In this exclusive interview TerraNova talks to Second Life member Jacqueline Richelieu about her plans to create an in-world investment bank and stock exchange.
For those not following SL here is a quick bit of background which should put the notion of in-world investment banking into context. Old hands can probably skip this bit:
- As many here know Second Life (SL) is a ‘social world’ that is unusual amongst VWs in that its contract (TOS / EULA) recognises player creation and grants certain rights over virtual objects to their creators – they players / members / citizens of SL. SL creator, Linden Lab, also accepts the trading of SLs currency on sites such as GOM.
With many social worlds one might ask ‘what is the game?’ in SL the answer is easy: it’s the economy, stupid.
A large number of players are active in the creation of product and / or services. These range from clothes and furniture through to animations, avatars, photography, live-DJing. Most of this merchant class own land - which they rent from Linden and seems to represents the core of the SL business model. The land is used for houses, clubs and of course shops and malls. An avatar vendor I met recently, for example, has space where he runs events – which is conveniently right next door to his shop, and rents five other outlets within malls and other businesses.
Gradually the SL economy is gaining a recognizable structure: people buy things e.g. custom avatars, avatar business rent space in a malls, mall owners buy land and services to create their malls. At the top of tree are popular merchants and the so called ‘land barons’ who buy large chunks of land from Linden then re-sell small parcels (aka ‘land stripping’). For the top merchants all of this activity generates a respectable real income, in some cases enough to live on.
Given the status and structure of the SL economy - and to be frank, the amount of money to be made in there, the next logical step for the ‘economic game’ is in-world financial services - which is where Jacqueline Richelieu (character name) enters the picture. Jacqueline is currently working on an in-world investment bank. Intrigued, TN caught up with her [Interview took place on 31/07/04 on the tennis courts at Avalon, transcript is edited for flow and typos]:
- TN: Can you give us an overview of your venture
Jacqueline Richelieu: as the first investment bank, we will be tracking many variables of SL's economy. We seek to provide financial analysis, place money, and determine attractive investment opportunity
TN: what kinds of things will u track?
Jacqueline Richelieu: land sales, USD$ to L$ ratios and the biggest opportunity: taking virtual SL companies public in SL.
TN: have u had much interest so far?
Jacqueline Richelieu: yes, many companies want to go public some of the largest enterprises seek to capitalize themselves… I envision our biggest market in taking SL companies public the SL stock exchange
Jacqueline Richelieu: The "hard" part will be auditors the need for 3rd party independently verified financials… our auditors will report on our undertakings from an independent perspective
TN: can u say who they are / will be
Jacqueline Richelieu: they will be announced, though at this point, we have yet to engage any
TN: will u have a web site to, and compete with GOM and IGE on the currency exchange front
Jacqueline Richelieu: we won't be direct competitors of GOM or IGE, in that we will most likely analyse trends there and not do actual USD$ exchanges but a web site providing investment opinions and analysis, yes
TN: do you have official underwriting from Linden [Labs]
Jacqueline Richelieu: no, nor will we seek it we seek to avoid regulatory oversight
TN: I also wonder about the enforceability of contract in here [Second Life]
Jacqueline Richelieu: IMHO, there is no enforceability. That is why auditors become so important
TN: So why would anyone invest if there is no security
Jacqueline Richelieu: the oldest point in the world: *principle*. Trust. Trust will be EVERYTHING at Richelieu and Associates.
So there we have it. Some people thought the idea of virtual currencies was odd, I’m just beginning to contemplate the kind of issues and complexities virtual investment banking is going to unearth. The firs thing that does spring to mind, as noted in the interview, is how enforceable an contract is going to be, and in what ways does a contract between players for a virtual enterprise relate to the TOS obligations that they have entered into with Linden (for reference here are the Second Life Terms of Service)
