Is there a second act for Second Life? That's the challenge that will be faced by Linden Lab's new CEO. Philip Rosedale, the company's founder, stepped aside as CEO in a surprise announcement on Friday, and said the company is beginning a search for a replacement.

Rosedale said he will focus day to day on the technology and strategy of Second Life, and leave running the company to the new CEO. The changed role was "100% my idea," he said. We talked with Rosedale in a telephone interview this week.

What are the requirements of the new CEO? For starters, Rosedale said it won't be a learn-as-you-go job. "They're going to have to have a deep and intuitive knowledge of what Second Life is, what it means, and why it's important. We're definitely not going to hire someone who doesn't have a deep functioning understanding of what's going on here, in the way that people who have immersed themselves in Second Life do," Rosedale said.

The CEO's most important job will be providing leadership internally, including choosing the right people for the right jobs, organizing the 250-person company, and motivating people to work. "I do a pretty good job of that, but it's not the best use of my skills," Rosedale said. He said he sends out quarterly, anonymous surveys to Linden Lab staff asking them to evaluate his performance. "My performance on those is extremely high. Everybody likes having me," Rosedale said.

The announcement by Rosedale comes at a time when Second Life's growth is hitting a plateau. The in-world population exploded in late 2006 and early 2007, fueled by a great deal of journalistic hype. The number of Second Life accounts went from about 2 million in December 2006 to 12.88 million as of Monday evening.

But new sign-ups slowed in the last half of 2007, and the number of active users -- people who log in frequently -- remained flat at under 600,000 for the past several months.

On the other hand, the news isn't all bad: The average number of users signed in at any given time is growing, routinely exceeding 60,000 simultaneous users logged in. And Rosedale says the company is profitable.

Could the change of CEO be a move to take the company public? The Financial Times thinks so. The paper reported on Sunday that Linden Lab "is moving closer towards a listing and life as a public company with the replacement of its founder with a new chief executive."

Rosedale denied that Linden Lab is moving toward an IPO. "No," he said. "That's my one-word answer. This is not predicated on anything about an IPO."

Rosedale's announcement comes four months after Cory Ondrejka, the former CTO of Linden Lab, and its fourth employee, left the company in December.

The Love Machine

The new CEO will come into a company with an unusual culture, focused on management by consensus and peer review.

One of the most well-known features of the Linden Lab culture is the Love Machine.