact a loose grouping of coders with the attitude of Rip (which perfectly matches the attitude of some Lindens) who get to be in the Architectural Working Group, or this lose coalition of high-end creators and land barons, who get to be in the exclusive SL Views, or the loose network of former Lindens and FIC who get to be in the metaversal development agencies, well, yeah, they put THAT community first. But what about the other 49,500 people logging on concurrently?

Giff, do you mean by fun light user experience the Sheep browser? You know my views on that.

[Rip]

Prok first off, as a novice coder I get to keep very little in this volunter effort to expand the scope of human knowledge. Secondly we dont see you doing anything more than stirring up drama in metaspace and attempting to bring people to your over wordy and sanctomonious blog. As far as you making this connection to leftist extreme totalitarianism, I have this to say. Where in the world are you hiding those goofball pills guy?

[Prokofy Neva]

Actually, I run a business in Second Life which generates a fair amount of revenue by inworld standards and keeps me busy with a lot of customers. I commission builds, support non-profit projects, do various things.

BTW are we to call it the Metaverse or Metaspace? Will there be a partition between the two?

[csven]

"Once the worlds are finished, we can then worry about these silly IP rights."

Those "silly IP rights" are arguably why the Western world has been so dominant for the last couple hundred years. When free people are encouraged to create by legally granting them some assurance their irretrievable time will not be wasted through the casual "sharing" of their hard-earned efforts by those who contributed nothing, society as a whole arguably benefits. Notice that Asia is beginning to rethink their largely lackluster response to IP enforcement and will likely continue to take matters more seriously as they become the innovation centers of the world.

I can't help but wonder if Croquet and other promising efforts won't fade away; not because they're technically inferior, but because content creators aren't likely to casually donate the time it takes to create the content which will attract people to those projects. It's Beta vs VHS, just from a different perspective.

One doesn't have to endorse the current laws to understand that the idea has merit. To dismiss the concept as "silly" seems to me the mark of someone who has yet to fully comprehend the situation. After all, even Lessig (to Barlow's dismay) argued that creators should have the final call on how something they've created is distributed. Yes. *That* Lessig.