Do we really owe GOM ? Inviting estimates of their "profit"

How would anyone know the $1200 number if they had not posted it in public forums? How would we know about the SWG fraud if they had not posted it in There and SL forums? How would not only the SL community, but SL competitors, know about LL development projects if this information had not been made public by GOM?


They have repeatedly posted information in public forums that their customers did not need to know, but was posted by them for their own reasons. It is a pattern and it has being going on for well over a year.


Actually I have always like GOM and defended them in some heated debates with friends but I can not in good conscious support a company so lacking in basic business ethics anymore.

My current issues with GOM are this:

1) Releasing development information. I can't understand why people are giving them a free pass on this. It is speaks to their ethics on a level that makes me uncomfortable they even have my personal information because I can no longer find them trustworthy.

2) Lack of regard for the community. They created almost a panic status with their forum posts and send the community and the Linden$ into a tailspin for over a week.

3) Lack of Customer Service. Customers have made simple requests of them, ATMs, Paypal payment changes and not only do they not respond with an ETA, they seem to ignore the requests as a whole. They can post all over forums but not answer customer questions?

I think you are probably overestimating the time frame. The whole LL Exchange controversy only croppped up in the last few months and before that the business dealings had been kept behind doors.

I do agree that it was not very professional to spill the discussion into the public domain, but I can understand the frustration when you are in negotiations between entrenched viewpoints where there is no course for compromise.

I've had similar things happen to me that is happening to GOM. My worse was losing about US$6000 in an investment for a business I set up in another game. This was due to changes and updates to the game by the makers. Whilst I didn't proceed with a similar path to GOM by airing my laundary in public, it was very tempting and I can understand the thinking behind it. I can also understand the lack of enthusiam that has been presented by GOM to things like Mass Pay, it took me several months to get back on my feet and attempt to start again with new ideas.

I have to say that I would not be surprised if GOM decided to close its doors (especially if the accounts show its not worth the effort), then again I wouldn't be surprised if GOM bounces back with some new ideas to compete

So there is no link and the fuck part is more of an in your opinion kind of thing?

Frankly all of this GOM bashing has left a foul taste in my mouth. GOM helped create the foundation for SL's economy. They were asked by the CEO of LL to do this. They devoted alot of hard work to put together a system that the residents of SL could fairly trade $L for $USD. They have always provided a level of customer service second to none in SL.

Now LL has decided that it is in the best interest of SL to provide the same service directly to it's customers. Maybe LL is right, maybe not. Time will tell. But they are effectively reducing the potential of GOM's future as the $L market. The founder's are disheartened by all of this, and who could blame them? They brought this to the public's attention after they felt all other avenues of communication had failed with LL, I think most of us would have done the same. I never saw this as a ploy by them to create drama.

For me, GOM has provided a way to easily sell $L at a fair market price since January 2004.

What do I owe GOM? The same customer loyalty that I award any top notch vendor. I owe them my support, sympathy, and compassion, as they have always offered me their's.

Speculating on their profitability, publically in the forums, with insinuations that perhaps they haven't been truthful in their disclosure is in bad taste IMO. I get the impression that certain people here smell blood, and are now circling for the kill. That's it guys, kick them while they are down. Throw rocks at them as they limp out of town. Bravo.

If you don't like the fee's, rates, service, or personality of GOM thats no problem, use another service; IGE , Anshe, or Ebay. I just think the community should show a little more compassion for members of our community that have helped pioneer the economy of our Second Life.

I don't see what the debate is about. No businesses can be ill treated. No businesses should be treated anything. They are and should remain an independent aspect of Second Life.

If I have US$2,000 (or more) of my money floating around at
GOM (or any compnay), then I'd appreciate the knowledge as
to if they are financially viable or not.

Ellie does not have any "inside" info she's sharing, I don't see
anything wrong with speculating on the profits of any company.
Perhaps if the profits are great, then it might spur competition?
Perhaps if poor, we should consider it safer to not invest so
much with them?

I'm not sure why Ellie's income should matter as to if she
should be allowed to speculate on the income of a biz.
And certainly your tone is far over the top.. and against
freedom of speech. You've voiced your opinion that
you don't like this thread... no more needs to be said.

... some of us ARE interested!

Gabrielle

What is the debate. Businesses should be treated indpendently. Business are not and should not be treated like players.

