I’ve now talked with a lot of people who’ve been watching Linden Lab’s manoeuvres this year, and who come from a wide variety of business backgrounds. The overall general consensus seems to be that it’s bikini season for Linden Lab.
Swimsuit weather is fast approaching, and the old girl wants very much to lose about an inch off her hips so she can get into that bikini and have someone pick her up.
That’s the metaphor.
While I was sceptical about it for some time, I do not find myself in any doubt now that Linden Lab has been positioning itself for a sale. Either that, or the Lab has some serious problems that it has not divulged.
A suitor is not looking for something with too much weight on its hips, or much in the way of special needs. Prospective suitors are either looking for a trophy wife… or for a source of valuable organs.
For that process, she’s got to lose excess baggage and drop encumbrances.
That means lean to the point of anorexia. To the point where the business becomes almost unable to function. Staff reductions, team elimination, making sure all your obscure licenses are not in breach, not even slightly. It means reducing paperwork, overhead and special deals, rechecking your intellectual property inventory, update the terms of service and so on.
It means becoming as simple as possible. Every single complication or special case that requires documentation beyond GAAP, or a meeting is going to knock a million dollars or more off the company sale price. That would also include all manner of contractors, messy overseas assets and payrolls, and special people like newly-hired CEOs. The current interim CEO doesn’t really represent that level of complication.
It means doing all the things that the Lab has been essentially doing in 2010.
That’s a trajectory – moreover, it’s a blindingly obvious one that I really should have given more credence to earlier, having been there myself on more than one occasion.
Would you buy the whole shooting match at the end of that trajectory? Who would, do you think?
Someone surely would. There have been offers.
Depending on who the winning suitor would be, the operation could be a going concern largely as it is at the time of acquisition, it could have staff slashed to eliminate duplication, or it could simply be shut down and gutted for technology, assets, and saleable body parts. There’s no way to tell.
As long as the board members are happy with the sale, it’s not their problem anymore.
The problem with a position-for-sale trajectory is there is really only so long that you can hold it together before you have to sell, or the business falls apart from running too lean. If people are coming to you with potentially acceptable offers that’s one thing, but if you’re spending all of your time posing seductively on a divan, you’re not really getting the work done.
A clarification: Bikini season isn’t actually the time when you’re wearing the bikini. It’s the protracted period where you’re trying it on, eyeing the scales with undisguised venom, and trying to diet and exercise.
The process of positioning a business for sale is a lengthy one, at best. I’ve never personally seen it done in less than six months, and 18-24 months is more usual. I used the word trajectory. The terminus of that trajectory is probably at least several months away. If the Lab is pitching for a sale, then my impression is that it will be ready somewhere in the vicinity of March/April at the current velocity.
Tateru, my version is similar (and based on) yours. But i simply need something positive, it’s autumn and my overall depressions knocking at my door – so:
Yup, 2010 was a year of getting into a slim model shape. But wait, what if SL isn’t a girl – it’s a guy ?
Getting rid of the overweight (WAS AvasUnited needed for SL ?), rid of the hindering pounds has not the goal of “looking good for being taken”, instead the goal of becoming athletic, strong and competitive – to “take someone/-thing”.
What do you think, did we get too deep into the pessimistic view, did we have too little trust in the strengths of LL and SL ? Is LL maybe preparing a bigger acquisition itself ?
In my opinion this would explain the cost cutting as well as the opposite does…
Let’s also consider another reason that LL has increased the edu/non profit sim prices: And that is that the current pricing is insufficient to provide them with covering their server and networking costs plus providing them a decent profit.
Seems like a simple equation to me. Edu sims have high traffic. That equals high bandwidth costs.
And before we jump on “The sky is falling” bandwagon let us realize that edu/non profits still have MANY options for about the same costs:
Homestead sim (land shaping and water included) 3750 prims $125 (less than edu sim rate)
1/2 sim Mainland ( limited land shaping and no water) 7500 prims $125 (less than edu sim rate)
Full Mainland sim (limited land shaping and no water) 15000 prims $195 (only $47.50 more)
not to mention either mainland or estate land at every single price point for ANY budget.
