Gaia is NOT in the red.

[Siarnaq]

I'm sorry, but that response doesn't make sense. Isn't it the BUSINESS'S decision to lay off its workforce?  

[jaggedbubbles]

Sheriff Dustin

One thing thought is if gaia wasn't in debt why did the government of California have gaia layoff 15% of it's workforce. They can do that to keep their money coming in to the gov't.

The USA is not socialist (even though many people will argue that), and the government has little say in how Gaia manages their workforce.

I suggest you read up on what capitalism is.  

[Xx Lushrocker xX]

It doesn't cost 1.5M to run Gaia, it costs a little more than 2 million (probably even more now). Fleep already mentioned somewhere in his journal that Lanzer left out a couple people and servers in his numbers, but even still, it's costs more than that. A week before that, Fin, Gaia's CEO, posted:

fin

We do a bit over $1 million a month in virtual good sales. In addition, we do a few hundred thousand a month from advertising. The main reason we talk to the press about our sales figures is for recruiting purposes: people trying to decide to work at Gaia vs. some other company want to know that we have a real, sustainable business model. Silicon Valley is a super competitive place to find talented engineers. (we've been really lucky recently - we've had a lot of people recently quit Google, Yahoo, and eBay and also little start ups to join us).

Our expenses are roughly $2mm per month (or approx. $25mm/year expenses). The expenses include payment fees to our merchants (Target, 7-Eleven, Paypal, etc.) and then everything to run gaia - salaries, rent, electricity, buying hardware (servers), food, legal expenses, customer service, etc. For example, just this month we bought half a million dollars of hardware to prepare for the launch of zOMG! Also, just people alone is bigger than you might guess. Many of us took pay cuts to come to Gaia because we wanted to work here so badly. Nevertheless, the sheer number of people needed to run the site is a lot: in addition to about 110 full time employees, we have another 50 or so contractors all over the world (freelance PHP, Java and Flash developers, 2D, 3D and animation artists, quality assurance engineers, etc.).

So, overall we lose money. But our plan has always been to keep investing in the site to make it better and not focus on short-term profitability. And, fortunately, as we make improvements to the site every month our traffic and our sales are growing. It's really thanks to you guys that we can keep investing in the future. We were able to raise a lot of money this year based on our fast growth and momentum and we made sure to raise enough so that even if it takes a couple more years to get profitable, we won't run out.

This site and this site attest to the $25M/year figure.

Plus, last december, Fin also wrote this:

fin

We are in fact in the red. It does, in fact, cost us more money to run the site - the servers, the rent, the bandwidth, salaries - than we make from selling virtual goods and advertising. People who buy virtual goods from gaia help keep us going. We totally totally appreciate everyone's support on the site. I hear you and am embarrassed that you've had bad customer service experience. We have improved it soo much over the last year. For example, it used to take us literally 8 months to resolve a hacking case. We're down to about 10 days now. We used to take months to answer a 'general inquiry' email and we're now down to a few days. That's all due to hard work, a bigger staff, and new software we've developed to resolve these things. It still needs to be much much better, but we're working on it.

We are testing lots of prices. Any suggestions on how to get someone who has never bought a virtual good to buy just one? Even a $1.00 purchase every month or so would make a huge difference to help cover our costs!

Thanks.

There you go. Straight from the CEO's mouth.

I thought you woul like to see this.  

[jaggedbubbles]

Lush: These quotes have been linked before, and no one can readily verify it without trying to consult with Gaia Online's accounting and finance department because their financial statements are private.

From a user standpoint, it hardly seems like those are accurate figures (and if they are, they're probably dated). We can either take their word for it or we can't. Most of us probably can't - or won't - take their word for it.  

[O.T.L.]

