When we tell people what our main source of income is they usually ask the same question: “So you mean you sell fake land for real money?”
Sometimes I come back with some smart-ass comment questioning exactly how real the US dollar is when the government is printing up new batches in the trillions. But, if you break it down into it’s most basic form I suppose that the answer to that question is: “Yes, that is exactly what we do!” Only its not as shady as it sounds. Let me explain.
There is a “game” called Second Life. It is not so much a game in the traditional sense. There is no real goal or points or rewards or end purpose. Basically its like a big chat room that has been given graphics to make it look more like the real world. You can interact with people and objects just like the real world. You can sit in a chair, dance with someone or even eat some food. On your computer screen you will see your Avatar doing all these things. In this Second Life you can have a home, be a shop owner or a club owner. This is where land comes in. To have any of these you need land.
The land actually looks like land on the computer screen but if it has any real world physical form you could say that it is server space. Some big computer somewhere has a small bit of resources allotted just to that land, so that there can be a permanent place in the virtual world for the owner of that land to put down buildings and objects. To paraphrase George Carlin its “A place for your stuff!”
Linden Lab is the company which runs the world and owns the server space. The only way to get your land is to either get it from Linden Lab or get it from someone who has gotten it from Linden Lab. There are many reasons why people come to us rather than Linden Lab, one of the biggest is price. We buy land in bulk and we can rent it in smaller chunks or for a smaller purchase price.
There is an in-world currency called Linden dollars (L$) which is bought and sold in the tens if not hundreds of millions every day. You can buy or sell Linden dollars on the Lindex with several major world currencies, including USD. So our customers buy or earn L$, then pay us with it, and then we cash it out for USD.
In this business the investment is low compared to the returns. Most of the time we look at anything less than 120% return on investment (ROI) to be very poor performance.
The ROI does reflect some risk. We could wake up one morning and find there is just no Second Life. Poof! Bye bye profits. Bye bye investment. For this reason we try to diversify our income by starting other businesses as well as keep the actual money tied up in our investment to a minimum.
The benefits however are huge and its much easier to manage than real world real estate. If someone isn’t paying their rent you can evict them and return all their possessions with the click of a button. Its impossible for them to ruin your property and it isn’t their actual home you are taking from them, its their entertainment. So it boils down to “no pay no stay” with no eviction periods or tenancy rights acts making things messy.
This business takes a little bit of time but nowhere near 40 hours a week. With a few good Estate Managers and Realtors on our payroll we might put in as little as 40 minutes a week. Not only that but we can do it anywhere. Some things we need to do we may need to log on with a computer to accomplish, but that is only the tiniest fraction. For the most part we can run the entire business from our Blackberry.
We operate at an extremely low vacancy rate because, if we can’t get a renter for the land in a relatively short amount of time, we can easily sell it to another land dealer. When demand picks up again, we buy more land.
While preparing our data for our accountant we had the shocking realization that in 2009 our business grossed almost quarter of a million dollars ($219,000 USD) after being in operation for about 2.5 years. Even more shocking to us, is that at our current rate of growth we will likely double that next year. No, not all of that goes into the Front Hip Pocket National Bank. We do have overhead and bills to pay. It did however keep us fed, our lights on and all without resorting to a J.O.B. (Just Over Broke).
There is also an open source version of Second Life called Opensim. As part of our diversification plan we have also been expanding our Virtual Real Estate business into that platform with our very own Grid. The costs are less but so is the demand and the customer base so far. We know however that it will grow and we are working hard to carve ourselves out a little niche so that we can be well established when the day comes that Opensim is as successful as Second Life.
