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By Xavier Mohr, CEO
SLReports.net [Editor's Note: This profile will be the first of several I post about the various exchanges here inside Second Life. Be sure to keep track as we speak with each of the exchange heads to hear about their plans for the present and future, and their outlooks on the SL economy as a whole!] There's been a lot of buzz in the financial community lately: bank collapses, corporate scandals, and ever-changing standards in Second Life's financial market. In all of this a lot of folks have overlooked the launch of the Ancapistan Capital Exchange (ACE)... Second Life's newest securities exchange. I thought it was about time for SL Reports to change course and ask a few questions. ACE Chairman IntLibber Brautigan, most recognizable as the controversial and outspoken CEO of Brautigan & Tuck Holdings (ACE: BNT), was kind enough to sit back and chat with me Saturday night about his new stock exchange, the past, present, and future of his businesses. It was truly interesting. What I thought would be a simple question and answer session turned into over an hour of discussion about Second Life's financial markets, Brautigan & Tuck, other exchanges, and the virtual world economy in general.
If you think this is going to be the quick and dirty post I am famous for, bookmark the page and come back later. I don't intend to be short and sweet this time. If you're looking for answers to your questions about ACE and an inside look at one of Second Life's most infamous and shrewd businessmen, however, sit back and enjoy. IntLibber Brautigan started Second Life almost a year ago with roughly $200.00 USD earned from Google AdSense . Since that time, Brautigan has enjoyed a number of successes including growth of one of the largest estate companies on the grid and the recent launch of the Ancapistan Capital Exchange - ACE as it is regularly called. According to Brautigan, the journey began with Brautigan & Tuck Holdings, a publicly-listed Second Life corporation often criticized for its huge market cap. Partially explaining the misconception, Brautigan commented, "I built BNT from the ground up." "We were not a startup," explained Brautigan. "BNT was worth 70k at auction when we IPOd... 70k USD" After a short-lived relationship and listing with the World Stock Exchange (WSE), Brautigan & Tuck Holdings moved to Investor Allen's AVIX exchange. BNT remained listed on AVIX beyond its purchase by Arbitrage Wise and rebranding to the SL Capital Exhcange (CapEx) before being delisted in September because of irreconcilable differences. Shortly afterwards - at the end of October - ACE was born. I asked IntLibber... with four exchanges and rumors of another coming soon, why did he feel the need to start ACE. Said Brautigan, "Firstly, our estates are focused on business, headquartering an exchange here has always been in the plan." "We had the WSE here, and AVIX here, and found that others running exchanges were not reliable for our estates stability," continued Brautigan. "Kids with code in their pockets have no appreciation for the maturity and stability required to build an exchange that fosters widespread public confidence." IntLibber continued on this track, mentioning that none of the other exchanges have ever met BNT's standards. He further expressed disappointment at the "old boy in-groups" that only allow their friends to raise capital. "If other exchanges met our standards, there would be no need for ACE," said Brautigan. "We are now focusing on building the sort of exchange that we see as the type we want to trade in, that is for the betterment of all of SL, and is open to all to raise capital provided they meet common standards." I mentioned to IntLibber the recent financial dramas Second Life has seen... and the corresponding drop in trading volume at all of our virtual world exchanges. He happily explained how ACE intended to correct that. "By operating by higher standards, and setting the example for other exchanges to operate by, we will revitalize in-world confidence," stated Brautigan. "We will also bring in new capital, new investors, to expand the capital base in SL." I also talked to IntLibber about the overall 'reality' of stock trading in Second Life, reminding him that each exchange in Second Life had a seemingly different view of how "real" or "fake" the Second Life economy was. There was no sidestepping with his view on this topic. "As you likely saw on Metanomics, we do not see SL as a game," Brautigan sharply replied. "The Linden Dollar is not fiction. Our stock market is not a game either - its an insult to assert such and damages the publics confidence." "Why should they invest in someone who calls their money fictitious?" he asked rhetorically. I mentioned to IntLibber a concern of my own at this point. I cited to him my own observation that while parties such as Robert Bloomfield of Cornell University - known as "Beyers Sellers" in Second Life - often tout the Second Life economy as real and important for others to consider as real, they frequently avoid the subject of real-life legal compliance. I asked Brautigan... if he were approached by the Securities and Exchange Commission (SEC) or Internal Revenue Service (IRS) concerning his Second Life activities, if he were confident that he would be compliant with expectations. He answered readily. "Yes," Brautigan stated with no hesitation. "With regard to the IRS, Second Life is a 'black box'. As long as people report the income they take out at currency exchanges, then they are compliant with IRS regs." With regard to the Securities and Exchange Commission, according to IntLibber, Second Life stocks are considered microcaps. "The SEC has very limited requirements with regard to microcaps," he explained. "... and Beyers Sellers is a supporter of the SLEC (Second Life Exchange Commission) concept. He has his students writing letters to the SEC advising no action." According to its website, the SLEC exists to establish private, voluntary, standards of performance, operations, and ethics for Second Life Stock Exchanges, corporations, stock brokers, traders, and holders... enforcing said standards through market pressure and publicity. "The exchange we are building at ACE, as described in our prospectus, encapsulates everything we have accomplished at the SLEC," Brautigan added. "ACE will be a model SLEC exchange when we are done. If the other exchanges meet our standards too, then thats all for the good for SL in general." With regard to the SLEC, IntLibber advised, "The SL public needs to realize that the SLEC is protecting them as