Everybody always speculates whether the Lindens are going to sell out Second Life. This is almost the favourite SL parlour game, where everybody gets out their pads and pencils (Ok, well, their typed chat) as they are sitting around their laggy, crashy sims in their prefab houses and chat up a storm.
One thing Adam Zaius is doing lately is putting out the story to "just a few close personal friends privately" (that's how you best ensure that EVERYONE will be chatting it up EVERYWHERE pretty soon) that "Philip is so rich, that he doesn't need venture capitalists and will put his own money into the SL if need be to keep it going."
Um...that reminds me of how kids used to talk up in the tree house about their dads. "Well, MY dad is SO rich that he could buy this whole block." "Well, MY DAD has SO MUCH money that he could buy this entire town!" etc.
I personally accosted Philip Linden last year at the SLCC and asked him this question, which he's probably heard a million times but -- why not a million and one? He said he'd never sell -- but of course, I'm familiar how this works. We all remember Will Wright, Maxis, at EA.com.
And in RL, too, you've seen it happen, as it does in SL, where somebody seems to disappear for long lunches...long talks...they come back somewhat glazed...then there is talk about joint projects, cooperation, mergers...and then press releases (Shaun Altman is really good at imitating the feel for those at Cyberland) to the effect, "Joe Schmo will remain very much hands-on, working as a consultant to the new team..." meanwhile Joe is busy actually teaching his job to Vikrem in Bangalore, and his desk is getting ever and ever closer to the door...
So it seems eminently reasonable that some larger thing like a Google or a Sony or a Bill Gates or a Ted Turner Better World Foundation or SOMETHING could buy out the Lindens and appear to leave the frog intact in the snake, performing various smoke and mirror tricks.
But why speculate endlessly? You won't get the Lindens to tell you, but then, ask knowledgeable people. And...don't just ask their competitors or fawning dependents in the game industry itself or the whole Metaverse Medicine Show filled with quacks and tonics to revify your avatar, ask people who actually observe business start-ups of various kinds, investigate them, and write about them.
So I caught up with my friend Ouchquack Stern, a pal from TSO days in fact, and asked him to read the crystal ball.
But not before consulting the inimitable Dr. Meridian Maginot on Pharos Island, who turned over some very, very good cards for the game. He did concede that he can't really read the game's fortune properly until either Governor Linden herself comes to visit him and roll the dice in person OR until something that Governor Linden owns can be placed on the Magic Compass board. I tried grabbing a Governor Linden tree and hoisting it over some sims but it got lost and I can't think of anything Governor Linden has made (let me know if you can!) but here it is: all bearish and all good (but no proof that this doesn't mean a buy-out.
So then I tried the Magic 8-ball, that's always pretty good for the yes/no questions, and Dr. Maginot also consulted the Ouiji board - but nothing but haze came up due to the lack of the presence of Governor Linden, or at least Philip Linden, himself.
Still, when asked whether LL would sell Second Life in the next year, the answer came back:
Meaning...it won't sell? Or...it will sell?
Drat, these damn crystal balls!!!
Well, Ouchcrack just had a much more matter-of-fact way of addressing the problem -- watching the typical course of start-ups; not pretending that an Internet/virtual world start-up is some kind of "special thing" that is "oh-so-different".
When you do that, here's what you come up with, my interview is cut in places just to stay on topic. We started talking about the problem of griefers, and the problem of how LL refuses to return to the credit-card validation:
Ouchquack Stern: can't they bring it back
Prokofy Neva: they don't wish to budge on this
Prokofy Neva: people have had numerous campaigns, meetings, protests, etc
Prokofy Neva: they are refusing to move
Ouchquack Stern: it's a horrid idea, but I know why they are doing it
Ouchquack Stern: it's the venture capital
Prokofy Neva: well they want to show volume sure
Ouchquack Stern: yeah
Ouchquack Stern: they got their second round last Feb. Look for that to run out about 12 months later.
