History of Second Life/LindeX Chatlog

List of Attendees

Peter Millionsofus - formerly Lawrence Linden
Tree Kyomoon
Trillium Bing
Celebrity Millionsofus

Transcript

[18:32 SLT] Peter Millionsofus: anyway, in mid 2005 I started working at Linden Lab
[18:32 SLT] Peter Millionsofus: My first project was a minor bit of server infrastructure that was really just "too early". While I worked on that project I spoke with Philip quite frequently
[18:33 SLT] Peter Millionsofus: he's full of ideas on how to build culture, lightweight process with lots of small tools to keep the labor burden low, and of course many features he'd love to someday see in SL
[18:35 SLT] Peter Millionsofus: One thing on his mind was all the friction in the L$ economy. New Residents largely had few L$, and in order to buy more they had to trust their credit card info to yet another website, usually that of a much smaller company
[18:36 SLT] Peter Millionsofus: we knew from our registration stats that asking for payment info caused a lot of people to pass on signing up for second life... even later when that was largely just used to restrict the number of alts someone could create , and for an attempt at age verification
[18:36 SLT] Peter Millionsofus: So I spent two weeks building a quick currency exchange prototype with a focus on making buying L$ from other residents easy
[18:37 SLT] Peter Millionsofus: priorities changed and that code got shelved in a working, but aestetically ugly state
[18:38 SLT] Peter Millionsofus: There was that whole interaction with the folks who ran GOM whcih I won't get into except to say that I feel good that Linden Lab went *way* out of their way to negotiate fairly.
[18:38 SLT] Peter Millionsofus: anyway, time passed, about 2-3 months.
[18:38 SLT] Tree Kyomoon: GOM?
[18:39 SLT] Peter Millionsofus: (GOM = Gaming Open Market, one of the first virtual currency exchanges... they used to support various gaming currencies and allow you to buy and sell them and cashout in US$ (CAN$ too I think)
[18:40 SLT] Tree Kyomoon: thanks
[18:40 SLT] Trillium Bing: oh
[18:40 SLT] Peter Millionsofus: eventually all the other companies behind the other games pretty well banned their dealings with their currencies... so by mid 2005 they only dealt with L$)
[18:41 SLT] Peter Millionsofus: They rana website where, after sending them money, you could then buy blocks of L$ that other residents set for sale.
[18:41 SLT] Peter Millionsofus: Anyway, when we first started working on LindeX we realized that GOM might not survive
[18:41 SLT] Celebrity Millionsofus: Was it an auction system like Lindex?
[18:42 SLT] Peter Millionsofus: it was more of an auction system than LindeX. You could pick exactly which block of L$ you would buy
[18:42 SLT] Peter Millionsofus: by that point in time they sold in blocks of L$1000
[18:42 SLT] Peter Millionsofus: often larger blocks sold for a more favorable rate than smaller blocks since GOM charge a commission based upon the # of blocks you sold in a month.
[18:43 SLT] Celebrity Millionsofus: Ahhh, k
[18:43 SLT] Peter Millionsofus: so selling one L$1000 block would cost the seller the same ammount as selling one L$100000 block
[18:43 SLT] Tree Kyomoon: hmm sounds like theres some money in there
[18:43 SLT] Peter Millionsofus: so there was a secondary business for people who would buy large blocks and break them into smaller blocks for the casual buyers to buy
[18:44 SLT] Tree Kyomoon: right...sounds like the land business
[18:44 SLT] Peter Millionsofus: so anyway, we realized that GOM might not survive if we opened our own exchange. So we went to great lengths to work with them, that were all ultimately rejected.
[18:45 SLT] Peter Millionsofus: we didn't want to harm their business since they'd really been a boon to SL's early economy. SL *might* not be here today with out GOM
[18:46 SLT] Peter Millionsofus: Anyway, in late september, in the middle of the week GOM announced they were closing their doors the following Saturday afternoon
[18:47 SLT] Peter Millionsofus: They cited various reasons including: unreliability of the L$ transaction history page on the secondlife.com website, unreliability of L$ transfers in world, and impending competition from LindeX.