much from government regulation as it is from fraudulent companies and poorly run exchanges." The SLEC of course has been a controversial topic in the SL investing community, with residents scoffing that the organization is unfairly biased towards BNT and ACE. IntLibber assurred, "While I founded the SLEC, I am not its chair... contrary to many claims. [TraderJohn Susa] only made me co-owner to help ease succession issues if he was indisposed." ACE reportedly has confidence in TraderJohn Susa's abilities to serve as Chairman of the SLEC. "He has some personal health issues right now," said Brautigan. "But if he cannot come back, then Patrickj Ah becomes the Chairman." I asked Brautigan to explain to me why the investing public should not be concerned about a SLEC bias towards ACE or BNT. "I am only one seat on the board," he explained. "There are now 7 seated, counting the ISE exit. Four of those are popularly elected, so the public is now the majority on the board... which is how it should be." I asked IntLibber directly, "IntLibber, if a public board on the SLEC questioned one of your decisions as ACE chairman, would ACE - since it is a member - consider the SLEC's concerns and consider any suggested change in action?" "Yes," he replied. "So long as it was within the purview of the SLEC. If I violated an SLEC standard unknowingly, I expect to be corrected on it. In fact we did so." Brautigan went on to explain that when ACE was handling the IPO of Express Shopping Network (ACE: ESN), he had forgotten about the "60% Rule" which mandates that a CEO may not hold more than 60% of company shares. The violation was corrected. Moving along in the questioning, I asked Brautigan if ACE planned to cooperate and work with other Second Life stock exchanges. "I think that ACE is quite ready for other exchanges to cut the sniping and other behaviors and get to working together to improve investor confidence," IntLibber said. "We've been perceived as being negative [but] the facts show that there was a large degree of what RL would consider criminal acts against BNT by various parties. We have a right to feel aggrieved... however, we are more interested in putting those feelings behind us for the greater good." I mentioned to IntLibber my observation that while CapEx and ACE were closest to one another - out of all the exchanges - in regard to goals and policy, there is seemingly the most tention between CapEx and ACE. I asked him if he agreed with this, and asked about the current status of relations between the two exchanges. Brautigan stated, "I have not spoken with people at CapEx much at all. BNT was poorly treated by CapEx, far worse than one would expect an exchange to treat its largest customer." "But thats the past," he conceded. "... and some of my actions were misinterpreted by people at CapEx." Looking to the future of the Ancapistan Capital Exchange, Brautigan clarified a bit about IPO policy and coming upgrades to his exchange software. According to Brautigan, ACE does require real-life identification to be provided by IPO applicants. I confronted him with a recent assertion here at SL Reports by columnist Guardian Market that there is no reason for exchanges to keep real-life IDs of CEOs - considering most real-life attorneys would simply subpoena Linden Lab for the CEO's account information. He explained his position. "Because starting a case, you have to convince a judge that Flappy McDoodle is someone you could rationally risk thousands of dollars with," said Brautigan. "In order to get a subpoena [that] is a legal hurdle that investors shouldn't have to deal with." Down the road, ACE will also be implementing stock options and futures into their software. "All the trained analysts know that options help rationalize a market and provide natural price regulation," he said. "So long as those options are all covered options, and we provide training to traders before they start trading those options, then I think this will be a valuable addition to our product line." Brautigan explained the reasoning for futures was somewhat similar, but furthered that market futures are a good measure of market direction. "Beyers Sellers has been advocating [futures] for some time," he explained. "I respect his arguments that he's made far more eloquently than I can here." "Beyond just stocks, look at the land market," Brautigan went on to explain. "The land market is huge but price signals are badly distorted. This is because LL doesn't count PayPal payments for land. Their average prices are seriously below real market averages." "With land futures," Brautigan cited, "we will help rationalize the land market and give people a rational basis to price their land more accurately. This will also help elimate the market use of land bots by narrowing the perceived vs. real price spread... it makes land bot operations less profitable." I asked IntLibber where he expected ACE to be three months down the road. He was happy to reply. "I am very bullish on ACE," he said. "Most people have no clue what we've got planned. While the WSE basically ripped off our prospectus for their "WSE 4.0" almost as soon as it was released, thats merely the first step in our long term plans." Brautigan expects ACE to have between 20 and 30 companies listed within 3 months, and that there will be a 'tipping point' coming soon. "My appearance on Metanomics resonated very strongly with the investing public," he explained. "We are very happy with that show and expect future press relations to expand ACE's positive public image." I concluded our interview here, thanking IntLibber for the time but also asking if he had any closing remarks. He concluded our conversation with enthusiasm. "I am passionate about my business, i work very hard at it and take it very seriously," he said. "I take my investors money very seriously. While some have twisted my passion to portray it as arrogance or negativity, once people get to know me one on one they realize thats all spin by those who resent the standards we hold." And I do have to give IntLibber credit. Despite his negative portrayal by readers here, users of other exchanges, and through other media outlets, the overall tone of our interview was positive and exciting. SL Reports will be keeping track of the Ancapistan Capital Exchange as it progresses into the future of our virtual world. We'll stay in touch with IntLibber, and we'll be watching with interest. I thank Mr. Brautigan for taking the time to speak with me. It was truly an enlightening conversation. Stay tuned to SLReports.net for more information.
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