Ouchquack Stern: That means that they have to bring in a third round or sell to a major media player in 12 months
Prokofy Neva: is that the formula?
Prokofy Neva: see Adam Zaius who is big friends with Philip
Prokofy Neva: he is putting out the story now that Philip is so rich he will fund it himself
Ouchquack Stern: I don't know Adam
Prokofy Neva: which sounds like provincial big talk to me
Prokofy Neva: well he's one of those old FIC types, he runs Azure
Ouchquack Stern: And yes, I covered venture capital startups for 4 1/2 years. that's pretty predictable now
Ouchquack Stern: Philip is swimming in deeper waters than his pockets can handle
Prokofy Neva: I would think
Prokofy Neva: and the guy who made an outmoded office product Lotus 1-2-3 -- I mean, how much of a horse is that to back?
Prokofy Neva: well why would VCs need to have volume when they know it will be fake?
Prokofy Neva: to me the daily cash take-home is more important
Prokofy Neva: on the world i mean
Prokofy Neva: they should judge it by that
Prokofy Neva: if they judge it like a country instead of a MMORPG they need to look at the GNP
Ouchquack Stern: what you say is prudent... but how many dot-coms in 1999 were going for profitability? It was "Eyeballs" that got the VC
Prokofy Neva: where are the eyeballs in SL? they are atomized and fractured
Prokofy Neva: the whole concept of media planners and eyeballs is outdated
Ouchquack Stern: Look, at best SL is running deep second behind WoW.
Prokofy Neva: for this
Prokofy Neva: there is no mass media here
Prokofy Neva: there are venues like the golf course
Prokofy Neva: that have interactive content where they could have some branding
Prokofy Neva: or they need viral campaigns of products
Prokofy Neva: and various asyncronous things to keep avatars visiting, music to listen to etc
Ouchquack Stern: VCs always back the second and third runners up
Ouchquack Stern: you're missing something
Prokofy Neva: well im just following the reality of Reuben's campaigns
Prokofy Neva: he is going for the one-hit wonders
Ouchquack Stern: every account is like an eyeball in that it has potential profit if properly exploited
Prokofy Neva: first car, first played-out 80s musician
Prokofy Neva: well but you can't REACH the eyeball
Prokofy Neva: effectively
Prokofy Neva: there is no mass media, no more than 40 on a sim
Prokofy Neva: things like communities like Dreamland and Ravenglass then on 55 sims mean something they should care more about
Ouchquack Stern: you are doing it again
Prokofy Neva: I'm telling you the reality of how they cannot reach people
Prokofy Neva: unless they stack 40 to a sim
Prokofy Neva: or have a venue that 40 parade by every hour
Ouchquack Stern: see. you ARE doing it again... talking about facts, and sense, and reality
Prokofy Neva: only if they sell something cool like a TELUS phone
Ouchquack Stern: don't kill the dream baby
Prokofy Neva: oh well I'm happy to talk hype
Prokofy Neva: hype is that they will all buy the TELUS phone
Prokofy Neva: because Reuben got some copy for it
Prokofy Neva: he got like 7 media blogs, 3 game blogs, 1 RL media outlet
Ouchquack Stern: :D
Prokofy Neva: so if he runs 12 of those a day, he will keep getting clients
Prokofy Neva: they're happy, he's happy
Prokofy Neva: but the world doesn't grow from that
Prokofy Neva: unless they get more of a sticky formula there to keep avatars coming to their stagesets
Prokofy Neva: I mean, did you go and sit on Regina Spektor's store lot and listen to her whiney music?
Prokofy Neva: I did for like one minute
Prokofy Neva: lol
Ouchquack Stern: I like the 'user generated content" concept of SL. And I believe in its internal free market... but RL money will fuck up the vision of the people behind SL
Prokofy Neva: well they could have a more or less peaceful coexistence
Prokofy Neva: http://www.dmwmedia.com/news/2006/08/23/a-gallery-of-virtual-firsts-from-second-life
Prokofy Neva: but it requires some nodding to the locals and incorporation of them
Ouchquack Stern: Well, I think SL will make it through the hard times.. but here is what I see in my crystal ball...
