Linden Lab laying off staff, closing Singapore office
by Tateru Nino 
Jun 7th 2010 at 1:00PM
Filed under: MMO industry, News items, Opinion, Second Life, Virtual worlds
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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Reader Comments (Page 1 of 3)
ethereal.wolf said on 1:13PM 6-07-2010
i'm curious if the creative freedom that SL offers is actually working against its wider adoption and serious use by corporations and educational institutions. is SL like the geocities of virtual worlds, and the reputation of entities operating there take a hit by association? if that is the case then Blue Mars might be on to something by screening content creators.
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Ann Otoole said on 1:38PM 6-07-2010
Under the Worker Adjustment and Retraining Notification Act, companies with more than 100 employees are typically required to give a 60-day notice of a pending mass layoff or closure. Failure to do so is grounds for a... you guessed it.. class action lawsuit.
And no ethereal, the incompetence in virtual world business that has been exhibited with such fisacos as have lined up since Kingdon took over have no bearing on content creation. In fact there is no outward appearance that SL is doing anything but growing unless Linden Lab has been outright lying with it's metrics and reports to the public. So if LL is planning to close up suddenly then it would likely be a failed attempt to escape 2 pending class action lawsuits.
In the meantime there are alternatives to SL getting going. Inworldz looks promising. some new thing called 3dchat.com is there for the real lifer homophobes that want to be sure the person they are pixelating with used actual real life identity data at sign up. Doesn't mean it is not a poser using fake real info but there you go.
Things do not point at a sudden closure with the observed grid growth going on. So it is interesting indeed. Oh and what about the entire US Air Force was going to be using Second Life Enterprise? Wouldn't it be nuts to shut down with such lucrative contracts in play?
Perhaps LL has something else to run from we have not heard about yet. Makes no sense.
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Anya Ristow said on 7:19PM 6-07-2010
@Ann, they have to be bigger than 100 and plan to lay off 1/3.
Jay said on 7:41PM 6-07-2010
As the Singapore branch closed one would assume that it would have been under their laws not yours. I know when I worked for a leading multinational they were quite able to spring very large unannounced layoffs in other countries without any problems.
For the odd manager here or there though on USA soil I am pretty sure they can remove 10 here and 10 there with the proper timing and not fall foul of the law in their home country.
NOYB said on 1:40PM 6-07-2010
They frauded all their loyal long term clients with the Tier 5 Land scale to no longer allowing adult content, moving their land to cheap worthless spot, while taking the expensive land and reselling it for themselves. Their support has been the worst in the world, not industry. They basically throw you out like a dead lab rat if the slightest inconvenience occurs on their end.. I love hearing Second Life dieing, please post more great news like this.
There is little point to pay for SL membership, No support, your guarantee'd headaches in a very poorly managed company that gives no authority to their employees which causes even more headches with billing problems..
This will tri-fold into even more layoffs, as the support was horrible as it was and now that its worse.. Heh, say goodbye to your virtual world..
They thought the business world would clutch on and they could tick off their average user.. They analyzed wrong and I am laughing watching this company fall straight through the floor.
Again it shows, how if you try to run a European type attitude business, which flicks its chin at its customers, there is no way to succeed long term.
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ChromeBallz said on 2:25PM 6-07-2010
"Again it shows, how if you try to run a European type attitude business, which flicks its chin at its customers, there is no way to succeed long term."
Ehm, what?
LL is an American company running things the American way. There's no way they would get away with running things like they do anywhere in Europe.
Jay said on 7:46PM 6-07-2010
Very much an American thing and not European. The lab loves to bend it's customers over and roger them, without lubrication. In the European countries it would be called rape, and like Microsoft they would be sanctioned.
In the USA it's called foreplay and is very much the way things are done.
No, not European, Linden Lab dirty tricks are a unique American blight on the rest of the world. One that really needs to just be erased.
