Thursday, October 20, 2016

Aideron Logi, Best Logi

Aideron Robotics is recruiting!

Sizing the Profit

With the upcoming Ascension expansion I've been stepping back from the gears and levers of Project Vulcan and having a hard think about going forward.

When I restructured my operations to keep better track of my material purchases, factory costs, and transaction taxes so that I could more accurately provide dividend payouts to my new shareholders, and this led to a fascinating post with comments a year ago about value:
The reason I ask this loaded question is because as I entered dreadnought production and brought investors into my Project Vulcan operation, I decided to keep a closer eye on the books and more accurately track profits for dividend payout reasons. This led me into the question of the best way to calculate profit and that leads to what is the actual value of the minerals I use in building a ship.
The easiest answer, and the one I have chosen to go with as its the most obvious, is that the value of the minerals I buy is the price I pay on the market.
However, follow me along on this thought experiment. Say I buy a piece of trit at 2 ISK (there was a time...) and then use it to build a paperweight (no blueprint required) with a factory cost of 1 ISK. So it cost 3 ISK to make, correct? And I sell it for 4 ISK so my profit is 1 ISK, correct? But what if the market changes while my paperweight is building and the new price of trit is 5. Is my profit still 1 ISK or is it now -2 ISK because the cost of production went up to 5 (price of trit) +1 (factory costs) = 6 ISK?
Obviously, my wallet is 1 ISK higher so my profit must of been positive, right? Well, let's say I took my paperweight and reprocessed it back down to tritanium (assume perfect recycle and no overhead cost for this example) and I then sell that piece of tritanium for 6 ISK. Now my wallet is 3 ISK higher instead of only 1 from selling the paperweight.
In other words, should I calculate my profit based on actual wallet balances or potential wallet balances?
And the comments were intense:

Easiest question ever: calculate based on the market value of materials plus actual expenses at the time of sale. This applies even if the eventual calculation says you lose money.
If you disagree, sell me the rarest item in your house for the price you bought it for.
As an accountant, you take the price that you paid as cost. The price of the paperweight would go up to 7 or 8 to cover the higher costs. If not, just buy all of the paperweights to reprocess them until the prices equalize again. This is why many manufacturers hedge their materials purchases (probably a bit harder in EVE)
Yep. If building a single item it's fine to use actual costs incurred. But if running a longer-term operation, you start getting into purchases made over time. Oh God, shall we introduce him to FIFO, LIFO and average cost? And let's not forget about amortizing the cost of blueprints, which according to Universal Accounting Standards must be done over no more than 1 year.
In economics, the value, profit, and revenue are all real values, calculated from actualized results. What you're describing is opportunity cost. Because you used the resources to achieve these actual results, what was the value of the best alternative option you could have pursued?
But that's a theoretical calculation to talk about efficiency, given perfect prescience.
Always use actual prices. If you stockpiled trit to build a dread and trit prices go up (without dread prices), then don't build a dread but sell the trit. More money, less work.
You seem to start to realize that trading (buying low, selling high) is much more profitable than actually doing something.

If there was ever a post that made me feel ignorant, that was the one. And I took a introductory course to economics in university! 

Since my operation was small and slow and casual, I went for a simple profit calculation based on what I paid for each mineral load per capital and the price I sold it for. And when I started into Astrahus production I followed the same pattern. 

However, as time goes on there are several problems with this approach.

First off, as I stepped up production and start planning for Raitaru production, I want to bulk purchase minerals with larger long running buy orders rather than putting up buy orders for each build. But the spreadsheet requires me to enter in a price-at-this-time value for each separate build, getting to the point where I seem to be spending more time entering values into the spreadsheet than actually manufacturing. I want to do the work in game and calculate profit holistically of the operation and not per item.

Secondly, there was always a fuzzy line between where my assets and ISK ended and the operation's assets and ISK began. This was never an issue when I was working for myself, but I feel ambivalent about treating everything as mine own when investors' ISK is involved, even though I've paid out in dividends enough to pay back their investment and then some.

