So who is lying? M and Philip can’t both be right. If M was correct in 2009 then after all these cuts Second Life is definitely in a very solid financial picture at this point in time. It also means that a lot of these cuts to staff and programs were not necessary. If Philip is right however and we are in a good financial position now (compared to then) then we, as a community, were lied to in 2009 which begs the question what else is Linden Lab not telling people.

For example, in the last week Linden Lab has dropped the bomb of closing down the SL Teen Grid in the middle of the school year. 3 days later they just sent an email with 24 hours notice to all community gateway owners that they are shutting down the community gateway program effective immediately.  In both case no substitution was offered for the replacement of the existing service.  In fact the closure of the teen grid, which isn’t that surprising, in the middle of the school year showed remarkable insensitivity to the teachers and educators which have been working all spring and summer to prepare their curriculum only to have the core of that program yanked with 2 weeks to prepare substitute course materials.

I’m sorry as this is not going to be PC BUT —- how dumb do you have to be to think that yanking the teen grid in the middle of the school year is a good idea. (notice that isn’t a question) And we don’t even deal with the teen grid at Rockcliffe. Even I’m mad about this not because it impacts us but because it is a symptom of what Linden Lab has been doing all year long.  That is, making unilateral decisions that impact a very broad community without community input. And driving customers away as a result.

From a strategy stand point this is very bad. One of Second Life’s core assets is the user community. While a good brand can get away with the occasional hit to their reputation, establishing a pattern of behaviour that clearly shows a move away from being customer-centric to being investor-centric is a sure fire way to erode that brand loyalty to the point where any competitive product will drive masses of people away from your core product lines.

Fortunately for Linden Lab there is no such product currently on the market however there are several in development which will be in power positions within the next two years if the Lab doesn’t stop shooting themselves in the foot, stem the bleeding, and start repairing relationships. By the time they are ready to do that it may be too late as OpenSim, Blue Mars, Unity3D and others may have caught up with Second Life at which point it will be game over.

Personally I was really hoping that Philip’s re-introduction as CEO was going to be a sign that calmer heads are ready to prevail. But in continuing these 1980’s MBA-style draconian tactics without involving the community has simply served to erode whatever linguistic capital he had to trade in stepping back up to the plate. In fact, this is exactly the type of thing he should be divorcing himself from as every subsequent announcement of this type drives his personal image away from being the poster boy for 3D collaborative environments.

Anyone new that is brought in to repair all this damage being done is going to have their job cut out for them over the first 2 years of their mandate. Philip was someone who could have repaired that damage in less than half that time and instead he’s just being set-up to look like every other high-paid executive out there which is good for being put in-front of a group of investors but extremely bad if it results in him losing all his identity capital with the customer base supporting Second Life and where it potentially can go. As any business owner can tell you, it’s easy to spend an investor’s money on a business – getting and keeping a loyal customer base is hard and it’s even more difficult if you start with a culture that is ready and willing to walk for a comparable value proposition.

It is an open avenue for any competitive company, like Unity3D, to walk in and pander to the existing client base to say “we care – they don’t”. And people will believe them even if the value proposition isn’t as robust as what Linden Lab can offer simply because the pattern of behaviour established over the last 8 months by Linden Lab has been screaming “we don’t care about you and to prove it we are about to cut another relationship or product or service that is important to the community without offering something better in exchange other than empty promises”.

People are short sighted. In general, long term means “next week” en mass when it comes to decision making and every hole that Linden Lab leaves in their tactical plan is one more hole that leaves their customer based feeling unhappy and unfulfilled. Short of firing their strategists, the Lab should at this point develop a dedicated PAID community strategy group under NDA to knock some sense into them before the community at large just decides that enough is enough and better to move to OpenSim. They may not get everything they want but at least they don’t have to worry about the Lab cutting them off at the knees without compassion, consultation, due warning, and alternative solutions.

Don’t get me wrong – I’m still dedicated to building Rockcliffe up and Second Life is a very large part of that strategic and tactical plan. But that only goes so far. If the Lab continues to alienate the user base all the way to Blue Mars and back then there is no point in staying with a sinking ship. We are nowhere close to that point right now but for the sake of the community I am really hoping that this is the end of the bone-headed manoeuvres that have done nothing but erode Linden Lab’s brand identity and services over the past year.

Somehow I doubt it though. Who knew they had so many shoes.

B2B Social Marketing is the perpetuation of social realities as defined by the relationship between a communal demographic and the brand that symbolizes those ideals.

