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Wired UK just published a pair of articles that are a great explication of the potential of Virtual Reality to become as powerful as the Web. They fairly report the vision that Philip Rosedale has been pursuing for most of his professional lifetime. My one-sentence summaries:

Second Life was just the beginning – Philip wanted to connect the world in a seamless 3D environment, but was greatly limited by technology of the time; today many of these limitations are lifting.

VR and the CD-ROM – People are most excited about closed VR experiences today, but this is like being excited about Encarta on CD-ROM before people understood how powerful Wikipedia would become.

Good articles; read them if you are interested in VR. I have just one, entirely personal, embarrassingly picayune, totally irrelevant problem …

The first article says: “Then, in 2006, Second Life stopped growing.”

I know this to be untrue. I ran finance for SL from 2005-2006, and remained on the exec team until I left the company in 2009. We raised money in 2006, and I personally prepared the financial projections that predicted our growth through 2008. Financial projections for startups are notoriously optimistic, which is to say they are mostly composed of fairy dust and bullshit. I was surprised as anyone to notice, in 2008, that my projections of fast growth held up, quarter over quarter, with a margin of error of no more than 10% (and even at that, the projection was usually lower than actual growth). So I know that SL was still growing quite well in 2006, in every meaningful aspect of usage and business metrics. The growth rate slowed in 2008, but absolute growth was still positive in 2009 when I left. Yes, SL did stop growing eventually. But not on my watch.

Ok, that’s prideful, and it’s petty. But it’s fair to say that I’m the single most authoritative source in the world on this topic. So when I read the article, I sent a note to the reporter with a correction. He replied that he’d “check it out.” A day later, he said that he followed up and he seems to be right, and cited an article by another reporter.

That is seriously annoying. The other reporter has no better access to the facts than the original reporter. That other reporter is just another source of rumor and speculation. In this case, I am the actual source of truth, and the reporter with access to the truth chose to ignore it!

Obviously, this is trivial. Who cares? No one but me and my wounded pride. But it’s frightening to consider how easily reporters will ignore the truth when it gets in the way of their own goals.

greatness and lateness

The late, great Bill Campbell passed away this week, and there is no shortage of encomia from the technorati about him. He was the greatest coach in Silicon Valley, and the list of leaders that have paid tributes is appropriately star-studded. Some of the most successful people in the business world have benefitted from his wise counsel and friendship. It’s not hard to find stories of some pearl of advice that Bill gave to change the direction of a company, or even a life. I’d like to share a story that’s different, though no less illustrative of his greatness, because it’s a story of what happens when you don’t listen to Bill Campbell.

Back when Linden Lab was one of the most hyped companies in the world, in the interregnum between Google and Facebook, we had typical growing pains that were no less painful for being typical. Through the extraordinary pleading of one of our board members, we had the good fortune to receive some time from Bill Campbell. It was a tough time to get his time. He’d recently found out that his close friend was suffering from a terminal disease, and he knew that supporting his friend and his friend’s family would soon becoming an all-consuming task. He could not agree to a team-wide mentoring relationship. But even in the face of this tragedy and his many other commitments, he agreed to spend some one-on-one time with our CEO in several sessions, and just one round of discussions through the rest of the exec team.

I was very excited when my turn came, having known not only of The Coach’s legendary reputation, but having heard and seen his sharp advice to our CEO implemented on a few occasions in our company already. We sat down in a fishbowl conference room, centrally located on the company’s main floor, with a view out across the desks on an otherwise normal day. As I began responding to his initial questions about my background and context, I saw his attention drawn sharply away to the window.

In just a few seconds of observation, he saw something he didn’t like outside the conference room. “Do you see that?” he asked me. Yes I did, I responded, I knew exactly what he was talking about. “What’s it about?” he probed. I gave my best explanation, no doubt biased, certainly incomplete, filled with my caveats and allowances for things that I perhaps did not understand completely. “Nonsense,” he said, “Your job is to take care of that situation. Do you think this company is going to make or break on the new markets you’re after, on the business deals you’re trying to swing? No. You are here for that, no one else on the team is going to do it. Fix it. That is your most important job.”

I’m sorry I’m being vague about the details of the problem that Bill saw. The details don’t matter in this particular telling of the story. What matters is how quickly Bill could see a critical problem in barely more than a glance, how few questions he had to ask to understand the nature of the problem, how firmly he could direct action where it was needed, how incisively he could assess character and roles on a team. That he could do all this in seconds was simply stunning.