[18:47 SLT] Peter Millionsofus: So that week I scrambled to pretty up the LindeX interface and add some primitive fraud prevention mechanisms, and generally ready LindeX for the public
[18:48 SLT] Peter Millionsofus: I got lots of testing help from the QA team and Philip (he's great at finding bug BTW)
[18:48 SLT] Peter Millionsofus: and we were able to setup a closed beta starting that Friday night
[18:48 SLT] Peter Millionsofus: by about noon that Saturday we were ready to go public
[18:48 SLT] Trillium Bing: holy moly!
[18:48 SLT] Peter Millionsofus: That version of lindex was much simpler
[18:48 SLT] Tree Kyomoon: nice
[18:49 SLT] Peter Millionsofus: There we only limit sell and market buy orders, the limits/tier system that determines how many L$ you can buy a day/month was greatly simplified, you couldn't buy L$ directly in the viewer
[18:49 SLT] Peter Millionsofus: *were
[18:50 SLT] Tree Kyomoon: what year was this?
[18:50 SLT] Peter Millionsofus: so we managed to get LindeX launched and public before GOM closed their doors. That was quite a relief to know that people would still be able to buy and sell L$.
[18:51 SLT] Peter Millionsofus: By that point in time there were already some Residents starting to rely upon the L$ they made in Second Life to pay their RL bills
[18:51 SLT] Peter Millionsofus: 2005
[18:51 SLT] Peter Millionsofus: right around Oct1
[18:51 SLT] Peter Millionsofus: I don't recall if we opened to the public Sept 30 or Oct 1, but I can look it up later
[18:51 SLT] Celebrity Millionsofus: When did the viewer enable users to buy Lindens in world?
[18:52 SLT] Tree Kyomoon: I cant even imagine not being able to buy/sell in the viewer :)
[18:52 SLT] Peter Millionsofus: the buying and selling in the viewer didn't happen until about a year later.... late 2006. Shortly after Zero Linden started
[18:53 SLT] Peter Millionsofus: he wrote the client side of things to make that happen and we each wrote some of the server code required to make that happen
[18:53 SLT] Peter Millionsofus: and Kona helped test much of those changes
[18:53 SLT] Tree Kyomoon: I didnt realize Zero was that young :)
[18:53 SLT] Peter Millionsofus: The LindeX usage went up a lot when we made it easy to buy from the viewer
[18:53 SLT] Celebrity Millionsofus: I bet!
[18:54 SLT] Celebrity Millionsofus: Since the Linden is a quote real unquote currency who set the monetary policy for Linden Lab?
[18:54 SLT] Peter Millionsofus: for a picture of how the market grew, check out my blog postings on the SL blog under Lawrence Linden
[18:55 SLT] Peter Millionsofus: there are some graphs, and .xls files with all the data for both LindeX and what we were able to scrape together from various sources for GOM
[18:55 SLT] Peter Millionsofus: I set a lot of the monetary policy at Linden Lab with input from Philip and Ginsu
[18:55 SLT] Peter Millionsofus: later Zee also contributed to ploicy setting
[18:56 SLT] Peter Millionsofus: since I wound up have to implement and enforce policy it quickly move from more of a task that was largely driven by Philip to a task I drove forward
[18:56 SLT] Celebrity Millionsofus: Nodnod.
[18:57 SLT] Peter Millionsofus: Ginsu did a great job of helping pave the way for some of the tools I needed to improve our management of the exchange rate
[18:57 SLT] Peter Millionsofus: for example, without being able sell L$ on LindeX we had a tougher with the exchange rate
[18:58 SLT] Celebrity Millionsofus: Is that why the rate kind of spiked up a lot last summer?
[18:58 SLT] Peter Millionsofus: the problems was we couldn't quickly and easily manage how many L$ went into the economy in a given month
[18:58 SLT] Celebrity Millionsofus: er, well down I guess from the perspective of sellers. :D
[18:58 SLT] Peter Millionsofus: celebrity: yes
[18:59 SLT] Peter Millionsofus: so, what we wanted to do was set up a situation where we biases the market such that we *needed* to sell L$ on the LindeX to grow the L$ supply in the right proportion to user growth
[18:59 SLT] Peter Millionsofus: the best way to achieve that was to lower stipends, and make sure that we were legally in the clear for selling L$
[19:00 SLT] Peter Millionsofus: for example, suppose that Second Life grows by 1000 Residents a month, and that for the economy to be healthy each Resident needs about L$200 in the overall L$ supply to prevent the L$ from rapidly appreciating
[19:01 SLT] Peter Millionsofus: you could choose to give everyone L$200 when they join SL, but what happens if the magic number that month is really L$180?