Ouchquack Stern: Starting in late November there will be LL layoffs galore
Ouchquack Stern: By February it will be bought by a major media company
Ouchquack Stern: There will be a reorganization of upper managment and many key staff
Ouchquack Stern: And by next summer it will stabilize but there will be more pay-to-play components
Ouchquack Stern: with some real marketing, and a ton of magazine ads
Ouchquack Stern: starting in September and running through Xmas
Prokofy Neva: what will happen to our land?
Prokofy Neva: why media? why not entertainment/gaming like Sony?
Ouchquack Stern: minor but unessential changes to the user agreement and maybe tiering
Ouchquack Stern: Sony is a media company
Prokofy Neva: ok I see your point
Prokofy Neva: Time Warner something like that
Ouchquack Stern: yeah... and PSP
Ouchquack Stern: In the end, it will be ok
Prokofy Neva: what will happen to Philip? Who will they fire?
Ouchquack Stern: but we're in for six months of hell starting in late Nov
Ouchquack Stern: Phillip is ok, he and a couple other founders will go to the Board... become instant multimillionaires because of their stock
Ouchquack Stern: sure, quote me
Ouchquack Stern: they will all be tied to 1 or 2 year contracts to continue in some kind of advisory fashion... and when that time runs out they'll announce their new idea and jump ship
Prokofy Neva: well my theory is a variation of this
Ouchquack Stern: because the advisory thing is a crock, once on the board they have little todo with operations
Prokofy Neva: this is what I started saying a year ago
Ouchquack Stern: done. what's yours
Prokofy Neva: 1) they will sell the blingtard list to Sony and have Sony take over management of the private island sales -- Anshe must be brought to heel
Prokofy Neva: 2) Anshe will storm out because they will simply bring in more huge deep pocketed island buyers
Prokofy Neva: and have their own island developers from china to outdo her
Prokofy Neva: 3) they will have LL form a 501-c-3 called Metaverse Research institute or something and pension off Pathfinder, the educational projects, etc. to that
Prokofy Neva: 4) they will offer some very special types like Adam licenses of the game to run their own continents
Prokofy Neva: but then Sony will object and they will sell them out
Prokofy Neva: 5) they will close the mainland
Prokofy Neva: Philip will find the educational thing too lame to play with but continent management for blingtards isn't intellectually thrilling
Prokofy Neva: so he and Cory will go somewhere else with some other geeked out thing
Prokofy Neva: maybe he will get to keep the name Second Life even and have some smaller SL 3.0 version of it
Prokofy Neva: but that isn't how it works
Prokofy Neva: yes yes
Prokofy Neva: I know where I need to go now
Prokofy Neva: because I will not have land in January lol
Prokofy Neva: thanks for concentrating my mind
Prokofy Neva: I must become one with the blingtards
Prokofy Neva: well I'm not a follower of start-ups and such as you are
Prokofy Neva: but my feeling is that they are not a profitable company at heart
Prokofy Neva: they are a Lab
Prokofy Neva: those that want to do Lab will get government grants and do Lab
Ouchquack Stern: I agree
Prokofy Neva: those that want to do commercial entertainment stuff will do Sony
Prokofy Neva: so I can see them sort of partitioning it
Prokofy Neva: apartheid
Prokofy Neva: No matter how I parse it though, I see the mainland as having to go
Ouchquack Stern: well, if they just let it grow naturally and kept their overhead)(staff) to a bare bones ... it could grow on its own to something powerful, and profitable
Prokofy Neva: which means I'm fucked
Ouchquack Stern: but they're not
Prokofy Neva: yes if they had the luxury to go slower
Prokofy Neva: I have no idea what the cash burn is on this place
Prokofy Neva: but it's got to be fairly steep
Ouchquack Stern: look at the job openings. they're hemorrhaging
Prokofy Neva: I took that to mean they're growing tho
Prokofy Neva: they have 100 Lindens now
Ouchquack Stern: not only that, but look at the TYPES of jobs they're looking for
Prokofy Neva: 50 telecommuters and 50 office
Prokofy Neva: well but they are ADDING Lindens
Prokofy Neva: there is no hemorrhage at all
Prokofy Neva: except economic forecasters
Prokofy Neva: they canned all of them
Ouchquack Stern: that IS hemorrhaging
Prokofy Neva: 3 economic forecasters isn't hemorrhaging
Ouchquack Stern: hiring people is a bad thing
Prokofy Neva: that's just shooting the messenger
Prokofy Neva: well they have lots of Lindens now with names like Amber
Prokofy Neva: Amber is good at working with people
Prokofy Neva: she's a people person
Ouchquack Stern: lol
Prokofy Neva: well?