Thirdly, and the main cause of all this rumination, is that I'm considering setting up a Raitaru engineering complex. How does that figure into the calculations of profit? Do I amortize the cost of setting up the structure across all profit math for all future builds? And how do I account for fuel costs? I already ignore jump freighter fuel (ISK)  and hauling costs (time) in terms of each build's bottom line, but I'm not sure I'm ready to swallow the cost of building and running a Raitaru so my investors can profit more than I will. And what if I want to branch out and open my Complex to other manufacturers and charge them fees? Should my investors get a cut of that pie?

In conclusion, the current model I've been using is not going to work going forward. But what to replace it with?

I don't want to have to be or hire an accountant, and I don't want bookkeeping to be the main activity of my project.

What I've decided to do is use the expansion as a starting point for a fresh start, and to do that I need to restructure the corporation as a separate entity from my personal property. This restructuring will require some changes to the shares in order to ensure that I can get paid for my efforts from the profits without just dipping my hand into the corp wallet whenever I want a new shiny ship. This also means a complete audit of the corporation's assets versus my personal assets (and deciding if the corporation has any assets to start with and if they need to buy/rent from me). 

Once we have a clean and audited slate for the corporation, I can determine its starting net worth and then every six months or so do a new audit to determine the new net worth, and the profit to be paid out in dividends will be the difference in the starting and new net worth. 

What I hope this means is that I can run the operation without constant bookkeeping on every mineral value and transaction tax, thus allowing me to work more at make profit rather than tracking it. You know, without hiring an actual accountant.

What this means for my shareholders: less frequent dividend payouts, but hopefully larger payout overall. If they want to use this restructuring period to sell back their shares, I have the capital on hand to do so.

Monday, October 17, 2016

Alphas and Perspectives: The Cautionary Tale of Art Hornbie

Way back in June of 2014 I wrote about Art Hornbie's blog and his culture shock at coming into EVE and finding things were not as he expected:

At first my reactions to these angry posts was the usual "get friends and do things", or to simply ignore them as the ravings of a bitter new player without the patience to work towards a goal. But over time as I continued to read his blog posts and consider them with an open mind, I realized that the issue is not his patience or ability to adapt, its the difference of a vastly different perspective on what Eve could be.
My Perspective
My perspective, and the one shared by the vast majority of the playerbase I suspect, is to view EVE's storyline and a lore as merely a backdrop to the actions and machinations of the player constructed entities, be they high sec manufacturers or null sec coalitions. I've often said that in EVE the players are the end game content and that roleplaying in EVE doesn't exist because players live the roles and don't need to play-act them.
On the other side, we have Art Hornbie and I'm going to try and paint what I think his perspective is. Imagine watching a show you love for years and getting a chance to visit the set. You walk down the street and decide to walk into a store and discover that inside the door the building is empty. Not just unfurnished, but a shell representing a store and not really a business. And the next house is also fake, like those ghost towns they used to build for nuclear tests. In fact, every building is a placeholder for a real business or home or utility but on the inside they are merely facades, painted to look the real thing but are not.
If you approach EVE as a living and vibrant sci-fi operatic universe filled with millions of souls moving in cohesion or conflict, and the players are mere actors in this milieu, then you are going to be sorely shocked to discover its all a two dimensional backdrop to the players that occasionally gets a new coat of paint or picture but is static and unresponsive the rest of the time. Don't bother looking for a man behind the curtain, the curtain hides only a brick wall.
This disappointment is further compounded by a game that continually gives more power to the players, which if you are a "players are the endgame" proponent is a good thing, but can be frustrating for a newer player who sees only the resources fought over and gobbled up by the string and/or numerous, leaving scraps (if anything) to the casual newer players.
And from that perspective, I can see why Art Hornbie writes what he does. I don't know if I agree with it and I definitely thinking he's tilting at windmills, so I'm patiently waiting for the "I'm Quitting" post albeit with a bit of sadness. Its possible the game Art expected and wants might have been a fun game if the technology could be built to allow it.
But its not EVE.
I was correct and Art Hornbie left EVE for Elite Dangerous a few short months later:
Well, after reading the CSM minutes, I plunked down my money for Elite:Dangerous. E:D's idea of billions of stars to precariously explore and frolic in appeals to me.
I've written before about how much fun it is to build things from scratch in Eve. Go out get the blueprints, harvesting the materials, assembling all the pieces and building a thing-a ma-jig. It's all fun until you realize that raw moon resources are all spoken for. Monopoly of content by those who have gone before stopped we newer players, me and my corp mates, dead in our tracks. And I've written about that ... extensively.
So the wide open opportunities that I presume are inherent within E:D are simply begging for me to discover and explore. A space game with actual space.
Eve doesn't have any much needed infinite-growth inhibitors so everything gets taken and monopolized by the few large constructs. In E:D, who cares! We'll just get what we need somewhere else; or, we'll simply operate on some fringe performing up to our capabilities. No more ghetto, no more content exclusion.
I'm looking forward to some real E:D space exploration of a logically laid out universe and discoverable resources. I expect I'll still Eve a bit, maybe.
Maybe I'm approaching one of those walk-away moments that I've read so much about. It's too bad, really, as the Eve Online sci-fi universe is so full and evolved. Wish it was actually part of the game.
Anyway, we all try new games from time to time. Since I'm a one-game kinda guy I'll be largely absent from Eve while I explore E:D. But I'll be checking in every once in a while to see if any content opens up for the progression of newer players.
Looking forward to the future of both games ... but more so for E:D atm as Eve has lost its way.
Consider this a cautionary tale for November and the possible incoming wave of Alpha players looking for a vibrant game they can plug into easily, or resources they can exploit alone or in small groups, and facing the same disappointment and uphill struggle Art Hornbie faced.