The sad, though hopefully instructive, remainder of the story is how poorly I executed on his insight. Fixing the problem immediately would require an extreme action that would disrupt the company in a sudden and unwelcome manner. I thought that the safer course of action was to confine the problem to a tight but explosive space, allowing it to self-destruct in a formidable container, like a bomb going off under a fortified blast dome. In retrospect, of course this was the wrong choice. The problem lingered longer than it should have, was not completely isolated or contained, and rather than have an explosion in the air that the winds could blow away, I had poison in the ground that was now part and parcel with the soil on which the company was built.

I wish we’d had more time than we got with Bill, I don’t think I would have handled things the same way with just a little bit more counsel. It was not the difference in our company’s success or failure, but it was the best advice for the moment and for the team in place. The lesson, I suppose, if there must be a lesson here, is that when you are fortunate enough to access the wisdom of the great, act on it decisively before it’s too late.

real time

At Second Life, we occasionally debated the merits of virtual reality vs augmented reality. In caricature:

Virtual reality was the core dream of SL, same as the core proposition of Snow Crash, the Holodeck, the Matrix – the idea that a computer simulated world could have all of the sensory and intellectual stimulus, all of the emotion and vitality, all of the commerce and society, of the “real” world (quotations necessary because virtual reality would be so real that non-simulated reality has no better claim on the term).

Augmented reality said that the virtual realists dropped too much acid in their youth. A fully simulated environment might be escapist pleasure for the overcommitted few, but computers would show their real power by adding a layer to our existing lives, not creating entirely new ones. Computers would sink themselves into our phones, our clothes, eventually our fingers and eyeballs and brains, not in the service of making another world, but enhancing the world we live in.

If that debate sounded ridiculously theoretical to you, then I hope that was yesterday because today it’s as real as it gets.

Google Glass is the vanguard of augmented reality, and obviously important to the company.* Google’s mission has always been to organize the world’s information – not to create a fantasy world but to organize our world.

Second Life had its heyday after Google established itself as the new tech titan, but before any serious challenger had risen up behind it. We spent a lot of time trying to convince people that SL could be the next big thing … trying to explain that people wanted to have an online identity, instantiations of themselves that would interact with other online personalities, creating tiny bits of content that might not have individual value, but would have enormous value as a whole fabric of an online world where people would go and interact every day …

I was laughed out of a lot of buildings after explaining SL. Who wants to live online? Who wants friends that they see only in a computer? Who wants to spend their leisure hours pecking away at a keyboard and looking at the cascades of dreck that other non-professional users create?

Second Life missed the mark for a lot of reasons, but not because we were wrong about online life. Facebook came along, and gave us all of the virtual life that the Web could really handle – only 2D, status updates instead of atomic 3D content, kitten pictures instead of furries – but Facebook succeeded in creating a virtual world.

And now they’ve acquired Oculus VR. If it wasn’t clear before – and perhaps it wasn’t clear even to them – they have now taken a side in that old debate, the same side that they’ve been on since the beginning. Facebook is going to go more and more towards virtual reality, while Google expands further and further into augmented reality.

 

*I don’t work on Glass, have no special knowledge of the product or strategy, and actually have never even tried it.

Bit flip

I was wrong about the PC. As a kid I played with the TRS-80, Apple ][ and C64 – I was engrossed in them all, I thought they were the future. But I didn’t predict the sweeping change the PC would have on society and the economy. I didn’t devote my hobbies and education to learning more about computer science.

I was wrong about the Internet. I was introduced to UNIX as an intern at Bell Labs, I read BBSes, I was on CompuServe and Prodigy and AOL, I used Mosaic. I enjoyed them all, I understood how these were the future. But I didn’t anticipate how all-encompassing this future could become. I didn’t devote my early career plans to working in Internet companies.

I was wrong about Google. As soon as I started using it in 1999, I saw that this combination of simplicity and power was the future of search, and that search was the key to the Web. But I didn’t see the enormous economic engine that search intent could generate. I didn’t want to work at Google while it was still a relatively small company.