It is not like there are no choices for edu/nonprofits to migrate to if they want to keep their presence.
plus they will now able to offer commerce on their lands in order to mitigate their costs.
I do see your argument that LL is getting lean in order to be more profitable for a sale, and I get that.
BUT costs and profit margins need to be put where numbers make sense for more than just that single possible reason.
Linden Lab is NOT a charity and has obviously decided that it should not be in the business of being one.
That is my analysis of what happened……
The only problem I see with your scenario, Little Guest, is that presumes LL has the business acumen not only to scheme an expansion but manage it once it were to happen.
I think we’ve all seen how inept they are in trying to manage an MMORPG which no-one in the front office seems to even bother to understand–much less play.
To wit: the outsourced Viewer-2.
Linden Lab is so busy trying to ride the facebook/twitter train, they’ve all but abandoned their core financial supporters.
I was actually expecting the Lab to make an acquisition early this year, but I do not think it likely now.
I’ll grant that the whole lean and competitive thing is a possibility. That’s what we’re told is happening, certainly. But some of it just doesn’t seem to fit that trajectory. The sale trajectory however – well, if you made a list of all the things that would need to be done… they’ve been happening, and that’s hard to ignore.
I’d like to trust that the Lab is primarily focused on what’s good for SL – but it’s hard to trust a service provider who says that they consider its customers to be partners, but will bend over backwards to avoid revealing any directions or goals.
*sighs* Thought i could convince you all
.
My personal conclusion now, duck and cover. Means i’ll go back and look if SL is still online. If so, then backing up my business stuff, preparing for the ‘big atomic bang’ that might come or not. See you later, somewhere.
“Prospective suitors are either looking for a trophy wife… or for a source of valuable organs.”
Purple prose, that.
I’m betting on vivisection of the blushing bride.
It’s sad to see some of the social users gloat over at the LL blogs about the end of the edu discounts. I don’t think for one minute that a LL buyer will want its furries, Goreans, fetishists, and happily “married” rezbians. These folks and their subcultures will get flushed right away.
Some real lives will end, sadly, if that happens.
What WOULD a suitor want from the vivisection? Tateru, that’s going to take a bigger brain than mine to savvy.
Maybe the Lab is just looking for an investor. Not to sell the company but to get fresh money to be able to invest in new projects, like cloud computing.
I don’t think it’s likely. I can’t see the Lab wanting to dilute the share-pool any further. YMMV. Anyone else got any thoughts on that?
@ Ignatius: I’m as confused on that point as you are. It’s hard to imagine that anybody would buy it for the server or client code, since you can get that from OpenSim for free, and they don’t really have any labor resources left worth buying, and the customer base will be non-existant come next summer if this trajectory continues. It’s not like they will have any big corporate or educational contracts they can brag about.
Maybe somebody would want to buy LL just for the IP addresses? We’re set to run out some time in 2012, after all. IPv4 addresses might become a hot commodity:
http://en.wikipedia.org/wiki/IPv4_address_exhaustion
Perhaps a porn company would buy it to datamine for trends in sexual preferences and kinks?
It would be hilarious if Anshe Chung came back and bought it.
Good post, except for one thing:
The bikini will fit no matter what size the Lab is as long as it’s texture-based clothing.
LL seems to be hellbent on getting this new marketplace running and XStreet shut down completely by year’s end. In light of everything else that has taken place this year, I expect to see some big announcement in December.
As much as I would like to believe that LL’s flailing about is actually a clever and well-thought business plan…..meh.
Because a business plan requires that one have customers of some sort. And it has remained very clear to me that I am not their customer. Nor are you, nor is anyone I know.
Unfortunately it appears that their customer is actually the person they wish to have buy their business, not those who ARE their business. And a business without customers is pretty much “selling fixtures, stock closeout”.
