Thursday, December 20, 2007

DDE: The year in review

As the year draws to a close, I reflected on the growth of my business, and took a look back to last December. At that time, which was about 3 months before I went public on the WSE, I owned about 2 1/2 mainland sims, which at the time I was partially renting and partially using to run a few malls, and had yet to purchase my first island. I had bought two mainland sims at auction, the second one about this time a year ago. All told, I had net assets of about 2m Lindens, and monthly revenues of about 200,000L.

Since that time, DDE has bought and sold about 2,000,000 square meters of mainland (about 30 sims), and has bought 22 island estates. We have distributed 1,600,000 Lindens in dividends since going public in March 2006 - almost 1L per share over that time. We currently have net assets of about $16,000,000L, and a monthly revenue stream of about $3,000,000L. Every month, we pay Linden Labs about $7,000 USD in tier payments, and hope to have profits close to 1,000,000L every month by the end of Q1 next year.

In November and December of this year, we filled a very successful secondary offer, that has allowed DDE to expand significantly, and we still maintain very high occupancy. Of the sims that are up and running, we are running at about 95% occupancy, with a few islands still being filled after coming online in the last couple of weeks.

DDE entered into a profitable joint venture with Sienkiewicz Investment Management (SIM) - buying three island estates run jointly. The joint venture now includes some of the most profitable islands in DDE's history, and is benefiting both companies tremendously.

It has not all been good news. DDE has lost money on some investments made in companies that have gone bankrupt, and on a couple of land deals that went sour. However, other stock investments have done extremely well, and overall, the investment portfolio of DDE has increased in value over time.

So, it is with some pride that I look back on the success of DDE - it's growth has been an astounding 800% on net assets, and 1500% on revenues in one year. The next year will not see growth near that level, as i will be scaling back expansion considerably, and will work on solidifying the existing land assets, and DDE will focus attention on new business possibilities in Second Life. But the fundamentals of DDE are already very solid - we have a proven formula for real estate, and will be leveraging the experience gained over the last year to move into new lines of business.

I would like to send a sincere and heartfelt thank you! to all of the people that have showed faith in DDE by investing their Lindens, and by providing valuable feedback and advice as we have navigated the stormy waters of SL through the massive growth in new accounts, financial scandals in SL, the gambling ban, the VAT, and the various and sundry other challenges that present themselves on a daily basis in the metaverse.

Without you, DDE would be a very different and poorer company. With you, we have realized tremendous success and profitability. I am truly humbled by and grateful for the support and faith you have shown, and I renew my pledge to you all to continue to hold DDE in your name, to work even harder to make it prosper, and to share the success it has with you tangibly in the form of dividends and a healthy share price.

Happy Holidays!!

Monday, December 17, 2007

The Nature of Betrayal in Second Life

I recently blogged about the nature of trust in SL. Closely related to that is the nature of betrayal in SL. Recent events with Kejo Merlin, and other people that have betrayed my trust, have left me disheartened and saddened. Are we doomed in Second Life to live a SLife without trust? Does the virtual and anonymous nature of SL mean that we have to build walls around ourselves, both emotionally and financially, to ensure that we are not the victims of repeated betrayal.


Sadly, I think so. I have now given up hope that Kejo will return to Second Life, or at least i have given up hope that the person behind Kejo will ever return under that name, to set things right and fulfill the commitments that he has made to friends, investors, and customers. Literally hundreds of people are affected by this. Personally, I have lost money – 715k Lindens paid for two islands never delivered, and about the same amount invested in Kejo's company, KJL. More than the money, I have lost a friend. Others are in a similar boat. Kejo's land owners will see there homes and businesses blink out of existence eventually, as the Lindens delete Kejo's islands. Investors that put Lindens into KJL will see their investment go poof.


With each SL betrayal, a piece of my faith in SL is destroyed. I look around me and see greed and avarice, posturing, and always the talk – lots of big talk and plans and promises and dreams – backed by nothing. I see people giving others their hearts and souls, as much as you can in Second Life, only to be abandoned and left alone to wonder what they did to deserve this. I see people continuing to search for that human connection that we all crave, that can be so intense in a closed world like Second Life, only to see the connection broken without reasons, recourse, or even reply.


A lot of people talk about Second Life being a game. I don't agree. But there are a lot of people that play games in Second Life. There are different kinds of investing in SL – the financial kind is simple – the risks are high, the potential rewards are high. The rules are that there are no rules, and so we invest out Lindens with the knowledge that we might make a bundle, and we might lose it all. Although losing Lindens is bad, we all know the risks and potential rewards.


But the investment of SELF is more complicated. People invest of themselves in SL almost without realizing it – either by forging relationships, or by creating or building something. We have all put pieces of ourselves into our SL lives, some more than others. Usually it is something like a betrayal that makes us realize just how deep we have got into it – while things are going well, we continue to invest, creating our own emotional equity in our virtual lives.


After a few such betrayals, we can't help but build the walls. I have tried a number of times to limit my personal investment of SELF in SL, but I keep slipping back into old habits and letting myself simply get too involved. At this point, my Second Life has an alarmingly big impact on my real life – I gain satisfaction and fulfillment from things here, just as I suffer disappointments and trials. Whether SL is a game or not, there are no such things as virtual feelings. At this point, I have spent so much time building a Second Life, and have cared deeply about how I am perceived here and what kind of reputation I am building. For the most part, even now, it is pretty positive – I guess I am proud of what I have accomplished in SL, and the kind of virtual person I have become.


But it's certainly not all positive. And I am certainly not proud of everything I have done. And, I am becoming a bit cynical these days about what I can reasonably expect from people here. I don't expect to make real friends here any more – the whole thing is just too transient, and I am a private person that doesn't want to mix SL and RL – so how real can a friendship be? I don't expect any longer that people will honor promises or commitments – too many people treat it with too much disdain for that to be reasonable.


So when i look at my desktop and cringe when I see the SL icon, or I flinch when an email comes in from an inworld chat, I know that it is time to build the walls higher. Frankly, I have a busy and fulfilling RL, I don't need aggravation from SL. So I have my trowel and bricks out and I am putting another couple of rows on the wall.


Lol. This wasn't a real positive blog! I have held off posting anything the last week or so, because I didn't really have anything nice to say – but i figured that even if it isn't positive, it's what's on my mind. I am not looking for a bunch of comments telling me I am great and everything will be ok. Share your own thoughts and experiences – let me know how you deal with betrayals in SL. I think that would be helpful.


DD

Tuesday, December 11, 2007

DDE acquisition of Delicious Skins to proceed

The recent motion seeking approval for DDE's acquisition of Delicious Skins (DSE) still has a day to run, but has already received more than 50% of possible votes, so I have asked LukeConnell to proceed with the conversion of DSE shares into DDE shares, as the mechanism for the acquisition.

I have already destroyed all of my own shares in DSE, and the 3:1 (DSE:DDE) conversion of remaining DSE shares will proceed immediately. As a first step, trading on both companies will need to be halted, so the WSE staff can complete the conversion. I have asked Luke to halt trading as soon as possible, and will keep you all appraised of the timing for the resumption of trading.

Thanks to all of my shareholders for their input and general support of this move. There was a significant minority of shareholders that voted against the motion, and I want to ensure them that I will work hard to make DDE even more profitable after this acquisition.

Please leave a comment or question, and I will try to answer quickly.

Yours sincerely,

Delicious Demar
CEO

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Building dreams. Doing it right.
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Sunday, December 9, 2007

The Nature of Trust in Second Life

Trust is a funny thing. I have been doing a lot of thinking about what it means in Second Life. It's a tough thing in real life to begin with, and when you add the transient, virtual nature of Second Life to the equation, it becomes almost impossible to figure out. Nevertheless, trust and trustworthiness are an intricate part of being human, and recent events in my SLife have got me thinking more and more about it. I have realized that it's important to me to be seen as trustworthy and to see that people trust me, but in the Second Life context, it might not be a realistic goal... I apologize in advance if this sounds like a philosophical treatise – lol – I do tend to get on the soapbox sometimes.



When i think about the nature of trust in SL, it seems to me that there are three important things to consider: the object of trust; the person who trusts; and the environment we live in (i.e. SL). Let's imagine for a moment that the object of the trust is in this case beyond reproach (lmao – it's hypothetical, ok!). Let's assume that by words, deeds, and demeanour, this person is deserving of trust by any objective assessment. She is, in other words, trustworthy.

What about the person that is doing the trusting? This is more complicated. People are all different – some people are by nature “too trusting”, and find it easy to place their trust in others – it is just a part of who they are. Some people are by nature “suspicious”, perhaps based on betrayals in their lives, and find it difficult to place their trust in anyone. So, in some cases, no matter how trustworthy someone else is, some people simply can't take that leap of faith. Because, essentially that is what trust is – a leap of faith. There has to be some risk associated with trust – without it, there is no need to place your trust in someone at all. If, for example, I enter a business arrangement with someone, and we draw up an ironclad contract that covers every eventuality, with tangible consequences for a breach of the contract, then trust is not really necessary at all. I guess an example in RL of this is a prenuptial agreement – it avoids the issue of trust altogether (at least financial trust), by laying out the conditions before the marriage, so that the whole question of trust is avoided. And, of course, it is this very thing which makes people NOT do a prenup – they want to prove to their partner that they are trustworthy, and trust them, and so don't need a contract to back it up. I'm not saying this is smart, mind you, but it's true nonetheless. In the end, some people can trust others and some can't, everything else being equal.


