Linden Lab laying off staff, closing Singapore office

Back in April, we observed the departure of what we estimate to be approximately 5% or so of Linden Lab's total headcount. Some churn is to be expected, of course, especially in a tech company. It seemed a little odd that the positions didn't appear to have been advertised or refilled, but sometimes that happens out of sight. Last week, a Lab spokesperson confirmed for us that the Lab still had in excess of 300 staff.

This week, however, we're actually becoming quite concerned as there are signs of what seems to be a significant series of layoffs in progress at Linden Lab.

There's a pattern at work when various key staffers are about to depart from the Lab fold. A sudden rise in job-oriented social networking (particularly reconnecting with ex-Lab staffers), a sudden burst of recommendations and references, and so forth. We watched it all over the weekend, in some very unusual places. Some staff have already gotten notice, while others are evaluating their options in case they're tapped in a subsequent round.

Most or all of the team that engineered the Second Life Enterprise product was let go not long after it went into production.

Linden Lab's country manager for Germany is gone (Germany is an important market, traditionally being Second Life's second largest national market).

At this moment, our information is far from complete but it's a pretty good bet that if you're a part of the Lab's market-development or business-development groups, you're already clearing out your desk this week. Just how deep the cuts are going to go is uncertain at present. Apparently, it isn't a good time to be a product evangelist on the Lab staff.

It also isn't a good time to be a part of Linden Lab's Singapore office which we are told is being shuttered (though the Lab is still advertising at least one position there).

Linden Lab has done a lot lately to try to boost the number of active Second Life users. A recent advertising campaign hugely increased the number of visitors to the website, but only provided a quite modest increase in new registrations.

Viewer 2 and the new orientation experience, whatever praise or complaints you might have for them, simply have not provided any noticeable improvements in overall usage. Median concurrency continues to decline, and the Second Life economy has shown no corroborative signs of real growth of late.

And that last part may be at the heart of the problem. For Linden Lab, growth of the Second Life economy is essentially profit. As long as that growth continues, there's demand for the currency pool to keep pace, and new Linden Dollars are very nearly pure profit.

As the growth rate of the Second Life economy has apparently flattened out, that would have slashed an enormous amount of revenue from the Lab's monthly balance sheet.

That, and any other factors influencing the Lab's profit, would seem to be enough for the Lab to compensate by shedding staff. Paradoxically, the bulk of the staff shed this year seem to be those who are (or were) best placed to boost Second Life usage.

That is pure speculation, however. The exact cause for the cuts is not known to us at this time.

It's going to be an interesting month at Linden Lab, certainly, and this week especially. Likely, we'll know more in a few days. It could wind up as a windfall for competitor businesses as well, as a number of exceptionally talented employees appear to be among the cull.

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