Businesses come into SL, do business, and allow themselves to be totally independent in the doings of SL and Linden Labs.

SL and Linden Labs must do whatever they can to improve the game with 100% focus on the end-user. Businsesses need to allow LL/SL to focus on the end-user, and do whatever it takes for the betterment of the end-user whithout regard to the businesses.

Businesses simply need to adjust. It does not matter how big a factor the businesses play for the betterment of SL. Every L in their revenue is compensation. Nobody owes the businesses anything more than what profit they make for their business. If changes need to be made that will cause a business or businesses to suffer, we need to let them deal with it. Their profit or loss is not the responsibility of Linden Labs, and especially not the responsibility of the SL community.

Will a change be fo the better of the end-user? That is the one question and only the one question we need to be focusing on.


With the regards to this situation with GOM:
1. Will GOM lose business? Yes. As long as LL makes currency exchange cheaper and more convenient, GOM will lose their entire market. Even better if LL tacks on no taxes/spreads for currency exchange. : ).

2. Does it matter if GOM loses their market? Absolutely not. They provided a service, and their compensation is only and should be only the money they made. If there are changes that will take away their market, they need to adust to the changes, and deal with them.

3. Is this fair to GOM? Yes. They would not be in their right mind if they felt they were treated unfair. They know when they start playing there will be changes that may cause them to lose their business. Nobody is responsible for GOM but GOM.

4. Does it matter how much GOM made or lost? No. It is completely irrelevant. If they made money, good. If they lost money, let themd eal with it themselves. It is not, and should not be the problem of Linden Labs or Second Life. Everybody knows when they start a business in SL, Linden Labs has the right to do whatever they want, and are totally justified for doing it as long as it improves the game for the end-user.

5. Did GOM screw up? Assuming GOM did contribute alot of intelligence/information to Linden Labs. Anybody that thinks GOM screwed up is not thinking in their right mind. As if we should all learn from GOM's mistake. GOM put out a business to make money just like anybody else would. If they lost money, it is there mistake. They as a business may have lost money because of providing intelligence to LL (assmuming they did). They and everybody knows from the start that LL has complete right and justification to do whatever they want with the information to make the game better for the end-user.

What is a mistake if all you are concerned about is profit/loss? Yes, it was a mistake in a business sense. Was it a mistake in a realistic sense? No. It was a good thing for the end user. Anything that is good for the end-user despit to its cost to a business' or businesses' profit or loss is not a mistake.


They, and all businesses need to take SL for what it is, do what they want to make money. As SL is constantly changing, they need to constantly take SL for what it is, and adjust to the changes.

Ok, here’s my analysis… significantly different than others already posted because IMO their math is wrong…, tell me where I’m wrong.


Total traded since inception (per GOM site): $2.64 million USD

Average exchange rate since inception (pulled outta my ass): L$250 / $1 USD (ie
$4.00 USD / L$1000)

Number of L$ traded since inception: $2.64M x L$250/$1USD = L$660,000,000

Since trades are by block of 1000, there have been 660,000 blocks traded since inception

Average commission per trade that others have used as an assumption: $0.05

So…. they made, uh, let’s see,… numerator divided by denominator… multiplied by… carry the one… hang on, ran out of fingers, taking off shoes…

Ok… 660,000 blocks x $.05/block = a whopping $33,000 USD!!

Take away $7,000 fraud = $26,000

Take away free phones, computer equipment, software, insurance, bank fees, hosting services, electricity, etc. that Buster mentioned….

And we get $26,000 for 2 people to cover 2 years.

Now to calculate the hourly rates (and I’ll calculate for 3 scenarios – take your pick):

Assuming 10 hours per guy per week times 2 guys, 52 weeks per year, over 2 years = 2080 manhours

$26000/2080 hours = $12.50 / hour

Assuming 20 hours per guy per week times 2 guys, 52 weeks per year, over 2 years = 4160 manhours

$26000/4160 hours = $6.25 / hour

Assuming 30 hours per guy per week times 2 guys, 52 weeks per year, over 2 years = 6240 manhours

$26000/6240 hours = $4.17 / hour



Ricky, Zeppi – where can I sign up – I wanna get rich too!!!


Jack

Mine too. I resent that my attempts to simply add some numeric facts to an already rampant debate are being hijacked to give the impression the thread is about attacking GOM.