B2C Social Marketing is the perpetuation of social realities as defined by the relationship between a competitive demographicand the brand that symbolizes those ideals.

While the essence of social marketing is the influence over social constructs of reality (i.e. what is justified is true) the essence of defining a difference in B2B and B2C marketing practices is one of the relationship between the firms competing within that market space.

B2B competitive practices require that both parties defining the relationship identify with a common communal consumer base which reinforces a brand to the benefit of both business parties.  The idea is that if the pie is worth $100M separately in combining forces in a shared approach the pie could be worth $150M. It is obviously therefore in the interest of the business parties involved to collaborate. So by increasing the size of the pie every party in the B2B collaboration receives economies of scale while the balance of power remains relatively constant.

B2C competitive practices by contrast assume that while a common consumer base exists, it is more advantageous for the company to pursue exclusionary marketing practices to gain a larger share of a pie that isn’t necessarily increasing in size. In this case the organization that focuses on B2C social networking is seeking domination of a market segment through competitive practices rather than cooperative engagement with key stakeholders inside and out of its value / supply chain.

That is not to say that there aren’t nuances of positioning in-between these two radically different ideological positions in terms of strategy. It is classic game theory. How much of each does an organization need to build into their business strategy in order to remain competitive without giving up their overall percentage of the pie regardless of which approach is the dominant strategy employed.

Its not a question really because only in looking at the overall make-up of the organization’s strategic partnerships can the decision be made. Also those decisions will change as market and social conditions change. Culture leads – marketers follow. While each influences the other to some degree customers ultimately vote with their feet as Apple learned in the 1990s and PC manufacturers are learning today.

Take for example, Martha Stewart (no really please). In 2004 while Madoff was bilking investors out of billions of dollars, here is Martha being dragged as a symbol for the SEC’s new mandate to go out there and crack down on those people that really were flagrant of the law by developing personal relationships with their brokers. And I’m sure that the millions of dollars that the SEC spend in prosecuting Mrs Stewart was truly justified compared to the $41K tax write off have she benefited by considering her total net worth.

What bothers me about these two scenarios is that it, along with other examples, shows a pattern of behaviour of the most senior levels of the SEC to only be working on those cases which are either high profile or as keeps the SEC’s name out of the papers. When cracks in the SEC’s ability to effectively regulate the equity markets do appear we see this rash of people “more willing now to give information”.

It has been well documented in the media that the SEC didn’t need these people to come forward, they were always there to begin with. Rather, what they needed was to prioritize the information they have been receiving better. I would suggest that the resulting perception is one where the SEC is doing as little as possible on the hopes that they are perceived as doing their jobs and while continuing to mismanage the public trust.

Maybe its time for the SEC to be dismantled, replaced, and new financial rules to be established.

The problem I have is that in protecting the public trust one of the key core competencies you have to be absolutely rock solid on is the proactive adjudication and assessment of risk. While this is not an easy thing to do in practice, the SEC does not seem capable of accomplishing this without the appearance of being in bed with those, such as Madoff, that they are suppose to be regulating. There appears to be this fear that in regulating those who have large established investment networks, investigating breaches of trust could do as much harm or worse than as if the risk were real.

This is a very fine line as a wrongly placed investigation which turns up nothing could very well bankrupt an otherwise healthy investment vehicle. At the same time, as the steward of that public trust you can’t be so timid of launching an investigation as to allow serious violations to go unchecked. 

For example, publicly traded companies that are formed by foreign nationals for the intent and purposes of going bankrupt. This scheme works as follows. You establish a company with a ‘reasonable’ track record and some good possibilities of future sales contracts (like in China for example). The SEC doesn’t verify proof of sales or contracts in 100% of the cases of filings so chances are no one is going to audit the books. You have a number of small investment accounts help drive up the price of the stock encouraging others to buy in. At a predetermined price the principles pull out their monies leaving the small investors holding a company that is worthless. As the sales contracts disappears and the price goes down, the principles short the stock, and hence increase their gains even further without so much as batting an eye. By the end of the scheme the principles have covered their shorts sells – write off the balance – and fold the company having fleeced a large number of small investors of their savings.

Now the existing SEC regulations in place are suppose to prevent this type of thing from happening. And yet I’ve seen this happen on at least two occasions with the SEC doing nothing about it despite having been given fair warning that it does occur. 

