The Virtual Whirl: A brief history of Second Life (2010 and the future)

2010 and beyond

So far this year, the Lab's been uncharacteristically quiet. Oh, there are video tutorials and hints and tips and so forth, but most of it has been top-down or just fluff, with very little in the way of conversations happening with markets and users. That said, it has been an interesting year already.

Linden Lab designated 2010 as the "Year of Delight."

In 2010, Linden Lab's errors of measuring economic growth caught up with them. The focus on user-to-user transactions caused them to miss seeing a slowing (and possible shrinkage) in the Second Life economy, until millions of US dollars in revenue had been wiped off their balance sheet.

Yes, we're attributing it to conceptual error. The alternative would be to suggest that Linden Lab was more aware of the true measurements of the Second Life economy and simply lied through 2009/10 by using a metric that was intended to make things look better than they were – and that's not a very nice suggestion. The reductions in growth were apparently obvious to virtually everyone else. Most cases of apparent dishonesty can easily be explained with simple shortsightedness, obstinacy or error, and we think that is also the case here.

As a result the Lab has shed more than 30% of its staff through Q1 and Q2 this year. The Singapore office has closed, the UK office will be closed once the UK labor laws are satisfied, any remaining presences in China, Korea and Japan have been cut, and terminations will continue until roughly August.

Amsterdam, the new EU marketing office for Linden Lab (which opened at the beginning of this year) apparently will be remaining open indefinitely, and is the only non-US office to be retained.

All of this was attributed to "a restructure" and that efforts would be directed towards a viewer that would run in a web-browser, thus hiding the download from potential users. Given the Lab's established track-record on projects, that should be ready around Q1 2012, unless there are unusual delays.

Two new lawsuits started up, which (if I'm counting correctly) brings the total to four current lawsuits against Linden Lab by its users. The new ones are Evans vs Linden Lab, and Fahy vs Linden Lab.

The WSE (World Stock Exchange) that had closed for one month of upgrades at the beginning of 2008, opened back up for business this year after two years, which surprised everyone who noticed. As a part of reopening, the WSE announced a permanent trading halt on all WSE-listed companies.

Linden Lab launched Viewer 2 (AKA Second Life 2) and a new orientation experience at the end of March this year, and we're going to say that it flopped.

No, there's nothing specific wrong with Viewer 2 (although the new orientation experience is too video-heavy for many to find it usable), but that's the point that usage metrics begin a sudden decline.

It is unlikely that these are not related (although perhaps we're committing a post hoc fallacy of our own), although the failure of Second Life's search system to allow you to actually find things is probably a contributing factor – along with the new Terms of Service.

After some reflection, renaming "Find" to "Search" was probably very appropriate. Since the renaming, you seem to do a whole lot more searching than finding.

The Future

There's the short history, sans the hundreds (well, actually thousands) of things that I've skipped over or not included because there is simply too much. There's enough to fill a book, or several. In fact, some of it already has, and if you want a fuller treatment of those early years James Wagner Au's book is probably the best place to start.

So, where is Second Life and Linden Lab going?

Overall, we're expecting the total staff reduction (including voluntary departures) to reach maybe 50 or 60% before the end of 2010.

For layoffs of more than 15-20% it's customary for the point-man (or woman) of the layoffs to be let go as well. It's a cats-paw thing. Removing the point-man allows remaining staff and customers to focus ill-feeling on the unlucky sod, and allows things to continue without so much negativity.

As it turns out, that's what ended up happening, so no real surprises there.

The Lab has always been secretive about its goals and plans, but as a part of announcing layoffs has indicated that it's planning to be more "consumer focused" in future.

Quite what that actually means is unclear. It certainly implies that the Lab wasn't before, and a large part of Second Life's history seems to bear that out, if we're judging the Lab by its actions rather than by its words.

You see, every year the Lab tells us that it is focused (or about to focus) on the consumer, that it is making an effort to simplify things, to improve stability and reliability and all of that. Rosedale said it at the anniversary speeches just a couple weeks ago. Kingdon said it every year he was in the CEO's chair, and Rosedale said it every year previously.

We don't think, therefore, that it's cynical to assume that what we're being told is so much hot air. It's pragmatism born of experience.

Talk is cheap, and Rosedale himself said to judge the Lab by its actions rather than its words. The problem is that the Lab takes a long time to accomplish things, so any visible actions are probably quite a ways off.

We also don't expect Rosedale to actually be involved much in the running of the Lab, interim CEO or not. Most of that will probably fall to the new COO. Rosedale might still be in love with Second Life, but we don't really think he has much interest in Linden Lab anymore.

The Lab must have a CEO, but there's no requirement for him to actually show up for work, or keep the chair warm, and we're really not expecting him to.

What it does do is give the Lab a bit of breathing space, and some much-needed warm fuzzy feelings to tide it over. Very soon, though, the Lab is going to have to show results, or it will lose any confidence that it gained by Rosedale's temporary appointment. Plus, it will need an actual full-time CEO.

So, overall, we're not really predicting or expecting anything to change noticeably in the way Linden Lab operates Second Life. We'd love to be proven wrong here. We're holding out hopes that we will, but we're just not expecting it.

Finally, what does any company in Linden Lab's present position normally do? They generally make new acquisitions, and some sort of new acquisition is what we're expecting to see before the next anniversary. Beyond that, it is hard to say. The Lab is still keeping its goals and directions a secret.

Second Life remains cool, interesting, nifty and valuable, but it ultimately runs on faith and Linden Lab has its work cut out for it to restore that faith.