With regard to the "1200$" I never for a moment suggested that it is a LIE. The whole point is that it is too vague to tell us anything at all, since it may or may not include the money taken for hours put in. And yet, it has influenced sympathy, as was probably meant, as though it was a definitive and meaningful statement. I'm sure that there is a financial viewpoint from which it is a totally honest description. But if we don't know what the viewpoint, and the number, actually was, it is meaningless for us. What does it include/exclude ? We haven't a clue.

There is only one poster here who is pretty cross with GOM, and is changing the flavor of the discourse.

Eboni, could I please ask that you take these aspects of what you feel to another thread, and leave this one for discussion on what financial returns or losses this business has likely been enjoying ? No criticism, Eboni. I've no idea whether you are right or wrong. Just it is turning this thread into an argument instead of a calculation. There are lots of the first, very few of the second.

Not only are these purely financial questions relevant to those (including me) who have substantial money in GOM's hands. They are also relevant as improved data for those who enjoy the "entitlement" side of the debate. Preferably not the place for that debate. But a data gathering thread to provide information to inform it.

I'm planning in a few weeks to start a thread estimating what we can on LL's finances. That too will be completely screwed up if people keep posting opinions of LL into the middle of it. But hopefully its results could be interestingly used in other threads which are about such opinions. See the difference ?

We need to keep things separate here. Or would you rather I formed a "financial estimating" group, invited people in, did it all privately, and we kept any insights to ourselves ? We can't get anywhere with all these emotional interruptions.

Introvert's objection that I shouldn't be doing this at all was relevant, and deserved respect, but I think I adequately dealt with it in a previous post.

Gee, Dark, Buster and Co......where were we ?
Hmmm.. Dark's figures suggest my first crack might be very pessimistic.
Buster thinks significant cost elements are being ignored.

...need to think more.....

Need more help.

Anyone able to contribute likely costs of providing infrastructure for a little business of this type, as Buster describes ? Either at home, or with a tiny rented office ?

Better hosting estimate ? Covering backup/security issues ?

need....more.....data

click-whirr-clank

Frankly, I would prefer that you conducted this matter privately. Why? Because even granting that your motives are utterly pure (which I'll accept as true) your interest in the subject is having the net effect of being a lightning rod that only inspires more political drama for a subject that ought be long dead. As far as I'm concerned you may also keep your results private. Given the paucity of data you have to work with, I don't think that *useful* insight will ever result from your analyses.

It is clear that you find this speculative endeavor pleasing, in much the same way that some people find fantasy baseball leagues pleasing. And I wouldn't say for a second that your recreation or theirs was "wrong". However, your public posting of your recreational "investigaton" is having the unintended consequence of politicization that you yourself decried in this thread.

If you cannot see why I respecfully request that you move this to a less public space, then might I request that your next object of analysis be AnsheCorp? Insofar as your goals are as you intially stated in post (#1), AnsheCorp is at least as germane to the game economy as is GOM.

I have to agree with Introvert. Altho I am pretty open about my own business in SL, that's very different to others disecting it to pieces. Is it wrong? No. But it does make me feel very uneasy, like someone is sifting thru the garbage, and with a good chance of finding something someone else put there.

Ok, I'm listening. But two people isnt SL.
I'll start a poll, and abide by its decision. Fair enough ?

Ellie, do as you wish lol, I am just offering you my opinion.

Really curious? POP FOR THEIR DUN & BRADSTREET REPORT! That's what D&B is for!! Doh!

But based on my experience in the e-commerce industry, I would bet that they have no office, no employees, do little or no advertising, nor have most of the other traditional business costs, like phone, insurance, accounting ...

No dedicated hardware on their side, though no doubt they used the corporation to pay for new PCs (tax deductible, then) and who doesn't want a new PC?

They are incorporated, so they may have minimum corporate tax/fees costs associated with that. Anyone know about Canadian corporation costs?

They definitely have a company bank account, which actually may not charge fees. They do not process credit cards. Most of their payment procesing is Paypal and eGold. They may get a bad check from time to time.

They list a suite number in their address, but I am willing to bet that this is a mail drop postal box. This probably costs them something like US$120 per year at the most.

Their biggest recurring expense is likely their hosting plan including database and forums (and this includes all the infrastructure maintenance, backup, etc). I doubt they are spending more than US$40 per month for this. Even their development tools are open source.