I've said it before, and I'll say it again: if they truly are losing as much money as Sherman claims, how are they paying their bills each month? By this point, the landlord is going to insist on getting his rent, the utilities are going to insist on their bills being paid, the employees are going to insist on their paychecks not bouncing. This money MUST be coming from SOMEWHERE. But if they're losing as much as is claimed, they're not getting that money, which means their not paying their expenses. Which means they would have closed down a long time ago. There is simply no way a six-year-old company is going to get the credit they need to survive if they can't show that they're capable of turning a profit (which, according to Sherman, they're not). (A large company that has been highly profitable in the past could run for some years in the red, because creditors will have reason to believe they could be profitable again in the future. Gaia isn't such a company.)

In other words, Sherman is either lying through his teeth, or Gaia is going to shut down any day now...  

[Nanenna]

Well, I had a thought that those arguments just shot down. :/ I'll post it here anyways because it seems like a common sense thing that people just forget about.

What if Gaia really is making more than it takes to run the site on a month to month basis but is still paying off debt that had accrued while they were still running in the red? In such a case, could Gaia still be considered in the red? (Based on my RL circumstances, fyi.)  

[jaggedbubbles]

Nanenna

Well, I had a thought that those arguments just shot down. :/ I'll post it here anyways because it seems like a common sense thing that people just forget about.

What if Gaia really is making more than it takes to run the site on a month to month basis but is still paying off debt that had accrued while they were still running in the red? In such a case, could Gaia still be considered in the red? (Based on my RL circumstances, fyi.)

It depends on what types of debts they took on.  

[Xx Lushrocker xX]

jaggedbubbles

Lush: These quotes have been linked before, and no one can readily verify it without trying to consult with Gaia Online's accounting and finance department because their financial statements are private.

From a user standpoint, it hardly seems like those are accurate figures (and if they are, they're probably dated). We can either take their word for it or we can't. Most of us probably can't - or won't - take their word for it.

Oh right sorry.
Im not very smart I guess, but I figured you smart people would wanna see it >.<  

[Andromeda Phoenix]

Didn't they say it cost 1.5 million to run when they first announced they were in the red? ninja I do not remember hearing 2 million when they first started their "Get us out of the red charade".

@lushrocker MK: Quit that. It was smart to look there. We can't work on saying they aren't in the red if there's no proof of them trying to convince us otherwise. 3nodding

I seriously remember a dev posting that they just barely made the cut each month and it wasn't about them getting out of the red, but rather them making a bit more money to line their pockets with because they felt they deserved it. Of course, if you ever find a way to find a dev's post in the forums from about a year or more ago without wanting to pull your hair out, you let me know. sweatdrop  

[ZNK]

If MMVII was never created, they wouldn't even be in a mess with money...

Well, the cut would of happened later this year instead, at least...  

[Xx Lushrocker xX]

Andromeda Phoenix

Didn't they say it cost 1.5 million to run when they first announced they were in the red? ninja I do not remember hearing 2 million when they first started their "Get us out of the red charade".

@lushrocker MK: Quit that. It was smart to look there. We can't work on saying they aren't in the red if there's no proof of them trying to convince us otherwise. 3nodding

I seriously remember a dev posting that they just barely made the cut each month and it wasn't about them getting out of the red, but rather them making a bit more money to line their pockets with because they felt they deserved it. Of course, if you ever find a way to find a dev's post in the forums from about a year or more ago without wanting to pull your hair out, you let me know. sweatdrop

Quit what, wha?

And yeah, I hear you. I am no good at finding scources. I mean, if its a forum I have seen beore, I can find it, otherwise, I tend to be lost.
The numbers are aways changing anyway, I guess.  

[Andromeda Phoenix]

lushrocker MK

Andromeda Phoenix

Didn't they say it cost 1.5 million to run when they first announced they were in the red? ninja I do not remember hearing 2 million when they first started their "Get us out of the red charade".

@lushrocker MK: Quit that. It was smart to look there. We can't work on saying they aren't in the red if there's no proof of them trying to convince us otherwise. 3nodding

I seriously remember a dev posting that they just barely made the cut each month and it wasn't about them getting out of the red, but rather them making a bit more money to line their pockets with because they felt they deserved it. Of course, if you ever find a way to find a dev's post in the forums from about a year or more ago without wanting to pull your hair out, you let me know. sweatdrop

Quit what, wha?

