For the longest time, Linden Lab's health as a company seemed certain. Even after the hype wave of 2006-2007 had passed, Linden executives claimed the company was profitable, and said so as recently as last October, doing well at the height of the recession, earning it a spot among Silicon Valley's top 25 start-ups. "We're reinvesting our profits to further enhance the Second Life experience," Linden CEO Mark Kingdon told Computerworld then. "We currently have 330 employees and are actively recruiting for 70 positions over the next 4-6 months."
Eight months later, however, after some ominous hints, 30% of Linden Lab's labor force was suddenly gone.
What went wrong, and where's the company going now? I've talked to a number of inside sources on background, done a lot of research on my own, and a general picture has emerged. Perhaps ironically, no one I've talked to has pointed any blame at Second Life's internal economy, or the state of user-generated content in SL. Second Life's dedicated community of users remains strong, and the best, perhaps last hope for the company that serves it. If Linden Lab is to regain its luster, it will only be through the talent and dedication of the Residents who have made Second Life among the most remarkable and inspiring user-generated content platforms on the entire Internet.
So what brought Linden Lab to this point? I see five key factors, which are actually symptoms of a much larger, overarching problem: