Broken Record

I had a lot of things in mind in my last post about working together, please don’t assume I had any one individual or situation in mind.

We now return to our regularly scheduled programming . . . which means I’m going to talk about LindeX again. The exchange rate has been trending down (stronger L$) since about May 25 or so. Peter theorizes that if we do nothing, we’ll see sales this weekend at the strongest rate ever, L$200/US$1 or better. Should we be happy about this? Isn’t a monotonically decreasing rate as damaging to [virtual] economic stability as a monotonically increasing rate?

If we believe that we shouldn’t let the L$ get so strong that people end up mistakenly buying (on market orders) into ridiculously strong rates, we should post a big block as an effective rate stop. Both Lindens and residents have suggested this before. We could post, say, US$100,000 of L$ at a rate of L$250/$L. Note though, that just leaving that block up there is our statement that we are fixing a maximum L$ value. Whether or not that is a good thing is not something I’m convinced we’ve thought through.

However, I’m also convinced that we ought to experiment, because we will never get to the end of our thinking if we want to think everything through about LindeX. We experiment with all sorts of areas of our product in terms of features, and as you know we experiment with all manner of internal company tools and processes. Our ability to experiment intelligently is one of the great strengths of Linden Lab. It is critically, critically important that we experiment with our revenue model. I understand that this thought is open to the criticism that we are jerking our customers around. This same criticism applies to our changing feature development, our registration process, etc. Nevertheless, we recognize as a company that if we do not experiment, we will lose.

Experimenting with our revenue model is just as important as any other kind of experiment we do here. Our long term success versus competitors is absolutely dependent on this. As companies become successful, it is harder and harder to experiment – you’re always afraid of killing the goose that lays the golden eggs. And this is what paralyzes larger companies, and allows small competitors to come in and win. The future of 3D online environments is immense and complex, I don’t think I have to sell anyone here on that. We have terribly poor odds of capturing the best opportunities in this expanding opportunity space if we are not continually experimenting. We are at continual risk of burrowing down into some business model that will get evolved out of existence.

So this does, now, wrap around back to my previous post. Please don’t think that all I think about is the money. We’re all working on the same complex system, and we all care about every part of it. We’re not going to have customers if the product doesn’t work. We don’t have enough people to give everyone what they want. We’re not going to be able to hire people if we’re not making money. But every growing company faces constrained resources. We have a choice: We can regard constrained resources as a vicious cycle and say there’s no hope. Or we can regard the demand and opportunity as a mandate to experiment. Obviously, it’s not really a choice – the first “option” flies in the face of every successful technology company of the last 20 years and more.

So, when are we going to start selling L$?

4 thoughts on “Broken Record

  1. So, if nobody knows what this will do, and we won’t know until we try, why don’t we just try it and see what happens? Will we perminantely destory ourselves?

  2. Seconded!!! Let’s go! If there’s some sort of problem or backlash we can just switch things back.

    \m/ ~_~ \m/

  3. I think we start selling. I think we should release to the market our selling policy. Tell the market that at Z date in the future LL will sell X number of $L per month no matter what the exchange price, unless it weakens to Y value. This in the long run signals to the market that we are not trying to sell $L due to potential inside information that they think we may have.

    In relating the $L exchange to an individual stock on the stock market, what often happens is that on the sale of stock by directors the shareholders read this as a negative signal that things are going to be bad for the stock price and panic sets in. Therefore directors in companies that wish to start selling shares will give market releases on their selling policy. This gives the market plenty of notice about when they intend to start selling stock and allows them to sell it on an ongoing basis (The Google guys are a classic example).

    I think one of the great things about LL is that we are very open and honest internally and with the residents. I think if we apply this same thinking with our $L sale policy we will see initial fluctuations in the exchange, but in the long term after the exchange adjusts to the fact that we are being open and honest it will continue no longer worrying about LL selling strategy.

    Go For It!

  4. I agree with Chric C on this way. With the recent strength in the Linden let’s go for it. The one suggestion I have is that we start with a relatively small amount of lindens. Something like less than 0.5% of the daily volume?

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