One of Second Life's biggest problems, says CEO Philip Rosedale, is that it's not enough like an iPhone. From the moment you open the box on an iPhone, it's fun to use, and in playing, you learn how to use it. The whole process is pleasurable. Second Life is nothing like that, learning to use it is a long process, and painful for many people.
I talked with Rosedale three weeks ago, when he'd been back as CEO of Linden Lab for two months. Rosedale is founder and chairman of Linden Lab, the company that created and operates Second Life. He stepped down as CEO two years ago, and returns to find the company battered and troubled.
Rosedale spoke at the Second Life Community Convention this summer, in which he was widely reported as saying that Second Life is abandoning the enterprise and education market. But he told me he believes he was "misunderstood." The company intends to focus on the basics, on improving Second Life in ways that will be valuable to all users, consumers, business and educators. That's the essence of the "fast, easy, fun" campaign that Rosedale launched when he returned as CEO in June. "The real focus should be the basic capabilities that impact everyone," rather than targeting a particular vertical market, he said.
That's part of the reason why Linden Lab shut down the Second Life Enterprise program, an expensive version of Second Life designed for businesses. Rosedale described SLE as a great product, but premature. Second Life isn't ready for widespread business adoption, because too few people are using it. "We can't expect enterprise users, educators, or anyone to embrace a system requiring ten hours of time, and whose complex behaviors virtually require a Ph.D. to activate," Rosedale said.
Throughout most of our conversation, Rosedale took his lumps and acknowledged Linden Lab's missteps and failures. But at the end of the conversation, he defended his record. He noted that Linden Lab has no real competitors. Platforms like Blue Mars and OpenSim are potential competitors, but their installed base is tiny compared with Second Life (just as SL's installed base is tiny compared with Twitter or Facebook.) The reason, says Rosedale: Creating a three-dimensional virtual world is extraordinarily difficult, and as many mistakes as Linden Lab has made, it's done far more things right than anybody else has managed to do.
"If we were ineptly plodding along, why aren't there any competitors that have wiped us out by now?" he said.
I responded that there's another explanation: Maybe virtual worlds are a niche market. Maybe three-dimensional simulated spaces are a weird activity that only a few people in the whole world are interested in doing, and Second Life now serves all of them.
Philip responded that he disagrees with that assessment, but even if it were true, it still wouldn't explain why Second Life has no competition among consumers. Linden Lab is a $100 million company with 250 employees, there are a great many companies in Silicon Valley that are far smaller than Linden Lab, and those companies have competitors. The only explanation, says Rosedale, is that Linden Lab is doing something that's extremely difficult, and they're the only company that's ever been able to do it well enough to satisfy customers.
After we spoke, I thought of yet another potential competitor to Second Life: Proton Media. But their ProtoSphere product is only loosely similar to Second Life. They're focused on business collaboration, rather than the universal focus of SL. And where Second Life is a place of vast, sprawling areas, ProtoSphere is made up of small rooms. So Second Life and ProtoSphere are different from each other, and not really competitors at all.
When Rosedale announced his return, his title was "interim CEO." He said he has no plans to step aside again. "I don't have any plans, nor have we as a company started a search or made any decisions on that," he said.
Since we spoke three weeks ago, Linden Lab hired a VP marketing, Kim Salzer, formerly of Activision Blizzard, where she was Vice President of Global Brand Management for properties like Guitar Hero and Call of Duty 2. The company is reportedly searching for a senior client manager to retain key customers, and a branding agency to work on marketing.
Rosedale's Second Life avatar, "Philip Linden"
They also announced second-quarter 2010 usage statistics. While Linden Lab described the results as "stable," another, better word would be "stagnating," and even down slightly in some key metrics. Monthly repeat logins peaked at 826,000 in March -- the company introduced its Viewer 2.0 client, which was supposed to help turn around Second Life and introduce a growth boom, March 31. Monthly repeat logins declined to 792,000 in June, and recovered slightly to 797,000 in July. User hours, and monthly economic participants were also down, although several less important markers were up.
The odds of success are against Second Life. In the technology industry, companies almost never get second chances. The best thing a technology company can hope for is to start up, grow, spend a few years dominating the industry, then painfully decline until it's finally purchased by another company that's on the upswing of that cycle. Examples of that lifecycle are numerous: Digital Equipment, Netscape, Compaq, and Palm went through the full lifecycle, and Yahoo, Dell, and AOL seem to be deep into the downward slope.
Still, the decline isn't inevitable. Rarely, a company defies million-to-one odds and has a second renaissance. IBM did it, and so did Apple. Maybe Linden Lab will be one of those rare companies.
As for me, I'm still finding involvement in Second Life to be enjoyable and rewarding. Saturday I had some trouble using in-world search to find an event I wanted to attend (search is a perennial problem in SL), but later I got in several great conversations with friends, including one who gave me great advice on how to do a better job selling myself -- in real life -- as a social media strategist. Sunday I found out about the San Diego Meetup & Music Jam, a so-called "mixed-reality" event that will happen in Second Life and real-life San Diego. In between, I saw some attractive Second Life builds, and listened to a couple of great Second Life musicians. All in all, a fun and useful time, and why I stick around SL despite its problems.
For more of my conversation with Philip, see: "'Fast, Easy, Fun' with Second Life founder Philip Rosedale"
"Philip Linden" photo by Ravenelle.
Mitch Wagner is a freelance technology journalist and social media strategist.