They also pay a fee for their SSL certificate service, Entrust -- most likely, the US$149 per year level.

Thankyou, Templar.
Great input.

Here is the poll.
Go vote ?

/130/62/62444/1.html#post651478

The problem I have with your numbers is that you are starting with USD and trying to convert them to USD. If they traded US$2.64M, then they traded that many USD no matter how many $L was traded. 2.64M * .05 = US$132,000, divide that over the guess of two years and you have US$66,000. The point of using the 2.64M is that you don't need to know the average exchange rate.

The fraud is a true loss, as well as the money paid to the investors. Electricity, rent, and servers are paid by NameScout, not GOM. I can't possibly guess about Canadian phone bills or bank fees.

P.S. This post is only meant to depate figures. Ducks head while people still decide whether the figures should be posted.

The problem with this is that you're taking a commission on the USD. The 5 cent average commission others guestimated would be on a block of 1000 L$ sold, so if applying the 5 cent commission, we have to convert USD to L$. Otherwise we'll have to calculate a proper commission per USD -- 5 cents is excessive.

No, Dark. I think Jack's right. The US$0.05 fee is per L$1000, not per US$1. At least at the present. Heaven only knows about past charging structures.

Thats my first reaction. I personally hadn't thought of attempting an analysis further back than the current month, as you two are attempting.

It seemed to me (or does the more I think about it now) that estimating effort and costs back to the beginning would be absolutely impossible. It would include the development time, and a slow growth of inworld time. It would need apportionment of costs (including development) between the different communities and currencies they started trading in, and estimates of revenue from those inaccessible other sources too, before they stopped. How to deal with the fraudulent loss is very difficult. To the extent that L$ may not have been the only currency involved, is it correct to aim at recovering it all from the L$ customers, who were adjudged to provide the only safe continuation for the business ? But where else can they get it ?

It is for all these reasons that I thought it best only to analyse current profitability, ie the current month. The past is gone, and this is all they still have to lose, or gain, by any imminent changes in competition. If, in the extreme, LL wiped them out, this is what without other changes, they would have lost.

So I limited myself to this much more answerable question. How much will GOM lose/make this month ? From the operation we can see. What effective hourly rate are those involved earning ?

From that we can extrapolate to how much they would make if things went on the same for another year. It is this that may be under threat. Surely no-one would argue to compensate them for losses or gains even before LL upped the competition, in the more distant past ?

Be my guest at attempting something more difficult, but it looks too hard to me.

And not so relevant to the impact of a future LL change.

Though admittedly it was GOM that brought it into the discussion, so it is fair game, and we are entitled to ask what the figure they gave us actually meant. At the moment it is certainly meaningless to us.

It's interesting to wonder which course Ricky will take, when he almost inevitably turns up here. Huge indignation at our appalling intrusion ? Friendly explanations and figures ?
Humorous dismissal ? I think I'd probably go for dignified silence while we hopefully bark up the wrong tree. I guess we'll see.

You are trying to have it both ways. You clearly stated at the begining that you don't believe the $1200 profit, and you started this thread to show how they are really making more then that. Now you are saying that the past doesn't matter? You only want to know what the future holds?

As with any business there are big start-up cost I am sure. Now that they have gotten the ball rolling they may be making a profit. But you have to take into account all the losses that they took in the begining. I would bet that most of the $1200 made has been in the last few months.

I don't think I ever said I DISBELIEVED them. Just that the figure quoted seems to have no meaning on its own. They didn't actually say "profit". We have absolutely no way to know what they meant, what was included, what was not, whether it excluded an hourly rate of pay.
I don't want to "show" anything predecided. There are those who are obsessed with compensating GOM for future loss of income. If the increased competition cuts their business we need some idea what we are talking about. If their business is halved next month, what will they in fact lose?

If GOM is currently making nothing, it will lose nothing. Can anyone argue with that ?

And LL will have taken nothing from it on our behalf.

Not that it matters. Businesses lose every day when market conditions move against them. Part of business risk. But lots of you seem to think it matters, so lets see how big it is.

Not true at all! What about all the time effort and time put into it? Just because they aren't making a prfit right now does not mean they have nothing to lose.

