Above: Linden Lab's Crunchbase listing
Last week's reader comment from "Irihapeti'" suggesting that Linden Lab should sell off Second Life provoked so many further comments that I looked up the startup in Crunchbase. I believe there was a round of seed funding around 1999/2000 that's not reported there, but according to Crunchbase, since 2004 the company has raised $19 million in total investments -- most recently in 2006, when a lead investor was Jeff Bezos. (Which yes, suggests that the future of Second Life may be impacted by Bezos' upcoming divorce settlement.) That's less an investment than I had recalled last week. With Second Life still returning relatively reliable revenue of about $60-70 million a year, the company could probably find a buyer for SL-- at, perhaps, $250 million -- give its original investors a very decent profit, and still have enough to function.
However, Irihapeti returned to write out an even more intriguing thought experiment: Turn Linden Lab into two companies, one running Second Life, the other running Sansar and other projects. As she argues:
It doesn't have to be sold to a single buyer. Concerns over a sale can be ameliorated by issuing new additional shares in the Second Life company to new investors who put their money into dividend-returning (cash cow) investments. A cash cow investment is what Second Life now is from an investors' point of view.
The existing Linden Lab shareholders would get some buyback cash from this, and can either retain their existing shares in the Second Life company, or sell them on the open market as they choose. While also retaining for themselves all the shares in Linden Lab Research (Sansar, and the other Lab games) with a cash infusion to the Lab from the sale of new Second Life shares, and a second cash infusion from a sale of additional shares in Linden Research if they so choose.
In that scenario, Sansar "will stand or fall on its own merits in the marketplace. And not be tied to the continued success or otherwise of Second Life." And then this second company could focus on SL and its established customer base -- a good thing for them, Irihapeti argues:
Will a change in the ownership structure of Second Life be a good thing? Or might a new board/CEO/management take the users of Second Life into a whole other dimension that the users find difficult? Possibly, but we as users have weathered four major management changes and subsequent Linden Lab direction changes. We would weather this change as well.
It would be the least disruptive change for us as users, because the new investors are buying a cash cow -- a stable company with a mature product and a dedicated user base willingly and continuing to pay for the benefits that Second Life delivers to them. Cash cow investors are not interested in investing in real world-changing disruptive technologies. That's what research-oriented companies do.
That last point is particularly on point. There are many social VR platforms out there that Sansar has more a resemblance to than Second Life, and it probably confuses the market for the same company to be managing both. Plus splitting the two worlds up would make it a lot easier for Linden Lab to definitively answer the perennial question posed by many SLers: "But when can we start having virtual sex in Sansar"?
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