King of Spades Out, Ace of Hearts In


Wow, what a ride! The Second Life Birthday events are usually full of drama (mostly regarding of what constitutes “art”, and bickering among the organisation managers, usually a mix of residents and Lindens… and where the Lindens, close to the end, sometimes have to kick the residents out and do whatever they need to do to get it rolling). This time, however, it was a box full of surprises.

When I heard about the huge layoffs two weeks ago, I though to myself, what a pity this is happening so close to SL7B — there will be little left to celebrate. As the rumours and the fear started growing, and people were losing faith in Linden Lab (and subsequently in Second Life itself), I felt that not even the impeding announcement of meshes would give us enough reasons to celebrate. And we didn’t get even that. We got voice morphing instead, which is sort of fun I guess, but not really “celebration-grade” material.

The Whys

It’s not unusual for LL to kick employees out once they finish their work, and, as said on my previous post, if LL was going to dump their Enterprise division, it would make sense giving up everybody who was assigned to a project in that area. It did not explain why people like Babbage (Mono, script changes), Pastrami (meshes), or even Blue (community) were dumped; Tateru also explained that most of the Enterprise developers had been kicked out before the Big Layoffs. And, of course, people like Pathfinder (or even Robin before him) had left LL well before all that. So the layoffs have been a long process for the past two years, they were just dramatically increased two weeks ago.

Since most ex-Lindens are not talking about the reasons why they were laid off, we can only do some conjectures. One aspect is just the usual Linden policy of dropping developers when their projects are finished. The other aspect is that some employees might not have been “aligned” with LL’s corporate policies and were encouraged to leave of their own will; when some refused to go (which would be more than understandable, given the circumstances of the job market these days), they had to be pushed aside. And the third, of course, is to make sure that the company remains highly profitable for years to come, keeping Second Life as a virtual world alive and well for plenty of years to come.

This is not really about M Linden being a “ruthless, evil” CEO. He just had a task in front of him. If he was planning to leave anyway, it wouldn’t make any sense to kick everybody out, in an access of anger or frustration — M Linden is too professional for that, and such a hypothesis was never advanced by anyone. It means mostly that there is something we’re not being told about, as Prad and others point out: so if LL was profitable — they have consistently shown more real profits than Facebook! — why the sudden downsizing of the company?

There are two popular explanations for that. The most popular one is that the shareholders want more profit, and want it faster. It would make sense if Linden Lab was a “normal” company backed up by venture capitalists and business angels. But it isn’t. Unlike the majority of popular techy Californian companies out there, Linden Lab has long, long ago generated enough revenues to pay back all investment (which was not much anyway) and even before M Linden became CEO it had plenty of free cash to invest (which they did — by hiring new people, by buying Avatars United, and so forth). They don’t need to be publicly exchanged to raise money. And their major investors (specially the ones in the past, like Jeff Bezos or Pierre Omidyar) are so well off that “a few million dollars” is just pocket money for them; the same applies, of course, to Mitch Kapor. These people are not after the money, they are — and always were — about the vision.

The second popular explanation is that M Linden is just “playing by the book”. A lot was mentioned that “this is how a typical Californian company is run, and what we have seen is what a typical CEO does”. I accept that explanation — but I happen to totally disagree with it. “Playing by the book” is the mark of a professional CEO, but not an innovative one. Visionaries have always made their own rules and pretty much ignored the way “the rest of the world” run their companies. Bill Gates was fond of running Microsoft as a “small company” — meaning that at each level of decision, there were not more than 35 people overseen by a “boss”, which has been shown to be the best “unit” to keep a group closely-knit and working together effectively; Steve Jobs, by contrast, is rumoured to use whips and bad temper to create a reign of utter terror inside Apple to get things done 🙂

Philip Rosedale never played by the book. He had two innovations in terms of management: the Tao of Linden (employees are allowed to work on pretty much they want, so long as they do reports on what they’re doing) and the Love Machine (do something right and get other employees to rate you positively for that). We can all question if any of those things are actually good corporate procedures (I would say “no”); but at least we can say, Philip didn’t qualm at management innovation according to his vision. He was aware that SL is a quite different product than the usual kind that technology companies sell (one where customers pretty much do all the hard work to make the product compelling); so I’m assuming that he thought that the company overseeing that kind of special product has to be special as well. Again, we can argue if he did a good job or not; but certainly he was aware that non-conventional solutions are required to maintain SL’s ongoing success.

Mark Kingdon is a classical CEO, who plays by the book. That’s why some of his decisions seem so strange to SL residents — although they make perfect sense to outsiders who just look at Linden Lab and see “a technology company with a product”. It saddens me to read fellow bloggers writing things like “nothing that M did surprised us; it was all predictable; LL is a textbook case, and he employed the usual methods for dealing with the issues”. I can definitely understand the why, but I still feel sad that LL has been managed reading a textbook case on corporate management. We are special and deserve a special treatment 🙂

Is that just being naive? No, not really. I’m no stranger to “unique” management solutions for “unique” companies; my own professional experience in the past also includes a very successfully run company using completely un-traditional methods. We used to have customers running part of the service; sometimes they even handled tech support for other users; and sometimes they sent emails (or text messages) to the employees warning them that a server was down, even before the automated network management systems detected it. Customers and employees discussed aspects of technical implementations on IRC and USENET forums. It was nowhere close to what Linden Lab actually does all the time with the residents, but nevertheless it wasn’t a “traditional” management method either. Employee loyalty was very high (one CEO got “stepped down” because the employees didn’t like him) and customer satisfaction was considerably above average (even when there were faults with the service, custoemrs were, in general, understanding and didn’t leave in a rush — they believed in the vision and bonded with the brand). At some point in time, the management was changed and got a CEO who also played by the book; after six months of caring little about customer’s needs (but only shareholders’ demands), most customers went away in disgust, and a huge chunk of the workforce submitted their resignation papers (including myself) — it was simply not the same company any longer. It even changed name to reflect its new “traditionally corporate” status (read: screw the customers, please the shareholders) and became an unknown player in the market. Ironically, a few years ago, after the “traditional CEO” was finally fired, the company picked up the old brand name and started offering some services under that brand again. I personally was surprised to see how many clients flocked back to it, after a decade or so, because they still remembered the brand and what it stood for!

Are these extraordinary cases? Very likely so — I can only speak from my own experience, those “unique” models of management, specially when there are incredibly close ties between employees and customers, are very, very hard to reproduce. Even more so when the company grows and becomes an established brand. But I can certainly learn from experience and observe similar innovative, visionary management techniques being employed to make a certain brand stand out from the rest — it’s easy to identify them when you have past experience working on a similar organisation! — and see how it starts failing when the core vision is abandoned for a traditionally corporate one.

I believe this has been the case under Kingdon’s reign at Linden Lab. His reputation as a professional CEO is peerless; he knows the book, and knows how to follow it. From what we hear — from Philip himself, but also from a lot of Lindens and ex-Lindens — Kingdon “got” SL and understood quite well what it could be used for. But he had a goal: to turn the clumsily, amateurishly managed LL into a professionally-run Bay Area-type company. And he set some strategic objectives (we started getting timelines again! And… LL started keeping to deadlines!): enter the Enterprise market (instead of shunning it as in the past); develop a better first-hour experience; improve stability by redesigning the infrastructure; expand the ties with the likes of IBM and Intel to ensure a long-term survival strategy where LL wouldn’t be the only company bearing the burden of building the Metaverse.

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