Friday, October 14, 2016

Raitaru, Raitaru, Wherefore Art Thou?

So let's talk more about Engineering Complexes.

We got more details on the structures in a dev blog earlier this week titled Building Dreams: Introducing Engineering Complexes. These are the structures intended to replace the manufacturing and science capabilities of Outposts and POS arrays, up to and including the production of Super capitals (with appropriate sov control of course for the latter). They have a lot of similarities to Citadels including asset safety, docking, corporate hangers, vulnerability windows, reinforcements, etc. On the other hand, they have lower build requirements thus lower costs; for example, a medium Astrahus citadel costs about 1 billion ISK to produce while the corresponding medium Raitaru will run around 700 million ISK at the same material prices. They also have longer vulnerability windows (3 hours for Astrahus, 9 hours for Raitaru), and tighter docking restrictions: the Large EngPlex can build and launch capitals but can't dock them like the large Citadel can, and similar situation with XLarge and super capitals. Related: the Medium Raitara cannot build capitals.

There is no word on the BPO costs yet, but assuming they follow the same price differential ratio as the structures themselves, I expect the medium BPO to be about 5 billion, large ~50 billion, and extra-large 500 billion ISK.

So What Does this Mean for Me?

Overall, this is not very good news for me. I was willing to invest in a EngPlex costing about the order of magnitude of an Astrahus for my capital and structure producing projects, but the Medium Raitaru cannot build the capitals and the Large Azbel complex at 5.2 billion ISK just for the structure is too rich with too much risk (i.e. large vulnerability window) that I alone cannot mitigate and therefore justify. Someone building Tech II ships might make a lone go out of a Raitaru, but in that case why not simply use a POS manufacturing array at a far lower investment cost?

And that's the rub: small time producers are not served by these structures at all. With the savings in terms of materials and time these promise to provide, small time producers in NPC stations or private POSes are going to be out-competed by any small group or larger working together in a EngPlex. Its the same issue as POS versus NPC station only writ larger.

Short term, I plan to build Raitaru EngPlexes and sell them for profit like I do for Astrahus Citadels. Putting one up for my own building is a possibility if I can build capital and structure components in one but I have a feeling the answer might be no, some investigation is required. Long term, it looks like cooperation with some other people or entities will be required to advance Ninveah Enterprises to the next level.


I found on the rig spreadsheet evidence that suggests one can build capital construction components, structure components, and structures themselves in a Raitaru:

So while I can't build capitals in a Medium Eng Plex, I might be able to improve efficiency with a Raitaru after all. More investigation required.