Nexii Malthus said on 1:49PM 6-07-2010
@etheral.wolf,
the problem is the freedom has been limited and restricted as SL has aged. Viewer 2.0 has been the most significant obstacle to content creation and social interaction so far.
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ethereal.wolf said on 2:02PM 6-07-2010
fair enough, i haven't messed with it myself. just asking theoretical questions.
iggyono said on 2:19PM 6-07-2010
Well, we educators will have OpenSim if LL closes shop. It's dodgy over there in OS, on the three grids I've used for more than a single visit. But steadily they are improving.
So was SL in 2007. An OpenSim world has this going for it, too: no SL reputation to refute with potential customers.
Tateru, thank you for covering this. We've seen signs for a while under Kingdon that LL is not meeting his grand plans. I've doubt that it can. We'll see which ornament falls off the tree next week.
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Tateru Nino said on 2:19PM 6-07-2010
@Noyb: I don't think there's anything in this that implies that Second Life itself is necessarily in trouble.
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Nika Talaj said on 2:32PM 6-07-2010
Kingdon restructured marketing when he came on board, and now it's being stripped down ... interesting. You don't mention Judy Wade's departure (totally understandable given that she's gone to a CEO position), but that certainly fits in with what you say.
/glances longingly at Robin Harper's blog and wishes, futilely, that she were slated to be involved in whatever else may happen this week.
My personal bet is that an acquisition is in LL's future, and so they are stripping down the payroll, and closing Singapore is completely in line with that. But things seem to be moving fast, and decimating marketing is very puzzling.
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NOYB said on 2:39PM 6-07-2010
Obviously you've never dealt with the company. We ran with it for almost 2 years mostly idling because we had no choice but to idle due to all the problems. And they robbed us several times from billing problems to bs fee's, and when we complained and they in fact agree'd they were to blame on all the occassions, they would not fix, or compensate. They simply would say they cant do nothing, and would close the communication window, then play ignore games...Keeping our money, lieing, playing email tag of answer this question, wait a week, answer that question, wait a week.. Till you had no choice but to give up what you owned, so they could just resell it and laff in your face.
The last straw was taking our land we payed massively for that was marketed as adult, and we paid high premium for it to be adult, and now no more adult.. here turn in your $1000 64km square x 100 for this .5 alternative in which we chose, and of course it wont be lakefront like you had.. While they resold our land for $840 confirmed on the AH, we monitored..
I imagine this goes on 500 times per day over there and they know it.. they look for any excuse possible to close that chat window of LIVE SUPPORT.
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SirNiko said on 2:52PM 6-07-2010
I've never understood why people are treating Second Life like it is actually appropriate for business and education. Having business meetings in Second Life is more a novelty than anything else. If your goal is to get something of value done you use messengers, skype, or network folders. Education has the same problem, the complexities and the inconvenience of the movement system makes the SL viewer more of an obstacle than a valuable tool. What does this add to business?
Actually, I do understand. It's a new technology and people want to jump on it because it might just rocket into the sky as the next big thing. Except it won't. At least, it won't be worthwhile for business. It's nothing more than a toy, a social novelty.
In business school, when pursuing my MBA, I had a professor who insisted Second Life and other virtual worlds were the future. They even had set up a preliminary presence there (but I couldn't find it when I logged in the game to search). I asked him why he felt that a presence in Second Life would be beneficial to the school, and the best he could come up with is that in Second Life, you can do anything and be anyone! The sample video he showed us from another educational institution demonstrated this with a girl turning into a butterfly. Why exactly does that benefit the educational process? It doesn't. All it does is invite griefing and distraction. WebCT and other online educational systems are already more functional and available than anything Linden Labs has on the market, and are going to be the where educators go once they realize Second Life isn't of value to them.
Much like the dotcom boom, I think the market for virtual worlds for businesses is going to quickly collapse. These are novelties at best, and the costs associated with them cannot and will not balance out with what they return when existing tools (like Skype and Network folders) produce the same results faster and more effectively.