There are likely hundreds of other schemes out there which are deliberately aimed at taking advantageof the small investor’s imperfect knowledge of the markets. Certainly investment brokers and their select clients talk in advance about news which isn’t public knowledge. You wouldn’t see such a dramatic rise or fall in some stocks prior to public news releases if their weren’t. And this doesn’t account for the millions of informal chats between employees with privileged knowledge and their friends and associates who, of course, are more than willing to pass a good tip along to others they know.

While the system isn’t perfect the investment community which has a stake in those equity markets under the SEC’s mandate to regulate I feel deserve better than to simply watch the SEC run after whatever ’shiny’ happens to be making the front page of the news. I would hope that the SEC starts to show some leadership by disclosing how else they are protecting the public interest because chasing after the flavour of the day simply cannot continue to cut it anymore.

In calling for putting a man on the moon, the technology was in the early stages of development already. New attitudes, technology, science and other aspects were needed in order to pull off the feat. However the moon landing didn’t require a massive overhaul of societal attitudes and supply chains. What was needed was for key sectors of R&D and the economy to advance a time table that they were already marching towards. The genius of JFK’s speech was that all which was needed was the right push at the right time.

Gore’s challenge is neither. Don’t get me wrong – I love the idea – I just don’t think its practical nor reachable. The breadth of the changes are too vast to be influenced by a single idea simply thrown at the wall like spaghetti. Most of it isn’t going to stick.

What is called for, if we were to press the JFK analogy, is for something relatively absurd but reasonable doable which focuses the efforts of a few key sectors to excel beyond anything they could hope to achieve without the right stimulus. As aptly put by JFK himself:

I believe we possess all the resources and talents necessary. But the facts of the matter are that we have never made the national decisions or marshaled the national resources required for such leadership. We have never specified long-range goals on an urgent time schedule, or managed our resources and our time so as to insure their fulfillment. (A Special Address to Congress On The Importance of Space – May 25, 1961)

What really stood apart however was the simplicity of the goal itself. To take a man from here – send him to the moon – and return him safely. Gore has I think missed this idea as part of his message.

What should we do? Many of the key challenges are to some extent all internal at this point. Yes there is President GW Bush’s goal of going to Mars but the technologies that we need to go there are starting to become more and more specialized to the point where mega-projects involving hundreds and thousands of specialists are needed in order to achieve the goal. Once that starts becoming common place those goals, while historic, are no longer capable of capturing the imagination of a world which has become use to the extraordinary every day. In fact the pace of technological innovation is such that a lack of extraordinary things occurring in people’s lives becomes extraordinary in of itself.

To answer the question we need to consider what we could do in the next 10 years that will change everything in one fell swoop. What can we do that will transcend cultural divides and bring a new global perspective to the world around us. Also something for which is outside of the range of the ordinary person to accomplish but which is within the grasp of ordinary people to aspire to.

My initial reaction is to say that most of those challenges are either cultural or technology-cultural oriented.

For example,

• I believe that within 10 years we could have a single world government with the rights and powers necessary to eliminate war between nation states. That would mean nation states would give up their rights to wage war in exchange for a common system of governance (not government) which would protect the rights of statehood irrespective of their system of government.
   
• I believe that within 10 years we could bring clean water to the deserts of the world and replenish their fertility in order to bring stability back to those ecosystems on which all life on earth is dependent. That would mean protection of rain forests which are only being cut down because of the fertility of the soil and the pleasantness of the surroundings.
   
• I believe that within 10 years we can develop the technology to cleanly fly an Airbus A380 fully loaded from Vancouver Canada to Sydney Australia without a single drop of jet fuel or other petroleum based equivalent. That would mean the capabilities to transform all major shipping forms and truly eliminate the dependence on oil for which we are dependent.

Each one of these would radically change life as we know it. Notice thou that in each case I am not talking about the goal being the final solution – but rather to bring society to the single milestone that could trigger the on-set of a global change in consciousness that will take us the rest of the way towards a new enlightenment of our capabilities both individually and as a globally interdependent society.

-K

1) assets purchased will be subject to market factors for the ‘best deal’ because private investors will have an equity stake in the asset. Hence reducing the risk of distressed assets being sold at a premium simply for the sake of the fact that in Government’s haste to purchase assets they may not necessarily value them properly;

2) It inherently increases the bailout funds from $700B to $840B at the stroke of a pen without putting inflationary pressure on the monetary system, and;

3) The investor becomes a partner in managing the asset to the extent that it needs to be managed.