EVE T-shirts

Desperate for some scrap of EVE Online clothing to wear I googled around and found this website called with a few shirts that seemed reasonably priced and looked not too bad. I ordered a Gallente Federation shirt and EVE ONLINE shirt that combined with online specials only came to ~24 dollars total.

Well they arrived yesterday and overall I'm pleased with my purchase:

They are 100% cotton and you can tell the thread count is not high, but they don't feel like they will disintegrate in the wash and should last me quite a while. Finally I have something to wear to show my support for the Federation!

For the record, I'm still pissed the CSM minutes rickrolled me with a tease about a new EVE Store.

Wednesday, October 12, 2016

System Crash

Somewhere along the line, a threshold was passed. Pressure started building, slowly, almost immeasurably day to day, but over time it became apart that the pressure was building to near dangerous levels and something was going to give.

Today CCP decided to alleviate the pressure by puncturing it with a sword: END USER LICENSE AGREEMENT CHANGES COMING WITH EVE ONLINE: ASCENSION

This change is related to the CONDUCT part of the EULA, specifically Section B, which has been updated as follows:

B. Selling Items and Objects
You may not transfer, sell or auction, or buy or accept any offer to transfer, sell or auction (or offer to do any of the foregoing), any content appearing within the Game environment, including without limitation characters, character attributes, items, currency, and objects, other than via a permitted Character Transfer as described in section 3 above. You may not encourage or induce any other person to participate in such a prohibited transaction. You may not use, transfer or assign any game assets for games of chance operated by third parties. The buying, selling or auctioning (or any attempt at doing so) of characters, character attributes, items, currency, or objects, whether through online auctions, newsgroups, postings on message boards or any other means is prohibited by the EULA and a violation of CCP's proprietary rights in the Game.
In short, this addition to the EVE Online EULA means that as of the launch of EVE Online: Ascension, players will be prohibited from using in game assets and currency, as well as the EVE IP, to take part in or promote gambling services or other games of chance that are operated by third parties. 
With this in mind, as of this announcement we have taken action against two organizations that are currently offering third party services based around gambling and games of chance: 
- The third party service IWANTISK has been shut down in game, and all ISK and assets have been confiscated after extensive and exhaustive investigation has brought forward compelling evidence of large-scale Real Money Trading. Permanent account suspensions have been issued against those involved.

- The third party service EVE Casino has been shut down in game, and all ISK and assets have been confiscated after multiple and sustained breaches of our Developer License Agreement. Permanent account suspensions have been issued against those involved.
EVE's gambling scene has been accumulating ISK and thus power over the past decade slowly but very surely. The height of that power was seen in the recent World War Bee where IWANTISK bankers used fat wallets to finance the effort against the Goons. Make no mistake: the Goons made many enemies over the years and the line to knock them down a peg or ten was miles long, but the ISK from the bankers like Lenny Kravitz2 ensured that people were willing to fleet up and give it a try.

And with the power that massive mountains of ISK hold comes the danger of corruption, not only in game with a 1% of players having undue influence over cluster politics and dynamics, but also out of gaming in the form of the lure of Real Money Trading which apparently overcame the mores of IWANTISK and EVE Casino according to CCP's investigations.

CCP tried to treat this pressure in a more targeted way with the SOMER Blink gambling site by forcing PLEX sales to be divorced from ISK gambling but apparently that has not be sufficient deterrent enough. Noizy Gamer has been writing about the problems Valve has been facing with gambling recently and there has been a lot of movement lately from governments starting to wake up to the online game gambling and this move by CCP could be more about getting out of the way of that train with the upcoming unlimited trial accounts rather than wait for potential legislation or lawsuits or fines.

Overall this is going to be a big shock to the system for the game, and one I'm not opposed to. Part of me really feels that the detrimental effects of gambling concentrating more and more ISK to the hands of a few while doing nothing for or with the actual gameplay of EVE is not a good thing in the long run, even though those mega rich players use their ISK in some beneficial ways for the community. It means that sites that depend on one or two big donors to operate will have to crowdsource their funding from the consumers of their content which requires more effort and has more inherent risk. I sympathize with them but adapt or die as the saying goes.