Linden Labs and Second Life will be just fine, there are already plenty of people who are heavily invested in the virtual sandbox for whatever reason, but it's only a matter of time before people realize that using Second Life for anything other than fun or the advertisement of a select few products (Marketing cars through SL is a big waste of money) is a huge waste of time.
Business in virtual worlds is not an end to itself, but I think most of Second Life's current corporate clientèle are confused and think it is.
-SirNiko
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Loki said on 3:22PM 6-07-2010
Should i be cautious then when looking into investing money and time to a project in SL for the next year or so? is SL heading to finacial difficulties?
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iggyono said on 3:54PM 6-07-2010
SirNiko,
I disagree with the particulars but not your general drift. Educators can do great work in SL and OpenSim worlds, but it's for two things: simulation and immersion. This is why medical programs have made great use of SL.
Yet you shortchange the many presenters who have shown at our weekly educators' roundtable--and presented data in support--of how training simulations can improve RL competence in several areas of education.
For many university programs, however, you have hit it on the head squarely: there was a novelty "to be there" in-world in the heady days of 2006-2007. But the UI was not intuitive, the building difficult, and the learning curve too large for faculty. Those schools are leaving SL or scaling back because much of what they did does not require owning land.
No offense to what you do in particular, but I don't have much respect for what's been taught in MBA programs, given our current economic disaster.
There was no good reason to build an American Apparel or Pontiac presence in SL. The whiz-kids who thought that would fly were not "thinking outside the box" or whatever buzzwords were drilled into their heads in the early 2000s.
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Kim said on 4:34PM 6-07-2010
There was a great reason to build American Apparel in SL. They got loads of coverage in the mainstream and tech media. It was a marketing project and it got a lot of attention . . . a winner. It just wasn't built for inworld Residents, but instead for the press. That was a successful approach for the first real-world companies in SL, but of course it wasn't one that was going to work for any but the first few.
Now businesses and educational institutions are using SL for meetings and classes, prototypes, and immersive training simulations, but that sort of thing was a harder sell. It was easy to get boardmembers at some org to look at some screenshots of something that looked just like a real-world store or classroom and to understand it and its potential. It's was trickier to demonstrate the effectiveness of the actual inworld experiences that are possible, because it takes a while to generate the use cases and whitepapers that you need to convince boards -- some pioneering organizations had to risk being the first.
Condolences to the Lindens who have been laid off, as well as to their friends and colleagues who are carrying on.
breezer said on 5:18PM 6-07-2010
If I were part of a business that were planning to set up something in SL, I would try to convince them against it.
In the gamer, MMOer world SL has a reputation as a virtual sex club. Obviously there are very few companies that would want this association.
Perhaps more and more businesses are finding out about this side of SL and with other avenues for free advertising (hi2u twitter), that are much more current and relevant... perhaps this is a contributor to SL's decline?
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Opensource Obscure said on 5:36AM 6-08-2010
@breezer no, I don't think that's contributing to SL's decline - not that I'm actually seeing a decline in SL.
What the gamer - MMOer world thinks about SL isn't very relevant when you're pondering to use SL as a tool in a business/corporation environment.
Gaby said on 7:20PM 6-07-2010
It is likely that the association SL had in the mainstream media with sex didn't help. Frankly a lot of businesspeople are pretty prudish in most ways and it wouldn't surprise me if that was a negative to many of them. I strongly doubt that the opinions of other gamers matter in the slightest though. As far as businesspeople are concerned gamers in general are more trouble than they are worth anyway. Griefers, theives, and lack of content security were probably a bigger problem.
The biggest problem though, was probably the utter lack of long-term business relevance for most businesses. SL's population is not well established, but it's probably below a million regular users. Not many businesses will bother with marketing specifically to what amounts to a mid-size city. Kim is right. SL's usefulness to them was exhausted when it stopped being news.
The only businesses SL seems relevant for in the long-term are those that use it as a cheap 3D development tool and those who exist primarily in SL. It's not at all well suited for teleconferencing and there are better competing tools for that elsewhere.
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