This last point I feel is probably the crucial piece that has been overlooked in all of this. It was something I brought up last week and is interesting, I feel, that Buffett is also making note of this. Real Estate assets need to be managed and require ongoing operational capital if there is going to be any hope of turning a profit once real estate prices start to rebound. By using the treasury funds to essentially provide interest free / low interest loans to investors, you have the capability to induce the investor to provide the needed capital to maintain the properties rather than having to go back to Congress to admit that this $700B bailout package screwed up on the whole ‘on-going’ costs thing.

Consider that a $300,000 house will typically have approximately $5-6,000 in ongoing operational costs to manage and maintain (not including work that is necessary for basic repair and maintenance such as lawn care), if you position the investor to take on those ongoing costs rather than the government, it essentially provides for a reasonable method of limiting the Government’s exposure to having to inject further capital for assets that they are ill-equipped to manage effectively.

As a plan – it is more than reasonable. However there are downsides.

First off – Who else but Warren Buffett has the financial resources to really pump money into a scheme like this. Keep in mind that Buffett just purchase a big chunk of Goldman Sachs – one of the few financial companies to, so far, come out of all of this mess with its balance sheet in tact. I’m thinking GS is going to be purchasing a lot of these distressed assets whether they get a Treasury fund boost or not. But what a sweet deal for GS if they do.

Second – the average person really isn’t going to be in a position to really take advantage of this deal. So while the proposed plan is a good one, its not one that is going to benefit the average investor, and in a number of cases I could envision that those small investors that do try to take advantage are probably going to be put into an ultra-high risk scenario as the ongoing maintenance costs are something more effectively managed on a larger scale – not in quantities of twos or threes.

Still – its a good suggestion by Buffett. I could see a number of players potentially lining up to develop asset management firms for the purposes of buying these distressed properties. Essentially leveraging multiple smaller accounts to create a pool of investment real estate which can be managed at a lower overall effective cost. Even at a 50:50 split between private investment capital and Treasury money I feel that this probably represents a very effective means of managing the financial risk of the bailout assuming that the US financial system’s house is eventually put in order over the next 12 months. – Big if.

So let me see if I get this straight. The US has spent approximately $560B since 2002 on the war in Iraq in order to make the region more peaceful and gain strategic access to oil reserves which have experienced an almost 300% increase since the war began. This is considered to be money well spent considering the level of outsourcing that has occurred over the past 10 years, the steady increase in corporate profits on what earnings are made within the US, the $350B/year different between what oil should cost compared to what it is priced at today thanks to market speculators, and now a $700B bail-out package whose price tag is going up every day unless something isn’t done to get the money market moving again.

By comparison, a similar $560B investment in intermediate-green technologies, such as Rentech’s GTL technology, which could have put the US substantially on the road to energy independence including the necessary fuels required for getting into space in the first place, and augmentation of NASA’s space program, which creates high-end jobs in both R&D and manufacturing domestically, would have realized . . . what? . . . maybe a thriving sustainable economy that leverages the key strategic assets that can only be gotten from first world countries such as a solid educational system and population with disposable income willing to invest and support those same technologies?

Yep – I can see the benefits are paying off already.

All sarcasms aside – the point here is that its unfair to point the finger at NASA for a failure of vision when the Administration that is necessary in order to support any vision is so stuck in a 1950s McCarthy era mindset that it can’t see past its own fear mongering to establish a realistic vision for the country as a whole. And the unfortunate part in all this is that where goes the US goes Canada, Europe, and a host of other countries/economic zones that are so economically integrated with American policy that it becomes impossible to talk about issues at this level such that their impacts are only felt within the US itself.

As with most issues however it is always easier to focus on pointing a finger in one direction rather than looking at the larger picture. If NASA needs a vision for the future then I offer one up here for consideration:

What drives countries from economic have-nots to world super powers is not their resource base but rather their capability of mobilizing a society towards manufacturing and export. NASA vision should not just be to go to Mars but rather developing the infrastructure necessary to produce finished and semi-finished goods in low and very-low gravity environments. So for example, mining and exploration of asteroids and comets in near earth orbit. Establishing habitats for trades and craftsmen. Transportation systems for getting raw materials in and out of the central orbital planes between Venus and Jupiter with Mars representing the ideal central location for such manufacturing to take place.

Essentially, NASA’s role would become one of co-ordinating the US economic engine and logistics towards these goals rather than being directly responsible for their implementation. R&D funds and local commercial manufacturing would necessarily follow suit as priorities are set for specific levels of resource and manufacturing production. This would not only stimulate political will behind space exploration in our immediate local group of planets but also funds from the commercial industry as the potential for ownership and economic profits related economic drivers steadily increase.