Titanic deck-chairs or SLurban renewal?

In the immediate wake of Linden Lab’s layoff/restructuring announcement this week, I was reminded of my own experience of mass layoff in the early stages of the dot-bomb era in 2001. The dot-com I had worked for for 5 years cut staff in a couple of stages as they went thru a major refocus, but the writing was on the wall for a while before the first shoe and then the second dropped.

At Linden Lab, the amount of “bleed” of long-timers over the past year has been a pretty obvious tip-off that things weren’t what they used to be, for good or ill. That should come as no surprise with the arrival of M Linden and Philip’s stepping down as CEO AND his own re-focusing on LoveMachine, and away from LL.  From the rumbles coming from a number of directions, I suspect a goodly number of Lindens knew changes were looming well before Wednesday’s bombshell.

While laying off 100-110 people represents some 30% of LL’s staff, I think it’s important to remember:

  • The number laid off is apparently close to the number of additions over the past year. That means the LL employment roster size post-layoff is somewhere around where it was just before M Linden arrived – even if the layoffs appear to be weighted more toward “old-timers.”
  • In the bigger scheme of layoffs, 110 people losing their jobs is a trivial number, especially when they’re not all in the same location geographically, or from the lone employer in a small town.

And that’s not to trivialize the individual impact, and the loss of contacts inside the lab for many. I certainly empathize with those who’ve been pink-slipped. I know what it’s like to find oneself unemployed via layoff (I’ve been through it twice), and what it’s like when you’ve been a long-term contractor and get laid off with no possibility of collecting unemployment insurance, which no doubt describes at least some of the LL departures.

Now… what’s the real story behind the hand-wringing?  We’re all conjecturing at this point, but here’s how I’m seeing it, with particular thanks to Gwyneth Llewellen, Grace McDunnough and Tateru Nino for their thoughtful blog posts:

–  The 1st quarter 2010 figures for inworld economy – the total $L held by residents – are looking rather flat and no-growth. Compared with all of 2009, with a healthy increase from quarter to quarter, this fall-off has to alert any CEO, and any board, that something needs to change, at least in the short-term.

– LL’s attempts to launch a behind-the-firewall enterprise solution have flopped, if dumping their enterprise staff is an indicator. Given how competitive this particular slice of the VE (virtual environments) market is, AND the lower-cost options that are easier for corporations to understand and/or buy into for experimental uses, AND the overall economic conditions over the past year that have reined in most corporate IT budgets, it’s probably a very smart move by LL to drastically scale back on this apparently losing proposition.  There is still enterprise market that will find its way into SL, since there are plenty of independent consultants focused on corporations, and nothing stopping enterprise users from buying sims and limiting access to their own internal audience, if their interests are in the meetings, collaboration and virtual water-cooler benefits that have already been well-documented.

– Viewer 2 was supposed to lower the bar for newbies, and advertising was supposed to coax them into SL. But again, looking at statistics since the first of the year, concurrency figures have declined, and there’s been considerable resistance to the new viewer as-initially-released, particularly from inworld content creators.

– In the “big-wide-world,” the buzz is around Facebook and mobile phone apps. The sooner SL can tap some of that attention, the better. I only fervently hope it doesn’t turn into the farmvillification of SL.

– SL is at a junction, sometimes called the “chasm” in the cycle of adoption, and has been stuck there for a while – well-populated by creatives and early adapters, but not gaining traction in the general consumer population. Getting past that does demand some easier views into the world of SL, which is where adding web viewer and mobile options fit and make sense.  But it does also mean that we creatives/early adapters perhaps need to control our sarcasm about the other 80% of the population.

– Whether the decision to move now and quickly was M Linden’s or a directive from the LL board we’ll probably never know. But it’s a safe assumption that looking at the financials, and the apparently lackluster results of efforts over the past year made it painfully clear that steps needed to happen – and quickly – to redirect, refocus and prevent further erosion of the bottom line.

– SL has tried to be all things to all people; that doesn’t work in the long term. Focusing on a more targeted market and doing it well plays on strengths and offers far greater likelihood of survivng – and thriving – in the future. At the same time, the very big risk of focusing on the consumer market is that market’s penchant for being fickle and fad-driven: witness Farmville, which will self-destruct soon; or the speed with which MySpace has been superseded by Facebook and Twitter.  SL needs to focus on what has staying power. Whether that clarity of focus underpins this week’s layoffs and restructuring remains to to be seen.

– Another area of noticeable cuts in the layoffs is in the area of community development-related staff, including one of the Lindens directly involved in the immanent SL7B (Second Life 7th Birthday) event. Might this signal a shift away from meddling in the affairs of residents and their communities, a return to a more hands-off approach by LL, and greater focus on offering the tools and policies that make it easier instead of harder for us to build, create and market our inworld products and services, and for us to create & build & maintain our own communities & social networks? Admittedly, a long shot, but one can always hope.

– If doing a better job of serving the consumer market is the retooled focus, then a chunk of this, as Tateru’s number-crunching suggests, is taking steps to get those transaction numbers moving upward again, seeing to it that more RL $’s get spent buying $L’s. How does that happen? By increasing participants and seeing those concurrency #s go up, by actually fixing search, and by keeping creators happy.

My bottom line on all this:  whatever happens, LL needs to not just surprise us with what they do next – we’ve had a few too many less-than-happy surprises in recent months. They need to learn from their own mistakes at doing it wrong when it comes to involving and informing their community of users; they need to focus on delighting us.

One Response to “Titanic deck-chairs or SLurban renewal?”

  1. Salome Says »Blog Archive » The Unreliability Card Says:

    […] insight far keener than anything I have to offer on that subject, I suggest reading, Grace, Gwen or Tara. However, amid all the history, speculation, and other reasoned interpretation (not to mention the […]

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