Founder replaces CEO of Second Life maker Linden Lab

Linden Lab, creator of the 3D virtual world Second Life, said today that Mark Kingdon (right) has resigned as chief executive and is being replaced by company founder Philip Rosedale, who will serve as interim CEO.

Chief financial officer Bob Komin has assumed the additional role of chief operating officer. In a statement, Rosedale thanked Kingdon for his contributions, including growing the user base and revenue, increasing the stability of the platform and building a world-class team.

Such niceties, commonplace in press releases acknowledging the resignation of a top executive, do nothing to explain Kingdon’s seemingly abrupt departure.

San Francisco-based Linden Lab was founded in 1999 and it launched Second Life in 2003. That sparked the craze for 3D animated virtual worlds. The company went through a hype cycle as Second Life hit the cover of Time magazine and tons of companies opened up virtual storefronts in the world. Many of those closed, but the users stayed and built virtual goods businesses that generated real income.

Second Life users have logged more than 1 billion hours and generated more than $1 billion in user-to-user transactions. But the company recently cut 30 percent of its staff as it eliminated its enterprise team. Prior to the cuts, Linden Lab employed more than 300.

Back in April, Kingdon said Second Life was bucking the trend of a decline in traffic for virtual worlds. Social networks are the new craze, but Second Life saw $160 million in user-to-user transactions in the first quarter, up 30 percent from a year ago. The company’s monthly unique user number hit a peak of 826,000 in March, up 13 percent from a year earlier. This happened even as virtual worlds such as Vivaty, There.com and Metaplace were shutting down.

Linden Lab declined an interview request, but Rosedale wrote in a blog post, “This is a big, tough change but one the board of directors and management team deeply believes in.”