I think there are different veiw on what LL did. Some see it as LL coming to these 2 players, and telling them to build this money exchange. These 2 players put in a lot of work to build and maintain, and prove that people will buy and sell L$ on an open market. Just as things are begining to go smoothly with the exchange LL comes and says "Thanks for all the work you did, now we will do what you did ourselves." Thus leaving these 2 players high and dry.

Others see it as just the risk of doing business. Something new came along and now the old needs to move out of the way.

Profit it or not, the real question is, and always has been, is what LL did right? There is no right answer or wrong answer, just what you think.

Ok.
I'm going to do something a bit odd. I'm going to pretend to be representing GOM in this thread. My guess of what they would say to our estimates. Balance things up. Tie together the present and the past.

Here I go:

______________________

Can we get a few things straight, Miss Ellie Whatever-your-name-is?

Calculate away. Yes of course, you are absolutely right. In straight cash terms, we are now making good money each month. Our income way exceeds our expenses, and has done for some time. By rather more than the US$3000 you so generously estimate.

This has made it possible for us to actually (finally) start paying ourselves some money.

The reason we don't start trumpeting this about, is that people will misunderstand it, and believe that just because we are raking in something decent now, that must mean the whole thing has been profitable for us. Far from the case.

We have a huge backlog of hours we have recorded, from the time when there was little or no cash coming in each month, and for which we have up to now been unable to pay ourselves a cent. The whole plan was to eventually pay ourselves for these hours when the cash flow allowed it.

Only recently have we been able to begin doing this. We reached this point once before, but we lost $7000 in a fraud against us, and had to start all over again, through no fault of yours, and only slight fault of our own. We didn't literally have to borrow that, but in effect it came from the pool of customers money, and we had to stand ready to make it good on the spot in cash in the event that deposits with us had fallen too low. All the cash surplus of the last many months has been absorbed in making this good, so that finding this money is no longer hanging over us, and everything is square.

This is why we have only just started paying ourselves anything.

So you see, the 2x$1200 figure was literally true. That is all we had had for our labour up to that point.

This huge backlog of unpaid hours is still hanging over us, and we plan to recover it bit-by-bit now that the cash is finally flowing in.

This is why we are so upset at LL threatening our market share, and hence this precious long-awaited income. It could have happened at a worse time, but not much. Just as we start reaping some benefit, and even that only in the form of a pretty measly hourly rate for work long done, suddenly we see it endangered.

Our need to recover this was also at the root of our failure to accept LL's offer. We didn't want shares, we wanted to recover the cash we had deprived ourselves of. And LL refused to accept the sheer scale of what we needed to recover, and just thought we were asking too much.

We estimate that we need about another 5 or 6 months enjoying our current healthy monthly cash flow before we are up to date with our backlog of hours, even at a pretty poor notional hourly rate which is none of your business.

Only after that would we really have begun to actually make money, in the sort of amounts which I am sure you can estimate.

So you see, we were right about the $2400. And you are right about the current decent cash flow. But it gives the wrong picture.

Worst of all, those who think we feel hard-done-to are absolutely right - there is no bigger disaster than losing your market just before the payback has kicked in.

Yes, I know - I've seen you wittering on about business risk, and it being the price of the chance of the rewards. All very well, but looks like our rewards have been snatched away at the worst moment, and we are naturally pretty sore.

The only point against us, I think, is that we did have plenty of warning, and time to prepare. But you see, we never thought it would come to this. LL seduced us into wasting the time in abortive talks with them, rather than in preparing to do combat with great new features. Don't think it was deliberate, but that was the end result.

We're exploring the issues, see ? Trying to look at both sides.
Like a debate. But one to explore truth rather than just compete.

I'm a bit startled by how good a case I made. Thought I did pretty well.

Does this mean I'm nuts, or just that I'm not as biased as many of you think ?

Sorry, GOM, if I got it wrong. You probably did actually borrow the $7000, if from family and friends. Hopefully a post to correct this and all my other errors wouldn't have to be too long ?

My conclusion is - everybody is right. They told the literal truth. Our estimates of their current trading aren't far out. They have been at least very unlucky with the timing.

The only real issue is - should we establish a "compensation climate" with all the future implications and complications and bureaucracy which would follow. And with the other residents, of course, ultimately footing the ever escalating bill. Every time LL change something it hurts someone.

I still think not, though my heart is sad for GOM. Though let's remember, we really don't have any firm evidence that their business will be negatively impacted at all. I'm going to keep trading with them, anyway.