Oh, and thanks for the reminder that it is summer where you are, as I scrape the ice from my windshield this morning
@Ignatius Onomatopoeia
Any business who would acquire Second Life would not care about what their customer is up to as long as it’s within the TOS & providing income, and to do otherwise would be discriminatory as is your view that sub cultures are only allowed within a virtual world because Linden Lab is at the helm & by your own words negligent to some degree.
Go look at IMVU they have a whole section dedicated to furries and other sub cultures in the form of portals “shock horror” why? because those are the customers with money.
We likely spend more than the average resident, due to multiple avatars and other such parts we end up having to buy as full avatars at $1000+ each time just to get a single part to modify.
We’re actually pretty involved in Second Life more than I guess you like, Hydra does the TreetTv show, there’s 3 furrie lindens & and numinous Lindens who liked an alternate avatar, no one in a Virtual world should be bound by conformity when there’s everything to gain and anything you can dream of at the throw of a L$ or prim you spent hours working with.
So no I don’t think any legitimate company who acquires Second Life, or seeks to acquire it would flush sub cultures down the toilet, after all Linden Lab is the only company that seems to be trying to commit business suicide all others are just looking to survive.
If you look at Second Life as a whole regardless of discriminatory comments or stereotypes, it could be classed as a sub culture of real life *shock horror* for you I guess eh?.
Without Sub cultures or the culture of Second Life, there would be no Second Life worth buying, we make it what it is because we are the *spark* that gave it life & we are the ones who maintain it’s heart beat, Linden Lab is just a background administrator a *god* that should not stamping on us little ants.
The puzzle for the educators is why bring the teens onto the main grid and then hammer the educators on the discount? I can see the business logic behind the latter but not the former, except maybe that the TG was a wrinkle that needed ironing out. I think your special deals link is wrong btw.
They should loose the bulging gut, not the shapely butt.
If i had the power, things there would be run much differently in several aspects.
I don’t buy “lean and competitive” as a reason for all the shedding Linden Lab has been doing. I mean, hell, they’re letting go of entire market segments (teen, enterprise, education and non-profit) and the best of their talent (Qarl, Babbage, the WindLight devs, so on).
When a company downsizes for “lean and competitive”, they usually cut excess and what isn’t necessary to any long term strategy. Given all of the cuts just this year, praytell what is Linden Lab’s strategy in any given area? Does the Viewer team cuts bode well for a Viewer 3 around the corner? C# and other LSL things being put on halt inspire hope for another Mono year? So on and so on.
There’s just no other explanation other than Linden Lab seeking to be acquired if you asked me. There’s a few things that’ll change my mind; like a permanent CEO being instated with a pronounced and instantly actionable strategy. Short of that, our interim CEO and the “fast, fun and easy” and “scrum teams” and all that is smoke and mirrors for exactly what this post states, bikini season for being picked up.
On the idea of the Lab just seeking more investments…I doubt it. To what end? There’s no area for Linden Lab to plan to expand that they didn’t just give up or shrink this year. The rounds of investment from before was to truck the Lab along to profitability, and as of the last couple of years they’ve been proclaiming profitability.
Its return of investment time moreso than time to be venture capital darling all over again. That phase of the Lab is over.
@Bunjie,
No, I’m not opposed to what furs or others in subcultures do. It’s humorous (but understandable given my choice of words) that you’d reached the conclusion that you did.
I built our House of Usher immersive simulation with an SL furry. I’m in our campus organization to support GLBTQ students and staff.
But college admins and funding agencies will be really, really happy when we rebuild outside SL. The subcultures I’ve noted have a hard time co-existing with education that gets funding from non-SLers, even those who “celebrate difference” in RL communities.
In any case, it’s a moot point now. From what I’m hearing on the SLED list and from colleagues in the Virtual Worlds Education Roundtable, lots of us are leaving. Our campus island is typical: it will close in early 2011 and we’ll remake our signature build in a private grid hosted by Reaction Grid.
To you and others in SL who stay: good luck to you, hope you have a Plan B, and may your tiers never rise.
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