Where to start.... Hmmmm.
Well, for anyone who doesn't already know it, the World Stock Exchange is a virtual stock exchange in Second Life, that currently lists 62 companies, including two of my own: Delicious Demar Enterprises (DDE) and Delicious Skins (DSE). Investors can buy into a company that is seeking to raise capital by purchasing shares during the Initial Public Offering, and once the company goes public, can trade shares through the WSE website (http://www.wselive.com/).
The WSE started about 7 months ago, and has certainly had its shares of ups and downs, all well documented throughout the extended metaverse of Second Life, in blogs and forums, announcements on the WSE, etc. etc. I certainly don't intend to rehash any of the history of the last 7 months. Google it. lol DDE was listed in a bout the 3rd week of WSE's existence.
The founder and CEO of the WSE is a man named Luke Connell, aka Lukeconnell Vandeverre. Now, I want to state for the record that I have a great deal of respect for Luke - he is a visionary that, while others talked, acted. He may not always do things the best way, but at least he has DONE something, which many others have tried to duplicate. So, if i bash the WSE, please take it in that context. DDE and DSE are committed to the WSE, so any negative comments should be seen more as the infighting of a (possibly dysfunctional) family, rather than a condemnation of Luke or the WSE. I may not always like what happens there, but we are going to ride it out, no matter what it may be. Of course, a girl's entitled to her opinion, nontheless... hehehe
My first rant, therefore, about WSE has to do with the new Analyst functionality. I have read most of the reports that have been posted on the WSE by their analysts, and just wanted to make a few observations:
2. Can you say "inconsistent"?? The reports, and the analysts approaches to them, are wildly inconsistent. A few have been thoughtful and well researched - quoting key metrics and showing an obvious familiarity with the companies in question (i.e. the analyst actually talked to the company CEO before doing their report). And of course, Casper's report on DDE is a masterpiece (LMAO). But since there are no guidelines and no moderation of these reports, we have seen some companies getting reports out of left field, based seemingly on nothing but opinion and speculation. Note I say "nothing but opinion". Obviously, analysts have to form an opinion about the company to make a recommendation. But wtf is it based on?? From some of the reports posted, I have no idea...
3. Can you say "conflict of interest"?? How on earth is it reasonable to have analysts making reports on a company, when they have a vested interest in either its success or failure?? Analysts who hold shares in a company should NEVER be allowed to analyse them. Analysts who are CEO's of competing businesses should NEVER be allowed to analyse the. Analysts who have new companies in IPO or secondaries out, should NEVER be allowed to analsye ANY company (sorry Lindsay...) Follow the logic here - and note that i am NOT saying that any of this was a motivation for any specific report, but in something like this, the appearance of a potential conflict of interest should be enough to give an analyst pause.
WSE has market liquidity problems - we all know this. There simply aren't enough investors and enough Lindens to support 62 companies, and the 4 million new ones that are seeking to go public. In Lindsay Druarts report on SIM (ok - full disclosure, I am on the Board of SIM and DDE/SIM have a joint venture underway - so I am biased, ok!), she basically topedoed a new startup company (3 months old), and gave them a strong sell recommendation. In addition, she suggeted that the CEO consider one shareholder's suggestion that SIM liquidate and provide a final dividend to shareholders and delist. Huh???? SIM is one of the few companies that actually have assets roughly equal to their market capitalization. There are dozens of companies on the WSE that have NO assets, and huge market capitalization, so I just don't get it.
On the other hand, if SIM provides a liquidation dividend, suddenly there are 1.5m Lindens available for investing in other companies or IPO's. Hmmmm. Like I say, I don't think this was really Lindsay's motivation, but she really should have thought through the wisdom of analysing a company a) that is a direct competitor, and b) whose delisting could potentially benefit CEO's with outstanding IPO's.
In the end, this is NOT the analysts fault. They were apparently given no guidelines, or set of principles, on which to base their analyses, so the fault lies with the WSE. The has to be a Code of Ethics and/or guiding principles for analysts. We just saw yesterday one company that DELISTED from the WSE in large part because of a brutal report by one of the analysts - because they decided they could not recover from that kind of negative press. Is this helping the WSE??
So, bottom line, I support the implementation of analyst reports. But Luke, slow the fuck down and think through what you are doing, before you do it!! You can't keep hitting the "Go Live" button with new functionality without talking to your community and thinking through its likely effects.