Tuesday, October 11, 2016

On the Mend

Sorry for the silence recently. I took the day off work to take care of some things around the house and near the end of the afternoon I took a bad step off my deck onto uneven ground and rolled my ankle something fierce.
I've been stuck on the couch all weekend, which was the holiday Thanksgiving weekend to boot, and pretty depressed as it means my walking, running, and martial arts are all on hold for the next 1-2 months. I've been diagnosed with a grade 2 ankle sprain and I'm wearing a aircast boot which allows me to walk without crutches and improves my mobility a bit at least. I'm now able to get to the main computer in the basement, and I'll be back at work tomorrow.

Stay tuned for my thoughts on the Engineering Complex dev blog tomorrow!

Wednesday, October 05, 2016

Engineering the Complexity

When the CSM 11 Summit 1 Meeting Minutes came out I quickly turned to the section that talked about Engineering Complexes supposedly coming in November, looking for information. In the section on Structures there was some:

Discussion then moved to the Engineering Complexes
Sullen asked what the benefits of the bigger complexes, to which CCP Fozzie
replied that it would be similar to the Citadel in providing bonuses to more things
at once as you increase in size. CCP also explained that the new rigs would
provide bonuses to manufacturing (both TE and ME)
CCP further explained that Engineering Complexes would be weaker than citadels,
have longer vulnerability windows and bonuses to manufacturing
instead but
otherwise be quite similar.
Fafer asked if you could anchor Engineering Complexes near Citadels, to which
CCP replied no. The CSM expressed that they would love to see structures be able
to be linked to each other. Although this was discussed within CCP at the very
beginning of the project years ago, the complexity involved did not make this a
viable option.
CCP explained that there would be a service module that would enable
manufacturing everything but capitals and super capitals, another that enables
capitals and a final one that enables supercapital manufacturing
CCP Fozzie also explained that materials in build or completed but not delivered
build jobs could possibly drop if the structure is destroyed, but the blueprint
would go to asset safety.
Emphasis mine.

So the most interesting part was the last point, that running jobs in a EngPlex that is attacked and destroyed would not lose the blueprint (although the materials are forfeit). That is good news for anyone like me who is considering a small EngPlex for a small operation and is willing to risk the investment in a structure but much more leery about risking my billions of ISK of BPOs, and not willing to put in the effort to create endless piles of blueprint copies.

The big outstanding question for me is whether the smallest EngPlex can support the module to build capitals or if it has to be the large or extra large versions. If the latter, that will put a hamper on my Ninveah Enterprises base of operations.

Monday, October 03, 2016

Demographic Shift

I've been continuing to ponder on the upcoming change to EVE to allow for unlimited play via Alpha clones and although I'm still leaning towards the position that not much will change in terms of EVE's cluster population since the game is still very niche and complicated, I've been considering the potential impacts to the game in case I'm wrong. And one thing I've come to realize that it seems pundits and podcasters seem to have overlooked is that if the Alpha clone change is successful, it probably means a large demographic shift.

Consider the assumption that there is a significant portion of potential EVE players who would be players if the subscription cost was not such a large barrier to entry to the game, as opposed to those potential players where the cost is not a big factor but the return on the cost is (i.e. I don't have enough time to play to get my ~$15 worth every month). Chances are this pool of potential players probably skews to younger ages that lack credit cards, or are in school so lack sources of income.

We know currently that the current demographic of players in EVE skews older than your typical game with the median age being almost 32:
Click for full size
So if everything goes according to plan and this pool of potential players that lack funds but have the time and inclination to play jump in with both feet, we could see that demographic map radically change to the left and the median age dropping significantly. If so, existing groups that welcome these new Alpha players in will have to prepare themselves mentally for dealing with players that are recognizably from a different generation with different priorities than the current crop of players.

Its possible that relaxed fleet comms discussing raising children or taking family vacations or house moves or renovations (etc) will change to other topics. In order to not date myself, I'm not going pretend I know enough about what 20 year olds talk about nowadays to try and give examples.

Corporations preparing to welcome with open arms these new players better be prepared for the culture shock at the same time on both sides.

AddThis button