So I’m probably wrong about Bitcoin. For reasons I’ll go into towards the end of this post, I feel it’s very important to state this at the beginning. If you already know I’m wrong, your time is much better spent reading and re-reading this wonderful piece by Marc Andreessen, the finest articulation of the potential power of Bitcoin yet written. (Incidentally, I’ve concluded that I was wrong when I said that Andreessen is probably the best living tech entrepreneur, but would be a mediocre VC. He’s already proven he’s a great VC.)

Again: please stop reading if you already know I’m wrong.

I don’t believe in Bitcoin, I don’t believe that it’s the foundation of a new age, a wave to follow the PC, the Internet, the Web. My resistance to the judgment of my betters is broad and deep, logical and emotional, based on fact and conjecture. So clearly, I’m not trying to win an argument here. I just want to someday look back on this and laugh. Or cry, as the case may be.

The roots of my skepticism about Bitcoin grow from three areas, which I’ll call What’s Missing, What I Know From Experience, and What’s Distasteful.

What’s Missing

As I humblebragged above, I knew about some of the key life-changing technologies of our time before most people. I may have been wrong about just how far they would go, but I was right to be curious about them, right to try them before they were popular, and right to enjoy their early incarnations. I had that curiosity and enjoyment from the minute I heard about them, and that enjoyment was sustained and nourished through each and every use.

I’m not curious about Bitcoin, at least, not curious enough to try it. As a consumer (not as a technologist, futurist, or business person), I don’t see why I might enjoy using it. I can understand why it has speculative value, but the joy of a good return from a speculative investment is nonspecific to Bitcoin. As a consumer, what’s in it for me?

The shortest description of the most obvious consumer proposition for Bitcoin is that it’s digital cash. But I’m not actually having a problem with the features of non-digital cash. Making digital payment behave exactly like cash would introduce giant problems into my life without solving any.

The first problem is the fear of seller fraud, i.e. how to address the problem that the person selling the goods might not actually deliver the goods. Bitcoin could, in theory, help quite a lot with buyer fraud, since once Bitcoins are transferred it’s just like receiving cash. But I’m mostly a consumer, not a seller, and as a consumer I don’t like to hand cash over to anyone unless I receive the goods at the same time or before I give the cash. Under what circumstance besides anonymity could I possibly want to use digital cash rather than a credit card? A credit card gives me the assurance that if I’m truly defrauded by the seller, I can always call the credit card company and demand a chargeback. Bitcoin advocates talk about chargebacks as a merchant’s curse (which it is), without addressing how the same thing is an honest consumer’s blessing.

Another big problem is the fear of loss and theft. I have this problem with real cash already, I don’t want to keep an excessive amount on my person or in my home or business. I don’t want to forget where I put it, I don’t want someone to steal it. Digital cash makes this an enormous problem, since I can now have a very large amount of cash, which becomes a very attractive target for theft, and a very sad potential case for loss. Sure, I can protect my digital cash with all manner of digital locks and keys, but this makes my cash security problems worse, not better. Banking has lots and lots of problems, but one of them is not that if I forget my key, I lose all my money.

I understand that these are problems of privilege, first world problems, and I’m not addressing the benefits that Bitcoin’s success would have for problems particular to the developing world. But I’m also not aware of any mass consumer technology that became successful due to features that benefitted developing economies without solving first world problems first. That may be sad, but it’s true.

What I Know From Experience

How many people have managed the growth of a new currency from its early days through its use in hundreds of millions of dollars worth of transactions per year? I don’t know, but I suspect that the number is only in the dozens, and I know that I’m one of them. So I cannot help but view the prospects for Bitcoin through the lens of what I learned from developing the Linden Dollar as a product for Second Life. This experience might provide some special insight, but it also almost certainly comes with bias, false equivalencies, the color of regret and the specter of envy. Nevertheless, I can’t talk about Bitcoin without thinking of the Linden Dollar.

Since memories are short, let me try to explain the Linden Dollar very briefly. Second Life was once a thing that had the same level of interest as Bitcoin does today, actually a bit more judging by search queries:

SL-bitcoin

The Linden Dollar is a virtual currency, the primary medium of exchange for transactions in the virtual world of Second Life. At its peak, people using Second Life used the Linden Dollar to buy and sell virtual goods worth more than half a billion dollars per year. Although there are many other digital worlds featuring the ability to get goods in exchange for some virtual token, the Linden Dollar had some unusual features that didn’t exist or weren’t allowed by similar services. The L$ could be transferred from user to user, and could be exchanged for a price in US dollars (and Euros and other currencies). Linden Lab, the company making Second Life, could issue new Linden Dollars in any amount and at any price, without any guarantee of redemption for any value, making the L$ a true fiat currency (i.e. having value by declaration rather than by guarantee of exchange for something of value, like gold).

