Second Life on Mission

Linden Lab's CEO gives his vision, but many say there's too much focus on the bottom line.
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On Wednesday, San Francisco-based Linden Lab took the Second Life grid offline from 10 a.m. to 3 p.m. EST for scheduled maintenance, giving avatars time to reflect on the company's recently updated mission statement.

Earlier this week, Linden Lab CEO Philip Rosedale posted on the company's blog, attempting to communicate his clear vision for the future of Second Life. His post follows harsh criticism from residents of the virtual world regarding

price hikes for private islands and monthly land fees.

While the price increases drew ire from users, Rosedale garnered more criticism after admitting that he had consulted land designers and longtime users of Second Life for feedback before announcing the higher costs to all residents.

For Rosedale, though, the most pressing issue is dealing with the tremendous growth of the so-called metaverse. Second Life, where members can create 3-D identities free to roam the endless user-created virtual world, has seen its population balloon from 100,000 total accounts in January to over 1.28 million in early November.

After making a mistake regarding the price increases, Rosedale now feels he has the "responsibility to communicate, as clearly as possible, which way we are headed.

"While such rapid growth is, in the words of investors, a 'high-quality problem,' it is a problem nonetheless," Rosedale wrote. "New residents entering Second Life are choosing to commit their time, aspirations, creativity, and dreams to the creation of a shared virtual world. And very unlike the physical world, this virtual world is a place which, at least for the present, has an architecture and business model controlled by a small private company."

While Linden Lab is currently a privately owned company with no IPO planned, it is unclear where the company will head in the future.

In March, Linden Lab announced a new $11 million round of funding from Globespan Capital Partners,

Amazon.com

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founder Jeff Bezos, Lotus founder Mitch Kapor, the Omidyar Network and Catamount Ventures. The new investment comes after an $8 million round in October 2004. Many have speculated about what Amazon.com's involvement means to Second Life. So far, there have been no answers as to what will happen.

Rosedale acknowledges that Linden Lab's influence over Second Life is very strong, and his hope is that in communicating his "clear vision, then perhaps you, as readers, residents, or employees (and in some cases all of the above) will more easily forgive us when we make the mistakes that in our best efforts we will still sometimes make in following this mission.

"My best definition of our mission is that we are working to create an online world having the exceptional property that it advances the capabilities of the many people that use it, and by doing so affects and transforms them in a positive way," Rosedale writes, not before noting that the broad set of Linden Lab's owners can never agree on the same set of words. "But here I believe that our balance of uncertainly and agreement is close to ideal."

Rosedale also writes at length about investors in Linden Lab, nothing that some of these investors "have specific principles that they are willing to stick to independent of the impact that these principles may have on the value of their investments.

"Linden Lab is fortunate to have a number of such strongly principled investors, with their intentions loosely grouped around the idea of using technology to advance people," Rosedale writes. "Moreover, I believe that the principles of the investors in Linden Lab are very well aligned with creating great financial returns."

Rosedale goes on to write that Linden Lab has required a considerable amount of capital, spending roughly $20 million between its inception in 1999 and profitability. He goes on to praise the help of owners and investors for believing in the company.

"Though I would certainly describe my own vision, management style, and principles as being very well aligned with this diverse set of owners, I think that the company is more likely to succeed and profit long term with such a team rather than a single person in a position of complete control, however smart that one person may be," Rosedale writes.

Unfortunately, Rosedale's mission statement comes off as one addressed to Linden Lab's investors as opposed to subscription members. Already, residents are filing their grievances in the form of comments to Rosedale's blog post.

"Does it surprise anyone that in all of this, 'The Customer' is never once mentioned?" questions commenter Garde Burrel. "Investors are spoken of first and foremost, and it says that Linden Lab has a specific duty to those investors to create profitability. Where, in this mission statement, do those of us who do the paying fall? There is no hiding the fact that Linden Labs is more responsible to those who invest than those of us who pay."

"Of all the things that have happened in the last year and a half or so, the greatest mistake was Linden tipping off of certain residents about recent potential financial changes and their subsequent ability to profit from that information," John Horner writes. "Sometimes mistakes happen and it is important they not be terminal ones."

"I'm afraid you're really falling short of your goals at Linden Labs," wrote Yngwie Krogstad. "There appears to be a growing consensus among the content creators that we are getting the shaft because of severe performance issues, a perceived or real lack of customer support, and price hikes (some of which are, let's face it, extremely massive)."

Many other comments echo concerns about the private island price hikes, in addition to weekly stipend cuts for new users. All in all, residents are fed up with having to pay more when all attention seems to be diverted to those who are funding Linden Lab as owners. To some, the value of their membership in Second Life is ever-decreasing.

Since Linden Lab is a private company that does not report earnings, information that would back up claims about costs running higher than revenue isn't made public. Residents are forced to trust Rosedale's word that spending more money for Second Life and receiving less in stipend payments is all for the benefit of keeping the virtual world alive.

Rosedale admits that he and Linden Lab have "certainly made our share of mistakes, but we have managed with a small team to create a very complex software system, scale it under heavy growth, and support the emerging community. As our market space matures and competitors create offerings that are similar to Second Life, I think we will see further validation of the quality of our work."

It is worrisome, though, that so many free accounts are being subsidized by premium accounts, and those paying residents are being pressed for more and more money as Second Life's population grows. Even though investors such as Amazon.com's Bezos have poured millions into the company, Second Life's landscape would be barren if not for the residents who have built the user-created world.

Robert Holden is staff reporter Robert Holmes. He reports often from Second Life.