[Reset] and do a 180º turn

Today, Linden Lab turned another page on the history book for virtual worlds and entered another chapter… or, to be more precise, they turned a page back. Which is surprising. Linden Lab normally doesn’t do that. So, what happened?

First of all, I feel terribly sorry about the long list of Lindens that lost their jobs. Some of them have been around for eons and were good friends. Some, which you all will recognise, did an outstanding job while they were at the ‘lab — it’s incredible how M Linden has the courage to face them and tell them to go home. I profusely thank to all of you personally for the incredible work you’ve done in the past half-decade on behalf of all of us, and wish you all the best for your next endeavour, whatever it might be.

But now it’s time to see what this is all about. While the SLogosphere is already panicking (who writes those press releases anyway!?) and most can only read the words MASSIVE LAY-OFF AT LINDEN LAB, it’s worth to pay attention to the small print, which is where the interesting news actually are.

It’s about our world, after all

During the last days of Philip “Linden” Rosedale’s supreme reign, LL was starting to push out Second Life to areas that it was not prepared to deal with. They were all turned to the idea of Second Life as a residential, consumer product. It was supposed to be a Lego for adults, who would connect to it from home, and share their buildings with friends, and do crazy things with it. But all of a sudden, starting in 2006, real business and real academics started to see SL as an incredible opportunity to do a completely different things, not possible elsewhere.

People panicked at that time. They thought that all of a sudden “our” virtual world was going to be swamped over with ads and boards all over the place. The dozens of thousands of small businesses in SL (which have grown to hundreds of thousands these days) were scared about the “competition” coming from Real Business, which they feared that they could swamp SL with cheap or free content created by professionals paid in real money for real wages.

This, of course, did never happen (companies obviously hired existing residents; know-how is not something you can replicate so quickly). Instead, businesses clashed with LL’s policies. They wanted control over their sims; LL was not prepared to relinquish it. MTV jumped straight out and went to use There.com’s technology because of that; CSI:NY grumbled about the same and CBS didn’t do much more experimenting in SL after their initial efforts. The reason was the same: LL was antagonistic to RL corporations in SL.

But this quickly became impossible to stop. More and more corporations started to enter SL (1500 are known to be in-world), and they started to make demands. Professional developers were appalled at the way LL treated their clients. It was impossible, for instance, to get billed. Lots of excuses were invented on the spot to “explain” why LL was not really helping out companies to enter SL. At some stage, groups of independent developers even offered LL some help to create for free an official site for companies, which would have a completely different message than the “residential SL” consumer-oriented portal (an idea that obviously LL rejected, like they already had rejected a previous offer of help to run the in-world customer support, also for free).

So during the “hype years” of 2006/7, when corporations were all raging to enter SL, LL was simply not showing the appropriate attitude. And at the same time, universities were also starting to offer services in SL — and doing research. And, of course, stumbling over all the obstacles: thanks to Pathfinder Linden, who also had left a few months ago, at least they still had some official support back then from the ‘Lab. Corporations had no such luck.

A lot was written already about how companies “got it all wrong” during the hype days, and that’s the reason why besides IBM and Intel few have endured until today. But LL’s anti-corporation stance was not much discussed. Over time, they started to be a bit more flexible, but they took their time.

Then we entered the reign of M Linden. He came with a solid corporate background of managing a company that was focused on the corporate market, not the residential one. And he noticed that all these corporations were still knocking at LL’s door begging to enter. But they also had a long, long list of complaints of things that didn’t work well, from customer support, to an impossibly-high-learning curve, to lack of control.

M Linden started massively hiring new people, and re-assigning teams to new priorities. He realised that SL was not growing exponentially, but merely by a few percent every year — good enough to please the stakeholders, but not something that would earn him a picture as Time‘s Man of The Year. And that’s because SL was mostly — and still is — a service for the residential market. How could M bring the corporations in?

A lot of new ideas were implemented, all at the same time. A new web strategy was developed, where the consumer, enterprise, and educational markets would be clearly separated. The biggest change, of course, happened on the enterprise side: developers started being addressed much more like partners than “pests who ask too much from us”; corporations finally were able to be properly billed and even send wire transfers for payments instead of using the CEO’s personal credit card; a new product, SL-behind-the-firewall, was launched; a new marketplace was announced (still not launched); and a new viewer, allegedly easier to use, was introduced.

At the same time, on the residential side of things, a lot was being cut down. A ghetto was created to put the adult community (i.e. pretty much a third of SL’s economy) “out of sight”. Orientation islands were dumped. The Mentors were disbanded. All sort of crazy policies were implemented, with lots of drama around the interpretation of the new ToS. And the long-term open source strategy around their viewer totally backfired: instead of crowdsourcing a lot of eager programmers to fix bugs and implement new features, because LL takes 6-18 months to implement a patch of a single line of code (due to strict Quality Assurance procedures), programmers just gave up, forked the code, and launched a myriad of new projects, among which Emerald is the leader — and also the group that split the most, as new developers grabbed the code and released their own ToS-breaking, content-copying versions instead.

It became a mess, and the reluctance of adopting SL 2.0, combined with broken search didn’t help LL’s plans much. To make matters worse, LL started to aggressively compete with its own residents, by offering Linden Homes, which allegedly increased the number of Premium users, at the cost of putting established communities and land owners out of business and forced to try to sell and rent land below cost if they wanted to stay around. I have no idea if the extra Premium accounts compensated for the loss of landmass from landowners who gave up and closed their businesses.

Nevertheless, the residential side of LL’s business continued to thrive, which is quite a feat, and would run against all expectations. In spite of everything, SL grows, and grows more than the RL economy, even if there has been a slight decline of simultaneous users (but not of new users). Hours-per-month, however, continue to increase, as well as almost all indicators.

On the business side, we have no numbers. But… seriously… how many SL Enterprise boxes has LL shipped? They made a huge deal of listing the dozen beta-testers. I estimate that not more than 20 SLE boxes were ever sold. That means less than 1% of all income. 99% still come from the residents, doing business as usual, even in spite of all the difficulties.

I guess that M Linden was baffled. Why weren’t businesses rushing in like crazy? Now that LL had changed its strategy and approach to business and education — setting new sites, creating a network of partners to act as a sales force, launching new products and services, even opening up in-world business hubs… why weren’t all those corporations flooding the gates like they did in 2006/7, when LL was against them and they still came?

I have no idea what answer M did get. But I can speculate!

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