[19:01 SLT] Peter Millionsofus: you might puch the economy toward depreciation
[19:01 SLT] Tree Kyomoon: wow so much to consider!
[19:02 SLT] Celebrity Millionsofus: Seems like people'd make alts just for L$ too :D
[19:02 SLT] Peter Millionsofus: so what we choose to do, in effect, was to give each new Resident L$100.
[19:02 SLT] Trillium Bing: So, you guys had to become Alan Greenspan in like a month?
[19:02 SLT] Tree Kyomoon: lol
[19:02 SLT] Peter Millionsofus: That should leave an average shortfall of L$100 per new Resident, which we could make up for day-to-day by selling freshly minted L$ on LindeX. About L$100 worth per new Resident
[19:03 SLT] Peter Millionsofus: so if one month it needed a little more L$ injected into the overall L$ supply, we just sell a little more, but next month should it need a bit less, we would simple sell, say L$50 onto the market per new resident instead.
[19:03 SLT] Peter Millionsofus: Trillium: pretty much
[19:04 SLT] Trillium Bing: :)
[19:04 SLT] Peter Millionsofus: before linden we tinkered with the stipend ammount to try to help encourag ethe rate to remain steady, but that was every six months at best...
[19:05 SLT] Peter Millionsofus: and the ammount of the change was rarely backed by solid data.... which is fine if you can try something new each day and learn from things, but at the scale of once every six month, it's tought to steer that ship
[19:05 SLT] Peter Millionsofus: * "lindex" two senteces ago
[19:06 SLT] Peter Millionsofus: so by biasing the market so that we needed to put in L$ we gained finer control over the exchange rate, including the ability to, in a truely virtual sense, "buy" L$ back simply by not selling as many L$ into the market.
[19:07 SLT] Peter Millionsofus: back when we only could adjust the stipend rate (and the very small L$ sinks such as upload, group, and other land related fees) things could go bad for months at a time before we could correct them
[19:08 SLT] Peter Millionsofus: um, sorry
[19:08 SLT] Peter Millionsofus: wrong keys
[19:08 SLT] Tree Kyomoon: lol
[19:08 SLT] Celebrity Millionsofus: Hehe. S'okay.
[19:08 SLT] Peter Millionsofus: Anyway, let me pull up the lindex graphs a sec
[19:09 SLT] Peter Millionsofus: looking at http://secondlife.com/whatis/economy-market.php after clicking the "all" button beneath the graph....
[19:10 SLT] Peter Millionsofus: you can see that the rate graph really smooths out about halfway through the timeline
[19:10 SLT] Celebrity Millionsofus: Fascinating that the rate is rock steady, but the volume is like 4x.
[19:10 SLT] Tree Kyomoon: wow
[19:10 SLT] Peter Millionsofus: that's about the time we implemented the stipend reductions and started selling L$ on LindeX
[19:10 SLT] Tree Kyomoon: thats a real testament to your efforts!
[19:10 SLT] Celebrity Millionsofus: Yes, seriously.
[19:11 SLT] Trillium Bing: Yep
[19:11 SLT] Tree Kyomoon: it goes from crazy go nuts to straight an narrow!
[19:11 SLT] Peter Millionsofus: up until the volume plateau this year, LindeX volume at double nearly exactly every 90 days
[19:11 SLT] Peter Millionsofus: "was doubling"
[19:11 SLT] Peter Millionsofus: (sorry getting tired)
[19:11 SLT] Celebrity Millionsofus: Yes, it's getting late. :-) We should probably wrap this up pretty soon.