Let's assume for the moment, that if this were RL, we have a completely trustworthy person, and another who has a natural inclination to place trust in others. In RL, this would be no problem – we'd have the “I'd trust them with my life/money/heart” situation. But that brings into play the third factor here – Second Life. The SL environment is a crucially important part of trust for all of us. And, I am sad to say, Second Life might simply have made trust impossible. The virtual nature of SL makes it by necessity less real – and the ethics that govern our behaviour in RL don't always cross over into SL. Most disturbingly, we have all seen people who seem to be able to turn their ethics (and trustworthiness) on and off – acting responsibly and ethically until it becomes too difficult, or painful to do so, and then seemingly “turning” at some point. I can only assume that the rationale in their mind is that SL is not “real”, and so they just bail on the whole thing. The lack of tangible consequences for people in SL makes this easy, at least practically speaking. And the human mind is capable of incredible gymnastics in rationalizing bad behaviour if there are no societal, legal, or real consequences. We all have an image of ourselves as a good person, and can often convince ourselves that we are justified in whatever actions we take. Since the ethical framework in Second Life is so loose and inconsistent, and we see people acting abhorrently on a daily basis, it seems to have almost become acceptable to act badly – to bail on commitments and promises – to betray people. And because it is so loose, there is no ethical framework we can use to judge our own actions.


In RL we have laws, religions, communities, cultures – and all of these provide a frameworks into which we fit our actions, so we know, essentially, what is right and what is wrong for us. It isn't the same for everyone – but it is there nonetheless. In SL, this just isn't the case – the ethical frameworks of RL have only partially been reconstructed, and the norms of behaviour are close to amoral and anarchistic.


So, where does that leave us? We have a trustworthy person and another who is willing to trust, but an environment that is not conducive to trust at all... I am not sure that I have the answer – but there have been at least two people in SL that I would have said “I trust them implicitly based on their actions and words”, that have eventually turned around and screwed me emotionally and/or financially. And the oddest thing is that I truly believe that both of these people, in a RL situation, would be worthy of that trust. But Second Life made it too tempting to take the easy way out, I guess. Behind a veil of anonymity and lack of consequences, they went against their own natures and bailed on SL commitments, perhaps thinking to themselves, that it isn't really “real”. Delicious is just an avatar, after all, not a real person, right? This is just a game – these are just fictional transactions, or whatever. And hey – it would be so easy just to.... leave... not deal... bail.


My inner conflict is this. Because of who I am, I NEED to be trusted. I pride myself on being trustworthy, and I get insulted when people don't want to take me at my word, and just simply TRUST ME! Lol. It's a big part of what makes me tick. But ironically, because of everything i have watched unfolding in SL, I am less and less willing to trust anyone else – no matter how honest and honorable they seem. I realize that this is inconsistent and unfair, and I guess that is why it has been on my mind so much recently. It is one of the reasons I have resisted getting into a lot of partnerships and business ventures with others – the reason I have always done almost everything myself in Second Life. I recognize that the rules of fair play and honor are not the same in SL as they are in RL – and I just don't need the heartache.


I am NOT saying that no-one in SL is worthy of our trust. We are human – we need to trust each other. Frankly, i would rather live a life where I get screwed by people I trusted, than one in which i was unable to trust anyone. So, I will continue to place my faith in others – in spite of the mounting evidence to the contrary. This might seem naïve in light of everything we have seen over the last year, but i don't mind being a bit naïve. I for one will continue to to try to earn the trust of the people i work with and work for in DDE and in everything I do in SL – there is no other way I know how to behave. However, I think that with this realization, I will be able to not take it personally when someone is unable to put their trust in me.


As i was writing this, I thought of a couple of my favorite quotes that might apply. Mahatma Ghandi once said, “You must become the change you want to see in the world.” Far from giving up on the ethics of Second Life, we must redouble our efforts to have a strong personal commitment to doing things right! Others will follow. And, some clever person once said, “Time may heal all wounds, but time also wounds all heels.” It's karma people – eventually you reap what you sow.