Ouchquack Stern: there shouldn't be more than 20 Linden
Prokofy Neva: they are very useless
Ouchquack Stern: 10 would be better
Prokofy Neva: I try to get some of them engaged
Ouchquack Stern: lol
Prokofy Neva: you know Lindens sit in the sandbox bagging people selling stuff
Prokofy Neva: I try to hustle them around the grid more to my malls being nuked
Prokofy Neva: I try to give them an incident per night to work on geez
Prokofy Neva: I figured out that they were disappearing people
Prokofy Neva: it finally dawned on me
Prokofy Neva: I made a list of 100 incidents
Prokofy Neva: not a single one on the blotter
Prokofy Neva: most of the people deleted now
Prokofy Neva: so they just delete people
Prokofy Neva: it's like Argentina under the Generals
Ouchquack Stern: they absolutely delete Unverified. I haven't confirmed deletion of others
Ouchquack Stern: have you?
Prokofy Neva: hmm good question -- I think so yes
Prokofy Neva: but I wil watch that
Ouchquack Stern: me too
Ouchquack Stern: but I totally agree with you when it comes to unverifieds
Prokofy Neva: I made bunches of alts but finally the system told me I wasn't allowed anymore
Prokofy Neva: and I protested
Prokofy Neva: because shit how come all these kids can do it and I can't?
Ouchquack Stern: you can bypass that
Prokofy Neva: one problem I had is I forgot my passwords
Prokofy Neva: and since I had made up yahooo emails and forgot those too
Prokofy Neva: I can't find my alts
Prokofy Neva: LOL
Prokofy Neva: ROFL
Ouchquack Stern: lol, make a freaking Notepad
Prokofy Neva: I had one but I lost that too
Prokofy Neva: I have what I call "SL Census"
Ouchquack Stern: lol
Ouchquack Stern: :D
Prokofy Neva: try to keep track of at least the money making ones
Ouchquack Stern: are they still pushing out the dole to pre 666ers?
Prokofy Neva: yep
Ouchquack Stern: that's going to have to stop
Prokofy Neva: yeah
Ouchquack Stern: do you look at their data on the website about sinks?
Ouchquack Stern: their "source" volume outweighs "sink" volume, but at about 1/2 the variance that it had just 6 months ago. They're desperate to boost sinks and drop sources.
Prokofy Neva: yes I know I watch it
Prokofy Neva: and that's why they will be killing the free events
Prokofy Neva: and charging $50 per event listing
Prokofy Neva: and other things like that'
Ouchquack Stern: yeah, we'll see a lot of that
Ouchquack Stern: and some things will dive into RL money too
Ouchquack Stern: oh, enough pessimism... here's what I like very much about SL making it as a business
Ouchquack Stern: I love the fact that they made tools, opened them up to users, and required the users to make the content.