[19:11 SLT] Peter Millionsofus: yeah, before I left the maximumj daily rate hadn't changed a single point in about six months
[19:12 SLT] Peter Millionsofus: and the average only varied about 0.6%
[19:12 SLT] Tree Kyomoon: nice
[19:12 SLT] Peter Millionsofus: so overall I think it worked out well. You might ask about the volume plateau
[19:13 SLT] Peter Millionsofus: I think that plateau is caused by a combination of things:
[19:13 SLT] Peter Millionsofus: - huge international shift of SL users; most new SL users don't have a payment method supported by LindeX
[19:14 SLT] Peter Millionsofus: - the nature of recent fraud
[19:14 SLT] Trillium Bing: eeeew
[19:14 SLT] Peter Millionsofus: - system scaling (when SL is acting sick, LindeX in impacted pretty heavily)
[19:15 SLT] Tree Kyomoon: this is definitely a growing pains year
[19:15 SLT] Peter Millionsofus: - change over of the billing system made it so that some Residents could no longer use lindex
[19:15 SLT] Celebrity Millionsofus: Truthfully, Peter, when SL is sick it ripples through the whole economy. People won't spend Lindens if they think they won't get the content they've paid for.
[19:15 SLT] Celebrity Millionsofus: Not to mention people can't create content to buy either. :D
[19:15 SLT] Peter Millionsofus: - and slowing in the growth of the Resident population (which, eyeballing recent data, appears to be picking up again)
[19:16 SLT] Peter Millionsofus: Celebrity: true that about ripples
[19:16 SLT] Peter Millionsofus: - also support for LindeX and billing services had been backlogged most of this year which I'm sure turned people off
[19:16 SLT] Peter Millionsofus: (end of that list)
[19:16 SLT] Tree Kyomoon: but the volume is still 248,000 a day!
[19:16 SLT] Peter Millionsofus: yeah
[19:16 SLT] Tree Kyomoon: thats killer
[19:17 SLT] Peter Millionsofus: That still adds up a lot
[19:17 SLT] Peter Millionsofus: the monthly revenue is p[retty amazing
[19:17 SLT] Tree Kyomoon: how does that relate to profit ?
[19:17 SLT] Peter Millionsofus: however LindeX itself if often operated at a loss
[19:17 SLT] Tree Kyomoon: for linden
[19:18 SLT] Peter Millionsofus: (fraud + support costs is great than buyer and sellers fees)
[19:18 SLT] Peter Millionsofus: so, relating back to profit
[19:19 SLT] Peter Millionsofus: about 20% of the Linden's revenue is based upon exchange activity (Supply Linden's L$ sales on lindeX which to an extend replace what would otherwise be premium subscription fees)
[19:19 SLT] Peter Millionsofus: I can't talk about profitability number for Linden Lab... not really my place
[19:20 SLT] Peter Millionsofus: Zee Linden if the guy to ask
[19:20 SLT] Tree Kyomoon: well if support is a major cost for them, setting up democratically elected leadership in SL as well as empowering certain citizens would drastically decrease that cost
[19:21 SLT] Tree Kyomoon: Ive been pushing that since I got here, thats why I started the island owners council
[19:21 SLT] Trillium Bing: uh oh....politics
[19:21 SLT] Peter Millionsofus: I meant specifically billing/fraud/limits review support costs
[19:21 SLT] Peter Millionsofus: but certainly would seem that the only sane way to govern SL as it grows is as much self-governance as is practical
[19:22 SLT] Peter Millionsofus: I just hope they provide the right tools to allow any such push to be successful
[19:22 SLT] Tree Kyomoon: but could self governance apply to the lindex as well?
[19:22 SLT] Tree Kyomoon: I see a lot of stock exchanges forming
[19:23 SLT] Peter Millionsofus: to a limited extent yes. back when our only tool for governing the exchange rate felt like it was stipend ammounts we though to asking a board of residents to meet quartersly to determine stipend amounts.
[19:24 SLT] Peter Millionsofus: I think we just forgot about that once we could govern the rate better
[19:24 SLT] Celebrity Millionsofus: I see those too, but why would anyone trust their Lindens to what could easily be a bunch of criminal scammers or ponzai schemers? Markets for liquid assets require a degree of trust that SL just doesn't have in world, IMO. (Again, not representing Millions of Us as a company.)