It’s fair to say that the Linden Dollar was inferior to Bitcoin in every possible aspect of technical implementation, particularly the cryptological security measures. And it was not only centrally managed, but subject to the inflationary risks inherent to management of a money supply by an unstable government (i.e. a startup). Bitcoin advocates would have no problem listing dozens of feature inadequacies and design mistakes for the Linden Dollar. But I don’t think that the absence of any of Bitcoin’s vaunted features are the reason that the Linden Dollar didn’t reach mass success.

The Linden Dollar failed to reach a mass audience because Second Life failed to reach a mass audience. Even with SL’s shortcomings, the L$ might still have reached a broad audience if it had also become an accepted medium of exchange on another successful platform. The features and design of a currency can preclude certain types of failure (e.g. widespread fraud), but with one possible exception* they cannot be the driving reason for success. A currency, or any payment method, succeeds not because of its features, but because of the adoption of the platform on which the currency is the primary medium of exchange. As I have argued elsewhere, the value of the platform is the dominant factor in determining whether the medium of exchange for that platform will be successful. Consider the US dollar, which is after all Bitcoin’s true competition. The “platform” for the US dollar is the United States economy. The US$ has many feature deficiencies, and has undergone many design changes over the years. Someday the US dollar will fail to be the world’s dominant currency. That day will come after the United States is no longer the world’s largest economy, and not a day before.

Now, it’s arguable that the platform for Bitcoin is the Internet, and that economic transactions running through the Internet could exceed the US GDP (minus the portion running through the Internet). So perhaps we are on the cusp of seeing Bitcoin take the place of the US$, not because the features of the currency make it better than the US$, but because the US GDP is smaller than Internet GDP, and no rising country GDP (i.e. China) grows fast enough to fill the vacuum. But that’s not Bitcoin winning through superior features or technology, that’s the US economy failing and the world not wanting to rely on China’s economy.

What’s Distasteful

If it’s not clear enough already, this post is driven by personal taste, experience and bias as much as it is by fact and logic. So I may as well conclude with the least logical portion. I started this post by admitting that I’ve been wrong about pretty much every important technology trend in my lifetime, and practically begged many readers to read something else. Now I’ll admit that I don’t actually think I’m a moron. As I pointed out, I enjoyed and was excited about the PC, the Internet, the Web as soon as I saw them. I was right, I just didn’t make many important personal decisions based on that belief. (As an aside, I don’t actually regret the decisions I made instead. Life is full of wonderful choices.)

But I wanted to give Bitcoin fanatics every reason to dismiss this post without comment, because I’ve observed that Bitcoin skepticism is often attacked with an onslaught of vituperative insult. Now, this is true of the current sad state of Internet commentary generally, but here I’m excluding the routine trolls and bitter ignoramuses, and thinking of people who are clearly capable of intelligent, reasoned discussion. Some very smart and often nice people are Bitcoin fanatics, but in the eyes of many intelligent true believers on this topic, skeptics aren’t just wrong but idiotic, not just shortsighted but malicious. That reaction is of course is distasteful, but the point here isn’t just that I have delicate sensibilities. The point is pattern recognition: I have seen this kind of fanaticism many times, and it is usually a sign that merit of the proposition cannot speak for itself.

*The possible exception to all of my skepticism for Bitcoin is micropayments. I think this could be a compelling use case, though not in digital content payments because the problem with many digital content models is not that people don’t have a good means to pay, but that they would rather receive inferior free content than superior paid content at any price. But micropayments in antispam implementation or for microtransactions in data transmission generally is very interesting. This is the one area where I’ll continue to think about what Bitcoin could mean. After all, I’ve been wrong before.

too early in the game

Last month, I wrote about why Second Life failed so I didn’t have to write about why Second Life failed. I mean, that post wasn’t about reasons for failure, it was about the fact of failure. My thought was that there are many people who simply assume Second Life failed, and they’re wrong, and there are many who will passionately argue that Second Life has succeeded … and they’re wrong too. Failure can only be judged by the ones who were trying to succeed.