And yeah, I hear you. I am no good at finding scources. I mean, if its a forum I have seen beore, I can find it, otherwise, I tend to be lost.
The numbers are aways changing anyway, I guess.

Quit saying you're not very smart.
It takes a bit of work to find good sources.
Either way, they need to make up their minds. I know the costs change, but between Fin saying he's expecting profit this year and Devs saying "Gaia's still badly in the red" I'm not sure who to believe. For now, I pick no one though. I don't think they're in the red, but whether they are or not doesn't justify the way they're handling the site.  

[jaggedbubbles]

Andromeda Phoenix

lushrocker MK

Andromeda Phoenix

Didn't they say it cost 1.5 million to run when they first announced they were in the red? ninja I do not remember hearing 2 million when they first started their "Get us out of the red charade".

@lushrocker MK: Quit that. It was smart to look there. We can't work on saying they aren't in the red if there's no proof of them trying to convince us otherwise. 3nodding

I seriously remember a dev posting that they just barely made the cut each month and it wasn't about them getting out of the red, but rather them making a bit more money to line their pockets with because they felt they deserved it. Of course, if you ever find a way to find a dev's post in the forums from about a year or more ago without wanting to pull your hair out, you let me know. sweatdrop

Quit what, wha?

And yeah, I hear you. I am no good at finding scources. I mean, if its a forum I have seen beore, I can find it, otherwise, I tend to be lost.
The numbers are aways changing anyway, I guess.

Quit saying you're not very smart.
It takes a bit of work to find good sources.
Either way, they need to make up their minds. I know the costs change, but between Fin saying he's expecting profit this year and Devs saying "Gaia's still badly in the red" I'm not sure who to believe. For now, I pick no one though. I don't think they're in the red, but whether they are or not doesn't justify the way they're handling the site.

I agree, telling all the users that they are badly in the red to induce sales is a horrid way of going about things.  

[Andromeda Phoenix]

Yay, agreement!

Does anyone know of any other place that does this?
Gaia's the only place I've seen use this reason to help get money. Do I not get around enough or something?
I've seen individual people put up websites talking about how they need money for either a charity or to pay for a cure to some life threatening illness, but that's on the news...usually featuring scams. sweatdrop  

[O.T.L.]

Andromeda Phoenix

Either way, they need to make up their minds. I know the costs change, but between Fin saying he's expecting profit this year and Devs saying "Gaia's still badly in the red" I'm not sure who to believe. For now, I pick no one though. I don't think they're in the red, but whether they are or not doesn't justify the way they're handling the site.

Well, I suppose one way to help figure out who to believe is to look at to whom these statements are made. The devs make their claims of poverty to the Gaian community, yes? But I don't think that's where Fin makes his claims of profit. He probably makes those claims to financial reporter types, probably to get the attention of potential investors. (Feel free to correct me if I'm wrong.)

But here's the thing: you don't lie to potential investors. First of all, any investor who's even semi-competent isn't going to take your word on your profitability. They're going to insist on checking your books. And if you're claiming to expect a profit, and your books show massive losses... well, you're not going to get too many of those potential investors to become actual investors. Unless, of course, you fake your books. Which is grossly illegal. In fact, lying to potential investors in general may be somewhat illegal as well. (It'd be a form of fraud, I believe, although you'd probably have to check with an actual lawyer on that.) And given how long Gaia has been trying to get investors, and how long they claim they've been in the red... by now, that kind of financial shenanigans would have come to light (investors tend to not like it when you don't show them the profit you promised).

On the other hand, I don't think there's really any law about lying about your financial status to your customer base, especially since you don't have to reveal your specific financial details to them. (It's a lot easier to use only a portion of your expenses and income to claim you're in the red when you don't have to actually provide any numbers to back it up...)

So, I think it's kinda obvious who's more likely to be lying in this scenario...