Ouchquack Stern: That alone is GENIUS
Ouchquack Stern: I also like how attentive LL is to most (not all) user wants and needs with regard to development tools
Ouchquack Stern: I also think that the virtual market they have is freaking fantastic. I'd like to see it expanded to have things like virtual commodity's trading and maybe even instead of groups... corporations that produce dividends for its members based on the profitability
Ouchquack Stern: of their jointly owned method of production
Ouchquack Stern: I think the laissez-faire (mostly) attitude of this place is its sole saving grace
Ouchquack Stern: power here comes by giving power to the members
Ouchquack Stern: I really believe that
Ouchquack Stern: and Wow isn't doing that
Prokofy Neva: yes Cyberland gives dividends
Ouchquack Stern: does it really?
Prokofy Neva: yes
Prokofy Neva: and yes, you're right, the formula is amazing
Ouchquack Stern: I've been waiting for that!
Prokofy Neva: but they need the rule of law and disputes settlement
Ouchquack Stern: that's a HUGE good sign
Prokofy Neva: well buy into Cyberland
Prokofy Neva: www.slsolutions.org
Ouchquack Stern: lol, I'm just here for fun... I don't need to strike it rich. My money goes to my partner so she can buy sexy stuff
Prokofy Neva: He goes along with the game fiction
Ouchquack Stern: :D
Prokofy Neva: I used to day trade it then sold it at a profit last summer
Prokofy Neva: I felt when they went into private islands it was stupid for me to keep stock in it
Ouchquack Stern: heh heh
Prokofy Neva: because it was competing with my mainland rentals
Ouchquack Stern: I heard a fun thing about the mainland a couple months ago
Ouchquack Stern: too boost commerce and tourism... someone proposed a foot race between two points on the mainland
Ouchquack Stern: but I've been thinking how people could cheat
Ouchquack Stern: so I think this will work better
Ouchquack Stern: the organizer make an object like a bicycle(slow) that cannot leave the ground, cannot be flown without breaking, but can traverse terrain at a constant rate
Ouchquack Stern: then we hold a huge race and see who can cross the continent fastest
Ouchquack Stern: it would be fun
Prokofy Neva: yeah
Prokofy Neva: I remember Cubey Terra walked around the mainland
Prokofy Neva: I had an alt that got like half way around
Prokofy Neva: it may be growing at a faster rate than you can traverse
Ouchquack Stern: really?
Prokofy Neva: what's odd to me is your conviction that LL will not fail
Prokofy Neva: most forums types think they will
Prokofy Neva: that the assert server, etc. will give out
Ouchquack Stern: Oh, there will be technological and economic rough spots... some very disconcerting... but the basic business model of the game is good.
Ouchquack Stern: Unfortunately, I don't think the business model of the company is as sound. They will have to stop hemorrhaging. Layoffs are certain. Another round of VC or a sale is certain. I think a sale is more likely.
Ouchquack Stern: Anyone who is likely to buy it has the ability to promote SL well. And they'll have some other ways to cut costs and boost income.
Ouchquack Stern: I can speculate about other revenue sources, but its pure speculation and I'm not too confident that I can predict them.
Prokofy Neva: well don't forget that the NSF or Soros or some science or educational thing could step up
Ouchquack Stern: well, I gotta go to bed
Prokofy Neva: kk
Ouchquack Stern: Let me know if you need anything else for your paper
Prokofy Neva: ok
Ouchquack Stern: I'll be on tomorrow
Ouchquack Stern: Is what I am saying really not being said by others?You know I don't read the boards.
Prokofy Neva: no it's not!
Prokofy Neva: that's why I'd like a fresh take
Ouchquack Stern: weird
Ouchquack Stern: but VC backed startups have some predictability.
Ouchquack Stern: I've covered more than 500 startups since 2000. All were looking for VC. Some got it. And they had similar behavioral patterns based on a very few things like burn rate, adoption, sales growth and among media things like stickiness and target demographics.
Ouchquack Stern: anyway, gotta get my room ready for students tomorrow.
Ouchquack Stern: gnite