[19:24 SLT] Tree Kyomoon: well I mean more handing the lindex to privatized companies
[19:24 SLT] Peter Millionsofus: oh, yeah, WSE is doing great last I saw
[19:24 SLT] Peter Millionsofus: they;re seeing a huge amount of investment from a lot of "big players"
[19:24 SLT] Peter Millionsofus: Tree: anyone is welcome to start their own exchange
[19:25 SLT] Celebrity Millionsofus: If you just like "gamble" with your money, why not play the real OTCBB stock market? :-)
[19:25 SLT] Peter Millionsofus: there's a "risk API" to help 3rd party exchanges conduct business with less risk of fraud
[19:25 SLT] Tree Kyomoon: well its one thing if some unknown does it, but its another if Bof A comes in, or HSBC and sets up
[19:25 SLT] Tree Kyomoon: I noticed caldwell banker is doing realestate in here
[19:25 SLT] Trillium Bing: OK...you lost me now.
[19:25 SLT] Peter Millionsofus: There are quite a few 3rd party exchanges... in my opinion, due to fraud costs, they only make sense to operate when they service a specific niche market.
[19:26 SLT] Trillium Bing: LMNOP
[19:26 SLT] Celebrity Millionsofus: B of A = Bank of America.
[19:26 SLT] Tree Kyomoon: yes sorry
[19:26 SLT] Trillium Bing: :-)
[19:26 SLT] Celebrity Millionsofus: HSBC = Hang Seng Bank Corp.
[19:26 SLT] Peter Millionsofus: Tree: one of the major banks has setup in SL... don't recall who, but their website even mentions it
[19:26 SLT] Celebrity Millionsofus: Wells Fargo used to be tight with SL once upon a time.
[19:26 SLT] Tree Kyomoon: its all very exciting to me!
[19:27 SLT] Tree Kyomoon: love watching all this unfold, its like the wild west
[19:27 SLT] Peter Millionsofus: For example there's a dutch exchange that takes orders for L$ over the phone. They're doing great, but since they're really the only way for most dutch people to buy L$ they can charge a 30-40% markup that covers their service costs, and fraud.
[19:27 SLT] Trillium Bing: gotta run folks...
[19:27 SLT] Peter Millionsofus: nice to meet you trillium, take care
[19:27 SLT] Tree Kyomoon: yes nice to meet you:)
[19:28 SLT] Trillium Bing: nice to meet you all too. Peace and cya later
[19:28 SLT] Tree Kyomoon: well youve lost half your audience :)
[19:28 SLT] Peter Millionsofus: yeah, it's great watching new "countries" form
[19:28 SLT] Peter Millionsofus: haha, yeah
[19:28 SLT] Peter Millionsofus: we're working on a regular event calendar
[19:28 SLT] Tree Kyomoon: I cant believe Im the only one here, this is such an amazing conversation
[19:29 SLT] Peter Millionsofus: The hope is to draw more people here by providing content that people will enjoy
[19:29 SLT] Tree Kyomoon: with thousands of residents so concerned about he lindex...
[19:29 SLT] Tree Kyomoon: in fact at the last zero hours I was at we had a few people protesting
[19:29 SLT] Peter Millionsofus: yeah, well, it's largely out of my hands now (though I do sometimes pester the folks who took over when I left)
[19:30 SLT] Peter Millionsofus: but it's fun to share some of its history
[19:30 SLT] Tree Kyomoon: so how did you get involved in millions of us?
[19:30 SLT] Peter Millionsofus: :)
[19:30 SLT] Peter Millionsofus: I worked with Chris, one of the founders, on Ultima Online, and at Linden Lab. We work well together and are friends in RL.
[19:31 SLT] Peter Millionsofus: I'd been thinking of joining MoU for a long time... just never quite felt that he LindeX was ready to hand off
[19:31 SLT] Peter Millionsofus: I also worked with Reuben, another founder, and Lauren at LL
[19:32 SLT] Peter Millionsofus: so when the opportunity came up to work on a ton of technical projects for a lot of interesting brands... and the finally try working for an advertising company (I collect different industries.... seeing what's fun) I couldn't pass it up
[19:33 SLT] Tree Kyomoon: well its a great company, MOU, ive heard and seen a lot of your work and I love it
[19:33 SLT] Peter Millionsofus: thank you

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