Blatantly stealing the headline from
the Linden Lab website.
Short version. The parent
of Second Life and Tilia, Linden Research Inc., will be bought by two
investors, Randy Waterfield and Brad Oberwager.
Reading Inara's blog
looks like these two are Good (tm) people.
So, what will they do?
First lets see what it
will mean to us, the residents of Second Life?
Short and simple, nothing!
From here on remember, I
have no documentation! I am 100% guessing!!
It's not like we see Mitch
Kapor banging on doors all around Second Life so there is no reason
to expect any different from Randy and Brad.
Linden Research Inc. is
the investment vehicle for Linden Lab. That is why most of us have
never heard of it. When Philip Rosedale wanted to start Second Life
he walked door to door to find investors. He found a few and with
that capital he could buy stuffs and rent a poor peoples apartment on
Linden Street, San Francisco.
Of the original investors,
I think there were five, Mitch Kapor is the one best known. (There
was a Judy?) Philip had some cash with him coming from RealNetworks.
The capital was combined and legal things were documented.
It's a private company.
The capital was divided into owner shares and based on that the
investors would receive a percentage of the profit. The shares can
not be freely traded, if an investor wanted to un-invest the only way
to do that is to sell the shares back to Linden Research Inc.
When profits began to flow
in and the break even point was passed the employees received, besides
pay, shares in the company. These shares are more limited as the
investment shares. They pay out, but don't give any voting rights.
Linden Research Inc. (the
money) appoints the Board of Directors of Linden Lab. These define
the strategy, check accounting and appoint the CEO.
The value of the company
roughly can be divided,
15% IP rights (protected
70% Clients and goodwill
Add to that the value of
the potential of Tilia.
Who owns the stock
80% original investors
20% (former) employees
How well is Second Life
doing? There are two answers to that.
1/ The investors are
making profit, they have received more as their original investment.
2/ Second Life is no
longer the money maker as it used to be. Income has dropped
significantly but is stable the last few years. It is making good
So why then sell off to
The answer could be as
simple as. A few of the original investors want their stock converted
Problem is, the (book)
value of Linden Research is so high that the other investors can't
match that and can't (or don't want to) increase their investment.
Getting a normal loan from a bank would not be a good idea.
Another, more exciting,
answer could be. There are plans to do something that costs a lot of
money. For instance, set up an owned cloud.
There is a risk that Randy
and Brad will be doing the hedge fund thing. However, when you look
at the (assumed) distribution of value, there isn't much that can be
sold off and rented back (since that is what the hedge funds do, and
then let it die).
Sure it's possible to sell
up the competencies (IP) of running Second Life and Tilia. But that
would create competition reducing the value.
Sell off Second Life as a
whole would be possible. But that would scare away clients and
goodwill. Nobody wants an ad during log-in or while exploring the
world. Nobody wants their userdata to be exploited by some sugar
Sell off the servers,
well, that will happen when our bunny knows how to tweak things and
puts us all in the cloud. The servers could be rented out to Amazon
and become part of the AWS cloud, or be sold to them. It's just a
bunch of machines with cables around them.
What will be sold to Randy
and Brad? Not sure. I find it hard to believe that all original
investors will hand over their stock. Philip selling off his stake in
his brainchild? No way. Can they get their hands on the stock owned
by (ex) employees? Unlikely.
I have to assume that
Randy and Brad will get a majority stake in Linden Research because
of the word acquired and the regulatory things. They will not get
complete ownership, as is reflected by the board of directors that
doesn't change except that Randy and Brad will be part of it. If they
had full ownership they could/ should push them out.
They key words in the
publication are "to help Linden Lab achieve new heights in
distribution, scale, and quality while remaining true to the original
vision, creativity, and community that makes Second Life unique and
special" also "continue growth and expansion".
I am sure things will
change. I find it unlikely that those changes would hurt the
community. It could be possible that a localized Second Life could
spring up, only for one language/country on a localized, faster,
cloud. Would create competition and would break up the communities
but it could be a specialized world, for education, museum or
training ground separate from Second Life but controlled by Linden
Lab, from a distance.
From my point of view, no
time to call it quits. I'm not selling of my lands.
Randy and Brad will get an
account. Be Lindens, and we, as a community, will make sure they will
only do good for us. We are the value of Second Life, that won't
Reporter Vick Forcella