It would be safer for me to say that failure is a matter of perspective, for surely failure passes through the same lens as beauty in the eye of the beholder. I do understand that many SL Residents were on their own journeys, and so of course they are their own best judges of the success of those journeys. But it would be an artful evasion to claim that any of those journeys, or even all of them together, constitute the sum total equation for the success of Second Life. We were trying to do something more – or at least, something else – and we failed. (Of course, I’m talking about the team and the company that I knew, years ago. The team there today is on their own journey, which I know next to nothing about.)

So if I’m willing to be this myopic and insular about judging failure, you can bet I’d be just as parochial in reviewing the reasons. I’ve seen and heard a lot of speculation that I don’t agree with: poor strategy, worse execution; lack of focus, misplaced focus; poor technology, doomed architecture; dumb marketing, uncontrollable PR; niche market, bizarre customers; crazy culture, undisciplined development; bad hiring, bad management; feckless board, dominating board, ignorant board. I’ve heard it all, and while there may be a grain of something like truth here and there, none of these things holds real explanatory power as a reason for why Second Life failed.

We failed as people. We failed as a team. Our failure was intensely personal, particular to each person involved, and ruinous to the overall team.

I’m going to switch now from “we” to “I” but I want to be really clear about why. We Lindens were all in it together, and there is a broad sense in which all credit and blame goes to all of us … but not in this post. Here, I’m talking about maybe half a dozen people, and so it would be too much of a personal attack for me to try to describe the failures of anyone other than myself. I’m willing to attack myself in this forum, but not my former colleagues, all of whom I still respect and a few of whom I love like my own family. But I want you to remember the “we” because otherwise the rest of this post is going to seem incredibly egocentric: there’s a certain kind of self-blame that’s really self-aggrandizement, and though I regard my own failures as critical, even the most deluded version of the story couldn’t claim it was all about me.

So. I failed as a person. I failed the team. I was responsible for many elements of our strategy, execution, culture and management, and those decisions aren’t the ones I regret. What I regret, to the extent that I’m capable of regretting such a rich learning experience for me, is giving up. I don’t mean at the end, when I was tired and disillusioned and looking around at a company I didn’t recognize and a future I didn’t want to live. A lot earlier than that, I gave up on people that we needed, people who were flawed and fragile but necessary. I let people fail, I let people go, I let people hide in their illusions and fears, I let them give up because I’d already given up.

The irony was, when I joined the company, I was supposed to be an experienced hand that would bring some sanity to a crazy world. But I indulged my own worst instincts – throughout the craziest times, when I could’ve done the most good, I just brought more crazy. I was having fun, but I chose my own twisted growth over a higher goal, and at times I was just plain mean or selfish or drunk. I really wasn’t ready for the opportunity that Linden Lab presented to me. I really wasn’t the guy I should’ve been when I got there; I didn’t know what I needed to know until I left.

Too many of the key leaders at the Lab were working through similarly damaging personal limitations. You might ask whether this really points to a failure in culture or hiring or leadership, and that would be a fair question. It’s true that Linden had a way of hiring certain kinds of people and forcing them to confront their own deepest flaws – but I think that’s beautiful, a feature not a bug. What we needed was one or more or all of us to conquer our flaws, to enable the entire team to rise above the limitations of each of us. But none of us defeated our own demons, and so all of us perished.

I’ve been gone from Linden Lab for over two and a half years, and still my failure haunts me. The last day of the year is always a good moment to come to terms with the passage of time, and this New Year’s Eve I’ve decided I should finally accept the fact that I’m never going to let it go. I’ll try to reach peace through the zen realization that peace is unattainable.

why second life failed

This post is about why Second Life failed – but not in the sense of, “here are the reasons why Second Life failed,” but instead, “here is why it is true that Second Life failed.”

Slate published an article titled “Why Second Life Failed” that also, like this post, is not an elucidation of reasons why SL failed – but unlike this post, it is not an authentic attempt to support the proposition that SL indeed failed. It is simply an effort to market a new book by posting an article with a catchy headline. There is an unavoidable paradox in that any marketable headline with the structure “Why [X] Failed” must use for X something that has first achieved at least some significant success, otherwise the title would be too obscure to attract readers. I started a company called Bynamite that folded after less than two years – no one writes articles titled “Why Bynamite Failed” because no one’s ever heard of Bynamite.