As I said once in a previous post, in the end, we are left alone with ourselves in those quiet moments, right? And I don't want to spend my quiet moments alone with an asshole...


DD

Saturday, December 1, 2007

A Vision for DDE: Building dreams. Doing it right.

The secondary offer and transfer of islands from Kejo Merlin Land Group (KJL) have offered me a great opportunity to do some thinking about Delicious Demar Enterprises, and the future of DDE. It has been a frantic month - setting up 8 new sims is quite a challenge, especially with the numerous bugs and problems caused by Second Life! However, now that DDE runs approximately 25 sims, both mainland and island, throughout SL, it makes us one of the top half-dozen real estate companies in SL, and it was time to start seriously planning for the future.

The first thing to establish is what is the place of DDE in my life. As the months have gone on, the business side of SL has taken more and more time - which is fine - I really enjoy it. But I never intend for SL to become my job - I have one of those in RL which I like very much and which keeps me nice and busy. So, clearly, it is not my intention to continue to grow DDE forever - I want to get it to a manageable size, and then stop expansion and just enjoy it. In addition, although the land biz has been good to me and to DDE, I have many other projects in mind, and I want to have time to pursue those as well. I love to build and create things, make skins, etc. So, I have no intention of trying to make DDE the biggest (or even second biggest) real estate company in SL. Now, with the successful completion of the secondary offer on the horizon, I think I have grown DDE to the point where I would like to slow growth and simply turn a consistent and healthy profit.

The second thing to establish is, what is my role going to be in DDE into the future. I guess the simple answer is this - in large part, I AM DDE, and that is not going to change. I am going to continue to play the same active, hands-on role I have always played. In recent weeks, I have been able to delegate some of this work to others, but the management and operations of DDE is going to remain with me.

Having a company on the WSE is a double edged sword. On the one hand, kind investors have entrusted me with their hard-earned Lindens to invest in assets and create wealth for them, a responsiblity that I take very seriously. On the other hand, as I create more shares in secondary offers, I see my own ownership stake in the company diminish. One of my main goals in the coming months is to remedy this. With a dual strategy of buying shares with my own money, and also buying back and deleting shares with some of DDE's profits, I am going to increase my ownership in DDE until it is at least 50% +1. Depending on the market conditions, share price, etc, this could take a few months, or it could take longer. Regardless, I am not satisfied owning less than half of myself, so to speak, and will not rest until this is fixed... In fact, it may well be that over time, I will continue to gain an ever larger proportion of DDE shares. Personally, I think this will be very good for shareholders. Those that want to sit on shares to receive the healthy dividends I have established, can do so. Those that want to do some profit-taking can be assured that there will be constant share trading created by this substantial buy back strategy, which should keep the share price relatively high.

Finally, and most importantly, what business does DDE want to BE? What started as a hobby has turned into a significant business. I think that the way I have run DDE is rooted in my values, and that I have always tried to take a consistent approach of professionalism mixed with fun to everything I do in Second Life. So, I thought it was time to more formally lay out the mission and vision of DDE. Yeah, I know that mission and visions are sometimes just a lot of words, but I want to have something to look at when I am making decisions, to reflect the decisions against by asking myself, "Does doing THIS help me accomplish THAT."

So - I have thought for a long time about a statement that captures what DDE is all about - helping people realize their dreams in Second Life, building something of value, and doing it ethically and professionally. What I have come up with is this, a statement that I think encompasses all of these things:

Building Dreams. Doing it right.

I hope that this statement can be a lighthouse for me as I navigate the stormy waters of Second Life - guiding me in everything I do. Whenever I have a decision to make, I can see whether it helps to advance that vision. Dreams can be those of the people that get land from DDE for their home or business, customers that buy our products to enrich their SLives, or investors that want to make a good return on their investment. As we all know, sometimes the latter can seem like a distant dream... lol. Doing it right means both doing it ethically, and doing it properly and professionally.

So, onto the mission statement. A mission statement is supposed to give people an idea of what DDE actually DOES, day to day - the reason why DDE exists. I have tried to capture that in the following mission statement:

Delicious Demar Enterprises is an established and trusted company that provides land and other services and products in Second Life at a fair price, and with excellent customer service. DDE matches it's land, services, and products with the needs of its customers, to enable them to improve their Second Life experience. DDE is a publicly listed company on the World Stock Exchange that strives to create wealth and value for its shareholders.

With any luck, this is self-explanatory. lol. If not, it probably needs some work. I would be really interested in your feedback on this. Any comments would be greatly appreciated.

Onward and upward!!

DD