This mild paradox isn’t sufficient defense for SL’s ardent users and thoughtful critics. As is often the case with posts about SL’s demise, the comments to the Slate article are full of well-informed, intelligent and passionate conversation that puts the original article to shame. At Terra Nova, Greg Lastowka suggests that SL remains fertile ground for study, with the pointed rejoinder that “Second Life never failed – the media reporting on Second Life failed.”

As a former Linden, I appreciate the desire to insist that Second Life hasn’t failed. I joined Linden Lab in 2005, at a time when we had a few dozen employees and registered users in the tens of thousands. By the time I left four years later, we had around 7 times the number of employees, several hundred times as many users, and almost a hundred times the revenue. It certainly felt like success to me. I left sated with a feeling of accomplishment, and great hope for the future of Second Life.

But I also left feeling depleted. We had stumbled our way from obscurity to something like prominence, but I didn’t know how to take it to the next level. We weren’t making progress despite having bountiful talent, desire and resources. We had a beautiful company, a real culture of beauty and love, genuine emotion for each other and for the world we were helping to build. And it wasn’t working, not well enough and not fast enough and not big enough.

Perhaps there never was a next level. Perhaps it was always the destiny of Second Life to be an innovative niche product for a select group of people, a worthy subject of serious study, a constantly evolving emporium of edge cases. Maybe we should have just hunkered down, and focused on maintaining an elaborate playground for only a select audience of passionate and creative people. We could eke out a fine living, and damn the rest of the world who just didn’t get it.

But I couldn’t damn the rest of the world, because dammit, I’m from that rest of the world. I was never a true Resident of Second Life; I was a visitor, an outsider with the good fortune to see the incredible things that people can do in a truly free environment. I was inspired, amazed and delighted by Second Life – as well as occasionally revolted, offended and demoralized – and the diversity and depth of this experience was a revelation to me, one that I believed that everyone can appreciate.

And I still believe that, which is why I have to accept that Second Life has failed (so far, we must always say so far). The reality is that Second Life is still a niche product, and to deny that I wanted it to be something more would dishonor the heartbreaking glory of our ambition. It’s fair to say that Facebook became our second life, but it’s also shortsighted. Not so long ago, people laughed at the proposition that anyone wanted to maintain a virtual presence online that could form the basis of social interaction. Facebook did put an end to the dismissive chuckles on that topic.

But it’s equally laughable to say that this is where we’ll stop, that the final destination of online interaction consists of wall posts and text messages in two dimensions. I still believe that there’s no sensible way to define an impassible boundary between where we are today and a time when people “live” in a three-dimensional virtual environment. I’m still a true believer, an old true Linden in that way. So I have to admit that Second Life has failed.

So far.

the nature of their game

Pleased to meet you
Hope you guess my name
But what’s puzzling you
Is the nature of my game

Facebook may be overplaying its hand, but do we really understand the game they are playing?

We’re mad at Facebook because we feel like helpless pawns in an environment we need but don’t control.  Even though I’m included in that “we,” I have some sympathy for Facebook because I was once on the other side of a similar divide between the consumer and the company.

At Second Life, we (this time I mean we-the-company) had a seemingly omnipotent grip on the environment our users needed.  In theory, we knew our users intimately, knew who their friends were, knew where they went and what they did.  We owned their means of payment and communication, we set policy for their leisure and commercial activities.   This is a level of control that Facebook dreams of, not in a virtual world but for the entire Web . . . and it’s scary that they actually seem to be on the path to getting there.

Some of our most devoted customers were also our most vocal critics, because they were so deeply invested in the world they helped create – and every change in the service affected their lives deeply.  A few critics assumed that since our every change seemed to hurt some users, it should be easy to build a competitor that would satisfy all users.  But Second Life “killers” and open-source alternatives never gained traction, while Second Life continues to grow long after the hype cycle forgot about virtual worlds.

One lesson in all of this for me was that most critics and competition never really understood our business.  Our operation was so multifaceted and complex that every competitor only focused on the one or two things that they believed were important, and individually or collectively they never assembled a cohesive whole that could challenge our market dominance.

I’m seeing the same thing today with Facebook’s critics.  Competitors who think an open (source or otherwise) alternative to Facebook will bring down the giant simply fail to understand the business they are competing against.  Open identity, open interests and open social graphs are very difficult to grow and support without an overriding service reason to spur adoption and use:  People have an online identity and social graph because of the services they use, not the other way around.